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TABLE OF CONTENTS
As filed with the Securities and Exchange Commission on March 30, 2018September 20, 2019
Registration No. 333-333-233656
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SENSEONICS HOLDINGS, INC.
and the Registrant Guarantors*
(Exact name of registrant as specified in its charter)
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Delaware | 47-1210911 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
20451 Seneca Meadows Parkway
Germantown, MD 20876-7005
(301) 515-7260
(Address, including zip code, and telephone number, including area code of registrant’sregistrant's principal executive offices)
Timothy T. Goodnow
Chief Executive Officer
Senseonics Holdings, Inc.
20451 Seneca Meadows Parkway
Germantown, MD 20876-7005
(301) 515-7260
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Darren K. DeStefano
Mark Ballantyne
Cooley LLP
11951 Freedom Drive
Reston, VA 20190-5656
20190-5640
(703) 456-8000
From time to time after the effective date of this Registration Statement
(Approximate date of commencement of proposed sale to the public)
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. box: o
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, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. box: ýx
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. o
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. o
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. o
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. o
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"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company,”" and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer ý | |||||
Non-accelerated filer o | Smaller reporting company ý | |||||
Emerging growth company ý |
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 13(a)7(a)(2)(B) of the ExchangeSecurities Act. ýx
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to be Registered | Amount to be Registered | Proposed Maximum Offering Price per Share | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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5.25% Convertible Senior Notes due 2025 | $82,000,000(1) | 100%(1) | $82,000,000 | $9,938.40(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock, par value $0.001 | 74,545,454(2) | — | — | —(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees of 5.25% Convertible Senior Notes due 2025 | — | — | — | —(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2)There are being registered hereunder such indeterminatemaximum aggregate number of shares of common stock, and preferredpar value $0.001 ("common stock"), issuable upon conversion of the notes registered hereby at a conversion rate corresponding to the maximum conversion rate of 909.0909 shares of our common stock such indeterminateper $1,000 principal amount of debt securities and such indeterminate number of warrants to purchase common stock, preferred stock or debt securities as shall have an aggregate initial offering price not to exceed $200,000,000. If any debt securities are issued at an original issue discount, then the principal amount of such debt securities shall be in such greater amount as shall result in an aggregate initial offering price not to exceed $200,000,000, less the aggregate dollar amount of all securities previously issued hereunder. Any securities registered hereunder may be sold separately or as units with other securities registered hereunder. The securities registered also include such indeterminate number of shares of common stock and preferred stock and amount of debt securities as may be issued upon conversion of or exchange for preferred stock or debt securities that provide for conversion or exchange, upon exercise of warrants or pursuant to the antidilution provisions of any such securities. In addition, pursuantnotes. Pursuant to Rule 416 under the Securities Act, the shares being registered hereunder includeRegistrant is also registering such indeterminate number of additional shares of common stock and preferred stock as may be issuable with respectfrom time to time upon conversion of the shares being registered hereundernotes as a result of stock splits, stock dividends or similar transactions. Pursuant to Rule 415(a)(6), the securities being registered hereunder include $27,276,281anti-dilution provisions thereof.
(3)The proposed maximum aggregate offering price per class of security will be determined from time to time by the registrant in connection with the issuance by the registrant of the securities registered hereunder and is not specified as to each class of security pursuant to General Instruction II.D. of Form S-3457(i) under 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 that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This registration statement contains:
TABLE OF ADDITIONAL REGISTRANTS
The following subsidiary of Senseonics Holdings, Inc., and each other subsidiary that is or becomes a base prospectus which covers the offering, issuance and sale by the registrant of up to a maximum aggregate offering price of $200,000,000guarantor of the registrant’s common stock, preferred stock, debt securities and/or warrants; and
· a sales agreement prospectus covering the offering, issuance and sale by the registrant of up to a maximum aggregate offering price of $50,000,000 of the registrant’s common stock that may be issued and sold from time to time under a sales agreement with Cowen and Company, LLC, dated March 30, 2018.
The base prospectus immediately follows this explanatory note. The specific terms of any securitiesregistered hereby, is hereby deemed to be offered pursuant to the base prospectus will be specified in a prospectus supplement to the base prospectus. registrant.
Exact Name of Additional Registrant(1) | State or Other Jurisdiction of Incorporation or Organization | I.R.S. Employer Identification Number | Primary Standard Industrial Classification Code Number | ||||||
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Senseonics, Incorporated | Delaware | 52-2000730 | 3841 |
Contents
The information in this prospectus is not complete and may be changed. WeThe selling securityholders may not sell these securities or accept an offer to buy these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offersan offer to buy these securities in any state where suchthe offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 30, 2018
PROSPECTUS
SEPTEMBER 20, 2019
Senseonics Holdings, Inc.
$82,000,000
5.25% Convertible Senior Notes due 2025, Guarantees of
5.25% Convertible Senior Notes due 2025 and any
Shares of Common Stock Issuable upon Conversion
On July 25, 2019, we sold $82.0 million aggregate principal amount of our 5.25% Convertible Senior Notes due 2025 (the "notes"). We sold the notes in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). This prospectus may be used from time to time by certain recipients of the notes (as further provided for in the section entitled "Selling Securityholders" in this prospectus, the "selling securityholders") to offer up to $82.0 million in aggregate principal amount of the notes, the subsidiary guarantees and the shares of our common stock, par value $0.001 per share ("common stock") issuable upon conversion of the notes, in any manner described under the section entitled "Plan of Distribution" in this prospectus. The selling securityholders may sell the notes or any such shares of common stock in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at prices related to such prevailing market prices, at varying prices determined at the time of sale or at privately negotiated prices directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions. If the selling securityholders use underwriters, broker-dealers or agents, we will name them and describe their compensation in a supplement to this prospectus as may be required. We will receive no proceeds from any sale by the selling securityholders of the securities offered by this prospectus, but in some cases we have agreed to pay certain registration expenses. Please read this prospectus and any applicable prospectus supplement carefully before you invest.
The notes are not listed on any securities exchange. Our common stock is listed on the NYSE American and trades under the symbol "SENS." On September 19, 2019, the closing sale price of our common stock on the NYSE American was $1.08 per share.
We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and a smaller reporting company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, we have elected to rely on certain reduced public company disclosure requirements. See "Implications of Being an Emerging Growth Company and a Smaller Reporting Company."
Investing in our securities involves risks. You should carefully read and consider the risk factors included in our periodic reports, in any applicable prospectus supplement relating to a specific offering of securities and in any other documents we file with the Securities and Exchange Commission ("SEC"). See the sections entitled "Risk Factors" below on page 14, in the documents incorporated by reference in this prospectus and in the applicable prospectus supplement, if any.
Neither the SEC 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.
$200,000,000The date of this prospectus is , 2019.
Common StockTable of Contents
TABLE OF CONTENTS
Page | ||||
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ABOUT THIS PROSPECTUS | 1 | |||
WHERE YOU CAN FIND MORE INFORMATION | 2 | |||
INCORPORATION BY REFERENCE | 3 | |||
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | 4 | |||
PROSPECTUS SUMMARY | 6 | |||
RISK FACTORS | 14 | |||
USE OF PROCEEDS | 22 | |||
DESCRIPTION OF NOTES | 23 | |||
DESCRIPTION OF CAPITAL STOCK | 94 | |||
SELLING SECURITYHOLDERS | 99 | |||
PLAN OF DISTRIBUTION | 103 | |||
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS | 105 | |||
VALIDITY OF SECURITIES | 114 | |||
EXPERTS | 115 |
Neither we nor the selling securityholders or the underwriters, if any, have authorized anyone to provide you with any information or to make any representation other than as may be contained in or incorporated by reference into this prospectus, any prospectus supplement or in any free writing prospectus that we may file with the SEC. We do not, and the selling securityholders or the underwriters, if any, do not, take any responsibility for, and can provide no assurances as to, the reliability of any information that others may provide you. This prospectus and any applicable prospectus supplement or free writing prospectus do not constitute an offer to sell any securities in any jurisdiction where such offer and sale are not permitted. The information contained in or incorporated by reference into this prospectus or any prospectus supplement, free writing prospectus or other offering material is accurate only as of the respective dates of those documents or information, regardless of the time of delivery of the documents or information or the time of any sale of the securities. Neither the delivery of this prospectus or any applicable prospectus supplement nor any distribution of securities pursuant to such documents shall, under any circumstances, create any implication that there has been no change in the information set forth in this prospectus or any applicable prospectus supplement or in our affairs since the date of this prospectus or any applicable prospectus supplement.
This prospectus is part of a registration statement that we filed with the SEC utilizing a shelf registration process or continuous offering process. Under this shelf registration process, the selling securityholders may, from time to time, we may offer up to $200,000,000 of any combination ofsell the securities described in this prospectus in one or more offerings. We may also offer securities as may be issuable upon conversion, redemption, repurchase, exchange or exercise of any securities registered hereunder, including any applicable anti-dilution provisions.
This prospectus provides a general description of the securities we may offer. Each time we offer securities, we will provide specific terms of the securities offered in a supplement to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement and any related free writing prospectus may also add, update or change information contained in this prospectus. You should carefully read this prospectus, the applicable prospectus supplement and any related free writing prospectus, as well as any documents incorporated by reference, before you invest in any of the securities being offered.
This prospectus may not be used to consummate a sale of any securities unless accompanied by a prospectus supplement.
Our common stock is traded on the NYSE American under the symbol “SENS.” On March 28, 2018, the last reported sale price of our common stock was $2.79 per share. The applicable prospectus supplement will contain information, where applicable, as to any other listing on the NYSE American or any securities market or other exchange of the securities, if any, covered by the prospectus supplement.
We will sell these securities directly to investors, through agents designated from time to time or to or through underwriters or dealers, on a continuous or delayed basis. For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution” in this prospectus. If any agents or underwriters are involved in the sale of any securities with respect to which this prospectus is being delivered, the names of such agents or underwriters and any applicable fees, commissions, discounts or over-allotment options will be set forth in a prospectus supplement. The price to the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in 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 the applicable prospectus supplement and any related free writing prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus as described on page 7 of 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 , 2018.
TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration process. Under this shelf registration process, we may sell any combination of the securities described in this prospectus in one or more offerings up to a total aggregate offering price of $200,000,000. This prospectus provides you with a general description of the securities wethat may offer.
be offered, from time to time, by the selling securityholders. Each time we sella selling securityholder sells securities, underthe selling securityholder may be required to provide you with this prospectus we will provideand, in certain cases, a prospectus supplement that will containcontaining specific information about the selling securityholder and the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. Thethe securities being offered. That prospectus supplement and any related free writingmay include additional risk factors or other special considerations applicable to those securities. Any prospectus that we may authorize to be provided to yousupplement may also add, update, or change information containedin the prospectus. If there is any inconsistency between the information in this prospectus orand any prospectus supplement, you should rely on the information in that prospectus supplement.
You should read this prospectus and any documents that we haveprospectus supplement for a specific offering of securities, together with additional information described in the sections entitled "Where You Can Find More Information" and "Incorporation by Reference" below, before making an investment decision. You should rely only on the information contained in or incorporated by reference into this prospectus. You should read this prospectus, any applicable prospectus supplement and any related free writing prospectus, together with the information incorporated herein by reference as described under the heading “Incorporation of Certain Information by Reference,” before investing in any of the securities offered.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
Neither we, nor any agent, underwriter or dealer has authorized any person to give any information or to make any representation other than those contained or incorporated by reference in this prospectus, any applicableaccompanying prospectus supplement or any related free writing prospectus prepared by or on behalf of us or to which we have referred you. This prospectus, any applicable supplement to this prospectus or any related free writing prospectus do not constitute an offer to sell
Unless we state otherwise or the solicitation of an offercontext otherwise requires, references to buy any securities other than"Senseonics," the registered securities to which they relate, nor do this prospectus, any applicable supplement to this prospectus"Company," "us," "we" or any related free writing prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
You should not assume that the information contained"our" in this prospectus any applicable prospectus supplement or any related free writing prospectus is accurate on any date subsequent to the date set forth on the front of the document or that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus, any applicable prospectus supplement or any related free writing prospectus is delivered, or securities are sold, on a later date.
This prospectus and the information incorporated herein by reference 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 is a part, and you may obtain copies of those documents as described below under the heading “Where You Can Find More Information.”
SUMMARY
This summary highlights selected information from this prospectus and does not contain all of the information that you need to consider in making your investment decision. You should carefully read the entire prospectus, the applicable prospectus supplement and any related free writing prospectus, including the risks of investing in our securities discussed under the heading “Risk Factors” contained in the applicable prospectus supplement and any related free writing prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus. You should also carefully read the information incorporated by reference into this prospectus, including our financial statements, and the exhibits to the registration statement of which this prospectus is a part.
Unless the context indicates otherwise, as used in this prospectus, the terms “Senseonics,” “the Company,” “we,” “us” and “our” refer tomean Senseonics Holdings, Inc. and, where appropriate, our sole subsidiary. When we refer to "you" in this section, we mean all purchasers of the securities being offered by this prospectus and any accompanying prospectus supplement, whether they are the holders or only indirect owners of those securities. We use Senseonics, the Senseonics logo, Eversense and Eversense XL as trademarks in the United States and other countries. All other trademarks or trade names referred to in this prospectus supplement and the accompanying prospectus are the property of their respective owners.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings, including the Registration Statement and the exhibits and schedules thereto, are also available to the public from the SEC's website at http://www.sec.gov. You can also access our SEC filings through our website athttp://senseonics.com. Information contained in or accessible through our website does not constitute a part of this prospectus.
The SEC allows us to incorporate by reference information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The SEC file number for the documents incorporated by reference in this prospectus is 001-37717. The documents incorporated by reference into this prospectus contain important information that you should read about us.
The following documents are incorporated by reference into this document:
We also incorporate by reference into this prospectus all documents (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to such items) that are filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date of the initial filing of the registration statement of which this prospectus forms a part and prior to effectiveness of the registration statement, or (ii) after the date of this prospectus but prior to the termination of the offering. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, without charge upon written or oral request, a copy of any or all of the documents that are incorporated by reference into this prospectus but not delivered with the prospectus, including exhibits that are specifically incorporated by reference into such documents. You should direct any requests for documents to Senseonics Holdings, Inc., Attn: Investor Relations, 20451 Seneca Meadows Parkway, Germantown, MD 20876-7005, telephone: (301) 515-7260.
Any statement contained in this prospectus or contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded to the extent that a statement contained in this prospectus or any subsequently filed supplement to this prospectus, or document deemed to be incorporated by reference into this prospectus modifies or supersedes such statement.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference herein contain forward-looking statements. These are based on our management's current beliefs, expectations and assumptions about future events, conditions and results and on information currently available to us. Discussions containing these forward-looking statements may be found, among other places, in the sections entitled "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated by reference from ourAnnual Report on Form 10-K for the year ended December 31, 2018 and ourQuarterly Report on Form 10-Q for the quarter ended June 30, 2019, as well as any amendments thereto, as applicable, filed with the SEC.
Any statements in this prospectus, or incorporated herein, about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. Within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, these forward-looking statements include statements regarding:
In some cases, you can identify forward-looking statements by the words "may," "might," "can," "will," "to be," "could," "would," "should," "expect," "intend," "plan," "objective," "anticipate," "believe," "estimate," "predict," "project," "potential," "likely," "continue" and "ongoing," or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these words. These statements 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 the information expressed or implied by these forward-looking statements.
You should refer to the "Risk Factors" section contained in this prospectus and the other documents that are incorporated by reference into this prospectus, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Given
these risks, uncertainties and other factors, many of which are beyond our control, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate, and you should not place undue reliance on these forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.
Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to revise any forward-looking statements to reflect events or developments occurring after the date of this prospectus, even if new information becomes available in the future.
This summary highlights selected information contained elsewhere in this prospectus and in the documents we incorporate by reference herein. This summary does not contain all of the information you should consider before investing in our securities. You should read this entire prospectus carefully, especially the risks of investing in our securities discussed under "Risk Factors" beginning on page 14 of this prospectus and under similar headings in ourAnnual Report on Form 10-K for the year ended December 31, 2018 and ourQuarterly Report on Form 10-Q for the quarter ended June 30, 2019, as well as any amendments thereto reflected in our subsequent filings with the SEC, which are incorporated by reference in this prospectus, along with our consolidated financial statements and notes to those consolidated financial statements and the other information incorporated by reference in this prospectus, before making an investment decision.
Company Overview
We are a medical technology company focused on the design, development and commercialization of glucose monitoring products to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. Our continuous glucose monitoring, or CGM,monitoring("CGM") systems, Eversense and Eversense XL, are reliable, long-term, implantable CGM systems that we have designed to continually and accurately measure glucose levels in people with diabetes for a period of up to 90 and 180 days, respectively, as compared to six to fourteen days for currently available CGM systems. We believe Eversense and Eversense XL will provide people with diabetes with a more convenient method to monitor their glucose levels in comparison towith the traditional method of self-monitoring of blood glucose or SMBG,("SMBG"), as well as currently available CGM systems. In our U.S. pivotal clinical trial, we observed that Eversense measured glucose levels over 90 days with a degree of accuracy superior to that of other currently available CGM systems. Our Eversense and Eversense XL systems are currently approved for sale in Europe, the Middle East and we submittedAfrica (EMEA) and our pre-market approval, or PMA, applicationEversense system is currently approved for Eversense to the U.S. Food and Drug Administration, or FDA, in October 2016. On March 29, 2018, we had a meeting with the FDA Clinical Chemistry and Clinical Toxicology Devices Panel, during which the panel voted that the Eversense benefits outweighed the risks by a count of 8 to 0. The panel also voted 8 to 0 in favor of the safety and 8 to 0 in favor of the efficacy of Eversense. We anticipate that FDA’s decision on our PMA application might occur within two to four months following the panel meeting. If we receive FDA approval, we intend to initiate commercial launchsale in the United States promptly following the receipt of PMA approval.States.
Diabetes is a chronic, life-threatening disease for which there is no known cure. The disease is caused by the body’s inability to produce or effectively utilize the hormone insulin, which prevents the body from adequately regulating blood glucose levels. If diabetes is not managed properly, it can lead to serious health conditions and complications, including heart disease, limb amputations, loss of kidney function, blindness, seizures, coma and even death. According to the 2017 International Diabetes Federation Atlas, an estimated 425 million people worldwide had diabetes as of the date of the report. The number of people with diabetes worldwide is estimated to grow to 629 million by 2045, driven primarily by growth in Type 2 diabetes and due to various reasons, including changes in dietary trends, an aging population and increased prevalence of the disease in younger people. Diabetes is typically classified into two primary types. Type 1 diabetes is an autoimmune disorder that usually develops during childhood and is characterized by the inability of the body to produce insulin, resulting from destruction of the insulin producing beta cells of the pancreas. Type 2 diabetes is a metabolic disorder that results when the body is unable to produce sufficient amounts of insulin or becomes insulin resistant. People with Type 1 diabetes must administer insulin, either by injection or insulin pump, to survive. People with Type 2 diabetes may require diet and nutrition management, exercise, oral medications or the administration of insulin to regulate blood glucose levels. In the next few years, we expect the growth in sales of CGM systems to be driven primarily by increased penetration of CGM in the Type 1 diabetic population.
In an attempt to maintain blood glucose levels within the normal range, many people with diabetes seek to actively monitor their blood glucose levels. The traditional SMBG method of glucose monitoring requires lancing the fingertips, commonly referred to as fingersticks, multiple times per day and night to obtain a blood drop to be applied to a test strip inside a blood glucose meter. This method of monitoring glucose levels is inconvenient and can be painful and, because each measurement represents a single blood glucose value at a single point in time, it provides limited information regarding trends in blood glucose levels. In contrast, CGM systems are generally less painful and involve the insertion of sensors into the body to measure glucose levels in the interstitial fluid throughout the day and night, providing real-time data that shows trends in glucose measurements. Since CGM measurements from interstitial tissue are inherently less accurate than test-strip
measurements made directly from the blood, the FDA and other device regulators historically have required that CGMs be labeled and marketed as “adjunctive” to test-strip measurements, with instructions that patients confirm CGM measurements with test-strip measurements using blood obtained from fingersticks prior to self-medicating. Recent improvements in the accuracy of CGM systems have led to the FDA issuing the first “non-adjunctive” label in 2016. We expect that the approval of the Eversense PMA will have an “adjunctive” label initially. Our plans will be to pursue a “non-adjunctive” label as soon as possible. Currently available CGM systems are often inconvenient, requiring frequent sensor replacement and an extra device, called a receiver, to monitor glucose readings, and have limited safety features.
We believe we have an $18.0 billion market potential in the United States for our products and systems. According to the National Diabetes Statistics Report, as of the end of 2015, there are approximately 23 million patients diagnosed with diabetes in the United States. We estimate that 6.9 million of these diabetes patients take insulin.
European Development and Commercialization of Eversense
In May 2016,September 2015, we received our CE mark for Eversense, which allows us to market and sell Eversense in Europe. In connection with our CE Mark, we have agreed to conduct post-market surveillance activities. In June 2016, we commenced commercialization of Eversense in Sweden through our exclusiveentered into a distribution agreement with Rubin Medical, or Rubin, pursuant to which also haswe granted Rubin the exclusive right to market, sell and distribute Eversense in Sweden, Norway and Denmark.Denmark through September 2020. Rubin markets and sells medical products for diabetes treatment in the Scandinavian region.
region, including as the exclusive Scandinavian distributor for the insulin pump manufacturer Tandem Corporation. Under the agreement, Rubin is obligated to purchase from us specified minimum volumes of Eversense components at pre-determined prices.
In May 2016, we entered into a distribution agreement with Roche Diagnostics International AG and Roche Diabetes Care GmbH, together referred to as Roche, pursuant to which we granted Roche the exclusive right to market, sell and distribute Eversense in Germany, Italy and the Netherlands. Under the agreement, Roche is obligated to purchase from us specified minimum volumes of Eversense components at pre-determined prices. We began distributing Eversense through Roche in Germany in September 2016 and in Italy and the Netherlands in the fourth quarter of 2016. In November 2016, we entered into an amendment to the distribution agreement with Roche granting Roche the exclusive right to market, sell and distribute Eversense in Europe, the Middle East and Africa, excluding Sweden, Norway, Denmark, Finland and Israel. In January 2019, we entered into an additional amendment to the distribution agreement with Roche is a pioneerto extend the agreement through January 31, 2021. Pursuant to the amendment to the agreement, Roche has agreed to certain purchase levels of Eversense systems and pricing terms through the extended term of the agreement. In addition, under the amendment, Roche's role as the exclusive distributor of Eversense was expanded to provide Roche with exclusive distribution rights in 17 additional countries, including Brazil, Russia, India and China, as well as select markets in the developmentAsia Pacific and Latin American
regions. To date, we have begun distributing Eversense in an aggregate of 1315 European countries through Rubin and Roche.
In September 2017, we received the CE Markmark for Eversense XL, which is indicated for a sensor life of up to 180 days. Eversense XL began commercialization in Europe in the fourth quarter of 2017. In addition, in February 2018, we received approvalAll such commercialization and marketing activities remain subject to market Eversense NOW, which is an application designed to remotely monitor the Eversense users’ CGM data in real time.applicable government approvals.
United States Development and Commercialization of Eversense
In 2016, we completed our PrecisePRECISE II pivotal clinical trial in the United States. This trial, which was fully enrolled with 90 subjects, was conducted at eight sites in the United States. In the trial, we measured the accuracy of Eversense measurements through 90 days after insertion. We also assessed safety through 90 days after insertion or through sensor removal. In the trial, we observed a mean absolute relative difference, or MARD, of 8.5% utilizing two calibration points for Eversense across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. We also observed a MARD of 9.5% utilizing one calibration point for Eversense across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. Based on the data from this trial, in October 2016 we submitted a pre-market approval, or PMA, application to the FDAU.S. Food and Drug Administration ("FDA") to market Eversense in the United States for 90-day use. On March 29,June 21, 2018, we had a meeting withreceived PMA approval from the FDA Clinical Chemistry and Clinical Toxicology Devices Panel, during which the panel voted thatfor the Eversense benefits outweighedsystem. In July 2018, we began distributing the risks by a count of 8 to 0. The panel also voted 8 to 0 in favor of the safety and 8 to 0 in favor of the efficacy of Eversense. We anticipate that FDA’s decision on our PMA application might occur within two to four months following the panel meeting. However, the ultimate timing of FDA’s decision is uncertain and will depend on many factors. Accordingly, we cannot guarantee the timing of receipt of PMA approval, if at all. For commercializationEversense system directly in the United States we intend to distribute our product through our own direct sales and marketing organization. We have received Category III CPT codes for the insertion and removal of the Eversense sensor. We intend to pursue a Category I CPT codecode.
In December 2018, we initiated the PROMISE pivotal clinical trial to evaluate the safety and accuracy of Eversense for a period of up to 180 days in the future.United States. We plan to enroll over 200 subjects in this trial at up to 15 clinical sites. If the data from the PROMISE trial is positive, we intend to use the data in a regulatory submission to the FDA to expand the Eversense system use to 180 days in the United States. We expect to report topline data from the PROMISE trial in the first half of 2020.
In March 2019, we launched a patient access program, the Eversense Bridge Program, to assist those patients who do not have insurance coverage for Eversense, or whose insurance is denied or insufficient. Pursuant to this program, we are providing financial assistance to eligible patients purchasing Eversense to enable more patients to access the Eversense system. The amount of assistance that we provide depends on a patient's insurance coverage. The program establishes maximum limits per patient and excludes certain patients as ineligible, including government-insured patients and residents of certain states. Although this program has just recently begun, we already see stimulated interest and activity across patients and providers. The program provides opportunities to engage both regional and national payors, which we expect will lead to additional positive payor coverage decisions for the Eversense system.
In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the Eversense system. With this approval, Eversense system can now be used as a therapeutic CGM to replace fingerstick blood glucose measurement for dosing decisions. We plan to roll out the Eversense system with this expanded indication in the United States starting in the second half of 2019.
CorporateCompany Information
We were originally incorporated as ASN Technologies, Inc. in Nevada on June 26, 2014. On December 7, 2015, pursuant to the Merger Agreement and the transactions contemplated thereby, or the Acquisition, we acquired
Senseonics, Incorporated, a medical technology company focused on the design, development and commercialization of glucose monitoring systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. From its inception in 1996 until 2010, Senseonics, Incorporated devoted substantially all of its resources to researching various sensor technologies and platforms. Beginning in 2010, the company narrowed its focus to designing, developing and refining a commercially viable glucose monitoring system.
accuracy (the "Acquisition").
In connection with the Acquisition, we reincorporated in Delaware and changed our name to Senseonics Holdings, Inc. Upon the closing of the Acquisition, Senseonics, Incorporated merged with a wholly-owned subsidiary of ours formed solely for that purpose and became our wholly-owned subsidiary.
Our principal executive offices are located at 20451 Seneca Meadows Parkway, Germantown, Maryland 20876-7005. Our telephone number is (301) 515-7260. Our website is located at http://www.senseonics.com. We do not incorporate by reference into this prospectus the information on, or accessible through, our website, and you should not consider it as part of this prospectus.
Implications of Being an Emerging Growth Company and Smaller Reporting Company
We qualify as an “emerging"emerging growth company”company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of relief from some of the reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include:
·
We may take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an emerging"emerging growth companycompany" until the earlier of (a) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (b) December 31, 2019; (c)2019 at the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous six years; or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.latest. We may choose to take advantage of some but not all of these reduced burdens. For example, we have taken advantage of the reduced reporting requirements with respect to disclosure regarding our executive compensation arrangements, have presented only two years of audited financial statements and only two years of related “Management’s"Management's Discussion and Analysis of Financial Condition and Results of Operations”Operations" disclosure in our public filings, and have taken advantage of the exemption from auditor attestation on the effectiveness of our internal control over financial reporting. To the extent that we take advantage of these reduced burdens, the information that we provide stockholders may be different than you might obtain from other public companies in which you hold equity interests.
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
The Securities We May Offer
are also a "smaller reporting company" as defined in Rule 12b-2 promulgated under the Exchange Act. We may offer sharesremain a smaller reporting company until we have a non-affiliate public float in excess of $250 million and annual revenues in excess of $100 million, or a non-affiliate public float in excess of $700 million, each as determined on an annual basis. Even after we no longer qualify as an emerging growth company, we may still qualify as a smaller reporting company, which would allow us to take advantage of many of the same exemptions from disclosure requirements.
To the extent that we take advantage of these reduced burdens, the information that we provide stockholders may be different than you might obtain from other public companies in which you hold equity interests.
The Notes
Issuer | Senseonics Holdings, Inc., a Delaware corporation. | |
Securities | $82.0 million aggregate principal amount of 5.25% Convertible Senior Notes due 2025. | |
Use of proceeds | The selling securityholders will receive all of the proceeds from their sale from time to time under this prospectus and any accompanying prospectus supplement of the notes, the subsidiary guarantees and the shares of common stock issuable upon conversion of the notes. We will not receive any proceeds from these sales. | |
Maturity | January 15, 2025, unless earlier converted, redeemed or repurchased. | |
Interest | 5.25% per year. Interest accrues from July 25, 2019 and will be payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020. We will pay additional interest, if any, at our election as the sole remedy relating to the failure to comply with our reporting obligations as described under "Description of Notes — Events of Default." We may also pay additional interest as a result of our failure to comply with our obligations as described under "Description of Notes — Rule 144 Resales and Registration Rights — Registration Rights." | |
Conversion rights | Holders may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding the maturity date. | |
The conversion rate for the notes is initially 757.5758 shares of common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $1.32 per share of common stock), subject to adjustment for certain events, including, but not limited to, the declaration of any dividends, as described under "Description of Notes — Conversion Rights — Conversion Rate Adjustments." | ||
Upon conversion, we will deliver for each $1,000 principal amount of notes converted a number of shares of our common stock equal to the conversion rate (together with a cash payment in lieu of delivering any fractional share) on the second business day immediately following the relevant conversion date. |
In addition, following a notice of redemption or certain corporate events that occur prior to the maturity date, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with such notice of redemption or corporate event, as described under "Description of Notes — Conversion Rights — Increase in Conversion Rate upon Conversion upon a Make-Whole Fundamental Change or during a Redemption Period." | ||
You will not receive any additional cash payment or additional shares representing accrued and unpaid interest, if any, upon conversion of a note, except in limited circumstances. Instead, interest will be deemed to be paid by the delivery to you of the shares of our common stock, together with a cash payment for any fractional share, upon conversion of a note. | ||
Notwithstanding anything to the contrary herein, you will not be entitled to receive any shares of our common stock otherwise deliverable upon conversion of the notes to the extent, but only to the extent, that such receipt would cause you to become, directly or indirectly, a "beneficial owner" of shares of our common stock in excess of the beneficial ownership limits applicable to you at such time, as described under "Description of Notes — Conversion Rights — Limits on Issuance of Shares of Common Stock upon Conversion" and "Description of Notes — Conversion Rights — Waiver of Beneficial Ownership Limits." | ||
Optional redemption | We may redeem for cash all or part of the notes, at our option, if (1) the last reported sale price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption and (2) a registration statement covering the resale of the shares of our common stock issuable upon conversion of the notes is effective and available for use and is expected to remain effective and available for use during the redemption period as of the date of the redemption notice. The redemption price will be equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. See "Description of Notes — Optional Redemption." | |
No sinking fund is provided for the notes, which means that we are not required to redeem or retire the notes periodically. |
Special settlement provisions in connection with a make-whole fundamental change or redemption period | Unless we first obtain the requisite stockholder approval (as defined under "Description of Notes — Conversion Rights — Special Settlement Provisions in Connection with a Make-Whole Fundamental Change or Redemption Period"), we may be required to partially cash settle conversions made in connection with a make-whole fundamental change or during a redemption period. See "Description of Notes — Conversion Rights — Special Settlement Provisions in Connection with a Make-Whole Fundamental Change or Redemption Period." | |
Fundamental change | If we undergo a "fundamental change" (as defined under "Description of Notes — Fundamental Change Permits Holders to Require Us to Repurchase Notes"), subject to certain conditions, holders may require us to repurchase for cash all or part of their notes in principal amounts of $1,000 or an integral multiple thereof. The fundamental change repurchase price will be equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to but excluding, the fundamental change repurchase date. See "Description of Notes — Fundamental Change Permits Holders to Require Us to Repurchase Notes." | |
Covenants | The indenture governing the notes contains covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to: | |
§ incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock; | ||
§ declare or pay dividends on, repurchase or make distributions in respect of, their capital stock or make other restricted payments; | ||
§ make investments or acquisitions; | ||
§ create liens; | ||
§ enter into agreements restricting certain subsidiaries' ability to pay dividends or make other intercompany transfers; | ||
§ consolidate, merge, sell or otherwise dispose of all or substantially all of our assets and the assets of our restricted subsidiaries; | ||
§ enter into transactions with affiliates; | ||
§ sell, transfer or otherwise convey certain assets; and | ||
§ prepay certain types of indebtedness. |
These covenants are subject to a number of significant qualifications and limitations. See "Description of Notes — Covenants." | ||
Certain of these covenants will cease to apply upon the occurrence of a fundamental change described in clause (1) or (2) of the definition thereof in "Description of Notes — Covenants" or at such time as 25% or less of the initial aggregate principal amount of the notes remain outstanding. | ||
Ranking | The notes are our general unsecured, senior obligations and: | |
§ rank senior in right of payment to all of our existing and future indebtedness that is expressly subordinated in right of payment to the notes; | ||
§ rank equal in right of payment with all of our existing and future unsecured, senior indebtedness, including the 2023 notes (except that, with respect to the subsidiary guarantees, the notes rank senior in right of payment to the 2023 notes); | ||
§ rank structurally junior in right of payment to all the liabilities, including trade payables, of any of our subsidiaries that are not subsidiary guarantors; and | ||
§ are effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets or property securing such indebtedness. | ||
As of July 31, 2019, the principal amount of our total consolidated indebtedness was $142.7 million, of which $45.0 million was senior secured indebtedness of us and our sole subsidiary and subsidiary guarantor under the Solar Term Loan (as defined herein) and $97.7 million was our senior unsecured indebtedness under the notes and the 2023 notes. Our sole subsidiary guarantor had $127.0 million aggregate principal amount of indebtedness as of July 31, 2019. | ||
Subsidiary guarantees | The notes are, jointly and severally, fully and unconditionally guaranteed by the "subsidiary guarantors," which include Senseonics, Incorporated, our sole subsidiary as of the date of this prospectus, and each of our restricted subsidiaries formed or acquired after the date of the initial issuance of the notes that is not an excluded subsidiary. The subsidiary guarantees may be released under certain circumstances. See "Description of Notes — Covenants — Future Subsidiary Guarantees" and "Description of Notes — Covenants — Subsidiary Guarantees." |
Registration rights | We prepared this prospectus in connection with our obligations under a resale registration rights agreement, which provides the selling securityholders with certain registration rights with respect to the resale of the notes, the subsidiary guarantees and the shares of common stock issuable upon conversion of the notes. We may be required to pay additional interest as a result of our failure to comply with our obligations as described under "Description of Notes — Rule 144 Resales and Registration Rights — Registration Rights." | |
Book-entry form | The notes are issued in book-entry form and are represented by permanent global certificates deposited with, or on behalf of, The Depository Trust Company ("DTC"), and registered in the name of a nominee of DTC. Beneficial interests in any of the notes will be shown on, and transfers will be effected only through, records maintained by DTC or its nominee and any such interest may not be exchanged for certificated securities, except in limited circumstances. | |
Absence of a public market for the notes | There is currently no established market for the notes. Accordingly, we cannot assure you as to the development or liquidity of any market for the notes. We do not intend to apply for a listing of the notes on any securities exchange or any automated dealer quotation system. | |
Risk factors | See "Risk Factors" and other information included or incorporated by reference in this prospectus for a discussion of the factors you should carefully consider before deciding to invest in the notes or the common stock. | |
U.S. federal income tax consequences | For the U.S. federal income tax consequences of the holding, disposition and conversion of the notes, and the holding and disposition of shares of our common stock, see "Certain U.S. federal income tax considerations." | |
Listing | The notes are not listed on any securities exchange. Our common stock is listed on the NYSE American under the symbol "SENS." | |
Trustee, paying agent and conversion agent | U.S. Bank National Association. |
Investing in our common stocksecurities involves risks. You should carefully consider the risk factors described below and preferred stock, various seriesin Part I, Item 1A, "Risk Factors" in ourAnnual Report on Form 10-K for the fiscal year ended December 31, 2018 and in Part II, Item 1A, "Risk Factors" on ourQuarterly Report on Form 10-Q for the quarter ended June 30, 2019, and any updates to those risk factors or new risk factors contained in our subsequent Quarterly Reports on Form 10-Q, all of debt securities and warrants to purchase any of such securities, up to a total aggregate offering price of $200,000,000which is incorporated by reference into this prospectus, as the same may be amended, supplemented or superseded from time to time in one or more offeringsby our filings under
this prospectus, together with the Exchange Act, as well as any applicable prospectus supplement andrelating to a specific offering or resale. Before making any related free writing prospectus, at prices and on terms to be determinedinvestment decision, you should carefully consider these risks as well as other information we include or incorporate by market conditions at the time of the relevant offering. This prospectus provides you with a general description of the securities we may offer. Each time we offer a type or series of securities under this prospectus, we will provide a prospectus supplement that will describe the specific amounts, prices and other important terms of the securities, including, to the extent applicable:
· designation or classification;
· aggregate principal amount or aggregate offering price;
· maturity;
· original issue discount, if any;
· rates and times of payment of interest or dividends, if any;
· redemption, conversion, exchange or sinking fund terms, if any;
· conversion or exchange prices or rates, if any, and, if applicable, any provisions for changes to or adjustments in the conversion or exchange prices or rates and in the securities or other property receivable upon conversion or exchange;
· ranking;
· restrictive covenants, if any;
· voting or other rights, if any; and
· important U.S. federal income tax considerations.
The prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update or change information containedreference in this prospectus or in documents we have incorporated by reference. However, noany applicable prospectus supplement or free writing prospectus will offer a security that is not registeredprospectus. For more information, see the sections entitled "Where You Can Find More Information" and described in this prospectus at"Incorporation by Reference" above. These risks could materially affect our business, results of operations or financial condition and affect the timevalue of the effectiveness of the registration statement of which this prospectus is a part.
This prospectus may not be used to consummate a sale of securities unless it is accompanied by a prospectus supplement.
We may sell the securities directly to investors or through underwriters, dealers or agents. We, and our underwriters or agents, reserve the right to accept or rejectsecurities. You could lose all or part of your investment. Additionally, the risks and uncertainties discussed in this prospectus or in any proposed purchasedocument incorporated by reference into this prospectus are not the only risks and uncertainties that we face, and additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, results of securities. If we do offer securities through underwritersoperations or agents, we will include in the applicable prospectus supplement:
financial condition.
·Risks Related to the names of those underwriters or agents;Notes
· applicable fees, discountsThe notes and commissionsthe subsidiary guarantees are effectively subordinated to be paid to them;
· details regarding over-allotment options, if any;our secured debt and
· the estimated net proceeds to us.
Common Stock. We may issue sharessecured debt of our common stock from timesubsidiary guarantors, as applicable, and the notes are structurally subordinated to time. The holdersany liabilities of our common stock are entitlednon-guarantor subsidiaries.
The notes rank senior in right of payment to one vote for each share held of record on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of our common stock are entitledexisting and future indebtedness that is expressly subordinated in right of payment to receive ratably such dividends as may be declared by our boardthe notes; rank equal in right of directors out of legally available funds. Upon our liquidation, dissolution or winding up, holderspayment with all of our common stock are entitled to share ratably in all assets remaining after payment of liabilitiesexisting and future unsecured, senior indebtedness, including the liquidation preferences of any then outstanding shares of preferred stock. Our common stock does not carry any preemptive rights enabling a holder to subscribe for, or receive shares of, any class of our common stock or any other securities convertible into shares of any class of our common stock, or any redemption rights.
Preferred Stock. We may issue shares of our preferred stock from time to time, in one or more series. Under our certificate of incorporation, our board of directors has the authority, without further action by the stockholders (unless such stockholder action is required by applicable law or the rules of any stock exchange or market on which our securities are then traded), to designate up to 5,000,000 shares of preferred stock in one or more series and to determine the designations, voting powers, preferences and rights of each series of the preferred stock, as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, preemptive rights, terms of redemption or repurchase, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of any series, any or all of which may be greater than the rights of the common stock. Any convertible preferred stock we may issue will be convertible into our common stock or exchangeable for our other securities. Conversion may be mandatory or at the holder’s option and would be at prescribed conversion rates.
If we sell any series of preferred stock under this prospectus, we will fix the designations, voting powers, preferences and rights of such series of preferred stock, as well as the qualifications, limitations or restrictions thereof, in the certificate of designation relating to2023 notes (except that, series. We will file as an exhibitwith respect to the registration statementsubsidiary guarantees, the notes rank senior in right of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of preferred stock that we are offering before the issuance of the related series of preferred stock. We urge you to read the applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) relatedpayment to the series of preferred stock being offered, as well as the complete certificate of designation that contains the terms of the applicable series of preferred stock.
Debt Securities. We may issue debt securities from time to time, in one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. The senior debt securities will2023 notes); rank equally with any other unsecured and unsubordinated debt. The subordinated debt securities will be subordinate andstructurally junior in right of payment to all the extentliabilities, including trade payables, of any of our subsidiaries that are not subsidiary guarantors; and in the manner described in the instrument governing the debt,are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets or property securing such indebtedness. The subsidiary guarantors, jointly and severally, fully and unconditionally guarantee our payment obligations under the notes. The subsidiary guarantees rank senior in right of payment to all of the existing and future liabilities that are expressly subordinated in right of payment to the subsidiary guarantees; rank equal in right of payment with all of the existing and future unsecured, senior indebtedness of each subsidiary guarantor; and are effectively subordinated to all of existing and future secured indebtedness of each subsidiary guarantor to the extent of the value of the assets or property securing such indebtedness. Convertible debt securitiesIn the event of our bankruptcy, liquidation, reorganization or other winding up, our assets will be available to pay obligations on the notes only after all secured indebtedness, including the Loan and Security Agreement, dated as of July 16, 2019, among Solar Capital Ltd., as collateral agent and lender, the Company and Senseonics, Incorporated, as borrowers (the "credit agreement"), have been repaid in full from the assets securing such indebtedness. There may not be sufficient assets remaining to pay amounts due on any or all of the notes then outstanding.
You will not have any claim as a creditor against any of our future subsidiaries that do not become subsidiary guarantors. Those non-guarantor subsidiaries are separate and distinct legal entities and will have no obligation, contingent or otherwise, to pay any amounts due under the notes, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. Indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries are structurally senior to your claims against those subsidiaries.
In the event of a bankruptcy, liquidation, reorganization or other winding up of any of our non-guarantor subsidiaries, those non-guarantor subsidiaries will pay the holders of their debts, holders of preferred equity interests and their trade creditors before they will be able to distribute any of their assets to us (except to the extent we have a claim as a creditor of such non-guarantor subsidiary). Any right that we or the subsidiary guarantors have to receive any assets of any of the non-guarantor subsidiaries upon the bankruptcy, liquidation, reorganization or other winding up of those subsidiaries, and the consequent rights of holders of notes to realize proceeds from the sale of any of those subsidiaries' assets, are structurally subordinated to the claims of those subsidiaries' creditors, including trade creditors and holders of preferred equity interests of those subsidiaries.
As of July 31, 2019, the principal amount of our total consolidated indebtedness was $142.7 million, of which $45.0 million was senior secured indebtedness of us and our sole subsidiary and subsidiary guarantor under the Solar Term Loan and $97.7 million was our senior unsecured indebtedness under the notes and the 2023 notes. Our sole subsidiary guarantor had $127.0 million in principal amount of indebtedness as of July 31, 2019.
Recent and future regulatory actions and other events may adversely affect the trading price and liquidity of the notes.
We expect that many investors in, and potential purchasers of, the notes will employ, or seek to employ, a convertible arbitrage strategy with respect to the notes. Investors would typically implement such a strategy by selling short the common stock underlying the notes and dynamically adjusting their short position while continuing to hold the notes. Investors may also implement this type of strategy by entering into swaps on our common stock in lieu of or exchangeablein addition to short selling the common stock.
The SEC and other regulatory and self-regulatory authorities have implemented various rules and taken certain actions, and may in the future adopt additional rules and take other actions, that may impact those engaging in short selling activity involving equity securities (including our common stock). Such rules and actions include Rule 201 of SEC Regulation SHO, the adoption by the Financial Industry Regulatory Authority, Inc. and the national securities exchanges of a "Limit Up-Limit Down" program, the imposition of market-wide circuit breakers that halt trading of securities for certain periods following specific market declines, and the implementation of certain regulatory reforms required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Any governmental or regulatory action that restricts the ability of investors in, or potential purchasers of, the notes to effect short sales of our common stock, borrow our common stock or enter into swaps on our common stock could adversely affect the trading price and the liquidity of the notes.
Volatility in the market price and trading volume of our common stock could adversely impact the trading price of the notes.
The stock market in recent years has experienced significant price and volume fluctuations that have often been unrelated to the operating performance of companies. The market price of our common stock could fluctuate significantly for many reasons, including in response to the risks described in this prospectus or the documents incorporated by reference in this prospectus, or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability. A decrease in the market price of our common stock would likely adversely impact the trading price of the notes. The market price of our common stock could also be affected by possible sales of our common stock by investors who view the notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that we expect to develop involving our common stock. This trading activity could, in turn, affect the trading price of the notes.
We may not have the ability to raise the funds necessary to repurchase the notes upon a fundamental change, and our existing or future debt may contain limitations on our ability to repurchase of the notes.
Holders of the notes have the right to require us to repurchase their notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, as described under "Description of Notes — Fundamental Change Permits Holders to Require Us to Repurchase Notes." However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered therefor. In addition, we will be required to offer to repurchase the notes with excess proceeds from certain asset sales. Our ability to repurchase the notes may be limited by law, by regulatory authority or by agreements governing our indebtedness that exist at the time of the repurchase. The credit agreement restricts us from repurchasing the notes. Our failure to repurchase notes at a time when the repurchase is required by the indenture would constitute a default under the indenture. The occurrence of a fundamental change could cause an event of default under, or be prohibited or limited by, the terms of existing or future senior debt. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes.
The credit agreement prohibits us from making any cash payments to repurchase the notes.
The credit agreement prohibits us from making any cash payments to repurchase the notes upon a fundamental change. See "Description of Certain Other Indebtedness — Credit Agreement." Any new credit facility that we may enter into may have similar restrictions. Our failure to repurchase the notes as required under the terms of the notes would constitute a default under the indenture and permit holders of the notes to accelerate our obligations under the notes. A default under the indenture or the fundamental change itself could also lead to a default under the credit agreement or agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes.
Sales of our common stock in the public market or the perception that such sales could occur, could lower the market price for our common stock and adversely impact the trading price of the notes.
In the future, we may sell additional shares of our common stock to raise capital. In addition, a substantial number of shares of our common stock is reserved for issuance upon the exercise of stock options and upon conversion of the notes. We cannot predict the size of future issuances or preferredthe effect, if any, that they may have on the market price for our common stock. ConversionThe issuance and sale of substantial amounts of common stock, or the perception that such issuances and sales may occur, could adversely affect the trading price of the notes and the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.
Holders of notes are not entitled to any rights with respect to our common stock, but they are subject to all changes made with respect to them.
Holders of notes are not entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions on our common stock) prior to the conversion date with respect to any notes they surrender for conversion, but they are subject to all changes affecting our common stock. For example, if an amendment is proposed to our certificate of incorporation or bylaws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to the conversion date with respect to any notes surrendered for conversion, then the holder surrendering such notes will not be entitled to vote on the amendment, although such holder will nevertheless be subject to any changes affecting our common stock.
Guarantees of the notes may be mandatory or at the holder’s option and would be at prescribed conversion rates.
released.
The debt securities will be issued under one or more documents called indentures, whichnotes are contracts between us and a national banking association or other eligible party,guaranteed by Senseonics, Incorporated, our sole subsidiary as trustee. Inof the date of this prospectus, we have summarized certain general featuresand each of our restricted subsidiaries formed or acquired after the date of the debt securities. We urge you, however, to readinitial issuance of the applicable prospectus supplement (and any free writing prospectusnotes that we may authorize to be provided to you) related to the series of debt securities being offered, as well as the complete indentures that containis not an excluded subsidiary. Under the terms of the indenture governing the notes, a guarantee of the notes made by a subsidiary guarantor will be released without any action on the part of the trustee or any holder of notes under certain circumstances described in "Description of Notes — Covenants — Subsidiary Guarantees."
Federal and state statutes allow courts, under specific circumstances, to void notes and subsidiary guarantees and require noteholders to return payments received.
The issuance of the notes and the related subsidiary guarantees may be subject to review under federal and state fraudulent transfer and conveyance statutes. While the relevant laws may vary from state to state, under such laws the payment of consideration will be a fraudulent conveyance if (1) the consideration was paid with the intent of hindering, delaying or defrauding creditors or (2) we or any of the subsidiary guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for issuing either the notes or a subsidiary guarantee and, in the case of (2) only, one of the following is also true:
If a court were to find that the issuance of the notes or a subsidiary guarantee was a fraudulent conveyance, the court could void the payment obligations under the notes or such subsidiary guarantee or subordinate the notes or such subsidiary guarantee to presently existing and future indebtedness of us or such subsidiary guarantor, or require the holders of the notes to repay any amounts received with respect to the notes or such subsidiary guarantee. In the event of a finding that a fraudulent conveyance occurred, you may not receive any repayment on the notes.
The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. In general, however, a court would consider an issuer or a guarantor insolvent if:
We cannot be certain as to the standards a court would use to determine whether or not we or any subsidiary guarantor was solvent at the relevant time, or regardless of the standard that a court uses, that the issuance of the notes and the subsidiary guarantees would not be subordinated to our or any subsidiary guarantor's other debt.
If the subsidiary guarantees were legally challenged, any subsidiary guarantee could also be subject to the claim that, since the subsidiary guarantee was incurred for our benefit, and only indirectly for the benefit of the subsidiary guarantor, the obligations of the applicable subsidiary guarantor were incurred for less than fair consideration. A court could thus void the obligations under the subsidiary guarantees, subordinate
them to the applicable subsidiary guarantor's other debt securities. Aor take other action detrimental to the holders of the notes.
Each subsidiary guarantee contains a provision intended to limit the subsidiary guarantor's liability to the maximum amount that it could incur without causing the incurrence of obligations under its subsidiary guarantee to be a fraudulent transfer. This provision may not be effective to protect the subsidiary guarantees from being voided under fraudulent transfer law, or may reduce or eliminate the guarantor's obligation to an amount that effectively makes the subsidiary guarantee worthless.
The increase in the conversion rate for notes converted in connection with a make-whole fundamental change or during a redemption period may not adequately compensate you for any lost value of your notes as a result of such transaction.
If a make-whole fundamental change occurs prior to the maturity date or upon our issuance of a notice of redemption, under certain circumstances, we will increase the conversion rate by a number of additional shares of our common stock for notes converted in connection with such make-whole fundamental change or during the redemption period, as applicable. The increase in the conversion rate will be determined based on the date on which the specified corporate transaction becomes effective or the redemption notice date, as applicable, and the price paid (or deemed to be paid) per share of our common stock in such transaction or on such redemption notice date, as described below under "Description of Notes — Conversion Rights — Increase in Conversion Rate Upon Conversion upon a Make-Whole Fundamental Change or during a Redemption Period." The increase in the conversion rate for notes converted in connection with a make-whole fundamental change or during a redemption period may not adequately compensate you for any lost value of your notes as a result of such transaction or notice of redemption. In addition, if the price of our common stock in the transaction is greater than $20.00 per share or less than $1.10 per share (in each case, subject to adjustment), no additional shares will be added to the conversion rate. Moreover, in no event will the conversion rate per $1,000 principal amount of notes as a result of this adjustment exceed 909.0909 shares of common stock in the event of a make-whole fundamental change or conversion during a redemption period, subject to adjustment in the same manner as the conversion rate as set forth under "Description of Notes — Conversion Rights — Conversion Rate Adjustments."
Our obligation to increase the conversion rate for notes converted in connection with a make-whole fundamental change or during a redemption period could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness and equitable remedies.
The conversion rate of the notes may not be adjusted for all dilutive events.
The conversion rate of the notes is subject to adjustment for certain events, including, but not limited to, the issuance of certain stock dividends on our common stock, the issuance of certain rights or warrants, subdivisions, combinations, distributions of capital stock, indebtedness, or assets, cash dividends and certain issuer tender or exchange offers as described under "Description of Notes — Conversion Rights — Conversion Rate Adjustments." However, the conversion rate will not be adjusted for other events, such as a third-party tender or exchange offer or an issuance of common stock for cash, that may adversely affect the trading price of the notes or our common stock. An event that adversely affects the value of the notes may occur, and that event may not result in an adjustment to the conversion rate.
Some significant restructuring transactions may not constitute a fundamental change, in which case we would not be obligated to offer to repurchase the notes.
Upon the occurrence of a fundamental change, you have the right to require us to repurchase your notes. However, the fundamental change provisions will not afford protection to holders of notes in the event of other transactions that could adversely affect the notes. For example, transactions such as leveraged recapitalizations, refinancings, restructurings, or acquisitions initiated by us may not constitute a fundamental change requiring us to repurchase the notes. In the event of any such transaction, the holders
would not have the right to require us to repurchase the notes, even though each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings, thereby adversely affecting the holders of notes.
We cannot assure you that an active trading market will develop for the notes.
We do not intend to apply to list the notes on any securities exchange or to arrange for quotation on any automated dealer quotation system. In addition, the liquidity of the trading market in the notes, and the market price quoted for the notes, may be adversely affected by changes in the overall market for this type of security and by changes in our financial performance or prospects or in the prospects for companies in our industry generally. As a result, we cannot assure you that an active trading market will develop for the notes. If an active trading market does not develop or is not maintained, the market price and liquidity of the notes may be adversely affected. In that case you may not be able to sell your notes at a particular time or you may not be able to sell your notes at a favorable price.
Any adverse rating of the notes may cause their trading price to fall.
We do not intend to seek a rating on the notes. However, if a rating service were to rate the notes and if such rating service were to lower its rating on the notes below the rating initially assigned to the notes or otherwise announces its intention to put the notes on credit watch, the trading price of the notes could decline.
You may be subject to tax if we make or fail to make certain adjustments to the conversion rate of the notes even though you do not receive a corresponding cash distribution.
The conversion rate of the notes is subject to adjustment in certain circumstances, including the payment of cash dividends. If the conversion rate is adjusted as a result of a cash dividend paid to our common stockholders, you may be deemed to have received a dividend subject to U.S. federal income tax without the receipt of any cash. In addition, a failure to adjust (or to adjust adequately) the conversion rate after an event that increases your proportionate interest in us could be treated as a deemed taxable dividend to you. If a make-whole fundamental change occurs prior to the maturity date or upon our issuance of a notice of redemption, under some circumstances, we will increase the conversion rate for notes converted in connection with such make-whole fundamental change or notice of redemption. Such increase may also be treated as a distribution subject to U.S. federal income tax as a dividend. See "Certain Material U.S. Federal Income Tax Considerations." If you are a non-U.S. holder (as defined in "Certain Material U.S. Federal Income Tax Considerations"), any deemed dividend would be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty, and if you are a U.S. holder (as defined in "Certain Material U.S. Federal Income Tax Considerations"), any deemed dividend may be subject to federal backup withholding tax at a 24% rate, which, in each case, may be withheld from subsequent payments on the notes or other amounts received by you. See "Certain Material U.S. Federal Income Tax Considerations."
The comprehensive tax reform bill could adversely affect our business and financial condition.
On December 22, 2017, President Trump signed into law new tax legislation, the Tax Act, that significantly changes the Internal Revenue Code of 1986, as amended. The Tax Act, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. Our federal net operating loss carryovers created in 2018 and thereafter will be carried forward indefinitely pursuant to the Tax Act. We continue to examine the
impact this tax legislation may have on our business. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the Tax Act is uncertain and our business and financial condition could be adversely affected. The impact of this Tax Act on holders of our notes or common stock is also uncertain and could be adverse. This prospectus does not discuss any such tax legislation or the manner in which it might affect us or purchasers of our notes or holders of our common stock. We urge purchasers of notes in this offering to consult with their legal and tax advisors with respect to such legislation and the potential tax consequences of investing in our notes and common stock.
For as long as the notes are held in book-entry form, holders must rely on DTC's procedures to receive communications relating to the notes and exercise their rights and remedies.
We issued the notes in the form of indentureone or more global notes registered in the name of Cede & Co., as nominee of DTC. Beneficial interests in global notes are shown on, and transfers of global notes are effected only through, the records maintained by DTC. Except in limited circumstances, we will not issue certificated notes. See "Description of Notes — Book-Entry, Settlement and Clearance." Accordingly, if you own a beneficial interest in a global note, then you are not considered an owner or holder of the notes. Instead, DTC or its nominee is the sole holder of the notes. Unlike persons who have certificated notes registered in their names, owners of beneficial interests in global notes do not have the direct right to act on our solicitations for consents or requests for waivers or other actions from holders. Instead, those beneficial owners are permitted to act only to the extent that they have received appropriate proxies to do so from DTC or, if applicable, a DTC participant. The applicable procedures for the granting of these proxies may not be sufficient to enable owners of beneficial interests in global notes to vote on any requested actions on a timely basis. In addition, notices and other communications relating to the notes are sent to DTC. We expect DTC to forward any such communications to DTC participants, which in turn would forward such communications to indirect DTC participants. But we can make no assurances that you timely receive any such communications.
Risks Related to our Common Stock
The price of our common stock historically has been volatile. This volatility may affect the price at which you could sell the common stock you receive upon conversion of your notes, if any, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock and the value of your notes.
The trading volume of our common stock has been limited since our common stock began publicly trading on the OTCQB in December 2015 and has remained limited on the NYSE American since our initial public offering in March 2016. This volatility may affect the price at which you could sell the common stock, if any, you receive upon conversion of your notes, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock and the value of your notes. 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 variations in our quarterly operating results from our expectations or those of securities analysts or investors; downward revisions in securities analysts' estimates; announcement by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; and the other factors discussed elsewhere in this prospectus and the documents incorporated by reference in this prospectus, or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability.
Because we do not anticipate paying any cash dividends on shares of our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain if you convert your notes into common stock.
We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not
anticipate paying any cash dividends in the foreseeable future. Our ability to pay dividends on shares of our common stock is further limited by restrictions on our ability to pay dividends or make distributions under the terms of the agreements governing our indebtedness, including the indenture governing the notes offered hereby, and may be limited by future similar agreements. Accordingly, if you convert your notes into common stock, you may have to sell some or all of your securities in order to generate cash flow from your investment. You may not receive a gain on your investment when you sell securities and you may lose the entire amount of the investment.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine. However, this exclusive forum provision would not apply to suits brought to enforce a duty or liability created by the Securities Act or the Exchange Act. The choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
The selling securityholders will receive all of the proceeds from their sale from time to time under this prospectus and any accompanying prospectus supplement of the notes or the common stock issuable upon conversion of the notes. We will not receive any proceeds from these sales.
The notes were issued under an indenture (which we refer to as the "indenture") dated as of July 25, 2019, by and among us, Senseonics, Incorporated and U.S. Bank National Association, as trustee (which we refer to as the "trustee"). A copy of the indenture is filed as an exhibit to the registration statement of which this prospectus isforms a part, and supplemental indentures and formspart. The following summary of debt securities containing the terms of the debt securities being offered willnotes and the indenture does not purport to be filed as exhibitscomplete and is subject, and qualified in its entirety by reference, to the detailed provisions of the notes and the indenture. Those documents, and not this description, define a holder's legal rights as a holder of the notes. The terms of the notes include those expressly set forth in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended (the "TIA"). For purposes of this summary, the terms "Senseonics," "we," "us" and "our" refer only to Senseonics Holdings, Inc. and not to any of its subsidiaries, unless we specify otherwise. Unless the context requires otherwise, the term "interest" includes defaulted interest, if any, payable pursuant to the indenture and "additional interest" and "special interest" payable pursuant to the provisions described under "— Events of Default."
General
On July 25, 2019, we issued $82.0 million in aggregate principal amount of our 5.25% convertible senior notes due 2025 (the "notes") under the indenture. The notes bear interest at a rate of 5.25% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020, to holders of record at the close of business on the preceding January 1 and July 1 immediately preceding the January 15 and July 15 interest payment dates, respectively, except as described below.
The notes:
The notes are guaranteed by the "subsidiary guarantors," which include Senseonics, Incorporated, our sole subsidiary as of the date of this prospectus, and each of our restricted subsidiaries formed or acquired after the date of the initial issuance of the notes that is a part or willnot an Excluded Subsidiary (as defined below). The subsidiary guarantees may be incorporated by reference from reports that we file withreleased under certain circumstances. See "— Covenants — Future Subsidiary Guarantees" and "— Subsidiary Guarantees."
Subject to satisfaction of certain conditions, the SEC.
Warrants. Wenotes may issue warrants for the purchasebe converted at an initial conversion rate of 757.5758 shares of common stock preferredper $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $1.32 per share of common stock). The conversion rate is subject to adjustment if certain events occur as described under "— Conversion Rights — Conversion Rate Adjustments."
Upon conversion of a note, we will deliver shares of our common stock, and/together with a cash payment in lieu of delivering any fractional share, as described under "Conversion Rights — Settlement upon Conversion," and, if applicable, a cash payment as described under "— Conversion Rights — Special Settlement Provisions in Connection with a Make-Whole Fundamental Change or debtRedemption Period." You will not receive any separate cash payment for interest, if any, accrued and unpaid to the conversion date except under the limited circumstances described below under "— Conversion Rights — General."
However, you will not be entitled to receive any shares of our common stock otherwise deliverable upon conversion of the notes to the extent, but only to the extent, that such receipt would cause you to become, directly or indirectly, a "beneficial owner" of shares of our common stock in excess of the beneficial ownership limits applicable to you at such time.
We are not permitted to reopen the indenture to provide for the issuance of any additional notes.
We do not intend to list the notes on any securities exchange or any automated dealer quotation system.
Except to the extent the context otherwise requires, we use the term "notes" in onethis prospectus to refer to each $1,000 principal amount of notes. We use the term "common stock" in this prospectus to refer to our common stock, par value $0.001 per share. References in this prospectus to a "holder" or more series. "holders" of notes that are held through The Depository Trust Company ("DTC") are references to owners of beneficial interests in such notes, unless the context otherwise requires. However, we and the trustee will treat the person in whose name the notes are registered (Cede & Co., in the case of notes held through DTC) as the owner of such notes for all purposes. References herein to the "close of business" refer to 5:00 p.m., New York City time, and to the "open of business" refer to 9:00 a.m., New York City time.
Purchase and Cancellation
We will cause all notes surrendered for payment, repurchase (but excluding notes repurchased pursuant to cash-settled swaps or other derivatives), including as described immediately below and in "— Fundamental Change Permits Holders to Require Us to Repurchase Notes," redemption, registration of transfer or exchange or conversion, if surrendered to any person that we control other than the trustee, to be delivered to the trustee for cancellation and they will no longer be considered "outstanding" under the indenture upon their payment, repurchase, registration of transfer or exchange or conversion. All notes delivered to the trustee shall be cancelled promptly by the trustee. Except for notes surrendered for registration of transfer or exchange, no notes shall be authenticated in exchange for any notes cancelled as provided in the indenture.
We may, issue warrants independentlyto the extent permitted by law, and directly or togetherindirectly (regardless of whether such notes are surrendered to us), repurchase notes in the open market or otherwise, whether by us or our subsidiaries or through a privately negotiated transaction or public tender or exchange offer or through counterparties to private agreements, including by cash-settled swaps or other derivatives, in each case, without prior notice to the holders of the notes.
Payments on the Notes; Paying Agent and Registrar; Transfer and Exchange
We will pay or cause the paying agent to pay the principal of, and interest on, notes in global form registered in the name of or held by DTC or its nominee by wire transfer in immediately available funds to DTC or its nominee, as the case may be, as the registered holder of such global note.
We will pay or cause the paying agent to pay the principal of any certificated notes at the office or agency designated by us for that purpose. We have initially designated the trustee as our paying agent and registrar and its corporate trust office as a place where notes may be presented for payment or for registration of transfer. We may, however, change the paying agent or registrar without giving prior notice to the holders of the notes, and we may act as paying agent or registrar. Interest on certificated notes will be payable (i) to holders holding certificated notes having an aggregate principal amount of $5,000,000 or less, by check mailed to the holders of these notes and (ii) to holders holding certificated notes having an aggregate principal amount of more than $5,000,000, either by check mailed to each such holder or, upon written application by such holder to the registrar not later than the relevant regular record date, by wire transfer in immediately available funds to that holder's account within the United States if such holder has provided us, the trustee or the paying agent with common stock, preferred stock and/the requisite information necessary to make such wire transfer, which application shall remain in effect until the holder notifies, in writing, the registrar to the contrary.
A holder of notes may transfer or debt securities,exchange notes at the office of the registrar in accordance with the indenture. The registrar and the warrantstrustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents. No service charge will be imposed by us, the trustee or the registrar for any registration of transfer or exchange of notes, but we may require a holder to pay a sum sufficient to cover any transfer tax or other similar governmental charge required by law or permitted by the indenture. We are not required to transfer or exchange any note selected for redemption or surrendered for conversion or required repurchase. A holder of a beneficial interest in a note in global form may transfer or exchange such beneficial interest in accordance with the indenture and the applicable procedures of DTC. See "— Book-Entry, Settlement and Clearance."
The registered holder of a note will be treated as its owner for all purposes.
Interest
The notes bear cash interest at a rate of 5.25% per year until maturity. Interest on the notes accrues from July 25, 2019 or from the most recent date on which interest has been paid or duly provided for. Interest is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020.
Interest will be paid to the person in whose name a note is registered at the close of business on January 1 or July 1 (whether or not a business day (as defined below)), as the case may be, attachedimmediately preceding the relevant interest payment date (each, a "regular record date"). Interest on the notes will be computed on the basis of a 360-day year composed of 12 30-day months and, for partial months, on the basis of the number of days actually elapsed in a 30-day month.
If any interest payment date, the maturity date or any earlier required repurchase date upon a fundamental change of a note falls on a day that is not a business day, the required payment will be made on the next succeeding business day with the same force and effect as if made on such scheduled payment date, and no interest on such payment will accrue in respect of the delay. The term "business day" means, with respect to any note, any day other than a Saturday, a Sunday or separate from these securities. Ina day on which the Federal Reserve Bank
of New York is authorized or required by law or executive order to close or be closed or a day when the corporate trust office of the trustee or the depository is closed.
Unless the context otherwise requires, all references to interest in this prospectus we have summarizedinclude additional interest, if any, payable as described under "— Rule 144 Resales and Registration Rights" and at our election as the sole remedy during certain general featuresperiods for an event of default relating to the failure to comply with our reporting obligations as described under "— Events of Default."
Ranking
The notes:
Our operations are conducted through our subsidiary and, therefore, we depend on the cash flow of our subsidiary to readmeet our obligations, including our obligations under the notes. In addition, the ability of our subsidiaries to pay dividends and make other payments to us is restricted by, among other things, applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) related to the particular series of warrants being offered,corporate and other laws and regulations as well as agreements to which our subsidiaries may become a party. In the complete warrant agreementsevent of our bankruptcy, liquidation, reorganization or other winding up, our assets will be available to pay obligations on the notes only after secured indebtedness has been repaid in full from the assets securing such indebtedness. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all the notes then outstanding.
As of July 31, 2019, the principal amount of our total consolidated indebtedness was $142.7 million, of which $45.0 million was senior secured indebtedness of us and warrant certificatesour sole subsidiary and subsidiary guarantor under the Credit Agreement and $97.7 million was our senior unsecured indebtedness under the notes and the 2023 notes. Our sole subsidiary guarantor had $127.0 million principal amount of indebtedness as of July 31, 2019. We may not be able to pay cash for the fundamental change repurchase price upon a fundamental change if a holder requires us to repurchase notes as described below. See "Risk Factors — Risks Related to the Notes — We may not have the ability to raise the funds necessary to repurchase the notes upon a fundamental change, and our future debt may contain certain limitations on our ability to repurchase the notes."
Subsidiary Guarantees
Our subsidiary guarantors, jointly and severally, fully and unconditionally guarantee our payment obligations under the notes. Each subsidiary guarantee:
Under the terms of the warrants. Formsfull and unconditional guarantees, holders of the warrant agreementsnotes are not required to exercise their remedies against us before they proceed directly against the subsidiary guarantors.
The obligations of each subsidiary guarantor under its subsidiary guarantee are limited as necessary to prevent that subsidiary guarantee from constituting a fraudulent conveyance, fraudulent transfer or unlawful financial assistance under applicable law or otherwise to reflect limitations under applicable law. By virtue of these limitations, the obligations of a subsidiary guarantor under its subsidiary guarantee could be significantly less than amounts payable with respect to the notes or a subsidiary guarantor may have effectively no obligations under its respective subsidiary guarantee. See "Risk Factors — Risks Related to the Notes — Federal and formsstate statues allow courts, under specific circumstances, to void notes and guarantees and require noteholders to return payments received."
The notes are not and will not be guaranteed by (a) any subsidiary that is prohibited by any applicable law or, on the date such subsidiary is acquired (provided, that such prohibition is not be created in contemplation of warrant certificates containingsuch acquisition), its organizational documents, in each case, from guaranteeing the termsnotes; (b) any subsidiary that is prohibited by any contractual obligation that existed on the date any such subsidiary is acquired (provided, that such prohibition is not created in contemplation of such acquisition) from guaranteeing the notes; (c) any subsidiary to the extent that the provision of any subsidiary guarantee of the warrantsnotes would require the consent, approval, license or authorization of any governmental authority which has not been obtained, any subsidiary that is subject to such restrictions (provided that after such time that such restrictions on subsidiary guarantees are waived, lapse, terminate or are no longer effective, such subsidiary shall no longer be an Excluded Subsidiary by virtue of this clause (c)); (d) any wholly-owned Subsidiary organized under the laws of the United States, any state of the United States or the District of Columbia that (i) has no material assets other than Capital Stock of one or more subsidiaries that are "controlled foreign corporations" within the meaning of Section 957(a) of the Code or (ii) is a subsidiary of a subsidiary that is a "controlled foreign corporation" within the meaning of Section 957(a) of the Code (provided any subsidiary described in the foregoing clauses (d)(i) or (d)(ii) shall be an Excluded Subsidiary only with respect to the subsidiary guarantee of an obligation of a United States person); (e) any Subsidiary that is not incorporated or organized under the laws of the United States, any state of the United States or the District of Columbia; (f) any Unrestricted Subsidiary; and (g) any subsidiary for which the provision of a subsidiary guarantee would result in a material adverse tax or regulatory consequence to us or one of our subsidiaries, as applicable (collectively, the "Excluded Subsidiaries").
The subsidiary guarantee of a subsidiary guarantor will be automatically and unconditionally released:
Notwithstanding the foregoing, no subsidiary guarantor shall be released from its subsidiary guarantee for so long as such subsidiary guarantor guarantees or provides credit support for, any of our or our other restricted subsidiaries' indebtedness.
Under the circumstances described below under "— Covenants — Designation of Restricted and Unrestricted Subsidiaries," we will be permitted to designate certain of our subsidiaries as "unrestricted subsidiaries." Unrestricted subsidiaries will not be subject to many of the restrictive covenants in the indenture and will not guarantee the notes. If we have any unrestricted subsidiaries in the future, the notes will be effectively subordinated in right of payment to all indebtedness, including trade payables, of such unrestricted subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of these unrestricted subsidiaries, the unrestricted subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to us or any subsidiary guarantors.
