Item 1.01. Entry into a Material Definitive Agreement
On February 19, 2021, 180 Life Sciences Corp. (the "Company") entered into a
Securities Purchase Agreement (the "Purchase Agreement") with the purchasers
identified on the signature pages thereto (the "Purchasers") pursuant to which
the Company agreed to sell to the Purchasers an aggregate of 2,564,000 shares
(the "Shares") of the common stock, par value $0.0001 per share, of the Company
("Common Stock"), and warrants to purchase up to an aggregate of 2,564,000
shares of Common Stock (the "Warrants"), at a combined purchase price of $4.55
per Share and accompanying Warrant (the "Offering"). Aggregate gross proceeds
from the Offering are expected to be approximately $11.7 million, prior to
deducting placement agent fees and estimated offering expenses payable by the
Company. Net proceeds to the Company from the Offering, after deducting the
placement agent fees and estimated offering expenses payable by the Company, are
expected to be approximately $10.8 million. The Offering closed on February 23,
2021.
The terms of the Warrants are as set forth in the form of Warrant attached as
Exhibit 4.1 to this Current Report on Form 8-K. The Warrants will have an
exercise price equal to $5.00, will be immediately exercisable and will be
subject to customary anti-dilution adjustments for stock splits or dividends or
other similar transactions. However, the exercise price of the Warrants will not
be subject to adjustment as a result of subsequent equity issuances at effective
prices lower than the then-current exercise price. The Warrants will be
exercisable for 5 years following the closing date. The Warrants are subject to
a provision prohibiting the exercise of such Warrants to the extent that, after
giving effect to such exercise, the holder of such Warrant (together with the
holder's affiliates, and any other persons acting as a group together with the
holder or any of the holder's affiliates), would beneficially own in excess of
4.99% of the outstanding Common Stock (which may be increased to 9.99% on a
holder by holder basis, with 61 days prior written consent of the applicable
holder).
In connection with the Offering, the Company also entered into a Registration
Rights Agreement, dated as of February 23, 2021, with the Purchasers (the
"Registration Rights Agreement"). Pursuant to the Registration Rights Agreement,
the Company agreed to file a registration statement with the Securities and
Exchange Commission (the "SEC") on or prior to April 24, 2021 to register the
resale of the Shares and the shares of Common Stock issuable upon exercise of
the Warrants (the "Warrant Shares"), and to cause such registration statement to
be declared effective on or prior to June 23, 2021 (or, in the event of a "full
review" by the SEC, August 22, 2021).
The Company agreed in the Purchase Agreement that, until the earlier of (1)
thirty (30) days after the date on which the registration statement that is
filed pursuant to the Registration Rights Agreement to register the resale by
the Purchasers of the Shares and the Warrant Shares is declared effective by the
SEC (such date, the Effective Date") and (2) thirty (30) days after such date
that the Shares may be sold without limitation pursuant to Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), neither the Company
nor any subsidiary thereof would (i) issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common Stock (or
Common Stock equivalents) or (ii) file any registration statement or any
amendment or supplement thereto, in each case other than (A) as contemplated
pursuant to the Registration Rights Agreement and (B) as contemplated by that
certain Registration Rights Agreement, dated June 12, 2020, by and between the
Company and the parties signatory thereto.
Each of the directors and executive officers of the Company has entered into a
lock-up agreement with the Company in connection with the Offering (each, a
"Lock-Up Agreement"). Under the Lock-Up Agreements, from the date of the lock-up
agreements until the earlier of (x) sixty (60) days after the Effective Date and
(y) November 6, 2021, the directors and executive officers will not offer, sell,
contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition
due to cash settlement or otherwise) by the director or executive officer),
directly or indirectly, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, with respect to, any
shares of Common Stock or securities convertible, exchangeable or exercisable
into, shares of Common Stock, subject to limited exceptions.
