Company: OCEA
Filing Date: 2025-04-08
Form Type: 10-K
Source: 0001641172-25-003155
Chunk: 629

Company: Ocean Biomedical, Inc.
Filing Date: 2025-04-08
Form: 10-K
Item: Item 4
Chunk 629
---
 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.

    F-12

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 consolidated financial statements as the “Backstop
    Put Option Liability” and treated as a derivative liability recorded at fair value with changes in fair value recognized in
    net loss. The Company measures the fair value of the Backstop Put Option Liability on a recurring basis, with any fair value adjustment
    recorded within other income/(expense) in the consolidated statements of operations. Refer to Note 4, Fair Value Measurements,
    for further detail.

    (ii)
    The
    “Fixed Maturity Consideration” representing the 8,000,000 in
    maximum shares less the 4,885,466 Backstop
    Shares multiplied by $2.50.
    The Company has elected to measure the Fixed Maturity Consideration using the Fair Value Option (“FVO”) under ASC 825,
    Financial Instruments.