KreosCapital Facility Agreements
On August 17, 2017, we entered into a debt facility of up to€15 million with Kreos Capital – the First Kreos Capital Facility Agreement.The First Kreos Capital Facility Agreement is a loan consisting of two tranches. The first tranche of €10 million – Tranche A – was drawn down immediately after execution of the First Kreos Capital Facility Agreement. The second tranche of up to €5 million – Tranche B – was conditional upon us raising at least €20 million of additional funds before July 1, 2018. It was drawn down in October 2017, following ourOctober 2017 equity raise.On July 31, 2018, we entered into a second debt facility of up to €20 million with Kreos Capital–the Second Kreos Capital Facility Agreement.
The Second Kreos Capital Facility Agreement is a loan consisting of two tranches. The first tranche of €5 million – Tranche A – was drawn down immediately after execution of the Second Kreos Capital Facility Agreement. The remainder of €15 million is not available to us anymore. It had to be drawn down by March 31, 2019 and was conditional upon us having obtained a positive CHMP opinion to the European Commission recommending we receive marketing authorization for ATIR101 by then.Tranche A of each of the Kreos Capital Facility Agreements has a 45-month term from drawdown. Tranche A of the First Kreos Capital Facility Agreement has an implied 10% annual fixed interest rate and Tranche A of the Second Kreos Capital Facility Agreement has an implied 9% annual fixed interest rate. Interest payments hadto be made during the first 9 months, with the remaining 36 months amortizing in equal monthly instalments comprising principal and interest.
Tranche B of the First Kreos Capital Facility Agreement has a 48-month term from drawdown and an implied 10% annual fixed interest rate. Interest payments hadto be made during the first 12 months, with the remaining 36 months amortizing in equal monthly instalments comprising principal and interest. In relation to each of the Kreos Capital Facility Agreements, an end of loan payment equal to 5% of the amount drawn down is due at maturity and in the event of early repayment of all or any part of either facility a prepayment fee is payable by us.
Our obligations under the Kreos Capital Facility Agreements are secured for the benefit of KreosCapital by means of liens and security rights over our assets, including our intellectual property,receivables and moveable assetsthrough a New York law governed security agreementand a first ranking Dutch law governed pledge.
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The Kreos Capital Facility Agreements also include customary undertakings and restrictionsand events of default. These include a negative pledge undertaking and restriction on granting liens, a restriction on the disposals of assets outside of the ordinary course of business, a restriction on transferring or licensing our assets, a restriction on attracting further borrowings and debt except for certain categories of permitted indebtedness (such as fully subordinated and unsecured debt, a working capital facility at terms reasonably approved by Kreos Capital, operational leases and financial leases up to a certain threshold amount), a restriction on entering into joint ventures, and on any amalgamations, demergers, mergers or corporate reconstructions, an undertaking to continue the business in the ordinary course of business, a restriction on the granting of guarantees in respect of the obligation of any person, a restriction to make a substantial change to the general nature or scope of our current business and an undertaking to maintain adequate risk protection through insurances.
Also, as long as any of the loans under the Kreos Capital Facility Agreements remain outstanding, we are not entitled to make any dividend payment or other distributions to our Shareholders. Additionally, none of our subsidiaries may issue any shares (other than to affiliates) without the prior written consent of Kreos Capital.Events of default include non-payment, non-compliance, misrepresentation, cessation of business, cross-default, insolvency events, creditors' process, enforcement of security, illegality, material adverse change – including any event or circumstance which in Kreos Capital's reasonable opinion has a material adverse effect on our ability to perform or otherwise comply with our payment obligations under the Kreos Capital Facility Agreements or on our business, operations, property or financial condition – and de-listing.
The loans provided under the Kreos Capital Facility Agreements shall become immediately due and payable in the event that a person or group of persons acting in concert gains direct or indirect control over us by (i) obtaining the power to (a) to cast or control the casting of more than half thevotes that can be cast at a General Meeting, (b) appoint or remove all or the majority of the directors or (c) give binding directions with respect to our operating and financial policies or (ii) beneficially holding more than 50% of our issued share capital.As at the Simplified Registration Document Datean aggregate amount of €8.9millionin loans is outstanding under the Kreos Capital Facility Agreements.In connection with the First KreosCapital Facility Agreement, 253,617 warrants were issued to Kreos Capital V (Expert Fund) LP ("Kreos Expert"), of which 211,348 were issued at closing of the debt facility in August 2017, and 42,269 were issued following the drawdown of Tranche B in October 2017. In connection with the Second Kreos Capital Agreement, 41,212 warrants were issued to Kreos Expert atclosing of the debt facility in July 2018