Optional Redemption
No "sinking fund" is provided for the notes, which means that we are not required to redeem or retire the notes periodically. We may redeem for cash all or part of the notes, at our option, if (1) the last reported sale price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption (a "redemption notice date") and (2) a registration statement covering the resale of the shares of our common stock issuable upon conversion of the notes is effective and available for use and is expected to remain effective and available for use during the redemption period as of the date the redemption notice date. In the case of any redemption, we will provide not less than 20 nor more than 60 calendar days' notice before the redemption date to the trustee, the paying agent and the holder of notes, and the redemption price will be equal to 100% of the principal amount of the notes to be redeemedplus accrued and unpaid interest to, but excluding, the redemption date. The redemption date must be a business day.
Notwithstanding the foregoing, if we set a redemption date between a regular record date and the corresponding interest payment date, we will not pay accrued interest to any holder of notes to be redeemed, and will instead pay the full amount of the relevant interest payment on such interest payment date to the holder of record on such regular record date.
With respect to any notes that are called for redemption and converted from and including the redemption notice date until the close of business on the business day immediately preceding the redemption date (any such period, a "redemption period") as described under "— Conversion Rights — General," we will, under certain circumstances, increase the conversion rate for the notes so surrendered for conversion by a number of additional shares as described under "— Conversion Rights — Increase in Conversion Rate upon Conversion upon a Make-Whole Fundamental Change or during a Redemption Period."
Subject to the applicable rules and procedures of DTC, if we decide to redeem fewer than all of the outstanding notes, we will instruct the trustee regarding the selection of notes to be redeemed (in principal amounts of $1,000 or multiples thereof) by lot, on a pro rata basis or by another method we consider to be fair and appropriate.
If a portion of your note is selected for partial redemption and you convert a portion of the same note, the converted portion will be deemed to be from the portion selected for redemption.
In the event of any redemption in part, we will not be required to register the transfer of or exchange any note so selected for redemption, in whole or in part, except the unredeemed portion thereof.
The notes may not be redeemed if the principal amount of the notes has been accelerated, and such acceleration has not been rescinded, on or prior to the redemption date (except in the case of an acceleration resulting from a default by us in the payment of the redemption price with respect to the notes).
The "last reported sale price" of our common stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which our common stock is traded. If our common stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the "last reported sale price" will be the last quoted bid price for our common stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If our common stock is not so quoted, the "last reported sale price" will be the average of the mid-point of the last bid and ask prices for our common stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by us for this purpose.
"Trading day" means a day on which (i) trading in our common stock (or other security for which a closing sale price must be determined) generally occurs on The NYSE American or, if our common stock (or such other security) is not then listed or quoted on The NYSE American, on the principal other U.S. national or regional securities exchange on which our common stock (or such other security) is then listed or, if our common stock (or such other security) is not then listed on a U.S. national or regional securities exchange, on the principal other market on which our common stock (or such other security) is then traded, and (ii) a last reported sale price for our common stock (or closing sale price for such other security) is available on such securities exchange or market. If our common stock (or such other security) is not so listed or traded, "trading day" means a "business day."
Conversion Rights
General
Holders may convert all or any portion of their notes at their option at any time prior to the close of business on the business day immediately preceding the maturity date.
The initial conversion rate is 757.5758 shares of common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $1.32 per share of common stock).
The conversion rate is subject to adjustment if certain events occur. The conversion price at any given time will be computed by dividing $1,000 by the applicable conversion rate at such time. Accordingly, an adjustment to the conversion rate will result in a corresponding (but inverse) adjustment to the conversion price.
Upon conversion of a note, we will satisfy our conversion obligation by delivering shares of our common stock, together with a cash payment in lieu of delivering any fractional share, as set forth below under "— Settlement upon Conversion," and, if applicable, a cash payment as described under "— Conversion Rights — Special Settlement Provisions in Connection with a Make-Whole Fundamental Change or Redemption Period." We will settle our conversion obligation on the second business day immediately following the relevant conversion date. The trustee will initially act as the conversion agent.
A holder may convert fewer than all of such holder's notes so long as the notes converted are an integral multiple of $1,000 principal amount.
Upon conversion, you will not receive any separate cash payment for accrued and unpaid interest, if any, except as described below. We will not issue fractional shares of our common stock upon conversion of notes. Instead, we will pay cash in lieu of delivering any fractional share as described under "— Conversion Rights — Settlement upon Conversion." Our delivery to you of the full number of shares, together with a cash payment for any fractional share, into which a note is convertible will be deemed to satisfy in full our obligation to pay:
As a result, accrued and unpaid interest, if any, to, but not including, the relevant conversion date will be deemed to be paid in full rather than cancelled, extinguished or forfeited.
Notwithstanding the immediately preceding paragraph, if notes are converted after the close of business on a regular record date for the payment of interest, but prior to the open of business on the immediately following interest payment date, holders of such notes at the close of business on such regular record date will receive the full amount of interest payable on such notes on the corresponding interest payment date notwithstanding the conversion. However, notes surrendered for conversion during the period from the close of business on any regular record date to the open of business on the immediately following interest payment date must be accompanied by funds equal to the amount of interest payable on the notes so converted on the corresponding interest payment date (regardless of whether the holder was the holder of record on the corresponding regular record date);provided that no such payment need be made:
Conversion Procedures
If you hold a beneficial interest in a global note, to convert you must comply with DTC's procedures for converting a beneficial interest in a global note and, if required, pay funds equal to interest payable on the next interest payment date to which you are not entitled and, if required, pay all transfer or similar taxes, if any. As such, if you are a beneficial owner of the notes, you must allow for sufficient time to comply with DTC's procedures if you wish to exercise your conversion rights. Your exercise of such conversion rights shall be irrevocable.
If you hold a certificated note, to convert you must:
In addition, a holder may be required to provide a certification to us as to whether the person (or persons) receiving shares of our common stock upon conversion is, or would, as a result of such conversion, become the beneficial owner of shares of our common stock outstanding at such time in excess of any beneficial ownership limit then applicable to such person (or persons). See "— Conversion Rights — Limits on the Issuance of Shares of Common Stock upon Conversion."
We will pay any documentary, stamp or similar issue or transfer tax on the issuance of the shares of our common stock upon conversion of the notes, unless the tax is due because the holder requests such shares to be issued in a name other than the holder's name, in which case the holder must pay the tax.
We refer to the date you comply with the relevant procedures for conversion described above as the "conversion date."
If a holder has already delivered a repurchase notice as described under "— Fundamental Change Permits Holders to Require Us to Repurchase Notes" with respect to a note, the holder may not surrender that note for conversion until the holder has withdrawn the repurchase notice in accordance with the relevant provisions of the indenture. If a holder submits its notes for required repurchase, the holder's right to withdraw the repurchase notice and convert the notes that are subject to repurchase will terminate at the close of business on the business day immediately preceding the relevant fundamental change repurchase date.
Limits on Issuance of Shares of Common Stock upon Conversion
Notwithstanding anything to the contrary herein, no person will be entitled to receive any shares of our common stock otherwise deliverable upon conversion of the notes to the extent, but only to the extent, that such receipt would cause such person to become, directly or indirectly, a "beneficial owner" (as defined below) of more than 9.99% of the shares of our common stock outstanding at such time (such restriction, the "general beneficial ownership limit").
In addition, a holder of notes at its option may elect a beneficial ownership limit as to such holder (but not as to any other holder) that is less than or equal to the general beneficial ownership limit then applicable to the holders in general upon written notice delivered to us prior to the issuance of the notes or, if thereafter, at least 61 days prior to the date of effectiveness of such lower beneficial ownership limit, specifying the percentage of shares of our common stock for the beneficial ownership limit that shall apply to such holder (such beneficial ownership limit, a "holder beneficial ownership limit" and together with the general beneficial ownership limit, the "beneficial ownership limits").
Any purported delivery of shares of our common stock upon conversion of the notes shall be void and have no effect to the extent, but only to the extent, that such delivery would result in any person becoming the beneficial owner of shares of our common stock outstanding at such time in excess of the beneficial ownership limits applicable to such person.
Unless we have waived the general beneficial ownership limit as described below under "— Conversion Rights — Waiver of Beneficial Ownership Limits" and there is no holder beneficial ownership limit applicable to a holder, when such holder tenders notes for conversion, that holder must provide a certification to us as to whether the person (or persons) receiving shares of our common stock upon conversion is, or would, as a result of such conversion, become the beneficial owner of shares of our common stock outstanding at such time in excess of any beneficial ownership limit then applicable to such person (or persons).
If any delivery of shares of our common stock otherwise owed to any person (or persons) upon conversion of the notes is not made, in whole or in part, as a result of the applicable beneficial ownership limits, our obligation to make such delivery shall not be extinguished and, such holder may either:
otherwise due to such person (or persons) and (ii) two trading days after receipt of such certification; provided, however, until such time as the affected holder gives such notice, no person shall be deemed to be the stockholder of record with respect to the shares of our common stock otherwise deliverable upon conversion in excess of any applicable beneficial ownership limit. Upon delivery of such notice, the provisions under "Conversion Rights — Settlement upon Conversion," shall apply to the shares of common stock to be delivered pursuant to such notice.
For purposes of this section only, a person shall be deemed the "beneficial owner" of and shall be deemed to beneficially own any shares of our common stock that such person or any of such person's affiliates (as defined in Rule 12b-2 under the Exchange Act) or associates (as defined in Rule 12b-2 under the Exchange Act) is deemed to beneficially own, together with any shares of our common stock beneficially owned by any other persons whose beneficial ownership would be aggregated with such person for purposes of Section 13(d) of the Exchange Act. Subject to the following proviso, for purposes of the this section only, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder as in effect on the first date of original issuance of the notes; provided that the number of shares of our common stock beneficially owned by such person and its affiliates and associates and any other persons whose beneficial ownership would be aggregated with such person for purposes of Section 13(d) of the Exchange Act shall include the number of shares of our common stock issuable upon exercise or conversion of any of our securities or rights to acquire our common stock, whether or not such securities or rights are currently exercisable or convertible or are exercisable or convertible only after the passage of time (including the number of shares of our common stock issuable upon conversion of the notes in respect of which the beneficial ownership determination is being offeredmade), but shall exclude the number of shares of our common stock that would be issuable upon (A) conversion of the remaining, unconverted portion of any notes beneficially owned by such person or any of its affiliates or associates and any other persons whose beneficial ownership would be aggregated with such person for purposes of Section 13(d) of the Exchange Act and (B) exercise or conversion of the unexercised or unconverted portion of any of our other securities subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by such person or any of its affiliates or associates and any other persons whose beneficial ownership would be aggregated with such person for purposes of Section 13(d) of the Exchange Act. For the avoidance of doubt, the term "beneficial owner" as used in this section shall not include (i) with respect to any global note, the nominee of the depositary or any person having an account with the depositary or its nominee or (ii) with respect to any certificated note, the holder of such certificated note unless, in each case, such nominee, account holder or holder shall also be a beneficial owner of such note.
Waiver of Beneficial Ownership Limits
We may, at our option with the approval of our board of directors and subject to the applicable listing standards of NYSE American, waive the general beneficial ownership limit (as to a particular person or as to all persons). In the event that we exercise our right to waive the general beneficial ownership limit to all persons, we or, at our written request and our expense, the trustee, shall deliver or cause to be delivered to each holder 61 days prior to the effective waiver date an irrevocable notice stating that as of an effective date specified therein, we waive any restrictions that limit a holder from converting its notes in the event that such holder is, or would, as a result of a conversion of notes, become, a restricted converting holder. Any such waiver of the general beneficial ownership limit would not effect a waiver of any holder beneficial ownership limit.
Settlement upon Conversion
Except as described under "— Conversion Rights — Special Settlement Provisions in Connection with a Make-Whole Fundamental Change or Redemption Period," upon conversion, we will deliver to holders in respect of each $1,000 principal amount of notes being converted a number of shares of our common stock equal to the conversion rate, together with a cash payment in lieu of delivering any fractional share of
common stock issuable upon conversion based on the last reported sale price of our common stock on the relevant conversion date. We will deliver the consideration due in respect of conversion on the second business day immediately following the relevant conversion date.
Each conversion will be deemed to have been filedeffected as exhibitsto any notes surrendered for conversion on the conversion date, and the person in whose name the shares of our common stock shall be issuable upon such conversion will become the holder of record of such shares as of the close of business on such conversion date.
Conversion Rate Adjustments
The conversion rate will be adjusted by us as described below, except that we will not make any adjustments to the registration statementconversion rate if holders of the notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of our common stock and solely as a result of holding the notes, in any of the transactions described below without having to convert their notes as if they held a number of shares of our common stock equal to the conversion rate, multiplied by the principal amount (expressed in thousands) of notes held by such holder.
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where
CR0 | = | the conversion rate in effect immediately prior to the close of business on the record date (as defined below) of such dividend or distribution, or immediately prior to the open of business on the effective date of such share split or share combination, as applicable; | |||
CR1 | = | the conversion rate in effect immediately after the close of business on such record date or immediately after the open of business on such effective date, as applicable; | |||
OS0 | = | the number of shares of our common stock outstanding immediately prior to the close of business on such record date or immediately prior to the open of business on such effective date, as applicable (before giving effect to any such dividend, distribution, share split or share combination); and | |||
OS1 | = | the number of shares of our common stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination. |
Any adjustment made under this clause (1) shall become effective immediately after the close of business on the record date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this clause (1) is declared but not so paid or made, the conversion rate shall be immediately readjusted, effective as of the date our board of directors or a committee thereof determines not to pay such dividend or distribution, to the conversion rate that would then be in effect if such dividend or distribution had not been declared.
including, the trading day immediately preceding the date of announcement of such distribution, the conversion rate will be increased based on the following formula:
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where
CR0 | = | the conversion rate in effect immediately prior to the close of business on the record date for such distribution; | |||
CR1 | = | the conversion rate in effect immediately after the close of business on such record date; | |||
OS0 | = | the number of shares of our common stock outstanding immediately prior to the close of business on such record date; | |||
X | = | the total number of shares of our common stock distributable pursuant to such rights, options or warrants; and | |||
Y | = | the number of shares of our common stock equal to the aggregate price payable to exercise such rights, options or warrants,divided by the average of the last reported sale prices of our common stock over the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the date of announcement of the distribution of such rights, options or warrants. |
Any increase made under this clause (2) will be made successively whenever any such rights, options or warrants are distributed and shall become effective immediately after the close of business on such record date for such distribution. To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of our common stock are not delivered after the expiration of such rights, options or warrants, the conversion rate shall be decreased to the conversion rate that would then be in effect had the increase with respect to the distribution of such rights, options or warrants been made on the basis of delivery of only the number of shares of common stock actually delivered. If such rights, options or warrants are not so distributed or if no such rights, options or warrants are not exercised prior to their expiration, the conversion rate shall be decreased to the conversion rate that would then be in effect if such record date for such distribution had not occurred.
For the purpose of this clause (2), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of our common stock at less than such average of the last reported sale prices for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the date of announcement of such distribution, and in determining the aggregate offering price of such shares of our common stock, there shall be taken into account any consideration received by us for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by us in good faith and in a commercially reasonable manner.
then the conversion rate will be increased based on the following formula:
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where
CR0 | = | the conversion rate in effect immediately prior to the close of business on such record date for the distribution; | |||
CR1 | = | the conversion rate in effect immediately after the close of business on such record date; | |||
SP0 | = | the average of the last reported sale prices of our common stock over the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the ex-dividend date for such distribution; and | |||
FMV | = | the fair market value (as determined by us in good faith and in a commercially reasonable manner) of the shares of Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants distributed with respect to each outstanding share of our common stock on the record date for such distribution. |
Any increase made under the portion of this clause (3) above will become effective immediately after the close of business on the record date for such distribution. If such distribution is not so paid or made, the conversion rate shall be decreased to be the conversion rate that would then be in effect if such distribution had not been declared. In the case of any distribution of rights, options or warrants, to the extent such rights options or warrants expire unexercised, the applicable conversion rate shall be immediately readjusted to the applicable conversion rate that would then be in effect had the increase made for the distribution of such rights, options or warrants been made on the basis of delivery of only the number of shares of our common stock actually delivered upon exercise of such rights, options or warrants. Notwithstanding the foregoing, if "FMV" (as defined above) is equal to or greater than "SP0" (as defined above), in lieu of the foregoing increase, each holder of a note shall receive, in respect of each $1,000 principal amount thereof, at the same time and upon the same terms as holders of our common stock, the amount and kind of our Capital Stock, evidences of our indebtedness, other assets or property of ours or rights, options or warrants to acquire our Capital Stock or other securities that such holder would have received if such holder owned a number of shares of common stock equal to the conversion rate in effect on the record date for the distribution.
With respect to an adjustment pursuant to this clause (3) where there has been a payment of a dividend or other distribution on our common stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a subsidiary or other business unit, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange, which we refer to as a "spin-off," the conversion rate will be increased based on the following formula:
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where
CR0 | = | the conversion rate in effect immediately prior to the end of the valuation period (as defined below); |
CR1 | = | the conversion rate in effect immediately after the end of the valuation period; | |||
FMV0 | = | the average of the last reported sale prices of the Capital Stock or similar equity interest distributed to holders of our common stock applicable to one share of our common stock (determined by reference to the definition of last reported sale price set forth under "— Conversion Rights — Settlement Upon Conversion" as if references therein to our common stock were to such Capital Stock or similar equity interest) over the first 10 consecutive trading day period after, and including, the ex-dividend date of the spin-off (the "valuation period"); and | |||
MP0 | = | the average of the last reported sale prices of our common stock over the valuation period. |
The increase to the conversion rate under the preceding paragraph will occur at the close of business on the last trading day of the valuation period;provided that in respect of any conversion of notes, if the relevant conversion date occurs during the valuation period, the reference to "10" in the preceding paragraph shall be deemed replaced with such lesser number of trading days as have elapsed between the ex-dividend date for such spin-off and such conversion date in determining the conversion rate. If any dividend or distribution that constitutes a spin-off is declared but not so paid or made, the conversion rate shall be immediately decreased, effective as of the date our board of directors or a committee thereof determines not to pay or make such dividend or distribution, to the conversion rate that would then be in effect if such dividend or distribution had not been declared or announced.
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where
CR0 | = | the conversion rate in effect immediately prior to the close of business on the record date for such dividend or distribution; | |||
CR1 | = | the conversion rate in effect immediately after the close of business on such record date for such dividend or distribution; | |||
SP0 | = | the last reported sale price of our common stock on the trading day immediately preceding the ex-dividend date for such dividend or distribution; and | |||
C | = | the amount in cash per share we distribute to all or substantially all holders of our common stock. |
Any increase to the conversion rate made under this clause (4) shall become effective immediately after the close of business on the record date for such dividend or distribution. If such dividend or distribution is not so paid, the conversion rate shall be decreased, effective as of the date our board of directors or a committee thereof determines not to make or pay such dividend or distribution, to be the conversion rate that would then be in effect if such dividend or distribution had not been declared.
Notwithstanding the foregoing, if "C" (as defined above) is equal to or greater than "SP0" (as defined above), in lieu of the foregoing increase, each holder of a note shall receive, for each $1,000 principal amount of notes, at the same time and upon the same terms as holders of shares of our common stock, the amount of cash that such holder would have received if such holder owned a number of shares of our common stock equal to the conversion rate on the record date for such cash dividend or distribution.
(other than any odd-lot tender offer), to the extent that the cash and value of any other consideration included in the payment per share of our common stock exceeds the average of the last reported sale prices of our common stock over the 10 consecutive trading day period commencing on, and including, the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the "expiration date"), the conversion rate will be increased based on the following formula:
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where
CR0 | = | the conversion rate in effect immediately prior to the close of business on the 10th trading day immediately following, and including, the trading day next succeeding the expiration date; | |||
CR1 | = | the conversion rate in effect immediately after the close of business on the 10th trading day immediately following, and including, the trading day next succeeding the expiration date; | |||
AC | = | the aggregate value of all cash and any other consideration (as determined by us in good faith and in a commercially reasonable manner) paid or payable for shares purchased or exchanged in such tender or exchange offer; | |||
OS0 | = | the number of shares of our common stock outstanding immediately prior to the expiration date (prior to giving effect to the purchase or exchange of all shares accepted for purchase or exchange in such tender or exchange offer); | |||
OS1 | = | the number of shares of our common stock outstanding immediately after the expiration date (after giving effect to the purchase or exchange of all shares accepted for purchase or exchange in such tender or exchange offer); and | |||
SP1 | = | the average of the last reported sale prices of our common stock over the 10 consecutive trading day period commencing on, and including, the trading day next succeeding the expiration date. |
The increase to the conversion rate under the preceding paragraph will occur at the close of business on the 10th trading day immediately following, and including, the trading day next succeeding the date such tender or exchange offer expires;provided that in respect of any conversion of notes, if the relevant conversion date occurs during the 10 trading days immediately following, and including, the trading day next succeeding the expiration date of any tender or exchange offer, references to "10" or "10th" in the preceding paragraph shall be deemed replaced with such lesser number of trading days as have elapsed between the expiration date of such tender or exchange offer and such conversion date in determining the conversion rate.
In the event that we or one of our subsidiaries is obligated to purchase shares of our common stock pursuant to any such tender offer or exchange offer described in clause (5), but we are, or such subsidiary is, permanently prevented by applicable law from effecting any such purchase or all such purchases are rescinded, then the conversion rate shall again be adjusted to be the conversion rate that would then be in effect if such tender offer or exchange offer had not been made or had been made only in respect of the purchases that have been effected.
Except as stated herein, we will not adjust the conversion rate for the issuance of shares of our common stock or any securities convertible into or exchangeable for shares of our common stock or the right to purchase shares of our common stock or such convertible or exchangeable securities.
As used in this section, "ex-dividend date" means the first date on which the shares of our common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from us or, if applicable, from the seller of our common stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market, and "effective date" means the first date on which the shares of our common stock trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable. For the avoidance of doubt, any alternative trading convention on the applicable exchange or market in respect of shares of our common stock under a separate ticker symbol or CUSIP number will not be considered "regular way" for this purpose.
As used in this section, "record date" means, with respect to any dividend, distribution or other transaction or event in which the holders of our common stock (or other applicable security) have the right to receive any cash, securities or other property or in which our common stock (or such other security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of our common stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by our board of directors or a duly authorized committee thereof, statute, contract or otherwise).
We are permitted to increase the conversion rate of the notes by any amount for a period of at least 20 business days if we determine that such increase would be in our best interest. We may also (but are not required to) increase the conversion rate to avoid or diminish income tax to holders of our common stock or rights to purchase shares of our common stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event.
A holder may, in some circumstances, including a distribution of cash dividends to holders of our shares of common stock, be deemed to have received a distribution subject to U.S. federal income tax as a result of an adjustment or the nonoccurrence of an adjustment to the conversion rate. For a discussion of the U.S. federal income tax treatment of an adjustment to the conversion rate, see "Certain U.S. Federal Income Tax Considerations."
If we have a rights plan in effect upon conversion of the notes into common stock, you will receive, in addition to the shares of common stock received in connection with such conversion, the rights under the rights plan. However, if, prior to any conversion, the rights have separated from the shares of common stock in accordance with the provisions of the applicable rights plan, the conversion rate will be adjusted at the time of separation as if we distributed to all or substantially all holders of our common stock, shares of our Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants as described in clause (3) above, subject to readjustment in the event of the expiration, termination or redemption of such rights. We currently do not have a stockholder rights plan in effect.
Notwithstanding any of the foregoing, the conversion rate will not be adjusted:
If an adjustment to the conversion rate otherwise required by the provisions described above would result in a change of less than 1% to the conversion rate, then, notwithstanding the foregoing, we may, at our election, defer and carry forward such adjustment, except that all such deferred adjustments must be given effect immediately upon the earliest to occur of the following: (i) when all such deferred adjustments would result in an aggregate change of at least 1% to the conversion rate, (ii) on the conversion date for any notes and (iii) on the effective date of any make-whole fundamental change or redemption notice date, in each case, unless the adjustment has already been made, in each case, unless the adjustment has already been made.
Adjustments to the conversion rate will be calculated to the nearest 1/10,000th of a share.
Recapitalizations, Reclassifications and Changes of Our Common Stock
In the case of:
in each case, as a result of which this prospectus isour common stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a part,"share exchange event"), then we or the successor or acquiring company, as the case may be, will execute with the trustee, without the consent of the holders, a supplemental indenture providing that, at and supplemental warrant agreements and formsafter the effective time of warrant certificatesthe share exchange event, the right to convert each $1,000 principal amount of notes will be filed as exhibitschanged into a right to convert such principal amount of notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of common stock equal to the registration statementconversion rate immediately prior to such share exchange event would have owned or been entitled to receive (the "reference property") upon such share exchange event. However, at and after the effective time of the share exchange event, the number of shares of our common stock otherwise deliverable upon conversion of the notes as set forth under "— Conversion Rights — Settlement upon Conversion" above will be deliverable in the amount and type of reference property that a holder of that number of shares of our common stock would have received in such transaction. If the share exchange event causes our common stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the reference property into which the notes will be convertible will be deemed to be (i) the weighted average of the types and amounts of consideration received by the holders of our common stock that affirmatively make such an election or (ii) if no holders of our common stock affirmatively make such an election, the types and amounts of consideration actually received by the holders of our common stock. We will notify holders, the trustee and the conversion agent (if other than the trustee) of the weighted average as soon as practicable after such determination is made.
If the reference property in respect of any share exchange event includes, in whole or in part, shares of common equity, the supplemental indenture providing that the notes will be convertible into reference property will also provide for anti-dilution and other adjustments that are as nearly equivalent as possible to the adjustments described under "— Conversion Rights — Conversion Rate Adjustments" above with respect to the portion of the reference property consisting of such common equity. If the reference property in respect of any such share exchange event includes shares of stock, securities or other property or assets (other than cash and/or cash equivalents) of a company other than us or the successor or purchasing company, as the case may be, in such share exchange event, such other company, if an affiliate of us or the successor or acquiring company, will also execute such supplemental indenture, and such supplemental indenture will contain such additional provisions to protect the interests of the holders, including the right of holders to require us to repurchase their notes upon a fundamental change as described under "— Fundamental Change Permits Holders to Require Us to Repurchase Notes" below, as we in good faith reasonably consider necessary by reason of the foregoing. We will agree in the indenture not to become a party to any such share exchange event unless its terms are consistent with the foregoing.
Adjustments of Prices
Whenever any provision of the indenture requires us to calculate the last reported sale prices over a span of multiple days (including, without limitation, the period, if any, for determining "stock price" for purposes of a make-whole fundamental change or notice of redemption), we will make appropriate adjustments in good faith and in a commercially reasonable manner (to the extent no corresponding adjustment is otherwise made pursuant to the provisions described under "— Conversion Rights — Conversion Rate Adjustments" above) to each to account for any adjustment to the conversion rate that becomes effective, or any event requiring an adjustment to the conversion rate where the ex-dividend date, effective date or expiration date of the event occurs, at any time during the period when the last reported sale prices are to be calculated.
For the avoidance of doubt, the adjustments made pursuant to the foregoing paragraph will be made, solely to the extent we determine in good faith and in a commercially reasonable manner that any such adjustment is appropriate, without duplication of any adjustment made pursuant to the provision set forth under "— Conversion Rights — Conversion Rate Adjustments."
Increase in Conversion Rate upon Conversion upon a Make-Whole Fundamental Change or during a Redemption Period
If the "effective date" (as defined below) of a "make-whole fundamental change" (as defined below) occurs prior to the maturity date of the notes and a holder elects to convert its notes in connection with such make-whole fundamental change, or we issue a notice of redemption as set forth under "— Optional Redemption" and a holder elects to convert its notes called for redemption, if any, during the related redemption period, we will, under certain circumstances, increase the conversion rate for the notes so surrendered for conversion by a number of additional shares of common stock (the "additional shares"), as described below. A "make-whole fundamental change" means any transaction or event that constitutes a fundamental change defined below in clause (1), (2) or (4) of the definition of "fundamental change" under "— Fundamental Change Permits Holders to Require Us to Repurchase Notes" below, after giving effect to any exceptions or exclusions from such definition, but without regard to theproviso in clause (2) of the definition thereof. A conversion of notes will be deemed for these purposes to be "in connection with" such make-whole fundamental change if the relevant conversion date occurs during the period from, and including, the effective date of the make-whole fundamental change up to, and including, the business day immediately prior to the related fundamental change repurchase date (or, in the case of a make-whole fundamental change that would have been a fundamental change but for theproviso in clause (2) of the definition thereof, the 35th trading day immediately following the effective date of such make-whole fundamental change) (such period, the "make-whole fundamental change period").
For the avoidance of doubt, if we elect to redeem less than all of the outstanding notes, then holders of the notes not called for redemption will not be entitled to an increased conversion rate for such notes as described in this section on account of the redemption.
Upon surrender of notes for conversion in connection with a make-whole fundamental change or during a redemption period, we will deliver shares of our common stock, including the additional shares, as described under "— Conversion Rights — Settlement upon Conversion," but subject to the provisions described under "— Conversion Rights — Special Settlement Provisions in Connection with a Make-Whole Fundamental Change or Redemption Period." However, if the consideration for our common stock in any make-whole fundamental change described in clause (2) of the definition of fundamental change is composed entirely of cash, for any conversion of notes following the effective date of such make-whole fundamental change, the conversion obligation will be calculated based solely on the "stock price" (as defined below) for the transaction and will be deemed to be an amount of cash per $1,000 principal amount of converted notes equal to the conversion rate (including any increase to reflect the additional shares as described in this section),multiplied by such stock price. We will notify the trustee, the conversion agent (if other than the trustee) and holders of the effective date of any make-whole fundamental change no later than five business days after such effective date.
The amount, if any, by which the conversion rate will be increased will be determined by reference to the table below, based on the date on which the make-whole fundamental change occurs or becomes effective (the "effective date") or the redemption notice date, as applicable, and the price (the "stock price") paid (or deemed to be paid) per share of our common stock in the make-whole fundamental change or on the redemption notice date, as applicable. If the holders of our common stock receive in exchange for their common stock only cash in a make-whole fundamental change described in clause (2) of the definition of fundamental change, the stock price will be the cash amount paid per share. Otherwise, the stock price will be the average of the last reported sale prices of our common stock over the five consecutive trading day period ending on, and including, the trading day immediately preceding the effective date of the make-whole fundamental change or the redemption notice date, as the case may be. In the event that a conversion during a redemption period would also be deemed to be in connection with a make-whole fundamental change, a holder of the notes to be converted will be entitled to a single increase to the conversion rate with respect to the first to occur of the applicable redemption notice date or the effective date of the applicable make-whole fundamental change, and the later event will be deemed not to have occurred for purposes of this section.
The stock prices set forth in the column headings of the table below will be adjusted as of any date on which the conversion rate of the notes is otherwise adjusted. The adjusted stock prices will equal the stock prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the conversion rate immediately prior to the adjustment giving rise to the stock price adjustment and the denominator of which is the conversion rate as so adjusted. The amounts by which the conversion rate will be increased as set forth in the table below will be adjusted in the same manner and at the same time as the conversion rate as set forth under "— Conversion Rights — Conversion Rate Adjustments."
The following table sets forth the amount, if any, by which the conversion rate will be increased per $1,000 principal amount of notes for each stock price and effective date or redemption notice date set forth below:
| | Stock Price | | ||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Effective Date / Redemption Notice Date | | ||||||||||||||||||||||||||||||||||||
| $1.10 | | $1.20 | | $1.32 | | $1.50 | | $1.98 | | $3.00 | | $4.00 | | $5.00 | | $7.00 | | $10.00 | | $15.00 | | $20.00 | | |||||||||||||
July 25, 2019 | | 151.5151 | | 151.5151 | | 151.5151 | | 140.8242 | | 137.4261 | | 90.7012 | | 68.0259 | | 54.4207 | | 38.8719 | | 27.2104 | | 18.1402 | | 13.6052 | | ||||||||||||
January 15, 2020 | | 151.5151 | | 151.5151 | | 151.5151 | | 136.4909 | | 126.1966 | | 83.2898 | | 62.4673 | | 49.9739 | | 35.6956 | | 24.9869 | | 16.6580 | | 12.4935 | | ||||||||||||
January 15, 2021 | | 151.5151 | | 151.5151 | | 151.5151 | | 125.7575 | | 101.8981 | | 67.2528 | | 50.4396 | | 40.3517 | | 28.8226 | | 20.1758 | | 13.4506 | | 10.0879 | | ||||||||||||
January 15, 2022 | | 151.5151 | | 151.5151 | | 146.9697 | | 110.9575 | | 77.1215 | | 50.9002 | | 38.1751 | | 30.5401 | | 21.8144 | | 15.2701 | | 10.1800 | | 7.6350 | | ||||||||||||
January 15, 2023 | | 151.5151 | | 151.5151 | | 126.0606 | | 90.2909 | | 51.8508 | | 34.2215 | | 25.6661 | | 20.5329 | | 14.6664 | | 10.2664 | | 6.8443 | | 5.1332 | | ||||||||||||
January 15, 2024 | | 151.5151 | | 131.5909 | | 94.0152 | | 59.0242 | | 26.1361 | | 17.2499 | | 12.9374 | | 10.3499 | | 7.3928 | | 5.1750 | | 3.4500 | | 2.5875 | | ||||||||||||
January 15, 2025 | | 151.5151 | | 75.7575 | | 0.0000 | | 0.0000 | | 0.0000 | | 0.0000 | | 0.0000 | | 0.0000 | | 0.0000 | | 0.0000 | | 0.0000 | | 0.0000 | |
The exact stock prices and effective dates or redemption notice dates may not be set forth in the table above, in which case:
Notwithstanding the foregoing, in no event will the conversion rate per $1,000 principal amount of notes exceed 909.0909 shares of common stock in the event of a make-whole fundamental change or notice of redemption, subject to adjustment in the same manner as the conversion rate as set forth under "— Conversion Rights — Conversion Rate Adjustments."
Our obligation to increase the conversion rate for notes converted in connection with a make-whole fundamental change or during a redemption period could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness and equitable remedies.
Special Settlement Provisions in Connection with a Make-Whole Fundamental Change or Redemption Period
If a note is to be converted in connection with a make-whole fundamental change or during a redemption period, then we will settle such conversion based on a conversion rate that reflects the additional shares added thereto pursuant to the provisions described under "— Conversion Rights — Increase in Conversion Rate upon Conversion upon a Make- whole Fundamental Change or during a Redemption Period" section. However, in order to comply with Section 713 of the NYSE American LLC Company Guide that limit the number of shares we may deliver upon conversion of the notes unless we first obtain the approval of our stockholders (the "requisite stockholder approval") in accordance with the rules of the NYSE American, we may be required to partially cash settle conversions made in connection with a make-whole fundamental change or during a redemption period. Accordingly, if we have not obtained the requisite stockholder approval as of the effective date of a make-whole fundamental change or a redemption notice date, as applicable, then we will settle the conversion of a note made in connection with such make-whole fundamental change or during a redemption period as follows:
Notwithstanding anything to the contrary described above, if the consideration for our common stock in any make-whole fundamental change described in clause (2) of the definition of fundamental change is comprised entirely of cash, then we will settle the conversion of any note following the effective date of such make-whole fundamental change by delivering, on or before the second business day after the conversion date for such conversion, an amount of cash, per $1,000 principal amount of such note to be converted, equal to the product of (i) the stock price for such make-whole fundamental change; and (ii) the applicable conversion rate (including any adjustment as described in this prospectussection).
We will notify holders, in the notice of the make-whole fundamental change or redemption notice, as applicable, whether we have obtained the requisite stockholder approval.
Fundamental Change Permits Holders to Require Us to Repurchase Notes
If a "fundamental change" (as defined below in this section) occurs at any time prior to the maturity date, holders will have the right, at their option, to require us to repurchase for cash all of their notes, or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple of $1,000. The fundamental change repurchase date will be a partdate specified by us that is not less than 20 or more than 35 business days following the date of our fundamental change notice as described below.
The fundamental change repurchase price we are required to pay will be equal to 100% of the principal amount of the notes to be repurchased,plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date (unless the fundamental change repurchase date falls after a regular record date but on or prior to the interest payment date to which such regular record date relates, in which case we will instead pay the full amount of accrued and unpaid interest (to, but not including, such interest payment date) to the holder of record on such regular record date, and the fundamental change repurchase price will be equal to 100% of the principal amount of the notes to be repurchased).
