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Item 1.01
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Entry into a Material Definitive Agreement.
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On August 15, 2017, xG Technology, Inc.,
a Delaware corporation (the “Company”), entered into a placement agency agreement (the “Placement Agency Agreement”)
with Aegis Capital Corp. (the “Placement Agent”) under which the Placement Agent agreed to serve as the sole placement
agent, on a “reasonable best efforts” basis, in connection with the registered direct public offering (the “Registered
Direct Offering”) of an aggregate of 1,560,978 shares of the Company’s common stock, par value $0.00001 per share (the
“Shares”). Also on August 15, 2017, to effect the Registered Direct Offering, the Company entered into a securities
purchase agreement (the “Purchase Agreement”) with certain institutional investors named in the signature pages thereto
(the “Purchasers”) under which we agreed to issue and sell the Shares directly to the Purchasers. The Shares
are being offered at a price of $2.05 per share.
In a concurrent private placement (the
“Private Placement”; together with the Registered Direct Offering, the “Offering”), we are also selling
to the Purchasers, for no additional consideration, a warrant (each a “Warrant” and collectively, the “Warrants”)
to purchase 0.50 of a share of Common Stock for each Share purchased for cash in the Offering. The Warrants will be exercisable
immediately on the date of issuance (the “Initial Exercise Date”), at an exercise price of $2.50 per share and will
expire on the fifth anniversary of the Initial Exercise Date.
The Company expects the Offering to close
on or about August 18, 2017, subject to the satisfaction of customary closing conditions in the Purchase Agreement. The Purchase
Agreement contains customary representations, warranties and agreements of the Company and the Purchasers and customary indemnification
rights and obligations of the parties.
The Placement Agency Agreement contains
customary representations, warranties and agreements by us and customary conditions to closing. The Placement Agency Agreement
provides that the Company will indemnify the Placement Agent against certain liabilities, including liabilities under the Securities
Act of 1933, as amended, or reimburse the Placement Agent for payments that the Placement Agent may be required to make because
of such liabilities. Additionally, under the Placement Agency Agreement the Company agreed not to contract to issue or announce
the issuance or proposed issuance of any Common Stock or Common Stock equivalents for ninety (90) days following the closing of
the Offering.
The
Placement Agent did not purchase or sell any securities, nor is it required to arrange the purchase or sale of any minimum number
or dollar amount of securities. The Placement Agent agreed to use its reasonable best efforts to arrange for the sale of
all of the Shares and Warrants being issued and sold in the Offering. The Placement Agent will be paid a cash fee (the “Placement
Fee”) in an aggregate amount equal to 7% of the gross cash proceeds received by the Company from the sale of the Shares in
the Offering. In addition to the Placement Fee to be paid by the Company,
the Company has agreed to reimburse the Placement
Agent at the closing non-accountable expense allowance in the aggregate amount of 1% of the gross proceeds in the Offering and
for its out-of-pocket expenses, including fees of counsel to the Placement Agent, subject to compliance with FINRA Rule 5110(f)(2)(D).
The Company estimates the total expenses of this Offering, which will be payable by us, excluding the Placement Agent fee, will
be approximately $100,000.
The Shares will be issued pursuant to a
prospectus supplement to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-197820),
which was initially filed with SEC on August 1, 2014, and was declared effective on August 21, 2014. The Company expects to file
the prospectus supplement for the Registered Direct Offering on or about August 17, 2017.
The Warrants and the shares of Common Stock
issuable upon the exercise of the Warrants (the “Warrant Shares”), are not being registered under the Securities Act
of 1933, as amended (the “Securities Act”), pursuant to the registration statement of which the aforementioned prospectus
supplement and the accompanying base prospectus form a part and are not being offered pursuant to aforementioned prospectus supplement
and the accompanying base prospectus. The Warrants are being offered pursuant to an exemption from the registration requirements
of the Securities Act provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The Warrants
are not and will not be listed for trading on any national securities exchange. The Placement Agent is acting as the sole placement
agent for the offer and sale of the Warrants
The foregoing description of the Placement
Agency Agreement, Purchase Agreement, and the Warrants are qualified in their entirety by reference to the full text of the Placement
Agency Agreement, the Purchase Agreement, and the Warrants, the forms of which are attached as Exhibit 1.1, Exhibit 10.1 and Exhibit
4.1 respectively, to this Current Report on Form 8-K (this “Report”), and which are incorporated herein in their entirety
by reference. The Company is filing the opinion of its counsel, Robinson Brog Leinwand Greene Genovese & Gluck P.C., relating
to the legality of the issuance and sale of the shares of the Shares and the Warrants in the Purchase Agreement, as Exhibit 5.1
hereto. Exhibit 5.1 is incorporated herein by reference and into the registration statement.
This Report contains forward-looking statements.
Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies,
predictions or any other statements related to our future activities, or future events or conditions. These statements are based
on current expectations, estimates and projections about the Company’s business based, in part, on assumptions made by management.
These statements are not guarantees of future performances and involve risks, uncertainties and assumptions that are difficult
to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking
statements due to numerous factors, including those risks discussed in the Company’s Annual Report on Form 10-K, as amended,
and in other documents the Company files from time to time with the Securities and Exchange Commission (the “Commission”).
Any forward-looking statements speak only by the date on which they are made, and the Company undertakes no obligation to update
any forward-looking statement to reflect events or circumstances after the date of this report, except as required by law.
The prospectus supplement relating to the
Offering will be available on the Commission’s web site at
http://www.sec.gov
. Copies of the prospectus supplement
may also be obtained from Aegis Capital Corp., 810 Seventh Avenue, 18th Floor, New York, New York 10019, (212) 813-1047.