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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 30, 2025
Outlook Therapeutics,
Inc.
(Exact name of registrant as specified in its charter)
| Delaware |
001-37759 |
38-3982704 |
(State or other jurisdiction
of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
111 S. Wood Avenue
Unit #100
Iselin, New Jersey |
08830 |
| (Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including area code:
(609) 619-3990
(Former
name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class |
|
Trading Symbol(s) |
|
Name of Each Exchange on Which
Registered |
| Common Stock |
|
OTLK |
|
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ¨
| Item 1.01 |
Entry into a Material Definitive Agreement. |
On January 31, 2025, Outlook Therapeutics, Inc. (the “Company”)
entered into a Securities Purchase Agreement (“SPA”) with Avondale Capital, LLC, a Utah limited liability company (the “Lender”),
pursuant to which, the Company agreed to issue to the Lender an unsecured convertible promissory note with a face amount of $33,100,000
(the “Note”). The Company expects to use the proceeds from the issuance of the Note to repay in full the remaining obligations
of $32,373,792 (estimated as of January 15, 2025), including accrued and unpaid interest and the applicable exit fee, under the Company’s
existing convertible promissory note with Streeterville Capital, LLC, dated December 22, 2022, which will be cancelled in connection with
the issuance of the Note. The Company intends to use the remaining proceeds from the issuance of the Note for support of its ONS-5010
development program as well as working capital and other general corporate purposes, which may include repayment of debt. The closing
of the transactions contemplated by the SPA and the Note (the “Closing”) is expected to occur shortly following the Company’s
2025 annual meeting of stockholders, subject to the satisfaction of closing conditions as described in greater detail below.
Securities Purchase Agreement
The SPA contains customary representations, warranties, and covenants
of the Company and the Lender and customary closing conditions and other obligations of the parties. Among other closing conditions, the
Company must obtain approval by its stockholders of the issuance of shares of the Company’s common stock, par value $0.01 per share
(the “Common Stock”), in excess of 19.99% of the outstanding Common Stock upon the conversion of the Note at a conversion
price per share that is less than the “minimum price” under Nasdaq Listing Rule 5635, if required pursuant to the terms
of the Note (the “Stockholder Approval”). Until the Closing, the Company has agreed, among other things, not to sell shares
of Common Stock at a price per share less than $2.26 other than issuances pursuant to the Company’s at-the-market offering. Until
amounts due under the Note are paid in full, the Company has agreed, among other things, to: (i) timely make all filings under the Securities
Exchange Act of 1934, (ii) maintain the listing of the Common Stock on The Nasdaq Capital Market (“Nasdaq”), (iii) not encumber,
mortgage, pledge or grant a security interest in any of its assets, including intellectual property, subject to certain exceptions, (iv)
subject to certain exceptions, not issue certain debt securities or certain equity or equity-linked securities with a conversion price
that varies with the public trading price of the Common Stock, in each case, without the Lender’s prior consent, and (v) not enter
into any agreement that would restrict the Company’s ability to issue Common Stock to the Lender.
Pursuant to the SPA, the Company has agreed to file a registration
statement registering the resale of shares of common stock issuable upon conversion of the Note (the “Registration Statement”)
within seven days following the Closing, and to use commercially reasonable efforts to have such Registration Statement declared effective
within 45 days of filing (the “Effectiveness Deadline”). In the event the Registration Statement is not declared effective
by the Effectiveness Deadline, the outstanding balance on the Note will, on the Effectiveness Deadline and each 30th day thereafter,
automatically be increased by 0.5% until the Registration Statement is declared effective.
Subject to certain exceptions and limitations, the SPA grants the Lender
a participation right to acquire, at the Lender’s discretion, up to 10% of the amount of certain debt obligations or convertible
securities issued by the Company during the term of the Note.
Note
The Note will initially bear interest at the prime rate (as published
in the Wall Street Journal) plus 3% (subject to a floor of 9.5%), will be scheduled to mature on July 1, 2026 and will be convertible
into Common Stock as described below. The Company will have an obligation to repay at least $3,000,000 of the outstanding balance of the
Note for each calendar quarter beginning with the second calendar quarter of 2025 (subject to adjustment for conversions by the Lender
and to payment of an exit fee of 7.5%) (the “Quarterly Debt Reduction Obligations”).
Beginning on the earlier of (i) six months following the issuance of
the Note and (ii) the date on which the Registration Statement is declared effective (the “Conversion Commencement Date”),
the Lender will have the right to convert all or any portion of the outstanding balance under the Note into a number of shares of Common
Stock obtained by dividing the amount of the Note being converted by the Conversion Price (as defined below). In addition, the Company
will have the right to convert all or any portion of the outstanding balance under the Note into shares of Common Stock at the Conversion
Price if certain conditions have been met at the time of conversion, including if at any time after the Conversion Commencement Date,
the daily volume-weighted average price of our common stock on Nasdaq equals or exceeds $3.00 per share (subject to adjustments for stock
splits and stock combinations) for a period of 30 consecutive trading days and the median daily dollar trading volume during the preceding
30 trading day period is greater than or equal to $1,000,000. The Company may make payments (i) in cash, (ii) in shares of Common
Stock, with the number of shares being equal to the portion of the applicable payment amount divided by the Conversion Price, or (iii) a
combination of cash and shares of Common Stock. Any payments made by the Company in cash, including prepayments or repayment at maturity,
will be subject to an additional fee of 7.5%.
The Note will provide that the Company shall not effect any conversion
of the Note to the extent that, after giving effect to the conversion, the Lender (together with its affiliates), would beneficially own
a number of shares of common stock exceeding 4.99% of the number of shares of common stock outstanding on such date immediately after
giving effect to such conversion (the “Beneficial Ownership Limitation”); provided, however, that the Beneficial Ownership
Limitation will be increased to 9.99% at such time our market capitalization is less than $25.0 million. By written notice to the Company,
the Lender may increase, decrease or waive the Beneficial Ownership Limitation as to itself, but any such waiver will not be effective
until the 61st day after delivery thereof.
Upon the occurrence of certain events described in the Note, including,
among others, the Company’s failure to pay amounts due and payable under the Note, failure to comply with the Quarterly Debt Reduction
Obligations, events of insolvency or bankruptcy, failure to observe covenants contained in the SPA and the Note, breaches of representations
and warranties in the SPA, and occurrence of certain transactions without the Lender’s consent (each such event, a “Trigger
Event”), the Lender shall have the right, subject to certain exceptions, to increase the balance of the Note by 10% for a Major
Trigger Event (as defined in the Note) and 5% for a Minor Trigger Event (as defined in the Note). If a Trigger Event is not cured within
ten trading days of written notice thereof from the Lender, it will result in an event of default (such event, an Event of Default). Following
an Event of Default, the Lender may accelerate the Note such that all amounts thereunder become immediately due and payable, and interest
shall accrue at a rate of 22% annually until paid. Under the Note, “Conversion Price” means, prior to a Major Trigger Event,
$2.26 per share (subject to adjustment for stock splits and stock combinations), and following a Major Trigger Event, the lesser of (i)
$2.26 per share (subject to adjustment for stock splits and stock combinations), and (ii) 90% multiplied by the lowest closing bid price
in the three trading days prior to the date on which the conversion notice is delivered; provided, however, that if the Conversion Price
is below $0.404 per share (subject to adjustment for stock splits and stock combinations), which may be subject to change in the future
to the extent permitted by stock exchange rules in effect at the time of such change, the Company will be required to satisfy a conversion
notice from the Lender in cash.
The foregoing summary of the SPA and Note is qualified in its
entirety by reference to the SPA and the Form of Note, which are filed herewith as Exhibits 10.1 and 10.2 and are incorporated by reference
herein.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure under Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 2.03 by reference.
| Item 3.02 |
Unregistered Sales of Equity Securities. |
The disclosure under Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 3.02 by reference. The Note and any shares of Common Stock issued upon conversion thereof will be issued pursuant
to the exemption provided in Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506(b) promulgated thereunder.
| Item 5.02 |
Departure of directors or certain officers; election of directors; appointment of certain officers; compensatory arrangements of certain officers. |
On January 30, 2025, in order to achieve an equal balance of
membership among the three classes of directors of the Board of Directors of the Company (the “Board”), the Board
determined that Lawrence A. Kenyon should be reclassified from Class II, with a term expiring at the 2027 Annual Meeting of Stockholders,
to Class III, with a term expiring at the 2025 Annual Meeting of Stockholders. Accordingly, and solely to effect such change, effective
January 30, 2025, Mr. Kenyon resigned as a Class II director and was immediately elected by the Board as a Class III director, effective
as of January 30, 2025. The resignation and re-election of Mr. Kenyon was effected solely to rebalance the Board’s classes, and for
all other purposes, Mr. Kenyon’s service on the Board is deemed to have continued uninterrupted.
Forward-Looking Statements
This Current Report on Form 8-K contains
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as
“anticipate,” “expect,” “intend,” “may,” “will,” “would,”
and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended
to identify forward-looking statements. All statements other than statements of historical fact contained in this Current Report on
Form 8-K are forward-looking statements, including without limitation statements regarding the expected closing of the Note, receipt
of the Stockholder Approval, anticipated proceeds of the Note and the use thereof, and the Company’s plans to file a resale
registration statement to register the resale of the shares of common stock underlying the Note. These forward-looking statements
are based on the Company’s expectations and assumptions as of the date of this Current Report on Form 8-K. These
forward-looking statements are subject to risks and uncertainties that could cause results and events to differ significantly from
those expressed or implied by the forward-looking statements, including risks associated with closing a securities offering.
Additional factors that may cause the Company’s actual results to differ from those expressed or implied in the
forward-looking statements in this Current Report on Form 8-K are discussed in the Company’s filings with the U.S. Securities
and Exchange Commission, including under “Risk Factors” in the Company’s annual report on Form 10-K for the year
ended September 30, 2024 and future filings by the Company. Except as required by law, the Company assumes no obligation to update
any forward-looking statements contained herein to reflect any change in expectations, even as new information becomes
available.
| Item 9.01 |
Financial Statements and Exhibits |
(d) Exhibits
* Certain of the exhibits and schedules to this exhibit have been omitted
in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the
Securities and Exchange Commission upon its request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
Outlook Therapeutics, Inc. |
| |
|
| Date: January 31, 2025 |
By: |
/s/ Lawrence A. Kenyon |
| |
|
Lawrence A. Kenyon |
| |
|
Chief Financial Officer |
Exhibit 10.1
Securities
Purchase Agreement
This
Securities Purchase Agreement (this “Agreement”), dated as of January 31, 2025 (the “Effective Date”),
is entered into by and between Outlook Therapeutics, Inc., a Delaware corporation (“Company”),
and Avondale Capital, LLC, a Utah limited liability company, its successors and/or assigns
(“Investor”).
