tm2230263-1_s3 - none - 9.01566s
As filed with the Securities and Exchange Commission on November 14, 2022
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SCHOLAR ROCK HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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82-3750435
(I.R.S. Employer Identification
Number)
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301 Binney Street, Cambridge, MA 02142
(Address of principal executive offices)
(857) 259-3860
(Registrant’s telephone number, including area code)
Jay T. Backstrom
President and Chief Executive Officer
301 Binney Street
Cambridge, MA 02142
(857) 259-3860
(Name, address, including zip code, and telephone number, including area code, of agent for service)
With copies to:
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Kingsley L. Taft
Laurie A. Burlingame
Goodwin Procter LLP
100 Northern Ave.
Boston, MA 02210
(617) 570-1000
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Junlin Ho
Scholar Rock Holding Corporation
301 Binney Street
Cambridge, MA 02142
(857) 259-3860
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Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
EXPLANATORY NOTE
This registration statement contains two prospectuses:
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a base prospectus which covers the offering, issuance and sale by us of the securities identified above from time to time in one or more offerings with a total value of up to $400,000,000; and
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a sales agreement prospectus covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $100,000,000 of our common stock that may be issued and sold under a sales agreement with Jefferies LLC, or Jefferies.
The base prospectus immediately follows this explanatory note. The specific terms of any securities to be offered pursuant to the base prospectus other than the shares under the sales agreement will be specified in a prospectus supplement to the base prospectus. The specific terms of the securities to be issued and sold under the sales agreement are specified in the sales agreement prospectus that immediately follows the base prospectus. The common stock that may be offered, issued and sold under the sales agreement prospectus is included in the $400,000,000 of securities that may be offered, issued and sold by the registrant under the base prospectus. Upon termination of the sales agreement, any portion of the $100,000,000 included in the sales agreement prospectus that is not sold pursuant to the sales agreement will be available for sale in other offerings pursuant to the base prospectus.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 14, 2022
PROSPECTUS
$400,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
We may from time to time offer and sell up to $400,000,000 in aggregate principal amount of, in one or more series or classes, our common stock, preferred stock, debt securities, warrants and/or units. We may offer these securities separately or together in units. We will specify in the accompanying prospectus supplement the terms of the securities being offered. We may sell these securities to or through underwriters and also to other purchasers or through agents. We will set forth the names of any underwriters or agents, and any fees, conversions, or discount arrangements, in the accompanying prospectus supplement. We may not sell any securities under this prospectus without delivery of the applicable prospectus supplement.
You should read this document and any prospectus supplement or amendment carefully before you invest in our securities.
Our common stock is listed on The Nasdaq Global Select Market under the symbol “SRRK.” On November 9, 2022, the closing price for our common stock, as reported on The Nasdaq Global Select Market, was $7.66 per share. Our principal executive offices are located at 301 Binney Street, Cambridge, MA 02142.
We are an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012 and, as such, we are subject to reduced public company reporting requirements.
This prospectus may not be used to offer or sell any of our securities unless accompanied by a prospectus supplement.
Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” contained in this prospectus beginning on page 2 and any applicable prospectus supplement, and under similar headings in the other documents that are incorporated by reference into this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is , 2022.
TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
This prospectus is part of an automatic registration statement that we filed with the Securities and Exchange Commission, or the SEC, Securities Act of 1933, as amended, using a “shelf” registration process. Under this shelf registration process, we may from time to time sell any combination of the securities described in this prospectus in one or more offerings.
This prospectus provides you with a general description of the securities we may offer in one or more offerings for an aggregate offering amount of up to $400,000,000. Each time we sell securities, we will provide one or more prospectus supplements that will contain specific information about the terms of the offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and the accompanying prospectus supplement together with the additional information described under the heading “Where You Can Find More Information”.
You should rely only on the information contained in or incorporated by reference in this prospectus, any accompanying prospectus supplement or in any related free writing prospectus filed by us with the SEC. We have not authorized anyone to provide you with different information. This prospectus and the accompanying prospectus supplement do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities described in the accompanying prospectus supplement or an offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. You should assume that the information appearing in this prospectus, any prospectus supplement, the documents incorporated by reference and any related free writing prospectus is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed materially since those dates.
Unless the context otherwise indicates, references in this prospectus to “Scholar Rock”, “we”, “our”, “us” and “the Company” refer, collectively, to Scholar Rock Holding Corporation and its subsidiaries.
We own various U.S. federal trademark applications and unregistered trademarks, including “Scholar Rock” and our corporate logo. All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the symbols ® and ™, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
RISK FACTORS
Investing in our securities involves a high degree of risk. You should carefully consider the risks described in the documents incorporated by reference in this prospectus and any prospectus supplement, as well as other information we include or incorporate by reference into this prospectus and any applicable prospectus supplement, before making an investment decision. Our business, financial condition or results of operations could be materially adversely affected by the materialization of any of these risks. The trading price of our securities could decline due to the materialization of any of these risks, and you may lose all or part of your investment. This prospectus and the documents incorporated herein by reference also contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and in the documents incorporated herein by reference, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which is on file with the SEC and is incorporated herein by reference, and our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, and other documents we file with the SEC that are deemed incorporated by reference into this prospectus. See “Where You Can Find More Information” for information about how to obtain a copy of these documents. The risks and uncertainties described in the documents we incorporate by reference are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of these risks or uncertainties actually occur, they could materially and adversely affect our business, financial condition, results of operations, cash flows or prospects, which in turn could materially and adversely affect the price of our securities and might cause you to lose all or part of your investment in the offered securities.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but are not always, made through the use of words or phrases such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions, or the negative of these terms, or similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this prospectus, and in particular those factors referenced in the section “Risk Factors.”
This prospectus contains forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. These statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
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the success, cost and timing of clinical trials for apitegromab and SRK-181 including the progress and completion of clinical trials, and the results, and the timing of results, from these trials;
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the success, cost and timing of our other product development activities, preclinical studies and clinical trials, and the results, and timing of results, from these studies and trials;
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our success in identifying and executing a development program for additional indications for apitegromab and SRK-181 and in identifying product candidates from our preclinical programs;
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the clinical utility of our product candidates and their potential advantages over other therapeutic options;
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our ability to obtain, generally or on terms acceptable to us, funding for our operations, including funding necessary to complete further development and, upon successful development, if approved, commercialization of apitegromab, SRK-181 or any of our future product candidates;
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timing of and costs associated with our restructuring, and the savings benefits we expect to receive from the restructuring;
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risks associated with the COVID-19 pandemic or other public health pandemics, which may adversely impact our workforce, global supply chain, business, preclinical studies, clinical trials and financial results;
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the potential for our identified research priorities to advance our proprietary platform, by identifying future product candidates;
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the timing, scope or likelihood of our ability to obtain and maintain regulatory approval from the U.S. Food and Drug Administration, or FDA, the European Commission, or EC, and other regulatory authorities for apitegromab, SRK-181 and any future product candidates, and any related restrictions, limitations or warnings in the label of any approved product candidate;
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our ability to continue to grow our organization, including our personnel, systems and relationships with third parties;
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our ability to retain our executives and highly skilled technical and managerial personnel, which could be affected due to any transition in management, or if we fail to recruit additional highly skilled personnel;
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our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and the duration of such protection;
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our ability and the potential to successfully manufacture our product candidates for clinical trials and for commercial use, if approved;
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our ability to establish or maintain collaborations or strategic relationships;
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our expectations relating to the potential of our proprietary platform technology;
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our ability to obtain additional funding when necessary;
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the size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in combination with others;
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our expectations related to the use of our cash reserves;
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the impact of new laws and regulations or amendments to existing laws and regulations;
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developments and projections relating to our competitors and our industry;
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our expected use of proceeds from this offering;
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our estimates and expectations regarding cash and expense levels, future revenues, capital requirements and needs for additional financing, including our expected use of proceeds from our public offerings, and liquidity sources; and
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our expectations regarding the period during which we qualify as an emerging growth company, or EGC, under the Jumpstart Our Business Startups Act of 2012 or as a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934.
We have included important factors in the cautionary statements included in this prospectus and the documents we incorporate by reference herein, particularly in the “Risk Factors” sections of these documents, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. No forward-looking statement is a guarantee of future performance.
You should read this prospectus and the documents that we incorporate by reference in this prospectus completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements in this prospectus and the documents we incorporate by reference herein represent our views as of the date of this prospectus. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward- looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this prospectus.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus supplement, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
THE COMPANY
The following highlights information about the Registrant and our business contained elsewhere or incorporated by reference in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in any of our securities. You should carefully read this prospectus together with the more detailed information incorporated by reference in this prospectus.
We are a biopharmaceutical company focused on the discovery and development of innovative medicines for the treatment of serious diseases in which signaling by protein growth factors plays a fundamental role. Our novel understanding of the molecular mechanisms of growth factor activation enabled us to develop a proprietary platform for the discovery and development of monoclonal antibodies that locally and selectively target the precursor, or latent, forms of growth factors. By targeting the signaling proteins at the cellular level and acting in the disease microenvironment, we believe we may avoid the historical dose-limiting safety challenges associated with inhibiting growth factors for therapeutic effect. We believe our focus on biologically validated growth factors may facilitate a more efficient development path.
We have a productive scientific platform and are building our portfolio of novel product candidates with the aim of transforming the lives of patients suffering from a wide range of serious diseases, including neuromuscular disorders, cancer, and fibrosis. We have discovered and progressed the development of:
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Apitegromab, an inhibitor of the activation of latent myostatin, for the treatment of spinal muscular atrophy (“SMA”). We also believe apitegromab could have potential in the treatment of other myostatin-related disorders.
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SRK-181, an inhibitor of the activation of latent transforming growth factor beta-1 (“TGFβ1”), for the treatment of cancers that are resistant to anti-PD-(L)1 antibody therapies.
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Potent and selective inhibitors of the activation of transforming growth factor beta (“TGFβ”) for the treatment of fibrotic diseases. We are advancing multiple antibody profiles toward product candidate selection including antibodies that selectively inhibit the activation of latent TGFβ1 in the context of fibrotic extracellular matrix and that avoid perturbing TGFβ1 presented by cells of the immune system.
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Additional discovery and early preclinical programs related to the selective modulation of growth factor signaling, including BMP6 and other growth factors.
Our first product candidate, apitegromab (formerly SRK-015), is a highly selective, fully human, monoclonal antibody with a unique mechanism of action that results in inhibition of the activation of the growth factor, myostatin, in skeletal muscle. Apitegromab is being developed as a potential first muscle- directed therapy for the treatment of SMA. We are conducting SAPPHIRE, a pivotal Phase 3 clinical trial to evaluate the efficacy and safety of apitegromab in patients with non-ambulatory Type 2 and Type 3 SMA (which is estimated to represent the majority of the current prevalent SMA patient population in the U.S. and Europe). Apitegromab was evaluated in our Phase 2 TOPAZ proof-of-concept clinical trial for the treatment of patients with Type 2 and Type 3 SMA. Positive 12-month top-line results from the Phase 2 TOPAZ clinical trial were initially announced in April 2021 and presented at the Cure SMA Virtual Conference in June 2021.
In June 2022, at the Cure SMA Research & Clinical Care Meeting, we presented 24-month efficacy and safety extension data of apitegromab from TOPAZ. The data supports sustained and continued improvement with apitegromab for non-ambulatory patients with Types 2 and 3 SMA receiving an SMN therapy. Tertiary endpoint data from the TOPAZ trial was presented at the 27th International Annual Congress of the World Muscle Society 2022 and the 3rd International Scientific Congress on SMA 2022, showing trends of continuous improvement in quality-of-life measures such as activities of daily living, fatigue and endurance over 24 months
TOPAZ evaluated apitegromab across a broad age range (2-21 years) of patients with Types 2 and 3 SMA. All 35 non-ambulatory patients (Cohorts 2 and 3) and 12 of 23 ambulatory patients (Cohort 1) were receiving nusinersen maintenance therapy. The primary efficacy endpoint for the non-ambulatory population was mean change from baseline in Hammersmith Functional Motor Scale Expanded (“HFMSE”).
Additional endpoints included mean change from baseline in Revised Upper Limb Module (“RULM”), an assessment specifically designed for upper limb function in patients with SMA. The HFMSE is a validated measure for the assessment of gross motor function in SMA, while the RULM is validated to evaluate upper limb motor performance by evaluating tasks which correspond to the ability to perform various everyday activities with their hands and arms.
For this 24-month evaluation, an observed case analysis was conducted, which pooled all the non-ambulatory patients (Cohorts 2 and 3) and was based upon the available data for given timepoints. This analysis population included patients receiving either low dose (2 mg/kg) or high dose (20 mg/kg) apitegromab (inclusive of patients in Cohort 3 who switched from 2 mg/kg to 20 mg/kg in Year 2) and did not exclude any patients who had missed apitegromab doses due to study site access restrictions from COVID-19.
Non-ambulatory patients (age range of 2 to 21 years old) with valid HFMSE assessments had sizable, sustained gains in HFMSE scores at 24 months from baseline (prior to first dose of apitegromab), while RULM scores continued to increase at 24 months. The mean change from baseline results for non-ambulatory patients showed:
* Three patients in the non-ambulatory group underwent scoliosis surgery in year 2, which has been reported to negatively impact HFMSE scores for a considerable period afterwards. This analysis excluded post-surgery data of these patients.
Dose response continued to be observed across the 24 months of apitegromab administration based upon HFMSE scores and pharmacodynamic data (target engagement as measured by serum latent myostatin concentrations), with signs that that there may be further HFMSE increases as non-ambulatory patients originally receiving the low dose switched to the high dose treatment.
Data at 24-months for ambulatory patients with Type 3 SMA (Cohort 1) suggest stability of Revised Hammersmith Scale (“RHS”) scores in patients receiving 20 mg/kg of apitegromab and nusinersen. The mean RHS change from baseline at 24-months was -0.7 points (95% CI: -3.1, 1.7) for the apitegromab and nusinersen subgroup (n=10) and -2.8 points (95% CI: -8.4, 2.8) for the apitegromab monotherapy subgroup (n=11). A subset of individuals in Cohort 1 (n=21) had RHS improvements, as reflected by 42.9% (9/21) and 23.8% (5/21) of patients having ≥1-point and ≥3-point RHS increases from baseline at 24 months respectively.
Of the 55 patients who completed the 24-month TOPAZ extension period, 54 opted to continue treatment in the 36-month extension period.
Consistent with the 12-month safety data, no serious safety risks were identified as part of the analysis of the cumulative 24-month data. The incidence and severity of adverse events were consistent with the underlying patient population and background therapy. The five most common treatment-emergent adverse events (“TEAEs”) were headache, pyrexia, upper respiratory tract infection, cough, and nasopharyngitis. No deaths or serious adverse reactions have been observed with apitegromab. A total of 14 serious TEAEs were reported over the 24-month treatment period, all assessed by the respective trial investigator as unrelated to apitegromab.
The U.S. Food and Drug Administration (“FDA”) granted Fast Track designation, Rare Pediatric Disease designation and Orphan Drug Designation to apitegromab for the treatment of SMA in May 2021, August 2020 and March 2018, respectively. The European Medicines Agency (“EMA”) granted PRIority MEdicines (“PRIME”) designation in March 2021 and the European Commission (“EC”) granted Orphan Medicinal Product designation in December 2018 to apitegromab for the treatment of SMA.
We have identified multiple other diseases for which the selective inhibition of the activation of myostatin may offer therapeutic benefit, including additional patient populations in SMA (such as Type 1 SMA and ambulatory SMA) and indications outside of SMA.
Our second product candidate, SRK-181, is being developed for the treatment of cancers that are resistant to checkpoint inhibitor (“CPI”) therapies, such as anti-PD-1 or anti-PD-L1 antibody therapies. SRK-181 is a highly selective inhibitor of the activation of latent TGFβ1 that is being investigated in our Phase 1 DRAGON proof-of-concept clinical trial in patients with locally advanced or metastatic solid tumors
that exhibit primary resistance to anti-PD-(L)1 antibodies. This two-part clinical trial consists of a dose escalation portion (Part A) and a dose expansion portion evaluating SRK-181 in combination with an approved anti-PD-(L)1 antibody therapy (Part B). Part B commenced in 2021 and includes the following active cohorts: urothelial carcinoma, cutaneous melanoma, non-small cell lung cancer, and clear cell renal cell carcinoma. Initial clinical data from Part A were presented in November 2021 at the Society for Immunotherapy of Cancer (“SITC”) 36th Annual Meeting and additional clinical data were presented at the 2022 SITC Annual Meeting in November 2022.
Utilizing our proprietary platform, we have multiple early stage and preclinical programs directed against targets that are known to be important in serious diseases, including neuromuscular disorders, cancer and fibrosis. We are discovering and generating selective and differentiated monoclonal antibodies against difficult targets by 1) applying our structural insights and antibody discovery expertise, 2) prioritizing human biology, and 3) embedding translational thinking early in the research and development process.
Company information
We were incorporated in 2017 under the laws of the State of Delaware as the holding company for Scholar Rock, Inc. Scholar Rock, Inc. is a wholly owned subsidiary of Scholar Rock Holding Corporation. On December 22, 2017, we completed a series of transactions pursuant to which Scholar Rock Merger Sub, LLC, a wholly owned subsidiary of Scholar Rock Holding Corporation, was merged with and into Scholar Rock, LLC, or the Reorganization. The purpose of the Reorganization was to reorganize our corporate structure so that we would continue as a corporation and so that our investors prior to the Reorganization would own our capital stock after the Reorganization rather than equity interests in a limited liability company. All of our convertible preferred stock converted into shares of common stock upon the completion of our initial public offering at the then effective conversion ratio. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, developing our technology, identifying potential product candidates, producing drug substance and drug product material for use in preclinical studies and clinical trials, conducting preclinical studies of our product candidates and conducting clinical trials for our product candidates, apitegromab (formerly SRK-015) and SRK-181. We do not have any products approved for sale and have not generated any product revenue to date.
Our principal executive offices are located at 301 Binney Street, Cambridge, MA 02142, and our phone number is (857) 259-3860. Our website address is www.scholarrock.com. The information contained on our website or social media accounts, or that can be accessed through our website or social media accounts, is not a part of this prospectus and is not incorporated by reference into this prospectus. You should not rely on any such information in deciding whether to purchase our common stock.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of any securities offered under this prospectus for general corporate purposes unless otherwise indicated in the applicable prospectus supplement. General corporate purposes may include research and development and commercialization costs, including the conduct of clinical trials and process development and manufacturing of our product candidates, services or technologies, expansion of our technology infrastructure and capabilities, working capital and capital expenditures. We may temporarily invest the net proceeds in a variety of capital preservation instruments, including investment grade, interest bearing instruments and U.S. government securities, until they are used for their stated purpose. We have not determined the amount of net proceeds to be used specifically for such purposes. As a result, management will retain broad discretion over the allocation of net proceeds.
SECURITIES WE MAY OFFER
This prospectus contains summary descriptions of the securities we may offer from time to time. These summary descriptions are not meant to be complete descriptions of each security. The particular terms of any security will be described in the applicable prospectus supplement.
DESCRIPTION OF CAPITAL STOCK
The following description of our common stock and preferred stock, together with the additional information we include in any applicable prospectus supplements, summarizes the material terms and provisions of the common stock and preferred stock that we may offer under this prospectus. The following description of our capital stock does not purport to be complete and is subject to, and qualified in its entirety by, our Amended and Restated Certificate of Incorporation, as amended to date, and our Amended and Restated Bylaws, which are exhibits to the registration statement of which this prospectus forms a part, and by applicable law. We refer in this section to our Amended and Restated Certificate of Incorporation, as amended to date, as our “certificate of incorporation,” and we refer to our Amended and Restated Bylaws as our “bylaws.” The terms of our common stock and preferred stock may also be affected by Delaware law.
Authorized Capital Stock
Our authorized capital stock consists of 150,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share, all of which shares of preferred stock are undesignated.
As of September 30, 2022, 51,660,854 shares of our common stock were outstanding and held by approximately nine stockholders of record. In addition, as of September 30, 2022, we had outstanding options to purchase 6,142,673 shares of our common stock, at a weighted-average exercise price of $17.69 per share, 2,247,725 of which were exercisable, 1,707,735 shares of unvested restricted stock units, 27,689,692 pre-funded warrants to purchase shares of our common stock and 10,459,181 warrants to purchase shares of our common stock at a weighted-average exercise price of $7.35 per share.
Common Stock
The holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders. The holders of our common stock do not have any cumulative voting rights. Holders of our common stock are entitled to receive ratably any dividends declared by the board of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred stock. Our common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.
In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in all assets remaining after payment of all debts and other liabilities and any liquidation preference of any outstanding preferred stock. The shares to be issued by us will be, when issued and paid for, validly issued, fully paid and non-assessable.
Listing
Our common stock is listed on The Nasdaq Global Select Market under the symbol “SRRK.” On November 9, 2022, the closing price for our common stock, as reported on The Nasdaq Global Select Market, was $7.66 per share.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.
November 2020 Prefunded Warrants for Common Stock
In November 2020, we sold pre-funded warrants to purchase 2,179,487 shares of common stock.
Form. The pre-funded warrants are issued as individual warrant agreements to each individual purchaser of a pre-funded warrant.
Term. The pre-funded warrants do not expire.
Exercisability. The pre-funded warrants are exercisable at any time after their original issuance. The pre- funded warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice and by payment in full of the exercise price in immediately available funds for the number of shares of our common stock purchased upon such exercise. As an alternative to payment of the exercise price in immediately available funds, the holder may elect to exercise the pre-funded warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of our common stock determined according to the formula set forth in the pre-funded warrants. No fractional shares of our common stock will be issued in connection with the exercise of a pre-funded warrant. In lieu of fractional shares, we will pay the holder an amount in cash equal to the fractional amount multiplied by the last closing trading price of our common stock on the exercise date.
Exercise limitations. Under the pre-funded warrants, we may not effect the exercise of any pre-funded warrant, and a holder will not be entitled to exercise any portion of any pre-funded warrant, which, upon giving effect to such exercise, would cause (i) the aggregate number of shares of our common stock beneficially owned by the holder (together with its affiliates) to exceed 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, or (ii) the combined voting power of our securities beneficially owned by the holder (together with its affiliates) to exceed 9.99% of the combined voting power of all of our securities then outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 19.99% upon at least 61 days’ prior notice from the holder to us.
Exercise price. The exercise price per whole share of our common stock purchasable upon the exercise of the pre-funded warrants is $0.0001 per share of our common stock. The exercise price of the prefunded warrants and the number of shares of our common stock issuable upon exercise of the pre- funded warrants are subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders. The exercise price will not be adjusted below the par value of our common stock.
Transferability. Subject to applicable laws, the pre-funded warrants may be offered for sale, sold, transferred or assigned without our consent. The pre-funded warrants will be held in definitive form by the warrant agent. The ownership of the pre-funded warrants and any transfers of the pre-funded warrants will be registered in a warrant register maintained by the warrant agent. We will initially act as warrant agent.
June 2022 Pre-Funded Warrants
In June 2022, we sold pre-funded warrants to purchase 25,510,205 shares of common stock.
Form. The pre-funded warrants are issued as individual warrant agreements to each individual purchaser of a pre-funded warrant.
Term. The pre-funded warrants do not expire.
Exercise price. Each pre-funded warrant offered has an initial exercise price per share equal to $0.0001. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock and the exercise price.
Exercisability. The pre-funded warrants are exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of such holder’s pre-funded warrant to the extent that the holder would own more than 9.99% (or, at the election of the purchaser, 4.99%, 14.99% or 19.99%) of the outstanding shares of common stock immediately after exercise, except that upon at least 61 days’ written prior notice from the holder to us, the holder may increase or decrease the amount of ownership of outstanding shares of common stock after exercising the holder’s pre-funded warrants up to 19.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded
warrants. No fractional shares of common stock will be issued in connection with the exercise of a pre-funded warrant. In lieu of fractional shares, we will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.
Cashless exercise. In lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the pre-funded warrants.
Fundamental transactions. In the event of any fundamental transaction, as described in the pre-funded warrants and generally including any merger with or into another entity, sale of all or substantially all of our assets, tender offer or exchange offer, or reclassification of our shares of common stock, then upon any subsequent exercise of a pre-funded warrant, the holder will have the right to receive as alternative consideration, for each share of common stock that would have been issuable upon such exercise immediately prior to the occurrence of such fundamental transaction, the number of shares of common stock of the successor or acquiring corporation or of our company, if it is the surviving corporation, and any additional consideration receivable upon or as a result of such transaction by a holder of the number of shares of common stock for which the Pre-funded Warrant is exercisable immediately prior to such event.
Transferability. Subject to applicable laws, the pre-funded warrants may be offered for sale, sold, transferred or assigned without our consent. The pre-funded warrants will be held in definitive form by the warrant agent. The ownership of the pre-funded warrants and any transfers of the pre-funded warrants will be registered in a warrant register maintained by the warrant agent. We act as warrant agent.
Exchange listing. There is no established trading market for the pre-funded warrants. We do not intend to list the pre-funded warrants on any securities exchange or nationally recognized trading system.
Right as a stockholder. Except as otherwise provided in the pre-funded warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the pre-funded warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until such pre-funded warrant holders exercise their pre-funded warrants.
June 2022 Common Warrants
In June 2022, we sold warrants to purchase 10,459,181 shares of common stock.
Form. The pre-funded warrants are issued as individual warrant agreements to each individual purchaser of a pre-funded warrant.
Duration and exercise price. Each warrant has an initial exercise price per share equal to $7.35 The warrants are immediately exercisable and will expire upon December 31, 2025. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock and the exercise price.
Exercisability. The warrants are exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of such holder’s warrant to the extent that the holder would own more than 4.99% (or, at the election of the purchaser, 9.99%, 14.99% or 19.99%) of the outstanding shares of common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to us, the holder may increase the amount of ownership of outstanding shares of common stock after exercising the holder’s warrants up to 9.99%, 14.99% or 19.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants. No fractional shares of common stock will be issued in connection with the exercise of a warrant. In lieu of fractional shares, we will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.
Cashless exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the shares of common stock issuable upon exercise of the warrants, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the warrants.
Fundamental transactions. In the event of any fundamental transaction, as described in the warrants and generally including any merger with or into another entity, sale of all or substantially all of our assets, tender offer or exchange offer, or reclassification of our shares of common stock, then upon any subsequent exercise of a warrant, the holder will have the right to receive as alternative consideration, for each share of common stock that would have been issuable upon such exercise immediately prior to the occurrence of such fundamental transaction, the number of shares of common stock of the successor or acquiring corporation or of our company, if it is the surviving corporation, and any additional consideration receivable upon or as a result of such transaction by a holder of the number of shares of common stock for which the warrant is exercisable immediately prior to such event.
Transferability. Subject to applicable laws, a warrant or the rights thereunder may not be transferred or assigned, in whole or in part unless such transfer is to the warrant holder’s successors and Affiliates (as defined in the warrant). The ownership of the warrants and any transfers of the warrants will be registered in a warrant register maintained by the warrant agent. We will initially act as warrant agent.
Exchange listing. There is no trading market available for the warrants on any securities exchange or nationally recognized trading system. We do not intend to list the warrants on any securities exchange or nationally recognized trading system.
Right as a stockholder. Except as otherwise provided in the warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until they exercise their warrants.
Preferred Stock
Undesignated Preferred Stock
Our board of directors or any authorized committee thereof has the authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges, and restrictions thereof. No shares of preferred stock are outstanding, and we have no present plans to issue any shares of preferred stock.
The purpose of authorizing our board of directors to issue preferred stock in one or more series and determine the number of shares in the series and its rights and preferences is to eliminate delays associated with a shareholder vote on specific issuances. Examples of rights and preferences that the board of directors may fix are:
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dividend rights;
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dividend rates;
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conversion rights;
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voting rights;
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terms of redemption; and
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liquidation preferences.
The existence of authorized but unissued shares of preferred stock may enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. For example, if in the due exercise of its fiduciary obligations, our board of directors were to determine that a takeover proposal is not in the best interests of us or our stockholders, our board of directors could cause shares of preferred stock to be issued without stockholder approval in
one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer, stockholder or stockholder group. The rights of holders of our common stock described above will be subject to, and may be adversely affected by, the rights of any preferred stock that we may designate and issue in the future. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance may also adversely affect the rights and powers, including voting rights, of these holders and may have the effect of delaying, deterring or preventing a change in control of us.
