Item 1.01. Entry Into or Amendment of a Material Definitive Agreement.

Indenture and Notes



On December 7, 2020, Progenity, Inc. (the "Company") issued $164,025,000
principal amount of its 7.25% Convertible Senior Notes due 2025 (the "Notes").
The Notes were issued pursuant to, and are governed by, an indenture (the
"Indenture"), dated as of December 7, 2020, by and between the Company and The
Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee").
Pursuant to the purchase agreement between the Company and the initial purchaser
of the Notes, the Company granted the initial purchaser an option to purchase,
for settlement within a period of 13 days from, and including, the date the
Notes are first issued, up to an additional $15,000,000 principal amount of
Notes. The Notes issued on December 7, 2020 include $10,525,000 principal amount
of Notes issued pursuant to the partial exercise by the initial purchaser of
such option.

The Notes will be the Company's senior, unsecured obligations and will be
(i) equal in right of payment with the Company's existing and future senior,
unsecured indebtedness; (ii) senior in right of payment to the Company's
existing and future indebtedness that is expressly subordinated to the Notes;
(iii) effectively subordinated to the Company's existing and future secured
indebtedness, to the extent of the value of the collateral securing that
indebtedness; and (iv) structurally subordinated to all existing and future
indebtedness and other liabilities, including trade payables, and (to the extent
the Company is not a holder thereof) preferred equity, if any, of the Company's
subsidiaries.

The Notes will accrue interest at a rate of 7.25% per annum, payable
semi-annually in arrears on June 1 and December 1 of each year, with the initial
payment on June 1, 2021. The Notes will mature on December 1, 2025, unless
earlier repurchased, redeemed or converted. At any time from, and including, the
date that is 30 calendar days after the initial closing date of the offering of
Notes and before the close of business on the second scheduled trading day
immediately before the maturity date, noteholders may convert their Notes at
their option into shares of the Company's common stock, together, if applicable,
with cash in lieu of any fractional share, at the then-applicable conversion
rate. The initial conversion rate is 278.0094 shares of common stock per $1,000
principal amount of Notes, which represents an initial conversion price of
approximately $3.60 per share of common stock. Noteholders that convert their
Notes before December 1, 2022 will, in certain circumstances, be entitled to an
additional cash payment representing the present value of any remaining interest
payments on the Notes through December 1, 2022. The conversion rate and
conversion price will be subject to customary adjustments upon the occurrence of
certain events. In addition, if certain corporate events that constitute a
"Make-Whole Fundamental Change" (as defined in the Indenture) occur, then the
conversion rate will, in certain circumstances, be increased for a specified
period of time.

Certain listing standards of The Nasdaq Global Market limit the number of shares
the Company may deliver upon conversion of the Notes to an amount that is less
than 20% of the number of shares of the Company's common stock outstanding on
the pricing date of the Notes offering, unless the Company first obtains the
approval of its stockholders to issue shares in excess of that amount. The
Company has entered into agreements with its chairman and chief executive
officer and the affiliated investors, who collectively beneficially own
approximately 80% of the Company's outstanding common stock, agreeing to provide
written consent that would result in the stockholder approval required under
these listing standards. Accordingly, the Company expects to obtain such
stockholder approval before the Notes become convertible at the election of the
noteholders. However, if the Company does not obtain the stockholder approval,
then the number of shares due upon conversion of the Notes will be limited under
these listing standards. In that case, upon conversion of any Note, the Company
will be required to pay a cash amount equal to the product of the last reported
sale price per share of the Company's common stock on the relevant conversion
date and number of shares that are withheld from the settlement of that
conversion to comply with these listing standards.

The Notes will be redeemable, in whole and not in part, at the Company's option
at any time on or after December 1, 2023, at a cash redemption price equal to
the principal amount of the Notes to be redeemed, plus accrued and unpaid
interest, if any, to, but excluding, the redemption date, but only if the last
reported sale price per share of the Company's common stock exceeds 130% of the
conversion price on (i) each of at least 20 trading days, whether or not
consecutive, during the 30 consecutive trading days ending on, and including,
the trading day immediately before the date the Company sends the related
redemption notice; and (2) the trading day immediately before the date the
Company sends such notice. In addition, calling the Notes will constitute a
Make-Whole Fundamental Change, which will result in an increase to the
conversion rate in certain circumstances for a specified period of time.

