NEPHROS, INC. (OTCBB:NEPH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On March 17, 2017, Nephros, Inc. (the Company) entered into a
Securities Purchase Agreement (the Purchase Agreement) with
certain purchasers identified therein (the Purchasers) to which
the Company agreed to sell, and the Purchasers agreed to purchase
4,059,994 units of the Companys securities, each unit consisting
of one share (each, a Share) of the Companys common stock, par
value $0.001 per share (the Common Stock), and a warrant (each, a
Warrant) to purchase one share of Common Stock (each, a Warrant
Share), at a cash purchase price equal to $0.30 per unit. The
aggregate purchase price payable to the Company for all of the
Shares and Warrants to be sold under the Purchase Agreement is
$1,218,000 before deducting placement agent fees and other
transaction-related expenses of approximately $116,350. The
closing of the sale of the Shares and Warrants was completed on
March 22, 2017.
The Purchasers included two minor children of Daron Evans, the
Companys President and Chief Executive Officer, who collectively
purchased 83,332 units of the Companys securities under the
Purchase Agreement, and Andy Astor, the Companys Chief Financial
Officer, who purchased 166,666 units. Such purchases were made on
the same terms as all other Purchasers under the Purchase
Agreement.
The Purchase Agreement contained customary representations,
warranties and covenants by each of the Company and the
Purchasers. In addition, the Purchase Agreement provides that
each Purchaser has a right, subject to certain exceptions
described in the agreement, to participate in future issuances of
equity and debt securities by the Company for a period of 12
months following the effective date of the Registration Statement
(defined below under Registration Rights Agreement).
In connection with the closing of the transactions contemplated
by the Purchase Agreement, the Company will pay to Maxim Group
LLC (Maxim), which served as the Companys sole placement agent in
connection with the offer and sale of the Shares and Warrants, a
cash fee equal to 7.5% of the gross proceeds from such sale. In
addition, the Company will issue to Maxim a warrant to purchase
81,199 shares of Common Stock (the Placement Agent Warrant). The
form of the Placement Agent Warrant is substantially the same as
the Warrants issuable to the Purchasers, except that the exercise
price applicable to the Placement Agent Warrant will be $0.33 per
share.
The foregoing summary of the Purchase Agreement is qualified in
its entirety by reference to the complete form of agreement, a
copy of which is attached hereto as Exhibit 10.1 and incorporated
herein by reference. On March 17, 2017, the Company issued a
press release announcing the issuance and sale of the Shares and
Warrants, a copy of which is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
Terms of the Warrants
The Warrants entitle the purchasers to purchase, for a period of
5 years from the date of issuance, up to an aggregate of
4,059,994 Warrant Shares at an initial exercise price of $0.30
per share, subject to adjustment for stock splits, combinations
and similar recapitalization events. The Warrants are required to
be exercised for cash, provided that if following the six-month
anniversary of the issuance date of the Warrants, if there is not
during the term of the Warrants an effective registration
statement under the Securities Act covering the resale of the
Warrant Shares, then the Warrants may be exercised on a cashless
(net exercise) basis.
The foregoing summary of the Warrants is qualified in its
entirety by reference to the complete form of Warrant, a copy of
which is attached hereto as Exhibit 4.1 and incorporated herein
by reference.
Registration Rights Agreement
In connection with the entry into the Purchase Agreement, and as
contemplated thereby, on March 17, 2017, the Company also entered
into a Registration Rights Agreement with the Purchasers. to the
terms of the Registration Rights Agreement, the Company agreed to
file, on or before April 16, 2017 (the Filing Date), a
registration statement under the Securities Act covering the
resale of the Shares and Warrant Shares (the Registration
Statement), and to cause such Registration Statement to be
declared effective by the Commission as soon as practicable
thereafter, but not later than 60 days following the date of the
Registration Rights Agreement or, if the Registration Statement
is subject to review by the Commission staff, not later than 120
days following the date of such agreement (the Effectiveness
Date). If the Company does not file the Registration Statement by
the Filing Date or obtain its effectiveness by the Effectiveness
Date, then the Company is required to pay liquidated damages to
the Purchasers in an amount equal to 1.0% of the aggregate
purchase price paid by such Purchaser for the Securities per
month until the Registration Statement is filed or declared
effective, as applicable. The Company is required to maintain the
effectiveness of the Registration Statement until all of the
shares covered thereby are sold or may be sold to Rule 144 under
the Securities Act without volume or manner-of-sale restrictions
and without the requirement that the Company be in compliance
with the current public information requirements of Rule 144.
The foregoing summary of the Registration Rights Agreement is
qualified in its entirety by reference to the complete form of
such agreement, a copy of which is attached hereto as Exhibit
10.2 and incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity
Securities.
The information set forth under Item 1.01 is incorporated herein
by reference. The offer and sale of the Shares, Warrants and the
Placement Agent Warrant to the terms of the Purchase Agreement
constituted a private placement under Section 4(a)(2) of the
Securities Act of 1933, as amended, in accordance with Regulation
D promulgated thereunder.
The Shares and Warrants offered and sold to the Purchase
Agreement will not be or have not been registered under the
Securities Act of 1933, as amended or state securities laws and
may not be offered or sold in the United States absent
registration with the Securities and Exchange Commission or an
applicable exemption from such registration requirements.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits. The following exhibits are filed herewith.
| Exhibit No. | Description | |
| 4.1 | Form of Warrant. | |
| 10.1 |
Securities Purchase Agreement dated March 17, 2017, among the Company and the Purchasers identified therein. |
|
| 10.2 |
Registration Rights Agreement dated March 17, 2017, among the Company and the Purchasers identified therein. |
|
| 99.1 | Press Release of Nephros, Inc. dated March 17, 2017. |
About NEPHROS, INC. (OTCBB:NEPH)
Nephros, Inc. (Nephros) is a commercial-stage medical device and commercial products company that develops and sells high performance liquid purification filters and hemodiafiltration (HDF) systems. The Company’s filters, ultrafilters, are primarily used in dialysis centers for the removal of biological contaminants from water and bicarbonate concentrate, and used in hospitals for the prevention of infection from water borne pathogens, such as legionella and pseudomonas. The Company has approximately two product lines: HDF Systems and Ultrafiltration Products. Its products in HDF modality deliver therapy for End Stage Renal Disease (ESRD) patients. It offers ultrafilters for customers in hospitals and other healthcare facilities for filtration of water to be used for patient washing and drinking as an aid in infection control. The filters also produce water that is suitable for wound cleansing, cleaning of equipment used in medical procedures and washing of surgeons’ hands. NEPHROS, INC. (OTCBB:NEPH) Recent Trading Information
NEPHROS, INC. (OTCBB:NEPH) closed its last trading session down -0.010 at 0.375 with 15,786 shares trading hands.