| Item 1.01. | Entry Into a Material Definitive Agreement. |
As previously reported, on June 14, 2019, Odyssey Marine Exploration, Inc. (“Odyssey”), Exploraciones Oceánicas S. de R.L. de C.V., a Mexican company (“ExO” and, together with Odyssey, the “Claimholder”), and Poplar Falls LLC (the “Funder”) entered into an International Claims Enforcement Agreement (the “Original Agreement”), pursuant to which the Funder agreed to provide financial assistance to the Claimholder to facilitate the prosecution and recovery of the claim by the Claimholder against the United Mexican States under Chapter Eleven of the North American Free Trade Agreement (“NAFTA”) for violations of the Claimholder’s rights under NAFTA related to the development of an undersea phosphate deposit off the coast of Baja Sur, Mexico (the “Project”),Odyssey Marine Exploration, Inc. on its own behalf and on behalf of Exploraciones Oceánicas S. de R.L. de C.V. and United Mexican States (the “Subject Claim”). Pursuant to the Original Agreement, the Funder agreed to pay for the purpose of funding specified fees and expenses regarding the Subject Claim (the “Claims Payments”) incrementally and at the Funder’s sole discretion.
On January 31, 2020, the Claimholder and the Funder entered into an Amended and Restated International Claims Enforcement Agreement (the “Restated Agreement”) relating to the Subject Claim. Under the terms of the Restated Agreement, the Funder has made and agreed to make Claims Payments in an aggregate amount not to exceed $10,000,000 (the “Maximum Investment Amount”). The Maximum Investment Amount will be made available to the Claimholder as set forth below:
(a) a first phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $1,500,000 for the payment of antecedent and ongoing costs (“Phase I Investment Amount”);
(b) a second phase, in which the Funder shall make Claims Payments in an aggregate amount no greater than $6,300,000 for the purposes of pursuing the Subject Claim to a final award (“Phase II Investment Amount”); and
(c) separate and apart from Phase I Investment Amount and Phase II Investment Amount, the Claimholder has the option to request up to US $2,200,000 (“Arbitration Support Funds”) for the purpose of paying the Claimholder’s litigation support costs in connection with the Subject Claim.
The Phase I Investment Amount remains unchanged under the Restated Agreement, the Phase II Investment Amount represents an increase of $1,300,000 from the comparable amount under the Original Agreement, and the Arbitration Support Funds are a new feature not included in the Original Agreement. As of the date of this report, the Phase I Investment Amount has been fully funded, approximately $1,925,000 of the Phase II Investment Amount has been funded, and $500,000 of the Arbitration Support Funds has been funded. As of the effective date of the Restated Agreement, the Funder has retained closing fees in an aggregate amount equal to $360,000 from the Phase I Investment Amount, the Phase II Investment Amount, and the Arbitration Support Funds to pay third parties in connection with due diligence and other administrative and transaction costs incurred by the Funder prior to and in furtherance of execution of the Restated Agreement. The retained closing fees are included in the amounts stated as funded above.
The Restated Agreement provides that if the Claimholder ceases the Subject Claim for any reason other than (a) a full and final arbitral award against the Claimholder or (b) a full and final monetary settlement of the claims, all Claims Payments shall immediately convert to a senior secured liability of the Claimholder. This sum shall incur an annualized IRR of 50.0% retroactive to the date each Funding Request was paid by the Funder under Phase I or to the date the Claimholder ceased the Subject Claim (the “Trigger Date”) for Phase II and/or the Arbitration Support Funds (collectively, the “Conversion Amount”). Such Conversion Amount and any and all accrued IRR shall be payablein-full by the
