Item 1.01. Entry into a Material Definitive Agreement.
On October 11, 2017, CytoDyn Inc. (the
Company
) entered into Subscription Agreements (the
Subscription Agreements
)
with certain investors (the
Investors
) for the sale by the Company of 1,880,765 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 940,380 shares of Common Stock (the
Warrants
). Each share of Common Stock
was sold together with one half of a Warrant to purchase one share of Common Stock for a combined purchase price of $0.65.
The aggregate gross proceeds
for the sale of the Common Shares and Warrants will be approximately $1.22 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 October 11, 2017. Paulson Investment Company, LLC (the
Placement Agent
), was engaged as a placement agent in connection with the Offering.
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 $1.11 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 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 August 8, 2017 (the
Placement Agent Agreement
), which was previously filed as
Exhibit 10.3 to the
Form 8-K
filed on September 8, 2017, the Company has agreed to pay the Placement Agent a cash fee equal to 9% of the gross proceeds received by the Company from investors in the
Offering, as well as a one-time non-accountable expense fee of $25,000 for aggregate expenses incurred collectively in the Offering and the September 8, 2017 offering. 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 investors in the Offering at an exercise price equal to 110% of the price of the Common Stock sold in the Offering, or $0.715 per share (the
Placement Agent
Warrants
). 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 forms of the Warrants and the Subscription Agreement are filed as
Exhibits 4.1 and 10.1, respectively, 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.
1
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.