UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 20-F

 

 

 

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

OR

 

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                     

Commission file number                     

 

 

ACCUSTEM SCIENCES LIMITED

(Exact name of Registrant as specified in its charter)

 

 

Not Applicable

(Translation of Registrant’s name into English)

England and Wales

(Jurisdiction of incorporation or organization)

107 Cheapside, 9th Floor

London EC2V 6DN United Kingdom

(Address of principal executive offices)

Keeren Shah

55 Park Lane

London W1K 1NA United Kingdom

Telephone: +44 (0) 20 7066 1000

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Not Applicable

(Title of Class)

Securities registered or to be registered pursuant to Section 12(g) of the Act.

 

Title of each class

American Depositary Shares, each representing two ordinary shares, nominal value £0.01 per share
Ordinary shares, nominal value £0.01 per share*
* Not for trading, but only in connection with the registration of American Depositary Shares.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable

(Title of Class)

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Ordinary shares, nominal value £0.01 per share: 204,193,543 as of March 9, 2021

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  ☐    Yes  ☑    No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☐    No  ☑

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☐    No  ☑

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

      Large accelerated filer       Accelerated filer   
      Non-accelerated filer       Emerging growth company   

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis for accounting the registrant has used to prepare the financing statements included in this filing:

 

U.S. GAAP  ☐           International Financial Reporting Standards as issued      Other  ☐
          by the International Accounting Standards Board   ☑     

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    ☐  Item 17     ☐  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☐

 

 

 


ACCUSTEM SCIENCES LIMITED

 

 

FORM 20-F

 

 

TABLE OF CONTENTS

 

INTRODUCTION

     1  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     6  

PART I

     7  

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     7  

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

     9  

ITEM 3. KEY INFORMATION

     9  

ITEM 4. INFORMATION ON THE COMPANY

     30  

ITEM 4A. UNRESOLVED STAFF COMMENTS

     41  

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     41  

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

     48  

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     52  

ITEM 8. FINANCIAL INFORMATION

     54  

ITEM 9. THE OFFER AND LISTING

     55  

ITEM 10. ADDITIONAL INFORMATION

     55  

ITEM 11. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     73  

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     73  

PART II

     83  

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     83  

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

     83  

ITEM 15. CONTROLS AND PROCEDURES

     83  

ITEM 16. RESERVED

     83  

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

     83  

ITEM 16B. CODE OF ETHICS

     83  

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     83  

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

     83  

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

     83  

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

     84  

ITEM 16G. CORPORATE GOVERNANCE

     84  

ITEM 16H. MINE SAFETY DISCLOSURE

     84  

PART III

     84  

ITEM 17. FINANCIAL STATEMENTS

     84  

ITEM 18. FINANCIAL STATEMENTS

     84  

ITEM 19. EXHIBITS

     84  

 

i


INTRODUCTION

On October 30, 2020, Tiziana Life Sciences plc a London-listed biotechnology company focused on innovative therapeutics for oncology, inflammation and infectious diseases, completed the demerger and spin-off (which we refer to as the “Demerger”), into a separate business, AccuStem Sciences Limited, of its StemPrintER and SPARE operations, a novel biology-based genomic predictor of distant recurrence in breast cancer. Through the Demerger process, as discussed below, Tiziana declared a dividend in specie (a distribution to shareholders of the shares of another company) equal to the book value of its shareholding in StemPrintER Sciences Limited, the entity within its group which holds all of the assets and intellectual properly relating to StemPrintER and SPARE and £1 million in cash. The dividend in specie was satisfied by the transfer of StemPrintER Sciences Limited to the Company and in consideration for this transfer, the Company issued Ordinary Shares, credited as fully paid, to Tiziana shareholders. This registration statement is filed to register those Ordinary Shares under the Exchange Act. Unless otherwise indicated, “AccuStem”, “the Company”, “we”, “us” and “our” refer to AccuStem Sciences Limited.

References to “U.K. Pounds Sterling”, “pence”, “£” or “p” are to the lawful currency of the United Kingdom and references to “U.S. dollars”, “$” or “cents” are to the lawful currency of the United States.

Reference to “the Ordinary Shares” are references to AccuStem’s ordinary shares, nominal value £0.01 per share, and references to “the ADSs” are to AccuStem’s American Depositary Shares (each representing two Ordinary Shares), which are evidenced by American Depositary Receipts, or ADRs. The following definitions apply throughout this registration statement:

 

Admission    admission of the Ordinary Shares to listing on the standard segment of the Official List and to trading on the Main Market;
ADSs    American Depositary Shares;
affiliate or affiliates    an affiliate of, or person affiliated with, a person; a person that, directly or indirectly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified;
AGM    an annual general meeting of the Company;
Articles or Articles of Association    the articles of association of the Company in force from time to time;
Audit Committee    the audit committee of the Board;
Brexit    the formal exit from the EU by the U.K. on January 31, 2020;
CE marking” or “CE mark    European conformity marking which is a mandatory conformity mark for products placed on the market in the EEA which ensures that the products conform with the essential requirements of the applicable European regulations and directives;
CLIA    U.S. Clinical Laboratory Improvement Amendments of 1988;
Change of Control    following any acquisition, the acquisition of Control of the Company by any person or party (or by any group of persons or parties who are acting in concert);
Companies Act    the U.K. Companies Act 2006;

 

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Company or AccuStem    AccuStem Sciences Limited, a company incorporated in England and Wales with company number 12647178;
Control    (i) the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: (a) cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the Company; or (b) appoint or remove all, or the majority, of the Directors or other equivalent officers of the Company; or (c) give directions with respect to the operating and financial policies of the Company with which the Directors or other equivalent officers of the Company are obliged to comply; and/or (ii) the holding beneficially of more than 50% of the issued shares of the Company (excluding any issued shares that carry no right to participate beyond a distribution of either profits or capital), but excluding in the case of each of (i) and (ii) above any such power or holding that arises as a result of the issue of Ordinary Shares by the Company in connection with the acquisition;
CREST” or “CREST System    the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear in the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear in accordance with the CREST Regulations;
CREST Regulation    the Uncertificated Securities Regulations 2001 (SI 2001 No 3755);
Demerger    the demerger of the Company from Tiziana Life Sciences plc on October 30, 2020;
Demerger Agreement    the agreement between the Company and Tiziana, dated October 5, 2020, pursuant to which Tiziana declared a dividend in specie on the Ordinary Shares equal to the book value (of approximately £3.07 million) of Tiziana’s shareholding in StemPrintER Sciences Limited, the entity within the Group which holds all of the assets and intellectual property relating to StemPrintER and SPARE and £1 million in cash, as amended on October 30, 2021;
Demerger Record Time    7:00 a.m. on October 30, 2020;
Depositary    JPMorgan Chase Bank, N.A.
Directors, Board or Board of Directors    the directors of the Company, whose names appear in “Item 1.A.—Directors and Senior Management” of this registration statement, or the board of directors from time to time of the Company, as the context requires, and “Director” is to be construed accordingly;
EEA    the European Economic Area, comprising the EU, Iceland, Norway and Liechtenstein;
EMA    the European Medicines Agency;
EN ISO 13485    specifies requirements for a quality management system where an organisation needs to demonstrate its ability to provide medical devices and related services that consistently meet customer requirements and regulatory requirements applicable to medical devices and related services;
ER+    oestrogen receptor positive;

 

2


Exchange Act    U.S. Securities Exchange Act of 1934, as amended;
EU” or “European Union    the European Union first established by the treaty made at Maastricht on February 7, 1992;
Euroclear    Euroclear U.K. & Ireland Limited (a company incorporated in England and Wales with company number 02878738, being the operator of CREST);
EUWA    European Union (Withdrawal) Act 2018;
FCA    the U.K. Financial Conduct Authority or any successor thereof, the single U.K. statutory regulator under FSMA;
FDA    the U.S. Food and Drug Administration;
FSMA    the U.K. Financial Services and Markets Act 2000;
FTC    U.S. Federal Trade Commission;
GDPR    General Data Protection Regulation (EU) 2016/679;
general meeting    a general meeting of the shareholders of the Company or a class of shareholders of the Company, as the context requires;
Group    AccuStem and its wholly-owned subsidiary, StemPrintER Sciences Limited;
HER2-    human epidermal growth factor receptor 2 negative;
HIPAA    U.S. Health Insurance Portability and Accountability Act of 1996;
HMRC    Her Majesty’s Revenue and Customs;
IEO/University of Milan    Istituto Europeo di Oncologia, Fondazione FIRC per l’Oncologia Molecolare and the University of Milan;
IFRS    International Financial Reporting Standards, as issued by the International Accounting Standards Board;
IVDs    In vitro medical devices;
IVD Directive    In Vitro Diagnostic Medical Device Directive 98/79/EC;
IVDR    In Vitro Diagnostic Medical Device Regulation (EU) 2017/746;
LDT    lab developed test;
License    the exclusive license agreement dated June 24, 2014 between Tiziana and IEO/University of Milan, which was assigned to the Company on October 30, 2020, pursuant to which the Company holds a worldwide, royalty-bearing, exclusive licence under certain patents and a worldwide, royalty-bearing, non-exclusive license under certain know-how, respectively, of IEO/University of Milan to develop and commercialize licensed products in connection with a multi-gene prognostic tool;

 

3


Listing Rules    the listing rules made by the FCA under section 73A of FSMA;
LN-    lymph node negative;
London Stock Exchange    London Stock Exchange plc (a company registered in England and Wales with company number 2075721);
Main Market    the main market for listed securities of the London Stock Exchange;
Market Abuse Regulation    Market Abuse Regulation (EU) 596/2014;
Medicaid    a national health insurance programme administered by the Centers for Medicaid and Medicare Services of the U.S. Federal Government which assists with healthcare costs of Americans with limited income and/or resources;
Medicare    a national health insurance programme administered by the Centers for Medicaid and Medicare Services of the U.S. Federal Government which provides health care insurance for Americans aged 65 and older who have contributed to the fund via the payroll tax during the course of their working lives;
U.K. Market Abuse Regulation    the Market Abuse Regulation, which forms part of retained law by virtue of the EUWA;
Medical Device Directive    Medical Device Directive 93/42/EEC;
Medical Device Regulation” or “MDR    EU Medical Device Regulation (EU) 2017/745;
MHRA    U.K. Medicines and Healthcare products Regulatory Agency;
mRNA    messenger ribonucleic acid;
Nasdaq    the Nasdaq Global Market operated by NASDAQ, Inc.;
Nomination Committee    the nomination committee of the Board;
Official List    the official list maintained by the FCA pursuant to Part VI of FSMA;
Order    the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005;
Ordinary Resolution    resolution of shareholders requiring a simple majority of not less than 50%;
Ordinary Shares    ordinary shares of nominal value 1 pence each in the capital of the Company;
R&D    research and development;

 

4


Registrar    Link Market Services, a trading name of Link Market Services Limited, of The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, or any other registrar appointed by the Company from time to time;
Regulation S    Regulation S under the Securities Act;
Remuneration Committee    the remuneration committee of the Board;
SaMD    software as a medical device;
SEC    U.S. Securities and Exchange Commission;
Securities Act    U.S. Securities Act of 1933, as amended;
Senior Managers    the members of the senior management team of the Company, the name(s) of which are appear in Item 1.A.—“Directors and Senior Management”;
Shareholder    a holder of Ordinary Shares;
Special Resolution    a resolution of shareholders requiring a majority of not less than 75%;
Standard Listing    a standard listing under Chapter 14 of the Listing Rules;
Takeover Code    the City Code on Takeovers and Mergers;
Tiziana    Tiziana Life Sciences plc (Nasdaq: TLSA / LSE: TILS), a public limited company incorporated in England and Wales with company number 03508592;
Transition Period    the transition period following Brexit during which the U.K. continued to follow all EU rules between January 31, 2020 and December 31, 2020;
U.K. Corporate Governance Code    the U.K. Corporate Governance Code issued by the Financial Reporting Council (or successor bodies thereto) in the U.K. from time to time;
U.K. MDR 2002    the U.K. Medical Devices Regulations 2002, as amended by 2019 No. 791;
uncertificated or uncertificated form    in relation to a share or other security, a share or other security, title to which is recorded in the relevant register of the share or other security concerned as being held in uncertificated form (i.e., in CREST) and title to which may be transferred by using CREST;
United Kingdom or U.K.    the United Kingdom of Great Britain and Northern Ireland;
United States or U.S.    the United States of America, its possessions or territories, any State of the United States of America and the district of Columbia or any area subject to its jurisdiction or any political subdivision thereof; and
VAT    (i) within the EU, any tax imposed by any Member State in conformity with the Directive of the Council of the European Union on the common system of value added tax (2006/112/EC), and (ii) outside the EU, any tax corresponding to, or substantially similar to, the common system of value added tax referred to in paragraph (i) of this definition.

 

5


References to a “company” in this registration statement shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established.

All references to legislation or regulation in this registration statement are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation or regulation shall include any amendment, modification, supplement, re-enactment or extension thereof. Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.

For the purpose of this registration statement, “subsidiary” and “subsidiary undertaking” have the meanings given by the Companies Act.

In this registration statement any reference to any EU directive, EU regulation, EU decision, EU tertiary legislation or provision of the EEA agreement (an “EU Matter”) which forms part of domestic law by application of the EUWA shall be read as a reference to that EU Matter as it forms (by virtue of the EUWA) part of retained EU law and as modified by domestic law from time to time. For the purposes of this paragraph, (i) “domestic law” shall have the meaning given in the EUWA; and (ii) any other words and expressions shall, unless the context otherwise provides, have the meanings given in the EUWA.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This registration statement contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this registration statement, other than statements of historical fact, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The forward-looking statements in this registration statement include, among other things, statements about:

 

   

the success, cost and timing of our clinical development of our products, including the progress of, and results from, our preclinical and clinical trials of StemPrintER and SPARE products, our discovery programs and other potential product candidates;

 

   

our ability to obtain and maintain regulatory approval of our product candidates, and any related restrictions, limitations or warnings in the label of any of our product candidates, if approved;

 

   

our ability to compete with companies currently marketing or engaged in the development of treatments for indications that our product candidates are designed to target;

 

   

our plans to pursue research and development of other future product candidates;

 

   

the potential advantages of our product candidates and those being developed;

 

   

the rate and degree of market acceptance and clinical utility of our product candidates;

 

   

the success of our collaborations and partnerships with third parties;

 

   

our estimates regarding the potential market opportunity for our product candidates;

 

   

our sales, marketing and distribution capabilities and strategy;

 

   

our ability to establish and maintain arrangements for manufacture of our product candidates;

 

   

our intellectual property position;

 

6


   

our expectations related to the use of capital;

 

   

the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and future clinical trials;

 

   

our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;

 

   

the impact of government laws and regulations; and

 

   

our competitive position.

Forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks, uncertainties and other important factors. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. We cannot assure you that our plans, intentions or expectations will be achieved. Our actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this registration statement as described in “Item 3.D.—Risk Factors”, “Item 4—Information on the Company” and “Item 5—Operating and Financial Review and Prospects”. Given these risks, uncertainties and other important factors, you should not place undue reliance on these forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this registration statement. Also, these forward-looking statements represent our estimates and assumptions only as of the date such forward-looking statements are made. Except as required by law, we assume no obligation to update any forward-looking statements publicly, whether as a result of new information, future events or otherwise.

PART I

 

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A. Directors and Senior Management

The following table sets forth the names and positions of our senior management and Directors, all of whom can be reached at our business address of 107 Cheapside, 9th Floor, London EC2V 6DN United Kingdom:

 

NAME    POSITION

Senior Management

  

Keeren Shah

   Finance Director*

* Not a statutory Director of the Company

Non-Employee Directors

  

Gabriele Cerrone (3)

   Chairman

Dr. Kunwar Shailubhai, Ph.D., M.B.A.

   Director

Willy Simon (1) (2) (3)

   Director

John Brancaccio (1) (2)

   Director

 

(1)

Member of the Audit Committee.

(2)

Member of the Remuneration Committee.

(3)

Member of the Nomination Committee.

Executive Officers

Keeren Shah serves as our Finance Director. Ms. Shah currently also serves as the Finance Director of Tiziana and OKYO Pharma Limited and Rasna Therapeutics Inc., having previously served as the Group Financial Controller

 

7


for both businesses from June 2016 to July 2020. Prior to joining the Company, Ms. Shah spent 10 years at Visa, Inc. as a Senior Leader in its finance team where she was responsible for key financial controller activities, financial planning and analysis, and core processes as well as leading and participating in key transformation programmes and Visa Inc.’s initial public offering. Before joining Visa, Ms. Shah has also held a variety of finance positions at other leading companies including Arthur Andersen and BBC Worldwide. She holds a Bachelor of arts with honours in Economics and is a member of the Chartered Institute of Management Accountants.

Non-Employee Directors

Gabriele Cerrone has a successful track record and extensive experience in the financing and restructuring of micro-cap biotechnology companies. He has founded ten biotechnology companies in oncology, infectious diseases and molecular diagnostics, and has taken seven of these companies to the Nasdaq Market and two to the Main Market and AIM Market in London. Mr. Cerrone co-founded Cardiff Oncology, Inc. (Nasdaq: CRDF), an oncology company and served as its Co-Chairman; he was a co-founder and served as Chairman of both Synergy Pharmaceuticals, Inc. (Nasdaq: SGYP) and Callisto Pharmaceuticals, Inc. (OTCMKTS: CLSP), and was a Director of and led the restructuring of Siga Technologies, Inc. (Nasdaq: SIGA). Mr. Cerrone also co-founded FermaVir Pharmaceuticals, Inc. and served as Chairman of the Board until its merger in September 2007 with Inhibitex, Inc. Mr. Cerrone served as a director of Inhibitex, Inc. until its $2.5bn sale to Bristol Myers Squibb Co in 2012. Mr. Cerrone is the Executive Chairman and Founder of dual-listed Tiziana Life Sciences plc (Nasdaq:TLSA, LSE: TILS) an oncology focused therapeutics company; Co-Founder of Rasna Therapeutics Inc. (OTCMKTS: RASP), a company focused on the development of therapeutics for leukaemias; Co-Founder of Hepion Pharmaceuticals, Inc. (Nasdaq: HEPA); Executive Chairman and Co-Founder of Gensignia Life Sciences, Inc., a molecular diagnostics company focused on oncology using microRNA technology; Non-Executive Chairman and Founder of OKYO Pharma Limited; and founder of BioVitas Capital Ltd.

Kunwar Shailubhai, Ph.D., M.B.A. serves as Chief Executive Officer and Chief Scientific Officer of Tiziana and is also an Executive Director of the Company. Dr. Shailubhai brings more than 25 years of experience within the life science industry, combined with a distinguished track record of success in translating drugs from concept through commercialisation to market. He also currently serves as CEO of Rasna Therapeutics, Inc., a developer of therapeutics to address the high unmet need that exists for AML and other forms of leukaemia. As co-founder, EVP and CSO of Synergy Pharmaceuticals, Inc. (Nasdaq: SGYP) he led the non-clinical, CMC and clinical development of Trulance from inception to approval by the FDA. Earlier, from 2003 until 2008, Dr. Shailubhai served as Senior Vice President, Drug Discovery and from 2001 to 2003, he held the position of Vice President, Drug Discovery at Synergy, where he pioneered therapeutic applications of GC-C agonists in a variety of human diseases such as Asthma, COPD and cholesterol lowering. Prior to Synergy, he was with Monsanto Company, serving as Group Leader, Cancer Prevention and previously served as a Senior Staff Fellow at the National Institutes of Health, and as an Assistant Professor at the University of Maryland. Dr. Shailubhai received his Ph.D. in microbiology from the University of Baroda, India, and his MBA from the University of Missouri, St. Louis.

Willy Jules Simon is a banker and worked at Kredietbank N.V. and Citibank London before serving as an executive member of the Board of Generale Bank NL from 1997 to 1999 and as the chief executive of Fortis Investment Management from 1999 to 2002. He acted as chairman of Bank Oyens & van Eeghen from 2002 to 2004. From 2004 until 2012, he served as a non-executive director of Redi & Partners Ltd., a fund of funds. He was previously chairman of AIM-traded Velox3 plc (formerly 24/7 Gaming Group Holdings plc) until 2015 and had been a director of Playlogic Entertainment Inc., a Nasdaq OTC listed company, and Frasia Holdings S.A. Mr. Simon is also currently a director of Rasna Therapeutics, Inc., OKYO Pharma Limited, African Metals Limited, Bever Holding N.V. and Ducat Maritime Limited.

Mr. Brancaccio, retired CPA, is a financial executive with extensive international and domestic experience in pharmaceutical and biotechnology for privately and publicly held companies. From 2000 to 2002, Mr. Brancaccio was the Chief Financial Officer/Chief Operating Officer of Eline Group, an entertainment and media company. From May 2002 until March 2004, Mr. Brancaccio was the Chief Financial Officer of Memory Pharmaceuticals Corp., a biotechnology company. From April 2004 until May 2017, Mr. Brancaccio was the Chief Financial Officer of Accelerated Technologies, Inc., an incubator for medical device companies. Mr. Brancaccio is also currently a director of Cardiff Oncology, Inc., Rasna Therapeutics, Inc., OKYO Pharma Limited and Hepion Pharmaceuticals, Inc.

 

8


B. Advisers

Our principal United States legal advisers are Orrick, Herrington & Sutcliffe LLP, located at 51 West 52nd Street, New York, NY 10166 and our principal United Kingdom legal advisers are Orrick, Herrington & Sutcliffe (UK) LLP, located at 107 Cheapside, London EC2V 6DN, United Kingdom.

C. Auditors

Mazars LLP has been our auditor since our incorporation on June 5, 2020; its address is Tower Bridge House, St Katharine’s Way, London E1W 1DD, United Kingdom. Mazars is registered to perform audits in the U.K. by the Institute of Chartered Accountants in England and Wales and is a registered auditor with the PCAOB.

 

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

 

ITEM 3.

KEY INFORMATION

A. SELECTED FINANCIAL DATA

We derived the selected consolidated financial data as of and for the period from incorporation on June 5, 2020 to December 31, 2020 from our audited financial statements included elsewhere in this registration statement. We present our consolidated financial statements in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IFRS”).

The summary financial data below should be read together with those financial statements as well as “Item 5.—Operating and Financial Review and Prospects.” Our historical results for any prior period are not necessarily indicative of results to be expected in any future period, and our interim period results are not necessarily indicative of results to be expected for a full year or any other interim period.

Consolidated Income Statement Data

 

     December 31, 2020  

Revenue

   £ —    

Administrative expenses

     (40,689

Operating result

     (40,689

Finance income/(expense)

     —    

Profit before taxation

     (40,689

Income tax

     —    

Profit for the period and total comprehensive income for the period

     (40,689

Consolidated Balance Sheet Data

 

     As at
December 31, 2020
 

ASSETS

  

Current Assets

  

Cash receivable

   £  1,151,383  

Non-Current Assets

  

Intangible asset in process research & development

     2,073,930  

Total assets

     3,225,313  

 

9


     As at
December 31, 2020
 

LIABILITIES

  

Related party payable

     9,892  

Other payable

     30,797  

Total liabilities

     40,689  

EQUITY AND LIABILITIES

  

Equity attributable to owners

  

Ordinary Share capital

     2,041,935  

Share premium

     55,571  

Merger reserve

     1,127,807  

Retained earnings

     (40,689

Total equity attributable to shareholders

     3,184,624  

Total equity and liabilities

     3,225,313  

B. CAPITALIZATION AND INDEBTEDNESS

The table below sets forth our cash and cash equivalents and shows our capitalization as of February 28, 2021. You should read this table in conjunction with our audited consolidated financial statements included in this registration statement, together with the accompanying notes and the other information appearing under the heading “Item 5.— Operating and Financial Review and Prospects”.

 

     As of
December 31, 2020
 

Cash and cash equivalents

   £ 1,151,383  

Shareholders’ equity:

  

Share capital, nominal value £0.01 par value per ordinary share; 204,193,543 shares issued and outstanding

     2,041,935  

Share premium

     55,571  

Merger reserve

     1,127,807  

Retained earnings

     (40,689

Total Capitalization

     3,184,624  

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

Holding Ordinary Shares and ADSs carries a significant degree of risk, including risks in relation to our business strategy, risks relating to taxation and risks relating to the ADSs. However, as the risks which we face relate to events and depend on circumstances that may or may not occur in the future, you should consider the risks and uncertainties described below.

The risks referred to below are those risks which we believe to be the material risks relating to our company. However, there may be additional risks that we do not currently consider to be material or of which we are not currently aware that may adversely affect our business, financial condition, results of operations or prospects. If any of the risks referred to in this registration statement were to occur, our results of operations, financial condition and prospects could be materially adversely affected. If that were to be the case, the trading price of the Ordinary Shares and/or the level of dividends or distributions (if any) received from the Ordinary Shares could decline significantly.

Risks Specific to the Development of the Business

We do not have collaborations in place with institutions for utility studies and there is no guarantee that we will be able to demonstrate prospective clinical utility of the StemPrintER and SPARE products

Following the completion of the initial retrospective validation studies in two spatial and temporal independent cohorts in respect of the StemPrinter and SPARE products, we are likely to run clinical utility studies to support

 

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applications for reimbursement, which are necessary for successful commercialization and to provide further evidence to support marketing claims. We have not yet identified which institutions will carry out the utility studies and have not yet entered into the relevant agreements with these institutions. There is a risk that we will not be able to secure these collaborations, which would impact our ability to proceed to the utility study stage. Whilst the utility studies are not a source of continuing revenue, such studies do provide a short-term revenue stream from sales of the tests run on the StemPrintER and SPARE products.

Furthermore, we may not be able to demonstrate the clinical utility of the StemPrintER and SPARE products in a real-world setting, which would impact our ability to secure reimbursement. If such reimbursement is not achieved, it will make commercialization of the StemPrintER and SPARE products significantly more challenging and would impact our ability to generate revenue and, accordingly, result in a material adverse impact on our business, financial condition and results of operations and those of our wholly-owned subsidiary, StemPrintER Sciences Limited (which we refer to collectively as the “Group”).

There are risks associated with the process of establishing a U.S. Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified laboratory and in offering StemPrintER and SPARE products as laboratory developed tests (“LDTs”) which are outside our control

The StemPrintER and SPARE products do not as yet have status as LDTs and we do not yet have a CLIA-certified laboratory.

We may be able to generate revenue from offering the StemPrintER and SPARE products as LDTs. However, there are inherent risks associated with offering the StemPrintER and SPARE products as LDTs that are outside our control, including test uptake, which would have an impact on the amount of revenue we could generate.

We are dependent on other third parties who provide certain resources and services to us, as we have limited resources in the short-term

We rely in part on external resources to conduct the research, development, supply of supplies and clinical testing of our StemPrintER and SPARE products, including in relation to our laboratory systems which rely on software developed by external manufacturers. The future development of the StemPrintER and SPARE products and other products will partly depend upon the performance of these third parties. We cannot guarantee that the relevant third parties will be able to carry out their obligations under the relevant arrangements. In the future, we may depend on external resources in marketing, sales and distribution of its products. We cannot guarantee that we will be able to assign competent partners to conduct these tasks or that these tasks can be completed on the basis of terms which are beneficial to us. Additionally, whilst the Directors are responsible for making decisions on our behalf, the Directors will rely to a certain extent on the advice of external professional advisors. There is no guarantee that we will receive the correct advice from such advisors.

Disagreements between us and any third parties could lead to delays in our research and development (“R&D”) program and/or commercialization plans. If any third parties were to terminate their relationships with us, we would be required to obtain development and/or commercialization services from other third parties or develop the relevant functions internally, which could have an adverse effect on our business, results of operations and financial condition.

We are subject to research and product development risk

We may not be able to develop new products or to identify specific market needs that can be addressed by tests or solutions developed us. Product development will be a key ongoing activity for us. However, there can be no guarantee that further products will be developed, successfully launched, or accepted by the market. All new product development has an inherent level of risk and can be a lengthy process and suffer unforeseen delays, cost overruns and setbacks, such as difficultly recruiting patients into clinical trials. The nature of the medical device industry may mean new products may become obsolete as a result of competition or regulatory changes which could have a material adverse effect on our business, results of operations and financial condition.

 

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In addition, R&D may be subject to various requirements, such as research subject protection for individuals participating in clinical evaluations of new products, institutional review board oversight, regulatory authorizations, and design control requirements. Failure to comply with requirements could result in penalties, delay, or prevent commercialization of products.

We are subject to risks associated with medical and technological change and obsolescence

Demand for our products could be adversely impacted by the development of alternative technology and alternative medicines. There can be no assurance that the technology and products currently being developed by us will not be rendered obsolete. As a result, there is the possibility that new technology or products may be superior to, or render obsolete, the technology and products that we are currently developing. Any failure of ours to ensure that our products remain up to date with the latest advances may have a material adverse impact on our competitiveness and financial performance. Our success will depend, in part, on our ability to develop and adapt to these technological changes and industry trends and failure to do so could have a material adverse effect on our business, results of operations and financial condition.

Risks Relating to Intellectual Property

Our rights to develop and commercialize our product candidates are subject to the terms and conditions of licenses granted to us by others. If we fail to comply with our obligations under our existing and any future intellectual property licenses with third parties, we could lose license rights that are important to our business

We are reliant upon licenses and sublicenses from Istituto Europeo di Oncologia, Fondazione FIRC per l’Oncologia Molecolare and the University of Milan (“IEO/University of Milan”) to certain patent rights and proprietary technology that are important or necessary to the development of our technology and product candidates, including the patents and know-how relating to manufacture.

On June 24, 2014, Tiziana entered into an exclusive licence agreement with IEO/University of Milan (the “License”), pursuant to which it obtained a worldwide, royalty-bearing, exclusive licence under certain patents and a worldwide, royalty-bearing, non-exclusive licence under certain know-how, respectively, of IEO/University of Milan to develop and commercialize licensed products in connection with a multi-gene prognostic tool. The License was assigned to us as part of the arrangements contained in the Demerger Agreement on October 30, 2020. Pursuant to the terms of the License, we are obliged to use commercially reasonable efforts in connection with the development and commercialization of the licensed products, including in accordance with specified diligence milestones. If the Company fails to meet its obligations under the License or if the License is terminated for any reason, it could negatively impact the Company’s business and strategic goals. The License may also be terminated for other reasons including breach and insolvency.

IEO/University of Milan have not provided the level of assurances and representations that are usually expected of similar options or licences, and generally the rights are granted on an ‘as is’ basis. Although it is appreciated that as an academic institution IEO/University of Milan is not in the habit of providing warranties, but generally it does leave us commercially exposed. Furthermore, our liability under the License is not capped.

IEO/University of Milan may terminate the License immediately if we de-list from a public stock exchange, among other things, meaning that the IEO/University of Milan may trigger this termination right if we were to be taken private following admission of our Ordinary Shares to the London Stock Exchange, which could impact our value.

If we are unable to obtain and maintain patent protection for our product candidates and technology, or if the scope of our patent protection is not sufficiently broad, our competitors could develop and commercialize similar products and technology

Our success depends, in large part, on our ability to seek, obtain and maintain patent protection in the United States, U.K. and other countries with respect to our product candidates and technology. Our licensors have sought, and we intend to seek, to protect our proprietary position by filing patent applications in the United States, the U.K. and elsewhere, related to certain technologies and our product candidates, StemPrintER and SPARE, that are important to our business.

 

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Our current patent portfolio contains a limited number of patent applications, which are in-licensed from third parties. If we are unable to assert any such patents to prevent others from reproducing our technology and product candidates, or are unable to identify patentable aspects of our R&D output before it is too late to obtain patent protection, failure to do so could have a material adverse effect on our business, results of operations and financial condition.

Our intellectual property is open to challenge

No assurance can be given that any current or future trademark, design right or patent applications will result in registered trademarks, design rights or patents, that the scope of any patent, design or trademark protection or the protection provided by copyright or database rights or the right to bring actions for breach of confidentiality will exclude competitors or provide competitive advantages to us, that any of our owned or licensed-in patents, design rights or trademarks will be held valid if challenged or that third parties will not claim rights or ownership of the patents, design rights, trademarks or other intellectual property rights held by us.

If we cannot successfully enforce our intellectual property rights, this could have a material adverse effect on our business, financial condition and prospects. We may be subject to claims in relation to the infringement of patents, design rights, trademarks or other intellectual property rights owned by third parties. Adverse judgments against us may give rise to significant liabilities in monetary damages, legal fees and/or an inability to manufacture, market or sell products either at all or in particular territories.

Our strategy involves generating commercially valuable intellectual property that can be protected

We intend to augment our intellectual property portfolio. No assurance can be given that any future patent applications will result in granted patents, that the scope of any patent protection will exclude competitors or provide competitive advantages to us, that any of our patents will be held valid if challenged or that third parties will not claim rights in or ownership of the patents and other proprietary rights held by us. Should we fail to successfully obtain additional patent protection in respect its technology and products could have a material adverse effect on our business, results of operations and financial condition.

Market and Competitive Risks

We operate in a competitive market and may face competition from competitors involved in multi-gene prognostic assay for the prediction of risk of recurrence in luminal ER+/HER2- breast cancer patients

We may face competition from competitors involved in developing a multi-gene prognostic assay for the prediction of risk of recurrence in luminal ER+/HER2- breast cancer patients. Some of our competitors may have access to greater research, development, marketing, financial and personnel resources which may provide commercial advantages to those competitors. New products may be more effective, cheaper or more effectively marketed than StemPrintER and SPARE. A substantial increase in competition for any of these reasons could require us to, for example, increase our marketing or capital expenditure or require us to change our business model to remain competitive, which may have an adverse impact on our business including our profitability and/or financial condition.

The market opportunities for our product candidates may be smaller than we anticipate

We are focusing our R&D efforts on a multi-gene prognostic tool for predicting the recurrence of certain breast cancers. Our understanding of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from our prognostic assay, is based on estimates. These estimates may prove to be incorrect and new studies may reduce the estimated incidence or prevalence of these diseases. The number of patients in the United States, the U.K., the EU and elsewhere may turn out to be lower than expected, may not be otherwise amenable to assessment with our product candidates or patients may become increasingly difficult to identify and access, all of which would adversely affect our business, financial condition, results of operations and prospects.

 

13


Further, there are several factors that could contribute to making the actual number of patients who receive our potential products, if and when approved, less than the potentially addressable market, such as the lack of widespread availability of, and limited reimbursement for, new therapies in many underdeveloped markets.

The future commercial success of our product candidates will depend upon the degree of each product candidates’ market acceptance by physicians, patients, third-party payors and others in the medical community

We have no product authorised for marketing; our product candidates are at the validation study stage of development, and we may never have a product that is commercially successful. The commercial success of our product candidates will depend, in part, on their acceptance by physicians, patients and third-party payors as medically necessary, cost-effective and safe. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable. Even if some product candidates achieve market acceptance, the market may not prove to be large enough to generate significant revenues. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on several factors, including, but not limited to:

 

   

the effectiveness and safety of our product candidates as demonstrated in clinical trials;

 

   

the potential and perceived advantages of our product candidates over alternative prognostic tools;

 

   

the availability and cost of use relative to alternative prognostic tools;

 

   

changes in the standard of care for the targeted indications for any product candidate;

 

   

the willingness of physicians to use, and the target patient population to try, new prognostic tools;

 

   

product labelling or product insert requirements of the FDA, the U.K. Medicines and Healthcare products Regulatory Agency (“MHRA”), the European Medicines Agency (“EMA”) or other regulatory authorities, including any limitations or warnings contained in a product’s approved labelling;

 

   

the timing of market introduction of competitive products;

 

   

sales, distribution and marketing support;

 

   

publicity concerning our product candidates or competing products and treatments;

 

   

potential product liability claims;

 

   

any restrictions on the use of our products together with other medications; and

 

   

favourable third-party payor coverage and adequate reimbursement.

Even if a potential product displays favourable clinical properties and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be fully known until after it is launched.

 

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The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for our approved product candidates could limit our ability to market those products

We expect that coverage and adequate reimbursement by government and private payors will be essential for most patients to be able to afford our approved product candidates. Accordingly, sales of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organisations, or will be reimbursed by government authorities, private health coverage insurers and other third-party payors. Coverage and reimbursement by a third-party payor may depend upon several factors, including the third-party payor’s determination that use of a product is:

 

   

a covered benefit under our health plan;

 

   

safe, effective and medically necessary;

 

   

appropriate for the specific patient;

 

   

cost-effective; and

 

   

neither experimental nor investigational.

Obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data. We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. If coverage and reimbursement are not available, or are available only at limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be adequate to realise a sufficient return on our investment.

Market acceptance and sales of our products will depend significantly on the availability of adequate coverage and reimbursement from third-party payors and may be affected by existing and future healthcare reform measures.

Regulatory Risks

Our failure to maintain compliance of its future clinical laboratory operations with applicable laws could result in substantial civil or criminal penalties

The operation of a clinical laboratory by us will be in a highly regulated environment which, among other things, will require maintaining compliance with CLIA certification and state clinical laboratory licensing requirements. Failure to maintain compliance with these requirements may result in a range of enforcement actions, including certificate or license suspension, limitation, or revocation, directed plan of action, onsite monitoring, civil monetary penalties and criminal sanctions. Such failure may also result in significant adverse publicity. Any of these consequences could limit or entirely prevent our continued operation and therefore impact our financial performance.

We are subject to various health regulatory laws pertaining to fraud and abuse and related matters, and any failure to comply with such laws could result in substantial civil or criminal penalties

Our employees, independent contractors, consultants, and collaborators may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for us and harm our operations and reputation. We are exposed to the risk that our employees, independent contractors, consultants, and collaborators may engage in fraud or other misconduct to comply with manufacturing standards we have established, to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable non-U.S. regulatory authorities, to report financial information or data accurately or to disclose unauthorized activities to us. Such misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct, and the precautions we will take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or

 

15


lawsuits stemming from a failure to comply with such laws, standards or regulations. If any such actions are instituted against us, or our key employees, independent contractors, consultants, or collaborators, and we are not successful in defending ourself or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant criminal, civil and administrative sanctions including monetary penalties, damages, fines, disgorgement, individual imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, reputational harm, and we may be required to curtail or restructure our operations.

Our failure to prevent a data breach would result in serious reputational damage to us and may result in civil or criminal lawsuits and associated penalties

We take our responsibility to maintain patient confidentiality and protect patient data extremely seriously. By its nature, the de-identified data that is being processed is highly sensitive and includes genetic and demographic information, the processing of which is subject to the most onerous obligations of applicable data protection legislation. If, due to a technical oversight, human error or malicious action by an employee or third party, the privacy, security or integrity of the data were compromised, we may be obliged to report such breach once we became aware of it under applicable laws and regulations such as HIPAA, GDPR, DPA 2018 or other U.S. state, U.K. or EU member state specific laws as well as the data privacy laws of other countries such as Japan, Singapore, Hong Kong and China. Depending on the nature and extent of the breach, we may become subject to a regulatory investigation, which would divert time and financial resources from the day-to-day operation of the business and may result in civil or criminal lawsuits and financial fines and penalties as well as adverse publicity. If third parties and/or customers of ours become aware of such breaches, they may opt to cancel existing contracts or not enter new contracts with us, reducing revenue. We may also be required to personally inform the patients whose data was released or accessed as a result of a data breach, which may increase the severity of the reputational damage and may lead to patients revoking their consent for the data to be used by us. In addition, patients may have the right to bring claims for compensation for such breaches which might be brought by way of class or representative actions and claim significant sums as damages. To mitigate the risk of a data breach or related issue, we will employ technical security measures to protect data and work closely with our data providers to ensure that each party understands its obligations to protect personal data.

Risks Specific to our Current Size and Headcount

We are reliant upon the expertise and continued service of a small number of key individuals of our management, Board of Directors and scientific advisors

We rely on the expertise and experience of a small number of key individuals of its management, Directors and scientific advisors to continue to develop and manage our business. The retention of their services cannot be guaranteed. Accordingly, the departure of these key individuals could have a negative impact on our operations, financial condition, our ability to execute our business strategy and future prospects.

Going forwards, we will rely, in part, on the recruitment of appropriately qualified personnel, including personnel with a high level of scientific and technical expertise in the industry. We may be unable to find a sufficient number of appropriately highly trained individuals to satisfy its growth rate which could affects its ability to develop products as planned.

In addition, if we fail to succeed in pre-clinical or clinical studies, it may make it more challenging to recruit and retain appropriately qualified personnel. Our inability to recruit key personnel or the loss of the services of key personnel or consultants may impede the progress of our R&D objectives as well as the commercialization of our lead and other products, which could have a material adverse effect on our business, results of operations and financial condition.

 

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We will need to expand our organization and may experience difficulties in managing this growth, which could disrupt our operations

As we mature, we expect to expand our full-time employee base and to hire more scientists, technicians and other skilled or experienced personnel. The management may need to divert a disproportionate amount of its attention away from the day-to-day activities and devote a substantial amount of time toward managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional products or technologies. If the management is unable to effectively manage our growth, our expenses may increase more than expected, the ability to generate and/or grow revenues could be reduced, and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize products and compete effectively will depend, in part, on our ability to effectively manage any future growth.

Risks Specific to the Future Financing of the Business

We need substantial additional funding to complete the development of its product candidates, which may not be available on acceptable terms, if at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate certain of our product development, research operations or future commercialization efforts, if any

Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing activities, particularly as we continue the R&D of, initiate further clinical trials of and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for our product candidates, we expect to incur significant expenses related to product sales, marketing, manufacturing and distribution.

Furthermore, we expect to incur additional costs associated with operating as a public reporting company in the United States.

If we are unable to obtain adequate funding on a timely basis, we may be required to significantly curtail, delay or discontinue our R&D programmes of our product candidates or any future commercialization efforts, be unable to expand our operations or be unable to otherwise capitalize on our business opportunities, as desired, which could harm our business and potentially cause a discontinuation of operations.

We may need to raise additional funding to take advantage of future opportunities

We may need to raise additional funding to take advantage of future opportunities. Such additional funding may not be available or, if available, may not be on terms that are favorable to us or our shareholders. If we are unable to obtain additional funding as required, we may be required to reduce the scope of our operations or anticipated expansion.

Risks Related to Being a Newly Independent, Public Company

We have no history of operating as a separate, U.S. public company.

Our historical financial information is not necessarily representative of the results that we would have achieved as a separate, U.S. public company and may not be a reliable indicator of our future results. Prior to the Demerger, in which Tiziana contributed its StemPrintER operations to us to operate as a separate, independent business, our operations were conducted by Tiziana as part of its broader corporate organization, rather than as a separate company. Tiziana performed various corporate functions for us. Our historical financial results reflect corporate expenses for such functions that are likely to be less than the expenses we would have incurred had we operated as a separate company, and our future expenses for these functions likely will increase. We will also incur additional expenses to comply with our obligations as a public company in the U.S.

 

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Risks Related to Legal, Political and Economic Uncertainty

The relationship of the U.K. with the EU could impact our ability to operate efficiently in certain jurisdictions or in certain markets

The U.K. formally exited the EU on January 31, 2020 (“Brexit”). Under the terms of its departure, the U.K. entered a transition period during which it continued to follow all EU rules until December 31, 2020 (the “Transition Period”). On December 30, 2020, the U.K. and EU signed the Trade and Cooperation Agreement, which includes an agreement on free trade between the two parties.

There is considerable uncertainty resulting from a lack of precedent and the complexity of the U.K. and EU’s intertwined legal regimes as to how Brexit (following the Transition Period) will impact the medical devices industry in Europe. Since a significant proportion of the regulatory framework in the U.K. applicable to our business and product candidates is derived from EU directives and regulations, Brexit could materially impact the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the U.K. or the EU. The impact will largely depend on the model and means by which the U.K.’s relationship with the EU is governed post-Brexit and the extent to which the U.K. chooses to diverge from the EU regulatory framework. For example, following the Transition Period, the U.K. will no longer be covered by the centralized procedures for obtaining EU-wide marketing authorizations and our product candidates will therefore require a separate marketing authorization for such products to be marketed in the U.K.. It is also unclear as to whether the relevant authorities in the EU and the U.K. are adequately prepared for the additional administrative burden caused by Brexit. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from, or delay commercialization of, product candidates in the U.K. and/or the EEA and restrict our ability to generate revenue and achieve and sustain profitability.

If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the U.K. for our product candidates, which could significantly and materially harm our business. There is a degree of uncertainty regarding the overall impact that Brexit will have on process to obtain regulatory approval in the U.K. for product candidates.

Further, the U.K.’s withdrawal from the EU has resulted in the relocation of the EMA from the U.K. to the Netherlands. This relocation has caused, and may continue to cause, disruption in the administrative and medical scientific links between the EMA and the MHRA, including delays in granting clinical trial authorisation or marketing authorization, disruption of importation and export of medical devices. The cumulative effects of the disruption to the regulatory framework may add considerably to the development lead time to marketing authorization and commercialization of product candidates in the EU and/or the U.K.. Brexit may also result in a reduction of funding to the EMA once the U.K. no longer makes financial contributions to EU institutions, such as the EMA. If funding to the EMA is so reduced, it could create delays in the EMA issuing regulatory approvals for the Company’s product candidates and, accordingly, have a material adverse effect on our business, financial condition, results of operations or prospects.

Risks Related to our Business Operations

Risks relating to managing growth, employee matters and other risks relating to our business

Growth may place significant demands on our management and resources. We expect to experience growth in the number of our employees and the scope of our operations in connection with the continued development and, in due course, the potential commercialisation of our products.

This potential growth will place a significant strain on our management and operations, and we may have difficulty managing this future potential growth.

We are highly dependent on our current Directors and the Senior Manager (together, the “Persons Discharging Managerial Responsibility” (“PDMR”)) and their services are critical to the successful implementation of our product development and regulatory strategies. Whilst suitable contracts of employment or engagement are in place including six to 12 months’ notice periods for all PDMRs, they may give notice to terminate their employment with us at any time. The loss of the services of any of the PDMRs and our inability to find suitable replacements could harm our business, prospects, financial condition, results of operations and ability to achieve the successful development or commercialisation of our products.

 

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Challenges in identifying and retaining key personnel could impair our ability to conduct and grow our operations effectively

Our ability to compete in the highly competitive medical device industry depends upon our ability to attract and retain highly qualified management and sales teams. We are intending to recruit our own commercial team and expand our existing central infrastructure team. Many of the other pharmaceutical companies and academic institutions that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than it does. We might not be able to attract or retain these key persons on conditions that are economically acceptable. Our inability to attract and retain these key persons could have a material adverse effect on our business, prospects, financial conditions and results of operation.

We may become subject to product liability claims

We face an inherent risk of product liability and associated adverse publicity as a result of the clinical testing of our products and sales of our products once marketing approval is received from relevant regulatory authorities.

Criminal or civil proceedings might be filed against us by study subjects, patients, relevant regulatory authorities, pharmaceutical companies, and any other third party using or marketing our products. Any such product liability claims may include allegations of defects in manufacturing or design, negligence, strict liability, a breach of warranties and a failure to warn of dangers inherent in the product.

If we cannot successfully defend ourself against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products, if approved. Even if we successfully defends ourself against such product liability claims it could require significant financial and management resources. Regardless of the merits or eventual outcome, product liability claims may result in:

 

   

decreased demand for our products due to negative public perception;

 

   

injury to our reputation;

 

   

withdrawal of clinical study participants or difficulties in recruiting new study participants;

 

   

initiation of investigations by regulators;

 

   

costs to defend or settle the related litigation;

 

   

diversion of management’s time and our resources;

 

   

substantial monetary awards to patients, study participants or subjects;

 

   

product recalls, withdrawals or labelling, marketing or promotional restrictions;

 

   

loss of revenues from product sales; or

 

   

the inability to commercialize any our products, if approved.

Although we will maintain levels of insurance customary for our sector to cover our current and future business operations, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. In such cases, we would have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

 

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If we or our partners, licensees and subcontractors were unable to obtain and maintain appropriate insurance coverage at an acceptable cost, or to protect ourself or themselves in any way against actions for damages, this would seriously affect the marketing of our products and, more generally, be detrimental to our business, prospects, results of operations or financial condition.

Risks Relating to Taxation

We may be classified as a passive foreign investment company for United States federal income tax purposes

We may be classified as a passive foreign investment company for U.S. federal income tax purposes. If we are so classified, we may, but are not obliged to, provide to U.S. holders of Ordinary Shares the information that would be necessary in order for such persons to make a qualified electing fund election with respect to the Ordinary Shares for any year in which we are a passive foreign investment company.

Changes in tax law and practice may impact shareholders and the Group

The tax treatment of shareholders and the Group are subject to changes in tax laws or tax authority practices in the United Kingdom or any other relevant jurisdiction. Any change may reduce any net return derived by investors from a shareholding in us.

You should not rely on the general guide to taxation set out in this registration statement and should seek their own specialist advice. The tax rates referred to in this registration statement are those currently applicable and they are subject to change.

We may not be able to make returns for shareholders in a tax efficient manner

We intend to structure the Group, including any company or business acquired, to maximise returns for shareholders in as fiscally efficient a manner as is practicable. We have made certain assumptions regarding taxation. However, if these assumptions are not borne out in practice, taxes may be imposed with respect to any of the Group’s assets, or the members of the Group may be subject to tax on income, profits, gains or distributions in a particular jurisdiction or jurisdictions in excess of taxes that were anticipated. This could alter the post-tax returns for shareholders (or shareholders in certain jurisdictions). The level of return for shareholders may also be adversely affected. Any change in laws or tax authority practices could also adversely affect any post-tax returns of capital to shareholders or payments of dividends (if any, of which we do not envisage the payment, at least in the short to medium term). In addition, we may incur costs in taking steps to mitigate any such adverse effect on the post-tax returns for Shareholders.

Risks Related to Our Ordinary Shares and ADSs

We do not expect that an active trading market will develop for our ADSs, which will make it difficult for you to sell your ADSs

While we intend for our Ordinary Shares to be admitted to a Standard Listing and to trade on the Main Market of the London Stock Exchange later in 2021, the ADSs registered hereunder constitute the first opportunity to receive our ADSs in the United States. No public market has previously existed for our ADSs or our Ordinary Shares and we do not anticipate a public market for the ADSs or the Ordinary Shares developing in the near term. We do not intend to apply to have our ADSs listed on any stock exchange or over-the-counter trading market in the United States, which will make it difficult for holders to sell their ADSs; instead, holders may withdraw the underlying Ordinary Shares and trade those Ordinary Shares on the Main Market of the London Stock Exchange, when such shares are admitted to trading later in 2021.

 

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There is currently no market for our Ordinary Shares, and a market for our Ordinary Shares may not develop, which would adversely affect the liquidity and price of our Ordinary Shares

There is currently no market for our Ordinary Shares. Although our current intention is that our Ordinary Shares should trade on the Main Market of the London Stock Exchange, we cannot assure you that we will do so. If we do proceed with a listing on the Main Market of the London Stock Exchange, an active trading market for our Ordinary Shares may not develop or, if developed, may not be maintained. You may be unable to sell the Ordinary Shares underlying your ADSs unless a market can be established and maintained, and if we subsequently obtain a listing on an exchange in addition to, or in lieu of, the Main Market of the London Stock Exchange, the level of liquidity of the Ordinary Shares may decline.

The market price of our Ordinary Shares, when and if they are admitted to a Standard Listing and to trading of the Main Market of the London Stock Exchange, may be highly volatile

The market price of our Ordinary Shares, when and if they are admitted for trading on the Main Market of the London Stock Exchange, is likely to be volatile. Stock markets in general, and for biopharmaceutical companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell the Ordinary Shares underlying your ADSs.

Further issuances of Ordinary Shares may be dilutive

We may decide to offer additional shares in the future for capital raising or other purposes. Shareholders who do not take up or who are not eligible to take such an offer will find their proportionate ownership and voting interests in us to be reduced. An additional offering could also have a material adverse effect on the market price of the Ordinary Shares as a whole.

Economic conditions and current economic weakness

Any economic downturn either globally or locally in any area in which we operate may have an adverse effect on the demand for our services. A more prolonged economic downturn may restrict our ability to generate a profit.

In addition, although signs of economic recovery have been perceptible in certain countries, the sustainability of a global economic upturn is not yet assured. If economic conditions remain uncertain this might have an adverse impact on our operations and business results.

Our ability to pay dividends in the future is not certain

We cannot guarantee that we will have sufficient cash resources to pay dividends in the future. The declaration, payment and amount of any future dividends are subject to the shareholders’ discretion , or in the case of interim dividends, the Board’s discretion, and will depend upon our earnings, financial position, cash requirements, availability or profits, any dividends and profits that we receive from our subsidiary companies, as well as provisions for relevant laws or generally accepted accounting principles from time to time.

We are likely to have a number of outstanding options which, if exercised, could have a material dilutive effect on existing shareholders

Whilst we currently have no outstanding options over Ordinary Shares, options may be issued in connection with our proposed admission to a Standard Listing and to trading of the Main Market of the London Stock Exchange. Such convertible instruments would have a material dilutive effect on shareholders when and if they are exercised.

Pre-emption rights for U.S. and other non-U.K. holders of Ordinary Shares may be unavailable

In the case of certain increases in the Company’s issued share capital, existing holders of Ordinary Shares are generally entitled to pre-emption rights to subscribe for such shares, unless shareholders waive such rights by a resolution at a shareholders’ meeting. U.S. holders of ordinary shares in U.K. companies are customarily excluded from exercising any such pre-emption rights they may have, unless a registration statement under the Securities Act is effective with respect to those rights, or an exemption from the registration requirements thereunder is available.

 

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Any exemption from the registration requirements of the Securities Act or applicable non-U.S. securities law may not be available to enable U.S. or other non-U.K. holders to exercise such pre-emption rights or, if available, the Company may not utilize any such exemption.

Shareholders may be unable to enforce judgments obtained in U.S. courts

The Company is incorporated and registered in England and Wales under the Companies Act. Service of process upon our Directors and officers, all of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, since all of our directly owned assets and those of our Directors are located outside the United States, any judgment obtained in the United States against it or them may not be enforceable outside of the United States, including without limitation judgments based upon the civil liability provisions of the U.S. federal securities laws or the laws of any state or territory within the U.S. In addition, an award or awards of punitive damages in actions brought in the U.S. or elsewhere may be unenforceable in the U.K.. Shareholders may also have difficulties enforcing, in original actions brought in courts in jurisdictions outside the U.S., liabilities under U.S. securities laws.

Holders of ADSs are not treated as holders of our Ordinary Shares

After purchasing an ADS, you will become a holder of ADSs with rights to the underlying shares in a company incorporated under English law. Holders of ADSs are not treated as holders of our Ordinary Shares, unless they withdraw the Ordinary Shares underlying their ADSs in accordance with the deposit agreement and applicable laws and regulations. The Depositary is the holder of the Ordinary Shares underlying the ADSs. Holders of ADSs therefore do not have any rights as holders of our Ordinary Shares, other than the rights that they have pursuant to the deposit agreement. See “Item 12.D.—American Depositary Shares.”

Holders of ADSs may be subject to limitations on the transfer of their ADSs and the withdrawal of the underlying ordinary shares

ADSs are transferable on the books of the Depositary. However, the Depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The Depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the Depositary are closed, or at any time if we or the Depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason, subject to the right of ADS holders to cancel their ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of your ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting or we are paying a dividend on our ordinary shares. In addition, ADS holders may not be able to cancel their ADSs and withdraw the underlying ordinary shares when they owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities. See “Item 12.D.—American Depositary Shares.”

You will not have the same voting rights as the holders of our Ordinary Shares and may not receive voting materials in time to be able to exercise your right to vote

Except as described in this registration statement and the deposit agreement, holders of the ADSs will not be able to exercise voting rights attaching to the Ordinary Shares represented by the ADSs. Under the terms of the deposit agreement, holders of the ADSs may instruct the Depositary to vote the Ordinary Shares underlying their ADSs. Otherwise, holders of ADSs will not be able to exercise their right to vote unless they withdraw the Ordinary Shares underlying their ADSs to vote them in person or by proxy in accordance with applicable laws and regulations and our Articles of Association. Even so, ADS holders may not know about a meeting far enough in advance to withdraw those Ordinary Shares. If we ask for the instructions of holders of the ADSs, the Depositary, upon timely notice from us, will notify ADS holders of the upcoming vote and arrange to deliver our voting materials to them. Upon our request, the Depositary will mail to holders a shareholder meeting notice that contains, among other things, a statement as to the manner in which voting instructions may be given. We cannot guarantee that ADS holders will

 

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receive the voting materials in time to ensure that they can instruct the depositary to vote the ordinary shares underlying their ADSs. A shareholder is only entitled to participate in, and vote at, the meeting of shareholders, provided that it holds our Ordinary Shares as of the record date set for such meeting and otherwise complies with our Articles of Association. In addition, the Depositary’s liability to ADS holders for failing to execute voting instructions or for the manner of executing voting instructions is limited by the deposit agreement. As a result, holders of ADSs may not be able to exercise their right to give voting instructions or to vote in person or by proxy and they may not have any recourse against the Depositary or us if their Ordinary Shares are not voted as they have requested or if their Ordinary Shares cannot be voted.

You may not receive distributions on our Ordinary Shares represented by the ADSs or any value for them if it is illegal or impractical to make them available to holders of ADSs

The Depositary has agreed to pay to you any cash dividends or other distributions it or the custodian receives on our Ordinary Shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our Ordinary Shares your ADSs represent. However, in accordance with the limitations set forth in the deposit agreement, it may be unlawful or impractical to make a distribution available to holders of ADSs. We have no obligation to take any other action to permit distribution on the ADSs, ordinary shares, rights or anything else to holders of the ADSs. This means that you may not receive the distributions we make on our ordinary shares or any value from them if it is unlawful or impractical to make them available to you. These restrictions may have an adverse effect on the value of your ADSs.

ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action

The deposit agreement provides that, to the fullest extent permitted by law, holders and beneficial owners of ADSs irrevocably waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to the ADSs or the deposit agreement.

If this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury trial. If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the U.S. Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement, by a federal or state court in the City of New York, which has non-exclusive jurisdiction over matters arising under the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before entering into the deposit agreement.

If you or any other holders or beneficial owners of ADSs bring a claim against us or the Depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and/or the depositary. If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims, and the venue of the hearing.

No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the Depositary of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

 

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Our principal shareholder has a significant holding in the company which may give them influence in certain matters requiring approval by shareholders, including approval of significant corporate transactions in certain circumstances

As of December 31, 2020, Gabriele Cerrone and Planwise Group Limited, a company in which Mr. Cerrone has a beneficial interest, held an aggregate of approximately 37.12 per cent. of our Ordinary Shares. Accordingly, Mr. Cerrone and Planwise Group Limited may, as a practical matter, be able to influence certain matters requiring approval by shareholders, including approval of significant corporate transactions in certain circumstances. Such concentration of ownership may also have the effect of delaying or preventing any future proposed change in control of the Company. The trading price of the Ordinary Shares, when and if admitted to a Standard Listing and to trading of the Main Market of the London Stock Exchange, could be adversely affected if potential new investors are disinclined to invest in us because they perceive disadvantages to a large shareholding being concentrated in the hands of a single shareholder. The interests of Tiziana and holders that acquire ADSs may not be aligned. Tiziana may make acquisitions of, or investments in, other businesses in the same sectors as us. These businesses may be, or may become, competitors of us. In addition, funds or other entities managed or advised by Tiziana may be in direct competition with us on potential acquisitions of, or investments in, certain businesses.

We are an “emerging growth company, and there are reduced disclosure requirements applicable to emerging growth companies

We are an “emerging growth company” as defined in the SEC’s rules and regulations and we will remain an emerging growth company until the earlier to occur of (1) the last day of 2025, (2) the last day of the fiscal year in which we have total annual gross revenues of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer”, under the rules of the U.S. Securities and Exchange Commission,

or SEC, which means the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

 

   

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

 

   

not being required to comply with any requirement that has or may be adopted by the Public Company Accounting Oversight Board (PCAOB) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

 

   

being permitted to provide only two years of audited financial statements in this initial registration statement, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

 

   

reduced disclosure obligations regarding executive compensation; and

 

   

an exemption from the requirement to seek nonbinding advisory votes on executive compensation or golden parachute arrangements.

We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of reduced reporting burdens in this registration statement. In particular, we have not included all of the executive compensation information that would be required if we were not an emerging growth company. We cannot predict whether you will find our ADSs less attractive if we rely on certain or all of these exemptions.

In addition, the JOBS Act provides that an emerging growth company may take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are considering whether we will take advantage of the extended transition period for complying with new or revised accounting standards. Since IFRS makes no distinction between public and private companies for purposes of compliance with new or revised accounting standards, the requirements for our compliance as a private company and as a public company are the same.

 

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We are not, and do not intend to become, regulated as an “investment company” under the Investment Company Act and if we were deemed an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business

The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities and impose certain governance requirements. We have not been and do not intend to become regulated as an investment company, and we intend to conduct our activities so that we will not be deemed to be an investment company under the Investment Company Act. In order to ensure that we are not deemed to be an investment company, we may be limited in the assets that we may continue to own and, further, may need to dispose of or acquire certain assets at such times or on such terms as may be less favorable to us than in the absence of such requirement. If anything were to happen which would cause us to be deemed to be an investment company under the Investment Company Act (such as significant changes in the value of our Founded Entities or a change in circumstance that results in a reclassification of our interests in our Founded Entities for purposes of the Investment Company Act), the requirements imposed by the Investment Company Act could make it impractical for us to continue our business as currently conducted, which would materially adversely affect our business, results of operations and financial condition. In addition, if we were to become inadvertently subject to the Investment Company Act, any violation of the Investment Company Act could subject us to material adverse consequences, including potentially significant regulatory penalties and the possibility that certain of our contracts could be deemed unenforceable.

As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the SEC than a U.S. company. This may limit the information available to holders of ADSs or our ordinary shares

We are a “foreign private issuer”, as defined in the SEC’s rules and regulations and, consequently, we are not subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act, that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and Directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, while we currently make annual and semi-annual filings with respect to our listing on the LSE, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic issuers and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act. Accordingly, there will be less publicly available information concerning our company than there would be if we were not a foreign private issuer.

We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense

While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2021.

In the future, we would lose our foreign private issuer status if we to fail to meet the requirements necessary to maintain our foreign private issuer status as of the relevant determination date. For example, if more than 50 per cent. of our securities are held by U.S. residents and more than 50 per cent. of the members of our executive committee or members of our Board of Directors are residents or citizens of the United States, we could lose our foreign private issuer status.

The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed

 

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and extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial statements in accordance with U.S. GAAP, rather than IFRS, and modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers. Such conversion of our financial statements to U.S. GAAP will involve significant time and cost. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers such as the ones described above and exemptions from procedural requirements related to the solicitation of proxies.

We will incur increased costs as a result of operating as a U.S. public company, and our management will be required to devote substantial time to new compliance initiatives

As a U.S. public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we will not incur as a public company listed on the LSE. In addition, the Sarbanes-Oxley Act of 2002, and rules subsequently implemented by the SEC have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance.

Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk we will not be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

If we are unable to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause you to lose confidence in our reported financial information.

Our management will be required to assess the effectiveness of these controls annually. However, for as long as we are an emerging growth company, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404. We could be an emerging growth company for up to five years. An independent assessment of the effectiveness of our internal controls over financial reporting could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation.

 

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Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud

Upon completion of this registration, we will become subject to certain reporting requirements of the Exchange Act. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.

We may be unable to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future U.K. tax liabilities

As a U.K. incorporated and tax resident entity, we are subject to U.K. corporate taxation on its tax-adjusted trading profits. Due to the nature of our business, we have generated losses since inception and therefore we have not paid any U.K. corporation tax. Subject to numerous utilization criteria and restrictions (including those that limit the percentage of profits that can be reduced by carried forward losses and those that can restrict the use of carried forward losses where there is a change of ownership of more than half the ordinary shares of the company and a major change in the nature, conduct or scale of the trade), we expect these to be eligible for carry forward and utilization against future U.K. operating profits.

Future changes to tax laws could materially adversely affect our company and reduce net returns to our shareholders

The tax treatment of the company is subject to changes in tax laws, regulations and treaties, or the interpretation thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities in jurisdictions

in which we operate, as well as tax policy initiatives and reforms related to the Organisation for Economic Co-Operation and Development, Base Erosion and Profit Shifting Project, the European Commission’s state aid investigations and other initiatives. Such changes may include (but are not limited to) the taxation of operating income, investment income, dividends received or (in the specific context of withholding tax) dividends paid. We are unable to predict what tax reform may be proposed or enacted in the future or what effect such changes would have on our business, but such changes, to the extent they are brought into tax legislation, regulations, policies or practices, could affect our financial position and overall or effective tax rates in the future in countries where we have operations, reduce post-tax returns to our shareholders, and increase the complexity, burden and cost of tax compliance.

Tax authorities may disagree with our positions and conclusions regarding certain tax positions, resulting in unanticipated costs, taxes or non-realization of expected benefits

A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, HM Revenue & Customs, (“HMRC”), the Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between certain of our Founded Entities pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property development. Similarly, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one

 

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or more jurisdictions. A tax authority may take the position that material income tax liabilities, interest and penalties are payable by us, in which case, we expect that we might contest such assessment. Contesting such an assessment may be lengthy and costly and if we were unsuccessful in disputing the assessment, the implications could increase our anticipated effective tax rate, where applicable.

Shareholder protections found in provisions under the U.K. City Code on Takeovers and Mergers (the “Takeover Code”), will not apply if our securities are no longer admitted to trading on a regulated market or a multilateral trading facility in the United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man and our place of management and control is considered to change to outside the United Kingdom

We intend to re-register as a public limited company incorporated in England and Wales in the near future and have our Ordinary Shares admitted to trading on the Main Market of the London Stock Exchange. Accordingly, if and when we proceed with an admission to trading on the Main Market of the London Stock Exchange, we will become subject to the Takeover Code and, as a result, our shareholders are entitled to the benefit of certain takeover offer protections provided under the Takeover Code. The Takeover Code provides a framework within which takeovers of companies are regulated and conducted. If, at the time of a takeover offer, we have de-listed from the Main Market of the London Stock Exchange (and do not maintain a listing of securities on any other regulated market or a multilateral trading facility in the United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man) and the Panel on Takeovers and Mergers determine that we do not have our place of central management and control in the United Kingdom, then the Takeover Code may not apply to us and our shareholders would not be entitled to the benefit of the various protections that the Takeover Code affords. In particular, we would not be subject to the rules regarding mandatory takeover bids. The following is a brief summary of some of the most important rules of the Takeover Code:

 

   

when any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares already held by that person and an interest in shares held or acquired by persons acting in concert with him or her) carry 30 per cent. or more of the voting rights of a company that is subject to the Takeover Code, that person is generally required to make a mandatory offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company;

 

   

when any person who, together with persons acting in concert with him or her, is interested in shares representing not less than 30 per cent. but does not hold more than 50 per cent. of the voting rights of a company that is subject to the Takeover Code, and such person, or any person acting in concert with him or her, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he or she is interested, then such person is generally required to make a mandatory offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company;

 

   

a mandatory offer triggered in the circumstances described in the two paragraphs above must be in cash (or be accompanied by a cash alternative) and at not less than the highest price paid within the preceding 12 months to acquire any interest in shares in the company by the person required to make the offer or any person acting in concert with him or her;

 

   

in relation to a voluntary offer (i.e. any offer which is not a mandatory offer), when interests in shares representing 10 per cent. or more of the shares of a class have been acquired for cash by an offeror (i.e., a bidder) and any person acting in concert with it in the offer period and the previous 12 months, the offer must be in cash or include a cash alternative for all shareholders of that class at not less than the highest price paid for any interest in shares of that class by the offeror and by any person acting in concert with it in that period. Further, if an offeror acquires for cash any interest in shares during the offer period, a cash alternative must be made available at not less than the highest price paid for any interest in the shares of that class;

 

   

if the offeror acquires an interest in shares in an offeree company (i.e., a target) at a price higher than the value of the offer, the offer must be increased to not less than the highest price paid for the interest in shares so acquired;

 

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the offeree company must obtain competent advice as to whether the terms of any offer are fair and reasonable and the substance of such advice must be made known to all the shareholders, together with the opinion of the board of directors of the offeree company;

 

   

special or favorable deals for selected shareholders are not permitted, except in certain circumstances where independent shareholder approval is given and the arrangements are regarded as fair and reasonable in the opinion of the financial adviser to the offeree;

 

   

all shareholders must be given the same information;

 

   

each document published in connection with an offer by or on behalf of the offeror or offeree must state that the directors of the offeror or the offeree, as the case may be, accept responsibility for the information contained therein;

 

   

profit forecasts, quantified financial benefits statements and asset valuations must be made to specified standards and must be reported on by professional advisers;

 

   

misleading, inaccurate or unsubstantiated statements made in documents or to the media must be publicly corrected immediately;

 

   

actions during the course of an offer by the offeree company, which might frustrate the offer are generally prohibited unless shareholders approve these plans. Frustrating actions would include, for example, lengthening the notice period for directors under their service contract or agreeing to sell off material parts of the target group;

 

   

stringent and detailed requirements are laid down for the disclosure of dealings in relevant securities during an offer, including the prompt disclosure of positions and dealing in relevant securities by the parties to an offer and any person who is interested (directly or indirectly) in 1 per cent. or more of any class of relevant securities; and

 

   

employees of both the offeror and the offeree company and the trustees of the offeree company’s pension scheme must be informed about an offer. In addition, the offeree company’s employee representatives and pension scheme trustees have the right to have a separate opinion on the effects of the offer on employment appended to the offeree board of directors’ circular or published on a website.

The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation

The Company is incorporated under the laws of England and Wales. The rights of holders of ordinary shares and, therefore, certain of the rights of holders of ADSs, are governed by English law, including the provisions of the Companies Act, and by our Articles of Association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. See “Articles of Association—Differences in Corporate Law” in this registration statement for a description of the principal differences between the provisions of the Companies Act applicable to us and, for example, the Delaware General Corporation Law relating to shareholders’ rights and protections.

