Exhibit 10.1

 

THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF
SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THE SECURED
CONVERTIBLE PROMISSORY NOTE, NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF (COLLECTIVELY, THE “SECURITIES”), HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY
STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR
QUALIFICATION OR EXEMPTION THEREFROM. BORROWER (AS DEFINED BELOW) MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO BORROWER TO
THE EFFECT THAT ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is entered into as of December 20,
2019 by and among Iliad Research and Trading, L.P., a Utah limited partnership
(“Iliad”), Chicago Venture Partners, L.P., a Utah limited partnership (“CVP,”
and together with Iliad, “Lenders”), and Outlook Therapeutics, Inc., a Delaware
corporation (“Borrower”).

 

A.                Borrower previously sold and issued those certain Secured
Promissory Notes set forth on Schedule 1 attached hereto (the “Original Notes”).

 

B.                 Effective June 27, 2019, Lenders acquired all of the Original
Notes.

 

C.                 Borrower and Lenders desire to exchange (such exchange is
referred to as the “Note Exchange”) the Original Notes for new Secured
Convertible Promissory Notes substantially in the form attached hereto as
Exhibit A (the “Exchange Notes”).

 

D.                The Note Exchange will consist of Lenders surrendering the
Original Notes in exchange for the Exchange Notes.

 

E.                 This Agreement, the Exchange Notes, the Transfer Agent Letter
(as defined below), the Secretary’s Certificate (as defined below), and any
other documents, agreements, or instruments entered into or delivered in
connection with this Agreement, or any amendments to any of the foregoing, are
collectively referred to as the “Exchange Documents”.

 

F.                  For purposes of this Agreement: “Conversion Shares” means
all shares of Common Stock (as defined below) issuable upon conversion of all or
any portion of the Exchange Notes; and “Securities” means the Exchange Notes and
the Conversion Shares.

 

G.                Other than the surrender of the Original Notes, no
consideration of any kind whatsoever shall be given by Lenders to Borrower in
connection with this Agreement.

 

 

 

H.                Lenders and Borrower now desire to exchange the Original Notes
for the Exchange Notes on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

 

1.                  Recitals and Definitions. Each of the parties hereto
acknowledges and agrees that the recitals set forth above in this Agreement are
true and accurate, are contractual in nature, and are hereby incorporated into
and made a part of this Agreement.

 

2.                  Issuance of Exchange Notes. Upon execution of this
Agreement, Lenders will surrender the Original Notes to Company and Company will
issue to Lenders the Exchange Notes. In conjunction therewith, Company hereby
confirms that the Original Notes represent Company’s unconditional obligation to
repay the amounts owing thereunder pursuant to the terms thereof. Company and
Holder agree that upon issuance of the Exchange Notes, the Original Notes will
be cancelled and the remaining obligations owed to Lenders pursuant to the
Original Notes shall hereafter be evidenced solely by the Exchange Notes.

 

3.                  Exchange Fee; Affirmation of Outstanding Balance. The
Company acknowledges that the outstanding balance of each Exchange Note includes
an exchange fee in the amount set forth on Schedule 2 (each, an “Exchange Fee”),
which sum was added to the outstanding balance of each Exchange Note. Holder and
the Company acknowledge and agree that the outstanding balance of each Exchange
Note, upon its issuance, including application of the Exchange Fee, is as set
forth on Schedule 2.

 

4.                  Closing. The closing of the transaction contemplated hereby
(the “Closing”) along with the delivery of the Exchange Notes to Lenders shall
occur on the date that is mutually agreed to by Borrower and Lenders by means of
the exchange by express courier and/or email of .pdf documents, but shall be
deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in
Lehi, Utah.