Additional Series of Preferred Stock
We will incorporate by reference as an exhibit to the registration statement, which includes this prospectus, the form of any certificate of designation that describes the terms of the series of preferred stock we are offering. This description and the applicable prospectus supplement will include:
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the title and stated value;
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the number of shares authorized;
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the liquidation preference per share;
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the purchase price;
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the dividend rate, period and payment date, and method of calculation for dividends;
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whether dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate;
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the procedures for any auction and remarketing, if any;
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the provisions for a sinking fund, if any;
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the provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights;
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any listing of the preferred stock on any securities exchange or market;
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whether the preferred stock will be convertible into our common stock, and, if applicable, the conversion price, or how it will be calculated, and the conversion period;
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whether the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange price, or how it will be calculated, and the exchange period;
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voting rights, if any, of the preferred stock;
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preemptive rights, if any;
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restrictions on transfer, sale or other assignment, if any;
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whether interests in the preferred stock will be represented by depositary shares;
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a discussion of any material United States federal income tax considerations applicable to the preferred stock;
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the relative ranking and preferences of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs;
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any limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and
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any other specific terms, preferences, rights or limitations of, or restrictions on, the preferred stock.
When we issue shares of preferred stock under this prospectus, the shares will fully be paid and nonassessable and will not have, or be subject to, any preemptive or similar rights.
Registration Rights
Gilead Sciences, Inc., or Gilead,, is entitled to rights with respect to the registration of certain shares under the Securities Act pursuant to a registration rights agreement, or Registration Rights Agreement, and include demand registration rights, short-form and shelf registration rights and piggyback registration rights. All fees, costs and expenses of underwritten registrations, subject to certain restrictions, will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by Gilead.
Demand Registration Rights
Under the terms of the Registration Rights Agreement with Gilead, beginning on December 19, 2020, we are required, upon the written request of the stockholder to register securities with an aggregate value of at least $10.0 million based on then-current value of the securities, to use reasonable best efforts to effect the registration of such shares on Form S-1, subject to certain exceptions. Under the terms of the Registration Rights Agreement, we are required to effect up to two registrations pursuant to this provision, and the short- form and shelf registration rights provisions of the Registration Rights Agreement, except that the number of shelf takedowns that are not underwritten offerings are not limited.
An aggregate of up to 980,392 shares of common stock are entitled to the demand registration rights under the Registration Rights Agreement.
Short-Form and Shelf Registration Rights
Under the terms of the Registration Rights Agreement, beginning on December 19, 2020, if we are eligible to file a registration statement on Form S-3, upon the written request of the stockholder to register securities with an aggregate value of at least $3.0 million based on then-current value of the securities, we will use reasonable best efforts to cause registration of the securities on Form S-3. In addition, under the terms of the Registration Rights Agreement, upon the written request of the stockholder, we will be required to file a shelf registration statement on Form S-3 to register the securities pursuant to Securities Act Rule 415 and use our reasonable best efforts to cause such shelf registration statement to become effective, subject to certain exceptions.
The right to have such shares registered on Form S-3 is further subject to other specified conditions and limitations in each case.
An aggregate of up to 980,392 shares of common stock are entitled to the Form S-3 registration rights under the Registration Rights Agreement.
Piggyback Registration Rights
If we propose to register any of our securities, either for our own account or for the account of other security holders, under the Registration Rights Agreement, we will use reasonable best efforts to include the stockholder’s shares in the registration.
Under the Registration Rights Agreement, subject to certain exceptions, the underwriters may limit the number of shares included in the underwritten offering to the number of shares which the underwriters determine in their sole discretion will not jeopardize the success of the offering, including, specifically, where the underwriter has determined that in their opinion there is a risk that the price of the securities will be reduced or the number of securities intended to be included on our behalf will be reduced.
An aggregate of up to 980,392 shares of common stock are entitled to these piggyback registration rights under the Registration Rights Agreement.
Indemnification
The Registration Rights Agreement contains customary cross- indemnification provisions, under which we are obligated to indemnify the stockholder in the event of material misstatements or omissions in the
registration statement attributable to us, and the stockholder is obligated to indemnify us for material misstatements or omissions attributable to it.
Expiration of Registration Rights
The registration rights granted under the Registration Rights Agreement will terminate, with respect to 50% of the Registrable Securities held by the stockholder, on December 19, 2023 and with respect to 50% of the Registrable Securities held by the stockholder, on December 19, 2024.
Anti-Takeover Effects of Our Certificate of Incorporation and Our Bylaws
Our certificate of incorporation and bylaws contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of the company unless such takeover or change in control is approved by the board of directors.
These provisions include:
Classified Board. Our certificate of incorporation provides that our board of directors is divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors has the effect of making it more difficult for stockholders to change the composition of our board. Our certificate of incorporation provides that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed exclusively pursuant to a resolution adopted by our board of directors. Our board of directors has eight members. Our certificate of incorporation provides that the affirmative vote of at least two-thirds of the outstanding shares of capital stock entitled to vote, and the affirmative vote of at least two-thirds of the outstanding shares of each class entitled to vote as a class, is required to amend or repeal the foregoing provision. This requirement of a supermajority vote to amend or repeal that provision of our bylaws could enable a minority of our stockholders to prevent a declassification of our Board.
Action by Written Consent; Special Meetings of Stockholders. Our certificate of incorporation provides that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting. This limit may lengthen the amount of time required to take stockholder actions and would prevent the amendment of our bylaws or removal of directors by our stockholders without holding a meeting of stockholders. Our certificate of incorporation provides that the affirmative vote of at least two-thirds of the outstanding shares of capital stock entitled to vote, and the affirmative vote of at least two-thirds of the outstanding shares of each class entitled to vote as a class, is required to amend or repeal the foregoing provision. Our certificate of incorporation and bylaws provide that, except as otherwise required by law, special meetings of the stockholders can be called only by or at the direction of the board of directors pursuant to a resolution adopted by a majority of the total number of directors, and only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our bylaws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting. Stockholders are not permitted to call a special meeting or to require the board of directors to call a special meeting. Our bylaws provide that the affirmative vote of at least two thirds of the outstanding shares entitled to vote, and of each class entitled to vote, respectively, is required to amend the or repeal the provision in our bylaws that provides that special meetings of the stockholders can be called only by or at the direction of the board of directors pursuant to a resolution adopted by a majority of the total number of directors, unless the Board first recommends such amendment or repeal to stockholders. This requirement of a supermajority vote to amend or repeal that provision of our bylaws could enable a minority of our stockholders to prevent a change to such provision and has the effect of making it more difficult for stockholders to call a special meeting of stockholders.
Removal of Directors. Our certificate of incorporation provides that our directors may be removed only for cause and then only by the affirmative vote of the holders of two-thirds or more of the shares then entitled to vote at an election of directors, at a meeting of the stockholders called for that purpose. Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting
from an increase in the size of our board, may only be filled by the affirmative vote of a majority of our directors then in office even if less than a quorum. This requirement of a supermajority vote to remove directors could enable a minority of our stockholders to prevent a change in the composition of our board, and the treatment of vacancies also has the effect of making it more difficult for stockholders to change the composition of our board.
Advance Notice Procedures. Our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. Our bylaws specify the requirements as to form and content of all stockholders’ notices. Stockholders at an annual meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our secretary timely written notice, in proper form, of the stockholder’s intention to bring that business before the meeting. Although the bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the company.
Super Majority Approval Requirements and Amendment to Certificate of Incorporation and Bylaws. Any amendment of our certificate of incorporation must first be approved by a majority of our board of directors, and if required by law or our certificate of incorporation, must thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment and a majority of the outstanding shares of each class entitled to vote thereon as a class, except that the amendment of the provisions relating to stockholder action, board composition, limitation of liability and the amendment of our bylaws and certificate of incorporation must be approved by not less than two-thirds of the outstanding shares entitled to vote on the amendment, and not less than two-thirds of the outstanding shares of each class entitled to vote thereon as a class. Our bylaws may be amended by the affirmative vote of a majority of the directors then in office, subject to any limitations set forth in the bylaws, and may also be amended by the affirmative vote of at least two-thirds of the outstanding shares entitled to vote on the amendment, or, if our board of directors recommends that the stockholders approve the amendment, by the affirmative vote of the majority of the outstanding shares entitled to vote on the amendment, in each case voting together as a single class.
Authorized but Unissued Shares. Our authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital and corporate acquisitions. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise. For example, if in the due exercise of its fiduciary obligations, our board of directors were to determine that a takeover proposal is not in the best interests of our stockholders, our board of directors could cause shares of convertible preferred stock to be issued without stockholder approval in one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer or insurgent stockholder or stockholder group. In this regard, our certificate of incorporation grants our board of directors broad power to establish the rights and preferences of authorized and unissued shares of convertible preferred stock. The issuance of shares of convertible preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance may also adversely affect the rights and powers, including voting rights, of these holders and may have the effect of delaying, deterring or preventing a change in control of us.
Choice of Forum. Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a
fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders; (3) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware or our certificate of incorporation or bylaws; (4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; or (5) any action asserting a claim governed by the internal affairs doctrine.
In addition, our bylaws contain a provision by virtue of which, unless we consent in writing to the selection of an alternative forum, the United States District Court for the District of Massachusetts will be the exclusive forum for any complaint asserting a cause of action arising under the Securities Act. In addition, our bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provisions.
This exclusive forum provision would not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Although our certificate of incorporation contains the choice of forum provision described above, it is possible that a court could rule that such a provision is inapplicable for a particular claim or action or that such provision is unenforceable.
We have chosen the United States District Court for the District of Massachusetts as the exclusive forum for such causes of action because our principal executive offices are located in Cambridge, Massachusetts. Some companies that have adopted similar federal district court forum selection provisions are currently subject to a suit in the Court of Chancery of the State of Delaware brought by stockholders who assert that the federal district court forum selection provision is not enforceable. While the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court are “facially valid” under Delaware law, there is uncertainty as to whether other courts will enforce our federal forum selection provision, and we may incur additional costs of litigation should such enforceability be challenged.
Section 203 of the Delaware General Corporation Law
We are subject to the provisions of Section 203 of the Delaware General Corporation Law, or Section 203. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the corporation’s voting stock.
Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions: before the stockholder became interested, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
A Delaware corporation may “opt out” of these provisions with an express provision in its original certificate of incorporation or an express provision in its certificate of incorporation or bylaws resulting from a stockholders’ amendment approved by at least a majority of the outstanding voting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of us may be discouraged or prevented.
DESCRIPTION OF DEBT SECURITIES
The paragraphs below describe the general terms and provisions of the debt securities we may issue. When we offer to sell a particular series of debt securities, we will describe the specific terms of the securities in a supplement to this prospectus, including any additional covenants or changes to existing covenants relating to such series. The prospectus supplement also will indicate whether the general terms and provisions described in this prospectus apply to a particular series of debt securities. You should read the actual indenture if you do not fully understand a term or the way we use it in this prospectus.
We may offer senior or subordinated debt securities. Each series of debt securities may have different terms. The senior debt securities will be issued under one or more senior indentures, dated as of a date prior to such issuance, between us and the trustee identified in the applicable prospectus supplement, as amended or supplemented from time to time. We will refer to any such indenture throughout this prospectus as the “senior indenture.” Any subordinated debt securities will be issued under one or more separate indentures, dated as of a date prior to such issuance, between us and the trustee identified in the applicable prospectus supplement, as amended or supplemented from time to time. We will refer to any such indenture throughout this prospectus as the “subordinated indenture” and to the trustee under the senior or subordinated indenture as the “trustee.” The senior indenture and the subordinated indenture are sometimes collectively referred to in this prospectus as the “indentures.” The indentures will be subject to and governed by the Trust Indenture Act of 1939, as amended. We included copies of the forms of the indentures as exhibits to our registration statement and they are incorporated into this prospectus by reference.
If we issue debt securities at a discount from their principal amount, then, for purposes of calculating the aggregate initial offering price of the offered securities issued under this prospectus, we will include only the initial offering price of the debt securities and not the principal amount of the debt securities.
We have summarized below the material provisions of the indentures and the debt securities, or indicated which material provisions will be described in the related prospectus supplement. The prospectus supplement relating to any particular securities offered will describe the specific terms of the securities, which may be in addition to or different from the general terms summarized in this prospectus. Because the summary in this prospectus and in any prospectus supplement does not contain all of the information that you may find useful, you should read the documents relating to the securities that are described in this prospectus or in any applicable prospectus supplement. Please read “Where You Can Find More Information” to find out how you can obtain a copy of those documents. Except as otherwise indicated, the terms of the indentures are identical. As used under this caption, the term “debt securities” includes the debt securities being offered by this prospectus and all other debt securities issued by us under the indentures.
General
The indentures:
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do not limit the amount of debt securities that we may issue;
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allow us to issue debt securities in one or more series;
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do not require us to issue all of the debt securities of a series at the same time;
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allow us to reopen a series to issue additional debt securities without the consent of the holders of the debt securities of such series; and
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provide that the debt securities will be unsecured, except as may be set forth in the applicable prospectus supplement.
Unless we give you different information in the applicable prospectus supplement, the senior debt securities will be unsubordinated obligations and will rank equally with all of our other senior unsecured and unsubordinated indebtedness. Payments on the subordinated debt securities will be subordinated to the prior payment in full of all of our senior indebtedness, as described under “Description of Debt Securities — Subordination” and in the applicable prospectus supplement.
Each indenture provides that we may, but need not, designate more than one trustee under an indenture. Any trustee under an indenture may resign or be removed and a successor trustee may be appointed to act
with respect to the series of debt securities administered by the resigning or removed trustee. If two or more persons are acting as trustee with respect to different series of debt securities, each trustee shall be a trustee of a trust under the applicable indenture separate and apart from the trust administered by any other trustee. Except as otherwise indicated in this prospectus, any action described in this prospectus to be taken by each trustee may be taken by each trustee with respect to, and only with respect to, the one or more series of debt securities for which it is trustee under the applicable indenture.
The prospectus supplement for each offering will provide the following terms, where applicable:
•
the title of the debt securities and whether they are senior or subordinated;
•
the aggregate principal amount of the debt securities being offered, the aggregate principal amount of the debt securities outstanding as of the most recent practicable date and any limit on their aggregate principal amount, including the aggregate principal amount of debt securities authorized;
•
the price at which the debt securities will be issued, expressed as a percentage of the principal and, if other than the principal amount thereof, the portion of the principal amount thereof payable upon declaration of acceleration of the maturity thereof or, if applicable, the portion of the principal amount of such debt securities that is convertible into common stock or other securities of ours or the method by which any such portion shall be determined;
•
if convertible, the terms on which such debt securities are convertible, including the initial conversion price or rate and the conversion period and any applicable limitations on the ownership or transferability of common stock or other securities of ours received on conversion;
•
the date or dates, or the method for determining the date or dates, on which the principal of the debt securities will be payable;
•
the fixed or variable interest rate or rates of the debt securities, or the method by which the interest rate or rates is determined;
•
the date or dates, or the method for determining the date or dates, from which interest will accrue;
•
the dates on which interest will be payable;
•
the record dates for interest payment dates, or the method by which such dates will be determined;
•
the persons to whom interest will be payable;
•
the basis upon which interest will be calculated if other than that of a 360-day year of twelve 30- day months;
•
any make-whole amount, which is the amount in addition to principal and interest that is required to be paid to the holder of a debt security as a result of any optional redemption or accelerated payment of such debt security, or the method for determining the make-whole amount;
•
the place or places where the principal of, and any premium or make-whole amount, and interest on, the debt securities will be payable;
•
where the debt securities may be surrendered for registration of transfer or conversion or exchange;
•
where notices or demands to or upon us in respect of the debt securities and the applicable indenture may be served;
•
the times, prices and other terms and conditions upon which we may redeem the debt securities; any obligation we have to redeem, repay or purchase the debt securities pursuant to any sinking fund or analogous provision or at the option of holders of the debt securities, and the times and prices at which we must redeem, repay or purchase the debt securities as a result of such obligation;
•
the currency or currencies in which the debt securities are denominated and payable if other than United States dollars, which may be a foreign currency or units of two or more foreign currencies or a composite currency or currencies and the terms and conditions relating thereto, and the manner of determining the equivalent of such foreign currency in United States dollars;
•
whether the principal of, and any premium or make-whole amount, or interest on, the debt securities of the series are to be payable, at our election or at the election of a holder, in a currency or currencies
other than that in which the debt securities are denominated or stated to be payable, and other related terms and conditions;
•
whether the amount of payments of principal of, and any premium or make-whole amount, or interest on, the debt securities may be determined according to an index, formula or other method and how such amounts will be determined;
•
whether the debt securities will be in registered form, bearer form, or both, and (i) if in registered form, the person to whom any interest shall be payable, if other than the person in whose name the security is registered at the close of business on the regular record date for such interest, or (ii) if in bearer form, the manner in which, or the person to whom, any interest on the security shall be payable if otherwise than upon presentation and surrender upon maturity;
•
any restrictions applicable to the offer, sale or delivery of securities in bearer form and the terms upon which securities in bearer form of the series may be exchanged for securities in registered form of the series and vice versa, if permitted by applicable laws and regulations;
•
whether any debt securities of the series are to be issuable initially in temporary global form and whether any debt securities of the series are to be issuable in permanent global form with or without coupons and, if so, whether beneficial owners of interests in any such permanent global security may, or shall be required to, exchange their interests for other debt securities of the series, and the manner in which interest shall be paid;
•
the identity of the depositary for securities in registered form, if such series are to be issuable as a global security;
•
the date as of which any debt securities in bearer form or in temporary global form shall be dated if other than the original issuance date of the first security of the series to be issued;
•
the applicability, if any, of the defeasance and covenant defeasance provisions described in this prospectus or in the applicable indenture;
•
whether and under what circumstances we will pay any additional amounts on the debt securities in respect of any tax, assessment or governmental charge and, if so, whether we will have the option to redeem the debt securities in lieu of making such a payment;
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whether and under what circumstances the debt securities being offered are convertible into common stock or other securities of ours, as the case may be, including the conversion price or rate and the manner or calculation thereof;
•
the circumstances, if any, specified in the applicable prospectus supplement, under which beneficial owners of interests in the global security may obtain definitive debt securities and the manner in which payments on a permanent global debt security will be made if any debt securities are issuable in temporary or permanent global form;
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any provisions granting special rights to holders of securities upon the occurrence of such events as specified in the applicable prospectus supplement;
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if the debt securities of such series are to be issuable in definitive form only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and/or terms of such certificates, documents or conditions;
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the name of the applicable trustee and the nature of any material relationship with us or any of our affiliates, and the percentage of debt securities of the class necessary to require the trustee to take action;
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any deletions from, modifications of or additions to our events of default or covenants with regard to such debt securities and any change in the right of any trustee or any of the holders to declare the principal amount of any of such debt securities due and payable;
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applicable CUSIP numbers; and
•
any other terms of such debt securities not inconsistent with the provisions of the applicable indenture.
We may issue debt securities that provide for less than the entire principal amount thereof to be payable upon declaration of acceleration of the maturity of the debt securities. We refer to any such debt securities throughout this prospectus as “original issue discount securities.” The applicable prospectus supplement will describe the United States federal income tax consequences and other relevant considerations applicable to original issue discount securities.
We also may issue indexed debt securities. Payments of principal of, and premium and interest on, indexed debt securities are determined with reference to the rate of exchange between the currency or currency unit in which the debt security is denominated and any other currency or currency unit specified by us, to the relationship between two or more currencies or currency units or by other similar methods or formulas specified in the prospectus supplement.
Except as described under “— Merger, Consolidation or Sale of Assets” or as may be set forth in any prospectus supplement, the debt securities will not contain any provisions that (i) would limit our ability to incur indebtedness or (ii) would afford holders of debt securities protection in the event of (a) a highly leveraged or similar transaction involving us, or (b) a change of control or reorganization, restructuring, merger or similar transaction involving us that may adversely affect the holders of the debt securities. In the future, we may enter into transactions, such as the sale of all or substantially all of our assets or a merger or consolidation, that may have an adverse effect on our ability to service our indebtedness, including the debt securities, by, among other things, substantially reducing or eliminating our assets.
Our governing instruments do not define the term “substantially all” as it relates to the sale of assets. Additionally, Delaware cases interpreting the term “substantially all” rely upon the facts and circumstances of each particular case. Consequently, to determine whether a sale of “substantially all” of our assets has occurred, a holder of debt securities must review the financial and other information that we have disclosed to the public.
We will provide you with more information in the applicable prospectus supplement regarding any deletions, modifications, or additions to the events of default or covenants that are described below, including any addition of a covenant or other provision providing event risk or similar protection.
Payment
Unless we give you different information in the applicable prospectus supplement, the principal of, and any premium or make-whole amount, and interest on, any series of the debt securities will be payable at the corporate trust office of the trustee. We will provide you with the address of the trustee in the applicable prospectus supplement. We may also pay interest by mailing a check to the address of the person entitled to it as it appears in the applicable register for the debt securities or by wire transfer of funds to that person at an account maintained within the United States.
All monies that we pay to a paying agent or a trustee for the payment of the principal of, and any premium or make-whole amount, or interest on, any debt security will be repaid to us if unclaimed at the end of two years after the obligation underlying payment becomes due and payable. After funds have been returned to us, the holder of the debt security may look only to us for payment, without payment of interest for the period which we hold the funds.
Denomination, Interest, Registration and Transfer
Unless otherwise described in the applicable prospectus supplement, the debt securities of any series will be issuable in denominations of $1,000 and integral multiples of $1,000.
Subject to the limitations imposed upon debt securities that are evidenced by a computerized entry in the records of a depository company rather than by physical delivery of a note, a holder of debt securities of any series may:
•
exchange them for any authorized denomination of other debt securities of the same series and of a like aggregate principal amount and kind upon surrender of such debt securities at the corporate trust office of the applicable trustee or at the office of any transfer agent that we designate for such purpose; and
•
surrender them for registration of transfer or exchange at the corporate trust office of the applicable trustee or at the office of any transfer agent that we designate for such purpose.
Every debt security surrendered for registration of transfer or exchange must be duly endorsed or accompanied by a written instrument of transfer satisfactory to the applicable trustee or transfer agent. Payment of a service charge will not be required for any registration of transfer or exchange of any debt securities, but we or the trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. If in addition to the applicable trustee, the applicable prospectus supplement refers to any transfer agent initially designated by us for any series of debt securities, we may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that we will be required to maintain a transfer agent in each place of payment for such series. We may at any time designate additional transfer agents for any series of debt securities.
Neither we, nor any trustee, will be required to:
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issue, register the transfer of or exchange debt securities of any series during a period beginning at the opening of business 15 days before the day that the notice of redemption of any debt securities selected for redemption is mailed and ending at the close of business on the day of such mailing;
•
register the transfer of or exchange any debt security, or portion thereof, so selected for redemption, in whole or in part, except the unredeemed portion of any debt security being redeemed in part; and
•
issue, register the transfer of or exchange any debt security that has been surrendered for repayment at the option of the holder, except the portion, if any, of such debt security not to be so repaid.
Merger, Consolidation or Sale of Assets
The indentures provide that we may, without the consent of the holders of any outstanding debt securities, (i) consolidate with, (ii) sell, lease or convey all or substantially all of our assets to, or (iii) merge with or into, any other entity provided that:
•
either we are the continuing entity, or the successor entity, if other than us, assumes the obligations (a) to pay the principal of, and any premium or make-whole amount, and interest on, all of the debt securities and (b) to duly perform and observe all of the covenants and conditions contained in each indenture;
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after giving effect to the transaction, there is no event of default under the indentures and no event which, after notice or the lapse of time, or both, would become such an event of default, occurs and continues; and
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an officers’ certificate and legal opinion covering such conditions are delivered to each applicable trustee.
Covenants
Existence. Except as described under “— Merger, Consolidation or Sale of Assets,” the indentures require us to do or cause to be done all things necessary to preserve and keep in full force and effect our existence, rights and franchises. However, the indentures do not require us to preserve any right or franchise if we determine that any right or franchise is no longer desirable in the conduct of our business.
Payment of taxes and other claims. The indentures require us to pay, discharge or cause to be paid or discharged, before they become delinquent (i) all taxes, assessments and governmental charges levied or imposed on us, and (ii) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon our property. However, we will not be required to pay, discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.
Provision of financial information. The indentures require us to (i) within 15 days of each of the respective dates by which we are required to file our annual reports, quarterly reports and other documents
with the SEC, file with the trustee copies of the annual report, quarterly report and other documents that we file with the SEC under Section 13 or 15(d) of the Exchange Act, (ii) file with the trustee and the SEC any additional information, documents and reports regarding compliance by us with the conditions and covenants of the indentures, as required, (iii) within 30 days after the filing with the trustee, mail to all holders of debt securities, as their names and addresses appear in the applicable register for such debt securities, without cost to such holders, summaries of any documents and reports required to be filed by us pursuant to (i) and (ii) above, and (iv) supply, promptly upon written request and payment of the reasonable cost of duplication and delivery, copies of such documents to any prospective holder.
Additional covenants. The applicable prospectus supplement will set forth any of our additional covenants relating to any series of debt securities.
Events of Default, Notice and Waiver
Unless the applicable prospectus supplement states otherwise, when we refer to “events of default” as defined in the indentures with respect to any series of debt securities, we mean:
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default in the payment of any installment of interest on any debt security of such series continuing for 30 days;
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default in the payment of principal of, or any premium or make-whole amount on, any debt security of such series for five business days at its stated maturity;
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default in making any sinking fund payment as required for any debt security of such series for five business days;
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default in the performance or breach of any covenant or warranty in the debt securities or in the indenture by us continuing for 60 days after written notice as provided in the applicable indenture, but not of a covenant added to the indenture solely for the benefit of a series of debt securities issued thereunder other than such series;
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a default under any bond, debenture, note, mortgage, indenture or instrument:
(i)
having an aggregate principal amount of at least $30,000,000; or
(ii)
under which there may be issued, secured or evidenced any existing or later created indebtedness for money borrowed by us, if we are directly responsible or liable as obligor or guarantor,
if the default results in the indebtedness becoming or being declared due and payable prior to the date it otherwise would have, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within 30 days after notice to the issuing company specifying such default. Such notice shall be given to us by the trustee, or to us and the trustee by the holders of at least 10% in principal amount of the outstanding debt securities of that series. The written notice shall specify such default and require us to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and shall state that such notice is a “Notice of Default” under such indenture;
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bankruptcy, insolvency or reorganization, or court appointment of a receiver, liquidator or trustee of us; and
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any other event of default provided with respect to a particular series of debt securities.
If an event of default occurs and is continuing with respect to debt securities of any series outstanding, then the applicable trustee or the holders of 25% or more in principal amount of the debt securities of that series will have the right to declare the principal amount of all the debt securities of that series to be due and payable. If the debt securities of that series are original issue discount securities or indexed securities, then the applicable trustee or the holders of 25% or more in principal amount of the debt securities of that series will have the right to declare the portion of the principal amount as may be specified in the terms thereof to be due and payable. However, at any time after such a declaration of acceleration has been made, but before a judgment or decree for payment of the money due has been obtained by the applicable trustee, the
holders of at least a majority in principal amount of outstanding debt securities of such series or of all debt securities then outstanding under the applicable indenture may rescind and annul such declaration and its consequences if:
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we have deposited with the applicable trustee all required payments of the principal, any premium or make-whole amount, interest and, to the extent permitted by law, interest on overdue installment of interest, plus applicable fees, expenses, disbursements and advances of the applicable trustee; and
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all events of default, other than the non-payment of accelerated principal, or a specified portion thereof, and any premium or make-whole amount, have been cured or waived.
The indentures also provide that the holders of at least a majority in principal amount of the outstanding debt securities of any series or of all debt securities then outstanding under the applicable indenture may, on behalf of all holders, waive any past default with respect to such series and its consequences, except a default:
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in the payment of the principal, any premium or make-whole amount, or interest;
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in respect of a covenant or provision contained in the applicable indenture that cannot be modified or amended without the consent of the holders of the outstanding debt security that is affected by the default; or
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in respect of a covenant or provision for the benefit or protection of the trustee, without its express written consent.
The indentures require each trustee to give notice to the holders of debt securities within 90 days of a default unless such default has been cured or waived. However, the trustee may withhold notice if specified persons of such trustee consider such withholding to be in the interest of the holders of debt securities. The trustee may not withhold notice of a default in the payment of principal, any premium or interest on any debt security of such series or in the payment of any sinking fund installment in respect of any debt security of such series.
The indentures provide that holders of debt securities of any series may not institute any proceedings, judicial or otherwise, with respect to such indenture or for any remedy under the indenture, unless the trustee fails to act for a period of 60 days after the trustee has received a written request to institute proceedings in respect of an event of default from the holders of 25% or more in principal amount of the outstanding debt securities of such series, as well as an offer of indemnity reasonably satisfactory to the trustee. However, this provision will not prevent any holder of debt securities from instituting suit for the enforcement of payment of the principal of, and any premium or make-whole amount, and interest on, such debt securities at the respective due dates thereof.
The indentures provide that, subject to provisions in each indenture relating to its duties in the case of a default, a trustee has no obligation to exercise any of its rights or powers at the request or direction of any holders of any series of debt securities then outstanding under the indenture, unless the holders have offered to the trustee reasonable security or indemnity. The holders of at least a majority in principal amount of the outstanding debt securities of any series or of all debt securities then outstanding under an indenture shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the applicable trustee, or of exercising any trust or power conferred upon such trustee. However, a trustee may refuse to follow any direction which:
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is in conflict with any law or the applicable indenture;
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may involve the trustee in personal liability; or
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may be unduly prejudicial to the holders of debt securities of the series not joining the proceeding.