A. Company
and Investor are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the Securities
Act of 1933, as amended (the “1933 Act”), and the rules and regulations promulgated thereunder by the United States
Securities and Exchange Commission (the “SEC”).
B. Investor
desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a Convertible Promissory
Note, in the form attached hereto as Exhibit A, in the original principal amount of $33,100,000.00 (the “Note”),
convertible into common stock, $0.01 par value per share, of Company (the “Common Stock”), upon the terms and subject
to the limitations and conditions set forth in such Note.
C. This
Agreement, the Note, and all other certificates, documents, agreements, resolutions and instruments delivered to any party under or in
connection with this Agreement, as the same may be amended from time to time, are collectively referred to herein as the “Transaction
Documents”.
D. For
purposes of this Agreement: “Conversion Shares” means all shares of Common Stock issuable upon conversion of all or
any portion of the Note; and “Securities” means the Note and the Conversion Shares.
E. Company
previously issued to Streeterville Capital, LLC that certain Convertible Promissory Note dated December 22, 2022 with an original
principal balance of $31,820,000.00 (the “Streeterville Note”).
F. The
parties desire for the proceeds received from the Note to be used to repay the Streeterville Note and for other general corporate purposes.
NOW,
THEREFORE, in consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Company and Investor hereby agree as follows:
1. Purchase
and Sale of Securities.
1.1. Purchase
of Securities. Company shall issue and sell to Investor and Investor shall purchase from Company the Securities. In consideration
thereof, Investor shall pay the Purchase Price (as defined below) to Company.
1.2. Form of
Payment. On the Closing Date (as defined below), Investor will pay the Purchase Price to Company via wire transfer of immediately
available funds in accordance with the instructions set forth in the Disbursement Memorandum attached hereto as Exhibit B.
1.3. Closing
Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below, the
date of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be a mutually agreeable
date following Company’s satisfaction of all applicable closing conditions which shall not be later than one (1) Trading Day
(as defined in the Note) following satisfaction of the applicable closing conditions. The closing of the transactions contemplated by
this Agreement (the “Closing”) shall occur on the Closing Date by means of the exchange by email of signed .pdf documents,
but shall be deemed for all purposes to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.
1.4. Purchase
Price. The purchase price for the Note will be $33,100,000.00 (the “Purchase Price”).
1.5. Collateral
for the Note. The Note shall be unsecured.
2. Investor’s
Representations and Warranties. Investor represents and warrants to Company that as of the Closing Date: (i) this Agreement has
been duly and validly authorized; (ii) this Agreement constitutes a valid and binding agreement of Investor enforceable in accordance
with its terms; and (iii) Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D of the 1933 Act.
3. Company’s
Representations and Warranties. Company represents and warrants to Investor that as of the Closing Date: (i) Company is a corporation
duly organized, validly existing and in good standing under the laws of its state of incorporation and has the requisite corporate power
to own its properties and to carry on its business as now being conducted; (ii) Company is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such
qualification necessary and for which the failure to remain so qualified would reasonably be expected to have a Material Adverse Effect
(as defined below) on the business, operations or financial condition of the Company; (iii) Company has registered its Common Stock
under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and is obligated
to file reports pursuant to Section 13 or Section 15(d) of the 1934 Act; (iv) each of the Transaction Documents and
the transactions contemplated hereby and thereby, have been duly and validly authorized by Company and all necessary actions have been
taken; (v) this Agreement, the Note, and the other Transaction Documents have been duly executed and delivered by Company and constitute
the valid and binding obligations of Company enforceable in accordance with their terms; (vi) the execution and delivery of the Transaction
Documents by Company, the issuance of the Securities in accordance with the terms hereof, and the consummation by Company of the other
transactions contemplated by the Transaction Documents do not and will not conflict with or result in a breach by Company of any of the
terms or provisions of, or constitute a default under (a) Company’s formation documents or bylaws, each as currently in effect,
(b) any indenture, mortgage, deed of trust, or other material agreement or instrument to which Company is a party or by which it
or any of its properties or assets are bound, including, without limitation, any listing agreement for the Common Stock, the breach or
default of which would reasonably be expected to have a Material Adverse Effect on the business, operations or financial condition of
the Company, or (c) any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United
States federal, state or foreign regulatory body, administrative agency, or other governmental body having jurisdiction over Company or
any of Company’s properties or assets; (vii) no further authorization, approval or consent of any court, governmental body,
regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders or any lender of Company is required
to be obtained by Company for the issuance of the Securities to Investor or the entering into of the Transaction Documents; (viii) none
of Company’s filings with the SEC contained, at the time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances
under which they were made, not materially misleading; (ix) Company has filed all reports, schedules, forms, statements and other
documents required to be filed by Company with the SEC under the 1934 Act on a timely basis or has received a valid extension of such
time of filing and has filed any such report, schedule, form, statement or other document prior to the expiration of any such extension;
(x) there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the
knowledge of Company, threatened against or affecting Company before or by any governmental authority or non-governmental department,
commission, board, bureau, agency or instrumentality or any other person, that has not been disclosed in the Company’s public filings
and wherein an unfavorable decision, ruling or finding would be reasonably expected to have a Material Adverse Effect on Company or which
would adversely affect the validity or enforceability of, or the authority or ability of Company to perform its obligations under, any
of the Transaction Documents; (xi) Company has not consummated any financing transaction that has not been disclosed in a periodic
filing or current report with the SEC under the 1934 Act; (xii) Company is not, nor has it been at any time in the previous twelve
(12) months, a “Shell Company,” as such type of “issuer” is described in Rule 144(i)(1) under the 1933
Act that was required to be disclosed therein; (xiii) with respect to any commissions, placement agent or finder’s fees or
similar payments that will or would become due and owing by Company to any person or entity as a result of this Agreement or the transactions
contemplated hereby (“Broker Fees”), any such Broker Fees will be made in full compliance with all applicable laws
and regulations and only to a person or entity that is a registered investment adviser or registered broker-dealer; (xiv) Investor
shall have no obligation with respect to any Broker Fees or with respect to any claims made by or on behalf of other persons for fees
of a type contemplated in this subsection that may be due in connection with the transactions contemplated hereby and Company shall indemnify
and hold harmless each of Investor, Investor’s employees, officers, directors, stockholders, members, managers, agents, and
partners, and their respective affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and
reasonable attorneys’ fees) and expenses suffered in respect of any such claimed Broker Fees; (xv) neither Investor nor any
of its officers, directors, stockholders, members, managers, employees, agents or representatives has made any representations or warranties
to Company or any of its officers, directors, employees, agents or representatives except as expressly set forth in the Transaction Documents
and, in making its decision to enter into the transactions contemplated by the Transaction Documents, Company is not relying on any representation,
warranty, covenant or promise of Investor or its officers, directors, members, managers, employees, agents or representatives other than
as set forth in the Transaction Documents; (xvi) Company acknowledges that the State of Utah has a reasonable relationship and sufficient
contacts to the transactions contemplated by the Transaction Documents and any dispute that may arise related thereto such that the laws
and venue of the State of Utah, as set forth more specifically in Section 9.2 below, shall be applicable to the Transaction Documents
and the transactions contemplated therein; (xvii) Company acknowledges that Investor is not registered as a ‘dealer’
under the 1934 Act; and (xviii) Company has performed due diligence and background research on Investor and its affiliates and has
received and reviewed the due diligence packet provided by Investor. Company, being aware of the matters and legal issues described in
subsections (xvii) and (xviii) above, acknowledges and agrees that such matters, or any similar matters, have no bearing on
the transactions contemplated by the Transaction Documents and covenants and agrees it will not use any such information or legal theory
as a defense to performance of its obligations under the Transaction Documents or in any attempt to avoid, modify, reduce, rescind or
void such obligations.
