LIQUIDIA CORP: Entering into a Material Definitive Agreement, Creation of a Direct Financial Obligation or Obligation under a Registrant’s Off-Balance Sheet Arrangement, Financial Statements and Supporting Documentation (Form 8-K)

Article 1.01 Entry into an important final agreement.

Effective January 7, 2021 (the “Effective Date”) Liquidia Corporation, a
Delaware company (the “Company”) has entered into an amended and updated loan and guarantee agreement (the “Loan Agreement”) by and between the Company, Silicon Valley Bank, a California company (“SVB”), in its capacity as administrative agent and guarantee agent, Silicon Valley Bank, a California company, as a lender and SVB Innovation Credit Fund VIII, LP, a Delaware limited partnership (“Innovation”), as a lender (SVB and Innovation collectively the “Lenders” and each individually a “Lender”). The loan agreement amended and reaffirmed that certain loan and guarantee agreements dated February 26, 2021, as amended, by and between the Company and SVB (the “Prior Agreement”).

The Loan Agreement grants the Company up to $ 40.0 million in term loans, the first of which $ 20.0 million was funded on the effective date. The prior agreement provided for up to $ 20.5 million in term loans including $ 10.5 million
had been funded on the effective date.

Under the New Loan Facility, the Lender will grant loans in three tranches. The proceeds of the first tranche of $ 20.0 million were used to repay outstanding loans under the prior agreement and adds $ 9.5 million cash flow on the Company’s balance sheet. The first tranche also offers the possibility of drawing an additional amount $ 5.0 million at the discretion of the Company by December 31, 2022. A second installment of $ 7.5 million is available for funding upon receipt of final and unconditional approval of YUTREPIA ™ Inhalation Powder (Treprostinil) by December 31, 2022. The third installment of $ 7.5 million will be available via August 31, 2023, after having generated net sales of products over the last six months of YUTREPIA of $ 27.5 million through June 30, 2023. The loan facility will mature on December 1, 2025 and will consist of interest payments only by December 31, 2023, unless the milestone of the third tranche is reached, in which case the interest-only payments will continue until
December 31, 2024. The principal amount outstanding on term loans will bear interest at an annual variable rate equal to the greater of (1) seven and a quarter one percent (7.25%) and (2) the annual interest rate from time to time published in the monetary rates section of The Wall Street Journal plus four percent (4.0%).

Under the terms of the loan agreement, the Company has granted to the agent, for the proportional benefit of the lenders, to guarantee the payment and the full performance of all the obligations set out in the loan agreement, a continuing security pledged to the agent, for the benefit of the lenders, the collateral (as defined below), wherever it is located, whether currently held or acquired or resulting, and all products and products thereof.

For the purposes of the Loan Agreement, “guarantee” means all of the Company’s rights, title and interest in the following personal property: (i) all property, accounts (including health care receivables), ” equipment, inventory, contractual rights or rights to payment of money, leases, license agreements, franchise agreements, general intangibles (except as provided below), commercial tort claims, documents, instruments ( including promissory notes), movable effects (physical or electronic), cash, deposit accounts, certificates of deposit, arrangements, rights to letters of credit (whether or not the letter of credit is embodied in writing), securities, securities accounts, rights to securities and all other investment property, supporting obligations and financial assets, whether they are currently held or acquired below, wherever they are located; and (ii) all company records relating to the foregoing, and all claims, rights and interests in any of the above and all substitutions, additions, attachments, accessories, acquisitions and improvements and replacements , products, products and insurance products of all or part of the foregoing. All defined terms used in this paragraph have the definitions assigned to that term in the Uniform Commercial Code.

As with the previous Agreement, the Loan Agreement contains customary covenants, positive and negative, including, but not limited to, certain financial covenants, the protection of intellectual property rights and the disposition of certain assets.

As an incentive to enter into the Loan Agreement, from the Effective Date, the Company issued to each of SVB, Innovation and VIII-A LP Innovation Credit Fund (“Innovation Credit”). certain warrants to purchase ordinary shares of the Company in accordance with the share subscription agreements entered into by and between the Company and each beneficiary (collectively, the “Warrants”). The granting of warrants under the respective warrants conferred (i) on SVB the initial right to obtain 125,000 shares of the Company at an exercise price of $ 5.14 one share, and there is an opportunity for SVB to obtain up to 50,000 additional warrants on the basis of certain loans that may be granted under the loan agreement, (ii) Innovation with the initial right to obtain 62,500 Company shares at an exercise price of $ 5.14 one share, and there is an opportunity for Innovation to obtain up to 25,000 additional warrants based on certain loans that may be granted under the Loan Agreement, and (iii) Innovation Credit with the right initial purchase of 62,500 Company shares at an exercise price of
$ 5.14 one share, and Innovation Credit has the option of obtaining up to 25,000 additional warrants based on certain loans that may be made under the loan agreement. The warrants provide an option for a cashless exercise.

The description of the terms of the Loan Agreement and the Warrants is qualified in its entirety by the full text of each agreement filed attached as Exhibit 1.1, Exhibit 1.2, Exhibit 1.3 and Exhibit 1.4 and incorporated herein by reference. .

Item 2.03    Creation of a Direct Financial Obligation or an Obligation under an
             Off-Balance Sheet Arrangement of a Registrant.

The information to be reported under this Item 2.03 is incorporated by reference from Item 1.01 of this current report on Form 8-K.

Item 9.01 Financial statements and supporting documents.

(d) The exhibits listed in the exhibits index below are filed as part of this current report on Form 8-K.

Exhibit
No.                                        Exhibit
  4.1        Warrant to Purchase Stock, dated as of January 7, 2022, by and
           between the Company and Silicon Valley Bank.
  4.2        Warrant to Purchase Stock, dated as of January 7, 2022, by and
           between the Company and SVB Innovation Credit Fund VIII, L.P.
  4.3        Warrant to Purchase Stock, dated as of January 7, 2022, by and
           between the Company and Innovation Credit Fund VIII-A L.P.
  10.1       Amended and Restated Loan and Security Agreement, dated as of
           January 7, 2022, by and among the Company, Silicon Valley Bank and SVB
           Innovation Credit Fund VIII, L.P.
  99.1       Press Release of Liquidia Corporation, dated January 7, 2022.
104        Cover Page Interactive Data File (embedded within the Inline XBRL
           document).

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