Item 1.01Entry into a Material Definitive Agreement.
On June 26, 2022, AeroClean Technologies, Inc. (the "Company") entered into a
Securities Purchase Agreement (the "Purchase Agreement") with a single
institutional investor (the "Purchaser"). The Purchase Agreement provides for
the issuance and sale by the Company in a private placement of (i) an aggregate
of 1,500,000 shares (the "Shares") of the Company's common stock, par value
$0.01 per share ("Common Stock"), and (ii) a warrant to purchase up to 1,500,000
shares of Common Stock (the "Warrant" and, together with the Shares,
collectively, the "Securities") for an aggregate offering price of $15,000,000
(the "Private Placement"). The Purchase Agreement contains customary
representations, warranties and agreements by the Company, customary conditions
to closing and indemnification obligations of the Purchaser and the Company. The
closing of the Private Placement occurred on June 29, 2022 (the "Closing Date").
The Warrant has an exercise price of $11.00 per share. The Warrant will be
exercisable with respect to 1,261,650 shares beginning on the earlier of the
effective date of a resale registration statement covering the shares of Common
Stock underlying the Warrant and September 27, 2022 (the "Initial Exercise
Date"). The remainder of the Warrant may be exercised upon receiving the
requisite Stockholder Approval (as defined below) for the issuance of the
Securities. The Warrant must be exercised on or prior to 5:00 p.m. on the
fifth-year anniversary of the Initial Exercise Date (which will be no later than
September 27, 2027). The Purchaser has contractually agreed to restrict its
ability to exercise the Warrant if the number of shares of the Company's Common
Stock held by the Purchaser and its affiliates after such exercise would exceed
4.99% of the then issued and outstanding shares of the Company's Common Stock.
The Purchaser may increase or decrease this limitation upon notice to the
Company, but in no event will any such limitation exceed 9.99%.
In connection with the Private Placement, the Company entered into a
registration rights agreement (the "Registration Rights Agreement") with the
Purchaser. Pursuant to the Registration Rights Agreement, the Company is
required to file a resale registration statement (the "Registration Statement")
with the Securities and Exchange Commission (the "SEC") in order to register the
Shares and the shares underlying the Warrant for resale promptly following the
Closing Date but in no event later than July 11, 2022. The Company is also
required to use its best efforts to have such Registration Statement declared
effective as promptly as practicable thereafter and in any event no later than
90 days thereafter in the event of a full review by the SEC. The Company will be
obligated to pay certain liquidated damages to the Purchaser if the Company
fails to file the Registration Statement when required, fails to cause the
Registration Statement to be declared effective by the SEC when required, or
fails to maintain the effectiveness of the Registration Statement pursuant to
the terms of the Registration Rights Agreement.
In connection with the Private Placement and the issuance of the Securities, on
June 26, 2022, certain stockholders of the Company holding approximately 65% of
the voting power of the Company's outstanding Common Stock entered into a letter
agreement (the "Letter Agreement"). Pursuant to the Letter Agreement, in order
to comply with Nasdaq Listing Rule 5635, the stockholders irrevocably and
unconditionally committed to (i) attend the Company's annual meeting of
stockholders on July 12, 2022 (the "Annual Meeting"), (ii) cause their shares of
Common Stock to be counted as present at the Annual Meeting for purpose of
establishing a quorum and (iii) vote or cause their shares to be voted in favor
of the Private Placement (the "Stockholder Approval").
The Purchase Agreement has been included to provide security holders with
information regarding its terms but it is not intended to provide any other
factual information about the Company or its affiliates. The Purchase Agreement
contains representations, warranties and covenants by the Company and the
Purchaser. These representations, warranties and covenants were made solely for
the benefit of the other party to the Purchase Agreement and (a) are not
intended to be treated as categorical statements of fact, but rather as a way of
allocating risk to one of the parties if those statements prove to be
inaccurate, (b) may have been qualified in the Purchase Agreement by
confidential disclosure schedules that were delivered to the other party in
connection with the signing of the Purchase Agreement, which disclosure
schedules contain information that modifies, qualifies and creates exceptions to
the representations, warranties and covenants set forth in the Purchase
Agreement, (c) may be subject to standards of materiality applicable to the
parties that differ from what might be viewed as material to stockholders and
(d) were made only as of the date of the Purchase Agreement or such other date
or dates as may be specified in the Purchase Agreement. Accordingly, you 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.
