|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
Senior Secured Note Exchange
On December 20, 2019, Outlook Therapeutics, Inc. (the “Company”)
entered into an exchange agreement with the holders of its approximately $7.3 million outstanding aggregate principal amount and
accrued interest of senior secured notes (the “Old Senior Notes”) originally issued pursuant to the certain Note and
Warrant Purchase Agreement dated December 22, 2017, as amended on April 13, 2017, November 5, 2018, and June 28, 2019 (the “Exchange
Agreement”). Pursuant to the Exchange Agreement, the holders of the Old Senior Notes exchanged the entire outstanding principal
and accrued interest for new senior secured notes having an aggregate outstanding original principal amount of $7.6 million, which
includes an aggregate exchange fee of approximately $0.3 million. Such exchange was exempt from the registration requirements of
the Securities Act of 1933, as amended, pursuant to Section 3(a)(9) thereof.
The New Senior Notes are substantially similar to the Old Senior
Notes, as amended through the date of the Exchange Agreement, bear interest at a rate of 12.0% per annum and will mature December
31, 2020 (subject to extension to June 30, 2021 at the Company’s option upon payment of an extension fee equal to 3% of the
outstanding balance and being in compliance with applicable Nasdaq listing requirements). The New Senior Notes are convertible,
at the option of the holder, from time to time beginning April 1, 2020, into shares of the Company’s common stock, par value
$0.01 per share, at a conversion price equal to 90% of the two lowest closing bid prices in the 20 trading days immediately preceding
such conversion, subject to a beneficial ownership cap, and compliance with applicable Nasdaq rules requiring stockholder approval
prior to the issuance of more than 19.99% of the Company’s outstanding shares at a price per share lower than the “minimum
price.” The Company agreed to file a definitive proxy statement to seek such stockholder approval no later than June 30,
2020.
Under the Exchange Agreement, while the New Senior Notes are
outstanding, the Company agreed to keep adequate public information available, maintain its Nasdaq listing, and refrain from undertaking
certain “Variable Security Issuances” without the holders’ consent, subject to certain limited exempt issuances,
in addition to other negative covenants. The New Senior Notes provide that it is an event of default if the Company breaches its
negative covenants under the Exchange Agreement, and contain other customary events of default, in addition to providing for a
default rate of 14%, and giving the holder the right to increase the outstanding balance by 5% in the event of default.
In connection with the closing of the initial sale of the Old
Senior Notes, the Company entered into a Security Agreement and an Intellectual Property Security Agreement, each dated December
22, 2016, granting the holders of the Old Senior Notes a security interest in all of its assets. The New Senior Notes are deemed
to be “Notes” for purposes of such security agreements and accordingly, the New Senior Notes are similarly secured
by a security interest in all of the Company’s assets.
The foregoing description of the Exchange Agreement and New
Senior Notes are summaries of the material terms of such agreement and notes, do not purport to be complete and are qualified in
their entirety by reference to the Exchange Agreement, form of New Senior Note, and Security Agreement and Intellectual Property
Security Agreement, which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and are incorporated
by reference herein.
April 2019 Warrant Restructuring
On December 23, 2019, the Company amended
the terms of its outstanding 15-month warrants and five-year warrants issued April 12, 2019 (collectively, the “Warrants”),
which originally had an exercise price of $2.90 per share of the Company’s common stock, par value $0.01 per share (the “Common
Stock”), by entering into Amendment #2 (“Amendment #2”) to that certain Warrant Agreement, dated as of April
12, 2019, as previously amended June 11, 2019 (the “Warrant Agreement”), by and between the Company and American Stock
Transfer & Trust Company, LLC, as warrant agent, with the written consent of the requisite Warrant holders.
Under Amendment #2, the exercise price
of all outstanding Warrants was reduced to $0.2320 per share and the exercise period was amended such that all Warrants expire
at 5:00 P.M., Eastern time, on December 24, 2019 (the “New Expiration Date”).
Amendment #2 also revised the cashless
exercise provisions such that all Warrants may be cashless exercised at any time, and provided that all Warrants that have not
been exercised prior to the New Expiration Date will be automatically exercised on a cashless basis for Common Stock immediately
prior to expiration, with shares held in abeyance to accommodate the beneficial ownership restrictions applicable to all holders,
and provided a carveout from such restrictions for BioLexis Pte. Ltd., the Company’s controlling stockholder. Other than
the reduction in the exercise price, amendment of the New Expiration Date, amendment of cashless exercise provisions and providing
for automatic net exercise prior to expiration, provision for abeyance for all holders to comply with beneficial ownership limitations,
and provision of a carveout for BioLexis Pte. Ltd. from the beneficial ownership restrictions, all other terms and provisions of
the Warrants remain unchanged.
The Company further agreed with the holders
to a market standstill subject to customary exceptions through February 1, 2020.
The foregoing description of Amendment
#2 is a summary of the material terms of such agreement, does not purport to be complete and is qualified in its entirety by reference
to the full text of Amendment #2, which is filed as Exhibit 10.5 to this Current Report on Form 8-K and incorporated by reference
herein.