pivotal trial in pancreatic cancer, as defined by achieving the primary efficacy endpoint per the protocol, of (A) Part 2 of the Company’s TYME-88-Panc clinical trial or (B) an arm of the Precision PromiseSM clinical trial with the Pancreatic Cancer Action Network using SM-88, in either case, with any such amendments or changes to the protocol resulting from U.S. Food and Drug Administration (“FDA”) guidance or communications and in each case that is adequate for
registration submission and meets the primary endpoint as prespecified in the protocol provided to the FDA incorporating FDA comments, or (ii) FDA approval of SM-88 in any cancer indication within the
United States (the “Milestone Event”). Upon the occurrence of a Milestone Event, subject to certain conditions, Eagle will make a one-time cash payment of $10,000,000 to the Company and
purchase 10,000 shares of Series A Preferred Stock, par value $0.0001 (the “Preferred Shares”), at a price of $1,000 per share. The Preferred Shares will be convertible into Common Stock and will have a conversion ratio equal to the
quotient of $1,000 divided by an amount equal to 1.15 times the average of the volume weighted average price of the Company’s Common Stock for the seven trading days immediately following announcement of the Milestone Event (the
“Conversion Ratio”). Eagle’s obligations to effectuate these transactions will terminate if the Milestone Event does not occur on or prior to the five year anniversary of the SPA, although Eagle retains the right to waive this
requirement. The rights of the Series A Preferred Stock are further defined and discussed in Item 3.03 below. The disclosure set forth below in Item 3.03 relating to the Company’s Certificate of Designation of Series A Convertible Preferred
Stock is incorporated herein to this Item 3.02.
In the event that the Company consummates a fundamental corporate transaction, including a sale of all or
substantially all of its assets, prior to the Milestone Closing (as such term is defined in the SPA), Eagle will have no obligation to purchase the Preferred Shares.
Eagle has agreed to customary “lock-up” and “standstill” restrictions, each ending at the earlier
of the date that is (i) three months after the occurrence of the Milestone Event or (ii) the three year anniversary of the SPA (the “Lockup Period”). It has also agreed to execute a customary
“lock-up” agreement in connection with any public offering of shares of Common Stock or securities exchangeable or convertible into shares of Common Stock that is consummated on or prior to the third
anniversary of the date of the SPA.
The Common Stock issued and sold in connection with the Initial Purchase were, and any issuance of Preferred Shares
at the subsequent closing will be, made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder,
as the sale and issuance in a transaction by an issuer not involving any public offering.
Registration Rights Agreement
In connection with the SPA, the Company simultaneously entered into a registration rights agreement (the “Registration Rights Agreement”) with
Eagle. In the Registration Rights Agreement, the Company has provided Eagle with demand registration rights such that the Company has agreed to prepare and file a registration statement with the Securities and Exchange Commission (the
“SEC”), any time after the expiration of the Lockup Period, within 30 days of either (i) Eagle’s receipt of written notice from the Company that the Company has determined Eagle is an affiliate of the Company under Rule
144, or (ii) any date that the Company has not filed all reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, for the preceding 12 months (the “Trigger Date”), in either case, to
the extent such event happens after the expiration of the Lockup Period. Such registration statement would register the resale of shares of Common Stock issued to Eagle under the SPA (including any shares of Common Stock issued upon the conversion
of any Preferred Shares issued to Eagle under the SPA) and any Common Stock issued as a dividend or other distribution with respect to, or in replacement of, the foregoing securities.
The Company has agreed to use commercially reasonable efforts to cause the registration statement to be declared effective on or before 90 days following the
Trigger Date (with a 30-day extension if the SEC reviews and provides comments on the registration statement). If the registration statement is not effective within the required time period, the Company will be required to pay liquidated damages to
Eagle in an amount equal to 1% of the aggregate purchase price paid by Eagle under the SPA per 30-day period for each month during which such event continues, subject to certain limits set forth in the
Registration Rights Agreement. The Company is required to use commercially reasonable efforts to keep the registration statement continuously effective under the Securities Act until the earlier of (i) such time as all securities covered by the
registration statement have been publicly sold and (ii) the date all such securities may be sold without volume or manner-of-sale restrictions pursuant to Rule 144
and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144.