Item
1.01. Entry into a Material Definitive Agreement.
As
previously reported on a Current Report on Form 8-K filed July 6, 2022, on June 30, 2022, Ensysce Biosciences, Inc. (“Ensysce”
or the “Company”) entered into a Securities Purchase Agreement (the “SPA”) for an aggregate financing of $8.0
million with institutional investors. At the first closing under the SPA, which occurred on June 30, 2022, the Company issued to the
investors (i) senior secured convertible promissory notes in the aggregate principal amount of $4.24 million for an aggregate purchase
price of $4 million (collectively, the “Notes”) and (ii) warrants (collectively, the “Warrants”) to purchase
4,667,890 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) in the aggregate.
At
a second closing under the SPA, which occurred on August 8, 2022 (“Second Closing”) , the Company issued to the institutional
investors referenced above, (i) Notes in the aggregate principal amount of $4.24 million for an aggregate purchase price of $4 million
and (i) Warrants to purchase 4,667,890 shares of the Common Stock in the aggregate.
At
the Second Closing, the parties entered into a Letter Agreement which modified a prior letter agreement dated June 30, 2022 (“Second
Letter Agreement”). Among other matters, the parties to the Second Letter Agreement (i) reduced the Conversion Price for the remaining
balance of the Company’s outstanding 2021 Senior Secured Convertible Notes from $0.78 to $0.35 for the period from the Second Closing
until October 1, 2022, and (ii) agreed to register any additional shares of Common Stock required to give the buyers registered shares
upon conversion of the Senior Secured Convertible Notes. Concurrently, purchasers agreed that the 2021 Senior Secured Convertible
Notes would not be due and payable until October 10, 2022, at which time they must be satisfied with cash.
The
Notes, subject to an original issue discount of six percent (6%), have a term of eighteen months and accrue interest at the rate of 6.0%
per annum. The Notes are convertible into the Common Stock, at a per share conversion price equal to $0.5450, a 10% premium to the average
price of the Common Stock for the three trading days prior to the first closing under the SPA. Under the Notes issued June 30, 2022,
commencing on September 29, 2022 and continuing monthly on the first day of each month beginning November 1, 2022, the Company is obligated
to redeem one fifteenth (1/15th) of the original principal amount under the applicable Note, plus accrued but unpaid interest, liquidated
damages and any other amounts then owing to the holder of such Note. Under the Notes issued August 8, 2022, commencing on November 1,
2022 and continuing monthly on the first day of each month beginning December 1, 2022, the Company is obligated to redeem one fifteenth
(1/15th) of the original principal amount under the applicable Note, plus accrued but unpaid interest, liquidated damages and any other
amounts then owing to the holder of such Note. The Company may elect to pay all or part of the redemption amount in cash with a premium
of eight percent or in conversion shares of Common Stock based on a conversion price equal to the lesser of (i) the conversion price
and (ii) 92% of the average of the three lowest VWAPs (as defined in the SPA) during the ten (10) consecutive trading days ending on
the trading day that is immediately prior to the applicable redemption date, but in no event may the Company pay the redemption amount
in conversion shares of Common Stock unless the conversion price is at least equal to $0.1003 and certain equity conditions are satisfied.
The
Warrants have an exercise price of $0.7085, a 30% premium to the conversion price and are exercisable for five years following issuance.
The Company issued, to the purchasers signatory to the SPA, Warrants to purchase up to a number of shares of Common Stock equal to sixty
percent (60%) of the shares of Common Stock issuable to each purchaser under the SPA upon conversion of the Note such purchaser held
on each of the first and second closing dates under the SPA.
The
Company has registered with the Securities and Exchange Commission (the “SEC”) the resale of the shares of Common Stock issuable
upon conversion of the Notes as well as the shares of Common Stock issuable upon the exercise of the Warrants pursuant to the Registration
Rights Agreement, dated June 30, 2022, by and among the Company and the purchasers signatory to the SPA. The second closing occurred
on the 2nd trading day after the registration statement was declared effective by the SEC.
The
Notes contain certain covenants, and events of default and triggering events, respectively, which would require repayment of the obligations
outstanding pursuant to such instruments. The obligations of the Company pursuant to the Notes are (i) secured by all assets of the Company
and all subsidiaries of the Company pursuant to the Security Agreement and Patent Security Agreement, each dated June 30, 2022, by and
among the Company, the subsidiaries of the Company and the holders of the Notes and (ii) guaranteed jointly and severally by the subsidiaries
of the Company pursuant to the Subsidiary Guarantee, dated June 30, 2022, by and among the Company, the subsidiaries of the Company and
the purchasers signatory to the SPA.