Item 1.01. Entry into a Material Definitive
Agreement.
Common Stock and Warrant Private Placement
Between
September 28, 2016 and October 11, 2016, MetaStat, Inc. (the
“Company”) entered into a subscription agreement (the
“Subscription Agreement”) with a number of accredited
investors (collectively, the “Investors”) pursuant to
which the Company may sell up a maximum of 2,000 units, with each
unit consisting of (i) 5,000 shares of the Company’s common
stock, par value $0.0001 per share (the “Common
Stock”), at an effective price of $2.00 per share (the
“Effective Price”), and (ii) and five-year warrants
(the “Warrants”) to purchase 2,500 shares of Common
Stock (the “Warrant Shares”), at a purchase price of
$3.00 per share (the “Private Placement”). For the
benefit of certain Investors that would be deemed to have
beneficial ownership in excess of 4.99% or 9.99%, the Company may
issue shares of a newly created convertible preferred stock,
classified as Series A-2 Convertible Preferred Stock (the
“Series A-2 Preferred”), in lieu of issuing to such
Investors shares of Common Stock in the Private Placement. Each
share of Series A-2 Preferred is convertible into 10 shares of
Common Stock (the “Conversion Shares”). The offering
price is $10,000 per unit.
Pursuant
to the second and third closings of the Private Placement under the
Subscription Agreement, the Company issued an aggregate of 135
units consisting of 192,000 shares of Common Stock, 48,300 shares
of Series A-2 Preferred,
convertible
into 483,000 shares of Common Stock,
and 337,500 Warrants,
for an aggregate purchase price of $1.35 million. After deducting
placement agent fees and other offering expenses, the Company
received net proceeds of approximately $1.23 million. Additionally,
the Company will issue an aggregate of 54,000 placement agent
warrants in substantially the same form as the
Warrants.
For a
period of one hundred eighty (180) days following the final closing
of the Private Placement, the Investors shall have
“full-ratchet” anti-dilution price protection based on
certain issuances by the Company of Common Stock or securities
convertible into shares of Common Stock at an effective price per
share less than the Effective Price.
Pursuant
to a registration rights agreement entered into by the parties, the
Company has agreed to file a registration statement with the
Securities and Exchange Commission providing for the resale of the
shares of Common Stock, the Conversion Shares and the Warrant
Shares issued pursuant to the Private Placement on or before the
date which is forty-five (45) days after the date of the final
closing of the Private Placement. The Company will use
its commercially reasonable efforts to cause the registration
statement to become effective as promptly as possible after the
filing date.
Pursuant
to the Certificate of Designation of Rights and Preferences of the
Series A-2 Convertible Preferred Stock (the “Certificate of
Designation”), the terms of the Series A-2 Preferred are as
follows:
Ranking
The
Series A-2 Preferred will rank (i) senior to the Common Stock, (ii)
pari passu
with the
Company’s Series A Convertible Preferred Stock, and (iii)
junior to the Company’s Series B Convertible Preferred Stock
with respect to distributions of assets upon the liquidation,
dissolution or winding up of the Company.
Dividends
The
Series A Preferred is not entitled to any dividends.
Liquidation Rights
In the
event of any liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, the holders of the Series A-2
Preferred shall be entitled to receive out of the assets of the
Company, whether such assets are capital or surplus, for each share
of Series A-2 Preferred an amount of cash, securities or other
property to which such holder would be entitled to receive with
respect to each such share of Preferred Stock if such shares had
been converted to Common Stock immediately prior to such
liquidation, dissolution or winding-up of the Company.
Voluntary Conversion; Anti-Dilution Adjustments
Each
share of Series A-2 Preferred shall, at any time, and from time to
time, at the option of the holder, be convertible into ten (10)
shares of Common Stock (the “Series A-2 Conversion
Ratio”). The Series A-2 Conversion Ratio is subject to
customary adjustments for issuances of shares of Common Stock as a
dividend or distribution on shares of Common Stock, or mergers or
reorganizations.
Conversion Restrictions
The
holders of the Series A-2 Preferred may not convert their shares of
Series A-2 Preferred into shares of Common Stock if the resulting
conversion would cause such holder and its affiliates to
beneficially own (as determined in accordance with Section 13(d) of
the Exchange Act, and the rules thereunder) in excess of 4.99% or
9.99% of the Common Stock outstanding, when aggregated with all
other shares of Common Stock owned by such holder and its
affiliates at such time;
provided
,
however
, that such holder may elect to
waive these conversion restrictions upon 61 days’ advanced
written notice.
Voting Rights
The
Series A-2 Preferred has no voting rights. The Common Stock into
which the Series A-2 Preferred is convertible shall, upon issuance,
have all of the same voting rights as other issued and outstanding
Common Stock, and none of the rights of the Series A-2
Preferred.
The
foregoing description of the Private Placement and related
transactions does not purport to be complete and is qualified in
its entirety by reference to the complete text of the (i) form of
Subscription Agreement filed as Exhibit 10.1 hereto; (ii) form of
Registration Rights Agreement filed as Exhibit 10.2 hereto, (iii)
form of Warrant issued in connection with the Private Placement as
Exhibit 4.1 hereto, and (iv) form of Series A-2 Convertible
Preferred Stock Certificate of Designation as Exhibit 4.2
hereto.
