Item 1.01 Entry into a Material Definitive Agreement.
On December 22 2022, Outlook Therapeutics, Inc. (the “Company”)
entered into a Securities Purchase Agreement (“SPA”) with Streeterville Capital, LLC, a Utah limited liability company (the
“Lender”), and, pursuant to the SPA, issued to the Lender an unsecured convertible promissory note with a face amount of $31,820,000
(the “Note”), reflecting an original issue discount of $1,800,000, for gross proceeds of approximately $30 million after deducting
the Lender’s transaction costs covered by the Company in connection with the issuance. A portion of the proceeds from the Note will
be used to repay in full the remaining outstanding principal and accrued interest of approximately $11.9 million on the Company’s
existing convertible promissory note with the Lender, dated November 16, 2021, 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 is expected to occur on December 28, 2022.
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. As an
additional condition to closing, the Company must raise at least $25,000,000 in new equity financing. 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 Company’s common stock of the Company, $0.01 par value per share
(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.
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.
The foregoing summary of the SPA is qualified in its entirety by reference
to the form of SPA, which is filed herewith as Exhibit 10.1 and is incorporated by reference herein.
Note
The
Note bears interest at the annual rate of 9.5%, matures on January 1, 2024 (the “Maturity Date”) and is convertible into
Common Stock as described below. Beginning on April 1, 2023, the Lender has 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 has the right to convert all or any portion of the outstanding balance under the Note
into shares of Common Stock at a conversion price of $2.00 per share if certain conditions have been met at the time of conversion, including
if at any time after the six-month anniversary of the closing date, the
daily volume-weighted average price of the Common Stock on Nasdaq equals or exceeds $2.50 per share (subject to adjustments for stock
splits and stock combinations) for a period of 30 consecutive trading days. Payments may be made by the Company (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 provides 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 the Company’s market capitalization is less than $25,000,000.
Absent the required shareholder approval described
in the following sentence, the total cumulative number of shares of Common Stock that can be issued to the Lender under the Note and the
SPA may not exceed 45,206,312 shares of Common Stock (the “Issuance Cap”). The Company has agreed to seek stockholder approval
of the Note and the issuance of shares of Common Stock upon conversion thereunder in excess of the Issuance Cap at its next annual meeting
of stockholders. If the Company is unable to obtain such approval, any remaining outstanding balance of the Note after reaching the Issuance
Cap must be repaid in cash.
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, 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 (10) 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, $2.00 per share (subject to adjustment for stock splits and stock combinations), and following a Major
Trigger Event, the lesser of (i) $2.00 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.
The foregoing summary of the Note is qualified
in its entirety by reference to the form of Note, which is filed herewith as Exhibit 10.2, and is incorporated by reference herein.