4. Company
Covenants. Until all of Company’s obligations under the Note are paid and performed in full, or within the timeframes otherwise
specifically set forth below, Company will at all times comply with the following covenants: (i) Company will timely file on the
applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and will
take all reasonable action under its control to ensure that adequate current public information with respect to Company, as required in
accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; (ii) the
Common Stock shall be listed or quoted for trading on NYSE, NYSE American or Nasdaq; (iii) trading in Company’s Common Stock
will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease trading on Company’s principal trading market;
(iv) neither Company nor any subsidiary of Company will encumber, mortgage, pledge or grant a security interest in any of its assets
(other than intellectual property) except in connection with the financing of any equipment in the ordinary course of business, purchase
money liens and liens in respect of capital lease obligations, liens for taxes, assessments or other governmental charges, statutory liens
of landlords, carriers, warehousemen, mechanics, materialmen and other liens imposed by law in the ordinary course of business, pledges
and deposits made in the ordinary course of business, deposits or pledges to secure the performance of bids, tenders, trade contracts,
governmental contracts, leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds and other obligations
of a like nature, judgment and attachment liens not giving rise to a Trigger Event or an Event of Default, customary rights of set-off,
revocation, refund or chargeback under deposit agreements or under the Uniform Commercial Code or common law of banks or other financial
institutions where the Borrower or any of its subsidiaries maintains deposits in the ordinary course of business and Liens of a collection
bank arising under Section 4-210 of the UCC on items in the course of collection, leases, subleases or real property licenses granted
to others in the ordinary course of business, and liens representing any interest or title of a licensor, lessor or sublicensor or sublessor
under any lease or real property license, easements, zoning restrictions, rights-of-way, restrictions and similar encumbrances imposed
by law or arising in the ordinary course of business, without Investor’s prior written consent, which consent may be granted or
withheld in Investor’s sole and absolute discretion; (v) except licenses with respect to intellectual property existing as
of the date of this Agreement and future in-licenses, neither Company nor any subsidiary of Company will license, encumber, mortgage,
pledge or grant a security interest in or to any of its intellectual property without Investors’ written consent, which consent
may be granted in withheld in Investor’s sole and absolute discretion; (vi) Company will not make any Restricted Issuance (as
defined below) without Investor’s prior written consent, which consent may be granted or withheld in Investor’s sole and absolute
discretion; provided, however, that Investor’s consent will not be required for an Exempt Issuance; (vii) Company will
not enter into any agreement or otherwise agree to any covenant, condition, or obligation that locks up, restricts in any way or otherwise
prohibits Company: (a) from entering into a variable rate transaction with Investor or any affiliate of Investor, or (b) from
issuing Common Stock, preferred stock, warrants, convertible notes, other debt securities, or any other Company securities to Investor
or any affiliate of Investor; (viii) Company will file a resale registration statement on Form S-3 to register the resale of
such number of shares equal to the Purchase Price divided by the Fixed Conversion Price (the “Registrable Shares”)
within seven (7) days of the Closing and (ix) the Company will not issue and sell any new shares of Common Stock (or options,
warrants, convertible debt or preferred stock, or similar rights to purchase or acquire Common Stock) at a price per share less than $2.26,
except for issuances pursuant to the Company’s “at-the-market” facility and issuances pursuant to clause (a) and
(b) of the definition of “Exempt Issuance” below, during the period beginning on the Effective Date and ending on the
Closing Date. For purposes hereof, the term “Restricted Issuance” means the (a) issuance, incurrence or guaranty
of any debt for borrowed money other than trade payables in the ordinary course of business, letters of credit, credit card obligations,
capital leases, equipment financings, security deposits, intercompany debt, hedging obligations, purchase money indebtedness, earn-outs,
indemnification obligations, purchase price adjustments, non-compete obligations and similar adjustments in respect of acquisitions or
other asset sales, surety, appeal, indemnity, performance or other similar bonds in the ordinary course of business, reimbursement or
indemnification obligations incurred in the ordinary of business, indebtedness arising in connection with endorsement of instruments or
other payment items for deposit in the ordinary course of business, indebtedness incurred in respect of bank guarantees, warehouse receipts,
letters of credit, or similar instruments issued or created in the ordinary course of business, or (b) the issuance of any securities
that (1) have or may have, by its terms, conversion rights of any kind, contingent, conditional or otherwise, in which the number
of shares that may be issued pursuant to such conversion right varies with the market price of the Common Stock, (2) are or may become
convertible into Common Stock (including without limitation convertible debt, warrants or convertible preferred shares), by its terms,
with a conversion price that varies with the market price of the Common Stock, even if such security only becomes convertible following
an event of default, the passage of time, or another trigger event or condition; or (3) have a fixed conversion price, exercise price
or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt or equity security
(A) due to a change in the market price of Company’s Common Stock since the date of the initial issuance or (B) upon the
occurrence of specified or contingent events directly or indirectly related to the business of Company. For the avoidance of doubt, the
issuance of Common Stock under, pursuant to, in exchange for or in connection with any contract or instrument, whether convertible or
not, is deemed a Restricted Issuance for purposes hereof if the number of shares of Common Stock to be issued is based upon or related
in any way to the market price of the Common Stock, including, but not limited to, Common Stock issued in connection with a Section 3(a)(9) exchange,
a Section 3(a)(10) settlement, or any other similar settlement or exchange. For purposes hereof, “Exempt Issuance”
means (a) the issuance of Common Stock or common stock equivalents to employees, officers, directors, consultants or vendors of the
Company pursuant to any stock or option plan duly adopted for such purpose, by the Board of Directors or a majority of the members of
a committee of directors established for such purpose, (b) the issuance of securities upon the exercise or exchange of or conversion
of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities
issued pursuant to acquisitions, divestitures, licenses, partnerships, collaborations or strategic transactions approved by the Board
of Directors or a majority of the members of a committee of directors established for such purpose, which acquisitions, divestitures,
licenses, partnerships, collaborations or strategic transactions can have a Restricted Issuance component, provided that any such issuance
shall only be to a person (or to the equity holders of a person) which is, itself or through its subsidiaries, an operating company or
an asset in a business synergistic with the business of the Company and shall provide to the Company benefits in addition to the investment
of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities, (d) the entry into, or issuance of securities pursuant to, an
“at-the-market” facility, or (e) the issuance of warrants with no price reset, except in the case of stock splits, reclassifications
or similar events.
5. Conditions
to Company’s Obligation to Sell. The obligation of Company hereunder to issue and sell the Securities to Investor at the Closing
is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:
5.1. Investor
shall have executed this Agreement and delivered the same to Company.
5.2. Investor
shall have delivered the Purchase Price to Company in accordance with Section 1.2 above.
6. Conditions
to Investor’s Obligation to Purchase. The obligation of Investor hereunder to purchase the Securities at the Closing is subject
to the satisfaction, on or before the Closing Date, of each of the following conditions, provided that these conditions are for Investor’s
sole benefit and may be waived by Investor at any time in its sole discretion:
6.1. Company
shall have executed this Agreement and the Note and delivered the same to Investor.
6.2. Company
shall have delivered to Investor a fully executed Irrevocable Letter of Instructions to Transfer Agent (the “TA Letter”)
substantially in the form attached hereto as Exhibit C acknowledged and agreed to in writing by Company’s transfer agent
(the “Transfer Agent”).
6.3. Company
shall have delivered to Investor a fully executed Secretary’s Certificate substantially in the form attached hereto as Exhibit D
evidencing Company’s approval of the Transaction Documents.
6.4. Company
shall have delivered to Investor a fully executed Share Issuance Resolution substantially in the form attached hereto as Exhibit E
to be delivered to the Transfer Agent.
6.5. Company
shall have established the Share Reserve (as defined below).
6.6. No
Event of Default (as defined in the Streeterville Note) shall have occurred under the Streeterville Note.
6.7. No
breach of any of the covenants set forth in Section 4 above shall have occurred.
6.8. Company
shall have received the Approval (as defined below). At Company’s next annual meeting but in no event later than March 31,
2025, Company will seek stockholder approval of the Note and the issuance of Conversion Shares (as defined in the Note) thereunder in
excess of 19.99% of the outstanding shares of Common Stock on the Effective Date (the “Approval”).
6.9. No
Material Adverse Effect (as defined below) shall have occurred between the Effective Date and the Closing Date. “Material Adverse
Effect” means the occurrence of any of the following: (i) a material adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material adverse effect on the operations, business or financial condition of Company or any
subsidiary, taken as a whole, or (iii) a material adverse effect on Company’s ability to perform in any material respect on
a timely basis its obligations under any Transaction Document, provided however, that, none of the following (alone or when aggregated
any other effects), shall be deemed to be a Material Adverse Effect, and none of the following (alone or when aggregated any other effects),
shall be taken into account for purposes of clause (ii) above: (a) (1) general market, economic or political conditions
or (2) conditions (or any changes therein) in the industries in which Company conducts business, in each case, including any acts
of terrorism or war, weather conditions, global virus epidemics or other force majeure events, in the case of each of (1) and (2),
solely to the extent that such effects do not have and are not reasonably likely to have a material disproportionate impact on Company,
as the case may be; (b) this Agreement and the transactions contemplated hereby and thereby; or (c) changes in the trading price
or volume of the Common Stock, in and of themselves.
7. Reservation
of Shares. Promptly following the effectiveness of the Company’s amendment to its certificate of incorporation increasing its
authorized shares of Common Stock, Company will reserve 15,000,000 shares of Common Stock from its authorized and unissued Common Stock
to provide for all issuances of Common Stock under the Note (the “Share Reserve”). Company further agrees to add additional
shares of Common Stock to the Share Reserve in increments of 500,000 shares as and when requested by Investor if at any time following
a Major Trigger Event (as defined in the Note) under the Note the number of shares being held in the Share Reserve is less than two and
a half (2.5) times the number of shares of Common Stock obtained by dividing the Outstanding Balance (as defined in the Note) as of the
date of the request by the Conversion Price (as defined in the Note). Company shall further instruct the Transfer Agent to hold the shares
of Common Stock reserved pursuant to the Share Reserve exclusively for the benefit of Investor and to issue such shares to Investor promptly
upon Investor’s delivery of a Redemption Notice under the Note. Finally, Company shall instruct the Transfer Agent to issue shares
of Common Stock pursuant to the Note to Investor out of its authorized and unissued shares, and not the Share Reserve, to the extent shares
of Common Stock have been authorized, but not issued, and are not included in the Share Reserve. The Transfer Agent shall only issue shares
out of the Share Reserve to the extent there are no other authorized shares available for issuance and then only with Investor’s
written consent.
8. Participation
Right. Beginning on the Closing Date and ending on the date that the Note is paid in full, Company hereby grants to Investor a participation
right, whereby Investor shall have the right to participate at Investor’s discretion in up to ten percent (10%) of the amount sold
in any Restricted Issuance (the “Participation Right”). Within two (2) Trading Days following the consummation
of a Restricted Issuance, Company will provide Investor with written notice of the consummation of such Restricted Issuance, along with
copies of the transaction documents. Investor will then have up to five (5) calendar days to elect to purchase up to ten percent
(10%) of the amount of debt or equity securities issued in such transaction on the most favorable terms and conditions offered to any
other purchaser of the same securities.
9. Miscellaneous.
The provisions set forth in this Section 9 shall apply to this Agreement, as well as all other Transaction Documents as if these
terms were fully set forth therein; provided, however, that in the event there is a conflict between any provision set forth in this Section 9
and any provision in any other Transaction Document, the provision in such other Transaction Document shall govern.
9.1. Arbitration
of Claims. The parties shall submit all Claims (as defined in Exhibit F) arising out of this Agreement or any other Transaction
Document or any other agreement between the parties and their affiliates or any Claim relating to the relationship of the parties to binding
arbitration pursuant to the arbitration provisions set forth in Exhibit F attached hereto (the “Arbitration Provisions”).
For the avoidance of doubt, the parties agree that the injunction described in Section 9.2 below may be pursued in an arbitration
that is separate and apart from any other arbitration regarding all other Claims arising under the Transaction Documents. The parties
hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from
all other provisions of this Agreement. By executing this Agreement, Company represents, warrants and covenants that Company has reviewed
the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that
the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the
terms and limitations set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations.
Company acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Company regarding the Arbitration
Provisions.
9.2. Governing
Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of Utah. Each party consents to and expressly agrees that the exclusive
venue for arbitration of any dispute arising out of or relating to any Transaction Document or the relationship of the parties or their
affiliates shall be in Salt Lake County, Utah. Without modifying the parties’ obligations to resolve disputes hereunder pursuant
to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents (and notwithstanding the
terms (specifically including any governing law and venue terms) of any transfer agent services agreement or other agreement between the
Transfer Agent and Company, such litigation specifically includes, without limitation any action between or involving Company and the
Transfer Agent under the TA Letter or otherwise related to Investor in any way (specifically including, without limitation, any action
where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Transfer Agent from issuing Common
Stock to Investor for any reason)), each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction
of any state or federal court sitting in Salt Lake County, Utah, (ii) expressly submits to the exclusive venue of any such court
for the purposes hereof, (iii) agrees to not bring any such action (specifically including, without limitation, any action where
Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Transfer Agent from issuing Common Stock
to Investor for any reason) outside of any state or federal court sitting in Salt Lake County, Utah, and (iv) waives any claim of
improper venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense or objection to the bringing
of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper. Finally, Company
covenants and agrees to name Investor as a party in interest in, and provide written notice to Investor in accordance with Section 9.9
below prior to bringing or filing, any action (including without limitation any filing or action against any person or entity that is
not a party to this Agreement, including without limitation the Transfer Agent) that is related in any way to the Transaction Documents
or any transaction contemplated herein or therein, including without limitation any action brought by Company to enjoin or prevent the
issuance of any shares of Common Stock to Investor by the Transfer Agent, and further agrees to timely name Investor as a party to any
such action. Company acknowledges that the governing law and venue provisions set forth in this Section 9.2 are material terms to
induce Investor to enter into the Transaction Documents and that but for Company’s agreements set forth in this Section 9.2
Investor would not have entered into the Transaction Documents.