Within 120 days after the close of each fiscal year, we will be required to deliver to each trustee a certificate, signed by one of our several specified officers, stating whether or not that officer has knowledge of any default under the applicable indenture. If the officer has knowledge of any default, the notice must specify the nature and status of the default.
Modification of the Indentures
The indentures provide that modifications and amendments may be made only with the consent of the affected holders of a majority in principal amount of all outstanding debt securities issued under that indenture. However, no such modification or amendment may, without the consent of the holders of the debt securities affected by the modification or amendment:
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change the stated maturity of the principal of, or any premium or make-whole amount on, or any installment of principal of or interest on, any such debt security;
•
reduce the principal amount of, the rate or amount of interest on, or any premium or make-whole amount payable on redemption of, any such debt security;
•
reduce the amount of principal of an original issue discount security that would be due and payable upon declaration of acceleration of the maturity thereof or would be provable in bankruptcy, or adversely affect any right of repayment of the holder of any such debt security;
•
change the place of payment or the coin or currency for payment of principal of, or any premium or make-whole amount, or interest on, any such debt security;
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impair the right to institute suit for the enforcement of any payment on or with respect to any such debt security;
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reduce the percentage in principal amount of any outstanding debt securities necessary to modify or amend the applicable indenture with respect to such debt securities, to waive compliance with particular provisions thereof or defaults and consequences thereunder or to reduce the quorum or voting requirements set forth in the applicable indenture; and
•
modify any of the foregoing provisions or any of the provisions relating to the waiver of particular past defaults or covenants, except to increase the required percentage to effect such action or to provide that some of the other provisions may not be modified or waived without the consent of the holder of such debt security.
The holders of a majority in aggregate principal amount of the outstanding debt securities of each series may, on behalf of all holders of debt securities of that series, waive, insofar as that series is concerned, our compliance with material restrictive covenants of the applicable indenture.
We and our respective trustee may make modifications and amendments of an indenture without the consent of any holder of debt securities for any of the following purposes:
•
to evidence the succession of another person to us as obligor under such indenture;
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to add to our covenants for the benefit of the holders of all or any series of debt securities or to surrender any right or power conferred upon us in such indenture;
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to add events of default for the benefit of the holders of all or any series of debt securities;
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to add or change any provisions of an indenture (i) to change or eliminate restrictions on the payment of principal of, or premium or make-whole amount, or interest on, debt securities in bearer form, or (ii) to permit or facilitate the issuance of debt securities in uncertificated form, provided that such action shall not adversely affect the interests of the holders of the debt securities of any series in any material respect;
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to change or eliminate any provisions of an indenture, provided that any such change or elimination shall become effective only when there are no debt securities outstanding of any series created prior thereto which are entitled to the benefit of such provision;
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to secure the debt securities;
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to establish the form or terms of debt securities of any series;
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to provide for the acceptance of appointment by a successor trustee or facilitate the administration of the trusts under an indenture by more than one trustee;
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to cure any ambiguity, defect or inconsistency in an indenture, provided that such action shall not adversely affect the interests of holders of debt securities of any series issued under such indenture; and
•
to supplement any of the provisions of an indenture to the extent necessary to permit or facilitate defeasance and discharge of any series of such debt securities, provided that such action shall not adversely affect the interests of the holders of the outstanding debt securities of any series.
Voting
The indentures provide that in determining whether the holders of the requisite principal amount of outstanding debt securities of a series have given any request, demand, authorization, direction, notice, consent or waiver under the indentures or whether a quorum is present at a meeting of holders of debt securities:
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the principal amount of an original issue discount security that shall be deemed to be outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon declaration of acceleration of the maturity thereof;
•
the principal amount of any debt security denominated in a foreign currency that shall be deemed outstanding shall be the United States dollar equivalent, determined on the issue date for such debt security, of the principal amount or, in the case of an original issue discount security, the United States dollar equivalent on the issue date of such debt security of the amount determined as provided in the preceding bullet point;
•
the principal amount of an indexed security that shall be deemed outstanding shall be the principal face amount of such indexed security at original issuance, unless otherwise provided for such indexed security under such indenture; and
•
debt securities owned by us or any other obligor upon the debt securities or by any affiliate of ours or of such other obligor shall be disregarded.
The indentures contain provisions for convening meetings of the holders of debt securities of a series. A meeting will be permitted to be called at any time by the applicable trustee, and also, upon request, by us or the holders of at least 25% in principal amount of the outstanding debt securities of such series, in any such case upon notice given as provided in such indenture. Except for any consent that must be given by the holder of each debt security affected by the modifications and amendments of an indenture described above, any resolution presented at a meeting or adjourned meeting duly reconvened at which a quorum is present may be adopted by the affirmative vote of the holders of a majority of the aggregate principal amount of the outstanding debt securities of that series represented at such meeting.
Notwithstanding the preceding paragraph, except as referred to above, any resolution relating to a request, demand, authorization, direction, notice, consent, waiver or other action that may be made, given or taken by the holders of a specified percentage, which is less than a majority of the aggregate principal amount of the outstanding debt securities of a series, may be adopted at a meeting or adjourned meeting duly reconvened at which a quorum is present by the affirmative vote of such specified percentage.
Any resolution passed or decision taken at any properly held meeting of holders of debt securities of any series will be binding on all holders of such series. The quorum at any meeting called to adopt a resolution, and at any reconvened meeting, will be persons holding or representing a majority in principal amount of the outstanding debt securities of a series. However, if any action is to be taken relating to a consent or waiver which may be given by the holders of at least a specified percentage in principal amount of the outstanding debt securities of a series, the persons holding such percentage will constitute a quorum.
Notwithstanding the foregoing provisions, the indentures provide that if any action is to be taken at a meeting with respect to any request, demand, authorization, direction, notice, consent, waiver or other action that such indenture expressly provides may be made, given or taken by the holders of a specified percentage in principal amount of all outstanding debt securities affected by such action, or of the holders of such series and one or more additional series:
•
there shall be no minimum quorum requirement for such meeting; and
•
the principal amount of the outstanding debt securities of such series that vote in favor of such request, demand, authorization, direction, notice, consent, waiver or other action shall be taken account in determining whether such request, demand, authorization, direction, notice, consent, waiver or other action has been made, given or taken under such indenture.
Subordination
Unless otherwise provided in the applicable prospectus supplement, subordinated debt securities will be subject to the following subordination provisions.
Upon any distribution to our creditors in a liquidation, dissolution or reorganization, the payment of the principal of and interest on any subordinated debt securities will be subordinated to the extent provided in the applicable indenture in right of payment to the prior payment in full of all senior debt. However, our obligation to make payments of the principal of and interest on such subordinated debt securities otherwise will not be affected. No payment of principal or interest will be permitted to be made on subordinated debt securities at any time if a default on senior debt exists that permits the holders of such senior debt to accelerate its maturity and the default is the subject of judicial proceedings or we receive notice of the default. After all senior debt is paid in full and until the subordinated debt securities are paid in full, holders of subordinated debt securities will be subrogated to the rights of holders of senior debt to the extent that distributions otherwise payable to holders of subordinated debt securities have been applied to the payment of senior debt. The subordinated indenture will not restrict the amount of senior debt or other indebtedness of ours. As a result of these subordination provisions, in the event of a distribution of assets upon insolvency, holders of subordinated debt securities may recover less, ratably, than our general creditors.
The term “senior debt” will be defined in the applicable indenture as the principal of and interest on, or substantially similar payments to be made by us in respect of, other outstanding indebtedness, whether outstanding at the date of execution of the applicable indenture or subsequently incurred, created or assumed. The prospectus supplement may include a description of additional terms implementing the subordination feature.
No restrictions will be included in any indenture relating to subordinated debt securities upon the creation of additional senior debt.
If this prospectus is being delivered in connection with the offering of a series of subordinated debt securities, the accompanying prospectus supplement or the information incorporated in this prospectus by reference will set forth the approximate amount of senior debt outstanding as of the end of our most recent fiscal quarter.
Discharge, Defeasance and Covenant Defeasance
Unless otherwise indicated in the applicable prospectus supplement, the indentures allow us to discharge our obligations to holders of any series of debt securities issued under any indenture when:
•
either (i) all securities of such series have already been delivered to the applicable trustee for cancellation; or (ii) all securities of such series have not already been delivered to the applicable trustee for cancellation but (a) have become due and payable, (b) will become due and payable within one year, or (c) if redeemable at our option, are to be redeemed within one year, and we have irrevocably deposited with the applicable trustee, in trust, funds in such currency or currencies, currency unit or units or composite currency or currencies in which such debt securities are payable, an amount sufficient to pay the entire indebtedness on such debt securities in respect of principal and any premium or make-whole amount, and interest to the date of such deposit if such debt securities have become due and payable or, if they have not, to the stated maturity or redemption date;
•
we have paid or caused to be paid all other sums payable; and
•
an officers’ certificate and an opinion of counsel stating the conditions to discharging the debt securities have been satisfied has been delivered to the trustee.
Unless otherwise indicated in the applicable prospectus supplement, the indentures provide that, upon our irrevocable deposit with the applicable trustee, in trust, of an amount, in such currency or currencies,
currency unit or units or composite currency or currencies in which such debt securities are payable at stated maturity, or government obligations, or both, applicable to such debt securities, which through the scheduled payment of principal and interest in accordance with their terms will provide money in an amount sufficient to pay the principal of, and any premium or make-whole amount, and interest on, such debt securities, and any mandatory sinking fund or analogous payments thereon, on the scheduled due dates therefor, the issuing company may elect either:
•
to defease and be discharged from any and all obligations with respect to such debt securities; or
•
to be released from its obligations with respect to such debt securities under the applicable indenture or, if provided in the applicable prospectus supplement, its obligations with respect to any other covenant, and any omission to comply with such obligations shall not constitute an event of default with respect to such debt securities.
Notwithstanding the above, we may not elect to defease and be discharged from the obligation to pay any additional amounts upon the occurrence of particular events of tax, assessment or governmental charge with respect to payments on such debt securities and the obligations to register the transfer or exchange of such debt securities, to replace temporary or mutilated, destroyed, lost or stolen debt securities, to maintain an office or agency in respect of such debt securities, or to hold monies for payment in trust.
The indentures only permit us to establish the trust described in the paragraph above if, among other things, we have delivered to the applicable trustee an opinion of counsel to the effect that the holders of such debt securities will not recognize income, gain or loss for United States federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance had not occurred. Such opinion of counsel, in the case of defeasance, will be required to refer to and be based upon a ruling received from or published by the Internal Revenue Service or a change in applicable United States federal income tax law occurring after the date of the indenture. In the event of such defeasance, the holders of such debt securities would be able to look only to such trust fund for payment of principal, any premium or make-whole amount, and interest.
When we use the term “government obligations,” we mean securities that are:
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direct obligations of the United States or the government that issued the foreign currency in which the debt securities of a particular series are payable, for the payment of which its full faith and credit is pledged; or
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obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States or other government that issued the foreign currency in which the debt securities of such series are payable, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States or such other government, which are not callable or redeemable at the option of the issuer thereof and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such government obligation or a specific payment of interest on or principal of any such government obligation held by such custodian for the account of the holder of a depository receipt. However, except as required by law, such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the government obligation or the specific payment of interest on or principal of the government obligation evidenced by such depository receipt.
Unless otherwise provided in the applicable prospectus supplement, if after we have deposited funds and/or government obligations to effect defeasance or covenant defeasance with respect to debt securities of any series, (i) the holder of a debt security of such series is entitled to, and does, elect under the terms of the applicable indenture or the terms of such debt security to receive payment in a currency, currency unit or composite currency other than that in which such deposit has been made in respect of such debt security, or (ii) a conversion event occurs in respect of the currency, currency unit or composite currency in which such deposit has been made, the indebtedness represented by such debt security will be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of, and premium or make-whole amount, and interest on, such debt security as they become due out of the proceeds yielded by converting the amount so deposited in respect of such debt security into the currency, currency unit or
composite currency in which such debt security becomes payable as a result of such election or such cessation of usage based on the applicable market exchange rate.
When we use the term “conversion event,” we mean the cessation of use of:
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a currency, currency unit or composite currency both by the government of the country that issued such currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community;
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the European Currency Unit both within the European Monetary System and for the settlement of transactions by public institutions of or within the European Communities; or
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any currency unit or composite currency other than the European Currency Unit for the purposes for which it was established.
Unless otherwise provided in the applicable prospectus supplement, all payments of principal of, and any premium or make-whole amount, and interest on, any debt security that is payable in a foreign currency that ceases to be used by its government of issuance shall be made in United States dollars.
In the event that (i) we effect covenant defeasance with respect to any debt securities and (ii) those debt securities are declared due and payable because of the occurrence of any event of default, the amount in the currency, currency unit or composite currency in which such debt securities are payable, and government obligations on deposit with the applicable trustee, will be sufficient to pay amounts due on such debt securities at the time of their stated maturity but may not be sufficient to pay amounts due on such debt securities at the time of the acceleration resulting from such event of default. However, the issuing company would remain liable to make payments of any amounts due at the time of acceleration.
The applicable prospectus supplement may further describe the provisions, if any, permitting such defeasance or covenant defeasance, including any modifications to the provisions described above, with respect to the debt securities of or within a particular series.
Conversion Rights
The terms and conditions, if any, upon which the debt securities are convertible into common stock or other securities of ours will be set forth in the applicable prospectus supplement. The terms will include whether the debt securities are convertible into shares of common stock or other securities of ours, the conversion price, or manner of calculation thereof, the conversion period, provisions as to whether conversion will be at the issuing company’s option or the option of the holders, the events requiring an adjustment of the conversion price and provisions affecting conversion in the event of the redemption of the debt securities and any restrictions on conversion.
Global Securities
The debt securities of a series may be issued in whole or in part in the form of one or more global securities that will be deposited with, or on behalf of, a depository identified in the applicable prospectus supplement relating to such series. Global securities, if any, issued in the United States are expected to be deposited with The Depository Trust Company, or DTC, as depository. We may issue global securities in either registered or bearer form and in either temporary or permanent form. We will describe the specific terms of the depository arrangement with respect to a series of debt securities in the applicable prospectus supplement relating to such series. We expect that unless the applicable prospectus supplement provides otherwise, the following provisions will apply to depository arrangements.
Once a global security is issued, the depository for such global security or its nominee will credit on its book-entry registration and transfer system the respective principal amounts of the individual debt securities represented by such global security to the accounts of participants that have accounts with such depository. Such accounts shall be designated by the underwriters, dealers or agents with respect to such debt securities or by us if we offer such debt securities directly. Ownership of beneficial interests in such global security will be limited to participants with the depository or persons that may hold interests through those participants.
We expect that, under procedures established by DTC, ownership of beneficial interests in any global security for which DTC is the depository will be shown on, and the transfer of that ownership will be effected
only through, records maintained by DTC or its nominee, with respect to beneficial interests of participants with the depository, and records of participants, with respect to beneficial interests of persons who hold through participants with the depository. Neither we nor the trustee will have any responsibility or liability for any aspect of the records of DTC or for maintaining, supervising or reviewing any records of DTC or any of its participants relating to beneficial ownership interests in the debt securities. The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and laws may impair the ability to own, pledge or transfer beneficial interest in a global security.
So long as the depository for a global security or its nominee is the registered owner of such global security, such depository or such nominee, as the case may be, will be considered the sole owner or holder of the debt securities represented by the global security for all purposes under the applicable indenture. Except as described below or in the applicable prospectus supplement, owners of beneficial interest in a global security will not be entitled to have any of the individual debt securities represented by such global security registered in their names, will not receive or be entitled to receive physical delivery of any such debt securities in definitive form and will not be considered the owners or holders thereof under the applicable indenture. Beneficial owners of debt securities evidenced by a global security will not be considered the owners or holders thereof under the applicable indenture for any purpose, including with respect to the giving of any direction, instructions or approvals to the trustee under the indenture. Accordingly, each person owning a beneficial interest in a global security with respect to which DTC is the depository must rely on the procedures of DTC and, if such person is not a participant with the depository, on the procedures of the participant through which such person owns its interests, to exercise any rights of a holder under the applicable indenture. We understand that, under existing industry practice, if DTC requests any action of holders or if an owner of a beneficial interest in a global security desires to give or take any action which a holder is entitled to give or take under the applicable indenture, DTC would authorize the participants holding the relevant beneficial interest to give or take such action, and such participants would authorize beneficial owners through such participants to give or take such actions or would otherwise act upon the instructions of beneficial owners holding through them.
Payments of principal of, and any premium or make-whole amount, and interest on, individual debt securities represented by a global security registered in the name of a depository or its nominee will be made to or at the direction of the depository or its nominee, as the case may be, as the registered owner of the global security under the applicable indenture. Under the terms of the applicable indenture, we and the trustee may treat the persons in whose name debt securities, including a global security, are registered as the owners thereof for the purpose of receiving such payments. Consequently, neither we nor the trustee have or will have any responsibility or liability for the payment of such amounts to beneficial owners of debt securities including principal, any premium or make-whole amount, or interest. We believe, however, that it is currently the policy of DTC to immediately credit the accounts of relevant participants with such payments, in amounts proportionate to their respective holdings of beneficial interests in the relevant global security as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in such global security held through such participants will be governed by standing instructions and customary practices, as is the case with securities held for the account of customers in bearer form or registered in street name, and will be the responsibility of such participants. Redemption notices with respect to any debt securities represented by a global security will be sent to the depository or its nominee. If less than all of the debt securities of any series are to be redeemed, we expect the depository to determine the amount of the interest of each participant in such debt securities to be redeemed to be determined by lot. Neither we, the trustee, any paying agent nor the security registrar for such debt securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the global security for such debt securities or for maintaining any records with respect thereto.
Neither we nor the trustee will be liable for any delay by the holders of a global security or the depository in identifying the beneficial owners of debt securities, and we and the trustee may conclusively rely on, and will be protected in relying on, instructions from the holder of a global security or the depository for all purposes. The rules applicable to DTC and its participants are on file with the SEC.
If a depository for any debt securities is at any time unwilling, unable or ineligible to continue as depository and we do not appoint a successor depository within 90 days, we will issue individual debt
securities in exchange for the global security representing such debt securities. In addition, we may at any time and at our sole discretion, subject to any limitations described in the applicable prospectus supplement relating to such debt securities, determine not to have any of such debt securities represented by one or more global securities and in such event will issue individual debt securities in exchange for the global security or securities representing such debt securities. Individual debt securities so issued will be issued in denominations of $1,000 and integral multiples of $1,000.
The debt securities of a series may also be issued in whole or in part in the form of one or more bearer global securities that will be deposited with a depository, or with a nominee for such depository, identified in the applicable prospectus supplement. Any such bearer global securities may be issued in temporary or permanent form. The specific terms and procedures, including the specific terms of the depositary arrangement, with respect to any portion of a series of debt securities to be represented by one or more bearer global securities will be described in the applicable prospectus supplement.
No Recourse
There is no recourse under any obligation, covenant or agreement in the applicable indenture or with respect to any security against any of our or our successor’s past, present or future shareholders, employees, officers or directors.
DESCRIPTION OF WARRANTS
The following description, together with the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions of the warrants that we may offer under this prospectus and the related warrant agreements and warrant certificates. While the terms summarized below will apply generally to any warrants that we may offer, we will describe the particular terms of any series of warrants in more detail in the applicable prospectus supplement. If we indicate in the prospectus supplement, the terms of any warrants offered under that prospectus supplement may differ from the terms described below. Specific warrant agreements will contain additional important terms and provisions and will be incorporated by reference as an exhibit to the registration statement, which includes this prospectus.
General
We may issue warrants for the purchase of common stock, preferred stock and/or debt securities in one or more series. We may issue warrants independently or together with common stock, preferred stock and/or debt securities, and the warrants may be attached to or separate from these securities.
We will evidence each series of warrants by warrant certificates that we will issue under a separate warrant agreement. We will enter into the warrant agreement with a warrant agent. We will indicate the name and address of the warrant agent in the applicable prospectus supplement relating to a particular series of warrants.
We will describe in the applicable prospectus supplement the terms of the series of warrants, including:
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the offering price and aggregate number of warrants offered;
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the currency for which the warrants may be purchased;
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if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;
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if applicable, the date on and after which the warrants and the related securities will be separately transferable;
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in the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant and the price at, and currency in which, this principal amount of debt securities may be purchased upon such exercise;
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in the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise;
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the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants;
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the terms of any rights to redeem or call the warrants;
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any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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the periods during which, and places at which, the warrants are exercisable;
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the manner of exercise;
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the dates on which the right to exercise the warrants will commence and expire;
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the manner in which the warrant agreement and warrants may be modified;
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federal income tax consequences of holding or exercising the warrants;
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the terms of the securities issuable upon exercise of the warrants; and
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any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
DESCRIPTION OF UNITS
We may issue units comprised of shares of common stock, shares of preferred stock, debt securities and warrants in any combination. We may issue units in such amounts and in as many distinct series as we wish. This section outlines certain provisions of the units that we may issue. If we issue units, they will be issued under one or more unit agreements to be entered into between us and a bank or other financial institution, as unit agent. The information described in this section may not be complete in all respects and is qualified entirely by reference to the unit agreement with respect to the units of any particular series. The specific terms of any series of units offered will be described in the applicable prospectus supplement. If so described in a particular supplement, the specific terms of any series of units may differ from the general description of terms presented below. We urge you to read any prospectus supplement related to any series of units we may offer, as well as the complete unit agreement and unit certificate that contain the terms of the units. If we issue units, forms of unit agreements and unit certificates relating to such units will be incorporated by reference as exhibits to the registration statement, which includes this prospectus.
Each unit that we may issue will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date. The applicable prospectus supplement may describe:
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the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
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any provisions of the governing unit agreement;
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the price or prices at which such units will be issued;
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the applicable United States federal income tax considerations relating to the units;
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any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
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any other terms of the units and of the securities comprising the units.
The provisions described in this section, as well as those described under “Description of Capital Stock,” “Description of Debt Securities” and “Description of Warrants” will apply to the securities included in each unit, to the extent relevant and as may be updated in any prospectus supplements.
Issuance in Series
We may issue units in such amounts and in as many distinct series as we wish. This section summarizes terms of the units that apply generally to all series. Most of the financial and other specific terms of your series will be described in the applicable prospectus supplement.
Unit Agreements
We will issue the units under one or more unit agreements to be entered into between us and a bank or other financial institution, as unit agent. We may add, replace or terminate unit agents from time to time. We will identify the unit agreement under which each series of units will be issued and the unit agent under that agreement in the applicable prospectus supplement.
The following provisions will generally apply to all unit agreements unless otherwise stated in the applicable prospectus supplement:
Modification without Consent
We and the applicable unit agent may amend any unit or unit agreement without the consent of any holder:
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to cure any ambiguity, including modifying any provisions of the governing unit agreement that differ from those described below;
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to correct or supplement any defective or inconsistent provision; or
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to make any other change that we believe is necessary or desirable and will not adversely affect the interests of the affected holders in any material respect.
We do not need any approval to make changes that affect only units to be issued after the changes take effect. We may also make changes that do not adversely affect a particular unit in any material respect, even if they adversely affect other units in a material respect. In those cases, we do not need to obtain the approval of the holder of the unaffected unit; we need only obtain any required approvals from the holders of the affected units.
Modification with Consent
We may not amend any particular unit or a unit agreement with respect to any particular unit unless we obtain the consent of the holder of that unit, if the amendment would:
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impair any right of the holder to exercise or enforce any right under a security included in the unit if the terms of that security require the consent of the holder to any changes that would impair the exercise or enforcement of that right; or
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reduce the percentage of outstanding units or any series or class the consent of whose holders is required to amend that series or class, or the applicable unit agreement with respect to that series or class, as described below.
Any other change to a particular unit agreement and the units issued under that agreement would require the following approval:
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If the change affects only the units of a particular series issued under that agreement, the change must be approved by the holders of a majority of the outstanding units of that series; or
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If the change affects the units of more than one series issued under that agreement, it must be approved by the holders of a majority of all outstanding units of all series affected by the change, with the units of all the affected series voting together as one class for this purpose.
These provisions regarding changes with majority approval also apply to changes affecting any securities issued under a unit agreement, as the governing document.
In each case, the required approval must be given by written consent.
Unit Agreements Will Not Be Qualified under Trust Indenture Act
No unit agreement will be qualified as an indenture, and no unit agent will be required to qualify as a trustee, under the Trust Indenture Act. Therefore, holders of units issued under unit agreements will not have the protections of the Trust Indenture Act with respect to their units.
Mergers and Similar Transactions Permitted; No Restrictive Covenants or Events of Default
The unit agreements will not restrict our ability to merge or consolidate with, or sell our assets to, another corporation or other entity or to engage in any other transactions. If at any time we merge or consolidate with, or sell our assets substantially as an entirety to, another corporation or other entity, the successor entity will succeed to and assume our obligations under the unit agreements. We will then be relieved of any further obligation under these agreements.
The unit agreements will not include any restrictions on our ability to put liens on our assets, nor will they restrict our ability to sell our assets. The unit agreements also will not provide for any events of default or remedies upon the occurrence of any events of default.
Governing Law
The unit agreements and the units will be governed by Delaware law.
Form, Exchange and Transfer
Unless the accompanying prospectus supplement states otherwise, we will issue each unit in global — i.e., book-entry — form only. Units in book-entry form will be represented by a global security registered in the name of a depositary, which will be the holder of all the units represented by the global security. Those who own beneficial interests in a unit will do so through participants in the depositary’s system, and the rights of these indirect owners will be governed solely by the applicable procedures of the depositary and its participants. We will describe book-entry securities, and other terms regarding the issuance and registration of the units in the applicable prospectus supplement.
Unless the accompanying prospectus supplement states otherwise, each unit and all securities comprising the unit will be issued in the same form.
If we issue any units in registered, non-global form, the following will apply to them.
The units will be issued in the denominations stated in the applicable prospectus supplement. Holders may exchange their units for units of smaller denominations or combined into fewer units of larger denominations, as long as the total amount is not changed.
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Holders may exchange or transfer their units at the office of the unit agent. Holders may also replace lost, stolen, destroyed or mutilated units at that office. We may appoint another entity to perform these functions or perform them ourselves.
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Holders will not be required to pay a service charge to transfer or exchange their units, but they may be required to pay for any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange, and any replacement, will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership. The transfer agent may also require an indemnity before replacing any units.
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If we have the right to redeem, accelerate or settle any units before their maturity, and we exercise our right as to less than all those units or other securities, we may block the exchange or transfer of those units during the period beginning 15 days before the day we mail the notice of exercise and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers of or exchange any unit selected for early settlement, except that we will continue to permit transfers and exchanges of the unsettled portion of any unit being partially settled. We may also block the transfer or exchange of any unit in this manner if the unit includes securities that are or may be selected for early settlement.
Only the depositary will be entitled to transfer or exchange a unit in global form, since it will be the sole holder of the unit.
Payments and Notices
In making payments and giving notices with respect to our units, we will follow the procedures as described in the applicable prospectus supplement.
PLAN OF DISTRIBUTION
We may sell securities:
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through underwriters;
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through dealers;
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through agents;
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directly to purchasers; or
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through a combination of any of these methods or any other method permitted by law.
In addition, we may issue the securities as a dividend or distribution or in a subscription rights offering to our existing security holders.
We may directly solicit offers to purchase securities, or agents may be designated to solicit such offers. In the prospectus supplement relating to such offering, we will name any agent that could be viewed as an underwriter under the Securities Act and describe any commissions that we must pay to any such agent. Any such agent will be acting on a best efforts basis for the period of its appointment or, if indicated in the applicable prospectus supplement, on a firm commitment basis. This prospectus may be used in connection with any offering of our securities through any of these methods or other methods described in the applicable prospectus supplement.
The distribution of the securities may be effected from time to time in one or more transactions:
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at a fixed price, or prices, which may be changed from time to time;
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at market prices prevailing at the time of sale;
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at prices related to such prevailing market prices; or
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at negotiated prices.
Each prospectus supplement will describe the method of distribution of the securities and any applicable restrictions.
The prospectus supplement with respect to the securities of a particular series will describe the terms of the offering of the securities, including the following:
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the name of the agent or any underwriters;
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the public offering or purchase price;
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any discounts and commissions to be allowed or paid to the agent or underwriters;
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all other items constituting underwriting compensation;
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any discounts and commissions to be allowed or paid to dealers; and
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any exchanges on which the securities will be listed.
If any underwriters or agents are used in the sale of the securities in respect of which this prospectus is delivered, we will enter into an underwriting agreement, sales agreement or other agreement with them at the time of sale to them, and we will set forth in the prospectus supplement relating to such offering the names of the underwriters or agents and the terms of the related agreement with them.
