Item
1.01 Entry into a Material Definitive Agreement.
On
September 18, 2020, Ocean Power Technologies, Inc. (the “Company”), entered into a common stock purchase agreement
(the “Purchase Agreement”) with Aspire Capital Fund, LLC (“Aspire Capital”), which provides that, upon
the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate
of $12,500,000 of shares of the Company’s common stock over the 30-month term of the Purchase Agreement. Concurrently with
entering into the Purchase Agreement, the Company also entered into a registration rights agreement with Aspire Capital (the “Registration
Rights Agreement”), in which the Company agreed to file one or more registration statements, as permissible and necessary
to register sales under the Securities Act of 1933, as amended (the “Securities Act”), of the shares of the Company’s
common stock that have been and may be issued to Aspire Capital pursuant to the Purchase Agreement.
Under
the Purchase Agreement, after the Securities and Exchange Commission (the “SEC”) has declared effective the registration
statement referred to above, on any trading day selected by the Company, the Company has the right, in its sole discretion, to
present Aspire Capital with a purchase notice (each, a “Purchase Notice”), directing Aspire Capital (as principal)
to purchase up to 250,000 shares of the Company’s common stock per business day at a per share price (the “Purchase
Price”) equal to the lesser of:
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the
lowest sale price of the Company’s common stock on the purchase date; or
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the
arithmetic average of the three (3) lowest closing sale prices for the Company’s common stock during the ten (10) consecutive
trading days ending on the trading day immediately preceding the purchase date.
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In
addition, on any date on which the Company submits a Purchase Notice to Aspire Capital in an amount of 250,000 shares, the Company
also has the right, in its sole discretion, to present Aspire Capital with a volume-weighted average price purchase notice (each,
a “VWAP Purchase Notice”) directing Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate
shares of the Company’s common stock traded on its principal market on the next trading day (the “VWAP Purchase Date”),
subject to a maximum number of shares the Company may determine. The purchase price per share pursuant to such VWAP Purchase Notice
is generally 97% of the volume-weighted average price for the Company’s common stock traded on its principal market on the
VWAP Purchase Date.
The
Purchase Price will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction
occurring during the period(s) used to compute the Purchase Price. The Company may deliver multiple Purchase Notices and VWAP
Purchase Notices to Aspire Capital from time to time during the term of the Purchase Agreement, so long as the most recent purchase
has been completed.
The
Purchase Agreement provides that the Company and Aspire Capital shall not effect any sales under the Purchase Agreement on any
purchase date where the closing sale price of the Company’s common stock is less than $0.10. There are no trading volume
requirements or restrictions under the Purchase Agreement, and the Company will control the timing and amount of sales of the
Company’s common stock to Aspire Capital. Aspire Capital has no right to require any sales by the Company, but is obligated
to make purchases from the Company as directed by the Company in accordance with the Purchase Agreement. There are no limitations
on use of proceeds, financial or business covenants, restrictions on future fundings, rights of first refusal, participation rights,
penalties or liquidated damages in the Purchase Agreement. The Purchase Agreement may be terminated by the Company at any time,
at its discretion, without any cost to the Company. Aspire Capital has agreed that neither it nor any of its agents, representatives
and affiliates shall engage in any direct or indirect short-selling or hedging of the Company’s common stock during any
time prior to the termination of the Purchase Agreement. Any proceeds the Company receives under the Purchase Agreement are expected
to be used for working capital and general corporate purposes.
The
foregoing is a summary description of certain terms of the Purchase Agreement and the Registration Rights Agreement and, by its
nature, is incomplete. Copies of the Purchase Agreement and Registration Rights Agreement are filed herewith as Exhibits 10.1
and 4.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. All readers are encouraged
to read the entire text of the Purchase Agreement and the Registration Rights Agreement.
The
issuance of the shares of common stock that may be issued from time to time to Aspire Capital under the Purchase Agreement is
exempt from registration under the Securities Act, pursuant to the exemption for transactions by an issuer not involving any public
offering under Section 4(a)(2) of the Securities Act.