Item 1.01 Entry into a Material Definitive Agreement.
On May 8, 2023, Lexaria Bioscience Corp. (the “Company”) entered into a placement agency agreement dated as of May 8, 2023 (the “PAA”) with Maxim Group LLC (the “Placement Agent”) in connection with an offering of an aggregate of 2,106,000 Units (the “Offering”), each Unit consisting of one share (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and one warrant to purchase one share of Common Stock (the “Warrants”). The public offering price was $0.95 per Unit, before deducting placement agent fees and estimated offering expenses. The Offering is expected to close on May 11, 2023, subject to customary closing conditions. The components of the Units were issued separately and are immediately separable upon issuance.
The Warrants are immediately exercisable at a price of $0.95 per share and will expire on the five (5) year anniversary of May 11, 2023, the original issuance date. In addition, a holder may also effect a “cashless” exercise for the number of shares of common stock to be determined according to a formula set forth in the Warrant if at the time of the exercise of the Warrant, there is no effective registration statement or the prospectus contained in an effective registration statement is not available for the issuance of the underlying shares to the holder.
Pursuant to the PAA, the Company agreed to pay the Placement Agent a cash placement fee equal to 7.0% of the gross proceeds of the Offering, plus the reimbursement of up to $70,000 of legal fees.
On May 8, 2023, the Company also entered into a security purchase agreement (the “Purchase Agreement”) with certain institutional investors named therein (the “Purchasers”) in connection with the Offering. Under the Purchase Agreement, the Purchasers agreed to subscribe for up to an aggregate of $247,000 of Units.
The Units, the Shares, the Warrants, and the shares of Common Stock issuable upon exercise of the Warrants were offered by the Company pursuant to a Registration Statement on Form S-1, as amended (File No. 333-271096), initially filed on April 3, 2023, with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and declared effective on May 8, 2023.
The Purchase Agreement and PAA contain customary representations, warranties, and agreements by the Company, customary conditions to closing, and indemnification obligations of the Company, the Placement Agent and the Purchasers. The representations, warranties and covenants contained in the Purchase Agreement and PAA were made only for purposes of such agreements and as of a specific date, were solely for the benefit of the parties to such agreements, and may be subject to limitations agreed upon by the contracting parties.
In conjunction with the closing of the Offering, the Company expects to enter into a Warrant Agency Agreement with Computershare Inc. and Computershare Trust Company, N.A. (“Computershare”), pursuant to which Computershare will act as warrant agent with respect to the Warrants issued by the Company in the Offering.
A copy of the form of Warrant is filed hereto as Exhibit 4.1. Copies of the Purchase Agreement and PAA are filed hereto as Exhibits 10.1 and 10.2, respectively. A copy of the form of Warrant Agency Agreement is filed hereto as Exhibit 4.2. The foregoing descriptions of the terms of the Warrants, Purchase Agreement, PAA and Warrant Agency Agreement are qualified in their entirety by reference to such exhibits.