AGEX THERAPEUTICS, INC. : Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Financial Statements and Exhibits (Form 8 -K)

Section 1.01 – Registration in the Material Final Agreement.

At February 14, 2022, AgeX and Limited youthfulness (“Juvenescence”) has entered into a secured convertible promissory note (the “Secured Note”) pursuant to which Juvenescence has agreed to provide AgeX with a $13,160,000 12-month line of credit. AgeX drew an initial $8,160,000 of the line of credit and used $7,160,000 to pay the outstanding principal and other amounts due as loan origination fees under its 2019 loan facility agreement, as amended, with Juvenescence. The rest $5 million line of credit may be drawn from time to time over the next 12 months, subject to Juvenescence’s discretion to approve each loan drawing. AgeX can’t pull more than $1 million in any subsequent single draw. The unpaid principal balance of the secured note will become due and payable on February 14, 2024 (the “Redemption Date”).

In lieu of accrued interest, AgeX will pay Juvenescence an origination fee equal to 4% of the amount of each drawdown of loan funds, which will accrue as each drawdown is funded, and an additional 4% of any the total amount of funds. drawdowns that will accumulate after the end of the 12-month period during which funds may be drawn on the line of credit. The issue charges will become due and payable on the redemption date or on the pro rata basis of any early redemption of all or part of the unpaid principal balance of the secured note.

Conversion of loan amounts into common shares

Instead of repaying the borrowed funds, AgeX may convert the Loan Balance and any accrued but unpaid Original Fees (collectively the “Outgoing Amount”) into common shares or “units” of AgeX (a “Conversion of the borrower”) if AgeX makes a “qualified conversion” Offer”, which means a sale of ordinary shares (or ordinary shares associated with warrants or other securities convertible into “units”) in which the gross proceeds from the sale is at least $10 million. The conversion price per share or unit will be the lowest price at which the shares or units are sold under the Qualified Offer before deduction of subscription fees and discounts, placement agent fees and expenses and other expenses of the Qualified Bid. In the case of sales of Ordinary Shares by AgeX from time to time pursuant to a “bid to market”, a qualified bid will be deemed to have occurred if and when the proceeds of the sale reach $10 million.

Juvenescence may convert the Amount Amount in whole or in part into shares of AgeX common stock (a “Lender Conversion”) at any time at Juvenescence’s election at the closing price per AgeX common share on the US stock exchange NYSE or at a other national stock exchange on the date prior to the date on which Juvenescence notifies AgeX of Juvenescence’s election to convert the outstanding amount or part thereof into ordinary shares.

Any borrower conversion or lender conversion is subject to certain restrictions in order to comply with the applicable requirements of the NYSE American (the “Exchange”) where the shares of AgeX common stock are listed. Section 713 of the Exchange Company Guide requires listed companies to obtain shareholder approval as a condition precedent to listing approval before: (i) issuing additional shares under ‘a transaction involving the sale, issue or potential issue by the issuer of common stock (or securities convertible into common stock) equal to 20% or more of the outstanding stock (as determined on the date of the particular transaction agreement) for less than the greater of the book value or market value of publicly traded common stock (the “20% Rule”) and (ii) the issuance of shares which will result in a change of control of the company (the “change of control rule”). Although the Exchange has not defined “change of control”, the Exchange considers that any issuance of shares is subject to the change of control rule if the issuance of shares would result in a shareholder owning 50% or plus outstanding shares of a corporation. The Secured Note contains a “19.9% ​​lock-up” clause and a “change-of-control lock-up” clause intended to prevent a conversion of the Outstanding which would violate the 20% Rule or the Change of Control Rule.