A "fundamental change" will be deemed to have occurred at the time after the notes are originally issued if any of the following occurs:
thereof immediately after such transaction in substantially the same proportions (relative to each other) as such ownership immediately prior to such transaction shall not be a fundamental change pursuant to this clause (2);
A transaction or transactions described in clause (1) or clause (2) above will not constitute a fundamental change, however, if at least 90% of the consideration received or to be received by our common stockholders, excluding cash payments for fractional shares and cash payments made pursuant to dissenters' appraisal rights, in connection with such transaction or transactions consists of shares of common stock, ordinary shares, American depositary receipts or other common equity interests, in each case, that are listed or quoted on any of the NYSE American, The New York Stock Exchange, The Nasdaq Global Select Market, The Nasdaq Global Market or The Nasdaq Capital Market (or any of their respective successors) or will be incorporated byso listed or quoted when issued or exchanged in connection with such transaction or transactions and as a result of such transaction or transactions such consideration becomes reference from reports that we file withproperty for the SEC.notes, excluding cash payments for fractional shares and cash payments made pursuant to dissenters' appraisal rights (subject to the provisions set forth above under "— Conversion Rights — Settlement upon Conversion").
We will evidence eachAny event, transaction or series of warrantsrelated transactions that constitute a fundamental change under both clause (1) and clause (2) above (determined without regard to the proviso in clause (2) above) will be deemed to be a fundamental change solely under clause (2) above.
If any transaction in which our common stock is replaced by warrant certificatesthe securities of another entity occurs, following completion of any related make-whole fundamental change period (or, in the case of a transaction that would have been a fundamental change or a make-whole fundamental change but for the immediately preceding paragraph, following the effective date of such transaction), references to us in the definition of "fundamental change" above shall instead be references to such other entity.
On or before the 20th business day after the occurrence of a fundamental change, we will issue. Warrantsprovide to all holders of the notes, the trustee, the conversion agent (if other than the trustee) and paying agent (if other than the trustee) a notice of the occurrence of the fundamental change and of the resulting repurchase right. Such notice shall state, among other things:
If notes are held in certificated form, to exercise the fundamental change repurchase right, holders of certificated notes must deliver, prior to the close of business on the business day immediately preceding the
fundamental change repurchase date, the notes to be repurchased, duly endorsed for transfer, together with a written repurchase notice, to the paying agent. Each repurchase notice must state:
If the notes are not in certificated form, such repurchase notice must comply with applicable DTC procedures.
Holders of certificated notes may withdraw any repurchase notice (in whole or in part) by a written notice of withdrawal delivered to the paying agent prior to the close of business on the business day immediately preceding the fundamental change repurchase date. The notice of withdrawal shall state:
If the notes are not in certificated form, such notice of withdrawal must comply with applicable DTC procedures.
We will be required to repurchase the notes on the fundamental change repurchase date, subject to postponement to comply with applicable law. Holders who have exercised the repurchase right will receive payment of the fundamental change repurchase price on the later of (i) the fundamental change repurchase date and (ii) the time of book-entry transfer or the delivery of the notes. If the paying agent holds money sufficient to pay the fundamental change repurchase price of the notes on the fundamental change repurchase date, then, with respect to the notes that have been properly surrendered for repurchase and have not been validly withdrawn:
In connection with any repurchase offer pursuant to a fundamental change repurchase notice, we will, if required:
in each case, so as to permit the rights and obligations under this "— Fundamental Change Permits Holders to Require Us to Repurchase Notes" to be exercised in the prospectus supplementtime and in the manner specified in the indenture.
No notes may be repurchased by us on any date at the option of holders upon a fundamental change if the principal amount of the notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a default by us in the payment of the fundamental change repurchase price with respect to such notes).
The repurchase rights of the holders upon a fundamental change could discourage a potential acquirer of us. The fundamental change repurchase feature, however, is not the result of management's knowledge of any specific effort to obtain control of us by any means or part of a plan by management to adopt a series of anti-takeover provisions.
Notwithstanding anything to the contrary in the foregoing, we will not be required to repurchase or make an offer to repurchase the notes upon a fundamental change if a third party makes such an offer in the same manner, at the same time and otherwise in compliance with the requirements for an offer made by us as set forth in the indenture and such third party purchases all notes properly surrendered and not validly withdrawn under its offer in the same manner, at the same time and otherwise in compliance with the requirements for an offer made by us as set forth in the indenture.
To the extent that the provisions of any securities laws or regulations conflict with the provisions of the indenture relating to our obligations to repurchase the notes upon a fundamental change, we will comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under such provisions of the indenture by virtue of such conflict.
The term fundamental change is limited to specified transactions and may not include other events that might adversely affect our financial condition. In addition, the requirement that we offer to repurchase the notes upon a fundamental change may not protect holders in the event of a highly leveraged transaction, reorganization, merger or similar transaction involving us.
Furthermore, holders may not be entitled to require us to repurchase their notes upon a fundamental change or entitled to an increase in the conversion rate upon conversion as described under "— Conversion Rights — Increase in Conversion Rate upon Conversion upon a Make-Whole Fundamental Change or during a Redemption Period" in circumstances involving a significant change in the composition of our board, unless such change is in connection with a fundamental change or make-whole fundamental change, as the case may be, as described herein.
The definition of fundamental change includes a phrase relating to the particular seriessale, lease or other transfer of warrants being offered."all or substantially all" of the consolidated assets of us and our subsidiaries, taken as a whole. There is no precise, established definition of the phrase "substantially all" under applicable law. Accordingly, the ability of a holder of the notes to require us to repurchase its notes as a result of the sale, lease or other transfer of less than all of the consolidated assets of us and our subsidiaries, taken as a whole may be uncertain.
If a fundamental change were to occur, we may not have enough funds to pay the fundamental change repurchase price. Our ability to repurchase the notes for cash may be limited by restrictions on our ability to obtain funds for such repurchase through dividends from our subsidiaries, the terms of our then existing borrowing arrangements or otherwise. See "Risk Factors — Risks Related to the Notes." The occurrence of a fundamental change could cause an event of default under, or be prohibited or limited by, the terms of existing or future senior debt.
RISK FACTORS
InvestingWe may not have the ability to raise the funds necessary to repurchase the notes for cash upon a fundamental change, and our future debt may contain limitations on our ability to repurchase the notes. If we fail to repurchase the notes when required following a fundamental change, we will be in our securities involves a high degree of risk. You should carefully review the risks and uncertainties describeddefault under the heading “Risk Factors” containedindenture. Any such default may, in turn, cause a default under existing or future senior debt. In addition, we have, and may in the applicable prospectus supplementfuture incur, other indebtedness with similar change in control provisions permitting our holders to accelerate or to require us to repurchase our indebtedness upon the occurrence of similar events or on some specific dates.
Covenants
Certain Definitions
Set forth below are certain defined terms used in this "Description of Notes."
"Affiliate" of any specified Person means any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified 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.
"Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with U.S. GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease on or prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty; provided that such determination shall be made without giving effect to Accounting Standards Codification 842,Leases (or any other Accounting Standards Codification having similar result or effect) (and related free writing prospectus,interpretations) to the extent any lease (or similar arrangement) would be required to be treated as a capital lease thereunder where such lease (or arrangement) would have been treated as an operating lease under U.S. GAAP as in effect immediately prior to the effectiveness of such Accounting Standards Codification.
"Capital Stock" means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity, but shall not include any debt securities convertible into or exchangeable for any securities otherwise constituting Capital Stock pursuant to this definition. Unless the context otherwise requires, Capital Stock shall refer to Capital Stock of the Company.
"Cash Equivalents" means:
defined in Section 3(a)(62) of the Exchange Act) with maturities of not more than 365 days from the date of acquisition;
"Company" means Senseonics Holdings, Inc. until a successor or assignee replaces it pursuant to the registration statementindenture and, thereafter, means that successor or assignee.
"Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which this prospectusit is a part. Eachconvertible, or for which it is exchangeable, in each case, at the option of the risk factors describedholder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the earlier of (x) the date that is 91 days after the date on which the notes mature and (y) the date that is 91 days after the date no notes remain outstanding;provided that only the portion of the Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock;provided,further, that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the Company or its Restricted Subsidiaries (as defined herein) or by any such plan to such employees, such Capital Stock will not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations or as a result of such employee's termination, death or disability. Notwithstanding anything to the contrary in the documents referenced above could adversely affect our business, operating results and financial condition, as well as adversely affectpreceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the valueholders of an investment in our securities, andthe Capital Stock have the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a "change of control," "fundamental change," an "asset sale" or similar provision will not constitute Disqualified Stock if the "change of control," "fundamental change," "asset sale" or similar provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the terms applicable to the notes;provided that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the "— Covenants — Restricted Payments" covenant. The amount of these risks might cause youDisqualified Stock deemed to lose allbe outstanding at any time for purposes of the indenture will be the maximum amount that the Company or partany and its Restricted Subsidiaries may become obligated to pay upon the maturity of, your investment. Additional risks not presently knownor pursuant to usany mandatory repurchase or that we currently believe are immaterial may also significantly impair our business operations.redemption provisions of, such Disqualified Stock exclusive of accrued dividends (other than the accretion, accumulation or payment-in-kind of dividends).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and"Events of Default" means each of the documents incorporated by reference herein contain forward-looking statements. These are based on our management’s current beliefs, expectations and assumptions about future events conditions and results and on information currently available to us. Discussions containing these forward-looking statements may be found, among other places,listed in the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis"Events of Financial Condition and Results of Operations” contained in the documents incorporated by reference herein.Default" section.
Any statements in this prospectus, or incorporated herein, about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. Within the meaning of Section 27A of the Securities Act and Section 21E of"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Existing Indebtedness" means all Indebtedness of the Company and its Subsidiaries in existence on the Issue Date.
"2023 notes" means the Company's 5.25% convertible senior subordinated notes due 2023.
"Fair Market Value" means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by our board of directors or a committee thereof.
"Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under:
in each case, not entered into by such Person for speculative purposes.
"Indebtedness" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent and without duplication:
in each case, if and to the extent any of the preceding items would appear as a liability upon a balance sheet (excluding the footnotes) of the specified Person prepared in accordance with U.S. GAAP. In addition, the term "Indebtedness" includes (i) to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person and (ii) all Indebtedness of others secured by a Lien (as defined herein) on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) equal to the lesser of (x) the Fair Market Value of such asset as of the date of determination and (y) the amount of such Indebtedness.
Notwithstanding anything to the contrary in the foregoing paragraph, the term "Indebtedness" will not include (a) in connection with any Permitted Investment or other acquisition or any Asset Sale or other disposition, purchase price adjustments, indemnities or royalty, earn-out, contingent or other deferred payments of a similar nature, unless such payments are required under U.S. GAAP to appear as a liability on the balance sheet (excluding the footnotes);provided that at the time of closing, the amount of any such payment is not determinable or, to the extent such payment has become fixed and determined, the amount is paid within 30 days thereafter; (b) contingent obligations incurred in the ordinary course of business and not in respect of borrowed money; (c) deferred or prepaid revenues; (d) any Capital Stock other than Disqualified Stock; (e) purchase price holdbacks in respect of a portion of the purchase price of an asset to
satisfy warranty or other unperformed obligations of the respective seller; or (f) deferred compensation and severance, pension, health and welfare retirement and equivalent benefits to current or former employees, directors or managers of such Person and its subsidiaries. Indebtedness shall be calculated without giving effect to the effects of Accounting Standards Codification Topic 815 "Derivatives and Hedging" and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under the indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.
"Investments" means, with respect to any specified Person, all direct or indirect investments by such specified Person in other Persons (including Affiliates) in the forms of loans (including guarantees of Indebtedness or other Obligations), advances or capital contributions (excluding (i) commission, travel and similar advances to officers and employees made in the ordinary course of business and (ii) extensions of credit to customers or advances, deposits or payment to or with suppliers, lessors or utilities or for workers' compensation, in each case, that are incurred in the ordinary course of business), or purchases or other acquisitions for consideration of Indebtedness, Capital Stock or other securities (other than Permitted Equity Derivatives). The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person that was acquired in contemplation of the acquisition of such Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person determined as provided in the indenture. Except as otherwise provided in the indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value but after giving effect (without duplication) to all subsequent reductions in the amount of such Investment as a result of the repayment or disposition thereof for cash, not to exceed the original amount of such Investment.
"Issue Date" means the original date of the indenture.
"Legal Requirements" means, as to any Person, any treaty, law (including the common law), statute, ordinance, code, rule, regulation, guidelines, license, permit requirement, judgment, decree, verdict, order, consent order, consent decree, writ, declaration or injunction, policies and procedures, Order or determination of an arbitrator or a court or other governmental authority, and the interpretation or administration thereof, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject, in each case whether or not having the force of law.
"Non-Recourse Debt" means Indebtedness:
"Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers' acceptances), damages and other liabilities payable under the documentation governing any Indebtedness.
"Officer's Certificate" means a written certificate containing the information specified in the indenture, signed in the name of the Company, or any subsidiary guarantor, as applicable, by an officer, and delivered to the trustee;provided that, if such certificate is given as an annual compliance certificate, (i) the officer signing such certificate must be the Chief Financial Officer or the Chief Accounting Officer of the Company and (ii) such certificate need not contain the information specified elsewhere in the indenture.
"Opinion of Counsel" means a written opinion containing the information specified in the indenture, from legal counsel who is reasonably satisfactory to the trustee. The counsel may be an employee of, or counsel to, the Company who is reasonably satisfactory to the trustee.
"Order" means any judgment, decree, verdict, order, consent order, consent decree, writ, declaration or injunction.
"Permitted Business" means any business conducted by the Company or any of its Restricted Subsidiaries on the Issue Date and any business that, in the good faith judgment of our board of directors or a committee thereof, is similar or reasonably related, ancillary, supplemental or complementary thereto or a reasonable extension, development or expansion thereof.
"Person" or "person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof.
"Registration Rights Agreement" means the Resale Registration Rights Agreement, between the Company, Senseonics, Incorporated and Jefferies LLC, dated as of July 25, 2019 (as it may be further amended, restated, replaced, supplemented or otherwise modified from time to time).
"Restricted Subsidiary" of a Person means any Subsidiary of such Person that is not an Unrestricted Subsidiary. Where such term is used without a referent Person, such term shall be deemed to mean a Subsidiary of the Company that is not an Unrestricted Subsidiary, unless the context otherwise requires.
"SEC" means the Securities and Exchange Commission.
"Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal, as applicable, was scheduled to be paid in the documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof;provided,however, that, with respect to clause (3) of the first paragraph of the "— Covenants — Restricted Payments" covenant below, the Stated Maturity of any Existing Indebtedness shall be the Stated Maturity as of the Issue Date or a later date to the extent the documents governing such Indebtedness shall have been amended or modified to provide for such later date.
"Subsidiary" means, with respect to any specified Person:
"Unrestricted Subsidiary" means any Subsidiary of the Company that is designated by our board of directors or a committee thereof as an Unrestricted Subsidiary pursuant to a resolution of our board of directors or a committee thereof, but only to the extent that such Subsidiary:
"U.S. GAAP" means generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States in effect on the Issue Date.
"Wholly Owned Subsidiary" of any specified Person means, (a) any corporation one hundred percent of whose Capital Stock (other than directors' qualifying shares and other nominal shares required to be held by local nationals, in each case to the extent required under applicable Legal Requirements) is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person and (b) any partnership, association, joint venture, limited liability company or other entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person have a one hundred percent Capital Stock (other than directors' qualifying shares and other nominal shares required to be held by local nationals, in each case to the extent required under applicable Legal Requirements) at such time.
Application of Covenants
The covenants set forth under "— Covenants — Asset Sales," "— Covenants — Restricted Payments," "— Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock," "— Covenants — Liens," "— Covenants — Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries," "— Covenants — Transactions with Affiliates" and "— Covenants — Limitation on Issuance of Capital Stock" will cease to apply upon the occurrence of a fundamental change described in clause (1) or (2) of the definition thereof or at such time as 25% or less of the initial aggregate principal amount of the notes remain outstanding.
Asset Sales
The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale unless:
For purposes of clause (2) above, the amount (without duplication) of any Indebtedness (other than Subordinated Indebtedness) of the Company or such Restricted Subsidiary that is expressly assumed by the transferee in such Asset Sale and with respect to which the Company or such Restricted Subsidiary, as the case may be, is unconditionally released by the holder of such Indebtedness shall be deemed cash.
The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, effect any Product Intellectual Property Sale or Exclusive Product License to any Unrestricted Subsidiary or other subsidiary that is not a subsidiary guarantor.
The Net Proceeds (or any portion thereof) (as defined herein) from Asset Sales may be applied by the Company or a Restricted Subsidiary (A) within 90 days of receipt thereof, to repay, prepay, repurchase, redeem, legally defease or otherwise retire the Credit Facilities (as defined herein) or any other Indebtedness of the Company or any Restricted Subsidiary secured by a Lien on assets of the Company or any Restricted Subsidiary of the Company (excluding, in any such case, any Indebtedness owed to the Company or an Affiliate of the Company) (for purposes of this "Asset Sales" covenant, the "Senior Obligations") or (B) within 360 days of receipt thereof, if the Asset Sale is not a Product Intellectual Property Sale and solely with respect to the percentage of the Net Proceeds set forth in the "Company Retention" column in the table below, to reinvest in Additional Assets or R&D Expenditures (including by means of an Investment in Additional Assets or R&D Expenditures by a Restricted Subsidiary with Net Proceeds received by the Company or another Restricted Subsidiary), and in the case of either clause (A) or (B), to the extent not so applied shall constitute "Excess Proceeds."
Proceeds (millions) | | Note Redemption (%) | | Company Retention (%) | | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
First $10 | | | 0.0 | | | | 100.0 | | | ||
Next $15 | | | 50.0 | | | | 50.0 | | | ||
Any remaining proceeds thereafter | | | 80.0 | | | | 20.0 | | |
Pending application of Net Proceeds pursuant to this covenant, such Net Proceeds shall, to the extent not inconsistent with the terms of the Senior Obligations, be invested in Cash Equivalents or applied to temporarily reduce revolving credit indebtedness. If the Asset Sale is not a Product Intellectual Property Sale and solely with respect to the percentage of the Net Proceeds set forth in the "Company Retention" column in the table above, any Net Proceeds that are not segregated from the general funds of the Company for investment in identified Additional Assets or R&D Expenditures in respect of a project that shall have been commenced, and/or for which binding contractual commitments have been entered into, prior to the end of such 360-day period shall constitute "Excess Proceeds";provided,however, that the amount of any Net Proceeds that ceases to be so segregated as contemplated above and any unapplied Net Proceeds that is segregated in respect of a project that is abandoned or completed shall also constitute "Excess Proceeds" at the time any such Net Proceeds ceases to be so segregated or at the time the relevant project is so abandoned or completed, as applicable;provided further, however, that the amount of any Net Proceeds that continues to be segregated for investment and that is not actually reinvested within 18 months from the date of the receipt of such Net Proceeds shall also constitute "Excess Proceeds."
To the extent permitted under the Credit Agreement, when the aggregate amount of Excess Proceeds exceeds $7.5 million, the Company will be required to make an offer to purchase (the "Asset Sales Prepayment Offer") the notes which offer shall be in the amount of the Allocable Excess Proceeds (as defined herein), on a pro rata basis according to principal amount at maturity, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant
interest payment date), in accordance with the procedures (including prorating in the event of oversubscription) set forth in the indenture. To the extent that any portion of the amount of Net Proceeds remains after compliance with the preceding sentence andprovided that all holders of notes have been given the opportunity to tender their notes for purchase in accordance with the indenture, the Company or such Restricted Subsidiary may use such remaining amount for any purpose permitted by the indenture and the amount of Excess Proceeds will be reset to zero.
The term "Allocable Excess Proceeds" will mean the product of:
Within twenty business days after the Company is obligated to make an Asset Sales Prepayment Offer as described in the preceding paragraph, the Company will send a written notice, by first-class mail or electronically, to the holders of the notes, accompanied by such information regarding the Company and its Subsidiaries as the Company in good faith believes will enable such holders to make an informed decision with respect to such Asset Sales Prepayment Offer. Such notice shall state, among other things, the purchase price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a business day no earlier than 20 days nor later than 30 business days from the date such notice is mailed. Nothing shall prevent the Company from conducting an Asset Sales Prepayment Offer earlier than as set forth in this paragraph. Upon completion of each Asset Sale Prepayment Offer, the amount of Excess Proceeds shall be reset to zero.
In connection with any Asset Sales Prepayment Offer pursuant to this "Asset Sales" covenant, we will, if required:
that may then be applicable;
in each case, so as to permit the rights and maintain regulatory approval of, Eversenseobligations under this "— Asset Sales" covenant to be exercised in the United States;time and in the manner specified in the indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof.
The following terms are defined as follows in the indenture:
"Additional Assets" means:
"Asset Sale" means:
Notwithstanding the foregoing, none of the following items will be deemed to be an Asset Sale:
"Exclusive Product License" means any Product License that provides for exclusive rights to develop, commercialize, sell, market, distribute or promote the Products whether or not such Product License contains limitations upon geographic territory or field of use.
"Intellectual Property" means, with respect to any Person, all intellectual property and proprietary rights in any jurisdiction throughout the world, and all corresponding rights, presently or hereafter existing, including: (a) all inventions (whether or not patentable or reduced to practice), all improvements thereto, and all patents, patent applications, industrial designs, industrial design applications, and patent disclosures, together with all reissues, continuations, continuations-in-part, revisions, divisionals, extensions and reexaminations in connection therewith; (b) all trademarks, trademark applications, tradenames, servicemarks, servicemark applications, trade dress, logos and designs, business names, company names, Internet domain names, and all other indicia of origin, all applications, registrations, and renewals in
connection therewith, and all goodwill associated with any of the foregoing; (c) all copyrights and other works of authorship, mask works, database rights and moral rights, and all applications, registrations, and renewals in connection therewith; (d) all trade secrets and proprietary knowhow and confidential information (including technical data, customer and supplier lists, manufacturing processes, pricing and cost information, and business and marketing plans and proposals); (e) all software (including source code, executable code, data, databases, and related documentation); and (f) all rights of privacy and publicity, including rights to the use of names, likenesses, images, voices, signatures and biographical information of real persons.
"Product Intellectual Property Sale" means (i) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) by the Company or any Restricted Subsidiary, other than any Product License, of all or any substantial portion of the Product Intellectual Property, and (ii) any Exclusive Product License, other than a Permitted Licensing Arrangement, as a result of which the Company or its Restricted Subsidiary transfers all or a substantial portion of its legal or economic interests in the Product Intellectual Property in a transaction whereby the predominant consideration received for transferred interests in such Product Intellectual Property is to be received upfront or timebound fixed fee as compared to any retained or reversionary interests in such Product Intellectual Property and any rights of the Company or any of its Restricted Subsidiaries to royalties, milestones, profit sharing and other future payments in respect of such Product Intellectual Property and its commercialization.
"Net Proceeds" means the aggregate cash proceeds and Cash Equivalents received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account, without duplication, (1) any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness secured by a Permitted Lien on the asset or assets that were the subject of such Asset Sale, and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with U.S. GAAP, (2) any reserve or payment with respect to liabilities associated with such asset or assets and retained by the Company or any of its Restricted Subsidiaries after such sale or other disposition thereof, including, without limitation, severance costs, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction, (3) any cash escrows in connection with purchase price adjustments, reserves or indemnities (until released) and (4) in the case of any Asset Sale by a Restricted Subsidiary that is not a subsidiary guarantor, payments to holders of Capital Stock in such Restricted Subsidiary in such capacity (other than such Capital Stock held by the Company or any Restricted Subsidiary) to the extent that such payment is required to permit the distribution of such proceeds in respect of the Capital Stock in such Restricted Subsidiary held by the Company or any Restricted Subsidiary;provided that in the case of any Product License (other than any Product License that provides for exclusive rights to develop, commercialize, sell, market, distribute or promote the Products within the United States or any Product License that would constitute a Product Intellectual Property Sale), Net Proceeds shall not include the portion of proceeds received from any cost-plus, royalty or other variable payment provision other than an upfront or fixed payment (which, for the avoidance of doubt, includes any milestone payments that are not based upon product sales) included therein;provided, further, that in the case of any Product License, Net Proceeds shall not include the portion of proceeds received specifically related to bona fide work performed by the Company or any Restricted Subsidiary, in a manner consistent with past practice.
"Permitted Licensing Arrangement" means (1) any Product License or other license for the use of the Intellectual Property of the Company or any of its Subsidiaries, in each case that is not an Exclusive Product License, (2) licenses, which may be exclusive, for the manufacturing and supply of the Product in
the ordinary course of business, consistent with past practice and so long as such license does not relate to the commercialization, sale or distribution of any product and the Company and its Restricted Subsidiaries retain the rights to commercialize the Products, and (3) sponsored research licenses and similar licenses for research and development (but not the commercialization, sale or distribution of any product).
"Products" means any of Eversense and Eversense XLXL.
"Product Intellectual Property" means any Intellectual Property of the Company and its Restricted Subsidiaries that is necessary for, or otherwise material to, the development, commercialization and/or manufacture, or other exploitation of the Products.
"Product License" means any license, commercialization, co-promotion, collaborations, distribution, marketing or partnering agreement pursuant to which the Company or any Restricted Subsidiary grants to any Person (other than the Company or any Restricted Subsidiary) a license under any Product Intellectual Property.
"R&D Expenditure" means any expenditure incurred by the Company or any Restricted Subsidiary in Europe;research and development or clinical development efforts, or any license or distribution agreements, in connection with the Products or other potential product candidates that may be introduced by the Company for carrying on the business of the Company and its Restricted Subsidiaries that an officer of the Company determines in good faith will enhance the income generating ability of the Company and its Restricted Subsidiaries, taken as a whole.
·Restricted Payments
The indenture provides that the clinicalCompany will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment:
Notwithstanding anything to the contrary therein, this "Restricted Payments" covenant will not prohibit:
account of Capital Stock or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with the provisions of this "Restricted Payments" covenant;
The amount of all Restricted Payments (other than cash), including for purposes of clauses (1) through (14) above, will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or the relevant Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this "Restricted Payments" covenant will be determined by the Company or, if such Fair Market Value is in excess of $5.0 million, by our board of directors or a committee thereof, whose resolution with respect thereto will be delivered to the trustee.
For purposes of determining compliance with this "Restricted Payments" covenant, in the event that a proposed Restricted Payment (or portion thereof) meets the criteria of more than one of the categories of Restricted Payments described in clauses (1) through (14) of the second paragraph of this "Restricted Payments" covenant or is entitled to be incurred as one or more categories of Permitted Investments or is permitted pursuant to the first paragraph of this covenant, the Company will be entitled to classify such Restricted Payment or portion thereof in any manner that complies with this "Restricted Payments" covenant, and such Restricted Payment will be treated as having been made pursuant to only such clause or clauses, categories of Permitted Investments or the first paragraph of this covenant.
For purposes of the covenant described above, the notes and the 2023 notes will be deemed not to be Capital Stock. The following terms are defined as follows in the indenture:
"Permitted Bond Hedge Transaction" means (1) any call option or capped call option (or substantively equivalent derivative transaction) on the common or ordinary Capital Stock of the Company (or any direct or indirect parent company thereof) purchased by the Company or any of its Subsidiaries in connection with an issuance of debt securities convertible into or exchangeable for any securities otherwise constituting Capital Stock of the Company (or any direct or indirect parent company thereof), and (2) any call option or capped call option (or substantively equivalent derivative transaction) replacing or refinancing the foregoing.
"Permitted Equity Derivatives" means (1) any forward purchase, accelerated share purchase or other equity derivative transactions relating to the Capital Stock of the Company (or any direct or indirect parent company thereof) entered into by the Company or any Restricted Subsidiary provided that any Restricted Payment made in connection with such transaction is permitted pursuant to the this "— Restricted Payments" Covenant and (2) any Permitted Bond Hedge Transaction and any Permitted Warrant Transaction.
"Permitted Investments" means:
time outstanding, exceed $2.0 million, net of any cash return of capital with respect to such Investments received by the Company or any Restricted Subsidiary of the Company;
"Permitted Warrant Transaction" means any call options, warrants or rights to purchase (or substantively equivalent derivative transactions) on common or ordinary Capital Stock of the Company (or any direct or indirect parent company thereof) issued or sold by the Company (or any direct or indirect parent company thereof) or any of its Subsidiaries substantially concurrently with a Permitted Bond Hedge Transaction.
·Incurrence of Indebtedness and Issuance of Preferred Stock our
The indenture provides that the Company and the subsidiary guarantors will not, and the Company will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, enter into a guarantee of or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt (as defined herein)), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock or preferred interests;provided,however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the subsidiary guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock or preferred interests, if the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries, on a consolidated basis, for the most recently completed four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock or preferred interests are issued, as the case may be, would have been at least 3.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock or preferred interests had been issued, as the case may be, at the beginning of such four-quarter period.
Notwithstanding anything to the contrary therein, the first paragraph of this "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of any of the following Disqualified Stock, preferred stock or preferred interests (collectively, "Permitted Debt"):
provided,further, that (i) any subsequent issuance or transfer of Capital Stock that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (8);
For purposes of determining compliance with this "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, in the event that an item of proposed Indebtedness or Disqualified Stock meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (22) of the preceding paragraph, or is entitled to be incurred pursuant to the first paragraph of this "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, the Company will be permitted to classify all or a portion of such item of Indebtedness or Disqualified Stock on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness or Disqualified Stock (based on circumstances existing on the date of such reclassification), in any manner that complies with this covenant;provided that (x) all Indebtedness outstanding under the Credit Agreement (as defined herein) on the Issue Date will be treated as incurred under clause (1) of the preceding paragraph and (y) all Indebtedness represented by 2023 notes and outstanding on the Issue Date will be treated as incurred under clause (2) of the preceding paragraph and, in each case, and may not be reclassified.
The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant,provided, in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges (as defined herein) of the Company as accrued. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of any Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred or first committed, in the case of revolving Indebtedness. Notwithstanding anything to the contrary in this covenant, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.
The amount of any Indebtedness outstanding as of any date will be:
The following terms are defined as follows in the indenture:
"Acquired Debt" means, with respect to any specified Person:
"Attributable Debt" means in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with U.S. GAAP;provided,however, that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Attributable Debt represented thereby will be the amount of liability in respect thereof determined in accordance with the definition of "Capital Lease Obligation."
"Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:
it represents a reduction in an accrual of or reserve for cash charges or expenses in any future period), in each case, on a consolidated basis and determined in accordance with U.S. GAAP.
"Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the net income (loss) from continuing operations of such Person and its Restricted Subsidiaries for such period, on a consolidated basis determined in accordance with U.S. GAAP and without any reduction in respect of preferred stock dividends;provided that:
"Credit Agreement" means the Loan and Security Agreement dated as of July 16, 2019 (as it may be further amended, restated, replaced, supplemented or otherwise modified from time to time), among Solar Capital Ltd., as collateral agent and lender, other lenders party thereto from time to time, and the Company and Senseonics, Incorporated, as borrowers, together with the related documents thereto (including any guarantees and security documents), and in each case as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement or instrument (and related documents) governing Indebtedness incurred to refinance or replace, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such facilities or a successor facility, whether by the same or any other bank, institutional lender, purchaser, investor, trustee or agent or group thereof.
"Credit Facilities" means, with respect to the Company or any Restricted Subsidiary, one or more debt facilities (including, without limitation, under the Credit Agreement), letter of credit facilities or commercial paper facilities providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit or other extensions of credit or other Indebtedness, in each case, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in
connection therewith and, in each case, as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement or instrument (and related documents) governing Indebtedness incurred to refinance or replace, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such facilities or a successor facility, whether by the same or any other bank, institutional lender, purchaser, investor, trustee or agent or group thereof.
"Fixed Charge Coverage Ratio" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than (i) ordinary working capital borrowings and (ii) Indebtedness incurred under any revolving credit facility for ordinary working capital purposes unless such Indebtedness has been permanently repaid and has not been replaced) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated after giving pro forma effect, in the good-faith judgment of the Chief Financial Officer of the Company as set forth in a certificate with supporting calculations delivered to the trustee, to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
"Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of:
"Treasury Management Arrangement" means any agreement or other arrangement governing the provision of treasury or cash management services, including, without limitation, deposit accounts, overdraft, overnight draft, credit cards, debit cards, p-cards (including purchasing cards, employee credit card programs and commercial cards), funds transfer, automated clearinghouse, direct debit, zero balance accounts, returned check concentration, check endorsement guarantees, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services, netting services, cash pooling or sweep arrangements, payment processing, credit and debit card acceptance or merchant services and other treasury or cash management services.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing:
Liens
The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness of any kind on any asset now owned or hereafter acquired, except Permitted Liens (as defined herein).
The following terms are defined as follows in the indenture:
"Lien" means, with respect to any property, (a) any mortgage, deed of trust, lien (statutory or other), judgment liens, pledge, encumbrance, claim, charge, assignment, hypothecation, deposit arrangement, security interest or encumbrance of any kind or any arrangement to provide priority or preference, including any easement, servitude, right-of-way or other encumbrance on title to real property, in each of the foregoing cases whether voluntary or imposed or arising by operation of law, and any agreement to give any of the foregoing, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement and any lease in the nature thereof and any option, call, trust, contractual, statutory, UCC or similar right relating to such property, (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities, and (d) any other arrangement having the effect of providing security. For the avoidance of doubt, in no event shall an operating lease or a license be deemed to constitute a Lien.
"Permitted Liens" means:
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:
The restrictions in the preceding paragraph do not apply to encumbrances or restrictions existing under or by reason of:
· ourFor purposes of determining compliance with this "Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries" covenant, the subordination of loans or advances made to the Company or a Restricted Subsidiary to other Indebtedness incurred by the Company or any such Restricted Subsidiary shall not be deemed a restriction on the ability to accessmake loans or advances.
Transactions with Affiliates
The indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each, an "Affiliate Transaction"), unless:
The following will be deemed not to be Affiliate Transactions and, therefore, will not be subject to this "Transactions with Affiliates" covenant:
Future Subsidiary Guarantees
The indenture provides that, if, after the Issue Date, (i) the Company or any Restricted Subsidiary of the Company forms or acquires any Person that is not an Excluded Subsidiary or (ii) an Excluded Subsidiary guarantees any indebtedness of the Company or any subsidiary guarantor, then the Company shall cause such Person to, within 30 days after the date of such event:
unconditionally guarantee all of the Company's obligations under the notes, the indenture and the Registration Rights Agreement on the terms set forth in the indenture; and
Thereafter, such Restricted Subsidiary shall be a subsidiary guarantor for all purposes.
·Designation of Restricted and Unrestricted Subsidiaries
As of the timingIssue Date and availabilitythe date hereof, all of datathe Subsidiaries of the Company were and are Restricted Subsidiaries. The indenture provides that our board of directors or a committee thereof will be able, at any time after the Issue Date, to designate any Restricted Subsidiary to be an Unrestricted Subsidiary;provided, that immediately before and after such designation, no Default or Event of Default shall have occurred and be continuing. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Restricted Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments permitted under the "— Covenants — Restricted Payments" covenant. That designation will only be permitted if the Investment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an "Unrestricted Subsidiary."
Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of a resolution of our board of directors or a committee thereof giving effect to such designation and an Officer's Certificate certifying that such designation complied with the preceding conditions and was permitted by the "— Covenants — Restricted Payments" covenant. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary and any Indebtedness of such Unrestricted Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the "— Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, the Company will be in Default of such covenant. Our board of directors or a committee thereof may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Company;provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and the creation, incurrence, assumption or otherwise causing to exist any Lien of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under the "— Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, calculated on a pro forma basis as if such designation had occurred at the beginning of the relevant four-quarter period; (2) such Lien is permitted; and (3) no Default or Event of Default would be in existence following such designation.
Limitation on Issuance of Capital Stock
The indenture provides that no subsidiary guarantor may issue any Capital Stock of such subsidiary guarantor (including by way of sales of treasury stock or the issuance of any debt security that is convertible into, or exchangeable for, Capital Stock of such subsidiary guarantor) to any Person other than (i) to the Company or any other subsidiary guarantor, (ii) in connection with the transfer of all of the Capital Stock of such subsidiary guarantor otherwise permitted under the indenture, or (iii) the issuance of director's qualifying shares or other nominal shares required by law to be held by a Person other than the Company or a subsidiary guarantor.
