Company: OCEA
Filing Date: 2025-01-13
Form Type: 10-Q
Source: 0001493152-25-001880
Chunk: 116

Company: Ocean Biomedical, Inc.
Filing Date: 2025-01-13
Form: 10-Q
Item: Item 8
Chunk 116
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 price trades below a stipulated price per share for any 30 trading days during a 45 day
consecutive trading-day period (in October 2023, this acceleration provision was amended with one Backstop Party providing it the right
to accelerate the Maturity Date if the Company’s stock price trades below a stipulated price per share for any 20 trading days
during a 30 day consecutive trading-day period). On any date following the closing of the Business Combination, the Backstop Parties
also have the option to early terminate the arrangement in whole or in part by providing an optional early termination date notice to
the Company (the “Optional Early Termination”). For those shares that are early terminated (the “Terminated Shares”),
the Backstop Parties will owe the Company an amount equal to the product of (x) the number of Terminated Shares and (y) the Redemption
Price, which may be reduced in the case of certain dilutive events (the “Reset Price”).

Upon
the Maturity Date, the Company is obligated to pay the Backstop Parties an amount equal to the product of (i) the maximum number of shares
of 8,000,000 less the number of Terminated Shares by (ii) $2.50 (the “Maturity Consideration”). The Company can pay the Maturity
Consideration in cash or shares of the Company’s common stock if certain conditions are met.

The
Backstop Parties have purchased a fixed total of 4,885,466 of the Company’s common stock, referred to herein as the “Backstop
Shares.” The Backstop Parties’ Optional Early Termination economically results in the Backstop Agreement operating in substance
to grant the Backstop Parties’ a put option with the right to sell all or a portion of the 4,885,466 Backstop Shares. Over the
three-year maturity period, the Company is entitled to either a return of the Prepayment, the underlying shares, or a combination thereof,
at the sole discretion of the Backstop Parties.

For
further information regarding the Backstop Agreement, refer to Note 3, Business Combination and Backstop Agreement.

Backstop
Put Option Liability and Fixed Maturity Consideration

The
Backstop Agreement consists of two financial instruments that are accounted for as follows:

    (i)
    The in-substance written
    put option which is recorded in the Company’s condensed consolidated financial statements as the “Backstop Put Option
    Liability” and treated as a derivative