9.3. Specific
Performance. Company acknowledges and agrees that Investor may suffer irreparable harm in the event that Company fails to perform
any material provision of this Agreement or any of the other Transaction Documents in accordance with its specific terms. It is accordingly
agreed that Investor shall be entitled to one or more injunctions to prevent or cure breaches of the provisions of this Agreement or such
other Transaction Document and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other
remedy to which Investor may be entitled under the Transaction Documents, at law or in equity. Company specifically agrees that: (i) following
an Event of Default (as defined in the Note) under the Note, Investor shall have the right to seek and receive injunctive relief
from a court or an arbitrator prohibiting Company from issuing any of its Common Stock or preferred stock to any party unless fifty percent
(50%) of the gross proceeds received by Company in connection with such issuance are simultaneously used by Company to make a payment
under the Note; and (ii) following a breach of Section 4(vii). above, Investor shall have the right to seek and
receive injunctive relief from a court or arbitrator invalidating such lock-up Company specifically acknowledges that Investor’s
right to obtain specific performance constitutes bargained for leverage and that the loss of such leverage would result in irreparable
harm to Investor. For the avoidance of doubt, in the event Investor seeks to obtain an injunction from a court or an arbitrator against
Company or specific performance of any provision of any Transaction Document, such action shall not be a waiver of any right of Investor
under any Transaction Document, at law, or in equity, including without limitation its rights to arbitrate any Claim pursuant to the terms
of the Transaction Documents, nor shall Investor’s pursuit of an injunction prevent Investor, under the doctrines of claim preclusion,
issues preclusion, res judicata or other similar legal doctrines, from pursuing other Claims in the future in a separate arbitration.
9.4. Counterparts.
This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic
signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
9.5. Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this
Agreement.
9.6. Severability.
In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute
or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
9.7. Entire
Agreement. This Agreement, together with the other Transaction Documents, contains the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Company nor Investor makes
any representation, warranty, covenant or undertaking with respect to such matters. For the avoidance of doubt, all prior term sheets
or other documents between Company and Investor, or any affiliate thereof, related to the transactions contemplated by the Transaction
Documents (collectively, “Prior Agreements”), that may have been entered into between Company and Investor, or any
affiliate thereof, are hereby null and void and deemed to be replaced in their entirety by the Transaction Documents. To the extent there
is a conflict between any term set forth in any Prior Agreement and the term(s) of the Transaction Documents, the Transaction Documents
shall govern.
9.8. Amendments.
No provision of this Agreement may be waived or amended other than by an instrument in writing signed by both parties hereto.
9.9. Notices.
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt therefor or by email
to an executive officer named below or such officer’s successor, or by facsimile (with successful transmission confirmation which
is kept by sending party), (ii) the earlier of the date delivered or the third Trading Day after deposit, postage prepaid, in the
United States Postal Service by certified mail, or (iii) the earlier of the date delivered or the third Trading Day after mailing
by express courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by five (5) calendar days’ advance written notice
similarly given to each of the other parties hereto):
If
to Company:
Outlook Therapeutics, Inc.
Attn: Lawrence A. Kenyon, CFO
and Interim CEO
111 S. Wood Ave, Unit #100
Iselin, New Jersey 08830
If
to Investor:
Avondale Capital, LLC
Attn: John Fife
297 Auto Mall Drive, Suite #4
St. George, Utah 84770
With a copy to (which copy shall not constitute notice):
Hansen Black Anderson Ashcraft PLLC
Attn: Jonathan Hansen
3051 West Maple Loop Drive, Suite 325
Lehi, Utah 84043
9.10. Successors
and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor
hereunder may be assigned by Investor to its affiliates, in whole or in part, without the need to obtain Company’s consent thereto.
Company may not assign its rights or obligations under this Agreement or delegate its duties hereunder, whether directly or indirectly,
without the prior written consent of Investor, and any such attempted assignment or delegation shall be null and void.
9.11. Survival.
The representations and warranties of Company and the agreements and covenants set forth in this Agreement shall survive the Closing
hereunder notwithstanding any due diligence investigation conducted by or on behalf of Investor.
9.12. Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
9.13. Investor’s
Rights and Remedies Cumulative. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents are cumulative
and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that Investor may
have, whether specifically granted in this Agreement or any other Transaction Document, or existing at law, in equity, or by statute,
and any and all such rights and remedies may be exercised from time to time and as often and in such order as Investor may deem expedient.
9.14. Attorneys’
Fees and Cost of Collection. In the event any action at law or in equity to enforce or interpret the terms of this Agreement or the
Transaction Documents, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes
and shall therefore be entitled to an additional award of the full amount of the reasonable attorneys’ fees and expenses paid by
such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims
or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses
for frivolous or bad faith pleadings.
9.15. Waiver.
No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by the party granting the
waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to
any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a
party to provide a waiver or consent in the future except to the extent specifically set forth in writing.
9.16. Waiver
of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE RELATIONSHIPS
OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR
ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY
WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.
9.17. Time
is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and the other
Transaction Documents.
9.18. Voluntary
Agreement. Company has carefully read this Agreement and each of the other Transaction Documents and has asked any questions needed
for Company to understand the terms, consequences and binding effect of this Agreement and each of the other Transaction Documents and
fully understand them. Company has had the opportunity to seek the advice of an attorney of Company’s choosing, or has waived the
right to do so, and is executing this Agreement and each of the other Transaction Documents voluntarily and without any duress or undue
influence by Investor or anyone else.
9.19. Document
Imaging. Investor shall be entitled, in its sole discretion, to image or make copies of all or any selection of the agreements, instruments,
documents, and items and records governing, arising from or relating to any of Company’s loans, including, without limitation, this
Agreement and the other Transaction Documents, and Investor may destroy or archive the paper originals. The parties hereto (i) waive
any right to insist or require that Investor produce paper originals, (ii) agree that such images shall be accorded the same force
and effect as the paper originals, (iii) agree that Investor is entitled to use such images in lieu of destroyed or archived originals
for any purpose, including as admissible evidence in any demand, presentment or other proceedings, and (iv) further agree that any
executed facsimile (faxed), scanned, emailed, or other imaged copy of this Agreement or any other Transaction Document shall be deemed
to be of the same force and effect as the original manually executed document.
[Remainder of page intentionally left blank;
signature page follows]
IN WITNESS WHEREOF, the undersigned
Investor and Company have caused this Agreement to be duly executed as of the date first above written.
| INVESTOR: |
| | | |
| | Avondale Capital, LLC |
| | | |
| | By: | /s/ John M. Fife |
| | | John M. Fife, President |
| |
COMPANY: |
| |
|
|
| |
Outlook Therapeutics, Inc. |
| |
|
|
| |
By: |
/s/ Lawrence A. Kenyon |
| |
|
Lawrence A. Kenyon, Interim
CEO and CFO |
[Signature Page to
Securities Purchase Agreement]
ATTACHED EXHIBITS:
| Exhibit A | | Note |
| Exhibit B | | Disbursement Memorandum |
| Exhibit C | | Irrevocable Transfer Agent
Instructions |
| Exhibit D | | Secretary’s Certificate |
| Exhibit E | | Share Issuance Resolution |
| Exhibit F | | Arbitration Provisions |
Exhibit F
ARBITRATION PROVISIONS
1. Dispute
Resolution. For purposes of this Exhibit F, the term “Claims” means any disputes, claims, demands,
causes of action, requests for injunctive relief, requests for specific performance, liabilities, damages, losses, or controversies whatsoever
arising from, related to, or connected with the transactions contemplated in the Transaction Documents and any communications between
the parties related thereto, including without limitation any claims of mutual mistake, mistake, fraud, misrepresentation, failure of
formation, failure of consideration, promissory estoppel, unconscionability, failure of condition precedent, rescission, and any statutory
claims, tort claims, contract claims, or claims to void, invalidate or terminate the Agreement (or these Arbitration Provisions (defined
below)) or any of the other Transaction Documents. For the avoidance of doubt, Investor’s pursuit of an injunction or other
Claim pursuant to these Arbitration Provisions or with a court will not later prevent Investor under the doctrines of claim preclusion,
issue preclusion, res judicata or other similar legal doctrines from pursuing other Claims in a separate arbitration in the future. The
parties to this Agreement (the “parties”) hereby agree that the Claims may be arbitrated in one or more Arbitrations
pursuant to these Arbitration Provisions (one for an injunction or injunctions and a separate one for all other Claims). The parties to
the Agreement hereby agree that the arbitration provisions set forth in this Exhibit F (“Arbitration Provisions”)
are binding on each of them. As a result, any attempt to rescind the Agreement (or these Arbitration Provisions) or declare the Agreement
(or these Arbitration Provisions) or any other Transaction Document invalid or unenforceable for any reason is subject to these Arbitration
Provisions. As a result, any attempt to rescind the Agreement (or these Arbitration Provisions) or any other Transaction Document) or
declare the Agreement (or these Arbitration Provisions) or any other Transaction Document invalid or unenforceable pursuant to Section 29
of the 1934 Act or for any other reason is subject to these Arbitration Provisions. Any capitalized term not defined in these Arbitration
Provisions shall have the meaning set forth in the Agreement.
2. Arbitration.
Except as otherwise provided herein, all Claims must be submitted to arbitration (“Arbitration”) to be conducted exclusively
in Salt Lake County, Utah and pursuant to the terms set forth in these Arbitration Provisions. Subject to the arbitration appeal right
provided for in Paragraph 5 below (the “Appeal Right”), the parties agree that the award of the arbitrator rendered
pursuant to Paragraph 4 below (the “Arbitration Award”) shall be (a) final and binding upon the parties, (b) the
sole and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator,
and (c) promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Subject
to the Appeal Right, any costs or fees, including without limitation reasonable attorneys’ fees, incurred in connection with or
incident to enforcing the Arbitration Award shall, to the maximum extent permitted by law, be charged against the party resisting such
enforcement. The Arbitration Award shall include default interest (as defined or otherwise provided for in the Note, “Default
Interest”) (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the
Arbitration Award. Judgment upon the Arbitration Award will be entered and enforced by any state or federal court sitting in Salt Lake
County, Utah.
