Item
1.01 Entry into a Material Definitive Agreement.
On
September 27, 2017 and September 28, 2017, RespireRx Pharmaceuticals Inc. (the “Company”) entered into Common Stock
and Warrant Purchase Agreements (each a “Purchase Agreement”) with accredited investors (each, a “Purchaser”
and, together with purchasers in the initial closing under the Private Placement, the “Purchasers”), pursuant to which,
the Company sold units for aggregate cash consideration of $51,000, 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”). These were the second and third
closings of a private placement of up to $1.15 million (the “Private Placement”), bringing the aggregate amount raised
under the Private Placement as of October 3, 2017 to $126,000.
The
initial closing of the Private Placement for $75,000 occurred on August 29, 2017. The Company filed a Current Report on Form 8-K
in connection with that initial closing on August 30, 2017.
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Closing Date
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Number of
Shares Issued
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Number of Shares
Issuable Upon
Exercise of Warrants
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August 29, 2017
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|
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75,000
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|
|
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75,000
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|
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September 27, 2017 and September 28, 2017
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|
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51,000
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|
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51,000
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Total
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126,000
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|
|
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126,000
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|
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 Purchasers were non-affiliated investors.
In total, 51,000 shares of Common Stock were purchased in the second and third closing of the Private Placement, together with
Warrants to purchase an additional 51,000 shares of Common Stock. There may be subsequent closings with other purchasers
until a maximum of $1.15 million of units have been sold. Closings may take place until December 30, 2017.
Of
the maximum amount available in the Private Placement, 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. As of October 3, 2017, 171,716 incremental new shares have
been issued in connection with the exercise of such rights. In addition, 170,284 warrants originally purchased in the prior unit
offerings in December 2016 and March 2017 were cancelled and 342,000 new warrants were issued in connection with these exchanges.
The new warrants are substantially similar to the cancelled warrants.
In
addition, as set forth in the Purchase Agreements, each 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, each 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 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.