The principal differences include the following:

 

   

under English law and our Articles of Association, each shareholder present at a meeting has only one vote when voting by a show of hands unless demand is made for a vote on a poll, in which case each holder gets one vote per share owned. The Company usually conducts all of its shareholder votes on a poll. Under U.S. law, each shareholder typically is entitled to one vote per share at all meetings;

 

   

under English law, it is only on a poll that the number of shares determines the number of votes a holder may cast. You should be aware, however, that the voting rights of ADSs are also governed by the provisions of a deposit agreement with our depositary bank;

 

   

under English law, subject to certain exceptions and disapplications, each shareholder generally has preemptive rights to subscribe on a proportionate basis to any issuance of ordinary shares or rights to subscribe for, or to convert securities into, ordinary shares for cash. Under U.S. law, shareholders generally do not have preemptive rights unless specifically granted in the certificate of incorporation or otherwise;

 

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under English law and our Articles of Association, certain matters require the approval of 75 per cent. of the shareholders who vote (in person or by proxy) on the relevant resolution (or on a poll of shareholders representing 75 per cent. of the ordinary shares voting (in person or by proxy)), including amendments to the Articles of Association. This may make it more difficult for us to complete certain corporate transactions deemed advisable by our Board of Directors. Under U.S. law, generally only majority shareholder approval is required to amend the certificate of incorporation or to approve other significant transactions;

 

   

in the U.K., takeovers may be structured as takeover offers or as schemes of arrangement. Under English law, for so long as we continue to be subject to the Takeover Code, a bidder seeking to acquire us by means of a takeover offer would need to make an offer for all of our outstanding ordinary shares/ADSs. If acceptances are not received for 90 per cent. or more of the ordinary shares/ADSs under the offer, under English law, the bidder cannot complete a “squeeze out” to obtain 100 per cent. control of us. Accordingly, acceptances of 90 per cent. of our outstanding ordinary shares/ADSs will likely be a condition in any takeover offer to acquire us, not 50 per cent. as is more common in tender offers for corporations organized under Delaware law. By contrast, a scheme of arrangement, the successful completion of which would result in a bidder obtaining 100 per cent. control of us, requires the approval of a majority of shareholders voting at the meeting and representing 75 per cent. of the ordinary shares voting for approval;

 

   

under English law and our Articles of Association, shareholders and other persons whom we know or have reasonable cause to believe are, or have been, interested in our shares may be required to disclose information regarding their interests in our shares upon our request, and the failure to provide the required information could result in the loss or restriction of rights attaching to the shares, including prohibitions on certain transfers of the shares, withholding of dividends and loss of voting rights. Comparable provisions generally do not exist under U.S. law; and

 

   

the quorum requirement for a shareholders’ meeting is a minimum of two shareholders entitled to vote at the meeting and present in person or by proxy or, in the case of a shareholder which is a corporation, represented by a duly authorized officer. Under U.S. law, a majority of the shares eligible to vote must generally be present (in person or by proxy) at a shareholders’ meeting in order to constitute a quorum. The minimum number of shares required for a quorum can be reduced pursuant to a provision in a company’s certificate of incorporation or bylaws, but typically not below one-third of the shares entitled to vote at the meeting.

 

ITEM 4.

INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

We operate a genomics-based personalized medicine business, particularly focused on breast cancer patients. Our pre-clinical product candidate is StemPrintER, a multi-gene prognostic assay intended for the prediction of the risk of distant recurrence in luminal, ER+/HER2-negative breast cancer patients, based on the detection of 20 stem cell markers normalised to four housekeeping genes. StemPrintER has been evaluated in an initial retrospective validation study using a consecutive cohort of approximately 2,400 patients with breast cancer. In that validation study, StemPrintER showed superiority to Oncotype DX® in predicting recurrence in ER+/HER2- postmenopausal breast cancer patients. Our next generation derivative risk model, SPARE, combines StemPrintER with two clinical markers, namely lymph nodal status and tumour size, in a more refined risk model.

We aim to commercialize the StemPrintER and SPARE platform technology. The Company was incorporated in England and Wales on June 5, 2020 as a private company with limited liability under the Companies Act with indefinite life and company number 12647178, we intend to re-register as a public limited company if and when we may apply to have our shares traded on the London Stock Exchange. The Company was created in connection with its Demerger (spin-off) from Tiziana Life Sciences plc, a company admitted to a Standard Listing and to trading on both the Main Market of the London Stock Exchange and Nasdaq.

On October 5, 2020, we entered into a Demerger Agreement with Tiziana pursuant to which Tiziana declared a dividend in specie equal to the book value (of approximately £3.07 million) of Tiziana’s shareholding in StemPrintER Sciences Limited, the entity in the Tiziana group which held all of the assets and intellectual property relating to StemPrintER and SPARE and £1.0 million in cash.

 

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The dividend in specie was satisfied by the transfer by Tiziana to us of the shares in StemPrintER Sciences Limited. In return for this transfer, we allotted Ordinary Shares in to Tiziana shareholders on a one for one basis. You are receiving Ordinary Shares, in the form of ADSs, as a result of this transfer.

The Demerger was conditional upon, among other things, Court approval of a capital reduction which was approved by special resolution of shareholders on October 2, 2020. The Court sanctioned the related capital reduction on October 27, 2020 and the Demerger became effective on October 30, 2020.

The objective of the Demerger was to maximise value to the shareholders of Tiziana through the further commercialization of StemPrintER and its assets and intellectual property. The demerger will allow the Company to continue these commercialization efforts as a separate listed company with cash reserves of approximately £1,000,000. Subject to our Ordinary Shares being admitted to a Standard Listing and to trading on the Main Market of the London Stock Exchange, Tiziana has agreed, pursuant to the terms of the Supplemental Demerger Agreement, to invest not less than £2,000,000 in our equity securities.

Tiziana will continue to provide certain limited management and administrative services to the Company for a 12-month period following the completion of the demerger. Tiziana and the Company have entered into a Demerger Agreement which sets out certain agreements that govern certain aspects of the relationship between Tiziana and the Company and their respective subsidiaries following the Demerger, details of the Demerger Agreement are more fully outlined in “Item 5.A.—Material Contracts”.

Our principal capital expenditures are devoted to conducting research and development of our product candidate, as further discussed in “Item 5.A.—Operating Results”.

The Company’s legal name is AccuStem Sciences Limited. Our registered office is situated at 107 Cheapside, 9th floor, London EC2V 6DN, United Kingdom, and our telephone number is +44 (0) 20 7066 1000. We have one wholly owned subsidiary: StemPrintER Sciences Limited, a private company incorporated in England and Wales with limited liability under the Companies Act. Our website address is www.accustem.com. The reference to our website is an inactive textual reference only and information contained in, or that can be accessed through, our website or any other website cited in this registration statement is not part of hereof.

B. BUSINESS OVERVIEW

Overview and Market Opportunity

Endocrine receptor positive (ER+) breast cancers constitute the majority of breast cancer cases (~75-80%) and display remarkable variability in clinical behaviour. This heterogeneity makes prognosis and therapy response often challenging to predict using the standard clinicopathological features of the tumour. Although the overall prognosis for this group of patients is good, a significant proportion (>20%) of these patients will experience distant recurrence in the first 10 years post-surgery. For ER+ patients who also have a negative HER2 status (HER2-), the standard of care is endocrine therapy with the addition of adjuvant chemotherapy in those patients considered to be at risk of recurrence according to clinicopathological parameters.

However, it has become apparent that these parameters are often insufficient to predict risk of recurrence in ER+/HER2- breast cancer patients, and, as a consequence, a significant proportion of these patients are either over- or under-treated. Multigene prognostic tests can assist decision making on treatments, differentiating low risk patients who could be safely be spared chemotherapy from higher risk patients who might benefit from chemotherapy or prolonged endocrine treatments. We anticipate this in vitro prognostic test to be used in conjunction with clinical evaluation to identify those patients at increased risk for early and/or late metastasis.

StemPrintER is designed to help physicians distinguish ER+/HER2- patients. StemPrintER has a novel biological basis in the stem cell biology and interrogates the intrinsic content and aggressiveness of cancer stem cells of the primary tumour. The assay uses a reliable real-time quantitative reverse transcription polymerase chain reaction (qRT-PCR), formalin-fixed, paraffin-embedded (FFPE) platform for testing.

StemPrintER has been initially developed and clinically validated in a retrospective validation study using a consecutive cohort of approximately 2,400 patients with breast cancer. Subsequently, StemPrintER has been further validated in an independent retrospective cohort of more than 800 ER+/HER2- postmenopausal patients from the TransATAC trial.

 

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Scientific Background

The identification and development of multi-gene assays for accurate prognostication of individual breast cancer patients has represented an expanding area of research for more than a decade. In this context, it has become progressively clear that biomarkers for the prediction of clinical outcome should be able to interrogate the underlying biology of the tumours of individual breast cancer patients. The increasingly recognised relevance of cancer stem cells to breast cancer heterogeneity and disease course suggests that the knowledge of the “degree of stemness” of a breast cancer might substantially advance individualised patient management.

StemPrintER was developed to be a novel genomic predictor based on a cluster of 20 stem cell genes whose high expression levels were capable of identifying a homogeneous group of patients with adverse clinical outcome in the meta-analysis of four distinct public breast cancer datasets.

Based on existing published research, several of the 20 stem cell genes display evident connection to metastatic dissemination through their role in matrix degradation, migration, invasion and engraftment (e.g., MMP1, SNF, MIEN1, PHLDA2, EPB41L5).

For other genes (RACGAP1, H2AFZ, H2AFJ, APOBEC3B, CENPW, TOP2A CDK1), it was considered possible, or even probable, that they were significant in the establishment of cancer stem cells phenotypes and might be linked to involvement in genomic instability, which could be reasonably hypothesized based on their role in processes, such as DNA replication and repair, chromatin remodelling and mitotic control of chromosome segregation.

A final set of genes, whose putative role in metastasis is less obvious, might be linked – directly or indirectly - to the development of adaptive plastic responses required for cancer stem cells to withstand and survive in hostile environmental conditions, such as hypoxia and nutrient deprivation, both at the primary tumour and metastatic site level, and/or to resist hormonal or chemotherapy treatments, often in the broader context of the activation of an epithelial-to-mesenchymal transition (EMT) program. These genes include those involved in: (a) metabolism reprogramming and mitochondrial physiology (MRPS23, NDUFB10, Phb); (b) mRNA ribonucleoparticle bioGENEsis, mRNA transcription, splicing and export, and RNA processing and degradation events (ALYREF, EXOSC4); and (c) survival/escape from apoptosis, which is connected to resistance to hormonal and/or chemotherapy through hijacking of signalling pathways, such as TGF-beta and pi3k-AKT-mTOR (NOL3, LY6E, EIF4EBP1). Additional evidence for a mechanistic link between the 20 genes and the cancer stem cell phenotype comes from the observation that these genes are frequently overexpressed in breast cancer, sometimes as a consequence of gene amplification.

Whilst further studies may be needed to establish whether the genes comprised in the signature are causal in the determination and/or maintenance of cancer stem cells in breast cancers, and possibly of their metastatic potential, the ability of the 20 stem cell gene signature to predict distant metastasis in breast cancer patients also support the proposition that the metastatic potential of individual breast cancers can be traced back to the molecular characteristics of a rare subpopulation of tumour cells that display cancer stem cell traits.

Summary of Clinical Research History

Through validation studies in a large prospective-retrospective cohort of breast cancer patients with high-quality follow-up, and functional prospective studies based on the use of fresh tumour samples from an additional consecutive series of breast cancer patients, it has been established that the 20-gene SC-based assay predicts the individual likelihood to develop distant metastasis in breast cancer, in particular in triple negative breast cancer and luminal ER+/HER2- breast cancer cancers and does so, most likely, by interrogating the number and biological characteristics of their cancer stem cells. Of note, our genomic predictor comprises a set of genes that do not belong (with one exception) to any other genomic tool or molecular classifier described for triple negative breast cancer and luminal breast cancers.

We accordingly believe that the result of our research is the development of a unique tool capable of probing into the “degree of stemness”, and hence into the clinical outcome, of breast cancers.

Our initial research focused on genes discriminating mammary stem cells from progenitors in the normal gland. Only those genes that were expressed at higher levels in mammary stem cells versus progenitors were selected. Selection criteria was based on the premise that cancer stem cells might display traits reminiscent of those present in normal mammary stem cells and, since cancer stem cells are rare, the selection of overexpressed genes (mammary stem cells versus progenitors) afforded a higher likelihood of scoring differences, with respect to under-expressed genes.

 

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Accordingly, these findings have important potential implications from both the biological and clinical perspective.

Clinical and Commercial Viability

From a clinical standpoint, although future studies in independent retrospective and/or prospective breast cancer patient cohorts are warranted to increase the level of clinical evidence of the reliability and transportability of the 20 stem cell gene genomic tool, in light of the recent independent validation study in the TransATAC cohort of the Royal Marsden Hospital and Queen Mary University in London, the results of our research have immediate relevance to the clinical management of breast cancer patients, in particular for the subgroup of ER+/HER2- breast cancer patients. These patients represent the majority (~75%) of the cases and display high molecular heterogeneity and variability in their clinical behaviour. Accordingly, ER+/HER2- breast cancer patients can greatly benefit from accurate stratification of their risk of recurrence, for the administration of the optimal therapy, while avoiding under- or over-treatment.

Based on the 20 stem cell -gene signature, StemPrintER is a specific risk model for ER+/HER2- breast cancer patients. StemPrintER is an independent predictor of both early and late metastasis. This places StemPrintER among the more recently developed second generation multi-gene assays for breast cancer, such as Prosigna and EndoPredict, which have been shown to outperform first generation breast cancer prognostic tests – e.g., Oncotype DX® and MammaPrint – in the prediction of the risk of late recurrence (5–10 years post-surgery).

In particular, StemPrintER predicts early metastasis in lymph node-negative breast cancer patients, and both early and late metastasis in lymph node-positive breast cancer patients. Accordingly, we consider that StemPrintER could have immediate clinical application as a tool to tailor the administration of adjuvant chemotherapy, in addition to the standard endocrine therapy, in those ER+/HER2- breast cancer patients at high risk of early recurrence, while sparing unnecessary chemotherapy to low risk patients.

In addition, StemPrintER could also represent a valuable tool to identify ER+/HER2- breast cancer patients at high risk of late recurrence, who might benefit from prolongation of endocrine therapy beyond the standard 5 years of treatment. This is an important issue in the clinical management of ER+/HER2- breast cancer patients, who remain at persistent risk of recurrence for at least 15–20 years, with >50% of relapses and more than two-thirds of deaths occurring >5 years after the original diagnosis. However, while continuation of endocrine therapy reduces the proclivity to develop late recurrences, its benefits must be weighed against side effects and quality of life, avoiding overtreatment through accurate patient stratification.

Recent Developments

A team of scientists from IEO/University of Milan conducted an independent validation of StemPrintER and its derivative, SPARE, in the TransATAC cohort of ER+/HER2- postmenopausal breast cancer patients, in collaboration with the Royal Marsden Hospital and Queen Mary University in London, alongside a head-to-head comparison of StemPrintER with Oncotype DX® in these patients.

This study was further evidence that StemPrintER/SPARE predicts the distant recurrence risk independently of all the other clinicopathological parameters, as expressed by the Clinical Treatment Score (CTS), and that StemPrintER/SPARE provides substantial more prognostic information on the top of clinicopathological parameters (CTS) for a more refined distant recurrence prediction.

The results from this study also clearly showed that StemPrintER outperforms Oncotype DX® in 10-year risk prediction in more than 800 ER+/HER2- postmenopausal breast cancer patients in the analysis, including in lymph node-negative (N0) and 1 to 3 lymph node-positive (N1-3) patients. In particular, StemPrintER is 40-50% superior to Oncotype DX® in providing additional prognostic information beyond the standard CTS.

Commercialization

We intend to continue our collaboration strategy to further develop, validate and commercialize the StemPrintER/SPARE platform. We intend to conduct further validation and utility studies with the intention of filing for regulatory review under the CLIA system and, ultimately, for reimbursement review. We also expect to pursue a strategy to achieve appropriate regulatory review with European and Asian regulatory agencies to expand the addressable market for its products.

 

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Regulatory Process

For diagnostics in the U.S., all laboratories performing clinical testing must achieve compliance with federal regulations under CLIA. These regulations are administered at the state level through the individual state departments of health where states may add further regulation alongside the federal. There are two states, New York and Washington, where the state level regulations are considered at least or more rigorous than the federal, and in those two states, the state level credentialing is allowed to show compliance at the federal level exempting from the need to achieve direct CLIA certification.

Companies which create a test and offer the diagnostic product as a service (returning results to individuals/clinicians) as a LDT under the CLIA process should obtain clearance from the FDA for that LDT. Performing the LDT in a CLIA compliant laboratory without first clearing the test though FDA is more simple and faster but does necessitate both the laboratory and the product being certificated and require specialist staff and approval processes.

CLIA requires that laboratories demonstrate or verify the analytical validity of all tests they perform. A clinical laboratory analyzing specimens based on a proprietary test method (i.e., an LDT)must, among other things, document the accuracy, precision, specificity, sensitivity of, and establish a reference range for, such test.

Revenue Strategy

Our revenue is expected to be derived from different sources including standard private third-party and government medical insurance coverage and reimbursement models. Prior to full commercial scaling, we expect to focus our first revenues from a small number of early adopting sites, where we may also subsidize the full cost of the test to encourage use and create further validation data. This is expected to be within 24 months of Admission, subject to successful validation trials and approvals under the CLIA certification or upon the obtaining of a CE mark for the test.

Competition

The current market leader in the field is the Oncotype DX® assay, a 21-gene assay that predicts the likelihood of chemotherapy benefit and 10-year risk of distant recurrence to inform adjuvant treatment decisions in certain women with early-stage invasive breast cancer. Oncotype DX® is owned by Exact Sciences Corp., a leading provider of cancer screening and diagnostic tests.

Whilst Exact Sciences Corp. is market leader, as noted above, a team of scientists from IEO/University of Milan conducted a head-to-head comparison of StemPrintER with Oncotype DX® in collaboration with the Royal Marsden Hospital and Queen Mary University in London with favorable results showing superior performance of StemPrintER over Oncotype DX®.

EndoPredict is a CE-marked assay that is designed to predict the likelihood of metastases developing within 10 years of an initial breast cancer diagnosis. The test is for pre- and post-menopausal people with early breast cancer with ER+, HER2- and LN- or LN-positive disease (up to 3 positive nodes).

MammaPrint is a CE-marked assay that is designed to assess the risk of distant recurrence within 5 and 10 years and whether a person would benefit from chemotherapy. The test is for pre- and post-menopausal people with stage 1 or 2 breast cancer, with a tumor size of 5 centimeters or less, and LN-negative or LN-positive disease (up to 3 positive nodes). The test can be used irrespective of ER and HER2 status.

Prosigna is a CE-marked assay designed to provide information on breast cancer subtype and to predict distant recurrence-free survival at 10 years. The test is for postmenopausal people with early breast cancer that is ER+/HER2- and LN-negative or LN-positive (up to 3 positive nodes).

As was noted by the U.K. National Institute for Health and Care Excellence (NICE) in its review of available prognostic testing, there are few available studies of the market leaders on a direct comparison basis focused on head-to-head utility.

 

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Government Regulation

EU and U.K. regulatory overview

The following provides an overview of key aspects of medical device regulation within the EU and U.K. It should be noted this overview does not address every facet of regulation but only those that would generally be most relevant to the activities discussed in this registration statement.

We operate and intend to operate in a highly regulated industry that is subject to a changing political, economic and regulatory landscape across many countries. Our products will be subject to national and supra-national EU laws and regulations. Our products will also be subject to U.K. laws and regulations.

Current EU and U.K. regulatory framework

Software applications (whether stand-alone or components of a larger system) qualify as medical devices or medical device accessories under EU rules if they meet the relevant definition under the EU Medical Device Directive 93/42/EEC (the “Medical Device Directive”) or they may be classified as in vitro medical 38 devices and governed by the In Vitro Diagnostic Medical Device Directive 98/79/EC (the “IVD Directive”) as the regulatory route to bear CE marking.

Which directive is applicable to our products will depend on a number of factors, including whether or not our software interprets data derived from human tissue or blood samples, or data which itself has been derived from an in vitro medical device. Given that the data our software may analyze may come from multiple sources and may change over time, we have set out below an overview of both the Medical Device Directive and the IVD Directive. Included in discussion below is the upcoming change to meet EU Medical Device Regulation (EU) 2017/745) (the “MDR”) and EU In Vitro Diagnostic Regulation (EU) 2017/746 (the “IVDR”).

As published on September 1, 2020 guidance document, the MHRA will continue to recognize CE marks and certificates issued by EEA-based notified bodies until June 30, 2023 and then medical devices and IVDs distributed in Great Britain will be required to bear the new U.K.CA mark from July 1, 2023. Commercialization of products in Northern Ireland will continue to require a CE Mark as achieved through the MDD or IVDD regime (or MDR by May 26, 2021 and IVDR by May 26, 2022).

Due to the delay with MDR and IVDR taking effect after Brexit, IVDR and MDR will not automatically apply in Great Britain. It is anticipated that additional changes to requirements for commercializing medical devices and IVDs in Great Britain may be forthcoming as suggested in MHRA’s guidance document. Until then, under U.K. law, Medical Devices Regulations 2002 (“U.K. MDR 2002”, and as amended by 2019 No. 791), as transposed from MDD and IVDD into U.K. law will continue to apply post-Brexit.

The Medical Device Directive

Under the Medical Device Directive, a software medical device may be placed on the EU market only if it conforms with the “essential requirements” set out in Annex I to the Medical Device Directive. To assist manufacturers in satisfying the essential requirements of the Medical Device Directive, the European standards organizations have prepared European standards applicable to medical devices. These include harmonized international quality standards (including International Organization for Standardization Standards and International Electrotechnical Commission standards) aimed at ensuring that medical devices are correctly designed and manufactured. While not mandatory, compliance with these standards entitles the manufacturer to a presumption of conformity with the essential requirement that is covered by the standards concerned.

The manufacturer is obliged to demonstrate that the device conforms to the relevant essential requirements through a conformity assessment procedure. For Class I non-sterile and non-measuring medical devices, the manufacturer is responsible for performing the conformity assessment procedure. For Class II and III devices, as well as the sterility/measuring aspects of Class I devices, the manufacturer declares conformity with the essential requirements, but this must be backed up with a conformity assessment by a notified body resulting in a CE certificate. Depending on the conformity assessment route agreed with the notified body, separate certificates may be issued for the device and the underlying quality assurance system against harmonized standard EN ISO 13485.

EU government regulatory bodies are not involved in the pre-market approval of medical devices. The onus of ensuring a device is safe enough to be placed on the market is ultimately the responsibility of the manufacturer and,

 

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where relevant, the notified body. Notified bodies are entities licensed by the individual member states to provide independent certification of certain classes of medical device. They apply for and are designated to carry out this function by the relevant national competent authorities, which carry out periodic assessment audits to determine whether the notified bodies continue to satisfy the requirements set out in the Medical Device Directive and the guidance developed by the Notified Body Oversight Group. A notified body must possess the resources (e.g., facilities and staff) for the conformity assessment of medical devices for which it is designated and must conduct such assessments in a competent, transparent, independent and impartial manner.

Once the appropriate conformity assessment procedure for a medical device has been completed, the manufacturer must draw up a written declaration of conformity and affix the CE mark to the device. The device can then be marketed throughout the EEA. Notified bodies perform surveillance and unannounced audits at the manufacturer and critical suppliers with respect to the devices covered by the certificates issued by them. If non-conformities raised during the audits are not timely remedied by the manufacturer, the notified body may (partially or wholly) suspend or withdraw the certificate concerned.

Manufacturers of medical devices are subject to post-market requirements, notably device vigilance and safety reporting obligations. EU member states are responsible for enforcing the EU’s medical device rules and for ensuring that only compliant medical devices are placed on the market or put into service in their jurisdictions. They have powers to suspend the marketing and use, or demand the recall, of unsafe or noncompliant devices. They also have the power to bring enforcement action against companies or individuals for breaches of the device rules, but this is extremely rare absent a public health risk. Non-compliance may also result in notified bodies revoking any certificate of conformity that they have issued for a device or the manufacturer’s quality system.

The IVD Directive

The EU regulates in vitro medical devices (“IVDs”) as a specific category of medical devices with particular differences, which means they are regulated under a separate regime. The Company’s software application is envisaged to process input data from EHRs and from ‘wet’ samples and is envisaged to be installed as a local software layer in clinical institutions that will communicate with the cloud. The EU Guidance document “Qualification and Classification of standalone software” provides that stand alone software fulfilling the definition of medical device and intended to be used for the purpose of providing information derived from in vitro examination of a specimen derived from the human body falls under the IVD Directive. The software may therefore qualify as ‘expert function software’ for the purposes of the applicable guidance, in which case it would therefore be regulated under the IVD Directive.

The IVD Directive sets out certain “essential requirements” set out in Annex I of the IVD Directive and with which IVDs must comply before being placed on the market in the EU. Not all the essential requirements will apply to all devices and it is up to the manufacturer of the device to assess which are appropriate for that particular product. As for the Medical Device Directive, one way in which manufacturers can demonstrate that they have met the essential requirements is to comply with the relevant national standards that transpose harmonized standards.

There are four categories of IVDs, reflecting the perceived risk. Annex II of the IVD Directive sets out specific device types that are categorized as either high risk (List A) or moderate risk (List B). There are also self-test IVDs, which are those devices intended by the manufacturer to be able to be used by lay persons in a home environment, and then the final category covers all IVDs which are not classified as List A, List B or Self-test IVDs, known as general IVDs. As for other medical devices, pre-market approval is delegated to notified bodies. For List A, List B and Self-Test IVDs this means that the manufacturer must gain independent certification by a notified body in order to complete the conformity route process, apply for CE marking and be able to place the device on the European market.

Manufacturers of IVDs are subject to post-market requirements, including setting up an on-going systematic process to review experience gained for their device on the market and to have a vigilance procedure to immediately inform relevant competent authorities. Each competent authority has the right to remove a device that they believe is unsafe from their national market.

 

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The EU Medical Device Regulation

In May 2017, the European Commission finalized and adopted the text of the Medical Device Regulation, which will repeal and replace the Medical Device Directive. Due to COVID-19 pandemic, implementation of the Medical Device Regulation will take effect May 26, 2021. The Company will need to ensure compliance with the Medical Device Regulation in the future if it is to place software that is a medical device on the EU market.

The Medical Device Regulation contains a new classification rule specific to software in Annex VIII (rule 11). All software intended to provide information used to make diagnostic or therapeutic decisions will be in Class IIa, except if the decisions may cause death or an irreversible deterioration in health, in which case it will be in Class III. Where decisions could result in a serious deterioration in a person’s state of health or a surgical intervention, they will be in Class IIb. Software intended to monitor physiological processes will be in Class IIa, except if it is intended to monitor vital physiological parameters and variations in those parameters could result in immediate danger to the patient, in which case it is classified as Class IIb. All other software will be in Class I. Software that currently qualifies as a Class I device under the Medical Device Directive may therefore need to be reclassified as Class IIa or higher once the Medical Device Regulation becomes applicable. This will require a notified body conformity assessment in accordance with the requirements of the Medical Device Regulation.

The Medical Device Regulation will require significantly more clinical data for CE marking than is currently required by the Medical Device Directive. It also promulgates new design requirements for software and will not grandfather any previous CE mark under the Medical Device Directive. We will need to obtain timely CE marking under the new regulation.

The EU In Vitro Diagnostic Medical Device Regulation

The EU In Vitro Diagnostic Medical Device Regulation (“IVDR”) was adopted in May 2017 and will repeal the existing In Vitro Diagnostic Medical Devices Directive (98/79/EC). The majority of the provisions of the IVDR apply from May 26, 2022 and will harmonize the law on in vitro medical devices across the EU. We will need to ensure compliance with the IVDR in the future if it is to place software that is a medical device which is used as an in vitro diagnostic on the EU market after this regulation comes into force. The IVDR will require significantly more clinical data for CE marking than is currently required by the IVD Directive. It also promulgates new design requirements for software and will not grandfather any previous CE mark under the IVD Directive.

As a result, should the IVDR apply to our products, we will need to obtain timely CE marking under the new regulation.

The IVDR contains a new classification regime for all IVDs, including software that qualifies as an IVD, in Annex VIII. The new classification regime groups all IVDs in four risk classes A, B, C, and D, of which only risk class A remains subject to self-declaration for CE marking. Because the software is intended to work with blood-based biomarkers it is likely that, if it is regulated by the IVDR, it will be classified in the highest risk class (D) and will be subject to notified body conformity assessment. Depending on the intended use and inherent risks of the devices, it may alternatively be classified in risk Class C per Rule 2 or Rule 3 as defined in Annex VIII of the IVDR. Class C devices per IVDR are also subject to notified body conformity assessment.

With implementation of IVDR and MDR, Medical Device Coordination Group (MDCG) have established a set of guidelines. The MDCG guidelines are specific to IVDR and MDR and therefore replaces prior MEDEV guidelines that are specific to IVDD and MDD.

U.K. MDR 2002 (as amended by 2019 No.791, MDR 2019)

At this time, essential requirements and conformity assessments follow similarly to those described per MDD and IVDD with specific modifications as transposed into U.K. MDR 2002 and their respective amendments. Process by which requirements for conformity assessments as specified in U.K. MDR 2002 (and amendments) are supplemented by guidance issued by the MHRA. With respect to software as the medical device defined by U.K. MDR 2002, similar definitions to MDD and IVDD applied. Guidance to medical device stand-alone software including apps and in vitro diagnostic medical device provides an interim guide until such time as the MHRA publishes a new set of guidance.

 

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Other Healthcare Standards

Development, clinical evaluation and marketing of digital health software products are subject to significant global regulation by governments and global regulatory agencies. Many approvals require clinical evaluation data relating to safety, quality and efficacy of a product. Many countries, including the U.S. (510(k) clearance), Europe (CE marking), China (CFDA), and Japan (PMDA) have high standards of technical appraisal and have a risk of delays in the approval process.

Data Protection Legislation

On May 25, 2018, the GDPR came into effect in the European Union which regulation continued to apply in the U.K. for the Brexit transition period with effect from January 31, 2020 to December 31, 2020 alongside, the Data Protection Act 2018 (“DPA 2018”) which is and will, post Brexit, be the domestic law governing the processing of personal data in the U.K.. The obligations in the DPA 2018 are for all practical purposes the same as those set out in the GDPR. The GDPR imposes an enhanced data protection regulatory regime with potentially significant sanctions for non-compliance. To the extent we process personal data that is subject to the GDPR, in the future, we will need to comply with the GDPR and the DPA 2018, and any other applicable laws with respect to the handling of personal data respectively for EU and U.K.. U.K. and European hospitals which may, in the future, provide patient data to the us for the us to analyze using its artificial intelligence technology will also be responsible for ensuring that there is a legal basis on which they may collect the data and anonymize it effectively so that it can be transferred to us as anonymous data to which GDPR and the DPA 2018 do not apply (because once anonymized effectively it will no long be personal data). In vitro diagnostic kit development will include, at a minimum, compliance to ISO 13485:2016 – Medical devices – Quality management systems – Requirements for regulatory purposes, 21CFR820 (U.S. Quality Systems Regulations) and other product design and manufacturing standards as identified to support our commercial plan.

U.S. health regulatory overview

The following provides an overview of key aspects of laboratory service and medical device regulation within the U.S. It should be noted this overview does not address every facet of regulation at the federal and state level, but only those that would generally be most relevant to the activities described in this registration statement.

Federal and state clinical laboratory licensing requirements

The CLIA, governs the operations of all clinical laboratories operating in or returning results to individuals in the U.S. CLIA is administered by CMS, in partnership with state health departments. A clinical laboratory is defined as a laboratory that performs testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease, or the assessment of health. Clinical laboratories must hold a certificate applicable to the type of laboratory examinations they perform and must demonstrate compliance with regulations addressing, among other things, personnel qualification and training, record keeping, quality control, and proficiency testing, all of which are intended to ensure the timeliness, reliability, and accuracy of clinical laboratory testing services. CLIA requires that laboratories demonstrate or verify the analytical validity of all tests they perform. Where a clinical laboratory analyses specimens based on a proprietary test method (i.e., an LDT), the laboratory must, among other things, document the accuracy, precision, specificity, sensitivity of, and establish a reference range for, such test.

CMS provides for exemption from CLIA for states that develop clinical laboratory standards that are at least as stringent as federal requirements. Both New York and Washington State are exempt from CLIA. The NYS Clinical Laboratory Evaluation Program requires all independent clinical laboratories operating in, or testing specimens from, NYS to obtain a laboratory permit prior to commencing operations, and all clinical laboratories performing LDTs to submit test validation documentation demonstrating the tests’ analytical and clinical validity.

Failure to comply with CLIA certification and state clinical laboratory licensure requirements may result in a range of enforcement actions, including certificate or license suspension, limitation, or revocation, directed plan of action, onsite monitoring, civil monetary penalties, criminal sanctions, and revocation of the laboratory’s approval to receive Medicare and Medicaid payment for its services, as well as significant adverse publicity.

 

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FDA

The FDA regulates, among other medical products, “medical devices” which include certain articles intended for use in the diagnosis, prevention, cure, mitigation, or treatment of disease or intended to effect the structure or function of the body. Whether a product is intended for use as a medical device is generally determined, in the first instance, based on the manufacturer’s product labelling, which includes the label affixed to the product, materials distributed with the product, and promotional communications concerning the product.

Devices classified as Class I (low risk), generally may be marketed without FDA pre-market review, but are subject to “general controls”, including establishment registration, device listing, record keeping, medical device reporting, and quality system regulations, including design controls. Devices classified as Class II (moderate risk), may, in addition to general controls, also be subject to “special controls” (e.g., performance standards / manufacturing standards, post-market surveillance, patient registries, special labelling requirements, pre-market data requirements and guidelines), and also generally must obtain 510(k) premarket clearance or DeNovo authorization from FDA. Class III (high risk) devices must, in addition to general controls, obtain FDA pre-market approval through the submission of a pre- market approval application that contains evidence, including data from adequate and well- controlled clinical studies, demonstrating that the device is safe and effective for its intended use. In general, devices that require FDA pre-market clearance or DeNovo authorization may not be commercially distributed or promoted prior to obtaining such authorization, although they may be distributed and used for the purpose of developing the clinical data necessary to support FDA marketing applications, subject to certain limitations. Post-market changes to a cleared / authorized or approved device also may be subject to prior review by FDA, depending on the scope of the change and its potential impact on device safety and effectiveness.

It should also be emphasized that this pre-market review process is only one facet of FDA’s regulation. For example, FDA regulates product labelling, including promotional claims; the manufacturing of medical devices, including their design, under FDA quality system requirements; clinical trials with new or modified products; and post-market monitoring for, reporting of, and action related to, safety concerns. Failure to comply with applicable pre- and post-market device requirements can result in a determination by FDA that a device is “adulterated” (Section 501) or “misbranded” (Section 502) in violation of the U.S. Federal Food, Drug, and Cosmetics Act. The statute provides for a number of penalties, including seizure, injunction, criminal, and civil monetary penalties, for the sale or distribution of adulterated or misbranded devices. In general, prior to undertaking enforcement action, FDA will notify a regulated entity of a violation or suspected 36 violation through a communication, such as a “Warning Letter” or “Untitled Letter”. If FDA identifies violations during inspection of a manufacturer’s facility, the agency will issue a Form 483 listing the identified violation and directing the manufacturer to make the necessary corrections.

FDA regulation of software

Commercially distributed software applications that meet the definition of a medical device may be subject to FDA pre-market authorization, depending on their classification and software function. These include both applications that are components of a hardware medical device and certain “stand-alone” software. In 2017, FDA issued final guidance adopting international principles established by the International Medical Device Regulators Forum for the clinical evaluation of software as a medical device (“SaMD”), which refers to software that is intended to be used for one or more medical purposes that perform these purposes without being part of a hardware medical device. In 2019, FDA issued a guidance that provides guidance on FDA’s oversight of device software functions including mobile medical apps that meet the definition of a device. While the guidance is not binding on either FDA or regulated industry, FDA intends to consider the principles in developing regulatory approaches for SaMD as well as for digital health technologies.

FDA regulation of LDTs

FDA regulates a category of medical devices, called in vitro diagnostic medical devices, or IVDs, that are used in the collection, preparation, and examination of specimens from the human body. IVDs include reagents, instruments, and systems that are intended for use in diagnosis of disease or other conditions, including the state of health, in order to cure, mitigate, treat, or prevention disease or its sequelae. FDA historically has taken the position that tests

 

39


developed in-house by a clinical laboratory and used to analyze patient specimens meet the definition of an IVD and fall within the agency’s regulatory jurisdiction. At the same time, FDA historically has for the most part exercised “enforcement discretion,” i.e., has not required clinical laboratories performing LDTs to comply with IVD device requirements. In the past, FDA has signaled intent to modify its enforcement discretion policy with regard to LDT regulation, and in 2014 proposed a regulatory framework for LDTs, which it abandoned before implementation in 2016. As of August 19, 2020, the U.S. Department of Health and Human Services (HHS) determined that LDTs will not require a premarket review with FDA, but rather an applicant may voluntarily submit a premarket notification or premarket approval (or an Emergency Use Authorization in the case of COVID-19 tests) for their LDT. It is possible that Congress will enact legislation directing FDA to regulate LDTs.

The U.S. Federal Trade Commission and Consumer Protection Laws

Within the U.S., the U.S. Federal Trade Commission (“FTC”), has authority to regulate advertising for most medical devices and for laboratory services. In addition, various state consumer protection laws exist which can similarly regulate claims that are being made by entities with respect to what benefits their products or services can provide to consumers. In some instances, FTC or U.S. states have taken action with respect to medical products based on claims being made with respect to, e.g., their benefits to patients, seeking various penalties, such as injunctions and substantial fines. Activities have focused more, to date, on products that are sold directly to consumers, such as dietary supplements, as opposed to prescription products ordered by physicians, although the possibility exists that FTC or other consumer protection bodies could take steps to regulate claims with respect to IVDs or LDTs.

Fraud and Abuse

The significant U.S. fraud and abuse laws include the:

 

   

Anti-Kickback Statute: the federal U.S. Anti-Kickback Statute (42 U.S. Code § 1320a–7b(b) imposes criminal penalties on persons and entities for, among other things, knowingly and willfully soliciting, offering, receiving or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease or order of a good, facility, item or service for which payment may be made under a government healthcare program such as Medicare and Medicaid.

 

   

False Claims Act: the U.S. federal false claims and civil monetary penalties laws, including the federal civil U.S. False Claims Act (31 USC. §§ 3729 – 3733), impose criminal and civil penalties, including through civil whistleblower or qui tam actions against individuals or entities for, among other things knowingly presenting or causing to be presented false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing, or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages, significant per-claim penalties, and administrative penalties.

Transparency requirements

The U.S. Physician Payments Sunshine Act (known as Affordable Care Act Section 6002: Transparency Reports and Reporting of Physician Ownership or Investment Interests) requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the CMS information related to payments or transfers of value made to physicians and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members. Any failure to report or providing incomplete or misleading information may subject the Company to penalties. Analogous state laws. Analogous state fraud and abuse laws and regulations, such as U.S. state antikickback and false claims laws, can apply to sales or marketing arrangements, and claims involving healthcare items or services reimbursed by governmental or non-governmental third-party payors. These laws are generally broad and are enforced by many different U.S. federal and state agencies as well as through private actions. Some state laws require adherence to compliance guidelines promulgated by the U.S. federal government and require device and drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures.

 

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Data privacy and security

HIPAA

The HIPAA imposes criminal and civil liability for, among other things, failing to protect the privacy of patient and security of patient data. Additionally, the HIPAA by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations on covered entities and their business associates that perform certain functions or activities that involve the use or disclosure of protected health information on their behalf, including mandatory contractual terms as well as implementing reasonable and appropriate administrative, physical and technical safeguards with respect to maintaining the privacy, security and transmission of protected health information.

FTC

The FTC has taken an active role with regard to protection of personal information, relying on its broad consumer protection powers to seek substantial penalties where companies that have made deceptive or misleading statements regarding practices of collecting and safeguarding data or did not have adequate safeguards to protect information consistent with their claims regarding data security.

State laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.

Legal Proceedings

We are not party to any material legal matters or claims. In the future, we may become party to legal matters and claims arising in the ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows.

C. ORGANIZATIONAL STRUCTURE

We have one wholly owned subsidiary: StemPrintER Sciences Limited, a private company incorporated in England and Wales with limited liability under the Companies Act.

D. PROPERTY, PLANTS AND EQUIPMENT

We do not own any property but sublease approximately 75 square feet of office space in London from Tiziana for which we reimburse Tiziana at cost. We believe that our existing facilities are adequate to meet our current needs for the foreseeable future, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms if needed.

 

ITEM 4A.

UNRESOLVED STAFF COMMENTS

Not Applicable.

 

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis together with “Selected Financial Data” and our consolidated financial statements, including the notes thereto, included elsewhere in this registration statement. Some of the information contained in this discussion and analysis or set forth elsewhere in this registration statement, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this registration statement, our actual results could differ materially from the results described in or implied by these forward-looking statements. Our audited consolidated financial statements as of and for the year ended December 31, 2020 have been prepared in accordance with IFRS.

 

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A. OPERATING RESULTS

Overview

We operate a genomics-based personalized medicine business, particularly focused on breast cancer patients. Our pre-clinical product candidate is StemPrintER, a multi-gene prognostic assay intended for the prediction of the risk of distant recurrence in luminal, ER+/HER2-negative breast cancer patients, based on the detection of 20 stem cell markers normalised to four housekeeping genes. StemPrintER has been evaluated in an initial retrospective validation study using a consecutive cohort of approximately 2,400 patients with breast cancer. In that validation study, StemPrintER showed superiority to Oncotype DX® in predicting recurrence in ER+/HER2- postmenopausal breast cancer patients. Our next generation derivative risk model, SPARE, combines StemPrintER with two clinical markers, namely lymph nodal status and tumour size, in a more refined risk model.

StemPrintER Sciences Limited was transferred to the Company on October 30, 2020 pursuant to the Demerger of the StemPrintER and SPARE business from Tiziana. The objective of the Demerger was to maximise value to the shareholders of Tiziana through the further commercialization of StemPrintER and its assets and intellectual property. The Demerger will allow us to continue its collaboration strategy to further develop, validate and commercialize the StemPrintER/SPARE platform as a separate listed company with cash reserves of approximately £1.095 million.

Since our inception, we have devoted substantially all of our resources to conducting research and development of our product candidate. Our revenue is expected to be derived from different sources including standard private third-party and government medical insurance coverage and reimbursement models. To date, Tiziana, the former parent of our subsidiary StemPrintER, raised a total of £89.9 million from external funding sources, such as major investment funds and other leading investors. On completion of the Demerger, Tiziana transferred £1.0 million in cash to StemPrintER Sciences Limited and the entire issued share capital of StemPrintER Sciences Limited to the Company and has agreed to invest a further £2.0 million in our equity securities if and when we list on the London Stock Exchange. As of December 31, 2020, we had cash, cash equivalents and short-term investments of £1,151,383.

We expect our expenses to increase substantially in connection with our ongoing development activities related to our preclinical and clinical programs. We intend to conduct further validation and utility studies with the intention of filing for regulatory review under the CLIA system and, ultimately, for reimbursement review. We also expect to pursue a strategy to achieve appropriate regulatory review with European and Asian regulatory agencies to expand the addressable market for its products. In addition, we plan to build out our management team and infrastructure.

In addition, upon the effectiveness of this registration statement, we expect to incur additional costs associated with operating as a public company in the United States. We expect that our expenses and capital requirements will increase substantially in the near to mid-term as we:

 

   

continue our research and development efforts;

 

   

seek regulatory approvals for any product candidates that successfully complete clinical trials;

 

   

add clinical, scientific, operational financial and management information systems and personnel, including personnel to support our product development and potential future commercialization claims; and

 

   

operate as a U.S. public company.

As a result, we may need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

 

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Material Contracts

The following are all of the contracts (not being contracts entered into in the ordinary course of business) that have been entered into by us (including our wholly-owned subsidiary StemPrinterER Sciences Limited) since our incorporation which: (i) are, or may be, material to us (or our wholly-owned subsidiary StemPrinterER Sciences Limited); or (ii) contain obligations or entitlements which are, or may be, material to us (or our wholly-owned subsidiary StemPrinterER Sciences Limited) as at the date of this registration statement.

Demerger Agreement

On October 5, 2020, we entered into an agreement with Tiziana pursuant to which Tiziana declared a dividend in specie on its ordinary shares equal to the book value (of approximately £3.07 million) of Tiziana’s shareholding in StemPrintER Sciences Limited, the entity within the Tiziana Group which holds all of the assets and intellectual property relating to StemPrintER and SPARE and £1.0 million in cash.

The dividend in specie was satisfied by the transfer by Tiziana to us of the shares in StemPrintER Sciences Limited. In return for this transfer, we allotted Ordinary Shares to Tiziana shareholders who were registered on the Tiziana Share Register at the Demerger Record Time (being 7:00 a.m. on October 30, 2020), on the basis of one Ordinary Share for each Tiziana ordinary share held by them at that time, save that the number of Ordinary Shares allotted to our initial subscriber (who at the Demerger Record Time was a Tiziana shareholder) was reduced by the number of Ordinary Shares already held by them so that, on the Demerger becoming effective, each Tiziana Shareholder (including our initial subscriber) held one Ordinary Share for each Tiziana ordinary share held at the Demerger Record Time.

The Demerger was conditional, among other things, upon Court approval of a capital reduction which was approved by special resolution of shareholders on October 2, 2020. The Court sanctioned the related capital reduction on October 27, 2020; the Demerger became effective on October 30, 2020; and we allotted 194,612,288 Ordinary Shares to the Tiziana shareholders.

On October 30, 2020, we entered into a supplementary agreement to the Demerger Agreement with Tiziana, pursuant to which we agreed to issue 9,581,254 additional Ordinary Shares at a price of £0.01 per share to reflect various rights which existed in Tiziana prior to the Demerger, and Tiziana agreed to subscribe for £2.0 million in additional Ordinary Shares upon completion of the London listing.

Asset Transfer Agreement

On October 5, 2020, StemPrintER Sciences Limited entered into an agreement with Tiziana pursuant to which Tiziana transferred all of the StemPrintER intellectual property and other business assets, together with £1 million in cash to StemPrintER Sciences Limited in exchange for the issue by StemPrintER Sciences Limited of 3,070,000 Ordinary Shares, each credited as fully paid.

License

On June 24, 2014, Tiziana entered into an exclusive license agreement with IEO/University of Milan, pursuant to which it obtained a worldwide, royalty-bearing, exclusive license under certain patents and a worldwide, royalty-bearing, non-exclusive license under certain know-how, respectively, of IEO/University of Milan to develop and commercialize licensed products in connection with a multi-gene prognostic tool. This license was assigned to us pursuant to the terms of the Asset transfer Agreement.

Pursuant to the terms of the License, we are obliged to use commercially reasonable efforts in connection with the development and commercialization of the licensed products, including in accordance with specified diligence milestones. If we fail to meet our obligations under the License or if the License is terminated for any reason, it could negatively impact our business and strategic goals. The License may also be terminated for other reasons including breach and insolvency.

 

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Results of Operations

We derived the selected financial data as of and for the period from incorporation on June 5, 2020 to December 31, 2020 from our audited financial statements included elsewhere in this registration statement. We present our financial statements in accordance with IFRS.

The summary financial data below should be read together with those financial statements. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period, and our interim period results are not necessarily indicative of results to be expected for a full year or any other interim period.

Consolidated Income Statement Data

 

     December 31, 2020  

Revenue

   £ —    

Administrative expenses

     (40,689

Operating result

     (40,689

Finance income/(expense)

     —    

Profit before taxation

     (40,689

Income tax

     —    

Profit for the period and total comprehensive income for the period

     (40,689

Basic and diluted earnings per Ordinary Share (pence)

     —    

Components of Our Results of Operations

Revenue

We have not yet generated any revenue from product sales, and we do not expect to generate any revenue from product sales for the foreseeable future.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, which include:

 

   

employee-related expenses, including salaries, related benefits and equity-based compensation;

 

   

expenses incurred in connection with the preclinical and clinical development of our product candidates, including our agreements with contract research organizations, or CROs;

 

   

expenses incurred under agreements with consultants who supplement our internal capabilities;

 

   

the cost of lab supplies and acquiring, developing and manufacturing preclinical study materials and clinical trial materials;

 

   

costs related to compliance with regulatory requirements; and

 

   

facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other operating costs.

We expense all research costs in the periods in which they are incurred and development costs are capitalized only if certain criteria are met. For the periods presented, we have not capitalized any development costs since we have not met the necessary criteria required for capitalization. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase for the foreseeable future in connection with our planned preclinical and clinical development activities in the near term and in the future. The successful development of our product candidates is

 

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highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the remainder of the development of these product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from our product candidates. This is due to the numerous risks and uncertainties associated with developing products.

Comparison of Results of Operations

Not applicable.

Accounting Policies

Our consolidated financial statements are prepared in accordance with IFRS. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in our consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Recent Accounting Pronouncements

For information on recent accounting pronouncements, see our consolidated financial statements and the related notes found elsewhere in this registration statement.

Internal Control over Financial Reporting

We are a private company which intends to seek a listing on the London Stock Exchange with limited requirements to implement and test internal controls under a U.K. framework. As such, we have not been subject to the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002 and the standards of the PCAOB and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting in accordance with such rules. As a U.S. public company, Section 404 of the Sarbanes-Oxley Act will require that our management assess our internal control over financial reporting and include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our second annual report. Although we will adhere to all internal control requirements made relevant by the governance of the LSE, the requirements pertaining to the design and implementation of internal controls over financial reporting as contemplated under the Sarbanes-Oxley Act had not been considered in the production of financial statements included elsewhere in this registration statement.

B. LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Since our inception, we have not generated any revenue and have incurred significant operating losses. Our potential products are at various phases of preclinical and clinical development. We do not expect to generate significant revenue from product sales for several years, if at all. To date, Tiziana, our former parent, raised a total of £89.9 million from external funding sources, such as major investment funds and other leading investors. Pursuant to the Demerger, Tiziana committed to transfer £1.0 million in cash to StemPrintER Sciences Limited and the entire issued share capital of StemPrintER Sciences Limited to the Company. For a description of our structure see “Item 4.B.—Business Overview”.

Our cash flows may fluctuate and are difficult to forecast and will depend on many factors. As of February 28, 2021, our cash receivable balance was approximately £1.09m.

 

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Cash Flows

The following table summarizes our cash flows for from the date of incorporation on June 5, 2020 to December 31, 2020:

 

     Period Ended
December 31, 2020
£
 

Cash flows from operating activities

  

Loss before income tax

     (40,689

Related party and other payables

     40, 689  

Net cash from operating activities

     —    

Net increase in cash and cash equivalents

     —    

Cash and cash equivalents at beginning of period

     —    

Cash and cash equivalents at end of period

     —    

Operating Activities

Related party payables were due to Tiziana of £9.892 for expenses it had paid on our behalf. Other trade payables of £30,797 consisted of the audit fee due for this period.

Investing Activities

There was no net cash used in or provided by investing activities for the period to December 31, 2020.

Financing Activities

There was no net cash received in financing investing activities for the period to December 31, 2020. There is a cash receivable balance due from Tiziana Life Sciences PLC of £1,151,383 for shares issued but not yet paid.

Material Capital Expenditure Commitments

We have no material commitment for capital expenditures.

Funding Requirements

We expect that our expenses will increase and operating losses will be generated, and we have no retained earnings as at December 31, 2020. Based on our current plans, we believe our existing cash and cash equivalents will be sufficient to fund our operations and capital expenditure requirements into 2022. We expect to incur substantial additional expenditures in the near term to support our ongoing activities. Additionally, if we elect to proceed, we expect to incur additional costs as a result of operating as a public company whose Ordinary Shares are admitted to a Standard Listing on the Official List and to trading on the Main Market of the London Stock Exchange. We expect to incur net losses for the foreseeable future. Our ability to fund our product development and clinical operations as well as commercialization of our product candidates, will depend on the amount and timing of cash received from planned financings. Our future capital requirements will depend on many factors, including:

 

   

the costs, timing and outcomes of clinical trials and regulatory reviews associated with our product candidates;

 

   

the costs of commercialization activities, including product marketing, sales and distribution;

 

   

the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims;

 

   

the emergence of competing technologies and products and other adverse marketing developments;

 

   

the effect on our product development activities of actions taken by the FDA, EMA or other regulatory authorities;

 

   

our degree of success in commercializing our product candidates, if and when approved; and

 

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the number and types of future products we develop and commercialize.

A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity financings, debt financings, collaborations with other companies or other strategic transactions. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.

Quantitative and Qualitative Disclosures about Financial Risks

Interest Rate Sensitivity

As at December 31, 2020, we had cash and cash equivalents of £1,151,383. Our exposure to interest rate sensitivity is the interest received on the cash held which is immaterial.

Foreign Currency Exchange Risk

As all monetary assets and liabilities and all our transactions are denominated in our functional currency, we are not exposed to any foreign currency risk.

We do not currently engage in currency hedging activities in order to reduce our currency exposure, but we may begin to do so in the future. Instruments that may be used to hedge future risks include foreign currency forward and swap contracts. These instruments may be used to selectively manage risks, but there can be no assurance that we will be fully protected against material foreign currency fluctuations.

JOBS Act Exemptions and Foreign Private Issuer Status

We qualify as an “emerging growth company” as defined in the U.S. Jumpstart Our Business Startups Act of 2012. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. This includes an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act. We may take advantage of this exemption for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company if we have more than $1.07 billion in total annual gross revenue, have more than $700.0 million in market value of our ordinary shares held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these provisions that allow for reduced reporting and other requirements.

 

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We are considering whether we will take advantage of the extended transition period provided under Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. Since IFRS makes no distinction between public and private companies for purposes of compliance with new or revised accounting standards, the requirements for our compliance as a private company and as a public company are the same

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

For a discussion of our research and development activities, see “Item 4.B.—Business Overview” and “Item 5.A.—Operating Results.”

D. TREND INFORMATION

For a discussion of trends and uncertainties relating to our business, see “Item 5.A.—Operating Results.”

E. OFF-BALANCE SHEET ARRANGEMENTS

We have no other off-balance sheet arrangements that have had, or are reasonably likely to have, a material current or future effect on our consolidated financial statements or changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

Contractual Obligations and Commitments

The following table summarizes our contractual commitments and obligations as of as of December 31, 2020:

 

     Payments Due By Period
     Total    Less Than
1 Year
   1-3
Years
   3-5
Years
   More Than
5 Years
None                         

We have no current payment obligations under a license agreement with IEO/University of Milan. Under this agreement we are required to make milestone payments upon successful completion and achievement of certain sales milestones. The payment obligations under the License are contingent upon future events such as our achievement of specified commercial milestones, and we will be required to make royalty payments in connection with the sale of products developed under these agreements. As the achievement and timing of these future milestone payments are not probable or estimable, such amounts have not been included in our unaudited condensed consolidated financial statements or in the contractual obligations table above. For additional information regarding our License, see “Item 5.A.—Material Contracts” above.

G. SAFE HARBOR

This registration statement contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding Forward-Looking Statements” included elsewhere in this registration statement.

 

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

For information about our Directors and senior management, see “Item 1.A.—Identity of Directors, Senior Management and Advisers – Directors and Senior Management.”

 

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B. COMPENSATION

Executive Compensation

For the period from June 5, 2020 to December 31, 2020, we did not pay any cash compensation or benefits, such as pension, retirement or similar benefits, to our executive officer.

Outstanding Equity Awards

We currently have no outstanding option awards although we anticipate that certain option awards will be made in conjunction with the intended listing of our Ordinary Shares on the London Stock Exchange.

Employment Arrangements

We have not entered into any employment agreements.

Consultancy Agreements

Keeren Shah

We entered into a consultancy agreement with Ms. Shah on March 1, 2021 to provide finance director services. Compensation under the consultancy agreement becomes payable from the date on which our Ordinary Shares are listed on the London Stock Exchange. This agreement entitles Ms. Shah to receive a base fee of £10,000 per annum. Ms. Shah may also be eligible to receive a bonus in an amount to be determined in our sole discretion. Ms. Shah is not entitled to any fringe benefits. If Ms. Shah’s consultancy with the Company is terminated without cause, Ms. Shah will be entitled to a payment in lieu of notice to the equal to her basic salary for all or any remaining part of the relevant period of notice. The payment in lieu shall consist solely of her base fee for the relevant period and shall exclude any other entitlements or benefits.

Ms. Shah is also subject to a 6-month non-competition and non-solicitation covenant.

Share Option and Other Compensation Plans

The Company currently has no share option or other compensation plans.

Annual Bonus

The Company currently has no annual bonus program.

Retirement Plan

The Company currently has no retirement plans.

Limitations on Liability and Indemnification

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our Directors, officers or controlling persons, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

NON-EMPLOYEE DIRECTOR COMPENSATION

The following table sets forth information regarding compensation earned by our non-employee Directors during the period from June 5, 2020 to December 31, 2020. We have agreed that, from the date on which our Ordinary Shares are admitted to a Standard Listing and to trading on the Main Market of the London Stock Exchange, our Chairman, Gabriele Cerrone, will receive a fee of £50,000 per annum and our Non-Executive Directors will receive fees of £20,000 per annum. We also intend to reimburse non-employee members of our Board of Directors for reasonable travel expenses with effect from the date on which are Ordinary Shares are admitted to a Standard Listing and to trading on the Main Market of the London Stock Exchange. The compensation of our Finance Director is discussed above in “Executive Compensation.”

 

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NAME

   FEES EARNED OR
PAID IN CASH(£)
     TOTAL(£)  

Dr. Kunwar Shailubhai

     —          —    

Gabriele Cerrone

     —          —    

Willy Simon

     —          —    

John Brancaccio

     —          —    

Non-Employee Director Compensation Policy

We do not currently pay our Directors. With effect from the date on which our Ordinary Shares are admitted to a Standard Listing and to trading on the Main Market of the London Stock Exchange, we intend to pay our Directors in accordance with the following non-employee Director compensation policy. Such amounts are subject to annual adjustment, as determined by the Remuneration Committee. Each non-employee Director will be paid a fee per annum of £20,000 for their services on our Board of Directors with any additional advisory services provided to be agreed on a case by case basis.

C. BOARD PRACTICES

Board Composition

Our Board of Directors currently consists of four members, the Chairman and three Non-Executive Directors. Each Directors’ term expires at the next annual general meeting of shareholders in 2021.

As a foreign private issuer that is not listed on any stock market, we are not required to have independent directors on our Board of Directors, except that our audit committee is required to consist fully of independent Directors, subject to certain phase-in schedules.

Corporate Governance and Committees of the Board

Corporate Governance

The Directors are responsible for carrying out our objectives, implementing our business strategy and conducting our overall supervision. The Board will provide leadership within a framework of prudent and effective controls. The Board will establish our corporate governance values and will have overall responsibility for setting our strategic aims, defining the business plan and strategy and managing our financial and operational resources. The Board will schedule quarterly meetings and hold additional meetings as and when required. The expectation is that this will not result in more than four meetings of the Board each year.

While we are not under an obligation to adopt a governance code on a ‘comply or explain’ basis given our intention to admit our Ordinary Shares to a Standard Listing and to trading on the Main Market of the London Stock Exchange, the Directors have opted to observe the requirements of the U.K. Corporate Governance Code to the extent they consider appropriate in light of the Company’s size, stage of development and resources. The Directors will take into account the Corporate Governance Guidelines for Smaller Quoted Companies published by the Quoted Companies Alliance so far as it is practicable and appropriate.

We will hold Board meetings periodically as issues arise which require the Board’s attention. The Board will be responsible for the management of our business, setting our strategic direction, establishing our policies and appraising the making of all material investments. It will be the Board’s responsibility to oversee our financial position and monitor our business and affairs on behalf of shareholders, to whom the Directors are accountable. The primary duty of the Board will be to act in the best interests of the Company at all times. The Board will also address issues relating to internal control and our approach to risk management.

 

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Other Corporate Governance Matters

The Sarbanes-Oxley Act of 2002, as well as related rules subsequently implemented by the SEC, requires foreign private issuers, including our company, to comply with various corporate governance practices. We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act of 2002 and the rules adopted by the SEC.

Because we are a foreign private issuer, our Directors and senior management are not subject to short-swing profit and insider trading reporting obligations under Section 16 of the Exchange Act. They will, however, be subject to the obligations to report changes in share ownership under Section 13 of the Exchange Act and related SEC rules.

Committees of the Board

Our Board of Directors has established an audit committee, a nomination committee and a remuneration committee. Each of these committees operates under formally delegated duties and responsibilities.

Audit Committee

The audit committee of the Board comprises John Brancaccio and Willy Simon. It is chaired by John Brancaccio, and is responsible for:

 

   

monitoring the quality of internal controls and ensuring our financial performance is properly measured and reported on;

 

   

consideration of the Directors’ risk assessment and suggesting items for discussion at the full Board;

 

   

receipt and review of reports from our management and auditors relating to the interim and annual accounts, including a review of accounting policies, accounting treatment and disclosures in the financial reports;

 

   

consideration of the accounting and internal control systems in use throughout the Company and its subsidiaries; and

 

   

overseeing our relationship with external auditors, including making recommendations to the Board as to the appointment or re-appointment of the external auditors, reviewing their terms of engagement, and monitoring the external auditors’ independence, objectivity and effectiveness.

The Audit Committee meets not less than twice in each financial year and has unrestricted access to our auditors.

Our Board of Directors has determined that John Brancaccio is an “audit committee financial expert” as defined in Item 16.A. of Form 20-F.

In order to satisfy the independence criteria for audit committee members set forth in Rule 10A-3 under the Exchange Act, each member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the Board of Directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. We believe that the composition of our audit committee will meet the requirements for independence under current SEC rules and regulations.

Remuneration Committee

The remuneration committee of the Board comprises Willy Simon and John Brancaccio. It is chaired by Willy Simon, and is responsible for:

 

   

the review of the performance of the Executive Directors;

 

   

recommendations to the Board on matters relating to the remuneration and terms of service of the Executive Directors; and

 

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recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time.

In making their recommendations, the Remuneration Committee will have due regard to our shareholders’ interests and our performance.

In order to satisfy the independence criteria for Remuneration Committee members set forth in Rule 10C-1 under the Exchange Act, all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a remuneration committee member must be considered, including, but not limited to: (1) the source of compensation of the director, including any consulting advisory or other compensatory fee paid by such company to the director; and (2) whether the director is affiliated with the company or any of its subsidiaries or affiliates. We believe the composition of our remuneration committee will meet the requirements for independence under current SEC rules and regulations.

Nomination Committee

The Nomination Committee of the Board comprises Gabriele Cerrone and Willy Simon. It is chaired by Gabriele Cerrone, and is responsible for:

 

   

drawing up selection criteria and appointment procedures for Directors;

 

   

recommending nominees for election to our Board of Directors and its corresponding committees;

 

   

assessing the functioning of individual members of our Board of Directors and executive officers and reporting the results of such assessment to our Board of Directors; and

 

   

developing corporate governance guidelines.

None of the members of our compensation committee is, or has ever been, an officer or employee of our company.

D. EMPLOYEES

As of December 31, 2020, we had no employees.

E. SHARE OWNERSHIP

For information regarding the share ownership of our Directors and management, see “Item 6.B.—Compensation” and “Item 7.A.—Major Shareholders”.

 

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

The following table sets forth information with respect to the beneficial ownership of our Ordinary Shares as of December 31, 2020by:

 

   

each of our Directors;

 

   

each of our executive officers; and

 

   

each person, or group of affiliated persons, who is known by us to beneficially own more than 5 per cent. of our outstanding Ordinary Shares.

 

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            Number of
Ordinary
Shares
Beneficially
Owned
 

Name and address of beneficial owner

   Shares      %  

Planwise Group Limited (1)

     65,886,784        32.27

Executive Officers and Directors (2)

     

Gabriele Cerrone (3)

     75,806,147        37.12

Dr. Kunwar Shailubhai

        *  

Willy Simon

        *  

Keeren Shah

        *  

 

*   Represents beneficial ownership of less than 1 per cent. of our outstanding ordinary shares.

 

(1)

Gabriele Cerrone, Chairman, has a beneficial interest in the entire issued share capital of Planwise Group Limited.

 

(2)

The address of our executive officers and Directors is 107 Cheapside, 9th Floor, London EC2V 6DN, United Kingdom.

 

(3)

This includes shares held by Mr. Cerrone personally and shares held by Planwise Group Limited and Panetta Partners Limited (being entities in which Mr. Cerrone is considered to have a beneficial interest).

The column entitled “Percentage of Shares Beneficially Owned” is based on a total of 204,193,543 ordinary shares outstanding as at December 31, 2020.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our ordinary shares. Ordinary shares subject to options that are currently exercisable or exercisable within 60 days after December 31, 2020 are considered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted, the persons and entities in this table have sole voting and investment power with respect to all of the ordinary shares beneficially owned by them, subject to community property laws, where applicable. The information in the table below is based on information known to us or ascertained by us from public filings made by the shareholders. We have also set forth below information known to us regarding any significant change in the percentage ownership of our ordinary shares by any major shareholders during the past three years. The major shareholders listed below do not have voting rights with respect to their Ordinary Shares that are different from the voting rights of other holders of our Ordinary Shares.

To our knowledge there has been no significant change in the percentage ownership held by the major shareholders listed above in the last three years, except as described in “Item 7.B.—Related Party Transactions” included in this registration statement.

We are not aware that the Company is directly owned or controlled by another corporation, any foreign government or any other natural or legal person(s) severally or jointly. We are not aware of any arrangement, the operation of which may result in a Change of Control of the Company.

B. RELATED PARTY TRANSACTIONS

The following is a description of related party transactions we have entered into with the beneficial owners of 10 per cent. or more of our ordinary shares, which are our only voting securities, senior management and members of our Board of Directors, since June 5, 2020.

Agreements with Our Executive Officers and Directors

We have entered into an employment agreement with our Finance Director and Director compensation agreements with our Non-Executive Directors. See “Item 6.B.—Compensation” These agreements contain customary provisions and representations, including confidentiality, non-competition and non-solicitation undertakings by the executive officer. However, the enforceability of the non-competition provisions may be limited under applicable law.

Demerger Agreement

We entered into a Demerger Agreement with Tiziana Life Sciences plc on October 5, 2020 pursuant to which Tiziana declared a dividend in specie on its ordinary shares equal to the book value (of approximately £3.07 million) of Tiziana’s shareholding in StemPrintER Sciences Limited, the entity within the Tiziana Group that holds all of the assets and intellectual property relating to StemPrintER and SPARE and £1.0 million in cash.

 

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The dividend in specie was satisfied by the transfer of the shares in StemPrintER Sciences Limited to us. In return for the transfer, we allotted Ordinary Shares to the Tiziana shareholders who were registered on the Tiziana Share Register at the Demerger Record Time (being 7:00 a.m. on October 30, 2020), on the basis of one Ordinary Share for each Tiziana ordinary share held by them at that time, save that the number of Ordinary Shares allotted to our initial subscriber (who at the Demerger Record Time was a Tiziana shareholder) was reduced by the number of Ordinary Shares already held by them so that, on the Demerger becoming effective, each Tiziana Shareholder (including our initial subscriber) held one Ordinary Share for each Tiziana ordinary share held at the Demerger Record Time.

The Demerger was conditional, among other things, upon Court approval of a capital reduction which was approved by special resolution of shareholders on October 2, 2020. The Court sanctioned the related capital reduction on October 27, 2020 and the Demerger became effective on October 30, 2020 and we allotted 194,612,288 Ordinary Shares to the Tiziana shareholders.

On October 30, 2020, we entered into a supplementary agreement to the Demerger Agreement with Tiziana, pursuant to which we agreed to issue 9,581,254 additional Ordinary Shares at a price of £0.01 per share to reflect various rights which existed in Tiziana prior to the Demerger, and Tiziana agreed to subscribe for £2.0 million in additional Ordinary Shares upon completion of the London listing.

Family Relationships

None.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

 

ITEM 8.

FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Consolidated Financial Statements

Our audited consolidated financial statements for the fiscal year December 31, 2020 are included in Item 18 of this registration statement.

Legal proceedings

From time to time, we may become involved in legal, governmental or arbitration proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal, governmental or arbitration proceeding. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Dividend Distribution Policy

We have never declared or paid any dividends on our ordinary shares, and we currently do not plan to declare or pay dividends on our ordinary shares in the foreseeable future. Under English law, we may only pay dividends if our accumulated realized profits, which have not been previously distributed or capitalized, exceed our accumulated realized losses, so far as such losses have not been previously written off in a reduction or reorganization of capital. Therefore, we must have sufficient distributable profits before issuing a dividend. Distributable profits are determined at the holding company level and not on a consolidated basis. Subject to such restrictions and to any restrictions set out in the Articles of Association, declaration and payment of cash dividends in the future, if any, will be at the discretion of our Board of Directors (and in the case of final dividends, must be approved by our shareholders), and will depend upon such factors as results of operations, capital requirements, contractual restrictions, our overall financial condition or applicable laws and any other factors deemed relevant by our Board of Directors.

 

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B. SIGNIFICANT CHANGES

Except as otherwise disclosed in this registration statement, no significant change has occurred since the date of the most recent financial statements included in this registration statement.

 

ITEM 9.

THE OFFER AND LISTING

A. OFFER AND LISTING DETAILS

Not applicable.

For a description of the rights of our ADSs, see “Item 12.D. —American Depositary Shares.”

B. PLAN OF DISTRIBUTION

Not applicable.

C. MARKETS

We intend to re-register as a public limited company incorporated in England and Wales in the near future and have our Ordinary Shares admitted to trading on a regulated market in the United Kingdom (being the Main Market of the London Stock Exchange). We presently have no intention to list the ADSs on any stock exchange.

D. SELLING SHAREHOLDERS

Not applicable.

E. DILUTION

Not applicable.

F. EXPENSES OF THE ISSUE

Not applicable.

 

ITEM 10.

ADDITIONAL INFORMATION

A. SHARE CAPITAL

Issued Share Capital

Our issued share capital as of March 9, 2021 is 204,193,543 Ordinary Shares with a par value of £0.01 per Ordinary Share. Each issued Ordinary Share is fully paid. We currently have no deferred shares in our issued share capital.

Ordinary Shares

The holders of Ordinary Shares are entitled to receive dividends in proportion to the number of Ordinary Shares held by them and according to the amount paid up on such Ordinary Shares during any portion or portions of the period in respect of which the dividend is paid. Holders of Ordinary Shares are entitled, in proportion to the number of Ordinary Shares held by them and to the amounts paid up thereon, to share in any surplus in the event of our winding up. The holders of Ordinary Shares are entitled to receive notice of, attend either in person or by proxy or, being a corporation, by a duly authorized representative, and vote at general meetings of shareholders.

 

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Share Register

We are required by the Companies Act 2006 to keep a register of our shareholders. Under English law, the Ordinary Shares are deemed to be issued when the name of the shareholder is entered in our share register. The share register therefore is prima facie evidence of the identity of our shareholders, and the shares that they hold. The share register generally provides limited, or no, information regarding the ultimate beneficial owners of our Ordinary Shares. Our share register is maintained by our registrar, Link Market Services.

As an ADS holder, we will not treat you as one of our shareholders and your name will therefore not be entered into our share register. The Depositary will be the holder of the shares underlying our ADSs. For discussion on

our ADSs and ADS holder rights see “Item 12.D.—American Depository Shares” in this registration statement. As an ADS holder, you have a right to receive the ordinary shares underlying your ADSs as discussed at “Item 12.D.—American Depository Shares” in this registration statement.

Under the Companies Act 2006, we must enter an allotment of shares in our share register as soon as practicable and in any event within two months of the allotment. We are also required by the Companies Act 2006 to register a transfer of shares (or give the transferee notice of and reasons for refusal) as soon as practicable and in any event within two months of receiving notice of the transfer.