 

5.                  Holding Periods, Tacking and Legal Opinion. Borrower
represents, warrants and agrees that for the purposes of Rule 144 (“Rule 144”)
of the Securities Act of 1933, as amended (the “Securities Act”), the holding
periods of the Original Notes and the Exchange Notes will include the prior
noteholders’ holding period of the Original Notes as well as Lenders’ holding
periods of the Original Notes. Borrower agrees not to take a position contrary
to this Section 5 in any document, statement, setting, or situation. Borrower
agrees to take all action necessary to issue the Conversion Shares without
restriction, and not containing any restrictive legend without the need for any
action by Lenders; provided that the applicable holding period has been met. In
furtherance thereof, prior to the Closing, counsel to Lenders may, in its sole
discretion, provide an opinion that: (a) the Conversion Shares may be resold
pursuant to Rule 144 without volume or manner-of-sale restrictions; and (b) the
transactions contemplated hereby and all other documents associated with this
transaction comport with the requirements of Section 3(a)(9) of the Securities
Act. Borrower represents that it is not subject to Rule 144(i). The Exchange
Notes are being issued in substitution of and exchange for the Original Notes.
Borrower acknowledges and understands that the representations and agreements of
Borrower in this Section 5 are a material inducement to Lenders’s decision to
consummate the transactions contemplated herein.

 

2

 

 

6.                  Borrower’s Representations, Warranties and Agreements. In
order to induce Lenders to enter into this Agreement, Borrower, for itself, and
for its affiliates, successors and assigns, hereby acknowledges, represents,
warrants and agrees as follows: (a) Borrower has full power and authority to
enter into this Agreement and to incur and perform all obligations and covenants
contained herein, all of which have been duly authorized by all proper and
necessary action, (b) no consent, approval, filing or registration with or
notice to any governmental authority is required as a condition to the validity
of this Agreement or the performance of any of the obligations of Borrower
hereunder, (c) no event of default has occurred under the Original Notes that
has not been waived or cured prior to the date hereof, (d) except as
specifically set forth herein, nothing herein shall in any manner release,
lessen, modify or otherwise affect Borrower’s obligations under the Original
Notes, (e) the issuance of the Exchange Notes is duly authorized by all
necessary corporate action and the Exchange Notes are validly issued, fully paid
and non-assessable, free and clear of all taxes, liens, claims, pledges,
mortgages, restrictions, obligations, security interests and encumbrances of any
kind, nature and description, (f) Borrower has not received any consideration in
any form whatsoever for entering into this Agreement, other than the surrender
of the Original Notes, and (g) Borrower has taken no action that would give rise
to any claim by any person for a brokerage commission, placement agent or
finder’s fee or other similar payment by Borrower related to this Agreement.

 

7.                  Lenders’ Representations, Warranties and Agreements. In
order to induce Borrower to enter into this Agreement, each Lender, for itself,
and for its affiliates, successors and assigns, hereby acknowledges, represents,
warrants and agrees as follows: (a) Lender has full power and authority to enter
into this Agreement and to incur and perform all obligations and covenants
contained herein, all of which have been duly authorized by all proper and
necessary action, (b) other than the Nasdaq Approval, as contemplated herein, no
consent, approval, filing or registration with or notice to any governmental
authority is required as a condition to the validity of this Agreement or the
performance of any of the obligations of Lender hereunder, (c) no event of
default has occurred under the Original Notes that has not been waived or cured
prior to the date hereof, (d) Lender has not paid any consideration in any form
whatsoever for entering into this Agreement, other than the surrender of the
Original Notes and (e) Lender has taken no action that would give rise to any
claim by any person for a brokerage commission, placement agent or finder’s fee
or other similar payment by Borrower related to this Agreement.

 

3

 

 

