| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously reported, on April 8, 2024, the Company and certain investors (the "Investors") entered into a securities purchase agreement (the "Securities Purchase Agreement") relating to the issuance and sale of shares of common stock (or pre-funded warrants in lieu of common stock) pursuant to a registered direct offering and a private placement of warrants to purchase shares of common stock (collectively, the "Offering"). The Investors purchased approximately $4.2 million of shares and warrants, consisting of an aggregate of 1,855,000 shares of common stock, pre-funded warrants to purchase 125,000 shares of common stock and warrants to purchase 1,980,000 shares of common stock, at a purchase price of $2.14 per share and accompanying warrant. The warrants are exercisable after the Stockholder Approval Date (as defined in the Securities Purchase Agreement) at an exercise price of $2.14 per share of common stock, expire on the date that is five (5) years after the Stockholder Approval Date and are subject to adjustment in certain circumstances, including upon any subsequent equity sales at a price per share lower than the then effective exercise price of such warrants, then such exercise price shall be lowered to such price at which the shares were offered. The pre-funded warrants are exerciseable immediately upon issuance at an execise price of $0.00001. The Offering closed on April 9, 2024.
The net proceeds to the Company from the Offering, after deducting the fees of Dawson James Securities, Inc. (the "Placement Agent") and the Company's estimated offering expenses, were approximately $3.9 million.
The common stock and pre-funded warrants (and shares issuable upon exercise of the pre-funded warrants) were offered and sold pursuant to the Company's Registration Statement on Form S-3 (Registration No. 333-270473) previously filed with the Securities and Exchange Commission and declared effective on March 31, 2023, the base prospectus included therein and a related prospectus supplement to be filed. The warrants and shares issuable upon conversion are being issued in a private placement and were exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(a)(2) thereof as a transaction not involving a public offering and/or Rule 506 of Regulation D promulgated thereunder. The Company has agreed to file a registration statement on Form S-3 (or other appropriate form if the Company is not then S-3 eligible) providing for the resale by the Investors of the shares issued and issuable upon exercise of the warrants within 10 trading days of the date of the Securities Purchase Agreement.
The shares issuable upon exercise of the warrants will be subject to stockholder approval. The Company has agreed to hold an annual or special meeting of stockholders within 90 days following the Closing Date (as defined in the Securities Purchase Agreement) to have stockholders approve the issuance of the shares of common stock underlying the warrants pursuant to applicable Nasdaq rules.
The Company agreed to pay the Placement Agent a cash fee of 6.0% of the gross proceeds from the Offering, an additional 6.0% cash fee of any cash exercise of the warrants and to reimburse the Placement Agent for its expenses, including the reimbursement of legal fees up to an aggregate of $50,000. In addition, the Company issued an aggregate of 118,800 placement agent warrants to the Placement Agent and its designees with substantially the same terms as the warrants to the Investors, except that the placement agent warrants will terminate five years following the commencement of sales of the Offering and have an exercise price of $2.675.
The foregoing summaries of the terms of the Securities Purchase Agreement, warrants, pre-funded warrants and placement agent warrrants are subject to, and qualified in their entirety by, such documents attached hereto as Exhibits 10.1 and 4.1, 4.2 and 4.3, respectively, and incorporated herein by reference. The provisions of the Securities Purchase Agreement, including the representations and warranties contained therein, are not for the benefit of any party other than the parties to such agreement or as stated therein and are not intended as a document for investors and the public to obtain factual information about the current state of affairs of the parties to the documents and agreements. Rather, investors and the public should look to other disclosures contained in the Company's filings with the Commission.
A copy of the opinion of Foley & Lardner LLP relating to the legality of the issuance and sale of the shares of common stock is attached hereto as Exhibit 5.1.
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22nd Century Group Inc. published this content on 09 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 April 2024 21:07:48 UTC.