Item
1.01 Entry into a Material Definitive Agreement.
On
September 26, 2020, Orgenesis Inc. (the “Company”) entered into an Agreement and Plan of Merger and Reorganization
(the “Merger Agreement”) by and among the Company, Orgenesis Merger Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company (“Merger Sub”), Koligo Therapeutics Inc., a Kentucky corporation (“Koligo”),
the shareholders of Koligo (collectively, the “Shareholders”), and Long Hill Capital V, LLC (“Long Hill”),
solely in its capacity as the representative, agent and attorney-in-fact of the Shareholders. The Merger Agreement provides for
the acquisition of Koligo by the Company through the merger of Merger Sub with and into Koligo, with Koligo surviving as a wholly-owned
subsidiary of the Company (the “Merger”).
Koligo
is a privately-held US regenerative medicine company. Koligo’s first commercial product is KYSLECEL® (autologous pancreatic
islets) for chronic and acute recurrent pancreatitis. Koligo’s 3D-V technology platform incorporates the use of advanced
3D bioprinting techniques and vascular endothelial cells to support development of transformational cell and tissue products for
serious diseases.
At
the effective time of the Merger, by virtue of the Merger and without any action on the part of the holders of capital stock of
Koligo, all issued and outstanding shares of the capital stock of Koligo will be converted into the right to receive, subject
to customary adjustments, an aggregate of $15 million in shares of Company common stock valued at $7.00 per share which shall
be issued to Koligo’s accredited investors (with certain non-accredited investors to be paid solely in cash) in accordance
with the terms of the Merger Agreement. In connection with the Merger, the Company shall assume an aggregate of $1.3 million of
Koligo’s liabilities, estimated to be substantially all of Koligo’s liabilities at the closing of the Merger.
The
Merger Agreement contains customary representations, warranties and covenants of Koligo and the Company, including covenants providing
for each of the parties to use its reasonable best efforts to cause the Merger and the other transactions contemplated by the
Merger Agreement to be consummated, and covenants requiring Koligo, subject to certain exceptions, to carry on its business in
the ordinary course of business during the period between the execution of the Merger Agreement and the closing of the Merger
and prohibiting the Company from initiating, soliciting or otherwise facilitating any proposal or offer with any party other than
the Company with respect to certain transactions involving Koligo or any of its subsidiaries.
The Merger Agreement also contains customary
indemnification provisions whereby the Shareholders of Koligo will indemnify the Company and certain affiliated parties for any
losses arising out of breaches of the representations, warranties and covenants of Koligo and the Shareholders under the Merger
Agreement. As partial security for the indemnification and purchase price adjustment obligations of Koligo shareholders under
the Merger Agreement, approximately 15% of the cash and shares of Company common stock of the merger consideration otherwise
payable in the Merger to Koligo Shareholders will be placed in third party escrow to secure claims of the Company for indemnification
under the Merger Agreement. The aggregate indemnification obligations of the Koligo shareholders under the Merger Agreement is
capped at the amounts in escrow, subject to certain limited exceptions.
The
Merger Agreement contains customary termination rights for both the Company and Koligo, including, among others, for failure to
consummate the Merger by December 31, 2020.
The
Merger Agreement includes customary closing conditions, including the receipt of certain third party consents, the satisfaction
of certain liabilities and the absence of any proceeding, order or other restraint preventing or challenging the consummation
of the Merger.
In
connection with the Merger Agreement, the Company, Long Hill and Maxim Group LLC (“Maxim”) have agreed to enter into
a Registration Rights and Lock-Up Agreement prior to closing pursuant to which Long Hill will have one demand registration right
to require the registration of the shares of Company common stock received by Long Hill in the Merger and Long Hill and Maxim
will have certain piggyback registration rights. In addition, Long Hill shall agree with the Company that, during the applicable
Restriction Period (as defined below), it shall not sell or transfer, subject to certain limited exceptions, the portion of the
shares received in the Merger during the applicable Restriction Period, subject to a limitation on the number of shares sold per
any trading day not to exceed 10% of the average daily trading volume of the Common Stock, as reported by Bloomberg Financial
L.P. “Restriction Period” means (a) in relation to 70% of all of the shares received in the Merger that Long Hill
is entitled to receive under or in connection with the Merger Agreement, the period beginning on the date of the closing and ending
on the date that is the four month anniversary thereof, and (b) in relation to the remaining 30% of all of the shares received
in the Merger that Long Hill is entitled to receive under or in connection with the Merger Agreement, the period beginning on
the date of the closing and ending on the date that is the twelve month anniversary thereof.
In
addition, pursuant to separate Lock-Up Agreements to be entered into by the Shareholders other than Long Hill with the Company
(the “Shareholders Lock-Up Agreement”), such Shareholders shall agree that they will not transfer any of their shares
received in the Merger except in accordance with the following lock-up release schedule whereby one fifth of such holder’s
respective shares will be released from such restriction every six months, starting six months from the closing of the Merger.
Each holder’s sales of such shares will be subject to a resale limit of its pro rata portion of 10% of the average daily
trading volume, allocated to the Shareholders other than Long Hill pro-rata.
The
above summaries of the Merger Agreement, the form of Registration Rights and Lock-Up Agreement, and the form of Shareholders Lock-Up
Agreement do not purport to be complete and are qualified in their entirety to the full text of each such agreement, which agreements
are filed as Exhibits 2.1, 10.1, and 10.2 to this Current Report on Form 8-K and are qualified herein by this reference.