We, any of our shareholders or any other affected person may apply to the court for rectification of the share register if:

 

   

the name of any person is wrongly entered in or omitted from our register of members; or

 

   

there is a failure or unnecessary delay in amending the register of members to show the date a member ceased to be a member.

History of Share Capital

For the dates described below, the Company issued Ordinary Shares as follows:

 

Issue Date or Period

  

Type of Issuance

   Number of
Ordinary
Shares Issued
     Number of
Shares
after Issuance
     Consideration
Received
 
June 5, 2020    Subscriber share on incorporation      1        1        (1)  
October 30, 2020    Allotment pursuant to the Demerger      194,612,288        194,612,289        (2)  
October 30, 2020    Allotment pursuant to the terms of the Supplemental Demerger Agreement      9,581,254        204,193,543        (1)(3)  

 

(1)

We received cash consideration for this issuance.

 

(2)

This allotment was pursuant to the Demerger Agreement, as described in “Item 5.A.—Material Contracts”, without consideration.

 

(3)

This allotment was pursuant to the Supplemental Demerger Agreement, as described in “Item 5.A.—Material Contracts” for the future cash consideration described on satisfaction of the conditions specified above.

B. ARTICLES OF ASSOCIATION

Articles of Association

Objects

Section 31 of the Companies Act provides that the objects of a company are unrestricted unless any restrictions are set out in the articles. There are no such restrictions in the Articles and our objects are therefore unrestricted.

 

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Voting Rights

The shareholders have the right to receive notice of, and to vote at, our general meetings. Each shareholder who is present in person (or, being a corporation, by representative) at a general meeting on a show of hands has one vote and, on a poll, every such holder who is present in person (or, being a corporation, by representative) or by proxy has one vote in respect of every share held by him.

Dividends

We may, subject to the provisions of the Companies Act and the Articles, by ordinary resolution from time to time declare dividends to be paid to members not exceeding the amount recommended by the Directors. Subject to the provisions of the Companies Act in so far as, in the Directors’ opinions our profits justify such payments, the Directors may pay interim dividends on any class of shares.

Any dividend unclaimed after a period of 12 years from the date such dividend was declared or became payable shall, if the Directors resolve, be forfeited and shall revert to us. No dividend or other moneys payable on or in respect of a share shall bear interest as against us.

Allotment of Shares and Pre-Emption Rights

Subject to the Companies Act and to any rights attached to existing shares, any share may be issued with or have attached to it such rights and restrictions as we may by ordinary resolution determine, or if no ordinary resolution has been passed or so far as the resolution does not make specific provision, as the Directors may determine (including shares which are to be redeemed, or are liable to be redeemed at our option or the holder of such shares).

In accordance with section 551 of the Companies Act, the Directors may be generally and unconditionally authorised to exercise all our powers to allot shares up to an aggregate nominal amount equal to the amount stated in the relevant ordinary resolution authorising such allotment.

The provisions of section 561 of the Companies Act (which confer on shareholders rights of pre-emption in respect of the allotment of equity securities which are paid up in cash) apply to us except to the extent disapplied by special resolution of the Company.

Distribution of Assets on a Winding-Up

If the Company is wound up (whether the liquidation is voluntary, under supervision of the court or by the court), the liquidator may, with the sanction of a special resolution and any other sanction required by Act, divide among the members in specie the whole or any part of our assets. For this purpose, the liquidator may set such value as he considers fair on any one or more class or classes of property and may determine how such division shall be carried out as between members or classes of members. The liquidator may, with the same authority, transfer the whole or any part of the assets to trustees on such trusts for the benefit of members as he thinks fit.

Transfer of Shares

Every transfer of shares which are in certificated form must be in writing in any usual form or in any form approved by the Board and shall be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid up) by or on behalf of the transferee.

Every transfer of shares which are in uncertificated form must be made by means of a relevant system (such as CREST).

The Board may, in its absolute discretion and without giving reason, refuse to register any transfer of certificated shares unless: (a) it is in respect of a share which is fully paid up; (b) it is in respect of a share upon which we have no lien; (c) it is only for one class of share; (d) it is duly stamped or is duly certificated or otherwise shown to the satisfaction of the Board to be exempt from stamp duty; and (e) it is delivered for registration to our registered office (or such other place as the Board may determine), accompanied (except in the case of a transfer by a person to whom we are not required by law to issue a certificate and to whom a certificate has not been issued or in the case of a renunciation) by the certificate for the shares to which it relates and such other evidence as the Board may reasonably require to prove the title of the transferor (or person renouncing) and the due execution of the transfer or renunciation by him or, if the transfer or renunciation is executed by some other person on his behalf, the authority of that person to do so.

 

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The Directors may refuse to register a transfer of uncertificated shares in any circumstances that are allowed or required by the CREST Regulations and the CREST System.

Restrictions on Voting Rights

If a member or any person appearing to be interested in shares held by such a member has been duly issued with a notice under section 793 of the Companies Act, a failure in relation to any shares to provide the required information could result in the loss or restriction of rights attaching to the shares, including prohibitions on certain transfers of the shares, withholding of dividends and loss of voting rights.

Variation of Class Rights

Whenever our share capital is divided into different classes of shares, the special rights attached to any class may be varied or abrogated either with the consent in writing of the holders of three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class and may be so varied and abrogated whilst the Company is a going concern or during or in contemplation of a winding up.

Share Capital, Changes in Capital and Purchase of Own Shares

We may issue shares with such rights or restrictions as may be determined by ordinary resolution, including shares which are to be redeemed, or are liable to be redeemed at our option or the holder of such shares.

We may by ordinary resolution consolidate or divide all of its share capital into shares of larger nominal value than its existing shares, or cancel any shares which, at the date of the ordinary resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the nominal amount of shares so cancelled or sub-divide its shares, or any of them, into shares of smaller nominal value.

We may, in accordance with the Companies Act, reduce or cancel its share capital or any capital redemption reserve or share premium account in any manner and with and subject to any conditions, authorities and consents required by law.

General Meetings

We must convene and hold AGMs in accordance with the Companies Act.

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the choice or appointment of a Chair of the meeting which shall not be treated as part of the business of the meeting. Save as otherwise provided by the articles, two shareholders present in person or by proxy and entitled to vote shall be a quorum for all purposes.

Borrowing Powers

Subject to the Articles and the Companies Act, the Board may exercise all of our powers to:

 

   

borrow money;

 

   

indemnify and guarantee;

 

   

mortgage or charge;

 

   

create and issue debentures and other securities; and

 

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give security either outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

Capitalization of profits

The Directors may, if they are so authorised by an ordinary resolution of the shareholders, decide to capitalize any of our undivided profits (whether or not they are available for distribution), or any sum standing to the credit of our share premium account or capital redemption reserve. The Directors may also, subject to the aforementioned ordinary resolution, appropriate any sum which they so decide to capitalize to the persons who would have been entitled to it if it were distributed by way of dividend and in the same proportions.

Uncertificated shares

Subject to the Companies Act, the Directors may permit title to shares of any class to be issued or held otherwise than by a certificate and to be transferred by means of a ‘relevant system’ (i.e., the CREST System) without a certificate.

The Directors may take such steps as it sees fit in relation to the evidencing of and transfer of title to uncertificated shares, any records relating to the holding of uncertificated shares and the conversion of uncertificated shares to certificated shares, or vice-versa.

We may by notice to the holder of an uncertificated share, require that share to be converted into certificated form.

The Board may take such other action that the Board considers appropriate to achieve the sale, transfer, disposal, forfeiture, re-allotment or surrender of an uncertified share or otherwise to enforce a lien in respect of it.

Directors

Unless otherwise determined by us by ordinary resolution, the number of Directors (other than any alternate Directors) shall not be less than two and shall not be more than fifteen.

Subject to the Articles and the Companies Act, we may by ordinary resolution appoint a person who is willing to act as a Director and the Board shall have power at any time to appoint any person who is willing to act as a Director, in both cases either to fill a vacancy or as an addition to the existing Board.

At each AGM all Directors shall retire from office except any Director appointed by the Board after the notice of that AGM has been given and before that AGM has been held.

Subject to the provisions of the Articles, the Board may regulate their proceedings as they think fit. A Director may, and the secretary at the request of a Director shall, call a meeting of the Directors.

The quorum for a Directors’ meeting shall be fixed from time to time by a decision of the Directors, and unless otherwise fixed, it is two.

Questions and matters requiring resolution arising at a meeting shall be decided by a majority of votes of the participating Directors. In the case of an equality of votes the chairman of the meeting shall have a second or casting vote (unless he is not entitled to vote on the resolution in question).

Each of the Directors may be paid a fee at such rate as may from time to time be determined by the Board. However, the aggregate of all fees payable to the Directors (other than amounts payable under any other provision of the Articles) must not exceed £2,000,000 a year or such higher amount as may from time to time be decided by us by ordinary resolution. The salary or remuneration of any Director appointed to hold any employment or executive office may be either a fixed sum of money, or may altogether or in part be governed by business done or profits made or otherwise determined by the Board, and may be in addition to or instead of any fee payable to him for his services as Director.

 

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The Directors shall also be entitled to be paid all reasonable expenses properly incurred by them in connection with their attendance at meetings of shareholders or class meetings, board or committee meetings or otherwise in connection with the exercise of their powers and the discharge of their responsibilities in relation to us.

Directors’ Interests

The Board may, in accordance with the requirements in the Articles, authorise any matter proposed to them by any Director which would, if not authorised, involve a Director breaching his duty under the Companies Act to avoid conflicts of interests.

A Director seeking authorisation in respect of such conflict shall declare to the Board the nature and extent of their interest in a conflict as soon as is reasonably practicable.

The Director shall provide the Board with such details of the matter as are necessary for the Board to decide how to address the conflict together with such additional information as may be requested by the Board.

Any authorisation by the Board will be effective only if:

 

   

to the extent permitted by the Companies Act, the matter in question shall have been proposed by any Director for consideration in the same way that any other matter may be proposed to the Directors under the provisions of the Articles;

 

   

any requirement as to the quorum for consideration of the relevant matter is met without counting the conflicted Director and any other conflicted Director; and

 

   

the matter is agreed to without the conflicted Director voting or would be agreed to if the conflicted Director’s and any other interested Director’s vote is not counted.

Subject to the provisions of the Companies Act, every Director, secretary or other officer of the Company (other than an auditor) is entitled to be indemnified against all costs, charges, losses, damages and liabilities incurred by him in the actual purported exercise or discharge of his duties or exercise of his powers or otherwise in relation to them.

Differences in Corporate Law

The applicable provisions of the Companies Act differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of certain differences between the provisions of the Companies Act applicable to us and the Delaware General Corporation Law relating to shareholders’ rights and protections. This summary is not intended to be a complete discussion of the respective rights and it is qualified in its entirety by reference to Delaware law and English law.

 

    

England and Wales

  

Delaware

Number of Directors    Under the Companies Act, a public limited company must have at least two directors and the number of directors may be fixed by or in the manner provided in a company’s articles of association.    Under Delaware law, a corporation must have at least one director and the number of directors shall be fixed by or in the manner provided in the bylaws.
Removal of Directors    Under the Companies Act, shareholders may remove a director without cause by an ordinary resolution (which is passed by a simple majority of those voting in person or by proxy at a general    Under Delaware law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except (i) unless the

 

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   meeting) irrespective of any provisions of any service contract the director has with the company, provided 28 clear days’ notice of the resolution has been given to the company and its shareholders. On receipt of notice of an intended resolution to remove a director, the company must forthwith send a copy of the notice to the director concerned. Certain other procedural requirements under the Companies Act must also be followed, such as allowing the director to make representations against his or her removal either at the meeting or in writing.    certificate of incorporation provides otherwise, in the case of a corporation whose board of directors is classified, stockholders may effect such removal only for cause, or (ii) in the case of a corporation having cumulative voting, if less than the entire board of directors is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire board of directors, or, if there are classes of directors, at an election of the class of directors of which he is a part.
Vacancies on the Board of Directors    Under English law, the procedure by which directors, other than a company’s initial directors, are appointed is generally set out in a company’s articles of association, provided that where two or more persons are appointed as directors of a public limited company by a resolution of the shareholders, resolutions appointing each director must be voted on individually.    Under Delaware law, vacancies and newly created directorships may be filled by a majority of the directors then in office (even though less than a quorum) or by a sole remaining director unless (i) otherwise provided in the certificate of incorporation or bylaws of the corporation or (ii) the certificate of incorporation directs that a particular class of stock is to elect such director, in which case a majority of the other directors elected by such class, or a sole remaining director elected by such class, will fill such vacancy.
Annual General Meeting    Under the Companies Act, a public limited company must hold an annual general meeting in each six-month period following its annual accounting reference date.    Under Delaware law, the annual meeting of stockholders shall be held at such place, on such date and at such time as may be designated from time to time by the board of directors or as provided in the certificate of incorporation or by the bylaws.
General Meeting    Under the Companies Act, a general meeting of the shareholders of a public limited company may be called by the directors.    Under Delaware law, special meetings of the stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws.
   Shareholders holding at least 5% of the paid-up capital of the company carrying voting rights at general meetings (excluding any paid up capital held as treasury shares) can require the directors to call a general meeting and, if the directors fail to do so within a certain period, may themselves (or any of them representing more than one half of the total voting rights of all of them) convene a general meeting.   

 

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Notice of General Meetings    Subject to a company’s articles of association providing for a longer period, under the Companies Act, 21 clear days’ notice must be given for an annual general meeting and any resolutions to be proposed at the meeting, Subject to a company’s articles of association providing for a longer period, at least 14 clear days’ notice is required for any other general meetings. In addition, certain matters, such as the removal of directors or auditors, require special notice, which is 28 clear days’ notice. The shareholders of a company may in all cases consent to a shorter notice period, the proportion of shareholders’ consent required being 100% of those entitled to attend and vote in the case of an annual general meeting and, in the case of any other general meeting, a majority in number of the members having a right to attend and vote at the meeting, being a majority who together hold not less than 95% in nominal value of the shares giving a right to attend and vote at the meeting.    Under Delaware law, unless otherwise provided in the certificate of incorporation or bylaws, written notice of any meeting of the stockholders must be given to each stockholder entitled to vote at the meeting not less than 10 nor more than 60 days before the date of the meeting and shall specify the place, date, hour and purpose or purposes of the meeting.
Quorum    Subject to the provisions of a company’s articles of association, the Companies Act provides that two shareholders present at a meeting (in person, by proxy or authorised under the Companies Act) shall constitute a quorum for companies with more than one shareholder.    The certificate of incorporation or bylaws may specify the number of shares, the holders of which shall be present or represented by proxy at any meeting in order to constitute a quorum, but in no event shall a quorum consist of less than one third of the shares entitled to vote at the meeting. In the absence of such specification in the certificate of incorporation or bylaws, a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of stockholders.
Proxy    Under the Companies Act, at any meeting of shareholders, a shareholder may designate another person to attend, speak and vote at the meeting on their behalf by proxy.    Under Delaware law, at any meeting of stockholders, a stockholder may designate another person to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A director of a Delaware corporation may not issue a proxy representing the director’s voting rights as a director.

 

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Issue of New Shares    Under the Companies Act, the directors of a company must not exercise any power to allot shares or grant rights to subscribe for, or to convert any security into, shares unless they are authorized to do so by the company’s Articles or by an ordinary resolution of the shareholders. Any authorization given must state the maximum amount of shares that may be allotted under it and specify the date on which it will expire, which must be not more than five years from the date the authorization was given. The authority can be renewed by a further resolution of the shareholders.    Under Delaware law, if the corporation’s certificate of incorporation so provides, the directors have the power to authorize additional stock. The directors may authorize capital stock to be issued for consideration consisting of cash, any tangible or intangible property or any benefit to the corporation or any combination thereof. In the absence of actual fraud in the transaction, the judgment of the directors as to the value of such consideration is conclusive.
Pre-emptive Rights    Under the Companies Act, “equity securities,” being (i) shares in the company other than shares that, with respect to dividends and capital, carry a right to participate only up to a specified amount in a distribution, referred to as “ordinary shares,” or (ii) rights to subscribe for, or to convert securities into, ordinary shares, proposed to be allotted for cash must be offered first to the existing equity shareholders in the company in proportion to the respective nominal value of their holdings, unless an exception applies or a special resolution to the contrary has been passed by shareholders in a general meeting or the articles of association provide otherwise in each case in accordance with the provisions of the Companies Act.    Under Delaware law, stockholders have no pre-emptive rights to subscribe to additional issues of stock or to any security convertible into such stock unless, and except to the extent that, such rights are expressly provided for in the certificate of incorporation.
Authority to Allot    Under the Companies Act, the directors of a company must not allot shares or grant of rights to subscribe for or to convert any security into shares unless an exception applies or an ordinary resolution to the contrary has been passed by shareholders in a general meeting or the articles of association provide otherwise, in each case in accordance with the provisions of the Companies Act.    Under Delaware law, if the corporation’s charter or certificate of incorporation so provides, the board of directors has the power to authorize the issuance of stock. The board of directors may authorize capital stock to be issued for consideration consisting of cash, any tangible or intangible property or any benefit to the corporation or any combination thereof. In the absence of actual fraud in the transaction, the judgment of the directors as to the value of such consideration is conclusive.

 

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Liability of Directors and Officers    Under the Companies Act, any provision, whether contained in a company’s Articles or any contract or otherwise, that purports to exempt a director of a company, to any extent, from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void. Any provision by which a company directly or indirectly provides an indemnity, to any extent, for a director of the company or of an associated company against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company of which he is a director is also void except as permitted by the Companies Act, which provides exceptions for the company to: (i) purchase and maintain insurance against such liability; (ii) provide a “qualifying third party indemnity” (being an indemnity against liability incurred by the director to a person other than the company or an associated company or criminal proceeding in which such director is convicted); and (iii) provide a “qualifying pension scheme indemnity” (being an indemnity against liability incurred in connection with the company’s activities as trustee of an occupational pension plan).   

Under Delaware law, a corporation’s certificate of incorporation may include a provision eliminating or limiting the personal liability of a director to the corporation and its stockholders for damages arising from a breach of fiduciary duty as a director. However, no provision can limit the liability of a director for:

 

•  any breach of the director’s duty of loyalty to the corporation or its stockholders;

 

•  acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

 

•  intentional or negligent payment of unlawful dividends or stock purchases or redemptions; or

 

•  any transaction from which the director derives an improper personal benefit.

Voting Rights    Under English law, unless a poll is demanded by the shareholders of a company or is required by the chairman of the meeting or the company’s articles of association, shareholders shall vote on all resolutions on a show of hands. Under the Companies Act, a poll may be demanded by: (i) not fewer than five shareholders having the right to vote on the resolution; (ii) any    Delaware law provides that, unless otherwise provided in the certificate of incorporation, each stockholder is entitled to one vote for each share of capital stock held by such stockholder.

 

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shareholder(s) representing not less than 10% of the total voting rights of all the shareholders having the right to vote on the resolution (excluding any voting rights attaching to treasury shares); or (iii) any shareholder(s) holding shares in the company conferring a right to vote on the resolution (excluding any voting rights attaching to treasury shares) being shares on which an aggregate sum has been paid up equal to not less than 10% of the total sum paid up on all the shares conferring that right. A company’s articles of association may provide more extensive rights for shareholders to call a poll.

 

Under English law, an ordinary resolution is passed on a show of hands if it is approved by a simple majority (more than 50%) of the votes cast by shareholders present (in person or by proxy) and entitled to vote. If a poll is demanded, an ordinary resolution is passed if it is approved by holders representing a simple majority of the total voting rights of shareholders present, in person or by proxy, who, being entitled to vote, vote on the resolution. Special resolutions require the affirmative vote of not less than 75% of the votes cast by shareholders present, in person or by proxy, at the meeting. If a poll is demanded, a special resolution is passed if it is approved by holders representing not less than 75% of the total voting rights of shareholders in person or by proxy who, being entitled to vote, vote on the resolution.

  
Shareholder Vote on Certain Transactions    The Companies Act provides for schemes of arrangement, which are arrangements or compromises between a company and any class of shareholders or creditors and used in certain types of reconstructions, amalgamations, capital reorganizations or takeovers. These arrangements require:    Generally, under Delaware law, unless the certificate of incorporation provides for the vote of a larger portion of the stock, completion of a merger, consolidation, sale, lease or exchange of all or substantially all of a corporation’s assets or dissolution requires:

 

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•  the approval at a shareholders’ or creditors’ meeting convened by order of the court, of a majority in number of shareholders or creditors

 

or class thereof representing 75% in value, the class of shareholders or creditors, or class thereof present and voting, either in person or by proxy; and

 

•  the approval of the court.

  

•  the approval of the board of directors; and

 

•  the approval by the vote of the holders of a majority of the outstanding stock or, if the certificate of incorporation provides for more or less than one vote per share, a majority of the votes of the outstanding stock of the corporation entitled to vote on the matter.

Standard of Conduct for Directors   

Under English law, a director owes various statutory and fiduciary duties to the company, including:

 

•  to act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole;

 

•  to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly conflicts, with the interests of the company;

   Delaware law does not contain specific provisions setting forth the standard of conduct of a director. The scope of the fiduciary duties of directors is generally determined by the courts of the State of Delaware. In general, directors have a duty to act without self-interest, on a well-informed basis and in a manner they reasonably believe to be in the best interest of the stockholders.
  

•  to act in accordance with the company’s constitution and only exercise his powers for the purposes for which they are conferred;

 

•  to exercise independent judgment;

 

•  to exercise reasonable care, skill and diligence;

 

•  not to accept benefits from a third party conferred by reason of his being a director or doing, or not doing, anything as a director; and

 

•  to declare any interest that he has, whether directly or indirectly, in a proposed or existing transaction or arrangement with the company.

   Directors of a Delaware corporation owe fiduciary duties of care and loyalty to the corporation and to its stockholders. The duty of care generally requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. In general, but subject to certain exceptions, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Delaware courts have also imposed a heightened standard of conduct upon directors of a Delaware corporation who take any action designed to defeat a threatened change in control of the corporation.

 

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      In addition, under Delaware law, when the board of directors of a Delaware corporation approves the sale or break-up of a corporation, the board of directors may, in certain circumstances, have a duty to obtain the highest value reasonably available to the stockholders.
Shareholder Litigation    Under English law, generally, the company, rather than its shareholders, is the proper claimant in an action in respect of a wrong done to the company or where there is an irregularity in the company’s internal management. Notwithstanding this general position, the Companies Act provides that (i) a court may allow a shareholder to bring a derivative claim (that is, an action in respect of and on behalf of the company) in respect of a cause of action arising from a director’s negligence, default, breach of duty or breach of trust and (ii) a shareholder may bring a claim for a court order where the company’s affairs have been or are being conducted in a manner that is unfairly prejudicial to some of its shareholders.   

Under Delaware law, a stockholder may initiate a derivative action to enforce a right of a corporation if the corporation fails to enforce the right itself. The complaint must:

 

•  state that the plaintiff was a stockholder at the time of the transaction of which the plaintiff complains or that the plaintiffs shares thereafter devolved on the plaintiff by operation of law; and

 

•  allege with particularity the efforts made by the plaintiff to obtain the action the plaintiff desires from the directors and the reasons for the plaintiff’s failure to obtain the action; or

 

•  state the reasons for not making the effort.

 

Additionally, the plaintiff must remain a stockholder through the duration of the derivative suit. The action will not be dismissed or compromised without the approval of the Delaware Court of Chancery.

C. MATERIAL CONTRACTS

Except as otherwise set forth below or as otherwise disclosed in this registration statement, we are not currently, and have not been in the last two years, party to any material contract, other than contracts entered into in the ordinary course of business. See the section titled “Item 5.A.—Material Contracts”.

D. EXCHANGE CONTROLS

Other than certain economic sanctions which may be in place from time to time, there are currently no U.K. laws, decrees or regulations restricting the import or export of capital or affecting the remittance of dividends or other

 

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payment to holders of ordinary shares who are non-residents of the United Kingdom. Similarly, other than certain economic sanctions which may be in force from time to time, there are no limitations relating only to nonresidents of the United Kingdom under English law or the Articles of Association on the right to be a holder of, and to vote in respect of, the Ordinary Shares.

E. TAXATION

Certain United Kingdom Tax Considerations

The following is a general summary of certain U.K. tax considerations relating to the ownership and disposal of an ordinary share or ADS and does not address all possible tax consequences relating to holding an ordinary share or ADS. It is based on U.K. tax law and generally published HMRC, practice (which may not be binding on HMRC) as of the date of this registration statement, both of which are subject to change, possibly with retrospective effect.

Save as provided otherwise, this summary applies only to a person who is the absolute beneficial owner of an ordinary share or ADS and who is resident (and, in the case of an individual, domiciled) in the United Kingdom for tax purposes and who is not resident for tax purposes in any other jurisdiction and does not have a permanent establishment or fixed base in any other jurisdiction with which the holding of an ordinary share or ADS is connected (“U.K. Holders”). A person (a) who is not resident (or, if resident, is not domiciled) in the United Kingdom for tax purposes, including an individual and company who trades in the United Kingdom through a branch, agency or permanent establishment in the United Kingdom to which an ordinary share or ADS is attributable, or (b) who is resident or otherwise subject to tax in a jurisdiction outside the United Kingdom, is recommended to seek the advice of professional advisors in relation to their taxation obligations.

This summary is for general information only and is not intended to be, nor should it be considered to be, legal or tax advice to any particular shareholder. It does not address all of the tax considerations that may be relevant to you in light of your particular circumstances or to those of you subject to special treatment under U.K. tax law. In particular:

 

   

this summary only applies to an absolute beneficial owner of an ordinary share or ADS and any dividend paid in respect of the ordinary share where the dividend is regarded for U.K. tax purposes as that person’s own income (and not the income of some other person);

 

   

this summary: (a) only addresses the principal U.K. tax consequences for a holder of an ordinary share or ADS as a capital asset, (b) does not address the tax consequences that may be relevant to certain special classes of holders such as a dealer, broker or trader in shares or securities and any other person who otherwise holds an ordinary share or ADS, (c) does not address the tax consequences for a holder that is a financial institution, insurance company, collective investment scheme, pension scheme, charity or tax-exempt organization, (d) assumes that a holder is not an officer or employee of the company (nor of any related company) and has not (and is not deemed to have) acquired the an ordinary share or ADS by virtue of an office or employment, and (e) assumes that a holder does not control or hold (and is not deemed to control or hold), either alone or together with one or more associated or connected persons, directly or indirectly (including through the holding of an ordinary share or ADS), an interest of 10 per cent. or more in the issued share capital (or in any class thereof), voting power, rights to profits or capital of the company, and is not otherwise connected with the company.

This summary further assumes that a holder of an ordinary share or ADS is the beneficial owner of the underlying ordinary share for U.K. direct tax purposes.

YOU SHOULD SATISFY YOURSELF AS TO THE OVERALL TAX CONSEQUENCES, INCLUDING, SPECIFICALLY, THE CONSEQUENCES UNDER U.K. TAX LAW AND HMRC PRACTICE OF THE ACQUISITION, OWNERSHIP AND DISPOSAL OF THE ORDINARY SHARES OR ADSs, IN YOUR OWN PARTICULAR CIRCUMSTANCES BY CONSULTING YOUR TAX ADVISERS.

 

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Taxation of Dividends

Withholding Tax

A dividend payment in respect of an ordinary share may be made without withholding or deduction for or on account of U.K. tax.

Income Tax

A dividend received by individual U.K. Holders may, depending on his or her particular circumstances, be subject to U.K. income tax on the gross amount of the dividend paid.

An individual holder of an ordinary share or ADS who is not a U.K. Holder will not be chargeable to U.K. income tax on a dividend paid by the company, unless such holder carries on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a permanent establishment in the United Kingdom to which the ordinary share or ADS is attributable. In these circumstances, such holder may, depending on his or her individual circumstances, be chargeable to U.K. income tax on a dividend received from the company.

All dividends received by a U.K. Holder from the Company or from other sources will form part of the U.K. Holder’s total income for U.K. income tax purposes and will constitute the top slice of that income. The rate of U.K. income tax that is chargeable on dividends received in the tax year 2020/2021 by (i) an additional rate taxpayer is 38.1 percent, (ii) a higher rate taxpayer is 32.5 percent, and (iii) a basic rate taxpayer is 7.5 percent. A nil rate of income tax will apply to the first £2,000 of taxable dividend income received by an individual U.K. Holder in a tax year.

Corporation Tax

A U.K. Holder within the charge to U.K. corporation tax may be entitled to exemption from U.K. corporation tax in respect of dividend payments, provided the dividends qualify for exemption (which is likely) and certain conditions are met (including anti-avoidance conditions). If the conditions for the exemption are not satisfied, or such U.K. Holder elects for an otherwise exempt dividend to be taxable, U.K. corporation tax will be chargeable on the gross amount of a dividend. If you are in any doubt as to your position, you should consult your own professional advisers.

A corporate holder of an ordinary share or ADS that is not a U.K. Holder will not be subject to U.K. corporation tax on a dividend received from the company, unless it carries on a trade in the United Kingdom through a permanent establishment to which the ordinary share or ADS is attributable. In these circumstances, such holder may, depending on its individual circumstances and if the exemption from U.K. corporation tax discussed above does not apply, be chargeable to U.K. corporation tax on dividends received from the company.

Taxation of Disposals

U.K. Holders

A disposal or deemed disposal of an ordinary share or ADS by an individual U.K. Holder may, depending on his or her individual circumstances, give rise to a chargeable gain or to an allowable loss for the purpose of U.K. capital gains tax. The principal factors that will determine the capital gains tax position on a disposal of an ordinary share or ADS are the extent to which the holder realizes any other capital gains in the tax year in which the disposal is made, the extent to which the holder has incurred capital losses in that or any earlier tax year and the level of the annual exemption for tax-free gains in that tax year (the “annual exemption”). The annual exemption for the 2020/2021 tax year is £12,500. If, after all allowable deductions, an individual U.K. Holder’s total taxable income for the year exceeds the basic rate income tax limit, a taxable capital gain accruing on a disposal of an ordinary share or an ADS is taxed at the rate of 20 percent. In other cases, a taxable capital gain accruing on a disposal of an ordinary share or ADS may be taxed at the rate of 10 per cent. save to the extent that any capital gains exceed the unused basic rate tax band. In that case, the rate currently applicable to the excess would be 20 percent.

An individual U.K. Holder who ceases to be resident in the United Kingdom (or who fails to be regarded as resident in a territory outside the United Kingdom for the purposes of double taxation relief) for a period of five tax years or less than five years and who disposes of an ordinary share or ADS during that period of temporary non-residence may be liable to U.K. capital gains tax on a chargeable gain accruing on such disposal on his or her return to the United Kingdom (or upon ceasing to be regarded as resident outside the United Kingdom for the purposes of double taxation relief) (subject to available exemptions or reliefs).

 

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A disposal (or deemed disposal) of an ordinary share or ADS by a corporate U.K. Holder may give rise to a chargeable gain or an allowable loss for the purpose of U.K. corporation tax. Any gain or loss in respect of currency fluctuations over the period of holding an ordinary share or an ADS are also brought into account on a disposal.

Non-U.K. Holders

An individual holder who is not a U.K. Holder should not normally be liable to U.K. capital gains tax on capital gains realized on the disposal of an ordinary share or ADS unless such holder carries on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a permanent establishment in the United Kingdom to which the ordinary share or ADS is attributable. In these circumstances, such holder may, depending on his or her individual circumstances, be chargeable to U.K. capital gains tax on chargeable gains arising from a disposal of his or her ordinary share or ADS.

A corporate holder of an ordinary share or ADS that is not a U.K. Holder will not be liable for U.K. corporation tax on chargeable gains realized on the disposal of an ordinary share or ADS unless: (i) it carries on a trade in the United Kingdom through a permanent establishment to which the ordinary share or ADS is attributable; or (ii) the corporate holder is disposing of an interest in a company and that disposal is of an asset that derives 75 per cent. or more of its gross asset value from U.K. land and that holder has a substantial indirect interest in U.K. land (broadly at least 25 per cent. at any time during the previous two years). In these circumstances, a disposal (or deemed disposal) of an ordinary share or ADS by such holder may give rise to a chargeable gain or an allowable loss for the purposes of U.K. corporation tax.

Inheritance Tax

If, for the purposes of the Double Taxation Relief (Taxes on Estates of Deceased Persons and on Gifts) Treaty United States of America Order 1979 (S1 1979/1454) between the United States and the United Kingdom, an individual holder is domiciled at the time of their death or at the time of a transfer made during their lifetime in the United States and is not a national of the United Kingdom, any ordinary share or ADS beneficially owned by that holder should not generally be subject to U.K. inheritance tax, provided that any applicable U.S. federal gift or estate tax liability is paid, except where (i) the ordinary share or ADS is part of the business property of a U.K. permanent establishment or pertain to a U.K. fixed base used for the performance of independent personal services; or (ii) the ordinary share or ADS is comprised in a settlement unless, at the time the settlement was made, the settlor was domiciled in the United States and not a national of the U.K. (in which case no charge to U.K. inheritance tax should apply).

Stamp Duty and Stamp Duty Reserve Tax

The stamp duty and stamp duty reserve tax, or SDRT, treatment of the issue, transfer and agreement to transfer an ordinary share outside a depositary receipt system or a clearance service are discussed in the paragraphs under “General” below. The stamp duty and SDRT treatment of such transactions in relation to such systems are discussed in the paragraphs under “Depositary Receipt Systems and Clearance Services” below.

General

The issue of an ordinary share or ADS does not give rise to a SDRT liability, according to the HM Revenue & Customs practice and recent case law and is not subject to stamp duty.

A transfer of an ordinary share or ADS will generally be subject to stamp duty at the rate of 0.5 per cent. of the consideration given for the transfer (rounded up to the next £5). An exemption from stamp duty is available on an instrument transferring an ordinary share or ADSs where the amount or value of the consideration is £1,000 or less, and it is certified on the instrument that the transaction effected does not form part of a larger transaction or series of transactions in respect of which the aggregate amount or value of the consideration exceeds £1,000. The purchaser normally pays the stamp duty.

 

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An unconditional agreement to transfer an ordinary share or ADS will normally give rise to a charge to SDRT at the rate of 0.5 per cent. of the amount or value of the consideration payable for the transfer. SDRT is, in general, payable by the purchaser.

If a duly stamped transfer completing an agreement to transfer is produced within six years of the date on which the agreement is made (or, if the agreement is conditional, the date on which the agreement becomes unconditional) any SDRT already paid is generally repayable, normally with interest, and any SDRT charge yet to be paid is cancelled.

No stamp duty will, in practice, be payable on a written instrument transferring an ordinary share or an ADS or on an unconditional agreement to transfer an ordinary share or an ADS if the instrument of transfer or the unconditional agreement to transfer is executed and remains at all times outside the U.K..

Depositary Receipt Systems and Clearance Services

Based on current HMRC practice and recent case law in respect of the European Council Directives 69/335/EC and 2009/7/EC, on the Capital Duties Directive, no SDRT is generally payable when shares are issued or transferred to a clearance service or depositary receipt system as an integral part of a raising of capital.

Where an ordinary share or ADS is otherwise transferred (i) to, or to a nominee or an agent for, a person whose business is or includes the provision of clearance services or (ii) to, or to a nominee or an agent for a person whose business is or includes issuing depositary receipts, stamp duty or SDRT will generally be payable at the higher rate of 1.5 per cent. of the amount or value of the consideration given or, in certain circumstances, the value of the shares.

There is an exception from the 1.5 per cent. charge on the transfer to, or to a nominee or agent for, a clearance service where the clearance service has made and maintained an election under section 97A(1) of the Finance Act 1986, which has been approved by HM Revenue & Customs. In these circumstances, SDRT at the rate of 0.5 per cent. of the amount or value of the consideration payable for the transfer will arise on any transfer of ordinary share into such an account and on subsequent agreements to transfer such shares within such account.

Any liability for stamp duty or SDRT in respect of a transfer into a clearance service or depositary receipt system, or in respect of a transfer within such a service, which does arise will strictly be accountable by the clearance service or depositary receipt system operator or their nominee, as the case may be, but will, in practice, be borne by the participants in the clearance service or depositary receipt system.

Taxation in the United States

The following summary of the material U.S. federal income tax consequences of the acquisition, ownership and disposition of our ordinary shares or ADSs is based upon current law and does not purport to be a comprehensive discussion of all the tax considerations that may be relevant to a decision to purchase our ordinary shares or ADSs. This summary is based on current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing, final, temporary and proposed U.S. Treasury Regulations, administrative rulings and judicial decisions, in each case as available on the date of this registration statement. All of the foregoing are subject to change, which change could apply retroactively and could affect the tax consequences described below.

This section summarizes the material U.S. federal income tax consequences to U.S. holders and certain non-U.S. holders, each as defined below, of our ordinary shares or ADSs. This summary addresses only the U.S. federal income tax considerations for holders that acquire our ordinary shares or ADSs at their original issuance and hold our ordinary shares or ADSs as capital assets. This summary does not address all U.S. federal income tax matters that may be relevant to a particular holder. You should consult a professional tax advisor with respect to the tax consequences of the acquisition, ownership or disposition of our ordinary shares or ADSs. This summary does not address tax considerations applicable to a holder of our ordinary shares or ADSs that may be subject to special tax rules including, without limitation, the following:

 

   

banks or other financial institutions;

 

   

insurance companies;

 

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dealers or traders in securities, currencies, or notional principal contracts;

 

   

tax-exempt entities, including an “individual retirement account” or “Roth IRA” retirement plan;

 

   

regulated investment companies or real estate investment trusts;

 

   

“qualified foreign pension funds,” or entities wholly owned by a “qualified foreign pension fund”; persons who have elected to mark securities to market

 

   

persons that hold the ordinary shares as part of a hedge, straddle, conversion, constructive sale or similar transaction involving more than one position;

 

   

holders (whether individuals, corporations or partnerships) that are treated as expatriates for some or all U.S. federal income tax purposes;

 

   

persons who acquired the ADSs as compensation for the performance of services;

 

   

persons holding the ADSs in connection with a trade or business conducted outside of the United States;

 

   

holders that own (or are deemed to own) 10 per cent. or more of our ordinary shares or ADSs, by vote or value; and

 

   

holders that have a “functional currency” other than the U.S. dollar.

Further, this summary does not address any aspects of any U.S. state, local or non-U.S. tax law, alternative minimum tax, gift or estate consequences, the rules regarding qualified small business stock within the meaning of Section 1202 of the Code, any election to apply Section 1400Z-2 of the Code to gains recognized with respect to our ordinary shares, any other U.S. federal tax other than the income tax or the indirect effects on the holders of equity interests in entities that own our ordinary shares or ADSs.

For the purposes of this summary, a “U.S. holder” is a beneficial owner of ordinary shares or ADSs that is (or is treated as), for U.S. federal income tax purposes:

 

   

an individual who is either a citizen or resident of the United States;

 

   

a corporation, or other entity that is treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state of the United States or the District of Columbia;

 

   

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust, if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust or has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.

If a partnership holds ordinary shares or ADSs, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. This discussion does not address the tax treatment of partnerships or other entities that are pass-through entities for U.S. federal income tax purposes or persons that hold their ordinary shares or ADSs through partnerships or other pass-through entities. A partner in a partnership or other pass-through entity that will hold our ordinary shares or ADSs should consult his, her or its tax advisor regarding the tax consequences of acquiring, holding and disposing of our ordinary shares or ADSs through a partnership or other pass-through entity, as applicable.

We will not seek a ruling from the U.S. Internal Revenue Service (the “IRS”), with regard to the U.S. federal income tax treatment of holding our ordinary shares or ADSs, and we cannot assure you that the IRS will agree with the conclusions set forth below.

YOU SHOULD CONSULT YOUR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES APPLICABLE TO YOU RELATING TO THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE ORDINARY SHARES OR ADSs, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE AND LOCAL TAX LAWS.

Ownership of ADSs

For U.S. federal income tax purposes, a holder of ADSs generally will be treated as the owner of the ordinary shares represented by such ADSs. Gain or loss will generally not be recognized on account of exchanges of ordinary shares for ADSs, or of ADSs for ordinary shares. References to ordinary shares in the discussion below are deemed to include ADSs, unless context otherwise requires.

 

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F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

The Company’s consolidated financial statements of as of and for the year ended December 31, 2020, have been included herein and in the registration statement in reliance upon the report of Mazars LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

H. DOCUMENTS ON DISPLAY

When this registration statement on Form 20-F becomes effective, we will be subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers, and under those requirements will file reports with the SEC. The SEC also maintains a website at http://www.sec.gov from which filings may be accessed.

As a foreign private issuer, we will be exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, Directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm.

I. SUBSIDIARY INFORMATION

Not applicable.

 

ITEM 11.

QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information about our quantitative and qualitative disclosures about market risk, see “Item 5.B.—Operating and Financial Review and Prospects—Liquidity and Capital Resources” under the sub-heading “Quantitative and Qualitative Disclosures about Financial Risks.”

 

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. DEBT SECURITIES

Not applicable.

B. WARRANTS AND RIGHTS

Not applicable.

C. OTHER SECURITIES

Not applicable.

D. AMERICAN DEPOSITARY SHARES

JPMorgan Chase Bank, N.A., as depositary will issue the ADSs which you will be entitled to receive in this offering. Each ADS will represent an ownership interest in a designated number of ordinary shares which we will deposit with the custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary and yourself as an ADR holder. In the future, each ADS will also represent any securities, cash or other property

 

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deposited with the depositary but which they have not distributed directly to you. Unless certificated ADRs are specifically requested by you, all ADSs will be issued on the books of our depositary in book-entry form and periodic statements will be mailed to you which reflect your ownership interest in such ADSs. In our description, references to American depositary receipts, or ADRs, shall include the statements you will receive which reflect your ownership of ADSs.

The depositary’s office is located at 383 Madison Avenue, Floor 11, New York, NY, 10179.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.

As an ADR holder, we will not treat you as a shareholder of ours and you will not have any shareholder rights. The law of England and Wales governs shareholder rights. Because the depositary or its nominee will be the shareholder of record for the ordinary shares represented by all outstanding ADSs, shareholder rights rest with such record holder. Your rights are those of an ADR holder. Such rights derive from the terms of the deposit agreement to be entered into among us, the depositary and all registered holders from time to time of ADRs issued under the deposit agreement. The obligations of our company, the depositary and its agents are also set out in the deposit agreement. Because the depositary or its nominee will actually be the registered owner of the ordinary shares, you must rely on it to exercise the rights of a shareholder on your behalf. The deposit agreement and the ADSs are governed by New York law. Under the deposit agreement, as an ADR holder, you agree that any legal suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit agreement, the ADSs or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York, and you irrevocably waive any objection which you may have to the laying of venue of any such proceeding and irrevocably submit to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

The following is a summary of what we believe to be the material terms of the deposit agreement. Notwithstanding this, because it is a summary, it may not contain all the information that you may otherwise deem important. For more complete information, you should read the entire deposit agreement and the form of ADR which contains the terms of your ADSs. You can read a copy of the deposit agreement which is filed as an exhibit to the registration statement of which this prospectus forms a part. You may also obtain a copy of the deposit agreement at the SEC’s Public Reference Room which is located at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-732-0330. You may also find the registration statement and the attached deposit agreement on the SEC’s website at www.sec.gov.

Share Dividends and Other Distributions

How will I receive dividends and other distributions on the ordinary shares underlying my ADSs?

We may make various types of distributions with respect to our securities. The depositary has agreed that, to the extent practicable, it will pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities, after converting any cash received into U.S. dollars (if it determines such conversion may be made on a reasonable basis) and, in all cases, making any necessary deductions provided for in the deposit agreement. The depositary may utilize a division, branch or affiliate of JPMorgan Chase Bank, N.A. to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement. Such division, branch and/or affiliate may charge the depositary a fee in connection with such sales, which fee is considered an expense of the depositary. You will receive these distributions in proportion to the number of underlying securities that your ADSs represent.

Except as stated below, the depositary will deliver such distributions to ADR holders in proportion to their interests in the following manner:

 

   

Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain registered ADR holders, and (iii) deduction of the depositary’s and/or its agents’ expenses in (1) converting any foreign

 

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currency to U.S. dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution.

 

   

Ordinary Shares. In the case of a distribution in ordinary shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such ordinary shares. Only whole ADSs will be issued. Any ordinary shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto.

 

   

Rights to receive additional ordinary shares. In the case of a distribution of rights to subscribe for additional ordinary shares or other rights, if we timely provide evidence satisfactory to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other instruments in the discretion of the depositary representing rights to acquire additional ADRs. However, if we do not timely furnish such evidence, the depositary may: (i) sell such rights if practicable and distribute the net proceeds in the same manner as cash to the ADR holders entitled thereto; or (ii) if it is not practicable to sell such rights by reason of the non-transferability of the rights, limited markets therefor, their short duration or otherwise, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing and the rights may lapse.

 

   

Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may either (i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or property and distribute any net proceeds in the same way it distributes cash.

 

   

Elective Distributions. In the case of a dividend payable at the election of our shareholders in cash or in additional ordinary shares, we will notify the depositary at least 30 days prior to the proposed distribution stating whether or not we wish such elective distribution to be made available to ADR holders. The depositary shall make such elective distribution available to ADR holders only if (i) we shall have timely requested that the elective distribution is available to ADR holders, (ii) the depositary shall have determined that such distribution is reasonably practicable and (iii) the depositary shall have received satisfactory documentation within the terms of the deposit agreement including any legal opinions of counsel that the depositary in its reasonable discretion may request. If the above conditions are not satisfied, the depositary shall, to the extent permitted by law, distribute to the ADR holders, on the basis of the same determination as is made in the local market in respect of the ordinary shares for which no election is made, either (x) cash or (y) additional ADSs representing such additional ordinary shares. If the above conditions are satisfied, the depositary shall establish procedures to enable ADR holders to elect the receipt of the proposed dividend in cash or in additional ADSs. There can be no assurance that ADR holders generally, or any ADR holder in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of ordinary shares.

If the depositary determines in its discretion that any distribution described above is not practicable with respect to any specific registered ADR holder, the depositary may choose any method of distribution that it deems practicable for such ADR holder, including the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.

Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the depositary in accordance with its then current practices.

The depositary is not responsible if it fails to determine that any distribution or action is lawful or reasonably practicable.

There can be no assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period. All purchases and sales of securities will be handled by the Depositary in accordance with its then current policies, which are currently set forth in the “Depositary Receipt Sale and Purchase of Security” section of www.adr.com/Investors/FindOutAboutDRs, the location and contents of which the Depositary shall be solely responsible for.

 

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Deposit, withdrawal and Cancellation

How does the depositary issue ADSs?

The depositary will issue ADSs if you or your broker deposit ordinary shares or evidence of rights to receive ordinary shares with the custodian and pay the fees and expenses owing to the depositary in connection with such issuance. In the case of the ADSs to be issued under this prospectus, we will arrange with the underwriters named herein to deposit such ordinary shares.

Ordinary shares deposited in the future with the custodian must be accompanied by certain delivery documentation and shall, at the time of such deposit, be registered in the name of the depositary, the custodian or a nominee of either.

The custodian will hold all deposited ordinary shares (including those being deposited by or on our behalf in connection with this offering to which this prospectus relates) for the account and to the order of the depositary for the benefit of registered holders of ADRs, to the extent not prohibited by law. ADR holders thus have no direct ownership interest in the ordinary shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited ordinary shares. The deposited ordinary shares and any such additional items are referred to as “deposited securities.”

Upon each deposit of ordinary shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositary’s direct registration system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in such holder’s name. An ADR holder can request that the ADSs not be held through the depositary’s direct registration system and that a certificated ADR be issued.

How do ADR holders cancel an ADS and obtain deposited securities?

When you turn in your ADR certificate at the depositary’s office, or when you provide proper instructions and documentation in the case of direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying ordinary shares to you or upon your written order. Delivery of deposited securities in certificated form will be made at the custodian’s office. At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.

The depositary may only restrict the withdrawal of deposited securities in connection with:

 

   

temporary delays caused by closing our transfer books or those of the depositary or the deposit of ordinary shares in connection with voting at a shareholders meeting, or the payment of dividends;

 

   

the payment of fees, taxes and similar charges; or

 

   

compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Record Dates

The depositary may, after consultation with us if practicable, fix record dates (which, to the extent applicable, shall be as near as practicable to any corresponding record dates set by us) for the determination of the registered ADR holders who will be entitled (or obligated, as the case may be):

 

   

to receive any distribution on or in respect of deposited securities;

 

   

to give instructions for the exercise of voting rights;

 

   

to pay the fee assessed by the depositary for administration of the ADR program and for any expenses as provided for in the ADR; or

 

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to receive any notice or to act in respect of other matters,

 

   

all subject to the provisions of the deposit agreement.

Voting Rights

How do I vote?

If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the ordinary shares which underlie your ADSs. Subject to the next sentence, as soon as practicable after receipt from us of notice of any meeting at which the holders of ordinary shares are entitled to vote, or of our solicitation of consents or proxies from holders of ordinary shares, the depositary shall fix the ADS record date in accordance with the provisions of the deposit agreement in respect of such meeting or solicitation of consent or proxy. The depositary shall, if we request in writing in a timely manner (the depositary having no obligation to take any further action if our request shall not have been received by the depositary at least 30 days prior to the date of such vote or meeting) and at our expense and provided no legal prohibitions exist, distribute to the registered ADR holders a notice stating such information as is contained in the voting materials received by the depositary, stating that that each registered holder of ADRs on the ADS record date will, subject to any applicable provisions of the law of England and Wales, be entitled to instruct the depositary as to the exercise of any voting rights pertaining to ordinary shares underlying such holder’s ADSs, and describing how you may instruct the depositary to exercise the voting rights for the ordinary shares which underlie your ADSs, including instructions for giving a discretionary proxy to a person designated by us. For instructions to be valid, the depositary must receive them in the manner and on or before the date specified. The depositary will try, as far as is practical, subject to the provisions of or governing the underlying ordinary shares or other deposited securities, to vote or cause to be voted the ordinary shares or other deposited securities as you instruct. The depositary will only vote or attempt to vote as you instruct. Holders are strongly encouraged to forward their voting instructions to the depositary as soon as possible. Voting instructions will not be deemed to be received until such time as the ADR department responsible for proxies and voting has received such instructions notwithstanding that such instructions may have been physically received by the depositary prior to such time. The depositary will not itself exercise any voting discretion. Furthermore, neither the depositary nor its agents are responsible for any failure to carry out any voting instructions, for the manner in which any vote is cast or for the effect of any vote. Notwithstanding anything contained in the deposit agreement or any ADR, the depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of deposited securities, distribute to the registered holders of ADRs a notice that provides such holders with, or otherwise publicizes to such holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).

There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

Reports and Other Communications

Will ADR holders be able to view our reports?

The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian the deposit agreement, the provisions of or governing deposited securities, and any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities.

Additionally, if we make any written communications generally available to holders of our ordinary shares, and we furnish copies thereof (or English translations or summaries) to the depositary, it will distribute the same to registered ADR holders.

Fees and Expenses

What fees and expenses will I be responsible for paying?

The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of ordinary shares, issuances in respect of share distributions, rights and other distributions, issuances

 

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pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities or whose ADSs are cancelled or reduced for any other reason, $5.00 for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered, as the case may be. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a share distribution, rights and/or other distribution prior to such deposit to pay such charge.

The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing ordinary shares or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a distribution of ADSs), whichever is applicable:

 

   

a fee of U.S.$1.50 per ADR or ADRs for transfers of certificated or direct registration ADRs;

 

   

a fee of up to U.S.$0.05 per ADS for any cash distribution made pursuant to the deposit agreement;

 

   

an aggregate fee of up to U.S.$0.05 per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in the next succeeding provision);

 

   

a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of its agents (including, without limitation, the custodian and expenses incurred on behalf of holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the ordinary shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions);

 

   

a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the $0.05 per ADS issuance fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were ordinary shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those holders entitled thereto;

 

   

stock transfer or other taxes and other governmental charges;

 

   

SWIFT, cable, telex and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery of ordinary shares, ADRs or deposited securities;

 

   

transfer or registration fees for the registration or transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities;

 

   

in connection with the conversion of foreign currency into U.S. dollars, JPMorgan Chase Bank, N.A. shall deduct out of such foreign currency the fees, expenses and other charges charged by it and/or its agent (which may be a division, branch or affiliate) so appointed in connection with such conversion; and

 

   

fees of any division, branch or affiliate of the depositary utilized by the depositary to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement.

JPMorgan Chase Bank, N.A. and/or its agent may act as principal for such conversion of foreign currency. For further details see www.adr.com.

We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary. The charges described above may be amended from time to time by agreement between us and the depositary. The right of the depositary to receive payment of fees, charges and expenses as provided above shall survive the termination of the deposit agreement.

The depositary may make available to us a set amount or a portion of the depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as we and the depositary may agree from time to time. The depositary collects its fees for issuance and cancellation of ADSs directly from anyone depositing ordinary shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to you by deducting those fees from the amounts distributed or by selling a

 

78


portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, or by directly billing you, or by charging the book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by the depositary.

Payment of Taxes

If any taxes or other governmental charges (including any penalties and/or interest) shall become payable by or on behalf of the custodian or the depositary with respect to any ADR, any deposited securities represented by the ADSs evidenced thereby or any distribution thereon, such tax or other governmental charge shall be paid by the holder thereof to the depositary and by holding or having held an ADR the holder and all prior holders thereof, jointly and severally, agree to indemnify, defend and save harmless each of the depositary and its agents in respect thereof. If an ADR holder owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions, or (ii) sell deposited securities by public or private sale (after attempting by reasonable means to notify the ADR holder hereof prior to such sale) and deduct the amount owing from the net proceeds of such sale. In either case the ADR holder remains liable for any shortfall. If any tax or governmental charge is unpaid, the depositary may also refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities until such payment is made. If any tax or governmental charge is required to be withheld on any cash distribution, the depositary may deduct the amount required to be withheld from any cash distribution or, in the case of a non-cash distribution, sell the distributed property or securities (by public or private sale) in such amounts and in such manner as the depositary deems necessary and practicable to pay such taxes and distribute any remaining net proceeds or the balance of any such property after deduction of such taxes to the ADR holders entitled thereto.

By holding an ADR or an interest therein, you will be agreeing to indemnify us, the depositary, its custodian and any of our or their respective officers, Directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.

Reclassifications, Recapitalizations and Mergers

If we take certain actions that affect the deposited securities, including (i) any change in nominal value, split-up, consolidation, cancellation or other reclassification of deposited securities or (ii) any distributions of ordinary shares or other property not made to holders of ADRs or (iii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to, and shall if reasonably requested by us:

 

(1)

amend the form of ADR;

 

(2)

distribute additional or amended ADRs;

 

(3)

distribute cash, securities or other property it has received in connection with such actions;

 

(4)

sell any securities or property received and distribute the proceeds as cash; or

 

(5)

none of the above.

If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a proportionate interest in such property.

Amendment and Termination

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days’ notice of any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, SWIFT, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or otherwise prejudices any substantial existing right of ADR holders. Such notice need not describe in detail the specific amendments

 

79


effectuated thereby, but must identify to ADR holders a means to access the text of such amendment. If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder is deemed to agree to such amendment and to be bound by the deposit agreement as so amended. Any amendments or supplements which (i) are reasonably necessary (as agreed by us and the depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act or (b) the ADSs or ordinary shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by ADR holders, shall be deemed not to prejudice any substantial rights of ADR holders. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the deposit agreement or the form of ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit agreement and the ADR at any time in accordance with such changed laws, rules or regulations, which amendment or supplement may take effect before a notice is given or within any other period of time as required for compliance. No amendment, however, will impair your right to surrender your ADSs and receive the underlying securities, except in order to comply with mandatory provisions of applicable law.

How may the deposit agreement be terminated?

The depositary may, and shall at our written direction, terminate the deposit agreement and the ADRs by mailing notice of such termination to the registered holders of ADRs at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the depositary shall have (i) resigned as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered holders unless a successor depositary shall not be operating under the deposit agreement within 60 days of the date of such resignation, and (ii) been removed as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered holders of ADRs unless a successor depositary shall not be operating under the deposit agreement on the 120th day after our notice of removal was first provided to the depositary. After termination, the depositary’s only responsibility will be (i) to deliver deposited securities to ADR holders who surrender their ADRs, and (ii) to hold or sell distributions received on deposited securities. As soon as practicable after the expiration of six months from the termination date, the depositary will sell the deposited securities which remain and hold the net proceeds of such sales (as long as it may lawfully do so), without liability for interest, in trust for the ADR holders who have not yet surrendered their ADRs. After making such sale, the depositary shall have no obligations except to account for such proceeds and other cash.

Limitations on Obligations and Liability to ADR holders

Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and holders of ADSs

Prior to the issue, registration, registration of transfer, split-up, combination, or cancellation of any ADRs, or the delivery of any distribution in respect thereof, and from time to time in the case of the production of proofs as described below, we or the depositary or its custodian may require:

 

   

payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of ordinary shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement;

 

   

the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper; and

 

   

compliance with such regulations as the depositary may establish consistent with the deposit agreement.

The issuance of ADRs, the acceptance of deposits of ordinary shares, the registration, registration of transfer, split-up or combination of ADRs or the withdrawal of ordinary shares, may be suspended, generally or in particular instances, when the ADR register or any register for deposited securities is closed or when any such action is deemed advisable by the depositary; provided that the ability to withdraw ordinary shares may only be limited under the following circumstances: (i) temporary delays caused by closing transfer books of the depositary or our transfer books or the deposit of ordinary shares in connection with voting at a shareholders meeting, or the payment of dividends, (ii) the payment of fees, taxes, and similar charges, and (iii) compliance with any laws or governmental regulations relating to ADRs or to the withdrawal of deposited securities.

 

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The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and each of our and the depositary’s respective agents, provided, however, that no disclaimer of liability under the Securities Act or the Exchange Act, to the extent applicable, is intended by any provision of the deposit agreement. In the deposit agreement it provides that neither we nor the depositary nor any such agent will be liable to registered holders or beneficial owners of ADSs if:

 

   

any present or future law, rule, regulation, fiat, order or decree of the United States, England and Wales or any other country or jurisdiction, or of any governmental or regulatory authority or securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism, nationalization, expropriation, currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or circumstance beyond our, the depositary’s or our respective agents’ direct and immediate control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our respective agents (including, without limitation, voting);

 

   

it exercises or fails to exercise discretion under the deposit agreement or the ADRs including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable;

 

   

it performs its obligations under the deposit agreement and ADRs without gross negligence or willful misconduct; or

 

   

it takes any action or refrains from taking any action in reliance upon the advice of or information from legal counsel, accountants, any person presenting ordinary shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information.

We, the depositary and its agents may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by them to be genuine and to have been signed, presented or given by the proper party or parties.

Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as may be required. The depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the deposit agreement, any registered holder or holders of ADRs, any ADRs or otherwise related to the deposit agreement or ADRs to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. The depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system. Furthermore, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A. Notwithstanding anything to the contrary contained in the deposit agreement or any ADRs, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the custodian except to the extent that any registered holder of ADRs has incurred liability directly as a result of the custodian having (i) committed fraud or willful misconduct in the provision of custodial services to the depositary or (ii) failed to use reasonable care in the provision of custodial services to the depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located. The depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale.

The depositary has no obligation to inform ADR holders or other holders of an interest in any ADSs about the requirements of the law of England and Wales, rules or regulations or any changes therein or thereto.

Neither the depositary nor its agents will be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast or for the effect of any such vote. The

 

81


depositary may rely upon instructions from us or our counsel in respect of any approval or license required for any currency conversion, transfer or distribution. The depositary shall not incur any liability for the content of any information submitted to it by us or on our behalf for distribution to ADR holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the validity or worth of the deposited securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the deposit agreement or for the failure or timeliness of any notice from us. The depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary. Neither the depositary nor any of its agents shall be liable to registered holders or beneficial owners of interests in ADSs for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought.

In the deposit agreement each party thereto (including, for avoidance of doubt, each holder and beneficial owner and/or holder of interests in ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any suit, action or proceeding against the depositary and/or us directly or indirectly arising out of or relating to the ordinary shares or other deposited securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated therein, or the breach thereof (whether based on contract, tort, common law or any other theory).

The depositary and its agents may own and deal in any class of securities of our company and our affiliates and in ADSs.

Disclosure of Interest in ADSs

To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or other ownership of deposited securities, other ordinary shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, you agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may provide in respect thereof. We reserve the right to instruct you to deliver your ADSs for cancellation and withdrawal of the deposited securities so as to permit us to deal with you directly as a holder of ordinary shares and, by holding an ADS or an interest therein, you will be agreeing to comply with such instructions.

Books of Depositary

The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which register shall include the depositary’s direct registration system. Registered holders of ADRs may inspect such records at the depositary’s office at all reasonable times, but solely for the purpose of communicating with other holders in the interest of the business of our company or a matter relating to the deposit agreement. Such register may be closed at any time or from time to time, when deemed expedient by the depositary.

The depositary will maintain facilities for the delivery and receipt of ADRs.

Appointment

In the deposit agreement, each registered holder of ADRs and each person holding an interest in ADSs, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the deposit agreement will be deemed for all purposes to:

 

   

be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs; and

 

   

appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in

the deposit agreement and the applicable ADR or ADRs, to adopt any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR and ADRs, the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

Governing Law

The deposit agreement and the ADRs shall be governed by and construed in accordance with the laws of the State of New York. In the deposit agreement, we have submitted to the jurisdiction of the courts of the State of New York and appointed an agent for service of process on our behalf. Notwithstanding the foregoing, any action based on the deposit agreement or the transactions contemplated thereby may be instituted by the depositary in any competent court in England and Wales.

 

82


By holding an ADS or an interest therein, registered holders of ADRs and owners of ADSs each irrevocably agree that any legal suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit agreement, the ADSs or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York, and each irrevocably waives any objection which it may have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

PART II

 

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

 

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

 

ITEM 15.

CONTROLS AND PROCEDURES

Not applicable.

 

ITEM 16.

RESERVED

 

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined that John Brancaccio is an “audit committee financial expert” as defined in Item 16.A. of Form 20-F.

 

ITEM 16B.

CODE OF ETHICS

Not applicable

 

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable.

 

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

 

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

 

83


ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

 

ITEM 16G.

CORPORATE GOVERNANCE

Not applicable.

 

ITEM 16H.

MINE SAFETY DISCLOSURE

Not applicable.

PART III

 

ITEM 17.

FINANCIAL STATEMENTS

We have elected to furnish financial statements and related information specified in Item 18.

 

ITEM 18.

FINANCIAL STATEMENTS

See the financial statements beginning on page F-1 of this registration statement.

 

ITEM 19.

EXHIBITS

The Exhibits listed in the Exhibit Index at the end of this registration statement are filed as Exhibits to this registration statement.

 

84


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as of and for the Year Ended December 31, 2020

 

Report of Mazars LLP, Independent Registered Public Accounting Firm

     F-2  

Consolidated Balance Sheet

     F-3  

Consolidated Statements of Operations and Comprehensive Loss

     F-4  

Consolidated Statement of Shareholders’ Equity

     F-5  

Consolidated Statement of cash flows

     F-6  

Notes to the Consolidated Financial Statements

     F-7  

 

F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of AccuStem Sciences Ltd.

Opinion on the special period Financial Statements

We have audited the accompanying balance sheet of AccuStem Sciences Ltd. as of December 31, 2020, together with the related statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for the period from June 5, 2020 to December 31, 2020, including the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2020, and the results of its operations and its cash flows for each of the period June 5, 2020 to December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Mazars LLP

London, England

March 10, 2021

 

F-2


CONSOLIDATED BALANCE SHEET

 

     As at
December 31, 2020
 

ASSETS

  

Non-Current Assets

  

Intangible asset In Process Research & Development

   £ 2,073,930  

Current Assets

  

Related party receivable

     1,151,383  

Total assets

     3,225,313  

LIABILITIES

  

Related party payable

     9,892  

Other payable

     30,797  

Total liabilities

     40,689  

EQUITY AND LIABILITIES

  

Equity attributable to owners

  

Ordinary Share capital

     2,041,935  

Share premium

     55,571  

Merger reserve

     1,127,807  

Retained earnings

     (40,689

Total equity attributable to Shareholders

     3,184,624  

Total equity and liabilities

     3,225,313  

 

F-3


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

     Period from
June 5, 2020 to
December 31, 2020
 

Revenue

   £ —    

Administrative expenses

     (40,689

Operating result

     —    

Finance income/(expense)

     —    

Profit before taxation

     (40,689

Income tax

     —    

Profit for the period and total comprehensive income for the period

     (40,689

Total basic and diluted loss per share (£ per share)

     (0.00

 

F-4


CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

 

    

Share
Capital

£

    

Share
Premium

£

    

Merger
Reserve

£

    

Retained
Earnings

£

   

Total
Equity

£

 

Balance at 5 June 2020

     —          —          —          —         —    

Transactions with owners

             

Issue of share capital

     2,041,935        55,571        1,127,807          3,225,313  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total transactions with owners

     2,041,935        55,571        1,127,807          3,225,313  

Comprehensive income

             

Loss for the period

     —          —             (40,689     (40,689
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive income

     —          —             (40,689     (40,689
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance at 31 December 2020

     2,041,935        55,571        1,127,807        (40,689     3,184,624  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

F-5


CONSOLIDATED STATEMENT OF CASH FLOWS

 

    

Period from
June 5, 2020 to
December 31, 2020

£

 

CASH FLOWS FROM OPERATING ACTIVITIES:

  

Loss from operations before income taxes

     (40,689

Increase in related party payable

     9,892  

Increase in trade payable

     30,797  

Net cash used in operating activities

     —    

Net increase in cash and cash equivalents

     —    
  

 

 

 

Cash and cash equivalent, beginning of period

     —    
  

 

 

 

Cash and cash equivalent, end of period

     —    
  

 

 

 

Non cash items:

  

Cash receivable from related party

     1,000,000  

Shares issued but not yet been paid

     151,383  

 

F-6


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.

General Information

AccuStem Sciences Limited is a private limited company incorporated on June 5, 2020 in the United Kingdom under the Companies Act. The principal activities of the Company and its subsidiaries (the “Group”) are that of a genomics-based personalized medicine business, particularly focused on breast cancer patients.

The ultimate parent of the group is AccuStem Sciences Limited.

These financial statements are have been prepared for the period from June 5, 2020 to December 31, 2020 and are presented in thousands UK Pounds Sterling (£) which is the presentational and functional currency of the Company, indicative of the primary economic environment in which the Company operates.

2. Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been applied to the period presented unless otherwise stated.

Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and IFRIC interpretations as applicable to companies reporting under IFRS.

New and Revised Standards

Standards in effect in 2020

An amendment to IFRS 3 ‘Definition of a business’ has come into effect from January 1, 2020. The adoption of the amendment has had no impact on the company.

IFRS in issue but not applied in the current financial statements

The Directors do not expect that the adoption of new IFRS Standards, Interpretations and Amendments that have been issued but are not yet effective will have a material impact on the financial statements of the Group in future periods.

A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant for the Group’s activities and which have not therefore been adopted in preparing these financial statements.

Going Concern

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realization of assets and discharge of liabilities in the normal course of business.

The directors believe that there are reasonable grounds to believe that the company and consolidated entity will be able to continue as going concerns, after consideration of the following factors;

 

   

Cash receivable totaling £1.2 million at 31 December 2020

 

F-7


   

Tiziana Life Sciences plc (Tiziana) has agreed to invest £2m in the Company upon the Company’s listing. Tiziana has sufficient funds to meet this obligation.

 

   

The Directors have prepared cash flow projections that include the costs associated with development of the StemPrintER asset. On the basis of those projections, the directors conclude that the company will be able to meet its liabilities as they fall due for the next 12 months from the date when these financial statements are issued.

Accordingly, the directors believe that the Company and consolidated entities will be able to continue as going concerns and that it is appropriate to adopt the going concern basis in the preparation of these financial statements. The financial statements do not include any adjustment relating to the amounts or classification of recorded assets or liabilities that might be necessary if the Company and consolidated entities do not continue as going concerns.

Basis of consolidation

Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating policies of the subsidiary and therefore exercises control. The existence and effect of both current voting rights and potential voting rights that are currently exercisable or convertible are considered when assessing whether control of an entity is exercised. Subsidiaries are consolidated from the date at which the Group obtains control and are de-consolidated from the date at which control ceases.

Inter-company transactions, balances, and unrealized gains on transactions between group companies are eliminated upon consolidation. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

Common control combinations

Merger accounting is used by the Group for common control combinations, which are transactions between entities that are ultimately controlled by the same party or parties. This method treats the merged entities as if they had been combined throughout the current and comparative accounting periods.

There are however no comparatives presented in these financial statements as the business asset did not exist until the statutory demerger of StemPrintER Sciences Ltd.

Merger accounting principles for these combinations result in the recognition of a merger reserve in the consolidated statement of financial position, being the difference between the nominal value of any new shares issued by the parent company for the acquisition of the shares of the subsidiary and the subsidiary’s Net Asset Value. See note 4.

Financial instruments

The Group classifies a financial instrument, or its component parts, as a financial liability, a financial asset or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, a financial asset and an equity instrument.

The Group evaluates the terms of the financial instrument to determine whether it contains an asset, a liability or an equity component. Such components shall be classified separately as financial assets, financial liabilities or equity instruments.

The Group’s financial liabilities include trade and other payables.

The Group does not hold any financial assets or liabilities at fair value through profit or loss or fair value through other comprehensive income.

 

F-8


Intangible Assets

The StemPrintER asset has been recognized as intangible in-process research & development (“IPR&D”) with an indefinite useful life. This asset arose through the transaction described in note 4.

IPR&D assets are considered to have an indefinite useful life until the completion or abandonment of the associated research and development project. Management evaluates indefinite life intangible assets for impairment on an annual basis and on an interim basis if events or changes in circumstances between annual impairment tests indicate that the asset might be impaired. The ongoing evaluation for impairment of its indefinite life intangible assets requires significant management estimates and judgment.

Management has prepared a budget for the ongoing development of the asset and concludes that as at December 31, 2020 there has been no impairment trigger.

Impairment

Impairment of financial assets measured at amortized cost

At each reporting date the Group recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost.

In establishing the appropriate amount of loss allowance to be recognized, the Group applies either the general approach or the simplified approach, depending on the nature of the underlying group of financial assets.

General approach

The general approach is applied to the impairment assessment of cash and cash and cash equivalents.

Under the general approach the Group recognizes a loss allowance for a financial asset at an amount equal to the 12-month expected credit losses, unless the credit risk on the financial asset has increased significantly since initial recognition, in which case a loss allowance is recognized at an amount equal to the lifetime expected credit losses.

Simplified approach

Under the simplified approach the Group always recognizes a loss allowance for a financial asset at an amount equal to the lifetime expected credit losses.

Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Non-financial assets are impaired when its carrying amount exceed its recoverable amount. The recoverable amount is measured as the higher of fair value less cost of disposal and value in use. The value in use is calculated as being net projected cash flows based on financial forecasts discounted back to present value.

 

F-9


Share capital

Ordinary shares of the Parent Company are classified as equity.

 

3.

CRITICAL ACCOUTING AND JUDGEMENTS

The preparation of financial information in accordance with generally accepted accounting practice, in the case of the Group being International Financial Reporting Standards as issued by the International Accounting Standards Board, requires the directors to make estimates and judgements that affect the reported amount of assets, liabilities, income and expenditure and the disclosures made in the financial statements. Such estimates and judgements must be continually evaluated based on historical experience and other factors, including expectations of future events.

The Group has been involved in a demerger transaction during the period and management has used its judgement to determine whether the transaction was one of common control, or an acquisition through a business combination.

The Group has also made a judgement on the impact of Brexit and COVID during the preparation of the financial statements and considered it to not be significant. Indeed, the Company is planning to file a registration statement form 20-F due to a biotech boom in US, caused in part by the importance of this industry driven by the COVID pandemic.

The Group has also made a judgment regarding the recoverability of the related party receivable due. The Group does not deem there to be any risk involved with recoverability of the receivable.

 

4.

ACQUISITION OF SUBSIDIARY

The consolidated position of the Group is a result of the demerger of the legal entity StemPrintER Sciences Limited from Tiziana Life Sciences plc (Tiziana) on October 30, 2020. The transaction is as detailed below:

In September 2020, Tiziana Life Sciences plc transferred all the ownership rights and intellectual property relating to StemPrintER along with £1.0 million in cash to its wholly owned subsidiary, StemPrinter Sciences Limited in exchange for shares in the subsidiary.

On October 5, 2020, the Company entered into an agreement with Tiziana Life Sciences plc to acquire its subsidiary StemPrintER Sciences Limited, including the ownership rights and intellectual property relating to StemPrintER and cash of |£1.0 million contained within the entity. In exchange for the transfer of ownership, the Company allotted 194,612,288 ordinary shares of £0.01 par value to Tiziana shareholders on a one for one basis based on the Tiziana ownership as at October 30, 2020.

The initial distribution by Tiziana was recorded at fair value, and that is what drives the fair value of the intangible asset in StemPrintER Sciences Limited with a fair value of £2,073,930. The fair value of the asset was approximated by its cost to recreate, using historical cost, as this was identified as the best valuation method for determining fair value.

As the transaction was between entities that were ultimately controlled by the same parties, the acquisition has been treated as a common control combination. No comparatives have been presented, however as the StemPrintER asset did not exist in the prior year.

 

F-10


The net assets acquired within StemPrintER Sciences Limited are therefore as follows:

 

     £  

Intangible asset

     2,073,930  

Cash receivable (Note 7)

     1,000,000  
  

 

 

 

Net Assets

     3,073,930  
  

 

 

 

 

5.

INTANGIBLE ASSETS

The IPR&D intangible asset has an indefinite useful life.

Management evaluates indefinite life intangible assets for impairment on an annual basis and on an interim basis if events or changes in circumstances between annual impairment tests indicate that the asset might be impaired. The ongoing evaluation for impairment of its indefinite life intangible assets requires significant management estimates and judgment.

Management has prepared a budget for the ongoing development of the asset and concludes that as at December 31, 2020 there has been no impairment trigger. The long term intention by management is to invest more than £2m in the asset.

 

Company and Group   

IPR&D
Acquired

£

 

Cost

  

At June 5, 2020

     —    

Acquired through common control combination

     2,073,930  
  

 

 

 

At December 31, 2020

     2,073,930  
  

 

 

 

 

F-11


6.

SHARE CAPITAL AND MERGER RESERVE

Share Capital

 

Company and Group   

Ordinary
Shares

Number

    

Share
Capital

£

     Share
Premium
£
    

Merger
reserve

£

    

Total

£

 

In issue at June 5, 2020

     1        —          —             —    

Issued in exchange for acquisition of StemPrintER Sciences Ltd

     194,612,288        1,946,123        —          1,127,807        3,073,930  

Issue of additional shares

     9,581,254        95,812        55,571        —          151,383  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

In issue at December 31, 2020

     204,193,543        2,041,935        55,571        1,127,807        3,225,313  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ordinary Shares

Ordinary shares have a par value of £0.01. Every holder of ordinary shares is entitled to one vote, to participate in dividends, and to share in the proceeds of winding up the company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. The Company does not have a limited amount of authorized capital.

The additional shares were issued to option and warrant holders who were identified as eligible to receive shares in the Company but were not on the Tiziana register as at 7.00am on October 30, 2020 due to constraints on the timing of the delivery of Tiziana shares under Note 11 to Rule 9 of the Takeover code.

Merger reserve

On October 30, 2020, the Group acquired StemPrinter Sciences Ltd from its then parent company Tiziana Life Sciences plc. StemPrinter Sciences Ltd had a net asset value of £3,073,930. The transfer was effected by the issue of 194,612,288 ordinary shares to Tiziana shareholders on a one for one basis based on the Tiziana ownership as at October 30, 2020. giving rise to a merger reserve of £1,127,807 in the consolidated statement of financial position, being the difference between the nominal value of the shares issued by the Company for the acquisition of the shares of the subsidiary and the subsidiary’s net asset value.

 

7.

LOSS PER SHARE

Basic loss per share is calculated by dividing the loss attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

 

     December 31, 2020  

(Loss) attributable to equity holders of the Company (£)

     (40,689

Weighted average number of ordinary shares in issue

     204,193,543  
  

 

 

 

Basic loss per share (£ per share)

     (0.00
  

 

 

 

 

F-12


The basic and diluted earnings per share as presented on the face of the Income Statement are identical. All earnings per share figures presented above arise from continuing and total operations and therefore no earnings per share for discontinued operations are presented.

 

8.

RELATED PARTY TRANSACTIONS

Tiziana Life Sciences PLC (“Tiziana”)

Tiziana Life Sciences plc is a related party as it is under common control, it shares directors, officers and shareholders. The Group has also been formed due to an acquisition of a subsidiary company of Tiziana, see Note 4 for further details.

As at December 31, 2020, £1,151,383 was due from Tiziana, made up of the cash due to StemPrintER Sciences Limited of £1,000,000 plus an additional share subscription of 9,581,254 shares issued at £0.0158 of £151,383.

As at December 31, 2020, £9,892 was also due to Tiziana, as Tiziana had paid for expenses on behalf of the Company.

 

9.

FINANCIAL INSTRUMENTS

The main risks arising from the Group’s financial instruments are liquidity risk, foreign currency risk and credit risk. The directors regularly review and agree policies for managing each of these risks which are summarized below.

Credit risk

The Group has exposure to credit risk arising from its outstanding related party receivables balance. The Group reviews its related party arrangements carefully to minimize such risks and as Tiziana is a related party with common directors, officers and shareholders, this risk is viewed as minimal, especially as the liquidity of Tiziana is sufficient to cover this receivable.

Liquidity risk

The Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and long term. The Group finances its activities through cash generated from by private offerings of equity and debt securities.

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:

 

     December 31, 2020  
£000    Less than 1 year      Above 1 year      Total  

Trade and other payables

     30,797        —          30,797  

Related party payables

     9,892        —          9.892  
  

 

 

    

 

 

    

 

 

 
     40,689        —          40,689  
  

 

 

    

 

 

    

 

 

 

 

F-13


10.

CAPITAL RISK MANAGEMENT

For the purpose of the Group’s capital management, capital includes called up share capital share premium and merger reserve attributable to the equity holders of the parent as reflected in the statement of financial position.

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern and to maximize shareholder value through the optimization of the equity balance.

The Group adjusts its capital structure in light of changes in economic conditions and expected business demands on capital. In order to maintain or adjust its capital structure, the Group considers whether or not to pay dividends and adjusts the amount of any dividend payments to shareholders. The Group may also return capital to shareholders or issue additional shares.

 

F-14


EXHIBIT INDEX

 

EXHIBIT
NUMBER
   DESCRIPTION OF EXHIBIT
1.1    Articles of Association of AccuStem Sciences Limited
4.1    Form of Deposit Agreement
4.2    Form of American Depositary Receipt (included in Exhibit 4.1)
4.3    Demerger Agreement between Tiziana Life Sciences PLC and AccuStem Sciences Limited dated October 5, 2020
4.4    Supplemental Demerger Agreement between Tiziana Life Sciences PLC and AccuStem Sciences Limited dated October 30, 2020
4.5    License Agreement between Tiziana Life Sciences PLC and IEO/University of Milan dated June 24, 2014
8.1    List of Subsidiaries
15.1    Consent of Mazars LLP, independent registered public accounting firm


SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

Date: March 12, 2021

 

 

ACCUSTEM SCIENCES LIMITED

By:   /S/ KEEREN SHAH
 

Name: Keeren Shah

 

Title: Finance Director

Exhibit 1.1

 

 

ACCUSTEM SCIENCES LIMITED

COMPANY NUMBER 12647178

ARTICLES OF ASSOCIATION

APPROVED BY SPECIAL RESOLUTION ON 20 OCTOBER 2020

 

 

 

LOGO


TABLE OF CONTENTS

 

Clause    Page  

1.   EXCLUSION OF MODEL ARTICLES (AND ANY OTHER PRESCRIBED REGULATIONS)

     4  

2.   INTERPRETATION

     4  

3.   FORM OF RESOLUTION

     7  

4.   LIMITED LIABILITY

     7  

5.   CHANGE OF NAME

     7  

6.   SHAREHOLDER RIGHTS

     7  

7.   POWER TO ATTACH RIGHTS TO SHARES

     8  

8.   ALLOTMENT OF SHARES AND PRE-EMPTION

     8  

9.   REDEEMABLE SHARES

     10  

10.  PARI PASSU ISSUES

     10  

11.  VARIATION OF RIGHTS

     10  

12.  RIGHTS DEEMED NOT VARIED

     11  

13.  PAYMENT OF COMMISSION

     11  

14.  TRUSTS NOT RECOGNISED

     11  

15.  UNCERTIFICATED SHARES

     11  

16.  SHARE CERTIFICATES

     13  

17.  REPLACEMENT CERTIFICATES

     13  

18.  LIEN ON SHARES NOT FULLY PAID

     14  

19.  ENFORCEMENT OF LIEN BY SALE

     14  

20.  APPLICATION OF PROCEEDS OF SALE

     14  

21.  CALLS

     14  

22.  LIABILITY OF JOINT HOLDERS

     15  

23.  INTEREST ON CALLS

     15  

24.  SUMS TREATED AS CALLS

     15  

25.  POWER TO DIFFERENTIATE

     15  

26.  PAYMENT OF CALLS IN ADVANCE

     15  

27.  NOTICE IF CALL OR INSTALMENT NOT PAID

     16  

28.  FORFEITURE FOR NON-COMPLIANCE

     16  

29.  NOTICE AFTER FORFEITURE

     16  

30.  FORFEITURE MAY BE ANNULLED

     16  

31.  SURRENDER

     16  

32.  SALE OF FORFEITED SHARES

     16  

33.  EFFECT OF FORFEITURE

     17  

34.  EVIDENCE OF FORFEITURE

     17  

35.  FORM OF TRANSFER

     17  

36.  RIGHT TO REFUSE REGISTRATION OF TRANSFER

     18  

37.  NOTICE OF REFUSAL TO REGISTER A TRANSFER

     18  

38.  NO FEES ON REGISTRATION

     19  

39.  OTHER POWERS IN RELATION TO TRANSFERS

     19  

40.  TRANSMISSION OF SHARES ON DEATH

     19  

41.  ELECTION OF PERSON ENTITLED BY TRANSMISSION

     19  

42.  RIGHTS ON TRANSMISSION

     20  

43.  DESTRUCTION OF DOCUMENTS

     20  

44.  SUB-DIVISION

     21  

45.  FRACTIONS

     21  

46.  ANNUAL GENERAL MEETINGS

     22  

47.  CONVENING OF GENERAL MEETINGS

     22  

48.  NOTICE OF GENERAL MEETINGS

     22  

49.  CONTENTS OF NOTICE OF MEETINGS

     22  

50.  OMISSION TO GIVE NOTICE AND NON-RECEIPT OF NOTICE

     23  

51.  POSTPONEMENT OF GENERAL MEETING

     23  

52.  QUORUM AT GENERAL MEETING

     23  

53.  PROCEDURE IF QUORUM NOT PRESENT

     24  

 

-i-


TABLE OF CONTENTS

(continued)

 

Clause    Page  

54.  CHAIRMAN OF GENERAL MEETING

     24  

55.  ENTITLEMENT TO ATTEND AND SPEAK

     24  

56.  ADJOURNMENTS

     25  

57.  NOTICE OF ADJOURNMENT

     25  

58.  BUSINESS OF ADJOURNED MEETING

     25  

59.  SECURITY ARRANGEMENTS AND ORDERLY CONDUCT

     25  

60.  OVERFLOW MEETING ROOMS

     26  

61.  SATELLITE MEETING PLACES

     26  

62.  PROCEDURE WHERE GENERAL MEETINGS HELD AT MORE THAN ONE PLACE

     27  

63.  AMENDMENT TO RESOLUTIONS

     28  

64.  WITHDRAWAL AND RULING AMENDMENTS OUT OF ORDER

     28  

65.  MEMBERS’ RESOLUTIONS

     28  

66.  METHOD OF VOTING

     28  

67.  OBJECTION TO ERROR IN VOTING

     29  

68.  VOTING PROCEDURE

     29  

69.  VOTES OF MEMBERS

     29  

70.  NO RIGHT TO VOTE WHERE SUMS OVERDUE ON SHARES

     30  

71.  VOTING BY PROXY

     30  

72.  RECEIPT OF PROXY

     32  

73.  REVOCATION OF PROXY

     33  

74.  AVAILABILITY OF APPOINTMENTS OF PROXY

     33  

75.  CORPORATE REPRESENTATIVES

     34  

76.  FAILURE TO DISCLOSE INTERESTS IN SHARES

     34  

77.  POWER OF SALE OF SHARES OF UNTRACED MEMBERS

     36  

78.  APPLICATION OF PROCEEDS OF SALE OF SHARES OF UNTRACED MEMBERS

     38  

79.  NUMBER OF DIRECTORS

     38  

80.  POWER OF COMPANY TO APPOINT DIRECTORS

     38  

81.  POWER OF BOARD TO APPOINT DIRECTORS

     38  

82.  ELIGIBILITY OF NEW DIRECTORS

     38  

83.  RETIREMENT OF DIRECTORS

     39  

84.  DEEMED RE-APPOINTMENT

     39  

85.  PROCEDURE IF INSUFFICIENT DIRECTORS APPOINTED

     39  

86.  REMOVAL OF DIRECTORS

     40  

87.  VACATION OF OFFICE BY DIRECTOR

     40  

88.  RESOLUTION AS TO VACANCY CONCLUSIVE

     41  

89.  APPOINTMENT OF ALTERNATE DIRECTORS

     41  

90.  ALTERNATE DIRECTORS’ PARTICIPATION IN BOARD MEETINGS

     41  

91.  ALTERNATE DIRECTOR RESPONSIBLE FOR OWN ACTS

     41  

92.  INTERESTS OF ALTERNATE DIRECTOR

     41  

93.  REVOCATION OF ALTERNATE DIRECTOR

     42  

94.  DIRECTORS’ FEES

     42  

95.  EXPENSES

     42  

96.  ADDITIONAL REMUNERATION

     42  

97.  REMUNERATION OF EXECUTIVE DIRECTORS

     43  

98.  PENSIONS AND OTHER BENEFITS

     43  

99.  POWERS OF THE BOARD

     43  

100.  POWERS OF DIRECTORS IF LESS THAN MINIMUM NUMBER

     44  

101.  POWERS OF EXECUTIVE DIRECTORS

     44  

102.  DELEGATION TO COMMITTEES

     44  

103.  LOCAL MANAGEMENT

     45  

104.  POWER OF ATTORNEY

     45  

105.  EXERCISE OF VOTING POWER

     45  

 

-ii-


TABLE OF CONTENTS

(continued)

 

Clause    Page  

106.   PROVISION FOR EMPLOYEES ON CESSATION OF BUSINESS

     45  

107.   OVERSEAS REGISTERS

     46  

108.   BORROWING POWERS

     46  

109.   BOARD MEETINGS

     49  

110.   NOTICE OF BOARD MEETINGS

     49  

111.   QUORUM

     49  

112.   CHAIRMAN

     49  

113.   VOTING

     50  

114.   PARTICIPATION BY TELEPHONE OR OTHER FORM OF COMMUNICATION

     50  

115.   RESOLUTION IN WRITING

     50  

116.   PROCEEDINGS OF COMMITTEES

     50  

117.   MINUTES OF PROCEEDINGS

     51  

118.   VALIDITY OF PROCEEDINGS

     51  

119.   TRANSACTIONS OR OTHER ARRANGEMENTS WITH THE COMPANY

     51  

120.   AUTHORISATION OF DIRECTORS’ CONFLICTS OF INTEREST

     52  

121.   DIRECTORS’ PERMITTED INTERESTS

     54  

122.   GENERAL

     55  

123.   POWER TO AUTHENTICATE DOCUMENTS

     56  

124.   USE OF SEALS

     56  

125.   DECLARATION OF DIVIDENDS

     56  

126.   INTERIM DIVIDENDS

     56  

127.   CALCULATION AND CURRENCY OF DIVIDENDS

     57  

128.   AMOUNTS DUE ON SHARES CAN BE DEDUCTED FROM DIVIDENDS

     57  

129.   DIVIDENDS NOT IN CASH

     57  

130.   NO INTEREST ON DIVIDENDS

     58  

131.   METHOD OF PAYMENT

     58  

132.   UNCASHED DIVIDENDS

     59  

133.   UNCLAIMED DIVIDENDS

     60  

134.   SCRIP DIVIDENDS

     60  

135.   CAPITALISATION OF RESERVES

     62  

136.   RECORD DATES

     64  

137.   INSPECTION OF RECORDS

     65  

138.   ACCOUNT TO BE SENT TO MEMBERS

     65  

139.   SERVICE OF NOTICES

     65  

140.   HARD COPY FORM

     67  

141.   ELECTRONIC FORM

     67  

142.   ELECTRONIC MEANS

     67  

143.   WEBSITE

     67  

144.   SENDING OR SUPPLYING ANY DOCUMENT, INFORMATION OR NOTICE BY ANY OTHER MEANS

     68  

145.   PRESENCE AT MEETING EVIDENCE IN ITSELF OF RECEIPT OF NOTICE

     68  

146.   NOTICE ON PERSON ENTITLED BY TRANSMISSION

     68  

147.   RECORD DATE FOR SERVICE

     69  

148.   EVIDENCE OF SERVICE

     69  

149.   NOTICE WHEN POST NOT AVAILABLE

     70  

150.   VALIDATION OF DOCUMENTS IN ELECTRONIC FORM

     70  

151.   WINDING UP

     70  

152.   INDEMNITY AND INSURANCE

     71  

153.   EXCLUSIVE JURISDICTION

     72  

 

-iii-


THE COMPANIES ACT 2006

PUBLIC COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION

OF

ACCUSTEM SCIENCES LIMITED

COMPANY NUMBER 12647178

(Approved by special resolution on 20 October 2020)

 

1.

EXCLUSION OF MODEL ARTICLES (AND ANY OTHER PRESCRIBED REGULATIONS)

No regulations or articles set out in any statute, or in any statutory instrument or other subordinate legislation made under any statute, concerning companies (including the regulations in the Companies (Model Articles) Regulations 2008 (SI 2008/3229)) shall apply as the articles of the Company. The following shall be the articles of association of the Company.

 

2.

INTERPRETATION

 

2.1

In these articles, unless the context otherwise requires:

Act” means Companies Act 2006;

address” includes any number or address used for the purposes of sending or receiving documents or information by electronic means;

Affiliates” means in relation to a person any other person directly or indirectly controlling, controlled by or under common control with such person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a person whether through the ownership of voting securities, contract or otherwise, provided that Affiliates shall not include any portfolio companies of a person;

Articles” means these articles of association as altered from time to time and “Article” shall be construed accordingly;

Board” means the board of Directors for the time being of the Company or the Directors present or deemed to be present at a duly convened quorate meeting of the Directors;

certificated shares” means a share which is not an uncertificated share and references in these Articles to a share being held in certificated form shall be construed accordingly;

class meeting” shall have the meaning given to it in Article 11.1(c);

 

4


clear days” means in relation to a period of notice means that period excluding the day when the notice is served or deemed to be served and the day for which it is given or on which it is to take effect;

Companies Acts” means the Act, the Companies Act 1985 and, where the context requires, every other statute from time to time in force concerning companies and affecting the Company;

Company” means Accustem Sciences Limited;

Director” means a director for the time being of the Company;

electronic form” has the meaning given to it in section 1168 of the Act;

electronic means” has the meaning given to it in section 1168 of the Act;

hard copy form” has the meaning given to it in section 1168 of the Act;

Listing” means listing of the Company’s Ordinary Shares or any depositary share representing one or more units of the same on a stock exchange or trading platform;

London Stock Exchange” means London Stock Exchange plc;

member” means a member of the Company, or where the context requires, a member of the Board or of any committee;

Office” means the registered office from time to time of the Company;

Operator” means the Operator of a relevant system (as defined in the uncertificated securities rules) or the transfer agent of the Company (as applicable);

Ordinary Shareholders” means the holders of Ordinary Shares from time to time;

Ordinary Shares” means the ordinary shares of £0.01 each in the capital of the Company in issue from time to time and having the rights set out in Article 6;

paid up” means paid up or credited as paid up;

participating class” means a class of shares title to which is permitted by the Operator to be transferred by means of a relevant system;

Register” means the register of members of the Company to be maintained under the Act or as the case may be any overseas branch register maintained under Article 107;

relevant system” means a computer-based system which allows units of securities without written instruments to be transferred and endorsed pursuant to the uncertificated securities rules or other applicable regulations;

Secretary” means the secretary of Company for the time being;

 

5


share” means an Ordinary Share and/or a depositary receipt or depositary share representing any of the foregoing as the context requires;

Share Warrant” means a warrant to bearer issued by the Company in respect of its shares;

Seal” means the common seal of the Company or, where the context allows, any official seal kept by the Company under section 50 of the Act;

uncertificated securities rules” means any provision of the Companies Acts relating to the holding, evidencing of title to, or transfer of uncertificated shares and any legislation, rules or other arrangements made under or by virtue of such provision;

uncertificated share” means a share of a class which is at the relevant time a participating class, title to which is recorded on the Register as being held in uncertificated form and references in these Articles to a share being held in uncertificated form shall be construed accordingly; and

Voting Control” means with respect to a share the exclusive power (whether directly or indirectly) to vote or direct the voting of such share by proxy, voting agreement, or otherwise.

 

2.2

Headings are used for convenience only and shall not affect the construction or interpretation of these Articles.

 

2.3

A reference to a “person” includes a corporate and an unincorporated body (whether or not having separate legal personality).

 

2.4

Words in the singular shall include the plural and vice versa.

 

2.5

A reference to one gender shall include a reference to the other gender.

 

2.6

A reference to a statute or statutory provision is a reference to it as it is in force for the time being, taking account of any amendment, extension, or re-enactment and includes any subordinate legislation for the time being in force made under it.

 

2.7

Any words or expressions defined in the Companies Acts in force when these Articles or any part of these Articles are adopted shall (if not inconsistent with the subject or context in which they appear) have the same meaning in these Articles or that part, save that the word “company” shall include any body corporate.

 

2.8

A reference to a document “being signed” or to “signature” includes references to its being executed under hand or under seal or by any other method and, in the case of a communication in electronic form, such references are to its being authenticated as specified by the Companies Acts.

 

2.9

A reference to “writing” or “written” includes references to any method of representing or reproducing words in a legible and non-transitory form whether sent or supplied in electronic form or otherwise.

 

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2.10

A reference to documents or information “being sent or supplied by or to” a company (including the Company) shall be construed in accordance with section 1148(3) of the Act.

 

2.11

A reference to a “meeting” shall not be taken as requiring more than one person to be present if any quorum requirement can be satisfied by one person.

 

3.

FORM OF RESOLUTION

Subject to the Companies Acts, where anything can be done by passing an ordinary resolution, this can also be done by passing a special resolution.

 

4.

LIMITED LIABILITY

The liability of the members of the Company is limited to the amount, if any, unpaid on the shares in the Company held by them.

 

5.

CHANGE OF NAME

The Company may change its name by resolution of the Board.

 

6.

SHAREHOLDER RIGHTS

The Ordinary Shareholders have the following rights:

 

6.1

Dividends

Any dividend declared by the Company shall be paid on the Ordinary Shares.

 

6.2

Return of Capital

In the event of the liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to members shall be distributed amongst all holders of Ordinary Shares, in proportion to the number of Ordinary Shares held irrespective of the amount paid or credited as paid on any share.

 

6.3

Deemed Liquidation

 

  (a)

Any:

 

  (i)

consolidation or merger of the Company with or into another entity or entities (whether or not the Company is the surviving entity) as a result of which the holders of the Company’s outstanding shares possessing the voting power (under ordinary circumstances) to elect a majority of the Board immediately prior to such sale or issue cease to own the Company’s outstanding shares possessing the voting power (under ordinary circumstances) to elect a majority of the Board;

 

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  (ii)

sale or transfer by the Company of all or substantially all of its assets (determined either for the Company alone or together with its subsidiaries on a consolidated basis); or

 

  (iii)

sale, transfer or issuance or series of sales, transfers and/or issues of shares by the Company or the holders thereof, as a result of which the holders of the Company’s outstanding shares possessing the voting power (under ordinary circumstances) to elect a majority of the Board immediately prior to such sale or issue cease to own the Company’s outstanding shares possessing the voting power (under ordinary circumstances) to elect a majority of the Board,

shall be deemed to be a liquidation, dissolution and winding up of the Company for purposes of this Article 6 (unless the Board determine otherwise), and the holders of the Ordinary Shares shall be entitled to receive from the Company the amounts payable with respect to the Ordinary Shares on a liquidation, dissolution or winding up of the Company under Article 6.2, above, in cancellation of their Ordinary Shares upon the completion of any such transaction.

 

6.4

Voting

 

  (a)

At a general meeting of the Company and at any separate class meeting of the holders of Ordinary Shares, shall be entitled to one vote for each Ordinary Share held.

 

  (b)

A holder of Ordinary Shares is entitled to receive notice of any general meeting of the Company (and notice of any separate class meeting of the holders of Ordinary Shares) and a copy of every report, accounts, circular or other document sent out by the Company to members.

 

7.

POWER TO ATTACH RIGHTS TO SHARES

Subject to the Companies Acts and to any rights attached to existing shares, any share may be issued with or have attached to it such rights and restrictions as the Company may by ordinary resolution determine, or if no ordinary resolution has been passed or so far as the resolution does not make specific provision, as the Board may determine.

 

8.

ALLOTMENT OF SHARES AND PRE-EMPTION

 

8.1

Subject to the Companies Acts, these Articles and to any relevant authority of the Company in general meeting required by the Act, the Board may offer, allot (with or without conferring rights of renunciation), grant options over or otherwise deal with or dispose of shares or grant rights to subscribe for or convert any security into shares to such persons, at such times and upon such terms as the Board may decide. No share may be issued at a discount to the nominal value of such share.

 

8.2

The Board may, at any time after the allotment of any share but before any person has been entered in the Register, recognise a renunciation by the allottee in favour of some other person and accord to the allottee of a share a right to effect such renunciation and/or allow the rights to be represented to be one or more participating securities, in each case upon the subject to such terms and conditions as the Board may think fit to impose.

 

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8.3

Under and in accordance with section 551 of the Act, the Directors shall be generally and unconditionally authorised to exercise for each prescribed period all the powers of the Company to allot shares up to an aggregate nominal amount equal to the Section 551 Amount.

 

8.4

Under and within the terms of the said authority or otherwise in accordance with section 570 of the Act, the Directors shall be empowered during each prescribed period to allot equity securities (as defined by the Act) wholly for cash:

 

  (a)

in connection with a rights issue; and

 

  (b)

otherwise than in connection with a rights issue up to an aggregate nominal amount equal to the Section 561 Amount.

 

8.5

During each prescribed period the Company and its Directors by such authority and power may make offers or agreements which would or might require equity securities or other securities to be allotted after the expiry of such period.

 

8.6

For the purposes of this Article 8:

 

  (a)

rights issue” means an offer of equity securities (as defined by the Act) open for acceptance for a period fixed by the Board to holders of equity securities on the Register on a fixed record date in proportion to their respective holdings of such securities or in accordance with the rights attached to them but subject to such exclusions or other arrangements as the Board may deem necessary or expedient with regard to treasury shares, fractional entitlements or legal or practical problems under the laws of any territory or under the requirements of any recognised regulatory body or stock exchange in any territory;

 

  (b)

prescribed period” means any period for which the authority, in the case of Article 8.3, is conferred or renewed by ordinary or special resolution stating the Section 551 Amount and in the case of Article 8.4 is conferred or renewed by special resolution stating the Section 561 Amount;

 

  (c)

Section 551 Amount” means for any prescribed period, the amount stated in the relevant ordinary or special resolution;

 

  (d)

Section 561 Amount” means for any prescribed period, the amount stated in the relevant special resolution; and

 

  (e)

the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or to convert any securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights.

 

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9.

REDEEMABLE SHARES

Subject to the Companies Acts and to any rights attaching to existing shares, any share may be issued which can be redeemed or is liable to be redeemed at the option of the Company or the holder. The Board may determine the terms, conditions and manner of redemption of any redeemable shares which are issued. Such terms and conditions shall apply to the relevant shares as if the same were set out in these Articles.

 

10.

PARI PASSU ISSUES

If new shares are created or issued which rank equally with any other existing shares, or the Company purchases any of its own shares, the rights of the existing shares will not be regarded as changed or abrogated unless the terms of the existing shares expressly say otherwise.

 

11.

VARIATION OF RIGHTS

 

11.1

Subject to the Companies Acts, the rights attached to any class of shares can be varied or abrogated:

 

  (a)

in such manner (if any) as may be provided by those rights;

 

  (b)

with the consent in writing of the holders of not less than three-quarters in nominal value of the issued share of that class (excluding any shares of that class held as treasury shares); or

 

  (c)

with the authority of a special resolution passed at a separate meeting of the holders of the relevant class of shares (such a meeting, a “class meeting”).

 

11.2

The provisions of this Article will apply to any variation or abrogation of rights of shares forming part of a class. Each part of the class which is being treated differently is treated as a separate class in applying this Article.

 

11.3

All the provisions in these Articles as to general meetings shall apply, with any necessary modifications, to every class meeting except that:

 

  (a)

the quorum at every such meeting shall not be less than two persons holding or representing by proxy at least one-third of the nominal amount paid up on the issued shares of the class) (excluding any shares of that class held as treasury shares); and

 

  (b)

if at any adjourned meeting of such holders such quorum as set out above is not present, at least one person holding shares of the class who is present in person or by proxy shall be a quorum.

 

11.4

The Board may convene a class meeting whenever it thinks fit and whether or not the business to be transacted involves a variation or abrogation of class rights.

 

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12.

RIGHTS DEEMED NOT VARIED

Unless otherwise expressly provided by the rights attached to any class of shares, those rights shall be deemed not to be varied by the purchase by the Company of any of its own shares or the holding of such shares as treasury shares.

 

13.

PAYMENT OF COMMISSION

The Company may in connection with the issue of any shares or the sale for cash of treasury shares exercise all powers of paying commission and brokerage conferred or permitted by the Companies Acts. Any such commission or brokerage may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or other securities or the grant of an option to call for an allotment of shares or any combination of such methods.

 

14.

TRUSTS NOT RECOGNISED

Except as otherwise expressly provided by these Articles, required by law or as ordered by a court of competent jurisdiction, the Company shall not recognise any person as holding any share on any trust, and the Company shall not be bound by or required in any way to recognise (even when having notice of it) any equitable, contingent, future, partial or other claim to or interest in any share other than an absolute right of the holder of the whole of the share.

 

15.

UNCERTIFICATED SHARES

 

15.1

Under and subject to the uncertificated securities rules, the Board may permit title to shares of any class to be evidenced otherwise than by certificate and title to shares of such a class to be transferred by means of a relevant system and may make arrangements for a class of shares (if all shares of that class are in all respects identical) to become a participating class. Title to shares of a particular class may only be evidenced otherwise than by a certificate where that class of shares is at the relevant time a participating class. The Board may also, subject to compliance with the uncertificated securities rules, determine at any time that title to any class of shares may from a date specified by the Board no longer be evidenced otherwise than by a certificate or that title to such a class shall cease to be transferred by means of any particular relevant system.

 

15.2

In relation to a class of shares which is a participating class and for so long as it remains a participating class, no provision of these Articles shall apply or have effect to the extent that it is inconsistent in any respect with:

 

  (a)

the holding of shares of that class in uncertificated form;

 

  (b)

the transfer of title to shares of that class by means of a relevant system; or

 

  (c)

any provision of the uncertificated securities rules,

 

11


and, without prejudice to the generality of this Article, no provision of these Articles shall apply or have effect to the extent that it is in any respect inconsistent with the maintenance, keeping or entering up by the Operator, so long as that is permitted or required by the uncertificated securities rules, of an Operator register of securities in respect of that class of shares in uncertificated form.

 

15.3

Shares of a class which is at the relevant time a participating class may be changed from uncertificated to certificated form, and from certificated to uncertificated form, in accordance with and subject as provided in the uncertificated securities rules.

 

15.4

If, under these Articles or the Companies Acts, the Company is entitled to sell, transfer or otherwise dispose of, forfeit, re-allot, accept the surrender of or otherwise enforce a lien over an uncertificated share, then, subject to these Articles and the Companies Acts, such entitlement shall include the right of the Board to:

 

  (a)

require the holder of the uncertificated share by notice in writing to change that share from uncertificated to certificated form within such period as may be specified in the notice and keep it as a certificated share for as long as the Board requires;

 

  (b)

appoint any person to take such other steps, by instruction given by means of a relevant system or otherwise, in the name of the holder of such share as may be required to effect the transfer of such share and such steps shall be as effective as if they had been taken by the registered holder of that share; and

 

  (c)

take such other action that the Board considers appropriate to achieve the sale, transfer, disposal, forfeiture, re-allotment or surrender of that share or otherwise to enforce a lien in respect of that share.

 

15.5

Unless the Board determines otherwise, shares which a member holds in uncertificated form shall be treated as separate holdings from any shares which that member holds in certificated form but a class of shares shall not be treated as two classes simply because some shares of that class are held in certificated form and others in uncertificated form.

 

15.6

Unless the Board determines otherwise or the uncertificated securities rules require otherwise, any shares issued or created out of or in respect of any uncertificated shares shall be uncertificated shares and any shares issued or created out of or in respect of any certificated shares shall be certificated shares.

 

15.7

The Company shall be entitled to assume that the entries on any record of securities maintained by it in accordance with the uncertificated securities rules and regularly reconciled with the relevant Operator register of securities are a complete and accurate reproduction of the particulars entered in the Operator register of securities and shall accordingly not be liable in respect of any act or thing done or omitted to be done by or on behalf of the Company in reliance on such assumption. Any provision of these Articles which requires or envisages that action will be taken in reliance on information contained in the Register shall be construed to permit that action to be taken in reliance on information contained in any relevant record of securities (as so maintained and reconciled).

 

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16.

SHARE CERTIFICATES

 

16.1

Every person (except a person to whom the Company is not by law required to issue a certificate) whose name is entered in the Register as a holder of any certificated shares shall be entitled, without charge, to receive within the time limits prescribed by the Companies Acts (unless the terms of issue prescribe otherwise) one certificate for all of the shares of that class registered in his name.

 

16.2

The Company shall not be bound to issue more than one certificate in respect of shares held jointly by two or more persons. Delivery of a certificate to the person first named in the Register shall be sufficient delivery to all joint holders.

 

16.3

Where a member has transferred part only of the shares comprised in a certificate, he shall be entitled without charge to a certificate for the balance of such shares to the extent that the balance is to be held in certificated form. Where a member receives more shares of any class, he shall be entitled without charge to a certificate for the extra shares of that class to the extent that the balance is to be held in certificated form.

 

16.4

A share certificate may be issued under Seal (by affixing the Seal to or printing the Seal or a representation of it on the certificate) or signed by at least two Directors or by at least one Director and the Secretary. Such certificate shall specify the number and class of the shares in respect of which it is issued and the amount or respective amounts paid up on it. The Board may by resolution decide, either generally or in any particular case or cases, that any signatures on any share certificates need not be autographic but may be applied to the certificates by some mechanical or other means or may be printed on them or that the certificates need not be signed by any person.

 

16.5

Every share certificate sent in accordance with these Articles will be sent at the risk of the member or other person entitled to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery.

 

17.

REPLACEMENT CERTIFICATES

 

17.1

Any two or more certificates representing shares of any one class held by any member may at his request be cancelled and a single new certificate for such shares issued in lieu without charge on surrender of the original certificates for cancellation.

 

17.2

Any certificate representing shares of any one class held by any member may at his request be cancelled and two or more certificates for such shares may be issued instead.

 

17.3

If a share certificate is defaced, worn out or said to be stolen, lost or destroyed, it may be replaced on such terms as to evidence and indemnity as the Board may decide and, where it is defaced or worn out, after delivery of the old certificate to the Company.

 

17.4

The Board may require the payment of any exceptional out-of-pocket expenses of the Company incurred in connection with the issue of any certificates under this Article. In the case of shares held jointly by several persons, any such request as is mentioned in this Article may be made by any one of the joint holders.

 

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18.

LIEN ON SHARES NOT FULLY PAID

The Company shall have a first and paramount lien on every share, not being a fully paid share, for all amounts payable to the Company (whether presently or not) in respect of that share. The Company’s lien over a share takes priority over any third party’s interest in that share, and extends to any dividend or other money payable by the Company in respect of that share (and, if the lien is enforced and the share is sold by the Company, the proceeds of sale of that share). The Board may at any time, either generally or in any particular case, waive any lien that has arisen or declare any share to be wholly or in part exempt from the provisions of this Article.

 

19.

ENFORCEMENT OF LIEN BY SALE

The Company may sell, in such manner as the Board may decide, any share over which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen (14) clear days after a notice has been served on the holder of the share or the person who is entitled by transmission to the share, demanding payment and stating that if the notice is not complied with the share may be sold. For giving effect to the sale, in the case of a certificated share, the Board may authorise some person to sign an instrument of transfer of the share sold to, or in accordance with the directions, of the buyer. In the case of an uncertificated share, the Board may require the Operator to convert the share into certificated form and after such conversion, authorise any person to sign the instrument of transfer of the share to effect the sale of the share. The buyer shall not be bound to see to the application of the purchase money, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the sale.

 

20.

APPLICATION OF PROCEEDS OF SALE

The net proceeds of any sale of shares subject to any lien, after payment of the costs, shall be applied:

 

  (a)

first, in or towards satisfaction of so much of the amount due to the Company or of the liability or engagement (as the case may be) as is presently payable or is liable to be presently fulfilled or discharged; and

 

  (b)

second, any residue shall be paid to the person who was entitled to the share at the time of the sale but only after the certificate for the shares sold has been surrendered to the company for cancellation, or an indemnity in a form reasonably satisfactory to the Directors has been given for any lost certificates, and subject to a like lien for debts or liabilities not presently payable as existed on the share prior to the sale.

 

21.

CALLS

 

21.1

Subject to these Articles and the terms on which the shares are allotted, the Board may from time to time make calls on the members in respect of any monies unpaid on their shares (whether in respect of nominal value or premium) and not payable on a date fixed by or in accordance with the terms of issue.

 

14


21.2

Each member shall (subject to the Company serving upon him at least fourteen (14) clear days’ notice specifying when and where payment is to be made and whether or not by instalments) pay to the Company as required by the notice the amount called on for his shares.

 

21.3

A call shall be deemed to have been made at the time when the resolution of the Board authorising the call was passed.

 

21.4

A call may be revoked or postponed, in whole or in part, as the Board may decide.

 

21.5

Liability to pay a call is not extinguished or transferred by transferring the shares in respect of which the call is required to be paid.

 

22.

LIABILITY OF JOINT HOLDERS

The joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share.

 

23.

INTEREST ON CALLS

If a call remains unpaid after it has become due and payable, the person from whom it is due and payable shall pay all expenses that may have been incurred by the Company by reason of such non-payment together with interest on the amount unpaid from the day it is due and payable to the time of actual payment at such rate (not exceeding the Bank of England base rate by more than five percentage points) as the Board may decide. The Board may waive payment of the interest or the expenses in whole or in part.

 

24.

SUMS TREATED AS CALLS

An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call and if it is not paid these Articles shall apply as if that sum had become due and payable by virtue of a call.

 

25.

POWER TO DIFFERENTIATE

On or before the issue of shares, the Board may decide that allottees or holders of shares can be called on to pay different amounts or that they can be called on at different times.

 

26.

PAYMENT OF CALLS IN ADVANCE

The Board may, if it thinks fit, receive from any member willing to advance the same, all or any part of the monies uncalled and unpaid on the shares held by him. Such payment in advance of calls shall, to the extent of the payment, extinguish the liability on the shares on which it is made. The Company may pay interest on the money paid in advance, or so much of it as exceeds the amount for the time being called upon the shares in respect of which such advance has been made, at such rate as the Board may decide. The Board may at any time repay the amount so advanced by giving at least three months’ notice in writing to such member of its intention to do so, unless before the expiration of such notice the amount so advanced shall have been called up on the shares in respect of which it was advanced.

 

15


27.

NOTICE IF CALL OR INSTALMENT NOT PAID

If any member fails to pay the whole of any call (or any instalment of any call) by the date when payment is due, the Board may at any time give notice in writing to such member (or to any person entitled to the shares by transmission), requiring payment of the amount unpaid (and any accrued interest and any expenses incurred by the Company by reason of such non-payment) by a date not less than fourteen (14) clear days from the date of the notice. The notice shall name the place where the payment is to be made and state that, if the notice is not complied with, the shares in respect of which such call was made will be forfeited.

 

28.

FORFEITURE FOR NON-COMPLIANCE

If the notice referred to in Article 27 is not complied with, any share for which it was given may be forfeited, by resolution of the Board to that effect, at any time before the payment required by the notice has been made. Such forfeiture shall include all dividends declared or other monies payable in respect of the forfeited shares and not paid before the forfeiture.

 

29.

NOTICE AFTER FORFEITURE

When any share has been forfeited, notice of the forfeiture shall be served on the holder of the share or the person entitled to such share by transmission (as the case may be) before forfeiture. An entry of such notice having been given and of the forfeiture and the date of forfeiture shall immediately be made in the Register in respect of such share. However, no forfeiture shall be invalidated by any omission to give such notice or to make such entry in the Register.

 

30.

FORFEITURE MAY BE ANNULLED

The Board may annul the forfeiture of a share, at any time before any forfeited share has been cancelled or sold, re-allotted or otherwise disposed of, on the terms that payment shall be made of all calls and interest due on it and all expenses incurred in respect of the share and on such further terms (if any) as the Board shall see fit.

 

31.

SURRENDER

The Board may accept the surrender of any share liable to be forfeited and, in any event, references in these Articles to forfeiture shall include surrender.

 

32.

SALE OF FORFEITED SHARES

 

32.1

A forfeited share shall become the property of the Company.

 

32.2

Subject to the Companies Acts, any such share may be sold, re-allotted or otherwise disposed of, on such terms and in such manner as the Board thinks fit.

 

16


32.3

The Board may, for the purposes of the disposal, authorise some person to transfer the share in question and may enter the name of the transferee in respect of the transferred share in the Register even if no share certificate is lodged and may issue a new certificate to the transferee. An instrument of transfer executed by that person shall be as effective as if it had been executed by the holder of, or the person entitled by transmission to, the share. The Company may receive the consideration (if any) given for the share on its disposal.

 

33.

EFFECT OF FORFEITURE

A shareholder whose shares have been forfeited shall cease to be a member in respect of such forfeited shares and shall surrender the certificate for such shares to the Company for cancellation. Such shareholder shall remain liable to pay to the Company all sums which at the date of forfeiture were presently payable by him to the Company in respect of such shares with interest (not exceeding the Bank of England base rate by 2 percentage points) from the date of the forfeiture to the date of payment. The Directors may waive payment of interest wholly or in part and may enforce payment, without any reduction or allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal.

 

34.

EVIDENCE OF FORFEITURE

A statutory declaration by a Director or the Secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share. The declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share. The person to whom the share is transferred or sold shall not be bound to see to the application of the purchase money or other consideration (if any), nor shall his title to the share be affected by any act, omission or irregularity relating to or connected with the proceedings in reference to the forfeiture or disposal of the share.

 

35.

FORM OF TRANSFER

 

35.1

Subject to these Articles:

 

  (a)

each member may transfer all or any of his shares which are in certificated form by instrument of transfer in writing in any usual form or in any form approved by the Board. Such instrument shall be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid up) by or on behalf of the transferee. All instruments of transfer, when registered, may be retained by the Company; and

 

  (b)

each member may transfer all or any of his shares which are in uncertificated form by means of a relevant system in such manner provided for, and subject as provided in, the uncertificated securities rules. No provision of these Articles shall apply in respect of an uncertificated share to the extent that it requires or contemplates the effecting of a transfer by an instrument in writing or the production of a certificate for the share to be transferred.

 

17


35.2

The transferor of a share shall be deemed to remain the holder of the share concerned until the name of the transferee is entered in the Register in respect of it.

 

36.

RIGHT TO REFUSE REGISTRATION OF TRANSFER

 

36.1

The Board may, in its absolute discretion, refuse to register any transfer of a share in certificated form (or renunciation of a renounceable letter of allotment) unless:

 

  (a)

it is for a share which is fully paid up;

 

  (b)

it is for a share upon which the Company has no lien;

 

  (c)

it is only for one class of share;

 

  (d)

it is in favour of a single transferee or no more than four joint transferees;

 

  (e)

it is duly stamped or is duly certificated or otherwise shown to the satisfaction of the Board to be exempt from stamp duty (if this is required); and

 

  (f)

it is delivered for registration to the Office (or such other place as the Board may determine), accompanied (except in the case of a transfer by a person to whom the Company is not required by law to issue a certificate and to whom a certificate has not been issued or in the case of a renunciation) by the certificate for the shares to which it relates and such other evidence as the Board may reasonably require to prove the title of the transferor (or person renouncing) and the due execution of the transfer or renunciation by him or, if the transfer or renunciation is executed by some other person on his behalf, the authority of that person to do so.

 

36.2

The Board shall not refuse to register any transfer or renunciation of partly paid shares which are listed on the London Stock Exchange on the grounds that they are partly paid shares in circumstances where such refusal would prevent dealings in such shares from taking place on an open and proper basis.

 

36.3

Transfers of shares will not be registered in the circumstances referred to in Article 76.

 

36.4

The Board may refuse to register a transfer of uncertificated shares in any circumstances that are allowed or required by the uncertificated securities rules and the relevant system.

 

37.

NOTICE OF REFUSAL TO REGISTER A TRANSFER

If the Board refuses to register a transfer of a share it shall notify the transferee of the refusal and the reasons for it within two months after the date on which the transfer was lodged with the Company or the instructions to the relevant system received. Any instrument of transfer which the Board refuses to register shall be returned to the person depositing it (except if there is suspected or actual fraud). All instruments of transfer which are registered may be retained by the Company.

 

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38.

NO FEES ON REGISTRATION

No fee shall be charged for registration of a transfer or other document or instruction relating to or affecting the title to any share or for making any other entry in the Register.

 

39.

OTHER POWERS IN RELATION TO TRANSFERS

Nothing in these Articles shall prevent the Board:

 

  (a)

from recognising a renunciation of the allotment of any share by the allottee in favour of another person; or

 

  (b)

(if empowered to do so by these Articles) from authorising any person to execute an instrument of transfer of a share and from authorising any person to transfer that share in accordance with any procedures implemented under Article 19.

 

40.

TRANSMISSION OF SHARES ON DEATH

If a member dies, the survivors or survivor (where he was a joint holder), and his executors or administrators (where he was a sole or the only survivor of joint holders), shall be the only persons recognised by the Company as having any title to his shares. Nothing in these Articles shall release the estate of a deceased member from any liability for any share which has been solely or jointly held by him.

 

41.

ELECTION OF PERSON ENTITLED BY TRANSMISSION

 

41.1

Any person becoming entitled to a share because of the death or bankruptcy of a member, or otherwise by operation of law, may (on such evidence as to his title being produced as the Board may require) elect either to become registered as a member or to have some person nominated by him registered as a member. If he elects to become registered himself, he shall notify the Company to that effect. If he elects to have some other person registered, he shall execute an instrument of transfer of such share to that person. All the provisions of these Articles relating to the transfer of shares shall apply to the notice or instrument of transfer (as the case may be) as if it were an instrument of transfer executed by the member and his death, bankruptcy or other event had not occurred. Where the entitlement of a person to a share because of the death or bankruptcy of a member or otherwise by operation of law is proved to the satisfaction of the Board, the Board shall within thirty (30) days after proof cause the entitlement of that person to be noted in the Register.

 

41.2

A person entitled by transmission to a share in uncertificated form who elects to have some other person registered shall either:

 

  (a)

procure that instructions are given by means of the relevant system to effect transfer of such uncertificated share to that person; or

 

  (b)

change the uncertificated share to certificated form and execute an instrument of transfer of that certificated share to that person.

 

19


42.

RIGHTS ON TRANSMISSION

Where a person becomes entitled to a share because of the death or bankruptcy of any member, or otherwise by operation of law, the rights of the holder in relation to such share shall cease. However, the person so entitled may give a good discharge for any dividends and other monies payable in respect of it and shall have the same rights to which he would be entitled if he were the holder of the share, except that he shall not be entitled to receive notice of, or to attend or vote at, any meeting of the Company or an separate meeting of the holders of any class of shares of the Company before he is registered as the holder of the share. The Board may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share. If the notice is not complied with within thirty (30) days, the Board may withhold payment of all dividends and the other monies payable in respect of such share until the requirements of the notice have been complied with.

 

43.

DESTRUCTION OF DOCUMENTS

 

43.1

The Company may destroy any:

 

  (a)

instrument of transfer, after six years from the date on which it is registered;

 

  (b)

dividend mandate or any variation or cancellation of a dividend mandate or any notification of change of name or address, after two years from the date on which it is recorded;

 

  (c)

share certificate, after one year from the date on which it is cancelled;

 

  (d)

instrument of proxy which has been used for the purpose of voting at any time after one year has elapsed from the date of use;

 

  (e)

instrument of proxy which has not been used for the purpose of voting at any time after a period of one month has elapsed from the end of the meeting to which the instrument of proxy relates;

 

  (f)

Share Warrant (including coupons or tokens detailed from it) which has been cancelled at any time after seven years from the date on which it was cancelled; or

 

  (g)

other document for which any entry in the Register is made, after six years from the date on which an entry was first made in the Register in respect of it, provided that the Company may destroy any such type of document at a date earlier than that authorised by this Article if a copy of such document is made and retained (whether electronically, by microfilm, by digital imaging or by other similar means) until the expiration of the period applicable to the destruction of the original of such document.

 

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43.2

It shall be conclusively presumed in favour of the Company that every:

 

  (a)

entry in the Register purporting to have been made on the basis of a document so destroyed was duly and properly made;

 

  (b)

instrument of transfer so destroyed was duly registered;

 

  (c)

share certificate so destroyed was duly cancelled; and

 

  (d)

other document so destroyed had been properly dealt with under its terms and was valid and effective according to the particulars in the records of the Company.

 

43.3

This Article shall only apply to the destruction of a document in good faith and without notice of any claim (regardless of the parties to it) to which the document might be relevant. Nothing in this Article shall be construed as imposing any liability on the Company in respect of the destruction of any such document other than as provided for in this Article which would not attach to the Company in the absence of this Article. References in this Article to the destruction of any document include references to the disposal of it in any manner.

 

43.4

References in this Article to instruments of transfer shall include, in relation to uncertificated shares, instructions and/or notifications made in accordance with the relevant system relating to the transfer of such shares.

 

44.

SUB-DIVISION

Any resolution authorising the Company to sub-divide its shares or any of them may determine that, as between the shares resulting from the sub-division, any of them may have any preference or advantage or be subject to any restriction as compared with the others.

 

45.

FRACTIONS

 

45.1

Where any difficulty arises in regard to any consolidation or division, the Board may settle such difficulty as they see fit. In particular, without limitation, the Directors may sell to any person (including the Company) the shares representing the fractions for the best once reasonably obtainable and distribute the net proceeds of sale in due proportion among those members or retain such net proceeds for the benefit of the Company and:

 

  (a)

in the case of shares in certificated form, the Board may authorise any person to execute an instrument of transfer of the shares to the purchaser or a person nominated by the purchaser and take such other steps (including the giving of directions to or on behalf of the holder, who shall be bound by them) as they think fit to effect such transfer; and

 

  (b)

in the case of shares in uncertificated form, the Board may:

 

  (i)

to enable the Company to deal with the share in accordance with the provisions of this Article, require or procure any relevant person or the Operator (as applicable) to convert the share into certificated form; and

 

21


  (ii)

after such conversion, authorise any person to execute an instrument of transfer of the shares to the purchaser or a person nominated by the purchaser and take such other steps (including the giving of directions to or on behalf of the holder, who shall be bound by them) as they think fit to effect the transfer.

 

45.2

The transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale.

 

46.

ANNUAL GENERAL MEETINGS

An annual general meeting shall be held once a year, at such time (consistent with the terms of the Companies Acts) and place as may be determined by the Board.

 

47.

CONVENING OF GENERAL MEETINGS

All meetings other than annual general meetings shall be called general meetings. The Board or the chairman of the Board may, whenever it thinks fit, and shall on requisition in accordance with the Companies Acts, proceed to convene a general meeting. For all other purposes, and unless expressly provided otherwise in these Articles, the procedures for giving notice (other than as to duration) of, the conduct of, and voting at annual general meetings and all other general meetings shall be the same.

 

48.

NOTICE OF GENERAL MEETINGS

A general meeting shall be called by at least such minimum notice as is required or permitted by the Companies Acts. The period of notice shall in either case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held and shall be given to all members other than those who are not entitled to receive such notices from the Company. The Company may give such notice by any means or combination of means permitted by the Companies Acts.

 

49.

CONTENTS OF NOTICE OF MEETINGS

 

49.1

Every notice calling a meeting shall specify;

 

  (a)

whether the meeting shall be a physical or electronic meeting or a hybrid meeting;

 

  (b)

in the case of a physical meeting and/or a hybrid meeting the place, date and time of the meeting; and

 

  (c)

in the case of an electronic and/or hybrid meeting, the date, time and electronic platform for the meeting, which electronic platform may vary from time to time and from meeting to meeting as the board, in its sole discretion, sees fit,

 

22


and there shall appear with reasonable prominence in every such notice a statement that a member entitled to attend and vote is entitled to a proxy or (if he has more than one share) proxies to exercise all or any of his rights to attend, speak and vote and that a proxy need not be a member of the Company. Such notice shall also include the address of the website on which the information required by the Act is published, state the procedures with which members must comply in order to be able to attend and vote at the meeting (including the date by which they must comply), provide details of any forms to be used for the appointment of a proxy and state that a member has the right to ask questions at the meeting in accordance with the Act.

 

49.2

The notice shall specify the general nature of the business to be transacted at the meeting and shall set out the text of all resolutions to be considered by the meeting and shall state in each case whether it is proposed as an ordinary resolution or as a special resolution.

 

49.3

In the case of an annual general meeting, the notice shall also specify the meeting as such.

 

49.4

For the purposes of determining which persons are entitled to attend or vote at a meeting and how many votes a person may cast, the Company may specify in the notice of meeting a time, not more than forty-eight (48) hours before the time fixed for the meeting (not taking into account non-working days) by which a person must be entered in the Register in order to have the right to attend or vote at the meeting or appoint a proxy to do so.

 

50.

OMISSION TO GIVE NOTICE AND NON-RECEIPT OF NOTICE

The accidental omission to give notice of any meeting or to send an instrument of proxy (where this is intended to be sent out with the notice) to, or the non-receipt of either by, any person entitled to receive the same shall not invalidate the proceedings of that meeting.

 

51.

POSTPONEMENT OF GENERAL MEETING

If the Board considers that it is impracticable or unreasonable to hold a general meeting on the date or at the time or place stated in the notice calling the meeting, it may postpone or move the meeting (or do both). The Board shall take reasonable steps to ensure that notice of the date, time and place of the rearranged meeting is given to any member trying to attend the meeting at the original time and place. Notice of the date, time and place of the rearranged meeting shall, if practicable, also be placed in at least two national newspapers published in the United Kingdom. Notice of the business to be transacted at such rearranged meeting shall not be required. If a meeting is rearranged in this way, appointments of proxy are valid if they are received as required by these Articles not less than forty-eight (48) hours before the time appointed for holding the rearranged meeting and for the purpose of calculating this period, the Board can decide in their absolute discretion, not to take account of any part of a day that is not a working day. The Board may also postpone or move the rearranged meeting (or do both) under this Article.

 

52.

QUORUM AT GENERAL MEETING

No business shall be transacted at any general meeting unless a quorum is present. If a quorum is not present a chairman of the meeting can still be chosen and this will not be treated as part of the business of the meeting. Two members present in person or by proxy and entitled to attend and to vote on the business to be transacted shall be a quorum.

 

23


53.

PROCEDURE IF QUORUM NOT PRESENT

If a quorum is not present within fifteen (15) minutes (or such longer interval as the chairman in his absolute discretion thinks fit) from the time appointed for holding a general meeting, or if a quorum ceases to be present during a meeting, the meeting shall be dissolved if convened on the requisition of members. In any other case, the meeting shall stand adjourned to another day, (not being less than ten (10) clear days after the date of the original meeting), and at such time and place as the chairman (or, in default, the Board) may determine. If at such adjourned meeting a quorum is not present within fifteen (15) minutes from the time appointed for holding the meeting, one person entitled to vote on the business to be transacted, being a member or a proxy for a member or a duly authorised representative of a corporation which is a member, shall be a quorum and any notice of an adjourned meeting shall state this.

 

54.

CHAIRMAN OF GENERAL MEETING

The chairman of the Board shall preside at every general meeting of the Company. If there is no such chairman or if at any meeting he shall not be present within five (5) minutes after the time appointed for holding the meeting, or shall be unwilling to act as chairman, the deputy chairman (if any) of the Board shall, if present and willing to act, preside at such meeting. If more than one deputy chairman is present they shall agree amongst themselves who is to take the chair or, if they cannot agree, the deputy chairman who has been in office as a Director the longest shall take the chair. If no chairman or deputy chairman shall be so present and willing to act, the Directors present shall choose one of their number to act or, if there be only one Director present, he shall be chairman if willing to act. If there be no Director present and willing to act, the members present and entitled to vote shall choose one of their number to be chairman of the meeting. Nothing in these Articles shall restrict or exclude any of the powers or rights of a chairman of a meeting which are given by law.

 

55.

ENTITLEMENT TO ATTEND AND SPEAK

 

55.1

A Director (and any other person invited by the chairman to do so) may attend and speak at any general meeting and at any separate meeting of the holders of any class of shares of the Company, whether or not he is a member.

 

55.2

The Board may resolve to enable persons entitled to attend a general meeting hosted on an electronic platform (such meeting being an electronic general meeting) to do so by simultaneous attendance by electronic means with no member necessarily in physical attendance at the electronic general meeting. The members or their proxies present shall be counted in the quorum for, and entitled to vote at, the general meeting in question, and that meeting shall be duly constituted and its proceedings valid if the chairman of the general meeting is satisfied that adequate facilities are available throughout the electronic general meeting to ensure that members attending the electronic general meeting who are not present together at the same place may, by electronic means, attend and speak and vote at it.

 

24


55.3

Nothing in these Articles prevents a general meeting being held both physically and electronically.

 

56.

ADJOURNMENTS

 

56.1

The chairman may, with the consent of a meeting at which a quorum is present, and shall, if so directed by the meeting, adjourn any meeting from time to time (or indefinitely) and from place to place as the meeting shall determine.

 

56.2

Without prejudice to any other power which he may have under these Articles or at common law, the chairman may, without the need for the consent of the meeting, interrupt or adjourn any meeting from time to time and from place to place or for an indefinite period if he is of the opinion that it has become necessary to do so in order to secure the proper and orderly conduct of the meeting or to give all persons entitled to do so a reasonable opportunity of attending, speaking and voting at the meeting (where facilities at a physical meeting place and/or an electronic platform appear to the chairman to have become inadequate for the purpose) or to ensure that the business of the meeting is properly disposed of.

 

56.3

Meetings can be adjourned more than once, in accordance with the procedures set out in this Article 56.

 

57.

NOTICE OF ADJOURNMENT

If the meeting is adjourned indefinitely or for more than three months, notice of the adjourned meeting shall be given in the same manner as in the case of the original meeting. Except as provided in these Articles, there is no need to give notice of the adjourned meeting or of the business to be considered there.

 

58.

BUSINESS OF ADJOURNED MEETING

No business shall be transacted at any adjourned meeting other than the business which might properly have been transacted at the meeting from which the adjournment took place.

 

59.

SECURITY ARRANGEMENTS AND ORDERLY CONDUCT

 

59.1

The Board may direct that any person wishing to attend any meeting should provide such evidence of identity and submit to such searches or other security arrangements or restrictions as the Board shall consider appropriate in the circumstances and shall be entitled in its absolute discretion to refuse entry to any meeting to any person who fails to provide such evidence of identity or to submit to such searches or to otherwise comply with such security arrangements or restrictions.

 

25


59.2

The Board and, at any electronic general meeting, the chairman may make any arrangement and impose any requirement or restriction as is:

 

  (a)

necessary to ensure the identification of those taking part and the security of the electronic communication; and

 

  (b)

proportionate to those objectives.

In this respect, the Company is able to authorise any voting application, system or facility for electronic general meetings as it sees fit.

 

59.3

The chairman shall take such action or give directions as he thinks fit to promote the orderly conduct of the business of the meeting as laid down in the notice of the meeting and to ensure the security of the meeting and the safety of the people attending the meeting. The chairman’s decision on matters of procedure or arising incidentally from the business of the meeting shall be final as shall be his determination as to whether any matter is of such a nature.

 

60.

OVERFLOW MEETING ROOMS

 

60.1

The Board may, in accordance with this Article, make arrangements for members and proxies who are entitled to attend and participate in a general meeting, but who cannot be seated in the main meeting room where the chairman will be, to attend and take part in a general meeting in an overflow room or rooms. Any overflow room will have appropriate links to the main room and will enable audio-visual communication between the meeting rooms throughout the meeting. The Board will decide how to divide members and proxies between the main room and the overflow room. If an overflow room is used, the meeting will be treated as being held and taking place in the main meeting room and the meeting will consist of all the members and proxies who are attending both in the main meeting room and the overflow room.

 

60.2

Details of any arrangements for overflow rooms will be set out in the notice of the meeting but failure to do so will not invalidate the meeting.

 

61.

SATELLITE MEETING PLACES

 

61.1

To facilitate the organisation and administration of any general meeting, the Board may decide that the meeting shall be held at two or more locations.

 

61.2

For the purposes of these Articles, any general meeting of the Company taking place at two or more locations shall be treated as taking place where the chairman of the meeting presides (the “principal meeting place”) and any other location where that meeting takes place is referred in this Article as a “satellite meeting”.

 

61.3

A member present in person or by proxy at a satellite meeting may be counted in the quorum and may exercise all rights that they would have been able to exercise if they were present at the principal meeting place.

 

26


61.4

The Board may make and change from time to time such arrangements as they shall in their absolute discretion consider appropriate to:

 

  (a)

ensure that all members and proxies for members wishing to attend the meeting can do so;

 

  (b)

ensure that all persons attending the meeting are able to participate in the business of the meeting and to see and hear anyone else addressing the meeting;

 

  (c)

ensure the safety of persons attending the meeting and the orderly conduct of the meeting; and

 

  (d)

restrict the numbers of members and proxies at any one location to such number as can safely and conveniently be accommodated there.

 

61.5

The entitlement of any member or proxy to attend a satellite meeting shall be subject to any such arrangements then in force and stated by the notice of the meeting or adjourned meeting to apply to the meeting.

 

61.6

If there is a failure of communication equipment or any other failure in the arrangements for participation in the meeting at more than one place, the chairman may adjourn the meeting in accordance with Article 56. Such adjournment will not affect the validity of such meeting, or any business conducted at such meeting up to the point of adjournment, or any action taken pursuant to such meeting.

 

61.7

A person (“satellite chairman”) appointed by the Board shall preside at each satellite meeting. Every satellite chairman shall carry out all requests made of him by the chairman of the meeting, may take such action as he thinks necessary to maintain the proper and orderly conduct of the satellite meeting and shall have all powers necessary or desirable for such purposes.

 

62.

PROCEDURE WHERE GENERAL MEETINGS HELD AT MORE THAN ONE PLACE

 

62.1

The provisions of this Article shall apply if any general meeting is held at or adjourned to more than one place.

 

62.2

The notice of such a meeting or adjourned meeting shall specify the principal meeting place and the Directors shall make arrangements for simultaneous attendance and participation at the principal meeting place and at other satellite meetings by members, provided that persons attending at any particular place shall be able to see and hear and be seen and heard by means of audio visual links by persons attending the principal meeting place and at the other satellite meeting places at which the meeting is held.

 

62.3

The Directors may from time to time make such arrangements for the purpose of controlling the level of attendance at any such place (whether involving the issue of tickets or the imposition of some geographical or regional means of selection or otherwise) as they shall in their absolute discretion consider appropriate, and may from time to time vary any such arrangements or make new arrangements in place of them, provided that a member who is not entitled to attend, in person or by proxy, at any principal meeting place shall be entitled so to attend at one of the satellite meetings, and the entitlement of any member so to attend the meeting or adjourned meeting at such place shall be subject to any such arrangements as may from time to time be in force and by the notice of meeting or adjourned meeting stated to apply to the meeting.

 

27


62.4

For the purposes of all other provisions of these Articles, any such meeting shalt be treated as being held at the principal meeting place.

 

62.5

If a meeting is adjourned to more than one place, not less than seven days’ notice of the adjourned meeting shall be given despite any other provision of these Articles.

 

63.

AMENDMENT TO RESOLUTIONS

 

63.1

If an amendment to any resolution under consideration is proposed but is ruled out of order by the chairman of the meeting in good faith, any error in such ruling shall not invalidate the proceedings on the original resolution.

 

63.2

In the case of a resolution duly proposed as a special resolution, no amendment to it (other than an amendment to correct a patent error) may in any event be considered or voted on. In the case of a resolution duly proposed as an ordinary resolution no amendment to it (other than an amendment to correct a patent error) may be considered or voted on unless either at least forty-eight (48) hours prior to the time appointed for holding the meeting or adjourned meeting at which such ordinary resolution is to be proposed, notice in writing of the terms of the amendment and intention to move the same has been lodged at the Office or received in electronic form at the electronic address at which the Company has or is deemed to have agreed to receive it or the chairman of the meeting in his absolute discretion decides that it may be considered or voted on.

 

64.

WITHDRAWAL AND RULING AMENDMENTS OUT OF ORDER

With the consent of the chairman of the meeting, an amendment may be withdrawn by its proposer before it is voted on. If an amendment proposed to any resolution under consideration is ruled out of order by the chairman of the meeting, the proceedings on the resolution shall not be invalidated by any error in the ruling.

 

65.

MEMBERS’ RESOLUTIONS

 

65.1

Members of the Company shall have the rights provided by the Companies Acts to have the Company circulate and give notice of a resolution which may be properly moved, and is intended to be moved, at the Company’s next annual general meeting.

 

65.2

Expenses of complying with these rights shall be borne in accordance with the Companies Acts.

 

66.

METHOD OF VOTING

 

66.1

Any resolution put to the vote of a general meeting must be decided exclusively on a poll.

 

66.2

At general meetings, resolutions shall be put to the vote by the chairman of the meeting and there shall be no requirement for the resolution to be proposed or seconded by any person.

 

28


67.

OBJECTION TO ERROR IN VOTING

No objection shall be raised to the qualification of any voter or to the counting of, or failure to count, any vote, except at the meeting or adjourned meeting at which the vote objected to is given or tendered or at which the error occurs. Any objection or error shall be referred to the chairman of the meeting and shall only vitiate the decision of the meeting on any resolution if the chairman decides that the same is of sufficient magnitude to vitiate the resolution or may otherwise have affected the decision of the meeting. The decision of the chairman of the meeting on such matters shall be final and conclusive.

 

68.

VOTING PROCEDURE

 

68.1

Any poll on any question of adjournment shall be taken immediately. A poll on any other matter shall be taken in such manner (including the use of ballot or voting papers or tickets) and at such time and place, not more than thirty (30) days from the date of the meeting or adjourned meeting, as the chairman shall direct. The chairman may appoint scrutineers who need not be members. It is not necessary to give notice of a poll not taken immediately if the time and place at which it is to be taken are announced at the meeting. In any other case, at least seven clear days’ notice shall be given specifying the time, date and place at which the poll shall be taken. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was due to be conducted.

 

68.2

Votes may be given in person or by proxy. A member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.

 

68.3

No notice need be given of a poll not taken during the meeting if the time and place at which it is to be taken are announced at the meeting. In any other case, at least seven clear days’ notice must be given specifying the time and place at which the poll is to be taken.

 

69.

VOTES OF MEMBERS

 

69.1

Subject to Article 69.2, to the Companies Acts, to any special terms as to voting on which any shares may have been issued or may for the time being be held and to any suspension or abrogation of voting rights under these Articles, at any general meeting every Ordinary Shareholder present in person or by duly appointed proxy or corporate representative has one vote for every Ordinary Share of which he is the holder or in respect of which his appointment as proxy or corporate representative has been made and a member, proxy or corporate representative entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses the same way.

 

69.2

If two or more persons are joint holders of a share, then in voting on any question the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose seniority shall be determined by the order in which the names of the holders stand in the Register.

 

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69.3

Where in England or elsewhere a receiver or other person (by whatever name called) has been appointed by any court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any member on the ground (however formulated) of mental disorder, the Board may in its absolute discretion, upon or subject to production of such evidence of the appointment as the Board may require, permit such receiver or other person on behalf of such member to vote in person by proxy on behalf of such member at any general meeting or to exercise any other right conferred by membership in relation to meetings of the Company. Evidence to the satisfaction of the Board of the authority of the person claiming to exercise the right to vote shall be deposited at the Office, or at such other place as is specified in accordance with these Articles for the deposit of instruments of proxy, at least forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the right to vote is to be exercised and, in default, the right to vote shall not be exercisable.

 

69.4

In the case of equality of votes the chairman of the meeting shall not be entitled to a casting vote.

 

69.5

In order that the Company may determine the members entitled to vote at any meeting of members or any adjournment thereof, and how many votes such person may cast, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed the record date for determining members entitled to vote at a meeting of members shall, unless otherwise required by law, be at the close of business on the business day preceding the day on which notice is given.

 

70.

