Item 1.01 Entry into a Material Definitive Agreement.
Underwriting Agreement
On October 5, 2018, KemPharm, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with RBC Capital Markets, LLC (the “Underwriters”), to issue and sell 8,333,334 shares of common stock of the Company (“Common Stock”) in an underwritten public offering pursuant to a Registration Statement on FormS-3 (FileNo. 333-213926) and a related prospectus and prospectus supplement, in each case filed with the Securities and Exchange Commission (the “Offering”). The offering price to the public is $3.00 per share of Common Stock. In addition, the Company granted the Underwriters an option to purchase, for a period of 30 days, up to an additional 1,250,000 shares of Common Stock. The Company estimates that the net proceeds from the Offering will be approximately $23.2 million, or approximately $26.7 million if the Underwriters exercise in full their option to purchase additional shares of Common Stock, in each case after deducting underwriting discounts and commissions and estimated offering expenses.
The Underwriting Agreement contains customary representations, warranties, covenants and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Underwriting Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties. A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this Current Report on Form8-K and is incorporated herein by reference. The foregoing description of the Underwriting Agreement is qualified in its entirety by reference to such exhibit. A copy of the legal opinion as to the legality of the shares of Common Stock to be issued and sold in the Offering is filed as Exhibit 5.1 to this Current Report on Form8-K.
Exchange Agreement
On October 5, 2018, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Deerfield Private Design Fund III, L.P. and Deerfield Special Situations Fund, L.P. (the “Holders”). Under the Exchange Agreement, the Holders are exchanging an aggregate of $9,577,000 principal amount of the Company’s 5.50% Senior Convertible Notes due 2021 for an aggregate of 9,577 shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”). The Company has also agreed to pay the Holders an amount of $95,104.93 in cash, which represents the amount of accrued and unpaid interest on the exchanged notes.
The Exchange Agreement contains customary representations, warranties and covenants made by the Company and the Holders. The Exchange Agreement also requires the Company to reimburse the Holders for up to $25,000 of expenses relating to the exchange.
The foregoing description of the Exchange Agreement is a summary and is qualified in its entirety by Exhibit 10.1 attached hereto, which is incorporated by reference into this Item 1.01.
The terms of the Series A Preferred Stock are described in Item 5.03 of this filing. The information provided in Item 5.03 with respect to the Certificate of Designation (as defined below) is hereby incorporated by reference into this Item 1.01.
| Item 3.02. | Unregistered Sales of Equity Securities. |
The information contained above in Item 1.01 related to the Exchange Agreement and below in Item 5.03 related to the Series A Preferred Stock is hereby incorporated by reference into this Item 3.02.
The shares of Series A Preferred Stock were issued in reliance on the exemption from registration provided in Section 3(a)(9) of the Securities Act of 1933, as amended.
Item 3.03. Material Modifications to Rights of Security Holders.
The information contained above in Item 1.01 related to the Exchange Agreement and below in Item 5.03 related to the Series A Preferred Stock is hereby incorporated by reference into this Item 3.03.
