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Item 1.01
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Entry into a Material Definitive Agreement
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Debt Exchange
On January 27,
2021, Teligent, Inc. (the “Company”) completed a recapitalization and equitization transaction pursuant to an
Exchange Agreement, dated January 27, 2021, among the Company, the Series C Noteholders (as defined below) and Ares (as
defined below) (the “Exchange Agreement”). Under the Exchange Agreement, the holders (the “Series C Noteholders”)
of all of the Company’s 9.5% Series C Senior Secured Convertible Notes due 2023 (the “Series C Notes”)
agreed to exchange an aggregate of approximately $50.3 million of outstanding principal under the Series C Notes, representing
100% of the outstanding principal under the Series C Notes, together with the accrued interest thereon, for an aggregate of
29,862,641 shares (the “Series C Exchange Shares”) of the Company’s common stock, par value $0.01 per share
(the “Common Stock” and such transaction, the “Series C Equitization”). The Series C Equitization
resulted in the extinguishment of all of the Company’s obligations under the Indenture, dated as of July 20, 2020, between
the Company and Wilmington Trust, National Association, as trustee and collateral agent (the “Series C Indenture”).
Additionally, under
the Exchange Agreement, certain credit funds and accounts managed by affiliates of Ares Management Corporation (such funds and
accounts, collectively, “Ares” and, together with the Series C Noteholders, the “Participating Parties”)
that are lenders under the Second Lien Credit Agreement, dated December 13, 2018, by and among the Company, certain of its
subsidiaries, the lenders from time to time party thereto, and Ares Capital Corporation, as Administrative Agent (as amended, including
by the Second Lien Amendment (as defined below), the “Second Lien Credit Agreement”) agreed to convert a portion of
the outstanding term loans under the Second Lien Credit Agreement constituting 100% of the approximately $24.5 million in accrued
PIK interest under the Second Lien Credit Agreement into an aggregate of approximately 85,412 shares of the Company’s newly
created Series D Preferred Stock, par value $0.01 per share (the “Series D Preferred Stock”, and such transaction,
the “PIK Interest Exchange” and, together with the Series C Equitization, the “Debt Exchange Transactions”).
Each share of Series D Preferred Stock is non-voting and, subject to an increase in the number of shares of Common Stock available
for issuance under the Company’s amended and restated certificate of incorporation, is convertible into 200 shares of Common
Stock. The shares of Series D Preferred Stock issued in connection with the PIK Interest Exchange are convertible into an
aggregate of 17,082,285 shares of Common Stock. The holders of shares of Series D Preferred Stock may not convert such shares
of Series D Preferred Stock into shares of Common Stock to the extent such a conversion would result in a holder thereof,
together with its affiliates, collectively owning more than 15% of the number of shares of Common Stock then outstanding.
In addition, pursuant
to the terms of the Exchange Agreement, the Company is required to seek the requisite approval of its stockholders for an amendment
to its amended and restated certificate of incorporation to allow for the conversion in full of all shares of Series D Preferred
Stock into shares of Common Stock (either by an increase in the number of authorized shares of Common Stock, the effectuation of
a reverse stock split, or otherwise) (the “Stockholder Approval”). The Exchange Agreement provides that, if the Company
is unable to obtain the Stockholder Approval on or before July 1, 2021, then the Company will issue to each holder of Series D
Preferred Stock, on a quarterly basis, additional shares of Series D Preferred Stock equal to 2.5% of the number of shares
of Series D Preferred Stock originally issued to such holder until the Stockholder Approval is obtained (with a prorated amount
of Series D Preferred Stock to be issued in the event the Stockholder Approval is obtained during any such calendar quarter).
