Item
1.01. Entry into a Material Definitive Agreement.
On
February 16, 2021, Processa Pharmaceuticals, Inc. (the “Company”) entered into a securities purchase agreement for
a private placement with several investors, wherein a total of 1,321,132 shares of the Company’s common stock were sold,
par value $0.0001 per share (the “Common Stock”), at a purchase price of $7.75 per share for a total purchase price
of $10,238,773 (the “Offering”). It is anticipated that the Offering will raise net cash proceeds of $9,830,610 (after
deducting the placement agent fee and other expenses related to the Offering). The Company intends to use the net cash proceeds
from the Offering for general corporate purposes. The Offering is expected to close on or about February 23, 2021, subject to
the satisfaction of customary closing conditions.
The
Company engaged Tribal Capital Markets, LLC (“Tribal”) as placement agent for the Offering pursuant to an engagement
letter agreement. The Company agreed to pay Tribal a cash placement fee equal to 3% of the gross proceeds of the Offering and
to issue Tribal warrants to purchase up to 79,268 shares of Common Stock at an exercise price of $9.30 for cash for a period of
two years. The Company has also engaged Allele Capital Partners, LLC as its financial advisor for the Offering and other corporate
matters for a fee of $10,000 per month over a term of six months.
In
connection with the Offering, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”)
with investors containing customary representations and warranties. The Company and investors also entered into a Registration
Rights Agreement under which the Company will prepare and file a registration statement (the “Resale Registration Statement”)
with the Securities and Exchange Commission (“SEC”) for the purpose of registering the resale of shares of Common
Stock issued in the Offering. The Company will use its commercially reasonable best efforts to cause the Resale Registration Statement
to be declared effective by the SEC within 30 days after the filing thereof (75 days in the event the registration statement is
reviewed by the SEC). If the Company fails to meet the specified filing deadlines or keep the Resale Registration Statement effective,
subject to certain permitted exceptions, the terms of the Registration Rights Agreement provide that the Company will be required
to pay liquidated damages to the purchasers. The Company also agreed, among other things, to indemnify the selling holders under
the Resale Registration Statement from certain liabilities and to pay all fees and expenses incident to the Company’s performance
of or compliance with the Registration Rights Agreement.
The
representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties
to the Purchase Agreement and may be subject to limitations agreed upon by the contracting parties. In addition, such representations,
warranties and covenants (i) are intended as a way of allocating the risk between the parties to the Purchase Agreement and not
as statements of fact, and (ii) may apply standards of materiality in a way that is different from what may be viewed as material
by stockholders of, or other investors in, the Company. Accordingly, the Purchase Agreement is filed with this report only to
provide investors with information regarding the terms of transaction, and not to provide investors with any other factual information
regarding the Company. Stockholders 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. Moreover, information concerning the subject matter
of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or
may not be fully reflected in public disclosures.
The
Offering is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”)
pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities
Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. Each
of the Purchasers represented that it is an accredited investor within the meaning of Rule 501(a) of Regulation D, and was acquiring
the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution
thereof. The securities were offered without any general solicitation by the Company or its representatives.
The
foregoing description of each of the Purchase Agreement, Registration Rights Agreement and Form of Placement Agent Warrant is
qualified in its entirety by reference to the forms of such documents which are filed hereto as Exhibits 10.1, 10.2, and 10.3
respectively.