Washington, D.C. 20549
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under any of the following provisions:
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company as defined in Rule 405 of the Securities Act of 1933 or
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standards provided pursuant to Section 13(a) of the Exchange Act.
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On April 5, 2023, Eterna Therapeutics Inc., a Delaware corporation
(the “Company”), entered into
a purchase agreement (the “Purchase Agreement”)
and a registration rights agreement (the “Registration Rights
Agreement”) with Lincoln Park Capital Fund, LLC
(“Lincoln Park”),
pursuant to which Lincoln Park has committed to purchase up to
$10.0 million of the Company’s common stock, par value $0.005 per
share (the “Common Stock”), subject
to certain limitations and satisfaction of the conditions set forth
in the Purchase Agreement.
Upon the terms and subject to the satisfaction of the conditions
set forth in the Purchase Agreement, the Company has the right, but
not the obligation, to sell to Lincoln Park, and Lincoln Park is
obligated to purchase, up to $10.0 million of Common Stock. Such
sales of Common Stock by the Company, if any, are subject to
certain limitations set forth in the Purchase Agreement, and may
occur from time to time, at the Company’s sole discretion, over a
period of up to 24-months, commencing on the date on which each of
the conditions to Lincoln Park’s purchase obligations set forth in
the Purchase Agreement have initially been satisfied (such date,
the “Commencement Date”),
including the effectiveness of a registration statement registering
under the Securities Act of 1933, as amended (the “Securities Act”), the
resale by Lincoln Park of shares of Common Stock that have been and
may be issued by the Company to Lincoln Park under the Purchase
Agreement. The Company has agreed to file such registration
statement with the Securities and Exchange Commission (the
“SEC”) not later than 10
business days after the date of execution of the Purchase Agreement
and the Registration Rights Agreement.
From and after the Commencement Date, the Company may from time to
time, on any business day selected by the Company on which the
closing sale price per share of Common Stock as reported on The
Nasdaq Capital Market is not less than the “floor price” threshold
set forth in the Purchase Agreement (each such business day, a
“purchase date”), by written notice delivered by the Company to
Lincoln Park, direct Lincoln Park to purchase up to 30,000 shares
of Common Stock on such purchase date, at a purchase price per
share that will be determined and fixed in accordance with the
Purchase Agreement at the time the Company delivers such written
notice to Lincoln Park (each, a “regular purchase”). The maximum
number of shares the Company may sell to Lincoln Park in a regular
purchase may be increased by certain amounts to up to 90,000
shares, with the applicable maximum share limit determined by
whether the closing sale price per share of Common Stock as
reported on The Nasdaq Capital Market on the applicable purchase
date for such regular purchase equals or exceeds certain minimum
price thresholds set forth in the Purchase Agreement, in each case,
subject to adjustment for any recapitalization, non-cash dividend,
forward or reverse stock split or other similar transactions as
provided in the Purchase Agreement; however, Lincoln Park’s maximum
purchase commitment in any single regular purchase may not exceed
$1,000,000.
In addition to regular purchases, provided that the Company has
directed Lincoln Park to purchase the maximum amount of shares that
the Company is then able to sell to Lincoln Park in a regular
purchase, the Company may, in its sole discretion, direct Lincoln
Park to purchase additional shares of Common Stock in “accelerated
purchases” and “additional accelerated purchases,” as set forth in
the Purchase Agreement. The purchase price per share of Common
Stock sold in each such accelerated purchase and additional
accelerated purchase, if any, will calculated in accordance
with the pricing terms for an accelerated purchase and an
additional accelerated purchase, as applicable, set forth in the
Purchase Agreement. There are no upper limits on the price per
share that Lincoln Park must pay for shares of Common Stock in any
purchase under the Purchase Agreement.
Under the Purchase Agreement, the Company will control the timing
and amount of sales of Common Stock to Lincoln Park, if any.
Lincoln Park has no right to require the Company to sell any shares
of Common Stock to Lincoln Park, but Lincoln Park is obligated to
make purchases as the Company directs, subject to certain
conditions set forth in the Purchase Agreement. Actual sales
of shares of Common Stock to Lincoln Park, if any, will depend on a
variety of factors to be determined by the Company from time to
time, including, among others, general market conditions, the
trading prices for the Common Stock, and determinations by the
Company as to the appropriate sources of funding for the Company
and its operations.
Under applicable Nasdaq listing rules, the aggregate number of
shares of Common Stock that the Company may issue to Lincoln Park
under the Purchase Agreement cannot exceed 19.99% of the shares of
Common Stock issued and outstanding immediately prior to the
execution of the Purchase Agreement (the “Exchange Cap”), unless
(i) the Company first obtains stockholder approval to issue shares
of Common Stock in excess of the Exchange Cap in accordance with
applicable Nasdaq listing rules, or (ii) at the time the Company
has issued shares of Common Stock equal to the Exchange Cap and at
all times thereafter, the average price per share of Common Stock
for all shares of Common Stock sold by the Company to Lincoln Park
under the Purchase Agreement equals or exceeds $3.6094 per share
(representing the lower of the official closing price of the Common
Stock on Nasdaq on the trading day immediately preceding the date
of the Purchase Agreement and the average official closing price of
the Common Stock on Nasdaq for the five consecutive trading days
ending on the trading day immediately preceding the date of the
Purchase Agreement, as adjusted under applicable Nasdaq rules to
take into account the issuance of shares of Common Stock to Lincoln
Park for non-cash consideration as payment of the commitment fee
described below), such that the Exchange Cap limitation would no
longer apply to issuances and sales of Common Stock by the Company
to Lincoln Park under the Purchase Agreement under applicable
Nasdaq listing rules.
Additionally, Company may not direct Lincoln Park to purchase any
shares of Common Stock under the Purchase Agreement if such
purchase would result in Lincoln Park beneficially owning more than
4.99% of the issued and outstanding shares of Common Stock.
There are no restrictions on future financings, rights of first
refusal, participation rights, penalties or liquidated damages in
the Purchase Agreement or Registration Rights Agreement, except the
Company is prohibited, subject to certain exceptions, during the
term of the Purchase Agreement or 90 days following the effective
date of the termination of the Purchase Agreement, whichever
concludes earlier, from entering into an agreement to effect an
“equity line of credit” or other similar offering in which the
Company may issue and sell Common Stock, from time to time over a
certain period of time, at future determined prices based on the
market prices of the Common Stock at the time of each such issuance
and sale. Lincoln Park has agreed not to engage in any short
sales of the Common Stock or hedging transaction that establishes a
net short position in the Common Stock during the term of the
Purchase Agreement.
As consideration for Lincoln Park’s commitment to purchase shares
of Common Stock in accordance with the Purchase Agreement, the
Company has issued 73,659 shares of Common Stock to Lincoln Park as
a commitment fee.
The Purchase Agreement and the Registration Rights Agreement
contain customary representations, warranties, conditions and
indemnification obligations of the parties. The Company has the
right to terminate the Purchase Agreement at any time with one
business day’s prior written notice to Lincoln Park, at no cost or
penalty.
The foregoing description of the Purchase Agreement and the
Registration Rights Agreement is only a summary and is qualified in
its entirety by reference to the full text of the Purchase
Agreement and the Registration Rights Agreement, copies of which
are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively,
and incorporated herein by reference. The representations,
warranties and covenants contained in such agreements were made
only for purposes of such agreements and as of specific dates, were
solely for the benefit of the parties to such agreements and may be
subject to limitations agreed upon by the contracting
parties.
(d) Exhibits.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.