If certain corporate events that constitute a "Fundamental Change" (as defined
in the Indenture) occur, then noteholders may require the Company to repurchase
their Notes at a cash repurchase price equal to the principal amount of the
Notes to be repurchased, plus accrued and unpaid interest, if any, to, but
excluding, the fundamental change repurchase date. The definition of Fundamental
Change includes certain business combination transactions involving the Company
. . .

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

The disclosure set forth in Item 1.01 above is incorporated by reference into this Item 2.03.

Item 3.02. Unregistered Sales of Equity Securities.



The disclosure set forth in Item 1.01 above is incorporated by reference into
this Item 3.02. The Notes were issued to the initial purchaser in reliance upon
Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act")
in transactions not involving any public offering. The Notes were resold by the
initial purchaser to persons whom the initial purchaser reasonably believes are
"qualified institutional buyers," as defined in, and in accordance with, Rule
144A under the Securities Act. Any shares of the Company's common stock that may
be issued upon conversion of the Notes will be issued in reliance upon
Section 3(a)(9) of the Securities Act as involving an exchange by the Company
exclusively with its security holders. Assuming the initial purchaser fully
exercises its option to purchase additional Notes, initially, a maximum of
51,529,035 shares of the Company's common stock may be issued upon conversion of
the Notes, based on the initial maximum conversion rate of 305.8103 shares of
common stock per $1,000 principal amount of Notes, which is subject to customary
anti-dilution adjustment provisions.

Item 8.01. Other Events.

Concurrent Common Stock Offering



On December 2, 2020, the Company entered into an underwriting agreement (the
"Common Stock Underwriting Agreement") with certain underwriters (the "Common
Stock Underwriters") agreeing, subject to customary conditions, to issue and
sell 7,645,259 shares (the "Shares") of the Company's common stock to the Common
Stock Underwriters. The issuance of the Shares was completed on December 7,
2020, concurrent with the offering of the Notes. In addition, pursuant to the
Common Stock Underwriting Agreement, the Company granted the Common Stock
Underwriters an option, which is exercisable within 30 days after December 2,
2020, to purchase up to an additional 1,146,788 shares (the "Option Shares", and
together with the Firm Shares, the "Shares") of the Company's common stock. The
issuance of the Firm Shares was completed on December 7, 2020, concurrent with
the offering of the Notes.

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The Shares were offered and sold by the Company (the "Common Stock Offering")
pursuant to the Company's registration statement on Form S-1 (File
No. 333-251044) (the "Registration Statement") and filed with the Securities and
Exchange Commission (the "Commission") and the final prospectus filed with the
Commission pursuant to Rule 424(b)(4) of the Securities Act. The Registration
Statement was declared effective by the Commission on December 2, 2020.
Aggregate gross proceeds are approximately $25 million before deducting
underwriting discounts and commissions and fees and other estimated offering
expenses. The Company intends to use the net proceeds from the Common Stock
Offering to support its operations, to invest in its molecular testing research
and development program, to invest in research and development with respect to
its precision medicine platform, and for working capital and general corporate
purposes.

A copy of the opinion of Gibson, Dunn & Crutcher LLP relating to the validity of the Shares is filed herewith as Exhibit 5.1.

Item 9.01. Financial Statements and Exhibits.



Exhibits



Exhibit
Number                                                                 Description

4.1 Indenture, dated as of December 7, 2020, between Progenity, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee.

4.2 Form of certificate representing the 7.25% Convertible Senior Notes due 2025 (included as Exhibit A to Exhibit 4.1).



  5.1       Opinion of Gibson, Dunn & Crutcher LLP

 23.1       Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1)

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