Item 1.01. Entry into a Material Definitive Agreement
.
On June 30, 2016, Stellar Biotechnologies,
Inc. (the “Company”) entered into Securities Purchase Agreements (the “Securities Purchase Agreements”)
with certain institutional investors providing for the issuance and sale by the Company of an aggregate of 1,687,500 of the
Company’s common shares, no par value (the “Common Shares”), at a price of $4.00 per share (the “Public
Offering Price”) in a registered direct offering (the “Offering”). In a concurrent private placement, the
Company agreed to sell to such investors warrants (the “Purchase Warrants”) to purchase up to an aggregate of 1,265,625
Common Shares (the “Warrant Shares”) with an exercise price of $4.50 per share (the “Private Placement”).
The closing of the Offering and Private Placement is expected to occur on or about July 6, 2016, subject to the satisfaction of
customary closing conditions.
Maxim Group LLC (“Maxim”) is
acting as the exclusive placement agent for the Offering and Private Placement under a Placement Agency Agreement, dated June 27,
2016, between Maxim and the Company (the “Placement Agency Agreement”). Upon the closing of the Offering and Private
Placement, pursuant to the Placement Agency Agreement, Maxim will receive a placement agent fee equal to 7.0% of the gross proceeds
from sales arranged by Maxim (or 3.5% in the case of sales to investors introduced by the Company). In addition, the Placement
Agency Agreement provides that, upon the successful completion of the Offering, for a period of 12 months from the date of the
closing, the Company grants to Maxim a right of first refusal to act as lead managing underwriter and book runner for any and all
future public and private equity and debt offerings during such 12 month period of the Company, or any successor to or any subsidiary
of the Company.
The Common Shares are being offered
by the Company pursuant to a shelf registration statement on Form S-3 (File No. 333-203595) (the
“Registration Statement”), which was declared effective on May 8, 2015 by the Securities and Exchange Commission
(the “SEC”). The Common Shares may be offered only by means of a prospectus, including a prospectus
supplement, forming a part of the effective Registration Statement. A prospectus supplement relating to the offering
will be filed with the SEC and will be available on the SEC’s website at
http://www.sec.gov.
The Company
estimates that the net proceeds from the Offering and Private Placement will be $6.1 million, after deducting expenses and the
placement agent fee payable to Maxim. The Company intends to use the net proceeds from the Offering and Private Placement
for general corporate purposes, which may include working capital, capital expenditures, and research and development expenses.
Each Purchase Warrant will be
exercisable beginning on the initial exercise date that is six months after the date of closing (the “Initial Exercise
Date”) at an exercise price of $4.50 per share, subject to adjustment as provided therein. The Purchase Warrants will
be exercisable for five years from the Initial Exercise Date, but not thereafter. Subject to limited exceptions, a holder of
Purchase Warrants will not have the right to exercise any portion of its Purchase Warrants if the holder, together with its
affiliates, would beneficially own in excess of 4.99% of the number of Common Shares outstanding immediately after giving
effect to such exercise (the “Beneficial Ownership Limitation”); provided, however, that upon 61 days’
prior notice to us, the holder may increase the Beneficial Ownership Limitation, provided that in no event shall the
Beneficial Ownership Limitation exceed 9.99%.
The exercise price and number of Warrant
Shares issuable upon the exercise of the Purchase Warrants will be subject to adjustment in the event of any share dividends and
splits, reverse share split, recapitalization, reorganization or similar transaction, as described in the Purchase Warrants. The
Purchase Warrants and Warrant Shares are not being registered under the Securities Act pursuant to the Registration Statement.
The Purchase Warrants and
Warrant Shares are being offered pursuant to an exemption from the registration requirement of the Securities Act provided in
Section 4(a)(2) of the Securities Act and Rule 506(c) promulgated thereunder. The Purchase Warrants and Warrant Shares may not be
offered or sold in the United States in the absence of an effective registration statement or exemption from the registration
requirement of the Securities Act.
The Company has agreed to register for resale
the Warrant Shares under the Securities Act within 180 days of entering into the Securities Purchase Agreements. After the Initial
Exercise Date, if and only if no effective registration statement registering, or no current prospectus available for, the resale
of the Warrant Shares, the Purchasers may exercise the Purchase Warrants by means of a “cashless exercise.”
Attached as Exhibit 5.1 is the opinion of
McMillan LLP relating to the validity of the issuance and sale of the securities.
The Securities Purchase Agreements contain
customary representations, warranties and covenants by the Company and the investors, and the Placement Agency Agreement contains
customary representations, warranties and covenants by the Company and Maxim.
The foregoing summaries of the Placement
Agency Agreement, Securities Purchase Agreements and Warrants do not purport to be complete and are qualified in their entirety
by reference to the definitive transaction documents, copies of which are filed as exhibits to this Current Report. Each of
the Placement Agency Agreement and the Securities Purchase Agreements contain representations and warranties that the respective
parties made to, and solely for the benefit of, the other parties thereto in the context of all of the terms and conditions of
that agreement and in the context of the specific relationship between the parties. The provisions of the Placement Agency Agreement
and the Securities Purchase Agreements, including the representations and warranties contained therein, are not for the benefit
of any party other than the parties to such agreements or as stated therein and are not intended as documents for investors and
the public to obtain factual information about the current state of affairs of the parties to those documents and agreements. Rather,
investors and the public should look to other disclosures contained in the Company’s filings with the SEC.
This Current Report does not constitute
an offer to sell these securities or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities
in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state or jurisdiction.
This Current Report contains forward-looking
statements that involve risks and uncertainties, such as statements related to the anticipated closing of the Offering and Private
Placement and the amount of net proceeds expected from the Offering and Private Placement. The risks and uncertainties involved
include the Company’s ability to satisfy certain conditions to closing on a timely basis or at all, as well as other risks
detailed from time to time in the Company’s SEC filings.