As previously disclosed,
on December 16, 2020, the Company’s stockholders approved, as required by Nasdaq Marketplace Rule 5635(b) and
the Series C Indenture, the issuance to any Series C Noteholder (or group of related holders) of Common Stock exceeding
the greater of (x) 19.99% of the number of shares of Common Stock outstanding and (y) that percentage of the number of
shares of Common Stock outstanding as held by the then-largest holder of shares of Common Stock, all as further described in the
Company’s Proxy Statement filed with the Securities and Exchange Commission (the “SEC”) on September 9,
2020 (the “Prior Change of Control Approval”). Both immediately following the Prior Change of Control Approval and
after giving effect to the Debt Exchange Transactions, certain funds and accounts managed by Nantahala Capital Management, LLC
(“Nantahala”) were, collectively, the Company’s largest stockholder and owned or had the right to acquire, subject
to the terms of the Series C Indenture and each of the Stockholders Agreement (as defined below) and Voting Trust Agreements
(as defined below), more than 19.99% of Common Stock. Accordingly, no change of control of the Company occurred under applicable
Nasdaq Marketplace Rules with respect to the Debt Exchange Transactions, and no additional stockholder approval is required
pursuant to Nasdaq Marketplace Rule 5635(b).
As a condition to entering into the Exchange Agreement, the
Company entered into a Stockholders’ Agreement with the Participating Parties and B. Riley (as defined below) (the “Stockholders’
Agreement”), pursuant to which, among other matters, the Company granted (i) the Participating Parties registration
rights for the shares of Common Stock issuable upon conversion of the Series D Preferred Stock and the Series C Exchange
Shares, and (ii) B. Riley registration rights for the Fee Shares (as defined below). In addition to the voting restrictions
discussed further below, the Stockholders’ Agreement also contains terms restricting the transfer of shares of Common
Stock and Series D Preferred Stock held by the Participating Parties, including, subject to certain exceptions, a restriction
on all sales or other transfers or dispositions of such shares (i) in respect of the ATM Offering, from the date the ATM Offering
is launched until the termination of the ATM Offering; (ii) in any period during which the Company is conducting a follow-on
public offering of Common Stock within 11 months after the ATM Offering commences and ending on the earlier of 60 days after commencement
of such offering or five trading days following its completion; (iii) in violation of certain volume restrictions set forth
in the Stockholders’ Agreement (including the Rule 144 Volume Limitation (as defined in the Stockholders’ Agreement))
at any time when such Participating Party holds at least 9.9% of the Company’s outstanding shares of Common Stock (including
shares issuable upon conversion of the Series D Preferred Stock) and (iv) to any person or entity that is required to
file a statement on Schedule 13D or Schedule 13G with respect to the Company’s securities. The Stockholders’ Agreement
also (x) subjects each Participating Party to certain standstill provisions for a period of 18 months following the date of
the Stockholders’ Agreement, (y) requires each Participating Party to include, in any Schedule 13D or Schedule 13G that
such Participating Party may be required to file in respect of the Company’s securities, an acknowledgment that such Participating
Party has no intent to directly or indirectly control the Company or to take any actions contemplated by Section 5 of the
Stockholders’ Agreement and (z) provides that the rights of each of Nantahala and Silverback (as defined below) to appoint
a non-voting observer to the Company’s board of directors terminates upon the consummation of the Series C Exchange.
The Stockholders’
Agreement also contains certain voting restrictions as follows: (a) each Series C Noteholder and each of such Series C
Noteholder’s affiliates will not vote any shares of Common Stock held by such Series C Noteholder or such affiliates
to the extent such vote would result in such Series C Noteholder and such affiliates, collectively, voting in excess of 4.9%
of the outstanding shares of Common Stock as of the record date for such vote, and (b) Ares will not vote any shares of Common
Stock held by it to the extent such vote would result in Ares and its affiliates, collectively, voting in excess of 15% of the
outstanding shares of Common Stock as of the record date for such vote. In addition, pursuant to Voting Trust Agreements among
Wilmington Savings Fund Society, FSB (“WSFS Bank”), the Company and each of Nantahala and Silverback Asset Management,
LLC (“Silverback”) (the “Voting Trust Agreements”), the Company and each of Nantahala and Silverback have
agreed to establish voting trusts with WSFS Bank to hold all Series C Exchange Shares issued to Nantahala or Silverback, respectively,
in excess of 4.9% of the outstanding shares of Common Stock, and WSFS Bank has agreed to vote all such Series C Exchange Shares
on all matters presented to the vote of the Company’s stockholders in the same proportions as all shares of Common Stock
other than (x) the Series C Exchange Shares held in trust by WSFS Bank; (y) any other shares of Common Stock held
by Nantahala or Silverback, as applicable and (z) other shares of Common Stock held by the other Participating Parties.
