| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 22, 2022, Histogen Inc., a Delaware corporation (the “Company”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which the Company agreed to issue and sell, in a private placement offering (the “Offering”), (i) 2,500 shares of the Company’s Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), and (ii) 2,500 shares of the Company’s Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock” and together with the Series A Preferred Stock, the “Preferred Stock”), in each case, at an offering price of $952.38 per share, representing a 5% original issue discount to the stated value of $1,000 per share of Preferred Stock, for gross proceeds from the Offerings of approximately $4.75 million, before the deduction of the placement agent’s fee and other offering expenses. The shares of Series A Preferred Stock will have a stated value of $1,000 per share and will be convertible, at a conversion price of $1.00 per share, into 2,500,000 shares of common stock (subject in certain circumstances to adjustments). The shares of Series B Preferred Stock will have a stated value of $1,000 per share and will be convertible, at a conversion price of $1.00 per share, into 2,500,000 shares of common stock (subject in certain circumstances to adjustments). The Purchase Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing. The closing of the Offering occurred on March 25, 2022.
In connection with the Purchase Agreement, Histogen entered in a Registration Rights Agreement and agreed to file by July 20, 2022 a resale registration statement (the “Resale Registration Statement”) with the Securities and Exchange Commission (the “Commission”) covering all shares of Common Stock issuable upon conversion of the Preferred Stock that remains outstanding and has not previously been redeemed by the Company, and to cause the Resale Registration Statement to become effective by September 18, 2022 or, in the event of a full review” of the Resale Registration Statement by the Commission, by October 18, 2022.
The Preferred Stock and the shares of common stock issuable upon conversion of the Preferred Stock are being sold and issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 of Regulation D promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.
The Company intends to include a proposal at its 2022 annual meeting of shareholders to consider an amendment (the “Amendment”) to the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Charter”), to effect a reverse stock split of the outstanding shares of common stock (“Common Stock”) by a ratio to be determined by the Board of Directors of the Company (the “Reverse Stock Split”). The Investors have agreed in the Purchase Agreement to not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the shares of the Preferred Stock until the Reverse Stock Split and to vote the shares of the Series A Preferred Stock and Series B Preferred Stock purchased in the Offerings in connection with the Amendment. The Series A Preferred Stock permits the holder to vote on such proposal on an as-converted to common stock basis based on the minimum price under Nasdaq rules on the issuance date. The Series B Preferred Stock permits the holder to cast 30,000 votes per share of Series B Preferred Stock on such proposal. The Series A Preferred Stock and Series B Preferred Stock will not be permitted to vote on any other matter. The holders of the Series A Preferred Stock agreed to vote their shares on the reverse stock split proposal and the holders of the Series B Preferred Stock agreed to vote their shares on such proposal in the same proportions as the shares of common stock and Series A Preferred Stock are voted on such proposal. The Amendment requires the approval of the majority of the votes associated with our outstanding stock entitled to vote on the proposal. Since the Series B Preferred Stock will mirror only votes cast, abstentions or broker non-votes by common stockholders, which would ordinarily have the effect of a no vote, will not have any effect on the outcome of the vote.
Pursuant to the Purchase Agreement, the Company has filed two certificates of designation (the “Certificates of Designation”) with the Secretary of the State of Delaware designating the rights, preferences and limitations of the shares of Preferred Stock. The Certificates of Designation provide, in particular, that the Preferred Stock will have no voting rights, other than the right to vote as a class on certain specified matters, except that (i) each share of Series A Preferred Stock will have the right to vote, on an as converted basis, on the Reverse Stock Split (together with the Company’s Common Stock and the Series B Preferred Stock as a single class), and (ii) each share of Series B Preferred Stock will have the right to cast 30,000 votes per share of Series B Preferred Stock on the Reverse Stock Split; provided, that such votes of Series B Preferred Stock will, when cast, automatically be voted in a manner that “mirrors” the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series A Preferred Stock are voted on the Reverse Stock Split and the Amendment.
The holders of Preferred Stock will be entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares of Common Stock. The Preferred Stock is convertible into shares of Common Stock at a rate of $1.00 per share for the Series A Preferred Stock and $1.00 per share for the Series B Preferred Stock, subject in certain circumstances to adjustments. The conversion price can be adjusted pursuant to the Certificate of Designation for stock dividends and stock splits, subsequent rights offerings, pro rata
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