Item 1.01 Entry into a Material Definitive Agreement
Securities Purchase Agreement
On June 12, 2019, Arcadia Biosciences, Inc. (the “Company”) entered into a securities purchase agreement with certain institutional and accredited investors (the “Purchase Agreement”) relating to the offering and sale of 1,489,575 shares of Company common stock (the “Common Stock”) at a purchase price of $4.91 per share (the “Offering”). Concurrently with the Offering, and pursuant to the Purchase Agreement, the Company also commenced a private placement whereby it agreed to issue and sell warrants (the “Warrants”) exercisable for an aggregate of 1,489,575 shares of Common Stock (the “Warrant Shares”), which represents 100% of the shares of Common Stock sold in the Offering, for a purchase price of $0.125 per underlying warrant share and with an exercise price of $5.00 per share (the “Private Placement”). Subject to certain ownership limitations, the Warrants are exercisable upon issuance. The Warrants will expire on the 5.5 year anniversary of the date of issuance. None of the Warrants or the Warrants Shares have been registered with the Securities and Exchange Commission.
The Offering and Private Placement are expected to close on or about June 14, 2019, subject to customary closing conditions.
The 1,489,575 shares of Common Stock sold in the Offering (but not the Warrants or the Warrant Shares) were offered and sold pursuant to a prospectus, dated June 8, 2018, and a prospectus supplement dated June 12, 2019, in connection with a takedown from the Company’s shelf registration statement (“Registration Statement”) on Form S-3 (File No. 333-224893).
The issuance and sale of the Warrants pursuant to the Purchase Agreement and the issuance and sale of the Warrant Shares upon exercise of the Warrants are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), are not being offered pursuant to the Registration Statement and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder.
Engagement Letter
The Company also entered into an engagement letter with H.C. Wainwright & Co., LLC (“Wainwright”), dated June 12, 2019 (the “Engagement Letter”), pursuant to which Wainwright agreed to serve as exclusive placement agent for the issuance and sale of the shares of Common Stock and Warrants. The Company has agreed to pay Wainwright an aggregate fee equal to 6.0% of the gross proceeds received by the Company from the sale of the securities in the Offering and Private Placement. Pursuant to the Engagement Letter, the Company also agreed to grant to Wainwright, or its designees, warrants to purchase up to 5% of the aggregate number of shares sold in the transactions (each a “Placement Agent Warrant”). The Company also agreed to pay Wainwright $25,000 for non-accountable expenses, a management fee equal to 1% of the gross proceeds raised in the Offering and up to $35,000 for legal fees and other out-of-pocket expenses. The Engagement Letter has indemnity and other customary provisions for transactions of this nature. The Placement Agent Warrants have substantially the same terms as the investor Warrants, except that the exercise price of the Placement Agent Warrants is $6.294 per share and the term of the Placement Agent Warrants is five years. The Placement Agent Warrants, and the shares issuable upon exercise thereof, 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 foregoing description of the Purchase Agreement, the Warrants, the Engagement Letter and the Placement Agent Warrants are not complete and are qualified in their entirety by references to the full text of the Form of Purchase Agreement, the Form of Warrants, the Engagement Letter and the Form of Placement Agent Warrants which are filed as exhibits to this report and are incorporated by reference herein.
A copy of the opinion of Weintraub Tobin Chediak Coleman Grodin Law Corporation relating to the validity of the securities issued in the Offering is filed herewith as Exhibit 5.1.