Entry into a Material Definitive Agreement.
On January 20, 2023 (the “Issuance Date”), Kiromic BioPharma, Inc.
(the “Company”) entered into a note purchase agreement (the
“Agreement”) with an accredited investor (the “Investor”) and
pursuant to the Agreement issued a 25% Senior Secured Convertible
Promissory Note (the “Note”) to the Investor. The Note has a
principal amount of $2,000,000, bears interest at a rate of 25% per
annum (the “Stated Rate”) and matures on January 20, 2024 (the
“Maturity Date”), on which the principal balance and accrued but
unpaid interest under the Note shall be due and payable. The Stated
Rate will increase to 27% per annum or the highest rate then
allowed under applicable law (whichever is lower) upon occurrence
of an event of default, including the failure by the Company to
make payment of principal or interest due under the Note on the
Maturity Date, and any commencement by the Company of a case under
any applicable bankruptcy or insolvency laws. Pursuant to the
Agreement, the Company may sell and issue up to a maximum aggregate
principal amount of $6 million for all Notes issued pursuant to the
Agreement to the Investor in two subsequent closings to occur on or
before February 15, 2023 and March 15, 2023.
The Note is convertible into shares (the “Conversion Shares”) of
the Company’s common stock, par value $0.001 per share (the “Common
Stock”), at an initial conversion price of $0.35 per share (the
“Conversion Price”), subject to a beneficial ownership limitation
equivalent to 9.99% (the “Beneficial Ownership Limitation”) and a
share cap of 4,080,435 shares (the “Share Cap”), representing 19.9%
of the total issued and outstanding shares of Common Stock as of
January 20, 2023, in the event that the Conversion Price is lower
than $0.2074 per share, representing the lower of the closing price
immediately preceding the Issuance Date or the average closing
price of the Common Stock for the five trading days immediately
preceding the Issuance Date.
The unpaid principal of and interest on the Note constitute
unsubordinated obligations of the Company and are senior and
preferred in right of payment to all subordinated indebtedness and
equity securities of the Company outstanding as of the Issuance
Date; provided, however, that the Company may incur or guarantee
additional indebtedness after the Issuance Date, whether such
indebtedness are senior, pari passu or junior to the obligations
under the Note, which are secured by all of the Company’s right,
title and interest, in and to, (i) all fixtures (as defined in the
Uniform Commercial Code, the “UCC”) and equipment (as defined in
the UCC), and (ii) all of the Company’s intellectual property as
specified in the Note, subject to certain exclusions as described
in the Note.
The foregoing description of the Agreement and the Note is
qualified in its entirety by reference to the full text of such
Agreement and Note, a copy of which is attached hereto as exhibits
10.1 and 10.2, respectively, and incorporated herein by
Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Reference is made to the
disclosure set forth under Item 1.01 above, which disclosure is
incorporated herein by reference.
Unregistered Sales of Equity Securities
Reference is made to the disclosure set forth under Item 1.01
above, which disclosure is incorporated herein by reference. The
issuance of the Note was made in reliance on the exemption from
registration provided by Section 4(a)(2) of the Securities Act of
1933, as amended.
Item 9.01. Financial
Statements and Exhibits