8.                  Company Covenants. Until all of the Company’s obligations
under all of the Exchange Notes are paid and performed in full, or within the
timeframes otherwise specifically set forth below, the Company will at all times
comply with the following covenants: (a) so long as Holder beneficially owns any
Exchange Note and for at least ten (10) Trading Days thereafter, the Company
will timely file on or before the applicable deadline all reports required to be
filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and will
take all reasonable action under its control to ensure that adequate current
public information with respect to Company, as required in accordance with Rule
144 of the 1933 Act, is publicly available, and will not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would permit such termination; (b) the
Common Stock shall be listed for trading on Nasdaq; (c) when issued in
accordance with the terms of the Exchange Note, the Conversion Shares will be
duly authorized, validly issued, fully paid for and non-assessable, free and
clear of all liens, claims, charges and encumbrances; (d) trading in the Common
Stock will not be suspended, halted, chilled, frozen, reach zero bid or
otherwise cease on the Company’s principal trading market for a period in excess
of 24 hours; and (e) the Company will not make any Variable Security Issuance
(as defined below) without Holder’s prior written consent, which consent may be
granted or withheld in Holder’s sole and absolute discretion, other than in
connection with an Exempt Issuance. For purposes hereof, the term “Variable
Security Issuance” means the issuance by the Company of any securities that (A)
have or may have conversion rights of any kind, contingent, conditional or
otherwise, in which the number of shares that may be issued pursuant to such
conversion right varies with the market price of the Common Stock after the
initial issuance of such securities, or (B) are or may become convertible into
Common Stock (including without limitation convertible debt, warrants or
convertible preferred stock), with a conversion price that varies with the
market price of the Common Stock after the initial issuance of such securities,
even if such security only becomes convertible following an event of default,
the passage of time, or another trigger event or condition. For purposes hereof,
“Exempt Issuance” means (a) the issuance of Common Stock or common stock
equivalents to employees, officers, directors or vendors of the Company pursuant
to any stock or option plan duly adopted for such purpose, by the Board of
Directors or a majority of the members of a committee of directors established
for such purpose, (b) the issuance of securities upon the exercise or exchange
of or conversion of any Securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have
not been amended since the date of this Agreement to increase the number of such
securities or to decrease the exercise price, exchange price or conversion price
of such securities, (c) securities issued pursuant to acquisitions,
divestitures, licenses, partnerships, collaborations or strategic transactions
approved by the Board of Directors or a majority of the members of a committee
of directors established for such purpose, which acquisitions, divestitures,
licenses, partnerships, collaborations or strategic transactions can have a
Variable Security Issuance component, provided that any such issuance shall only
be to a person (or to the equity holders of a person) which is, itself or
through its subsidiaries, an operating company or an asset in a business
synergistic with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is
investing in securities, (d) the entry into, or issuance of securities pursuant
to, an equity line of credit or “at-the-market” facility, or (e) the issuance of
warrants with no price reset.

 

9.                  Conditions to Company’s Obligation to Exchange. The
obligation of Company hereunder to exchange the Original Notes for the Exchange
Notes at the Closing is subject to the satisfaction, on or before the Closing
Date, of the following condition: Holder shall have executed and delivered this
Agreement to Company.

 

10.               Conditions to Holder’s Obligation to Exchange. The obligation
of Holder hereunder to Exchange the Original Notes for the Exchange Notes at the
Closing is subject to the satisfaction, on or before the Closing Date, of each
of the following conditions, provided that these conditions are for Holder’s
sole benefit and may be waived by Holder at any time in its sole discretion:

 

(a)               Company shall have executed and delivered this Agreement and
the Exchange Notes to Holder.

 

4

 

 

(b)               Company shall have delivered to Holder a fully executed
Secretary’s Certificate substantially in the form attached hereto as Exhibit B
(the “Secretary’s Certificate”) evidencing Company’s approval of the Exchange
and the Exchange Documents.

 

(c)               Company shall have delivered to Holder a fully executed Letter
of Instructions to Transfer Agent (“Transfer Agent Letter”) substantially in the
form attached hereto as Exhibit C acknowledged and agreed to in writing by
Company’s transfer agent (the “Transfer Agent”).

 

11.              Reservation of Shares. On the date hereof, the Company will
reserve 20,000,000 shares of Common Stock from its authorized and unissued
Common Stock to provide for all issuances of Common Stock under the Exchange
Notes (the “Share Reserve”). The Company further agrees to add additional shares
of Common Stock to the Share Reserve in increments of 1,000,000 shares as and
when requested by Holder if as of the date of any such request the number of
shares then being held in the Share Reserve is less than two (2) times the
number of shares of Common Stock obtained by dividing the aggregate outstanding
balance of the Exchange Notes as of the date of the request by the then
applicable Conversion Price (as defined in the Exchange Notes).