3. The
Arbitration Act. The parties hereby incorporate herein the provisions and procedures set forth in the Utah Uniform Arbitration Act,
U.C.A. § 78B-11-101 et seq. (as amended or superseded from time to time, the “Arbitration Act”). Notwithstanding
the foregoing, pursuant to, and to the maximum extent permitted by, Section 105 of the Arbitration Act, in the event of conflict
or variation between the terms of these Arbitration Provisions and the provisions of the Arbitration Act, the terms of these Arbitration
Provisions shall control and the parties hereby waive or otherwise agree to vary the effect of all requirements of the Arbitration Act
that may conflict with or vary from these Arbitration Provisions.
4. Arbitration
Proceedings. Arbitration between the parties will be subject to the following:
4.1 Initiation
of Arbitration. Pursuant to Section 110 of the Arbitration Act, the parties agree that a party may initiate Arbitration by giving
written notice to the other party (“Arbitration Notice”) in the same manner that notice is permitted under Section 9.9
of the Agreement; provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed initiated
as of the date that the Arbitration Notice is deemed delivered to such other party under Section 9.9 of the Agreement (the “Service
Date”). After the Service Date, information may be delivered, and notices may be given, by email or fax pursuant to Section 9.9
of the Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy, the remedies
sought, and the decision to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent with the
Utah Rules of Civil Procedure.
4.2 Selection
and Payment of Arbitrator.
(a) Within
ten (10) calendar days after the Service Date, Investor shall select and submit to Company the names of three (3) arbitrators
that are impartial and independent, and qualified as “neutrals” by Utah ADR Services (http://www.utahadrservices.com)
(such three (3) designated persons hereunder are referred to herein as the “Proposed Arbitrators”). For the avoidance
of doubt, each Proposed Arbitrator must be impartial and independent, and qualified as a “neutral” with Utah ADR Services.
Within five (5) calendar days after Investor has submitted to Company the names of the Proposed Arbitrators, Company must select,
by written notice to Investor, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration
Provisions. If Company fails to select one of the Proposed Arbitrators in writing within such 5-day period, then Investor may select
the arbitrator from the Proposed Arbitrators by providing written notice of such selection to Company.
(b) If Investor fails
to submit to Company the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant to subparagraph (a) above,
then Company may at any time prior to Investor so designating the Proposed Arbitrators, identify the names of three (3) arbitrators
that are impartial and independent, and qualified as “neutrals” by Utah ADR Service by written notice to Investor. Investor
may then, within five (5) calendar days after Company has submitted notice of its Proposed Arbitrators to Investor, select, by written
notice to Company, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions.
If Investor fails to select in writing and within such 5-day period one (1) of the three (3) Proposed Arbitrators selected by
Company, then Company may select the arbitrator from its three (3) previously selected Proposed Arbitrators by providing written
notice of such selection to Investor.
(c) If a Proposed Arbitrator
chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected such Proposed Arbitrator
may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the chosen Proposed
Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators decline
or are otherwise unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this Paragraph
4.2.
(d) The date that the
Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both parties to serve
as the arbitrator hereunder is referred to herein as the “Arbitration Commencement Date”. If an arbitrator resigns
or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to continue
the Arbitration. If Utah ADR Services ceases to exist or to provide a list of neutrals and there is no successor thereto, then the arbitrator
shall be selected under the then prevailing rules of the American Arbitration Association with the American Arbitration Association
serving as the appointing authority.
(e) Subject to Paragraph
4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if one party refuses or
fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject to the accrual of Default
Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration Award.
4.3 Applicability
of Certain Utah Rules. The parties agree that the Arbitration shall be conducted generally in accordance with the Utah Rules of
Civil Procedure and the Utah Rules of Evidence. More specifically, the Utah Rules of Civil Procedure shall apply, without limitation,
to the filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions. The Utah Rules of
Evidence shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding the foregoing, it is the
parties’ intent that the incorporation of such rules will in no event supersede these Arbitration Provisions. In the event
of any conflict between the Utah Rules of Civil Procedure or the Utah Rules of Evidence and these Arbitration Provisions, these
Arbitration Provisions shall control.
4.4 Answer
and Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating the
Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required deadline,
the arbitrator must provide written notice to the defaulting party stating that the arbitrator will enter a default award against such
party if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within
the five (5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the Arbitration
Notice, against a party that fails to submit an answer within such time period.
4.5 Related
Litigation. The party that delivers the Arbitration Notice to the other party shall have the option to also commence concurrent legal
proceedings with any state or federal court sitting in Salt Lake County, Utah (“Litigation Proceedings”), subject to
the following: (a) the complaint in the Litigation Proceedings is to be substantially similar to the claims set forth in the Arbitration
Notice, provided that an additional cause of action to compel arbitration will also be included therein, (b) so long as the other
party files an answer to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice, the Litigation Proceedings
will be stayed pending an Arbitration Award (or Appeal Panel Award (defined below), as applicable) hereunder, (c) if the other party
fails to file an answer in the Litigation Proceedings or an answer in the Arbitration proceedings, then the party initiating Arbitration
shall be entitled to a default judgment consistent with the relief requested, to be entered in the Litigation Proceedings, and (d) any
legal or procedural issue arising under the Arbitration Act that requires a decision of a court of competent jurisdiction may be determined
in the Litigation Proceedings. Any award of the arbitrator (or of the Appeal Panel (defined below)) may be entered in such Litigation
Proceedings pursuant to the Arbitration Act.
4.6 Discovery.
Pursuant to Section 118(8) of the Arbitration Act, the parties agree that discovery shall be conducted as follows:
(a) Written
discovery will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof,
and the written discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded
in the Arbitration. The party seeking written discovery shall always have the burden of showing that all of the standards and limitations
set forth in these Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited as
follows:
(i) To
facts directly connected with the transactions contemplated by the Agreement.
(ii) To
facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome or less
expensive than in the manner requested.
(b) No party shall be
allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests for admission
(including discrete subparts), (iii) more than ten (10) document requests (including discrete subparts), or (iv) more than
three (3) depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs associated with
depositions will be borne by the party taking the deposition. The party defending the deposition will submit a notice to the party taking
the deposition of the estimated attorneys’ fees that such party expects to incur in connection with defending the deposition. If
the party defending the deposition fails to submit an estimate of attorneys’ fees within five (5) calendar days of its receipt
of a deposition notice, then such party shall be deemed to have waived its right to the estimated attorneys’ fees. The party taking
the deposition must pay the party defending the deposition the estimated attorneys’ fees prior to taking the deposition, unless
such obligation is deemed to be waived as set forth in the immediately preceding sentence. If the party taking the deposition believes
that the estimated attorneys’ fees are unreasonable, such party may submit the issue to the arbitrator for a decision. All depositions
will be taken in Utah.
(c) All
discovery requests (including document production requests included in deposition notices) must be submitted in writing to the
arbitrator and the other party. The party submitting the written discovery requests must include with such discovery requests a detailed
explanation of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Utah Rules of
Civil Procedure. The receiving party will then be allowed, within five (5) calendar days of receiving the proposed discovery requests,
to submit to the arbitrator an estimate of the attorneys’ fees and costs associated with responding to such written discovery requests
and a written challenge to each applicable discovery request. After receipt of an estimate of attorneys’ fees and costs and/or challenge(s) to
one or more discovery requests, consistent with subparagraph (c) above, the arbitrator will within three (3) calendar days make
a finding as to the likely attorneys’ fees and costs associated with responding to the discovery requests and issue an order that
(i) requires the requesting party to prepay the attorneys’ fees and costs associated with responding to the discovery requests,
and (ii) requires the responding party to respond to the discovery requests as limited by the arbitrator within twenty-five (25)
calendar days of the arbitrator’s finding with respect to such discovery requests. If a party entitled to submit an estimate of
attorneys’ fees and costs and/or a challenge to discovery requests fails to do so within such 5-day period, the arbitrator will
make a finding that (A) there are no attorneys’ fees or costs associated with responding to such discovery requests, and (B) the
responding party must respond to such discovery requests (as may be limited by the arbitrator) within twenty-five (25) calendar days of
the arbitrator’s finding with respect to such discovery requests. Any party submitting any written discovery requests, including
without limitation interrogatories, requests for production subpoenas to a party or a third party, or requests for admissions, must prepay
the estimated attorneys’ fees and costs, before the responding party has any obligation to produce or respond to the same, unless
such obligation is deemed waived as set forth above.
(d) In
order to allow a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth
in these Arbitration Provisions and the Utah Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a
discovery request does not satisfy any of the standards set forth in these Arbitration Provisions or the Utah Rules of Civil Procedure,
the arbitrator may modify such discovery request to satisfy the applicable standards, or strike such discovery request in whole or in
part.
(e) Each party may submit
expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days of the Arbitration Commencement
Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following: (i) a complete statement
of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the expert’s name and qualifications,
including a list of all the expert’s publications within the preceding ten (10) years, and a list of any other cases in which
the expert has testified at trial or in a deposition or prepared a report within the preceding ten (10) years; and (iii) the
compensation to be paid for the expert’s report and testimony. The parties are entitled to depose any other party’s expert
witness one (1) time for no more than four (4) hours. An expert may not testify in a party’s case-in-chief concerning
any matter not fairly disclosed in the expert report.
4.6 Dispositive
Motions. Each party shall have the right to submit dispositive motions pursuant Rule 12 or Rule 56 of the Utah Rules of
Civil Procedure (a “Dispositive Motion”). The party submitting the Dispositive Motion may, but is not required
to, deliver to the arbitrator and to the other party a memorandum in support (the “Memorandum in Support”) of the Dispositive
Motion. Within seven (7) calendar days of delivery of the Memorandum in Support, the other party shall deliver to the arbitrator
and to the other party a memorandum in opposition to the Memorandum in Support (the “Memorandum in Opposition”). Within
seven (7) calendar days of delivery of the Memorandum in Opposition, as applicable, the party that submitted the Memorandum in Support
shall deliver to the arbitrator and to the other party a reply memorandum to the Memorandum in Opposition (“Reply Memorandum”).
If the applicable party shall fail to deliver the Memorandum in Opposition as required above, or if the other party fails to deliver the
Reply Memorandum as required above, then the applicable party shall lose its right to so deliver the same, and the Dispositive Motion
shall proceed regardless.
4.7 Confidentiality.
All information disclosed by either party (or such party’s agents) during the Arbitration process (including without limitation
information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential in nature. Each party
agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration process (including
without limitation during the discovery process or any Appeal) unless (a) prior to or after the time of disclosure such information
becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party or its agents,
(b) such information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified
the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent jurisdiction
prior to disclosure, or (c) such information is disclosed to the receiving party’s agents, representatives and legal counsel
on a need to know basis who each agree in writing not to disclose such information to any third party. Pursuant to Section 118(5) of
the Arbitration Act, the arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure of privileged
information and confidential information upon the written request of either party.
