free and clear of all liens, claims, charges, mortgages, pledges, security interests, equities, restrictions or other encumbrances, (ii) ProstaGene assigned to us, and we assumed from
ProstaGene, the liabilities and obligations expressly set forth in the schedules to the Transaction Agreement, and (iii) we transferred to Old CytoDyn the acquired assets of ProstaGene, and we assigned to Old CytoDyn all of the assumed
liabilities and obligations of ProstaGene, in exchange for additional stock of Old CytoDyn (with (i) through (iii) above constituting the ProstaGene Asset Acquisition).
The ProstaGene Transaction, including the Holding Company Reorganization and the ProstaGene Asset Acquisition, did not require the approval of
the Old CytoDyn stockholders. We relied upon the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended, in connection with the issuance of shares of common stock in the ProstaGene Asset Acquisition.
Escrow Agreement
In connection with the
ProstaGene Transaction, on November 16, 2018, us and ProstaGene entered into an Escrow Agreement (the Escrow Agreement) with our transfer agent, pursuant to which 5,400,000 shares of common stock (the Stock Holdback
Shares) will be held by our transfer agent as the sole source of recovery for us against any indemnification claims against ProstaGene or Dr. Pestell. The Escrow Agreement provides for release of the Stock Holdback Shares in three equal
installments, on each date that is 6, 12 and 18 months following the closing date of the ProstaGene Transaction, subject to any indemnity claims that may exist.
Stock Restriction Agreement
In
connection with the ProstaGene Transaction, on November 16, 2018, we entered into a Stock Restriction Agreement (the Stock Restriction Agreement) restricting the transfer of 8,342,000 shares of the common stock payable to
Dr. Pestell in the ProstaGene Transaction (the Restricted Shares) for a three-year period from the closing date of the ProstaGene Transaction. In the event Dr. Pestells employment with us is terminated other than by us
without Cause (as defined in the Employment Agreement entered into between us and Dr. Pestell (the Employment Agreement)) or by Dr. Pestell for Good Reason (as defined in the Employment Agreement), we will have an option to
repurchase such Restricted Shares from Dr. Pestell at a purchase price of $0.001 per share. The Restricted Shares will vest and be released from the Stock Restriction Agreement in three equal annual installments commencing one year after the
closing date of the ProstaGene Transaction.
The foregoing descriptions of the Stock Restriction Agreement, and the Escrow Agreement are
qualified in their entirety by reference to the full text of each agreement, copies of which are filed as Exhibits 10.1, 10.2, and 10.3, respectively, to the Current Report on
Form 8-K12G3
filed by
us on November 19, 2018.
Private Placements
The shares of our common stock being offered for resale by selling stockholders named herein pursuant to this prospectus were issued or are issuable in
connection with private placement transactions described below.
December 2018 Placement
Between August 28, 2018 and December 11, 2018, we issued in private placements to accredited investors (which we refer to as the December 2018
Placement) an aggregate of 46,975,170 shares of our common stock, together with warrants (the December 2018 Investor Warrants) to purchase an aggregate of 23,487,585 shares of our common stock at an exercise price of $0.75 per
share. We paid Paulson Investment Company, LLC, as the placement agent for certain of the transactions in the December 2018 Placement, in addition to certain cash fees, warrants (the December 2018 Placement Agent Warrants and, together
with the December 2018 Investor Warrants, the Warrants) to purchase an aggregate of 4,446,917 shares of our common stock at an exercise price of $0.50 per share. The December 2018 Investor Warrants and December 2018 Placement Agent
Warrants all have a five-year expiration term and were immediately exercisable from the date of issuance. The December 2018 Placement Agent warrants provide for cashless exercise.