In connection with the offering of securities, we may grant to the underwriters an option to purchase additional securities with an additional underwriting commission, as may be set forth in the accompanying prospectus supplement. If we grant any such option, the terms of such option will be set forth in the prospectus supplement for such securities.
If a dealer is used in the sale of the securities in respect of which the prospectus is delivered, we will sell such securities to the dealer, as principal. The dealer, who may be deemed to be an “underwriter” as that term
is defined in the Securities Act, may then resell such securities to the public at varying prices to be determined by such dealer at the time of resale.
If we offer securities in a subscription rights offering to our existing security holders, we may enter into a standby underwriting agreement with dealers, acting as standby underwriters. We may pay the standby underwriters a commitment fee for the securities they commit to purchase on a standby basis. If we do not enter into a standby underwriting arrangement, we may retain a dealer-manager to manage a subscription rights offering for us.
Agents, underwriters, dealers and other persons may be entitled under agreements which they may enter into with us to indemnification by us against certain civil liabilities, including liabilities under the Securities Act, and may be customers of, engage in transactions with or perform services for us in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit offers by certain institutions to purchase securities from us pursuant to delayed delivery contracts providing for payment and delivery on the date stated in the prospectus supplement. Each contract will be for an amount not less than, and the aggregate amount of securities sold pursuant to such contracts shall not be less nor more than, the respective amounts stated in the prospectus supplement. Institutions with whom the contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions, but shall in all cases be subject to our approval. Delayed delivery contracts will not be subject to any conditions except that:
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the purchase by an institution of the securities covered under that contract shall not at the time of delivery be prohibited under the laws of the jurisdiction to which that institution is subject; and
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if the securities are also being sold to underwriters acting as principals for their own account, the underwriters shall have purchased such securities not sold for delayed delivery. The underwriters and other persons acting as our agents will not have any responsibility in respect of the validity or performance of delayed delivery contracts.
Offered securities may also be offered and sold, if so indicated in the prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as principals for their own accounts or as agents for us. Any remarketing firm will be identified and the terms of its agreement, if any, with us and its compensation will be described in the applicable prospectus supplement. Remarketing firms may be deemed to be underwriters in connection with their remarketing of offered securities.
Certain agents, underwriters and dealers, and their associates and affiliates, may be customers of, have borrowing relationships with, engage in other transactions with, or perform services, including investment banking services, for us or one or more of our respective affiliates in the ordinary course of business.
In order to facilitate the offering of the securities, any underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the securities or any other securities the prices of which may be used to determine payments on such securities. Specifically, any underwriters may overallot in connection with the offering, creating a short position for their own accounts. In addition, to cover overallotments or to stabilize the price of the securities or of any such other securities, the underwriters may bid for, and purchase, the securities or any such other securities in the open market. Finally, in any offering of the securities through a syndicate of underwriters, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the securities in the offering if the syndicate repurchases previously distributed securities in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the securities above independent market levels. Any such underwriters are not required to engage in these activities and may end any of these activities at any time.
We may engage in at the market offerings into an existing trading market in accordance with Rule 415 (a)(4) under the Securities Act. In addition, we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions.
If the applicable prospectus supplement so indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and, if not identified in this prospectus, will be named in the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities to a financial institution or other third party that in turn may sell the securities short using this prospectus and an applicable prospectus supplement. Such financial institution or other third party may transfer its economic short position to investors in our securities or in connection with a concurrent offering of other securities.
Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade expressly agree otherwise. The applicable prospectus supplement may provide that the original issue date for your securities may be more than two scheduled business days after the trade date for your securities. Accordingly, in such a case, if you wish to trade securities on any date prior to the second business day before the original issue date for your securities, you will be required, by virtue of the fact that your securities initially are expected to settle in more than two scheduled business days after the trade date for your securities, to make alternative settlement arrangements to prevent a failed settlement.
The securities may be new issues of securities and may have no established trading market. The securities may or may not be listed on a national securities exchange. We can make no assurance as to the liquidity of or the existence of trading markets for any of the securities.
The specific terms of any lock-up provisions in respect of any given offering will be described in the applicable prospectus supplement.
The underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business for which they receive compensation.
The anticipated date of delivery of offered securities will be set forth in the applicable prospectus supplement relating to each offer.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon for us by Goodwin Procter LLP, Boston, Massachusetts. Any underwriters will also be advised about the validity of the securities and other legal matters by their own counsel, which will be named in the prospectus supplement.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements are incorporated by reference in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Exchange Act and, in accordance therewith, file annual, quarterly and special reports, proxy statements and other information with the SEC. These documents also may be accessed through the SEC’s electronic data gathering, analysis and retrieval system, or EDGAR, via electronic means, including the SEC’s home page on the Internet (www.sec.gov).
We have the authority to designate and issue more than one class or series of stock having various preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption. See “Description of Capital Stock.” We will furnish a full statement of the relative rights and preferences of each class or series of our stock which has been so designated and any restrictions on the ownership or transfer of our stock to any shareholder upon request and without charge. Written requests for such copies should be directed to Investor Relations, Scholar Rock Holding Corporation, 301 Binney Street, Cambridge, MA 02142. Our website is located at www.scholarrock.com. Information contained on our website is not incorporated by reference into this prospectus and, therefore, is not part of this prospectus or any accompanying prospectus supplement.
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference the information and reports we file with it, which means that we can disclose important information to you by referring you to these documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede the information already incorporated by reference. We are incorporating by reference the documents listed below, which we have already filed with the SEC, and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including all filings made after the date of the filing of this registration statement and prior to the effectiveness of this registration statement, except as to any portion of any future report or document that is not deemed filed under such provisions, until we sell all of the securities:
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our Current Reports on Form 8-K (other than information furnished rather than filed) filed with the SEC on January 10, 2022, May 27, 2022, June 17, 2022, June 21, 2022, July 26, 2022 and September 20, 2022;
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Upon request, we will provide, without charge, to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, a copy of the documents incorporated by reference into this prospectus but not delivered with the prospectus. You may request a copy of these filings, and any exhibits we have specifically incorporated by reference as an exhibit in this prospectus, at no cost by writing us at the following address: Investor Relations, Scholar Rock Holding Corporation, 301 Binney Street, Cambridge, MA 02142.
This prospectus is part of a registration statement we filed with the SEC. We have incorporated exhibits into this registration statement. You should read the exhibits carefully for provisions that may be important to you.
You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or in the documents incorporated by reference is accurate as of any date other than the date on the front of this prospectus or those documents.
Scholar Rock
$400,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
PROSPECTUS
, 2022
We have not authorized any dealer, salesperson or other person to give any information or represent anything not contained in this prospectus. You must not rely on any unauthorized information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus does not offer to sell any securities in any jurisdiction where it is unlawful. Neither the delivery of this prospectus, nor any sale made hereunder, shall create any implication that the information in this prospectus is correct after the date hereof.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 14, 2022
PROSPECTUS
Scholar Rock Holding Corporation
Up to $100,000,000
Common Stock
We have entered into a certain Open Market Sale AgreementSM dated November 14, 2022, or sales agreement, with Jefferies LLC, or Jefferies, relating to shares of our common stock offered by this prospectus. In accordance with the terms of the sales agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $100,000,000 from time to time through Jefferies, acting as agent.
Our common stock is listed on The Nasdaq Global Select Market under the symbol “SRRK.” On November 9, 2022, the closing price of our common stock, as reported on The Nasdaq Global Select Market, was $7.66 per share.
Sales of our common stock, if any, under this prospectus may be made in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or the Securities Act. Jefferies is not required to sell any specific number or dollar amount of securities, but will act as a sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between Jefferies and us. There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
The compensation to Jefferies for sales of common stock sold pursuant to the sales agreement will be equal to 3.0% of the gross proceeds of any shares of common stock sold under the sales agreement. In connection with the sale of the common stock on our behalf, Jefferies will be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of Jefferies will be deemed to be underwriting commissions or discounts. We have also agreed to provide indemnification and contribution to Jefferies with respect to certain liabilities, including liabilities under the Securities Act. See the section titled “Plan of Distribution” on page S-13 of this prospectus.
Investing in our common stock involves a high degree of risk. You should review carefully the risks and uncertainties referenced under the heading “Risk Factors” on page S-6 of this prospectus and in the documents that are incorporated by reference into this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Jefferies
The date of this prospectus is , 2022
TABLE OF CONTENTS
We are responsible for the information contained and incorporated by reference in this prospectus, in any accompanying prospectus, and in any related free writing prospectus we prepare or authorize. We have not authorized anyone to give you any other information, and we take no responsibility for any other information that others may give you. If you are in a jurisdiction where offers to sell, or solicitations of offers to purchase, the securities offered by this documentation are unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this document does not extend to you. The information contained in this document speaks only as of the date of this document, unless the information specifically indicates that another date applies. Our business, financial condition, results of operations and prospects may have changed since those dates.
ABOUT THIS PROSPECTUS
This prospectus relates to the offering of our common stock. Before buying any of the common stock that we are offering, we urge you to carefully read this prospectus together with the information incorporated by reference as described under the headings “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” in this prospectus, and any free writing prospectus or prospectus supplement that we have authorized for use in connection with this offering. These documents contain important information that you should consider when making your investment decision.
This prospectus describes the terms of this offering of common stock and also adds to and updates information contained in the documents incorporated by reference into this prospectus. To the extent there is a conflict between the information contained in this prospectus, on the one hand, and the information contained in any document incorporated by reference into this prospectus that was filed with the Securities and Exchange Commission, or the SEC, before the date of this prospectus, on the other hand, you should rely on the information in this prospectus. If any statement in one of these documents is inconsistent with a statement in another document having a later date — for example, a document incorporated by reference into this prospectus — the statement in the document having the later date modifies or supersedes the earlier statement.
We have not authorized anyone to provide you with information in addition to or different from that contained in this prospectus, any applicable prospectus supplement and any related free writing prospectus. We take no responsibility for, and can provide no assurances as to the reliability of, any information not contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus that we may authorize to be provided to you. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information in this prospectus, the accompanying prospectus or any related free writing prospectus is accurate only as of the date on the front of the document and that any information incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, the accompanying prospectus or any related free writing prospectus, or any sale of a security.
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus and the accompanying prospectus is a part, and you may obtain copies of those documents as described below under the heading “Where You Can Find More Information”.
Unless the context otherwise indicates, references in this prospectus to “Scholar Rock”, “we”, “our”, “us” and “the Company” refer, collectively, to Scholar Rock Holding Corporation and its subsidiaries.
We own various U.S. federal trademark applications and unregistered trademarks, including “Scholar Rock” and our corporate logo. All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the symbols ® and ™, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
PROSPECTUS SUMMARY
The following summary of our business highlights some of the information contained elsewhere in, or incorporated by reference into, this prospectus. Because this is only a summary, however, it does not contain all of the information that may be important to you. You should carefully read this prospectus and the accompanying prospectus, including the documents incorporated by reference, which are described under “Incorporation of certain information by reference” in this prospectus. You should also carefully consider the matters discussed in the section of this prospectus entitled “Risk factors” and under similar sections of the accompanying prospectus and other periodic reports incorporated herein and therein by reference.
Company overview
We are a biopharmaceutical company focused on the discovery and development of innovative medicines for the treatment of serious diseases in which signaling by protein growth factors plays a fundamental role. Our novel understanding of the molecular mechanisms of growth factor activation enabled us to develop a proprietary platform for the discovery and development of monoclonal antibodies that locally and selectively target the precursor, or latent, forms of growth factors. By targeting the signaling proteins at the cellular level and acting in the disease microenvironment, we believe we may avoid the historical dose-limiting safety challenges associated with inhibiting growth factors for therapeutic effect. We believe our focus on biologically validated growth factors may facilitate a more efficient development path.
We have a productive scientific platform and are building our portfolio of novel product candidates with the aim of transforming the lives of patients suffering from a wide range of serious diseases, including neuromuscular disorders, cancer, and fibrosis. We have discovered and progressed the development of:
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Apitegromab, an inhibitor of the activation of latent myostatin, for the treatment of spinal muscular atrophy (“SMA”). We also believe apitegromab could have potential in the treatment of other myostatin-related disorders.
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SRK-181, an inhibitor of the activation of latent transforming growth factor beta-1 (“TGFβ1”), for the treatment of cancers that are resistant to anti-PD-(L)1 antibody therapies.
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Potent and selective inhibitors of the activation of transforming growth factor beta (“TGFβ”) for the treatment of fibrotic diseases. We are advancing multiple antibody profiles toward product candidate selection including antibodies that selectively inhibit the activation of latent TGFβ1 in the context of fibrotic extracellular matrix and that avoid perturbing TGFβ1 presented by cells of the immune system.
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Additional discovery and early preclinical programs related to the selective modulation of growth factor signaling, including BMP6 and other growth factors.
Our first product candidate, apitegromab, is a highly selective, fully human, monoclonal antibody, with a unique mechanism of action that results in inhibition of the activation of the growth factor, myostatin, in skeletal muscle. Apitegromab is being developed as a potential first muscle- directed therapy for the treatment of spinal muscular atrophy (“SMA”). We are conducting SAPPHIRE, a pivotal Phase 3 trial to evaluate the efficacy and safety of apitegromab in patients with non-ambulatory Type 2 and Type 3 SMA (which is estimated to represent the majority of the current prevalent SMA patient population in the U.S. and Europe). Apitegromab was evaluated in our TOPAZ Phase 2 proof-of-concept clinical trial for the treatment of patients with Type 2 and Type 3 SMA. Positive 12-month top-line results were announced in April 2021, and presented at Cure SMA Virtual Conference in June. In June 2022 we announced 24-month efficacy and safety extension data of apitegromab in patients with Type 2 and Type 3 SMA from the TOPAZ Phase 2 clinical trial, and presented at the Cure SMA Research & Clinical Care Meeting (see “TOPAZ 24-Month Analysis” below). Tertiary endpoint data from the TOPAZ trial was presented at the 27th International Annual Congress of the World Muscle Society 2022 and the 3rd International Scientific Congress on SMA 2022, showing trends of continuous improvement in quality-of-life measures such as activities of daily living, fatigue and endurance over 24 months. The U.S. Food and Drug Association (“FDA”) granted Fast Track Designation, Rare Pediatric Disease designation and Orphan Drug Designation to apitegromab for the treatment of SMA in May 2021, August 2020 and March 2018, respectively. The European Medicines Agency
(“EMA”) granted PRIority MEdicines (“PRIME”) designation in March 2021 and the European Commission (“EC”) granted Orphan Medicinal Product designation in December 2018 to apitegromab for the treatment of SMA.
Our second product candidate, SRK-181, is being developed for the treatment of cancers that are resistant to checkpoint inhibitor (“CPI”) therapies, such as anti-PD-1 or anti-PD-L1 antibody therapies. SRK-181 is a highly selective inhibitor of the activation of latent TGFβ1 that is being investigated in our Phase 1 DRAGON proof-of-concept clinical trial in patients with locally advanced or metastatic solid tumors that exhibit primary resistance to anti-PD-(L)1 antibodies. This two-part clinical trial consists of a dose escalation portion (Part A) and a dose expansion portion evaluating SRK-181 in combination with an approved anti-PD-(L)1 antibody therapy (Part B). Part B commenced in 2021 and includes the following active cohorts: urothelial carcinoma, cutaneous melanoma, non-small cell lung cancer, and clear cell renal cell carcinoma. Initial clinical data from Part A were presented in November 2021 at the Society for Immunotherapy of Cancer 36th Annual Meeting. Initial clinical data from Part A were presented in November 2021 at the Society for Immunotherapy of Cancer 36th Annual Meeting and additional clinical data were presented at the 2022 SITC Annual Meeting in November 2022.
Our approach and proprietary platform
Beyond these programs, we continue to discover and develop highly specific monoclonal antibodies to selectively modulate growth factor signaling. Growth factors are naturally occurring proteins that typically act as signaling molecules between cells and play a fundamental role in regulating a variety of normal cellular processes, including cell growth and differentiation. Current therapeutic approaches to treating diseases in which growth factors play a fundamental role involve directly targeting the active form of the growth factor or its receptor systemically throughout the body. These approaches have suffered from a variety of shortcomings, including lack of pathway selectivity, lack of target selectivity, and non-localized target inhibition.
Our innovative approach is rooted in our structural biology insights into the mechanism by which certain growth factors are activated in close proximity to the cell surface. We integrate these insights with sophisticated protein expression, assay development and monoclonal antibody discovery capabilities. We believe our proprietary platform can address the challenges of treating diseases in which growth factors play a fundamental role by:
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targeting the natural activation mechanism to prevent activation of the growth factor rather than attempting to inhibit the growth factor after activation;
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achieving heightened specificity for the targeted growth factor while minimizing interactions with structurally similar and related growth factors, thereby potentially reducing the risk of unintended systemic adverse events; and
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targeting the disease microenvironment, where we believe we can interfere with the disease process while minimizing the effects on the normal physiological processes mediated by the same growth factors.
Our structural insights and unique antibody discovery capabilities can be applied to other protein classes beyond growth factors, with an aim of generating differentiated candidates targeting cell surface receptors such as immune cell receptors or G-protein coupled receptors, where selectivity remains challenging.
Company information
We were incorporated in 2017 under the laws of the State of Delaware as the holding company for Scholar Rock, Inc. Scholar Rock, Inc. is a wholly owned subsidiary of Scholar Rock Holding Corporation. On December 22, 2017, we completed a series of transactions pursuant to which Scholar Rock Merger Sub, LLC, a wholly owned subsidiary of Scholar Rock Holding Corporation, was merged with and into Scholar Rock, LLC (the “Reorganization”). The purpose of the Reorganization was to reorganize our corporate structure so that we would continue as a corporation and so that our investors prior to the Reorganization would own our capital stock after the Reorganization rather than equity interests in a limited liability company. All of our convertible preferred stock converted into shares of common stock upon the
completion of our initial public offering at the then effective conversion ratio. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, developing our technology, identifying potential product candidates, producing drug substance and drug product material for use in preclinical studies and clinical trials, conducting preclinical studies of our product candidates and conducting clinical trials for our product candidates, apitegromab and SRK-181. We do not have any products approved for sale and have not generated any product revenue to date.
Our principal executive offices are located at 301 Binney Street, Cambridge, MA 02142, and our phone number is (857) 259-3860. Our website address is www.scholarrock.com. The information contained on our website or social media accounts, or that can be accessed through our website or social media accounts, is not a part of this prospectus and is not incorporated by reference into this prospectus. You should not rely on any such information in deciding whether to purchase our common stock.
Implications of being an emerging growth company
As a company with less than $1.235 billion in revenue during our most recently completed fiscal year, we qualify as an “emerging growth company” and “smaller reporting company” as defined in Section 2(a) of the Securities Act of 1933, as amended (“the Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable, in general, to public companies that are not emerging growth companies. These provisions include:
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reduced disclosure about our executive compensation arrangements;
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exemption from the non-binding stockholder advisory votes on executive compensation or golden parachute arrangements;
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exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting; and
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reduced disclosure of financial information in this prospectus, the accompanying prospectus and the information incorporated herein and therein, such as being permitted to include only two years of audited financial information and two years of selected financial information in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure.
We may take advantage of these exemptions until we are no longer an emerging growth company. We would cease to be an emerging growth company on the last day of 2023, or sooner if we have more than $1.235 billion in annual revenues as of the end of a fiscal year, have more than $700 million in market value of our capital stock held by non-affiliates as of any June 30 before that time or if we issue more than $1.0 billion of non-convertible debt over a three-year-period. We may choose to take advantage of some, but not all, of the available exemptions. We are also a “smaller reporting company” as defined in the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies.
The JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for non- emerging growth companies.
THE OFFERING
Common stock offered by us
Shares of our common stock having an aggregate offering price of up to $100,000,000.
Common stock to be outstanding immediately after this offering
Up to 64,715,684 shares (as more fully described in the notes following this table), assuming sales of 13,054,830 shares of our common stock in this offering at an offering price of $7.66 per share, which was the last reported sale price of our common stock on The Nasdaq Global Select Market on November 9, 2022. The actual number of shares issued will vary depending on the sales price under this offering.
“At the market offering” that may be made from time to time through our sales agent, Jefferies LLC, or Jefferies. See “Plan of Distribution” on page S-13 of this prospectus.
We currently intend to use the net proceeds from this offering for general corporate purposes. General corporate purposes may include research and development and commercialization costs, including the conduct of clinical trials and process development and manufacturing of our product candidates, services or technologies, expansion of our technology infrastructure and capabilities, working capital, and capital expenditures. See “Use of Proceeds” on page S-10 of this prospectus.
Investing in our common stock involves significant risks. See “Risk Factors” on page S-6 of this prospectus and under similar headings in other documents incorporated by reference into this prospectus.
The Nasdaq Global Select Market Symbol
“SRRK”
The number of shares of our common stock that will be outstanding immediately after this offering as shown above is based on 51,660,854 shares outstanding as of September 30, 2022. The number of shares outstanding as of September 30, 2022 as used throughout this prospectus, unless otherwise indicated, excludes:
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27,689,692 pre-funded warrants to purchase shares of common stock with an exercise price of $0.0001 per share;
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10,459,181 common warrants to purchase shares of common stock with a weighted-average exercise price of $7.35 per share;
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293,777 shares of common stock issuable upon the exercise of stock options outstanding under our 2017 Stock Option and Incentive Plan at a weighted-average exercise price of $6.08 per share
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4,848,896 shares of common stock issuable upon the exercise of stock options outstanding under our 2018 Stock Option and Incentive Plan at a weighted-average exercise price of $20.21 per share;
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1,000,000 shares of common stock issuable upon the exercise of stock options outstanding under our 2022 Inducement Plan at a weighted-average exercise price of $8.85 per share;
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1,707,735 shares of common stock issuable upon the vesting and settlement of restricted stock units issued under our 2018 Stock Option and Incentive Plan;
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885,122 shares of common stock reserved for the future issuance under our 2018 Stock Option and Incentive Plan;
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1,489,463 shares of our common stock available for future issuance under our 2018 Employee Stock Purchase Plan; and
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1,000,000 shares of our common stock available for future issuance under our 2022 Inducement Equity.
RISK FACTORS
Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below and in the documents incorporated by reference in this prospectus, as well as other information we include or incorporate by reference into this prospectus, before making an investment decision. Our business, financial condition and results of operations could be materially adversely affected by the materialization of any of these risks. The trading price of our securities could decline due to the materialization of any of these risks, and you may lose all or part of your investment. This prospectus and the documents incorporated herein by reference also contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described in the documents incorporated herein by reference, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which is on file with the SEC and is incorporated herein by reference, and our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K and other reports and documents that are incorporated by reference into this prospectus and other documents we file with the SEC that are deemed incorporated by reference into this prospectus.
Risks related to this offering
You will experience immediate and substantial dilution.
The offering price per share in this offering will be substantially higher than the net tangible book value per share of our common stock outstanding prior to this offering. Based on an estimated public offering price of $7.66 per share, and a net tangible book value of $293.3 million, or $5.68 per share of common stock, as of September 30, 2022, if you purchase securities in this offering, you will suffer immediate and substantial dilution of $1.63 per share in the net tangible book value of the securities you purchase representing the difference between our as adjusted net tangible book value per share after giving effect to this offering and the public offering price per share of common stock. The exercise of outstanding stock options and warrants will result in further dilution of your investment. See the section titled “Dilution” below for a more detailed illustration of the dilution you would incur if you participate in this offering.
We have broad discretion in the use of our existing cash, cash equivalents and marketable securities and the net proceeds from this offering and may not use them effectively.
Our management will have broad discretion in the application of our existing cash, cash equivalents and marketable securities and the net proceeds from this offering, including for any of the purposes described in the section titled “Use of proceeds,” and you will not have the opportunity as part of your investment decision to assess whether such proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of our existing cash and cash equivalents and the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management might not apply our existing cash and cash equivalents and the net proceeds from this offering in ways that ultimately increase the value of your investment. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.
You may experience future dilution as a result of future equity offerings.
In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share in this offering. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to those of existing stockholders. The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in this offering.
Sales of a substantial number of shares of our common stock in the public market after this offering could cause our stock price to fall.
Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our common stock. In addition, the sale of substantial amounts of our common stock could adversely impact the price of our common stock. As of September 30, 2022, 51,660,854 shares of our common stock were outstanding. The sale, or the availability for sale, of a large number of shares of our common stock in the public market could cause the price of our common stock to decline.
The common stock offered hereby will be sold in “at the market” offerings, and investors who buy shares at different times will likely pay different prices.
Investors who purchase shares in this offering at different times will likely pay different prices, and so may experience different outcomes in their investment results. We will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold, and there is no minimum or maximum sales price. Investors may experience a decline in the value of their shares as a result of share sales made at prices lower than the prices they paid.
The actual number of shares we will issue under the sales agreement, at any one time or in total, is uncertain.
Subject to certain limitations in the sales agreement and compliance with applicable law, we have the discretion to deliver placement notices to Jefferies LLC, or Jefferies, at any time throughout the term of the sales agreement. The number of shares that are sold by Jefferies after delivering a placement notice will fluctuate based on the market price of the common stock during the sales period and limits we set with Jefferies. Because the price per share of each share sold will fluctuate based on the market price of our common stock during the sales period, it is not possible at this stage to predict the number of shares that will be ultimately issued.
The trading price of the shares of our common stock could be highly volatile, and purchasers of our common stock could incur substantial losses.
Since our common stock began trading on The Nasdaq Global Select Market on May 29, 2018, our stock has traded at prices as low as $4.32 per share and as high as $70.00 per share through November 10, 2022. This volatility may affect the price at which you could sell the shares of our common stock, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock. Our stock price is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including those described in the sections captioned “Risk factors” in this prospectus, the accompanying prospectus and the documents incorporated by reference herein and therein.
As a result, you may not be able to sell your shares of common stock at or above the price at which you purchase them. In addition, the stock market in general, and The Nasdaq Global Select Market and the stock of biotechnology and emerging pharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.
We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference herein and therein, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward- looking. These statements are often, but are not always, made through the use of words or phrases such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions, or the negative of these terms, or similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this prospectus and the accompanying prospectus, and in particular those factors referenced in the section “Risk factors.”
This prospectus contain forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. These statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
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the success, cost and timing of preclinical studies and clinical trials for apitegromab and SRK-181, including, but not limited to, progress and completion of clinical trials, and the results, and the timing of results, from these trials;
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the success, cost and timing of our other product development activities, preclinical studies and clinical trials, and the results, and timing of results, from these studies and trials;
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our success in identifying and executing a development program for additional indications for apitegromab and SRK-181 and in identifying product candidates from our preclinical programs;
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the clinical utility of our product candidates and their potential advantages over other therapeutic options;
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our ability to obtain, generally or on terms acceptable to us, funding for our operations, including funding necessary to complete further development and, upon successful development, if approved, commercialization of apitegromab, SRK-181 or any of our future product candidates;
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timing of and costs associated with our restructuring, and the savings benefits we expect to receive from the restructuring;
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risks associated with the COVID-19 pandemic or other public health pandemics, which may adversely impact our workforce, global supply chain, business, preclinical studies, clinical trials and financial results;
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the potential for our identified research priorities to advance our proprietary platform identifying future product candidates;
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the timing, scope, or likelihood of our ability to obtain and maintain regulatory approval from the U.S. Food and Drug Administration, or FDA, the European Commission, or EC, and other regulatory authorities for apitegromab, SRK-181 and any future product candidates, and any related restrictions, limitations or warnings in the label of any approved product candidate;
•
our ability to continue to grow our organization, including our personnel, systems and relationships with third parties;
•
our ability to retain our executives and highly skilled technical and managerial personnel, which could be affected due to any transition in management, or if we fail to recruit additional highly skilled personnel;
•
our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and the duration of such protection;
•
our ability and the potential to successfully manufacture our product candidates for clinical trials and for commercial use, if approved;
•
our ability to establish or maintain collaborations or strategic relationships;
•
our expectations relating to the potential of our proprietary platform technology;
•
our ability to obtain additional funding when necessary;
•
the size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in combination with others;
•
our expectations related to the use of our cash reserves;
•
the impact of new laws and regulations or amendments to existing laws and regulations;
•
developments and projections relating to our competitors and our industry;
•
our expected use of proceeds from this offering;
•
our estimates and expectations regarding cash and expense levels, future revenues, capital requirements and needs for additional financing, including our expected use of proceeds from our public offerings, and liquidity sources; and
•
our expectations regarding the period during which we qualify as an emerging growth company, or EGC, under the Jumpstart Our Business Startups Act or as a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934.
We have included important factors in the cautionary statements included in this prospectus and the documents we incorporate by reference herein and therein, particularly in the “Risk factors” sections of these documents, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. No forward-looking statement is a guarantee of future performance.
You should read this prospectus the accompanying prospectus and the documents that we incorporate by reference herein and therein completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements in this prospectus and the accompanying prospectus and the documents we incorporate by reference herein and therein represent our views as of the date of this prospectus. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward- looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this prospectus.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
USE OF PROCEEDS
We may issue and sell shares of our common stock having aggregate sales proceeds of up to $100,000,000 from time to time. Because there is no minimum offering amount required as a condition to close this offering, the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this time.