4.8 Authorization;
Timing; Scheduling Order. Subject to all other portions of these Arbitration Provisions, the parties hereby authorize and direct the
arbitrator to take such actions and make such rulings as may be necessary to carry out the parties’ intent for the Arbitration proceedings
to be efficient and expeditious. Pursuant to Section 120 of the Arbitration Act, the parties hereby agree that an Arbitration Award
must be made within one hundred twenty (120) calendar days after the Arbitration Commencement Date. The arbitrator is hereby authorized
and directed to hold a scheduling conference within ten (10) calendar days after the Arbitration Commencement Date in order to establish
a scheduling order with various binding deadlines for discovery, expert testimony, and the submission of documents by the parties to enable
the arbitrator to render a decision prior to the end of such 120-day period.
4.9 Relief.
The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief which the arbitrator
deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator
may not award exemplary or punitive damages.
4.10 Fees
and Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being awarded
the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration,
and (b) reimburse the prevailing party for all reasonable attorneys’ fees, arbitrator costs and fees, deposition costs, other
discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration.
5. Arbitration
Appeal.
5.1 Initiation
of Appeal. Following the delivery of the Arbitration Award, either party (the “Appellant”) shall have a period
of thirty (30) calendar days in which to notify the other party (the “Appellee”), in writing, that the Appellant elects
to appeal (the “Appeal”) the Arbitration Award (such notice, an “Appeal Notice”) to a panel of arbitrators
as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice to the Appellee is referred to herein as the “Appeal
Date”. The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph 4.1 above with respect
to delivery of an Arbitration Notice. In addition, together with delivery of the Appeal Notice to the Appellee, the Appellant must also
pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond in the amount of 110% of
the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing. In the event an Appellant
delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of
this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set forth herein, will not be further
conditioned. In the event a party does not deliver an Appeal Notice (along with proof of payment of the applicable bond) to the other
party within the deadline prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award. If no party
delivers an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline described in this
Paragraph 5.1, the Arbitration Award shall be final and judgment may be entered in a state or federal court sitting in Salt Lake County,
Utah. The parties acknowledge and agree that any Appeal shall be deemed part of the parties’ agreement to arbitrate for purposes
of these Arbitration Provisions and the Arbitration Act.
5.2 Selection
and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of
the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3) person arbitration
panel (the “Appeal Panel”).
(a) Within
ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5) arbitrators
that are qualified as “neutrals” by Utah ADR Services (http://www.utahadrservices.com) (such five (5) designated
persons hereunder are referred to herein as the “Proposed Appeal Arbitrators”). For the avoidance of doubt, each Proposed
Appeal Arbitrator must be impartial and independent, and qualified as a “neutral” with Utah ADR Services, and shall not be
the arbitrator who rendered the Arbitration Award being appealed (the “Original Arbitrator”). Within five (5) calendar
days after the Appellee has submitted to the Appellant the names of the Proposed Appeal Arbitrators, the Appellant must select, by written
notice to the Appellee, three (3) of the Proposed Appeal Arbitrators to act as the members of the Appeal Panel. If the Appellant
fails to select three (3) of the Proposed Appeal Arbitrators in writing within such 5-day period, then the Appellee may select such
three (3) arbitrators from the Proposed Appeal Arbitrators by providing written notice of such selection to the Appellant.
(b) If
the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after the
Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed
Appeal Arbitrators, identify the names of five (5) arbitrators that are qualified as “neutrals” by Utah ADR Service,
and impartial and independent (none of whom may be the Original Arbitrator) by written notice to the Appellee. The Appellee may then,
within five (5) calendar days after the Appellant has submitted notice of its selected arbitrators to the Appellee, select, by written
notice to the Appellant, three (3) of such selected arbitrators to serve on the Appeal Panel. If the Appellee fails to select in
writing within such 5-day period three (3) of the arbitrators selected by the Appellant to serve as the members of the Appeal Panel,
then the Appellant may select the three (3) members of the Appeal Panel from the Appellant’s list of five (5) arbitrators
by providing written notice of such selection to the Appellee.
(c) If
a selected Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal Arbitrator
may select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date
a chosen Proposed Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three
(3) of the five (5) designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal
Arbitrator selection process shall begin again in accordance with this Paragraph 5.2; provided, however, that any Proposed Appeal
Arbitrators who have already agreed to serve shall remain on the Appeal Panel.
(d) The
date that all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via email)
delivered to both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein as the “Appeal
Commencement Date”. No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate
in writing (including via email) to the Appellant and the Appeal Panel the name of one (1) of the three (3) members of the Appeal
Panel to serve as the lead arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator
for purposes of these Arbitration Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only
act or make determinations upon the approval or vote of no less than the majority vote of its members, as announced or communicated by
the lead arbitrator on the Appeal Panel. If an arbitrator on the Appeal Panel ceases or is unable
to act during the Appeal proceedings, a replacement arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue the
Appeal as a member of the Appeal Panel. If Utah ADR Services ceases to exist or to provide a list of neutrals, then the arbitrators
for the Appeal Panel shall be selected under the then prevailing rules of the American Arbitration Association.
(d) Subject
to Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the Appellant.
5.3 Appeal
Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel
shall conduct a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and
all other provisions of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate
for a fair and expeditious disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous
evidence and discovery, together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents
filed with the Appeal Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the
Appeal Panel shall not permit the parties to conduct any additional discovery or raise any new Claims to be arbitrated, shall not permit
new witnesses or affidavits, and shall not base any of its findings or determinations on the Original Arbitrator’s findings or the
Arbitration Award.
5.4 Timing.
(a) Within
seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal
Panel copies of the Appeal Notice, and all briefs, pleadings and other documents filed with the Original Arbitrator (which material Appellee
shall have the right to review and supplement if necessary), and (ii) may, but is not required to, deliver to the Appeal Panel and
to the Appellee a Memorandum in Support of the Appellant’s arguments concerning or position with respect to all Claims, counterclaims,
issues, or accountings presented or pleaded in the Arbitration. Within seven (7) calendar days of the Appellant’s delivery
of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal Panel and to the Appellant a Memorandum in Opposition
to the Memorandum in Support. Within seven (7) calendar days of the Appellee’s delivery of the Memorandum in Opposition, as
applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply Memorandum to the Memorandum in Opposition. If
the Appellant shall fail to substantially comply with the requirements of clause (i) of this subparagraph (a), the Appellant shall
lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final. If the Appellee shall fail to deliver the Memorandum
in Opposition as required above, or if the Appellant shall fail to deliver the Reply Memorandum as required above, then the Appellee or
the Appellant, as the case may be, shall lose its right to so deliver the same, and the Appeal shall proceed regardless.
(b) Subject
to subparagraph (a) above, the parties hereby agree that the Appeal must be heard by the Appeal Panel within thirty (30) calendar
days of the Appeal Commencement Date, and that the Appeal Panel must render its decision within thirty (30) calendar days after the Appeal
is heard (and in no event later than sixty (60) calendar days after the Appeal Commencement Date).
5.5 Appeal
Panel Award. The Appeal Panel shall issue its decision (the “Appeal Panel Award”) through the lead arbitrator on
the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety
and make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall
remain in full force and effect), (b) be final and binding upon the parties, with no further rights of appeal, (c) be the sole
and exclusive remedy between the parties regarding any Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration,
and (d) be promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any
costs or fees, including without limitation attorneys’ fees, incurred in connection with or incident to enforcing the Appeal
Panel Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Appeal Panel Award
shall include Default Interest (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and
after the Arbitration Award. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in
Salt Lake County, Utah.
5.6 Relief.
The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel deems
proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal Panel
may not award exemplary or punitive damages.
5.7 Fees
and Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party being awarded
the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines,
penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration
and the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal Panel,
which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded
to any part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery costs,
and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including without
limitation in connection with the Appeal).
6. Miscellaneous.
6.1 Severability.
If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision shall be modified
to the minimum extent necessary to make such provision enforceable under applicable law, and the remainder of the Arbitration Provisions
shall remain unaffected and in full force and effect.
6.2 Governing
Law. These Arbitration Provisions shall be governed by the laws of the State of Utah without regard to the conflict of laws principles
therein.
6.3 Interpretation.
The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of, or affect the interpretation
of, these Arbitration Provisions.
6.4 Waiver.
No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed by the party
granting the waiver.
6.5 Time
is of the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions.
[Remainder of page intentionally left blank]
Exhibit 10.2
CONVERTIBLE
PROMISSORY NOTE
| January 31, 2025 | U.S.
$33,100,000.00 |
FOR VALUE RECEIVED, Outlook
Therapeutics, Inc., a Delaware corporation (“Borrower”), promises to pay to Avondale
Capital, LLC, a Utah limited liability company, or its successors or assigns (“Lender”), $33,100,000.00 and
any interest, fees, charges, and late fees accrued hereunder on July 1, 2026 (the “Maturity Date”) in accordance
with the terms set forth herein and to pay interest on the Outstanding Balance at the U.S. Prime Rate plus three percent (3%) (but in
no event less than nine and a half percent (9.5%)) per annum from the Purchase Price Date until the same is paid in full. All interest
calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall
compound daily and shall be payable in accordance with the terms of this Note. This Convertible Promissory Note (this “Note”)
is issued and made effective as of the date set forth above (the “Effective Date”). This Note is issued pursuant to
that certain Securities Purchase Agreement dated January 31, 2025, as the same may be amended from time to time, by and between Borrower
and Lender (the “Purchase Agreement”). Certain capitalized terms used herein are defined in Attachment 1 attached
hereto and incorporated herein by this reference.
1. Payment;
Exit Fee; Security; Registration Effectiveness Failure.
1.1. Payment.
All payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares (as defined below), as provided
for herein, and delivered to Lender at the address or bank account furnished to Borrower for that purpose. All payments shall be applied
first to (a) reasonable costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid
interest, and thereafter, to (d) principal.
1.2. Exit
Fee. Any payments made under this Note by Borrower in cash (including prepayments or repayment at maturity) will be subject to a seven
and a half percent (7.5%) exit fee.
1.3. Security.
This Note is unsecured.
1.4. Registration
Effectiveness Failure. In the event the Form S-3 registration statement (the “Registration Statement”) filed
by Company with respect to the Registrable Shares (as defined in the Purchase Agreement) is not declared effective within forty-five (45)
days of filing then on such 45th day and each 30th day thereafter until the registration statement is declared effective
or Lender becomes eligible to sell Conversion Shares pursuant to Rule 144 (as defined below), the Outstanding Balance will automatically
increase by one-half percent (0.5%).
