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Item 3.02
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Unregistered Sales of Equity Securities
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Lincoln Park Transaction.
On May 1, 2017, we entered into a purchase
agreement (the “Purchase Agreement”), together with a registration rights agreement (the “Registration Rights
Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”).
Under the terms and subject to the conditions
of the Purchase Agreement, we have the right to sell to and Lincoln Park is obligated to purchase up to $40 million in shares of
our common stock (“Common Stock”), subject to certain limitations, from time to time, over the 36-month period commencing
on the date that a registration statement, which we have agreed to file with the Securities and Exchange Commission (the “SEC”)
pursuant to the Registration Rights Agreement, is declared effective by the SEC and a final prospectus in connection therewith
is filed. We may direct Lincoln Park, at our sole discretion and subject to certain conditions, to purchase up to 500,000 shares
of Common Stock on any business day, provided that at least one business day has passed since the most recent purchase, increasing
to up to 1,000,000 shares, depending upon the closing sale price of the Common Stock (such purchases, “Regular Purchases”).
However, in no event shall a Regular Purchase be more than $1,000,000. The purchase price of shares of Common Stock related to
the future funding will be based on the prevailing market prices of such shares at the time of sales. In addition, we may direct
Lincoln Park to purchase additional amounts as accelerated purchases under certain circumstances. Our sales of shares of Common
Stock to Lincoln Park under the Purchase Agreement are limited to no more than the number of shares that would result in the beneficial
ownership by Lincoln Park and its affiliates, at any single point in time, of more than 4.99% of the then outstanding shares of
Common Stock.
In connection with the Purchase Agreement,
we issued to Lincoln Park 5,540,550 shares of Common Stock and we are required to issue up to 5,540,550 additional shares of Common
Stock pro rata as we require Lincoln Park to purchase our shares under the Purchase Agreement over the term of the agreement. Lincoln
Park has represented to us, among other things, that it is an “accredited investor” (as such term is defined in Rule
501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)). We sold the securities
in reliance upon an exemption from registration contained in Section 4(a)(2) under the Securities Act. The securities sold may
not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The
Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties, agreements and conditions
to completing future sale transactions, indemnification rights and obligations of the parties. We have the right to terminate the
Purchase Agreement at any time, at no cost or penalty. Actual sales of shares of Common Stock to Lincoln Park under the Purchase
Agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions,
the trading price of the Common Stock and determinations by us as to the appropriate sources of funding for us and our operations.
There are no trading volume requirements or,
o
ther
than the limitation on beneficial ownership discussed above, restrictions under the Purchase Agreement. Lincoln Park has no right
to require any sales by us, but is obligated to make purchases from us as we direct in accordance with the Purchase Agreement.
Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of
our shares.
The net proceeds received by us under the
Purchase Agreement will depend on the frequency and prices at which we sell shares of our stock to Lincoln Park. We anticipate
that any proceeds received by us from such sales to Lincoln Park under the Purchase Agreement will be used for research and product
development, general corporate purposes and working capital requirements.
The foregoing descriptions of the Purchase
Agreements and the Registration Rights Agreement are qualified in their entirety by reference to the full text of the Purchase
Agreement and the Registration Rights Agreement, copies of which are attached hereto as Exhibit 10.1 and 10.2, respectively, and
each of which is incorporated herein in its entirety by reference. The representations, warranties and covenants contained in such
agreements were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties
to such agreements, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures exchanged between the parties in connection with execution of the agreements.