We intend to use the net proceeds we receive, together with our existing cash, cash equivalents and investments, to advance our ongoing and future clinical programs (including the development of apitegromab in SMA through the anticipated Phase 3 SAPPHIRE topline data readout and SRK-181 in immuno-oncology) and commercialization of our programs, to further develop our technology platform and to continue to advance our preclinical pipeline. Any remaining proceeds will be used for other ongoing research and development activities and general corporate purposes, such as working capital, operating expenses and capital expenditures. We may temporarily invest the net proceeds in a variety of capital preservation instruments, including investment grade, interest bearing instruments and U.S. government securities, until they are used for their stated purpose. We have not determined the amount of net proceeds to be used specifically for such purposes. As a result, management will retain broad discretion over the allocation of net proceeds.
DILUTION
Purchasers of common stock offered by this prospectus will suffer immediate and substantial dilution in the net tangible book value per share of common stock. Our net tangible book value as of September 30, 2022 was approximately $293.3 million, or approximately $5.68 per share of common stock. Net tangible book value per share represents the amount of total tangible assets (total assets less intangible assets) less total liabilities, divided by the number of shares of our common stock outstanding as of September 30, 2022.
Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers in this offering and the net tangible book value (deficit) per share of our common stock immediately after this offering. After giving effect to the assumed sale of shares of our common stock in the aggregate amount of approximately $100,000,000 at an assumed offering price of $7.66 per share, the last reported sale price of our common stock on November 9, 2022, and after deduction of commissions and offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2022 would have been approximately $389.9 million, or $6.03 per share of common stock. This represents an immediate increase in net tangible book value of $0.35 per share of common stock to our existing stockholders and an immediate dilution in net tangible book value of $1.63 per share of common stock to investors participating in this offering at an assumed offering price of $7.66 per share.
The following table illustrates this per share dilution:
| |
Assumed offering price per share
|
|
|
|
|
|
|
|
|
|
$ |
7.66 |
|
|
| |
Net tangible book value per share as of September 30, 2022
|
|
|
|
$ |
5.68 |
|
|
|
|
|
|
|
|
| |
Increase in per share attributable to new investors attributable to this offering
|
|
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
| |
As adjusted net tangible book value per share as of September 30, 2022, after giving effect to this offering
|
|
|
|
|
|
|
|
|
|
$ |
6.03 |
|
|
| |
Dilution per share to new investors participating in this offering
|
|
|
|
|
|
|
|
|
|
$ |
1.63 |
|
|
The table above assumes for illustrative purposes that an aggregate of 13,054,830 shares of our common stock are sold at a price of $7.66 per share, the last reported sale price of our common stock on the Nasdaq Global Select Market on November 9, 2022, for aggregate gross proceeds of approximately $100,000,000. The shares sold in this offering, if any, will be sold from time to time at various prices. An increase of $1.00 per share in the price at which the shares are sold from the assumed offering price of $7.66 per share shown in the table above, assuming all of our common stock in the aggregate amount of approximately $100,000,000 is sold at that price, would result in an increase to our adjusted net tangible book value per share after the offering to $6.17 and an increase in the dilution in net tangible book value per share to new investors in this offering to $2.49, after deducting commissions and estimated offering expenses payable by us. A decrease of $1.00 per share in the price at which the shares are sold from the assumed offering price of $7.66 per share shown in the table above, assuming all of our common stock in the aggregate amount of approximately $100,000,000 is sold at that price, would result in a decrease to our adjusted net tangible book value per share after the offering to $5.85 and a decrease in the dilution in net tangible book value per share to new investors in this offering to $0.81, after deducting commissions and estimated offering expenses payable by us. This information is supplied for illustrative purposes only, and will adjust based on the actual offering prices, the actual number of shares that we offer and sell in this offering and other terms of each sale of shares in this offering.
The information above and in the foregoing table is based upon 51,660,854 shares of our common stock outstanding as of September 30, 2022. The information above and in the foregoing table excludes as of September 30, 2022:
•
27,689,692 pre-funded warrants to purchase shares of common stock with an exercise price of $0.0001 per share;
•
10,459,181 common warrants to purchase shares of common stock with a weighted-average exercise price of $7.35 per share
•
293,777 shares of common stock issuable upon the exercise of stock options outstanding as of September 30, 2022 under our 2017 Stock Option and Incentive Plan at a weighted-average exercise price of $6.08 per share
•
4,848,896 shares of common stock issuable upon the exercise of stock options outstanding as of September 30, 2022 under our 2018 Stock Option and Incentive Plan at a weighted-average exercise price of $20.21 per share;
•
1,000,000 shares of common stock issuable upon the exercise of stock options outstanding as of September 30, 2022 under our 2022 Inducement Plan at a weighted-average exercise price of $8.85 per share;
•
1,707,735 shares of common stock issuable upon the vesting and settlement of restricted stock units issued under our 2018 Stock Option and Incentive Plan;
•
885,122 shares of common stock reserved for the future issuance under our 2018 Stock Option and Incentive Plan as of September 30, 2022;
•
1,489,463 shares of our common stock available for future issuance under our 2018 Employee Stock Purchase Plan as of September 30, 2022; and
•
1,000,000 shares of our common stock available for future issuance under our 2022 Inducement Equity Plan as of September 30, 2022.
In addition, we may choose to raise additional capital in the future through the sale of equity or convertible debt securities due to market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. To the extent that any of our outstanding options are exercised, new options are issued under our equity incentive plans or we issue additional shares of common stock or other equity or convertible debt securities in the future, there will be further dilution to investors participating in this offering.
PLAN OF DISTRIBUTION
We have entered into a certain Open Market Sale AgreementSM, or sales agreement, with Jefferies LLC, or Jefferies, under which we may offer and sell shares of our common stock from time to time through Jefferies, acting as agent. Pursuant to this prospectus, we may offer and sell up to $100,000,000 of our shares of common stock. Sales of our shares of common stock, if any, under this prospectus will be made by any method that is deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act.
Each time we wish to issue and sell shares of common stock under the sales agreement, we will notify Jefferies of the number of shares to be issued, the dates on which such sales are anticipated to be made, any limitation on the number of shares to be sold in any one day and any minimum price below which sales may not be made. Once we have so instructed Jefferies, unless Jefferies declines to accept the terms of such notice, Jefferies has agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such shares up to the amount specified on such terms. The obligations of Jefferies under the sales agreement to sell our shares of common stock are subject to a number of conditions that we must meet.
The settlement of sales of shares between us and Jefferies is generally anticipated to occur on the second trading day following the date on which the sale was made. Sales of our shares of common stock as contemplated in this prospectus will be settled through the facilities of The Depository Trust Company or by such other means as we and Jefferies may agree upon. There is no arrangement for funds to be received in an escrow, trust or similar arrangement.
We will pay Jefferies a commission equal to 3.0% of the aggregate gross proceeds we receive from each sale of our shares of common stock. Because there is no minimum offering amount required as a condition to close this offering, the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this time. In addition, we have agreed to reimburse Jefferies for the fees and disbursements of its counsel, payable upon execution of the sales agreement, in an amount not to exceed $75,000, in addition to certain ongoing disbursements of its legal counsel unless we and Jefferies otherwise agree. We estimate that the total expenses for the offering, excluding any commissions or expense reimbursement payable to Jefferies under the terms of the sales agreement, will be approximately $0.3 million. The remaining sale proceeds, after deducting any other transaction fees, will equal our net proceeds from the sale of such shares.
Jefferies will provide written confirmation to us before the open on The Nasdaq Global Select Market on the day following each day on which shares of common stock are sold under the sales agreement. Each confirmation will include the number of shares sold on that day, the aggregate gross proceeds of such sales and the proceeds to us.
In connection with the sale of the shares of common stock on our behalf, Jefferies will be deemed to be an “underwriter” within the meaning of the Securities Act, and the compensation of Jefferies will be deemed to be underwriting commissions or discounts. We have agreed to indemnify Jefferies against certain civil liabilities, including liabilities under the Securities Act. We have also agreed to contribute to payments Jefferies may be required to make in respect of such liabilities.
The offering of our shares of common stock pursuant to the sales agreement will terminate upon the earlier of (i) the sale of all shares of common stock subject to the sales agreement and (ii) the termination of the sales agreement permitted therein.
This summary of the material provisions of the sales agreement does not purport to be a complete statement of its terms and conditions. A copy of the sales agreement is filed as an exhibit to the registration statement of which this prospectus forms a part.
Jefferies and its affiliates may in the future provide various investment banking, commercial banking, financial advisory and other financial services for us and our affiliates, for which services they may in the future receive customary fees. In the course of its business, Jefferies may actively trade our securities for its own account or for the accounts of customers, and, accordingly, Jefferies may at any time hold long or short positions in such securities.
A prospectus and the accompanying prospectus in electronic format may be made available on a website maintained by Jefferies, and Jefferies may distribute the prospectus and the accompanying prospectus electronically.
LEGAL MATTERS
Certain legal matters, including the legality of the securities offered, will be passed upon for us by Goodwin Procter LLP, Boston, Massachusetts. Jefferies LLC is being represented in this offering by Cooley LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements are incorporated by reference in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement that we have filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance with the rules of the SEC. We are subject to the information requirements of the Exchange Act and, in accordance therewith, file annual, quarterly and special reports, proxy statements and other information with the SEC. These documents also may be accessed through the SEC’s electronic data gathering, analysis and retrieval system, or EDGAR, via electronic means, including the SEC’s home page on the Internet (www.sec.gov). You may also inspect the registration statement and this prospectus on this website.
We have the authority to designate and issue more than one class or series of stock having various preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption. We will furnish a full statement of the relative rights and preferences of each class or series of our stock which has been so designated and any restrictions on the ownership or transfer of our stock to any shareholder upon request and without charge. Written requests for such copies should be directed Investor Relations, Scholar Rock Holding Corporation, 301 Binney Street, Cambridge, MA 02142. Our website is located at www.scholarrock.com. Information contained on our website is not incorporated by reference into this prospectus, and, except for the documents incorporated by reference as noted below, you should not consider any information on, or that can be accessed from, our website as part of this prospectus or any accompanying prospectus supplement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference the information and reports we file with it, which means that we can disclose important information to you by referring you to these documents. The information incorporated by reference is an important part of this prospectus, and information that we file after the date hereof with the SEC will automatically update and supersede the information already incorporated by reference. We are incorporating by reference the documents listed below, which we have already filed with the SEC, and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to any portion of any future report or document that is not deemed filed under such provisions, after the date of this prospectus and prior to the termination of this offering:
•
•
•
our Current Reports on Form 8-K (other than information furnished rather than filed) filed with the SEC on January 10, 2022, May 27, 2022, June 17, 2022, June 21, 2022, July 26, 2022 and September 20, 2022;
•
•
the description of our common stock contained in our registration statement on Form 8-A filed with the SEC on May 21, 2018, including any amendments or reports filed for the purposes of updating this description.
Pursuant to Rule 412 under the Securities Act, any statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
Upon request, we will provide, without charge, to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, a copy of the documents incorporated by reference into this prospectus but not delivered with the prospectus. You may request a copy of these filings, and any exhibits
we have specifically incorporated by reference as an exhibit in this prospectus, at no cost by writing us at the following address: Investor Relations, Scholar Rock Holding Corporation, 301 Binney Street, Cambridge, MA 02142. Our website is located at www.scholarrock.com. The reference to our website is intended to be an inactive textual reference and, except for the documents incorporated by reference as noted above, the information on, or accessible through, our website is not intended to be part of this prospectus.
You should rely only on the information incorporated by reference or provided in this prospectus and the accompanying prospectus. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus or in the documents incorporated by reference is accurate as of any date other than the date on the front of this prospectus or those documents.
We advise that there have been no material changes in our affairs that have occurred since the end of the latest fiscal period for which audited financial statements were included in the latest Form 10-K and that have not been described in a Form 10-Q or Form 8-K filed under the Exchange Act.
This prospectus is part of a registration statement we filed with the SEC. We have incorporated exhibits into this registration statement. You should read the exhibits carefully for provisions that may be important to you.
Up to $100,000,000
Common Stock
PROSPECTUS
Jefferies
, 2022
Part II — INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses payable by Scholar Rock Holding Corporation (the “Registrant” or the “Company”) in connection with the issuance and distribution of the securities being registered (other than underwriting discounts and commissions, if any) are set forth below. Each item listed is estimated, except for the Securities and Exchange Commission registration fee.
| |
Securities and Exchange Commission registration fee
|
|
|
|
$ |
44,080 |
|
|
| |
Legal fees and expenses
|
|
|
|
|
*
|
|
|
| |
Accounting fees and expenses
|
|
|
|
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*
|
|
|
| |
Printing fees and expenses
|
|
|
|
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*
|
|
|
| |
Transfer agent and trustee fees
|
|
|
|
|
*
|
|
|
| |
Miscellaneous
|
|
|
|
|
*
|
|
|
| |
Total
|
|
|
|
$ |
*
|
|
|
*
Estimated expenses not presently known
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law, or the DGCL, authorizes a corporation to indemnify its directors and officers against liabilities arising out of actions, suits and proceedings to which they are made or threatened to be made a party by reason of the fact that they have served or are currently serving as a director or officer to a corporation. The indemnity may cover expenses (including attorneys’ fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by the director or officer in connection with any such action, suit or proceeding. Section 145 permits corporations to pay expenses (including attorneys’ fees) incurred by directors and officers in advance of the final disposition of such action, suit or proceeding. In addition, Section 145 provides that a corporation has the power to purchase and maintain insurance on behalf of its directors and officers against any liability asserted against them and incurred by them in their capacity as a director or officer, or arising out of their status as such, whether or not the corporation would have the power to indemnify the director or officer against such liability under Section 145.
We have adopted provisions in our certificate of incorporation and bylaws that limit or eliminate the personal liability of our directors to the fullest extent permitted by the DGCL, as it now exists or may in the future be amended. Consequently, a director will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director, except for liability for:
•
any breach of the director’s duty
•
of loyalty to us or our stockholders;
•
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
•
any unlawful payments related to dividends or unlawful stock purchases, redemptions or other distributions; or
•
any transaction from which the director derived an improper personal benefit.
These limitations of liability do not alter director liability under the federal securities laws and do not affect the availability of equitable remedies such as an injunction or rescission.
In addition, our bylaws provide that:
•
we will indemnify our directors, officers and, in the discretion of our board of directors, certain employees to the fullest extent permitted by the DGCL, as it now exists or may in the future be amended; and
•
we will advance reasonable expenses, including attorneys’ fees, to our directors and, in the discretion of our board of directors, to our officers and certain employees, in connection with legal proceedings relating to their service for or on behalf of us, subject to limited exceptions.
We have entered, and intend to continue to enter, into separate indemnification agreements with our directors, officers and certain of our key employees, in addition to the indemnification provided for in our amended and restated certificate of incorporation and amended and restated bylaws. These agreements, among other things, require us to indemnify our directors, officers and key employees for certain expenses, including attorneys’ fees, judgments, penalties, fines and settlement amounts actually incurred by these individuals in any action or proceeding arising out of their service to us or any of our subsidiaries or any other company or enterprise to which these individuals provide services at our request. Subject to certain limitations, our indemnification agreements also require us to advance expenses incurred by our directors, officers and key employees for the defense of any action for which indemnification is required or permitted.
We also maintain general liability insurance which covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers, including liabilities under the Securities Act.
The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.
Item 16. Exhibits
A list of exhibits filed with this registration statement on Form S-3 is set forth on the Exhibit Index and is incorporated herein by reference.
EXHIBIT INDEX
| |
Exhibit No.
|
|
|
Description
|
|
| |
1.1*
|
|
|
Form of Underwriting Agreement
|
|
| |
1.2
|
|
|
Open Market Sale AgreementSM, by and between Scholar Rock Holding Corporation and Jefferies LLC, dated November 14, 2022
|
|
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3.1
|
|
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|
|
| |
3.2
|
|
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Amendment to Amended and Restated Certificate of Incorporation of Scholar Rock Holding Corporation (incorporated by reference to Exhibit 3.1.1 to the Registrant’s Form S-1/A filed on May 14, 2018)
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3.3
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| |
4.1
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|
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| |
4.2
|
|
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Amended and Restated Warrant to Purchase Stock, by and between Scholar Rock Holding Corporation and Silicon Valley Bank, dated December 22, 2017 (incorporated by reference to Exhibit 4.3 to the Registrant’s Form S-1 filed on April 27, 2018)
|
|
| |
4.3
|
|
|
Registration Rights Agreement, by and among Scholar Rock Holding Corporation, Gilead Sciences, Inc. and certain of the Registrant’s stockholders named therein (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K/A filed on December 24, 2018)
|
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| |
4.4
|
|
|
|
|
| |
4.5
|
|
|
|
|
| |
Exhibit No.
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|
|
Description
|
|
| |
4.6*
|
|
|
Form of Certificate of Designations
|
|
| |
4.7*
|
|
|
Form of Warrant Agreements
|
|
| |
4.8*
|
|
|
Form of Unit Certificate
|
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| |
4.9*
|
|
|
Form of Preferred Stock Certificate
|
|
| |
5.1
|
|
|
|
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| |
5.2
|
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23.1
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23.2
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23.3
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24.1
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25.1**
|
|
|
Form T-1 Statement of Eligibility of Trustee for Senior Indenture under the Trust Indenture Act of 1939
|
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| |
25.2**
|
|
|
Form T-1 Statement of Eligibility of Trustee for Subordinated Indenture under the Trust Indenture Act of 1939
|
|
| |
107
|
|
|
|
|
*
To be filed if necessary by amendment or as an exhibit to a document to be incorporated or deemed to be incorporated by reference in this registration statement, including a Current Report on Form 8-K.
**
To be filed by amendment pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (l)(i), (l)(ii) and (l)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act, each such post- effective amendment shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser:
(i)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(l)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date;
(5)
That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser;
(b) That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(h) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue; and
(j) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939 in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)(2) of the Trust Indenture Act of 1939.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Cambridge, Massachusetts, on this 14th day of November, 2022.
SCHOLAR ROCK HOLDING CORPORATION
By:
/s/ Jay T. Backstrom
Jay T. Backstrom
President and Chief Executive Officer
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jay T. Backstrom and Edward H. Myles, and each of them singly, as such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign any or all amendments (including, without limitation, post-effective amendments) to this registration statement (or any registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933), and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney- in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that any said attorney-in-fact and agent, or any substitute or substitutes of any of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on the date indicated:
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Signature
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Title
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Date
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/s/ Jay T. Backstrom
Jay T. Backstrom
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President, Chief Executive Officer and Director (Principal Executive Officer)
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November 14, 2022
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/s/ Edward H. Myles
Edward H. Myles
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Chief Financial Officer (Principal Financial and Accounting Officer)
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November 14, 2022
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/s/ David Hallal
David Hallal
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Director
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November 14, 2022
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/s/ Kristina Burow
Kristina Burow
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Director
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November 14, 2022
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/s/ Jeffrey S. Flier
Jeffrey S. Flier, M.D.
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Director
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November 14, 2022
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/s/ Michael Gilman
Michael Gilman, Ph.D.
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Director
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November 14, 2022
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/s/ Amir Nashat
Amir Nashat, Sc.D.
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Director
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November 14, 2022
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Signature
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/s/ Akshay Vaishnaw
Akshay Vaishnaw M.D., Ph.D.
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Director
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November 14, 2022
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/s/ Joshua Reed
Joshua Reed
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Director
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November 14, 2022
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/s/ Srinivas Akkaraju
Srinivas Akkaraju
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Director
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November 14, 2022
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Exhibit 1.2
Execution Version
OPEN
MARKET SALE AGREEMENTSM
November 14, 2022
JEFFERIES LLC
520 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
Scholar
Rock Holding Corporation, a Delaware corporation (the “Company”), proposes, subject to the terms and conditions stated
herein, to issue and sell from time to time through Jefferies LLC, as sales agent and/or principal (the “Agent”), shares
of the Company’s common stock, par value $0.001 per share (the “Common Shares”), on the terms set forth in this
agreement (this “Agreement”).
Section 1. DEFINITIONS
(a) Certain
Definitions. For purposes of this Agreement, capitalized terms used herein and not otherwise defined shall have the following respective
meanings:
“Affiliate”
of a Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with, such first- mentioned Person. The term “control” (including the terms “controlling,” “controlled
by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Agency Period”
means the period commencing on the date of this Agreement and expiring on the earliest to occur of (x) the date on which the Agent
shall have placed the Maximum Program Amount pursuant to this Agreement and (y) the date this Agreement is terminated pursuant to
Section 7.
“Commission”
means the U.S. Securities and Exchange Commission.
“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.
“Floor Price”
means the minimum price set by the Company in the Issuance Notice below which the Agent shall not sell Shares during the applicable period
set forth in the Issuance Notice, which may be adjusted by the Company at any time during the period set forth in the Issuance Notice
by delivering written notice of such change to the Agent and which in no event shall be less than $1.00 without the prior written consent
of the Agent, which may be withheld in the Agent’s sole discretion.
SM “Open Market Sale Agreement” is a service
mark of Jefferies LLC
“Issuance Amount”
means the aggregate Sales Price of the Shares to be sold by the Agent pursuant to any Issuance Notice.
“Issuance Notice”
means a written notice delivered to the Agent by the Company in accordance with this Agreement in the form attached hereto as Exhibit A
that is executed by its Chief Executive Officer, President, Chief Financial Officer or General Counsel.
“Issuance Notice
Date” means any Trading Day during the Agency Period that an Issuance Notice is delivered
pursuant to Section 3(b)(i).
“Issuance Price”
means the Sales Price less the Selling Commission.
“Maximum Program
Amount” means Common Shares with an aggregate Sales Price of the lesser of (a) the number or dollar amount of Common Shares
registered under the effective Registration Statement (defined below) pursuant to which the offering is being made, (b) the number
of authorized but unissued Common Shares (less Common Shares issuable upon exercise, conversion or exchange of any outstanding securities
of the Company or otherwise reserved from the Company’s authorized capital stock), (c) the number or dollar amount of Common
Shares permitted to be sold under Form S-3 (including General Instruction I.B.6 thereof, if applicable), or (d) the number or
dollar amount of Common Shares for which the Company has filed a Prospectus (defined below).
“Person”
means an individual or a corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental authority or other entity of any kind.
“Principal Market”
means the Nasdaq Global Market or such other national securities exchange on which the Common Shares, including any Shares, are then listed.
“Sales Price”
means the actual sale execution price of each Share placed by the Agent pursuant to this Agreement.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.
“Selling Commission”
means three percent (3.0%) of the gross proceeds of Shares sold pursuant to this Agreement, or as otherwise agreed between the Company
and the Agent with respect to any Shares sold pursuant to this Agreement.
“Settlement
Date” means the second business day following each Trading Day during the period set forth in the Issuance Notice on
which Shares are sold pursuant to this Agreement, when the Company shall deliver to the Agent the amount of Shares sold on such Trading
Day and the Agent shall deliver to the Company the Issuance Price received on such sales.
“Shares”
shall mean the Company’s Common Shares issued or issuable pursuant to this Agreement.
“Trading Day”
means any day on which the Principal Market is open for trading.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and
warrants to, and agrees with, the Agent that, unless such representation, warranty or agreement specifies otherwise, as of (1) the
date of this Agreement, (2) each Issuance Notice Date, (3) each Settlement Date, (4) each Triggering Event Date and (5) as
of each Time of Sale (each of the times referenced above is referred to herein as a “Representation Date”), except
as may be disclosed in the Prospectus (including any documents incorporated by reference therein and any supplements thereto) on or before
a Representation Date:
(a) Registration
Statement. The Company has prepared and has filed, or will file, with the Commission a shelf registration statement on Form S-3 that
contains a base prospectus (the “Base Prospectus”). Such registration statement registers the issuance and sale by
the Company of the Shares under the Securities Act. The Company may file one or more additional registration statements from time to time
that will contain a base prospectus and related prospectus or prospectus supplement, if applicable, with respect to the Shares. Except
where the context otherwise requires, such registration statement(s), including any information deemed to be a part thereof pursuant to
Rule 430B under the Securities Act, including all financial statements, exhibits and schedules thereto and all documents incorporated
or deemed to be incorporated therein by reference pursuant to Item 12 of Form S-3 under the Securities Act as from time to time amended
or supplemented, is herein referred to as the “Registration Statement,” and the prospectus constituting a part of such
registration statement(s), together with any prospectus supplement filed with the Commission pursuant to Rule 424(b) under the
Securities Act relating to a particular issuance of the Shares, including all documents incorporated or deemed to be incorporated therein
by reference pursuant to Item 12 of Form S-3 under the Securities Act, in each case, as from time to time amended or supplemented,
is referred to herein as the “Prospectus,” except that if any revised prospectus is provided to the Agent by the Company
for use in connection with the offering of the Shares that is not required to be filed by the Company pursuant to Rule 424(b) under
the Securities Act, the term “Prospectus” shall refer to such revised prospectus from and after the time it is first
provided to the Agent for such use. The Registration Statement at the time it originally became effective is herein called the “Original
Registration Statement.” As used in this Agreement, the terms “amendment” or “supplement” when applied
to the Registration Statement or the Prospectus shall be deemed to include the filing by the Company with the Commission of any document
under the Exchange Act after the date hereof that is or is deemed to be incorporated therein by reference.
All
references in this Agreement to financial statements and schedules and other information which is “contained,” “included”
or “stated” in the Registration Statement or the Prospectus (and all other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in
or otherwise deemed under the Securities Act to be a part of or included in the Registration Statement or the Prospectus, as the case
may be, as of any specified date; and all references in this Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include, without limitation, the filing of any document under the Exchange Act which is or is deemed
to be incorporated by reference in or otherwise deemed under the Securities Act to be a part of or included in the Registration Statement
or the Prospectus, as the case may be, as of any specified date.
At the time the Original Registration
Statement was or will be declared effective and at the time the Company’s most recent annual report on Form 10-K was filed
with the Commission, if later, the Company met the then-applicable requirements for use of Form S-3 under the Securities Act. During
the Agency Period, each time the Company files an annual report on Form 10-K the Company will meet the then-applicable requirements
for use of Form S-3 under the Securities Act.
(b) Compliance
with Registration Requirements. The Original Registration Statement and any Rule 462(b) Registration Statement have been
declared or have been deemed effective by the Commission under the Securities Act or shall be declared effective by the Commission under
the Securities Act prior to the issuance of any Issuance Notice by the Company. The Company has complied to the Commission’s satisfaction
with all requests of the Commission for additional or supplemental information in connection therewith, if any. No stop order suspending
the effectiveness of the Registration Statement, or any post-effective amendment thereto, or the Rule 462(b) Registration Statement,
if any, is in effect and no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company,
are contemplated or threatened by the Commission.
The Prospectus when filed
complied and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and, if filed with
the Commission through its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”) (except as may be permitted
by Regulation S-T under the Securities Act), was identical to the copy thereof delivered to the Agent for use in connection with
the issuance and sale of the Shares. Each of the Registration Statement, any Rule 462(b) Registration Statement and any post-effective
amendment or supplement thereto, at the time it became or becomes effective and at each Representation Date, complied and will comply
in all material respects with the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the statements therein not misleading. As of the date of this Agreement,
the Prospectus and any Free Writing Prospectus considered together (collectively, the “Time of Sale Information”) did
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The Prospectus, as amended or supplemented, as of its date and
at each Representation Date, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations
and warranties set forth in the three immediately preceding sentences do not apply to statements in or omissions from the Registration
Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the Prospectus, or any amendments
or supplements thereto, made in reliance upon and in conformity with information relating to the Agent furnished to the Company in writing
by the Agent expressly for use therein, it being understood and agreed that the only such information furnished by the Agent to the Company
consists of the information described in Section 6 below. There are no contracts or other documents required to be described
in the Prospectus or to be filed as exhibits to the Registration Statement which have not been described or filed as required. The Registration
Statement and the offer and sale of the Shares as contemplated hereby meet the requirements of Rule 415 under the Securities Act
and comply in all material respects with said rule.
(c) Ineligible
Issuer Status. The Company is not an “ineligible issuer” in connection with the offering of the Shares pursuant to Rules 164,
405 and 433 under the Securities Act. Any Free Writing Prospectus that the Company is required to file pursuant to Rule 433(d) under
the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act. Each Free
Writing Prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that
was prepared by or on behalf of or used or referred to by the Company complies or will comply in all material respects with the requirements
of Rule 433 under the Securities Act including timely filing with the Commission or retention where required and legending, and each
such Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the issuance and sale of the
Shares did not, does not and will not include any information that conflicted, conflicts with or will conflict with the information contained
in the Registration Statement or the Prospectus, including any document incorporated by reference therein. Except for the Free Writing
Prospectuses, if any, and electronic road shows, if any, furnished to the Agent before first use, the Company has not prepared, used or
referred to, and will not, without the Agent’s prior consent, prepare, use or refer to, any Free Writing Prospectus.
