Provision Language
Definitions
“Conversion Amount” means the amount of the Loan (excluding any Accrued Interest) to be converted into Conversion Stock
“Conversion Price” means the price per share at which the Loan will be converted into Conversion Stock, as further detailed in Schedule 5
“Conversion Stock” means the common stock of the Company, $0.0001 par value per share
“Drawdown Documents” means:
(a) A Drawdown Notice;
(b) A Disclosure Letter;
(c) A spend report in the standard Wellcome form detailing actual expenditure of the previous Facility tranche; and
(d) Financial Documents
“Drawdown Notice” means a notice in writing signed by the Company as detailed in Schedules 3 or 4 of this Agreement (as relevant)
“Drawdown Period” means the period starting on the Effective Date and ending on the date which is the earlier of the Repayment Date or forty-eight (48) months from the date of this Agreement
“Facility Amount” means the maximum principal amount of the Facility being eleven million six hundred and sixty-three thousand one hundred and three US dollars (USD $11,663,103)
“Financial Documents” means the latest set of publicly available financial documents published by the Company
“Loan Conditions” means the following conditions:
a) no Event of Default is subsisting or would result from the proposed Advance being paid to the Company;
b) the Warranties are true and correct in all respects, subject to the matters set out in the relevant Disclosure Letter;
c) Wellcome has received the relevant Drawdown Documents and the contents of such Drawdown Documents are reasonably acceptable to Wellcome;
d) no written demand for repayment of the Loan has been issued by Wellcome to the Company;
e) other than in the case of a drawdown of the first tranche of the Facility, Wellcome has provided confirmation to the Company that the relevant Milestone for the relevant tranche to be drawn down has been met;
f) in the case of the Retained Amount (specified in the payment table at Schedule 1), the End of Award Report and Final Expenditure Report have been accepted by Wellcome (such acceptance not to be unreasonably withheld as long as they have been submitted in accordance with the terms of this Agreement, and any publications made by the Company in respect of the Project have been made in compliance with Wellcome’s Open Access Policy included in Schedule 8; and
g) the credit rating of the Company’s bank receiving Advances of the Loan is in accordance with Wellcome’s minimum required credit rating from time to time
“Milestones” means the Milestones as described in Schedule 1, and “Milestone” means any one of them
“Sale” means:
a) the acquisition by any person of more than fifty percent (50%) of the shares of the Company or all of the shares not already owned by the acquirer; or
b) the acquisition by any person of the business, assets or undertaking of the Company or any material part thereof (for which purpose the Project IPRs shall be considered a material part of the Company’s assets);
2 LOAN TO BE ADVANCED BY WELLCOME
2.1 Use of the Loan. The Company may use the Loan only for the purpose of funding the Project as described in the Project Plan. The Costs Schedule attached at Schedule 2 sets out how the Parties envisage the Facility Amount will be used for the Project. Any other use of the Loan is subject to the prior written consent of Wellcome.
2.2 Drawdown. In order to draw down the Loan:
(a) the Company must provide Wellcome with the Drawdown Documents; and
(b) Wellcome must be satisfied that the Loan Conditions are met on both the date of the Drawdown Notice and on the proposed Drawdown Date.
(c) Drawdowns can be made quarterly.
2.3 Facility cancellation.
(a) The Project is expected to start on the Project Start Date but, in any event, the Project must start within six (6) months of the Effective Date.
(b) If no Drawdown Notice has been received by Wellcome within six (6) months of the Effective Date, the Facility shall be cancelled unless agreed otherwise in writing by Wellcome.
2.4 Milestones and subsequent tranches of the Facility
(a) On the achievement of any Milestone by the relevant Milestone Date, the Company shall promptly provide Wellcome with a report setting out how the Milestone was achieved (a “Milestone Report”) together with the Drawdown Documents if drawdown is required.
(b) Within twenty (20) Business Days of receipt of the Milestone Report and the relevant Drawdown Documents, Wellcome shall confirm to the Company in writing:
(i) whether Wellcome is satisfied, acting reasonably, that the relevant Milestone has been achieved by the relevant Milestone Date. In such circumstances, Wellcome’s confirmation shall trigger payment of the relevant tranche of the Facility to the Company in accordance with Clause 2.5;
(ii) whether Wellcome is not satisfied, acting reasonably, that the relevant Milestone has been achieved by the relevant Milestone Date. In such circumstances, the relevant tranche of the Facility will not be paid by Wellcome to the Company (subject to the remainder of this Clause 2.4(b)(ii)) and Wellcome shall provide the Company with reasonable details of the grounds on which it has reached this decision. Wellcome may, at its sole discretion, grant the Company a reasonable period of time (“Milestone Extension”), in order to address the reasons why Wellcome has judged that a particular Milestone has not been met. Upon the expiry of a Milestone Extension, Wellcome shall, at its sole discretion, decide whether or not to pay any further tranches of the Loan to the Company, but Wellcome shall not be obliged to do so.
2.5 Payment of Facility tranches. Subject always to the satisfaction of the Loan Conditions, Wellcome shall release the relevant tranche of the Facility within twenty-five (25) Business Days of the date that Wellcome receives a Drawdown Notice. Drawdowns can be requested quarterly, up to the value of the relevant approved Milestone. Drawdowns will be capped to the total of the relevant Milestone, until, subject to Clause 2.4(b)(ii), the date that Wellcome agrees that the next relevant Milestone has been achieved. If the Loan Conditions are not met because the contents of any Drawdown Documents are not in compliance with the terms of this Agreement, the relevant tranche of the Facility will not be released, in which case Wellcome shall provide the Company with reasonable details of the grounds on which it has reached this decision. If the Company cures the issues identified by Wellcome within a reasonable period of time, and in any event prior to the expiry of the Drawdown Period, Wellcome shall release the relevant tranche of the Facility within fifteen (15) Business Days of confirmation that such issues have been cured. In case the Company is unable to cure the issues identified by Wellcome and Wellcome formally conveys the same to the Company, this event shall constitute an Event of Default under Clause 9.1(c).
