Item
1.01 Entry into a Material Definitive Agreement.
Patent
License Agreement
On
August 1, 2020 (the “Effective Date”), RespireRx Pharmaceuticals Inc. (the “Company”) and the University
of Wisconsin-Milwaukee Research Foundation, Inc. (“UWMRF”), an affiliate of the University of Wisconsin-Milwaukee,
entered into a Patent License Agreement (the “License Agreement”), pursuant to which UWMRF has licensed to the Company
certain patent and technology rights held by UWMRF for the Company’s use in developing commercial products.
The
License Agreement was entered into upon the Company’s exercise of its option to enter into the License Agreement pursuant
to that certain Option Agreement with UWMRF, a copy of which is attached as Exhibit 99.1 to the Company’s Current Report
on Form 8-K filed March 4, 2020, and which is incorporated herein by reference. The Company satisfied the conditions precedent
to the exercise of its option to enter into the License Agreement and on August 1, 2020 sent a formal notice of exercise of such
option to UWMRF dated as of such date.
Under
the License Agreement, UWMRF granted to the Company an exclusive license to commercialize products based on UWMRF’s rights
in certain patents and patent applications, and a non-exclusive license to commercialize products based on UWMRF’s rights
in certain technology that is not the subject of the patents or patent applications. UWMRF maintains the right to use, and, upon
the approval of the Company, to license, these patent and technology rights for any non-commercial purpose, including research
and education. The License Agreement expires upon the later of the expiration of the Company’s payment obligations to UWMRF
or the expiration of the last remaining licensed patent granted thereunder, subject to early termination upon the occurrence of
certain events. The License Agreement also contains a standard indemnification provision in favor of UWMRF and confidentiality
provisions obligating both parties.
Under the
License Agreement, in consideration for the licenses granted, the Company will pay to UWMRF the following: (i) patent filing
and prosecution costs incurred by UWMRF prior to the Effective Date, paid in yearly installments over three years from the
Effective Date; (ii) annual maintenance fees, beginning on the second anniversary of the Effective Date, which annual
maintenance fees terminate upon the Company’s payment of royalties pursuant to clause (iv) below; (iii) milestone
payments, paid upon the occurrence of certain dosing events of patients during clinical trials and certain approvals by the
Food and Drug Administration; and (iv) royalties on net
sales of products developed with the licenses, subject to minimum annual payments and to royalty rate adjustments based on
whether separate royalty payments by the Company yield an aggregate rate beyond a stated threshold. The Company has also
granted UWMRF certain stock appreciation rights with respect to the Company’s neuromodulator programs, subject to
certain limitations, and will pay to UWMRF certain percentages of revenues generated from sublicenses of the licenses
provided under the License Agreement by the Company to third parties.
The
description of the License Agreement does not purport to be complete and is qualified in its entirety by reference to the License
Agreement, which is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The
press release announcing the License Agreement with UWMRF is attached as Exhibit 99.3 to this Current Report on Form 8-K.
Securities
Purchase Agreement with EMA Financial, LLC
On
July 30, 2020 (the “EMA Effective Date”), the Company and EMA Financial, LLC (the “Lender”) entered into
a Securities Purchase Agreement (the “SPA”) by which the Lender is to provide a sum of $68,250 (the “Consideration”)
to the Company, in return for a fixed rate convertible note (the “Note”) with a face amount of $75,000, and
a common stock purchase warrant (the “Warrant”) for 3,750,000 shares of the Company’s common stock, par value
$0.001 (“Common Stock”). The net proceeds of the Consideration received by the Company on August 4, 2020 that
will be used for general corporate purposes was $63,750 after payment of $3,500 in Lender’s legal fees and the withholding
by Lender of $1,000 in diligence fees. Under the terms of the SPA and the Note, the Lender paid the Consideration, less fees as
noted above, at closing.
The
Note obligates the Company to pay by October 30, 2021 (the “Maturity Date”) a principal amount of $75,000 together
with interest at a rate equal to 10% per annum, which principal exceeds the Consideration by the amount of an original issue discount
of $6,750. Any amount of principal or interest that is not paid by the Maturity Date would bear interest at the rate of 24% from
the Maturity Date to the date such amount is paid.
The
Lender has the right, in its discretion, at any time, to convert any outstanding and unpaid amount of the Note into shares of
Common Stock, provided that such conversion would not result in the Lender beneficially owning more than 4.99% of the Company’s
then outstanding Common Stock. In the absence of an Event of Default (as defined in the Note), the Lender may convert at a per
share conversion price equal to $0.02, subject to a retroactive downward adjustment if the lowest traded price on each of the
three consecutive trading days following such conversion is lower than $0.02. Upon an Event of Default, the conversion price is
adjusted downward based on a discount to market with respect to subsequent financings or a percentage of the lowest traded price
during the twenty-one day period prior to the conversion, if lower than $0.02. Upon such conversion, all rights with respect to
the portion of the Note being so converted terminate, except for the right to receive Common Stock or other securities, cash or
other assets as provided in the Note due upon such conversion.
The
Company may, with prior written notice to the Lender, prepay the outstanding principal amount under the Note during the initial
180 day period after the EMA Effective Date by making a payment to the Lender of an amount in cash equal to a certain percentage
of the outstanding principal, interest, default interest and other amounts owed. Such percentage varies from 110% to 115% depending
on the period in which the prepayment occurs, as set forth in the Note.
If,
prior to the repayment or conversion of the Note, the Company consummates a registered, qualified or unregistered primary offering
of its securities for capital raising purposes with aggregate net proceeds in excess of $2,500,000, the Lender will have the right,
in its discretion, to demand repayment in full of any outstanding principal, interest (including default interest) under the Note
as of the closing date of such offering.
The
SPA includes, among other things: (1) an automatic adjustment to the terms of the SPA and related documents to the terms of a
future financing if those terms are more beneficial to an investor than the terms of the SPA and related documents are to the
Lender, subject to limited exceptions; and (2) certain registration rights. In addition, the Note prohibits the Company from selling
or otherwise disposing of a significant portion of its assets outside the ordinary course of business or in connection with a
merger or consolidation or sale of all or substantially all of the Company’s assets where the surviving or successor entity
does not assume the Company’s obligations under the SPA. Further, any subsidiary to which the Company transfers a material
amount of assets must guarantee certain obligations of the Company under the Note.
The
Warrant is a common stock purchase warrant to purchase 3,750,000 shares of the Common Stock, for value received in connection
with the issuance of the Note, from the date of issuance of the Warrant until September 30, 2023, at an exercise price of $0.007
(subject to adjustment as provided therein) per share of Common Stock.
The
Note and the shares of Common Stock issuable upon conversion thereof are offered and sold to the Lender in reliance upon specific
exemptions from the registration requirements of United States federal and state securities laws, which include Section 4(a)(2)
of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D promulgated thereunder. Pursuant
to these exemptions, the Lender represented to the Company under the SPA, among other representations, that it was an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D under the 1933 Act.
The
descriptions of the SPA, the Note, and the Warrant do not purport to be complete and are qualified in their entirety by reference
to the SPA, the Note, and the Warrant, which are included as Exhibit 99.4, Exhibit 99.5, and Exhibit 99.6, respectively, to this
Current Report on Form 8-K and are incorporated herein by reference.