NO RIGHT TO VOTE WHERE SUMS OVERDUE ON SHARES

No member may vote at a general meeting (or any separate meeting of the holders of any class of shares), either in person or by proxy, or to exercise any other right or privilege as a member in respect of a share held by him unless:

 

  (a)

all calls or other sums presently due and payable by him in respect of that share whether alone or jointly with any other person together with interest and expenses (if any) have been paid to the Company; or

 

  (b)

the Board determines otherwise.

 

71.

VOTING BY PROXY

 

71.1

Subject to Article 71.2, an instrument appointing a proxy shall be in writing in any usual form (or in another form approved by the Board) executed under the hand of the appointor or his duly constituted attorney or, if the appointor is a corporation, under its seal or signed by a duly authorised officer or attorney or other person authorised to sign.

 

71.2

Subject to the Companies Acts, the Board may accept the appointment of a proxy received by electronic means on such terms and subject to such conditions as it considers fit. The appointment of a proxy received by electronic means shall not be subject to the requirements of Article 71.1.

 

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71.3

For the purposes of 71.1 and 71.2, the Board may require such reasonable evidence it considers necessary to determine:

 

  (a)

the identity of the member and the proxy; and

 

  (b)

where the proxy is appointed by a person acting on behalf of the member, the authority of that person to make the appointment.

 

71.4

A member may appoint another person as his proxy to exercise all or any of his rights to attend and to speak and to vote on a resolution or amendment of a resolution, or on other business arising, at a meeting or meetings of the Company. Unless the contrary is stated in it, the appointment of a proxy shall be deemed to confer authority to exercise all such rights, as the proxy thinks fit.

 

71.5

A proxy need not be a member.

 

71.6

A member may appoint more than one proxy in relation to a meeting, provided that each proxy is appointed to exercise the rights attached to different shares held by the member. When two or more valid but differing appointments of proxy are delivered or received for the same share for use at the same meeting, the one which is last validly delivered or received (regardless of its date or the date of its execution) shall be treated as replacing and revoking the other or others as regards that share. If the Company is unable to determine which appointment was last validly delivered or received, none of them shall be treated as valid in respect of that share.

 

71.7

Delivery or receipt of an appointment of proxy does not prevent a member attending and voting in person at the meeting or an adjournment of the meeting.

 

71.8

The appointment of a proxy shall (unless the contrary is stated in it) be valid for an adjournment of the meeting as well as for the meeting or meetings to which it relates. The appointment of a proxy shall be valid for 12 months from the date of execution or, in the case of an appointment of proxy delivered by electronic means, for 12 months from the date of delivery unless otherwise specified by the Board.

 

71.9

Subject to the Companies Acts, the Company may send a form of appointment of proxy to all or none of the persons entitled to receive notice of and to vote at a meeting. If sent, the form shall provide for three-way voting on ail resolutions (other than procedural resolutions) set out in the notice of meeting.

 

71.10

The Company shall not be bound to enquire whether any proxy or corporate representative votes in accordance with the instructions given to him by the member he represents and if a proxy or corporate representative does not vote in accordance with the instructions of the member he represents the vote or votes cast shall nevertheless be valid for all purposes.

 

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72.

RECEIPT OF PROXY

 

72.1

An instrument appointing a proxy and any reasonable evidence required by the Board in accordance with Article 71.3 shall:

 

  (a)

subject to 72.1(c) and (d), in the case of an instrument of proxy in hard copy form, delivered to the office, or another place in the United Kingdom specified in the notice convening the meeting or in the form of appointment of proxy or other accompanying document sent by the Company in relation to the meeting (a “proxy notification address”) not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting at which the person named in the form of appointment of proxy proposes to vote;

 

  (b)

subject to 72.1(c) and (d), in the case of an appointment of a proxy sent by electronic means, where the Company has given an electronic address (a “proxy notification electronic address”):

 

  (i)

in the notice calling the meeting;

 

  (ii)

in an instrument of proxy sent out by the Company in relation to the meeting;

 

  (iii)

in an invitation to appoint a proxy issued by the Company in relation to the meeting; or

 

  (iv)

on a website maintained by or on behalf of the Company on which any information relating to the meeting is required by the Act to be kept,

it shall be received at such proxy notification electronic address not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting at which the person named in the form of appointment of proxy proposes to vote;

 

  (c)

in the case of a poll taken more than forty-eight (48) hours after it is demanded, delivered or received at a proxy notification address or a proxy notification electronic address and not less than twenty-four (24) hours before the time appointed for the holding of the adjourned meeting; or

 

  (d)

in the case of a poll which is not taken at the meeting but is taken forty-eight (48) hours or less thereafter, or in the case of an adjourned meeting to be held forty-eight (48) hours or less after the time fixed for holding the original meeting, received:

 

  (i)

at a proxy notification address or a proxy notification electronic address in accordance with 72.1(a) or (b);

 

  (ii)

by the chairman of the meeting or the Secretary or any Director at the meeting, as the case may be, at the original meeting; or

 

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  (iii)

at a proxy notification address or a proxy notification electronic address by such time as the chairman of the meeting may direct at the meeting.

In calculating the periods in this Article, no account shall be taken of any part of a day that is not a working day.

 

72.2

The Board may decide, either generally or in any particular case, to treat a proxy appointment as valid notwithstanding that the appointment or any of the information required under Article 71.3 has not been received in accordance with the requirements of this Article.

 

72.3

Subject to Article 72.2, if the proxy appointment and any of the information required under Article 71.3 is not received in the manner set out in Article 72.1, the appointee shall not be entitled to vote in respect of the shares in question.

 

72.4

Without limiting the foregoing, in relation to any uncertificated shares, the Board may from time to time:

 

  (a)

permit appointments of a proxy by means of a communication sent in electronic form in the form of an uncertificated proxy instruction; and

 

  (b)

permit supplements to, or amendments or revocations of, any such uncertificated proxy instruction by the same means.

The Board may in addition prescribe the method of determining the time at which any such uncertificated proxy instruction is to be treated as received by the Company or a participant acting on its behalf. The Board may treat any such uncertificated proxy instruction which purports to be or is expressed to be sent on behalf of a holder of a share as sufficient evidence of the authority of the person sending that instruction to send it on behalf of that holder.

 

73.

REVOCATION OF PROXY

A vote given shall be valid in the event of the death or mental disorder of the principal or the revocation of the instrument of proxy, or of the authority under which the instrument of proxy was executed, or the transfer of the share for which the instrument of proxy is given, unless notice in writing of such death, mental disorder, revocation or transfer shall have been received by the Company at the Office, or at such other place as has been appointed for the deposit of instruments of proxy, no later than the last time at which an appointment of a proxy should have been received in order for it to be valid for use at the meeting at which the vote was given.

 

74.

AVAILABILITY OF APPOINTMENTS OF PROXY

The Directors may at the expense of the Company send or make available appointments of proxy or invitations to appoint a proxy to the members by post or by electronic means or otherwise (with or without provision for their return prepaid) for use at any general meeting or at any separate class meeting, either in blank or nominating in the alternative any one

 

33


or more of the Directors or any other person If for the purpose of any meeting, appointments of proxy or invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the Company’s expense, they shall be issued to all (and not to some only) of the members entitled to be sent a notice of the meeting and to vote at it. The accidental omission, or the failure due to circumstances beyond the Company’s control, to send or make available such an appointment of proxy or give such an invitation to, or the non-receipt thereof by, any member entitled to attend and vote at a meeting shall not invalidate the proceedings at that meeting.

 

75.

CORPORATE REPRESENTATIVES

 

75.1

A corporation (whether or not a company within the meaning of the Act) which is a member may, by resolution of its Directors or other governing body, authorise such person as it thinks fit to act as its representative (or, as the case may be, representatives) at any meeting of the Company or at any separate meeting of the holders of any class of shares.

 

75.2

Any person so authorised shall be entitled to exercise the same powers on behalf of the corporation (in respect of that part of the corporation’s holdings to which the authority relates) as the corporation could exercise if it were an individual member.

 

75.3

The corporation shall for the purposes of these Articles be deemed to be present in person and at any such meeting if a person so authorised is present at it, and all references to attendance and voting in person shall be construed accordingly.

 

75.4

A Director, the Secretary or some person authorised for the purpose by the Secretary may require the representative to produce a certified copy of the resolution so authorising him or such other evidence of his authority reasonably satisfactory to them before permitting him to exercise his powers.

 

75.5

A vote given by a corporate representative shall be valid notwithstanding that he is no longer authorised to represent the member unless notice of the revocation of appointment was delivered in writing to the Company at such place or address and by such time as is specified in Article 73 for the revocation of the appointment of a proxy.

 

76.

FAILURE TO DISCLOSE INTERESTS IN SHARES

 

76.1

If a member, or any other person appearing to be interested in shares held by that member, has been issued with a notice under section 793 of the Act (a “section 793 notice”) and has failed in relation to any shares (the “default shares”, which expression includes any shares issued after the date of such notice in right of those shares) to give the Company the information required by the section 793 notice within the prescribed period from the service of the notice, the following sanctions shall apply unless the Board determines otherwise:

 

  (a)

the member shall not be entitled in respect of the default shares to be present or to vote (either in person or by representative or proxy) at any general meeting or at any separate meeting of the holders of any class of shares or to exercise any other right conferred by membership in relation to any such meeting; and

 

34


  (b)

where the default shares represent at least 0.25% in nominal value of the issued shares of their class (calculated exclusive of any shares held as treasury shares):

 

  (i)

any dividend or other money payable for such shares shall be withheld by the Company, which shall not have any obligation to pay interest on it, and the member shall not be entitled to elect, pursuant to Article 134, to receive shares instead of that dividend; and

 

  (ii)

no transfer, other than an excepted transfer, of any shares held by the member shall be registered unless the member himself is not in default of supplying the required information and the member proves to the satisfaction of the Board that no person in default of supplying such information is interested in any of the shares that are the subject of the transfer; and

 

  (c)

for the purposes of ensuring Article 76.1(b)(ii) can apply to all shares held by the member, the Company may in accordance with the uncertificated securities rules, issue a written notification to the Operator requiring conversion into certificated form of any share held by the member in uncertificated form.

 

76.2

Where the sanctions under Article 76.1 apply in relation to any shares, they shall cease to have effect (and any dividends withheld under Article 76.1(b) shall become payable):

 

  (a)

if the shares are transferred by means of an excepted transfer but only in respect of the shares transferred; or

 

  (b)

at the end of the period of seven days (or such shorter period as the Board may determine) following receipt by the Company of the information required by the section 793 notice and the Board being fully satisfied that such information is full and complete.

 

76.3

Where, on the basis of information obtained from a member in respect of any share held by him, the Company issues a section 793 notice to any other person, it shall at the same time send a copy of the notice to the member, but the accidental omission to do so, or the non-receipt by the member of the copy, shall not invalidate or otherwise affect the application of Article 76.1.

 

76.4

For the purposes of this Article 76:

 

  (a)

a “person” other than the member holding a share, shall be treated as appearing to be interested in that share if the member has informed the Company that the person is, or may be, so interested, or if the Company (after taking account of any information obtained from the member or, pursuant to a section 793 notice, from anyone else) knows or has reasonable cause to believe that the person is, or may be, so interested;

 

  (b)

interested” shall be construed as it is for the purpose of section 793 of the Act;

 

35


  (c)

reference to a person having failed to give the Company the information required by a notice, or being in default as regards supplying such information, includes reference:

 

  (i)

to his having failed or refused to give all of any part of it; and

 

  (ii)

to his having given information which he knows to be false in a material particular or having recklessly given information which is false in a material particular;

 

  (d)

prescribed period” means fourteen (14) days; and

 

  (e)

excepted transfer” means, in relation to any shares held by a member:

 

  (i)

a transfer by way of or pursuant to acceptance of a takeover offer for the Company (within the meaning of section 974 of the Act);

 

  (ii)

a transfer in consequence of a sale made through the London Stock Exchange or any other stock exchange on which the Company’s shares are normally traded; or

 

  (iii)

a transfer which is shown to the satisfaction of the Board to be made in consequence of a sale of the whole of the beneficial interest in the shares to a person who is unconnected with the member and with any other person appearing to be interested in the shares.

 

76.5

Nothing contained in this Article shall be taken to limit the powers of the Company under section 794 of the Act.

 

77.

POWER OF SALE OF SHARES OF UNTRACED MEMBERS

 

77.1

The Company shall be entitled to sell at the best price reasonably obtainable any share of a member, or any share to which a person is entitled by transmission, if and provided that:

 

  (a)

during the period of twelve (12) years before the date of sending of the notice referred to in Article 77.1(b) no cheque, order or warrant in respect of such share sent by the Company through the post in a pre-paid envelope addressed to the member or to the person entitled by transmission to the share, at his address on the Register or other last known address given by the member or person to which cheques, orders or warrants in respect of such share are to be sent has been cashed and the Company has received no communications in respect of such share from such member or person entitled, provided that during such period of twelve (12) years the Company has paid at least three cash dividends (whether interim or final) and no such dividend has been claimed by the person entitled to it;

 

36


  (b)

on or after expiry of the said period of twelve (12) years, the Company has given notice of its intention to sell such share by sending a notice to the member or person entitled by transmission to the share at his address on the Register or other last known address given by the member or person entitled by transmission to the share and before sending such a notice to the member or other person entitled by transmission, the Company must have used reasonable efforts to trace the member or other person entitled, engaging, if considered appropriate, a professional asset reunification company or other tracing agent and/or giving notice of its intention to sell the share by advertisement in a national newspaper and in a newspaper circulating in the area of the address of the member or person entitled by transmission to the share shown in the Register; and

 

  (c)

during the further period of three months following the date of such notice and prior to the exercise of the power of sale the Company has not received any communication in respect of such share from the member or person entitled by transmission.

 

77.2

To give effect to any sale of shares under this Article 77:

 

  (a)

in the case of a share in certificated form, the Board may authorise any person to execute an instrument of transfer of the share to the purchaser or a person nominated by the purchaser and take such other steps (including the giving of directions to or on behalf of the holder, who shall be bound by them) as it thinks fit to effect the transfer. The Board may authorise some person to transfer the shares in question and may enter the name of the transferee in respect of the transferred shares in the Register even if no share certificate has been lodged for such shares and may issue a new certificate to the transferee. An instrument of transfer executed by that person shall be as effective as if it had been executed by the holder of, or the person entitled by transmission to, the shares; and

 

  (b)

in the case of a share in uncertificated form, the Directors may:

 

  (i)

to enable the Company to deal with the share in accordance with the provisions of this Article, require or procure any relevant person or the Operator (as applicable) to convert the share into certificated form; and

 

  (ii)

after such conversion authorise any person to execute an instrument of transfer of the shares to the purchase or person nominated by the purchaser and take such other steps (including the giving of directions to or on behalf of the holder, who shall be bound by them) as it thinks fit to effect the transfer.

 

77.3

The buyer shall not be bound to see to the application of the purchase monies, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. If the shares are in uncertificated form, in accordance with the uncertificated securities rules, the Board may issue a written notification to the Operator requiring the conversion of the share to certificated form.

 

77.4

If during the period of twelve (12) years referred to in Article 77.1, or during any period ending on the date when all the requirements of 77.1(a) to 77.1(c) have been satisfied, any additional shares have been issued in respect of those held at the beginning of, or previously so issued during, any such period and all the requirements of 77.1(b) to 77.1(c) have been satisfied in regard to such additional shares, the Company shall also be entitled to sell the additional shares.

 

37


78.

APPLICATION OF PROCEEDS OF SALE OF SHARES OF UNTRACED MEMBERS

The Company shall account to the member or other person entitled to the share for the net proceeds of a sale under Article 77 by carrying all monies relating to such sale to a separate account. The Company shall be deemed to be a debtor to, and not a trustee for, such member or other person in respect of such monies. Monies carried to such separate account may either be employed in the business of the Company or invested in such investments as the Board may think fit. No interest shall be payable to such member or other person in respect of such monies and the Company does not have to account for any money earned on them.

 

79.

NUMBER OF DIRECTORS

Unless otherwise determined by the Company by ordinary resolution, the number of Directors (other than any alternate Directors) shall be at least two and not more than fifteen (15).

 

80.

POWER OF COMPANY TO APPOINT DIRECTORS

Subject to these Articles and the Companies Acts, the Company may by ordinary resolution appoint a person who is willing to act to be a Director, either to fill a vacancy or as an addition to the existing Board but the total number of Directors shall not exceed any maximum number fixed in accordance with these Articles.

 

81.

POWER OF BOARD TO APPOINT DIRECTORS

Subject to these Articles, the Board shall have power at any time to appoint any person who is willing to act as a Director, either to fill a vacancy or as an addition to the existing Board but the total number of Directors shall not exceed any maximum number fixed in accordance with these Articles.

 

82.

ELIGIBILITY OF NEW DIRECTORS

 

82.1

No person, other than a retiring Director (by rotation or otherwise), shall be appointed or reappointed a Director at any general meeting unless:

 

  (a)

he is recommended by the Board; or

 

  (b)

at least seven but not more than forty-two (42) clear days before the date appointed for the meeting the Company has received notice from a member (other than the person proposed) entitled to vote at the meeting of his intention to propose a resolution for the appointment or re-appointment of that person, stating the particulars which would, if he were so appointed or re-appointed, be required to be included in the Company’s register of Directors and a notice executed by that person of his willingness to be appointed or re-appointed, is lodged at the Office.

 

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82.2

A Director need not be a member of the Company.

 

83.

RETIREMENT OF DIRECTORS

At each annual general meeting of the Company all Directors shall retire from office except any Director appointed by the Board after the notice of that annual general meeting has been given and before that annual general meeting has been held.

 

84.

DEEMED RE-APPOINTMENT

 

84.1

A Director who retires at an annual general meeting shall (unless he is removed from office or his office is vacated in accordance with these Articles) retain office until the close of the meeting at which he retires or (if earlier) when a resolution is passed at that meeting not to fill the vacancy or to elect another person in his place or the resolution to re-appoint him is put to the meeting and lost.

 

84.2

If the Company, at any meeting at which a Director retires in accordance with these Articles does not fill the office vacated by such Director, the retiring Director, if willing to act, shall be deemed to be re-appointed unless at that meeting a resolution is passed not to fill the vacancy or elect another person in his place or unless the resolution to re-appoint him is put to the meeting and lost.

 

85.

PROCEDURE IF INSUFFICIENT DIRECTORS APPOINTED

 

85.1

If:

 

  (a)

at the annual general meeting in any year any resolution or resolutions for the appointment or re-appointment of the persons eligible for appointment or reappointment as Directors are put to the meeting and lost; and

 

  (b)

at the end of that meeting the number of Directors is fewer than any minimum number of Directors required under Article 79,

all retiring Directors who stood for re-appointment at that meeting (Retiring Directors) shall be deemed to have been re-appointed as Directors and shall remain in office but the Retiring Directors may only act for the purpose of filling vacancies, convening general meetings of the Company and performing such duties as are essential to maintain the Company as a going concern, and not for any other purpose.

 

85.2

The Retiring Directors shall convene a general meeting as soon as reasonably practicable following the meeting referred to in Article 85.1 and they shall retire from office at that meeting. If at the end of any meeting convened under this Article the number of Directors is fewer than any minimum number of Directors required under Article 79, the provisions of this Article shall also apply to that meeting.

 

39


86.

REMOVAL OF DIRECTORS

In addition to any power of removal conferred by the Companies Acts, the Company may by special resolution, or by ordinary resolution of which special notice has been given in accordance with section 312 of the Act, remove a Director before the expiry of his period of office (without prejudice to a claim for damages for breach of contract or otherwise) and may (subject to these Articles) by ordinary resolution appoint another person who is willing to act to be a Director in his place.

 

87.

VACATION OF OFFICE BY DIRECTOR

 

87.1

Without prejudice to the provisions for retirement (by rotation or otherwise) contained in these Articles, the office of a Director shall be vacated if:

 

  (a)

he resigns by notice in writing delivered to the Secretary at the Office or at an address specified by the Company for the purposes of communication by electronic means or tendered at a Board meeting;

 

  (b)

he offers to resign by notice in writing delivered to the Secretary at the Office or at an address specified by the Company for the purposes of communication by electronic means or tendered at a Board meeting and the Board resolves to accept such offer;

 

  (c)

he is requested to resign by all of the other Directors by notice in writing addressed to him at his address as shown in the register of Directors (without prejudice to any claim for damages which he may have for breach of any contract between him and the Company);

 

  (d)

he ceases to be a Director by virtue of any provision of the Companies Acts, is removed from office pursuant to these Articles or the Act or becomes prohibited by law or the rules of the London Stock Exchange Rules from being a Director;

 

  (e)

he becomes bankrupt or makes an arrangement or composition with his creditors generally;

 

  (f)

a registered medical practitioner who is treating that person gives a written opinion to the Company stating that person has become physically or mentally incapable of acting as a Director and may remain so for more than three months, or he is or has been suffering from mental or physical ill health and the Board resolves that his office be vacated; or

 

  (g)

he is absent (whether or not his alternate Director appointed by him attends), without the permission of the Board, from Board meetings for six consecutive months and a notice is served on him personally, or at his residential address provided to the Company under section 165 of the Act signed by all the other Directors stating that he shall cease to be a Director with immediate effect (and such notice may consist of several copies each signed by one or more Directors).

 

40


87.2

If the office of a Director is vacated for any reason, he shall cease to be a member of any committee or sub-committee of the Board.

 

88.

RESOLUTION AS TO VACANCY CONCLUSIVE

A resolution of the Board declaring a Director to have vacated office under the terms of Article 87 shall be conclusive as to the fact and ground of vacation stated in the resolution.

 

89.

APPOINTMENT OF ALTERNATE DIRECTORS

 

89.1

Each Director may appoint any person (including another Director) to be his alternate and may at his discretion remove an alternate Director so appointed. Any appointment or removal of an alternate Director must be by written notice delivered to the Office or at an address specified by the Company for the purposes of communication by electronic means or tendered at a Board meeting or in any other manner approved by the Board. The appointment requires the approval of the Board unless it has been previously approved or the appointee is another Director.

 

89.2

An alternate Director must provide the particulars, and sign any form for public filing required by the Companies Acts relating to his appointment.

 

90.

ALTERNATE DIRECTORS’ PARTICIPATION IN BOARD MEETINGS

 

90.1

Every alternate Director is (subject to his giving to the Company an address within the United Kingdom at which notices may be served on him (and, if applicable, an address in relation to which electronic communications may be received by him)) entitled to receive notice of all meetings of the Board and all committees of the Board of which his appointor is a member and, in his appointor’s absence, to attend and vote at such meetings and to exercise all the powers, rights, duties and authorities of his appointor. Each person acting as an alternate Director shall have a separate vote at Board meetings for each Director for whom he acts as alternate Director in addition to his own vote if he is also a Director, but he shall count as only one for the purpose of determining whether a quorum is present.

 

90.2

Signature by an alternate Director of any resolution in writing of the Board or a committee of the Board will, unless the notice of his appointment provides otherwise, be as effective as signature by his appointor.

 

91.

ALTERNATE DIRECTOR RESPONSIBLE FOR OWN ACTS

Each person acting as an alternate Director will be an officer of the Company, will alone be responsible to the Company for his own acts and defaults and will not be deemed to be the agent of the Director appointing him.

 

92.

INTERESTS OF ALTERNATE DIRECTOR

An alternate Director is entitled to contract and be interested in and benefit from contracts or arrangements with the Company, to be repaid expenses and to be indemnified to the same extent as if he were a Director. However, he is not entitled to receive from the Company any fees for his services as alternate, except such part (if any) of the fee payable to his appointor as such appointor may by written notice to the Company direct.

 

41


93.

REVOCATION OF ALTERNATE DIRECTOR

An alternate Director will cease to be an alternate Director:

 

  (a)

if his appointor revokes his appointment;

 

  (b)

if he resigns his office by notice in writing to the Company;

 

  (c)

if his appointor ceases for any reason to be a Director, provided that if any Director retires but is re-appointed or deemed to be re-appointed at the same meeting, any valid appointment of an alternate Director which was in force immediately before his retirement shall remain in force; or

 

  (d)

if any event happens in relation to him which, if he were a Director otherwise appointed, would cause him to vacate his office.

 

94.

DIRECTORS’ FEES

Each of the Directors may be paid a fee at such rate as may from time to time be determined by the Board. However, the aggregate of all fees payable to the Directors (other than amounts payable under any other provision of these Articles) must not exceed £2,000,000 a year or such higher amount as may from time to time be decided by ordinary resolution of the Company. Any fees payable under this Article shall be distinct from any salary, remuneration or other amounts payable to a Director under any other provisions of these Articles and shall accrue from day to day.

 

95.

EXPENSES

Each Director may be paid his reasonable travelling, hotel and other expenses properly incurred by him in or about the performance of his duties as Director, including any expenses incurred in attending meetings of the Board or any committee of the Board or general meetings or separate meetings of the holders of any class of shares or debentures of the Company. Subject to the Act, the Directors shall have the power to make arrangements to provide a Director with funds to meet expenditure incurred or to be incurred by him for the purposes of the Company or for the purpose of enabling him to perform his duties as an officer of the Company or to enable him to avoid incurring any such expenditure.

 

96.

ADDITIONAL REMUNERATION

If by arrangement with the Board any Director shall perform or render any special duties or services outside his ordinary duties as a Director and not in his capacity as a holder of employment or executive office, he may be paid such reasonable additional remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine.

 

42


97.

REMUNERATION OF EXECUTIVE DIRECTORS

The salary or remuneration of any Director appointed to hold any employment or executive office in accordance with these Articles may be either a fixed sum of money, or may altogether or in part be governed by business done or profits made or otherwise determined by the Board, and may be in addition to or instead of any fee payable to him for his services as Director under these Articles.

 

98.

PENSIONS AND OTHER BENEFITS

 

98.1

The Board may exercise all the powers of the Company to provide pensions or other retirement or superannuation benefits and to provide death or disability benefits or other allowances or gratuities (whether by insurance or otherwise) for any person who is or has at any time been a Director or employee of:

 

  (a)

the Company;

 

  (b)

any company which is or was a holding company or a subsidiary undertaking of the Company;

 

  (c)

any company which is or was allied to or associated with the Company or a subsidiary undertaking or holding company of the Company; or

 

  (d)

a predecessor in business of the Company or of any holding company or subsidiary undertaking of the Company.

and, in each case, for any member of his family (including a spouse or former spouse) and any person who is or was dependent on him.

 

98.2

The Board may establish, maintain, subscribe and contribute to any scheme, institution, association, club, trust or fund and pay premiums and, subject to the Companies Acts, lend money or make payments to, guarantee or give an indemnity in respect of, or give any financial or other assistance in connection with any of the matters set out in Article 98.1. The Board may procure any of such matters to be done by the Company either alone or in conjunction with any other person. Any Director or former Director shall be entitled to receive and retain for his own benefit any pension or other benefit provided under this Article and shall not have to account for it to the Company. The receipt of any such benefit will not disqualify any person from being or becoming a Director of the Company.

 

99.

POWERS OF THE BOARD

 

99.1

Subject to the Companies Acts, these Articles and to any directions given by special resolution of the Company, the business of the Company will be managed by the Board, which may exercise all the powers of the Company, whether relating to the management of the business or not.

 

99.2

No alteration of these Articles and no such direction given by the Company shall invalidate any prior act of the Board which would have been valid if such alteration had not been made or such direction had not been given. Provisions contained elsewhere in these Articles as to any specific power of the Board shall not be deemed to limit the general powers given by this Article.

 

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100.

POWERS OF DIRECTORS IF LESS THAN MINIMUM NUMBER

If the number of Directors is less than the minimum prescribed in Article 79 or decided by the Company by ordinary resolution, the remaining Director or Directors may act only for the purposes of appointing an additional Director or Directors to make up that minimum or convening a general meeting of the Company for the purpose of making such appointment. If no Director or Directors is or are able or willing to act, two members may convene a general meeting for the purpose of appointing Directors. An additional Director appointed in this way holds office (subject to these Articles) only until the dissolution of the next annual general meeting after his appointment unless he is reappointed during the annual general meeting.

 

101.

POWERS OF EXECUTIVE DIRECTORS

The Board or any committee authorised by the Board may:

 

  (a)

delegate or entrust to and confer on any Director holding executive office (including a Chief Executive or Managing Director) such of its powers, authorities and discretions (with power to sub-delegate) for such time, on such terms and subject to such conditions as it thinks fit; and

 

  (b)

revoke, withdraw, alter or vary all or any of such powers.

 

102.

DELEGATION TO COMMITTEES

 

102.1

The Board may delegate any of its powers, authorities and discretions (with power to sub-delegate) for such time on such terms and subject to such conditions as it thinks fit to any committee consisting of one or more Directors and (if thought fit) one or more other persons provided that:

 

  (a)

a majority of the members of a committee shall be Directors; and

 

  (b)

no resolution of a committee shall be effective unless a majority of those present when it is passed are Directors or alternate Directors.

 

102.2

The Board may confer such powers either collaterally with, or to the exclusion of and in substitution for, all or any of the powers of the Board in that respect and may revoke, withdraw, alter or vary any such powers and discharge any such committee in whole or in part. Insofar as any power, authority or discretion is so delegated, any reference in these Articles to the exercise by the Board of such power, authority or discretion shall be construed as if it were a reference to the exercise of such power, authority or discretion by such committee.

 

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103.

LOCAL MANAGEMENT

 

103.1

The Board may establish any local or divisional boards or agencies for managing any of the affairs of the Company in any specified locality, either in the United Kingdom or elsewhere, and appoint any persons to be members of such local or divisional board, or any managers or agents, and may fix their remuneration.

 

103.2

The Board may delegate to any local or divisional board, manager or agent so appointed any of its powers, authorities and discretions (with power to sub-delegate) and may authorise the members of any such local or divisional board, or any of them, to fill any vacancies and to act notwithstanding vacancies. Any such appointment or delegation under this Article may be made, on such terms and conditions as the Board may think fit. The Board may confer such powers either collaterally with, or to the exclusion of and in substitution for, all or any of the powers of the Board, and the Board may remove any person so appointed and may annul or vary all or any of such powers, but no person dealing in good faith and without notice of any such annulment or variation shall be affected by it.

 

103.3

Subject to any terms and conditions expressly imposed by the Board, the proceedings of any local or divisional board or agency with two or more members shall be governed by such of these Articles as regulate the proceedings of the Board, so far as they are capable of applying.

 

104.

POWER OF ATTORNEY

The Board may, by power of attorney or otherwise, appoint any person or persons to be the agent or attorney of the Company and may delegate to any such person or persons any of its powers, authorities and discretions (with power to sub-delegate), in each case for such purposes and for such time, on such terms (including as to remuneration) and conditions as it thinks fit. The Board may confer such powers either collaterally with, or to the exclusion of and in substitution for, all or any of the powers of the Board in that respect and may revoke, withdraw, alter or vary any of such powers.

 

105.

EXERCISE OF VOTING POWER

The Board may exercise or cause to be exercised the voting power conferred by the shares in any other company held or owned by the Company, or any power of appointment to be exercised by the Company, in such manner as it thinks fit (including the exercise of the voting power or power of appointment in favour of the appointment of any Director as a Director or other officer or employee of such company or in favour of the payment of remuneration to the Directors, officers or employees of such company).

 

106.

PROVISION FOR EMPLOYEES ON CESSATION OF BUSINESS

The Board may, by resolution, sanction the exercise of the power to make provision for the benefit of persons employed or formerly employed by the Company or any of its subsidiary undertakings, in connection with the cessation or the transfer to any person of the whole or part of the undertaking of the Company or that subsidiary undertaking, but any such resolution shall not be sufficient for payments to or for the benefit of Directors, former Directors or shadow Directors.

 

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107.

OVERSEAS REGISTERS

Subject to the Companies Acts, the Company may keep an overseas, local or other register and the Board may make and vary such regulations as it thinks fit respecting the keeping of any such register.

 

108.

BORROWING POWERS

 

108.1

Subject to these Articles and the Companies Acts, the Board may exercise all the powers of the Company to:

 

  (a)

borrow money;

 

  (b)

indemnify and guarantee;

 

  (c)

mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company;

 

  (d)

create and issue debentures and other securities; and

 

  (e)

give security either outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

 

108.2

The Board shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiary undertakings (if any) so as to secure (as regards the subsidiary undertakings, so far as by such exercise they can secure) that the aggregate of the amounts borrowed by the Group and remaining outstanding at any time (excluding intra-Group borrowings) shall not without the previous sanction of an ordinary resolution of the Company exceed an amount equal to five times the Adjusted Capital and Reserves. The limit in this Article 108.2 may be varied, increased, reduced or relaxed (temporarily or permanently) or the same replaced with a fixed monetary cap at any time and from time to time with the sanction of an ordinary resolution of Shareholders.

 

108.3

For the purpose of this Article:

 

  (a)

Group” means the Company and its subsidiary undertakings for the time being;

 

  (b)

relevant balance sheet” means the most recent audited consolidated balance sheet of the Group at the relevant time;

 

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  (c)

Adjusted Capital and Reserves” means a sum equal to the aggregate, as shown by the relevant balance sheet, of the amount paid up or credited or deemed to be paid up on the issued or allotted share capital of the Company and the amount standing to the credit of the reserves (including, without limitation, the profit and loss account and any share premium account or capital redemption reserve) of the Company and its subsidiary undertakings included in the consolidation in the relevant balance sheet but after:

 

  (i)

making such adjustment as may be appropriate to reflect the profit or loss of the Company since the relevant balance sheet;

 

  (ii)

excluding any amount set aside for taxation (including any deferred taxation) or any amounts attributable to outside shareholders in subsidiary undertakings of the Company;

 

  (iii)

making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital and or any reserves (other than the profit and loss account) after the date of the relevant balance sheet. For this purpose, if any issue or proposed issue of shares by the Company for cash has been underwritten then such shares shall be deemed to have been issued and the amount (including any premium) of the subscription monies paid for them (other than money to be paid more than six months after the allotment date) shall to the extent so underwritten be deemed to have been paid up on the date when the issue of such shares was underwritten (or, if such underwriting was conditional, on the date when it became unconditional);

 

  (iv)

making such adjustments as may be appropriate in respect of any distribution declared, recommended, made or paid by the Company or its subsidiary undertakings (to the extent not attributable directly or indirectly to the Company) out of profits earned up to and including the date of the relevant balance sheet to the extent such distribution is not provided for in such balance sheet;

 

  (v)

making such adjustments as may be appropriate in respect of any variation in the interests of the Company in its subsidiary undertakings (including a variation where an undertaking ceases to be a subsidiary undertaking) since the date of the relevant balance sheet; and

 

  (vi)

making such adjustments as the auditors of the Company may consider appropriate.

 

  (d)

minority proportion means a proportion equal to the proportion of the issued share capital of a partly-owned subsidiary undertaking which is not attributable to a member of the Group.

 

108.4

Borrowings shall be deemed to include the following except in so far as otherwise taken into account:

 

  (a)

the nominal amount of any issued and paid up share capital (other than equity share capital) of any subsidiary undertaking of the Company owned otherwise than by a member of the Group;

 

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  (b)

the nominal amount of any other issued and paid up share capital and the principal amount of any debentures or borrowed moneys which is not at the relevant time beneficially owned by a member of the Group, the redemption or repayment of which is the subject of a guarantee or indemnity by a member of the Group or which any member of the Group may be required to buy;

 

  (c)

the principal amount of any debenture (whether secured or unsecured) of a member of the Group beneficially owned otherwise than by a member of the Group;

 

  (d)

the outstanding amount raised by acceptances by any bank or accepting house under any acceptance credit opened by or on behalf of any member of the Group; and

 

  (e)

the minority proportion of moneys borrowed by a member of the Group and owing to a partly-owned subsidiary undertaking.

 

108.5

Borrowings shall not include and shall be deemed not to include:

 

  (a)

borrowings incurred by any member of the Group for the purpose of repaying within six months of the borrowing the whole or any part (with or without premium) of any borrowings of that or other member of the Group then outstanding, pending their application for such purpose within such period; and

 

  (b)

the minority proportion of moneys borrowed by a partly owned subsidiary undertaking and not owing to another member of the Group.

 

108.6

When the aggregate principal amount of borrowings required to be taken into account on any particular date is being ascertained, any particular borrowing then outstanding which is denominated or repayable in a currency other than sterling shall be notionally converted into sterling at the rate of exchange prevailing in London on the last business day before that date or, if it would result in a lower figure, at the rate of exchange prevailing in London on the last business day six months before that date. For these purposes the rate of exchange shall be taken to be the spot rate in London recommended by a London clearing bank, selected by the Board, as being the most appropriate rate for the purchase by the company of the currency in question for sterling on the day in question.

 

108.7

A certificate or report by the auditors of the Company as to the amount of any borrowings or to the effect that the limit imposed by this Article has not been or will not be exceeded at any particular time or times, shall be conclusive evidence of such amount or fact for the purposes of this Article. Nevertheless, the Board may at any time rely on a bona fide estimate of the aggregate of the borrowings. If, in consequence, the limit on borrowings set out in this Article is inadvertently exceeded, the amount of borrowings equal to the excess may be disregarded for ninety (90) days after the date on which by reason of a determination of the auditors of the Company or otherwise the Board becomes aware that such a situation has or may have arisen.

 

108.8

No person dealing with the Company or any of its subsidiary undertakings shall be concerned to see or enquire whether the said limit is observed and no debt incurred or security given in excess of such limit shall be invalid or ineffectual unless the lender or recipient of the security had, at the time the debt was incurred or security given, express notice that the said limit had been or would be exceeded.

 

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109.

BOARD MEETINGS

 

109.1

The Board can decide when and where to have meetings and how they will be conducted. They may also adjourn meetings.

 

109.2

A Board meeting can be called by any Director. The Secretary must call a Board meeting if asked to do so by a Director.

 

110.

NOTICE OF BOARD MEETINGS

 

110.1

Notice of a Board meeting shall be deemed to be duly given to a Director if it is given to him personally or by word of mouth or given in writing or by electronic means to him at his last known address or any other address given by him to the Company for that purpose.

 

110.2

A Director may waive the requirement that notice be given to him of any Board meeting, either prospectively or retrospectively and any retrospective waiver shall not affect the validity of the meeting or of any business conducted at the meeting.

 

111.

QUORUM

 

111.1

The quorum necessary for the transaction of business may be determined by the Board and until otherwise determined shall be two persons, each being a Director or an alternate Director. A duly convened meeting of the Board at which a quorum is present shall be competent to exercise all or any of the authorities, powers, and discretions for the time being vested in or exercisable by the Board.

 

111.2

If a Director ceases to be a Director at a Board meeting, he can continue to be present and to act as a Director and be counted in the quorum until the end of the meeting if no other Director objects and if otherwise a quorum of Directors would not be present.

 

112.

CHAIRMAN

 

112.1

The Board may appoint one or more of its body as chairman or joint chairman and one or more of its body as deputy chairman of its meetings and may determine the period for which he is or they are to hold office and may at any time remove him or them from office.

 

112.2

If no such chairman or deputy chairman is elected, or if at any meeting neither a chairman nor a deputy chairman is present within ten (10) minutes of the time appointed for holding the same, the Directors present shall choose one of their number to be chairman of such meeting. In the event two or more joint chairmen or, in the absence of a chairman, two or more deputy chairman being present, the joint chairman or deputy chairman to act as chairman of the meeting shall be decided by those Directors present.

 

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113.

VOTING

Questions arising at any Board meeting shall be determined by a majority of votes. In the case of an equality of votes the chairman of that meeting shall have a second or casting vote (unless he is not entitled to vote on the resolution in question).

 

114.

PARTICIPATION BY TELEPHONE OR OTHER FORM OF COMMUNICATION

 

114.1

Any Director or his alternate may validly participate in a meeting of the Board or a committee of the Board through the medium of conference telephone or any other form of communications equipment (whether in use when these Articles are adopted or developed subsequently), provided that all persons participating in the meeting are able to hear and speak to each other throughout such meeting.

 

114.2

A person so participating by telephone or other communication shall be deemed to be present in person at the meeting and shall be counted in a quorum and entitled to vote. Such a meeting shall be deemed to take place where the largest group of those participating is assembled or, if there is no group which is larger than any other group, where the chairman of the meeting then is.

 

114.3

A resolution passed at any meeting held in the above manner, and signed by the chairman of the meeting, shall be as valid and effectual as if it had been passed at a meeting of the Board (or committee, as the case may be) duly convened and held.

 

115.

RESOLUTION IN WRITING

 

115.1

A resolution in writing signed or confirmed electronically by all the Directors for the time being entitled to receive notice of a Board meeting and to vote on the resolution and not being less than a quorum (or by all the members of a committee of the Board for the time being entitled to receive notice of such committee meeting and to vote on the resolution and not being less than a quorum of that committee), shall be as valid and effective for all purposes as a resolution duly passed at a meeting of the Board (or committee, as the case may be).

 

115.2

Such a resolution may consist of several documents or electronic communications in the same form each signed or authenticated by one or more of the Directors or members of the relevant committee.

 

116.

PROCEEDINGS OF COMMITTEES

All committees of the Board shall, in the exercise of the powers delegated to them and in the transaction of business, conform with any mode of proceedings and regulations which the Board may prescribe and subject to this shall be governed by such of these Articles as regulate the proceedings of the Board as are capable of applying.

 

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117.

MINUTES OF PROCEEDINGS

 

117.1

The Board shall keep minutes of all shareholder meetings, all Board meetings and meetings of committees of the Board. The minutes must include the names of the Directors present.

 

117.2

Any such minutes, if purporting to be signed by the chairman of the meeting at which the proceedings were held or by the chairman of the next meeting or the Secretary, shall be evidence of the matters stated in such minutes without any further proof.

 

118.

VALIDITY OF PROCEEDINGS

All acts done by a meeting of the Board, or of a committee of the Board, or by any person acting as a Director, alternate Director or member of a committee shall be valid even if it is discovered afterwards that there was some defect in the appointment of any person or persons acting, or that they or any of them were or was disqualified from holding office or not entitled to vote, or had in any way vacated their or his office.

 

119.

TRANSACTIONS OR OTHER ARRANGEMENTS WITH THE COMPANY

 

119.1

Subject to the Companies Acts and provided he has declared the nature and extent of his interest in accordance with the requirements of the Companies Acts, a Director who is in any way, whether directly or indirectly, interested in an existing or proposed transaction or arrangement with the Company may:

 

  (a)

be a party to, or otherwise interested in, any transaction or arrangement with the Company or in which the Company is otherwise (directly or indirectly) interested;

 

  (b)

act by himself or through his firm in a professional capacity for the Company (otherwise than as auditor) and he or his firm shall be entitled to remuneration for professional services as if he were not a Director;

 

  (c)

be or become a Director or other officer of, or employed by, or a party to a transaction or arrangement with, or otherwise interested in, any body corporate in which the Company is otherwise (directly or indirectly) interested; and

 

  (d)

hold any office or place of profit with the Company (except as auditor) in conjunction with his office of Director for such period and upon such terms, including as to remuneration as the Board may decide.

 

119.2

A Director shall not, save as he may otherwise agree, be accountable to the Company for any benefit which he derives from any such contract, transaction or arrangement or from any such office or employment or from any interest in any such body corporate and no such contract, transaction or arrangement shall be liable to be avoided on the grounds of any such interest or benefit nor shall the receipt of any such remuneration or other benefit constitute a breach of his duty under section 176 of the Act.

 

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120.

AUTHORISATION OF DIRECTORS’ CONFLICTS OF INTEREST

 

120.1

The Board may, in accordance with the requirements set out in this Article, authorise any matter or situation proposed to them by any Director which would, if not authorised, involve a Director (an “Interested Director”) breaching his duty under the Act to avoid conflicts of interest.

 

120.2

A Director seeking authorisation in respect of a conflict of interest shall declare to the Board the nature and extent of his interest in a conflict of interest as soon as is reasonably practicable. The Director shall provide the Board with such details of the matter as are necessary for the Board to decide how to address the conflict of interest together with such additional information as may be requested by the Board.

 

120.3

Any authorisation under this Article will be effective only if:

 

  (a)

to the extent permitted by the Act, the matter in question shall have been proposed by any Director for consideration in the same way that any other matter may be proposed to the Directors under the provisions of these Articles;

 

  (b)

any requirement as to the quorum for consideration of the relevant matter is met without counting the Interested Director and any other interested Director; and

 

  (c)

the matter is agreed to without the Interested Director voting or would be agreed to if the Interested Director’s and any other interested Director’s vote is not counted.

 

120.4

Any authorisation of a conflict of interest under this Article must be recorded in writing (but the authority shall be effective whether or not the terms are so recorded) and may (whether at the time of giving the authorisation or subsequently):

 

  (a)

extend to any actual or potential conflict of interest which may reasonably be expected to arise out of the matter or situation so authorised;

 

  (b)

provide that the Interested Director be excluded from the receipt of documents and information and the participation in discussions (whether at meetings of the Directors or otherwise) related to the conflict of interest;

 

  (c)

impose upon the Interested Director such other terms for the purposes of dealing with the conflict of interest as the Directors think fit;

 

  (d)

provide that, where the Interested Director obtains, or has obtained (through his involvement in the conflict of interest and otherwise than through his position as a Director) information that is confidential to a third party, he will not be obliged to disclose that information to the Company, or to use it in relation to the Company’s affairs where to do so would amount to a breach of that confidence; and

 

  (e)

permit the Interested Director to absent himself from the discussion of matters relating to the conflict of interest at any meeting of the Directors and be excused from reviewing papers prepared by, or for, the Directors to the extent they relate to such matters.

 

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120.5

Where the Directors authorise a conflict of interest, the Interested Director will be obliged to conduct himself in accordance with any terms and conditions imposed by the Directors in relation to the conflict of interest.

 

120.6

The Directors may revoke or vary such authorisation at any time, but this will not affect anything done by the Interested Director, prior to such revocation or variation, in accordance with the terms of such authorisation.

 

120.7

A Director is not required, by reason of being a Director (or because of the fiduciary relationship established by reason of being a Director), to account to the Company for any remuneration, profit or other benefit which he derives from or in connection with a relationship involving a conflict of interest which has been authorised by the Directors or by the Company in general meeting (subject in each case to any terms, limits or conditions attaching to that authorisation) and no contract shall be liable to be avoided on such grounds.

 

120.8

If he has disclosed to the Board the nature and extent of his interest to the extent required by the Companies Acts, a Director is not required, by reason of being a Director (or because of the fiduciary relationship established by reason of being a Director), to account to the Company for any remuneration or other benefit which he derives from or in connection with:

 

  (a)

being a party to, or otherwise interested in, any transaction or arrangement with:

 

  (i)

the Company or in which the Company is interested; or

 

  (ii)

a body corporate in which the Company is interested;

 

  (b)

acting (otherwise than as auditor) alone or through his organisation in a professional capacity for the Company (and he or that organisation is entitled to remuneration for professional services as if he were not a Director); or

 

  (c)

being a director or other officer of, or employed by, or otherwise interested in any other body corporate in which the Company is interested.

 

120.9

A Director’s receipt of any remuneration or other benefit referred to in Article 120.7 or 120.8 does not constitute an infringement of his duty under the Companies Acts.

 

120.10

A transaction or arrangement referred to in Article 120.7 or 120.8 is not liable to be avoided on the ground of any remuneration, benefit or interest referred to in that Article.

 

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121.

DIRECTORS’ PERMITTED INTERESTS

 

121.1

A Director cannot vote or be counted in the quorum on any resolution relating to any transaction or arrangement with the Company in which he has an interest and which may reasonably be regarded as likely to give rise to a conflict of interest but can vote (and be counted in the quorum) on the following:

 

  (a)

giving him any security, guarantee or indemnity for any money or any liability which he, or any other person, has lent or obligations he or any other person has undertaken at the request, or for the benefit, of the Company or any of its subsidiary undertakings;

 

  (b)

giving any security, guarantee or indemnity to any other person for a debt or obligation which is owed by the Company or any of its subsidiary undertakings, to that other person if the Director has taken responsibility for some or all of that debt or obligation. The Director can take this responsibility by giving a guarantee, indemnity or security;

 

  (c)

a proposal or contract relating to an offer of any shares or debentures or other securities for subscription or purchase by the Company or any of its subsidiary undertakings, if the Director takes part because he is a holder of shares, debentures or other securities, or if he takes part in the underwriting or sub-underwriting of the offer;

 

  (d)

any arrangement for the benefit of employees of the Company or any of its subsidiary undertakings which only gives him benefits which are also generally given to employees to whom the arrangement relates;

 

  (e)

any arrangement involving any other company if the Director (together with any person connected with the Director) has an interest of any kind in that company (including an interest by holding any position in that company or by being a shareholder of that company). This does not apply if he knows that he has a relevant interest;

 

  (f)

a contract relating to insurance which the Company can buy or renew for the benefit of the Directors or a group of people which includes Directors; and

 

  (g)

a contract relating to a pension, superannuation or similar scheme or a retirement, death, disability benefits scheme or employees’ share scheme which gives the Director benefits which are also generally given to the employees to whom the scheme relates.

 

121.2

A Director cannot vote or be counted in the quorum on a resolution relating to his own appointment or the settlement or variation of the terms of his appointment to an office or place of profit with the Company or any other company in which the Company has an interest.

 

121.3

Where the Directors are considering proposals about the appointment, or the settlement or variation of the terms or the termination of the appointment of two or more Directors to other offices or places of profit with the Company or any company in which the Company has an interest, a separate resolution may be put in relation to each Director and in that case each of the Directors concerned shall be entitled to vote and be counted in the quorum

 

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  in respect of each resolution unless it concerns his own appointment or the settlement or variation of the terms or the termination of his own appointment or the appointment of another Director to an office or place of profit with a company in which the Company has an interest and the Director seeking to vote or be counted in the quorum has a Relevant Interest in it.

 

121.4

A company shall be deemed to be one in which the Director has a Relevant Interest if and so long as (but only if and so long as) he is to his knowledge (either directly or indirectly) the holder of or beneficially interested in one per cent or more of any class of the equity share capital of that company (calculated exclusive of any shares of that class in that company held as treasury shares) or of the voting rights available to members of that company. In relation to an alternate Director, an interest of his appointor shall be treated as an interest of the alternate Director without prejudice to any interest which the alternate Director has otherwise. Where a company in which a Director has Relevant Interest is interested in a contract, he also shall be deemed interested in that contract.

 

121.5

If a question arises at a Board meeting about whether a Director (other than the chairman of the meeting) has an interest which is likely to give rise to a conflict of interest, or whether he can vote or be counted in the quorum, and the Director does not agree to abstain from voting on the issue or not to be counted in the quorum, the question must be referred to the chairman of the meeting. The chairman’s ruling about the relevant Director is final and conclusive, unless the nature and extent of the Director’s interests have not been fairly disclosed to the Directors. If the question arises about the chairman of the meeting, the question must be directed to the Directors. The chairman cannot vote on the question but can be counted in the quorum. The Directors’ resolution about the chairman is final and conclusive, unless the nature and extent of the chairman’s interests have not been fairly disclosed to the Directors.

 

122.

GENERAL

For the purposes of Articles 118 to 121 inclusive (which shall apply equally to alternate Directors):

 

122.1

An interest of a person who is connected (which word shall have the meaning given to it by section 252 of the Act) with a Director shall be treated as an interest of the Director.

 

122.2

A contract includes references to any proposed contract and to any transaction or arrangement or proposed transaction or arrangement whether or not consulting a contract.

 

122.3

A conflict of interest includes a conflict of interest and duty and a conflict of duties.

 

122.4

Subject to the Companies Acts, the Company may by ordinary resolution suspend or relax the provisions of Articles 118 to 121 to any extent or ratify any contract not properly authorised by reason of a contravention of any of the provisions of Articles 118 to 121.

 

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123.

POWER TO AUTHENTICATE DOCUMENTS

Any Director, the Secretary or any person appointed by the Board for the purpose shall have power to authenticate any documents affecting the constitution of the Company and any resolution passed by the Company or the Board or any committee, and any books, records, documents and accounts relating to the business of the Company, and to certify copies or extracts as true copies or extracts. Where any books, records, documents or accounts are not at the Office, the local manager or other officer of the Company who has their custody shall be deemed to be a person appointed by the Board for this purpose. A document purporting to be a copy of a resolution, or an extract from the minutes of a meeting, of the Company or the Board or any committee which is so certified shall be conclusive evidence in favour of all persons dealing with the Company that such resolution has been duly passed or, as the case may be, that any minute so extracted is a true and accurate record of proceedings at a duly constituted meeting.

 

124.

USE OF SEALS

 

124.1

The Board shall provide for the safe custody of the Seal. A Seal shall not be used without the authority of the Board or of a committee of the Board so authorised.

 

124.2

Subject as otherwise provided in these Articles, every document which is sealed using the Seal must be signed by at least one authorised person in the presence of a witness who attests the signature. An authorised person for this purpose is any Director, the Secretary or any other person authorised by the Directors for the purpose of signing documents to which the Seal is applied.

 

124.3

The Seal shall be used only for sealing securities issued by the Company and documents creating or evidencing securities so issued. Any such securities or documents sealed with the Seal shall not require to be signed unless the Board decides otherwise, or the law otherwise requires.

 

124.4

The Board may decide who will sign an instrument to which a Seal is affixed (or in the case of a share certificate, on which the Seal may be printed) either generally or in relation to a particular instrument or type of instrument and may also determine either generally or in a particular case that a signature may be dispensed with or affixed by mechanical means.

 

125.

DECLARATION OF DIVIDENDS

Subject to the Act and these Articles, the Company may by ordinary resolution declare dividends to be paid to members according to their respective rights and interests in the profits of the Company. However, no dividend shall exceed the amount recommended by the Board.

 

126.

INTERIM DIVIDENDS

 

126.1

Subject to the Act, the Board may declare and pay such interim dividends (including any dividend at a fixed rate) as appears to the Board to be justified by the profits of the Company available for distribution. If the Board acts in good faith, it shall not incur any liability to the holders of shares for any loss that they may suffer by the lawful payment of any interim dividend on any other class of shares ranking with or after those shares.

 

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126.2

If the share capital is divided into different classes, the Board may pay interim dividends on shares which confer deferred or non-preferred rights with regard to dividend as well as on shares which confer preferential rights with regard to dividend, but no interim dividend shall be paid on shares carrying deferred or non-preferred rights if, at the time of payment, any preferential dividend is in arrears.

 

126.3

The Board may also pay at intervals settled by them any dividend payable at a fixed rate if it appears to them that the profits available for distribution justify the payment. If the Directors act in good faith they shall not incur any liability to the holders of shares conferring preferred rights for any loss they may suffer by the lawful payment of a dividend on any shares having deferred or non-preferred rights.

 

127.

CALCULATION AND CURRENCY OF DIVIDENDS

Except as provided otherwise by the rights attached to shares, all dividends:

 

  (a)

shall be declared and paid accordingly to the amounts paid up (otherwise than in advance of calls) on the shares on which the dividend is paid;

 

  (b)

shall be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms that it shall rank for dividend as from a particular date, it shall rank for dividend accordingly; and

 

  (c)

may be declared or paid in any currency. The Board may decide the rate of exchange for any currency conversions that may be required and how any costs involved are to be met.

 

128.

AMOUNTS DUE ON SHARES CAN BE DEDUCTED FROM DIVIDENDS

The Board may deduct from any dividend or other money payable to any person on or in respect of a share all such sums as may be due from him to the Company on account of calls or otherwise in relation to the shares of the Company. Sums so deducted can be used to pay amounts owing to the Company in respect of the shares.

 

129.

DIVIDENDS NOT IN CASH

The Board may, by ordinary resolution of the Company direct, or in the case of an interim dividend may without the authority of an ordinary resolution direct, that payment of any dividend declared may be satisfied wholly or partly by the distribution of assets, and in particular of paid up shares or debentures of any other company, or in any one or more of such ways. Where any difficulty arises regarding such distribution, the Board may settle it as it thinks fit. In particular, the Board may:

 

  (a)

issue fractional certificates (or ignore fractions);

 

57


  (b)

fix the value for distribution of such assets or any part of them and determine that cash payments may be made to any members on the footing of the values so fixed, in order to adjust the rights of members; and

 

  (c)

vest any such assets in trustees on trust for the person entitled to the dividend.

 

130.

NO INTEREST ON DIVIDENDS

Unless otherwise provided by the rights attached to the share, no dividend or other monies payable by the Company or in respect of a share shall bear interest as against the Company.

 

131.

METHOD OF PAYMENT

 

131.1

The Company may pay any dividend, interest or other sum payable in respect of a share wholly or partly in cash or by direct debit, bank transfer, cheque, dividend warrant, or money order or by any other method, including by electronic means, as the Board may consider appropriate. For uncertificated shares, any payment may be made by means of the relevant system (subject always to the facilities and requirements of the relevant system) and such payment may be made by the Company or any person on its behalf by sending an instruction to the operator of the relevant system to credit the cash memorandum account of the holder or joint holders of such shares or, if permitted by the Company, of such person as the holder or joint holders may in writing direct.

 

131.2

The Company may send such payment by post or other delivery service (or by such means offered by the Company as the member or person entitled to it may agree in writing) to the registered address of the member or person entitled to it (or, if two or more persons are holders of the share or are jointly entitled to it because of the death or bankruptcy of the member or otherwise by operation of law, to the registered address of such of those persons as is first named in the Register) or to such person and such address as such member or person may direct in writing.

 

131.3

Every cheque, warrant, order or other form of payment is sent at the risk of the person entitled to the money represented by it, shall be made payable to the person or persons entitled, or to such other person as the person or persons entitled may direct in writing. Payment of the cheque, warrant, order or other form of payment (including transmission of funds through a bank transfer or other funds transfer system or by such other electronic means as permitted by these Articles or in accordance with the facilities and requirements of the relevant system concerned) shall be good discharge to the Company. If any such cheque, warrant, order or other form of payment has or shall be alleged to have been lost, stolen or destroyed the Company shall not be responsible.

 

131.4

Any joint holder or other person jointly entitled to a share may give an effective receipt for any dividend or other monies payable in respect of such share.

 

131.5

The Board may, at its discretion, make provisions to enable any member as the Board shall determine to receive duly declared dividends in a currency or currencies other than sterling. For the purposes of the calculation of the amount receivable in respect of any dividend, the rate of exchange to be used to determine the foreign currency equivalent of any sum payable as a dividend shall be such rate or rates and the payment shall be on such terms and conditions as the Board may in its absolute discretion determine.

 

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131.6

In respect of the payment of any dividend or other sum which is a distribution, the Board may decide, and notify recipients, that:

 

  (a)

one or more of the means described in this Article will be used for payment and a recipient may elect to receive the payment by one of the means so notified in the manner prescribed by the Directors;

 

  (b)

one or more of such means will be used for the payment unless a recipient elects otherwise in the manner prescribed by the Directors; or

 

  (c)

one or more of such means will be used for the payment and that recipients will not be able to elect otherwise,

the Board may for this purpose decide that different methods of payment may apply to different recipients or groups of recipients.

 

131.7

All cheques, warrants and similar financial instruments are sent, and payment in any other way is made, at the risk of the person who is entitled to the money and the Company will not be responsible for a payment which is lost, rejected or delayed. The Company can rely on a receipt for a dividend or other money paid in relation to a share from any one of the joint recipients on behalf of all of them. The Company is treated as having paid a dividend if the cheque, warrant or similar financial instrument is cleared or if a payment is made using a relevant system or inter-bank transfer or other electronic means.

 

131.8

Subject to the rights attaching to any shares, any dividends or other monies payable on or in respect of a share may be declared or paid in such currency or currencies and using such exchange rate or such date for determining the value or currency conversions as the Directors may determine.

 

132.

UNCASHED DIVIDENDS

If cheques, warrants or orders for dividends or other sums payable in respect of a share sent by the Company to the person entitled to them are returned to the Company or left uncashed on two consecutive occasions or, following one occasion, reasonable enquires have failed to establish any new address to be used for the purpose, the Company does not have to send any dividends or other monies payable in respect of that share due to that person until he notifies the Company of an address to be used for the purpose. If any such cheque, warrant or order has or is alleged to have been lost, stolen or destroyed, the Directors may, on request of the person entitled to it, issue a replacement cheque, warrant or order subject to compliance with such conditions as to evidence and indemnity and the payment of out of pocket expenses of the Company in connection with the request as the Directors may think fit.

 

59


133.

UNCLAIMED DIVIDENDS

All dividends, interest or other sums payable and unclaimed for 12 months after having become payable may be invested or otherwise made use of by the Board for the benefit of the Company until claimed. The Company shall not be a trustee in respect of such unclaimed dividends and will not be liable to pay interest on it. All dividends that remain unclaimed for twelve (12) years after they were first declared or became due for payment shall (if the Board so resolves) be forfeited and shall cease to remain owing by the Company.

 

134.

SCRIP DIVIDENDS

 

134.1

Subject to the Act, the Board may, by ordinary resolution of the Company and subject to such terms and conditions as the Board may determine, offer to any holders of shares (excluding any member holding shares as treasury shares) the right to elect to receive shares, credited as fully paid, instead of cash in respect of the whole (or some part, to be determined by the Board) of any dividend specified by the ordinary resolution. The following provisions shall apply:

 

  (a)

the said resolution may specify a particular dividend, or may specify all or any dividends declared within a specified period or periods but such period may not end later than the fifth anniversary of the date of the meeting at which the ordinary resolution is passed;

 

  (b)

the entitlement of each holder of shares to new shares shall be such that the relevant value of the entitlement shall be as nearly as possible equal to (but not greater than) the cash amount (disregarding any tax credit) of the dividend that such holder would have received by way of dividend. For this purpose “relevant value” shall be calculated by reference to the average of the middle market quotations for the shares on the London Stock Exchange or any other publication of a recognised investment exchange showing quotations for the Company’s shares), for the day on which the shares are first quoted “ex” the relevant dividend and the four subsequent dealing days, or in such other manner as the Board may determine on such basis as it considers to be fair and reasonable. A certificate or report by the Company’s auditors as to the amount of the relevant value in respect of any dividend shall be conclusive evidence of that amount;

 

  (c)

no fractions of a share shall be allotted. The Board may make such provisions as it thinks fit for any fractional entitlements including provisions where, in whole or in part, the benefit accrues to the Company and/or under which fractional entitlements are accrued and/or retained and in each case accumulated on behalf of any member and such accruals or retentions are applied to the allotment by way of bonus to or cash subscription on behalf of any member of fully paid shares and/or provisions where cash payments may be made to members in respect of their fractional entitlements;

 

60


  (d)

the Board shall, after determining the basis of allotment, notify the holders of shares in writing of the right of election offered to them, and specify the procedure to be followed and place at which, and the latest time by which, elections must be lodged in order to be effective. No such notice need be given to holders of shares who have previously given election mandates in accordance with this Article and whose mandates have not been revoked. The accidental omission to give notice of any right of election to, or the non-receipt (even if the Company becomes aware of such non-receipt) of any such notice by, any holder of shares entitled to the same shall neither invalidate any offer of an election nor give rise to any claim, suit or action;

 

  (e)

the Board may on any occasion decide that rights of election shall only be made available subject to such exclusions, restrictions or other arrangements as they shall in their absolute discretion deem necessary or desirable in order to comply with legal or practical problems under the laws of, or the requirements of any recognised regulatory body or stock exchange in, any territory;

 

  (f)

the Board shall not proceed with any election unless the company has sufficient reserves or funds that may be capitalised, and the Board has authority to allot sufficient shares, to give effect to it after the basis of the allotment is determined;

 

  (g)

the Board may exclude from any offer or make other arrangements in relation to any holders of shares where the Board considers that the making of the offer to them or in respect of such shares would or might involve the contravention of the laws of any territory or that for any other reason the offer should not be made to them or in respect of such shares;

 

  (h)

unless the Board decides otherwise or the rules of a relevant system require otherwise, any new shares which a holder has elected to receive instead of cash in respect of some or all of his dividend will be:

 

  (i)

shares in uncertificated form if the corresponding elected shares were uncertificated shares on the record date for that dividend; and

 

  (ii)

shares in certificated form if the corresponding elected shares were shares in certificated form on the record date for that dividend;

 

  (i)

the Board may establish or vary a procedure for election mandates in respect of future rights of election and may determine that every duly effected election in respect of any shares shall be binding on every successor in title to the holder;

 

  (j)

the dividend (or that part of the dividend in respect of which a right of election has been offered) shall not be payable on shares in respect of which an election has been duly made (“elected shares”) and instead additional shares shall be allotted to the holders of the elected shares on the basis of allotment determined as stated above. For such purpose the Board may capitalise, out of any amount for the time being standing to the credit of any reserve or fund (including any share premium account or capital redemption reserve) or of any of the profits which could

 

61


  otherwise have been applied in paying dividends in cash as the Board may determine, a sum equal to the aggregate nominal amount of the additional shares to be allotted on such basis and apply it in paying up in full the appropriate number of unissued shares for allotment and distribution to the holders of the elected shares on such basis. The Board may do all acts and things considered necessary or expedient to give effect to any such capitalisation;

 

  (k)

the Board may decide how any costs relating to the new shares available in place of a cash dividend will be met, including to deduct an amount from the entitlement of a holder of shares under this Article;

 

  (l)

the additional shares so allotted shall rank pad passu in all respects with each other and with the fully paid shares in issue on the record date for the dividend in respect of which the right of election has been offered, except that they will not rank for any dividend or other distribution or other entitlement which has been declared, paid or made by reference to such record date;

 

  (m)

the Board may terminate, suspend, or amend any offer of the right to elect to receive shares in lieu of any cash dividend at any time and generally may implement any scrip dividend scheme on such terms and conditions as the Board may determine and take such other action as the Board may deem necessary or desirable in respect of any such scheme; and

 

  (n)

the Board may do all acts and things which they consider necessary or expedient to give effect to any such capitalisation, and may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for such capitalisation and incidental matters and any agreement so made shall be binding on all concerned.

 

135.

CAPITALISATION OF RESERVES

 

135.1

The Board may, with the authority of an ordinary resolution of the Company:

 

  (a)

subject as provided in this Article, resolve to capitalise any undivided profits of the Company not required for paying any preferential dividend (whether or not they are available for distribution) or any sum standing to the credit of any reserve or fund of the Company which is available for distribution or standing to the credit of the share premium account of capital redemption reserve or other undistributable reserve;

 

62


  (b)

appropriate the sum resolved to be capitalised to the members in proportion to the nominal amounts of the shares (whether or not fully paid) held by them respectively which would entitle them to participate in a distribution of that sum if the shares were fully paid and the sum were then distributable and were distributed by way of dividend and apply such sum on their behalf either in or towards paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued shares or debentures of the Company of a nominal amount equal to that sum, and allot the shares or debentures credited as fully paid to those members or as they may direct, in those proportions, or partly in one way and partly in the other, provided that:

 

  (i)

the share premium account, the capital redemption reserve, any other undistributable reserve and any profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up in full shares to be allotted to members credited as fully paid;

 

  (ii)

the Company will also be entitled to participate in the relevant distribution in relation to any shares of the relevant class held by it as treasury shares and the proportionate entitlement of the relevant class of members to the distribution will be calculated accordingly; and

 

  (iii)

in a case where any sum is applied in paying amounts for the time being unpaid on any shares of the Company or in paying up in full debentures of the Company, the amount of the net assets of the Company at that time in not less than the aggregate of the called up share capital of the Company and its undistributable reserves as shown in the latest audited accounts of the Company or such other accounts as may be relevant and would not be reduced below that aggregate by the payment of it;

 

  (c)

resolve that any shares so allotted to any member in respect of a holding by him of any partly paid shares shall, so long as such shares remain partly paid, rank for dividends only to the extent that such partly paid shares rank for dividends;

 

  (d)

make such provision by the issue of fractional certificates (or by ignoring fractions or by accruing the benefit of it to the Company rather than to the members concerned) or by payment in cash or otherwise as it thinks fit in the case of shares or debentures becoming distributable in fractions;

 

  (e)

authorise any person to enter on behalf of such members concerned into an agreement with the Company providing for either:

 

  (i)

the allotment to them respectively, credited as fully paid up, of any shares or debentures to which they may be entitled on such capitalisation; or

 

  (ii)

the payment up by the Company on behalf of such members by the application of their respective proportions of the reserves or profits resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares,

(any agreement made under such authority being effective and binding on all such members); and

 

  (f)

generally do all acts and things required to give effect to such resolution.

 

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135.2

Where, pursuant to an employees’ share scheme (within the meaning of section 1166 of the Act) or any similar scheme under which participation is extended to non-executive Directors or consultants providing services to the Company or any of its subsidiaries:

 

  (a)

the Company has granted options to subscribe for shares on terms which provide (inter alia) for adjustments to the subscription price payable on the exercise of such options or to the number of shares to be allotted upon such exercise in the event of any increase or reduction in or other reorganisation of the Company’s issued share capital and an otherwise appropriate adjustment would result in the subscription price for any share being less than its nominal value, then the Board may, on the exercise of any of the options concerned and payment of the subscription price which would have applied had such adjustment been made, capitalise any such profits or other sum as is mentioned in Article 135.1(a) to the extent necessary to pay up the unpaid balance of the nominal value of the shares which fall to be allotted on the exercise of such options and apply such amount in paying up such balance and allot shares fully paid accordingly;

 

  (b)

the Company has granted (or assumed liability to satisfy) rights to subscribe for shares (whether in the form of stock options, stock units, restricted stock, stock appreciation rights, performance shares and units, dividend equivalent rights or otherwise) then the Board may, in connection with the issue of shares, capitalise any such profits or other sum as is mentioned in Article 135.1 to the extent necessary to pay up the unpaid balance of the nominal value of the shares which fall to be issued in connection with such rights to subscribe and apply such amount in paying up such balance and allot shares fully paid accordingly; and

 

  (c)

the provisions of Article 135.1(b) to (f) shall apply with the necessary alterations to this Article.

 

136.

RECORD DATES

 

136.1

Notwithstanding any other provision of these Articles but without prejudice to the rights attached to any shares and subject always to the Act, the Company or the Board may by resolution specify any date (“record date”) as the date at the close of business (or such other time as the Board may determine) on which persons registered as the holders of shares or other securities shall be entitled to receipt of any dividend, distribution, interest, allotment, issue, notice, information, document or circular. Such record date may be before, on or after the date on which the dividend, distribution, interest, allotment, issue, notice, information, document or circular is declared, made, paid, given, or served.

 

136.2

In the absence of a record date being fixed, entitlement to any dividend, distribution, interest, allotment, issue, notice, information, document or circular shall be determined by reference to the date on which the dividend is declared, the distribution allotment or issue is made or the notice, information, document or circular made, given or served.

 

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137.

INSPECTION OF RECORDS

No member (other than a Director) shall have any right to inspect any accounting record or other document of the Company unless he is authorised to do so by law, by order of a court of competent jurisdiction, by the Board or by ordinary resolution of the Company.

 

138.