The descriptions of the Purchase Agreement, the Warrant, the Registration Rights
Agreement, and the Letter Agreement do not purport to be complete and are
qualified in their entirety by the terms and conditions of the Purchase
Agreement, the Warrant, the Registration Rights Agreement, and the Letter
Agreement. The form of Warrant is attached hereto as Exhibit 4.1 and is
incorporated herein by reference. The forms of Purchase Agreement, Registration
Rights Agreement, and Letter Agreement are attached hereto as Exhibits 10.1,
10.2, and 10.3, respectively, and are incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The offer and sale of the Securities pursuant to the Purchase Agreement will not
be registered under the Securities Act of 1933, as amended, in reliance upon the
exemption from registration provided by Section 4(a)(2) of the Securities Act of
1933 and Regulation D promulgated thereunder. The information included under
Item 1.01 of this Form 8-K is hereby incorporated by reference in this Item
3.02.
Item 8.01 Other Events.
On June 27, 2022, the Company issued a press release announcing the pricing of
the Private Placement, a copy of which is attached hereto as Exhibit 99.1.
On June 29, 2022, the Company issued a press release announcing the closing of
the Private Placement, a copy of which is attached hereto as Exhibit 99.2.
Item 9.01 Financial Statements and Exhibits.
4.1 Form of Warrant
10.1† Form of Securities Purchase Agreement
10.2 Form of Registration Rights Agreement
10.3 Form of Stockholders Letter Agreement
99.1 Press Release, dated June 27, 2022
99.2 Press Release, dated June 29, 2022
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded
within the inline XBRL document)
†The schedules and annexes (and similar attachments) to this exhibit have been
omitted from this filing pursuant to Item 601(b)(10) of Regulation S-K. The
registrant agrees to furnish a supplemental copy of any omitted schedule (or
similar attachment) to the SEC upon request.
Forward-Looking Statements
This Form 8-K includes forward-looking statements relating to our management's
expectations, beliefs and intentions and AeroClean's
prospects. Forward-looking statements are statements that are not historical
facts. Such forward-looking statements are based on our management's current
expectations and projections about future events and trends, which are
inherently subject to risks, assumptions and uncertainties that could cause
actual results to differ materially from those explicitly or implicitly
projected, including (without limitation): macroeconomic uncertainties driven by
the war between Ukraine and Russia; rising inflation and the COVID-19 pandemic;
a failure by our products to perform as expected; our inability to develop
adequate distribution, customer service, and technical support networks; our
failure to implement our business strategy including completing any potential
acquisitions; any delay in or failure to comply with regulations, including the
U.S. Food and Drug Administration and other state regulations; our inability to
develop and maintain reliable manufacturing, consulting and other vendor
relationships important to the commercialization of our products; our inability
to protect our intellectual property or our infringement upon the proprietary
rights of others; and our inability to efficiently manage research and
development spending.
These and other risks and uncertainties that could affect AeroClean's future
results are included under the caption "Risk Factors" in AeroClean's annual
report on Form 10-K for the fiscal year ended December 31, 2021 filed with the
SEC on April 1, 2022, as amended, which is available on the SEC's website
at www.sec.gov. Further information regarding potential risks or uncertainties
that could affect actual results will be included in other periodic filings
AeroClean makes with the SEC.
The forward-looking statements in this Form 8-K reflect management's
expectations as of the date hereof and AeroClean expressly disclaims any
obligations or undertaking to release publicly any updates or revisions to
any forward-looking statements contained herein to reflect any change in the
expectations with respect thereto or any change in events, conditions or
circumstances on which any statement is based. Investors should realize that if
our underlying assumptions for the forward-looking statements contained herein
prove inaccurate, or if known or unknown risks or uncertainties materialize,
actual results could vary materially from our expectations and projections.
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