 

12.              Nasdaq Approval. Notwithstanding anything to the contrary
contained in this Agreement or any Exchange Agreement, Borrower and Lender agree
that the total cumulative number of shares of Common Stock issued to Lender
pursuant to all Exchanges may not exceed the requirements of Nasdaq Listing Rule
5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply
following Nasdaq Approval (defined below). So as not to violate the 20% limit
established in Nasdaq Stock Market Listing Rule 5635(d), the Company covenants
and agrees to file a definitive proxy statement to seek stockholder approval on
or before June 30, 2020 of the potential issuance of Common Stock in excess of
20% of the Company’s current issued and outstanding Common Stock pursuant to
conversions of the Exchange Notes (“Nasdaq Approval”). If the Company fails to
file a definitive proxy statement to seek Nasdaq Approval on or before such
date, such failure shall be an event of default under all of the Exchange Notes,
but, for the avoidance of doubt, the Company’s failure to obtain the Nasdaq
Approval shall not be an Event of Default under the Exchange Notes. If the
Borrower is unable to obtain such Nasdaq Approval, any remaining Outstanding
Balance of the Exchange Notes must be repaid in cash

 

13.              Governing Law; Waiver of Jury Trial. This Agreement and all
actions arising out of or in connection with this Agreement shall be construed
and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Agreement shall be governed by,
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

5

 

 

14.              Venue. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.

 

15.              Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument. The exchange of copies of this Agreement and of signature pages by
facsimile transmission or other electronic transmission (including email) shall
constitute effective execution and delivery of this Agreement as to the parties
and may be used in lieu of the original Agreement for all purposes. Signatures
of the parties transmitted by facsimile transmission or other electronic
transmission (including email) shall be deemed to be their original signatures
for all purposes.

 

16.              Attorneys’ Fees. In the event of any action at law or in equity
to enforce or interpret the terms of this Agreement, the parties agree that the
party who is awarded the most money shall be deemed the prevailing party for all
purposes and shall therefore be entitled to an additional award of the full
amount of the attorneys’ fees and expenses paid by such prevailing party in
connection with the litigation and/or dispute without reduction or apportionment
based upon the individual claims or defenses  giving rise to the fees and
expenses. Nothing herein shall restrict or impair a court’s power to award fees
and expenses for frivolous or bad faith pleading.

 

17.              No Reliance. Borrower acknowledges and agrees that neither
Lenders nor any of its officers, directors, members, managers, equity holders,
representatives or agents has made any representations or warranties to Borrower
or any of its agents, representatives, officers, directors, or employees except
as expressly set forth in this Agreement and the Exchange Documents and, in
making its decision to enter into the transactions contemplated by this
Agreement, Borrower is not relying on any representation, warranty, covenant or
promise of Lenders or its officers, directors, members, managers, equity
holders, agents or representatives other than as set forth in this Agreement.

 

18.              Severability. If any part of this Agreement is construed to be
in violation of any law, such part shall be modified to achieve the objective of
the parties to the fullest extent permitted and the balance of this Agreement
shall remain in full force and effect.

 

19.              Entire Agreement. This Agreement, together with the Exchange
Documents, and all other documents referred to herein, supersedes all other
prior oral or written agreements between Borrower, Lenders, its affiliates and
persons acting on its behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither Lenders
nor Borrower makes any representation, warranty, covenant or undertaking with
respect to such matters.

 

6

 

 

20.              Amendments. This Agreement may be amended, modified, or
supplemented only by written agreement of the parties. No provision of this
Agreement may be waived except in writing signed by the party against whom such
waiver is sought to be enforced.

 

21.              Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns. This Agreement or any of the severable rights and obligations inuring
to the benefit of or to be performed by Lenders hereunder may be assigned by
Lenders to a third party, including its financing sources, in whole or in part
with the prior written consent of Borrower, not to be unreasonably withheld,
conditioned or delayed; provided that Lenders may assign any of their rights
hereunder to any of their respective affiliates without requiring such consent
by Borrower. Borrower may not assign this Agreement or any of its obligations
herein without the prior written consent of Lenders, such consent not to be
unreasonably withheld, conditioned or delayed.

