Upon the satisfaction of the conditions in the LPC Purchase Agreement, the Company will have the right, from time to time at its sole discretion over the 36-month period from and after the Commencement Date, to direct Lincoln Park to purchase up to 200,000 shares of Common Stock on any business day (subject to certain limitations contained in the LPC Purchase Agreement), with such amounts increasing based on certain threshold prices set forth in the LPC Purchase Agreement; provided however, no regular purchase shall exceed $2,000,000 in total purchase proceeds up to 300,000 shares of Common Stock. The purchase price of shares of Common Stock that the Company elects to sell to Lincoln Park to the LPC Purchase Agreement will be based on the market prices of the Common Stock at the time of such purchases as set forth in the LPC Purchase Agreement.

In addition to regular purchases, as described above, the Company may also direct Lincoln Park to purchase additional amounts as accelerated purchases or as additional accelerated purchases if the closing sale price of the Common Stock is not below certain threshold prices, as set forth in the LPC Purchase Agreement. In all instances, the Company may not sell shares of its Common Stock to Lincoln Park if it would result in Lincoln Park beneficially owning more than 9.99% of the Common Stock at any time, and the Company also may not sell shares of its Common Stock to Lincoln Park under the LPC Purchase Agreement if it would result in the issuance of more than 19.99% of the number of shares of the Company’s Common Stock outstanding immediately prior to the signing of the LPC Purchase Agreement unless shareholder approval is obtained or certain other conditions are satisfied in compliance with the rules of the Nasdaq Global Market where the Common Stock is listed.

The LPC Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s common stock. Except for a prohibition on entering into any other variable rate transactions, 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 LPC Purchase Agreement.

As consideration for Lincoln Park’s commitment to purchase shares of Common Stock to the LPC Purchase Agreement, the Company is issuing to Lincoln Park Capital a total of 413,349 shares of Common Stock (the “Commitment Shares”). The Company will not receive any cash proceeds from the issuance of the Commitment Shares.

The Company has no obligation to sell Lincoln Park any shares of Common Stock under the LPC Purchase Agreement, the Company has the right, by giving written notice as specified in the LPC Purchase Agreement, to terminate the LPC Purchase Agreement at any time. The Company intends to use the net proceeds, if any, from the sales to the LPC Purchase Agreement for working capital and general corporate purposes, which may include, among other things, funding commercialization efforts and research and development activities.

The Common Stock subject to the LPC Purchase Agreement was registered to the Registration Statement and the related base prospectus included in the Registration Statement, as supplemented by a prospectus supplement dated July 30, 2019.

The foregoing descriptions of the LPC Purchase Agreement and Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the LPC Purchase Agreement and Registration Rights Agreement, which are filed as Exhibits 10.2 and 4.1, respectively, to this Current Report on Form 8-K.

This Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

On July 25, 2019, John McDonough notified the Company of his resignation as President and Chief Executive Officer (“CEO”) of the Company, effective as of the date on which his successor commences employment with the Company or such earlier date as determined by the Board of Directors of the Company (the “Separation Date”). Mr. McDonough’s employment with the Company will end on the Separation Date, and he will become the Chairman of the Board of Directors effective July 30, 2019.

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In connection with Mr. McDonough’s resignation, the Company has entered into a Second Amendment to Employment Agreement with Mr. McDonough (the “Amendment”), amending the terms of Mr. McDonough’s existing Employment Agreement with the Company, dated as of March 14, 2008, as amended on July 22, 2014 and by the Amendment (together, the “Amended Employment Agreement”).

The Amendment memorializes Mr. McDonough’s current annual base salary of $550,000 and current target annual bonus of 85% of his annual base salary. The Amendment also amends the award of 434,783 performance based restricted stock units granted to Mr. McDonough on March 15, 2018 to the Company’s 2014 Incentive Award Plan so that Mr. McDonough’s Termination of Service under and within the meaning of the agreement governing the award is deemed to occur upon the termination of his employment with the Company for any reason.

Under the terms of the Amended Employment Agreement, Mr. McDonough has agreed to resign his position as President and Chief Executive Officer, effective as of the Separation Date. Subject to Mr. McDonough’s continued compliance with certain requirements of the Amended Employment Agreement, his continued service through the Separation Date or earlier termination without “Cause” (as defined in the Amended Employment Agreement) and his execution and non-revocation of a general release of claims agreement, Mr. McDonough will be entitled to receive the following amounts upon his resignation as described above or earlier termination without Cause: (i) continued base salary for 15 months following the termination date (the “Transition Period”), which equals an aggregate amount of $687,500, (ii) an amount equal to $233,750, which represents 50% of his current target annual bonus, payable in a single lump sum on March 15 of the year following the year in which the termination date occurs, (iii) if such termination occurs prior to the receipt of an annual bonus in respect of 2019, the amount of any annual bonus that would have been earned had Mr. McDonough remained employed, based on actual performance and pro-rated for the portion of 2019 that Mr. McDonough remained employed (or, if his termination occurs in a subsequent year, the amount of any annual bonus that would have been earned had Mr. McDonough remained employed, based on actual performance and pro-rated for the portion of such year that Mr. McDonough remained employed), payable in a lump sum on March 15 of the year following the year in his termination date occurs, (iv) all premium payments for up to 15 months of continued medical coverage under COBRA; and (v) accelerated vesting of certain outstanding equity awards held by Mr. McDonough, as further described in the Amended Employment Agreement, each of which shall become vested on the termination date.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the actual Amendment, a copy of which is attached hereto as Exhibit 10.3 and incorporated herein by reference.

(d) Exhibits.

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T2 Biosystems, Inc. Exhibit
EX-4.1 2 d783859dex41.htm EX-4.1 EX-4.1 Exhibit 4.1 EXECUTION VERSION REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”),…
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About T2 Biosystems, Inc. (NASDAQ:TTOO)

T2 Biosystems, Inc. is an in vitro diagnostics company engaged in developing a technology platform offering an alternative to diagnostic methodologies. The Company’s T2 Magnetic Resonance platform (T2MR) enables detection of pathogens, biomarkers and other abnormalities in a range of unpurified patient sample types, including whole blood, plasma, serum, saliva, sputum and urine, and can detect cellular targets at limits of detection as one colony forming unit per milliliter (CFU/mL). The Company’s initial development efforts target sepsis, hemostasis and Lyme disease. T2MR is a miniaturized, magnetic resonance-based approach that measures how water molecules react in the presence of magnetic fields. Its platform detects a range of targets, including molecular targets, such as deoxyribonucleic acid (DNA), immunodiagnostics, such as proteins, and a range of hemostasis measurements. The Company offers T2Dx Instrument (T2Dx) and the T2Candida Panel.