ACCOUNT TO BE SENT TO MEMBERS

 

138.1

In respect of each financial year, a copy of the Company’s annual accounts, the strategic report, the Directors’ report, the Directors’ remuneration report, the auditor’s report on those accounts and on the auditable part of the Directors’ remuneration report shall be sent or supplied to:

 

  (a)

every member (whether or not entitled to receive notices of general meetings);

 

  (b)

every holder of debentures (whether or not entitled to receive notice of general meetings); and

 

  (c)

every other person who is entitled to receive notice of general meetings, not less than twenty-one (21) clear days before the dale of the meeting at which copies of those documents are to be laid in accordance with the Act.

 

138.2

This Article does not require copies of the documents to which it applies to be sent or supplied to:

 

  (a)

a member or holder of debentures of whose address the Company is unaware; or

 

  (b)

more than one of the joint holders of shares or debentures.

 

138.3

The Board may determine that persons entitled to receive a copy of the Company’s annual accounts, the strategic report, the Directors’ report, the Directors’ remuneration report, the auditor’s report on those accounts and on the auditable part of the Directors’ remuneration report are those persons entered on the Register at the close of business on a day determined by the Board, provided that the day determined by the Board may not be more than twenty-one (21) days before the day that the relevant copies are being sent.

 

138.4

Where permitted by the Act, a strategic report with supplementary material in the form and containing the information prescribed by the Act may be sent or supplied to a person so electing in place of the documents required to be sent or supplied by this Article 138.

 

139.

SERVICE OF NOTICES

 

139.1

The Company can send, deliver or serve any notice or other document, including a share certificate, to or on a member:

 

  (a)

personally;

 

  (b)

by sending it through the postal system addressed to the member at his registered address or by leaving it at that address addressed to the member;

 

65


  (c)

through a relevant system, where the notice or document relates to uncertificated shares;

 

  (d)

where appropriate, by sending or supplying it in electronic form to an address notified by the member to the Company for that purpose;

 

  (e)

where appropriate, by making it available on a website and notifying the member of its availability in accordance with this Article or

 

  (f)

by any other means authorised in writing by the member.

 

139.2

In the case of joint holders of a share:

 

  (a)

service, sending or supply of any notice, document or other information on or to one of the joint holders shall for all purposes be deemed a sufficient service on, sending or supplying to all the joint holders; and

 

  (b)

anything to be agreed or specified in relation to any notice, document or other information to be served on, sent or supplied to them may be agreed or specified by any one of the joint holders and the agreement or specification of the first named in the Register shall be accepted to the exclusion of that of the other joint holders.

 

139.3

Where a member (or, in the case of a joint holders, the person first named in the Register) has a registered address outside the United Kingdom but has notified the Company of an address within the United Kingdom at which notices, documents or other information may be given to him or has given to the Company an address for the purposes of communications by electronic means at which notices, documents or other information may be served, sent or supplied to him, he shall be entitled to have notices served, sent or supplied to him at such address or, where applicable, the Company may make them available on a website and notify the holder of that address. Otherwise no such member shall be entitled to receive any notice, document or other information from the Company.

 

139.4

If on three consecutive occasions any notice, document or other information has been sent to any member at his registered address or his address for the service of notices (by electronic means or otherwise) but has been returned undelivered, such member shall not be entitled to receive notices, documents or other information from the Company until he shall have communicated with the Company and supplied in writing a new registered address or address within the United Kingdom for the service of notices or has informed the Company of an address for the service of notices and the sending or supply of documents and other information in electronic form. For these purposes, any notice, document or other information served, sent or supplied by post shall be treated as returned undelivered if the notice, document or other information is served, sent or supplied back to the Company (or its agents) and a notice, document or other information served, sent or supplied in electronic form shall be treated as returned undelivered if the Company (or its agents) receives notification that the notice, document or other information was not delivered to the address to which it was served, sent or supplied.

 

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139.5

The Company may at any time and in its sole discretion choose to serve, send or supply notices, documents or other information in hard copy form alone to some or all of the members.

 

140.

HARD COPY FORM

 

140.1

Any document, information or notice is validly sent or supplied by the Company in hard copy form if it is handed to the intended recipient or sent or supplied by hand or through the post in a prepaid envelope:

 

  (a)

to an address specified for the purpose by the intended recipient;

 

  (b)

if the intended recipient is a company, to its registered office;

 

  (c)

to the address shown in the Company’s Register;

 

  (d)

to any address to which any provision of the Companies Acts authorises it to be sent or supplied; or

 

  (e)

if the Company is unable to obtain an address falling within paragraphs (a) to (d), to the last address known to the Company of the intended recipient.

 

141.

ELECTRONIC FORM

 

141.1

Any document, information or notice is validly sent or supplied by the Company in electronic form:

 

  (a)

to a person if that person has agreed (generally or specifically) that the document, information or notice may be sent or supplied in that form and has not revoked that agreement; or

 

  (b)

to a company that is deemed to have so agreed by the Companies Acts.

 

142.

ELECTRONIC MEANS

 

142.1

Any document, information or notice is validly sent or supplied by the Company by electronic means if it is sent or supplied:

 

  (a)

to an address specified for the purpose by the intended recipient (generally or specifically); or

 

  (b)

where the intended recipient is a company, to an address deemed by the Companies Acts to have been so specified.

 

143.

WEBSITE

 

143.1

Any document, information or notice is validly sent or supplied by the Company to a person by being made available on a website if:

 

67


  (a)

the person has agreed (generally or specifically) that the document, information or notice may be sent or supplied to him in that manner, or he is taken to have so agreed under Schedule 5 of the Act, and in either case he has not revoked that agreement;

 

  (b)

the Company has notified the intended recipient of:

 

  (i)

the presence of the document, information or notice on the website;

 

  (ii)

the address of the website;

 

  (iii)

the place on the website where it may be accessed;

 

  (iv)

how to access the document, information or notice; and

 

  (v)

any other information prescribed by the Companies Acts or any other provisions of law including, when the document, information or notice is a notice of meeting, that fact, the place, date and time of the meeting and whether the meeting is an annual general meeting; and

 

  (c)

the document, information or notice is available on the website throughout the period specified by any applicable provision of the Companies Acts or, if no such period is specified, the period of twenty-eight (28) days starting on the date on which the notification referred to in paragraph (b) above is sent to the relevant person.

 

144.

SENDING OR SUPPLYING ANY DOCUMENT, INFORMATION OR NOTICE BY ANY OTHER MEANS

Any document, information or notice that is sent or supplied otherwise than in hard copy form or electronic form or by means of a website is validly sent or supplied if it is sent or supplied in a form or manner that has been agreed by the intended recipient.

 

145.

PRESENCE AT MEETING EVIDENCE IN ITSELF OF RECEIPT OF NOTICE

A member present either in person or by proxy, or in the case of a corporate member by a duly authorised representative, at any meeting of the Company or of the holders of any class of Shares shall be deemed to have received notice of the meeting and, where required, of the purposes for which it was called.

 

146.

NOTICE ON PERSON ENTITLED BY TRANSMISSION

The Company may give notice to the person entitled to a share because of the death or bankruptcy of a member or otherwise by operation of law, by sending or delivering it in any manner authorised by these Articles for the giving of notice to a member, addressed to that person by name, or by the title of representative of the deceased or trustee of the bankrupt or representative by operation of law or by any like description, at the address (if any) within the United Kingdom supplied for the purpose by the person claimed to be so entitled or to which notices may be sent in electronic form. Until such an address has been so supplied, a notice may be given in any manner in which it might have been given if the death or bankruptcy or operation of law had not occurred. This shall apply whether or not the Company has notice of the death or bankruptcy or other event.

 

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147.

RECORD DATE FOR SERVICE

Any notice, document or other information may be served, sent or supplied by the Company by reference to the register as it stands at any time not more than fifteen (15) days before the date of service, sending or supplying. No change in the register after that time shall invalidate that service, sending or supply. Where any notice, document or other information is served on, sent or supplied to any person in respect of a share in accordance with these Articles, no person deriving any title or interest in that share shall be entitled to any further service, sending or supplying of that notice, document or other information.

 

148.

EVIDENCE OF SERVICE

 

148.1

Any notice, document or other information, addressed to a member at his registered address or address for service in the United Kingdom shall, if served, sent or supplied by first class post, be deemed to have been served or delivered on the day after the day when it was put in the post (or, where second class post is employed, on the second day after the day when it was put in the post). Proof that an envelope containing the notice, document or other information was properly addressed and put into the post as a prepaid letter shall be conclusive evidence that the notice was given.

 

148.2

Any notice, document or other information not served, sent or supplied by post but delivered or left at a registered address or address for service in the United Kingdom (other than an address for the purposes of communications by electronic means) shall be deemed to have been served or delivered on the day on which it was so delivered or left.

 

148.3

Any notice, document or other information, if served, sent or supplied by electronic means shall be deemed to have been received on the day on which the electronic communication was sent by or on behalf of the Company notwithstanding that the Company subsequently sends such notice, document or other information in hard copy form by post. Any notice, document or other information made available on a website shall be deemed to have been received on the day on which the notice, document or other information was first made available on the website or, if later, when a notice of availability is received or deemed to have been received pursuant to this Article. Proof that the notice, document or other information was properly addressed shall be conclusive evidence that the notice by electronic means was given.

 

148.4

Any notice, document or other information served, sent or supplied by the Company by means of a relevant system shall be deemed to have been received when the Company or any sponsoring system-participant acting on its behalf sends the issuer-instruction relating to the notice, document or other information.

 

148.5

Any notice, document or other information served, sent or supplied by the Company by any other means authorised in writing by the member concerned shall be deemed to have been received when the Company has carried out the action it has been authorised to take for that purpose.

 

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149.

NOTICE WHEN POST NOT AVAILABLE

If at any time by reason of the suspension, interruption or curtailment of postal services within the United Kingdom the Company is unable effectively to convene a general meeting by notices sent through the post, the Company need only give notice of a general meeting to those members with whom the Company can communicate by electronic means and who have provided the Company with an address for this purpose. The Company shall also advertise the notice in at least one national newspaper published in the United Kingdom and make it available on its website from the date of such advertisement until the conclusion of the meeting or any adjournment of it. In any such case the Company shall send confirmatory copies of the notice by post to those members to whom notice cannot be given by electronic means if, at least seven days prior to the meeting, the posting of notices to addresses throughout the United Kingdom again becomes practicable.

 

150.

VALIDATION OF DOCUMENTS IN ELECTRONIC FORM

 

150.1

Where a document is required under these Articles to be signed by a member or any other person, if the document is in electronic form, then in order to be valid the document must:

 

  (a)

incorporate the electronic signature, or personal identification details (which may be details previously allocated by the Company), of that member or other person, in such form as the Board may approve; or

 

  (b)

be accompanied by such other evidence as the Board may require in order to be satisfied that the document is genuine.

 

150.2

The Company may designate mechanisms for validating any such document and a document not validated by the use of any such mechanisms shall be deemed as having not been received by the Company In the case of any document or information relating to a meeting, an instrument of proxy or invitation to appoint a proxy, any validation requirements shall be specified in the relevant notice of meeting in accordance with Articles 49 and 72.

 

151.

WINDING UP

If the Company is wound up and subject to the rights and restrictions attached to any share or classes of shares, the liquidator may, with the sanction of a special resolution and any other sanction required by law, divide among the members in specie the whole or any part of the assets of the Company and may, for that purpose, value any assets and determine how the division shall be carried out as between the members or different classes of members. The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the members as he may with the like sanction determine, but no member shall be compelled to accept any assets upon which there is a liability.

 

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152.

INDEMNITY AND INSURANCE

 

152.1

In this Article:

 

  (a)

companies are “associated” if one is a subsidiary of the other or both are subsidiaries of the same body corporate;

 

  (b)

a “relevant officer” means any Director or other officer or former Director or other officer of the Company or an associated company (including any company which is a trustee of an occupational pension scheme (as defined by section 235(6) of the Act), but excluding in each case any person engaged by the Company (or associated company) as auditor (whether or not he is also a Director or other officer), to the extent he acts in his capacity as auditor); and

 

  (c)

relevant loss” means any loss or liability which has been or may be incurred by a relevant officer in connection with that relevant officer’s duties or powers in relation to the company, any associated company or any pension fund or employees’ share scheme of the company or associated company.

 

152.2

Subject to Article 152.3, but without prejudice to any indemnity to which a relevant officer is otherwise entitled:

 

  (a)

each relevant officer shall be indemnified out of the Company’s assets against all relevant loss and in relation to the Company’s (or any associated company’s) activities as trustee of an occupational pension scheme (as defined in section 235(6) of the Act), including any liability incurred by him in defending any civil or criminal proceedings, in which judgment is given in his favour or in which he is acquitted or the proceedings are otherwise disposed of without any finding or admission of any material breach of duty on his part or in connection with any application in which the court grants him, in his capacity as a relevant officer, relief from liability for negligence, default, breach of duty or breach of trust in relation to the Company’s (or any associated company’s) affairs; and

 

  (b)

the Company may provide any relevant officer with funds to meet expenditure incurred or to be incurred by him in connection with any proceedings or application referred to in Article 152.2(a) and otherwise may take any action to enable any such relevant officer to avoid incurring such expenditure.

 

152.3

This Article does not authorise any indemnity which would be prohibited or rendered void by any provision of the Companies Acts or by any other provision of law.

 

152.4

The Directors may decide to purchase and maintain insurance, at the expense of the Company, for the benefit of any relevant officer in respect of any relevant loss.

 

152.5

Where a relevant officer is indemnified against a liability in accordance with this Article, the indemnity extends to each cost, charge, loss, expense and liability incurred by him in relation to that liability.

 

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153.

EXCLUSIVE JURISDICTION

Subscribing for or acquiring shares, the member submits all disputes between him or herself and the Company or the Directors to the exclusive jurisdiction of the English courts.

 

72

Exhibit 4.1

 

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TABLE OF CONTENTS

 

         Page  

PARTIES

       1  

RECITALS

       1  

Section 1.

  Certain Definitions   

(a)            

 

ADR Register

     1  

(b)            

 

ADRs; Direct Registration ADRs

     1  

(c)            

 

ADS

     1  

(d)            

 

Beneficial Owner

     1  

(e)            

 

Custodian

     2  
(f)              

Deliver, execute, issue et al.

     2  

(g)            

 

Delivery Order

     2  

(h)            

 

Deposited Securities

     2  

(i)            

 

Direct Registration System

     2  

(j)            

 

Holder

     2  

(k)            

 

Securities Act of 1933

     2  

(l)            

 

Securities Exchange Act of 1934

     2  

(m)            

 

Shares

     3  

(n)            

 

Transfer Office

     3  

(o)            

 

Withdrawal Order

     3  

Section 2.

  Form of ADRs      3  

Section 3.

  Deposit of Shares      3  

Section 4.

  Issue of ADRs      4  

Section 5.

  Distributions on Deposited Securities      5  

Section 6.

  Withdrawal of Deposited Securities      5  

Section 7.

  Substitution of ADRs      5  

Section 8.

  Cancellation and Destruction of ADRs; Maintenance of Records      6  

Section 9.

  The Custodian      6  

Section 10.

  Lists of Holders      6  

Section 11.

  Depositary’s Agents      6  

Section 12.

  Resignation and Removal of the Depositary; Appointment of Successor Depositary      6  

Section 13.

  Reports      7  

Section 14.

  Additional Shares      8  

Section 15.

  Indemnification      8  

Section 16.

  Notices      9  

Section 17.

  Counterparts      10  

Section 18.

  No Third Party Beneficiaries; Holders and Beneficial Owners as Parties; Binding Effect      10  

Section 19.

  Severability      10  

Section 20.

  Governing Law; Consent to Jurisdiction      10  

Section 21.

  Agent for Service      11  

Section 22.

  Waiver of Immunities      12  

Section 23.

  Waiver of Jury Trial      13  

TESTIMONIUM

       13  

SIGNATURES

       13  

 

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         Page  
EXHIBIT A

 

FORM OF FACE OF ADR      A-1  

     Introductory Paragraph

     A-1  

(1)            

  Issuance of ADSs      A-2  

(2)            

  Withdrawal of Deposited Securities      A-3  

(3)            

  Transfers, Split-Ups and Combinations of ADRs      A-3  

(4)            

  Certain Limitations to Registration, Transfer etc.      A-4  

(5)            

  Liability for Taxes, Duties and Other Charges      A-5  

(6)            

  Disclosure of Interests      A-6  

(7)            

  Charges of Depositary      A-7  

(8)            

  Available Information      A-10  

(9)            

  Execution      A-10  

     Signature of Depositary

     A-11  

     Address of Depositary’s Office

     A-11  

FORM OF REVERSE OF ADR

     A-12  

(10)            

  Distributions on Deposited Securities      A-12  
(11)               Record Dates      A-13  
(12)               Voting of Deposited Securities      A-13  

(13)            

  Changes Affecting Deposited Securities      A-14  
(14)               Exoneration      A-15  

(15)            

  Resignation and Removal of Depositary; the Custodian      A-18  

(16)            

  Amendment      A-19  

(17)            

  Termination      A-20  

(18)            

  Appointment; Acknowledgements and Agreements      A-21  
(19)               Waiver      A-21  
(20)               Elective Distributions in Cash or Shares      A-22  

 


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DEPOSIT AGREEMENT dated as of [DATE] , 2020 (the “Deposit Agreement”) among ACCUSTEM SCIENCES LIMITED and its successors (the “Company”), JPMORGAN CHASE BANK, N.A., as depositary hereunder (the “Depositary”), and all Holders (defined below) and Beneficial Owners (defined below) from time to time of American Depositary Receipts issued hereunder (“ADRs”) evidencing American Depositary Shares (“ADSs”) representing deposited Shares (defined below). The Company hereby appoints the Depositary as depositary for the Deposited Securities (defined below) and hereby authorizes and directs the Depositary to act in accordance with the terms set forth in this Deposit Agreement. All capitalized terms used herein have the meanings ascribed to them in Section 1 or elsewhere in this Deposit Agreement. The parties hereto agree as follows:

1. Certain Definitions.

(a) “ADR Register” is defined in paragraph (3) of the form of ADR (Transfers, Split-Ups and Combinations of ADRs).

(b) “ADRs” mean the American Depositary Receipts executed and delivered hereunder. ADRs may be either in physical certificated form or Direct Registration ADRs (as hereinafter defined). ADRs in physical certificated form, and the terms and conditions governing the Direct Registration ADRs, shall be substantially in the form of Exhibit A annexed hereto (the “form of ADR”). The term “Direct Registration ADR” means an ADR, the ownership of which is recorded on the Direct Registration System. References to “ADRs” shall include certificated ADRs and Direct Registration ADRs, unless the context otherwise requires. The form of ADR is hereby incorporated herein and made a part hereof; the provisions of the form of ADR shall be binding upon the parties hereto.

(c) Subject to paragraph (13) of the form of ADR, (Changes Affecting Deposited Securities) each “ADS” evidenced by an ADR represents the right to receive, and to exercise the beneficial ownership interests in, the number of Shares specified in the form of ADR attached hereto as Exhibit A (as amended from time to time) that are on deposit with the Depositary and/or the Custodian and a pro rata share in any other Deposited Securities, subject, in each case, to the terms of this Deposit Agreement and the ADSs. The ADS(s)-to-Share(s) ratio is subject to amendment as provided in the form of ADR (which may give rise to fees contemplated in paragraph (7) thereof).

(d) “Beneficial Owner” means as to any ADS, any person or entity having a beneficial ownership interest in such ADS. A Beneficial Owner need not be the Holder of the ADR evidencing such ADS. If a Beneficial Owner of ADSs is not a Holder, it must rely on the Holder of the ADR(s) evidencing such ADSs in order to assert any rights or receive any benefits under this Deposit Agreement. The arrangements between a Beneficial Owner of ADSs and the Holder of the corresponding ADRs may affect the Beneficial Owner’s ability to exercise any rights it may have.

 

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(e) “Custodian” means the agent or agents of the Depositary (singly or collectively, as the context requires) and any additional or substitute Custodian appointed pursuant to Section 9.

(f) The terms “deliver”, “execute”, “issue”, “register”, “surrender”, “transfer” or “cancel”, when used with respect to Direct Registration ADRs, shall refer to an entry or entries or an electronic transfer or transfers in the Direct Registration System, and, when used with respect to ADRs in physical certificated form, shall refer to the physical delivery, execution, issuance, registration, surrender, transfer or cancellation of certificates representing the ADRs.

(g) “Delivery Order” is defined in Section 3.

(h) “Deposited Securities” as of any time means all Shares at such time deposited under this Deposit Agreement and any and all other Shares, securities, property and cash at such time held by the Depositary or the Custodian in respect or in lieu of such deposited Shares and other Shares, securities, property and cash. Deposited Securities are not intended to, and shall not, constitute proprietary assets of the Depositary, the Custodian or their nominees. Beneficial ownership in Deposited Securities is intended to be, and shall at all times during the term of the Deposit Agreement continue to be, vested in the Beneficial Owners of the ADSs representing such Deposited Securities.

(i) “Direct Registration System” means the system for the uncertificated registration of ownership of securities established by The Depository Trust Company (“DTC”) and utilized by the Depositary pursuant to which the Depositary may record the ownership of ADRs without the issuance of a certificate, which ownership shall be evidenced by periodic statements issued by the Depositary to the Holders entitled thereto. For purposes hereof, the Direct Registration System shall include access to the Profile Modification System maintained by DTC which provides for automated transfer of ownership between DTC and the Depositary.

(j) “Holder” means the person or persons in whose name an ADR is registered on the ADR Register. For all purposes under the Deposit Agreement and the ADRs, a Holder shall be deemed to have all requisite authority to act on behalf of any and all Beneficial Owners of the ADSs evidenced by the ADR(s) registered in such Holder’s name.

(k) “Securities Act of 1933” means the United States Securities Act of 1933, as from time to time amended.

(l) “Securities Exchange Act of 1934” means the United States Securities Exchange Act of 1934, as from time to time amended.

 

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(m) “Shares” mean the ordinary shares of the Company, and shall include the rights to receive Shares specified in paragraph (1) of the form of ADR (Issuance of ADSs).

(n) “Transfer Office” is defined in paragraph (3) of the form of ADR (Transfers, Split-Ups and Combinations of ADRs).

(o) “Withdrawal Order” is defined in Section 6.

2. Form of ADRs.

(a) Direct Registration ADRs. Notwithstanding anything in this Deposit Agreement or in the form of ADR to the contrary, ADSs shall be evidenced by Direct Registration ADRs, unless certificated ADRs are specifically requested by the Holder.

(b) Certificated ADRs. ADRs in certificated form shall be printed or otherwise reproduced at the discretion of the Depositary in accordance with its customary practices in its American depositary receipt business, or at the request of the Company typewritten and photocopied on plain or safety paper, and shall be substantially in the form set forth in the form of ADR, with such changes as may be required by the Depositary or the Company to comply with their obligations hereunder, any applicable law, regulation or usage or to indicate any special limitations or restrictions to which any particular ADRs are subject. ADRs may be issued in denominations of any number of ADSs. ADRs in certificated form shall be executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary. ADRs in certificated form bearing the facsimile signature of anyone who was at the time of execution a duly authorized officer of the Depositary shall bind the Depositary, notwithstanding that such officer has ceased to hold such office prior to the delivery of such ADRs.

(c) Binding Effect. Holders of ADRs, and the Beneficial Owners of the ADSs evidenced by such ADRs, shall each be bound by the terms and conditions of this Deposit Agreement and of the form of ADR, regardless of whether such ADRs are Direct Registration ADRs or certificated ADRs.

3. Deposit of Shares.

(a) Requirements. In connection with the deposit of Shares hereunder, the Depositary or the Custodian may require the following in a form satisfactory to it:

(i) a written order directing the Depositary to issue to, or upon the written order of, the person or persons designated in such order a Direct Registration ADR or ADRs evidencing the number of ADSs representing such deposited Shares (a “Delivery Order”);

 

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(ii) proper endorsements or duly executed instruments of transfer in respect of such deposited Shares;

(iii) instruments assigning to the Depositary, the Custodian or a nominee of either any distribution on or in respect of such deposited Shares or indemnity therefor; and

(iv) proxies entitling the Custodian to vote such deposited Shares.

(b) Registration of Deposited Securities. As soon as practicable after the Custodian receives Deposited Securities pursuant to any such deposit or pursuant to paragraph (10) (Distributions on Deposited Securities) or (13) (Changes Affecting Deposited Securities) of the form of ADR, the Custodian shall present such Deposited Securities for registration of transfer into the name of the Depositary, the Custodian or a nominee of either, in each case for the benefit of Holders, to the extent such registration is practicable, at the cost and expense of the person making such deposit (or for whose benefit such deposit is made) and shall obtain evidence satisfactory to it of such registration. Deposited Securities shall be held by the Custodian for the account and to the order of the Depositary for the benefit of Holders of ADRs (to the extent not prohibited by law) at such place or places and in such manner as the Depositary shall determine. Notwithstanding anything else contained herein, in the form of ADR and/or any outstanding ADSs, the Depositary, the Custodian and their respective nominees are intended to be, and shall at all times during the term of the Deposit Agreement be, the record holder(s) only of the Deposited Securities represented by the ADSs for the benefit of the Holders. The Depositary, on its own behalf and on behalf of the Custodian and their respective nominees, disclaims any beneficial ownership interest in the Deposited Securities held on behalf of the Holders.

(c) Delivery of Deposited Securities. Deposited Securities may be delivered by the Custodian to any person only under the circumstances expressly contemplated in this Deposit Agreement. To the extent that the provisions of or governing the Shares make delivery of certificates therefor impracticable, Shares may be deposited hereunder by such delivery thereof as the Depositary or the Custodian may reasonably accept, including, without limitation, by causing them to be credited to an account maintained by the Custodian for such purpose with the Company or an accredited intermediary, such as a bank, acting as a registrar for the Shares, together with delivery of the documents, payments and Delivery Order referred to herein to the Custodian or the Depositary.

4. Issue of ADRs. After any such deposit of Shares, the Custodian shall notify the Depositary of such deposit and of the information contained in any related Delivery Order by letter, first class airmail postage prepaid, or, at the request, risk and expense of the person making the deposit, by SWIFT, cable, telex or facsimile transmission. After receiving such notice from the Custodian, the Depositary, subject to this Deposit Agreement, shall properly issue at the Transfer Office, to or upon the order of any person named in such notice, an ADR or ADRs registered as requested and evidencing the aggregate ADSs to which such person is entitled.

 

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5. Distributions on Deposited Securities. To the extent that the Depositary determines in its discretion that any distribution pursuant to paragraph (10) of the form of ADR (Distributions on Deposited Securities) is not practicable with respect to any Holder, the Depositary may make such distribution as it so deems practicable, including the distribution of foreign currency, securities or property (or appropriate documents evidencing the right to receive foreign currency, securities or property) or the retention thereof as Deposited Securities with respect to such Holder’s ADRs (without liability for interest thereon or the investment thereof).

6. Withdrawal of Deposited Securities. In connection with any surrender of an ADR for withdrawal of the Deposited Securities represented by the ADSs evidenced thereby, the Depositary may require proper endorsement in blank of such ADR (or duly executed instruments of transfer thereof in blank) and the Holder’s written order directing the Depositary to cause the Deposited Securities represented by the ADSs evidenced by such ADR to be withdrawn and delivered to, or upon the written order of, any person designated in such order (a “Withdrawal Order”). Directions from the Depositary to the Custodian to deliver Deposited Securities shall be given by letter, first class airmail postage prepaid, or, at the request, risk and expense of the Holder, by SWIFT, cable, telex or facsimile transmission. Delivery of Deposited Securities may be made by the delivery of certificates (which, if required by law shall be properly endorsed or accompanied by properly executed instruments of transfer or, if such certificates may be registered, registered in the name of such Holder or as ordered by such Holder in any Withdrawal Order) or by such other means as the Depositary may deem practicable, including, without limitation, by transfer of record ownership thereof to an account designated in the Withdrawal Order maintained either by the Company or an accredited intermediary, such as a bank, acting as a registrar for the Deposited Securities.

7. Substitution of ADRs. The Depositary shall execute and deliver a new Direct Registration ADR in exchange and substitution for any mutilated certificated ADR upon cancellation thereof or in lieu of and in substitution for such destroyed, lost or stolen certificated ADR, unless the Depositary has notice that such ADR has been acquired by a bona fide purchaser, upon the Holder thereof filing with the Depositary a request for such execution and delivery and a sufficient indemnity bond and satisfying any other reasonable requirements imposed by the Depositary.

 

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8. Cancellation and Destruction of ADRs; Maintenance of Records. All ADRs surrendered to the Depositary shall be cancelled by the Depositary. The Depositary is authorized to destroy ADRs in certificated form so cancelled in accordance with its customary practices. The Depositary, however, shall maintain or cause its agents to maintain records of all ADRs surrendered and Deposited Securities withdrawn under Section 6 hereof and paragraph (2) of the form of ADR, substitute ADRs delivered under Section 7 hereof, and canceled or destroyed ADRs under this Section 8, in keeping with the procedures ordinarily followed by stock transfer agents located in the United States or as required by the laws or regulations governing the Depositary.

9. The Custodian.

(a) Rights of the Depositary. Any Custodian in acting hereunder shall be subject to the directions of the Depositary and shall be responsible solely to it. The Depositary reserves the right to add, replace or remove a Custodian. The Depositary will give prompt notice of any such action, which will be advance notice if practicable. The Depositary may discharge any Custodian at any time upon notice to the Custodian being discharged.

(b) Rights of the Custodian. Any Custodian may resign from its duties hereunder by providing at least 30 days’ prior written notice to the Depositary. The Depositary may discharge any Custodian at any time upon notice to the Custodian being discharged. Any Custodian ceasing to act hereunder as Custodian shall deliver, upon the instruction of the Depositary, all Deposited Securities held by it to a Custodian continuing to act. Notwithstanding anything to the contrary contained in this Deposit Agreement (including the ADRs) and, subject to the further limitations set forth in subparagraph (p) of paragraph (14) of the form of ADR (Exoneration), the Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the Custodian except to the extent that any Holder has incurred liability directly as a result of the Custodian having (i) committed fraud or willful misconduct in the provision of custodial services to the Depositary or (ii) failed to use reasonable care in the provision of custodial services to the Depositary as determined in accordance with the standards prevailing in the jurisdiction in which the Custodian is located.

10. Lists of Holders. The Company shall have the right to inspect transfer records of the Depositary and its agents and the ADR Register, take copies thereof and require the Depositary and its agents to supply copies of such portions of such records as the Company may request. The Depositary or its agent shall furnish to the Company promptly upon the written request of the Company, a list of the names, addresses and holdings of ADSs by all Holders as of a date within seven days of the Depositary’s receipt of such request.

11. Depositary’s Agents. The Depositary may perform its obligations under this Deposit Agreement through any agent appointed by it, provided that the Depositary shall notify the Company of such appointment and shall remain responsible for the performance of such obligations as if no agent were appointed, subject to paragraph (14) of the form of ADR (Exoneration).

12. Resignation and Removal of the Depositary; Appointment of Successor Depositary.

 

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(a) Resignation of the Depositary. The Depositary may at any time resign as Depositary hereunder by written notice of its election to do so delivered to the Company, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided.

(b) Removal of the Depositary. The Depositary may at any time be removed by the Company by providing no less than 60 days’ prior written notice of such removal to the Depositary, such removal to take effect the later of (i) the 60th day after such notice of removal is first provided and (ii) the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. Notwithstanding the foregoing, if upon the resignation or removal of the Depositary a successor depositary is not appointed within the applicable 60-day period as specified in paragraph (17) of the form of ADR (Termination), then the Depositary may elect to terminate this Deposit Agreement and the ADR and the provisions of said paragraph (17) shall thereafter govern the Depositary’s obligations hereunder.

(c) Appointment of Successor Depositary. In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor depositary shall execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor. The predecessor depositary, only upon payment of all sums due to it and on the written request of the Company, shall (i) execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder (other than its rights to indemnification and fees owing, each of which shall survive any such removal and/or resignation), (ii) duly assign, transfer and deliver all right, title and interest to the Deposited Securities to such successor, and (iii) deliver to such successor a list of the Holders of all outstanding ADRs. Any such successor depositary shall promptly mail notice of its appointment to such Holders. Any bank or trust company into or with which the Depositary may be merged or consolidated, or to which the Depositary shall transfer substantially all its American depositary receipt business, shall be the successor of the Depositary without the execution or filing of any document or any further act.

13. Reports. On or before the first date on which the Company makes any communication available to holders of Deposited Securities or any securities regulatory authority or stock exchange, by publication or otherwise, the Company shall transmit to the Depositary a copy thereof in English or with an English translation or summary. The Company has delivered to the Depositary, the Custodian and any Transfer Office, a copy of all provisions of or governing the Shares and any other Deposited Securities issued by the Company or any affiliate of the Company

 

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and, promptly upon any change thereto, the Company shall deliver to the Depositary, the Custodian and any Transfer Office, a copy (in English or with an English translation) of such provisions as so changed. The Depositary and its agents may rely upon the Company’s delivery of all such communications, information and provisions for all purposes of this Deposit Agreement and the Depositary shall have no liability for the accuracy or completeness of any thereof.

14. Additional Shares. The Company agrees with the Depositary that neither the Company nor any company controlling, controlled by or under common control with the Company shall (a) issue (i) additional Shares, (ii) rights to subscribe for Shares, (iii) securities convertible into or exchangeable for Shares or (iv) rights to subscribe for any such securities or (b) deposit any Shares under this Deposit Agreement, except, in each case, under circumstances complying in all respects with the Securities Act of 1933. At the reasonable request of the Depositary where it deems necessary, the Company will furnish the Depositary with legal opinions, in forms and from counsels reasonably acceptable to the Depositary, dealing with such issues requested by the Depositary. The Depositary will not knowingly accept for deposit hereunder any Shares required to be registered under the Securities Act of 1933 unless a registration statement is in effect and will use reasonable efforts to comply with written instructions of the Company not to accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company’s compliance with the requirements of the securities laws, rules and regulations in the United States.

15. Indemnification.

(a) Indemnification by the Company. The Company shall indemnify, defend and save harmless each of the Depositary, the Custodian and their respective directors, officers, employees, agents and affiliates against any loss, liability or expense (including reasonable fees and expenses of counsel) which may arise out of acts performed or omitted, in connection with the provisions of this Deposit Agreement and of the ADRs, as the same may be amended, modified or supplemented from time to time in accordance herewith (i) by either the Depositary or a Custodian or their respective directors, officers, employees, agents and affiliates, except for any liability or expense directly arising out of the negligence, or willful misconduct of the Depositary or its directors, officers or affiliates acting in their capacities as such hereunder, or (ii) by the Company or any of its directors, officers, employees, agents and affiliates.

The indemnities set forth in the preceding paragraph shall also apply to any liability or expense which may arise out of any misstatement or alleged misstatement or omission or alleged omission in any registration statement, proxy statement, prospectus (or placement memorandum), or preliminary prospectus (or preliminary placement memorandum) relating to the offer, issuance, withdrawal or sale of ADSs

 

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or the deposit of Shares in connection therewith, except to the extent any such liability or expense arises out of (i) information relating to the Depositary or its agents (other than the Company), as applicable, furnished in writing by the Depositary expressly for use in any of the foregoing documents and not changed or altered by the Company or (ii) if such information is provided, the failure to state a material fact necessary to make the information provided not misleading.

(b) Indemnification by the Depositary. Subject to the limitations provided for in Section 15(c) below, the Depositary shall indemnify, defend and save harmless the Company against any direct loss, liability or expense (including reasonable fees and expenses of counsel) incurred by the Company in respect of this Deposit Agreement to the extent such loss, liability or expense is due to the negligence or willful misconduct of the Depositary.

(c) Damages or Lost Profits. Notwithstanding any other provision of this Deposit Agreement or the ADRs to the contrary, neither the Depositary nor any of its agents shall be liable for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought.

(d) Survival. The obligations set forth in this Section 15 shall survive the termination of this Deposit Agreement and the succession or substitution of any indemnified person.

16. Notices.

(a) Notice to Holders. Notice to any Holder shall be deemed given when first mailed, first class postage prepaid, to the address of such Holder on the ADR Register or received by such Holder. Failure to notify a Holder or any defect in the notification to a Holder shall not affect the sufficiency of notification to other Holders or to the Beneficial Owners of ADSs held by such other Holders. The Depositary’s only notification obligations under this Deposit Agreement and the ADRs shall be to Holders. Notice to a Holder shall be deemed, for all purposes of the Deposit Agreement and the ADRs, to constitute notice to any and all Beneficial Owners of the ADSs evidenced by such Holder’s ADRs.

(b) Notice to the Depositary or the Company. Notice to the Depositary or the Company shall be deemed given when first received by it at the address or facsimile transmission number set forth in (i) or (ii), respectively, or at such other address or facsimile transmission number as either may specify to the other by written notice:

 

(i)    JPMorgan Chase Bank, N.A.   
   383 Madison Avenue, Floor 11   
  

New York, New York, 10179

  
  

Attention: Depositary Receipts Group

  
  

Fax: (302) 220-4591

  

 

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(ii)

  

Accustem Sciences Limited

  
  

[ADDRESS]

  
  

Attention: [CONTACT PERSON]

  
  

Fax: [FACSIMILE]

  

17. Counterparts. This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one instrument. Delivery of an executed signature page of this Deposit Agreement by facsimile or other electronic transmission (including “.pdf”, “.tif” or similar format) shall be effective as delivery of a manually executed counterpart hereof.

18. No Third-Party Beneficiaries; Holders and Beneficial Owners as Parties; Binding Effect. This Deposit Agreement is for the exclusive benefit of the Company, the Depositary, the Holders, and their respective successors hereunder, and, except to the extent specifically set forth in Section 15 of this Deposit Agreement, shall not give any legal or equitable right, remedy or claim whatsoever to any other person. The Holders and Beneficial Owners from time to time shall be parties to this Deposit Agreement and shall be bound by all of the provisions hereof. A Beneficial Owner shall only be able to exercise any right or receive any benefit hereunder solely through the Holder of the ADR(s) evidencing the ADSs owned by such Beneficial Owner.

19. Severability. If any provision of this Deposit Agreement or the ADRs is invalid, illegal or unenforceable in any respect, the remaining provisions contained herein and therein shall in no way be affected thereby.

20. Governing Law; Consent to Jurisdiction.

(a) The Deposit Agreement, the ADSs and the ADRs shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to the application of the conflict of law principles thereof.

(b) By the Company. The Company irrevocably agrees that any legal suit, action or proceeding against the Company brought by the Depositary or any Holder, arising out of or based upon this Deposit Agreement, the ADSs or the ADRs or the transactions contemplated hereby or thereby, may be instituted in any state or federal court in New York, New York, and irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company also irrevocably agrees that any legal suit, action or proceeding against the Depositary brought by the Company, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York.

 

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(c) By Holders and Beneficial Owners. By holding an ADS or an interest therein, Holders and Beneficial Owners each irrevocably agree that any legal suit, action or proceeding against or involving the Company or the Depositary, arising out of or based upon this Deposit Agreement, the ADSs, the ADRs or the transactions contemplated herein, therein or hereby, may only be instituted in a state or federal court in New York, New York, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

(d) Notwithstanding the foregoing, any action against the Company based on this Deposit Agreement, the ADSs or the ADRs or the transactions contemplated hereby or thereby, may be instituted by the Depositary in any competent court in the United Kingdom and/or the United States.

21. Agent for Service.

(a) Appointment. The Company has appointed _________________________, New York, New York, as its authorized agent (the “Authorized Agent”) upon which process may be served in any such action arising out of or based on this Deposit Agreement or the transactions contemplated hereby which may be instituted in any state or federal court in New York, New York by the Depositary or any Holder, and waives any other requirements of or objections to personal jurisdiction with respect thereto. Subject to the Company’s rights to replace the Authorized Agent with another entity in the manner required were the Authorized Agent to have resigned, such appointment shall be irrevocable.

(b) Agent for Service of Process. The Company represents and warrants that the Authorized Agent has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any suit, action or proceeding against the Company, by service by mail of a copy thereof upon the Authorized Agent (whether or not the appointment of such Authorized Agent shall for any reason prove to be ineffective or such Authorized Agent shall fail to accept or acknowledge such service), with a copy mailed to the Company by registered or certified air mail, postage prepaid, to its address provided in Section 16(b) hereof. The Company agrees that the failure of the Authorized Agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any suit, action or proceeding

 

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based thereon. If, for any reason, the Authorized Agent named above or its successor shall no longer serve as agent of the Company to receive service of process in New York, the Company shall promptly appoint a successor that is a legal entity with offices in New York, New York, so as to serve and will promptly advise the Depositary thereof.

(c) Waiver of Personal Service of Process. In the event the Company fails to continue such designation and appointment in full force and effect, the Company hereby waives personal service of process upon it and consents that any such service of process may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices hereunder, and service so made shall be deemed completed five (5) days after the same shall have been so mailed.

22. Waiver of Immunities. To the extent that the Company or any of its properties, assets or revenues may have or may hereafter be entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or other matters under or arising out of or in connection with the Shares or Deposited Securities, the ADSs, the ADRs or this Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and enforcement.

 

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23. Waiver of Jury Trial. EACH PARTY TO THIS DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH HOLDER AND BENEFICIAL OWNER OF, AND/OR HOLDER OF INTERESTS IN, ADSS OR ADRS) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE DEPOSITARY AND/OR THE COMPANY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE ADSs OR THE ADRs, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF (WHETHER BASED ON CONTRACT, TORT, COMMON LAW OR ANY OTHER THEORY). No provision of this Deposit Agreement or any ADR is intended to constitute a waiver or limitation of any rights which Holders or Beneficial Owners may have under the Securities Act of 1933 or the Securities Exchange Act of 1934, to the extent applicable.

IN WITNESS WHEREOF, ACCUSTEM SCIENCES LIMITED and JPMORGAN CHASE BANK, N.A. have duly executed this Deposit Agreement as of the day and year first above set forth and all Holders and Beneficial Owners shall become parties hereto upon acceptance by them of ADSs issued in accordance with the terms hereof, or upon acquisition of any beneficial interest therein.

 

ACCUSTEM SCIENCES LIMITED

By:_____________________________

Name:

Title

JPMORGAN CHASE BANK, N.A.

By:_____________________________

Name:

Title: Vice President

 

 

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EXHIBIT A

ANNEXED TO AND INCORPORATED IN

DEPOSIT AGREEMENT

[FORM OF FACE OF ADR]

 

                No. of ADSs:

Number

  
               Each ADS represents
               One Share                  
   CUSIP:        

AMERICAN DEPOSITARY RECEIPT

evidencing

AMERICAN DEPOSITARY SHARES

representing

ORDINARY SHARES

of

ACCUSTEM SCIENCES LIMITED

(Incorporated under the laws of England and Wales)

JPMORGAN CHASE BANK, N.A., a national banking association organized under the laws of the United States of America, as depositary hereunder (the “Depositary”), hereby certifies that                  is the registered owner (a “Holder”) of American Depositary Shares (“ADSs”), each (subject to paragraph (13) (Changes Affecting Deposited Securities)) representing one ordinary share (including the rights to receive Shares described in paragraph (1) (Issuance of ADSs), “Shares” and, together with any other securities, cash or property from time to time held by the Depositary in respect or in lieu of deposited Shares, the “Deposited Securities”), of Accustem Sciences Limited, a corporation organized under the laws of England and Wales (the “Company”), deposited under the Deposit Agreement dated as of [DATE], 2020 (as amended from time to time, the “Deposit Agreement”) among the Company, the Depositary and all Holders and Beneficial Owners from time to time of American Depositary Receipts issued thereunder (“ADRs”), each of whom by accepting an ADR becomes a party thereto. The Deposit Agreement and this ADR (which includes the provisions set forth on the reverse hereof) shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to the application of the conflict of law principles thereof. All capitalized terms used herein, and not defined herein, shall have the meanings ascribed to such terms in the Deposit Agreement.

 

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(1) Issuance of ADSs.

(a) Issuance. This ADR is one of the ADRs issued under the Deposit Agreement. Subject to the other provisions hereof, the Depositary may so issue ADRs for delivery at the Transfer Office (as hereinafter defined) only against deposit of: (i) Shares in a form satisfactory to the Custodian; or (ii) rights to receive Shares from the Company or any registrar, transfer agent, clearing agent or other entity recording Share ownership or transactions.

(b) Lending. In its capacity as Depositary, the Depositary shall not lend Shares or ADSs.

(c) Representations and Warranties of Depositors. Every person depositing Shares under the Deposit Agreement represents and warrants that:

 

  (i)

such Shares and the certificates therefor are duly authorized, validly issued and outstanding, fully paid, nonassessable and legally obtained by such person,

 

  (ii)

all pre-emptive and comparable rights, if any, with respect to such Shares have been validly waived or exercised,

 

  (iii)

the person making such deposit is duly authorized so to do,

 

  (iv)

the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim and

 

  (v)

such Shares (A) are not “restricted securities” as such term is defined in Rule 144 under the Securities Act of 1933 (“Restricted Securities”) unless at the time of deposit the requirements of paragraphs (c), (e), (f) and (h) of Rule 144 shall not apply and such Shares may be freely transferred and may otherwise be offered and sold freely in the United States or (B) have been registered under the Securities Act of 1933. To the extent the person depositing Shares is an “affiliate” of the Company as such term is defined in Rule 144, the person also represents and warrants that upon the sale of the ADSs, all of the provisions of Rule 144 which enable the Shares to be freely sold (in the form of ADSs) will be fully complied with and, as a result thereof, all of the ADSs issued in respect of such Shares will not be on the sale thereof, Restricted Securities.

 

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Such representations and warranties shall survive the deposit and withdrawal of Shares and the issuance and cancellation of ADSs in respect thereof and the transfer of such ADSs.

(d) The Depositary may refuse to accept for such deposit any Shares identified by the Company in order to facilitate compliance with the requirements of the Securities Act of 1933 or the Rules made thereunder.

(2) Withdrawal of Deposited Securities. Subject to paragraphs (4) (Certain Limitations to Registration, Transfer etc.) and (5) (Liability for Taxes, Duties and Other Charges), upon surrender of (a) a certificated ADR in a form satisfactory to the Depositary at the Transfer Office or (b) proper instructions and documentation in the case of a Direct Registration ADR, the Holder hereof is entitled to delivery at, or to the extent in dematerialized form from, the Custodian’s office of the Deposited Securities at the time represented by the ADSs evidenced by this ADR. At the request, risk and expense of the Holder hereof, the Depositary may deliver such Deposited Securities at such other place as may have been requested by the Holder. Notwithstanding any other provision of the Deposit Agreement or this ADR, the withdrawal of Deposited Securities may be restricted only for the reasons set forth in General Instruction I.A.(1) of Form F-6 (as such instructions may be amended from time to time) under the Securities Act of 1933.

(3) Transfers, Split-Ups and Combinations of ADRs. The Depositary or its agent will keep, at a designated transfer office (the “Transfer Office”), (i) a register (the “ADR Register”) for the registration, registration of transfer, combination and split-up of ADRs, and, in the case of Direct Registration ADRs, shall include the Direct Registration System, which at all reasonable times will be open for inspection by Holders and the Company for the purpose of communicating with Holders in the interest of the business of the Company or a matter relating to the Deposit Agreement and (ii) facilities for the delivery and receipt of ADRs. The term ADR Register includes the Direct Registration System. Title to this ADR (and to the Deposited Securities represented by the ADSs evidenced hereby), when properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer, is transferable by delivery with the same effect as in the case of negotiable instruments under the laws of the State of New York; provided that the Depositary, notwithstanding any notice to the contrary, may treat the person in whose name this ADR is registered on the ADR Register as the absolute owner hereof for all purposes and neither the Depositary nor the Company will have any obligation or be subject to any liability under the Deposit Agreement or any ADR to any Beneficial Owner, unless such Beneficial Owner is the Holder hereof. Subject to paragraphs (4) and (5), this ADR is transferable on the ADR Register and may be split into other ADRs or combined

 

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with other ADRs into one ADR, evidencing the aggregate number of ADSs surrendered for split-up or combination, by the Holder hereof or by duly authorized attorney upon surrender of this ADR at the Transfer Office properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer and duly stamped as may be required by applicable law; provided that the Depositary may close the ADR Register at any time or from time to time when deemed expedient by it. At the request of a Holder, the Depositary shall, for the purpose of substituting a certificated ADR with a Direct Registration ADR, or vice versa, execute and deliver a certificated ADR or a Direct Registration ADR, as the case may be, for any authorized number of ADSs requested, evidencing the same aggregate number of ADSs as those evidenced by the certificated ADR or Direct Registration ADR, as the case may be, substituted.

(4) Certain Limitations to Registration, Transfer etc. Prior to the issue, registration, registration of transfer, split-up or combination of any ADR, the delivery of any distribution in respect thereof, or, subject to the last sentence of paragraph (2) (Withdrawal of Deposited Securities), the withdrawal of any Deposited Securities, and from time to time in the case of clause (b)(ii) of this paragraph (4), the Company, the Depositary or the Custodian may require:

(a) payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of Shares or other Deposited Securities upon any applicable register and (iii) any applicable charges as provided in paragraph (7) (Charges of Depositary) of this ADR;

(b) the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, compliance with applicable law, regulations, provisions of or governing Deposited Securities and terms of the Deposit Agreement and this ADR, as it may deem necessary or proper; and

(c) compliance with such regulations as the Depositary may establish consistent with the Deposit Agreement.

The issuance of ADRs, the acceptance of deposits of Shares, the registration, registration of transfer, split-up or combination of ADRs or, subject to the last sentence of paragraph (2) (Withdrawal of Deposited Securities), the withdrawal of Deposited Securities may be suspended, generally or in particular instances, when the ADR Register or any register for Deposited Securities is closed or when any such action is deemed advisable by the Depositary.

 

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(5) Liability for Taxes, Duties and Other Charges. If any tax or other governmental charges (including any penalties and/or interest) shall become payable by or on behalf of the Custodian or the Depositary with respect to this ADR, any Deposited Securities represented by the ADSs evidenced hereby or any distribution thereon, such tax or other governmental charge shall be paid by the Holder hereof to the Depositary and by holding or having held this ADR or any ADSs evidenced hereby, the Holder and all Beneficial Owners hereof and thereof, and all prior Holders and Beneficial Owners hereof and thereof, jointly and severally, agree to indemnify, defend and save harmless each of the Depositary and its agents in respect of such tax or other governmental charge. Each Holder of this ADR and Beneficial Owner of the ADSs evidenced hereby, and each prior Holder and Beneficial Owner hereof and thereof (collectively, the “Tax Indemnitors”), by holding or having held an ADR or an interest in ADSs, acknowledges and agrees that the Depositary shall have the right to seek payment of amounts owing with respect to this ADR under this paragraph (5) from any one or more Tax Indemnitor(s) as determined by the Depositary in its sole discretion, without any obligation to seek payment from any other Tax Indemnitor(s).The Depositary may refuse to effect any registration, registration of transfer, split-up or combination hereof or, subject to the last sentence of paragraph (2) (Withdrawal of Deposited Securities), any withdrawal of such Deposited Securities until such payment is made. The Depositary may also deduct from any distributions on or in respect of Deposited Securities, or may sell by public or private sale for the account of the Holder hereof any part or all of such Deposited Securities, and may apply such deduction or the proceeds of any such sale in payment of such tax or other governmental charge, the Holder hereof remaining liable for any deficiency, and shall reduce the number of ADSs evidenced hereby to reflect any such sales of Shares. In connection with any distribution to Holders, the Company will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Company; and the Depositary and the Custodian will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Depositary or the Custodian. If the Depositary determines that any distribution in property other than cash (including Shares or rights) on Deposited Securities is subject to any tax that the Depositary or the Custodian is obligated to withhold, the Depositary may dispose of all or a portion of such property in such amounts and in such manner as the Depositary deems necessary and practicable to pay such taxes, by public or private sale, and the Depositary shall distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes to the Holders entitled thereto. Each Holder and Beneficial Owner agrees to indemnify the Depositary, the Company, the Custodian and any of their respective officers, directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained which obligations shall survive any transfer or surrender of ADSs or the termination of the Deposit Agreement.

 

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(6) Disclosure of Interests.

(a) General. To the extent that the provisions of or governing any Deposited Securities may require disclosure of or impose limits on beneficial or other ownership of, or interests in, Deposited Securities, other Shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, Holders and Beneficial Owners agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable Company instructions in respect thereof. The Company reserves the right to instruct Holders (and through any such Holder, the Beneficial Owners of ADSs evidenced by the ADRs registered in such Holder’s name) to deliver their ADSs for cancellation and withdrawal of the Deposited Securities so as to permit the Company to deal directly with the Holder and/or Beneficial Owner thereof as a holder of Shares and Holders and Beneficial Owners agree to comply with such instructions. The Depositary agrees to cooperate with the Company in its efforts to inform Holders of the Company’s exercise of its rights under this paragraph and agrees to consult with, and provide reasonable assistance without risk, liability or expense on the part of the Depositary, to the Company on the manner or manners in which it may enforce such rights with respect to any Holder.

(b) Jurisdiction Specific. Notwithstanding any provision of the Deposit Agreement or of the ADRs and without limiting the foregoing, by being a Holder or Beneficial Owner, each such Holder and Beneficial Owner agrees to provide such information as the Company may request in a disclosure notice (a “Disclosure Notice”) given pursuant to the United Kingdom Companies Act 2006 (as amended from time to time and including any statutory modification or re-enactment thereof, the “Companies Act”) or the Articles of Association of the Company. By accepting or holding an ADR, each Holder and Beneficial Owner acknowledges that it understands that failure to comply with a Disclosure Notice may result in the imposition of sanctions against the holder of the Shares in respect of which the non-complying person is or was, or appears to be or has been, interested as provided in the Companies Act and the Articles of Association which currently include, the withdrawal of the voting rights of such Shares and the imposition of restrictions on the rights to receive dividends on and to transfer such Shares. In addition, by accepting or holding an ADR each Holder and Beneficial Owner agrees to comply with the provisions of the United Kingdom Disclosure Guidance and Transparency Rules (as amended from time to time, the “DTRs”) with regard to the notification to the Company of interests in Shares and certain financial instruments, which currently provide, inter alia, that a Holder and Beneficial Owner must notify the Company of the percentage of its voting rights he holds as shareholder or holds or is deemed to hold through his direct or indirect holding of certain financial instruments (or a combination of such holdings) if the percentage of those voting rights (i) reaches, exceeds or falls below 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10% and each 1% threshold thereafter up to 100% as a result of an acquisition or disposal of Shares or certain financial instruments, or (ii) reaches, exceeds or falls below such applicable thresholds as a result of events changing the breakdown of voting rights and on the basis of information disclosed by the Company in accordance with the DTRs. The notification must be effected as soon as possible,

 

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but not later than two trading days after the Holder or Beneficial Owner, as the case may be, (a) learns of the acquisition or disposal or of the possibility of exercising voting rights, or on which, having regard to the circumstances, should have learned of it, regardless of the date on which the acquisition, disposal or possibility of exercising voting rights takes effect, or (b) is informed of the event mentioned in (ii) above.

Any summary of the laws and regulations of the United Kingdom and of the terms of the Company’s constituent documents has been provided by the Company solely for the convenience of Holders, Beneficial Owners and the Depositary. While such summaries are believed by the Company to be accurate as of the date of the Deposit Agreement, (i) they are summaries and as such may not include all aspects of the materials summarized applicable to a Holder or Beneficial Owner, and (ii) these laws and regulations and the Company’s constituent documents may change after the date of the Deposit Agreement. Neither the Depositary nor the Company has any obligation to update any such summaries.

(7) Charges of Depositary.

(a) Rights of the Depositary. The Depositary may charge, and collect from, (i) each person to whom ADSs are issued, including, without limitation, issuances against deposits of Shares, issuances in respect of Share Distributions, Rights and Other Distributions (as such terms are defined in paragraph (10) (Distributions on Deposited Securities)), issuances pursuant to a stock dividend or stock split declared by the Company, or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or the Deposited Securities, and (ii) each person surrendering ADSs for withdrawal of Deposited Securities or whose ADSs are cancelled or reduced for any other reason U.S.$5.00 for each 100 ADSs (or portion thereof) issued, delivered, reduced, cancelled or surrendered, or upon which a Share Distribution or elective distribution is made or offered (as the case may be). The Depositary may sell (by public or private sale) sufficient securities and property received in respect of Share Distributions, Rights and Other Distributions prior to such deposit to pay such charge.

(b) Additional charges by the Depositary. The following additional charges shall also be incurred by the Holders, the Beneficial Owners, by any party depositing or withdrawing Shares or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuances pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the ADSs or the Deposited Securities or a distribution of ADSs pursuant to paragraph (10) (Distributions on Deposited Securities), whichever is applicable:

 

  (i)

a fee of U.S.$0.05 or less per ADS held for any Cash distribution made, or for any elective cash/stock dividend offered, pursuant to the Deposit Agreement,

 

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  (ii)

a fee for the distribution or sale of securities pursuant to paragraph (10) hereof, such fee being in an amount equal to the fee for the execution and delivery of ADSs referred to above which would have been charged as a result of the deposit of such securities (for purposes of this paragraph (7) treating all such securities as if they were Shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the Depositary to Holders entitled thereto,

 

  (iii)

an aggregate fee of U.S.$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the Depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against Holders as of the record date or record dates set by the Depositary during each calendar year and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions), and

 

  (iv)

a fee for the reimbursement of such fees, charges and expenses as are incurred by the Depositary and/or any of its agents (including, without limitation, the Custodian and expenses incurred on behalf of Holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the Shares or other Deposited Securities, the sale of securities (including, without limitation, Deposited Securities), the delivery of Deposited Securities or otherwise in connection with the Depositary’s or its Custodian’s compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against Holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions).

(c) Other Obligations and Charges. The Company will pay all other charges and expenses of the Depositary and any agent of the Depositary (except the Custodian) pursuant to agreements from time to time between the Company and the Depositary, except:

 

  (i)

stock transfer or other taxes and other governmental charges (which are payable by Holders or persons depositing Shares);

 

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  (ii)

SWIFT, cable, telex and facsimile transmission and delivery charges incurred at the request of persons depositing, or Holders delivering Shares, ADRs or Deposited Securities (which are payable by such persons or Holders); and

 

  (iii)

transfer or registration fees for the registration or transfer of Deposited Securities on any applicable register in connection with the deposit or withdrawal of Deposited Securities (which are payable by persons depositing Shares or Holders withdrawing Deposited Securities.

(d) Foreign Exchange Related Matters. To facilitate the administration of various depositary receipt transactions, including disbursement of dividends or other cash distributions and other corporate actions, the Depositary may engage the foreign exchange desk within JPMorgan Chase Bank, N.A. (the “Bank”) and/or its affiliates in order to enter into spot foreign exchange transactions to convert foreign currency into U.S. dollars (“FX Transactions”). For certain currencies, FX Transactions are entered into with the Bank or an affiliate, as the case may be, acting in a principal capacity. For other currencies, FX Transactions are routed directly to and managed by an unaffiliated local custodian (or other third party local liquidity provider), and neither the Bank nor any of its affiliates is a party to such FX Transactions.

The foreign exchange rate applied to an FX Transaction will be either (a) a published benchmark rate, or (b) a rate determined by a third party local liquidity provider, in each case plus or minus a spread, as applicable. The Depositary will disclose which foreign exchange rate and spread, if any, apply to such currency on the “Disclosure” page (or successor page) of www.adr.com (as updated by the Depositary from time to time, “ADR.com”). Such applicable foreign exchange rate and spread may (and neither the Depositary, the Bank nor any of their affiliates is under any obligation to ensure that such rate does not) differ from rates and spreads at which comparable transactions are entered into with other customers or the range of foreign exchange rates and spreads at which the Bank or any of its affiliates enters into foreign exchange transactions in the relevant currency pair on the date of the FX Transaction. Additionally, the timing of execution of an FX Transaction varies according to local market dynamics, which may include regulatory requirements, market hours and liquidity in the foreign exchange market or other factors. Furthermore, the Bank and its affiliates may manage the associated risks of their position in the market in a manner they deem appropriate without regard to the impact of such activities on the Company, the Depositary, Holders or Beneficial Owners. The spread applied does not reflect any gains or losses that may be earned or incurred by the Bank and its affiliates as a result of risk management or other hedging related activity.

Notwithstanding the foregoing, to the extent the Company provides U.S. dollars to the Depositary, neither the Bank nor any of its affiliates will execute an FX Transaction as set forth herein. In such case, the Depositary will distribute the U.S. dollars received from the Company.

 

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Further details relating to the applicable foreign exchange rate, the applicable spread and the execution of FX Transactions will be provided by the Depositary on ADR.com. The Company, Holders and Beneficial Owners each acknowledge and agree that the terms applicable to FX Transactions disclosed from time to time on ADR.com will apply to any FX Transaction executed pursuant to the Deposit Agreement.

(e) Disclosure of Potential Depositary Payments. The Depositary anticipates reimbursing the Company for certain expenses incurred by the Company that are related to the establishment and maintenance of the ADR program upon such terms and conditions as the Company and the Depositary may agree from time to time. The Depositary may make available to the Company a set amount or a portion of the Depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as the Company and the Depositary may agree from time to time.

(f) The right of the Depositary to receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement. As to any Depositary, upon the resignation or removal of such Depositary, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.

(8) Available Information. The Deposit Agreement, the provisions of or governing Deposited Securities and any written communications from the Company, which are both received by the Custodian or its nominee as a holder of Deposited Securities and made generally available to the holders of Deposited Securities, are available for inspection by Holders at the offices of the Depositary and the Custodian, at the Transfer Office, on the U.S. Securities and Exchange Commission’s website, or upon request from the Depositary (which request may be refused by the Depositary at its discretion). The Depositary will distribute copies of such communications (or English translations or summaries thereof) to Holders when furnished by the Company. The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and accordingly files certain reports with the United States Securities and Exchange Commission (the “Commission”). Such reports and other information may be inspected and copied through the Commission’s EDGAR system or at public reference facilities maintained by the Commission located at the date hereof at 100 F Street, NE, Washington, DC 20549.

(9) Execution. This ADR shall not be valid for any purpose unless executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary.

 

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Dated:

 

JPMORGAN CHASE BANK, N.A., as Depositary
By  

                     

Authorized Officer

The Depositary’s office is located at 383 Madison Avenue, Floor 11, New York, New York 10179.

 

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[FORM OF REVERSE OF ADR]

(10) Distributions on Deposited Securities. Subject to paragraphs (4) (Certain Limitations to Registration, Transfer etc.) and (5) (Liability for Taxes, Duties and other Charges), to the extent practicable, the Depositary will distribute to each Holder entitled thereto on the record date set by the Depositary therefor at such Holder’s address shown on the ADR Register, in proportion to the number of Deposited Securities (on which the following distributions on Deposited Securities are received by the Custodian) represented by ADSs evidenced by such Holder’s ADRs:

(a) Cash. Any U.S. dollars available to the Depositary resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof authorized in this paragraph (10) (“Cash”), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain Holders, and (iii) deduction of the Depositary’s and/or its agents’ fees and expenses in (1) converting any foreign currency to U.S. dollars by sale or in such other manner as the Depositary may determine to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the Depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner.

(b) Shares. (i) Additional ADRs evidencing whole ADSs representing any Shares available to the Depositary resulting from a dividend or free distribution on Deposited Securities consisting of Shares (a “Share Distribution”) and (ii) U.S. dollars available to it resulting from the net proceeds of sales of Shares received in a Share Distribution, which Shares would give rise to fractional ADSs if additional ADRs were issued therefor, as in the case of Cash.

(c) Rights. (i) Warrants or other instruments in the discretion of the Depositary representing rights to acquire additional ADRs in respect of any rights to subscribe for additional Shares or rights of any nature available to the Depositary as a result of a distribution on Deposited Securities (“Rights”), to the extent that the Company timely furnishes to the Depositary evidence satisfactory to the Depositary that the Depositary may lawfully distribute the same (the Company has no obligation to so furnish such evidence), or (ii) to the extent the Company does not so furnish such evidence and sales of Rights are practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Rights as in the case of Cash, or (iii) to the extent the Company does not so furnish such evidence and such sales cannot practicably be accomplished by reason of the nontransferability of the Rights, limited markets therefor, their short duration or otherwise, nothing (and any Rights may lapse).

 

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(d) Other Distributions. (i) Securities or property available to the Depositary resulting from any distribution on Deposited Securities other than Cash, Share Distributions and Rights (“Other Distributions”), by any means that the Depositary may deem equitable and practicable, or (ii) to the extent the Depositary deems distribution of such securities or property not to be equitable and practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Other Distributions as in the case of Cash.

The Depositary reserves the right to utilize a division, branch or affiliate of JPMorgan Chase Bank, N.A. to direct, manage and/or execute any public and/or private sale of securities hereunder. Such division, branch and/or affiliate may charge the Depositary a fee in connection with such sales, which fee is considered an expense of the Depositary contemplated above and/or under paragraph (7) (Charges of Depositary). Any U.S. dollars available will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the Depositary in accordance with its then current practices. All purchases and sales of securities will be handled by the Depositary in accordance with its then current policies, which are currently set forth in the “Depositary Receipt Sale and Purchase of Security” section of https://www.adr.com/Investors/FindOutAboutDRs, the location and contents of which the Depositary shall be solely responsible for.

(11) Record Dates. The Depositary may, after consultation with the Company if practicable, fix a record date (which, to the extent applicable, shall be as near as practicable to any corresponding record date set by the Company) for the determination of the Holders who shall be responsible for the fee assessed by the Depositary for administration of the ADR program and for any expenses provided for in paragraph (7) hereof as well as for the determination of the Holders who shall be entitled to receive any distribution on or in respect of Deposited Securities, to give instructions for the exercise of any voting rights, to receive any notice or to act in respect of other matters and only such Holders shall be so entitled or obligated.

(12) Voting of Deposited Securities.

(a) Notice of any Meeting or Solicitation. As soon as practicable after receipt of notice of any meeting at which the holders of Shares are entitled to vote, or of solicitation of consents or proxies from holders of Shares or other Deposited Securities, the Depositary shall fix the ADS record date in accordance with paragraph (11) above provided that if the Depositary receives a written request from the Company in a timely manner and at least 30 days prior to the date of such vote or meeting, the Depositary shall, at the Company’s expense, distribute to Holders a notice (the “Voting Notice”) stating (i) final information particular to such vote and meeting and any solicitation materials, (ii) that each Holder on the record date set by

 

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the Depositary will, subject to any applicable provisions of English law, be entitled to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by the ADSs evidenced by such Holder’s ADRs and (iii) the manner in which such instructions may be given, including instructions to give a discretionary proxy to a person designated by the Company. Each Holder shall be solely responsible for the forwarding of Voting Notices to the Beneficial Owners of ADSs registered in such Holder’s name.    There is no guarantee that Holders and Beneficial Owners generally or any Holder or Beneficial Owner in particular will receive the notice described above with sufficient time to enable such Holder or Beneficial Owner to return any voting instructions to the Depositary in a timely manner.

(b) Voting of Deposited Securities. Following actual receipt by the ADR department responsible for proxies and voting of Holders’ instructions (including, without limitation, instructions of any entity or entities acting on behalf of the nominee for DTC), the Depositary shall, in the manner and on or before the time established by the Depositary for such purpose, endeavor to vote or cause to be voted the Deposited Securities represented by the ADSs evidenced by such Holders’ ADRs in accordance with such instructions insofar as practicable and permitted under the provisions of or governing Deposited Securities. The Depositary will not itself exercise any voting discretion in respect of any Deposited Securities.

(c) Alternative Methods of Distributing Materials. Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary may, to the extent not prohibited by any law, rule, or regulation or by the rules and/or requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the Depositary in connection with any meeting of or solicitation of consents or proxies from holders of Deposited Securities, distribute to the Holders a notice that provides Holders with or otherwise publicizes to Holders instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials). Holders are strongly encouraged to forward their voting instructions as soon as possible. Voting instructions will not be deemed received until such time as the ADR department responsible for proxies and voting has received such instructions, notwithstanding that such instructions may have been physically received by JPMorgan Chase Bank, N.A., as Depositary, prior to such time.

(13) Changes Affecting Deposited Securities.

(a) Subject to paragraphs (4) (Certain Limitations to Registration, Transfer etc.) and (5) (Liability for Taxes, Duties and Other Charges), the Depositary may, in its discretion, and shall if reasonably requested by the Company, amend this ADR or distribute additional or amended ADRs (with or without calling this ADR for exchange) or cash, securities or property on the record date set by the Depositary

 

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therefor to reflect any change in par value, split-up, consolidation, cancellation or other reclassification of Deposited Securities, any Share Distribution or Other Distribution not distributed to Holders or any cash, securities or property available to the Depositary in respect of Deposited Securities from (and the Depositary is hereby authorized to surrender any Deposited Securities to any person and, irrespective of whether such Deposited Securities are surrendered or otherwise cancelled by operation of law, rule, regulation or otherwise, to sell by public or private sale any property received in connection with) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of the Company.

(b) To the extent the Depositary does not so amend this ADR or make a distribution to Holders to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results from any of the foregoing shall constitute Deposited Securities and each ADS evidenced by this ADR shall automatically represent its pro rata interest in the Deposited Securities as then constituted.

(c) Promptly upon the occurrence of any of the aforementioned changes affecting Deposited Securities, the Company shall notify the Depositary in writing of such occurrence and as soon as practicable after receipt of such notice from the Company, may instruct the Depositary to give notice thereof, at the Company’s expense, to Holders in accordance with the provisions hereof. Upon receipt of such instruction, the Depositary shall give notice to the Holders in accordance with the terms thereof, as soon as reasonably practicable.

(14) Exoneration.

(a) The Depositary, the Company, and each of their respective directors, officers, employees, agents and affiliates and each of them shall: (i) incur no liability to Holders or Beneficial Owners (A) if any present or future law, rule, regulation, fiat, order or decree of the United States, England, Wales or any other country or jurisdiction, or of any governmental or regulatory authority or any securities exchange or market or automated quotation system, the provisions of or governing any Deposited Securities, any present or future provision of the Company’s charter, any act of God, war, terrorism, nationalization, expropriation, currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or circumstance beyond its direct and immediate control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the Deposit Agreement or this ADR provides shall be done or performed by it or them (including, without limitation, voting pursuant to paragraph (12) hereof), or (B) by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or things which by the terms of the Deposit Agreement it is provided shall or may be done or performed or any exercise or failure to exercise any discretion given it in the Deposit Agreement or this ADR

 

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(including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable); (ii) assume no liability to Holders or Beneficial Owners except to perform its obligations to the extent they are specifically set forth in this ADR and the Deposit Agreement without gross negligence or willful misconduct and the Depositary shall not be a fiduciary or have any fiduciary duty to Holders or Beneficial Owners; (iii) in the case of the Depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR; (iv) in the case of the Company and its agents hereunder be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required; and (v) not be liable to Holders or Beneficial Owners for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, or any other person believed by it to be competent to give such advice or information. The Depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system.