Consolidation, Merger and Sale of Assets
The indenture provides that we shall not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of the consolidated properties and assets of us and our direct or indirect subsidiaries, taken as a whole, to another person, unless (i) the resulting, surviving or transferee person (if not us) is a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and such corporation (if not us) expressly assumes by executing and delivering a supplemental indenture and any other agreements (including, without limitation, any registration rights agreement, if applicable) all of our obligations under the notes and the indenture; and (ii) immediately after giving effect to such transaction, no default or event of default has occurred and is continuing under the indenture. Upon any such consolidation, merger or sale, conveyance, transfer or lease, the resulting, surviving or transferee person (if not us) shall succeed to, and may exercise every right and power of, ours under the notes and the indenture, and we shall be discharged from our clinical trials;obligations under the notes and the indenture except in the case of any such lease.
·In addition, the timingindenture provides that a subsidiary guarantor shall not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to another person (other than us or another subsidiary guarantor), unless (i) the resulting, surviving or transferee person (if not such subsidiary guarantor, us or another subsidiary guarantor) expressly assumes by executing and delivering a supplemental indenture and any other agreements (including, without limitation, any registration rights agreement, if applicable) all of that subsidiary guarantor's obligations under the notes and the indenture; and (ii) immediately after giving effect to such transaction, no default or event of default has occurred and is continuing under the indenture. Upon any such consolidation, merger or sale, conveyance, transfer or lease, the resulting, surviving or transferee person (if not us or another subsidiary guarantor) shall succeed to, and may exercise every right and power of, that subsidiary guarantor under the notes and the indenture, and that subsidiary guarantor shall be discharged from its obligations under the notes and the indenture except in the case of any such lease.
Notwithstanding the foregoing, the foregoing shall not apply to:
Although these types of transactions are permitted under the indenture, certain of the foregoing transactions could constitute a fundamental change permitting each holder to require us to repurchase the notes of such holder as described above.
This covenant includes a phrase relating to the sale, conveyance, transfer and lease of "all or substantially all" properties and assets. There is no precise, established definition of the phrase "all or substantially all" under applicable law. Accordingly, whether a sale, conveyance, transfer or lease of less than all of the relevant properties and assets constitutes a sale or other disposition of "all or substantially all" may be uncertain.
·Events of Default
Each of the following is an event of default with respect to the notes:
· our ability to obtain adequate reimbursement and third-party payor coverage for Eversense;
· our expectations about the willingness of healthcare providers to recommend Eversense to people with diabetes;
· our commercialization, marketing and manufacturing capabilities and strategy;
· our abilityfailure to comply with our obligation to convert the notes in accordance with the indenture upon exercise of a holder's conversion right;
A "significant subsidiary" is a subsidiary that is a "significant subsidiary," as defined in Article 1, Rule 1-02 of Regulation S-X promulgated by the SEC as in effect on the date of the indenture provided that, in the case of a subsidiary that meets the criteria of clause (3) of the definition thereof but not clause (1) or (2) thereof, such subsidiary shall not be deemed to be a significant subsidiary unless the subsidiary's income from continuing operations before income taxes, extraordinary items and cumulative
· our abilityeffect of a change in accounting principle exclusive of amounts attributable to maintain our intellectual property position;any non-controlling interests for the last completed fiscal year prior to the date of such determination exceeds $5,000,000.
· our estimates regardingIf an event of default occurs and is continuing, the sizetrustee by notice to us, or the holders of at least 25% in principal amount of the outstanding notes by notice to us and the trustee, may, and the trustee at the request of such holders shall, declare 100% of the principal amount of and future growthaccrued and unpaid interest, if any, on all outstanding notes to be due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately. In case of any event of default described in clause (8) above with respect to us, 100% of the principal of and accrued and unpaid interest on the notes will automatically become due and payable.
Notwithstanding the foregoing, the indenture provides that, to the extent we elect, the sole remedy for an event of default under the indenture relating to (i) our failure to file with the trustee pursuant to Section 314(a)(1) of the Trust Indenture Act any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act or (ii) our failure to comply with our obligations as set forth under "— Reports" below, will (x) for the first 180 days after the occurrence of such an event of default (beginning on, and including, the date on which such an event of default first occurs), consist exclusively of the right to receive additional interest on the notes at a rate equal to 0.25% per annum of the principal amount of notes outstanding for each day during such 180-day period on which such event of default is continuing and (y) for the period from, and including, the 181st day after the occurrence of such an event of default to, and including, the 365th day after the occurrence of such an event of default, consist exclusively of the right to receive additional interest on the notes at a rate equal to 0.50% per annum of the principal amount of notes outstanding for each day during such additional 185-day period on which such event of default is continuing. In no event will the additional interest described in this paragraph accrue at a rate in excess of 0.25% per annum during the initial 180-day period or 0.50% per annum during the subsequent 185-day period pursuant to the indenture, regardless of the number of events or circumstances giving rise to the requirement to pay such additional interest (in addition to any additional interest that may accrue as a result of our failure to comply with our obligations as described under "— Rule 144 Resales and Registration Rights — Registration Rights"). In no event will additional interest payable at our election for failure to comply with our reporting obligations pursuant to this "— Events of Default" (together with any additional interest that may accrue as a result of our failure to comply with our obligations as described "— Rule 144 Resales and Registration Rights — Registration Rights") accrue at a rate in excess of 0.50% per annum pursuant to the indenture, regardless of the number of events or circumstances giving rise to the requirement to pay such additional interest.
If we so elect, such additional interest will be payable in the marketsame manner and on the same dates as the stated interest payable on the notes. On the 366th day after such event of default (if the event of default relating to the reporting obligations is not cured or waived prior to such 366th day), the notes will be subject to acceleration as provided above. The provisions of the indenture described in this paragraph will not affect the rights of holders of notes in the event of the occurrence of any other event of default. In the event we do not elect to pay the additional interest following an event of default in accordance with this paragraph or we elected to make such payment but do not pay the additional interest when due, the notes will be immediately subject to acceleration as provided above.
In order to elect to pay the additional interest as the sole remedy during the first 365 days after the occurrence of an event of default relating to the failure to comply with the reporting obligations in accordance with the immediately preceding two paragraphs, we must notify all holders of the notes, the trustee and the paying agent in writing of such election on or before the close of business on the date on which such event of default first occurs. Upon our failure to timely give such notice, the notes will be immediately subject to acceleration as provided above.
The holders of a majority in principal amount of the outstanding notes may waive all past defaults (except with respect to nonpayment of principal or interest or with respect to the failure to deliver the consideration
due upon conversion) and rescind any such acceleration with respect to the notes and its consequences if (i) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (ii) all existing events of default, other than the nonpayment of the principal of and interest on the notes that have become due solely by such declaration of acceleration, have been cured or waived.
Each holder shall have the right to receive payment or delivery, as the case may be, of:
its notes, on or after the respective due dates expressed or provided for CGM systems;in the indenture, or to institute suit for the enforcement of any such payment or delivery on or after the applicable due date, as the case may be.
Subject to the provisions of the indenture relating to the duties of the trustee, if an event of default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the holders unless such holders have offered to the trustee indemnity or security reasonably satisfactory to the trustee in its reasonable judgment against any loss, liability, claim or expense. Except to enforce the right to receive payment of principal or interest when due, or the right to receive payment or delivery of the consideration due upon conversion, no holder may pursue any remedy with respect to the indenture or the notes unless:
Subject to certain restrictions, the holders of a majority in principal amount of the outstanding notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or of exercising any trust or power conferred on the trustee.
The indenture provides that in the event an event of default has occurred and is continuing, the trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The trustee, however, may refuse to follow any direction that conflicts with law or the indenture or that the trustee determines is unduly prejudicial to the rights of any other holder or that would involve the trustee in personal liability. Prior to taking any action under the indenture, the trustee will be entitled to security or indemnification reasonably satisfactory to the trustee in its reasonable judgment against any loss, liability or expense caused by taking or not taking such action.
The indenture provides that if a default occurs and is continuing and is actually known to a responsible officer of the trustee, the trustee must send to each holder notice of the default within 90 days after it obtains such knowledge. Except in the case of a default in the payment of principal of or interest on any note or a default in the payment or delivery of the consideration due upon conversion, the trustee may
·withhold notice if and so long as it in good faith determines that withholding notice is in the interests of the holders. In addition, we are required to deliver to the trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any event of default under the indenture that occurred during the previous year. We are also required to deliver to the trustee, within 30 days after obtaining knowledge of the occurrence thereof, written notice of any events which would constitute certain events of defaults, their status and what action we are taking or proposing to take in respect thereof;provided that we are not required to deliver such notice if such event of default has been cured.
Payments of the redemption price, the fundamental change repurchase price, principal and interest that are not made when due will accrue interest per annum at the then-applicable interest rate from the required payment date.
Modification and Amendment
Subject to certain exceptions, the indenture or the notes may be amended with the consent of the holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a repurchase of, or tender or exchange offer for, notes) and, subject to certain exceptions, any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a repurchase of, or tender or exchange offer for, notes). However, without the consent of each holder of an outstanding note affected, no amendment may, among other things:
Without the consent of any holder, we and the trustee may amend the indenture and/or the notes to:
Holders do not need to approve the particular form of any proposed amendment. It will be sufficient if such holders approve the substance of the proposed amendment. After an amendment under the indenture becomes effective, we are required to deliver to the holders a notice briefly describing such amendment. However, the failure to give such notice to all the holders, or any defect in the notice, will not impair or affect the validity of the amendment.
Discharge; Defeasance
We may satisfy and discharge our obligations under the notes and the indenture by delivering to the securities registrar for cancellation all outstanding notes or by depositing with the trustee or delivering to the holders, as applicable, after the notes have become due and payable, whether at maturity, at any redemption date, at any fundamental change repurchase date, upon conversion or otherwise, cash and/or (in the case of conversion) shares of common stock sufficient to pay all of the outstanding notes and paying all other sums payable under the indenture by us. Such discharge is subject to terms contained in the indenture.
In addition, we may elect, at our option, to have our obligations released with respect to the covenants described under "— Covenants — Asset Sales," "— Covenants — Restricted Payments," "— Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock," "— Covenants — Liens," "— Covenants — Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries," — Covenants "— Transactions with Affiliates," "— Covenants — Limitation on Issuance of Capital Stock" and "— Covenants — Future Subsidiary Guarantees" ("covenant defeasance") and any omission to comply with such obligation shall not constitute a default or an event of default with respect to the notes. In the event covenant defeasance occurs, certain events (not including non-payment, failure to comply with obligation to convert the notes, failure to give a fundamental change or make-whole fundamental change notice, failure to comply with the
covenant described under "— Consolidation, Merger and Sale of Assets" and bankruptcy and insolvency events) described under "— Events of Default" will no longer constitute an event of default with respect to the notes. In addition, if we exercise our covenant defeasance option, each subsidiary guarantor will be released from all of its obligations with respect to its applicable guarantee.
To exercise covenant defeasance with respect to the notes:
The notes are not subject to legal defeasance.
Reports
The indenture provides that any annual or quarterly reports (on Form 10-K or Form 10-Q or any respective successor form) that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act (excluding any such information, documents or reports, or portions thereof, subject to confidential treatment and any correspondence with the SEC) must be filed by us with the trustee within 15 days after the same are required to be filed with the SEC (giving effect to any grace period provided by Rule 12b-25 or any successor rule under the Exchange Act). Documents filed by us with the SEC via the EDGAR system (or any successor thereto) will be deemed to be filed with the trustee as of the time such documents are filed via EDGAR (or any successor thereto), it being understood that the trustee shall not be responsible for determining whether such filings have been made. Delivery of reports, information and documents to the trustee under the indenture is for informational purposes only and the information and the trustee's receipt of the foregoing shall not constitute constructive notice of any information contained therein, or
determinable from information contained therein including our compliance with any of its covenants thereunder (as to which the trustee is entitled to rely exclusively on an officer's certificate).
We will schedule a conference call to be held not more than 15 days following the release of each quarterly and annual report referred to in the preceding paragraph, but after the release of any "earnings release" corresponding to the period of time forsuch report, at which we will make available at least one member of our current capital resourcessenior management to discuss the information contained in such report on such conference call. The indenture permits us to satisfy this obligation as part of our quarterly and annual earnings conference calls. We will notify holders about such call and provide them with call-in information concurrently with and in the same manner as each delivery of such reports.
If we have designated any subsidiaries as unrestricted subsidiaries, then our quarterly and annual financial information required by the second preceding paragraph will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, of the financial condition and results of operations of us and our restricted subsidiaries separate from the financial condition and results of operations of the our unrestricted subsidiaries.
Calculations in Respect of Notes
Except as otherwise provided above, we will be sufficientresponsible for making all calculations called for under the notes. These calculations include, but are not limited to, funddeterminations of the stock price, the last reported sale prices of our continued operations;common stock, accrued interest payable on the notes and the conversion rate of the notes (including any adjustments thereof). We will make all these calculations in good faith and, absent manifest error, our calculations will be final and binding on holders of notes. We will provide a schedule of our calculations to each of the trustee and the conversion agent, and each of the trustee and the conversion agent is entitled to rely conclusively upon the accuracy of our calculations without independent verification. The trustee will forward our calculations to any holder of notes upon the written request of that holder.
·Rule 144A Information
At any time we are not subject to Section 13 or Section 15(d) of the Exchange Act, we will, so long as any of the notes or any shares of our estimates regardingcommon stock issuable upon conversion thereof will, at such time, constitute "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, promptly provide to the trustee and will, upon written request, provide to any holder, beneficial owner or prospective purchase of such notes or any shares of our future expensescommon stock issuable upon conversion of such notes the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate the resale of such notes or shares of our common stock pursuant to Rule 144A under the Securities Act. We will take such further action as any holder or beneficial owner of such notes may reasonably request to the extent from time to time required to enable such holder or beneficial owner to sell such notes or shares of our common stock in accordance with Rule 144A under the Securities Act, as such rule may be amended from time to time.
Trustee
U.S. Bank National Association is the trustee, security registrar, paying agent and needsconversion agent. U.S. Bank National Association, in each of its capacities, including without limitation as trustee, security registrar, paying agent and conversion agent, assumes no responsibility for additional financing.
In some cases, you can identify forward-looking statements by the words “may,” “might,” “can,” “will,” “to be,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “likely,” “continue” and “ongoing,”accuracy or completeness of the information concerning us or our affiliates or any other party contained in this document or the negative of these terms,related documents or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these words. These statements 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 the information expressed or implied by these forward-looking statements.
You should refer to the “Risk Factors” section contained in the applicable prospectus supplement andfor any related free writing prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Given these risks, uncertainties and other factors, many of which are beyond our control, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate, and you should not place undue reliance on these forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not
regard these statements as a representation or warrantyfailure by us or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information.
The trustee is also the trustee under the indenture governing the 2023 notes. In addition, we maintain banking relationships in the ordinary course of business with the trustee and its affiliates.
Governing Law
The indenture provides that it and the notes, and any claim, controversy or dispute arising under or related to the indenture or the notes, will be governed by and construed in accordance with the laws of the State of New York.
Rule 144 Resales and Registration Rights
General
You may resell your notes or shares of our common stock issued upon conversion of notes pursuant to an exemption from the registration requirements of the Securities Act and other applicable securities laws or pursuant to this resale registration statement.
Subject to the Rule 144(i) exception discussed below, in general under Rule 144 under the Securities Act ("Rule 144") as currently in effect, a person that we will achievewho acquired notes from us (or our objectivesaffiliate) and plans in any specifiedwho has beneficially owned notes or shares of our common stock issued upon conversion of the notes for at least one year is entitled to sell such notes or shares of our common stock without registration, but only if such person is not deemed to have been our affiliate at the time frame,of, or at all.
Exceptany time during three months immediately preceding, the sale. Furthermore, subject to the Rule 144(i) exception discussed below, under Rule 144, a person who acquired notes from us (or our affiliate) and who has beneficially owned notes or shares of our common stock issued upon conversion of the notes for at least six months is entitled to sell such notes or shares of our common stock without registration, so long as (i) such person is not deemed to have been our affiliate at the time of, or at any time during three months immediately preceding, the sale and (ii) we have filed all required by law,reports under Section 13 or Section 15(d) of the Exchange Act, as applicable, during the twelve months preceding such sale (other than current reports on Form 8-K). Subject to the Rule 144(i) exception discussed below, if we assume no obligationare not current in filing our Exchange Act reports, a person who acquires from our affiliate notes or shares of our common stock issued upon conversion of the notes could be required to update these forward-looking statements publicly,hold such notes or shares of our common stock for up to revise any forward-looking statements to reflect events or developments occurring after the date of this prospectus, even if new information becomes available in the future.
RATIO OF EARNINGS TO FIXED CHARGES
one year following such acquisition. If we offer debt securities and/are not current in filing our Exchange Act reports, a person who is our affiliate and who owns notes or preference equity securities under this prospectus, then we will, ifshares of our common stock issued upon conversion of the notes could be required at that time, provide a ratioto hold such notes or shares of earnings to fixed charges and/or ratio of combined fixed charges and preference dividends to earnings, respectively, in the applicable prospectus supplement for such offering.
USE OF PROCEEDS
our common stock indefinitely.
We will retain broad discretionuse commercially reasonable efforts to prevent any of our "affiliates" (as defined in Rule 144) from acquiring any note.
Rule 144(i) Exception
Rule 144(i)(1) prohibits a stockholder or holder of notes from relying on Rule 144 if the issuer is now or at any time previously has been a "shell company" (as described in Rule 144(i)(1)(i)), unless the requirements of Rule 144(i)(2) are satisfied. Since we were previously a shell company described in Rule 144(i)(1)(i), but have subsequently ceased to be a shell company, Rule 144(i)(2) will permit the use of Rule 144 by our stockholders or holders of notes if the following requirements are satisfied at the time of the proposed sale in reliance on Rule 144:
Registration Rights
We prepared this prospectus in connection with our obligations under the Registration Rights Agreement, which provides the selling securityholders with certain registration rights with respect to the resale of the notes, the subsidiary guarantees and the shares of common stock issuable upon conversion of the notes.
We will pay additional interest on any interest payment date to the holders of notes and the shares of common stock issued upon conversion of the notes if the resale documents are unavailable for periods in excess of those permitted. Such additional interest will accrue until the date prior to the day the default is cured at a rate per year equal to:
Additional interest pursuant to the foregoing provisions will be payable in arrears on each interest payment date following accrual in the same manner as regular interest on the notes and will be in addition to any additional interest that may accrue at our election as the sole remedy relating to the failure to comply with our reporting obligations as described under "— Events of Default." In no event will additional interest payable at our election for failure to comply with our obligations pursuant to this "— Rule 144 Resales and Registration Rights — Registration Rights" (together with any additional interest that may accrue as a result of our failure to comply with our obligations as described under "— Events of Default") accrue at a rate in excess of 0.50% per annum pursuant to the indenture, regardless of the number of events or circumstances giving rise to the requirement to pay such additional interest.
Book-Entry, Settlement and Clearance
The Global Notes
The notes were initially issued in the form of one or more registered notes in global form, without interest coupons (the "global notes"). Each of the global notes was deposited with the trustee as custodian for DTC and registered in the name of Cede & Co., as nominee of DTC.
Ownership of beneficial interests in a global note is limited to persons who have accounts with DTC ("DTC participants") or persons who hold interests through DTC participants. We expect that under procedures established by DTC:
Beneficial interests in global notes may not be exchanged for notes in physical, certificated form except in the limited circumstances described below.
Book-Entry Procedures for the Global Notes
All interests in the global notes are subject to the operations and procedures of DTC and, therefore, you must allow for sufficient time in order to comply with these procedures if you wish to exercise any of your rights with respect to the notes. We provide the following summary of those operations and procedures solely for the convenience of investors. The operations and procedures of DTC are controlled by that
settlement system and may be changed at any time. None of we, the trustee or the initial purchaser are responsible for those operations or procedures.
DTC has advised us that it is:
DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants. DTC's participants include securities brokers and dealers, including the initial purchaser; banks and trust companies; clearing corporations and other organizations. Indirect access to DTC's system is also available to others such as banks, brokers, dealers and trust companies; these indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Investors who are not DTC participants may beneficially own securities held by or on behalf of DTC only through DTC participants or indirect participants in DTC.
So long as DTC's nominee is the registered owner of a global note, that nominee will be considered the sole owner or holder of the notes represented by that global note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a global note:
As a result, each investor who owns a beneficial interest in a global note must rely on the procedures of DTC to exercise any rights of a holder of notes under the indenture (and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through which the investor owns its interest). Neither we nor the trustee, paying agent or conversion agent has any responsibility or liability for any act or omission of DTC.
Payments of principal and interest with respect to the notes represented by a global note will be made by the trustee to DTC's nominee as the registered holder of the global note. Neither we nor the trustee will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a global note, for any aspect of the records relating to or payments made on account of those interests by DTC, or for maintaining, supervising or reviewing any records of DTC relating to those interests.
Payments by participants and indirect participants in DTC to the owners of beneficial interests in a global note will be governed by standing instructions and customary industry practice and will be the responsibility of those participants or indirect participants and DTC.
Transfers between participants in DTC will be effected under DTC's procedures and will be settled in same-day funds.
Certificated Notes
Notes in physical, certificated form will be issued and delivered to each person that DTC identifies as a beneficial owner of the related notes only if:
DESCRIPTION OF OTHER INDEBTEDNESS
Credit Agreement
On July 16, 2019, we entered into the credit agreement, with Solar, as collateral agent, and the lenders from time to time party thereto (collectively, the "Solar Lenders"). Pursuant to the credit agreement, we borrowed a term loan in an aggregate principal amount of $45.0 million (the "Solar Term Loan"). We used $11.6 million of the Solar Term Loan to repay in full outstanding borrowings under and terminate our then-existing Amended and Restated Loan and Security Agreement.
Interest on the Solar Term Loan is payable monthly at a floating annual rate of 6.50%, plus the greater of (i) the rate per annum rate published by the Intercontinental Exchange Benchmark Administration Ltd. and (ii) 2.48%, provided that the minimum floor interest rate is 8.98%. The maturity date for the Term Loans will be July 1, 2024 (the "Solar Maturity Date"). Commencing on August 1, 2021, we will be required to make monthly principal amortization payments; provided that the interest only period may be extended to (i) August 1, 2022 if our product revenue is greater than or equal to $40.0 million on a trailing six-month basis prior to the second anniversary of the effective date and (ii) August 1, 2023 if our product revenue is greater than or equal to $75.0 million on a trailing six-month basis after the achievement of the first extension.
We may elect to prepay the Solar Term Loan prior to the Solar Maturity Date subject to a prepayment fee equal to 3.00% if the prepayment occurs within one year of the effective date, 2.00% if the prepayment occurs during the second year following the effective date, and 1.00% if the prepayment occurs more than two years after the effective date and prior to the Solar Maturity Date.
The credit agreement contains customary events of default, including bankruptcy, the failure to make payments when due, the occurrence of a material impairment on the Solar Lenders' security interest over the usecollateral, a material adverse change, the occurrence of a default under certain other agreements entered into by us and our subsidiaries, the rendering of certain types of judgments against us and our subsidiaries, the revocation of certain government approvals, violation of covenants, and incorrectness of representations and warranties in any material respect. Upon the occurrence of an event of default, subject to specified cure periods, all amounts owed by us would begin to bear interest at a rate that is 5.00% above the rate effective immediately before the event of default, and may be declared immediately due and payable by the Solar Lenders.
The Solar Term Loan is secured by substantially all of our and our subsidiaries' assets. The credit agreement also contains specified financial covenants related to our liquidity and trailing six-month revenues. The credit agreement also contains certain restrictive covenants that limit our ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements or enter into various specified transactions, as well as financial reporting requirements.
In connection with the closing of the Solar Term Loan, on July 25, 2019 we issued the Solar Lenders warrants to purchase an aggregate of 1,125,000 shares of our common stock with an exercise price of $1.20 per share. The warrants are exercisable until July 25, 2019. The Solar Lenders also have the right to net exercise the warrants for shares of our common stock.
2023 Notes
In January 2018, we issued $50.0 million in aggregate principal amount of 5.25% convertible senior subordinated notes due 2023 (the "2023 notes"), and in February 2018, we issued an additional $3.0 million in aggregate principal amount of 2023 notes. We used $37.9 million of the net proceeds from the saleissuance of the securities offered hereby. Except as describednotes to repurchase $37.0 million aggregate principal amount of 2023 notes, at a
purchase price equal to the principal amount thereof, plus accrued and unpaid interest thereon. The 2023 notes are general, unsecured, senior subordinated obligations and bear interest at a rate of 5.25% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2018. The 2023 notes are not guaranteed and will mature on February 1, 2023, unless earlier repurchased or converted. Payment of the principal of, and accrued and unpaid interest, if any, applicable prospectus supplementon the maturity date, and the fundamental change repurchase price of (excluding cash payable in lieu of delivering fractional shares of our common stock), the 2023 notes is subordinated to the prior payment in full in cash or other payment satisfactory to the holders of senior debt, of all existing and future senior debt.
The 2023 notes are convertible into shares of our common stock at the option of the holders at any time prior to the close of business on the business day immediately preceding the maturity date. The conversion rate was initially 294.1176 shares of common stock per $1,000 principal amount of 2023 notes (equivalent to an initial conversion price of approximately $3.40 per share of common stock), subject to customary adjustments. Holders who convert prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in any free writing prospectusesshares of our common stock. In addition, following certain corporate events that occur prior to the maturity date, we may authorizewill, in certain circumstances, increase the conversion rate for a holder who elects to be provided to youconvert its 2023 notes in connection with such a specific offering, we currently intend to usecorporate event. As of July 31, 2019, the net proceeds from the saleaggregate outstanding principal amount of the securities offered hereby for working capital, capital expenditures and general corporate purposes. We may also use a portion2023 notes was $15.7 million.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock and provisions of our amended and restated certificate of incorporation, our amendment to our amended and restated certificate of incorporation, and amended and restated bylaws are summaries. You should also referThis description does not purport to thebe complete and is subject to, and qualified in its entirety by, our amended and restated certificate of incorporation and theour amended and restated bylaws, which are filed as exhibits toincorporated by reference in ourAnnual Report on Form 10-K for the registration statementyear ended December 31, 2018. The terms of which this prospectus is part.our common stock and preferred stock may also be affected by Delaware law.
General
OurUnder our amended and restated certificate of incorporation authorizes uswe are authorized to issue up to 250,000,000450,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.001 par value per share, all of which shares of preferred stock were undesignated as of December 31, 2017.are undesignated. Our board of directors may establish the rights and preferences of the preferred stock from time to time. As of December 31, 2017,August 6, 2019, we had outstanding 136,882,735203,168,205 shares of common stock.
Common Stock
Voting Rights
Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Under our certificate of incorporation and bylaws, our stockholders do not have cumulative voting rights. Because of this, the holders of a majority of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they should so choose.
Dividends
Dividends
Holders of common stock are entitled to receive ratably those dividends, if any, as may be declared from time to time by the board of directors out of legally available funds.
Liquidation
Liquidation
In the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders.
Rights and Preferences
Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.
Registration Rights
We and certain holders of our common stock have entered into a registration rights agreement.agreement (the "existing registration rights agreement"). The registration rights provisions of thisthat agreement provide those holders with demand, piggyback and Form S-3 registration rights. The shares subject to such rights are referred to herein as “Registrable"Registrable Shares.”
"
In addition, pursuant to the terms of our certain of our warrants to purchase common stock held by Oxford Finance LLC, or Oxford, Oxford has piggyback registration rights with respect to the shares of common stock issuable upon the exercise of the warrants on the same terms as are set forth in the existing registration rights agreement.
Demand Registration Rights
The holders of at least a majority of the Registrable Shares in the aggregate, or a lesser percent if the anticipated aggregate offering price would exceed $10.0 million, have the right to demand that we filed up to a total of two registration statements. These registration rights are subject to specified conditions and limitations, including the right of a managing underwriter to limit the number of shares included in any
such registration under specified circumstances. Upon such a request, we are required to effect the registration as expeditiously as possible. An aggregate of approximately 33.8 million shares of common stock are entitled to these demand registration rights.
Piggyback Registration Rights
If we propose to register any of our securities under the Securities Act of 1933, as amended, either for our own account or for the account of other stockholders, the holders of Registrable Shares and Oxford will each be entitled to notice of the registration and will be entitled to include their shares of common stock in the registration statement. These piggyback registration rights are subject to specified conditions and limitations, including the right of a managing underwriter to limit the number of shares included in any such registration under specified circumstances. An aggregate of approximately 34.1 million shares of common stock are entitled to these piggyback registration rights. The requisite holders of piggyback registration rights under our existing registration rights agreement and Oxford have waived these rights as they may apply to the filing of thethis registration statement of which this prospectus is a part.statement.
Registration on Form S-3
If we are eligible to file a registration statement on Form S-3, the holders of Registrable Shares will be entitled, upon their written request, to have such shares registered by us on a Form S-3 registration statement at our expense, provided that such requested registration has an anticipated aggregate offering size to the public of at least $1.0 million and subject to other specified conditions and limitations. An aggregate of approximately 33.8 million shares of common stock are entitled to these Form S-3 registration rights.
Expenses of Registration
We will pay all expenses relating to any demand, piggyback or Form S-3 registration, other than underwriting discounts and commissions, subject to specified conditions and limitations.
Termination of Registration Rights
The registration rights granted under the existing registration rights agreement will terminate on August 4, 2025 or, if earlier, with respect to a particular holder, at such time as that holder and its affiliates may sell all of their shares of common stock pursuant to Rule 144 under the Securities Act without any restrictions on volume.
Warrants
As of August 6, 2019, we had outstanding warrants to purchase an aggregate of 116,581, 63,025, 80,645 and 1,125,000 shares of common stock at an exercise price of $3.86, $2.38, $1.86 and $1.20 per share, respectively. These warrants expire on June 30, 2026, November 22, 2026, March 29, 2027 and July 25 2029, respectively. We also had outstanding warrants to purchase 167,570 shares of common stock at an exercise price of $1.79 per share, which warrants expire on November 2, 2020, July 14, 2021, and August 19, 2021. The number of shares of common stock issuable upon the exercise of each warrant is subject to adjustment from time to time upon the occurrence of specified events.
Preferred Stock
Pursuant to our amended and restated certificate of incorporation or the Restated Certificate,(the "Restated Certificate"), our board of directors has the authority, without further action by the stockholders (unless such stockholder action is required by applicable law or stock exchange listing rules), to designate and issue up to 5,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the designations, powers, preferences, privileges and relative participating, optional or special rights and the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.
The board of directors, without stockholder approval, can issue preferred stock with voting, conversion or other rights that could adversely affect the voting power and other rights of the holders of common stock. Preferred stock could be issued quickly with terms designed to delay or prevent a change in control of our company or make removal of management more difficult. Additionally, the issuance of preferred stock may
have the effect of decreasing the market price of the common stock and may adversely affect the voting power of holders of common stock and reduce the likelihood that common stockholders will receive dividend payments and payments upon liquidation.
Our board of directors will fix the designations, voting powers, preferences and rights of the each series, as well as the qualifications, limitations or restrictions thereof, of the preferred stock of each series that we offer under this prospectus and applicable prospectus supplements in the certificate of designation relating to that series. We will file as an exhibit to thea registration statement, of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of preferred stock we are offering before the issuance of that series of preferred stock. This description will include:
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The General Corporation Law of the State of Delaware or DGCL,(the "DGCL"), the state of our incorporation, provides that the holders of preferred stock will have the right to vote separately as a class (or, in some cases, as a series) on an amendment to our certificate of incorporation if the amendment would change the par value or, unless the certificate of incorporation provided otherwise, the number of authorized shares of the class
or change the powers, preferences or special rights of the class or series so as to adversely affect the class or series, as the case may be. This right is in addition to any voting rights that may be provided for in the applicable certificate of designation.
Antitakeover Effects of Provisions of Charter Documents and Delaware Law
Charter Documents. Our Restated Certificate and Amended and Restated Bylaws or Bylaws,(our "Bylaws"), each as amended to date, include a number of provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management of our company. First, our board of directors is classified into three classes of directors. Under Delaware law, directors of a corporation with a classified board may be removed only for cause unless the corporation’scorporation's certificate of incorporation provides otherwise. Our Restated Certificate does not provide otherwise. In addition, the Restated Certificate provides that all stockholder action must be effected at a duly called meeting of stockholders and not by a consent in writing. Further, our Bylaws limit who may call special meetings of the stockholders. Our Restated Certificate does not include a provision for cumulative voting for directors. Under cumulative voting, a minority stockholder holding a sufficient percentage of a class of shares may be able to ensure the election of one or more directors. Finally, our Bylaws establish procedures, including advance notice procedures, with regard to the nomination of candidates for election as directors and stockholder proposals. These and other provisions of our Restated Certificate and Bylaws and Delaware law could discourage potential acquisition proposals and could delay or prevent a change in control or management of our company.
Delaware Takeover Statute. We are subject to Section 203 of the DGCL, which regulates acquisitions of some Delaware corporations. Section 203 generally prohibits a publicly held Delaware corporation from engaging in a “business combination”"business combination" with an “interested stockholder”"interested stockholder" for a period of three years following the date of the transaction in which the person became an interested stockholder, unless:
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Section 203 of the DGCL defines a “business combination”"business combination" to include any of the following:
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In general, Section 203 defines an “interested stockholder”"interested stockholder" as any person who, together with the person’sperson's affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’scorporation's voting stock.
Section 203 of the DGCL could depress our stock price and delay, discourage or prohibit transactions not approved in advance by our board of directors, such as takeover attempts that might otherwise involve the payment to our stockholders of a premium over the market price of our common stock.
Transfer Agent andAnd Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent’s, and its address is 250 Royall Street, Canton, Massachusetts 02021. The transfer agent for any series of preferred stock that we may offer under this prospectus will be named and described in the prospectus supplement for that series.
Listing on the NYSE American
Our common stock is listed on the NYSE American under the symbol “SENS.”"SENS."
SELLING SECURITYHOLDERS
DESCRIPTION OF DEBT SECURITIESOn July 25, 2019, we issued $82.0 million aggregate principle of notes to Jefferies LLC as the initial purchaser, who subsequently resold the notes to qualified institutional buyers in reliance on the exemption from registration provided by 144A under the Securities Act. The notes were issued pursuant to an indenture. On July 25, 2019, in connection with the issuance of the notes, we and Senseonics, Incorporated entered into a resale registration rights agreement with Jefferies LLC pursuant which we agreed to register the resale of notes, the subsidiary guarantees and the shares of common stock issuable upon conversion of the notes.
WeFor purposes of this prospectus, "selling securityholders" includes the securityholders listed below and their permitted transferees, pledgees, assignees, distributees, donees or successors or others who later hold any of the selling securityholders' interests. Our registration of the resale of the notes, the subsidiary guarantees and the shares of common stock issuable upon conversion of the notes does not necessarily mean that the selling securityholders will sell all or any of such notes, subsidiary guarantees or common stock. The following table sets forth certain information as of September 17, 2019 concerning the notes and shares of common stock that may issue debt securitiesbe offered from time to time by each selling securityholder with this prospectus. The information is based on information provided by or on behalf of the selling securityholders. Information about the selling securityholders may change over time. In particular, the selling securityholders identified below may have sold, transferred or otherwise disposed of all or a portion of their notes since the date on which they provided us with information regarding their notes. Any changed or new information given to us
by the selling securityholders will be set forth in one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. While the terms we have summarized below will apply generallysupplements to any debt securities that we may offer under this prospectus we will describe the particular terms of any debt securities that we may offer in more detail in the applicable prospectus supplement. The terms of any debt securities offered under a prospectus supplement may differ from the terms described below. Unless the context requires otherwise, whenever we refer to the indenture, we also are referring to any supplemental indentures that specify the terms of a particular series of debt securities.