3. INTEREST
3.1 Interest. Interest is payable on repayment of the Loan in accordance with Clause 3.2. Interest is not payable on any amount(s) of the Loan converted into Conversion Stock. On the conversion of any amount of the Loan into Conversion Stock any Accrued Interest in respect of such Conversion Amount falls away and is not repayable.
3.2 Interest calculation on repayment. Accrued Interest shall be deemed to have accrued on a daily basis (by reference to a year of three hundred and sixty-five (365) days) on the amount of the Loan From time to time outstanding at a rate of two percent (2%) per annum above the Sterling Overnight Index Average (SONIA) from time to time, provided that at any time such rate is equal to or likely to exceed nine percent (9%), the Parties shall meet and discuss adjusting the interest rate (e.g., either by adjusting the percentage above SONIA, or setting a ceiling on the maximum applicable interest rate). Accrued Interest shall be added to the principal amount of the Loan annually on each Anniversary Date and on each Repayment Date (if the relevant Repayment Date is not an Anniversary Date).
3.3 Default interest. Where the Company fails to pay any amount due under this Agreement on the relevant due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is the sum of three percent (3%) per annum and the rate which would have been payable if the overdue amount had constituted a loan in an amount equal to such overdue amount on the same terms as the Loan. Any interest accruing under this Clause 3.3 shall be immediately payable by the Company on demand.
4. CONVERSION OR REPAYMENT OPTION
4.1 Conversion and repayment. Wellcome may by written notice to the Company served in accordance with Clause 4.3:
(a) convert the Loan (or part of the Loan), into fully paid Conversion Stock as follows:
(i) in connection with a Sale pursuant to the terms of paragraph 1.1 of Schedule 5;
(ii) at any time after the second (2nd) anniversary of the Effective Date pursuant to the terms of paragraph 1.2 of Schedule 5; or
(iii) in the case of an Event of Default pursuant to the terms of paragraph 1.2 of Schedule 5 and Clause 9.2(a); or
(b) require repayment of the Loan (or part of the Loan) together with Accrued Interest, in the following circumstances:
(i) at any time after the fifth (5th) anniversary of the Effective Date;
(ii) in the case of a Sale, within fifteen (15) business days following the closing date of a Sale
(iii) in the case of an Event of Default, in accordance with Clause 9.2(b).
4.2 Conversion. On conversion, the Conversion Amount shall be converted into such number of shares fully paid Conversion Stock as, at the Conversion Price, have an aggregate value equal to the Conversion Amount (as nearly as practicable, ignoring fractions and rounding down to the nearest whole number of shares of Conversion Stock). The Company shall (a) issue the appropriate number of shares of Conversion Stock to Wellcome as soon as practicable (and in any event no later than twenty (20) Business Days following receipt of notice from Wellcome), (b) provide instruction to the Company’s transfer agent, authorizing the issuance of the Conversion Stock to Wellcome, and (c) instruct the transfer agent to provide evidence to Wellcome of the issuance of such Conversion Stock. The Company undertakes to obtain all necessary consents and approvals as may be required to issue the Conversion Stock to Wellcome as soon as reasonably practicable.
4.3 Written demands. Written demands from Wellcome requiring repayment or conversion of the Loan (or both) shall state:
(a) For repayment: the relevant sub-section of Clause 4.1(b) pursuant to which such request is made, the Repayment Amount, the Repayment Date and the details of Wellcome’s bank account into which the Repayment Amount should be paid; and
(b) For conversion: the relevant sub-section of Clause 4.1(a) pursuant to which such request is made, and the amount of the Loan to be converted into Conversion Stock.
4.4 Repayment. On receipt of a valid written demand for repayment from Wellcome under Clause 4.1(b)(i) above:
(a) on the Repayment Date, unless the Company has sufficient funds in reserve to repay the Repayment Amount in full, the Company shall pay to Wellcome an amount equal to twenty percent (20%) of the Net Revenues of the Company received by it during the Year immediately preceding the Repayment Date (provided it does not exceed theRepayment Amount) and, thereafter, on each subsequent anniversary of the Repayment Date, an amount equal to twenty percent (20%) of the Net Revenues of the Company received during the Year immediately preceding that anniversary until the Repayment Amount has been paid in full; and
(b) if the Repayment Amount has not been repaid in full pursuant to Clause 4.4(a) or converted into Conversion Stock by the date that is seven (7) years from the Effective Date (the “Cut-Off Date”), the Company shall (in lieu of making any payments under Clause 4.4(a)) on the first anniversary of the Repayment Date following the Cut-Off Date pay Wellcome an amount equal to twenty percent (20%) of the Gross Revenues Of the Company received by the Company during the Year immediately preceding that anniversary and on each subsequent anniversary of the Repayment Date an amount equal to twenty percent (20%) of the Gross Revenues of the Company received during the Year immediately preceding that anniversary until the Repayment Amount Has been repaid in full.
4.5 Repayment on an Event of Default. If Wellcome requires repayment of the Loan and Accrued Interest on the occurrence of an Event of Default, the Loan and Accrued Interest shall be repayable in full within twenty (20) Business Days of the date on which Wellcome notifies the Company that repayment is required pursuant to Clause 9.2(b).