Item 1.01.
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Entry into a Material Definitive Agreement.
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On September 12, 2016, CytoDyn Inc. (the
Company
) entered into a Securities Purchase Agreement (the
Purchase Agreement
) with certain institutional investors (the
Investors
) for the sale by the Company of 13,333,334 shares (the
Common Shares
) of the Companys common stock, par value $0.001 per share (the
Common Stock
), at a purchase price of $0.75 per share in a registered direct offering. The investors in this offering also
received warrants to purchase 6,666,667 shares of Common Stock (the
Warrants
). The aggregate gross proceeds for the sale of the Common Shares and Warrants will be approximately $10.0 million. Subject to certain ownership
limitations, the Warrants will be exercisable commencing on the issuance date at an exercise price equal to $1.00 per share of Common Stock, subject to adjustments as provided under the terms of the Warrants. The Warrants are exercisable for five
years from the date of issuance. The closing of the sales of these securities under the Purchase Agreement is expected to occur on September 15, 2016.
Rodman & Renshaw, a unit of H.C. Wainwright & Co. (the
Placement Agent
), acted as the exclusive placement agent in
connection with the offering.
The net proceeds to the Company from the transactions, after deducting the placement agents fees and
expenses (not including the Placement Agent Warrants, as defined below), the Companys estimated offering expenses, and excluding the proceeds, if any, from the exercise of the Warrants, are expected to be approximately $9.0 million. The
Company intends to use the net proceeds from the transactions to fund clinical trials for its product candidates and for general corporate purposes.
The securities sold in the offering were offered and sold by the Company pursuant to an effective shelf registration statement on
Form S-3, which was filed with the Securities and Exchange Commission (the
SEC
) on August 26, 2016 and subsequently declared effective on September 9, 2016 (File No. 333-213349) (the
Registration
Statement
), and the base prospectus dated as of September 9, 2016 contained therein. The Company will file a prospectus supplement with the SEC in connection with the sale of the securities.
The representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties to the
Purchase Agreement. In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the Purchase Agreement and not as statements of fact, and (ii) may apply standards of
materiality in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the Purchase Agreement is included with this filing only to provide investors with information regarding
the terms of transaction, and not to provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which
subsequent information may or may not be fully reflected in public disclosures.
The Company also entered into an exclusive engagement
letter, as amended (the
Engagement Letter
) with the Placement Agent. The engagement letter expires January 16, 2017. The Company has agreed to pay Placement Agent an aggregate fee equal to 8% of the gross proceeds
received by the Company from the sale of the securities in the transactions plus a management fee equal to 1% of the gross proceeds from this offering. Pursuant to the Engagement Letter, the Company also agreed to grant to the Placement Agent or its
designees warrants to purchase up to 8% of the aggregate number of shares sold in the transactions at an exercise price equal to $0.825 per share (the
Placement Agent Warrants
). The Engagement Letter has a nine-month tail period
and a twelve-month right of first offer period, indemnity and other customary provisions for transactions of this nature. The
Placement Agent Warrants and the shares issuable upon exercise of the Placement Agent Warrants will be issued in reliance on the exemption from registration provided by
Section 4(a)(2) of the Securities Act as transactions not involving a public offering and in reliance on similar exemptions under applicable state laws.
The forms of the Purchase Agreement and the Warrant, as well as the Engagement Letter, are filed as Exhibits 10.1, 4.1 and 10.2, respectively,
to this Current Report on Form 8-K. The foregoing summaries of the terms of these documents are subject to, and qualified in their entirety by, such documents, which are incorporated herein by reference.
The legal opinion and consent of Lowenstein Sandler LLP relating to the securities is filed as Exhibit 5.1 to this Current Report on Form 8-K
and is incorporated herein by reference.