ORGENESIS INC. : Entering a Material Definitive Agreement, Completion of Acquisition or Disposal of Assets, Financial Statements and Supporting Documentation (Form 8-K)

Item 1.01. Conclusion of a significant definitive agreement.

On November 4, 2022, Orgenesis Inc. (“Orgenesis”), Morgenesis LLC
(“Morgenesis”), a recently incorporated subsidiary of Orgenesis holding all the assets of Orgenesis’ point-of-care services business for the treatment of patients (“POCare Services”), and MMOS Holdings, LP (“MM”), a subsidiary of Metalmark Capital Partners (“metal brand capital“), entered into a series of definitive agreements intended to fund, strengthen and develop Orgenesis’ POCare service company. Morgenesis will use this investment to grow and expand its POCare Services business globally, but initially focusing on United States. This includes the development of additional POCare centers, as well as the Mobile treatment units and Orgenesis laboratories (“OPPUL”). The OMPULs will allow Orgenesis to provide biotechnology companies and hospital systems with global cGMP supply for their point-of-care cell and gene therapy products, with the ability to rapidly grow and scale cell and gene treatments to meet ever-increasing demand.
metal brand capital is a leading private equity firm that seeks to create long-term value through active and collaborative partnerships with business owners, founders and executives, with a focus on healthcare , food and industrial.

Unit Purchase Agreement

OrgenesisMorgenesis and MM have entered into a unit purchase agreement (the “UPA”), pursuant to which MM has agreed to purchase 3,019,651 class A preferred units of Morgenesis (the “Class A Units”), which will represent 22.31% of the outstanding interests of Morgenesis following the initial closing, for a purchase price of $30,196,510composed of (i) $20,000,000 consideration in cash and (ii) the conversion of $10,196,510 MM’s then outstanding senior secured convertible loans previously entered into with MM under this senior secured convertible loan agreement, dated August 15, 2022between MM, Morgenesis and Orgenesis. The investment will be made at a pre-money valuation of $125,000,000subject to customary adjustments for debt and accounts receivable and an adjustment related to certain intercompany loan, and is expected to close on or about November 11, 2022. Following the initial closing, Orgenesis will own 77.69% of the issued and outstanding interests of Morgenesis.

If (a) Morgenesis and its subsidiaries generate net sales (as defined in the UPA) equal to or greater than $30,000,000 during the twelve month period ending
December 31, 2022 (the “First Step”) and/or equal to or greater than
$50,000,000 during the twelve month period ending December 31, 2023 (the “Second Stage”), and (b) the Orgenesis’ the shareholders approve the terms of the LLC Agreement (as defined below under “Principal Terms of the LLC Agreement”) on the earliest of the following dates: (x) the date which is seven (7) months after the date initial closing date and (y) the date of Orgenesis’ 2023 annual meeting of its shareholders (as
Orgenesis the Orgenesis Shareholder Approval hereinafter being the “Orgenesis Shareholder Approval” and such Orgenesis Shareholder Approval Deadline hereinafter being the “Orgenesis Shareholder Approval Deadline” ), consistent with applicable law and in a manner that will ensure that MM is able to exercise its rights under the LLC Agreement (as defined below) without further action or approval by MM, then MM will pay until $10,000,000 in cash in exchange for an additional 1,000,000 Class A Units if the first milestone is achieved and $10,000,000 in cash in exchange for 1,000,000 Class B units of Morgenesis Preferred Units (the “Class B-units“) if stage two is achieved. Notwithstanding the foregoing, if stage one is not achieved, but Morgenesis and its subsidiaries generate net income equal to or greater than $13,000,000 for the three months ending March 31, 2023then MM will do the first $10,000,000 future offering of 1,000,000 Class A Units described above. In the event Orgenesis fails to obtain Orgenesis shareholder approval prior to the shareholder approval deadline, Orgenesis shall not be entitled to receive (but MM may, in its sole discretion, choose to do) the first $10,000,000 the future investment or the second future $10,000,000 investment.

At any time until the consummation of an IPO or a change of control of the Company (in each case, as defined in the LLC Agreement), MM may, in its sole discretion, choose to invest up to an additional amount $60,000,000 in Morgenesis (such an investment, a “Optional investment“) in exchange for certain classes C preferred Morgenesis Units (the “Class C-units” and, with Class A Units and Class A Units B-unitsthe “preferred shares”). $10,000,000 of such Optional investment will be to purchase Class C-1 Preferred Units based on an enterprise value of $125,000,000with this enterprise value adjusted for any net debt at that time; $25,000,000 of Optional investment will be to purchase Class C-2 Preferred Units based on an enterprise value of $156,250,000, with this enterprise value adjusted for any net debt at that time; and $25,000,000 of
Optional investment will be to purchase Class C-3 Preferred Units based on an enterprise value of $250,000,000with that enterprise value adjusted for any net debt at that time.

