portion of the Investment Amount plus a specific annual rate of
return less payments previously received. If a change of control of
the Company occurs, the Company must immediately repay HCR the
total amount actually funded plus a change of control premium, the
amount of which is variable up to 95% based on timing and
circumstances of such change of control and the amount funded and
conditionally eligible to be funded by HCR as of the date of the
change of control.
The RIFA includes customary events of default upon the occurrence
of enumerated events, including non-payment of Revenue Interests,
failure to perform certain covenants and the occurrence of
insolvency proceedings, certain judgments, certain cross-defaults
or certain revocations, withdrawals or cancellations of regulatory
approval for MYCAPSSA. In addition, the RIFA contains various
representations and warranties, information rights, non-financial covenants,
indemnification obligations and other provisions that are customary
for a transaction of this nature. Further, the RIFA requires the
Company to maintain a minimum of $20.0 million in cash and
cash equivalents during any quarter that the trailing four quarters
of net revenue of MYCAPSSA is below a certain threshold. Upon the
occurrence of an event of default, the Investor may accelerate
payments due under the RIFA up to the Hard Cap. Upon the occurrence
of certain material adverse events or the material breach of
certain representations and warranties, which will not be
considered events of default, the Investor may elect to terminate
the RIFA and require the Company to make payments to the Investor
equal to the funded portion of the Investment Amount, minus
payments received by the Investor in respect of the Revenue
Interests, plus a specified annual rate of return. The Company’s
obligations under the RIFA will be secured by a first priority
perfected security interest in all cash and Cash Equivalents (as
defined in the RIFA) of the Company and all present and future net
revenues of MYCAPSSA and all MYCAPSSA-related assets.
The Company expects to file the Agreement as an exhibit to its next
Quarterly Report on Form 10-Q. The foregoing description of the
Agreement is qualified in its entirety by reference to the text of
the Agreement when filed.
A copy of the Company’s press release announcing the entry into the
RIFA is filed as Exhibit 99.1 to this Current Report on Form
8-K and is incorporated
herein by reference.
Open Market Sale Agreement
On April 7, 2020, the Company entered into an Open Market Sale
AgreementSM
(the “Sales Agreement”) with Jefferies LLC (“Jefferies”) with
respect to an at the market offering program under which the
Company may offer and sell, from time to time at its sole
discretion, shares of its common stock, par value $0.01 per share
(the “Common Stock”), having an aggregate offering price of up to
$60,000,000 (the “Placement Shares”) through Jefferies as sales
agent or principal. The issuance and sale, if any, of the Placement
Shares by the Company under the Sales Agreement will be made
pursuant to the Company’s effective registration statement on Form
S-3 (Registration Statement
No. 333-233654) and
the Prospectus Supplement dated April 8, 2020.
Jefferies may sell the Placement Shares by any method permitted by
law deemed to be an “at the market offering” as defined in Rule 415
of the Securities Act of 1933, as amended, including, without
limitation, sales made through The Nasdaq Global Select Market
(“Nasdaq”) or into any other existing trading market for the Common
Stock. Jefferies will use commercially reasonable efforts to sell
the Placement Shares from time to time, based upon instructions
from the Company (including any price, time or size limits or other
customary parameters or conditions the Company may impose). The
Company will pay Jefferies a commission up to three percent (3.0%)
of the gross sales proceeds of any Placement Shares sold through
Jefferies under the Sales Agreement, and also has provided
Jefferies with customary indemnification and contribution rights.
In addition, the Company has agreed to reimburse certain legal
expenses and fees by Jefferies in connection with the offering up
to a maximum of $50,000, in addition to certain ongoing
disbursements of Jefferies’ counsel.
The Company is not obligated to make any sales of Common Stock
under the Sales Agreement. The Company or Jefferies may suspend or
terminate the offering of Shares upon notice to the other party and
subject to other conditions. Jefferies will act as sales agent on a
commercially reasonable efforts basis consistent with its normal
trading and sales practices and applicable state and federal law,
rules and regulations and the rules of Nasdaq.
The foregoing description of the Sales Agreement is not complete
and is qualified in its entirety by reference to the full text of
the Sales Agreement, a copy of which is filed herewith as Exhibit
1.1 to this Current Report on Form 8-K and is incorporated herein by
reference. A copy of the opinion of Goodwin Procter LLP relating to
the legality of the issuance and sale of the Placement Shares in
the offering is attached as Exhibit 5.1 hereto.
