Item
1.01 Entry into a Material Definitive Agreement.
Convertible
Loan Agreements
On
January 10, 2023 (the “Effective Date”), Orgenesis Inc. (referred to herein as “us,” “our,” or the
“Company”) entered into the following agreements: (i) a convertible loan agreement (the “NewTech Convertible Loan Agreement”)
with NewTech Investment Holdings, LLC (the “NewTech Lender”), pursuant to which the NewTech Lender loaned the Company $4,000,000
(the “NewTech Loan Amount”), and (ii) a convertible loan agreement (the “Malik Convertible Loan Agreement”, together
with the NewTech Convertible Loan Agreement, the “Convertible Loan Agreements”) with Ariel Malik (the “Malik Lender”,
together with the NewTech Lender, the “Lenders”), pursuant to which the Malik Lender loaned the Company $1,000,000 (the “Malik
Loan Amount”, together with the NewTech Loan Amount, the “Loan Amount”).
The
terms of the NewTech Convertible Loan Agreement and the Malik Loan Agreement are identical. Interest is calculated at 8% per annum (based
on a 365-day year); provided, that if an Event of Default (as defined in the Convertible Loan Agreements) has occurred and is continuing,
the Outstanding Amount (as defined herein) will be calculated at 15.0% per annum. The Loan Amount and all accrued but unpaid interest
thereon (collectively, the “Outstanding Amount”) shall either (i) be repaid in cash or (ii) convert to shares of common stock,
par value $0.0001 per share (“Common Stock”), of the Company on the third anniversary of the Effective Date (the “Maturity
Date”). The Maturity Date may be extended by the Lender upon the written consent of the Lender. The Outstanding Amount may be prepaid
by the Company in whole or in part at any time with the prior approval of the Lender.
At
any time prior to or on the Maturity Date, any Lender may provide us with written notice to convert all or part of the Outstanding Amount
into shares of our Common Stock equal to the quotient obtained by dividing (x) the Outstanding Amount by (y) a price equal to $2.464
per share (subject to adjustment for certain capital events, such as stock splits) (the “Conversion Price”).
The
Convertible Loan Agreements contain customary affirmative and negative covenants, including a minimum share reserve, transactions with
affiliates, and restrictions on the incurrence of additional debt. Each Lender’s obligation to fund its respective Loan Amount
is subject to customary closing conditions and deliverables.
Under
the terms of the Convertible Loan Agreements, the Company will use the proceeds from the Loan Amount to (i) redeem the loan amount from
the previously disclosed Convertible Loan Agreement, dated as of May 19, 2022 between Orgenesis and Ricky Steven Neumann, as amended
by the previously disclosed certain Convertible Loan Extension Agreement, dated as of October 23, 2022, by and between Orgenesis and
Ricky Steven Neumann, and (ii) for general corporate purposes. The use of proceeds from any Additional Loan Amount (as defined in the
Convertible Loan Agreements) will be to redeem existing indebtedness; provided, that $3,000,000 of the Additional Loan Amount may be
used for general corporate purposes.
In
the event the closing price of our Common Stock on the Nasdaq Capital Market (or other national stock exchange or market on which our
Common Stock is then listed or quoted) equals or exceeds $15.00 per share (which amount may be adjusted for certain capital events, such
as stock splits) for ten (10) consecutive trading days, then the Lender must convert any and all accrued but unpaid interest into shares
of our Common Stock at the applicable Conversion Price.
In
connection with such loan, the Company agreed to issue the NewTech Lender warrants representing the right to purchase 405,844 shares
of our Common Stock, at an exercise price of $2.50 per share and the Malik Lender warrants representing the right to purchase 101,461
shares of our Common Stock, at an exercise price of $2.50 per share. Such Warrants will be exercisable at any time beginning six months
and one day after closing and ending 36 months after the closing date.
The
Warrants issued to the Lenders in connection with the Convertible Loan Agreements are subject to mandatory exercise wherein the Company
shall have the right to require the Lenders to exercise all or any portion of the Warrants that are still unexercised for a cash exercise
when the closing price of our Common Stock on the Nasdaq Capital Market equals or exceeds $15.00 per share for ten (10) consecutive trading
days.
The
convertible loans and the shares of Common Stock issuable upon conversion of the convertible loans, the Warrants and the shares of Common
Stock issuable upon exercise of such Warrants, have not been registered under the Securities Act of 1933, as amended (the “Securities
Act”) and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities
Act promulgated thereunder. The convertible loan, the Warrant and the shares of Common Stock issuable upon conversion of the convertible
loan and upon exercise of the Warrant may not be offered or sold in the absence of an effective registration statement or exemption from
the registration requirements under the Securities Act.
The
foregoing summaries of the NewTech Convertible Loan Agreement and form of Warrant do not purport to be complete and are subject to, and
qualified in their entirety by, the full text of such documents attached as Exhibits 4.1 and 10.1, respectively, to this Current Report
on Form 8-K, which are incorporated herein by reference.
The
foregoing summaries of the Malik Convertible Loan Agreement and form of Warrant do not purport to be complete and are subject to, and
qualified in their entirety by, the full text of such documents attached as Exhibits 4.1 and 10.2, respectively, to this Current Report
on Form 8-K, which are incorporated herein by reference.