Item 1.01 Entry into a Material Definitive Agreement
As previously announced, on September 27, 2019, Ocugen, Inc.
(“Ocugen” or the “Company”) and Ocugen Opco, Inc. (“Opco”) completed a private placement transaction
with certain accredited investors (the “Investors”) pursuant to that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”) dated June 13, 2019, as amended, by and among the Company, Opco and the Investors for an aggregate purchase
price of approximately $25.0 million (the “Pre-Merger Financing”), whereby, among other things, the Company agreed
to issue (a) Series A Warrants representing the right to acquire shares of Ocugen’s common stock (“Common Stock”)
up to the amount issuable in exchange for 200% of the shares of Common Stock issued to Investors under the Securities Purchase
Agreement (the “Series A Warrants”), (b) additional Series B warrants to purchase shares of Common Stock (the “Series
B Warrants”), and (c) Series C warrants to purchase 50 million shares of Common Stock (the “Series C Warrants”
and together with the Series A Warrants and the Series B Warrants, the “Warrants”). The Warrants were issued on October
4, 2019, and, as previously announced, on November 5, 2019, the parties entered into an amendment to the Warrants which, among
other things, amended the Series C Warrants such that they became exercisable for an aggregate of 20 million shares of Common Stock.
Following the consummation of the transactions described
below, all Warrants issued in connection with the Pre-Merger Financing were retired and 74,549,048 shares of Common Stock
will be outstanding, compared to 52,625,228 shares of Common Stock outstanding prior to the consummation of the transactions.
Amendment and Exchange Agreements
On April 22, 2020, the Company effected a private placement
of Common Stock pursuant to Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), at a
price per share of $0.395, which private placement constituted a Dilutive Issuance (as defined in the Series A Warrants) and resulted
in adjustments to the number of issuable Series A Warrant Shares and the exercise price under the Series A Warrants.
Contemporaneously with the Dilutive Issuance, the Company and
Opco entered into an Amendment and Exchange Agreement (each an “Exchange Agreement” and collectively, the “Exchange
Agreements”) with each of the Investors. Pursuant to the Exchange Agreements, the Company, Opco and the Investors agreed,
among other things, to the following:
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The outstanding Series A Warrants were amended such that, after giving
effect to the Dilutive Issuance and an adjustment to the number of shares of Common Stock issuable upon exercise of the Series
A Warrants, the outstanding Series A Warrants became exercisable for an aggregate of 48,103,344 Warrant Shares at an exercise price
of $0.395 per share.
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The restrictions on the Company’s entering into certain fundamental
transactions set forth in Section 4 of the Series A Warrants were deleted. Additionally, certain provisions in the Securities Purchase
Agreement relating to the Company’s use of proceeds from the Pre-Merger Financing, requirements regarding the listing of
the Common Stock on the Nasdaq Stock Market, restrictions on entering into fundamental transactions and a prohibition on certain
future-priced stock issuances, including at-the-market offerings, were each deleted.
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Immediately following the consummation of the amendments described
above, the Investors and the Company, pursuant to Section 3(a)(9) of the Securities Act, exchanged the Series A Warrants held by
such Investors (the “Existing Warrants”) for (i) an aggregate of 21,920,820 shares of Common Stock and (ii) certain
promissory notes issued by the Company in the aggregate principal amount of $5,625,000, further described below under “Promissory
Notes” (collectively, the “Exchange Securities,” and such transaction, the “Exchange”). Upon each
Investor’s receipt of the applicable Exchange Securities, the Existing Warrants were deemed for all corporate purposes to
have been cancelled. Each Investor received a pro rata portion of the Exchange Securities, with such portion having an aggregate
value commensurate with the Black Sholes value of the Series A Warrant held by such Investor immediately prior to the Exchange.
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The Exchange Agreements contain customary representations and
warranties by the Company and the Investors. The Exchange Agreements also include certain post-closing covenants, including a requirement
that the Company satisfy current public information requirements under Rule 144 under the Securities Act and pay to the Investors
a cash amount specified therein for any failures to satisfy such requirements.
Concurrently with the effectiveness of the Exchange Agreement,
an investor holding the only remaining Series B Warrant and Series C Warrants exercised such warrants in full for 1,000 shares
of Common Stock under each warrant.
Promissory Notes
The promissory notes issued in connection with the Exchange
(each a “Promissory Note,” and collectively, the “Promissory Notes”) do not bear interest (other than in
connection with an event of default, as described below) and have a maturity date of April 21, 2021 (the “Maturity Date”).
The Company may prepay the Promissory Notes in whole or in part
at any time without penalty or premium. In the event that the Company consummates a financing transaction that generates cash to
the Company, the Company is required to use a specified percentage of the applicable financing net proceeds to redeem the outstanding
amount under each Promissory Note, which percentage shall be 20% if the applicable financing transaction occurs on or prior to
August 22, 2020, and otherwise, 30%.
Upon an event of default, interest shall accrue under each Promissory
Note at a rate of 18% per annum, payable on the Maturity Date or upon any redemption. Events of default under each Promissory Note
include, among other things, (i) the Company’s failure to pay the holder any amount within five business days or when due
or on the Maturity Date; (ii) the breach of the negative or affirmative covenants set forth in the Promissory Notes; (iii) any
material adverse effect with respect to the Company; (iv) the suspension of the Common Stock from trading on certain eligible markets;
and (v) an event of default under any of the other Promissory Notes or under other indebtedness of the Company; in certain
cases, subject to applicable cure periods.
Upon an event of default, each holder may require the Company
to redeem all or any portion of the applicable Promissory Note, without penalty or premium. The holder of each Promissory Note
may also require the Company to redeem such note, without penalty or premium, in connection with the Company’s entering into
certain fundamental transactions representing a change of control of the Company.
Under the Promissory Notes, the Company is subject to certain
customary negative and affirmative covenants.
The foregoing description of the Exchange Agreements and Promissory
Notes does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the form
of Exchange Agreement and the form of Promissory Note, which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated
herein by reference.