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Maxim Group LLC (the "Placement Agent") acted as exclusive placement agent in
connection with the Offering pursuant to an Engagement Letter between the
Company and the Placement Agent dated January 26, 2021 (together with the
amendment letter dated February 18, 2021 (such amendment letter, the "Amendment
Letter"), the "Engagement Letter"). The Engagement Letter provides, among other
things, that the Placement Agent will receive a commission equal to seven
percent (7%) of the aggregate gross proceeds of the Offering.
The Engagement Letter and the Purchase Agreement contain customary
representations and warranties, agreements and obligations, conditions to
closing and termination provisions. The representations, warranties and
covenants contained in the Engagement Letter and the Purchase Agreement were
made only for purposes of such agreement and as of specific dates, were solely
for the benefit of the parties to the Engagement Letter and the Purchase
Agreement, and may be subject to limitations agreed upon by the contracting
parties.
The foregoing summaries of the material terms of the Purchase Agreement, the
Engagement Letter, the Amendment Letter, the Registration Rights Agreement, the
form of Lock-Up Agreement and the form of Warrant are not complete and are
qualified in their entirety by reference to the full text thereof, copies of
which are filed herewith as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 4.1,
respectively, and incorporated by reference herein.
Item 3.02. Unregistered Sales of Equity Securities
Offer and Sale of Shares and Warrants
The information set forth in "Item 1.01 Entry into a Material Definitive
Agreement" relating to the issuance of the Shares and the Warrants to the
Purchasers pursuant to the Purchase Agreement is incorporated by reference
herein in its entirety. The Company issued the Shares and the Warrants to the
Purchasers pursuant to the Purchase Agreement in reliance on the exemption from
registration provided by Section 4(a)(2) of the Securities Act and/or Rule
506(b) of Regulation D promulgated thereunder.
Conversion of Notes
On February 4 and February 5, 2021, the holders of the Company's convertible
promissory notes sold pursuant to that certain Securities Purchase Agreement,
dated as of September 8, 2020, among the Company and the purchasers identified
on the signature pages thereto, and that certain Securities Purchase Agreement,
dated as of June 12, 2020, among the Company and the purchasers identified on
the signature pages thereto, converted an aggregate of $423,416.67 of principal
and interest owed under such convertible notes into an aggregate of 128,730
shares of Common Stock pursuant to the terms of such notes, as amended, at a
conversion price of $3.29 per share. The current balance of the outstanding
convertible promissory notes sold pursuant to the aforementioned Purchase
Agreements is currently approximately $316,000. The Company claims an exemption
from registration provided by Section 3(a)(9) of the Securities Act of 1933, as
amended, for the issuance of the shares upon conversion of the notes.
Item 8.01. Other Events
On February 19, 2021, the Company issued a press release announcing the
execution of the Purchase Agreement. A copy of the press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
On February 24, 2021, the Company issued a press release announcing the closing
of the Offering. A copy of the press release is attached hereto as Exhibit 99.2
and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
4.1 Form of Warrant.
10.1# Securities Purchase Agreement dated as of February 19, 2021 by and
between 180 Life Sciences Corp. and the purchasers identified on the
signature pages thereto.
10.2 Engagement Letter dated January 26, 2021 between 180 Life Sciences
Corp. and Maxim Group LLC.
10.3 Amendment to Engagement Letter between 180 Life Sciences Corp. and
Maxim Group LLC dated February 18, 2021.
10.4 Registration Rights Agreement dated as of February 23, 2021 by and
between 180 Life Sciences Corp. and the purchasers signatory thereto.
10.5 Form of Lock-Up Agreement.
99.1 Press release of 180 Life Sciences Corp. dated February 19, 2021.
99.2 Press release of 180 Life Sciences Corp. dated February 24, 2021.
# The schedules to this exhibit have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. The Company agrees to furnish a copy of the omitted schedules
to the Securities and Exchange Commission on a supplemental basis upon its
request.
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