The foregoing descriptions
of the Exchange Agreement, the Stockholders’ Agreement and the Voting Trust Agreements do not purport to be complete and
each is qualified in its entirety by reference to the Exchange Agreement, the Stockholders’ Agreement and the Voting Trust
Agreements, which are filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated
herein by reference.
ATM Offering
On January 27,
2021, following consummation of the transactions contemplated by the Exchange Agreement, the Company entered into an At Market
Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”). Pursuant
to the terms of the Sales Agreement, the Company may sell from time to time through or to B. Riley shares of Common Stock having
an aggregate offering price of up to $22,619,204 (the “ATM Shares” and such offering the “ATM Offering”).
The offer and sale of the ATM Shares will be made pursuant to a shelf registration statement on Form S-3 and the related prospectus
(File No. 333-224188) that became effective on May 18, 2018, as supplemented by a prospectus supplement dated January 28,
2021 (the “Prospectus Supplement”) and filed with the SEC pursuant to Rule 424(b) under the Securities Act
of 1933, as amended (the “Securities Act”).
In accordance with
the terms of the Sales Agreement, sales of the ATM Shares under the Prospectus Supplement and the accompanying base prospectus,
if any, will be made by any method deemed to be an “at-the-market offering” as defined in Rule 415 of the Securities
Act. In connection with the sale of the ATM Shares on the Company’s behalf, B. Riley will be deemed an “underwriter”
within the meaning of the Securities Act, and the compensation of B. Riley will be deemed to be underwriting commissions or discounts.
The Company will pay B. Riley a commission of up to 7.0% of the gross proceeds of the sales price per ATM Share sold through or
to B. Riley pursuant to the Sales Agreement. The Company also agreed to pay B. Riley a commitment fee of $500,000, payable in unregistered
shares of Common Stock (such shares, the “Fee Shares”). The Sales Agreement contains customary representations, warranties
and conditions to the placement of the ATM Shares, and the Company has agreed to provide indemnification and contribution to B.
Riley against certain liabilities, including liabilities under the Securities Act. The Company will also reimburse B. Riley for
certain specified expenses in connection with entering into the Sales Agreement.
The Company intends
to use the net proceeds from the offering, after deducting B. Riley’s commissions and the Company’s offering expenses,
for general corporate purposes, including resolution of the issues raised in the November 2019 warning letter from the FDA
to the Company (the “FDA Warning Letter”), maintaining readiness for an FDA pre-approval inspection for the Company’s
newly constructed injectables facility and expanding the Company’s offering of contract development and manufacturing organization
services to its clients.
The foregoing description
of the Sales Agreement does not purport to be complete and is qualified in its entirety by reference to the Sales Agreement, which
is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. A copy of the opinion
of K&L Gates LLP relating to the legality of the issuance and sale of the ATM Shares is attached as Exhibit 5.1 hereto.
This Current Report
on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the ATM Shares, nor shall there be
any offer, solicitation, or sale of Common Stock in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Amendments to First Lien Credit Agreement and Second Lien
Credit Agreement
Also in connection
with the Debt Exchange Transactions and the ATM Offering, on January 27, 2021, the Company entered into (i) Amendment
No. 4 to First Lien Revolving Credit Agreement (the “First Lien Amendment”), amending the First Lien Credit Agreement,
dated December 13, 2018, by and among the Company, certain of its subsidiaries, the lenders from time to time party thereto,
and ACF Finco I LP as Administrative Agent (as amended by the First Lien Amendment, the “First Lien Credit Agreement”),
and (ii) Amendment No. 6 to Second Lien Credit Agreement (the “Second Lien Amendment”), pursuant to which
all identified defaults and events of default thereunder were waived and certain amendments were made to the First Lien Credit
Agreement and Second Lien Credit Agreement, respectively, including those described below.