(b) The Depositary. The Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any Custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A. The Depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale. Notwithstanding anything to the contrary contained in the Deposit Agreement (including the ADRs), subject to the further limitations set forth in subparagraph (p) of this paragraph (14), the Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the Custodian except to the extent that any Holder has incurred liability directly as a result of the Custodian having (i) committed fraud or willful misconduct in the provision of custodial services to the Depositary or (ii) failed to use reasonable care in the provision of custodial services to the Depositary as determined in accordance with the standards prevailing in the jurisdiction in which the Custodian is located.

(c) The Depositary, its agents and the Company may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by them to be genuine and to have been signed, presented or given by the proper party or parties.

 

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(d) The Depositary shall be under no obligation to inform Holders or Beneficial Owners about the requirements of the laws, rules or regulations or any changes therein or thereto of any country or jurisdiction or of any governmental or regulatory authority or any securities exchange or market or automated quotation system.

(e) The Depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, for the manner in which any such vote is cast or for the effect of any such vote.

(f) The Depositary may rely upon instructions from the Company or its counsel in respect of any approval or license required for any currency conversion, transfer or distribution.

(g) The Depositary and its agents may own and deal in any class of securities of the Company and its affiliates and in ADRs.

(h) Notwithstanding anything to the contrary set forth in the Deposit Agreement or an ADR, the Depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the Deposit Agreement, any Holder or Holders, any ADR or ADRs or otherwise related hereto or thereto to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators.

(i) None of the Depositary, the Custodian or the Company shall be liable for the failure by any Holder or Beneficial Owner to obtain the benefits of credits or refunds of non-U.S. tax paid against such Holder’s or Beneficial Owner’s income tax liability.

(j) The Depositary is under no obligation to provide the Holders and Beneficial Owners, or any of them, with any information about the tax status of the Company. The Depositary and the Company shall not incur any liability for any tax or tax consequences that may be incurred by Holders and Beneficial Owners on account of their ownership or disposition of the ADRs or ADSs.

(k) The Depositary shall not incur any liability for the content of any information submitted to it by or on behalf of the Company for distribution to the Holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited Securities, for the validity or worth of the Deposited Securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the Deposit Agreement or for the failure or timeliness of any notice from the Company.

 

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(l) Notwithstanding anything herein or in the Deposit Agreement to the contrary, the Depositary and the Custodian(s) may use third party delivery services and providers of information regarding matters such as pricing, proxy voting, corporate actions, class action litigation and other services in connection herewith and the Deposit Agreement, and use local agents to provide extraordinary services such as attendance at annual meetings of issuers of securities. Although the Depositary and the Custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third party providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information or services.

(m) The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary.

(n) By holding an ADS or an interest therein, Holders and Beneficial Owners each irrevocably agree that any legal suit, action or proceeding against or involving the Company or the Depositary, arising out of or based upon the Deposit Agreement, the ADSs or the transactions contemplated herein, therein or hereby, may only be instituted in a state or federal court in New York, New York, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

(o) The Company has agreed to indemnify the Depositary and its agents under certain circumstances and the Depositary has agreed to indemnify the Company under certain circumstances.

(p) Neither the Depositary nor any of its agents shall be liable to Holders or Beneficial Owners for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought.

(q) No provision of the Deposit Agreement or this ADR is intended to constitute a waiver or limitation of any rights which Holders or Beneficial Owners may have under the Securities Act of 1933 or the Securities Exchange Act of 1934, to the extent applicable.    

(15) Resignation and Removal of Depositary; the Custodian.

(a) Resignation. The Depositary may resign as Depositary by written notice of its election so to do delivered to the Company, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement.

 

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(b) Removal. The Depositary may at any time be removed by the Company by no less than 60 days’ prior written notice of such removal, to become effective upon the later of (i) the 60th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement.

(c) The Custodian. The Depositary may appoint substitute or additional Custodians and the term “Custodian” refers to each Custodian or all Custodians as the context requires.

(16) Amendment. Subject to the last sentence of paragraph (2) (Withdrawal of Deposited Securities), the ADRs and the Deposit Agreement may be amended by the Company and the Depositary, provided that any amendment that imposes or increases any fees or charges on a per ADS basis (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, SWIFT, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or that shall otherwise prejudice any substantial existing right of Holders or Beneficial Owners, shall become effective 30 days after notice of such amendment shall have been given to the Holders. Every Holder and Beneficial Owner at the time any amendment to the Deposit Agreement so becomes effective shall be deemed, by continuing to hold such ADR, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right of the Holder of any ADR to surrender such ADR and receive the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law. Any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act of 1933 or (b) the ADSs or Shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Holders, shall be deemed not to prejudice any substantial rights of Holders or Beneficial Owners.    Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the Deposit Agreement or the form of ADR to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and the ADR at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the Deposit Agreement in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance. Notice of any amendment to the Deposit Agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the Holders identifies a means for Holders and Beneficial Owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the Commission’s, the Depositary’s or the Company’s website or upon request from the Depositary).

 

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(17) Termination. The Depositary may, and shall at the written direction of the Company, terminate the Deposit Agreement and this ADR by mailing notice of such termination to the Holders at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the Depositary shall have (i) resigned as Depositary hereunder, notice of such termination by the Depositary shall not be provided to Holders unless a successor depositary shall not be operating hereunder within 60 days of the date of such resignation, or (ii) been removed as Depositary hereunder, notice of such termination by the Depositary shall not be provided to Holders unless a successor depositary shall not be operating hereunder on the 60th day after the Company’s notice of removal was first provided to the Depositary. Notwithstanding anything to the contrary herein, the Depositary may terminate the Deposit Agreement without notice to the Company, but subject to giving 30 days’ notice to the Holders, under the following circumstances: (i) in the event of the Company’s bankruptcy or insolvency, (ii) if the Shares cease to be listed on an internationally recognized stock exchange, (iii) if the Company effects (or will effect) a redemption of all or substantially all of the Deposited Securities, or a cash or share distribution representing a return of all or substantially all of the value of the Deposited Securities, or (iv) there occurs a merger, consolidation, sale of assets or other transaction as a result of which securities or other property are delivered in exchange for or in lieu of Deposited Securities.

After the date so fixed for termination, the Depositary and its agents will perform no further acts under the Deposit Agreement and this ADR, except to receive and hold (or sell) distributions on Deposited Securities and deliver Deposited Securities being withdrawn. As soon as practicable after the date so fixed for termination, the Depositary shall use its reasonable efforts to sell the Deposited Securities and shall thereafter (as long as it may lawfully do so) hold in an account (which may be a segregated or unsegregated account) the net proceeds of such sales, together with any other cash then held by it under the Deposit Agreement, without liability for interest, in trust for the pro rata benefit of the Holders of ADRs not theretofore surrendered. After making such sale, the Depositary shall be discharged from all obligations in respect of the Deposit Agreement and this ADR, except to account for such net proceeds and other cash. After the date so fixed for termination, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary and its agents.

Notwithstanding anything to the contrary, in connection with any termination pursuant to this paragraph (17), the Depositary may, in its sole discretion and without notice to the Company, establish an unsponsored American depositary share program (on such terms as the Depositary may determine) for the Shares and make available to Holders a means to withdraw the Shares represented by the ADSs issued under the Deposit Agreement and to direct the deposit of such Shares into such unsponsored American depositary shares program, subject, in each case, to receipt by the Depositary, at its discretion, of the fees, charges and expenses provided for in paragraph (7) hereof and the fees, charges and expenses applicable to the unsponsored American depositary share program.

 

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(18) Appointment; Acknowledgements and Agreements. Each Holder and each Beneficial Owner, upon acceptance of any ADSs or ADRs (or any interest in any of them) issued in accordance with the terms and conditions of the Deposit Agreement shall be deemed for all purposes to (a) be a party to and bound by the terms of the Deposit Agreement and the applicable ADR(s), (b) appoint the Depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the Deposit Agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the Depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the Deposit Agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof, and (c) acknowledge and agree that (i) nothing in the Deposit Agreement or any ADR shall give rise to a partnership or joint venture among the parties thereto nor establish a fiduciary or similar relationship among such parties, (ii) the Depositary, its divisions, branches and affiliates, and their respective agents, may from time to time be in the possession of non-public information about the Company, Holders, Beneficial Owners and/or their respective affiliates, (iii) the Depositary and its divisions, branches and affiliates may at any time have multiple banking relationships with the Company, Holders, Beneficial Owners and/or the affiliates of any of them, (iv) the Depositary and its divisions, branches and affiliates may, from time to time, be engaged in transactions in which parties adverse to the Company or the Holders or Beneficial Owners may have interests, (v) nothing contained in the Deposit Agreement or any ADR(s) shall (A) preclude the Depositary or any of its divisions, branches or affiliates from engaging in such transactions or establishing or maintaining such relationships, or (B) obligate the Depositary or any of its divisions, branches or affiliates to disclose such transactions or relationships or to account for any profit made or payment received in such transactions or relationships, (vi) the Depositary shall not be deemed to have knowledge of any information held by any branch, division or affiliate of the Depositary and (vii) notice to a Holder shall be deemed, for all purposes of the Deposit Agreement and this ADR, to constitute notice to any and all Beneficial Owners of the ADSs evidenced by such Holder’s ADRs. For all purposes under the Deposit Agreement and this ADR, the Holder hereof shall be deemed to have all requisite authority to act on behalf of any and all Beneficial Owners of the ADSs evidenced by this ADR.

(19) Waiver. EACH PARTY TO THE DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH HOLDER AND BENEFICIAL OWNER OF, AND/OR HOLDER OF INTERESTS IN, ADSS OR ADRS) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE DEPOSITARY AND/OR THE COMPANY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE ADSs OR THE ADRs, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF (WHETHER BASED ON CONTRACT, TORT, COMMON LAW OR ANY OTHER THEORY).

 

A-21


LOGO

 

(20) Elective Distributions in Cash or Shares. Whenever the Company intends to distribute a dividend payable at the election of the holders of Shares in cash or in additional Shares, the Company shall give notice thereof to the Depositary at least 30 days prior to the proposed distribution stating whether or not it wishes such elective distribution to be made available to Holders. Upon receipt of notice indicating that the Company wishes such elective distribution to be made available to Holders, the Depositary shall consult with the Company to determine, and the Company shall assist the Depositary in its determination, whether it is lawful and reasonably practicable to make such elective distribution available to the Holders. The Depositary shall make such elective distribution available to Holders only if (i) the Company shall have timely requested that the elective distribution is available to Holders, (ii) the Depositary shall have determined that such distribution is reasonably practicable and (iii) the Depositary shall have received satisfactory documentation within the terms of Section 14 of the Deposit Agreement including, without limitation, any legal opinions of counsel in any applicable jurisdiction that the Depositary in its reasonable discretion may request, at the expense of the Company. If the above conditions are not satisfied, the Depositary shall, to the extent permitted by law, distribute to the Holders, on the basis of the same determination as is made in the local market in respect of the Shares for which no election is made, either (x) cash or (y) additional ADSs representing such additional Shares. If the above conditions are satisfied, the Depositary shall establish a record date and establish procedures to enable Holders to elect the receipt of the proposed dividend in cash or in additional ADSs. The Company shall assist the Depositary in establishing such procedures to the extent necessary. Nothing herein shall obligate the Depositary to make available to Holders a method to receive the elective dividend in Shares (rather than ADSs). There can be no assurance that Holders or Beneficial Owners generally, or any Holder and/or Beneficial Owner in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of Shares.

 

A-22

Exhibit 4.3

 

 

DATED    2020

CONFORMED COPY

(1) TIZIANA LIFE SCIENCES PLC

(2) ACCUSTEM SCIENCES LIMITED

 

 

DEMERGER AGREEMENT

 

 

 


TABLE OF CONTENTS

 

         Page  

1.

 

INTERPRETATION

     1  

2.

 

CONDITIONS PRECEDENT

     6  

3.

 

SALE OF SHARES IN THE COMPANY

     7  

4.

 

INDEMNITIES

     8  

5.

 

RELEASE OF GUARANTEES AND UNDERTAKINGS

     10  

6.

 

WARRANTIES

     10  

7.

 

WRONG POCKET PROVISIONS

     11  

8.

 

INSURANCE

     13  

9.

 

CONFIDENTIALITY AND ANNOUNCEMENTS

     13  

10.

 

FURTHER ASSURANCE

     15  

11.

 

CO-OPERATION AND ACCESS TO INFORMATION

     15  

12.

 

ASSIGNMENT

     18  

13.

 

ENTIRE AGREEMENT

     18  

14.

 

VARIATION AND WAIVER

     18  

15.

 

COSTS

     19  

16.

 

NOTICE

     19  

17.

 

SEVERANCE

     20  

18.

 

AGREEMENT SURVIVES THE DEMERGER EFFECTIVE DATE

     20  

19.

 

THIRD PARTY RIGHTS

     20  

20.

 

COUNTERPARTS

     21  

21.

 

GOVERNING LAW AND JURISDICTION

     21  

SCHEDULE 1 PARTICULARS OF THE COMPANY AND RETAINED COMPANIES

     22  

Part 1 The Company

     22  

Part 2 The Retained Companies

     23  

SCHEDULE 2 CONDITIONS

     25  

SCHEDULE 3 COMPLETION OF THE DEMERGER

     26  

Part 1 What Topco shall deliver to Newco on the Demerger Effective Date

     26  

Part 2 Matters for the board meetings on the Demerger Effective Date

     26  

SCHEDULE 4 INSURANCE

     27  

 

 

-i-


DEMERGER AGREEMENT

DATED                                                                                                           2020

BETWEEN:

 

(1)

TIZIANA LIFE SCIENCES PLC, a company incorporated and registered in England and Wales with company number 03508592 whose registered office is at 3rd Floor 11-12 St. James’s Square, London SW1Y 4LB (“Topco”); and

 

(2)

ACCUSTEM SCIENCES LIMITED, a company incorporated and registered in England and Wales with company number 12647178 whose registered office is at 9th Floor, 107 Cheapside, London EC2V 6DN (“Newco”).

BACKGROUND

 

(A)

Topco has announced its intention to effect the Demerger pursuant to which Newco will become the new holding company for the Demerged Business by virtue of its ownership of the Company and intends to seek admission of the Newco Shares to listing on the Official List and to trading on the Main Market of the London Stock Exchange.

 

(B)

Topco will remain the ultimate holding company for the Retained Business by virtue of its ownership of the Retained Company and will remain admitted to trading on AIM.

 

(C)

Under the Demerger there will be a reduction of capital of Topco pursuant to which Topco will transfer the Company Shares to Newco in consideration for which Newco will allot and issue, credited as fully paid up, Newco Shares to Topco Shareholders subject to the terms and conditions of this agreement.

 

(D)

The parties wish to record certain terms upon which it is intended that the Demerger will be effected and upon which relations between them and their respective subsidiaries will be governed subject to and following the Demerger Effective Date.

AGREED TERMS

 

1.

INTERPRETATION

 

1.1

In this agreement, unless the context otherwise requires:

AIM” means the market of that name operated by the London Stock Exchange;

AIM Companies Rules” means the provisions of the AIM Rules for Companies published by the London Stock Exchange (as amended or reissued from time to time);

AIM Nomad Rules” means the provisions of the AIM Rules for Nominated Advisers published by the London Stock Exchange (as amended or reissued from time to time);

AIM Rules” means together, the AIM Companies Rules and AIM Nomad Rules;

 

1


Business Day” means a day other than a Saturday, Sunday or public holiday in England when banks in London are open for business;

certificated or in certificated form” means where a share or other security is not in uncertificated form;

Certificated Holder” means a Topco Shareholder who holds Topco Shares in certificated form;

Circular” means the circular in the agreed form to be dated on or around 16 September 2020 to be sent to the Topco Shareholders and incorporating a notice of a general meeting of Topco expected to be held on 2 October 2020 in relation to the approval of the Reduction of Capital and the Demerger;

Claim” has the meaning set out in clause 4.1;

Company” means StemPrintER Sciences Limited, a company incorporated and registered in England and Wales with company number 12856894 whose registered office is at 9th Floor, 107 Cheapside, London EC2V 6DN, further details of which are set out in Part 1 of Schedule 1;

Company Shares” means the entire issued share capital of the Company;

Conditions” means the conditions to completion of the Demerger, being the matters set out in Schedule 2;

Connected Person” means in the case of Newco, the Newco Group Companies (or any of them) and any of such companies’ directors, officers or employees and, in the case of Topco, the Topco Group Companies (or any of them) and any of such companies’ directors, officers or employees;

Costs” means all reasonable costs, losses, charges and out-of-pocket expenses including, without limitation, the reasonable costs of advisers (including, without limitation, legal advisers), in each case of any nature whatsoever;

CREST” means the relevant system (as defined in the Uncertificated Securities Regulations 2001, as amended) in respect of which Euroclear UK & Ireland Limited is the operator;

Demerged Business” means the division of Topco comprising the business intellectual property, research and development comprised in the product known as “StemPrintER”;

Demerger” means the proposed transfer of the Company Shares by Topco to Newco pursuant to the Reduction of Capital and in accordance with clause 3;

Demerger Effective Date” means the date on which the Conditions are satisfied or waived, expected on 30 October 2020;

Demerger Record Time” means 7:00 a.m. on 30 October 2020;

 

2


Encumbrance” means any interest or equity of any person (including any right to acquire, option or right of pre-emption) or any mortgage, charge, pledge, lien, assignment, hypothecation, security interest, title retention or any other security agreement or arrangement;

FCA” means the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part VI of FSMA;

FSMA” means the Financial Services and Markets Act 2000;

Guarantee” means any guarantee, indemnity, bond, suretyship, letter of comfort or other assurance or security given or undertaken by a person to secure or support the obligations (actual or contingent) or any other person and whether given directly or by way of counter-indemnity to any other person who has provided a Guarantee;

Liability” means each and any liability, loss, damage, demand, fine, penalty, cost, expense or obligation, in each case whether matured or unmatured, liquidated or unliquidated, fixed or contingent, known or unknown at the date of this agreement, and whether arising out of circumstances existing prior to, on or subsequent to the Demerger Effective Date;

Listing Rules” means the listing rules made by the FCA pursuant to section 73A(2) of FSMA as amended from time to time;

London Stock Exchange” means London Stock Exchange plc;

Longstop Date” means 6.00 p.m. on 30 December 2020 or such later time and date as the directors of Topco may determine;

Newco Consideration Share” means each Newco Share to be allotted and issued to a Topco Shareholder in consideration for the sale of the Company Shares in accordance with clause 3.1 on the Demerger Effective Date, together the “Newco Consideration Shares”;

Newco CREST Instruction” means the issuer instruction to credit Newco Shares to accounts maintained by Uncertificated Holders within CREST;

Newco Group” means Newco and the Company;

Newco Group Company” any member of the Newco Group;

Newco Group Holder” has the meaning set out in clause 7.3;

Newco Indemnified Persons” means the Newco Group Companies and each of their respective directors, officers and employees;

Newco Shares” means the ordinary shares of £0.01 each in the capital of Newco from time to time;

 

3


Newco Side Liability” means any Liability, whenever and howsoever suffered or incurred by any Topco Group Company which is directly or indirectly attributable to the Demerged Business but excluding any Liability which is otherwise expressly provided for under this agreement;

Official List” means the list maintained by the FCA in accordance with section 74(1) of FSMA;

Reduction of Capital” means the court approved reduction of capital of Topco pursuant to the Companies Act 2006, proposed to become effective on or about 29 October 2020, as more particularly described in the Circular;

Regulatory Authority” means any relevant government, governmental, supranational, competition, antitrust, supervisory, trade, regulatory or environmental agency, body or authority, in each case in any jurisdiction, including the FCA, London Stock Exchange and any Taxation Authority;

Relevant Data” has the meaning set out in clause 11.3;

Retained Business” means all the businesses of the Topco Group, including the Retained Companies and all other subsidiary undertakings of the Retained Companies not included within the Newco Group;

Retained Companies” means the legal entities specified in Part 2 of Schedule 1;

subsidiary undertaking” means a subsidiary undertaking as defined in section 1162 of the Companies Act 2006;

Taxation Authority” means any government, state or municipality or any local, state, federal or other fiscal, revenue, customs or excise authority, body or official competent to impose, administer, levy, assess or collect tax in the United Kingdom or elsewhere;

Topco CREST Instruction” means the issuer instruction to credit Newco Consideration Shares to accounts maintained by Uncertificated Holders within CREST;

Topco Group” means Topco and its subsidiary undertakings immediately following the Demerger Effective Date (excluding for avoidance of doubt the Company and the Subsidiaries);

Topco Group Company” means any member of the Topco Group after the Demerger Effective Date;

Topco Group Holder” has the meaning set out in clause 7.1;

Topco Indemnified Persons” means the Topco Group Companies and each of their respective directors, officers and employees and Topco Indemnified Person means any of the foregoing;

 

4


Topco Shareholders” means the holders of Topco Shares at the Demerger Record Time, as notified by Topco to Newco in accordance with clause 3.2;

Topco Shares” means the ordinary shares of £0.03 each in the capital of Topco from time to time;

Topco Side Liability” means any Liability, whenever and howsoever suffered or incurred by any Newco Group Company which is directly or indirectly attributable to the Retained Business or to any of the steps involved in the Demerger being held to be illegal, void or unenforceable but excluding any Liability which is expressly provided for under this agreement;

uncertificated or in uncertificated form” means shares or securities recorded on the relevant issuers register as being held in uncertificated form in CREST, and title to which, by virtue of the Uncertificated Securities Regulations 2001, may be transferred by means of CREST; and

Uncertificated Holder” means a Topco Shareholder who holds Topco Shares in uncertificated form.

 

1.2

In this agreement, unless the context otherwise requires:

 

  (a)

references to “this agreement” shall include the Background and Schedules to it, which form part of this agreement, and references to clauses, the Background and Schedules are to clauses of and the Background and Schedules to this agreement;

 

  (b)

clause, Schedule and paragraph headings shall not affect the interpretation of this agreement;

 

  (c)

references to clauses and Schedules are to the clauses of, and Schedules to, this agreement and references to paragraphs are to paragraphs of the relevant Schedule;

 

  (d)

the Schedules form part of this agreement and shall have effect as if set out in full in the body of this agreement. Any reference to this agreement includes the Schedules;

 

  (e)

a reference to a “company” shall include any company, corporation or other body corporate, wherever and however incorporated or established;

 

  (f)

a reference to a “holding company” or a “subsidiary” means a holding company or a subsidiary (as the case may be) as defined in section 1159 of the Companies Act 2006;

 

  (g)

a reference to a statute, statutory provision or subordinate legislation is a reference to it as it is in force from time to time and includes any statute, statutory provision or subordinate legislation which it amends or re-enacts and subordinate legislation for the time being in force made under it;

 

5


  (h)

a reference to “writing” or “written” includes email;

 

  (i)

any words following the terms “including”, include”, in particular”, “for example” or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms. Where the context permits, “other” and “otherwise” are illustrative and shall not limit the sense of the words preceding them; and

 

  (j)

references to a document in “agreed form” are to that document in the form agreed by the parties or on their behalf and initialled by them or on their behalf for identification.

 

2.

CONDITIONS PRECEDENT

 

2.1

Completion of this agreement is subject to and conditional upon:

 

  (a)

each of the Conditions being satisfied (or waived in accordance with clause 2.6) on or before the Longstop Date; and

 

  (b)

the Condition in paragraph 3 of Schedule 2 being satisfied on each day from and including the date of this agreement up to and including the Demerger Effective Date (or waived in accordance with clause 2.6).

 

2.2

If any of the Conditions are not satisfied in accordance with clause 2.1, then unless each unfulfilled Condition is waived pursuant to clause 2.6, this agreement shall terminate and cease to have effect on the Longstop Date except for:

 

  (a)

the provisions referred to in clause 2.3; and

 

  (b)

any rights, remedies, obligations or liabilities of the parties that have accrued up to the date of termination, including the right to claim damages in respect of any breach of the agreement which existed at or before the date of termination.

 

2.3

On termination of this agreement in accordance with clause 2.2, the following clauses shall continue in force:

 

  (a)

clause 1;

 

  (b)

clause 2 and this clause 2.3;

 

  (c)

clause 9; and

 

  (d)

clause 12 to clause 21 (inclusive).

 

2.4

The parties shall use all reasonable endeavours to procure (so far as it lies within their respective powers so to do) that the Conditions are satisfied as soon as practicable and in any event no later than the Longstop Date.

 

6


2.5

The parties shall co-operate fully in all actions necessary to procure the satisfaction of the Conditions including (but not limited to) the provision by the parties of all information reasonably necessary to make any notification or filing as required by any Relevant Authority, keeping the other party informed of the progress of any notification or filing and providing such other assistance as may reasonably be required.

 

2.6

Topco may, to the extent that it thinks fit (in its absolute discretion) and is legally entitled to do so, waive any of the Conditions in Schedule 2 by notice in writing to Newco.

 

3.

SALE OF SHARES IN THE COMPANY

 

3.1

Subject to the Conditions, on the terms of this agreement and pursuant to the Reduction of Capital, Topco shall sell and Newco shall buy, with effect from and at the Demerger Effective Date, the Company Shares with full title guarantee free from all Encumbrances and together with all rights that attach (or may in the future attach) to the Company Shares including, in particular, the right to receive all dividends and distributions declared, made or paid on or after the date of this agreement by delivering to Newco (or as it may direct) duly executed transfers of the Company Shares in favour of Newco (or as it may direct) accompanied by the relevant share certificates, in consideration for which Newco shall:

 

  (a)

allot the Newco Consideration Shares, credited as fully paid and ranking pari passu in all respects with each other Newco Consideration Share and any other Newco Shares then in issue, to the Topco Shareholders on the basis of one Newco Consideration Share for every one fully paid Topco Share held by the relevant Topco Shareholder at the Demerger Record Time; and

 

  (b)

procure that each Newco Consideration Share so allotted shall, on the earlier of (i) admission of the Newco Shares to listing on the Official List, and (ii) the date which is two months following the date of this agreement, be registered in the name(s) of the Topco Shareholder(s) entitled to it, provided that the number of Newco Consideration Shares allotted to any Topco Shareholder who holds Newco Shares as at the Demerger Record Time shall be reduced by the number of Newco Shares held by them at such time.

 

3.2

Topco shall provide Newco with the names and addresses of each Topco Shareholder together with details of the number of fully paid Topco Shares held by each of them and whether such shares are held in uncertificated form in sufficient time to enable Newco to comply with its obligations under clause 3.1.

 

3.3

Newco shall procure that:

 

  (a)

definitive share certificates in respect of the Newco Consideration Shares are despatched to those Certificated Holders entitled thereto in accordance with the Circular; and

 

  (b)

the Newco CREST Instruction is sent so as to credit the Newco Consideration Shares to the accounts maintained in CREST by the Uncertificated Holders entitled thereto to take effect as soon as practicable following the Demerger Effective Date.

 

7


3.4

The allotment and issue by Newco of the Newco Consideration Shares pursuant to clause 3.1 shall extinguish any obligation on Newco to issue any further shares in the capital of Newco to any holder of any shares or other securities in Topco (whether such person shall have been a holder before or after the Demerger Record Time) in connection with the transfer of the Company Shares by Topco to Newco.

 

3.5

On the Demerger Effective Date:

 

  (a)

Topco shall comply with its obligations in Schedule 3; and

 

  (b)

Newco shall deliver a certified copy of the resolution adopted by the board of directors of Newco allotting and issuing the Newco Consideration Shares.

 

4.

INDEMNITIES

 

4.1

With effect from the Demerger Effective Date and save as provided in clause 4.2, Newco undertakes to Topco (for itself and on trust for each Topco Indemnified Person) to keep fully and effectively indemnified and hold harmless Topco or the relevant Topco Indemnified Person (on demand and on an after tax basis), from and against all or any claims (whether or not successful, compromised or settled), actions, liabilities, demands, proceedings or judgements (each a “Claim”) asserted or established against Topco or the relevant Topco Indemnified Person in any jurisdiction and against all associated Costs, to the extent the Claim arises, directly or indirectly, from:

 

  (a)

any Guarantee provided by any Topco Group Company in respect of the obligations of any Newco Group Company pending its release in accordance with clause 5;

 

  (b)

any Newco Side Liability;

 

  (c)

any allegation that information relating to the Demerged Business contained in:

 

  (i)

the Circular; or

 

  (ii)

any other document published, or statement or announcement made, by any Topco Indemnified Person before the Demerger Effective Date which was approved by Newco or any of its directors in advance of its publication or before being made,

was untrue, inaccurate, incomplete, misleading or not based on reasonable grounds or that the Circular or any such other document, statement or announcement did not contain or fairly present, all information relating to the Demerged Business required to be contained therein provided that no person shall be entitled to be indemnified under this clause 4.1(c) if he is a director of Newco at the time the relevant document, statement or announcement is published or made; and

 

  (d)

the breach by Newco of any of its obligations under this agreement.

 

8


4.2

Neither Topco nor any other Topco Indemnified Person shall be entitled to any indemnity under clause 4.1 for any Claim or associated Costs to the extent that it results, directly or indirectly, from:

 

  (a)

the failure by Topco or the relevant Topco Indemnified Person to delete or correct any information after being requested to do so by any Newco Group Company; or

 

  (b)

the negligence, wilful default or fraud of the relevant Topco Indemnified Person.

 

4.3

With effect from the Demerger Effective Date and save as provided in clause 4.4, Topco undertakes to Newco (for itself and on trust for each of the other Newco Indemnified Persons) to keep fully and effectively indemnified and hold harmless Newco or the relevant Newco Indemnified Person (on demand and on an after tax basis), from and against all or any Claims asserted or established against Newco or the relevant Newco Indemnified Person in any jurisdiction and against all associated Costs, to the extent the Claim arises, directly or indirectly, from:

 

  (a)

any Guarantee provided by any Newco Group Company in respect of the obligations of any Topco Group Company pending its release in accordance with clause 5;

 

  (b)

any Topco Side Liability;

 

  (c)

any allegation that information relating to the Demerger or the Retained Business contained in:

 

  (i)

the Circular or any of them; or

 

  (ii)

any other document published, or statement or announcement made, by any Newco Indemnified Person, before the Demerger Effective Date which was approved by Topco or any of its directors in advance of its publication or before being made,

was untrue, inaccurate, incomplete, misleading or not based on reasonable grounds or that the Circular or any such other document, statement or announcement did not contain or fairly present, all information relating to the Demerger or the Retained Business required to be contained therein provided that no person shall be entitled to be indemnified under this clause 4.3(c) if he is a director of Topco at the time the relevant document, statement or announcement is published or made;

 

  (d)

the breach by Topco of any of its obligations under this agreement; and

 

  (e)

the Costs of implementing the Demerger in accordance with clause 15.

 

9


4.4

Neither Newco nor any other Newco Indemnified Person shall be entitled to any indemnity under clause 4.3 for any Claim or associated Costs to the extent that it results, directly or indirectly, from:

 

  (a)

the failure by Topco or the relevant Newco Indemnified Person to delete or correct any information after being requested to do so by any Topco Group Company; or

 

  (b)

the negligence, wilful default or fraud of the relevant Newco Indemnified Person.

 

5.

RELEASE OF GUARANTEES AND UNDERTAKINGS

 

5.1

With effect from the Demerger Effective Date, Newco, acting in good faith, shall use all reasonable endeavours, including incurring costs and making expenditure where reasonable to do so, to obtain the full and effective release of the relevant Topco Group Company from any Guarantees provided by any Topco Group Company in respect of obligations of any Newco Group Company.

 

5.2

With effect from the Demerger Effective Date, Topco, acting in good faith, shall use all reasonable endeavours, including incurring costs and making expenditure where reasonable to do so, to obtain the full and effective release of the relevant Newco Group Company from any Guarantee provided by any Newco Group Company in respect of obligations of any Topco Group Company.

 

6.

WARRANTIES

 

6.1

Topco warrants to Newco on the date of this agreement that:

 

  (a)

it has taken all necessary action and has all requisite power and authority to enter into and perform this agreement in accordance with its terms and the other documents referred to in it;

 

  (b)

this agreement and the other documents referred to in it constitute (or shall constitute when executed) valid, legal and binding obligations on Topco in the terms of the agreement and such other documents;

 

  (c)

compliance with the terms of this agreement and the documents referred to in it shall not breach or constitute a default under any of the following:

 

  (i)

Topco’s articles of association, or any other agreement or instrument to which Topco is a party or by which it is bound; or

 

  (ii)

any order, judgment, decree or other restriction applicable to Topco;

 

  (d)

Topco is the sole legal and beneficial owner of the Company Shares;

 

  (e)

the Company Shares are fully paid up and comprise the entire issued share capital of the Company;

 

  (f)

the Company Shares are free from all Encumbrances and no commitment has been given to create an Encumbrance affecting the Company Shares; and

 

  (g)

no right has been granted to any person to require the Company to issue any share capital and no Encumbrance has been created and no commitment has been given to create an Encumbrance in favour of any person affecting any unissued shares or debentures or other unissued securities of the Company.

 

10


6.2

The parties agree that:

 

  (a)

no party (nor any of its Connected Persons) has entered into this agreement in reliance upon any representation or warranty of any other party (or any of its Connected Persons);

 

  (b)

no party (nor any of its Connected Persons) has entered into this agreement in reliance upon any undertaking of any other party (or any of its Connected Persons) which is not expressly set out or referred to in this agreement;

 

  (c)

no party (nor any of its Connected Persons) shall have any claim for misrepresentation based upon any warranty or other statement set out in this agreement;

 

  (d)

this clause 6.2 shall not exclude any liability for, or remedy in respect of, fraudulent misrepresentation by a party (or any of its Connected Persons); and

 

  (e)

save as expressly set out in this agreement or in any other agreement or document referred to in this agreement, no party (nor any Connected Person) shall owe any duty of care to another party (or any of its Connected Persons) in connection with the transactions and agreements contemplated by this agreement.

 

6.3

Except in the event of fraudulent misrepresentation, each party agrees that this agreement shall not be capable of unilateral rescission by any party, whether before or after the Demerger Effective Date.

 

6.4

Each party contracts in clause 6.2 on its own behalf and as agent for each of its Connected Persons. Each Connected Person which contracts through the agency of a party may enforce this clause 6 directly against any of the parties and/or any other Connected Person.

 

7.

WRONG POCKET PROVISIONS

 

7.1

If and to the extent that, any asset (including cash) which relates or is attributable, exclusively, to the Demerged Business is, following the Demerger Effective Date, held or received by a Topco Group Company (referred to in this clause 7 as the Topco Group Holder) then Topco shall:

 

  (a)

procure that the Topco Group Holder shall (subject to clause 7.2) execute all such agreements or documents as may be necessary for the purpose of transferring the relevant interest in such asset to such Newco Group Company as Newco may request in writing and if the asset is included in the combined financial information of the Topco Group for the period ended 31 December 2019 then Newco shall, unless and to the extent it or another Newco Group Company has already paid an amount in respect of the purchase thereof, pay (on behalf of the relevant Newco Group Company) the book value of such asset as at the Demerger Effective Date (adjusted for any subsequent depreciation) to Topco (on behalf of the Topco Group Holder) together with any applicable value added tax chargeable on such supply; and

 

11


  (b)

do all such further acts or things as may be necessary to validly effect the transfer and vest the relevant interest in such asset in the relevant Newco Group Company, including, where necessary, by Topco making (or procuring that there is made) any payment (or additional payment) necessary to the Topco Group Holder to ensure that the transfer is lawful.

 

7.2

If any third party consent or approval is required for the transfer of a particular asset in accordance with clause 7.1 to be effective or lawful then:

 

  (a)

Topco shall (and shall procure that any relevant Topco Group Holder shall) use its reasonable endeavours to obtain that consent or approval as soon as reasonably practicable; and

 

  (b)

pending such consent or approval being given, Topco shall ensure that the Topco Group Holder shall, where permitted by the terms on which the Topco Group Holder has the right to such asset, hold the asset, and any monies, goods or other benefits arising after the Demerger Effective Date by virtue of it, as agent of and trustee for the relevant Newco Group Company and allow the relevant Newco Group Company to have full enjoyment and use of such asset and Topco shall ensure that the Topco Group Holder will promptly on receipt pay or deliver such monies, goods or other benefits to the relevant Newco Group Company.

 

7.3

If, and to the extent that, any asset (including cash) which relates or is attributable exclusively, to the Retained Business is, following the Demerger Effective Date, held by a Newco Group Company (referred to in this clause 7 as the Newco Group Holder), then Newco shall:

 

  (a)

procure that the Newco Group Holder shall (subject to clause 7.4) execute all such agreements or documents as may be necessary for the purpose of transferring the relevant interest in such asset or part thereof to such Topco Group Company as Topco may request in writing and if the asset is included in the combined financial information of the Newco Group for the period ended 31 December 2019 then Topco shall, unless and to the extent it or another the Topco Group Company has already paid an amount in respect of the purchase thereof, pay (on behalf of the relevant Topco Group Company) the book value of such asset as at the Demerger Effective Date (adjusted for any subsequent depreciation) to Newco (on behalf of the Newco Group Holder) together with any applicable value added tax chargeable on such supply; and

 

  (b)

do all such further acts or things as may be necessary to validly effect the transfer and vest the relevant interest in such asset in the relevant Topco Group Company including, where necessary, by Newco making (or procuring that there is made) any payment (or additional payment) necessary to the Newco Group Holder to ensure that the transfer is lawful.

 

12


7.4

If any third party consent or approval is required for the transfer of a particular asset in accordance with clause 7.3 to be effective or lawful then:

 

  (a)

Newco shall (and shall procure that any relevant Newco Group Holder shall) use its reasonable endeavours to obtain that consent or approval as soon as reasonably practicable; and

 

  (b)

pending such consent or approval being given, Newco shall use its reasonable endeavours to ensure that the Newco Group Holder shall, where permitted by the terms on which the Newco Group Holder has the right to such asset, hold the asset, and any monies, goods or other benefits arising after the Demerger Effective Date by virtue of it, as agent of and trustee for the relevant Topco Group Company and allow the relevant Topco Group Company to have full enjoyment and use of such asset and Newco shall ensure that the Newco Group Holder will promptly on receipt pay or deliver such monies, goods or other benefits to the relevant Topco Group Company.

 

7.5

Any Costs ancillary to the transfer of any assets under clause 7.1 and clause 7.3 shall be split equally between Topco and Newco on an after tax basis.

 

8.

INSURANCE

The provisions of Schedule 4 shall have effect from the Demerger Effective Date.

 

9.

CONFIDENTIALITY AND ANNOUNCEMENTS

 

9.1

Topco undertakes to each Newco Group Company that it shall (and shall procure that each Topco Group Company shall):

 

  (a)

keep confidential the terms of this agreement and all trade secrets and confidential information in its knowledge or possession relating to the Newco Group or the Demerged Business;

 

  (b)

not disclose any of the information referred to in clause 9.1(a) (whether in whole or in part) to any third party, except as expressly permitted by this clause 9; and

 

  (c)

not make any use of any of the information referred to in clause 9.1(a), other than to the extent necessary for the purpose of exercising or performing its rights and obligations under this agreement.

 

9.2

Newco undertakes to Topco that it shall:

 

  (a)

keep confidential the terms of this agreement and all confidential information and trade secrets in its knowledge or possession relating to the Topco Group or the Retained Business;

 

13


  (b)

not disclose any of the information referred to in clause 9.2(a) (whether in whole or in part) to any third party, except as permitted by this clause 9; and

 

  (c)

not make use of any of the information referred to in clause 9.2(a) other than to the extent necessary for the purpose of exercising or performing its rights and obligations under this agreement.

 

9.3

Nothing in this agreement shall be construed as imposing on Newco an obligation to keep confidential any information relating to the Company or any of the Subsidiaries, or restrict its use of such information after the Demerger Effective Date.

 

9.4

Notwithstanding any other provision of this agreement, neither party shall be obliged to keep confidential or to restrict its use of any information that:

 

  (a)

is or becomes generally available to the public other than as a direct or indirect result of the information being disclosed in breach of this agreement; or

 

  (b)

was, is or becomes available to the receiving party on a non-confidential basis from a person who, to the receiving party’s knowledge, is not connected with the party to whom the information relates and who is not under an obligation of confidence in respect of that information, or otherwise prohibited from disclosing the information.

 

9.5

Any party may disclose any information that it is otherwise required to keep confidential under this clause 9:

 

  (a)

to any of its employees, officers consultants, representatives or advisers (or those of its subsidiaries or holding company), who need to know such information for the purpose of advising on this agreement, or facilitating the Demerger, provided that the disclosing party informs the recipients of the confidential nature of the information before disclosure and procures that the recipients shall, in relation to any such information disclosed to them, comply with the obligations set out in this clause 9 as if they were that party. The party making a disclosure under this clause 9.5(a) shall, at all times, be liable for the failure of its recipients to comply with the obligations set out in this clause;

 

  (b)

in the case of Newco only, to a proposed transferee of the Company Shares for the purpose of enabling the proposed transferee to evaluate the proposed transfer;

 

  (c)

in the case of Newco only, to its funders, potential investors and their respective professional advisers, employees, officers, representatives or consultants;

 

  (d)

with the prior consent in writing of the other party;

 

  (e)

to confirm that the Demerger has taken place, or the Demerger Effective Date (but without otherwise revealing any other terms of the Demerger or making any other announcement); or

 

14


  (f)

to the extent that the disclosure is required:

 

  (i)

by the laws of any jurisdiction to which the disclosing party is subject;

 

  (ii)

by an order of any court of competent jurisdiction, or any judicial or similar body or any Regulatory Authority of competent jurisdiction;

 

  (iii)

to make any filing with, or obtain any authorisation from, any Regulatory Authority of competent jurisdiction; or

 

  (iv)

to protect the disclosing party’s interest in any legal proceedings,

PROVIDED that in each case (and to the extent it is legally permitted to do so), the disclosing party gives the other party as much notice of the disclosure as possible and, where notice of disclosure is not prohibited and is given in accordance with this clause 9, it takes into account the reasonable requests of the other party in relation to the content of the disclosure.

 

9.6

Each party shall supply the other party with such information about itself, its subsidiaries or holding company or this agreement as the other party may reasonably require for the purposes of satisfying the requirements of any law or any judicial body or Regulatory Authority of competent jurisdiction to which the other party is subject.

 

9.7

Save as otherwise expressly provided in this agreement, or agreed in writing by the parties, no party shall issue any press release or make any other public announcement relating to this agreement or the Demerger.

 

9.8

The parties shall issue a press release in agreed form immediately after the date of this agreement and after the Demerger Effective Date.

 

9.9

Newco may, at any time after the Demerger Effective Date, announce its acquisition of the Company Shares to any employees, clients, customers or suppliers of the Company or subsidiaries.

 

10.

FURTHER ASSURANCE

At its own expense, each party and each of its subsidiaries shall, and shall use reasonable endeavours to ensure that any necessary third party shall, promptly execute and deliver such documents and perform such acts as any other party may reasonably require from time to time for the purpose of giving to that other party the full benefit of all the provisions of this agreement.

 

11.

CO-OPERATION AND ACCESS TO INFORMATION

 

11.1

In respect of any financial period ending after the Demerger Effective Date in relation to which any Topco Group Company is required by statute, regulation or otherwise to report any information (of a financial or non-financial operating nature) relating to any Newco Group Company or to the Demerged Business for the purpose of financial reports and accounts, management or regulatory accounts, Newco shall to the extent necessary to enable the relevant Topco Group Company to comply with such requirements:

 

15


  (a)

permit (and use reasonable endeavours to procure that each Newco Group Company shall permit) Topco’s auditors to have access at reasonable times and upon reasonable notice to the auditors and management of any Newco Group Company as they may reasonably require for the purposes of preparing any consolidated accounts of Topco in respect of any such financial period subject to any reasonable requirements which may be imposed by the auditors of such Newco Group Company being met;

 

  (b)

upon reasonable notice, provide (and use reasonable endeavours to procure that each Newco Group Company provides) to Topco such financial information and non-financial operating data (including in relation to any relevant Newco Group Company) as may be reasonably requested by Topco for the purpose of preparing its consolidated accounts in respect of any such financial period; and

 

  (c)

upon reasonable notice, provide (and use reasonable endeavours to procure that each Newco Group Company shall provide) to Topco such financial and other information as may be reasonably requested by Topco for the purpose of complying with any request by or requirement of a Regulatory Authority.

 

11.2

In respect of any financial period ending after the Demerger Effective Date in relation to which any Newco Group Company is required by statute, regulation or otherwise, to report any information of a financial or non-financial operating nature) relating to any Topco Group Company or the Retained Business for the purpose of financial reports and accounts or management accounts, Topco shall to the extent necessary to enable the relevant Newco Group Company to comply with such requirements:

 

  (a)

permit (and use reasonable endeavours to procure that each Topco Group Company shall permit) the auditors of Newco to have access at reasonable times and upon reasonable notice to the auditors and management of any Topco Group Company as they may reasonably require for the purposes of preparing any consolidated accounts of Newco in respect of any such financial period subject to any reasonable requirements which may be imposed by the auditors of such Topco Group Company being met;

 

  (b)

upon reasonable notice, provide (and use reasonable endeavours to procure that each Topco Group Company provides) to Newco such financial information and non-financial operating data (including in relation to any relevant Topco Group Company) as may be reasonably requested by Newco for the purpose of preparing its consolidated accounts in respect of any such financial period; and

 

  (c)

upon reasonable notice, provide (and to procure that each Topco Group Company shall provide) to Newco such financial and other information as may be reasonably requested by Newco for the purpose of complying with any request by or requirement of a Regulatory Authority.

 

16


11.3

Topco and Newco recognise that following the Demerger Effective Date, the Topco Group Companies may have in their possession documentation and data (including information and data held on tape, microfiche, computer disk or in electronic form) that belongs, or substantially relates, to the Newco Group Companies (and vice versa) (Relevant Data). Accordingly, in addition to the information referred to in clause 11.1 and clause 11.2 (and subject always to clause 11.4), the parties agree to co-operate in good faith to assist one another in procuring prompt and unrestricted access during normal business hours (unless otherwise agreed) to any Relevant Data in its possession and to allow the other to use such Relevant Data, solely:

 

  (a)

to the extent reasonably necessary to deal with any of the commercial affairs as they are carried on as at the Demerger Effective Date of the relevant Newco Group Company or Topco Group Company (as the case may be); or

 

  (b)

for the purposes of complying with statutory or regulatory obligations or an order of any court of competent jurisdiction, or where required for disclosure to any Regulatory Authority of competent jurisdiction; or

 

  (c)

to the extent that:

 

  (i)

the relevant Newco Group Company or Topco Group Company (as the case may be) has a reasonable requirement for such access; and

 

  (ii)

having been provided with a written explanation of the basis of such requirement by the requesting party, the Newco Group Company or Topco Group Company (as the case may be) in possession of the Relevant Data gives its consent in writing to such access (such consent not to be unreasonably withheld or delayed).

 

11.4

Nothing in clause 11.3 shall oblige any Topco Group Company or Newco Group Company to breach any contract or duty of confidence or disclose any Relevant Data to the extent that such disclosure may be materially damaging or materially prejudicial to the business of the disclosing person or to breach any relevant law or regulation.

 

11.5

Subject to clause 11.3 and clause 11.4, for a period of three years from the Demerger Effective Date each of Topco and Newco will provide (or use its reasonable endeavours to procure the provision of) such access to the Relevant Data in its possession as the other party (Requesting Party) may reasonably require on reasonable notice during normal business hours (unless otherwise agreed) to, and only to, representatives of the Requesting Party whose identity has been notified to it from time to time and will, promptly upon request:

 

  (a)

provide (or use its reasonable endeavours to procure the provision of) copies (certified if reasonably practicable and where requested) of the Relevant Data to the Requesting Party;

 

17


  (b)

make available (or use its reasonable endeavours to procure that the same is made available) the Relevant Data for copying after which it shall promptly be returned; or

 

  (c)

where such Relevant Data is in documentary form, make available (or use its reasonable endeavours to procure that the same is made available), such original documents as are required for the purpose of litigation (to the extent legally permitted).

Copies provided pursuant to clause 11.5(a) shall be without charge to the Requesting Party, provided that if the frequency of such requests and the volume of material requested is such that the party so requested considers it appropriate, it shall be entitled to charge the Requesting Party at cost for the copying involved.

 

12.

ASSIGNMENT

 

12.1

This agreement is personal to the parties and neither party shall assign, transfer, mortgage, charge, declare a trust of, or deal in any other manner with any of its rights and obligations under this agreement without the prior written consent of the other party.

 

12.2

Subject to clause 12.1, this agreement shall be binding on and shall enure to the benefit of the parties to this agreement and their respective successors and permitted assigns.

 

13.

ENTIRE AGREEMENT

This agreement (together with the documents referred to in it) constitutes the entire agreement between the parties and supersedes and extinguishes all previous discussions, correspondence, negotiations, drafts, agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to their subject matter.

 

14.

VARIATION AND WAIVER

 

14.1

No variation of this agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives).

 

14.2

A failure or delay by any person to exercise any right or remedy provided under this agreement or by law shall not constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict the further exercise of that or any other right or remedy. No single or partial exercise of any right or remedy provided under this agreement or by law shall prevent or restrict the further exercise of that or any other right or remedy.

 

14.3

Except as expressly provided otherwise in this agreement, the rights and remedies provided under this agreement are in addition to, and not exclusive of, any rights or remedies provided by law.

 

18


15.

COSTS

Except as expressly provided in this agreement, all costs in connection with the negotiation, preparation, execution and performance of this agreement, and any documents referred to in it, shall be borne by Topco.

 

16.

NOTICE

 

16.1

19.1     A notice given to a party under or in connection with this agreement:

 

  (a)

shall be in writing and in English;

 

  (b)

shall be sent to the relevant party for the attention of the contact and to the address email address specified in clause 16.2 (or such other address, email address or person as that party may notify to the other in accordance with the provisions of this clause 16); and

 

  (c)

shall be:

 

  (i)

delivered by hand;

 

  (ii)

sent by email;

 

  (iii)

sent by pre-paid first-class post or another next working day delivery service providing proof of delivery; and

 

  (d)

unless proved otherwise is deemed received as set out in clause 16.4.

 

16.2

The addresses, email addresses, and named contacts for service of notice are:

 

  (a)

Topco

 

  (i)

address:             3rd Floor 11-12 St James’s Square

                                       London

SW1Y 4LB

 

  (ii)

for the attention of: [REDACTED]

 

  (iii)

email address: [REDACTED]

 

  (b)

Newco

 

  (i)

address:             9th Floor, 107 Cheapside

                                       London

EC2V 6DN

 

  (ii)

for the attention of: [REDACTED]

 

  (iii)

email address: [REDACTED]

 

19


16.3

A party may change its details for service of notices as specified in clause 16.2 by giving notice to the other party, provided that in the case of change to the party’s postal address the new address is an address in the UK. Any change notified pursuant to this clause shall take effect at 9.00 a.m. on the later of:

 

  (a)

the date (if any) specified in the notice as the effective date for the change; and

 

  (b)

five Business Days after deemed receipt of the notice of change.

 

16.4

Delivery of a notice is deemed to have taken effect (provided that all other requirements in this clause have been satisfied):

 

  (a)

if delivered by hand, on signature of a delivery receipt or at the time the notice is left at the address;

 

  (b)

if sent by email, at the time of transmission;

 

  (c)

in the case of pre-paid first-class post or another next working day delivery service delivery to an address in the UK, at 9.00 am on the second Business Day after posting or at the time recorded by the delivery service;

 

  (d)

if deemed receipt under the previous paragraphs of this clause 16.4 would occur outside business hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that is not a public holiday in the place of receipt), at 9.00 am on the day when business next starts in the place of receipt. For the purposes of this clause, all references to time are to local time in the place of deemed receipt.

 

16.5

This clause 16 does not apply to the service of any proceedings or other documents in any legal action or proceedings or, where applicable, any arbitration or other method of dispute resolution.

 

17.

SEVERANCE

If any provision or part-provision of this agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this clause shall not affect the validity and enforceability of the rest of this agreement.

 

18.

AGREEMENT SURVIVES THE DEMERGER EFFECTIVE DATE

This agreement (other than obligations that have already been fully performed) remains in full force after the Demerger Effective Date.

 

19.

THIRD PARTY RIGHTS

 

19.1

Except as expressly provided in clause 19.2, this agreement does not give rise to any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement.

 

20


19.2

The provisions of clause 9.1 are intended to benefit each Newco Group Company and shall be enforceable by each of them to the fullest extent permitted by law.

 

19.3

The rights of the parties to rescind or vary this agreement are not subject to the consent of any other person.

 

20.

COUNTERPARTS

This agreement may be executed (either by wet-ink signature or by a party applying its signature by some digital, electronic, mechanical or other means) in any number of counterparts, each of which shall constitute an original and all the counterparts shall together constitute one and the same agreement. The exchange of a fully executed (either by wet-ink signature or by a party applying its signature by some digital, electronic, mechanical or other means) version of this agreement (in counterparts or otherwise) by electronic transmission in PDF format or otherwise shall be sufficient to bind the parties to the terms and conditions of this agreement and no exchange of originals is necessary.

 

21.

GOVERNING LAW AND JURISDICTION

 

21.1

This agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the laws of England and Wales.

 

21.2

Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) that arises out of or in connection with this agreement or its subject matter or formation.

 

This

agreement has been entered into on the date stated at the beginning of it.

 

21


SCHEDULE 1

PARTICULARS OF THE COMPANY AND RETAINED COMPANIES

Part 1

The Company

 

Name:    StemPrintER Sciences Limited
Registration number:    12856894
Registered office:   

9th Floor 107 Cheapside

London EC2V 6DN

United Kingdom

Issued share capital:   

Amount: £0.01

 

Divided into: one ordinary share of £0.01

Registered shareholder (and number of Company Shares held):    Tiziana Life Sciences Plc (one share of £0.01)
Beneficial owner(s) of Company Shares (if different) (and number of Company Shares beneficially owned):    Tiziana Life Sciences Plc (one share of £0.01)
Directors and shadow directors:    Willy Jules Simon
Secretary:    None
Auditor:    Mazars LLP
Registered charges:    None

 

22


Part 2

The Retained Companies

 

1.

Tiziana Pharma Limited

 

Name:    Tiziana Pharma Limited
Registration number:    08760354
Registered office:    3rd Floor 11-12 St. James’s Square, London, United Kingdom, SW1Y 4LB
Issued share capital:   

Amount: £1.204

 

Divided into: 1,204 ordinary shares of £0.001 each

Registered shareholder(s) (and number of shares held):    Tiziana Life Sciences Plc (1,204 ordinary shares of £0.001 each)
Beneficial owner(s) of shares (if different) (and number of shares beneficially owned):    Tiziana Life Sciences Plc (1,204 ordinary shares of £0.001 each)
Directors and shadow directors:    Gabriele Marco Antonio Cerrone
Secretary:    Accomplish Secretaries Limited
Auditor:    Mazaars LLP
Registered charges:    None

 

2.

Tiziana Therapeutics, Inc.

 

Name:    Tiziana Therapeutics, Inc
Registered office:   

420 Lexington Avenue

Suite 2525

New York

NY 10170

USA

Registered shareholder    Tiziana Life Sciences Plc
Country of incorporation    USA

 

23


3.

Longevia Genomics SRL

 

Name:    Longevia Genomics SRL
Registered office:   

420 Lexington Avenue

Suite 2525

New York

NY 10170

USA

Registered shareholder    Tiziana Life Sciences Plc
Country of incorporation    USA

 

24


SCHEDULE 2

CONDITIONS

 

1.

Reduction of capital

The Reduction of Capital becoming effective on and in accordance with and subject to the terms and conditions set out in the Circular.

 

2.

Circular

The despatch by Topco to its shareholders of the Circular and the passing, at a duly convened general meeting of Topco, of the resolutions in the form set out in the Circular.

 

3.

Other conditions

No person:

 

  (a)

having commenced, or threatened to commence, any proceedings or investigation for the purpose of prohibiting or otherwise challenging or interfering with the Demerger; or

 

  (b)

having enacted or proposed any legislation (including any subordinate legislation) which would prohibit, materially restrict or materially delay the implementation of the Demerger or the operations of the Newco Group or the Topco Group.

 

25


SCHEDULE 3

COMPLETION OF THE DEMERGER

Part 1

What Topco shall deliver to Newco on the Demerger Effective Date

 

1.

Documents to be delivered:

On the Demerger Effective Date, Topco shall deliver or cause to be delivered to Newco the following:

 

  (a)

transfer of the Company Shares, in agreed form, executed by the registered holder in favour of Newco;

 

  (b)

the share certificates for the Company Shares in the name of the registered holder or an indemnity, in agreed form, for any lost certificates;

 

  (c)

in relation to the Company, the statutory registers and minute books (duly written up to the time of the Demerger Effective Date), the common seal (if any), certificate of incorporation and any certificates of incorporation on change of name; and

 

  (d)

a certified copy of the resolution, in agreed form, adopted by the board of directors of Topco authorising the execution and delivery of any documents referred to in this agreement as required to be delivered by Topco on the Demerger Effective Date.

Part 2

Matters for the board meetings on the Demerger Effective Date

 

1.

Topco shall cause a board meeting of the Company to be held on the Demerger Effective Date at which the approval of the registration of the transfer of the Company Shares, subject to the transfers being stamped at the cost of Newco.

 

26


SCHEDULE 4

INSURANCE

 

1.

The parties agree that the directors’ and officers’ liability insurance policies maintained by the Topco Group following the Demerger Effective Date:

 

  (a)

will not cover any insurance claims made after the Demerger Effective Date in respect of any Newco Group Company’s directors or officers and relating to occurrences taking place after the Demerger Effective Date; but

 

  (b)

will cover, on a basis consistent with that which currently applies to Topco’s directors’ and officers’ liability insurance, any insurance claims made after the Demerger Effective Date but in respect of any Newco Group Company’s directors or officers and relating to occurrences taking place before the Demerger Effective Date and Topco undertakes to maintain insurance policies that, in its reasonable opinion (acting in good faith), are adequate for this purpose.

 

2.

The parties agree to co-operate with each other in providing reasonable assistance and information required for the purposes of controlling any insurance claims arising.

 

27


SIGNED by Gabriele Cerrone

for and on behalf of

TIZIANA LIFE SCIENCES PLC

  

)

)

)

  

 

/s/ Gabriele Cerrone

Director

 

SIGNED by Willy Jules Simon

for and on behalf of

ACCUSTEM SCIENCES LIMITED

  

)

)

)

  

 

/s/ Willy Jules Simon

Director

 

28

Exhibit 4.4

 

DATED    2020

CONFORMED COPY

(1) TIZIANA LIFE SCIENCES PLC

(2) ACCUSTEM SCIENCES PLC

 

 

SUPPLEMENTAL DEMERGER AGREEMENT - OPTIONS,

WARRANTS, RIGHTS TO CALL AND FURTHER

INVESTMENT

 

 

 

LOGO


TABLE OF CONTENTS

 

         Page  

1.

  INTERPRETATION      1  

2.

  ACCRUED RIGHTS OF CERTAIN PERSONS      3  

3.

  THE PLACING      4  

4.

  FURTHER ASSURANCE      4  

5.

  ASSIGNMENT      4  

6.

  ENTIRE AGREEMENT      4  

7.

  VARIATION AND WAIVER      4  

8.

  COSTS      5  

9.

  NOTICE      5  

10.

  SEVERANCE      6  

11.

  AGREEMENT SURVIVES THE DEMERGER EFFECTIVE DATE      6  

12.

  THIRD PARTY RIGHTS      6  

13.

  COUNTERPARTS      7  

14.

  GOVERNING LAW AND JURISDICTION      7  

SCHEDULE 1

     8  

 

-i-


SUPPLEMENTAL DEMERGER AGREEMENT

 

DATED   2020

BETWEEN:

 

(1)

TIZIANA LIFE SCIENCES PLC, a company incorporated and registered in England and Wales with company number 03508592 whose registered office is at 3rd Floor 11-12 St. James’s Square, London SW1Y 4LB (“Topco”); and

 

(2)

ACCUSTEM SCIENCES LIMITED, a company incorporated and registered in England and Wales with company number 12647178 whose registered office is at 9th Floor, 107 Cheapside, London EC2V 6DN (“Newco”).

BACKGROUND

 

(A)

Topco has announced its intention to effect the Demerger pursuant to which Newco will become the new holding company for the Demerged Business by virtue of its ownership of the Company and intends to seek admission of the Newco Shares to listing on the Official List and to trading on the Main Market of the London Stock Exchange.

 

(B)

Topco and Newco are party to a Demerger Agreement governing the implementation of the Demerger.

 

(C)

The parties wish to record certain additional terms upon which are intended to be encapsulated in the Demerger.

AGREED TERMS

 

1.

INTERPRETATION

 

1.1

In this agreement, unless the context otherwise requires:

Circular” means the circular sent to the Topco Shareholders and incorporating a notice of a general meeting of Topco which was held on 2 October 2020 in relation to the approval of the Reduction of Capital and the Demerger;

Company” means StemPrintER Sciences Limited, a company incorporated and registered in England and Wales with company number 12856894 whose registered office is at 9th Floor, 107 Cheapside, London EC2V 6DN;

Demerger” means the proposed transfer of the Company Shares by Topco to Newco pursuant to the Reduction of Capital;

Demerger Record Time” means 7:00 a.m. on 30 October 2020;

Newco IPO” means the admission of all Newco Shares to the standard segment of the official list of the FCA and to trading on the main market of the London Stock Exchange plc, which is expected to occur in late Q4 2020;

 

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Newco Shares” means the ordinary shares of £0.01 each in the capital of Newco from time to time;

Placing Price” the price at which newco issues Newco Shares in a placing in connection with admission of its share capital to trading on the standard segment of the official list of the FCA and to trading on the main market of the London Stock Exchange plc.

Reduction of Capital” means the court approved reduction of capital of Topco pursuant to the Companies Act 2006, which became effective on 29 October 2020, as more particularly described in the Circular;

Topco Shares” means the ordinary shares of £0.03 each in the capital of Topco from time to time; and

Topco Side Liability” means any Liability, whenever and howsoever suffered or incurred by any Newco Group Company which is directly or indirectly attributable to the Retained Business or to any of the steps involved in the Demerger being held to be illegal, void or unenforceable but excluding any Liability which is expressly provided for under this agreement.

 

1.2

In this agreement, unless the context otherwise requires:

 

  (a)

references to “this agreement” shall include the Background and Schedules to it, which form part of this agreement, and references to clauses, the Background and Schedules are to clauses of and the Background and Schedules to this agreement;

 

  (b)

clause, Schedule and paragraph headings shall not affect the interpretation of this agreement;

 

  (c)

references to clauses and Schedules are to the clauses of, and Schedules to, this agreement and references to paragraphs are to paragraphs of the relevant Schedule;

 

  (d)

the Schedules form part of this agreement and shall have effect as if set out in full in the body of this agreement. Any reference to this agreement includes the Schedules;

 

  (e)

a reference to a “company” shall include any company, corporation or other body corporate, wherever and however incorporated or established;

 

  (f)

a reference to a “holding company” or a “subsidiary” means a holding company or a subsidiary (as the case may be) as defined in section 1159 of the Companies Act 2006;

 

  (g)

a reference to a statute, statutory provision or subordinate legislation is a reference to it as it is in force from time to time and includes any statute, statutory provision or subordinate legislation which it amends or re-enacts and subordinate legislation for the time being in force made under it;

 

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  (h)

a reference to “writing” or “written” includes email;

 

  (i)

any words following the terms “including”, include”, in particular”, “for example” or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms. Where the context permits, “other” and “otherwise” are illustrative and shall not limit the sense of the words preceding them; and

 

  (j)

references to a document in “agreed form” are to that document in the form agreed by the parties or on their behalf and initialled by them or on their behalf for identification.

 

2.

ACCRUED RIGHTS OF CERTAIN PERSONS

 

2.1

The Circular identified that certain holders of options and warrants, the exercise of which would result in the issue of additional Topco Shares and suggested that appropriate proposals would be extended to such persons.

 

2.2

Newco shall procure that:

 

  (a)

an additional 4,763,995 Newco Shares are issued to Gabriele Cerrone to reflect a realisation bonus accrued in Topco and in respect of which Mr Cerrone is unconditionally entitled through the issue of 4,763,995 Topco Shares (but for constraints on timing of delivery under Note 11 to Rule 9 of the UK Takeover Code);

 

  (b)

an additional 397,347 Newco Shares are issued to Panetta Partners Limited to reflect a convertible loan note outstanding from Topco and in respect of which Panetta Partners Limited is entitled to exercise its conversion rights to convert the loan note and accrued interest and the exercise of associated warrants into397,347 Topco Shares (but for constraints on timing of exercise under Note 11 to Rule 9 of the UK Takeover Code);

 

  (c)

an additional 1,830,775 Accustem Shares to Gabriele Cerrone credited as fully paid in respect of share options which Gabriele Cerrone would have exercised (and has undertaken to exercise) but for the constraints imposed by Note 11 to Rule 9 of the UK Takeover Code;

 

  (d)

an additional 2,589,137 Accustem Shares to Gabriele Cerrone credited as fully paid in respect of a convertible loan note in respect of which Gabriele Cerrone would have exercised underlying conversion rights (and has undertaken to exercise the same) but for the constraints imposed by Note 11 to Rule 9 of the UK Takeover Code; and

 

  (e)

to the extent that such shares were not entered in the register of members of Tiziana prior to the record date for the Demerger, the number of Newco Shares listed on the Schedule be issued to the persons listed in the Schedule credited as fully paid to reflect the exercise of certain holdings of options and warrants.

 

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2.3

The allotment and issue by Newco of the Newco Shares pursuant to clause 2.2 (a) to (d) shall be satisfied by Topco paying to Newco the sum equal to 1.58 pence per NewCo Share, being the aggregate nominal value of the additional Newco Shares and a total payment of £151,383.

 

3.

THE PLACING

Topco agrees invest the sum of £2,000,000 in Newco Shares at the Placing Price in the Newco IPO.

 

4.

FURTHER ASSURANCE

At its own expense, each party and each of its subsidiaries shall, and shall use reasonable endeavours to ensure that any necessary third party shall, promptly execute and deliver such documents and perform such acts as any other party may reasonably require from time to time for the purpose of giving to that other party the full benefit of all the provisions of this agreement.

 

5.

ASSIGNMENT

 

5.1

This agreement is personal to the parties and neither party shall assign, transfer, mortgage, charge, declare a trust of, or deal in any other manner with any of its rights and obligations under this agreement without the prior written consent of the other party.

 

5.2

Subject to clause 4.1, this agreement shall be binding on and shall enure to the benefit of the parties to this agreement and their respective successors and permitted assigns.

 

6.

ENTIRE AGREEMENT

This agreement (together with the documents referred to in it) constitutes the entire agreement between the parties and supersedes and extinguishes all previous discussions, correspondence, negotiations, drafts, agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to their subject matter.

 

7.

VARIATION AND WAIVER

 

7.1

No variation of this agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives).

 

7.2

A failure or delay by any person to exercise any right or remedy provided under this agreement or by law shall not constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict the further exercise of that or any other right or remedy. No single or partial exercise of any right or remedy provided under this agreement or by law shall prevent or restrict the further exercise of that or any other right or remedy.

 

7.3

Except as expressly provided otherwise in this agreement, the rights and remedies provided under this agreement are in addition to, and not exclusive of, any rights or remedies provided by law.

 

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8.

COSTS

Except as expressly provided in this agreement, all costs in connection with the negotiation, preparation, execution and performance of this agreement, and any documents referred to in it, shall be borne by Topco.

 

9.

NOTICE

 

9.1

19.1     A notice given to a party under or in connection with this agreement:

 

  (a)

shall be in writing and in English;

 

  (b)

shall be sent to the relevant party for the attention of the contact and to the address email address specified in clause 8.2 (or such other address, email address or person as that party may notify to the other in accordance with the provisions of this clause 8); and

 

  (c)

shall be:

 

  (i)

delivered by hand;

 

  (ii)

sent by email;

 

  (iii)

sent by pre-paid first-class post or another next working day delivery service providing proof of delivery; and

 

  (d)

unless proved otherwise is deemed received as set out in clause 8.4.

 

9.2

The addresses, email addresses, and named contacts for service of notice are:

 

  (a)

Topco

 

  (i)

address:             3rd Floor 11-12 St James’s Square

                                       London

SW1Y 4LB

 

  (ii)

for the attention of: [REDACTED]

 

  (iii)

email address: [REDACTED]

 

  (b)

Newco

 

  (i)

address:             9th Floor, 107 Cheapside

                                       London

EC2V 6DN

 

  (ii)

for the attention of: [REDACTED]

 

  (iii)

email address: [REDACTED]

 

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9.3

A party may change its details for service of notices as specified in clause 8.2 by giving notice to the other party, provided that in the case of change to the party’s postal address the new address is an address in the UK. Any change notified pursuant to this clause shall take effect at 9.00 a.m. on the later of:

 

  (a)

the date (if any) specified in the notice as the effective date for the change; and

 

  (b)

five Business Days after deemed receipt of the notice of change.

 

9.4

Delivery of a notice is deemed to have taken effect (provided that all other requirements in this clause have been satisfied):

 

  (a)

if delivered by hand, on signature of a delivery receipt or at the time the notice is left at the address;

 

  (b)

if sent by email, at the time of transmission;

 

  (c)

in the case of pre-paid first-class post or another next working day delivery service delivery to an address in the UK, at 9.00 am on the second Business Day after posting or at the time recorded by the delivery service;

 

  (d)

if deemed receipt under the previous paragraphs of this clause 8.4 would occur outside business hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that is not a public holiday in the place of receipt), at 9.00 am on the day when business next starts in the place of receipt. For the purposes of this clause, all references to time are to local time in the place of deemed receipt.

 

9.5

This clause 8 does not apply to the service of any proceedings or other documents in any legal action or proceedings or, where applicable, any arbitration or other method of dispute resolution.

 

10.

SEVERANCE

If any provision or part-provision of this agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this clause shall not affect the validity and enforceability of the rest of this agreement.

 

11.

AGREEMENT SURVIVES THE DEMERGER EFFECTIVE DATE

This agreement (other than obligations that have already been fully performed) remains in full force after the Demerger Effective Date.

 

12.

THIRD PARTY RIGHTS

 

12.1

This agreement does not give rise to any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement.

 

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12.2

The rights of the parties to rescind or vary this agreement are not subject to the consent of any other person.

 

13.

COUNTERPARTS

This agreement may be executed (either by wet-ink signature or by a party applying its signature by some digital, electronic, mechanical or other means) in any number of counterparts, each of which shall constitute an original and all the counterparts shall together constitute one and the same agreement. The exchange of a fully executed (either by wet-ink signature or by a party applying its signature by some digital, electronic, mechanical or other means) version of this agreement (in counterparts or otherwise) by electronic transmission in PDF format or otherwise shall be sufficient to bind the parties to the terms and conditions of this agreement and no exchange of originals is necessary.

 

14.

GOVERNING LAW AND JURISDICTION

 

14.1

This agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the laws of England and Wales.

 

14.2

Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) that arises out of or in connection with this agreement or its subject matter or formation.

This agreement has been entered into on the date stated at the beginning of it.