(d) Incorporated
Documents. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus,
at the time they were filed with the Commission, complied in all material respects with the requirements of the Exchange Act, as applicable,
and, when read together with the other information in the Prospectus, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(e) Exchange
Act Compliance. The documents incorporated or deemed to be incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, and any Free Writing Prospectus or amendment or supplement thereto complied and will comply in all material
respects with the requirements of the Exchange Act, and, when read together with the other information in the Prospectus, at the time
the Registration Statement and any amendments thereto become effective and as of each Representation Date, as the case may be, will not
contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
(f) The
Agreement. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles.
(g) Authorization
of the Shares. The Shares have been duly authorized for issuance and sale pursuant to this Agreement and, when issued and delivered
by the Company against payment therefor pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and the issuance
and sale of the Shares is not subject to any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase
the Shares.
(h) No
Applicable Registration or Other Similar Rights. There are no persons with registration or other similar rights to have any
equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement,
except for such rights as have been duly waived.
(i) No
Material Adverse Change. Except as otherwise disclosed in the Registration Statement and the Prospectus, subsequent to the respective
dates as of which information is given in the Registration Statement and the Prospectus: (i) there has been no material adverse change,
or any development that would reasonably be expected to result in a material adverse change, in the condition, financial or otherwise,
or in the earnings, business, properties, operations, assets, liabilities or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as one entity (any such change being referred to herein as
a “Material Adverse Change”); (ii) the Company and its subsidiaries, considered as one entity, have not incurred
any material liability or obligation, indirect, direct or contingent, including without limitation any losses or interference with its
business from fire, explosion, flood, earthquakes, accident or other calamity, whether or not covered by insurance, or from any strike,
labor dispute or court or governmental action, order or decree, that are material, individually or in the aggregate, to the Company and
its subsidiaries, considered as one entity, or has entered into any transactions not in the ordinary course of business; and (iii) there
has not been any material decrease in the capital stock or any material increase in any short-term or long-term indebtedness of the Company
or its subsidiaries and there has been no dividend or distribution of any kind declared, paid or made by the Company or, except for dividends
paid to the Company or other subsidiaries, by any of the Company’s subsidiaries on any class of capital stock, or any repurchase
or redemption by the Company or any of its subsidiaries of any class of capital stock.
(j) Independent
Accountants. Ernst & Young LLP, or other accountants (the “Accountants”), which has expressed its
opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) and supporting
schedules filed with the Commission as a part of and incorporated by reference into the Registration Statement and the Prospectus, is
(i) an independent registered public accounting firm as required by the Securities Act, the Exchange Act, and the rules of the
Public Company Accounting Oversight Board (“PCAOB”), (ii) in compliance with the applicable requirements relating
to the qualification of accountants under Rule 2-01 of Regulation S-X under the Securities Act and (iii) a registered public
accounting firm as defined by the PCAOB whose registration has not been suspended or revoked and who has not requested such registration
to be withdrawn.
(k) Financial
Statements. The financial statements (including the related notes thereto) of the Company and its consolidated subsidiaries filed
with the Commission as a part of the Registration Statement and the Prospectus present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries as of the dates indicated and the results of their operations, changes in stockholders’
equity and cash flows for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting
principles as applied in the United States (“U.S. GAAP”), applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the related notes thereto and except in the case of unaudited financial statements, which are subject
to normal and recurring year-end adjustments and do not contain all footnotes as permitted by the applicable rules of the Commission.
The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement fairly
presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and
guidelines applicable thereto. No other financial statements or supporting schedules are required to be included in the Registration Statement
or the Prospectus. The financial data set forth in each of the Registration Statement and the Prospectus fairly present, in all material
respects, the information set forth therein on a basis consistent with that of the audited financial statements contained in the Registration
Statement, and the Prospectus. All disclosures contained in the Registration Statement or the Prospectus and any free writing prospectus,
that constitute non-GAAP financial measures (as defined by the rules and regulations under the Securities Act and the Exchange Act)
comply with Regulation G under the Exchange Act and Item 10 of Regulation S-K under the Securities Act, as applicable. To the Company’s
knowledge, no person who has been suspended or barred from being associated with a registered public accounting firm, or who has failed
to comply with any sanction pursuant to Rule 5300 promulgated by the PCAOB, has participated in or otherwise aided the preparation
of, or audited, the financial statements, supporting schedules or other financial data filed with the Commission as a part of the Registration
Statement and the Prospectus.
(l) Company’s
Accounting System. The Company and each of its subsidiaries make and keep accurate books and records and maintain a system of
internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with U.S. GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) the interactive data in eXtensible
Business Reporting Language included or incorporated by reference in the Registration Statement and the Prospectus fairly presents the
information called for in all material respects and is prepared in accordance with the Commission’s rules and guidelines applicable
thereto.
(m) Disclosure
Controls and Procedures; Deficiencies in or Changes to Internal Control Over Financial Reporting. Except as described in the Registration
Statement and the Prospectus, the Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15
and 15d-15 under the Exchange Act), which (i) are designed to ensure that material information relating to the Company, including
its consolidated subsidiaries, is made known to the Company’s principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being
prepared; (ii) have been evaluated by management of the Company for effectiveness as of the end of the Company’s most recent
fiscal quarter; and (iii) are effective in all material respects to perform the functions for which they were established. Since
the end of the Company’s most recent audited fiscal year, there have been no significant deficiencies or material weakness in the
Company’s internal control over financial reporting (whether or not remediated) and no change in the Company’s internal control
over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control
over financial reporting. The Company is not aware of any change in its internal control over financial reporting that has occurred
during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
(n) Incorporation
and Good Standing of the Company. The Company has been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has the corporate power and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and the Prospectus and to enter into and perform its obligations under this Agreement.
The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure
to be so qualified or in good standing, as the case may be, or to have such power or authority would not, individually or in the aggregate,
have a Material Adverse Effect (defined below).
(o) Subsidiaries.
Each of the Company’s “subsidiaries” (for purposes of this Agreement, as defined in Rule 405 under the Securities
Act) has been duly incorporated or organized, as the case may be, and is validly existing and in good standing (where such concept is
recognized) under the laws of the jurisdiction of its incorporation or organization and has the power and authority (corporate or other)
to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus. Each
of the Company’s subsidiaries is duly qualified to transact business and is in good standing (where such concept is recognized)
in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure to be so qualified or in good standing, as the case may be, or have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect. All of the issued and outstanding capital stock or other equity
or ownership interests of each of the Company’s subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable
and are owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance
or adverse claim. The Company does not own or control, directly or indirectly, any corporation, association or other entity other than
the subsidiaries listed in Exhibit 21 to the Registration Statement.
(p) Capitalization
and Other Capital Stock Matters. The authorized, issued and outstanding capital stock of the Company is as set forth in the Registration
Statement, and the Prospectus under the caption “Capitalization” (other than for subsequent issuances, if any, pursuant to
employee benefit plans, or upon the exercise of outstanding options or warrants, in each case described in the Registration Statement
and the Prospectus). The Common Shares (including the Shares, when issued pursuant to the terms of this Agreement) conform, in all material
respects, to the description thereof contained in the Prospectus. All of the issued and outstanding Common Shares have been duly authorized
and validly issued, are fully paid and nonassessable and have been issued in compliance with all applicable federal and state securities
laws. None of the outstanding Common Shares was issued in violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for,
any capital stock of the Company or any of its subsidiaries other than those described in the Registration Statement and the Prospectus.
The descriptions of the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth in the Registration Statement and the Prospectus accurately and fairly presents, in all material respects,
the information required to be shown with respect to such plans, arrangements, options and rights.
(q) Stock
Exchange Listing. The Common Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed on the Principal
Market and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Shares
under the Exchange Act or delisting the Common Shares from the Principal Market, nor has the Company received any notification that the
Commission or the Principal Market is contemplating terminating such registration or listing.
(r) Non-Contravention
of Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any of its subsidiaries is
in violation of its charter or by-laws, partnership agreement or operating agreement or similar organizational documents, as applicable,
or is in default (or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture,
loan, credit agreement, note, lease, license agreement, contract, franchise or other instrument (including, without limitation, any pledge
agreement, security agreement, mortgage or other instrument or agreement evidencing, guaranteeing, securing or relating to indebtedness)
to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of their respective
properties or assets are subject (each, an “Existing Instrument”), except for such Defaults as could not be expected,
individually or in the aggregate, to have a material adverse effect on the condition (financial or other), earnings, business, properties,
operations, assets, liabilities or prospects of the Company and its subsidiaries, considered as one entity (a “Material Adverse
Effect”). The Company’s execution, delivery and performance of this Agreement, consummation of the transactions contemplated
hereby and by the Registration Statement and the Prospectus and the issuance and sale of the Shares (including the use of proceeds from
the sale of the Shares as described in the Registration Statement and the Prospectus under the caption “Use of Proceeds”)
(i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the charter
or by-laws, partnership agreement or operating agreement or similar organizational documents, as applicable, of the Company or any subsidiary
(ii) will not conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under,
or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries
pursuant to, or require the consent of any other party to, any Existing Instrument, except as could not be expected, individually or in
the aggregate, to have a Material Adverse Effect and (iii) will not result in any violation of any law, administrative regulation
or administrative or court decree applicable to the Company or any of its subsidiaries, except for such violations as would not be expected,
individually or in the aggregate, to have a Material Adverse Effect. No consent, approval, authorization or other order of, or registration
or filing with, any court or other governmental or regulatory authority or agency, is required for the Company’s execution, delivery
and performance of this Agreement and consummation of the transactions contemplated hereby and by the Registration Statement and the Prospectus,
except such as have been obtained or made or will be made by the Company under the Securities Act and such as may be required under applicable
state securities or blue sky laws or the Financial Industry Regulatory Authority, Inc. (“FINRA”). As used
herein, a “Debt Repayment Triggering Event” means any event or condition which gives, or with the giving of notice
or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of
its subsidiaries.
(s) Compliance
with Laws. The Company and its subsidiaries have been and are in compliance with all applicable laws, rules and regulations,
except where failure to be so in compliance could not be expected, individually or in the aggregate, to have a Material Adverse Effect.
(t) No
Material Actions or Proceedings. There is no action, suit, proceeding, inquiry or investigation brought by or before any governmental
entity now pending or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, which
if determined adversely to the Company or any of its subsidiaries would reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect or materially and adversely affect the consummation of the transactions contemplated by this Agreement or the
performance by the Company of its obligations hereunder; and the aggregate of all pending legal or governmental proceedings to which the
Company or any such subsidiary is a party or of which any of their respective properties or assets is the subject, including ordinary
routine litigation incidental to the business, if determined adversely to the Company, would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. No material labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is threatened or imminent. To the knowledge of the Company, no material labor dispute with
the employees of any principal supplier, manufacturer, customer or contractor of the Company, exists, or is threatened or imminent.
(u) Intellectual
Property Rights. The Company and its subsidiaries own, or have obtained valid and enforceable licenses for, the inventions,
patent applications, patents, trademarks, and trade names described in the Registration Statement and the Prospectus as being owned or
licensed by them or which are necessary for the conduct of their respective businesses as currently conducted or as currently proposed
to be conducted (with respect to the commercialization of the product candidates described in the Registration Statement and the Prospectus,
except where the failure to own or license such rights would not, individually or in the aggregate, have a Material Adverse Effect) (collectively,
“Intellectual Property”). To Company’s knowledge, other than the licensors, joint owners or collaborators
of any applicable Intellectual Property, there are no third parties who have rights to any Intellectual Property, except for: (i) the
licenses granted by Janssen Biotech. Inc., a subsidiary of Johnson & Johnson (pursuant to the Option and License Agreement Termination
dated July 2022); (ii) certain rights co-owned or retained by Children’s Medical Center Corporation (CMCC), including
rights to practice and use the co-owned patent rights for research, educational, clinical and charitable purposes; (iii) certain
Intellectual Property licensed under the Master Collaboration Agreement with Gilead Sciences, Inc. dated December 19, 2018 that
ended in January 2022; (iv) Adimab, LLC pursuant to the Amended and Restated Collaboration Agreement, dated March 12, 2019;
and (v) any licenses granted in the ordinary course for research, development or manufacturing, including customary reversionary
rights of third-party licensees and licensors with respect to Intellectual Property or (vi) that is disclosed in the Registration
Statement and the Prospectus as licensed to or by the Company or one or more of its subsidiaries; and, to the Company’s knowledge,
there is no infringement by third parties of any Intellectual Property. There is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others: (A) challenging the Company’s rights in or to any Intellectual Property,
and the Company is unaware of any facts which would form a reasonable basis for any such action, suit, proceeding or claim; (B) except
for the granted European patents EP2981822 and EP3368069 that are currently the subject of ongoing opposition proceedings before the European
Patent Office (“EPO”), challenging the validity, enforceability or scope of any Intellectual Property, and the Company is
unaware of any facts which would form a reasonable basis for any such action, suit, proceeding or claim; or (C) asserting that the
Company or any of its subsidiaries infringes or otherwise violates, or would, upon the commercialization of any product or service described
in the Registration Statement or the Prospectus as under development, infringe or violate, any patent, trademark, trade name, service
name, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any facts which would form a reasonable
basis for any such action, suit, proceeding or claim. The Company and its subsidiaries have complied with the terms of each agreement
pursuant to which Intellectual Property has been licensed to the Company or any subsidiary. The product candidates described in
the Registration Statement and the Prospectus as under development by the Company or any subsidiary fall within the scope of the claims
of one or more patents or pending patent applications owned by, or exclusively licensed to, the Company or any subsidiary.
(v) All
Necessary Permits, etc. The Company and its subsidiaries possess such valid and current certificates, authorizations or permits
required by state, federal or foreign regulatory agencies or bodies to conduct their respective businesses as currently conducted and
as described in the Registration Statement or the Prospectus (“Permits”), except where the failure to possess the same
or so qualify would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries is in violation of, or in default under, any of the Permits or has received any notice of proceedings relating
to the revocation or modification of, or non-compliance with the Permits, except for such violations, defaults or proceedings if resolved
unfavorably, would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(w) Title
to Properties. The Company and its subsidiaries have good and marketable title to all of the real and personal property and other
assets reflected as owned in the financial statements referred to in Section 2(k) above (or elsewhere in the Registration Statement
or the Prospectus), in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, adverse claims and
other defects, except such as do not materially and adversely affect the value of such property and do not materially interfere with the
use made or proposed to be made of such property by the Company. The real property, improvements, equipment and personal property held
under lease by the Company or any of its subsidiaries are held under valid and enforceable leases, with such exceptions as are not material
and do not materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property
by the Company or such subsidiary.
(x) Tax
Law Compliance. Except in any case in which failure to pay or file (as applicable) would not, individually or in the aggregate, have
a Material Adverse Effect, the Company and its subsidiaries have filed all necessary federal, state and foreign income and franchise tax
returns or have properly requested extensions thereof and have paid all taxes required to be paid by any of them and, if due and payable,
any related or similar assessment, fine or penalty levied against any of them except as may be being contested in good faith and by appropriate
proceedings. Except to the extent of any inadequacy that would not, individually or in the aggregate, result in a Material Adverse Effect,
the Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 2(k) above
in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company or
any of its subsidiaries has not been finally determined.
(y) Insurance.
Each of the Company and its subsidiaries are insured by recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are reasonably deemed adequate and customary for their businesses including,
but not limited to, policies covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and earthquakes and policies covering the Company and its subsidiaries for product liability claims and
clinical trial liability claims. The Company has no reason to believe that it or any of its subsidiaries will not be able (i) to
renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. Neither the Company nor any of its subsidiaries has been denied any insurance
coverage which it has sought or for which it has applied.
(z) Compliance
with Environmental Laws. Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse
Effect: (i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law,
rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental
Laws”); (ii) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements; (iii) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries; and (iv) there
are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action,
suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating
to Hazardous Materials or any Environmental Laws.
(aa) No
Rated Debt or Preferred Securities. There are no debt or preferred securities issued, or guaranteed, by the Company or its subsidiaries
that are rated by a “nationally recognized statistical rating organization,” as such term is defined in Section 3(a)(62)
of the Exchange Act.
(bb) ERISA
Compliance. The Company and its subsidiaries and any “employee benefit plan” (as defined under the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (collectively, “ERISA”))
established or maintained by the Company, its subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance
in all material respects with ERISA. “ERISA Affiliate” means, with respect to the Company or any of its subsidiaries,
any member of any group of organizations described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder (the “Code”) of which the Company or
such subsidiary is a member. No “reportable event” (as defined under ERISA), for which notice has not been waived,
has occurred or is reasonably expected to occur with respect to any “employee benefit plan” established or maintained by
the Company, its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan” established or maintained
by the Company, its subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated, would
have any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company, its subsidiaries nor
any of their ERISA Affiliates has incurred or reasonably expects to incur any liability under (i) Title IV of ERISA with respect
to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of
the Code. Each employee benefit plan established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates
that is intended to be qualified under Section 401(a) of the Code is so qualified and, to the knowledge of the Company, nothing
has occurred, whether by action or failure to act, which would cause the loss of such qualification.
(cc) Company
Not an “Investment Company.” The Company is not, and will not be, either after receipt of payment for the Shares
or after the application of the proceeds therefrom as described under “Use of Proceeds” in the Registration Statement or the
Prospectus, required to register as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment
Company Act”).
(dd) No
Price Stabilization or Manipulation; Compliance with Regulation M. The Company has not taken, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Common Shares
or any other “reference security” (as defined in Rule 100 of Regulation M under the Exchange Act (“Regulation
M”)) whether to facilitate the sale or resale of the Shares or otherwise, and has taken no action which would directly or indirectly
violate Regulation M. The Company acknowledges that the Agent may engage in passive market making transactions in the Shares on the Principal
Market in accordance with Regulation M. The Common Shares are currently “actively traded securities” (as defined in Regulation
M).
(ee) Related-Party
Transactions. There are no business relationships or related-party transactions involving the Company or any of its subsidiaries
or any other person required to be described in the Registration Statement or the Prospectus that have not been described as required.
(ff) FINRA
Matters. All of the information provided to the Agent or to counsel for the Agent by the Company, its counsel, its officers
and directors and, to the Company’s knowledge, the holders of any securities (debt or equity) or options to acquire any securities
of the Company in connection with the offering of the Shares is true, complete, correct and compliant with FINRA’s rules and
any letters, filings or other supplemental information provided to FINRA pursuant to FINRA Rules or NASD Conduct Rules is true,
complete and correct. As of the date of this Agreement, the Company meets the definition of the term “experienced issuer”
specified in FINRA Rule 5110(j)(6).
(gg) Market
Capitalization. At the time the Registration Statement was or will be originally declared effective, and thereafter at the time the
Company’s most recent Annual Report on Form 10-K was filed with the Commission, the Company met or will meet the then applicable
requirements for the use of Form S-3 under the Securities Act, including, but not limited to, General Instruction I.B.1 of Form S-3.
The Company is not a shell company (as defined in Rule 405 under the Securities Act) and has not been a shell company for at least
12 calendar months previously and if it has been a shell company at any time previously, has filed current Form 10 information (as
defined in Instruction I.B.6 of Form S-3) with the Commission at least 12 calendar months previously reflecting its status as an
entity that is not a shell company.
(hh) Statistical
and Market-Related Data. All statistical, demographic and market-related data included in the Registration Statement or the Prospectus
are based on or derived from sources that the Company believes, after reasonable inquiry, to be reliable and accurate. To the extent required,
the Company has obtained the written consent to the use of such data from such sources.
(ii) No
Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor, to the best knowledge of the Company,
any employee or agent of the Company or any of its subsidiaries, has made any contribution or other payment to any official of, or candidate
for, any federal, state or foreign office in violation of any applicable law or of the character required to be disclosed in the Registration
Statement or the Prospectus.
(jj) Foreign
Corrupt Practices Act. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer,
agent, employee, controlled affiliate or other person acting on behalf of the Company or any of its subsidiaries has, in the course of
its actions for, or on behalf of, the Company or any of its subsidiaries (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment
to any domestic government official, “foreign official” (as defined in the U.S. Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder, collectively, the “FCPA”) or employee from corporate funds;
(iii) violated or is in violation of any provision of the FCPA or any applicable non-U.S. anti-bribery statute or regulation; or
(iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any domestic government official,
such foreign official or employee; and the Company and its subsidiaries and, to the knowledge of the Company, the Company’s controlled
affiliates have conducted their respective businesses in compliance with the FCPA and have instituted and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
(kk) Money
Laundering Laws. The operations of the Company and its subsidiaries are, and have been conducted at all times, in compliance with
applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable
rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the
Company, threatened.
(ll) OFAC.
Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, after due inquiry, any director, officer, agent,
employee, controlled affiliate or person acting on behalf of the Company or any of its subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
will not directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, or any joint venture partner or other person or entity, for the purpose of financing the activities of or business with any
person, or in any country or territory, that currently is the subject to any U.S. sanctions administered by OFAC or in any other manner
that will result in a violation by any person (including any person participating in the transaction whether as underwriter, advisor,
investor or otherwise) of U.S. sanctions administered by OFAC.
(mm) Brokers.
Except pursuant to this Agreement, there is no broker, finder or other party that is entitled to receive from the Company any brokerage
or finder’s fee or other fee or commission as a result of any transactions contemplated by this Agreement.
(nn) Forward-Looking
Statements. Each financial or operational projection or other “forward-looking statement” (as defined by Section 27A
of the Securities Act or Section 21E of the Exchange Act) contained in the Registration Statement or the Prospectus (i) was
so included by the Company in good faith and with reasonable basis after due consideration by the Company of the underlying assumptions,
estimates and other applicable facts and circumstances and (ii) is accompanied by meaningful cautionary statements identifying those
factors that could cause actual results to differ materially from those in such forward-looking statement. No such statement was made
with the knowledge of an executive officer or director of the Company that it was false or misleading.
(oo) Emerging
Growth Company Status. From the time of initial confidential submission of the Company’s Original Registration Statement to
the Commission through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of
the Securities Act (an “Emerging Growth Company”).
(pp) Clinical
Data and Regulatory Compliance. The preclinical tests and clinical trials, if any, and other studies (collectively, “studies”)
conducted by or on behalf of or sponsored by the Company that are described in, or the results of which are referred to in, the Registration
Statement or the Prospectus were and, if still pending, are being conducted in all material respects in accordance with the protocols,
procedures and controls designed and approved for such studies and with standard medical and scientific research procedures; each description
of the results of such studies is accurate and complete in all material respects and fairly presents the data derived from such studies,
and the Company and its subsidiaries have no knowledge of any other studies the results of which are inconsistent with, or otherwise call
into question, the results described or referred to in the Registration Statement or the Prospectus; the Company and its subsidiaries
have made all such filings and obtained all such approvals as may be required by the Food and Drug Administration of the U.S. Department
of Health and Human Services or any committee thereof or from any other U.S. or foreign government or drug or medical device regulatory
agency, or health care facility Institutional Review Board (collectively, the “Regulatory Agencies”); neither the Company
nor any of its subsidiaries has received any notice of, or correspondence from, any Regulatory Agency requiring the termination, suspension
or material modification of any clinical trials that are described or referred to in the Registration Statement or the Prospectus; and
the Company and its subsidiaries have each operated and currently are in compliance in all material respects with all applicable rules,
regulations and policies of the Regulatory Agencies.
(qq) Compliance
with Health Care Laws. Except as described in the Registration Statement or the Prospectus, and except as would not, individually
or in the aggregate, have or may reasonably be expected to have a Material Adverse Effect: (i) the Company’s and each of its
subsidiaries’ business practices have been structured in a manner designed to comply with state, federal and foreign laws applicable
to the Company and its subsidiaries respective businesses, and the Company and its subsidiaries are in compliance with such laws including,
without limitation, applicable provisions of: (A) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.) and the
Public Health Service Act (42 U.S.C. § 201 et seq.), and the regulations promulgated thereunder; (B) all applicable federal,
state, local and all applicable foreign health care related fraud and abuse laws, including, without limitation, the U.S. Anti-Kickback
Statute (42 U.S.C. §1320a-7b(b)), the U.S. civil False Claims Act (31 U.S.C. §3729 et seq.), the federal criminal false claims
law (42 U.S.C. § 1320a-7b(a)), the federal civil monetary penalties law (42 U.S.C. § 1320a-7a), the Stark Law (42 U.S.C. §1395nn),
the U.S. Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h), 18 U.S.C. §§286, 287, 1347, and 1349 and the health care
fraud criminal provisions under the U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) (42
U.S.C. §1320d et seq.), the exclusion law (42 U.S.C. §1320a-7), Medicare, Title XVIII of the Social Security Act, and Medicaid,
Title XIX of the Social Security Act, and the regulations promulgated pursuant to such statutes; and (C) HIPAA, as amended by the
Health Information Technology for Economic and Clinical Health Act (42 U.S.C. §17921 et seq.), and the regulations promulgated thereunder
and any state or non-U.S. counterpart thereof or other law or regulation the purpose of which is to protect the privacy of individuals
or prescribers (collectively, “Health Care Laws”); (ii) the Company and its subsidiaries have not engaged in activities
which are cause for false claims liability, civil penalties, or mandatory or permissive exclusion from Medicare, Medicaid, or any other
state health care program or federal health care program; (iii) neither the Company nor its subsidiaries have received written notice
of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any court or arbitrator
or governmental or regulatory authority or third party alleging that any product, operation or activity is in violation of any Health
Care Laws nor, to the knowledge of the Company, is any, such claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration
or other action threatened; (iv) neither the Company nor any subsidiary has received written notice that any court or arbitrator
or governmental or regulatory authority has taken, is taking or intends to take action to limit, suspend, modify or revoke applicable
Permits or has any knowledge that any such court or arbitrator or governmental or regulatory authority is considering such action; (v) the
Company and its subsidiaries have filed, maintained or submitted all material reports, documents, forms, notices, applications, records,
claims, submissions and supplements or amendments as required by any Health Care Laws, and all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were complete and accurate on the date filed in all material
respects (or were corrected or supplemented by a subsequent submission); (vi) neither the Company nor its subsidiaries are a party
to any corporate integrity agreements, monitoring agreements, consent decrees, plans of correction, settlement orders, or similar agreements
with or imposed by any governmental or regulatory authority; and (vii) neither the Company, its subsidiaries nor any of their respective
officers, directors, employees, or agents have been excluded, suspended or debarred from participation in any U.S. federal health care
program or human clinical research or, to the knowledge of the Company, is subject to a governmental inquiry, investigation, proceeding,
or other similar action that could reasonably be expected to result in debarment, suspension, or exclusion.
(rr) No
Rights to Purchase Preferred Stock. The issuance and sale of the Shares as contemplated hereby will not cause any holder of any shares
of capital stock, securities convertible into or exchangeable or exercisable for capital stock or options, warrants or other rights to
purchase capital stock or any other securities of the Company to have any right to acquire any shares of preferred stock of the Company.
(ss) No
Contract Terminations. Neither the Company nor any of its subsidiaries has sent or received any communication regarding termination
of, or intent not to renew, any of the contracts or agreements referred to or described in the Prospectus or any free writing prospectus,
or referred to or described in, or filed as an exhibit to, the Registration Statement, and no such termination or non-renewal has been
threatened by the Company or any of its subsidiaries or, to the Company’s knowledge, any other party to any such contract or agreement,
which threat of termination or non-renewal has not been rescinded as of the date hereof.
(tt) Dividend
Restrictions. No subsidiary of the Company is prohibited or restricted, directly or indirectly, from paying dividends to the
Company, or from making any other distribution with respect to such subsidiary’s equity securities or from repaying to the Company
or any other subsidiary of the Company any amounts that may from time to time become due under any loans or advances to such subsidiary
from the Company or from transferring any property or assets to the Company or to any other subsidiary.
(uu) Sarbanes-Oxley.
The Company is in compliance, in all material respects, with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder.
(vv) Duties,
Transfer Taxes, Etc. No material stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or
other taxes are payable by the Agent in the United States or any political subdivision or taxing authority thereof or therein in connection
with the execution, delivery or performance of this Agreement by the Company or the sale and delivery by the Company of the Shares.
(ww) Underwriter
Agreements. The Company is not a party to any agreement with an agent or underwriter for any other “at the market” or
continuous equity transaction.
(xx) Reserved.
(yy) Cybersecurity.
To the best of the Company’s knowledge, the Company and its subsidiaries’ information technology assets and equipment, computers,
systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate
for, and operate and perform in all material respects as required in connection with the operation of the business of the Company and
its subsidiaries as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and
other corruptants. The Company and its subsidiaries have implemented and maintained commercially reasonable physical, technical and administrative
controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous
operation, redundancy and security of all IT Systems and data, including “Personal Data,” used in connection with their businesses.
