Execution Version
CONVERTIBLE LOAN AGREEMENT
This CONVERTIBLE LOAN AGREEMENT (“Agreement”) is made as of January 3, 2024 (the “Effective Date”) by and among XBiotech Inc., a British Columbia corporation (the “Company”), and John Simard (“Lender”).
RECITAL
Whereas, to provide the Company with additional resources to finance the construction of a new research and development facility, Lender is willing to loan to the Company the amount of Ten Million U.S. Dollars ($10,000,000), subject to the conditions specified herein.
AGREEMENT
Now, therefore, in consideration of the foregoing, and the conditions set forth below, the Company and Lender, intending to be legally bound, hereby agree as follows:
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the Company will send by U.S. mail and email to the Lender at least ten (10) days prior to the earliest date specified therein, a notice specifying (A) the date on which any such record is to be taken for the purpose of such dividend, distribution or right and the amount and character of such dividend, distribution or right; and (B) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected to become effective and the record date for determining stockholders entitled to vote thereon.
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(h) Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE AGREEMENT, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER REPRESENTS AND WARRANTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
(i) Counterparts. The Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to be one and the same agreement. Counterparts may be delivered via facsimile, electronic mail including PDF or any electronic signature complying with the U.S.
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federal ESIGN Act of 2000) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
(j) Severability. If one or more provisions of the Agreement are held to be unenforceable under any applicable law or regulation, such provisions will be excluded from the Agreement and the balance of the Agreement will be interpreted as if such provisions were so excluded and the Agreement will be enforceable in accordance with its terms.
(k) Acknowledgment. For the avoidance of doubt, it is acknowledged that Lender will be entitled to the benefit of all adjustments in the number of shares of the Company’s capital stock as a result of any splits, recapitalizations, combinations or other similar transactions affecting the Company’s capital stock underlying the Conversion Securities (as defined in the Purchase Agreement) that occur prior to the conversion of the Loan, provided that the Conversion Cap is not exceeded. Lender further represents and acknowledges that he is an “accredited investor” as such term is defined in Rule 501 under the Securities Act of 1933, as amended.
“Affiliate(s)” means another entity or person which controls, is controlled by, or is under common control of the Company.
“Change of Control” shall mean (i) any “person” or “group” (within the meaning of Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) other than Lender, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of the outstanding voting securities of the Company having the right to vote for the election of members of the Board of Directors (other than in a transaction in which the Company issues securities for cash (or upon the conversion of notes which were issued for cash) for capital raising purposes); (ii) any reorganization, merger or consolidation of the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity; or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company.
“Conversion Price” shall be a price per share that is equal to the “Minimum Price” for the Company’s Common Stock as defined in NASDAQ Rule IM-5635(d), which shall be the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of this Agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of this Agreement.
“Common Stock” shall mean the common stock of the Company.
“Effective Date” shall mean January 3, 2024.
“Enforcement Authority” shall mean any court, stock exchange, federal, state or provincial securities regulatory authority, or other enforcement body having jurisdiction over the Company, its stock or the Lender.
“Acceleration Event” has the meaning given in Section 3 hereof.
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“Financial Statements” shall mean, with respect to any accounting period for any Person, statements of operations, retained earnings and cash flow of such Person for such period, and balance sheets of such Person as of the end of such period, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year if such period is less than a full fiscal year or, if such period is a full fiscal year, corresponding figures from the preceding fiscal year, all prepared in reasonable detail and in accordance with GAAP. Unless otherwise indicated, each reference to Financial Statements of any Person shall be deemed to refer to Financial Statements prepared on a consolidated basis.
“GAAP” shall mean accounting principles generally accepted in the United States.
“Indebtedness” shall mean and include the aggregate amount of, without duplication (i) all obligations for borrowed money, (ii) all obligations evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations to pay the deferred purchase price of property or services (other than accounts payable incurred in the ordinary course of business determined in accordance with GAAP), (iv) all obligations with respect to capital leases (excluding obligations in connection with capital leases used solely for the purchase, finance or acquisition of equipment and where such indebtedness is secured solely by such equipment), (v) all obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person outside of the ordinary course of business, (vi) all reimbursement and other payment obligations, contingent or otherwise, in respect of letters of credit and similar surety instruments; and (vii) all guaranty obligations with respect to the types of Indebtedness listed in clauses (i) through (vi) above. Notwithstanding the foregoing, Indebtedness shall be deemed not to include (a) contingent obligations incurred in the ordinary course of business, (b) any indebtedness under any overdraft, treasury or cash management facilities or any automated clearinghouse transfer of funds so long as any such indebtedness is repaid in full no later than ten (10) days following the date on which it was incurred or in the case of such indebtedness in respect of credit or purchase cards, within sixty (60) days of incurrence, (c) any liability for Federal, state, local or other taxes, (d) any obligations in respect of a lease properly classified as an operating lease in accordance with GAAP or (e) any customer deposits or advance payments received in the ordinary course of business.
“Lender” shall mean the Person specified in the introductory paragraph of the Agreement or any Person who shall at the time be the registered holder of this Agreement.
“Lien” shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance.
“Maturity Date” shall mean that date which is five (5) years from the Funding Date.
“Maturity Event” shall mean (i) the Maturity Date; (ii) an acceleration, Acceleration Event or breach under the Agreement; (iii) a Change of Control transaction or sale of the Company or any of its Affiliates; (iv) a sale or transfer of substantially all the assets or intellectual property of the Company or that of its Affiliates other than to the Company; or (v) at Lender’s sole option, the termination of Lender’s employment with the Company or his ceasing to be the Company’s Chief Executive Officer based on any reason, whether without cause or for cause, whether voluntary or involuntary, and including based on death or incapacitation of Lender.
“Minimum Closing Conversion Price” shall mean the lesser of the closing stock price on the day of conversion or the Conversion Price.
“Obligations” shall mean and include all cash and interest payments owed under this Agreement.
“Outstanding Amount” has the meaning given in the Preamble hereto.
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“Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unlimited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.
“Preferred Stock” shall mean Company’s Series A Preferred Stock.
“Purchase Agreement” has the meaning given in the Preamble.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Subsidiary” shall mean a Person of which a majority of the outstanding voting stock is, or other equity securities are, owned by the Company, directly or indirectly.
(Signature Page Follows)
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In Witness Whereof, the undersigned has executed this Convertible Loan Agreement as of the Effective Date.
Company:
XBIOTECH INC.
By:
Name:
Title:
By:
Name:
Title:
Lender:
JOHN SIMARD
Signed:
Loan Amount: USD $10,000,000.00
[Signature page to Convertible Loan Agreement]