Item 1.01
Entry into a Material Definitive Agreement.
On June 26, 2022, AeroClean
Technologies, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with
a single institutional investor (the “Purchaser”). The Purchase Agreement provides for the issuance and sale by the Company
in a private placement of (i) an aggregate of 1,500,000 shares (the “Shares”) of the Company’s common stock, par value
$0.01 per share (“Common Stock”), and (ii) a warrant to purchase up to 1,500,000 shares of Common Stock (the “Warrant”
and, together with the Shares, collectively, the “Securities”) for an aggregate offering price of $15,000,000 (the “Private
Placement”). The Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions
to closing and indemnification obligations of the Purchaser and the Company. The closing of the Private Placement occurred on June 29,
2022 (the “Closing Date”).
The
Warrant has an exercise price of $11.00 per share. The Warrant will be exercisable with respect to 1,261,650 shares beginning on the earlier
of the effective date of a resale registration statement covering the shares of Common Stock underlying the Warrant and September 27,
2022 (the “Initial Exercise Date”). The remainder of the Warrant may be exercised upon receiving the requisite Stockholder
Approval (as defined below) for the issuance of the Securities. The Warrant must be exercised on or prior to 5:00 p.m. on the fifth-year
anniversary of the Initial Exercise Date (which will be no later than September 27, 2027). The Purchaser has contractually agreed to restrict
its ability to exercise the Warrant if the number of shares of the Company’s Common Stock held by the Purchaser and its affiliates
after such exercise would exceed 4.99% of the then issued and outstanding shares of the Company’s Common Stock. The Purchaser may
increase or decrease this limitation upon notice to the Company, but in no event will any such limitation exceed 9.99%.
In connection with the Private Placement, the Company entered into
a registration rights agreement (the “Registration Rights Agreement”) with the Purchaser. Pursuant to the Registration Rights
Agreement, the Company is required to file a resale registration statement (the “Registration Statement”) with the Securities
and Exchange Commission (the “SEC”) in order to register the Shares and the shares underlying the Warrant for resale promptly
following the Closing Date but in no event later than July 11, 2022. The Company is also required to use its best efforts to have such
Registration Statement declared effective as promptly as practicable thereafter and in any event no later than 90 days thereafter in the
event of a full review by the SEC. The Company will be obligated to pay certain liquidated damages to the Purchaser if the Company fails
to file the Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required,
or fails to maintain the effectiveness of the Registration Statement pursuant to the terms of the Registration Rights Agreement.
In
connection with the Private Placement and the issuance of the Securities, on June 26, 2022, certain stockholders of the Company holding
approximately 65% of the voting power of the Company’s outstanding Common Stock entered into a letter agreement (the “Letter
Agreement”). Pursuant to the Letter Agreement, in order to comply with Nasdaq Listing Rule 5635, the stockholders irrevocably and
unconditionally committed to (i) attend the Company’s annual meeting of stockholders on July 12, 2022 (the “Annual Meeting”),
(ii) cause their shares of Common Stock to be counted as present at the Annual Meeting for purpose of establishing a quorum and (iii)
vote or cause their shares to be voted in favor of the Private Placement (the “Stockholder Approval”).
The
Purchase Agreement has been included to provide security holders with information regarding its terms but it is not intended to provide
any other factual information about the Company or its affiliates. The Purchase Agreement contains representations, warranties and covenants
by the Company and the Purchaser. These representations, warranties and covenants were made solely for the benefit of the other party
to the Purchase Agreement and (a) are not intended to be treated as categorical statements of fact, but rather as a way of allocating
risk to one of the parties if those statements prove to be inaccurate, (b) may have been qualified in the Purchase Agreement by confidential
disclosure schedules that were delivered to the other party in connection with the signing of the Purchase Agreement, which disclosure
schedules contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth
in the Purchase Agreement, (c) may be subject to standards of materiality applicable to the parties that differ from what might be viewed
as material to stockholders and (d) were made only as of the date of the Purchase Agreement or such other date or dates as may be specified
in the Purchase Agreement. Accordingly, you 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.
The descriptions of the Purchase Agreement, the Warrant, the Registration
Rights Agreement, and the Letter Agreement do not purport to be complete and are qualified in their entirety by the terms and conditions
of the Purchase Agreement, the Warrant, the Registration Rights Agreement, and the Letter Agreement. The form of Warrant is attached hereto
as Exhibit 4.1 and is incorporated herein by reference. The forms of Purchase Agreement, Registration Rights Agreement, and Letter Agreement
are attached hereto as Exhibits 10.1, 10.2, and 10.3, respectively, and are incorporated herein by reference.