“Personal Data” means (i) a natural person’s name, street address, telephone number, e-mail address, photograph,
social security number or tax identification number, driver’s license number, passport number, credit card number, bank information,
or customer or account number; (ii) any information which would qualify as “personally identifying information” under
the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by GDPR; (iv) any information which
would qualify as “protected health information” under the Health Insurance Portability and Accountability Act of 1996, as
amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”); and (v) any
other piece of information that allows the identification of such natural person, or his or her family, or permits the collection or
analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations, outages
or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty
to notify any other person, nor any incidents under internal review or investigations relating to the same. The Company and its subsidiaries
are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any
court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and
security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation
or modification.
(zz) Compliance
with Data Privacy Laws. Compliance with Data Privacy Laws. To the best of the Company’s knowledge, the Company and its
subsidiaries are, and at all prior times were, in material compliance with all applicable state, federal and foreign data privacy
and security laws and regulations, including without limitations HIPAA and the European Union General Data Protection Regulation (EU
2016/679), in each case, as applicable (collectively, the “Privacy Laws”). To ensure compliance with the Privacy
Laws, the Company and its subsidiaries have in place, comply with, and take commercially reasonable steps reasonably designed to
ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the
collection, storage, use, disclosure, handling, and analysis of Personal Data (as defined below) (the
“Policies”). The Company and its subsidiaries have at all times made all disclosures to users or customers
required by the Privacy Laws, and none of such disclosures made or contained in any Policy have, to the knowledge of the Company,
been inaccurate or in violation of any Privacy Laws in any material respect. The Company further certifies that neither it nor any
subsidiary: (i) has received written notice of any actual or potential liability under or relating to, or actual or potential
violation of, any of the Privacy Laws, (ii) is currently conducting or paying for, in whole or in part, any investigation,
remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement
from or with a governmental or regulatory authority or agency that imposes any obligation or liability under any Privacy
Law.
Any certificate signed by
any officer or representative of the Company or any of its subsidiaries and delivered to the Agent or counsel for the Agent in connection
with an issuance of Shares shall be deemed a representation and warranty by the Company to the Agent as to the matters covered thereby
on the date of such certificate.
The Company acknowledges that
the Agent and, for purposes of the opinions to be delivered pursuant to Section 4(o) hereof, counsel to the Company and
counsel to the Agent, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
Section 3. ISSUANCE AND SALE OF COMMON SHARES
(a) Sale
of Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions
herein set forth, the Company and the Agent agree that the Company may from time to time seek to sell Shares through the Agent, acting
as sales agent, or directly to the Agent, acting as principal, as follows, with an aggregate Sales Price of up to the Maximum Program
Amount, based on and in accordance with Issuance Notices as the Company may deliver, during the Agency Period.
(b) Mechanics
of Issuances.
(i) Issuance Notice.
Upon the terms and subject to the conditions set forth herein, on any Trading Day during the Agency Period on which the conditions set
forth in Section 5(a) and Section 5(b) shall have been satisfied, the Company may exercise its right
to request an issuance of Shares by delivering to the Agent an Issuance Notice; provided, however, that (A) in no event may
the Company deliver an Issuance Notice to the extent that (I) the sum of (x) the aggregate Sales Price of the requested Issuance
Amount, plus (y) the aggregate Sales Price of all Shares issued under all previous Issuance Notices effected pursuant to this Agreement,
would exceed the Maximum Program Amount; and (B) prior to delivery of any Issuance Notice, the period set forth for any previous
Issuance Notice shall have expired or been terminated. An Issuance Notice shall be considered delivered on the Trading Day that it is
received by e-mail to the persons set forth in Schedule A hereto and confirmed by the Company by telephone (including a voicemail message
to the persons so identified), with the understanding that, with adequate prior written notice, the Agent may modify the list of such
persons from time to time.
(ii) Agent
Efforts. Upon the terms and subject to the conditions set forth in this Agreement, upon the receipt of an Issuance Notice, the Agent
will use its commercially reasonable efforts consistent with its normal sales and trading practices to place the Shares with respect to
which the Agent has agreed to act as sales agent, subject to, and in accordance with the information specified in, the Issuance Notice,
unless the sale of the Shares described therein has been suspended, cancelled or otherwise terminated in accordance with the terms of
this Agreement. For the avoidance of doubt, the parties to this Agreement may modify an Issuance Notice at any time provided they both
agree in writing to any such modification.
(iii) Method
of Offer and Sale. The Shares may be offered and sold (A) in negotiated transactions with the consent of the Company or (B) by
any other method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under
the Securities Act, including block transactions, sales made directly on the Principal Market or sales made into any other existing trading
market of the Common Shares. Nothing in this Agreement shall be deemed to require either party to agree to the method of offer and sale
specified in the preceding sentence, and (except as specified in clause (A) above) the method of placement of any Shares by the Agent
shall be at the Agent’s discretion.
(iv) Confirmation
to the Company. If acting as sales agent hereunder, the Agent will provide written confirmation to the Company no later than the opening
of the Trading Day next following the Trading Day on which it has placed Shares hereunder setting forth the number of Shares sold on such
Trading Day, the corresponding Sales Price and the Issuance Price payable to the Company in respect thereof.
(v) Settlement.
Each issuance of Shares will be settled on the applicable Settlement Date for such issuance of Shares and, subject to the provisions of
Section 5, on or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer
the Shares being sold by crediting the Agent or its designee’s account at The Depository Trust Company through its Deposit/Withdrawal
At Custodian (DWAC) System, or by such other means of delivery as may be mutually agreed upon by the parties hereto and, upon receipt
of such Shares, which in all cases shall be freely tradable, transferable, registered shares in good deliverable form, the Agent will
deliver, by wire transfer of immediately available funds, the related Issuance Price in same day funds delivered to an account designated
by the Company prior to the Settlement Date. The Company may sell Shares to the Agent as principal at a price agreed upon at each relevant
time Shares are sold pursuant to this Agreement (each, a “Time of Sale”).
(vi) Suspension
or Termination of Sales. Consistent with standard market settlement practices, the Company or the Agent may, upon notice to the other
party hereto in writing or by telephone (confirmed immediately by verifiable email), suspend any sale of Shares, and the period set forth
in an Issuance Notice shall immediately terminate; provided, however, that (A) such suspension and termination shall not affect
or impair either party’s obligations with respect to any Shares placed or sold hereunder prior to the receipt of such notice; (B) if
the Company suspends or terminates any sale of Shares after the Agent confirms such sale to the Company, the Company shall still be obligated
to comply with Section 3(b)(v) with respect to such Shares; and (C) if the Company defaults in its obligation to
deliver Shares on a Settlement Date, the Company agrees that it will hold the Agent harmless against any loss, claim, damage or expense
(including, without limitation, penalties, interest and reasonable legal fees and expenses), as incurred, arising out of or in connection
with such default by the Company. The parties hereto acknowledge and agree that, in performing its obligations under this Agreement, the
Agent may borrow Common Shares from stock lenders in the event that the Company has not delivered Shares to settle sales as required by
subsection (v) above, and may use the Shares to settle or close out such borrowings. The Company agrees that no such notice shall
be effective against the Agent unless it is made to the persons identified in writing by the Agent pursuant to Section 3(b)(i).
(vii) No
Guarantee of Placement, Etc. The Company acknowledges and agrees that (A) there can be no assurance that the Agent will be successful
in placing Shares; (B) the Agent will incur no liability or obligation to the Company or any other Person if it does not sell Shares;
and (C) the Agent shall be under no obligation to purchase Shares on a principal basis pursuant to this Agreement, except as otherwise
specifically agreed by the Agent and the Company.
(viii) Material
Non-Public Information. Notwithstanding any other provision of this Agreement, the Company and the Agent agree that the Company shall
not deliver any Issuance Notice to the Agent, and the Agent shall not be obligated to place any Shares, during any period in which the
Company is in possession of material non-public information.
(c) Fees.
As compensation for services rendered, the Company shall pay to the Agent, on the applicable Settlement Date, the Selling Commission for
the applicable Issuance Amount (including with respect to any suspended or terminated sale pursuant to Section 3(b)(vi)) by
the Agent deducting the Selling Commission from the applicable Issuance Amount.
(d) Expenses.
The Company agrees to pay all costs, fees and expenses incurred in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the issuance and
delivery of the Shares (including all printing and engraving costs); (ii) all fees and expenses of the registrar and transfer agent
of the Shares; (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Shares;
(iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors;
(v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and certificates of experts), the Prospectus, any Free Writing
Prospectus (as defined below) prepared by or on behalf of, used by, or referred to by the Company, and all amendments and supplements
thereto, and this Agreement; (vi) all filing fees, attorneys’ fees and expenses incurred by the Company or the Agent in connection
with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Shares for offer
and sale under the state securities or blue sky laws or the provincial securities laws of Canada, and, if requested by the Agent, preparing
and printing a “Blue Sky Survey” or memorandum and a “Canadian wrapper,, and any supplements thereto, advising
the Agent of such qualifications, registrations, determinations and exemptions; (vii) the reasonable fees and disbursements of the
Agent’s counsel, including the reasonable fees and expenses of counsel for the Agent in connection with, FINRA review, if any,
and approval of the Agent’s participation in the offering and distribution of the Shares; (viii) the filing fees incident to
FINRA review, if any; (ix) the costs and expenses of the Company relating to investor presentations on any “road show”
undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the
preparation or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel
and lodging expenses of the representatives, employees and officers of the Company and of the Agent and any such consultants, and the
cost of any aircraft chartered in connection with the road show; and (x) the fees and expenses associated with listing the Shares
on the Principal Market. The fees and disbursements of Agent’s counsel pursuant to subsections (vi) and (vii) above shall
not exceed (A) $75,000 in connection with execution of this Agreement and (B) $15,000 in connection with each Triggering Event
Date (as defined below) on which the Company is required to provide a certificate pursuant to Section 4(o).
Section 4. ADDITIONAL COVENANTS
The Company covenants and
agrees with the Agent as follows, in addition to any other covenants and agreements made elsewhere in this Agreement:
(a) Exchange
Act Compliance. During the Agency Period, the Company shall (i) file, on a timely basis, with the Commission all reports and
documents required to be filed under Section 13, 14 or 15 of the Exchange Act in the manner and within the time periods required
by the Exchange Act; and (ii) either (A) include in its quarterly reports on Form 10-Q and its annual reports on Form 10-K,
a summary detailing, for the relevant reporting period, (1) the number of Shares sold through the Agent pursuant to this Agreement
and (2) the net proceeds received by the Company from such sales or (B) prepare a prospectus supplement containing, or include
in such other filing permitted by the Securities Act or Exchange Act (each an “Interim Prospectus Supplement”), such
summary information and, at least once a quarter and subject to this Section 4, file such Interim Prospectus Supplement pursuant
to Rule 424(b) under the Securities Act (and within the time periods required by Rule 424(b) and Rule 430B under
the Securities Act)).
(b) Securities
Act Compliance. After the date of this Agreement, the Company shall promptly advise the Agent in writing (i) of the receipt of
any comments of, or requests for additional or supplemental information from, the Commission; (ii) of the time and date of any filing
of any post-effective amendment to the Registration Statement, any Rule 462(b) Registration Statement or any amendment or supplement
to the Prospectus, any Free Writing Prospectus; (iii) of the time and date that any post-effective amendment to the Registration
Statement or any Rule 462(b) Registration Statement becomes effective; and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto, any Rule 462(b) Registration
Statement or any amendment or supplement to the Prospectus or of any order preventing or suspending the use of any Free Writing Prospectus
or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Shares from any securities
exchange upon which they are listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings
for any of such purposes. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain
the lifting of such order as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rule 424(b) and
Rule 433, as applicable, under the Securities Act and will use its reasonable efforts to confirm that any filings made by the Company
under such Rule 424(b) or Rule 433 were received in a timely manner by the Commission.
(c) Amendments
and Supplements to the Prospectus and Other Securities Act Matters. If any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus so that the Prospectus does not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if in the opinion of the Agent or counsel for the Agent it is otherwise necessary to amend
or supplement the Prospectus to comply with applicable law, including the Securities Act, the Company agrees (subject to Section 4(d) and
4(f)) to promptly prepare, file with the Commission and furnish at its own expense to the Agent, amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered
to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law including the Securities
Act (it being acknowledged that the Company may delay the filing of any amendment or supplement, if, in the judgement of the Company,
it is in the best interest of the Company). Neither the Agent’s consent to, or delivery of, any such amendment or supplement shall
constitute a waiver of any of the Company’s obligations under Sections 4(d) and 4(f).
(d) Agent’s
Review of Proposed Amendments and Supplements. Prior to amending or supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act) or the Prospectus (excluding any amendment or supplement through
incorporation of any report filed under the Exchange Act), the Company shall furnish to the Agent for review, a reasonable amount of time
prior to the proposed time of filing or use thereof, a copy of each such proposed amendment or supplement, and the Company shall not file
or use any such proposed amendment or supplement without the Agent’s prior consent, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.
(e) Use
of Free Writing Prospectus. Neither the Company nor the Agent has prepared, used, referred to or distributed, or will prepare, use,
refer to or distribute, without the other party’s prior written consent, any “written communication” that
constitutes a “free writing prospectus” as such terms are defined in Rule 405 under
the Securities Act with respect to the offering contemplated by this Agreement (any such free
writing prospectus being referred to herein as a “Free Writing Prospectus”).
(f) Free
Writing Prospectuses. The Company shall furnish to the Agent for review, a reasonable amount of time prior to the proposed time of
filing or use thereof, a copy of each proposed free writing prospectus or any amendment or supplement thereto to be prepared by or on
behalf of, used by, or referred to by the Company and the Company shall not file, use or refer to any proposed free writing prospectus
or any amendment or supplement thereto without the Agent’s consent, which shall not be unreasonably withheld, conditioned or delayed.
The Company shall furnish to the Agent, without charge, as many copies of any free writing prospectus prepared by or on behalf of, or
used by the Company, as the Agent may reasonably request. If at any time when a prospectus is required by the Securities Act (including,
without limitation, pursuant to Rule 173(d)) to be delivered in connection with sales of the Shares (but in any event if at any time
through and including the date of this Agreement) there occurred or occurs an event or development as a result of which any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company conflicted or would conflict with the information contained
in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company shall promptly amend or supplement such free writing prospectus to eliminate or correct such conflict or so
that the statements in such free writing prospectus as so amended or supplemented will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at such
subsequent time, not misleading, as the case may be; provided, however, that prior to amending or supplementing any such free writing
prospectus, the Company shall furnish to the Agent for review, a reasonable amount of time prior to the proposed time of filing or use
thereof, a copy of such proposed amended or supplemented free writing prospectus and the Company shall not file, use or refer to any such
amended or supplemented free writing prospectus without the Agent’s consent, which shall not be unreasonably withheld, conditioned
or delayed.
(g) Filing
of Agent Free Writing Prospectuses. The Company shall not to take any action that would result in the Agent or the Company being required
to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf
of the Agent that the Agent otherwise would not have been required to file thereunder.
(h) Copies
of Registration Statement and Prospectus. After the date of this Agreement through the last time that a prospectus is required by
the Securities Act (including, without limitation, pursuant to Rule 173(d)) to be delivered in connection with sales of the Shares,
the Company agrees to furnish the Agent with copies (which may be electronic copies) of the Registration Statement and each amendment
thereto, and with copies of the Prospectus and each amendment or supplement thereto in the form in which it is filed with the Commission
pursuant to the Securities Act or Rule 424(b) under the Securities Act, both in such quantities as the Agent may reasonably
request from time to time; and, if the delivery of a prospectus is required under the Securities Act or under the blue sky or securities
laws of any jurisdiction at any time on or prior to the applicable Settlement Date for any period set forth in an Issuance Notice in connection
with the offering or sale of the Shares and if at such time any event has occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or,
if for any other reason it is necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act
any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the
Agent and to request that the Agent suspend offers to sell Shares (and, if so notified, the Agent shall cease such offers as soon as practicable);
and if the Company decides to amend or supplement the Registration Statement or the Prospectus as then amended or supplemented, to advise
the Agent promptly by telephone (with confirmation in writing) and to prepare and cause to be filed promptly with the Commission an amendment
or supplement to the Registration Statement or the Prospectus as then amended or supplemented that will correct such statement or omission
or effect such compliance (it being acknowledged that the Company may delay the filing of any amendment or supplement, if, in the judgement
of the Company, it is in the best interest of the Company); provided, however, that if during such same period the Agent is required to
deliver a prospectus in respect of transactions in the Shares, the Company shall promptly prepare and file with the Commission such an
amendment or supplement.
(i)
Blue Sky Compliance. The Company shall cooperate with the Agent and
counsel for the Agent to qualify or register the Shares for sale under (or obtain exemptions from the application of) the state
securities or blue sky laws or Canadian provincial securities laws of those jurisdictions designated by the Agent, shall comply with
such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of
the Shares. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as
a foreign corporation. The Company will advise the Agent promptly of the suspension of the qualification or registration of (or any
such exemption relating to) the Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or
exemption, the Company shall use its best efforts to obtain the withdrawal thereof as soon as practicable.
(j) Earnings
Statement. As soon as practicable, the Company will make generally available to its security holders and to the Agent an earnings
statement (which need not be audited) covering a period of at least twelve months beginning with the first fiscal quarter of the Company
occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
under the Securities Act.
(k) Listing;
Reservation of Shares. (a) The Company will maintain the listing of the Shares on the Principal Market; and (b) the Company
will reserve and keep available at all times, free of preemptive rights, Shares for the purpose of enabling the Company to satisfy its
obligations under this Agreement.
(l)
Transfer Agent. The Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Shares.
(m) Due
Diligence. During the term of this Agreement, the Company will reasonably cooperate with any reasonable due diligence review conducted
by the Agent in connection with the transactions contemplated hereby, including, without limitation, providing information and making
available documents and senior corporate officers, during normal business hours and at the Company’s principal offices, as the Agent
may reasonably request from time to time.
(n) Representations
and Warranties. The Company acknowledges that each delivery of an Issuance Notice and each delivery of Shares on a Settlement Date
shall be deemed to be (i) an affirmation to the Agent that the representations and warranties of the Company contained in or made
pursuant to this Agreement are true and correct as of the date of such Issuance Notice or of such Settlement Date, as the case may be,
as though made at and as of each such date, except as may be disclosed in the Prospectus (including any documents incorporated by reference
therein and any supplements thereto); and (ii) an undertaking that the Company will advise the Agent if any of such representations
and warranties will not be true and correct as of the Settlement Date for the Shares relating to such Issuance Notice, as though made
at and as of each such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented relating to such Shares).
(o) Deliverables
at Triggering Event Dates; Certificates. The Company agrees that on or prior to the date of the first Issuance Notice and, during
the term of this Agreement after the date of the first Issuance Notice, upon:
(A) the
filing of the Prospectus or the amendment or supplement of any Registration Statement or Prospectus (other than a prospectus supplement
relating solely to an offering of securities other than the Shares or a prospectus filed pursuant to Section 4(a)(ii)(B)), by means
of a post-effective amendment, sticker or supplement, but not by means of incorporation of documents by reference into the Registration
Statement or Prospectus;
(B) the
filing with the Commission of an annual report on Form 10-K or a quarterly report on Form 10-Q (including any Form 10-K/A
or Form 10-Q/A containing amended financial information or a material amendment to the previously filed annual report on Form 10-K
or quarterly report on Form 10-Q), in each case, of the Company; or
(C) the
filing with the Commission of a current report on Form 8-K of the Company containing amended financial information (other than information
“furnished” pursuant to Item 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K
relating to reclassification of certain properties as discontinued operations in accordance with Statement of Financial Accounting Standards
No. 144) that is material to the offering of securities of the Company in the Agent’s reasonable discretion;
(any such event, a “Triggering Event
Date”), the Company shall furnish the Agent (but in the case of clause (C) above only if the Agent reasonably determines
that the information contained in such current report on Form 8-K of the Company is material) with a certificate as of the Triggering
Event Date, in the form and substance satisfactory to the Agent and its counsel, substantially similar to the form previously provided
to the Agent and its counsel, modified, as necessary, to relate to the Registration Statement and the Prospectus as amended or supplemented,
(A) confirming that the representations and warranties of the Company contained in this Agreement are true and correct, (B) that
the Company has performed all of its obligations hereunder to be performed on or prior to the date of such certificate and as to the matters
set forth in Section 5(a)(iii) hereof, and (C) containing any other certification that the Agent shall reasonably
request. The requirement to provide a certificate under this Section 4(o) shall be waived for any Triggering Event Date
occurring at a time when no Issuance Notice is pending or a suspension is in effect, which waiver shall continue until the earlier to
occur of the date the Company delivers instructions for the sale of Shares hereunder (which for such calendar quarter shall be considered
a Triggering Event Date) and the next occurring Triggering Event Date. Notwithstanding the foregoing, if the Company subsequently decides
to sell Shares following a Triggering Event Date when a suspension was in effect and did not provide the Agent with a certificate under
this Section 4(o), then before the Company delivers the instructions for the sale of Shares or the Agent sells any Shares pursuant
to such instructions, the Company shall provide the Agent with a certificate in conformity with this Section 4(o) dated as of
the date that the instructions for the sale of Shares are issued.
(p) Legal
Opinions. On or prior to the date of the first Issuance Notice and on each Triggering Event Date with respect to which the Company
is obligated to deliver a certificate pursuant to Section 4(o) for which no waiver is applicable and excluding the date of this
Agreement, a negative assurances letter and the written legal opinion of Goodwin Procter LLP, counsel to the Company and McCarter &
English, LLP, intellectual property counsel to the Company, each dated the date of delivery, in form and substance reasonably satisfactory
to Agent and its counsel, substantially similar to the form previously provided to the Agent and its counsel, modified, as necessary,
to relate to the Registration Statement and the Prospectus as then amended or supplemented. In lieu of such opinions for subsequent periodic
filings, in the discretion of the Agent, the Company may furnish a reliance letter from such counsel to the Agent, permitting the Agent
to rely on a previously delivered opinion letter, modified as appropriate for any passage of time or Triggering Event Date (except that
statements in such prior opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented
as of such Triggering Event Date).
(q) Comfort
Letter. On or prior to the date of the first Issuance Notice and on each Triggering Event Date with respect to which the Company is
obligated to deliver a certificate pursuant to Section 4(o) for which no waiver is applicable and excluding the date of this
Agreement, the Company shall cause the Accountants, the independent registered public accounting firm who has audited the financial statements
included or incorporated by reference in the Registration Statement, to furnish the Agent a comfort letter, dated the date of delivery,
in form and substance reasonably satisfactory to the Agent and its counsel, substantially similar to the form previously provided to the
Agent and its counsel; provided, however, that any such comfort letter will only be required on the Triggering Event Date specified to
the extent that it contains financial statements filed with the Commission under the Exchange Act and incorporated or deemed to be incorporated
by reference into a Prospectus. If requested by the Agent, the Company shall also cause a comfort letter to be furnished to the Agent
within ten (10) Trading Days of the date of occurrence of any material transaction or event requiring the filing of a current report
on Form 8-K containing material amended financial information of the Company, including the restatement of the Company’s financial
statements. The Company shall be required to furnish no more than one comfort letter from the Accountants hereunder per each filing of
an annual report on Form 10-K or a quarterly report on Form 10-Q.
(r) Secretary’s
Certificate. On or prior to the date of the first Issuance Notice and on each Triggering Event Date, the Company shall furnish the
Agent a certificate executed by the Secretary of the Company, signing in such capacity, dated the date of delivery (i) certifying
that attached thereto are true and complete copies of the resolutions duly adopted by the Board of Directors of the Company authorizing
the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation,
the issuance of the Shares pursuant to this Agreement), which authorization shall be in full force and effect on and as of the date of
such certificate, (ii) certifying and attesting to the office, incumbency, due authority and specimen signatures of each Person who
executed this Agreement for or on behalf of the Company, and (iii) containing any other
certification that the Agent shall reasonably request.
(s) Agent’s
Own Account; Clients’ Account. The Company consents to the Agent trading, in compliance with applicable law, in the Common Shares
for the Agent’s own account and for the account of its clients at the same time as sales of the Shares occur pursuant to this Agreement.
(t) Investment
Limitation. The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Shares in such
a manner as would require the Company or any of its subsidiaries to register as an investment company under the Investment Company Act.
(u) Market
Activities. The Company will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of the Shares or any other reference security, whether to facilitate the sale
or resale of the Shares or otherwise, and the Company will, and shall cause each of its affiliates to, comply with all applicable provisions
of Regulation M. If the limitations of Rule 102 of Regulation M (“Rule 102”) do not apply with respect to
the Shares or any other reference security pursuant to any exception set forth in Section (d) of Rule 102, then promptly
upon notice from the Agent (or, if later, at the time stated in the notice), the Company will, and shall cause each of its affiliates
to, comply with Rule 102 as though such exception were not available but the other provisions of Rule 102 (as interpreted by
the Commission) did apply. The Company shall promptly notify the Agent if it no longer meets the requirements set forth in Section (d) of
Rule 102.
(v) Notice
of Other Sale. Without the written consent of the Agent, the Company will not, directly or indirectly, offer to sell, sell, contract
to sell, grant any option to sell or otherwise dispose of any Common Shares or securities convertible into or exchangeable for Common
Shares (other than Shares hereunder), warrants or any rights to purchase or acquire Common Shares, or effect a reverse stock split, recapitalization,
share consolidation, reclassification or similar transaction affecting the outstanding Common Shares, during the period beginning on the
third Trading Day immediately prior to the date on which any Issuance Notice is delivered to the Agent hereunder and ending on the third
Trading Day immediately following the Settlement Date with respect to Shares sold pursuant to such Issuance Notice and will not directly
or indirectly enter into any other “at the market” or continuous equity transaction offer to sell, sell, contract to sell,
grant any option to sell or otherwise dispose of any Common Shares (other than the Shares offered pursuant to this Agreement) or securities
convertible into or exchangeable for Common Shares, warrants or any rights to purchase or acquire, Common Shares prior to the termination
of this Agreement; provided, however, that such restrictions will not be required in connection with the Company’s (i) issuance
or sale of Common Shares, options to purchase Common Shares or Common Shares issuable upon the exercise of options or other equity awards
pursuant to any employee or director share option, incentive or benefit plan, share purchase or ownership plan, long-term incentive plan,
dividend reinvestment plan, inducement award under the Principal Market rules or other compensation plan of the Company or its subsidiaries,
as in effect on the date of this Agreement, (ii) issuance or sale of Common Shares issuable upon exchange, conversion or redemption
of securities or the exercise or vesting of warrants, options or other equity awards outstanding at the date of this Agreement, (iii) issuance
or sale of Common Shares or securities convertible into or exchangeable for Common Shares as consideration for mergers, acquisitions,
other business combinations, joint ventures or strategic alliances occurring after the date of this Agreement which are not used for capital
raising purposes and (iv) modification of any outstanding options, warrants of any rights to purchase or acquire Common Shares.
(w) Reserved.
Section 5. CONDITIONS TO DELIVERY OF ISSUANCE NOTICES AND TO
SETTLEMENT
(a) Conditions
Precedent to the Right of the Company to Deliver an Issuance Notice and the Obligation of the Agent to Sell Shares. The right of the
Company to deliver an Issuance Notice hereunder is subject to the satisfaction, on the date of delivery of such Issuance Notice, and the
obligation of the Agent to use its commercially reasonable efforts to place Shares during the applicable period set forth in the Issuance
Notice is subject to the satisfaction, on each Trading Day during the applicable period set forth in the Issuance Notice, of each of the
following conditions:
| (i) | Accuracy of the Company’s Representations and Warranties; Performance by the Company. The
Company shall have delivered the certificate required to be delivered pursuant to Section 4(o) on or before the date
on which delivery of such certificate is required pursuant to Section 4(o). The Company shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company
at or prior to such date, including, but not limited to, the covenants contained in Section 4(m), Section 4(q) and
Section 4(r). |
| (ii) | No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby that prohibits or directly and materially adversely affects any of
the transactions contemplated by this Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or
materially adversely affecting any of the transactions contemplated by this Agreement. |
| (iii) | Material Adverse Changes. Except as disclosed in the Registration Statement, the Prospectus and
the Time of Sale Information, (a) in the judgment of the Agent there shall not have occurred any Material Adverse Change; and (b) there
shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review
for a possible change that does not indicate the direction of the possible change, in the rating accorded any securities of the Company
or any of its subsidiaries by any “nationally recognized statistical rating organization” as such term is defined for purposes
of Section 3(a)(62) of the Exchange Act. |
| (iv) | No Suspension of Trading in or Delisting of Common Shares; Other Events. The trading of the Common
Shares (including without limitation the Shares) shall not have been suspended by the Commission, the Principal Market or FINRA and the
Common Shares (including without limitation the Shares) shall have been approved for listing or quotation on and shall not have been delisted
from the Nasdaq Stock Market, the New York Stock Exchange or any of their constituent markets. There shall not have occurred (and be continuing
in the case of occurrences under clauses (i) and (ii) below) any of the following: (i) trading or quotation in any
of the Company’s securities shall have been suspended or limited by the Commission or by the Principal Market or trading in securities
generally on either the Principal Market shall have been suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the FINRA; (ii) a general banking moratorium shall have been declared
by any of federal or New York, authorities; or (iii) there shall have occurred any outbreak or escalation of national or international
hostilities or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change
or development involving a prospective substantial change in United States’ or international political, financial or economic conditions,
as in the judgment of the Agent is material and adverse and makes it impracticable to market the Shares in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of securities. |
(b) Documents
Required to be Delivered on each Issuance Notice Date. The Agent’s obligation to use its commercially reasonable efforts to
place Shares hereunder shall additionally be conditioned upon the delivery to the Agent on or before the Issuance Notice Date of a certificate
in form and substance reasonably satisfactory to the Agent, executed by the Chief Executive Officer,
President or Chief Financial Officer of the Company, to the effect that all conditions to the delivery of such Issuance Notice
shall have been satisfied as at the date of such certificate (which certificate shall not be required if the foregoing representations
shall be set forth in the Issuance Notice).
