Item
1.01 Entry into a Material Definitive Agreement.
On
August 29, 2017, RespireRx Pharmaceuticals Inc. (the “Company”) entered into a Common Stock and Warrant Purchase Agreement
(“Purchase Agreement”) with an accredited investor (“Purchaser”), pursuant to which, in a closing (“Closing”)
on August 29, 2017, the Company sold units for aggregate cash consideration of $75,000, with each unit consisting of (i) one share
of the Company’s Common Stock, par value $0.001 per share (“Common Stock”), and (ii) one Warrant to purchase
an additional share of Common Stock (each a “Warrant” and collectively, the “Warrants”). The price per
unit in the initial closing of the private placement (“Private Placement”) was $1.00 (the “Per Unit Price”).
The Warrants are exercisable until 5:00 p.m. on September 29, 2022 and may be exercised at 110% of the Per Unit Price, or $1.10
per share of Common Stock. The Warrants have a cashless exercise provision and certain “blocker” provisions limiting
the percentage of shares of Common Stock of the Company that the purchaser can hold upon exercise. The Warrants are also subject
to a call by the Company at $0.001 per share upon ten (10) days written notice if the Company’s Common Stock closes at 250%
or more of the Unit Purchase Price for any five (5) consecutive trading days. The Purchaser was a non-affiliated investor. In
total, 75,000 shares of Common Stock were purchased in the Private Placement, together with warrants to purchase an additional
75,000 shares of Common Stock. This Closing is an initial closing and there may be subsequent closings with other purchasers until
a maximum of $1.15 million of units have been sold. Of that maximum amount, up to $642,000 of units may be obtained by stockholders
who purchased units in prior unit offerings in December 2016 and March 2017 that grant them the right to exchange into subsequent
offerings, similar to the rights being granted in this offering that are described below. Because of the terms of this offering,
the Company expects that most, if not all, of such stockholders will exercise their exchange rights. The Company will not receive
any proceeds with respect to units issued upon the exercise of these rights. Closings may take place until September 29, 2017,
unless extended by the Company until no later than December 30, 2017.
In
addition, as set forth in the Purchase Agreement, the Purchaser has an unlimited number of exchange rights, which are options
and not obligations, to exchange such Purchaser’s entire investment (but not less than the entire investment) into one or
more subsequent equity financings (consisting solely of convertible preferred stock or common stock or units containing preferred
stock or common stock and warrants exercisable only into preferred stock or common stock) that would be considered as “permanent
equity” under United States Generally Accepted Accounting Principles and the rules and regulations of the United States
Securities and Exchange Commission, and therefore classified as stockholders’ equity, and excluding any form of debt or
convertible debt (each such financing a “Subsequent Equity Financing”). These exchange rights are effective until
the earlier of: (i) the completion of any number of Subsequent Equity Financings that aggregate at least $15 million of gross
proceeds, or (ii) December 30, 2017. For clarity, an investor’s entire investment is the entire amount invested (“Investment
Amount”) (for purposes of the multiple described below) and all of the Common Stock and Warrants purchased (for purposes
of the exchange) pursuant to the Purchase Agreement, however, if the Warrants have been exercised in part or in whole on a cashless
basis, then the Investment Amount (for purposes of the multiple described below) will be the Investment Amount (for purposes of
the multiple described below) and all of the Common Stock initially purchased pursuant to the Purchase Agreement plus any shares
of Common Stock issued pursuant to a cashless exercise and any Warrants remaining after such cashless exercise (for purposes of
the exchange), or, if the Warrants have been exercised for cash, then the entire Investment Amount will be the amount initially
invested plus the amount of cash paid upon cash exercise (for purposes of the multiple described below) and all of the Common
Stock initially purchased pursuant to the Purchase Agreement plus any shares of Common Stock issued pursuant to the cash exercise
and any Warrants remaining after such cash exercise (for purposes of the exchange).
At
the time of a Subsequent Equity Financing, Purchaser has an exchange right to either: (a) retain the securities purchased or subsequently
acquired in a Subsequent Equity Financing into which they had previously exchanged, or (b) exchange the all the securities purchased
or acquired in a Subsequent Equity Financing into which such Purchaser had previously exchanged, into securities issued in the
next Subsequent Equity Financing (assuming the next Subsequent Equity Financing is one for which an exchange right is available).
The
dollar amount (calculated as a ratio) used to determine the measurement amount for the exchange into a Subsequent Equity Financing
shall be 1.2 times the entire Investment Amount described above. Under certain circumstances, as described in Section 2(h) of
the Purchase Agreement, the multiple will be 1.4 times the entire Investment Amount described above.
There
is a floor price of $1.00 per common share equivalent in any exchange transaction.
In
the case of an Acquisition (as defined in the Purchase Agreement) in which the Company is not the surviving entity, the holder
of each Warrant would receive from any surviving entity or successor to the Company, in exchange for such Warrant, a new warrant
from the surviving entity or successor to the Company, substantially in the form of the existing Warrant and with an exercise
price adjusted to reflect the nearest equivalent exercise price of common stock (or other applicable equity interest) of the surviving
entity that would reflect the economic value of the Warrant, but in the surviving entity.
Unlimited
piggy-back registration rights have been granted with respect to the Common Stock, and the Common Stock underlying the Warrants,
unless such Common Stock is eligible to be sold without volume limits under an exemption from registration under any rule or regulation
of the SEC that permits the holder to sell securities of the Company to the public without registration.
The
shares of Common Stock and Warrants were offered and sold 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 provided in Rule
506(b) of Regulation D promulgated thereunder. None of the shares of Common Stock issued as part of the units, the Warrants, the
Common Stock issuable upon exercise of the Warrants or any warrants issued to a qualified referral source. have been registered
under the Securities Act or any other applicable securities laws, and unless so registered, may not be offered or sold in the
United States except pursuant to an exemption from the registration requirements of the Securities Act.
This
description of the Purchase Agreement, including the form of Warrant, does not purport to be complete and is qualified in its
entirety by reference to the form of Purchase Agreement (including (i) the schedules thereto, and (ii) the Form of Warrant attached
as Exhibit A thereto), which is included as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.