Item
1.01. Entry into a Material Definitive Agreement.
On
June 28, 2019 and July 3, 2019, Adhera Therapeutics, Inc. (the “Company”) entered into Subscription Agreements (each
a “Subscription Agreement” and collectively the “Subscription Agreements”) with certain accredited investors,
and conducted closings, pursuant to which the Company issued secured promissory notes in the aggregate principal amount of $3,239,400
after giving effect to both closings (each a “Note” and collectively the “Notes”).
The
Company intends to use the proceeds from the sale of the Notes for the commercialization of the Company’s approved product
for the treatment of hypertension, funding working capital, capital expenditure needs and other general corporate requirements
The
Notes are being offered and sold in a private placement pursuant to exemptions from the registration requirements of the Securities
Act of 1933, as amended, afforded by Section 4(a)(2) and Rule 506(b) of Regulation D promulgated thereunder.
The
terms and conditions of the Notes are generally as follows:
Maturity
:
The unpaid principal balance of the Notes, plus accrued and unpaid interest thereon, will be due and payable on the earliest to
occur of: (i) June 28, 2020 (subject to extension for up to sixty (60) days based upon the mutual agreement of the Company and
the holders of a majority of the unpaid principal balance of all outstanding Notes at such time (the “Requisite Holders”)
as set forth therein) or (ii) at any time following an Event of Default (as defined below).
Pre-Payment
:
The Notes may not be prepaid without the prior written consent of the Requisite Holders, which consent shall not be unreasonably
withheld, conditioned or delayed.
Interest
:
Interest on the unpaid principal amount of the Notes shall accrue at a rate equal to twelve percent (12%) per annum. Interest
will be payable quarterly with the first interest payment to be made on the six month anniversary of the date of the closing and
each subsequent payment every three months thereafter.
Security
Interest
: The obligations of the Company under the Notes are secured by a first lien and security interest in all of the assets
of the Company and certain of its wholly-owned subsidiaries pursuant to the terms and conditions of a Security Agreement dated
June 29, 2019 by the Company and such wholly-owned subsidiaries in favor of the Purchasers (the “Security Agreement”).
Ranking
:
The indebtedness evidenced by the Notes and the payment of the principal amount and interest thereunder shall be senior to, and
have priority in right of payment over, all indebtedness of the Company now outstanding.
Default
:
The occurrence of any of the following events of default (each an “Event of Default”) shall, upon the election of
the Requisite Holders, make all sums of principal and interest then remaining unpaid on the Notes and all other amounts payable
under the Notes immediately due and payable, upon demand:
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the
Company fails to pay any of the principal, interest or other sum due under the Notes when due and such failure continues for
a period of fourteen (14) calendar days after receipt by the Company of written notice of such default;
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the
Company breaches any material covenant or other term or condition of the Notes (including, and without limitation, any covenants
set forth in the Subscription Agreements or the Security Agreement) and such breach, if subject to cure, continues for a period
of 10 business days after written notice to the Company;
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any
material representation or warranty of the Company made in the Subscription Agreements or the Security Agreement shall be
false or misleading in any material respect;
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the
Company shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or
trustee for itself or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be
appointed and not dismissed within 60 calendar days;
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any
money judgment, writ or similar final process shall be entered or filed against the Company or any subsidiary of the Company
or any of their property or other assets for more than $250,000, and shall remain unvacated, unbonded, unappealed, unsatisfied,
or unstayed for a period of 60 calendar days;
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a
default by the Company under any one or more obligations in an aggregate monetary amount in excess of $150,000 for more than
90 calendar days after the due date, unless the Company is contesting the validity of such obligation in good faith and has
segregated cash funds equal to not less than one-half of the contested amount;
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bankruptcy,
insolvency, reorganization, or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Company
or any subsidiary of the Company and if instituted against them are not dismissed within 60 calendar days of initiation;
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a
disposition of all or substantially all of the assets of the Company;
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proceeds
of the Notes not being utilized substantially in accordance with the intended uses set forth in the Subscription Agreement
and the Private Placement Memorandum relating to the offering of the Notes; or
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the
occurrence of an Event of Default under the Security Agreement.
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Amendment
:
The terms and provisions of the Notes may be amended or modified, and any provision thereof may be waived, only with the written
consent of the Company and the Requisite Holders.
The
foregoing summaries of the material terms of the form of Note and the Security Agreement are not complete and are qualified in
their entirety by reference to the full text thereof, copies of which are filed herewith as Exhibits 4.1 and 10.1, respectively,
and incorporated by reference herein.