Securities Purchase Agreement
On January 16, 2020, Iterum Therapeutics Bermuda Limited, a company formed under the laws of Bermuda (Iterum Bermuda) and a wholly-owned
subsidiary of the Issuer, entered into a securities purchase agreement (the Purchase Agreement) with the Issuer, the Issuers wholly-owned subsidiaries and a group of accredited investors, including Arix Ltd., as set forth therein
(the Investors), pursuant to which the Issuer agreed to issue and sell to the Investors in a private placement (the Private Placement) approximately $51.9 million aggregate principal amount of its 6.500% exchangeable senior
subordinated notes due 2025 (the Exchangeable Notes) and $0.1 million aggregate principal amount of its limited recourse royalty-linked subordinated notes (the RLNs and, together with the Exchangeable Notes, the
Securities). Specifically, Arix Ltd. purchased 1,900 Units (as defined below) for an aggregate purchase price of $1,900,000.00. Each Unit consists of $1,000 principal amount of its 6.500% Exchangeable Notes and 50 RLNs.
Iterum Bermudas obligations under the Securities will be guaranteed by the Issuer and its wholly-owned subsidiaries (collectively, the Guarantors).
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, a
copy of which is filed as Exhibit 99.5 attached hereto.
Exchangeable Note Indenture and the Exchangeable Notes
In connection with the transactions contemplated by the Purchase Agreement, on January 21, 2020 (the Closing Date), Iterum Bermuda and the
Guarantors entered into an indenture (the Exchangeable Note Indenture) with respect to the Exchangeable Notes with U.S. Bank National Association, as trustee (the Exchangeable Notes Trustee). The Exchangeable Notes will
mature on January 31, 2025, unless earlier exchanged, redeemed or repurchased in accordance with their terms, and bear simple, non-compounding interest at a rate of 6.500% per year, payable solely on the
date of maturity.
The Exchangeable Notes are senior subordinated obligations of Iterum Bermuda and are guaranteed on a senior subordinated basis by the
Guarantors (the Exchangeable Note Guarantees). The Exchangeable Notes and Exchangeable Note Guarantees are unsecured and rank equally with all of Iterum Bermudas and each Guarantors existing and future senior obligations. The
Exchangeable Notes are senior in right of payment to any of Iterum Bermudas and each Guarantors future obligations that are, by their terms, expressly subordinated in right of payment to the Exchangeable Notes and Exchangeable Note
Guarantees. The Exchangeable Notes and Exchangeable Note Guarantees are subordinated to Iterum Bermudas and the Guarantors obligations to Silicon Valley Bank (SVB), including their obligations pursuant to the Loan and
Security Agreement, dated as of April 27, 2018 and amended as of January 16, 2020, with SVB (the Loan Agreement) and any refinancings thereof, subject to the terms of the Exchangeable Note Indenture. In addition, the
Exchangeable Notes and Exchangeable Note Guarantees are effectively subordinated to Iterum Bermudas and each Guarantors secured obligations, including obligations under the Loan Agreement, to the extent of the value of the collateral
securing such obligations.
The Exchangeable Notes are exchangeable, at the Issuers election, into Ordinary Shares, cash or a combination of
Ordinary Shares and cash, at an initial exchange rate of 1,000 shares per $1,000 principal amount of Exchangeable Notes (equivalent to an initial exchange price of approximately $1.00 per Ordinary Share). The exchange rate is subject to
anti-dilution adjustments, including weighted-average anti-dilution protections and other customary anti-dilution protections, as set forth in the Exchangeable Note Indenture.
Subject to the terms of the Exchangeable Note Indenture, on or after the one-year anniversary of the Closing Date
until the second scheduled trading day immediately preceding January 15, 2025, Arix Ltd., as a holder, may exchange the Exchangeable Notes at any time. In addition, the Exchangeable Notes will be mandatorily exchangeable if, following the one-year anniversary of the Closing Date and on or prior to January 1, 2025, (i) the U.S. Food and Drug Administration (FDA) accepts for filing a new drug application by the Issuer or any of its
affiliates for specified sulopenem products; (ii) the Issuer has at least $75 million of unrestricted cash, on a consolidated basis without including any net proceeds from sales of the Securities to the Investors and any other financing
provided by the Investors after the date of the Exchangeable Note Indenture; and (iii) the daily volume-weighted average price of the Ordinary Shares has been at least $8.00 for 60 consecutive trading days.
Iterum Bermuda may at any time on or after the earliest of (i) the later of (x) the date on which certain ownership caps set forth in the
Exchangeable Note Indenture no longer apply and (y) one year from the Closing Date, (ii) the consummation of a fundamental change, as defined in the Exchangeable Note Indenture, and (iii) the date that the Issuer enters
into a definitive agreement relating to a fundamental change, and, in each case, upon written consent of the holders of any outstanding senior debt, redeem for cash all
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