MUSTANG BIO, INC. : Entering a Material Definitive Agreement, Financial Statements and Supporting Documentation (Form 8-K)

Section 1.01 Entering into a Material Definitive Agreement.

At March 4, 2022 (the “Closing Date”), Mustang Bio, Inc. (“Mustang”), a clinical-stage biopharmaceutical company focused on translating current medical breakthroughs in cell and gene therapies into potential cures for hematological cancers, solid tumors and rare genetic diseases, has entered into an $75.0 million
loan and guarantee agreement (the “loan agreement”) with Runway Growth Finance Corp. (NASDAQ: RWAY) (“Runway”), the proceeds of which will be used to support ongoing clinical development of key investigational product candidates in Mustang’s pipeline and for general working capital purposes. Under the loan agreement, $30.0 million from $75.0 million loan has been financed on the closing date, the balance $45.0 million fundable if Mustang reaches certain predetermined milestones.

Each loan will mature on April 15, 2027 (the “Term Loan Maturity Date”). Departure March 15, 2022Mustang will make monthly interest-only payments up to April 1, 2024 (the “Amortization Date”). The amortization date can be extended up to April 1, 2025 if Mustang reaches certain predetermined milestones. After that, Mustang will make monthly interest and principal payments. If the amortization date is postponed to April 1, 2025, monthly payments will be recalculated into equal amounts based on the remaining number of payment dates until the term loan maturity date. Any unpaid Principal Amount and any accrued and unpaid interest will be due and payable in full on the Term Loan Maturity Date.

Each loan bears interest at a variable annual rate equal to 8.75% plus the greater of (i) 0.50% and (ii) the three-month LIBOR rate for we dollar deposits, as published by Bloomberg (or other commercially available source providing LIBOR quotes as reasonably determined by Runway from time to time) or the rate reasonably determined by Runway as the rate at which we three-month dollar deposits would be offered by banks London, England to major banks in London or other offshore interbank market (the “Applicable Rate”); provided that the Applicable Rate is not less than 9.25%.

At its discretion, upon ten days written notice to Runway, Mustang may prepay all Loans in an amount equal to the sum of (i) all outstanding principal plus accrued and unpaid interest, (ii) fees prepayment (as defined in the Loan Agreement), (iii) the Final Payment (as defined in the Loan Agreement) and (iv) all other sums due and payable, including interest at the Default Rate (as defined in the Loan Agreement), if applicable.

Each Loan is secured by a lien on substantially all of Mustang’s assets, other than Intellectual Property and Excluded Collateral (in each case, as defined in the Loan Agreement). The terms of the loan agreement contain customary covenants and representations, including a liquidity clause, a financial reporting clause and limitations on dividends, indebtedness, guarantees, investments, distributions, transfers , mergers or acquisitions, taxes, corporate changes, depository accounts and subsidiaries.

Events of default under the Loan Agreement include, without limitation and subject to customary grace periods, (1) Mustang’s failure to make payments of principal or interest in under the Loan Agreement, promissory notes, or other loan documents, (2) Mustang’s breach or default in performing any covenant under the Loan Agreement, (3) the occurrence of an event or circumstance that could reasonably be expected to have a material adverse effect, (4) certain seizures or judgments of Mustang’s assets, (5) the insolvency or bankruptcy of Mustang , (6) the occurrence of any material default under certain agreements or obligations of Mustang involving indebtedness in excess of $500,000(7) the issuance of fines, penalties, judgments, orders or decrees for the payment of a sum of money in an amount, individually or in the aggregate, greater than $500,000, or (8) Mustang making any representation or warranty that is false or misleading in any material respect. If an Event of Default occurs, Runway shall be entitled to take enforcement action, including acceleration of amounts due under the Loan Agreement.

Pursuant to the Loan Agreement, Mustang issued a warrant (the “Warrant”) to Runway to purchase 748,036 shares of Mustang common stock with an exercise price of $0.8021. The warrant is exercisable for ten years from the date of issue. Runway may exercise the warrant in cash or through a net issue conversion. Mustang Common Shares will be registered on Mustang’s first opportunity after the warrant exercise date.

Item 9.01. Financial statements and supporting documents.

(d) Exhibits.

The following documents are attached:

Number     Description
  4.1        Warrant to Purchase Common Stock issued March 4, 2022, by Mustang
           Bio, Inc. to Runway Growth Finance Corp.

  99.1       Loan and Security Agreement, dated March 4, 2022, by and between
           Mustang Bio, Inc., Runway Growth Finance Corp.

104        Cover Page Interactive Data File (embedded within the Inline XBRL

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