Item 1.01 Entry into a Material Definitive Agreement.
On May
9, 2019, ChromaDex Corporation (the
“
Company
”
) entered into a Note Purchase
Agreement (the
“
Purchase
Agreement
”
) with Winsave
Resources Limited (“Winsave”) and Pioneer Step Holdings
Limited (“Pioneer”, together with Winsave, the
“
Purchasers
”
), pursuant to which the Company
agreed to sell and issue convertible promissory notes (the
“Notes”) in the aggregate principal amount of $10.0
million to the Purchasers (the
“
Financing
”
). The Financing is expected to
close on May 17, 2019 and is subject to certain customary closing
conditions. The Notes will have a maturity date of 45 days
following the date of the closing of the Financing (the
“Maturity Date”) and interest will accrue on the Notes
at a rate of 5.0% per annum. On the Maturity Date, the Notes will
automatically convert into shares of the Company’s Common
Stock, par value $0.001 per share (“Common Stock”), at
a price per share equal to the lesser of (i) $4.59, or (ii) if one
or more Common Stock financings occur on or prior to the Maturity
Date, the lowest price per share at which the shares of Common
Stock are issued in all such financings. Winsave and Pioneer are
each existing stockholders of the Company and as previously
disclosed, Pioneer has the right to designate a member of the
Company’s board of directors.
In
connection with the Financing, also on May 9, 2019, the Company
entered into a Registration Rights Agreement with the Purchasers
(the
“
Registration Rights
Agreement
”
). Pursuant to
the Registration Rights Agreement, the Company agreed to (i) file
one or more registration statements with the Securities and
Exchange Commission (the
“
SEC
”
) to cover the sale of the shares of
Common Stock that are issuable to the Purchasers upon conversion of
the Notes (the “Shares”), (ii) use its reasonable best
efforts to have all such registration statements declared effective
within the timeframes set forth in the Registration Rights
Agreement, and (iii) use its commercially reasonable efforts to
keep such registration statements effective during the timeframes
set forth in the Registration Rights Agreement. In the event that
such registration statements are not filed or declared effective
within the timeframes set forth in the Registration Rights
Agreement, any such effective registration statements subsequently
become unavailable, or the Purchasers are unable to sell the Shares
because the Company has failed to satisfy the current public
information requirement of Rule 144 under the Securities Act of the
1933, as amended (the
“
Securities Act
”
), the Company would be required to
pay liquidated damages to the Purchasers equal to 1.0% of the
aggregate purchase price per month for each default (up to a
maximum of 5.0% of such aggregate purchase price).
Oppenheimer
& Co. Inc. (the “Placement Agent”) acted as
placement agent in connection with the Financing. Pursuant to the
terms of an Engagement Letter, dated April 3, 2019, as amended on
May 7, 2019, between the Company and the Placement Agent (the
“Engagement Letter”), the Company has agreed to pay the
Placement Agent (i) upon the closing of the Financing, an aggregate
cash fee equal to (A) 5.0% of the aggregate gross proceeds from the
Financing generated by the Placement Agent, (B) 2.5% of all other
gross proceeds from the Financing, plus (C) the reimbursement of
certain expenses, and (ii) a non-creditable quarterly advisory fee
of $50,000 beginning on July 1, 2019 with the final quarterly
advisory fee payment due on July 1, 2020. The Engagement Letter
contains customary representations, warranties, and indemnification
of the Placement Agent by the Company.
The
Notes and the Shares are not registered under the Securities Act,
or any state securities laws. The Company has relied on the
exemption from the registration requirements of the Securities Act
by virtue of Section 4(a)(2) thereof and Rule 506 of Regulation D
thereunder. In connection with the Purchasers
’
execution of the Purchase
Agreement, the Purchasers represented to the Company that they are
each an
“
accredited
investor
”
as defined in
Regulation D of the Securities Act and that the securities to be
purchased by them will be acquired solely for their own account and
for investment purposes and not with a view to the future sale or
distribution.
The
foregoing descriptions of the Purchase Agreement and the
Registration Rights Agreement are not complete and are qualified in
their entirety by reference to the full text of (i) the Purchase
Agreement, a copy of which is attached to this Current Report as
Exhibit 99.1 and (ii) the Registration Rights Agreement, a copy of
which is attached to this Current Report as Exhibit 99.2. On May 9,
2019, the Company also issued a press release announcing the
Financing. A copy of the press release is attached as Exhibit 99.3
hereto.
Forward-Looking Statements
This
Current Report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements include, without limitation,
statements with respect to the completion, timing and size of the
Financing, the expected proceeds from the Financing and the
issuance of the Notes and the Shares in connection with the
Financing. These forward-looking statements are based upon the
Company’s current expectations and inherently involve
significant risks and uncertainties. Actual results and the timing
of events could differ materially from those anticipated in such
forward-looking statements as a result of these risks and
uncertainties, which include, without limitation, risks and
uncertainties associated with the satisfaction of customary closing
conditions related to the Financing. Additional risks and
uncertainties relating to the Company and its business can be found
under the caption “Risk Factors” in the Company’s
Annual on Form 10-K for the year ended December 31, 2018, as filed
with the SEC and other filings submitted by the Company.
Forward-looking statements speak only as of the date of this
Current Report, and the Company undertakes no duty or obligation to
update any forward-looking statements contained in this Current
Report as a result of new information, future events or changes in
its expectations after the date of this Current
Report.