Item 1.01 Entry into a Material Definitive Agreement.
On November 14, 2022, DIRTT Environmental Solutions Ltd. (the "Company") entered
into irrevocable subscription agreements (the "Subscription Agreements") with
22NW Fund, LP ("22NW"), 726 BC LLC and 726 BF LLC (collectively, "726" and
together with 22NW, the "Institutional Purchasers"), Douglas Edwards, Aron
English, Brad Little, Richard Hunter, Cory Mitchell, Shaun Noll, Scott Robinson,
Scott Ryan, Ken Sanders, Benjamin Urban, Jeff Dopheide, Mark Greffen and Nandini
Somayaji (collectively, the "Individual Purchasers" and together with the
Institutional Purchasers, the "Purchasers"). Pursuant to the Subscription
Agreements, the Company agreed to issue and sell to the Purchasers, and the
Purchasers agreed to purchase from the Company, up to an aggregate of 8,743,256
common shares of the Company ("Common Shares"), having an aggregate subscription
price of $2,774,235 (the "Private Placement").
Pursuant to the Subscription Agreements, the subscription price for the Common
Shares sold in the Private Placement will be equal to the greater of (i) the
closing bid price of the Common Shares on the Nasdaq Global Select Market on
November 14, 2022, being $0.3173; and (ii) the volume weighted average trading
price (converted to U.S. dollars based on the Bank of Canada daily exchange
rate) of the Common Shares on the Toronto Stock Exchange ("TSX") for the five
trading days immediately following the announcement, being November 15 to
November 21 (inclusive).
22NW and 726 have committed to purchase $0.5 million and $0.75 million of Common
Shares, respectively, and the Individual Purchasers have committed to purchase
approximately $1.5 million of Common Shares in total, for aggregate gross
proceeds to the Company of $2,774,235. Each Institutional Purchaser (or its
affiliated director) has also committed to purchase Common Shares having an
aggregate subscription price of not less than $1.0 million in any rights
offering conducted by the Company within one year of the closing of the Private
Placement. Each of 22NW and 726 will allocate its commitment between itself and
its affiliated director (being Aron English and Shaun Noll, respectively). The
subscription price for such Common Shares will be the same as the subscription
price under the basic subscription privilege to all other shareholders under any
such future rights offering.
The Private Placement is subject to standard regulatory approvals, including the
approval of the TSX, and is expected to close on or about November 23, 2022. The
Subscription Agreements contain customary representations, warranties and
covenants of the Company and the Purchasers. The Common Shares to be issued
pursuant to the Subscription Agreements have been offered and sold in reliance
upon an exemption from registration provided under Section 4(a)(2) of the
Securities Act of 1933.
As of the date hereof, 22NW and 726 are the Company's two largest shareholders
and beneficially own 15,894,165 and 11,111,669 Common Shares, representing
approximately 17.9% and 12.5% of the Company's issued and outstanding Common
Shares, respectively. Each of Douglas Edwards, Aron English, Cory Mitchell,
Shaun Noll, Scott Robinson, Scott Ryan, Ken Sanders and Benjamin Urban is a
director of the Company. Mr. Urban is also the Chief Executive Officer of the
Company. Each of Jeff Dopheide, Mark Greffen, Richard Hunter, Brad Little and
Nandini Somayaji is an executive officer of the Company.
The foregoing is qualified in its entirety by reference to the full text of the
Subscription Agreements, copies of which are filed as exhibits to this Current
Report on Form 8-K and are incorporated herein by reference.
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Item 3.02. Unregistered Sale of Equity Securities.
The information regarding the Private Placement set forth in Item 1.01 of this
Current Report on Form 8-K is incorporated by reference into this Item 3.02.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. Description
10.1* Subscription Agreement, dated November 14, 2022, by and between
DIRTT Environmental Solutions Ltd. and 22NW Fund, LP, together
with a schedule identifying substantially identical agreements
between DIRTT Environmental Solutions Ltd. and each shareholder
and U.S. director and executive officer listed on the schedule
and identifying the material differences between each of those
agreements and the filed Subscription Agreement.
10.2* Subscription Agreement, dated November 14, 2022, by and between
DIRTT Environmental Solutions Ltd. and Mark Greffen, together
with a together with a schedule identifying substantially
identical agreements between DIRTT Environmental Solutions Ltd.
and each shareholder and Canadian executive officer listed on the
schedule and identifying the material differences between each of
those agreements and the filed Subscription Agreement.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to
the Securities and Exchange Commission upon request.
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