Item 1.01. Entry into a Material Definitive Agreement.
On September 8, 2017, CytoDyn Inc. (the
Company
) entered into Subscription Agreements (the
Subscription Agreements
)
and Securities Purchase Agreements (the
Securities Purchase Agreements
and, collectively with the Subscription Agreements, the
Offering Agreements
) with certain investors (the
Investors
) for
the sale by the Company of 3,336,331 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 1,668,163 shares of Common Stock (the
Warrants
). The aggregate gross proceeds for the sale of the Common Shares and Warrants will be approximately $2.5
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 Offering Agreements is expected to occur on or about September 8, 2017.
Paulson Investment Company, LLC (the
Placement Agent
), was engaged as a placement agent in connection with the offering. Investors
introduced to the Company by the Placement Agent executed a form of Subscription Agreement to effect the sale of Common Shares and Warrants in the Offering; all other Investors executed a form of Securities Purchase Agreement.
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 $2.24 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 Offering Agreements were made solely for the benefit of the parties to the Offering Agreements. In addition, such representations, warranties and covenants (i) are intended as a way of
allocating the risk between the parties to the Offering 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 forms of the Offering Agreements are 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 Offering Agreements, which subsequent information may or may not be fully reflected in public disclosures.
Pursuant to the Placement Agent Agreement, dated as of August 8, 2017 (the
Placement Agent Agreement
) with the Placement Agent, the
Company has agreed to pay the Placement Agent a cash fee equal to 9% of the gross proceeds received by the Company from qualified investors as well as a non-accountable expense fee of $25,000. 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 to qualified investors at an exercise price equal to 110% of the price of the Common Stock sold in the offering or
$0.825 per share (the
Placement Agent Warrants
). The Placement Agent is not entitled to compensation relating to Investors not first introduced by it to the Company. 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. A copy of the Placement Agent Agreement is filed as Exhibit 10.3 to this Current Report on Form
8-K
and is incorporated herein by reference.
The forms of the Subscription Agreement and the Securities Purchase Agreement are filed as Exhibits 10.1 and
10.2, respectively, to this Current Report on
Form 8-K.
The form of Warrant is filed as Exhibit 4.1 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 are filed as Exhibit 5.1 to this Current Report on Form
8-K.