Item 1.01 Entry into a Material Definitive Agreement.
On December 24, 2020, KemPharm, Inc., a Delaware corporation (the “Company”), entered into an Amendment to Facility Agreement, Notes and to December 2020 Exchange Agreement (the “Amendment”) with Deerfield Private Design Fund III, L.P. (“DPDF”) and Deerfield Special Situations Fund, L.P. (together with DPDF, the “Deerfield Holders”). The Amendment modifies certain specified terms of the December 2020 Exchange Agreement and Amendment to Facility Agreement, Notes and Investors’ Rights Agreement, dated as of December 20, 2020 (the “December 2020 Exchange Agreement”), between the Company and the Deerfield Holders, the Notes (as defined in the Amendment) and the Existing Facility Agreement (as defined in the Amendment), including to, among other things, amend the definition of “Required Note Holders” under the Notes and to amend the terms of the amendment to the definition of “Required Lenders” in the Existing Facility Agreement included in the December 2020 Exchange Agreement and to clarify that certain interest payment provisions in the Existing Facility Agreement will remain in effect unless and until certain amendments to the Existing Facility Agreement set forth in the December 2020 Exchange Agreement become effective.
The Amendment contains customary representations, warranties and covenants made by the Company.
The foregoing descriptions of the Amendment are a summary and are qualified in their entirety by Exhibit 10.1 attached hereto, which is incorporated by reference into this Item 1.01.
Item 8.01. Other Events
On December 23, 2020, each of Delaware Street Capital Master Fund, L.P. and M. Kingdon Offshore Master Fund, LP (together with the Deerfield Holders, the “Holders”) signed joinder agreements by which each such Holder agreed to become party to the December 2020 Exchange Agreement, as amended, and subject to the transactions contemplated thereunder. Accordingly, upon the terms and subject to the conditions set forth in the December 2020 Exchange Agreement, including the closing of the Company’s previously-announced public offering, (a) the Company will make a cash pre-payment of a portion of principal amount of the Notes held by the Holders equal to approximately $30.3 million, plus accrued interest if such payment is made on or after January 1, 2020, and (b) subject to the satisfaction or waiver of certain conditions specified in the December 2020 Exchange Agreement, including the making of the Holders’ debt repayment, issue shares of the Company’s Series B-2 Preferred Stock, par value $0.0001 per share (the “Series B-2 Preferred Stock”), and warrants exercisable for shares of the Company’s common stock (the “Exchange Warrants”), in exchange for the cancellation of the principal amount of the Notes owned by the Holders in an aggregate amount equal to the Cash Payment Amount, plus the Q4 PIK Interest Payment (as defined in the December 2020 Exchange Agreement) (such transaction, the “Exchange”). Upon payment of the Cash Payment Amount and completion of the Exchange, the Company anticipates that the aggregate principal amount of the outstanding Notes held by the Holders will be approximately $7.6 million.
A detailed description of the terms and conditions of the December 2020 Exchange Agreement, the Exchange, the Series B-2 Preferred Stock and the Exchange Warrants is included in the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission December 21, 2020, which description is incorporated herein by reference.
Forward Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements about the closing of the transactions contemplated under the Amendment and the December 2020 Exchange Agreement, including pre-payment of any portion of the Notes or the closing of the Exchange, and other statements containing the words “expect,” “intend,” “may,” “will,” and similar expressions. Such statements constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties related to market conditions, uncertainties inherent in the operation of the Company’s business and such other factors as are set forth in the risk factors detailed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. In addition, the forward-looking statements included in this Current Report on Form 8-K, including the press release and
