Loan Facility with K2 HealthVentures LLC
Loan Agreement
On July 12, 2021, ASLAN
Pharmaceuticals Limited (the Company) and ASLAN Pharmaceuticals (USA) Inc. as borrowers entered into a Loan, Guaranty, and Security Agreement (the Loan Agreement) with ASLAN Pharmaceuticals Pte. Ltd (ASLAN
Singapore) as guarantor, the lenders from time to time party thereto, K2 HealthVentures LLC as administrative agent and Ankura Trust Company, LLC as collateral agent. The Loan Agreement provides for up to $45.0 million of delayed draw
term loans, consisting of (i) the first tranche of $20.0 million available at closing, (ii) the second and third traches in the aggregate amount of $10.0 million subject to the Companys achievement of certain clinical
milestones related to ASLAN003 and ASLAN004 and (iii) an uncommitted fourth tranche of up to $15.0 million.
The Company borrowed the full
$20.0 million first tranche of term loans at closing. The Company intends to use the proceeds of the term loans to advance the clinical development of ASLAN003, a promising candidate for the potential treatment of autoimmune gastrointestinal
and skin diseases, as well as for general corporate purposes. In connection with entering into the Loan Agreement, the Company paid off its outstanding loans with CSL Finance Pty Ltd in the amount of $4.2 million.
The term loans bear interest at a floating rate equal to the greater of (i) the prime rate published by Wall Street Journal plus 5.00% and (ii) 8.25% per
annum. The monthly payments are interest-only until August 1, 2023, which may be extended to August 1, 2024 upon the Companys achievement of certain clinical milestones. Subsequent to the interest-only period, the term loans will be
payable in equal monthly installments of principal plus accrued and unpaid interest, through the maturity date which is July 1, 2025. The company paid the lenders a one-time $255,000 facility fee at
closing and will be obligated to pay for an additional facility fee equal to 0.85% of any term loans borrowed under the fourth tranche. In addition, the Company is obligated to pay a final payment fee of 6.25% of the original principal amount of the
term loans at the maturity date. The Company may elect to prepay all, but not less than all, of the term loans prior to the term loan maturity date, subject to a prepayment fee of up to 3.0% of the then outstanding principal balance. After
repayment, no term loans may be borrowed again.
The borrowers obligations under the Loan Agreement are guaranteed by ASLAN Singapore and any future
material subsidiaries and secured by substantially all of borrowers, ASLAN Singapores and any future subsidiary guarantors assets, other than intellectual property. The Loan Agreement includes customary affirmative and negative
covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, cash management, dividends and other distributions. In addition, the Loan Agreement
also includes customary events of default, including, but not limited to, failure to pay interest, principal and fees or other amounts when due, material misrepresentations or misstatements, covenant defaults, certain cross defaults to other
material indebtedness, certain judgment defaults and events of bankruptcy or insolvency. Upon the occurrence and continuance of an event of default, the lenders may declare all outstanding obligations immediately due and payable and take such other
actions as set forth in the Loan Agreement and other loan documents.
K2 Warrant and Participation Rights
In connection with the closing of the Loan Agreement, the Company issued a warrant to purchase ordinary shares (the Warrant) to K2 HealthVentures
Equity Trust LLC. The number of ordinary shares exercisable under the Warrant equals (i) 2.95% of the aggregate original principal amount of the term loans funded to the Company divided by (ii) the warrant price of $0.5257 per share (subject to
adjustment as provided therein). The Warrant also includes a cashless exercise feature allowing the holder to receive shares underlying the warrant in an amount reduced by the aggregate exercise price that would have been payable upon exercise of
the warrant for such shares. In addition, subject to compliance with applicable securities laws (including any holding period requirements), the Company is required to use commercially reasonable efforts to facilitate and take all other actions
required to enable the deposit of any or all of the ordinary shares exercisable under the Warrant with the Companys depositary for the issuance of American Depositary Shares. The Warrant is exercisable until its expiration on July 12,
2031. The Warrant also provides for automatic cashless exercise or assumption as a result of certain transactions involving a merger, acquisition or sale of the Company, as set forth in the Warrant.