Item 1.01 Entry Into a Material Definitive Agreement.
Securities Purchase Agreement
On
Pursuant to the Purchase Agreement, in the event that an
The Purchase Agreement contains customary representations and warranties from the Company, on the one hand, and the Buyers, on the other, including representations and warranties by the Company regarding its capitalization, compliance with applicable laws, undisclosed liabilities, affiliate transactions, taxes and litigation. The Company has also agreed to certain covenants regarding its compliance with laws.
In addition, promptly following the receipt of Stockholder Approval (as defined
below), one or more of the Designee's affiliates will purchase warrants to
purchase up to 100,000,000 shares of Common stock (the "Series B Warrants" and
together with the Preferred Shares, the Series A Warrants and the Notes, the
"Securities") at an exercise price (subject to certain price-based anti-dilution
adjustments) of either (i)
Subject to certain limitations, the Company has also agreed to indemnify each Buyer for (i) any misrepresentation or breach of any representation or warranty made by the Company in the Securities Purchase Agreement and (ii) any breach of any covenant or agreement of the Securities Purchase Agreement.
The Company and the Buyers entered into the Purchase Agreement in reliance upon
the exemption from securities registration afforded by Section 4(a)(2) of the
Securities Act of 1933 (as amended, "1933 Act"), and Rule 506(b) of Regulation D
as promulgated by the
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From and after the consummation of an Additional Closing, the Preferred Shares may be exchanged for Notes and Series B Warrants without any additional consideration.
The Company has agreed to file with the
Subject to (i) the Company's obtaining Stockholder Approval, (ii) the
consummation of one or more Approved Investments and (iii) at least
Item 3.03 Material Modification to Rights of Security Holders.
On
Under the terms of the Certificate of Designations (as defined below), the ability of the Company to pay dividends on, make distributions with respect to, or to redeem, purchase or acquire, or make a liquidation payment on its common stock or any preferred stock ranking junior to the Preferred Shares, will be subject to restrictions in the event that the Company does not declare dividends on the Preferred Shares for the most recently completed dividend period or, in the case of any such liquidation payment, does not pay to holders of the Preferred Shares Preferred Liquidation Distributions.
The terms of the Preferred Shares are more fully described in the Certificate of Designations, which establishes the rights, preferences, privileges, qualifications, restrictions and limitations relating to the Preferred Shares. A Copy of the Certificate of Designations is included as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On
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Other than the Governance Agreement and the Financing, there is no arrangement
or understanding between
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
Capitalized terms used in this Item 5.03 but not defined herein shall have the meanings set forth in the Certificate of Designations.
Security Series A Convertible Preferred Stock, par value$0.001 per share Ranking, with respect to The Series A Convertible Preferred Stock will rank senior to all rights as to as to of the Common Stock and any other class or series of capital dividends, distributions, stock of the Company. redemptions and payments upon the liquidation, dissolution and winding up of the Company
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Stated Value$100 per share of Series A Convertible Preferred Stock Dividend The initial dividend rate will be 3.0% per annum on the Stated Value, payable quarterly in arrears. Upon the consummation of anApproved Investment , the dividend rate shall increase to 8.0% per annum. The Series A Convertible Preferred Stock will also participate on an as-converted basis in any regular or special dividends paid to Common Stock holders. Redemption If the Company does not obtain the Stockholder Approval by the Stockholder Approval Deadline; if the Company does not issue at least$50.0 million aggregate principal of the Notes, during the periods ofMay 15, 2021 throughAugust 15, 2021 andMay 15, 2022 throughAugust 15, 2022 ; and for the period fromNovember 15, 2024 throughFebruary 15, 2025 , a holder may require the Company to redeem all or a portion of their outstanding Series A Convertible Preferred Stock at the Holder Optional Redemption Price (as defined in the Certificate of Designations). If the Company does not issue at least$50.0 million aggregate principal of the Notes, and assuming certain conditions of the Common Stock have been met, during the period ofMay 15, 2022 throughAugust 15, 2022 , the Company may redeem all of the outstanding Series A Convertible Preferred Stock at the Company Optional Redemption Price (as defined in the Certificate of Designations). Conversion Rights Holders' Conversion Right The Holders may elect to convert the Series A Convertible Preferred Stock into shares of the Common Stock, at the applicable conversion rate (subject to certain adjustments), at any time and from time to time. The conversion rate is determined by dividing 100 by the "Conversion Price." The Conversion Price will be$3.65 , subject to adjustment. Company's Conversion Right At any time on or afterNovember 15, 2025 , the Company will have the right to cause all or a portion of the Series A Convertible Preferred Stock to be converted into shares of Common Stock at the applicable conversion rate, if the closing price of the Common Stock equals or exceeds 190% of the Conversion Price for 30 consecutive trading days, and assuming certain conditions of the Common Stock have been met.
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Limitations on Conversions The Company shall not convert any shares of Series A Convertible Preferred Stock (and any such conversion shall be null and void) to the extent that (i) after giving effect to such conversion, such Holder together with its affiliates collectively would own in excess of 4.89% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion, or (ii) the conversion (together with any shares issued upon exercise of the Series A Warrants) would result in the issuance of greater than 19.99% of the number of Common Stock outstanding as of the date of signing (the "Exchange Cap"). Voting The Series A Convertible Preferred Stock will have the right to vote with common shareholders on an as-converted basis on all matters, without regard to limitations on conversion other than the Exchange Cap. Holders of Series A Convertible Preferred Stock will also be entitled to a separate class vote with respect to amendments to the Company's organizational documents that generally have an adverse effect on the Series A Convertible Preferred Stock. Change of Control Upon consummation of a change of control of the Company, the Holders shall have the right to require the Company to repurchase the Series A Convertible Preferred Stock at an amount equal to the sum of (i) the greater of (A) the Stated Value of the Series A Convertible Preferred Stock being redeemed plus accrued and unpaid dividends and late charges and (B) the Make-Whole Amount (as such term is defined in the Certificate of Designations). Maturity DateNovember 15, 2027 , subject to extension as described in the Certificate of Designations.
A copy of the Certificate of Designations is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Certificate of Designations does not purport to be complete and is qualified in its entirety by reference to such exhibit.
Important Additional Information and Where to Find It
In connection with the Financing, the Company will file with the
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and may file one or more amendments to such documents. When completed, a
definitive proxy statement and a form of proxy will be filed with the
The Company and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the solicitation of
proxies from its stockholders in connection with the proposed authorization and
issuance of securities. Information concerning the interests of the Company's
participants in the solicitation, which may be different than those of the
Company stockholders generally, is set forth in the Company's definitive proxy
statement for the Company's 2019 annual meeting of stockholders, previously
filed with the
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 3.1 Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock, as filed with theDelaware Secretary of State onNovember 18, 2019 4.1 Form of Senior Secured Note 4.2 Form of Series A Warrant to Purchase Common Stock 4.3 Form of Series B Warrant to Purchase Common Stock 10.1 Securities Purchase Agreement datedNovember 18, 2019 , by and amongAcacia Research Corporation ,Starboard Value LP and the investors listed on the Schedule of Buyers attached thereto 10.2 Registration Rights Agreement datedNovember 18, 2019 , by and amongAcacia Research Corporation and the investors listed on the Schedule of Buyers attached thereto 10.3 Governance Agreement datedNovember 18, 2019 , by and amongAcacia Research Corporation and the entities and natural persons set forth on the signature pages thereto.
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