(c) No
Misstatement or Material Omission. The Agent shall not have advised the Company that the Registration Statement, the Prospectus or
the Time of Sale Information, or any amendment or supplement thereto, contains an untrue statement of fact that in the Agent’s reasonable
opinion is material, or omits to state a fact that in the Agent’s reasonable opinion is material and is required to be stated therein
or is necessary to make the statements therein not misleading.
(d) Agent
Counsel Legal Opinion. Agent shall have received from Cooley LLP, counsel for Agent, such opinion or opinions, on or before the date
on which the delivery of the Company counsel legal opinion is required pursuant to Section 4(p), with respect to such matters as
Agent may reasonably require, and the Company shall have furnished to such counsel such documents as they request for enabling them to
pass upon such matters.
Section 6. INDEMNIFICATION AND CONTRIBUTION
(a) Indemnification
of the Agent. The Company agrees to indemnify and hold harmless the Agent, its officers and employees, and each person, if any, who
controls the Agent within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense,
as incurred, to which the Agent or such officer, employee or controlling person may become subject, under the Securities Act, the Exchange
Act, other federal or state statutory law or regulation, or the laws or regulations of foreign jurisdictions where Shares have been offered
or sold or at common law or otherwise (including in settlement of any litigation), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based upon (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof
pursuant to Rule 430B under the Securities Act, or the omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading; or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any Free Writing Prospectus that the Company has used, referred to or filed, or is required to file, pursuant
to Rule 433(d) of the Securities Act or the Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading and to reimburse the Agent and each such officer, employee and controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by the Agent) as such expenses are reasonably incurred by the Agent or such officer,
employee or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability
or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Agent expressly for
use in the Registration Statement, any such Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), it being
understood and agreed that the only such information furnished by the Agent to the Company consists of the information described in subsection
(b) below. The indemnity agreement set forth in this Section 6(a) shall be in addition to any liabilities that
the Company may otherwise have.
(b) Indemnification
of the Company, its Directors and Officers. The Agent agrees to indemnify and hold harmless the Company, each of its directors, each
of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which the Company or any such director,
officer or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law
or regulation, or the laws or regulations of foreign jurisdictions where Shares have been offered or sold or at common law or otherwise
(including in settlement of any litigation), arises out of or is based upon (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof
pursuant to Rule 430B under the Securities Act, or the omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading; or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any Free Writing Prospectus that the Company has used, referred to or filed, or is required to file, pursuant
to Rule 433(d) of the Securities Act or the Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; but, for each of (i) and (ii) above, only to the extent arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information
furnished to the Company by the Agent expressly for use in the Registration Statement, any such Free Writing Prospectus or the Prospectus
(or any amendment or supplement thereto), it being understood and agreed that the only such information furnished by the Agent to the
Company consists of the information set forth in the ninth paragraph under the caption “Plan of Distribution” in the Prospectus,
and to reimburse the Company and each such director, officer and controlling person for any and all expenses (including the fees and disbursements
of one counsel chosen by the Company) as such expenses are reasonably incurred by the Company or such officer, director or controlling
person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense
or action. The indemnity agreement set forth in this Section 6(b) shall be in addition to any liabilities that the Agent
or the Company may otherwise have.
(c) Notifications
and Other Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 6 of notice of
the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 6, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise
than under the indemnity agreement contained in this Section 6 or to the extent it is not materially prejudiced as a proximate
result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to
seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 6 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable
for the fees and expenses of more than one separate counsel (together with local counsel), representing the indemnified parties who are
parties to such action), which counsel (together with any local counsel) for the indemnified parties shall be selected by the indemnified
party (in the case of counsel for the indemnified parties referred to in Section 6(a) and (b) above),
(ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the indemnifying party, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying party and shall be paid as they are incurred.
(d) Settlements.
The indemnifying party under this Section 6 shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by Section 6(c) hereof, the indemnifying party agrees that it shall
be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than
30 days after receipt by such indemnifying party of the aforesaid request; and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been
sought hereunder by such indemnified party, unless such settlement, compromise or consent includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action, suit or proceeding.
(e) Contribution.
If the indemnification provided for in this Section 6 is for any reason held to be unavailable to or otherwise insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Agent, on the other hand, from the offering of the Shares pursuant to this
Agreement; or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the
Company, on the one hand, and the Agent, on the other hand, in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Agent, on the other hand, in connection with the offering of the Shares pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total gross proceeds from the offering of the Shares (before deducting expenses)
received by the Company bear to the total commissions received by the Agent. The relative fault of the Company, on the one hand, and the
Agent, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, on the one
hand, or the Agent, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 6(c), any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in Section 6(c) with respect to notice
of commencement of any action shall apply if a claim for contribution is to be made under this Section 6(e); provided,
however, that no additional notice shall be required with respect to any action for which notice has been given under Section 6(c) for
purposes of indemnification.
The Company and the Agent agree that it would not
be just and equitable if contribution pursuant to this Section 6(e) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable considerations referred to in this Section 6(e).
Notwithstanding the provisions
of this Section 6(e), the Agent shall not be required to contribute any amount in excess of the Selling Commission received
by the Agent in connection with the offering contemplated hereby. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(e), each officer and employee of the Agent and each person, if any, who
controls the Agent within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Agent,
and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls
the Company within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company.
Section 7. TERMINATION & SURVIVAL
(a) Term.
Subject to the provisions of this Section 7, the term of this Agreement shall continue from the date of this Agreement until
the end of the Agency Period, unless earlier terminated by the parties to this Agreement pursuant to this Section 7.
(b) Termination;
Survival Following Termination.
| (i) | Either party may terminate this Agreement prior to the end of the Agency Period, by giving written notice
as required by this Agreement, upon ten calendar days’ notice to the other party; provided that, (A) if the Company terminates
this Agreement after the Agent confirms to the Company any sale of Shares, the Company shall remain obligated to comply with Section 3(b)(v) with
respect to such Shares and (B) Section 2, Section 3(d), Section 6, Section 7 and
Section 8 shall survive termination of this Agreement. If termination shall occur prior to the Settlement Date for any sale
of Shares, such sale shall nevertheless settle in accordance with the terms of this Agreement. Except as set forth herein, upon termination
of this Agreement, the Company shall not have any liability to the Agent for any discount, commission or other compensation with respect
to any Shares not otherwise sold by the Agent under this Agreement. |
| (ii) | In addition to the survival provision of Section 7(b)(i),
the respective indemnities, agreements, representations, warranties and other statements of the Company, of its officers and of the Agent
set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf
of the Agent or the Company or any of its or their partners, officers or directors or any controlling person, as the case may be, and,
anything herein to the contrary notwithstanding, will survive delivery of and payment for the Shares sold hereunder and any termination
of this Agreement. |
Section 8. MISCELLANEOUS
(a) Press
Releases and Disclosure. The Company may issue a press release describing the material terms of the transactions contemplated hereby
as soon as practicable following the date of this Agreement, and may file with the Commission a Current Report on Form 8-K, with
this Agreement attached as an exhibit thereto, describing the material terms of the transactions contemplated hereby, and the Company
shall consult with the Agent prior to making such disclosures, and the parties hereto shall use all commercially reasonable efforts, acting
in good faith, to agree upon a text for such disclosures that is reasonably satisfactory to all parties hereto. No party hereto shall
issue thereafter any press release or like public statement (including, without limitation, any disclosure required in reports filed with
the Commission pursuant to the Exchange Act) related to this Agreement or any of the transactions contemplated hereby without the prior
written approval of the other party hereto, except as may be necessary or appropriate in the reasonable opinion of the party seeking to
make disclosure to comply with the requirements of applicable law or stock exchange rules. If any such press release or like public statement
is so required, the party making such disclosure shall consult with the other party prior to making such disclosure, and the parties shall
use all commercially reasonable efforts, acting in good faith, to agree upon a text for such disclosure that is reasonably satisfactory
to all parties hereto.
(b) No
Advisory or Fiduciary Relationship. The Company acknowledges and agrees that (i) the transactions contemplated by this Agreement,
including the determination of any fees, are arm’s-length commercial transactions between the Company and the Agent, (ii) when
acting as a principal under this Agreement, the Agent is and has been acting solely as a principal is not the agent or fiduciary of the
Company, or its stockholders, creditors, employees or any other party, (iii) the Agent has not assumed nor will assume an advisory
or fiduciary responsibility in favor of the Company with respect to the transactions contemplated hereby or the process leading thereto
(irrespective of whether the Agent has advised or is currently advising the Company on other matters) and the Agent does not have any
obligation to the Company with respect to the transactions contemplated hereby except the obligations expressly set forth in this Agreement,
(iv) the Agent and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of
the Company, and (v) the Agent has not provided any legal, accounting, regulatory or tax advice with respect to the transactions
contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.
(c) Research
Analyst Independence. The Company acknowledges that the Agent’s research analysts and research departments are required to and
should be independent from their respective investment banking divisions and are subject to certain regulations and internal policies,
and as such the Agent’s research analysts may hold views and make statements or investment recommendations and/or publish research
reports with respect to the Company or the offering that differ from the views of their respective investment banking divisions. The Company
understands that the Agent is a full service securities firm and as such from time to time, subject to applicable securities laws, may
effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities
of the companies that may be the subject of the transactions contemplated by this Agreement.
(d) Notices.
All communications hereunder shall be in writing and shall be mailed, hand delivered, sent via electronic mail (if applicable) or telecopied
and confirmed to the parties hereto as follows:
If
to the Agent:
Jefferies LLC
520 Madison Avenue
New York, NY 10022
Facsimile:
Attention: General Counsel
with a copy (which shall not constitute
notice) to:
Cooley LLP
55 Hudson Yards
New York, NY 10001
Facsimile: (212) 479-6275
Attention: Daniel I. Goldberg, Esq.
If to the Company:
Scholar
Rock Holding Corporation
301 Binney Street, 3rd Floor
Cambridge, MA 02142
Attention: General Counsel
with a copy (which shall not constitute
notice) to:
Goodwin Procter LLP
620 Eighth Avenue
New York, NY 10018
Attention: Kingsley Taft and Laurie A. Burlingame
Any party hereto may change the address for receipt
of communications by giving written notice to the others in accordance with this Section 8(d).
(e) Successors.
This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 6, and in each case their respective successors, and no other person
will have any right or obligation hereunder. The term “successors” shall not include any purchaser of the Shares as such from
the Agent merely by reason of such purchase.
(f) Partial
Unenforceability. The invalidity or unenforceability of any Article, Section, paragraph or provision of this Agreement shall not affect
the validity or enforceability of any other Article, Section, paragraph or provision hereof. If any Article, Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
(g) Governing
Law Provisions. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable
to agreements made and to be performed in such state. Any legal suit, action or proceeding arising out of or based upon this Agreement
or the transactions contemplated hereby may be instituted in the federal courts of the United States of America located in the Borough
of Manhattan in the City of New York or the courts of the State of New York in each case located in the Borough of Manhattan in the City
of New York (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction
(except for proceedings instituted in regard to the enforcement of a judgment of any such court, as to which such jurisdiction is non-exclusive)
of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party’s
address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The
parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other
proceeding brought in any such court has been brought in an inconvenient forum.
(h) General
Provisions. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral
and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may
be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument, and may be delivered by facsimile transmission or by electronic delivery of a portable document
format (PDF) file(including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act,
the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com). This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit. The Article and Section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
[Signature Page Immediately Follows]
If the foregoing is in accordance
with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument,
along with all counterparts hereof, shall become a binding agreement in accordance with its terms
| |
Very truly yours, |
| |
|
| |
SCHOLAR ROCK HOLDING CORPORATION |
| |
By: |
/s/ Junlin Ho |
| |
|
Name: Junlin Ho |
| |
|
Title: General Counsel and Corporate
Secretary |
The foregoing Agreement is hereby confirmed and
accepted by the Agent in New York, New York as of the date first above written.
JEFFERIES LLC
| By: |
/s/ Donald Lynaugh |
|
| |
Name: Donald Lynaugh |
|
| |
Title: Managing Director |
|
EXHIBIT A
ISSUANCE NOTICE
[Date]
Jefferies LLC
520 Madison Avenue
New York, New York 10022
Attn: [__________]
Reference is made to the Open Market Sale Agreement
between Scholar Rock Holding Corporation (the “Company”) and Jefferies LLC (the “Agent”) dated as
of November 14, 2022. The Company confirms that all conditions to the delivery of this Issuance Notice are satisfied as of the date
hereof.
Date of Delivery of Issuance Notice (determined pursuant to Section 3(b)(i)):
_______________________
Issuance Amount (equal to the total Sales Price for such Shares):
| Number of days in selling period: |
|
|
| |
|
|
| First date of selling period: |
|
|
| |
|
|
| Last date of selling period: |
|
|
Settlement Date(s) if other than standard T+2 settlement:
Floor Price Limitation (in no event less than
$1.00 without the prior written consent of the Agent, which consent may be withheld in the Agent’s sole discretion): $ ____ per
share
Schedule A
Notice Parties
The Company
Jay Backstrom
Edward H. Myles
Junlin Ho
The Agent
Donald Lynaugh
Jack Fabbri
Matthew Kim
Exhibit 4.4
SCHOLAR
ROCK HOLDING CORPORATION
TO
Trustee
Indenture
Dated
as of , 20
Senior
Debt Securities
TABLE OF CONTENTS
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Page |
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| ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION |
1 |
| SECTION 101 |
Definitions |
1 |
| SECTION 102 |
Compliance Certificates and Opinions |
9 |
| SECTION 103 |
Form of Documents Delivered to Trustee |
10 |
| SECTION 104 |
Acts of Holders |
10 |
| SECTION 105 |
Notices, etc., to Trustee and Company |
11 |
| SECTION 106 |
Notice to Holders; Waiver |
12 |
| SECTION 107 |
Counterparts; Effect of Headings and Table of Contents |
13 |
| SECTION 108 |
Successors and Assigns |
13 |
| SECTION 109 |
Severability Clause |
13 |
| SECTION 110 |
Benefits of Indenture |
13 |
| SECTION 111 |
Governing Law |
13 |
| SECTION 112 |
Legal Holidays |
13 |
| SECTION 113 |
Limited Liability; Immunity of Stockholders, Directors, Officers and Agents of the Company |
13 |
| SECTION 114 |
Conflict with Trust Indenture Act |
14 |
| ARTICLE TWO - SECURITIES FORMS |
14 |
| SECTION 201 |
Forms of Securities |
14 |
| SECTION 202 |
Form of Trustee’s Certificate of Authentication |
14 |
| SECTION 203 |
Securities Issuable in Global Form |
14 |
| ARTICLE THREE - THE SECURITIES |
15 |
| SECTION 301 |
Amount Unlimited; Issuable in Series |
15 |
| SECTION 302 |
Denominations |
19 |
| SECTION 303 |
Execution, Authentication, Delivery and Dating |
19 |
| SECTION 304 |
Temporary Securities |
21 |
| SECTION 305 |
Registration, Registration of Transfer, Conversion and Exchange |
23 |
| SECTION 306 |
Mutilated, Destroyed, Lost and Stolen Securities |
26 |
| SECTION 307 |
Payment of Interest; Interest Rights Preserved |
27 |
| SECTION 308 |
Persons Deemed Owners |
28 |
| SECTION 309 |
Cancellation |
29 |
| SECTION 310 |
Computation of Interest |
29 |
| SECTION 311 |
CUSIP Numbers |
29 |
| ARTICLE FOUR - SATISFACTION AND DISCHARGE |
30 |
| SECTION 401 |
Satisfaction and Discharge of Indenture |
30 |
| SECTION 402 |
Application of Trust Funds |
30 |
| ARTICLE FIVE - REMEDIES |
31 |
| SECTION 501 |
Events of Default |
31 |
| SECTION 502 |
Acceleration of Maturity; Rescission and Annulment |
32 |
| SECTION 503 |
Collection of Indebtedness and Suits for Enforcement by Trustee |
33 |
| SECTION 504 |
Trustee May File Proofs of Claim |
34 |
| SECTION 505 |
Trustee May Enforce Claims Without Possession of Securities or Coupons |
34 |
| SECTION 506 |
Application of Money Collected |
34 |
| SECTION 507 |
Limitation on Suits |
35 |
| SECTION 508 |
Unconditional Right of Holders to Receive Principal, Premium or Make-Whole Amount, if any, and Interest |
35 |
TABLE OF CONTENTS
(continued)
| |
|
Page |
| |
|
|
| SECTION 509 |
Restoration of Rights and Remedies |
35 |
| SECTION 510 |
Rights and Remedies Cumulative |
36 |
| SECTION 511 |
Delay or Omission Not Waiver |
36 |
| SECTION 512 |
Control by Holders of Securities |
36 |
| SECTION 513 |
Waiver of Past Defaults |
36 |
| SECTION 514 |
Waiver of Usury, Stay or Extension Laws |
37 |
| SECTION 515 |
Undertaking for Costs |
37 |
| ARTICLE SIX - THE TRUSTEE |
37 |
| SECTION 601 |
Notice of Defaults |
37 |
| SECTION 602 |
Certain Rights of Trustee |
37 |
| SECTION 603 |
Not Responsible for Recitals or Issuance of Securities |
39 |
| SECTION 604 |
May Hold Securities |
39 |
| SECTION 605 |
Money Held in Trust |
40 |
| SECTION 606 |
Compensation and Reimbursement |
40 |
| SECTION 607 |
Corporate Trustee Required; Eligibility; Conflicting Interests |
40 |
| SECTION 608 |
Resignation and Removal; Appointment of Successor |
41 |
| SECTION 609 |
Acceptance of Appointment by Successor |
42 |
| SECTION 610 |
Merger, Conversion, Consolidation or Succession to Business |
43 |
| SECTION 611 |
Appointment of Authenticating Agent |
43 |
| SECTION 612 |
Certain Duties and Responsibilities of the Trustee |
44 |
| ARTICLE SEVEN - HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY |
45 |
| SECTION 701 |
Disclosure of Names and Addresses of Holders |
45 |
| SECTION 702 |
Reports by Trustee |
46 |
| SECTION 703 |
Reports by Company |
46 |
| SECTION 704 |
Company to Furnish Trustee Names and Addresses of Holders |
46 |
| ARTICLE EIGHT - CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE |
47 |
| SECTION 801 |
Consolidations and Mergers of Company and Sales, Leases and Conveyances Permitted Subject to Certain Conditions |
47 |
| SECTION 802 |
Rights and Duties of Successor Corporation |
47 |
| SECTION 803 |
Officers’ Certificate and Opinion of Counsel |
47 |
| ARTICLE NINE - SUPPLEMENTAL INDENTURES |
48 |
| SECTION 901 |
Supplemental Indentures Without Consent of Holders |
48 |
| SECTION 902 |
Supplemental Indentures with Consent of Holders |
49 |
| SECTION 903 |
Execution of Supplemental Indentures |
50 |
| SECTION 904 |
Effect of Supplemental Indentures |
50 |
| SECTION 905 |
Conformity with Trust Indenture Act |
50 |
| SECTION 906 |
Reference in Securities to Supplemental Indentures |
50 |
| ARTICLE TEN - COVENANTS |
50 |
| SECTION 1001 |
Payment of Principal, Premium or Make-Whole Amount, if any; and Interest |
50 |
| SECTION 1002 |
Maintenance of Office or Agency |
51 |
| SECTION 1003 |
Money for Securities Payments to Be Held in Trust |
52 |
| SECTION 1004 |
Existence |
53 |
| SECTION 1005 |
Maintenance of Properties |
53 |
| SECTION 1006 |
Insurance |
54 |
| SECTION 1007 |
Payment of Taxes and Other Claims |
54 |
| SECTION 1008 |
Statement as to Compliance |
54 |
TABLE OF CONTENTS
(continued)
| |
|
Page |
| |
|
|
| SECTION 1009 |
Waiver of Certain Covenants |
54 |
| ARTICLE ELEVEN - REDEMPTION OF SECURITIES |
54 |
| SECTION 1101 |
Applicability of Article |
54 |
| SECTION 1102 |
Election to Redeem; Notice to Trustee |
54 |
| SECTION 1103 |
Selection by Trustee of Securities to Be Redeemed |
54 |
| SECTION 1104 |
Notice of Redemption |
55 |
| SECTION 1105 |
Deposit of Redemption Price |
56 |
| SECTION 1106 |
Securities Payable on Redemption Date |
56 |
| SECTION 1107 |
Securities Redeemed in Part |
57 |
| ARTICLE TWELVE - SINKING FUNDS |
57 |
| SECTION 1201 |
Applicability of Article |
57 |
| SECTION 1202 |
Satisfaction of Sinking Fund Payments with Securities |
58 |
| SECTION 1203 |
Redemption of Securities for Sinking Fund |
58 |
| ARTICLE THIRTEEN - REPAYMENT AT THE OPTION OF HOLDERS |
58 |
| SECTION 1301 |
Applicability of Article |
58 |
| SECTION 1302 |
Repayment of Securities |
58 |
| SECTION 1303 |
Exercise of Option |
59 |
| SECTION 1304 |
When Securities Presented for Repayment Become Due and Payable |
59 |
| SECTION 1305 |
Securities Repaid in Part |
60 |
| ARTICLE FOURTEEN - DEFEASANCE AND COVENANT DEFEASANCE |
60 |
| SECTION 1401 |
Applicability of Article; Company’s Option to Effect Defeasance or Covenant Defeasance |
60 |
| SECTION 1402 |
Defeasance and Discharge |
60 |
| SECTION 1403 |
Covenant Defeasance |
61 |
| SECTION 1404 |
Conditions to Defeasance or Covenant Defeasance |
61 |
| SECTION 1405 |
Deposited Money and Government Obligations to Be Held in Trust; Other Miscellaneous Provisions |
62 |
| ARTICLE FIFTEEN - MEETINGS OF HOLDERS OF SECURITIES |
63 |
| SECTION 1501 |
Purposes for Which Meetings May Be Called |
63 |
| SECTION 1502 |
Call, Notice and Place of Meetings |
63 |
| SECTION 1503 |
Persons Entitled to Vote at Meetings |
64 |
| SECTION 1504 |
Quorum; Action |
64 |
| SECTION 1505 |
Determination of Voting Rights; Conduct and Adjournment of Meetings |
65 |
| SECTION 1506 |
Counting Votes and Recording Action of Meetings |
65 |
| ARTICLE SIXTEEN - CONVERSION OF SECURITIES |
66 |
| SECTION 1601 |
Applicability of Article; Conversion Privilege and Conversion Price |
66 |
| SECTION 1602 |
Exercise of Conversion Privilege |
67 |
| SECTION 1603 |
Fractions of Shares |
67 |
| SECTION 1604 |
Adjustment of Conversion Price |
68 |
| SECTION 1605 |
Notice of Adjustments of Conversion Price |
71 |
| SECTION 1606 |
Notice of Certain Corporate Action |
71 |
| SECTION 1607 |
Company to Reserve Common Stock |
71 |
| SECTION 1608 |
Taxes on Conversion |
72 |
| SECTION 1609 |
Covenants as to Common Stock |
72 |
| SECTION 1610 |
Cancellation of Converted Securities |
72 |
TABLE OF CONTENTS
(continued)
| |
|
Page |
| |
|
|
| SECTION 1611 |
Provisions in Case of Consolidation, Merger or Sale of Assets; Special Distributions |
72 |
| SECTION 1612 |
Trustee Adjustment Disclaimer; Company Determination Final |
73 |
| SECTION 1613 |
When No Adjustment Required |
73 |
| SECTION 1614 |
Equivalent Adjustments |
74 |
SCHOLAR ROCK HOLDING CORPORATION
Reconciliation and tie between the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act” or “TIA”) and the Indenture,
dated as of , 20 .
| Trust Indenture Act Section |
|
Indenture Section |
| § 310(a)(1) |
|
607 |
| (a)(2) |
|
607 |
| (b) |
|
607, 608 |
| § 312(c) |
|
701 |
| § 313(a) |
|
702 |
| (c) |
|
702 |
| § 314(a) |
|
703 |
| (a)(4) |
|
1008 |
| (c)(1) |
|
102 |
| (c)(2) |
|
102 |
| (e) |
|
102 |
| § 315(b) |
|
601 |
| § 316(a) (last sentence) |
|
101(“Outstanding”) |
| (a)(1)(A) |
|
502, 512 |
| (a)(1)(B) |
|
513 |
| (b) |
|
508 |
| § 317(a)(1) |
|
503 |
| (a)(2) |
|
504 |
| § 318(a) |
|
111 |
| (c) |
|
111 |
NOTE: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Indenture.
Attention should also be directed to Section 318(c) of
the Trust Indenture Act, which provides that the provisions of Sections 310 to and including 317 of the Trust Indenture Act are
a part of and govern every qualified indenture, whether or not physically contained therein.
INDENTURE,
dated as of , 20 , between SCHOLAR ROCK HOLDING CORPORATION, a corporation organized
under the laws of the State of Delaware (hereinafter called the “Company”), having its principal office at 620
Memorial Drive, 2nd Floor, Cambridge, MA 02139, and ,
as Trustee hereunder (hereinafter called the “Trustee”), having a Corporate Trust Office at .
RECITALS OF THE COMPANY
The Company deems it necessary to issue
from time to time for its lawful purposes senior debt securities (hereinafter called the “Securities”) evidencing
its unsecured and senior indebtedness, and has duly authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Securities, to be issued in one or more Series as provided in this Indenture.
This Indenture is subject to the provisions
of the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act” or “TIA”), that
are deemed to be incorporated into this Indenture and shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture
a valid and legally binding agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE
WITNESSETH:
For and in consideration of the premises
and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities or of a Series thereof, as follows:
ARTICLE ONE - DEFINITIONS AND
OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101 Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the
terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;
(2) all
other terms used herein which are defined in the TIA, either directly or by reference therein, have the meanings assigned to them
therein, and the terms “cash transactions” and “self-liquidating paper,” as used in TIA Section 311,
shall have the meanings assigned to them in the rules of the Commission adopted under the TIA;
(3) all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
(4) any
reference to an “Article” or a “Section” refers to an Article or Section, as the case may be, of this
Indenture; and
(5) the
words “herein,” “hereof “and “hereunder” and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section or other subdivision.
“Act,” when used with
respect to any Holder, has the meaning specified in Section 104.
“Affiliate” of any specified
Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.
“Authenticating Agent”
means any Person authorized by the Trustee pursuant to Section 611 hereof to act on behalf of the Trustee
to authenticate Securities of one or more Series.
“Authorized Newspaper”
means a newspaper, printed in the English language or in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in each place in connection
with which the term is used or in the financial community of each such place. Whenever successive publications are required
to be made in Authorized Newspapers, the successive publications may be made in the same or in different Authorized Newspapers
in the same city meeting the foregoing requirements and in each case on any Business Day.
“Bankruptcy Law” has
the meaning specified in Section 501.
“Bearer Security” means
any Security established pursuant to Section 201 which is payable to the bearer.
“Board of Directors”
when used with reference to the Company, means the board of directors of the Company, or any committee of that board duly authorized
to act hereunder, or any director or directors and/or officer or officers of the Company, to whom the board or committee shall
have duly delegated its authority.
“Board Resolution” means
a copy of (1) a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors or a duly authorized committee of the Board of Directors and to be in full force and effect on the date
of such certification, or (2) a certificate signed by the director or directors and/or officer or officers to whom the Board
of Directors shall have duly delegated its authority, together with a resolution certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification
authorizing such delegation, and, in each case, delivered to the Trustee.
“Business Day,” when
used with respect to any Place of Payment or any other particular location referred to in this Indenture or in the Securities,
means, unless otherwise specified with respect to any Securities issued pursuant to Section 301, any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in that Place of Payment or
particular location are authorized or required by law, regulation or executive order to close.
“Capital Stock” means,
with respect to any Person, any capital stock (including preferred stock), shares, interests, participations or other ownership
interests (however designated) of such Person and any rights (other than debt securities convertible into or exchangeable for corporate
stock), warrants or options
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