“Budget” means the schedule of funds to be paid by CEPI for the Project activities in the Work Packages identified in Annex D, as may be amended from time to time.
“Stage Gate” means a mutually agreed “go/no go” decision point to continue a given Work Package or to commence activities in another Work Package.
“Step 1 Agreement” means the agreement between the Parties covering the [***] of the Project effective March 8, 2020.
3. Use of Funds; Procurement; Project Records
3.1. Use and Management of Funds. The Budget sets for the funding for each Work Package. Awardee shall use funding from CEPI only in accordance with a Work Package unless otherwise agreed by CEPI in advance. Awardee shall manage CEPI funds with financial controls and practices consistent with U.S. GAAP and further in compliance with CEPI’s policies and procedures as described in Clause 11.2 of this Agreement, which include CEPI’s Third Party Code, Cost Guidance and related procurement policies.
3.3. Payments. Payments under this Agreement shall be made in U.S. dollars ($) to Awardee’s bank account identified on the Agreement Summary. CEPI shall make payments [***] identified in the Budget and shall make adjustments to the initial payment hereunder to accommodate any funds carried forward from the Step 1 Agreement. Awardee shall be entitled to submit a payment request form to CEPI upon execution of this Agreement and thereafter [***]. Tranches of funding for each payment request under this Agreement shall be paid by CEPI [***] after receipt of all of the following: (i) payment request by Awardee; (ii) any [***] Technical Report due at the time of the payment request; and (iii) any [***] Financial Report due at the time of the payment request, each to be submitted using templates provided by CEPI. Payments may be adjusted to reflect any [***] as well as any [***] as noted in the Financial Report.
3.4. Delayed Payments. CEPI may delay or condition a payment if:
(a) Awardee has not achieved a material milestone in accordance with the iPDP by the agreed time, unless such delay has been approved by the JMAG in accordance with the Team Charter or otherwise by CEPI;
(b) CEPI has been notified by Awardee that it or any Subawardees are no longer in compliance with the representations and warranties in Clause 16 at the time the payment tranche is requested; or
(c) Awardee has not reasonably completed the payment request form or submitted reasonably satisfactory [***] Technical Reports and Financial Reports.
3.5. Hold on Payment During a Material Breach. CEPI is not obliged to pay any tranches of funding for any Work Package for so long as Awardee is in breach of a material obligation under this Agreement.
3.6. Retained Final Payment. CEPI shall retain [***] identified in the Budget and release it within [***] days after accepting Awardee’s final Technical Report and Financial Report. Within [***] of CEPI’s receipt of the both the Technical Report and Financial Report, CEPI shall notify Awardee of CEPI’s acceptance or rejection of such report(s).
14. Equitable Access
14.13. Loan Facility. CEPI shall fund certain of Awardee’s manufacturing related expenses, that may include reservation fees to secure future production capacity for the Project, certain acquisition fees to secure materials for the Project, and the like, each a “Loan Facility Payment,” as described in the iPDP (the Integrated Product Development Plan) and Budget, which Awardee may, in its sole discretion, elect to draw upon. CEPI, as lender, shall provide funds to Awardee, as borrower, as follows:
(a) CEPI hereby makes available to Awardee a term loan facility in an amount up to USD $142,500,000.00 (“Loan Amount”), which Loan Amount may be increased by mutual written agreement pursuant to Awardee’s request and CEPI’s acceptance of a loan request as described in subsection (d) below.
(b) Awardee shall apply the full amount of each tranche borrowed by it (each, a “Loan”) under this Clause 14.13 towards each such Loan Facility Payment.
(c) Awardee will request any Loan from CEPI hereunder generally no less than [***] prior to the proposed date of such Loan. For clarity, the advance of a Loan by CEPI for activities under any Work Package shall not be deemed as agreement by CEPI that any required Stage Gates have been achieved.
(d) Loans shall be requested by Awardee on a loan request form provided by CEPI which shall require that Awardee:
(i) affirms that, as of the date of such request, Awardee is not in default or insolvent pursuant to Clause 19.2;
(ii) affirms that the representations and warranties made by Awardee in Clauses 16.1 and 16.2 remain true and correct;
(iii) sets out the amount of the requested Loan, with a supporting third-party agreement or invoice and other documentation reasonably requested by CEPI;
(iv) sets forth any reimbursement to CEPI for or credit offsets against any [***] of a prior Loan amount that was not applied to a Loan Facility Payment; and
(v) sets out a triggering event for repayment (“Repayment Trigger”) for each Loan Facility Payment. For clarity, the nominal Repayment Trigger is the date that Awardee receives an advance purchase commitment or other purchase of Project Vaccine pursuant to Clauses 14.3 to 14.5. The Repayment Trigger may be adjusted by mutual written agreement. In general it is understood that Awardee will undertake to repay each Loan (if such Loan has not otherwise been Discharged) at the time it receives payment for one or more purchases of the Project Vaccine related to such Loan, provided such payment covers Awardee’s actual COGs, not including the amount of the associated Loan, as further described in Clause 14.14.
