Item 1.01. Entry into a Material Definitive Agreement.
On January 31, 2017, CytoDyn Inc. (the
Company
) entered into Subscription Agreements (the
Subscription Agreements
)
with certain investors (the
Investors
) for the sale by the Company of 1,534,999 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 767,498 shares of Common Stock (the
Warrants
). The aggregate gross proceeds for the sale of the
Common Shares and Warrants will be approximately $1.15 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 Subscription Agreements is expected to occur on January 31,
2017.
Paulson Investment Company, LLC (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 $1.0 million. The Company intends to use the net proceeds from the
transactions to fund clinical trials for its lead product candidate 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 initially 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 Subscription Agreements were made solely
for the benefit of the parties to the Subscription Agreements. In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the Subscription Agreements 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 form of Subscription 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 Subscription Agreements, which subsequent information may or may not be fully reflected in public disclosures.
The
Company also entered into a Placement Agent Agreement, dated as of January 11, 2017, as amended as of January 30, 2017, (the Placement Agent Agreement) with the Placement Agent. The Placement Agent Agreement expires March 31,
2017. The Company has agreed to pay Placement Agent an aggregate fee equal to 9% of the gross proceeds received by the Company from the sale of the securities in the transactions. Pursuant to the Placement Agent Agreement, 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
Placement Agent Agreement has 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 Subscription Agreement and the Warrant, as well as the Placement Agent Agreement, are filed as Exhibits 10.1, 4.1, 10.2 and 10.3,
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.