 

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SCHEDULE 1

 

Name

  

No. of Newco Shares

Gabriele Cerrone    169,225
Keeren Shah    5,000
Hana Malik    5,000
Tiziano Lazzaretti    150,000
Dr Kunwar Shailubhai    400,000
Vaseem Palejwala    20,000
Jules Jacob    3,500
Maria Preiss    3,000
GarCer BioVentures    344,063

 

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SIGNED by Gabriele Cerrone

for and on behalf of

TIZIANA LIFE SCIENCES PLC

  

)

)

)

  

 

/s/ Gabriele Cerrone

Director

 

SIGNED by Willy Jules Simon

for and on behalf of

ACCUSTEM SCIENCES LIMITED

  

)

)

)

  

 

/s/ Willy Jules Simon

Director

 

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Exhibit 4.5

LICENSE AGREEMENT

This License Agreement (“Agreement”) is made effective as of June 24th, 2014 (“Effective Date”) by and between on the one hand TTFactor Srl (“LICENSOR”) having registered offices in Via Ripamonti n 435, Milan, Italy on behalf of Istituto Europeo di Oncologia (“IE0”) and Fondazione Firc per l’Oncologia Molecolare (“IFOM”) and separately, Universita’ degli Studi di Milano, having registered offices in Via Festa del Perdono n 7, Milan, Italy (“University of Milan”) and on the other hand Tiziana Life Sciences PLC, a UK company having an office at 18 South Street, Mayfair, London, UK W1K 1DG (“Licensee”). LICENSOR and Licensee are each hereafter referred to individually as a “Party” and together as the “Parties,”

WHEREAS, Licensee desires to obtain an exclusive license to patents owned or controlled by LICENSOR, along with any associated know-how and biologic materials or other technology relating to the projects outlined herein and on Exhibit 2 attached hereto in order to research, develop and commercialize products and services;

WHEREAS, LICENSOR desires to grant an exclusive license to Licensee under LICENSOR’s rights to such patents upon the terms and conditions set forth herein and LICENSOR has the full right title and interest (from IEO, IFOM and University of Milan) to grant such exclusive License to Licensee;

WHEREAS, Licensee would also like to engage LICENSOR to conduct research at their place(s) of employment to create or enhance technologies to assist in Licensee’s development and commercialization of products and services, and LICENSOR wishes to perform such research to produce results of mutual interest to LICENSOR and Licensee; and

WHEREAS, LICENSOR acknowledges that certain payments in connection with the research and with the milestones and royalties as described herein, shall be paid directly to LICENSOR and LICENSOR is responsible for making any payments that LICENSOR is obligated to pay to IEO, IFOM and University of Milan,

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

I. DEFINITIONS

Capitalized terms used in this Agreement shall have the meanings specified below or elsewhere herein.

1.1. “Affiliate” means any Person who directly or indirectly controls or is controlled by or is under common control with another Person. A Person shall only be considered an Affiliate during the duration of such control. For purposes of this definition, “control” or “controlled” means ownership, directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interest, in the case of any other type of legal entity, or status as a general partner in any partnership, or the contractual right to control the election of directors or direct the affairs of any Person.

 

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1.2, “Confidential Information” means with respect to a Party (the “Receiving Party”), all information that is (i) disclosed by the other Party (the “Disclosing Party”) to the Receiving Party; and (ii) would be reasonably understood from notices or legends, the nature of such information itself or the circumstances of such information’s disclosure to be confidential by a reasonable person familiar with the applicable industry; provided, however, that Confidential Information shall not include information that the Receiving Party can demonstrate by its records or other suitable documentary evidence, (a) as of the date of disclosure is demonstrably known to the Receiving Party or its Affiliates other than by virtue of a prior confidential disclosure to such Party or its Affiliates; (b) as of the date of disclosure is in, or subsequently enters, the public domain, through no fault or omission of the Receiving Party; (c) is obtained from a Third Party having a lawful right to make such disclosure free from any obligation of confidentiality to the Disclosing Party; or (d) is independently developed by or for the Receiving Party without reference to or reliance upon any Confidential Information of the Disclosing Party. Research Results constitutes the Confidential Information of both Licensee and LICENSOR subject to LICENSOR’s obligations under Section 2.3 with respect to publication of such Research Result.

1.3. “Cover” (in all its verb and adjectival forms, such as “Covered” and “Covers”) means (a) with respect to Valid Claims in an issued patent, that, in the absence of a license, the use, sale, or manufacture of the product in question would infringe such Valid Claim or (b) with respect to a Valid Claim in a pending application, that, in the absence of a license, the use, offer for sale, sale, importation or manufacture of the product in question would infringe such Valid Claim, should such claims issue substantially as published.

1.4. “Field” means all uses covered by the Licensed Patents, including without limitation the fields of diagnostics and therapeutics.

1.5. “First Commercial Sale” means, on a country-by-country basis, the date of the first arm’s length transaction, transfer or disposition for value by or on behalf of Licensee or any Affiliate or Sublicensee of Licensee to a Third Party of a Licensed Product after the granting of all regulatory approvals, and marketing authorizations. First Commercial Sale excludes any sale or other distribution for use in a clinical trial or other development activity, or for compassionate use or on a named patient basis.

1.6. “Improvement” means any improvement, enhancement or modification of or to any technology claimed in the Licensed Patents, and or discovery concerning any development, manufacture, use or testing of any technology claimed or described in the Licensed Patents made in the performance of the research.

1.7. “Indemnitee” means an LICENSOR Indemnitee or a Licensee Indemnitee, as applicable.

 

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1,8. “LICENSOR Indemnitees” means LICENSOR, its Affiliates and the directors, officers, employees and agents of LICENSOR and its Affiliates.

1.9. “Licensed Patents” means

(a) all patents and applications conceived as a result of the Sponsored Research under Project A, as follows:

(Project A) The use of 20 (twenty) defined stem cell markers (the so called “Top 20”) for patient stratification in breast cancer.

(b) any United States and foreign patent applications claiming priority from (a) above, all substitutions, continuations, continuations-in-part (to the extent these claim priority to the above-identified patent applications), divisionals, renewals, and all reissues, reexaminations, extensions, confirmations, revalidations, registrations, and patents of addition with respect to (a) above, and

(c) any supplementary protection certificates, pediatric exclusivity periods, any other patent term extensions and exclusivity periods and the like of any patents and patent applications identified in (a) and/or (b) above. For the avoidance of doubt, Licensed Patents shall include any inventions that result from Project A that may have therapeutic uses.

1.10. “Licensed Product” means any product or service, the manufacture, use, sale, importation or performance of which is covered by a Valid Claim of the Licensed Patents (including without limitation any diagnostic or therapeutic product covered by a Valid Claim of the Licensed Patents).

1.11, “Net_Sales” Net Sales are the gross invoiced sales price for all Licensed Products sold by or on behalf of Licensee, its Affiliates or Sublicensees to third parties during each calendar quarter (excluding sales or dispositions at or below cost, including for use in patient assistance programs or for use in clinical trials or other scientific testing or reasonable quantities of samples), less the following amounts incurred or paid by Licensee or its Affiliates or Sublicensees during such calendar quarter with respect to sales of Licensed Products regardless of the calendar quarter in which such sales were made:

(a) trade, cash and quantity discounts or rebates;

(b) credits or allowances;

(c) any charges for insurance, freight, and other transportation costs directly related to the delivery of Licensed Product to the extent included in the invoiced sales price;

( ) any tax, tariff, duty or governmental charge levied on the sales, transfer, transportation or delivery of a Licensed Product, other than franchise or income tax of any kind whatsoever;

 

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(e) any import or export duties or their equivalent borne by the seller. Net Sales shall not include sales or transfers between Licensee and its Affiliates or Sublicensees. Net Sales by Sublicensees or their Affiliates may be calculated using the deductions set forth in the applicable sublicense agreement instead of the deductions set forth above, so long as such deductions are commercially reasonable.

If a Licensed Product is sold in combination with another active ingredient or component having independent therapeutic effect or diagnostic utility, then Net Sales, for purposes of determining royalty payments on the combination, shall be calculated using one of the following alternative methods: (x) by multiplying the Net Sales of the combination by the fraction A/A+B, where A is the gross selling price, during the royalty paying period in question, of the Licensed Product sold separately, and B is the gross selling price, during the royalty period in question, of the other active ingredients or components sold separately, provided that in no event will Net Sales be reduced by more than twenty five percent (25%); or (y) if no such separate sales are made of the Licensed Product or any of the active ingredients or components in such combination package during the royalty paying period in question, Net Sales, for the purposes of determining royalty payments shall be calculated using the above formula where A is the commercial value, as reasonably estimated by Licensee, of the Licensed Product sold separately and B is the commercial value, as reasonably estimated by Licensee, of the other active ingredients sold separately, provided that in no event will Net Sales be reduced by more than twenty five percent (25%).

1.12. “Person” means any individual, corporation, limited or general partnership, limited liability company, joint venture, trust, unincorporated association, governmental body, authority, bureau or agency, or any other entity or body.

1.13. “Research Plan” means the research plan attached as Exhibit 2 hereto.

1.14. “Research Results” means all data, test results, laboratory notes, techniques, know-how, and any other research results resulting or obtained from performance of the Research Plan.

1.15. “Royalty Term” means, with respect to each Licensed Product, the period of time beginning on the First Commercial Sale of such Licensed Product in a country following the receipt of applicable regulatory approval with respect to such sale of such Licensed Product in such country and continuing on a country-by-country and product-by-product basis until the expiration of the last Valid Claim of the Licensed Patents which Covers the sale of such Licensed Product in such country.

1.16. “Sublicense Revenue” means all considerations received by Licensee or its Affiliates from Sublicensees on account of sale of Licensed Products. Sublicense Revenue will not include: (a) if Licensee collaborates on research and/or development with such a Sublicensee, amounts paid by such Sublicensee as reimbursement for research and development costs incurred under such Sublicense with respect to Licensed Products; (b) bona fide loans; (c) reimbursement for clinical trial costs and expenses with respect to

 

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Licensed Products incurred after the execution of such Sublicense; (d) equity investment in Licensee to the extent such investments reflect the fair market value of such equity (any amounts paid in excess of fair market value shall be deemed Sublicense Revenue); (e) amounts paid for supplies of Licensed Products or other tangible materials, or that are otherwise paid in reimbursement of costs or expenditures, whether incurred before or after the date of the relevant sublicense agreement; (0 upfront fees and milestone payments; and (g) withholding taxes or other amounts actually withheld from the amounts received. Sublicense Revenue shall not include amounts received in connection with a merger, consolidation or sale of all or substantially all of the business or assets of Licensee to which this Agreement relates.

1.17. “Sublicensee” means any Third Party to whom Licensee grants a sublicense of some or all of the rights granted to Licensee under this Agreement.

1.18. “Third Party” means any person or entity other than Licensee, LICENSOR and their respective Affiliates.

1.19. “Valid Claim” means a claim in an issued, unexpired patent or in a pending patent application within the Licensed Patents that (a) has not been finally cancelled, withdrawn, abandoned or rejected by any administrative agency or other body of competent jurisdiction, (b) has not been revoked, held invalid, or declared unpatentable or unenforceable in a decision of a court or other body of competent jurisdiction that is unappealable or unappealed within the time allowed for appeal, (c) has not been rendered unenforceable through disclaimer or otherwise, and (d) is not lost through an interference proceeding. Notwithstanding the foregoing, if a claim of a pending patent application within the Licensed Patents has not issued as a claim of a patent within the four (4) years after the date of issuance of the first substantive patent office action considering the patentability of such claim by the relevant patent office in such country or territory within the Licensed Patents, such claim shall not be a Valid Claim for the purposes of this Agreement, unless and until such claim issues as a claim of an issued patent (from and after which time the same shall be deemed a Valid Claim subject to clauses (a) through (d) above).

1.20. Additional Definitions. Each of the following terms shall have the meaning described in the corresponding section of this Agreement indicated below:

 

Term    Section
Agreement    Introduction
LICENSOR    Introduction
Licensee    Introduction
Effective Date    Introduction
Indemnifying Party    10.2
Party and Parties    Introduction
Reasonable Opportunity    7.3
SR    5.1
Term    11.1

 

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2. LICENSE GRANT

2.1. License. LICENSOR hereby grants to Licensee and its Affiliates a worldwide, exclusive license (even as to LICENSOR), including the right to grant sublicenses, under the Licensed Patents and under LICENSOR’s right, title and interest in and to Improvements, for Licensee and its Affiliates to research, develop, make, have made, use, offer for sale, sell, have sold and import Licensed Products for any and all uses in the Field, subject to the terms and conditions of this Agreement, The foregoing includes the right to employ Third Party distributors to sell Licensed Products and Third Party contract manufacturers to make Licensed Products, neither of which shall be construed as a sublicense.

2.2, Sublicenses. Licensee will be entitled to grant sublicenses under rights granted under the License Agreement to third parties provided that such sublicense shall be on terms and conditions in compliance with and not inconsistent with the terms of the License Agreement and that such sublicense may only be made for consideration in a bona-fide arm’s length transaction, including a bona fide royalty on Net Sales by sublicensee. Licensee shall furnish Licensor with a fully executed copy of any sublicense agreement, promptly after its execution. Any act or omission by a sublicensee that would have constituted a breach of the License Agreement had it been an act or omission by Licensee shall constitute a breach of the License Agreement. Without limiting the foregoing, Licensee shall (a) cure such breach or (b) enforce its rights by terminating such sublicense agreement.

2.3. Reservation of Rights. LICENSOR shall retain the right for IFOM, IEO and University of Milan to practice the Licensed Patents and Improvements for internal research purposes only and in research collaboration with other non-profit academic institutions only, including clinical research, but not for any commercial purpose. TTF, IEO, IFOM and University of Milan acknowledge that publication before patent filing and unauthorized distribution of proprietary reagents and biologic materials may compromise the intellectual property generated under the Sponsored Research. IEO, IFOM and University of Milan retain the right to publish the results of the Sponsored Research, pending the obligations to provide Licensee with a copy of the manuscript at least 30 days ahead of publication. In addition, TTF, IEO, IFOM and University of Milan agree that distribution of proprietary reagents and biologic materials will only occur under a Material Transfer Agreement (the form of which is attached as Exhibit 3). LICENSOR shall not license, authorize or grant any Affiliate or any Third Party the right to make, have made, use, offer for sale, sell, have sold and/or import Licensed Products.

2.4, Sharing of Information. LICENSOR will provide Licensee access to and the right to use solely for the purpose of developing, making, having made, using and selling Licensed Products any information, technology or know-how controlled by Pier Paolo Di Fiore and persons working for hint relating to the Licensed Product and Licensed Patents which is necessary or useful in enabling Licensee to practice and fully exploit the Licensed Patents in the Field, or which relates to the development, manufacture, use or sale of a Licensed Product, in accordance with the terms of the Agreement.

 

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2.5. No Other Grant of Rights. Except as expressly provided herein, nothing in this Agreement will be construed to confer any ownership interest, license or other rights upon Licensee by implication, estoppel or otherwise as to any technology, intellectual property rights, products or biological materials of LICENSOR, IEO, IFOM, or the University of Milan, or any other entity, regardless of whether such technology, intellectual property rights, products or biological materials are dominant, subordinate or otherwise related to any Licensed Patents or Improvements.

3. DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCTS.

3.1. Authority. As between the Parties, Licensee shall have full control and authority over the research, development (including regulatory matters) and commercialization of Licensed Products in the Field worldwide.

3.2. Diligence. Licensee will, itself or through its Affiliates or Sublicensees, at all times exercise commercially reasonable efforts to commercialize one or more Licensed Products at a level of effort and resources that is consistent with the effort which it would apply to a product of comparable potential at a comparable stage of development resulting from its own development programs, such commercially reasonable efforts to include the milestones on Exhibit 1.

4. PAYMENTS

4.1. Milestone Payments. Subject to the terms and conditions of this Agreement, Licensee shall pay LICENSOR within thirty (30) calendar days of the first achievement of each of the following milestone events for the first Licensed Product that achieves the corresponding milestone event, per each project Field. For clarity, each milestone payment shall be payable only once per each project Field.

 

Milestone Event

  

Milestone Payment

(i) Upon Completion of Development of a commercial test (“Completion of Development” means first filing for pre-IDE, 510 (K) or other equivalent regulatory step with the FDA or other regulatory authority).

   50,000 Euros

(ii)  First Commercial Sale of the Product identified in (i) above, Licensed.

   100,000 Euros

(iii)  upon first regulatory approval in the USA or any other Major Market.

   150,000 Euros

 

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Licensee shall notify LICENSOR in writing within thirty calendar (30) days following the achievement of each milestone described in Section 4.3.1, and shall make the appropriate milestone payment within thirty calendar (30) days after the achievement of such milestone.

4.2. Royalty Payments.

4.2.1. Royalty Rates. Subject to the other terms of this Agreement (including the remainder of this Section 4.2), Licensee shall pay to LICENSOR, on a quarterly basis, a royally of (i) on Licensed Product-by-Licensed Product basis, one and one-half percent (1.5%) of Net Sales by Licensee and by Licensee Affiliates for each country as to which the Royalty Term remains in effect; and (ii) fifteen percent (15%) of Sublicense Revenue received from Sublicensee for each country as to which the License Agreement is effective.

4.2.2. Third Party Royalty Offset. The royalty paid to LICENSOR under Section 4.2.1 shall be reduced by the amount of any royalty that Licensee or any Affiliate or Sublicensee (as applicable) pays to a Third Party under licenses to a patent owned by such Third Party that such party reasonably determines to be necessary in order to research, develop, manufacture, use or sell a Licensed Product in a given country, provided that in no event shall the royalty payments to Licensor with respect to Licensed Products be reduced by more than twenty-five percent (25%) of the amount otherwise due.

4.2.3. One Royalty. Only one royalty shall be payable to LICENSOR hereunder for each sale of a Licensed Product.

4.3. Payment Terms.

4.3.1. Payment of Royalties. Licensee shall make any royalty payments owed to LICENSOR hereunder in arrears, within ninety (90) days from the end of each quarter in which such payment accrues. Each royalty payment shall be accompanied by a report for each country in which sales of Licensed Products occurred in the calendar quarter covered by such statement, specifying: the gross sales (if available) and Net Sales in each country’s currency; the applicable royalty rate under this Agreement; the royalties payable in each country’s currency, including an accounting of deductions taken in the calculation of Net Sales in accordance with Licensee’s accounting practices; the applicable exchange rate to convert from each country’s currency to United States Dollars; and the royalties payable in United States Dollars.

 

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4.3.2. Accounting. All payments hereunder shall be made in United States dollars. Conversion of foreign currency to United States dollars shall be made in the same manner as Licensee converts all of its other revenues, provided that (a) such manner is consistent with United States generally accepted accounting principles, and (b) the exchange rates employed arc those quoted by a reputable source, such as a recognized money center bank such as JP Morgan, Bank of America or an equivalent, OANDA.com, or the Wall Street Journal.

4.3,3. Tax Withholding; Restrictions on Payment. All payments hereunder shall be made free and clear of any taxes, duties, levies, fees or charges, except for withholding taxes and interest and penalties thereon (to the extent applicable). Licensee shall make any applicable withholding payments due on behalf of LICENSOR and shall provide LICENSOR with such written documentation regarding any such payment as available to Licensee relating to an application by LICENSOR for a foreign tax credit for such payment with the United States Internal Revenue Service. LICENSOR shall provide all information necessary to determine if withholding taxes are applicable.

4.4. Records Retention by Licensee; Review.

4.4.1. Royalty Records. Commencing as of the date of First Commercial Sale of the first Licensed Product hereunder, Licensee and its Affiliates and Sublicensees shall keep for at least three (3) years from the end of the calendar year to which they pertain complete and accurate records of sales by Licensee or its Affiliates and Sublicensees, as the case may be, of each Licensed Product, in sufficient detail to allow the accuracy of the payments hereunder to be confirmed.

4.4.2. Review. Subject to the other terms of this Section 4.4, at the request of LICENSOR, which shall not be made more frequently than once per calendar year during the Term, and upon at least thirty (30) days’ prior written notice from LICENSOR, and at the expense of LICENSOR (except as otherwise provided herein), Licensee shall permit and shall use its best effort to cause its Affiliates and Sublicensees to permit, an independent certified public accountant selected by LICENSOR and reasonably acceptable to Licensee to inspect (during Licensee’s or its Affiliates’ or Sublicensees’, as applicable, regular business hours) the relevant records required to be maintained by Licensee under Section 4.4. In every case the accountant must have previously entered into a confidentiality agreement with both Parties substantially similar to the provisions of Article 6 and limiting the disclosure and use of such information by such accountant to authorized representatives of the Parties and the purpose of verifying royalties payable to LICENSOR hereunder. Results of any such review shall be binding on both Parties absent manifest error. LICENSOR shall treat the results of any such accountant’s review of Licensee’s records as Confidential Information of Licensee subject to the terms of Article 6. If any review reveals a deficiency in the calculation and/or payment of royalties by Licensee, then (a) Licensee shall pay LICENSOR the amount remaining to be paid, and (b) if such underpayment is by ten percent (10%) or more for any twelve (12) month consecutive period, then Licensee shalt reimburse LICENSOR for its reasonable out-of-pocket costs and expenses incurred in performing the review.

 

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6.2. Limited Disclosure and Use. Each Party may disclose the other Party’s Confidential Information to any of its officers, employees, consultants, agents or Affiliates, or in the case of Licensee, Sublicensees, if and only to the extent necessary to carry out its rights and responsibilities under this Agreement. Such disclosures shall be limited to the maximum extent possible consistent with such rights and responsibilities and shall only be made to the extent any such persons receiving the other Party’s Confidential Information are bound by written confidentiality obligations to maintain the confidentiality thereof and not to use such Confidential Information except regard permitted by this Agreement. LICENSOR and Licensee each agree not to disclose or transfer the other Party’s Confidential Information to any Third Parties under any circumstance without the prior written approval from the other Party, except as otherwise required by law, and except as otherwise expressly permitted under this Article 6 or elsewhere in this Agreement. Each Party shall take such action, and shall cause its Affiliates, and in the case of Licensee, Sublicensees, to take such action, to preserve the confidentiality of each other’s Confidential Information as it would customarily take to preserve the confidentiality of its own Confidential Information, using, in all such circumstances, not less than reasonable care. Each Party, upon the request of the other Party, will return all the Confidential Information disclosed or transferred to it by the other Party pursuant to this Agreement, including all copies and extracts of documents and all manifestations in whatever form, in such Party’s possession within sixty (60) days of such request or, if earlier, the termination or expiration of this Agreement; provided however, that a Party may retain (a) any Confidential Information of the other Party relating to any license that is still in force hereunder or which expressly survives such termination, and (b) one (1) copy of all other Confidential Information in inactive archives solely for the purpose of establishing the contents thereof.

6.3. Terms of Agreement. The terms of this Agreement constitute each Party’s Confidential Information; provided, however, that either Party may disclose the terms of this Agreement (a) to the extent required by law or by the requirements of any nationally recognized securities exchange, quotation system or over-the-counter market on which such Party has its securities listed or traded, or (b) in confidence to its attorneys, accountants and other fiduciaries, and (c) to any acquirers, potential acquirers, investors, prospective investors, lenders and other potential financing sources who are obligated by contract to keep such information confidential.

6.4. Research Results. During the period set out at art. 5.1 above (four - 4 - years) and for two (2) years thereafter, LICENSOR shall keep confidential, and shall cause its employees, consultants (including academic collaborators, CROs and manufacturers), professional advisors, and Affiliates to keep confidential, all Research Results and shall not disclose any of the Research Results to a Third Party or use the Research Results on behalf of a Third Party without Licensee’s prior written consent, except as expressly set forth in Section 2.3 and the remainder of this Section. If LICENSOR wishes to publish any Research Results, LICENSOR provide Licensee with a copy of the manuscript at least 30 days ahead of publication.

 

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5. SPONSORED RESEARCH

5.1. Research Plan. LICENSOR will cause IEO to use reasonable efforts to perform the research according to the Research Plan attached hereto as Exhibit 2. The Parties acknowledge that the Sponsored Research scope of work may be amended by the Parties from time to time (“SR”). Licensee will fund SR as follows: Licensee shall pay TTF for sponsored research (SR) over four (4) years for the following project, as follows:

Project A: The use of 20 (twenty) defined stem cell markers (the so called “Top 20”) for patient stratification in breast cancer.

Licensee will fund 150,000 Euros for Project A per year, starting from the Effective Date, automatically renewable for up to 4 years, pending milestones evaluation at the end of each annual financing period, whereby the sponsored research funding shall be renewed automatically for Project A if the milestones for Project A are met, such milestones as set forth on Exhibit 2. The Sponsored Research payments are contingent on continuous affiliation with Professor Di Fiore at IEO. Payments for each project year will be made in two equal installments (each of 50% of the total payment for such year), as follows: the first installment will be made at the beginning of such project year (with the payment for the first project year being made within thirty (30) days of the Effective Date); and the second installment will be made six months after the beginning of such project year.

6. TREATMENT OF CONFIDENTIAL INFORMATION

6.1. Confidential Obligations, LICENSOR and Licensee each recognize that the other Party’s Confidential Information constitutes highly valuable and proprietary confidential information. LICENSOR and Licensee each agree that during the Term and for ten (10) years thereafter, it will keep confidential, and will cause its employees, consultants (including academic collaborators, CROs and manufacturers), professional advisors, Affiliates and, in the case of Licensee, Sublicensees to keep confidential, all Confidential Information of the other Party. Neither LICENSOR nor Licensee nor any of their respective employees, consultants, Affiliates or, in the case of Licensee, Sublicensees, shall use any Confidential Information of the other Party for any purpose whatsoever other than exercising any rights granted to it or reserved by it hereunder or as expressly permitted in this Article 6. Licensee may disclose LICENSOR’s Confidential Information to the extent such disclosure is reasonably necessary to file and prosecute patent applications and/or maintain patents which are filed or prosecuted in accordance with the provisions of this Agreement, or to obtain any authorization to conduct clinical studies or any regulatory approval for Licensed Products. Each Party may disclose the other Party’s Confidential Information as reasonably necessary to file, conduct or defend litigation in accordance with the provisions of this Agreement or comply with applicable laws, regulations or court orders; provided, however, that if a Party is required to make any such disclosure of the other Party’s Confidential Information in connection with any of the foregoing, it will give reasonable advance notice to the other Party of such disclosure requirement and will use reasonable efforts to assist such other Party in efforts to secure confidential treatment of such information required to be disclosed,

 

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6.5, Press Release. The Parties shall, immediately upon the Effective Date, diligently work together to draft a mutually agreeable press release announcing the execution of this Agreement, and shall publish such press release in a mutually agreeable manner.

7. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS

7.1. Prosecution Control. For purposes of this Article 7, the right to control prosecution of a Patent Right shall include the right to control preparing, filing, and prosecuting patent applications therefor, and obtaining and maintaining any resulting patents, including the conduct of interferences, the defense of oppositions and other similar proceedings with respect to a patent.

7.2. Patent Prosecution. Licensee shall, at its expense, and using attorneys of its choice, assume control of the prosecution of the Licensed Patents, subject to the provisions of this Article 7. Licensee shall prosecute the Licensed Patents in good faith. If Licensee decides not to prosecute or maintain any Patent Right within the Licensed Patents, then Licensee shall provide LICENSOR with written notice of such decision prior to the deadline for taking any action for such Patent Right or the date on which the abandonment of any such Patent Right would become effective, whichever is earlier, If Licensee does not wish to continue prosecution of a case or decides not to file in a particular country, then LICENSOR may do so at LICENSOR’s own cost.

7.3. Right of Review and Comment. Licensee shall consult with LICENSOR regarding the prosecution of the Licensed Patents by using commercially reasonable efforts to provide LICENSOR a Reasonable Opportunity to review and comment on all proposed submissions to any patent office before submission, where “Reasonable Opportunity” means that LICENSOR shall receive from Licensee or patent counsel true copies of all documents relating to filing, registration, prosecution, and maintenance of patent applications and patents within the Licensed Patents as soon as reasonably practical after Licensee has received such documents and materials. Licensee shall consider in good faith LICENSOR’s comments concerning such documents and materials that it timely receives.

7.4. Ownership. The Parties agree that ownership (i.e., the assignee patent applicant) of the inventions resulting from the Sponsored Research shall stem from inventorship and allocation of ownership shall be governed by the agreement between TTF and IEO and IFOM, and University of Milan.

8. PATENT ENFORCEMENT

8.1. Notice of Infringement. If, during the Term, either Party learns of any actual, alleged or threatened infringement by a Third Party of any Licensed Patents, such Party shall promptly notify the other Party and shall provide the other Party with available evidence of such infringement.

 

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8.2. Infringement of Patent Rights. Licensee shall have the first right (but not the obligation), at its own expense and with legal counsel of its own choice, to bring suit (or take other appropriate legal action) against any actual, alleged or threatened infringement of the Licensed Patents by any product or service that competes with a Licensed Product, as reasonably determined by Licensee. LICENSOR shall take all actions necessary to assist Licensee in any suit, including joining in such suit as a party if legally required, at Licensee’s expense. LICENSOR shall have the right, at its own expense, to be represented in any such action by counsel of LICENSOR’s own choice; provided, however, that the foregoing shall not affect the right of Licensee to control the suit as described in this Section. If Licensee exercises its right to sue, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorneys’ fees, necessarily incurred in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Licensor shall receive an amount equal to ten percent (10%) of such funds and the remaining ninety percent (90%) of such funds shall be retained by Licensee. If Licensee does not take action in the prosecution, prevention, or termination of any infringement and has not commenced negotiations with the infringer for the discontinuance of said infringement, within ninety (90) calendar days after receipt of notice to Licensee by Licensor of the existence of an infringement, Licensor may elect to do so. Should Licensor elect to bring suit against an infringer Licensee shall take all actions necessary to assist Licensor in any suit, including joining in such suit as a party if legally required, at Licensor’s expense. If Licensor exercises its right to sue, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorneys’ fees, necessarily incurred in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Licensee shall receive an amount equal to ten percent (10%) of such funds and the remaining ninety percent (90%) of such funds shall be retained by Licensor.

9. REPRESENTATIONS AND WARRANTIES

9.1. LICENSOR Representations. LICENSOR represents, warrants and covenants to Licensee that:

(a) the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all appropriate LICENSOR corporate action (including each of IEO, IFOM and University of Milan);

(b) this Agreement is a legal and valid obligation binding upon LICENSOR (including each of IEO, IFOM and University of Milan) and enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Parties does not conflict with any agreement, instrument or understanding to which LICENSOR (including each of IEO, IFOM and University of Milan) is a party or by which it is bound;

(c) LICENSOR (including each of IEO, IFOM and University of Milan) has the full right and legal capacity to grant the rights granted to Licensee hereunder;

 

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(d) the Licensed Patents have been properly filed and prosecuted as of the Effective Date;

(e) LICENSOR (collectively meaning EO, IFOM and University of Milan) is the owner of entire right, title and interest in and to the Licensed Patents;

(f) as of the Effective Date, LICENSOR (including each of IEO, IFOM and University of Milan) has not licensed or transferred to any Person, including LICENSOR Affiliates, any rights under the Licensed Patents.

9.2. Licensee Representations. Licensee represents and warrants to LICENSOR that:

9.2.1. the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all appropriate Licensee corporate action; and

9.2.2. this Agreement is a legal and valid obligation binding upon Licensee and enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Parties does not conflict with any agreement, instrument or understanding to which Licensee is a party or by which it is bound.

9.3. No Warranties. Except as expressly set forth in this Agreement, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF NON-INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS OF THIRD PARTIES, OR AS TO THE SUCCESS OR LIKELIHOOD OF SUCCESS OF THE RESEARCH, DEVELOPMENT OR COMMERCIALIZATION OF LICENSED PRODUCTS UNDER THIS AGREEMENT, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.

10. INDEMNIFICATION

10.1. Except with respect to matters for which Licensee is obligated to indemnify Licensor, as established below, neither party will be liable to the other with respect to the License. Licensor’s aggregate liability for all damages of any kind arising out of or relating to the License Agreement or its subject matter under any contract, negligence, strict liability or other legal or equitable theory shall not exceed the amounts paid to Licensor under the License Agreement

10.2. Licensee shall indemnify, defend and hold harmless the Licensor from and against any and all losses, damages, fees, expenses, settlement amounts and costs relating to or in connection with a third party claim arising out of: (a) any breach by Licensee of its representations, warranties or covenants made under the License Agreement; (b) any actual or alleged death, personal bodily injury or damage to real or tangible personal property claimed to result, directly or indirectly, from the possession, use or consumption of; or treatment with, the Licensed Product made or sold by or on behalf of Licensee or its affiliates or sublicensees, including any product liability claims; (c) an infringement of a third party’s intellectual property rights; (d) the performance of the sublicense agreements. Licensor cannot indemnify Licensee.

 

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10.3. Indemnification Procedures, If any Licensor is seeking indemnification under Sections 10.1 or 10.2 from a Party (the “Indemnifying Party”), the Licensor shall notify the Indemnifying Party of such claim as soon as reasonably practicable after the Indemnitee receives notice of the claim, and the Indemnitee shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle the claim solely for monetary consideration) and shall cooperate as requested (at the expense of the Indemnifying Party) in the defense of the claim. The indemnification obligations under this Article 10 shall not apply to any harm suffered as a direct result of any delay in notice to the Indemnifying Party hereunder, or to amounts paid in settlement of any claim, demand, action or other proceeding if such settlement is effected without the consent of the Indemnifying Party. The Indemnifying Party shall not unreasonably withhold or delay its consent to a settlement solely for monetary consideration that is proposed by the Licensor. The Licensor, its employees and agents, shall reasonably cooperate with the Indemnifying Party and its legal representatives in the investigation of any claim, demand, action or other proceeding covered by Sections 10.1 or 10.2.

11. TERM AND TERMINATION

11.1. Term; Expiration. Unless earlier terminated in accordance with this Article, the term of this Agreement (the “Term”) shall commence as of the Effective Date and remain in force, on a Licensed Product-by-Licensed Product and country-by-country basis, until the Licensed Patents covering such Licensed Product expire.

11.2. Termination for Breach. Subject to the other terms of this Agreement, this Agreement and the rights granted herein may be terminated by either Party for the unremedied material breach by the other Party of any material obligation or condition hereof, provided that the breaching Party has not cured such breach within forty-five (45) days after the date of written notice to the breaching Party in the case of a payment-related material breach and one hundred twenty (120) days after the date of written notice to the breaching Party in the case of any other material breach, which notice shall describe such material breach in reasonable detail and shall state the non-breaching Party’s intention to terminate this Agreement pursuant to this Section or in the case of Licensee, its intention to either terminate this Agreement or elect its alternative remedy pursuant to Section 11.9. In the event there is dispute as to whether “an unremedied material breach” as set forth in this section, has occurred, the dispute shall be resolved first by mediation, and if necessary thereafter, by arbitration.

11.3. Termination for Bankruptcy. Either party may terminate this Agreement upon forty-five (45) days written notice in the case of bankruptcy, insolvency, dissolution, or winding up of the other Party.

 

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11.4. Voluntary Termination. Licensee may terminate this Agreement at any time upon thirty (30) days’ notice to LICENSOR.

11.5. Effects of Expiration or Termination. Upon any termination of this Agreement, (i) as of the effective date of such termination all licenses granted by LICENSOR to Licensee under this Agreement hereunder shall terminate automatically; provided, however, that Licensee and its Affiliates and Sublicensees may sell Licensed Products in their inventory as of the effective date of such termination, subject to the payment of royalties under Section 4.2, and (ii) each Party shall return all Confidential Information of the other Party as required by Article 6.

11.6. Survival of Sublicenses. Notwithstanding anything to the contrary, no termination of this Agreement shall be construed as a termination of any sublicense of any Sublicensee, and thereafter each such Sublicensee shall be considered a direct licensee of LICENSOR, provided that (i) Licensee represents and warrants to LICENSOR that, to Licensee’s actual knowledge, as of the effective date of such termination, such Sublicensee is then in full compliance with all terms and conditions of its sublicense, (ii) such Sublicensee agrees in writing to assume all applicable obligations of Licensee under this Agreement.

11.7. Remedies. Except as otherwise expressly set forth in this Agreement, the termination provisions of this Article 11 are in addition to any other relief and remedies available to either Party at law.

11.8. Surviving Provisions. Notwithstanding any provision herein to the contrary, the rights and obligations of the Parties set forth in Articles and Sections 1 (Definitions), 4.4 (Records Retention by Licensee; Review), 6 (Treatment of Confidential Information), 9 (Representations and Warranties), 10 (Indemnification), 11.5 (Effects of Expiration or Termination), 11.6 (Survival of Sublicensees), 11.7 (Remedies), 11.8 (Surviving Provisions), and 12 (Miscellaneous) as well as any rights or obligations otherwise accrued hereunder (including any accrued payment obligations), shall survive the expiration or termination of the Term. Without limiting the generality of the foregoing, Licensee shall have no obligation to make any milestone or royalty payment to LICENSOR that has not accrued prior to the effective date of any termination of this Agreement.

11.9. Remedy in Lieu of Termination. In the event of termination by Licensee under Section 11.2 or 11.3 herein, Licensee will retain a perpetual, fully paid up, royalty free worldwide right and license to develop, make, have made, use and sell Licensed Products in the Field. The foregoing shall be without prejudice to any other right or remedy that may be available to Licensee under this Agreement or at law or in equity.

12. MISCELLANEOUS

12.1. Notices. All notices, requests and other communications hereunder shall be in writing, shall be addressed to the receiving Party’s address set forth below or to such other address as a Party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) made by facsimile transmission (to be followed with written fax confirmation), (iii) sent by private courier service providing evidence of receipt, or (iv) sent by registered or certified mail, return receipt requested, postage prepaid. The addresses and other contact information for the Parties are as follows:

 

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If to LICENSOR:            Daniela Bellomo,      
   [REDACTED]      
If to Licensee:   

Tiziana Life Sciences

18 South Street, Mayfair

London, UK W1K I DG

Phone:

Fax:

     
With a copy to:    Ivor Elrifi      
   COOLEY LLP      
   1114 Ave of the Americas      
   New York, NY 10036      
   [REDACTED]      

All notices, requests and other communications hereunder shall be deemed to have been given either (i) if by hand, at the time of the delivery thereof to the receiving Party at the address of such Party set forth above, (ii) if made by telecopy or facsimile transmission, at the time that receipt thereof has been acknowledged by the recipient, (iii) if sent by private courier, on the day such notice is delivered to the recipient, or (iv) if sent by registered or certified mail, on the seventy (7th) business day following the day such mailing is made.

12.2. Language. The Parties hereto have requested that this Agreement and any related documents be drafted in English, which shall be controlling for all purposes. Any translation of this Agreement or any part hereof into a language other than English is for convenience only, and only the original English language version of this Agreement, as it may be amended from time to time as permitted herein, shall have legal effect.

12.3. Governing Law. This Agreement will be construed, interpreted and applied in accordance with the laws of Italy (excluding its body of law controlling conflicts of law). The UN Convention for the International Sale of Goods shall not apply to this Agreement.

 

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12.4. Venue. Any dispute, controversy or claim initiated by either Party arising out of, resulting from or relating to this Agreement, or the performance by either Party of its obligations under this Agreement, whether before or after termination of this Agreement, shall be subject to the sole jurisdiction of, and venue in, the Court of Milan (Italian Jurisdiction). Licensee and LICENSOR each irrevocably consent to the jurisdiction of such courts, irrevocably waive any objection based on inconvenience of forum, and agree that process may be served in the manner provided herein for giving notices or otherwise as allowed by Italian or applicable federal law. Notwithstanding the foregoing, either Party shall have the right, without waiving any right or remedy available to such Party under this Agreement or otherwise, to seek and obtain from any court of competent jurisdiction any Interim or provisional relief that is necessary or desirable to protect the rights or property of such Party.

12.5. Limitations. Except as expressly set forth in this Agreement, neither Party grants to the other Party any right or license to any of its intellectual property.

12.6. Entire Agreement; Amendment. This Agreement and the SR scope of work comprise the entire Agreement between the Parties with respect to the subject matter hereof and thereof and supersede all prior representations, understandings and agreements between the Parties with respect to the subject matter hereof. No modification shall be effective unless in writing with specific reference to this Agreement and signed by the Parties.

12.7. Waiver. The terms or conditions of this Agreement may be waived only by a written instrument executed by the Party waiving compliance. The failure of either Party at any time or times to require performance of any provision hereof shall in no manner affect its rights at a later time to enforce the same. No waiver by either Party of any condition or term shall be deemed as a continuing waiver of such condition or term or of another condition or term.

12.8. Headings. Article, section and subsection headings are inserted for convenience of reference only and do not form part of this Agreement.

12.9. Assignment. Licensee shall have the right to assign all of its rights and obligations under the Agreement, without restriction and without any modification of any term of the Agreement, to (a) any Affiliate of Licensee, provided that Assignee agrees to assume the obligations of the definitive agreement or (b) the surviving entity in any merger or consolidation or to any entity to which it transfers all or substantially all of the portion of its business to which the Agreement pertains, provided that Assignee agrees to assume the obligations of the definitive agreement. Other than the foregoing right, neither this Agreement nor any right or obligation hereunder may be assigned, delegated or otherwise transferred, in whole or part, by either Party without the prior express written consent of the other. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any purported assignment in violation of this Section shall be void. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the permitted successors and assigns of the Parties.

 

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12.10. Force Majeure. Neither Party shall be liable for failure of or delay in performing obligations set forth in this Agreement, and neither shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes beyond the reasonable control of such Party. In event of such force majeure, the Party affected thereby shall use reasonable efforts to cure or overcome the same and resume performance of its obligations hereunder.

12.11. Construction. The Parties hereto acknowledge and agree that: (i) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to all Parties hereto and not in favor of or against any Party, regardless of which Party was generally responsible for the preparation of this Agreement. In this Agreement: (a) the word “including” shall be deemed to be followed by the phrase “without limitation” or like expression; (b) the singular shall include the plural and vice versa; (c) masculine, feminine and neuter pronouns and expressions shall be interchangeable, and (d) all references to “days” means “calendar days” unless expressly stated to be “business days”, whether or not so expressly stated.

12.12. Severability. If any provision(s) of this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then-current applicable law from time to time in effect during the Term hereof, it is the intention of the Parties that such provision(s) be deemed to be severed from this Agreement and the remainder of this Agreement shall not be affected thereby. The Parties hereto agree to renegotiate any such severed provision in good faith in order to provide a reasonably acceptable, valid alternative to the severed provision, it being the intent of the Parties that the basic purposes of this Agreement are to be effectuated.

12.13. Status. Nothing in this Agreement is intended or shall be deemed to constitute a partner, agency, employer-employee, or joint venture relationship between the Parties.

12.14. Further Assurances. Each Party agrees to execute, acknowledge and deliver such further instructions, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

12.15. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the Effective Date.

 

   
  Tiziana Life Sciences PLC       TTFactor Srl
  /s/ Gabriele Cerrone       /s/ Daniela Bellomo
  Gabriele Cerrone       Daniela Bellomo
  Chairman       Managing Director

 

   
       

/s/ Pier Giuseppe Pelicci

       

Pier Giuseppe Pelicci

        President

 

   
       

UNIVERSITADEGLI STUDI DI MILANO

/s/Gianluca Vago

       

Gianluca Vago

       

Il Rettore


EXHIBIT 1 — LICENSEE DILIGENCE

I, Submission of a regulatory approval document for a Licensed Product to the FDA or equivalent regulatory document in another country within 48 months from the date of delivery of the deliverables set forth in the workplan for the relevant Sponsored Research for Project A.

 

2.

Approval for commercial distribution of a Licensed Product by the FDA or equivalent approval in another country within 60 months from the date of delivery of the deliverables set forth in the workplan for the relevant Sponsored Research for Project A.

 

3.

First Commercial Sale of the first Licensed Product within 66 months from the date of delivery of the deliverables set forth in the workplan for the relevant Sponsored Research for Project A.

In the event that these diligence milestones are not met due to a failure of Licensee to be diligent, then a six month extension on the above timelines shall be granted (and such’ further extensions as the parties may reasonably agree upon consistent with the spirit of this agreement). In the event that these diligence milestones are not met due circumstances out of the control of Licensee, then the parties shall negotiate in good faith an appropriate extension of the above timelines.

If after the foregoing extensions the milestones are not met, then the license to Licensee shall be revoked and all rights under this agreement and data shall revert to TTF and TTF shall assume all rights under this agreement to commercialize any Licensed Product. In the event that the license to Licensee is revoked and TTF commercializes, either on its own or through a licensee or assignee, a Licensed Product, then TTF shall pay to Licensee a royalty of 1.5% on Net Sales or 10% on sublicensee income on sales.

 

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EXHIBIT 2 — RESEARCH PLAN AND DILIGENCE MILESTONES

Project A: The use of 20 (twenty) defined stem cell markers (the so-called “Top 20”) for patient stratification in breast cancer

The TOP20 genes have been defined based on our published expression profiles of breast stem cells, and further selected based on their levels of expression and likelihood of reduction into practice for patient stratification in breast cancer. They include: MMP1, CDC2, TOP2A, C6orf173, SFN, RACGAP1, EXOSC4, APOBEC3B, C17orf37, H2AFZ, ElF4EBPI, PHLDA2, MRPS23, H2AFJ, PUB, LY6E, NDUFB10, EPB41L5, NOL3, THOC4. In Yl, we will optimize conditions for detection of candidate stem cell markers by Q-PCR and immunohistochemistry (IHC) in formalin-fixed paraffin-embedded (FFPE) samples from breast cancer patients. In Y2, we will perform pilot studies to assess the value of the TOP20 stem cell marker genes. In Y3, we will extend validation of the

selected antibodies for II-IC analysis and of the Q-PCR assays on large-scale breast cancer patient cohorts. In Y4, we will validate the TOP20-gene prognostic model (IHC and/or Q-PCR based) on a consecutive cohort of breast cancer patients. Please Note: During Yl, attempts will be conducted to reduce the “top 20” gene list, by identifying — with various statistical analysis — more restricted signatures (within the 20-gene list) capable of performing with comparable accuracy. The milestones indicated underneath refer to the characterization of the complete 20-gene list. If we will succeed in reducing the signature, the milestones will be automatically adjusted to reflect the new reduced signatures, and the excluded genes will be dropped from the sponsored research agreement.

 

Delivery
Date

  

Milestones

End Y1   

•   Optimization of standardized protocols for extraction of genetic material from archival FFPE tissues.

  

•   Q-PCR studies. Optimization of protocols for reliable detection of both low and high abundant markers by pre-amplification technology by Applied Biosystem/Life Technologies.

  

•   Q-PCR studies. Design of a custom 384-well plate for selection of Taqman probes for detection of the TOP20 stem cell marker genes on RNA from FFPE samples. We intend to include in this card two different Taqman assays (targeting distinct, short (60-80 bp) areas of the transcript) for each TOP20 gene and for genes comprised in the OncotypeDX signature (for internal comparison) to select the best performing assay per each gene.

  

•   IHC studies. Selection of specific antibodies for IHC of the TOP20 candidate stem cell markers in FFPE breast specimens. We predict to characterize 5 Abs in Y1, 8 Abs in Y2 and 7 Abs in Y 3. The successful completion of this Task is subject to the availability of commercial Abs that work in IHC. If Abs are unavailable (or do not work in IHC), contingencies plan will have to be prepared, which cannot be predicted at this stage.

  

•  At the end of Yl the filing of IP might be considered.

End Y2   

•   With the Abs characterized in Yl, we will perform IHC on a cohort of 20 breast patients, in order to asses if they can identify bona-fide Cancer Stem Cells (CSC) and their number in tumors correlates with different histological and clinical features.

 

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•   Q-PCR studies. Having completed the set-up phase in Year 1, we will run a

   pre-screening study to test the 384-well Q-PCR card on a limited number of FFPE tumor samples (same cohort as at the above point) to correlate expression levels of TOP20 genes with cancer stem cell content assessed by IHC, as well as with other relevant clinico-pathological parameters. Results of this pre-screening study will allow us to select the best performing TaqMan assays to be reduced into a clinical assay and therefore to design a miniaturized card in a suitable format.
End Y3   

•   Continuation of the Ab characterization for IHC (8 Abs as from milestones at end of Y1 ) .

  

•   Q-PCR studies. Analysis on case-control study group of up to 200 breast cancer patients by Q-PCR to prove prognostic significance of TOP20 stem cell genes and develop an algorithm for prognosis prediction of breast cancer patients.

  

•   IHC analysis of validated antibodies (out of the 15 screened up to this point) against selected TOP20 genes on the same case-control study cohort as in above point.

  

•   Continuation of the Ab characterization for IHC (7 Abs as from milestones end of Y1 ) .

End Y4   

•   Q-PCRstudies. Use of the TOP20-gene prognostic model by Q-PCR in the analysis of a large retrospective local (IE0) cohort of patients.

  

•   IHC studies. Validation of the last 7 Abs (assuming that all them work in IHC) characterized in Y3 in the case-control study.

  

•   IWHC studies. Validation of all Abs (or of the Abs that work in IHC out of the 20 Abs tested) on a consecutive cohort of breast cancer patients.

Please note that all human biological materials cited in these milestones are collected on behalf of the LEO, under IRB approval, and in obeyance with Italian legislation regarding privacy and biological materials and will be made available by LEO for no other purpose than executing the Sponsored Research workplan at IEO.

 

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EXHIBIT 3 — FORM OF MATERIAL TRANSFER AGREEMENT

[RECIPIENT]

[TITLE]

[INSTITUTION]

[ADDRESS]

Date [                    1

Dear Dr. [                    ],

Further to your recent request, we are pleased to inform you that Dr. [IEO PROVIDER SCIENTIST] of the European Institute of Oncology (“IEO”) will release to the principal investigator [To be completed] (the “Principal Investigator”) at [TO BE COMPLETED] (“The Institute”) as stated in the First Schedule, the materials described in the Second Schedule to this letter (the “Materials”) subject to your acceptance of the following terms and conditions set out below.

Please, note that as per the Licensing and Operative Agreement entered into as of the 1 st July, 2010 by and between IEO, the FIRC Institute for Molecular Oncology (“IFOM”) and TTFactor S.r.l. (“TTF”), this agreement will be signed buy the duly representatives of TTF, acting in name and on behalf of IEO.

 

1.

Definitions

 

1.1 “Invention”                means any new and useful composition of matter, process, product of a process, or any new and useful improvement thereof (including without limitation, any potential human or animal therapeutic or diagnostic product) whether patentable or not, which is discovered, conceived, made, developed or reduced to practice solely or jointly by the Principal Investigator or any other employee of or person acting on behalf of, the Institute through research that used Materials, or to which the use of Materials made a contribution together with any and all intellectual property rights therein, including without limitation patent rights, know-how or trade secrets. Without limiting the foregoing,the discovery,identification,selection, characterisation of any gene or gene fragment, or homologue or orthologue thereof from any organism, including but not limited to a mouse, that is directly involved in the regulation of the or any protein that the expresses or is regulated by the or shall be deemed to constitute an Invention.

 

24


1,2 “Progeny”    means mice, including successive generations thereof, that have one or more of the mice provided as Materials as an ancestor,
1.3 “Research Field”    means use by the Principal Investigator and other employees of the Institute under the Principal Investigator’s direct supervision at the Institute, solely for the purposes of conducting non-commercial research. The Research Field excludes (i) any research where a Third Party acquires or is granted any right to acquire rights in any intellectual property generated through that research; (ii) the development of a library of mouse embryonic stem cells.
1.4 “Third Party”    means any entity other than IEO, TTF and the Institute

 

2.

The Principal Investigator and the Institute jointly and severally agree that:

 

  2.1

the Materials shall be used solely for the non-commercial research purposes set out in the Second Schedule attached to this letter (the “Purpose”) and shall not be used other than in the Research Field.

 

  2.2

both the Principal Investigator and the Institute shall abide by all relevant governmental regulations governing the use of the Materials and comply with all local regulations concerning experiments carried out in animals. The Principal Investigator and the Institute hereby indemnify IEO against any loss, claim, damage and any other liability; of whatever kind or nature, which may arise from or in connection with the use, handling, shipment or storage of the Materials by the Principal Investigator or the Institute.

 

  2.3

both the Principal Investigator and the Institute shall take all necessary steps to ensure the safe keeping of the Materials and not allow them to become available, or make them available, to any persons other than those engaged in non-commercial research under the direct supervision of the Principal Investigator and located at the Institute.

 

  2.4

neither the Principal Investigator nor the Institute shall release any Materials nor disclose any confidential information relating to the Materials or ariy data obtained from use of the Materials to any Third Party without the prior consent of Dr. PO PROVIDER SCIENTIST] at IEO, respectively.

 

  2.5

both the Principal Investigator and the Institute shall ensure that those persons under the direct supervision of the Principal Investigator to whom the Materials are made available are made aware of and agree to be bound by the obligations in relation to the Materials set out in this letter.

 

25


  2.6

should either the Principal Investigator or the Institute shall become aware that the Materials have fallen into the possession of a third party, or that they are being used for commercial purposes, he/she or it shall promptly notify IEO and provide 1E0 with full particulars thereof.

 

  2.7

should either the Principal Investigator or the Institute be approached by a commercial third party expressing an interest in the Materials, the Principal Investigator or the Institute as the case may be shall direct their enquiries to IEO or its agent as directed by IEO and promptly notify IEO or their agents as directed by 1E0 of the name of that third party and the nature of their interest.

 

  2.8

both the Principal Investigator and the Institute acknowledge that all rights in the Materials and Progeny vest absolutely in IEO.

 

  2.9

IEO and/or any agent appointed by IEO shall have the right to commercially exploit the results and intellectual property arising from any Invention and both the Principal Investigator and the Institute shall, at IEO cost and expense, do or procure the doing of all acts necessary to vest full legal title to the aforesaid intellectual property in the IEO or their agents, as directed by IEO.

 

  2.10

IEO has the right to request the transfer of any Material or Progeny to IEO at any time.

 

3.

Licence

 

  3.1

IEO grants a non-exclusive, non-commercial licence, with no right to grant sub-licences, subject to the terms and conditions of this agreement for use of the Materials in the Research Field.

 

4.

Confidentiality

 

  4.1

Any information provided to either the Principal Investigator or the Institute by IEO relating to the Materials shall at all times be treated in confidence and shall only be disclosed to those persons under your supervision who need to know, provided always that those persons are informed of and agree to be bound by the confidential nature of that information.

 

  4.2

The terms and existence of this agreement shall be kept confidential.

 

5.

Inventions and Ownership

 

  5.1

Any and all Inventions that arise from use of the Materials are hereby assigned to IEO. IEO or their agents, shall use reasonable commercial endeavours to exploit commercially any such inventions. In the event that such commercial endeavours generate income, the income received by IEO shall, after the deduction of IE0 and its agents costs, and third parties that collaborated or will collaborate to the generation of the Invention in proportion to be agreed among all the parties.

 

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  5.2

The Institute shall notify IEO as soon as any Invention has been made and shall on ISO’s request assist IEO or its appointed agent in the process of patenting such Invention, The Institute will not reveal any confidential information that may affect the patentability of any Invention without the prior authority of IEO or its appointed agents.

 

6,

Publication

 

  6.1

Any proposed publication which names the Principal Investigator or any other employees of the Institute as an author and which includes experiments or results obtained from the use of the Materials shall be sent to [1E0 PROVIDER SCIENTIST] at IEO at least sixty (60) days prior to submission for publishing.

 

7.

Return of the Materials

 

  7.1

The Institute and the Principal Investigator shall, immediately upon receiving a demand from IEO, return the Materials and/or any Progeny to IEO.

 

8.

Delivery of the Materials

 

  8.1

[1E0 PROVIDER SCIENTIST] at IEO shall upon receipt of a signed copy of this agreement prepare the Materials requested for release and inform the Principal Investigator when they are ready for collection. The Principal Investigator shall arrange for collection of the Materials using a suitable carrier, having arranged the required shipping documentation and insurance at the Institute’s cost.

 

  8.2

The Materials shall be deemed the responsibility of the Principal Investigator as soon as they have left their storage location at IEO.

 

9,

The terms of this agreement shall be governed by Italian law and any differences or disputes in relation to it shall be subject to the non-exclusive jurisdiction of the Court of Milan, Italy.

If you are willing to receive the Materials subject to the aforementioned terms and conditions, please sign both copies of this letter on the last page after the Schedules, returning one copy to us for our retention. On receipt of the signed letter we shall be pleased to arrange for the release of the Materials to you.

 

27


Yours sincerely,

Dr, Daniela Bellomo

General Manager

TTFactor s.r.l.

Acting in name and on behalf of

European Institute of Oncology

[IE0 PROVIDER SCIENTIST]

 

 

28


The First Schedule

Confirmation of Acceptance:

 

Signed by the Principal Investigator:

Signature:

  

 

Name:

  

 

Position:

  

 

Date:

  

 

Signed by an authorised signatory:

Signature:

  

 

Name:

  

 

Position:

  

 

Institute address:

  

 

Date:

  

 

  

 

  

 

 

29


The Second Schedule

The Materials

- [PLEASE COMPLETE THIS SECTION]

Purpose for use of the Materials

 

- [PLEASE CONIPLP    S SECTION]
Signed by an authorised signatory of the receiving institute:
Signature:   

 

Name:   

 

Position:   

 

Institute address:   

 

Date:   

 

  

 

  

 

 

30


TERM SHEET

TIZIANA LIFE SCIENCES

AND

TTFACTOR S.R.L. (ON BEHALF OF IEO AND IFOM)

SUMMARY OF MAIN TERMS TO BE ESTABLISHED IN THE LICENSE AGREEMENT

APRIL 30, 2014

 

Parties    Tiziana Life Sciences, a UK company, (“Tiziana” or “Licensee”), having registered office at 18 South Street, Mayfair, London, UK W1K IDG, and TTFactor (“TTF” or “Licensor”), having registered office in Via Ripamonti n 435, Milan, Italy on behalf of Istituto Europeo di Oncologia S.r.l. (“IEO”) and Fondazione Firc per l’Oncologia Molecolare (“IFOM”).
License Agreement           

By means of the License Agreement Licensor - acting also on behalf of the co-owner and possible co-licensor of the Licensed Patents as defined below, i.e. Universal degli Studi di Milano - will grant Licensee a worldwide exclusive license under the Licensed Patents (as defined below), with the right to grant sublicenses to arms-length third parties for bona tide market rate royalties, solely to develop, manufacture, use and sell Licensed Products (as defined below) for use in the fields established in the Research Plan to be attached to the License Agreement.

 

The Parties undertake to execute the License Agreement within sixty (60) calendar days of the date of execution of this Term Sheet, on the understandings that it shall be in line with the provisions set out herein. Any delays due to internal approval or signature collection processes typical to large non-profit organizations will not be considered cause for termination.

 

All provisions set out in this Term Sheet shall be reflected in the License Agreement.

Licensed Patents    Exclusive rights and interests in: (a) all patents and applications conceived as a result of the Sponsored Research under Project A as pointed out below; (c) any United States and foreign patent applications claiming priority from (a) and (b) above, all substitutions, continuations, continuations-in-part (to the extent these claim priority to the above-identified patent applications), divisional, renewals and all reissues, reexaminations, extensions, confirmations, revalidations, registrations, and patents of addition with respect to (a) and/or (b) above; (d) any supplementary protection certificates, pediatric exclusivity periods, any other patent term extensions and exclusivity periods and the like of any patents and patent applications identified in (a), (b) and/or (c) above.
Licensed Products    Any product or service covered by a valid claim of the Licensed Patents (including without limitation any diagnostic or therapeutic product covered by a valid claim of the Licensed Patents).
Territory    Worldwide.
Duration    For each Licensed Product, from the date of execution of the License Agreement until the relating Licensed Patents expire.

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Milestones    Licensee shall pay Licensor within thirty (30) calendar days of the first achievement of each of the following milestone events for the first Licensed Product per each project field: (a) EUR 50,000 (fifty thousand) upon completion of development of a commercial test; (b) upon first commercial sale: EUR 100,000 (one-hundred thousand); (c) upon first regulatory approval in USA or in any other major market: EUR 150,000 (one-hundred fifty thousand).
Net Sales    Net Sales are the gross invoiced sales price for all Licensed Products sold by or on behalf of Licensee, its affiliates or sublicensees to third parties during each calendar quarter (excluding sales or dispositions at or below cost, including for use in patient assistance programs or for use in clinical trials or other scientific testing or reasonable quantities of samples), less the following amounts incurred or paid by Licensee or its affiliates or sublicensees during such calendar quarter with respect to sales of Licensed Products regardless of the calendar quarter in which such sales were made: (a) trade, cash and quantity discounts or rebates; (b) credits or allowances; (c) any charges for insurance, freight, and other transportation costs directly related to the delivery of Licensed Product to the extent included in the invoiced sales price; (d) any tax, tariff, duty or governmental charge levied on the sales, transfer, transportation or delivery of a Licensed Product, other than franchise or income tax of any kind whatsoever; (e) any import or export duties or their equivalent borne by the seller. Net Sales shall not include sales or transfers between Licensee and its affiliates or sublicensees. Net Sales by sublicensees or their affiliates may be calculated using the deductions set forth in the applicable sublicense agreement instead of the deductions set forth above, so long as such deductions are commercially reasonable. If a Licensed Product is sold in combination with another active ingredient or component having independent therapeutic effect or diagnostic utility, then Net Sales, for purposes of determining royalty payments on the combination, shall be calculated using one of the following alternative methods: (x) by multiplying the Net Sales of the combination by the fraction A/A+B, where A is the gross selling price, during the royalty paying period in question, of the Licensed Product sold separately, and B is the gross selling price, during the royalty period in question, of the other active ingredients or components sold separately, provided that in no event will Net Sales be reduced by more than twenty five percent (25%); or (y) if no such separate sales are made of the Licensed Product or any of the active ingredients or components in such combination package during the royalty paying period in question, Net Sales, for the purposes of determining royalty payments shall be calculated using the above formula where A is the commercial value, as reasonably estimated by Licensee, of the Licensed Product sold separately and B is the commercial value, as reasonably estimated by Licensee, of the other active ingredients sold separately, provided that in no event will Net Sales be reduced by more than twenty five percent (25%),
Royalties    Licensee shall pay to Licensor, on a quarterly basis, a royalty of (i) on a Licensed Product-by-Licensed-Product basis, one and one-half percent (1.5%) of Net Sales by Licensee and by Licensee Affiliates for each country as to which the Royalty Term remains in effect; and (ii) fifteen percent (15%) of Sublicense Revenues received from sublicensee for each country as to which the License Agreement is effective. The royalty paid to Licensor shall be reduced by the amount of any royalty that Licensee or any affiliate or

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2


   sublicensee (as applicable) pays to a third party under licenses to a patent owned by such third party that such party reasonably determines to be necessary in order to research, develop, manufacture, use or sell a Licensed Product in a given country, provided that in no event shall the royalty payments to Licensor with respect to such Licensed Products be reduced by more than twenty-five percent (25%) of the amount otherwise due.
Sublicense Grant    Licensee will be entitled to grant sublicenses under rights granted under the License Agreement to third parties provided that such sublicense shall be on terms and conditions in compliance with and not inconsistent with the terms of the License Agreement and that such sublicense may only be made for consideration in a bona-fide arm’s length transaction, including a bona fide royalty on Net Sales by sublicensee. Licensee shall furnish Licensor with a fully executed copy of any sublicense agreement, promptly after its execution. Any act or omission by a sublicensee that would have constituted a breach of the License Agreement had it been an act or omission by Licensee shall constitute a breach of the License Agreement. Without limiting the foregoing, Licensee shall (a) cure such breach or (b) enforce its rights by terminating such sublicense agreement.
Sublicense Revenues    Sublicense Revenues consist of all consideration received by Licensee or its affiliates from sublicensees on account of the sale of Licensed Products, Sublicense Revenues will not include: (a) if Licensee collaborates on research and/or development with such a sublicensee, amounts paid by such sublicensee as reimbursement for research and development costs incurred under such Sublicense with respect to Licensed Products; (b) bona fide loans; (c) reimbursement for clinical trial costs and expenses with respect to Licensed Products incurred after the execution of such Sublicense; (d) equity investment in Licensee to the extent such investments reflect the fair market value of such equity (any amounts paid in excess of fair market value shall be deemed Sublicense Revenues); (e) amounts paid for supplies of Licensed Products or other tangible materials, or that are otherwise paid in reimbursement of costs or expenditures, whether incurred before or after the date of the relevant sublicense agreement; (t) upfront fees and milestone payments; and (g) withholding taxes or other amounts actually withheld from the amounts received. Sublicense Revenues shall not include amounts received in connection with a merger, consolidation or sale of all or substantially all of the business or assets of Licensee to which this Agreement relates.
Sponsored Research   

TTF will cause IEO to use reasonable efforts to perform the research according to the Research Plan to be established and attached to the License Agreement and which will refer to the following Projects:

 

•   Project A: The use of 20 (twenty) defined stem cell markers (the so-called “Top 20”) for patient stratification in breast cancer.

 

Tiziana will fund EUR 150,000 (one-hundred fifty thousand) for Project A per year, starting from the date of execution of the License Agreement, automatically renewable for up to 4 years if milestones (to be established for each project and attached to License Agreement) are met. The Sponsored Research payments are contingent upon continuous affiliation with Professor Di Fiore at IEO.

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3


Improvements and inventions   

TTF will offer any inventions or improvements on Project A to Tiziana for license.

In case of improvements deriving from Project A, the same terms as presented herein will apply, but without further upfront payments.

Enforcement, prosecution and infringement   

Tiziana shall have primary responsibility, for the preparation, filing, prosecution, maintenance and enforcement of the Licensed Patents, at its own expense and using attorneys of its choice. TTF will have the opportunity to review and provide comment on any such prosecution in advance of filing any paper in a patent office. Licensee shall have the first right (but not the obligation), at its own expense and with legal counsel of its own choice, to bring suit (or take other appropriate legal action) against any actual, alleged or threatened infringement of the Licensed Patents by any product or service that competes with a Licensed Product, as reasonably determined by Licensee. Licensor shall take all actions necessary to assist Licensee in any suit, including joining in such suit as a party if legally required, at Licensee’s expense. Licensor shall have the right, at its own expense, to be represented in any such action by counsel of Licensor’s own choice; provided, however, that the foregoing shall not affect the right of Licensee to control the suit. If Licensee exercises its right to sue, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorneys’ fees, necessarily incurred in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Licensor shall receive an amount equal to ten percent (10%) of such funds and the remaining ninety percent (90%) of such funds shall be retained by Licensee.

 

If Licensee does not take action in the prosecution, prevention, or termination of any infringement and has not commenced negotiations with the infringer for the discontinuance of said infringement, within ninety (90) calendar days after receipt of notice to Licensee by Licensor of the existence of an infringement, Licensor may elect to do so. Should Licensor elect to bring suit against an infringer Licensee shall take all actions necessary to assist Licensor in any suit, including joining in such suit as a party if legally required, at Licensor’s expense. If Licensor exercises its right to sue, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorneys’ fees, necessarily incurred in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Licensee shall receive an amount equal to ten percent (10%) of such funds and the remaining ninety percent (90%) of such funds shall be retained by Licensor.

Representations and Warranties    The Parties represent, warrant and covenant to each other that: (a) the execution and delivery of the License Agreement and the performance of the transactions to be contemplated therein will be duly authorized by all respective appropriate corporate action; (b) the License Agreement will be legal and valid obligation binding upon themselves and enforceable in accordance with its terms, and the execution, delivery and its performance will not be in conflict with any agreement, instrument or understanding to which the Parties themselves are, respectively, a party or by which they are bound;

 

4


  

Licensor represents and warrants to Licensee that: (i) it has the full right and legal capacity to grant the rights to be granted to Licensee; (ii) the Licensed Patents have been filed in good faith and prosecuted as of the date of execution of this Term Sheet; (iii) to Licensor’s knowledge, Licensor is the owner of entire right, title and interest’in and to the Licensed Patents; and (iv) as of the date of execution of this Term Sheet, Licensor has not licensed or transferred to any person, including its affiliates, any rights under the Licensed Patents. (Licensor makes no warranties that the Licensed Patents do not infringe other intellectual property rights)

 

Except as expressly set forth above, neither Party makes any representation or extends any warranties of any kind, either express or implied nor will make any representations or extend any warranties of any kind in the License Agreement. There are no and there will not be in the License Agreement express or implied warranties of merchantability or fitness for a particular purpose, or of non-infringement of any patent, copyright, trademark, or other rights of third parties, or as to the success or likelihood of success of the research, development or commercialization of licensed products under this agreement,

Liability and Indemnification   

or any other express or implied warranties. Except with respect to matters for which Licensee is obligated to indemnify Licensor, as established below, neither party will be liable to the other with respect to the License. Licensor’s aggregate liability for all damages of any kind arising out of or relating to the License Agreement or its subject matter under any contract, negligence, strict liability or other legal or equitable theory shall not exceed the amounts paid to Licensor under the License Agreement.

 

Licensee shall indemnify, defend and hold harmless the Licensor from and against any and all losses, damages, fees, expenses, settlement amounts and costs relating to or in connection with a third party claim arising out of: (a) any breach by Licensee of its representations, warranties or covenants made under the License Agreement; (b) any actual or alleged death, personal bodily injury or damage to real or tangible personal property claimed to result, directly or indirectly, from the possession, use or consumption of, or treatment with, the Licensed Product made or sold by or on behalf of Licensee or its affiliates or sublicensees, including any product liability claims; (c) an infringement of a third party’s intellectual property rights; (d) the performance of the sublicense agreements.

 

Licensor cannot indemnify Licensee.

Confidentiality   

The Parties undertake to keep strictly confidential the existence and the contents of this Term Sheet.

 

In the event that the License Agreement is not executed the Parties must observe the obligations of confidentiality established herein for a period three (3) years running from the date of execution of this Term Sheet.

Law and Jurisdiction    This Term Sheet is governed by the Italian Laws. For any disputes arising from this Term Sheet the Court of Milan (Italian Jurisdiction) will be exclusively competent. The above provisions regarding law and jurisdiction shall be set forth in the License Agreement.

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5


Agreed and accepted

 

 

Tiziana

     

TTF

  /s/ Gabriele Cerrone       /s/ Daniela Bellomo
  Gabriele Cerrone       Daniela Bellomo
  Chairman       Managing Director
       
        /s/ Pier Giuseppe Pelicci
       

Pier Giuseppe Pelicci

       

President

Exhibit 8.1

 

Subsidiary    Country of Incorporation    Voting Interest   
StemPrintER Sciences Limited    England and Wales    100%   

Exhibit 15.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors of Accustem Sciences Limited:

We consent to the use of our report dated March 10, 2021 with respect to the consolidated balance sheet for the year ended December 31, 2020 and the related consolidated statements of operations and comprehensive loss, cash flows and shareholders’ equity for the period from June 5, 2020 to December 31, 2020, and the related notes, for Accustem Sciences Limited and to the reference to our firm under the heading “Statement by Experts” in this registration statement on Form 20-F.

/s/ Mazars LLP.

Mazars LLP

London, England

March 10, 2021