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The 19.9% ​​Lock-Up provides that any conversion of the Secured Note into Common Stock must either (i) not involve the issuance of more than 19.9% ​​of the Common Stock outstanding on the date of the Secured Note at a lower price at the applicable market price (as further explained below) so that shareholder approval under the 20% rule is not required, or (ii) is approved by AgeX shareholders. Under the Secured Note, AgeX may borrow funds from Juvenescence in periodic installments or “tranches” and the market price of AgeX common stock is determined for each such tranche. The market price of each tranche is based on the closing price of AgeX common stock on the date of the drawdown notice from AgeX to Juvenescence requesting financing of the loan tranche. Upon conversion of the borrower, which can only take place in a qualified offer by AgeX, only ordinary shares issuable upon conversion of a tranche with a market price of the higher tranche at the applicable conversion price would be aggregated (along with any other ordinary shares that may be issued to Juvenescence under the Qualified Offer) for the purpose of determining the applicability of the 19.9% ​​blocker. On Lender Conversion, only shares issuable on conversion of a tranche whose market price for the tranche is less than the market price on the date preceding the date on which Juvenescence delivers a notice of conversion to AgeX are aggregated for the purpose of determining the applicability of the 19.9% ​​blocker. The Change of Control Lock-Up Provision provides that, without the prior approval of AgeX shareholders, a Borrower Conversion or a Lender Conversion cannot occur if it would cause Juvenescence’s ownership to equal or exceed 50% outstanding common shares of AgeX.

Accordingly, without the approval of the shareholders of AgeX, the Amount cannot be converted into ordinary shares of AgeX under the provisions of the Conversion of the Borrower or the provisions of the Conversion of the Lender of the Secured Obligation into a amount which (a) would be equal to or greater than 19.9% ​​of the outstanding common shares shares (measured at the date of the secured note) at a conversion price less than the greater of the book value or the market value of the tranche of AgeX common stock, or (b) cause ownership of Juvenescence to equal or exceed 50% of the outstanding AgeX common stock.

Pursuant to the secured note, AgeX has agreed to seek the vote of AgeX shareholders to approve AgeX’s and Juvenescence’s ability to convert the outstanding amount into AgeX common stock under the borrower conversion provisions and of the Lender of the Secured Note even if the Borrower Conversion or the Lender Conversion, as the case may be, would result in (a) Juvenescence receiving additional shares exceeding 19.9% ​​of the outstanding common shares of AgeX at the date of the Secured Obligation for an amount less than the greater of the book value or the market values ​​of the applicable tranches of the ordinary shares of AgeX, or (b) Juvenescence holding more than 50% of the ordinary shares outstanding from AgeX.


Default Provisions
. . .

Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant

At February 14, 2022AgeX drew an initial $8,160,000 of its credit available under the secured note described in point 1.01. The portion of Section 1.01 describing the relevant terms of the Secured Note as incorporated into this Section 2.03 by reference.

Item 3.02 Unrecorded Sales of Equity securities.

In connection with the initial drawdown of AgeX’s loan funds under the Secured Note (as defined in Section 1.01 of this report), AgeX will issue warrants to Juvenescence to purchase 5,230,768 common shares of AgeX (“warrants”) at an exercise price of $0.78 per share, the closing price of AgeX common stock on the NYSE American on February 11, 2022on the trading day immediately preceding the drawing of loan funds by AgeX.

The warrants are subject to the terms of the warrant agreement between AgeX and Juvenescence described in Section 1.01 and filed as an exhibit to this report.

Warrants will be issued without registration under the Securities Act based on the exemption from registration provided in Section 4(a)(2) thereof and Regulation S thereunder.

Item 9.01 – Financial statements and supporting documents.


Exhibit        Description
Number
    4.1          Form of Warrant
    10.1         Secured Note dated February 14, 2022, executed by AgeX
               Therapeutics, Inc. and Juvenescence Limited†
    10.2         Security Agreement, dated February 14, 2022, between AgeX
               Therapeutics, Inc. and Juvenescence Limited  †
    10.3         Warrant Agreement, dated February 14, 2022, between AgeX
               Therapeutics, Inc. and Juvenescence Limited
    10.4         Amendment No. 3 to Registration Rights Agreement, dated February
               14, 2022, between AgeX Therapeutics, Inc. and Juvenescence
               Limited
    104        Cover Page Interactive Data File (embedded within the Inline XBRL
               document)



†Schedules and attachments to this exhibit have been omitted pursuant to Rule SK 601(b)(2). A copy of any appendix or omitted exhibit will be provided to the Security and Exchange Commission or its staff on request.



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