We will issue the debt securities under the indenture that we will enter into with the trustee named in the indenture. The indenture will be qualified under the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act. We have filed the form of indenture as an exhibitamendments to the registration statement of which this prospectus is a part, if and supplemental indentures and formswhen necessary.
| Prior to Offering | | | After Offering | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Number of Shares of Common Stock Beneficially Owned and Offered Hereby(1) | |||||||||||||||||||||||
Name | Principal Amount of Notes Beneficially Owned | Number of Shares of Common Stock Beneficially Owned(1) | Percentage of Shares of Common Stock Beneficially Owned(2) | Principal Amount of Notes Beneficially Owned and Offered Hereby | Principal Amount of Notes Beneficially Owned | Number of Shares of Common Stock Beneficially Owned(1) | Percentage of Shares of Common Stock Beneficially Owned(2) | ||||||||||||||||||
Highbridge Capital Management, LLC(3) | $ | 22,000,000 | 16,666,667 | 7.6 | % | $ | 22,000,000 | 16,666,667 | — | — | — | ||||||||||||||
40 West 57th Street, 32nd Floor New York, NY 10019 | |||||||||||||||||||||||||
UBS O'Connor LLC(4) | $ | 19,500,000 | 15,619,002 | 7.2 | % | $ | 19,500,000 | 14,772,728 | — | 846,274 | * | ||||||||||||||
787 7th Avenue, 13th Floor, New York, NY 10019 | |||||||||||||||||||||||||
Silverback Asset Management LLC(5) | $ | 9,000,000 | 8,614,890 | 4.1 | % | $ | 9,000,000 | 6,818,181 | — | 1,796,709 | * | ||||||||||||||
1414 Raleigh Road Suite 250 Chapel Hill, NC 27517 | |||||||||||||||||||||||||
Wespath Funds Trust(6) | $ | 30,000 | 22,727 | * | $ | 30,000 | 22,727 | — | — | — | |||||||||||||||
280 Congress Street Boston, MA 02210 | |||||||||||||||||||||||||
Oddo BHF Convertibles Global(6) | $ | 60,000 | 45,454 | * | $ | 60,000 | 45,454 | — | — | — | |||||||||||||||
280 Congress Street Boston, MA 02210 | |||||||||||||||||||||||||
Wellington Trust Company, National Association Multiple Collective Investment Funds Trust II, ALTA Portfolio(6) | $ | 348,000 | 263,636 | * | $ | 348,000 | 263,636 | — | — | — | |||||||||||||||
280 Congress Street Boston, MA 02210 | |||||||||||||||||||||||||
Wellington Management Funds (Luxembourg) II SICAV-Wellington ALTA Fund(6) | $ | 1,948,000 | 1,475,757 | * | $ | 1,948,000 | 1,475,757 | — | — | — | |||||||||||||||
280 Congress Street Boston, MA 02210 | |||||||||||||||||||||||||
Wellington Trust Company, National Association Multiple Collective Investments Funds Trust II, ATLAS(6) | $ | 5,163,000 | 3,911,363 | 1.9 | % | $ | 5,163,000 | 3,911,363 | — | — | * | ||||||||||||||
280 Congress Street Boston, MA 02210 | |||||||||||||||||||||||||
Citadel Advisors LLC(7) | $ | 2,500,000 | 1,893,939 | * | $ | 2,500,000 | 1,893,939 | — | — | — | |||||||||||||||
131 South Dearborn Street, Chicago, IL 6063 | |||||||||||||||||||||||||
Geode Capital Management LP(8) | $ | 5,000,000 | 3,787,879 | 1.8 | % | $ | 5,000,000 | 3,787,879 | — | — | — | ||||||||||||||
100 Summer Street, 12th Floor Boston, MA 02110 | |||||||||||||||||||||||||
Polar Asset Management Partners Inc.(9) | $ | 3,000,000 | 4,595,726 | 2.2 | % | $ | 3,000,000 | 2,272,726 | 2,323,000 | 1.1 | % | ||||||||||||||
401 Bay St., Ste. 1900 Toronto, ON, M5H 2Y4 | |||||||||||||||||||||||||
The K2 Principal Fund L.P.(10) | $ | 2,000,000 | 1,515,151 | * | $ | 2,000,000 | 1,515,151 | — | — | — | |||||||||||||||
2 Bloor Street West, Suite 801, Toronto, Ontario M4W 3E2 Canada | |||||||||||||||||||||||||
CNH Partners, LLC(11) | $ | 1,500,000 | 1,136,362 | * | $ | 1,500,000 | 1,136,362 | — | — | — | |||||||||||||||
Two Greenwich Plaza, 4th Floor Greenwitch, CT 06830 | |||||||||||||||||||||||||
Aristeia Capital, L.L.C.(12) | $ | 1,000,000 | 757,575 | * | $ | 1,000,000 | 757,575 | — | — | — | |||||||||||||||
One Greenwich Plaza Greenwich Ct 06830 | |||||||||||||||||||||||||
Shaolin Capital Management LLC(13) | $ | 500,000 | 2,053,787 | 1.0 | % | $ | 500,000 | 378,787 | — | 1,675,000 | * | ||||||||||||||
1460 Broadway New York, NY 10036 | |||||||||||||||||||||||||
Soros Fund Management LLC(14) | $ | 6,451,000 | 4,536,363 | 2.2 | % | $ | 6,451,000 | 4,536,363 | — | — | — | ||||||||||||||
250 W 55th St. New York, NY 10019 | |||||||||||||||||||||||||
III Capital Management(15) | $ | 1,000,000 | 1,492,868 | (16) | * | $ | 1,000,000 | 757,575 | — | 735,293 | (16) | * | |||||||||||||
777 Yamato Road, Suite 300 Boca Raton, FL 33431 | |||||||||||||||||||||||||
Unnamed holders of notes or conversion shares or any future transferees, pledgees, donees, or successors of or from any such unnamed holders(17) | $ | 1,000,000 | 757,576 | * | $ | 1,000,000 | 757,576 | — | — | — |
Adjustments" and "Description of Notes — Conversion Rights — Fundamental Change Permits Holders to Require Us to Repurchase Notes." As a result, the number of shares of common stock issuable upon conversion of the notes may increase or decrease in the future.
Except for the transactions referred to herein and in documents filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (including director positions with us and the Investment Agreement), none of the selling securityholders has, or within the last three years has had, any position, office or other material relationship (legal or otherwise) with us or any of our subsidiaries other than as a holder of our securities.
We are registering the securities covered by this prospectus on behalf of the selling securityholders. All costs, expenses and fees connected with the registration of these securities will be incorporatedborne by referenceus. Any brokerage commissions and similar expenses connected with selling the securities will be borne by the selling securityholders. The selling securityholders may offer and sell the securities covered by this prospectus from reportstime to time in one or more transactions. The term "selling securityholders" includes pledgees, donees, transferees and other successors-in-interest who may acquire securities through a pledge, gift, partnership distribution or other non-sale related transfer from the selling securityholders. The selling securityholders will act independently of us in making decisions with respect to the timing, manner and size of each sale and they may sell securities on one or more exchanges, including the NYSE American, in the over-the-counter market or in privately negotiated transactions at prevailing market prices at the time of sale, at fixed prices, at varying prices determined at the time of the sale or at negotiated prices. These transactions include:
In connection with distributions of the securities or otherwise, the selling securityholders may:
The selling securityholders may also sell any securities under Rule 144 rather than with this prospectus if the sale meets the requirements of that rule.
In effecting sales, the selling securityholders may engage broker-dealers or agents, who may in turn arrange for other broker-dealers to participate. Broker-dealers or agents may receive commissions, discounts or concessions from the selling securityholders and/or from the purchasers of securities for whom the broker-dealers may act as agents or to whom they sell as principal, or both. The compensation to a particular broker-dealer may be in excess of customary commissions. To our knowledge, there is currently no plan, arrangement or understanding between any selling securityholders and any broker-dealer or agent regarding the sale of any securities by the selling securityholders.
The selling securityholders, any broker-dealers or agents and any participating broker-dealers that act in connection with the sale of the securities covered by this prospectus may be "underwriters" under the Securities Act with respect to those securities and will be subject to the prospectus delivery requirements of that Act. Any profit that the selling securityholders realize, and any compensation that any broker-dealer or agent may receive in connection with any sale, including any profit realized on resale of securities acquired as principal, may constitute underwriting discounts and commissions. If the selling securityholders are deemed to be underwriters, the selling securityholders may be subject to certain liabilities under statutes
including, but not limited to, Section 11, 12 and 17 of the Securities Act and Section 10(b) and Rule 10b-5 under the Exchange Act.
The securities laws of some states may require the selling securityholders to sell the securities in those states only through registered or licensed brokers or dealers. These laws may also require that we fileregister or qualify the securities for sale in those states unless an exemption from registration and qualification is available and the selling securityholders and we comply with that exemption. In addition, the SEC.
The following summaryanti-manipulation rules of material provisionsRegulation M under the Exchange Act may apply to sales of Securities in the market and to the activities of the debtselling securityholders and their affiliates. Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the securities. All of the foregoing may affect the marketability of the securities and the indenture is subjectability of any person to and qualifiedengage in its entirety by reference to, all of the provisions of the indenture applicable to a particular series of debt securities. We urge you to read the applicable prospectus supplements and any related free writing prospectuses relatedmarket-making activities with respect to the debtsecurities.
If any selling securityholder notifies us that he has entered into any material arrangement with a broker-dealer for the sale of securities thatthrough a block trade, special offering, exchange distribution, over-the-counter distribution or secondary distribution, or a purchase by a broker or dealer, we may offer underwill file any necessary supplement to this prospectus as well as to disclose:
General
The indenture does not limitarrangement, including the amountnames of debtany underwriters, dealers or agents who purchase securities, that we may issue. It provides that we may issue debt securities upas required;
In addition, if any covenantsselling securityholder notifies us that a donee, pledgee, transferee or other provisions designed to give holders of any debt securities protection against changessuccessor in our operations, financial condition or transactions involving us.
We may issue the debt securities issued under the indenture as “discount securities,” which means they may be sold at a discount below their stated principal amount. These debt securities, as well as other debt securities that are not issued at a discount, may be issued with “original issue discount,” or OID, for U.S. federal income tax purposes because of interest payment and other characteristics or terms of the debt securities. Material U.S. federal income tax considerations applicableselling securityholder intends to debtsell any securities, issued with OID will be described in more detail in any applicable prospectus supplement.
We will describe in the applicable prospectus supplement the terms of the series of debt securities being offered, including:
· the title of the series of debt securities;
· any limit upon the aggregate principal amount that may be issued;
· the maturity date or dates;
· the form of the debt securities of the series;
· the applicability of any guarantees;
· whether or not the debt securities will be secured or unsecured, and the terms of any secured debt;
· whether the debt securities rank as senior debt, senior subordinated debt, subordinated debt or any combination thereof, and the terms of any subordination;
· if the price (expressed as a percentage of the aggregate principal amount thereof) at which such debt securities will be issued is a price 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 another security or the method by which any such portion shall be determined;
· the interest rate or rates, which may be fixed or variable, or the method for determining the rate and the date interest will begin to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining such dates;
· our right, if any, to defer payment of interest and the maximum length of any such deferral period;
· if applicable, the date or dates after which, or the period or periods during which, and the price or prices at which, we may, at our option, redeem the series of debt securities pursuant to any optional or provisional redemption provisions and the terms of those redemption provisions;
· the date or dates, if any, on which, and the price or prices at which we are obligated, pursuant to any mandatory
sinking fund or analogous fund provisions or otherwise, to redeem, or at the holder’s option to purchase, the series of debt securities and the currency or currency unit in which the debt securities are payable;
· the denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral multiple thereof;
· any and all terms, if applicable, relating to any auction or remarketing of the debt securities of that series and any security for our obligations with respect to such debt securities and any other terms which may be advisable in connection with the marketing of debt securities of that series;
· whether the debt securities of the series shall be issued in whole or in part in the form of a global security or securities; the terms and conditions, if any, upon which such global security or securities may be exchanged in whole or in part for other individual securities; and the depositary for such global security or securities;
· if applicable, the provisions relating to conversion or exchange of any debt securities of the series and the terms and conditions upon which such debt securities will be so convertible or exchangeable, including the conversion or exchange price, as applicable, or how it will be calculated and may be adjusted, any mandatory or optional (at our option or the holders’ option) conversion or exchange features, the applicable conversion or exchange period and the manner of settlement for any conversion or exchange;
· if other than the full principal amount thereof, the portion of the principal amount of debt securities of the series which shall be payable upon declaration of acceleration of the maturity thereof;
· additions to or changes in the covenants applicable to the particular debt securities being issued, including, among others, the consolidation, merger or sale covenant;
· additions to or changes in the events of default with respect to the securities and any change in the right of the trustee or the holders to declare the principal, premium, if any, and interest, if any, with respect to such securities to be due and payable;
· additions to or changes in or deletions of the provisions relating to covenant defeasance and legal defeasance;
· additions to or changes in the provisions relating to satisfaction and discharge of the indenture;
· additions to or changes in the provisions relating to the modification of the indenture both with and without the consent of holders of debt securities issued under the indenture;
· the currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S. dollars;
· whether interest will be payable in cash or additional debt securities at our or the holders’ option and the terms and conditions upon which the election may be made;
· the terms and conditions, if any, upon which we will pay amounts in addition to the stated interest, premium, if any, and principal amounts of the debt securities of the series to any holder that is not a “United States person” for federal tax purposes;
· any restrictions on transfer, sale or assignment of the debt securities of the series; and
· any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, any other additions or changes in the provisions of the indenture, and any terms that may be required by us or advisable under applicable laws or regulations.
Conversion or Exchange Rights
We will set forth in the applicable prospectus supplement the terms on which a series of debt securities may be convertible into or exchangeable for our common stock or our other securities. We will include provisions as to settlement upon conversion or exchange and whether conversion or exchange is mandatory, at the option of the holder or at our option. We may include provisions pursuant to which the number of shares of our common stock or our other securities that the holders of the series of debt securities receive would be subject to adjustment.
Consolidation, Merger or Sale
Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the indenture will not contain any covenant that restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of our assets asfile an entirety or substantially as an entirety. However, any successor to or acquirer of such assets (other than a subsidiary of ours) must assume all of our obligations under the indenture or the debt securities, as appropriate.
Events of Default under the Indenture
Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the following are events of default under the indenture with respect to any series of debt securities that we may issue:
· if we fail to pay any installment of interest on any series of debt securities, as and when the same shall become due and payable, and such default continues for a period of 90 days; provided, however, that a valid extension of an interest payment period by us in accordance with the terms of any indenture supplemental thereto shall not constitute a default in the payment of interest for this purpose;
· if we fail to pay the principal of, or premium, if any, on any series of debt securities as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking or analogous fund established with respect to such series; provided, however, that a valid extension of the maturity of such debt securities in accordance with the terms of any indenture supplemental thereto shall not constitute a default in the payment of principal or premium, if any;
· if we fail to observe or perform any other covenant or agreement contained in the debt securities or the indenture, other than a covenant specifically relating to another series of debt securities, and our failure continues for 90 days after we receive written notice of such failure, requiring the same to be remedied and stating that such is a notice of default thereunder, from the trustee or holders of at least 25% in aggregate principal amount of the outstanding debt securities of the applicable series; and
· if specified events of bankruptcy, insolvency or reorganization occur.
If an event of default with respect to debt securities of any series occurs and is continuing, other than an event of default specified in the last bullet point above, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series, by notice to us in writing, and to the trustee if notice is given by such holders, may declare the unpaid principal of, premium, if any, and accrued interest, if any, of such series of debt securities due and payable immediately. If an event of default specified in the last bullet point above occurs with respect to us, the principal amount of and accrued interest, if any, of each issue of debt securities then outstanding shall be due and payable without any notice or other action on the part of the trustee or any holder.
The holders of a majority in principal amount of the outstanding debt securities of an affected series may waive any default or event of default with respect to the series and its consequences, except defaults or events of default regarding payment of principal, premium, if any, or interest, unless we have cured the default or event of default in accordance with the indenture. Any waiver shall cure the default or event of default.
Subject to the terms of the indenture, if an event of default under an indenture shall occur and be continuing, the trustee will be under no obligation to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of the applicable series of debt securities, unless such holders have offered the trustee reasonable indemnity. The holders of a majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series, provided that:
· the direction so given by the holder is not in conflict with any law or the applicable indenture; and
· subject to its duties under the Trust Indenture Act, the trustee need not take any action that might involve it in personal liability or might be unduly prejudicial to the holders not involved in the proceeding.
A holder of the debt securities of any series will have the right to institute a proceeding under the indenture or to appoint a receiver or trustee, or to seek other remedies only if:
· the holder has given written notice to the trustee of a continuing event of default with respect to that series;
· the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written request;
· such holders have offered to the trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred by the trustee in compliance with the request; and
· the trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series other conflicting directions within 90 days after the notice, request and offer.
These limitations do not apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium, if any, or interest on, the debt securities.
We will periodically file statements with the trustee regarding our compliance with specified covenants in the indenture.
Modification of Indenture; Waiver
Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, we and the trustee may change an indenture without the consent of any holders with respect to specific matters:
· to cure any ambiguity, defect or inconsistency in the indenture or in the debt securities of any series;
· to comply with the provisions described above under “Description of Debt Securities—Consolidation, Merger or Sale”;
· to provide for uncertificated debt securities in addition to or in place of certificated debt securities;
· to add to our covenants, restrictions, conditions or provisions such new covenants, restrictions, conditions or provisions for the benefit of the holders of all or any series of debt securities, to make the occurrence, or the occurrence and the continuance, of a default in any such additional covenants, restrictions, conditions or provisions an event of default or to surrender any right or power conferred upon us in the indenture;
· to add to, delete from or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication and delivery of debt securities, as set forth in the indenture;
· to make any change that does not adversely affect the interests of any holder of debt securities of any series in any material respect;
· to provide for the issuance of and establish the form and terms and conditions of the debt securities of any series as provided above under “Description of Debt Securities—General” to establish the form of any certifications required to be furnished pursuant to the terms of the indenture or any series of debt securities, or to add to the rights of the holders of any series of debt securities;
· to evidence and provide for the acceptance of appointment under any indenture by a successor trustee; or
· to comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act.
In addition, under the indenture, the rights of holders of a series of debt securities may be changed by us and the trustee with the written consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of each series that is affected. However, unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, we and the trustee may make the following changes only with the consent of each holder of any outstanding debt securities affected:
· extending the fixed maturity of any debt securities of any series;
· reducing the principal amount, reducing the rate of or extending the time of payment of interest, or reducing any premium payable upon the redemption of any series of any debt securities; or
· reducing the percentage of debt securities, the holders of which are required to consent to any amendment supplement, modification or waiver.
Discharge
The indenture provides that we can elect to be discharged from our obligations with respect to one or more series of debt securities, except for specified obligations, including obligations to:
· provide for payment;
· register the transfer or exchange of debt securities of the series;
· replace stolen, lost or mutilated debt securities of the series;
· pay principal of and premium and interest on any debt securities of the series;
· maintain paying agencies;
· hold monies for payment in trust;
· recover excess money held by the trustee;
· compensate and indemnify the trustee; and
· appoint any successor trustee.
In order to exercise our rights to be discharged, we must deposit with the trustee money or government obligations sufficient to pay all the principal of, any premium, if any, and interest on, the debt securities of the series on the dates payments are due.
Form, Exchange and Transfer
We will issue the debt securities of each series only in fully registered form without coupons and, unless we provide otherwise in the applicable prospectus supplement, in denominations of $1,000 and any integral multiple thereof. The indenture provides that we may issue debt securities of a series in temporary or permanent global form and as book-entry securities that will be deposited with, or on behalf of, The Depository Trust Company, or DTC, or another depositary named by us and identified in the applicable prospectus supplement with respect to that series. To the extent the debt securities of a series are issued in global form and as book-entry, a description of terms relating to any book-entry securities will be set forth in the applicable prospectus supplement.
At the option of the holder, subject to the terms of the indenture and the limitations applicable to global securities described in the applicable prospectus supplement, the holder of the debt securities of any series can exchange the debt securities for other debt securities of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms of the indenture and the limitations applicable to global securities set forth in the applicable prospectus supplement, holders of the debt securities may present the debt securities for exchange or for registration of transfer, duly endorsed or with the form of transfer endorsed thereon duly executed if so required by us or the security registrar, at the office of the security registrar or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided in the debt securities that the holder presents for transfer or exchange, we will impose no service charge for any registration of transfer or exchange, but we may require payment of any taxes or other governmental charges.
We will name in the applicable prospectus supplement the security registrar, and any transfer agent in addition to the security registrar, that we initially designate for any debt securities. We may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required to maintain a transfer agent in each place of payment for the debt securities of each series.
If we elect to redeem the debt securities of any series, we will not be required to:
· issue, register the transfer of, or exchange any debt securities of that series during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any debt securities that may be selected for redemption and ending at the close of business on the day of the mailing; or
· register the transfer of or exchange of any debt securities so selected for redemption, in whole or in part, except the unredeemed portion of any debt securities we are redeeming in part.
Information Concerning the Trustee
The trustee, other than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only those duties as are specifically set forth in the applicable indenture. Upon an event of default under an indenture, the trustee must use the same degree of care as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the trustee is under no obligation to exercise any of the powers given it by the indenture at the request of any holder of debt securities unless it is offered reasonable security and indemnity against the costs, expenses and liabilities that it might incur.
Payment and Paying Agents
Unless we otherwise indicate in the applicable prospectus supplement, we will make payment of the interest on any debt securities on any interest payment date to the person in whose name the debt securities, or one or more predecessor securities, are registered at the close of business on the regular record date for the interest.
We will pay principal of and any premium and interest on the debt securities of a particular series at the office of the paying agents designated by us, except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments by check that we will mail to the holder or by wire transfer to certain holders. Unless we otherwise indicate in the applicable prospectus supplement, we will designate the corporate trust office of the trustee as our sole paying agent for payments with respect to debt securities of each series. We will name in the applicable prospectus supplement any other paying agents that we initially designate for the debt securities of a particular series. We will maintain a paying agent in each place of payment for the debt securities of a particular series.
All money we pay to a paying agent or the trustee for the payment of the principal of or any premium or interest on any debt securities that remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to us, and the holder of the debt security thereafter may look only to us for payment thereof.
Governing Law
The indenture and the debt securities, and any claim, controversy or dispute arising under or related to the indenture or the debt securities, will be governed by and construed in accordance with the laws of the State of New York, except to the extent that the Trust Indenture Act is applicable.
Outstanding Debt Securities
On June 30, 2016, we entered into an Amended and Restated Loan and Security Agreement with Oxford and SVB, or the Lenders. Pursuant to the Amended and Restated Loan and Security Agreement, we have borrowed an aggregate principal amount of $25.0 million in the following three tranches: $15.0 million, or the Tranche 1 Term Loan; $5.0 million, or the Tranche 2 Term Loan; and $5.0 million, or the Tranche 3 Term Loan. We refer to each of the tranches as a Term Loan, and collectively, the Term Loans. The funding conditions for the Tranche 1 Term Loan were satisfied as of June 30, 2016. Therefore, we issued secured notes to the Lenders for aggregate gross proceeds of $15.0 million, or the Notes, on June 30, 2016. We used approximately $11.0 million from the proceeds from the Notes to repay the outstanding balance under our previously existing Loan and Security Agreement with Oxford, dated as of July 31, 2014, including the applicable final payment fee due thereunder of $1 million. On November 22, 2016, the funding conditions for the Tranche 2 Term Loan were satisfied; therefore we issued secured notes to the Lenders for aggregate gross proceeds of $5.0 million. On March 29, 2017, the funding conditions for the Tranche 3 Term Loan were satisfied; therefore we issued secured notes to the Lenders for aggregate gross proceeds of $5.0 million. The maturity date for all Term Loans is June 1, 2020, or the Maturity Date.
The Term Loans bear interest at a floating annual rate of 6.31% plus the greater of (i) 90-day U.S. Dollar LIBOR reported in the Wall Street Journal or (ii) 0.64%, provided that the minimum floor interest rate is 6.95%, and require monthly payments. The monthly payments initially consist of interest-only. Beginning on January 1, 2018, the monthly payments converted to payments of principal and monthly accrued interest, with the principal amount being amortized over the ensuing 30 months.
We may elect to prepay all Term Loans prior to the Maturity Date subject to a prepayment fee equal to 3.00% if the prepayment occurs within one year of the funding date of any Term Loan, 2.00% if the prepayment occurs during the second year following the funding date of any Term Loan, and 1.00% if the prepayment occurs more than two years after the funding date of any Term Loan and prior to the Maturity Date.
The Amended and Restated Loan and Security Agreement contains customary events of default, including bankruptcy, the failure to make payments when due, the occurrence of a material impairment on the Lenders’ security interest over the collateral, a material adverse change, the occurrence of a default under certain other agreements entered into by us, the rendering of certain types of judgments against us, the revocation of certain of our government approvals, violation of covenants, and incorrectness of representations and warranties in any material respect. Upon the occurrence of an event of default, subject to specified cure periods, all amounts owed by us would begin to bear interest at a rate that is 5.00% above the rate effective immediately before the event of default, and may be declared immediately due and payable by Lenders.
The Notes are collateralized by all of our consolidated assets. The Notes also contain certain restrictive covenants that limit our ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements or enter into various specified transactions, as well as financial reporting requirements.
At maturity (or earlier prepayment), we are also required to make a final payment equal to 9.00% of the aggregate principal balances of the funded Term Loans. This fee is being accrued as additional interest expense over the term of the Notes using the effective interest method.
In January 2018, we issued $50.0 million in aggregate principal amount of convertible senior subordinated notes, or the 2023 Notes, and in February 2018, we issued an additional $3.0 million in aggregate principal amount of 2023 Notes. The 2023 Notes are general, unsecured, senior subordinated obligations and bear interest at a rate of 5.25% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2018. The 2023 Notes will mature on February 1, 2023, unless earlier repurchased or converted. Payment of the principal of, and accrued and unpaid interest, if any, on the maturity date, and the fundamental change repurchase price of (excluding cash payable in lieu of delivering fractional shares of our common stock), the 2023 Notes is subordinated to the prior payment in full in cash or other payment satisfactory to the holders of senior debt, of all existing and future senior debt, which includes our indebtedness under the
Amended and Restated Loan and Security Agreement with the Lenders and any refinancing thereof.
The 2023 Notes will be convertible into shares of our common stock at the option of the holders at any time prior to the close of business on the business day immediately preceding the maturity date. The conversion rate is initially 294.1176 shares of common stock per $1,000 principal amount of 2023 Notes (equivalent to an initial conversion price of approximately $3.40 per share of common stock), subject to customary adjustments. Holders who convert on or after the date that is six months after the last date of original issuance of the 2023 Notes but prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of our common stock. In addition, following certain corporate events that occur prior to the maturity date, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2023 Notes in connection with such a corporate event.
DESCRIPTION OF WARRANTS
The following description, together with the additional information we may include in any applicable prospectus supplements and free writing prospectuses, summarizes the material terms and provisions of the warrants that we may offer under this prospectus, which may consist of warrants to purchase common stock, preferred stock or debt securities and may be issued in one or more series. Warrants may be issued independently or together with common stock, preferred stock or debt securities offered by any prospectus supplement, and may be attached to or separate from those securities. While the terms we have summarized below will apply generally to any warrants that we may offer under this prospectus, we will describe the particular terms of any series of warrants that we may offer in more detail in the applicable prospectus supplement and any applicable free writing prospectus. The terms of any warrants offered under a prospectus supplement may differ from the terms described below. However, no prospectus supplement will fundamentally change the terms that are set forth in this prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness.
We have filed forms of the warrant agreements and forms of warrant certificates containing the terms of the warrants being offered as exhibits to the registration statement of which this prospectus forms a part of or a supplement to this prospectus, if required.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a part. summary of certain U.S. federal income tax considerations of the ownership and disposition of notes and the shares of common stock into which the notes may be converted. This summary is based upon provisions of the U.S. Internal Revenue Code of 1986, as amended, or the Code, applicable Treasury Regulations, administrative rulings and judicial decisions in effect as of the date hereof, any of which may subsequently be changed, possibly retroactively, so as to result in U.S. federal income tax considerations different from those discussed below. This summary deals only with a note or share of common stock held by a beneficial owner as a capital asset. This summary is general in nature and does not address all aspects of U.S. federal income taxes and does not address state, local or non-U.S. tax considerations or any U.S. federal estate, gift, or alternative minimum tax considerations. In addition, it does not deal with all tax considerations that may be relevant to holders in light of their personal circumstances or particular situations, such as:
If an entity or arrangement treated as a partnership holds notes or shares of common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partners in partnerships holding the notes or shares of common stock should consult their tax advisors regarding the tax considerations generally applicable to them of the ownership and disposition of the notes or shares of common stock into which the notes may be converted.
We have not sought, nor will file as exhibitswe seek, a ruling from the Internal Revenue Service, or the IRS, with respect to the registration statementmatters discussed below. There can be no assurance that the IRS will not take a different position concerning the tax considerations of the ownership and disposition of the notes or shares of common stock into which the notes may be converted or that any such position would not be sustained.
THIS SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSIDERATIONS TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES OR THE SHARES OF COMMON STOCK INTO WHICH THE NOTES MAY BE CONVERTED.
As used herein, the term "U.S. holder" means a beneficial owner of notes or shares of common stock received upon conversion of the notes that is, for U.S. federal income tax purposes:
A "non-U.S. holder" is a part,beneficial owner (other than a partnership or any entity or arrangement treated as a partnership for U.S. federal income tax purposes) of notes or shares of common stock received upon conversion of the notes that is not a U.S. holder.
Considerations for U.S. Holders
Interest
The notes were issued with less than a de minimis amount of original issue discount (as determined under the Code). Stated interest on a note (and any additional amounts) will incorporate by reference from reports that we filegenerally be taxable to a U.S. holder as ordinary income at the time it is paid or accrued in accordance with the SEC,U.S. holder's usual method of accounting for U.S. federal income tax purposes.
Qualified Reopening
Subject to certain covenants, we may reopen the formindenture and issue additional notes with the same terms as the notes offered here. It is anticipated and intended that any issuance will meet the requirements of warrant agreement,a "qualified reopening" for U.S. federal income tax purposes. Debt instruments issued in a qualified reopening of a previously issued debt instrument are deemed to be part of the same issue as the original debt instrument and will be deemed to have the same issue date and issue price. Since the initial notes were issued with no original issue discount, any additional issuance would be similarly treated. To meet the requirements of a qualified reopening, the additional notes must either (i) be issued within thirteen (13) days of the issuance of the original debt; (ii) be issued within six (6) months of the issuance of the original debt and the yield of the additional debt (based on its cash purchase price) is not in excess of 110% of the yield of the additional debt is not in excess of the yield of the original debt on its issue date; or (iii) if issued more than six (6) months after the issue date of the original debt the yield of the original debt on its issue date. Failure to meet the requirements of a qualified reopening will mean that additional debt will be treated as a separate issue and may (by virtue of its terms) have original issue discount that will have to be accounted for by a U.S. holder.
Additional Amounts
As described under the heading "Description of Notes — Events of Default" and "Description of Notes — Rule 144 Resales and Registration Rights," we may pay additional interest on the notes in certain circumstances. We intend to take the position that the possibility of such payments should not cause the notes to be treated as contingent payment debt instruments. This position is based in part on our assessment that the possibility, as of the date of issuance of the notes, that such additional amounts will be paid is remote. Assuming such position is respected, any additional interest paid to a U.S. Holder as described under the heading "Description of Notes — Events of Default" or "Description of Notes — Rule 144 Resales and Registration Rights" would be taxable as additional ordinary income when received or accrued, in accordance with such U.S. holder's method of accounting for U.S. federal income tax purposes.
Our position that the notes are not contingent payment debt instruments is binding on each U.S. holder unless such U.S. holder discloses its contrary position to the IRS in the manner required by applicable Treasury Regulations. Our position that the notes are not contingent payment debt instruments is not, however, binding on the IRS. If the IRS successfully challenged this position, and the notes were treated as contingent payment debt instruments because of the possibility of such payments or such increase, U.S. holders would, among other things, be required to accrue interest income at a higher rate than the stated
interest rate on the notes and to treat any gain recognized on the sale or other disposition of a note (including any gain realized on the conversion of a note) as ordinary income rather than as capital gain. The remainder of this discussion assumes that the notes are not treated as contingent payment debt instruments.
Market Discount
A U.S. holder that purchases a note for an amount that is less than its revised issue price (as defined in Section 1278 of the Code), may be treated as acquiring such note with "market discount." Subject to a de minimis exception, the "market discount" on a note with equal the amount, if any, includingby which its revised issue price exceeds the U.S. holder's adjusted tax basis in the note immediately after its acquisition.
If a formU.S. holder acquires a note at a market discount and does not elect to include market discount in income as it accrues, such U.S. holder will generally be required to treat any principal payment on or gain recognized on a sale, exchange or other taxable disposition of warrant certificate,the note as ordinary income to the extent of the accrued market discount on such note at the time of such principal payment on or sale, exchange or other taxable disposition. In addition, such U.S. holder may be required to include accrued market discount in income upon a disposition of a note in certain otherwise non-taxable transactions as if such U.S. holder sold the note for its fair market value. A U.S. holder that describesacquires a note at a market discount and does not elect to include market discount in income as it accrues may be required to defer the deduction of all or a portion of the interest expense on any indebtedness incurred or maintained to purchase or carry the note until maturity or a taxable disposition of the note.
A U.S. holder may elect to include market discount in income on a current basis as it accrues over the remaining term of the note (on either a ratable or constant-yield method). Once made, this election applies to all market discount obligations acquired by such U.S. holder on or after the first taxable year to which the election applies and may not be revoked without the consent of the IRS. If a U.S. holder makes such an election, the rules described above which treat gain realized on a note as ordinary income to the extent of accrued market discount and require deferral of certain interest deductions will not apply. The market discount rules are complex and U.S. holders should consult their own tax advisors regarding the application of these rules to their investment in the notes and the election to include market discount in income on a current basis.
Generally, upon conversion of a note acquired at a market discount into shares of common stock, any market discount not previously included in income (including as a result of the conversion) will carry over to the common shares received in exchange for the note. Any such market discount that is carried over to shares of common stock received upon conversion will be taxable as ordinary income upon the sale or other disposition of such shares of common stock (including a deemed sale or disposition of a fractional share of common stock pursuant to a conversion). U.S. holders holding notes acquired with a market discount should consult their own tax advisors as to the particular tax considerations to them of the application of the market discount rules following a conversion of notes into shares of common stock.
Amortizable Bond Premium
If a U.S. holder acquires a note for an amount that is greater than the sum of all amounts payable on the note after the acquisition date other than payments of stated interest (generally, the note's principal amount), such U.S. holder generally will be considered to have acquired the note with "amortizable bond premium." For purposes of determining the amount of any amortizable bond premium on a note, the purchase price for the note is reduced by the amount of the portion of the purchase price attributable to the note's conversion feature. In general, the amortizable bond premium with respect to a note will be equal to the excess, if any, of (1) the U.S. holder's adjusted tax basis in the note immediately after its acquisition reduced by an amount equal to the value of the note's conversion feature over (2) the note's principal amount.
A U.S. holder may elect to amortize such premium over the remaining term of the note using a constant-yield method. A U.S. holder generally may use the amortizable bond premium allocable to an accrual period to offset stated interest otherwise required to be included in income with respect to the note in that accrual period under the U.S. holder's regular method of accounting for U.S. federal income tax purposes. Once made, an election to amortize bond premium applies to all debt obligations held as of the beginning of the taxable year to which such election applies or subsequently acquired by such U.S. holder and may not be revoked without the consent of the IRS. U.S. holders holding notes acquired with amortizable bond premium should consult their own tax advisors as to the particular tax considerations of them acquiring the notes with amortizable bond premium.
Conversion of Notes
If a U.S. holder presents a note for conversion, a U.S. holder will receive shares of our common stock and may receive cash in lieu of a fractional share of common stock. As described in "Description of Notes — Conversion Rights — General," our delivery of common stock upon conversion will be deemed to satisfy our obligation with respect to accrued and unpaid interest on the notes. A U.S. holder will generally not recognize any income, gain or loss on the conversion, except with respect to cash received in lieu of a fractional share of common stock and the fair market value of any common stock attributable to accrued and unpaid interest, subject to the discussion below under "— Constructive Distributions" regarding the possibility that the adjustment to the conversion rate of notes converted in connection with a make-whole fundamental change or a notice of redemption if a holder elects to convert notes during the related redemption period may be treated as a deemed distribution. The U.S. holder's aggregate tax basis in the common stock (including any fractional share for which cash is paid, but excluding shares attributable to accrued interest) will equal the U.S. holder's tax basis in the note. The U.S. holder's holding period in the common stock (other than shares attributable to accrued interest) will include the holding period in the note.
