Item 1.01. Entry into a Material Definitive Agreement.
On February 4, 2019, GT Biopharma, Inc. (the “Company”)
entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with the purchasers identified on the signature
pages thereto (individually, a “Purchaser,” and
collectively, the “Purchasers”), pursuant to which the
Company issued to the Purchasers, on February 4, 2019, Secured
Convertible Notes in an aggregate principal amount of $1,352,224
(the “Notes”), consisting of gross proceeds of
$1,052,224 and settlement of existing debt of $300,000, which Notes
shall be convertible at any time after issuance into shares (the
“Conversion Shares”) of the Company’s common
stock, par value $0.001 per share (the “Common Stock”),
at a conversion price of $0.60 per share (the “Conversion
Price”).
The Notes accrue interest at the rate of 10% per annum and mature
on August 2, 2019.
Interest on the Notes
is payable in cash or, at a Purchaser’s option, in shares of
Common Stock at the Conversion Price. Upon the occurrence of an
event of default, interest accrues at 18% per annum. The Notes
contain customary default provisions, including provisions for
potential acceleration, and covenants, including negative covenants
regarding additional indebtedness and dividends. The Conversion
Price is subject to adjustment due to certain events, including
stock dividends and stock splits, and is subject to reduction in
certain circumstances if the Company issues Common Stock or Common
Stock equivalents at an effective price per share that is lower
than the Conversion Price then in effect. The Company may only
prepay the Notes with the prior written consent of the respective
Purchasers thereof.
Contemporaneously with the execution and delivery of the Purchase
Agreement, on February 4, 2019, the Company and certain of its
wholly-owned subsidiaries entered into a Security Agreement (the
“Security Agreement”) with Alpha Capital Anstalt, as
collateral agent on behalf of the Purchasers, and with the
Purchasers, pursuant to which the Purchasers have been granted a
first-priority security interest in substantially all of the assets
of the Company and such subsidiaries securing (i) an aggregate
principal amount of $1,352,224 of Notes and (ii) an aggregate
principal amount of $9,058,962 of the Company’s 10% Senior
Convertible Debentures issued on August 2, 2018, September 7, 2018
and September 24, 2018 held by such Purchasers.
The Purchase Agreement contains customary representations,
warranties and covenants, including covenants, subject to certain
exceptions, that the Company, until the date on which less than 10%
of the Notes are outstanding, shall not effect any Variable Rate
Transaction (as defined in the Purchase Agreement) and that, for as
long as a Purchaser holds any Notes or Conversion Shares, the
Company shall amend the terms and conditions of the Purchase
Agreement and the transactions contemplated thereby with respect to
such Purchaser to give such Purchaser the benefit of any terms or
conditions under which the Company agrees to issue or sell any
Common Stock or Common Stock equivalents that are more favorable to
an investor than the terms and conditions granted to such Purchaser
under the Purchase Agreement and the transactions contemplated
thereby.
In addition, the Company entered into a registration rights
agreement (the “Registration Rights Agreement”) with
the Purchasers, pursuant to which the Company has agreed to file,
within 14 days after February 4, 2019, one or more registration
statements on Form S-3 (or, if Form S-3 is not then available to
the Company, such form of registration that is then available to
effect a registration for resale of the subject securities)
covering the resale of all Conversion Shares, subject to certain
penalties set forth in the Registration Rights
Agreement.
The issuance of the Notes and offer of the Conversion Shares is
being made in reliance on the exemption provided by Section 4(a)(2)
of the Securities Act of 1933, as amended (the “Securities
Act”), for the offer and sale of securities not involving a
public offering and Regulation D promulgated under the Securities
Act.
The foregoing description is qualified in its entirety by reference
to the full text of the form of Note, the Purchase Agreement, the
Security Agreement and the Registration Rights Agreement, as
applicable, a copy of each of which is filed as Exhibit 4.1,
Exhibit 10.1, 10.2, 10.3 and Exhibit 10.4 hereto, respectively, and
each of which is incorporated herein by reference.