Awardee’s failure to meet these requirements shall be grounds for CEPI to deny the advancement of any requested Loan, until such requirements are met.
14.14. Repayment and Discharge. Unless Discharged, each Loan shall be repaid on the date determined by its Repayment Trigger and when repaid by Awardee, will be acknowledged by CEPI as cancelled. Failure by Awardee to repay the Loans to CEPI as described in this Clause 14.14, shall be a material breach of this Agreement and CEPI shall be entitled to specific performance of this obligation. Generally, Awardee shall be released from repaying a Loan (“Discharged”) and such Loan shall be deemed a grant made by CEPI to Awardee when (i) Awardee demonstrates on or before the date determined by its Repayment Trigger of such Loan that Awardee was unable to utilize such reserved capacity or materials, as the case may be, or (ii) Awardee demonstrates that it was unable to secure one or more advanced purchase commitments or other purchases of the associated Project Vaccine and further demonstrates, to CEPI’s reasonable satisfaction, that there is no likely prospect for sale of such Project Vaccine or that Novavax is disposing of such Project Vaccine.
Repayment of Loans shall be made as follows:
(a) If (i) CEPI and Awardee agree to fully utilize reserved capacity from a Loan and (ii) Awardee obtains one or more advance purchase commitments or other purchases of the Project Vaccine produced pursuant to such reserved capacity, any such purchase proceeds that Awardee receives that are in excess of Awardee’s corresponding actual COGs, not including the amount of the associated Loan, shall be used to repay the Loan up to the full amount;
(b) If (i) CEPI and Awardee agree to partially utilize reserved capacity from a Loan and (ii) Awardee obtains one or more advance purchase commitments or other purchases of the Project Vaccine produced pursuant to such reserved capacity, in the interest of assuring Equitable Access to Project Vaccine, a pro-rated portion of the Loan related to the unused reserved capacity will be Discharged and any such purchase proceeds that Awardee receives that are in excess of Awardee’s corresponding actual COGs, not including the amount of the associated Loan, shall be used to repay the remaining portion of the Loan;
(c) If CEPI and Awardee agree not to utilize any reserved capacity from a Loan (whether or not CEPI utilizes the reserved capacity pursuant to Clause 14.16(a)), the entire amount of the Loan shall be Discharged;
(d) If against CEPI’s agreement, Awardee utilizes all or a portion of the reserved capacity from a Loan, Awardee shall repay the Loan in the full amount in [***] after Awardee starts utilizing the reserved capacity;
(e) For a Loan related to the purchase of materials, if Awardee obtains one or more advance purchase commitments or other purchases of the Project Vaccine produced using such material, any such purchase proceeds that Awardee receives that are in excess of Awardee’s corresponding actual COGs, not including the amount of the associated Loan, shall be used to repay the Loan up to the full amount; and
(f) Notwithstanding the previous, the Parties recognize that a variety of external factors, may impact repayment of a Loan and therefore agree to timely meet as requested by one Party and discuss a good faith adjustment to the repayment scenarios described herein.
14.15. Interest on Loans. No interest shall accrue or be payable on any Loan made under the Loan Facility.
14.16. Other Use of Reserved Capacity.
(a) If, as described in Clause 14.14(c), CEPI and Awardee agree not to utilize any reserved capacity from a Loan and the period of time for such reserved capacity is available, then CEPI shall have the right, but not an obligation, to use the reserved capacity for production of a designated third party product at its own cost but with the benefit of any unused credit recognized from the Loan Facility Payment, as provided by the underlying agreement with the entity with which such manufacturing capacity has been reserved.
(b) Awardee shall ensure that any contract with a relevant manufacturer to reserve and utilize reserved capacity secured by one or more Loan Facility Payment shall provide CEPI with the rights contemplated in the immediately preceding subsection (a); and shall provide copies of such contracts to CEPI in confidence. For clarity, Awardee shall have [***] after the Effective Date of this Agreement in which to secure such rights under any relevant third party contract already signed as of the Effective Date.