ZOSANO PHARMA CORPORATION (NASDAQ:ZSAN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

On October20, 2017, Zosano Pharma Corporation (the “Company”) entered into a purchase agreement and a registration rights agreement with an accredited investor, Lincoln Park Capital Fund, LLC (“Lincoln Park”), an Illinois limited liability company, providing for the purchase of up to $35.0million worth of the Company’s common stock over the term of the purchase agreement.

Under the terms and subject to the conditions of 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 $35.0million worth of shares of the Company’s common stock. In connection with the purchase agreement, the Company issued 227,500 shares of its common stock, as initial commitment shares, to Lincoln Park and the Company will issue, pro rata, up to an additional 227,500 shares of its common stock as additional commitment shares to Lincoln Park in connection with any additional purchases. Such future sales of common stock by the Company, if any, will be subject to certain limitations, and may occur from time to time, at the Company’s option, over the 30-month period commencing on the date that a registration statement, which the Company agreed to file with the Securities and Exchange Commission (the “SEC”) to the registration rights agreement, is declared effective by the SEC, a final prospectus in connection therewith is filed and the other conditions of the purchase agreement are satisfied (such time, the “Commencement”).

As contemplated by the purchase agreement, from and after the Commencement and so long as the closing price of the Company’s common stock exceeds $0.50 per share, the Company may direct Lincoln Park, at its sole discretion, to purchase up to 300,000 shares of its common stock on any business day. The price per share for such purchases will be equal to the lower of: (i)the lowest sale price on the applicable purchase date and (ii)the arithmetic average of the three (3)lowest closing sale prices for the Company’s common stock during the ten (10)consecutive business days ending on the business day immediately preceding such purchase date (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction that occurs on or after the date of the purchase agreement). The maximum number of shares that the Company may direct Lincoln Park to purchase in any single regular purchase may increase if the closing sale price of the common stock exceeds certain threshold prices at the time of sale as set forth in the purchase agreement, provided that Lincoln Park’s maximum obligation under any single regular purchase will not exceed $1.0million.

In addition to regular purchases, from and after the Commencement the Company may also direct Lincoln Park to purchase other amounts of shares of its common stock as accelerated purchases or as additional purchases if the closing sale price of the common stock exceeds certain threshold prices as set forth in the purchase agreement. In all instances, the Company may not sell shares of its common stock to Lincoln Park under the purchase agreement if it would result in Lincoln Park beneficially owning more than 9.99% of the Company’s common stock.

Lincoln Park represented to the Company, among other things, that it was an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)), and the Company sold the securities in reliance upon an exemption from registration contained in Section4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.

The purchase agreement and the registration rights agreement contain customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of the parties. The Company has the right to terminate the purchase agreement at any time, at no cost or penalty. During any “event of default” under the purchase agreement, all of which are outside of Lincoln Park’s control, Lincoln Park does not have the right to terminate the purchase agreement; however, the Company may not initiate any regular or other purchase of shares by Lincoln Park until such event of default is cured. In addition, in the event of bankruptcy proceedings by or against the Company, the purchase agreement will automatically terminate.

Actual sales of shares of common stock to Lincoln Park under the purchase agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the common stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. In addition, the Company is subject to a cap on the number of shares that may be issuable under the purchase agreement to the extent that the aggregate number of shares issued would breach the Company’s obligations under The NASDAQ Stock Market, which prohibits the issuance of more than 19.99%, or approximately 7.8million shares, of the Company’s outstanding shares of common stock as of August4, 2017, unless stockholder approval is obtained, or unless the average prices at which shares are sold under the Purchase Agreement cause the transactions under the Purchase Agreement to be exempt from such limitation under applicable NASDAQ rules. Lincoln Park has no right to require any sales by the Company, but is obligated to make purchases from the Company as it directs in accordance with the purchase agreement. Lincoln Park has covenanted not to engage in or cause, in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s shares.

The net proceeds under the purchase agreement to the Company will depend on the frequency and prices at which the Company sells shares of its stock to Lincoln Park. The Company expects that any proceeds received by the Company from such sales to Lincoln Park will be used for working capital and general corporate purposes.

This current report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any shares of common stock, nor shall there be any sale of shares of common stock 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.

The foregoing descriptions of the purchase agreement and the registration rights agreement are qualified in their entirety by reference to the full text of such agreements, copies of which are attached hereto as Exhibit 10.1 and 10.2, respectively, and each of which is incorporated herein in its entirety 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.

The information contained above in Item 1.01 is hereby incorporated by reference into this Item 1.01.

On October20, 2017, the Company issued a press release announcing the transaction with Lincoln Park. The press release is attached hereto as Exhibit99.1.

Zosano Pharma Corp Exhibit
EX-10.1 2 d480591dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 Execution Version PURCHASE AGREEMENT PURCHASE AGREEMENT (the “Agreement”),…
To view the full exhibit click here

About ZOSANO PHARMA CORPORATION (NASDAQ:ZSAN)

Zosano Pharma Corporation is a clinical-stage specialty pharmaceutical company. The Company has developed a transdermal microneedle patch system to deliver its formulations of existing drugs through the skin for the treatment of a range of indications. Its microneedle patch system offers consistent drug delivery and improved ease of use and room-temperature stability. The Company’s short-wear-time transdermal patch consists of an array of titanium microneedles that is coated with its formulation of an approved drug and attached to an adhesive patch. When the patch is applied with its hand-held applicator, the microneedles painlessly penetrate the skin, resulting in rapid dissolution and absorption of the drug coating through the capillary bed. Its product candidates include ZP-Triptan, ZP-Glucagon and ZP-PTH. ZP-PTH is a formulation of teriparatide, a synthetic form of parathyroid hormone. ZP-Glucagon is a formulation of glucagon.