Item 1.01.
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Entry into a Material Definitive Agreement.
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On May 22, 2018, CytoDyn Inc. (the
Company
) entered into Subscription Agreements (the
Subscription Agreements
) with certain investors (the
Investors
) for the sale by the Company of 4,640,000 shares (the
Common
Shares
) of the Companys common stock, par value $0.001 per share (the
Common Stock
), in a registered direct offering (the
Offering
). The Investors in the Offering also received warrants to
purchase 4,640,000 shares of Common Stock (the
Warrants
). Each share of Common Stock was sold together with one Warrant to purchase one share of Common Stock for a combined purchase price of $0.50.
The aggregate gross proceeds for the sale of the Common Shares and Warrants will be approximately $2.3 million. Subject to certain ownership limitations, the
Warrants will be exercisable commencing on the issuance date at an exercise price equal to $0.75 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 or about May 22, 2018.
The net
proceeds to the Company from the transactions, after deducting the fees and expenses of the Placement Agent, as defined below (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 $2.1 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 February 23, 2018 and subsequently declared effective on March 7,
2018 (File
No. 333-223195)
(the
Registration Statement
), and the base prospectus dated as of March 7, 2018 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 forms of the Subscription 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 Subscription Agreements, which subsequent information may or may not be fully reflected in public disclosures.
Pursuant to the Placement Agent Agreement, dated as of May 4, 2018 (the
Placement Agent Agreement
) with Paulson Investment Company,
LLC (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 first introduced to the Company in the Offering by the
Placement Agent, as well as a
one-time
non-accountable
expense fee of $25,000 for aggregate expenses incurred collectively in the Offering. 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 $0.55 per share (the
Placement Agent Warrants
). The Placement Agent Warrants provide for cashless exercise. The Placement Agent is not entitled to compensation relating to Investors not first introduced by
it to the Company in this Offering. 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 Placement
Agent Agreement is filed as Exhibit 10.2 to this Current Report on Form
8-K
and is incorporated herein by reference.
The form of the Subscription Agreement is filed as Exhibit 10.1 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.
Additional Information
and Where to Find It
This document may be deemed to be solicitation material in respect of the special meeting of stockholders to be held on June 7,
2018. In connection with the special meeting, the Company has filed a definitive proxy statement with the United States Securities and Exchange Commission (the SEC) on May 8, 2018. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS,
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE SPECIAL MEETING. The definitive proxy statement has been mailed
to stockholders who are entitled to vote at the special meeting. Stockholders will also be able to obtain a copy of the definitive proxy statement free of charge by directing a request to: 1111 Main Street, Suite 660, Vancouver, Washington 98660,
telephone: (360) 980-8524. In addition, the definitive proxy statement is available free of charge at the SECs website, www.sec.gov.
Participants in the Solicitation
The Company and its
directors and executive officers and other employees may be deemed to be participants in the solicitation of proxies in respect of the special meeting. Information regarding the Companys directors and executive officers is available in the
Companys proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on July 24, 2017. Information regarding any persons who may, under the rules of the SEC, be considered participants in the solicitation of
stockholders in connection with the special meeting is set forth in the definitive proxy statement filed with the SEC on May 8, 2018. These documents are available free of charge at the SECs website at www.sec.gov, and by mail at: 1111 Main
Street, Suite 660, Vancouver, Washington 98660, telephone: (360) 980-8524.