Cash received in lieu of a fractional share of our common stock upon a conversion of a note should be treated as a payment in exchange for the fractional share of our common stock. Accordingly, the receipt of cash in lieu of a fractional share of our common stock should generally result in capital gain or loss, if any, measured by the difference between the cash received for the fractional share of our common stock and a U.S. holder's tax basis allocable to such fractional share of our common stock. A U.S. holder's tax basis in a fractional share of our common stock will be determined by allocating such holder's tax basis in the shares of our common stock between the shares of our common stock actually received and the fractional share of our common stock deemed received upon conversion, in accordance with their respective fair market values.
The fair market value of the shares of our common stock received by a U.S. holder with respect to accrued interest will be taxed as payment of interest and included as ordinary income in accordance with such holder's usual method of accounting for U.S. federal income tax purposes. A U.S. holder's tax basis in common stock attributable to accrued interest will equal its fair market value on the date of receipt and the holding period for such stock will commence on the day after the date of receipt.
Possible Effect of the Change in Conversion Consideration
In the event we undergo certain of the events described under "Description of Notes — Conversion Rights — Recapitalizations, Reclassifications and Changes of Our Common Stock" or "Description of Notes — Consolidation, Merger and Sale of Assets," the conversion rate and the related conversion consideration may be adjusted such that a U.S. holder would be entitled to convert its notes into shares, property or assets other than our common stock.
Depending on the facts and circumstances at the time of such event, such adjustment may result in a deemed exchange of the outstanding notes, which may be a taxable event for U.S. federal income tax purposes. Whether or not such an adjustment results in a deemed exchange of the outstanding notes, a subsequent conversion of the notes might be treated as a fully taxable disposition of the notes if the property into which the notes are convertible is no longer stock of the notes' obligor. Furthermore,
depending on the circumstances, the U.S. federal income tax considerations of the exchange or conversion of the notes as well as the ownership of the notes and the shares of our common stock may be different from the U.S. federal income tax considerations addressed herein. U.S. holders should consult their tax advisors regarding the U.S. federal income tax considerations of such an adjustment.
Constructive Distributions
The conversion rate of the notes will be adjusted in certain circumstances. Adjustments (or failures to make adjustments) that have the effect of increasing a U.S. holder's proportionate interest in our assets or earnings may in some circumstances result in a deemed distribution to a U.S. holder for U.S. federal income tax purposes even though no cash or property is received. Adjustments to the conversion rate made pursuant to a bona fide reasonable adjustment formula that has the effect of preventing the dilution of the interest of the holders of the notes, however, will generally not be considered to result in a deemed distribution to a U.S. holder. Certain of the possible conversion rate adjustments provided in the notes (including, without limitation, adjustments with respect to taxable dividends to holders of our common stock) will not qualify as being pursuant to a bona fide reasonable adjustment formula. If such adjustments are made, a U.S. holder will be deemed to have received a distribution even though the U.S. holder has not received any cash or property as a result of such adjustments. In addition, an adjustment to the conversion rate in connection with a make-whole fundamental change or a notice of redemption if a holder elects to convert notes during the related redemption period may be treated as a deemed distribution. Any deemed distributions will be taxable as a dividend, return of capital, or capital gain as described in "— Distributions" below. U.S. holders should consult with their tax advisors as to the U.S. federal income tax considerations to them of any adjustments (or failures to make adjustments) to the conversion rate of the notes and of constructive distributions.
As a constructive dividend deemed received by a U.S. holder would not give rise to any cash from which any applicable withholding could be satisfied, if backup withholding is paid on behalf of a U.S. holder (because such U.S. holder failed to establish an exemption from backup withholding), such backup withholding may be withheld from payments of cash and common stock payable on the notes (or, in certain circumstances, against any payments on the common stock, or offset against other assets of such U.S. holder). Generally, a U.S. holder's adjusted tax basis in a note will be increased to the extent any such constructive distribution is treated as a dividend.
We are currently required to report the amount of any deemed distributions on our website or to the IRS and to holders of notes not exempt from reporting. On April 12, 2016, the IRS proposed regulations addressing the amount and timing of deemed distributions, obligations of withholding agents and filing and notice obligations of issuers. If adopted as proposed, the regulations would generally provide that (i) the amount of a deemed distribution is the excess of the fair market value of the right to acquire stock immediately after the conversion rate adjustment over the fair market value of the right to acquire stock without the adjustment (determined at the same time), (ii) the deemed distribution occurs at the earlier of the date the adjustment occurs under the terms of the particular series of warrants we are offering. The following summaries of material provisionsnote and the date of the warrantsactual amount of any deemed distributions on our website or to the IRS and to all holders of notes (including holders of notes that would otherwise be exempt from reporting). The final regulations will be effective for deemed distributions occurring on or after the warrant agreementsdate of adoption, but holders of notes and withholding agents may rely on them prior to that date under certain circumstances.
Distributions
Distributions, if any, made on our common stock will generally be included in a U.S. holder's income as ordinary dividend income to the extent of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. However, with respect to dividends received by individuals, such dividends are generally taxes at the lower applicable long-term capital gains rates, provided certain holding period and other requirements are met. Distributions in excess of our current and accumulated earnings and profits will be treated as a return of capital to the extent of a U.S. holder's tax basis in the common stock
and thereafter as capital gain from the sale or exchange of such common stock. Dividends received by a corporation may be eligible for a dividends received deduction, subject to applicable limitations.
Sale, Exchange, Redemption, Repurchase or Other Taxable Disposition
Except as provided above under "— Conversion of Notes" and qualified in their entirety by reference"— Market Discount," a U.S. holder will generally recognize gain or loss upon the sale, exchange, redemption, repurchase or other taxable disposition of a note or our common stock, equal to all the provisionsdifference between the sum of the warrant agreementcash plus the fair market value of any other property received upon such disposition (excluding any amount attributable to accrued but unpaid interest on a note, which will be treated as described above under "— Interest") and warrant certificate applicablesuch U.S. holder's adjusted tax basis in the note or our common stock. A U.S. holder's adjusted tax basis in a note will generally be equal to the particular series of warrantsamount that we may offer under this prospectus. We urge you to read the applicable prospectus supplements relatedU.S. holder paid for the note, plus the amount, if any, included in income by the U.S. holder on an adjustment to the particular series of warrants that we may offer under this prospectus, as well as any related free writing prospectuses, and the complete warrant agreements and warrant certificates that contain the termsconversion rate of the warrants.
General
Wenotes, as described in "— Constructive Distributions" above. If, at the time of the sale, exchange, redemption, repurchase or other taxable disposition of the note or our common stock, a U.S. holder held such note or common stock for more than one year, such gain or loss will describe in the applicable prospectus supplement the terms relatingbe long-term capital gain or loss. Long-term capital gains recognized by certain non-corporate U.S. holders, including individuals, will general be subject to a seriesreduced rate of warrants being offered, including:
· the title of such securities;
· the offering price or prices and aggregate number of warrants offered;
· the currency or currencies for which the warrantsU.S. federal income tax. A U.S. holder's ability to deduct capital losses may be purchased;limited.
·Medicare Tax on Net Investment Income if applicable,
Generally, a 3.8% Medicare contribution tax is imposed on the designation and termsnet investment income of the securitiescertain individuals with which the warrants are issued and the numbera modified adjusted gross income of warrants issued with each such security or each principal amount of such security;
· if applicable, the date on and after which the warrants and the related securities will be separately transferable;
· if applicable, the minimum or maximum amount of such warrants which may be exercised at any one time;
·over $200,000 ($250,000 in the case of warrantsjoint filers) and on the undistributed net investment income of certain estates and trusts. Interest and dividends received (or deemed to purchase debt securities,be received) by holders of the principal amount of debt securities purchasable upon exercise of one warrantnotes and the price at which, and currency in which, this principal amount of debt securities may be purchased upon such exercise;
· in the case of warrants to purchaseour common stock and capital gains from the sale or preferredother disposition of notes or common stock generally will constitute net investment income and be subject to the number3.8% tax. U.S. holders that are individuals, estates or trusts should consult their tax advisors regarding the applicability of the Medicare tax to them.
Information Reporting and Backup Withholding
Information reporting requirements will generally apply to payments of interest on the notes (including any additional amounts) and dividends on shares of common stock (including any constructive dividends deemed paid) and to the proceeds of a sale of a note or preferredshare of common stock paid to a U.S. holder unless the U.S. holder is an exempt recipient (such as a corporation). Backup withholding (currently at a 24% rate) will apply to those payments if the U.S. holder fails to provide its correct taxpayer identification number, or certification of exempt status, or if the U.S. holder is notified by the IRS that it has failed to report in full payments of interest and dividend income. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S. holder's U.S. federal income tax liability provided the required information is furnished timely to the IRS.
Considerations for Non-U.S. Holders
Interest
Subject to the discussions of backup withholding and withholding on foreign accounts below, U.S. federal income tax and the 30% U.S. federal withholding tax will not be applied to any payment of interest on a note to a non-U.S. holder provided that:
Special certification rules apply to non-U.S. holders that are pass-through entities.
If a non-U.S. holder cannot satisfy the requirements described above, the gross amounts of interest paid will generally be subject to the 30% U.S. federal withholding tax, unless the non-U.S. holder provides the applicable withholding agent with a properly executed (1) IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable form) claiming an exemption from or reduction in withholding under the benefit of an applicable income tax treaty or (2) IRS Form W-8ECI (or other applicable form) stating that interest paid on the notes is not subject to withholding tax because it is effectively connected with the non-U.S. holder's conduct of a trade or business in the United States and includible in the non-U.S. holder's gross income. If a non-U.S. holder is engaged in a trade or business in the United States and interest on the notes is effectively connected with the conduct of that trade or business and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment or a U.S. fixed base, then the non-U.S. holder will be subject to U.S. federal income tax on that interest on a net income basis generally in the same manner as if the non-U.S. holder were a U.S. holder. In addition, if a non-U.S. holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or lesser rate under an applicable income tax treaty) of its earnings and profits for the taxable year, subject to adjustments, that are effectively connected with its conduct of a trade or business in the United States.
Dividends and Constructive Distributions
Distributions, if any, on our common stock (and any deemed dividends resulting from certain adjustments or failure to make adjustments to the conversion rate) will generally constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the non-U.S. holder's investment, up to such holder's adjusted tax basis in the common stock. Any remaining excess will be treated as capital gain from the sale or exchange of such common stock, subject to the tax treatment described below in "Sale, Exchange, Redemption, Repurchase or Conversion."
Subject to the discussion below regarding effectively connected income, backup withholding and foreign accounts, dividends paid to a non-U.S. holder will generally be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder's country of residence.
Dividends that are treated as effectively connected with a trade or business conducted by a non-U.S. holder within the United States and, if an applicable income tax treaty so requires, that are attributable to a permanent establishment or a fixed base maintained by the non-U.S. holder within the United States, are generally exempt from the 30% withholding tax if the non-U.S. holder satisfies applicable certification and disclosure requirements. However, such U.S. effectively connected income, net of specified deductions and credits, is taxed at the same graduated U.S. federal income tax rates applicable to U.S. persons (as defined in the Code). Any U.S. effectively connected income received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder's country of residence.
To claim a reduction or exemption from withholding, a non-U.S. holder will generally be required to provide (a) a properly executed IRS Form W-8BEN or W-8BEN-E (or successor form) and satisfy applicable certification and other requirements to claim the benefit of an applicable income tax treaty between the United States and such holder's country of residence, or (b) a properly executed IRS Form W-8ECI stating that dividends are not subject to withholding because they are effectively connected with such non-U.S. holder's conduct of a trade or business within the United States. Non-U.S. holders are urged to consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.
A non-U.S. holder that is eligible for a reduced rate of U.S. withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.
Sale, Exchange, Redemption, Repurchase or Conversion
Subject to the discussions of backup withholding and withholding on foreign accounts below, any gain realized by a non-U.S. holder on the sale, exchange, redemption, repurchase or other taxable disposition of a note or common stock or a conversion of notes will not be subject to U.S. federal income tax unless:
If a non-U.S. holder's gain is described in the first bullet point above, such holder will be subject to tax at regular graduated U.S. federal income tax rates on the net gain derived from the sale, exchange, redemption, repurchase, conversion or other taxable disposition of a note or common stock, generally in the same manner as if such holder were a U.S. holder. If a non-U.S. holder is a foreign corporation that recognizes gain described in the first bullet point above, such holder may also be subject to the branch profits tax equal to 30% (or such lower rate as may be prescribed under an applicable U.S. income tax treaty) of its effectively connected earnings and profits.
If a non-U.S. holder is described in the second bullet point above, such holder will be subject to a flat 30% tax on the gain recognized on the sale, exchange, redemption, repurchase, conversion or other taxable disposition of a note or common stock (which gain may be offset by certain U.S.-source capital losses), even though the holder is not considered a resident of the United States. Any amounts (including common stock) which a non-U.S. holder receives on a sale, exchange, redemption, repurchase, conversion or other taxable disposition of a note which are attributable to accrued interest will be taxable as interest and will be subject to the rules described above under "— Payments of Interest."
In general, we would be a USRPHC if the fair market value of our U.S. real property interests equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business. We believe that we are not, and we do not anticipate becoming, a USRPHC for U.S. federal income tax purposes. However, there can be no assurance that we will not become a USRPHC in the future. Even if we are or become a U.S. real property holding corporation, so long as our common stock remains regularly traded on an established securities market (as defined by applicable U.S. Treasury Regulations), our common stock will be treated as a U.S. real property interest only with respect to a non-U.S. holder that holds more than 5% of our outstanding common stock, directly or indirectly, actually or constructively, during the shorter of the 5-year period ending on the date of the
disposition or the period that the non-U.S. holder held our common stock. In such case, such non-U.S. holder generally will be taxed on its net gain derived from the disposition at the graduated U.S. federal income tax rates applicable to U.S. persons (as defined in the Code). No assurance can be provided that our common stock will continue to be regularly traded on an established securities market for purposes of the rules described above.
Information Reporting and Backup Withholding
We must report annually to the IRS and to each non-U.S. holder the amount of interest (including any additional amounts) and dividends (including constructive dividends) paid (or deemed paid) to non-U.S. holders and the priceamount of tax, if any, withheld with respect to those payments. Copies of the information returns reporting such interest, dividends and withholding may also be made available to the tax authorities in the country in which a non-U.S. holder resides under the provisions of an applicable income tax treaty. In general, a non-U.S. holder will not be subject to backup withholding with respect to payments of interest or dividends that we make, provided the statement described above in the last bullet point under "— Payments of Interest" has been received (and we or an applicable withholding agent does not have actual knowledge or reason to know that the holder is a U.S. person, as defined under the Code, that is not an exempt recipient). In addition, a non-U.S. holder will be subject to information reporting and, depending on the circumstances, backup withholding at which,a rate of 24% with respect to payments of the proceeds of the sale of a note or share of common stock within the United States or conducted through certain U.S.-related financial intermediaries, unless the statement described above has been received (and the payer does not have actual knowledge or reason to know that a holder is a U.S. person, as defined under the Code, that is not an exempt recipient) or the non-U.S. holder otherwise establishes an exemption. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a non-U.S. holder's U.S. federal income tax liability provided the required information is furnished timely to the IRS.
Withholding on Foreign Accounts
The Foreign Account Tax Compliance Act, or FATCA, imposes withholding at a 30% rate on certain types of "withholdable payments" (including interest or constructive dividends paid on, and, subject to the discussion of certain proposed U.S. Treasury Regulations below, the gross proceeds from the sale or other disposition of, certain debt instruments, and dividends paid on, and the currencygross proceeds from the sale or other disposition of, stock in a U.S. corporation) made to a "foreign financial institution" or to a "non-financial foreign entity" (all as defined in the Code) (whether such foreign financial institution or non-financial foreign entity is the beneficial owner or an intermediary), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any "substantial United States owners" (as defined in the Code) or furnishes identifying information regarding each substantial United States owner or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities (as defined in applicable Treasury Regulations), annually report certain information about such accounts and withhold 30% on payments to noncompliant foreign financial institutions and certain other account holders. Foreign governments may enter into an agreement with the IRS to implement FATCA in a different manner.
FATCA withholding currently applies to payments of interest on the notes and dividends on our shares of common stock. The U.S. Treasury recently released proposed regulations which, these shares may be purchased upon such exercise;
·if finalized in their present form, would eliminate the effectfederal withholding tax of any merger, consolidation,30% applicable to the gross proceeds of a sale or other disposition of our businesscommon stock. In its preamble to such proposed regulations, the U.S. Treasury stated that taxpayers may generally rely on the warrant agreementsproposed regulations until final regulations are issued. Prospective investors should consult their tax advisors regarding the application of FATCA to the notes and the warrants;our common stock.
· the terms of any rights to redeem or call the warrants;VALIDITY OF SECURITIES
· the terms of any rights to force the exercise of the warrants;
· any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
· the dates on which the right to exercise the warrants will commence and expire;
· the manner in which the warrant agreements and warrants may be modified;
· a discussion of any material or special U.S. federal income tax consequences of holding or exercising the warrants;
· the termsThe validity of the securities issuable upon exercise of the warrants; and
· any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
Before exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including:
· in the case of warrants to purchase debt securities, the right to receive payments of principal of, or premium, if any, or interest on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture; or
· in the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or, payments upon our liquidation, dissolution or winding up or to exercise voting rights, if any.
Exercise of Warrants
Each warrant will entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants at any time up to the specified time on the expiration date that we set forth in the applicable prospectus supplement. After the close of business on the expiration date, unexercised warrants will become void.
Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together with specified information, and paying the required amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement. We will set forth on the reverse side of the warrant certificate and in the applicable prospectus supplement the information that the holder of the warrantbeing offered hereby will be required to deliver to the warrant agent in connection with the exercise of the warrant.
Upon receipt of the required payment and the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasablepassed upon such exercise. If fewer than all of the warrants representedfor us by the warrant certificate are exercised, then we will issue a new warrant certificate for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender securities as all or part of the exercise price for warrants.
Governing Law
Unless we provide otherwise in the applicable prospectus supplement, the warrants and warrant agreements, and any claim, controversy or dispute arising under or related to the warrants or warrant agreements, will be governed by and construed in accordance with the laws of the State of New York.
Enforceability of Rights by Holders of Warrants
Each warrant agent will act solely as our agent under the applicable warrant agreement and will not assume any obligation or relationship of agency or trust with any holder of any warrant. A single bank or trust company may act as warrant agent for more than one issue of warrants. A warrant agent will have no duty or responsibility in case of any default by us under the applicable warrant agreement or warrant, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us.Cooley LLP, Reston, Virginia. Any holder of a warrant may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate legal action its right to exercise, and receive the securities purchasable upon exercise of, its warrants.
Outstanding Warrants to Purchase Common Stock
As of December 31, 2017, we had outstanding warrants to purchase 116,581 shares of common stock at an exercise price of $3.86 per share, which warrants expire June 30, 2026, warrants to purchase 63,025 shares of common stock at an exercise price of $2.38 per share, which warrants expire November 22, 2026, warrants to purchase 80,645 shares of common stock at an exercise price of $1.86 per share, which warrants expire on March 29, 2027, and warrants to purchase 167,570 shares of common stock at an exercise price of $1.79 per share, which warrants expire on November 2, 2020, July 14, 2021, and August 19, 2021. The number of shares of common stock issuable upon the exercise of each warrant is subject to adjustment from time to time upon the occurrence of specified events.
LEGAL OWNERSHIP OF SECURITIES
We can issue securities in registered form or in the form of one or more global securities. We describe global securities in greater detail below. We refer to those persons who have securities registered in their own names on the books that we or any applicable trustee or depositary maintain for this purpose as the “holders” of those securities. These persons are the legal holders of the securities. We refer to those persons who, indirectly through others, own beneficial interests in securities that are not registered in their own names, as “indirect holders” of those securities. As we discuss below, indirect holders are not legal holders, and investors in securities issued in book-entry form or in street name will be indirect holders.
Book-Entry Holders
We may issue securities in book-entry form only, as we will specify in the applicable prospectus supplement. This means securities may be represented by one or more global securities registered in the name of a financial institution that holds them as depositary on behalf of other financial institutions that participate in the depositary’s book-entry system. These participating institutions, which are referred to as participants, in turn, hold beneficial interests in the securities on behalf of themselves or their customers.
Only the person in whose name a security is registered is recognized as the holder of that security. Global securities will be registered in the name of the depositary or its participants. Consequently, for global securities, we will recognize only the depositary as the holder of the securities, and we will make all payments on the securities to the depositary. The depositary passes along the payments it receives to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so under agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the securities.
As a result, investors in a global security will not own securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds an interest through a participant. As long as the securities are issued in global form, investors will be indirect holders, and not legal holders, of the securities.
Street Name Holders
We may terminate a global security or issue securities that are not issued in global form. In these cases, investors may choose to hold their securities in their own names or in “street name.” Securities held by an investor in street name would be registered in the name of a bank, broker or other financial institution that the investor chooses, and the investor would hold only a beneficial interest in those securities through an account he or she maintains at that institution.
For securities held in street name, we or any applicable trustee or depositary will recognize only the intermediary banks, brokers and other financial institutions in whose names the securities are registered as the holders of those securities, and we or any such trustee or depositary will make all payments on those securities to them. These institutions pass along the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required to do so. Investors who hold securities in street name will be indirect holders, not holders, of those securities.
Legal Holders
Our obligations, as well as the obligations of any applicable trustee or third party employed by us or a trustee, run only to the legal holders of the securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a security or has no choice because we are issuing the securities only in global form.
For example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with its participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, we may want to obtain the approval of the holders to amend an indenture, to relieve us of the consequences of a default or of our obligation to comply with a particular provision of an indenture, or for other purposes. In such an event, we would seek approval only from the holders, and not the indirect holders, of the securities. Whether and how the legal holders contact the indirect holders is up to the legal holders.
Special Considerations for Indirect Holders
If you hold securities through a bank, broker or other financial institution, either in book-entry form because the securities are represented by one or more global securities or in street name, you should check with your own institution to find out:
· how it handles securities payments and notices;
· whether it imposes fees or charges;
· how it would handle a request for the holders’ consent, if ever required;
· whether and how you can instruct it to send you securities registered in your own name so you can be a holder, if that is permitted in the future;
· how it would exercise rights under the securities if there were a default or other event triggering the need for holders to act to protect their interests; and
· if the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.
Global Securities
A global security is a security that represents one or any other number of individual securities held by a depositary. Generally, all securities represented by the same global securities will have the same terms.
Each security issued in book-entry form will be represented by a global security that we issue to, deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for all securities issued in book-entry form.
A global security may not be transferred to or registered in the name of anyone other than the depositary, its nominee or a successor depositary, unless special termination situations arise. We describe those situations below under “—Special Situations When a Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and legal holder of all securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that does. Thus, an investor whose security is represented by a global security will not be a legal holder of the security, but only an indirect holder of a beneficial interest in the global security.
If the prospectus supplement for a particular security indicates that the security will be issued as a global security, then the security will be represented by a global security at all times unless and until the global security is terminated. If termination occurs, we may issue the securities through another book-entry clearing system or decide that the securities may no longer be held through any book-entry clearing system.
Special Considerations for Global Securities
As an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s financial institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize an indirect holder as a holder of securities and instead deal only with the depositary that holds the global security.
If securities are issued only as global securities, an investor should be aware of the following:
· an investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his or her interest in the securities, except in the special situations we describe below;
· an investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection of his or her legal rights relating to the securities, as we describe above;
· an investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are required by law to own their securities in non-book-entry form;
· an investor may not be able to pledge his or her interest in the global security in circumstances where certificates representing the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective;
· the depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor’s interest in the global security;
· we and any applicable trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership interests in the global security, nor will we or any applicable trustee supervise the depositary in any way;
· the depositary may, and we understand that DTC will, require that those who purchase and sell interests in the global security within its book-entry system use immediately available funds, and your broker or bank may require you to do so as well; and
· financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in the global security, may also have their own policies affecting payments, notices and other matters relating to the securities.
There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible for the actions of any of those intermediaries.
Special Situations When a Global Security Will Be Terminated
In a few special situations described below, a global security will terminate and interests in it will be exchanged for physical certificates representing those interests. After that exchange, the choice of whether to hold securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in securities transferred to their own names, so that they will be direct holders. We have described the rights of holders and street name investors above.
A global security will terminate when the following special situations occur:
· if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security and we do not appoint another institution to act as depositary within 90 days;
· if we notify any applicable trustee that we wish to terminate that global security; or
· if an event of default has occurred with regard to securities represented by that global security and has not been cured or waived.
The applicable prospectus supplement may also list additional situations for terminating a global security that would apply only to the particular series of securities covered by the prospectus supplement. When a global security terminates, the depositary, and neither we nor any applicable trustee, is responsible for deciding the names of the institutions that will be the initial direct holders.
PLAN OF DISTRIBUTION
We may sell the securities from time to time pursuant to underwritten public offerings, negotiated transactions, block trades or a combination of these methods. We may sell the securities to or through underwriters or dealers, through agents, or directly to one or more purchasers. We may distribute securities from time to time in one or more transactions:
· at a fixed price or prices, which may be changed;
· at market prices prevailing at the time of sale;
· at prices related to such prevailing market prices; or
· at negotiated prices.
We may also sell equity securities covered by this registration statement in an “at the market” offering as defined in Rule 415 under the Securities Act. Such offering may be made into an existing trading market for such securities in transactions at other than a fixed price on or through the facilities of the NYSE American or any other securities exchange or quotation or trading service on which such securities may be listed, quoted or traded at the time of sale.
Such at the market offerings, if any, may be conducted by underwriters acting as principal or agent.
A prospectus supplement or supplements (and any related free writing prospectus that we may authorize to be provided to you) will describe the terms of the offering of the securities, including, to the extent applicable:
· the name or names of any underwriters, dealers or agents, if any;
· the purchase price of the securities and the proceeds we will receive from the sale;
· any over-allotment options under which underwriters may purchase additional securities from us;
· any agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation;
· any public offering price;
· any discounts or concessions allowed or reallowed or paid to dealers; and
· any securities exchange or market on which the securities may be listed.
Only underwriters named in the prospectus supplement are underwriters of the securities offered by the prospectus supplement.
If underwriters are used in the sale, they will acquire the securities for their own account and may resell the securities from time to time in one or more transactions at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject to the conditions set forth in the applicable underwriting agreement. We may offer the securities to the public through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Subject to certain conditions, the underwriters will also be obligated to purchase all of the securities offered by the prospectus supplement. Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers may change from time to time. We may use underwriters with whom we have a material relationship. We will describe in the prospectus supplement, naming the underwriter, the nature of any such relationship.
We may sell securities directly or through agents we designate from time to time. We will name any agent involved in the offering and sale of securities, and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus supplement states otherwise, our agent will act on a best-efforts basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by certain types of institutional investors to purchase securities from us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. We will describe the conditions to these contracts and the commissions we must pay for solicitation of these contracts in the prospectus supplement.
We may provide agents and underwriters with indemnification against civil liabilities related to this offering, including liabilities under the Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect to these liabilities. Agents and underwriters may engage in transactions with, or perform services for, us in the ordinary course of business.
All securities we offer, other than common stock, will be new issues of securities with no established trading market. Any underwriters may make a market in these securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot guarantee the liquidity of the trading markets for any securities.
Any underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids. Overallotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Short covering transactions involve purchases of the securities in the open market after the distribution is completed to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a stabilizing or covering transaction to cover short positions. Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time. These transactions may be effected on any exchange or over-the-counter market or otherwise.
Any underwriters who are qualified market makers on the NYSE American may engage in passive market making transactions in the securities on the NYSE American in accordance with Rule 103 of Regulation M, during the business day prior to the pricing of the offering, before the commencement of offers or sales of the securities. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
In compliance with guidelines of the Financial Industry Regulatory Authority, or FINRA, the maximum consideration or discount to be received by any FINRA member or independent broker dealer may not exceed 8% of the aggregate amount of the securities offered pursuant to this prospectus and any applicable prospectus supplement.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement, certain legal matters in connection with the offering andadvised about the validity of the securities offeredand other legal matters by this prospectus, and any supplement thereto,their own counsel, which will be passed upon by Cooley LLP, Reston, Virginia.named in the applicable prospectus supplement.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements included in ourAnnual Report on Form 10-K for the year ended December 31, 2017,2018, as set forth in their report (which contains an explanatory paragraph describing conditions that raise substantial doubt about the Company’sour ability to continue as a going concern as described in Note 2 to the consolidated financial statements), 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’sLLP'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 we filed with the SEC. This prospectus does not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further information with respect to us and the securities we are offering under this prospectus, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. You should rely only on the information contained in this prospectus or incorporated by reference in this prospectus. We have not authorized anyone else 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 is accurate as of any date other than the date on the front page of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities offered by this prospectus.
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy the registration statement, as well as any other document filed by us with the SEC, at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. You can also request copies of these documents by writing to the SEC and paying a fee for the copying cost. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC, including us. The address of the SEC website is www.sec.gov.
We maintain a website at www.senseonics.com. Information contained in or accessible through our website does not constitute a part of this prospectus.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The SEC file number for the documents incorporated by reference in this prospectus is 001-37717. The documents incorporated by reference into this prospectus contain important information that you should read about us.
The following documents are incorporated by reference into this document:
·Table of Contents our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and filed with the SEC on March 13, 2018;
· our Current Reports on Form 8-K filed with the SEC on January 25, 2018, January 26, 2018 (as amended by Amendment No. 1 filed on January 26, 2018) and January 30, 2018, to the extent the information in such reports is filed and not furnished; and
· the description of our common stock, which is registered under Section 12 of the Exchange Act, in our registration statement on Form 8-A, filed with the SEC on March 11, 2016, including any amendments or reports filed for the purpose of updating such description.
We also incorporate by reference into this prospectus all documents (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to such items) that are filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date of the initial filing of the registration statement of which this prospectus forms a part and prior to effectiveness of the registration statement, or (ii) after the date of this prospectus but prior to the termination of the offering. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, without charge upon written or oral request, a copy of any or all of the documents that are incorporated by reference into this prospectus but not delivered with the prospectus, including exhibits that are specifically incorporated by reference into such documents. You should direct any requests for documents to Senseonics Holdings, Inc., Attn: Investor Relations, 20451 Seneca Meadows Parkway, Germantown, MD 20876-7005, telephone: (301) 515-7260.
Any statement contained in this prospectus or contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded to the extent that a statement contained in this prospectus or any subsequently filed supplement to this prospectus, or document deemed to be incorporated by reference into this prospectus, modifies or supersedes such statement.
The information contained in this 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 prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, Dated March 30, 2018
PROSPECTUS
$50,000,000
Senseonics Holdings, Inc.
Common Stock
We have entered into a sales agreement with Cowen and Company, LLC, or Cowen, 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 $50.0 million from time to time through Cowen acting as our agent.
Our common stock is listed on the NYSE American under the symbol “SENS.” On March 28, 2018, the last reported sale price of our common stock was $2.79 per share.
Sales of our common stock, if any, under this prospectus will be made in sales deemed to be “at the market offerings” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, or the Securities Act. Cowen is not required to sell any specific amount of securities, but will act as our sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between Cowen and us. There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
The compensation to Cowen for sales of common stock sold pursuant to the sales agreement will be an amount equal to 3% of the gross proceeds of any shares of common stock sold under the sales agreement. See “Plan of Distribution” beginning on page 15 for additional information regarding the compensation to be paid to Cowen. In connection with the sale of the common stock on our behalf, Cowen will be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of Cowen will be deemed to be underwriting commissions or discounts. We have also agreed to provide indemnification and contribution to Cowen with respect to certain liabilities, including liabilities under the Securities Act or the Exchange Act of 1934, as amended.
Our business and an investment in our common stock involve significant risks. These risks are described under the caption “Risk Factors” beginning on page 7 of this prospectus and in the documents 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 passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Cowen
, 2018
TABLE OF CONTENTS
Prospectus
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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. 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 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.
You should rely only on the information contained in or incorporated by reference in this prospectus and in any free writing prospectus that we have authorized for use in connection with this offering. We have not, and the sales agent has not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the sales agent is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus, the documents incorporated by reference in this prospectus, and in any free writing prospectus that we have authorized for use in connection with this offering, is accurate only as of the date of those respective documents. Our business, financial condition, results of operations and prospects may have changed since those dates. You should read this prospectus, the documents incorporated by reference in this prospectus, and any free writing prospectus that we have authorized for use in connection with this offering, in their entirety before making an investment decision.
Unless the context indicates otherwise, as used in this prospectus, the terms “Senseonics,” “the Company,” “we,” “us” and “our” refer to Senseonics Holdings, Inc. and, where appropriate, our subsidiary.
PROSPECTUS SUMMARY
This summary highlights certain information about us, this offering and selected information contained elsewhere in or incorporated by reference into this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our common stock. For a more complete understanding of our company and this offering, we encourage you to read and consider carefully the more detailed information in this prospectus, including the information incorporated by reference in this prospectus, and the information included in any free writing prospectus that we have authorized for use in connection with this offering, including the information under the heading “Risk Factors” in this prospectus on page 5 and in the documents incorporated by reference into this prospectus.
Company Overview
We are a medical technology company focused on the design, development and commercialization of glucose monitoring products to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. Our continuous glucose monitoring, or CGM, systems, Eversense and Eversense XL, are reliable, long-term, implantable CGM systems that we have designed to continually and accurately measure glucose levels in people with diabetes for a period of up to 90 and 180 days, respectively, as compared to six to fourteen days for currently available CGM systems. We believe Eversense and Eversense XL will provide people with diabetes with a more convenient method to monitor their glucose levels in comparison to the traditional method of self-monitoring of blood glucose, or SMBG, as well as currently available CGM systems. In our U.S. pivotal clinical trial, we observed that Eversense measured glucose levels over 90 days with a degree of accuracy superior to that of other currently available CGM systems. Our Eversense and Eversense XL systems are currently approved for sale in Europe and we submitted our pre-market approval, or PMA, application for Eversense to the U.S. Food and Drug Administration, or FDA, in October 2016. On March 29, 2018, we had a meeting with the FDA Clinical Chemistry and Clinical Toxicology Devices Panel, during which the panel voted that the Eversense benefits outweighed the risks by a count of 8 to 0. The panel also voted 8 to 0 in favor of the safety and 8 to 0 in favor of the efficacy of Eversense. We anticipate that FDA’s decision on our PMA application might occur within two to four months following the panel meeting. If we receive FDA approval, we intend to initiate commercial launch in the United States promptly following the receipt of PMA approval.
Diabetes is a chronic, life-threatening disease for which there is no known cure. The disease is caused by the body’s inability to produce or effectively utilize the hormone insulin, which prevents the body from adequately regulating blood glucose levels. If diabetes is not managed properly, it can lead to serious health conditions and complications, including heart disease, limb amputations, loss of kidney function, blindness, seizures, coma and even death. According to the 2017 International Diabetes Federation Atlas, an estimated 425 million people worldwide had diabetes as of the date of the report. The number of people with diabetes worldwide is estimated to grow to 629 million by 2045, driven primarily by growth in Type 2 diabetes and due to various reasons, including changes in dietary trends, an aging population and increased prevalence of the disease in younger people. Diabetes is typically classified into two primary types. Type 1 diabetes is an autoimmune disorder that usually develops during childhood and is characterized by the inability of the body to produce insulin, resulting from destruction of the insulin producing beta cells of the pancreas. Type 2 diabetes is a metabolic disorder that results when the body is unable to produce sufficient amounts of insulin or becomes insulin resistant. People with Type 1 diabetes must administer insulin, either by injection or insulin pump, to survive. People with Type 2 diabetes may require diet and nutrition management, exercise, oral medications or the administration of insulin to regulate blood glucose levels. In the next few years, we expect the growth in sales of CGM systems to be driven primarily by increased penetration of CGM in the Type 1 diabetic population.