The proceeds of the investment will generally be used to finance the activities of Morgenesis and its consolidated subsidiaries. The terms, rights and privileges of the Preferred Units are described below under the heading “Principal Terms of the Preferred Units”.

In addition, if during the twelve month period ending on December 31, 2023Morgenesis and its subsidiaries generate (i) net sales (as defined in the UPA) equal to or greater than $70,000,000(ii) Gross Profit (as defined in the UPA) equal to or greater than $35,000,000 and (iii) an EBITDA (as defined in the UPA) equal to or greater than $10,000,000then MM will make (or cause to be made) a single cash payment of $10,000,000 at Orgenesis upon such payment becoming final and binding pursuant to the UPA (the “Indemnity Payment”).

The UPA contains customary representations and warranties that the parties have made to each other. The remedy for any damages with respect to any breach or inaccuracy of the representations and warranties or covenants made by Morgenesis and Orgenesis in the UPA or other related transaction document, subject to certain limited exceptions, will be an indemnity provided by
Orgenesis which will only be triggered when the indemnified MM have suffered damages for a total amount of $500,000. For purposes of clarification, no compensation is due to MM for certain matters which are disclosed to MM in the disclosure schedules accompanying the UPA.

The UPA also contains certain covenants, including, without limitation, covenants regarding (a) non-competition and non-interference with Morgenesis’ customers, suppliers, licensees and other business relationships for five years after the last close, and (b) non-solicitation of employees for five years after the last close, all relating to the POCare Services activity. The UPA also contains certain indemnities, including for breach of representations and warranties, breach of covenants and Orgenesis and certain specified benefits, subject to certain limited exceptions.

LLC Agreement

As part of joining the UPA, each of the OrgenesisMorgenesis and MM have entered into the Second Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) providing for certain restrictions on the disposition of Morgenesis securities, provisions of certain options and rights relating to the management and operations of Morgenesis , a right for MM to exchange shares of Morgenesis for shares of Orgenesis common stock and certain other rights and obligations. In addition, MM has been granted certain protective rights in Morgenesis, which are generally summarized below.

Main Terms of the LLC Agreement

Key terms of the LLC Agreement include the following:

1. Composition of the Board. The initial board of directors of Morgenesis (the “Morgenesis Board”) will consist of five (5) managers, three (3) of whom will be appointed by Orgenesis, one of whom must be an industry expert and will require prior reasonable consultation with MM, and two (2) by MM. The initial directors elected to the Morgenesis Board of Directors are as follows: Vered Caplan and Mark Cohen like both (2) Orgenesis designated persons, Orgenesis the nominated person and industry expert to be appointed later (the “Lead Industry Expert”), and Howard Hoffen and John Eppell as the two (2) delegates MM. If the shareholdings of each of the Orgenesis and MM fall below 25% of their initial stake in Morgenesis as specified above, each will be entitled to appoint one less manager.

If (i) at any time there is a Material Underperformance Event (as defined in the LLC Agreement), (ii) at any time there is a Material Governance Event (as defined in the LLC Agreement) LLC), (iii) Morgenesis does not pay in full the Aggregate Redemption Price (as defined in the LLC Agreement) to redeem on any Redemption Date (as defined in the LLC Agreement) all Preferred Units to be redeemed on such redemption date, (iv) Morgenesis or Orgenesis does not pay the full Total Price of the Put Option (as defined in the LLC Agreement), or (v) Orgenesis fails in its obligation to make an Approved Sale (as defined below) or otherwise, the failure of an Approved Sale to be consummated is primarily attributable to Orgenesis or its affiliates, the Board of Morgenesis will be appointed as follows: (a) a director will be appointed by Orgenesis, (b) the industry expert manager is nominated by MM and (c) three managers are nominated by MM. . . .

Section 2.01. Realization of the acquisition or disposal of assets

The information provided above in Section 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01 Financial statements and supporting documents

(d) Exhibits

10.1 # Unit Purchase Agreement dated November 4, 2022 by and among

Orgenesis Inc., Morgenesis LLC and MMOS Holdings, LP

10.2 # Form of Second Amended and Restated Limited Liability Company Agreement

of Morgenesis LLC

10.3 # Service Agreement, dated November 4, 2022by and between

Morgenesis LLC and Orgenesis Inc.

10.4 Advisory and Monitoring Services Agreement dated November 4, 2022

by and between Morgenesis LLC and Metalmark Management II LLC.

104 Cover page interactive data file (embedded in Inline XBRL document)

# Certain attachments and exhibits have been omitted pursuant to Section 601(b)(2) of the

SK regulations. A copy of any omitted schedule and/or parts will be provided

to Security and Exchange Commission on demand.

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