The First Lien Amendment
amends the First Lien Credit Agreement to, among other things, (i) permit borrowings under the revolving credit facility under
the First Lien Credit Agreement, subject to availability (which is currently $0) and the other terms and conditions of the First
Lien Credit Agreement, provided, that such borrowings are only available until the commitments of the lenders under the Second
Lien Credit Agreement under the Second Lien Delayed Draw Term Loan C Facility (as defined below) have been reduced to $0, (ii) reduce
from $10.0 million to $3.0 million (from and after the first draw of the Second Lien Delayed Drawn Term Loan C Facility described
below) the maximum amount of cash that the Company and its subsidiaries that are credit parties under the First Lien Credit Agreement
are permitted to maintain prior to triggering a mandatory prepayment of the revolving credit facility (without a permanent reduction
of the revolving credit commitments), which $3.0 million threshold automatically increases by the net proceeds received from the
ATM Offering and any other equity offering, (iii) reduce from $3.0 million to $1.0 million the minimum liquidity (as defined
in the First Lien Credit Agreement) required to be maintained by the Company and its subsidiaries that are credit parties under
the First Lien Credit Agreement on a consolidated basis until the earlier of (a) the date on which the net proceeds from the
ATM Offering exceed $15.0 million in the aggregate and (b) February 15, 2021, at which time the liquidity covenant increases
to $3.0 million on a consolidated basis, (iv) from and after March 31, 2022, further increase the liquidity covenant
to $4.0 million on a consolidated basis and (v) suspend testing of the minimum consolidated adjusted EBITDA covenant until
March 31, 2022, at which time such minimum consolidated adjusted EBITDA covenant levels will resume to the levels in effect
prior to the closing of the First Lien Amendment.
The Second Lien Amendment
amends the Second Lien Credit Agreement to (i) permit, among other things, the Debt Exchange Transactions, (ii) provide
for a new multiple-draw delayed draw term loan facility in the aggregate principal amount of up to $4.6 million (the “Second
Lien Delayed Draw Term Loan C Facility”) which will be made available to the Company until December 31, 2021, subject
to satisfaction of the conditions to borrowing, including, following the launch of the ATM Offering, a pro forma maximum liquidity
test of $4.0 million, the proceeds of which may be used to pay expenses specified in a budget approved by the administrative agent
under the Second Lien Credit Agreement, (iii) reduce from $3.0 million to $1.0 million the minimum liquidity (as defined in
the Second Lien Credit Agreement) required to be maintained by the Company and its subsidiaries that are credit parties under the
Second Lien Credit Agreement on a consolidated basis until the earlier of (a) the date on which the net proceeds from the
ATM Offering exceed $15.0 million in the aggregate and (b) February 15, 2021, at which time the minimum liquidity covenant
increases to $3.0 million on a consolidated basis, (iv) from and after March 31, 2022, further increase the minimum liquidity
covenant to $4.0 million on a consolidated basis, (v) suspend testing of the minimum consolidated adjusted EBITDA covenant
until March 31, 2022, at which time such minimum consolidated adjusted EBITDA covenant levels will resume to the levels in
effect prior to the closing of the Second Lien Amendment and (vi) extend the date on which the Company may elect to pay interest
in kind. Loans made under the Second Lien Delayed Draw Term Loan C Facility will be pari passu with, and have the same interest
and payment terms (including maturity) as those applicable to, the existing loans under the Second Lien Credit Agreement.
The foregoing descriptions
of the Second Lien Amendment and First Lien Amendment do not purport to be complete and each is qualified in its entirety by reference
to the Second Lien Amendment and First Lien Amendment, which are filed as Exhibits 10.4 and 10.5, respectively, to this Current
Report on Form 8-K and are incorporated herein by reference.