Item 1.01 Entry into a Material Definitive Agreement.
The Offering
On May 17, 2022, Tenax Therapeutics, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”) pursuant to which the Company agreed to sell and issue to the Investor 10,596,027 units (“Units”) in a private placement at a purchase price of $0.775 per Unit (the “Offering”). Each Unit consists of one unregistered pre-funded warrant to purchase one share of common stock, par value $0.0001 (collectively, the “Pre-Funded Warrants”), and one unregistered warrant to purchase one share of common stock (collectively, the “Series E Warrants”, and together with the Pre-Funded Warrants, the “Warrants”). In the aggregate, 21,192,054 shares of the Company’s common stock are underlying the Warrants (the “Warrant Shares”). The Offering closed on May 19, 2022. The aggregate gross proceeds to the Company of the Offering were approximately $8.0 million.
Each Unregistered Pre-Funded Warrant has an exercise price of $0.0001 per share of common stock, is immediately exercisable, may be exercised at any time until exercised in full and is subject to customary adjustments. Each Series E Warrant has an exercise price of $0.63 per share of common stock (the “Exercise Price”), is immediately exercisable, will expire five and one-half years from the date of issuance and is subject to customary adjustments. The Warrants may not be exercised if the aggregate number of shares of the Company’s common stock beneficially owned by the holder (together with its affiliates) would exceed 9.99% of the Company’s outstanding common stock immediately after exercise. However, the holder may increase (upon 61 days’ prior notice from the holder to the Company) or decrease such percentage, provided that in no event such percentage exceeds 9.99%.
The Company intends to use the net proceeds from the Offering to further its clinical trials of levosimendan and imatinib, for research and development and for general corporate purposes, including working capital.
Additionally, on May 17, 2022 and in connection with the Offering, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investor, pursuant to which the Company agreed to register for resale the Warrant Shares within 120 days following the date of the Registration Rights Agreement.
Under certain circumstances, including, but not limited to, (i) if the registration statement is not filed by the earlier of 30 calendar days after the date of the Registration Rights Agreement, (ii) if the registration statement has not been declared effective (A) by the 120th calendar day after the date of the Registration Rights Agreement (or, in the event of a “full review” by the Securities and Exchange Commission (the “SEC”), the 150th calendar day after the date of the Registration Rights Agreement) or (B) within five trading days following the date the Company is notified by the SEC that the registration statement will not be reviewed or is no longer subject to further review and comments, then the Company has agreed to pay the Investor, as partial liquidated damages, an amount equal to 1.0% of the Investor’s aggregate subscription amount paid pursuant to the Purchase Agreement.
The Purchase Agreement and the Registration Rights Agreement include customary representations, warranties and covenants by the Company. The foregoing descriptions of the Series E Warrants, the Pre-Funded Warrants, the Purchase Agreement and the Registration Rights Agreement do not purport to be complete and are qualified by reference to the full text of such agreements, which are attached to this Current Report on Form 8-K as Exhibits 4.1, 4.2, 10.1 and 10.2, respectively, and are incorporated herein by reference.
Warrant Amendment Agreement
In connection with the Offering, the Company entered into a warrant amendment agreement (the “Warrant Amendment Agreement”) with the Investor, in consideration for the Investor’s purchase of approximately $8.0 million of Units in the Offering, pursuant to which the Company agreed to amend certain previously issued warrants held by the Investor, as follows:
| i. | the warrants issued on July 8, 2021 to purchase 4,773,269 shares of Common Stock at an exercise price of $1.97 per share, were amended by reducing the existing exercise price to the Exercise Price and extending the termination date of the warrant to January 8, 2029; |
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| ii. | the Series B warrants issued on July 8, 2020 to purchase 3,175,924 shares of Common Stock at an exercise price of $0.903 per share, were amended by extending the termination date of the warrant to January 8, 2028; |
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| iii. | the Series C warrants issued on July 8, 2020 to purchase 4,607,692 shares of Common Stock at an exercise price of $0.903 per share, were amended by extending the termination date of the warrant to January 8, 2028; |
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| iv. | the warrants issued on March 13, 2020 to purchase 2,360,313 shares of Common Stock at an exercise price of $1.04 per share, were amended by reducing the existing exercise price to the Exercise Price and extending the termination date of the warrant to September 15, 2027; and |
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| v. | the Series 2 warrants issued on December 11, 2018 to purchase 2,072,538 shares of Common Stock at an exercise price of $1.93 per share, were amended by reducing the existing exercise price to the Exercise Price and extending the termination date of the warrant to December 11, 2025. |
The foregoing description of the Warrant Amendment Agreement does not purport to be complete and is qualified by reference to the full text of such agreement, which is attached to this Current Report on Form 8-K as Exhibit 4.3 and is incorporated herein by reference.
