On September 3, 2020, Tonix Pharmaceuticals Holding Corp. (the “Company”) entered into a purchase agreement, dated as of September 3, 2020 (the “Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase up to $30.0 million of shares (the “Purchase Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”). Concurrently with entering into the Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park, pursuant to which it agreed to provide Lincoln Park with certain registration rights related to the shares issued under the Purchase Agreement (the “Registration Rights Agreement”).
Beginning on the Commencement Date (as defined below) and thereafter, the Company has the right, in its sole discretion, to present Lincoln Park with a purchase notice (a “Regular Purchase Notice”), directing Lincoln Park to purchase up to 750,000 Purchase Shares (the “Regular Purchase Amount”) provided that the closing sale price of the Common Stock is not below $0.10 on the purchase date (a “Regular Purchase”). The Regular Purchase Amount may be increased to up to 1,000,000 shares if the closing sale price of the Common Stock is not below $0.75 per share, and to up to 1,250,000 shares if the closing sale price of the Common Stock is not below $1.00 per share. The Company and Lincoln Park may mutually agree to increase the Regular Purchase Amount provided that Lincoln Park’s committed obligation under each Regular Purchase shall not exceed 4,000,000 shares on any purchase date.
The Purchase Agreement provides for a purchase price per Purchase Share for each Regular Purchase (the “Purchase Price”) equal to the lesser of:
|•||the lowest sale price of the Common Stock on the Nasdaq Global Market on the purchase date of such shares; and|
|•||the average of the three lowest closing sale prices for the Common Stock on the Nasdaq Global Market during the ten consecutive business days ending on the business day immediately preceding the purchase date of such shares.|
In addition, on any date on which the Company submits a Purchase Notice for the maximum amount allowed for such a Regular Purchase to Lincoln Park and the closing sale price of the Common Stock is not below $0.20, it also has the right, in its sole discretion, to present Lincoln Park with an accelerated purchase notice (an “Accelerated Purchase Notice”), directing Lincoln Park to purchase an amount of Purchase Shares (an “Accelerated Purchase”), which number of Purchase Shares will not exceed the lesser of (i)300% of the number of shares purchased pursuant to such Regular Purchase and (ii) 30% of the total number of shares of the Common Stock traded on Nasdaq during all or a specified period on the applicable Accelerated Purchase date as set forth in the Purchase Agreement. The purchase price per Purchase Share for each such Accelerated Purchase will be equal to 97% of the lesser of:
|•||the volume-weighted average price of the Common Stock on the Nasdaq Global Market during the applicable Accelerated Purchase Measurement Period (as such term is defined in the Purchase Agreement) on the applicable Accelerated Purchase date; and|
|•||the closing sale price of the Common Stock on the Nasdaq Global Market on the applicable Accelerated Purchase date.|
The Company may also direct Lincoln Park, on any business day on which an Accelerated Purchase has been completed and all of the shares to be purchased thereunder have been properly delivered to Lincoln Park in accordance with the Purchase Agreement, to make purchases of an additional amount of our Common Stock upon the same terms as an Accelerated Purchase, (an “Additional Accelerated Purchase”).
The purchase price of Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases and the minimum closing sale price for a Regular Purchase will be adjusted for any reorganization, recapitalization,non-cashdividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price. The aggregate number of shares that the Company can sell to Lincoln Park under the Purchase Agreement may in no case exceed 26,042,434 shares (subject to adjustment as described above) of the Common Stock (which is equal to approximately 19.99% of the shares of the Common Stock outstanding immediately prior to the execution of the Purchase Agreement) (the “Exchange Cap”), unless (i)stockholder approval is obtained to issue Purchase Shares above the Exchange Cap, in which case the Exchange Cap will no longer apply, or (ii)the average price of all applicable sales of our Common Stock to Lincoln Park under the Purchase Agreement equals or exceeds $0.8496 per share (which represents the lower of (A) the official closing price of our Common Stock on Nasdaq on the trading day immediately preceding the date of the Purchase Agreement and (B) the average official closing price of our Common Stock on Nasdaq for the five consecutive trading days ending on the trading day immediately preceding the date of the Purchase Agreement, adjusted such that the transactions contemplated by the Purchase Agreement are exempt from the Exchange Cap limitation under applicable Nasdaq rules); provided that at no time may Lincoln Park (together with its affiliates) beneficially own more than 4.99% (which Lincoln Park may increase up to 9.99% upon 61 days’ prior written notice to us) of the Company’s issued and outstanding Common Stock. The Company issued 600,000 shares of Common Stock to Lincoln Park as acommitmentfee in connection with entering into the Purchase Agreement (the “Commitment Shares” and together with the Purchase Shares, the “Shares”).