2. Quarterly
Debt Reduction. Beginning the second calendar quarter of 2025 and each calendar quarter thereafter until this Note is paid in full,
Borrower must reduce the Outstanding Balance by at least $3,000,000.00 (whether through Conversions (as defined below) or cash payments)
during such quarter (such obligation, the “Minimum Quarterly Debt Service Obligation”). For the avoidance of doubt,
any Conversion made under the Note during a given quarter will be counted toward the Minimum Quarterly Debt Service Obligation and any
cash payments made during a given quarter to satisfy the Minimum Quarterly Debt Service Obligation will be subject to the 7.5% exit fee
set forth in Section 1.2 herein. Any amount converted by Lender during a given calendar quarter in excess of the Minimum Quarterly
Debt Service Obligation will be credited toward meeting the Minimum Quarterly Debt Service Obligation for the next quarter or quarters.
3. Conversions.
3.1. Lender
Optional Conversion. Lender has the right beginning on the earlier of (a) the date that is six (6) months from the Purchase
Price Date, and (b) the effective date of the Registration Statement, until the Outstanding Balance has been paid in full, at its
election, to convert (“Conversion”) all or any portion of the Outstanding Balance into fully paid and non-assessable
shares of common stock, par value $0.01 (the “Common Stock”), of Borrower (“Conversion Shares”)
as per the following conversion formula: the number of Conversion Shares equals the amount being converted (the “Conversion Amount”)
divided by the Conversion Price. Conversion notices in the form attached hereto as Exhibit A (each, a “Conversion
Notice”) may be effectively delivered to Borrower by any method set forth in the “Notices” Section of the Purchase
Agreement, and all Conversions shall be cashless and not require further payment from Lender. Borrower shall deliver the Conversion Shares
from any Conversion to Lender in accordance with Section 7 below. In the event Lender submits a Conversion Notice to Borrower and
the Conversion Price is below the Floor Price, then Borrower will not be allowed to honor such request by delivering Conversion Shares,
instead Borrower must pay to Lender the applicable Conversion Amount plus the exit fee described in Section 1.2 above in cash within
three (3) Trading Days of delivery of the applicable Conversion Notice.
3.2. Borrower
Optional Conversion. Borrower has the right beginning on the earlier of (a) the date that is six (6) months from the Purchase
Price Date, and (b) the effective date of the Registration Statement, until the Outstanding Balance has been paid in full, at its
election, to convert all or any portion of the Outstanding Balance into Conversion Shares at the Fixed Conversion Price and subject to
the Maximum Percentage (as defined below) by sending written notice to Lender, and deliver such Conversion Shares to Lender if each of
the Borrower Optional Conversion Conditions is met as of the date Borrower desires to exercise such conversion right. Borrower shall deliver
the Conversion Shares pursuant to this Section 3.2 in accordance with Section 7 below
4. Trigger
Events, Defaults and Remedies.
4.1. Trigger
Events. The following are trigger events under this Note (each, a “Trigger Event”): (a) Borrower fails to
pay any principal, interest, fees, charges, or any other amount when due and payable hereunder; (b) Borrower fails to comply with
the quarterly debt reduction obligations set forth in Section 2 above; (c) a receiver, trustee or other similar official shall
be appointed over Borrower or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall
not be dismissed or discharged within sixty (60) days; (d) Borrower becomes insolvent or generally fails to pay, or admits in writing
its inability to pay, its debts as they become due, subject to applicable grace periods, if any; (e) Borrower makes a general assignment
for the benefit of creditors; (f) Borrower files a petition for relief under any bankruptcy, insolvency or similar law (domestic
or foreign); (g) an involuntary bankruptcy proceeding is commenced or filed against Borrower; (h) Borrower fails to observe
or perform any covenant set forth in Section 4 of the Purchase Agreement and such failure remains unremedied for a period of ten
(10) calendar days; (i) the occurrence of a Fundamental Transaction without Lender’s prior written consent; (j) Borrower
fails to timely establish and maintain the Share Reserve (as defined in the Purchase Agreement); (k) Borrower fails to deliver any
Conversion Shares in accordance with the terms hereof; (l) any money judgment, writ or similar process is entered or filed against
Borrower or any subsidiary of Borrower or any of its property or other assets for more than $1,000,000.00, and shall remain unvacated,
unbonded or unstayed for a period of twenty (20) calendar days unless otherwise consented to by Lender; (m) Borrower fails to be
DWAC Eligible and does not cure such failure within twenty (20) days; (n) Borrower or any subsidiary of Borrower, breaches any covenant
or other term or condition contained in any Other Agreements in any material respect and such failure remains unremedied for a period
of twenty (20) calendar days; (o) Borrower defaults or otherwise fails to observe or perform any covenant, obligation, condition
or agreement of Borrower contained herein or in any other Transaction Document (as defined in the Purchase Agreement) in any material
respect, other than those specifically set forth in this Section 4.1 and Section 4 of the Purchase Agreement, and such failure
remains unremedied for a period of twenty (20) calendar days; (p) any representation, warranty or other statement made or furnished
by or on behalf of Borrower to Lender herein, in any Transaction Document, or otherwise in connection with the issuance of this Note is
false, incorrect, incomplete or misleading in any material respect when made or furnished; or (q) Borrower effectuates a reverse
split of its Common Stock without twenty (20) Trading Days prior written notice to Lender.
4.2. Trigger
Event Remedies. At any time following the occurrence of any Trigger Event, Lender may, at its option, increase the Outstanding Balance
by applying the Trigger Effect (subject to the limitation set forth below).
4.3. Defaults.
At any time following the occurrence of a Trigger Event, Lender may, at its option, send written notice to Borrower demanding that Borrower
cure the Trigger Event within ten (10) Trading Days. If Borrower fails to cure the Trigger Event within the required ten (10) Trading
Day cure period, the Trigger Event will automatically become an event of default hereunder (each, an “Event of Default”).
4.4. Default
Remedies. At any time and from time to time following the occurrence of any Event of Default, Lender may accelerate this Note by written
notice to Borrower, with the Outstanding Balance becoming immediately due and payable in cash at the Mandatory Default Amount. Notwithstanding
the foregoing, upon the occurrence of any Trigger Event described in clauses (c) – (g) of Section 4.1, an Event of
Default will be deemed to have occurred and the Outstanding Balance as of the date of the occurrence of such Trigger Event shall become
immediately and automatically due and payable in cash at the Mandatory Default Amount, without any written notice required by Lender for
the Trigger Event to become an Event of Default. At any time following the occurrence of any Event of Default, upon written notice given
by Lender to Borrower, interest shall accrue on the Outstanding Balance beginning on the date the applicable Event of Default occurred
at an interest rate equal to the lesser of twenty-two percent (22%) per annum or the maximum rate permitted under applicable law (“Default
Interest”). For the avoidance of doubt, Lender may continue making Conversions at any time following an Event of Default until
such time as the Outstanding Balance is paid in full. In connection with acceleration described herein, Lender need not provide, and Borrower
hereby waives, any presentment, demand, protest or other notice of any kind, and Lender may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such
acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and Lender shall have all rights as a holder
of the Note until such time, if any, as Lender receives full payment pursuant to this Section 4.2. No such rescission or annulment
shall affect any subsequent Trigger Event or Event of Default or impair any right consequent thereon. Nothing herein shall limit Lender’s
right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to Borrower’s failure to timely deliver Conversion Shares upon Conversion of the Note as required
pursuant to the terms hereof.
5. Unconditional
Obligation; No Offset. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation of Borrower
not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has or may have hereafter
against Lender, its successors and assigns, and agrees to make the payments or Conversions called for herein in accordance with the terms
of this Note.
6. Waiver.
No waiver of any provision of this Note shall be effective unless it is in the form of a writing signed by the party granting the waiver.
No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other
prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide
a waiver or consent in the future except to the extent specifically set forth in writing.
7. Method
of Conversion Share Delivery. On or before the close of business on the third (3rd) Trading Day following each date a Conversion
Notice is delivered by Lender (the “Delivery Date”), Borrower shall, provided it is DWAC Eligible at such time and
such Conversion Shares are eligible for delivery via DWAC, deliver or cause its transfer agent to deliver the applicable Conversion Shares
electronically via DWAC to the account designated by Lender in the applicable Conversion Notice. If Borrower is not DWAC Eligible or such
Conversion Shares are not eligible for delivery via DWAC, it shall deliver to Lender or its broker (as designated in the Conversion Notice),
via reputable overnight courier, a certificate representing the number of shares of Common Stock equal to the number of Conversion Shares
to which Lender shall be entitled, registered in the name of Lender or its designee. For the avoidance of doubt, Borrower has not met
its obligation to deliver Conversion Shares by the Delivery Date unless Lender or its broker, as applicable, has actually received the
certificate representing the applicable Conversion Shares no later than the close of business on the relevant Delivery Date pursuant to
the terms set forth above. Moreover, and notwithstanding anything to the contrary herein or in any other Transaction Document, in the
event Borrower or its transfer agent refuses to deliver any Conversion Shares without a restrictive securities legend to Lender on grounds
that such issuance is in violation of Rule 144 under the Securities Act of 1933, as amended (“Rule 144”),
Borrower shall deliver or cause its transfer agent to deliver the applicable Conversion Shares to Lender with a restricted securities
legend, but otherwise in accordance with the provisions of this Section 7. In conjunction therewith, Borrower will also deliver to
Lender a written explanation from its counsel or its transfer agent’s counsel opining as to why the issuance of the applicable Conversion
Shares violates Rule 144.
8. Ownership
Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, Borrower shall not
effect any conversion of this Note to the extent that after giving effect to such conversion would cause Lender (together with its affiliates)
to beneficially own a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (including for
such purpose the Common Stock issuable upon such issuance) (the “Maximum Percentage”). For purposes of this section,
beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. Notwithstanding the forgoing,
the term “4.99%” above shall be replaced with “9.99%” at such time as the Market Capitalization is less than $25,000,000.00.
Notwithstanding any other provision contained herein, if the term “4.99%” is replaced with “9.99%” pursuant to
the preceding sentence, such increase to “9.99%” shall remain at 9.99% until increased, decreased or waived by Lender as set
forth below. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver
will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional
and non-waivable and shall apply to all affiliates and assigns of Lender.
9. Opinion
of Counsel. In the event that an opinion of counsel is needed for conversion of this Note, Lender has the right to have any such opinion
provided by its counsel.
10. Governing
Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine
the proper venue for any disputes are incorporated herein by this reference.
11. Arbitration
of Disputes. By its issuance or acceptance of this Note, each party agrees to be bound by the Arbitration Provisions (as defined in
the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
12. Cancellation.
After repayment or conversion of the entire Outstanding Balance, this Note shall be deemed paid in full, shall automatically be deemed
canceled, and shall not be reissued.
13. Amendments.
The prior written consent of both parties hereto shall be required for any change or amendment to this Note.
14. Assignments.
Borrower may not assign this Note without the prior written consent of Lender. This Note and any Common Stock issued upon conversion
of this Note may be offered, sold, assigned or transferred by Lender to any of its affiliates without the consent of Borrower.
15. Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with
the subsection of the Purchase Agreement titled “Notices.”
16. Liquidated
Damages. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions of this Note,
Lender’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’
inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly,
Lender and Borrower agree that any fees, balance adjustments, Default Interest or other charges assessed under this Note are not
penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Lender’s and
Borrower’s expectations that any such liquidated damages will tack back to the Purchase Price Date for purposes of determining
the holding period under Rule 144).
17. Severability.
If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of Borrower
and Lender to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.
[Remainder of page intentionally
left blank; signature page follows]
IN WITNESS WHEREOF, Borrower
has caused this Note to be duly executed as of the Effective Date.
| BORROWER: |
| | | |
| | Outlook
Therapeutics, Inc.
|
| | | |
| | By: | /s/ Lawrence A. Kenyon |
| | | Lawrence A. Kenyon, Interim
CEO and CFO |
| ACKNOWLEDGED, ACCEPTED AND AGREED: |
| |
|
|
| LENDER: |
| |
|
|
| Avondale
Capital, LLC |
|
| |
|
|
| By: |
/s/ John M. Fife |
|
| |
John M. Fife, President |
|
[Signature Page to
Convertible Promissory Note]
ATTACHMENT 1
DEFINITIONS
For purposes of this Note, the following terms shall have the
following meanings:
A1. “Borrower
Optional Conversion Conditions” means that each of the following conditions has been satisfied on the date of each Conversion:
(a) all of the Conversion Shares would be freely tradable pursuant to an effective registration statement, under Rule 144 or
without the need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on
conversion of this Note); (b) the applicable Conversion Shares would be eligible for immediate resale by Lender; (c) no Trigger
Event shall have occurred hereunder at any time; (d) for each of the consecutive prior thirty (30) Trading Days (beginning with the
thirty (30) Trading Day period preceding the date that is the earlier of (i) the date that is six (6) months from the Purchase
Price Date, and (ii) the effective date of the Registration Statement), the daily VWAP was greater than or equal to $3.00 (subject
to adjustments for stock splits and stock combinations); (e) the Common Stock is trading on Nasdaq or NYSE; and (f) the average
and median daily dollar trading volume during the preceding thirty (30) Trading Day period is greater than or equal to $1,000,000.00.
A2. “Closing
Bid Price” and “Closing Trade Price” means the last closing bid price and last closing trade price, respectively,
for the Common Stock on its principal market, as reported by Bloomberg, or, if its principal market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade
price, respectively, of the Common Stock prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if its principal market
is not the principal securities exchange or trading market for the Common Stock, the last closing bid price or last trade price, respectively,
of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg,
or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of the Common Stock in the over-the-counter
market on the electronic bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for the Common Stock by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market
makers for the Common Stock as reported by OTC Markets Group, Inc., and any successor thereto. If the Closing Bid Price or the Closing
Trade Price cannot be calculated for the Common Stock on a particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Trade Price (as the case may be) of the Common Stock on such date shall be the fair market value as mutually determined by Lender
and Borrower. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other
similar transaction during such period.
A3. “Conversion
Price” means, prior to the occurrence of a Major Trigger Event, the Fixed Conversion Price, and following the occurrence of
a Major Trigger Event, the lesser of (a) the Fixed Conversion Price, and (b) ninety percent (90%) multiplied by the lowest Closing
Bid Price in the three (3) Trading Days prior to the date on which the Conversion Notice is delivered, but in no event less than
the Floor Price.
A4. “DTC”
means the Depository Trust Company or any successor thereto.
A5. “DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer program.
A6. “DWAC”
means the DTC’s Deposit/Withdrawal at Custodian system.
A7. “DWAC
Eligible” means that (a) Borrower’s Common Stock is eligible at DTC for full services pursuant to DTC’s operational
arrangements, including without limitation transfer through DTC’s DWAC system; (b) Borrower has been approved (without revocation)
by DTC’s underwriting department; (c) Borrower’s transfer agent is approved as an agent in the DTC/FAST Program; (d) the
Conversion Shares are otherwise eligible for delivery via DWAC; and (e) Borrower’s transfer agent does not have a policy prohibiting
or limiting delivery of the Conversion Shares via DWAC. Notwithstanding anything to the contrary herein, in the event Borrower or its
transfer agent refuses to deliver any Conversion Shares without a restrictive securities legend to Lender on grounds that such issuance
is in violation of Rule 144, Borrower shall deliver or cause its transfer agent to deliver the applicable Conversion Shares to Lender
with a restricted securities legend, but otherwise in accordance with the provisions of Section 7 and shall not be deemed to have
failed to be DWAC Eligible under this definition.
A8. “Fixed
Conversion Price” means $2.26 per share (subject to adjustment for stock splits and stock combinations).
Attachment 1 to Secured Convertible Promissory Note, Page 1
A9. “Floor
Price” $0.404 (subject to adjustment for stock splits and stock combinations),
which may be subject to change in the future to the extent permitted by stock exchange rules in effect at the time of such change.
A10. “Fundamental
Transaction” means that (a) (i) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more
related transactions, consolidate or merge with or into (whether or not Borrower or any of its subsidiaries is the surviving corporation)
any other person or entity, (ii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions,
sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets
to any other person or entity, (iii) Borrower or any of its subsidiaries shall, directly or indirectly, in one or more related transactions,
allow any other person or entity to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the
outstanding shares of voting stock of Borrower (not including any shares of voting stock of Borrower held by the person or persons making
or party to, or associated or affiliated with the persons or entities making or party to, such purchase, tender or exchange offer), (iv) Borrower
or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
any other person or entity whereby such other person or entity acquires more than 50% of the outstanding shares of voting stock of Borrower
(not including any shares of voting stock of Borrower held by the other persons or entities making or party to, or associated or affiliated
with the other persons or entities making or party to, such stock or share purchase agreement or other business combination), or (v) Borrower
or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify
the Common Stock, other than an increase in the number of authorized shares of Borrower’s Common Stock; or (b) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and
regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of Borrower.
For the avoidance of doubt, Borrower or any of its subsidiaries entering into a definitive agreement that contemplates a Fundamental Transaction
will be deemed to be a Fundamental Transaction unless such agreement contains a closing condition that this Note is repaid in full upon
consummation of the transaction.
A11. “Major
Trigger Event” means any Trigger Event occurring under Sections 4.1(a) - 4.1(l).
A12. “Mandatory
Default Amount” means the Outstanding Balance following the application of the Trigger Effect.
A13. “Market
Capitalization” means a number equal to (a) the average VWAP of the Common Stock for the immediately preceding fifteen
(15) Trading Days, multiplied by (b) the aggregate number of outstanding shares of Common Stock as reported on Borrower’s most
recently filed Form 10-Q or Form 10-K.
A14. “Minor
Trigger Event” means any Trigger Event that is not a Major Trigger Event.
A15. “Other
Agreements” means, collectively, all existing and future agreements and instruments between, among or by Borrower (or a subsidiary),
on the one hand, and Lender (or an affiliate), on the other hand.
A16. “Outstanding
Balance” means as of any date of determination, the Purchase Price, as reduced or increased, as the case may be, pursuant to
the terms hereof for payment, Conversion, offset, or otherwise, accrued but unpaid interest, collection and enforcements costs (including
attorneys’ fees) incurred by Lender, transfer, stamp, issuance and similar taxes and fees related to Conversions, and any other
fees or charges incurred under this Note.
A17. “Purchase
Price Date” means the date the Purchase Price (as defined in the Purchase Agreement) is delivered by Lender to Borrower.
A18. “Trading
Day” means any day on which Borrower’s principal market is open for trading.
A19. “Trigger
Effect” means multiplying the Outstanding Balance as of the date the applicable Trigger Event occurred by (a) ten percent
(10%) for each occurrence of any Major Trigger Event, or (b) five percent (5%) for each occurrence of any Minor Trigger Event, and
then adding the resulting product to the Outstanding Balance as of the date the applicable Trigger Event occurred, with the sum of the
foregoing then becoming the Outstanding Balance under this Note as of the date the applicable Trigger Event occurred; provided that the
Trigger Effect may only be applied three (3) times hereunder with respect to Major Trigger Events and three (3) times hereunder
with respect to Minor Trigger Events.
Attachment 1 to Secured Convertible Promissory Note, Page 2
A20. “VWAP”
means the volume weighted average price of the Common Stock on the principal market for a particular Trading Day or set of Trading Days,
as the case may be, as reported by Bloomberg.
[Remainder of page intentionally left blank]
Attachment 1 to Secured Convertible Promissory Note, Page 3
EXHIBIT A
Avondale Capital, LLC
| Outlook Therapeutics, Inc. | Date: |
| Attn: Lawrence A. Kenyon, Interim CEO and
CFO | |
| 111 S. Wood Ave, Unit #100 | |
| Iselin, New Jersey 08830 | |
CONVERSION NOTICE
The above-captioned Lender hereby gives notice
to Outlook Therapeutics, Inc., a Delaware corporation (the “Borrower”), pursuant to that certain Convertible Promissory
Note made by Borrower in favor of Lender on January 31, 2025 (the “Note”), that Lender elects to convert the portion
of the Note balance set forth below into fully paid and non-assessable shares of Common Stock of Borrower as of the date of conversion
specified below. Said conversion shall be based on the Conversion Price set forth below. In the event of a conflict between this Conversion
Notice and the Note, the Note shall govern, or, in the alternative, at the election of Lender in its sole discretion, Lender may provide
a new form of Conversion Notice to conform to the Note. Capitalized terms used in this notice without definition shall have the meanings
given to them in the Note.
| A. | Date of Conversion: ____________ |
| B. | Conversion #: ____________ |
| C. | Conversion Amount: ____________ |
| D. | Conversion Price: _______________ |
| E. | Conversion Shares: _______________ (C divided by D) |
| F. | Remaining Outstanding Balance of Note: ____________* |
* Subject to adjustments for corrections, defaults,
interest and other adjustments permitted by the Transaction Documents (as defined in the Purchase Agreement), the terms of which shall
control in the event of any dispute between the terms of this Conversion Notice and such Transaction Documents.
Please transfer the Conversion Shares electronically
(via DWAC) to the following account:
| Broker: | |
|
Address: | |
| DTC#: | |
|
| |
| Account #: | |
|
| |
| Account Name: | |
|
| |
| Lender: |
| | | |
| | Avondale
Capital, LLC |
| | | |
| | By: | |
| | | |
| | | John M. Fife, President |
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Outlook Therapeutics (NASDAQ:OTLK)
Graphique Historique de l'Action
De Jan 2025 à Fév 2025
Outlook Therapeutics (NASDAQ:OTLK)
Graphique Historique de l'Action
De Fév 2024 à Fév 2025