 

22.              Time of Essence. Time is of the essence with respect to each
and every provision of this Agreement.

 

23.              Notices. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of:

 

(a)               the date delivered, if delivered by personal delivery as
against written receipt therefor or by email to an executive officer, or by
facsimile (with successful transmission confirmation),

 

(b)               the fifth Business Day after deposit, postage prepaid, in the
United States Postal Service by certified mail, or

 

(c)               the second Business Day after mailing by domestic or
international express courier (e.g., FedEx), with delivery costs and fees
prepaid,

 

in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
five (5) Business Days’ advance written notice similarly given to each of the
other parties hereto):

 

If to Borrower:

 

Outlook Therapeutics, Inc.

Attn: Lawrence A. Kenyon, CEO & CFO

7 Clarke Drive

Cranbury, New Jersey 08512

email:

fax:

 

7

 

 

with a copy to (which shall not constitute notice):

 

Cooley LLP

Attn: Yvan-Claude Pierre

55 Hudson Yards

New York, New York 10001

email:

fax:

 

If to Lenders:

 

Iliad Research and Trading, L.P.

Attn: John M. Fife

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

email:

fax:

 

with a copy to (which shall not constitute notice):

 

Hansen Black Anderson Ashcraft PLLC

Attn: Jonathan K. Hansen

3051 West Maple Loop Drive, Suite 325

Lehi, Utah 84043

email:

fax:

 

in each case, addressed to each of the other parties thereunto entitled at the
party’s last known address.

 

24.              Further Assurances. Each party shall do and perform or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

[Remainder of page intentionally left blank]

 

8

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above.

 

  BORROWER:       OUTLOOK THERAPEUTICS, INC.       By: /s/ Lawrence A. Kenyon  
Name: Lawrence A. Kenyon   Title: President, Chief Executive Officer and Chief
Financial Officer       LENDERS:       ILIAD RESEARCH AND TRADING, L.P.      
By: Iliad Management, LLC, its General Partner       By: Fife Trading, Inc., its
Manager         By: /s/ John M. Fife       John M. Fife, President       CHICAGO
VENTURE PARTNERS, L.P.       By: Chicago Venture Management, L.L.C.,     its
General Partner       By: CVM, Inc., its Manager         By: /s/ John M. Fife  
    John M. Fife, President

 

EXHIBITS:

 

Exhibit AExchange Notes Exhibit BSecretary’s Certificate Exhibit CTransfer Agent
Letter

 

[Signature Page to Exchange Agreement]

 

 

 

SCHEDULE 1

 

ORIGINAL NOTES

 

Issuance Date  Original Noteholder  Buyer  Original Principal
Amount  12/22/2016  SteelMill Master Fund LP  Iliad  $4,000,000.00  4/13/2017 
SteelMill Master Fund LP  Iliad  $1,000,000.00  1/9/2017  Avoro Life Sciences
Fund LLC  CVP  $1,650,000.00  4/13/2017  Avoro Life Sciences Fund LLC  CVP 
$1,000,000.00  5/31/2017  Trutek Corp.  CVP  $1,500,000.00  12/22/2016  Nailesh
Bhatt  CVP  $650,000.00  12/22/2016  Scott Canute  CVP  $350,000.00  TOTAL 
$10,150,000.00 

 

 

 

SCHEDULE 2

 

EXCHANGE NOTES

 

Note   Noteholder    Exchange Fee     Original Principal
Amount   Exchange Note #1   Iliad   $ 132,000.00     $ 2,990,749.64   Exchange
Note #2   Iliad   $ 33,000.00     $ 747,687.41   Exchange Note #3   CVP   $
54,450.00     $ 1,233,684.23   Exchange Note #4   CVP   $ 33,000.00     $
747,687.41   Exchange Note #5   CVP   $ 49,500.00     $ 1,121,531.12   Exchange
Note #6   CVP   $ 21,450.00     $ 485,996.82   Exchange Note #7   CVP   $
11,550.00     $ 261,690.59   TOTAL     $ 7,589,027.22