Item
1.01 Entry into a Material Definitive
Agreement.
Effective December 1, 2022,
CytoDyn Inc. (the “Company”) entered into an amendment (the “Second
Amendment”) to the Surety Bond Backstop Agreement, as previously
amended on July 18, 2022 (the “First Amendment”), and initially
entered into by the Company with David Fairbank Welch, both
individually and in his capacity as trustee of a revocable trust,
LRFA, LLC, a Delaware limited liability company, and certain other
related parties (collectively, the “Indemnitors”), effective
February 14, 2022. The Surety Bond Backstop Agreement, as amended
by the First Amendment and the Second Amendment, is referred to
herein as the “Backstop Agreement.”
As previously reported in the
Company’s Current Report on Form 8-K filed on February 18, 2022,
the Indemnitors agreed to assist the Company in obtaining a surety
bond (the “Surety Bond”) for posting in connection with the
Company’s ongoing litigation with Amarex Clinical Research, LLC,
by, among other things, agreeing to indemnify the issuer of the
Surety Bond with respect to the Company’s obligations under the
Surety Bond. As
previously reported in the Company’s Current Report on Form 8-K
filed on July 25, 2022, the First Amendment provided, among other
things, for the extension of the obligation of the Indemnitors to
indemnify the Surety from August 13, 2022 to November 15,
2022.
The Second Amendment provides
for the extension of the obligation of the Indemnitors to indemnify
the Surety from November 15, 2022 to January 31, 2023; provided
that the Company will relieve the Indemnitors of a minimum of
$1,500,000 of cash collateral currently pledged by the Indemnitors
in support of the Surety Bond by January 5, 2023, with the balance
of the cash collateral ($5,000,000) to be relieved by January 31,
2023; and provided further that, if the balance of the cash
collateral on January 31, 2023, has been reduced to $1,000,000 or
less, the Company, in its sole discretion, may elect to require the
Indemnitors to accept shares of common stock or warrants to
purchase shares of common stock in exchange for the remaining
balance.
The Second Amendment also
provides, among other things, for: (i) the further reduction of the
exercise price of the warrants to purchase a total of 30,000,000
shares of common stock issued under the original Backstop Agreement
from $0.20 to $0.10 per share; (ii) the issuance to the Indemnitors
of a fully exercisable new warrant to purchase 7,500,000 shares of
common stock at an exercise price of $0.10 per share; and (iii) the
issuance of a second warrant to the Indemnitors covering up to
7,500,000 shares of common stock with an exercise price of $0.10
per share. Except as provided in the Second Amendment, the terms of
the warrants will be similar to the warrants issued under the
original Backstop Agreement, filed as Exhibit 4.1 to the Company’s
Current Report on Form 8-K filed on February 17, 2022. The ultimate
number of shares to be covered by the second warrant will be
calculated on or before February 14, 2023, based on a formula
relating to how quickly the Company relieves the balance of cash
collateral pledged by the Indemnitors. The shares covered by the
additional warrants are entitled to registration rights.
Following the execution of
the Second Amendment, Dr. Welch is deemed to beneficially own in
excess of five percent of the Company’s outstanding shares of
common stock. The foregoing description of the terms of the Second
Amendment is qualified in its entirety by reference to the complete
text of the Second Amendment, a copy of which is filed as Exhibit
10.1 to this Current Report on Form 8-K.
Item 3.02 Unregistered
Sales of Equity Securities.
On November 30, 2022, the
Company concluded a private warrant exchange in which four
accredited investors holding outstanding warrants to purchase a
total of approximately 1.2 million shares of common stock with an
original exercise price of $1.00 per share received a total of
approximately 9.5 million shares of common stock upon exercise
of the warrants, including approximately 8.4 million shares
issued as an inducement for the exercise. Gross cash proceeds from
the private warrant exchange totaled approximately
$2.1 million. The Company relied on the exemption provided by
Rule 506 of Regulation D and Section 4(a)(2) of the Securities
Act of 1933, as amended (the “Securities Act”), for the sales of
securities in the private warrant exchange.
Also, as disclosed in Item
1.01 of this Current Report on Form 8-K, on December 1, 2022, the
Company agreed to issue to an accredited investor a fully
exercisable warrant to purchase 7,500,000 shares of common stock at
an exercise price of $0.10 per share. The warrant has a five-year
term. The Company relied on the exemption provided by
Section 4(a)(2) of the Securities Act for the issuance of the
warrant in exchange for the consideration specified in the Second
Amendment.