In an attempt to maintain blood glucose levels within the normal range, many people with diabetes seek to actively monitor their blood glucose levels. The traditional SMBG method of glucose monitoring requires lancing the fingertips, commonly referred to as fingersticks, multiple times per day and night to obtain a blood drop to be applied to a test strip inside a blood glucose meter. This method of monitoring glucose levels is inconvenient and can be painful and, because each measurement represents a single blood glucose value at a single point in time, it provides limited information regarding trends in blood glucose levels. In contrast, CGM systems are generally less painful and involve the insertion of sensors into the body to measure glucose levels in the interstitial fluid throughout the day and night, providing real-time data that shows trends in glucose measurements. Since CGM measurements from interstitial tissue are inherently less accurate than test-strip measurements made directly from the blood, the FDA and other device regulators historically have required that CGMs be labeled and marketed as “adjunctive” to test-strip measurements, with instructions that patients confirm CGM measurements with test-strip measurements using blood obtained from fingersticks prior to self-medicating. Recent improvements in the accuracy of CGM systems have led to the FDA issuing the first “non-adjunctive” label in 2016. We expect that the approval of the Eversense PMA will have an “adjunctive” label initially. Our plans will be to pursue a “non-adjunctive” label as soon
as possible. Currently available CGM systems are often inconvenient, requiring frequent sensor replacement and an extra device, called a receiver, to monitor glucose readings, and have limited safety features.
We believe we have an $18.0 billion market potential in the United States for our products and systems. According to the National Diabetes Statistics Report, as of the end of 2015, there are approximately 23 million patients diagnosed with diabetes in the United States. We estimate that 6.9 million of these diabetes patients take insulin.
European Development and Commercialization of Eversense
In May 2016, we received our CE mark for Eversense, which allows us to market and sell Eversense in Europe. In connection with our CE Mark, we have agreed to conduct post-market surveillance activities. In June 2016, we commenced commercialization of Eversense in Sweden through our exclusive distribution agreement with Rubin Medical, or Rubin, which also has the right to distribute Eversense in Norway and Denmark. Rubin markets and sells medical products for diabetes treatment in the Scandinavian region.
In May 2016, we entered into a distribution agreement with Roche Diagnostics International AG and Roche Diabetes Care GmbH, together referred to as Roche, pursuant to which we granted Roche the exclusive right to market, sell and distribute Eversense in Germany, Italy and the Netherlands. In November 2016, we entered into an amendment to the distribution agreement granting Roche the exclusive right to market, sell and distribute Eversense in Europe, the Middle East and Africa, excluding Sweden, Norway, Denmark, Finland and Israel. Roche is a pioneer in the development of blood glucose monitoring systems and a global leader for diabetes management systems and services. We began distributing Eversense through Roche in Germany in September 2016 and in Italy and the Netherlands in the fourth quarter of 2016. To date, we have begun distributing Eversense in an aggregate of 13 European countries through Rubin and Roche.
In September 2017, we received the CE Mark for Eversense XL, which is indicated for a sensor life of up to 180 days. Eversense XL began commercialization in Europe in the fourth quarter of 2017. In addition, in February 2018, we received approval to market Eversense NOW, which is an application designed to remotely monitor the Eversense users’ CGM data in real time.
United States Development of Eversense
In 2016, we completed our Precise II pivotal clinical trial in the United States. This trial, which was fully enrolled with 90 subjects, was conducted at eight sites in the United States. In the trial, we measured the accuracy of Eversense measurements through 90 days after insertion. We also assessed safety through 90 days after insertion or through sensor removal. In the trial, we observed a mean absolute relative difference, or MARD, of 8.5% utilizing two calibration points for Eversense across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. We also observed a MARD of 9.5% utilizing one calibration point for Eversense across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. Based on the data from this trial, in October 2016 we submitted a pre-market approval, or PMA, application to the FDA to market Eversense in the United States for 90-day use. On March 29, 2018, we had a meeting with the FDA Clinical Chemistry and Clinical Toxicology Devices Panel, during which the panel voted that the Eversense benefits outweighed the risks by a count of 8 to 0. The panel also voted 8 to 0 in favor of the safety and 8 to 0 in favor of the efficacy of Eversense. We anticipate that FDA’s decision on our PMA application might occur within two to four months following the panel meeting. However, the ultimate timing of FDA’s decision is uncertain and will depend on many factors. Accordingly, we cannot guarantee the timing of receipt of PMA approval, if at all. For commercialization in the United States, we intend to distribute our product through our own direct sales and marketing organization. We have received Category III CPT codes for the insertion and removal of the Eversense sensor. We intend to pursue a Category I CPT code in the future.
Risks Associated with our Business
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary and those described under similar headings in the documents incorporated by reference into this prospectus. These risks include:
· We have incurred significant operating losses since inception and cannot assure you that we will ever achieve or sustain profitability.
· We have limited commercialization experience in Europe, and our products are not yet approved for sale in the United States. If we are unable to successfully receive regulatory approval for and commercialize Eversense in the United States, or if we experience significant delays in doing so, our business will be harmed.
· We are dependent on one product, Eversense. Our success depends on our ability to continue to develop, commercialize and gain market acceptance for our products.
· Failure to secure or retain coverage or adequate reimbursement for Eversense or future versions of Eversense systems, including the related insertion and removal procedures, by third-party payors could adversely affect our business, financial condition and operating results.
· If important assumptions we have made about what people with intensively managed diabetes are seeking in a CGM system are inaccurate, our business and operating results may be adversely affected.
· We operate in a very competitive industry and if we fail to compete successfully against our existing or potential competitors, many of whom have greater resources than we have, our sales and operating results may be negatively affected.
· The size and future growth in the market for CGM systems and CGM-related products has not been established with precision and may be smaller than we estimate, possibly materially. If our estimates and projections overestimate the size of this market, our sales growth may be adversely affected.
· If we are unable to establish a sales and marketing infrastructure, we may not be successful in commercializing Eversense in the United States, even if we receive regulatory approval.
· Our ability to maintain and grow our revenue will depend on establishing a customer base and retaining a high percentage of our customer base.
· We have a limited operating history as a commercial-stage company and may face difficulties encountered by companies early in their commercialization in competitive and rapidly evolving markets.
· We contract with third parties for the manufacture of Eversense for clinical testing and expect to continue to do so for commercialization. Risks associated with the manufacturing of our products could reduce our gross margins and negatively affect our operating results.
· We will need to raise substantial additional funds in the future, and these funds may not be available on acceptable terms or at all. A failure to obtain this necessary capital when needed could force us to delay, limit, scale back or cease some or all operations. As a result, our registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017.
Corporate Information
We were originally incorporated as ASN Technologies, Inc. in Nevada on June 26, 2014. On December 7, 2015, pursuant to a merger agreement and the transactions contemplated thereby, or the Acquisition, we acquired Senseonics, Incorporated, a medical technology company focused on the design, development and commercialization of glucose monitoring systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. From its inception in 1996 until 2010, Senseonics, Incorporated devoted substantially all of its resources to researching various sensor technologies and platforms. Beginning in 2010, the company narrowed its focus to designing, developing and refining a commercially viable glucose monitoring system.
In connection with the Acquisition, we reincorporated in Delaware and changed our name to Senseonics Holdings, Inc. Upon the closing of the Acquisition, Senseonics, Incorporated merged with a wholly-owned subsidiary of ours formed solely for that purpose and became our wholly-owned subsidiary.
Our principal executive offices are located at 20451 Seneca Meadows Parkway, Germantown, Maryland 20876-7005. Our telephone number is (301) 515-7260. Our website is located at http://www.senseonics.com. We do not incorporate by reference into this prospectus the information on, or accessible through, our website, and you should not consider it as part of this prospectus.
Implications of Being an Emerging Growth Company
We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of relief from some of the reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include:
· being permitted to provide only two years of audited financial statements, 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;
· not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
· not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
· reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and
· not being required to hold a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (b) December 31, 2019; (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous six years; or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. We may choose to take advantage of some but not all of these reduced burdens. For example, we have taken advantage of the reduced reporting requirements with respect to disclosure regarding our executive compensation arrangements, have presented only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in our public filings, and have taken advantage of the exemption from auditor attestation on the effectiveness of our internal control over financial reporting. To the extent that we take advantage of these reduced burdens, the information that we provide stockholders may be different than you might obtain from other public companies in which you hold equity interests.
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
THE OFFERING
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RISK FACTORS
Investing in our securities involves a high degree of risk. You should carefully review the risks and uncertainties described below and under the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, as updated by our annual, quarterly and other reports and documents that are incorporated by reference into this prospectus, before deciding whether to purchase any of the securities being registered pursuant to the registration statement of which this prospectus is a part. Each of the risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our securities, and the occurrence of any of these risks might cause you to lose all or part of your investment. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. Please also read carefully the section below titled “Special Note Regarding Forward-Looking Statements.”
ADDITIONAL RISKS RELATED TO THIS OFFERING
You may experience dilution.
The offering price per share in this offering may exceed the net tangible book value per share of our common stock outstanding prior to this offering. Assuming that an aggregate of 17,921,146 shares of our common stock are sold at a price of $2.79 per share, the last reported sale price of our common stock on the NYSE American on March 28, 2018, for aggregate gross proceeds of $50.0 million, and after deducting commissions and estimated offering expenses payable by us, you would experience immediate dilution of $2.43 per share, representing the difference between our as adjusted net tangible book value per share as of December 31, 2017 after giving effect to this offering and the assumed offering price. The exercise of outstanding stock options or warrants would result in further dilution of your investment. See the section entitled “Dilution” below for a more detailed illustration of the dilution you would incur if you participate in this offering. Because the sales of the shares offered hereby will be made directly into the market or in negotiated transactions, the prices at which we sell these shares will vary and these variations may be significant. Purchasers of the shares we sell, as well as our existing shareholders, will experience significant dilution if we sell shares at prices significantly below the price at which they invested.
Our management might apply the net proceeds from this offering in ways with which you do not agree and in ways that may impair the value of your investment.
We currently intend to use the net proceeds from this offering to begin commercialization of Eversense in the United States, if approved, to fund continued research and development of future configurations of Eversense, and for working capital and general corporate purposes. Pending these uses, we expect to invest the net proceeds in investment-grade, interest-bearing securities. Our management has broad discretion as to the use of these proceeds and you will be relying on the judgment of our management regarding the application of these proceeds. We might apply these proceeds in ways with which you do not agree, or in ways that do not yield a favorable return. If our management applies these proceeds in a manner that does not yield a significant return, if any, on our investment of these net proceeds, it could compromise our ability to pursue our growth strategy and adversely affect the market price of our common stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference herein contain forward-looking statements. These are based on our management’s current beliefs, expectations and assumptions about future events, conditions and results and on information currently available to us. Discussions containing these forward-looking statements may be found, among other places, in the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the documents incorporated by reference herein.
Any statements in this prospectus, or incorporated herein, about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. Within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, these forward-looking statements include statements regarding:
· the timing of, and our ability to obtain and maintain regulatory approval of, Eversense in the United States;
· our ability to maintain regulatory approval of Eversense and Eversense XL in Europe;
· the clinical utility of Eversense;
· our ability to develop future generations of Eversense;
· our ability to access our credit facilities in the future;
· the timing and availability of data from our clinical trials;
· the timing of our planned regulatory filings;
· our future development priorities;
· our ability to obtain adequate reimbursement and third-party payor coverage for Eversense;
· our expectations about the willingness of healthcare providers to recommend Eversense to people with diabetes;
· our commercialization, marketing and manufacturing capabilities and strategy;
· our ability to comply with applicable regulatory requirements;
· our ability to maintain our intellectual property position;
· our estimates regarding the size of, and future growth in, the market for CGM systems;
· our estimates regarding the period of time for which our current capital resources will be sufficient to fund our continued operations; and
· our estimates regarding our future expenses and needs for additional financing.
In some cases, you can identify forward-looking statements by the words “may,” “might,” “can,” “will,” “to be,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “likely,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these words. These statements 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 the information expressed or implied by these forward-looking statements.
You should refer to the “Risk Factors” section contained in this prospectus and any related free writing prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Given these risks, uncertainties and other factors, many of which are beyond our control, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate, and you should not place undue reliance on these forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.
Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to revise any forward-looking statements to reflect events or developments occurring after the date of this prospectus, even if new information becomes available in the future.
USE OF PROCEEDS
We may issue and sell shares of our common stock having aggregate sales proceeds of up to $50.0 million from time to time. Because there is no minimum offering price for the shares that we may offer from time to time, the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this time. There can be no assurance that we will sell any shares under or fully utilize the sales agreement with Cowen as a source of financing.
We currently intend to use the net proceeds from this offering to begin commercialization of Eversense in the United States, if approved, to fund continued research and development of future configurations of Eversense, and for working capital and general corporate purposes. We may also use a portion of the net proceeds to invest in or acquire businesses or technologies that we believe are complementary to our own, although we have no current plans, commitments or agreements with respect to any acquisitions as of the date of this prospectus. Pending these uses, we expect to invest the net proceeds in investment-grade, interest-bearing securities.
DILUTION
Our net tangible book value as of December 31, 2017 was approximately $7.3 million, or $0.05 per share. Net tangible book value per share is determined by dividing our total tangible assets, less total liabilities, by the number of shares of our common stock outstanding as of December 31, 2017. Dilution with respect to net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the net tangible book value per share of our common stock immediately after this offering.
After giving effect to the sale of 17,921,146 shares of our common stock in this offering at an assumed offering price of $2.79 per share, the last reported sale price of our common stock on the NYSE American on March 28, 2018, and after deducting estimated offering commissions and offering expenses payable by us, our as adjusted net tangible book value as of December 31, 2017 would have been approximately $55.6 million, or $0.36 per share. This represents an immediate increase in net tangible book value of $0.31 per share to existing stockholders and immediate dilution of $2.43 per share to investors purchasing our common stock in this offering at the assumed public offering price. The following table illustrates this dilution on a per share basis:
Assumed public offering price per share |
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| $ | 2.79 |
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Net tangible book value per share of as December 31, 2017 |
| $ | 0.05 |
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Increase in net tangible book value per share attributable to this offering |
| $ | 0.31 |
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As adjusted net tangible book value per share as of December 31, 2017, after giving effect to this offering |
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| $ | 0.36 |
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Dilution per share to investors purchasing our common stock in this offering |
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| $ | 2.43 |
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The above discussion and table are based on 136,882,735 shares of our common stock outstanding as of December 31, 2017, and exclude:
· 16,395,080 shares of our common stock issuable upon the exercise of stock options outstanding as of December 31, 2017, at a weighted-average exercise price of $1.61 per share;
· 4,427,086 shares of common stock issuable upon the exercise of warrants outstanding as of December 31, 2017, at a weighted-average exercise price of $1.85 per share; and
· 4,290,617 shares of common stock reserved for future issuance under our equity incentive plans as of December 31, 2017 consisting of (a) 2,554,921 shares of common stock reserved for future issuance under the Amended and Restated 2015 Equity Incentive Plan, and (b) 1,735,696 shares of common stock reserved for issuance under the 2016 Employee Stock Purchase Plan.
The table above assumes for illustrative purposes that an aggregate of 17,921,146 shares of our common stock are offered during the term of the sales agreement with Cowen at a price of $2.79 per share, the last reported sale price of our common stock on the NYSE American on March 28, 2018, for aggregate gross proceeds of $50.0 million. The shares subject to the sales agreement with Cowen are being sold from time to time at various prices.
To the extent that outstanding stock options or warrants outstanding as of December 31, 2017 have been or may be exercised or other shares issued, investors purchasing our common stock in this offering may experience further dilution. In addition, we may choose to raise additional capital 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 additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock and provisions of our amended and restated certificate of incorporation and amended and restated bylaws are summaries. You should also refer to the amended and restated certificate of incorporation and the amended and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus is part.
General
Our amended and restated certificate of incorporation authorizes us to issue up to 250,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.001 par value per share, all of which shares of preferred stock were undesignated as of December 31, 2017. Our board of directors may establish the rights and preferences of the preferred stock from time to time. As of December 31, 2017, we had outstanding 136,882,735 shares of common stock.
Common Stock
Voting Rights
Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Under our certificate of incorporation and bylaws, our stockholders do not have cumulative voting rights. Because of this, the holders of a majority of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they should so choose.
Dividends
Holders of common stock are entitled to receive ratably those dividends, if any, as may be declared from time to time by the board of directors out of legally available funds.
Liquidation
In the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders.
Rights and Preferences
Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.
Preferred Stock
Pursuant to our amended and restated certificate of incorporation, our board of directors has the authority, without further action by the stockholders (unless such stockholder action is required by applicable law or stock exchange listing rules), to designate and issue up to 5,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the designations, powers, preferences, privileges and relative participating, optional or special rights and the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.
Our board of directors, without stockholder approval, can issue preferred stock with voting, conversion or other rights that could adversely affect the voting power and other rights of the holders of common stock. Preferred stock could be issued quickly with terms designed to delay or prevent a change in control of our company or make removal of management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of the common stock and may adversely affect the voting power of holders of common stock and reduce the likelihood that common stockholders will receive dividend payments and payments upon liquidation.
Our board of directors will fix the designations, voting powers, preferences and rights of the each series, as well as the
qualifications, limitations or restrictions thereof, of the preferred stock of each series that we offer under this prospectus and applicable prospectus supplements in the certificate of designation relating to that series. We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of preferred stock we are offering before the issuance of that series of preferred stock. This description will include:
· the title and stated value;
· the number of shares we are offering;
· the liquidation preference per share;
· the purchase price per share;
· the dividend rate per share, dividend period and payment dates and method of calculation for dividends;
· whether dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate;
· our right, if any, to defer payment of dividends and the maximum length of any such deferral period;
· the procedures for any auction and remarketing, if any;
· the provisions for a sinking fund, if any;
· the provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights;
· any listing of the preferred stock on any securities exchange or market;
· whether the preferred stock will be convertible into our common stock or other securities of ours, including depositary shares and warrants, and, if applicable, the conversion period, the conversion price, or how it will be calculated, and under what circumstances it may be adjusted;
· whether the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange period, the exchange price, or how it will be calculated, and under what circumstances it may be adjusted;
· voting rights, if any, of the preferred stock;
· preemption rights, if any;
· restrictions on transfer, sale or other assignment, if any;
· whether interests in the preferred stock will be represented by depositary shares;
· a discussion of any material or special U.S. federal income tax considerations applicable to the preferred stock;
· the relative ranking and preferences of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs;
· any limitations on issuances of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock being issued as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and
· any other specific terms, rights, preferences, privileges, qualifications or restrictions of the preferred stock.
The Delaware General Corporation Law, or DGCL, the state of our incorporation, provides that the holders of preferred stock will have the right to vote separately as a class (or, in some cases, as a series) on an amendment to our certificate of incorporation if the amendment would change the par value or, unless the certificate of incorporation provided otherwise, the number of authorized shares of the class or change the powers, preferences or special rights of the class or series so as to adversely affect the class or series, as the case may be. This right is in addition to any voting rights that may be provided for in the applicable certificate of designation.
Warrants
As of December 31, 2017, we had outstanding warrants to purchase 116,581 shares of common stock at an exercise price of $3.86 per share, which warrants expire June 30, 2026, warrants to purchase 63,025 shares of common stock at an exercise price of $2.38 per share, which warrants expire November 22, 2026, warrants to purchase 80,645 shares of common stock at an exercise price of $1.86 per share, which warrants expire on March 29, 2027, and warrants to purchase 167,570 shares of common stock at an exercise price of $1.79 per share, which warrants expire on November 2, 2020, July 14, 2021, and August 19, 2021. The number of shares of common stock issuable upon the exercise of each warrant is subject to adjustment from time to time upon the occurrence of specified events.
Registration Rights
We and certain holders of our common stock have entered into a registration rights agreement. The registration rights provisions of this agreement provide those holders with demand, piggyback and Form S-3 registration rights. The shares subject to such rights are referred to herein as “Registrable Shares.”
In addition, pursuant to the terms of our certain of our warrants to purchase common stock held by Oxford Finance LLC, or Oxford, Oxford has piggyback registration rights with respect to the shares of common stock issuable upon the exercise of the warrants on the same terms as are set forth in the registration rights agreement.
Demand Registration Rights
The holders of at least a majority of the Registrable Shares in the aggregate, or a lesser percent if the anticipated aggregate offering price would exceed $10.0 million, have the right to demand that we filed up to a total of two registration statements. These registration rights are subject to specified conditions and limitations, including the right of a managing underwriter to limit the number of shares included in any such registration under specified circumstances. Upon such a request, we are required to effect the registration as expeditiously as possible. An aggregate of approximately 33.8 million shares of common stock are entitled to these demand registration rights.
Piggyback Registration Rights
If we propose to register any of our securities under the Securities Act of 1933, as amended, either for our own account or for the account of other stockholders, the holders of Registrable Shares and Oxford will each be entitled to notice of the registration and will be entitled to include their shares of common stock in the registration statement. These piggyback registration rights are subject to specified conditions and limitations, including the right of a managing underwriter to limit the number of shares included in any such registration under specified circumstances. An aggregate of approximately 34.1 million shares of common stock are entitled to these piggyback registration rights. The holders of piggyback registration rights under our registration rights agreement and Oxford have waived these rights as they may apply to the filing of the registration statement of which this prospectus is a part.
Registration on Form S-3
If we are eligible to file a registration statement on Form S-3, the holders of Registrable Shares will be entitled, upon their written request, to have such shares registered by us on a Form S-3 registration statement at our expense, provided that such requested registration has an anticipated aggregate offering size to the public of at least $1.0 million and subject to other specified conditions and limitations. An aggregate of approximately 33.8 million shares of common stock are entitled to these Form S-3 registration rights.
Expenses of Registration
We will pay all expenses relating to any demand, piggyback or Form S-3 registration, other than underwriting discounts and commissions, subject to specified conditions and limitations.
Termination of Registration Rights
The registration rights granted under the registration rights agreement will terminate on August 4, 2025 or, if earlier, with respect to a particular holder, at such time as that holder and its affiliates may sell all of their shares of common stock pursuant to Rule 144 under the Securities Act without any restrictions on volume.
Antitakeover Effects of Provisions of Charter Documents and Delaware Law
Charter Documents. Our amended and restated certificate of incorporation and Amended and Restated Bylaws, or Bylaws, each as amended to date, include a number of provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management of our company. First, our board of directors is classified into three classes of directors. Under Delaware law, directors of a corporation with a classified board may be removed only for cause unless the corporation’s certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation does not provide otherwise. In addition, the amended and restated certificate of incorporation provides that all stockholder action must be effected at a duly called meeting of stockholders and not by a consent in writing. Further, our Bylaws limit who may call special meetings of the stockholders. Our amended and restated certificate of incorporation does not include a provision for cumulative voting for directors. Under cumulative voting, a minority stockholder holding a sufficient percentage of a class of shares may be able to ensure the election of one or more directors. Finally, our Bylaws establish procedures, including advance notice procedures, with regard to the nomination of candidates for election as directors and stockholder proposals. These and other provisions of our amended and restated certificate of incorporation and Bylaws and
Delaware law could discourage potential acquisition proposals and could delay or prevent a change in control or management of our company.
Delaware Takeover Statute. We are subject to Section 203 of the DGCL, which regulates acquisitions of some Delaware corporations. Section 203 generally prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date of the transaction in which the person became an interested stockholder, unless:
· the board of directors of the corporation approved the business combination or the other transaction in which the person became an interested stockholder prior to the date of the business combination or other transaction;
· upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers of the corporation and shares issued under employee stock plans under which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
· on or subsequent to the date the person became an interested stockholder, the board of directors of the corporation approved the business combination and the stockholders of the corporation authorized the business combination at an annual or special meeting of stockholders by the affirmative vote of at least 66-2/3% of the outstanding stock of the corporation not owned by the interested stockholder.
Section 203 of the DGCL defines a “business combination” to include any of the following:
· any merger or consolidation involving the corporation and the interested stockholder;
· any sale, transfer, pledge or other disposition of 10% or more of the corporation’s assets or outstanding stock involving the interested stockholder;
· subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any of its stock to the interested stockholder;
· any transaction involving the corporation that has the effect of increasing the proportionate share of its stock owned by the interested stockholder; or
· the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
In general, Section 203 defines an “interested stockholder” as any person who, together with the person’s affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock.
Section 203 of the DGCL could depress our stock price and delay, discourage or prohibit transactions not approved in advance by our board of directors, such as takeover attempts that might otherwise involve the payment to our stockholders of a premium over the market price of our common stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent’s address is 250 Royall Street, Canton, Massachusetts 02021.
Listing on the NYSE American
Our common stock is listed on the NYSE American under the symbol “SENS.”
PLAN OF DISTRIBUTION
We have entered into a sales agreement with Cowen, under which we may issue and sell from time to time up to $50,000,000 of our common stock through Cowen as our sales agent. Sales of our common stock, if any, will be made at market prices by any method that is deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act, including sales made directly on NYSE American or any other trading market for our common stock. If authorized by us in writing, Cowen may purchase shares of our common stock as principal.
Cowen will offer our common stock subject to the terms and conditions of the sales agreement on a daily basis or as otherwise agreed upon by us and Cowen. We will designate the maximum amount of common stock to be sold through Cowen on a daily basis or otherwise determine such maximum amount together with Cowen. Subject to the terms and conditions of the sales agreement, Cowen will use its commercially reasonable efforts to sell on our behalf all of the shares of common stock requested to be sold by us. We may instruct Cowen not to sell common stock if the sales cannot be effected at or above the price designated by us in any such instruction. Cowen or we may suspend the offering of our common stock being made through Cowen under the sales agreement upon proper notice to the other party. Cowen and we each have the right, by giving written notice as specified in the sales agreement, to terminate the sales agreement in each party’s sole discretion at any time.
The aggregate compensation payable to Cowen as sales agent equals 3.0% of the gross sales price of the shares sold through it pursuant to the sales agreement. We have also agreed to reimburse Cowen up to $40,000 of Cowen’s actual outside legal expenses incurred by Cowen in connection with this offering, and for certain other expenses, including Cowen’s FINRA counsel fees in an amount up to $10,000. In accordance with FINRA Rule 5110 these reimbursed fees and expenses are deemed sales compensation to Cowen in connection with this offering. We estimate that the total expenses of the offering payable by us, excluding commissions payable to Cowen under the sales agreement, will be approximately $200,000.
The remaining sales proceeds, after deducting any expenses payable by us and any transaction fees imposed by any governmental, regulatory, or self-regulatory organization in connection with the sales, will equal our net proceeds for the sale of such common stock.
Cowen will provide written confirmation to us following the close of trading on the NYSE American on each day in which common stock is sold through it as sales agent under the sales agreement. Each confirmation will include the number of shares of common stock sold through it as sales agent on that day, the volume weighted average price of the shares sold, the percentage of the daily trading volume and the net proceeds to us.
We will report at least quarterly the number of shares of common stock sold through Cowen under the sales agreement, the net proceeds to us and the compensation paid by us to Cowen in connection with the sales of common stock.
Settlement for sales of common stock will occur, unless the parties agree otherwise, on the second business day that is also a trading day following the date on which any sales were made in return for payment of the net proceeds to us. There is no arrangement for funds to be received in an escrow, trust or similar arrangement.
In connection with the sales of our common stock on our behalf, Cowen may be deemed to be an “underwriter” within the meaning of the Securities Act, and the compensation paid to Cowen may be deemed to be underwriting commissions or discounts. We have agreed in the sales agreement to provide indemnification and contribution to Cowen against certain liabilities, including liabilities under the Securities Act. As sales agent, Cowen will not engage in any transactions that stabilize our common stock.
Our common stock is listed on the NYSE American and trades under the symbol “SENS.” The transfer agent of our common stock is Computershare Trust Company, N.A.
Cowen and/or its affiliates have provided, and may in the future provide, various investment banking and other financial services for us for which services they have received and, may in the future receive, customary fees.
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be passed upon by Cooley LLP, Reston, Virginia. Covington & Burling LLP, New York, New York, is counsel for Cowen in connection with this offering.
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, 2017, as set forth in their report (which contains an explanatory paragraph describing conditions that raise substantial doubt about the Company’s ability to continue as a going concern as described in Note 2 to the consolidated financial statements), 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 we filed with the SEC. This prospectus does not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further information with respect to us and the securities we are offering under this prospectus, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. You should rely only on the information contained in this prospectus or incorporated by reference in this prospectus. We have not authorized anyone else 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 is accurate as of any date other than the date on the front page of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities offered by this prospectus.
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy the registration statement, as well as any other document filed by us with the SEC, at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. You can also request copies of these documents by writing to the SEC and paying a fee for the copying cost. You may obtain information on the operation of the Public Reference Room by calling the SEC at (800) SEC-0330. The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC, including Senseonics Holdings, Inc. The address of the SEC website is www.sec.gov.
We maintain a website at www.senseonics.com. Information contained in or accessible through our website does not constitute a part of this prospectus.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The SEC file number for the documents incorporated by reference in this prospectus is 001-37717. The documents incorporated by reference into this prospectus contain important information that you should read about us.
The following documents are incorporated by reference into this document:
· our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and filed with the SEC on March 13, 2018;
· our Current Reports on Form 8-K filed with the SEC on January 25, 2018, January 26, 2018 (as amended by Amendment No. 1 filed on January 26, 2018) and January 30, 2018, to the extent the information in such reports is filed and not furnished; and
· the description of our common stock, which is registered under Section 12 of the Exchange Act, in our registration statement on Form 8-A, filed with the SEC on March 11, 2016, including any amendments or reports filed for the purpose of updating such description.
We also incorporate by reference into this prospectus all documents (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to such items) that are filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date of the initial filing of the registration statement of which this prospectus forms a part and prior to effectiveness of the registration statement, or (ii) after the date of this prospectus but prior to the termination of the offering. These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, without charge upon written or oral request, a copy of any or all of the documents that are incorporated by reference into this prospectus but not delivered with the prospectus, including exhibits that are specifically incorporated by reference into such documents. You should direct any requests for documents to Senseonics Holdings, Inc., Attn: Investor Relations, 20451 Seneca Meadows Parkway, Germantown, MD 20876-7005, telephone: (301) 515-7260.
Any statement contained in this prospectus or contained in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded to the extent that a statement contained in this prospectus or any subsequently filed supplement to this prospectus, or document deemed to be incorporated by reference into this prospectus, modifies or supersedes such statement.
$50,000,000
Common Stock
Prospectus
Cowen
, 2018
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an estimate of the estimated costsfees and expenses, other than underwriting discounts and commissions, payable by usthe registrant in connection with the offeringissuance and distribution of the securities being registered. All the amounts shown are estimates, except for the SEC registration fee.
Registration Fee | $ | 9,938 | ||
Legal Fees and Expenses | 50,000 | |||
Accounting Fees and Expenses | 25,000 | |||
Miscellaneous Fees and Expenses | 15,062 | |||
| | | | |
Total | $ | 100,000 | ||
| | | | |
| | | | |
| | | | |
SEC registration fee |
| $ | 24,900 |
|
FINRA filing fee |
| 30,500 |
| |
Accounting fees and expenses |
|
| (1) | |
Legal fees and expenses |
|
| (1) | |
Transfer agent fees and expenses |
|
| (1) | |
Trustee fees and expenses |
|
| (1) | |
Printing and miscellaneous expenses |
|
| (1) | |
Total |
| $ |
| (1) |
(1) These fees are calculated based on the securities offered and the number of issuances and, accordingly, cannot be estimated at this time.
Item 15. Indemnification of Officers and Directors
Under Section 145 of the Delaware General Corporation Law, or DGCL, we have broad powers to indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended, or the Securities Act. Section 145 of the DGCL generally provides that a Delaware corporation has the power to indemnify its present and former directors, officers, employees and agents against expenses incurred by them in connection with any suit to which they are or are threatened to be made, a party by reason of their serving in such positions so long as they acted in good faith and in a manner they reasonably believed to be in or not opposed to, the best interests of the corporation and, with respect to any criminal action, they had no reasonable cause to believe their conduct was unlawful.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that (i) eliminate the personal liability of our directors for monetary damages resulting from breaches of their fiduciary duty to the fullest extent permitted under applicable law, (ii) require us to indemnify our directors and executive officers to the fullest extent permitted by the DGCL or other applicable law and (iii) provide us with the power, in our discretion, to indemnify our other officers, employees and other agents as set forth in the DGCL or other applicable law. We believe that these provisions of our amended and restated certificate of incorporation and amended and restated bylaws are necessary to attract and retain qualified persons as directors and officers. These provisions do not eliminate our directors’directors' or officers’officers' duty of care, and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under the DGCL. In addition, each director will continue to be subject to liability pursuant to Section 174 of the DGCL, for breach of such director’sdirector's duty of loyalty to us, for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of law, for acts or omissions that such director believes to be contrary to our best interests or the best interests of our stockholders, for any transaction from which such director derived an improper personal benefit, for acts or omissions involving a reckless disregard for such director’sdirector's duty to us or to our stockholders when such director was aware or should have been aware of a risk of serious injury to us or to our stockholders, for acts or omission that constitute an unexcused pattern of inattention that amounts to an abdication of such director’sdirector's duty to us or to our stockholders, for improper transactions between such director and us and for improper loans to directors and officers. These provisions also do not affect a director’sdirector's responsibilities under any other law, such as the federal securities law or state or federal environmental
laws.
As permitted by Delaware law, we have entered into indemnification agreements with each of our current directors and officers pursuant to the foregoing provisions. We have an insurance policy covering our officers and directors with respect to certain liabilities, including liabilities arising under the Securities Act or otherwise.
The underwriting agreement, if any, entered into with respect to an offering of securities registered hereunder will provide for indemnification by any underwriters of any offering, our directors and officers who sign the registration statement and our controlling persons for some liabilities, including liabilities arising under the Securities Act.
Item 16. Exhibits and Financial Statement Schedules
*Table of Contents To be filed by amendment or by a report filed under the Exchange Act and incorporated herein by reference, if applicable.
The undersigned registrantRegistrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:Registration Statement:
To
provided, however,, that the undertakings set forth in paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrantRegistrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act that are incorporated by reference in this registration statementthe Registration Statement, or areis contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement.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:
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 statementRegistration Statement or made in any such document immediately prior to such effective date.
(5) That for the purpose of determining liability of the registrantRegistrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrantRegistrant undertakes that in a primary offering of securities of the undersigned registrantRegistrant pursuant to this registration statement,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 registrantRegistrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(6) That,(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’sRegistrant'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’splan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statementRegistration 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.
(7) That for purposes of determining any liability under the Securities Act, (i) the information omitted from the form of prospectus filed as part of the registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(l) or (4) or 497(h) under the Securities Act shall be deemed to be a part of the registration statement as of the time it was declared effective; and (ii) each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offing of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(8) 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 in accordance with the rules and regulations prescribed by the SEC under Section 305(b)(2) of the Trust Indenture Act.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrantRegistrant pursuant to the foregoing provisions, or otherwise, the registrantRegistrant has been advised that in the opinion of the SEC 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 registrantRegistrant of expenses incurred or paid by a director, officer or controlling person of the registrantRegistrant 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 registrantRegistrant 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.
SIGNATURESTable of Contents
Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Germantown, State of Maryland, on March 30, 2018.September 20, 2019.
SENSEONICS HOLDINGS, INC. | ||||
| /s/ TIMOTHY T. GOODNOW Timothy T. Goodnow | |||
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KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Timothy T. Goodnow, Ph.D., R. Don Elsey and Darren K. DeStefano, and each of them, his true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, thisAmendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | Title | Date | ||||||||
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/s/ TIMOTHY T. GOODNOW | President, Chief Executive Officer and Director(Principal Executive Officer) |
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Jon Isaacson |
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| (Principal Financial Officer and Principal Accounting Officer) | September 20, 2019 | ||||||||
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March 30, 2018
Signature | Title | Date | ||||
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Steven Edelman | Director | September 20, 2019 | ||||
*By: | /s/ TIMOTHY T. GOODNOW Timothy T. Goodnow Attorney-in-fact |
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 Amendment No. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Germantown, State of Maryland, on the 20th day of September, 2019.
SENSEONICS, INCORPORATED | ||||||||
By: | /s/ Timothy T. Goodnow Chief Executive Officer |
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Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | Title | Date | ||
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/s/ TIMOTHY T. GOODNOW Timothy T. Goodnow | Chief Executive Officer and Director (Principal Executive Officer) | September 20, 2019 |