Exhibit 10.4

 

TERM SHEET

CONVERTIBLE PREFERRED EQUITY INVESTMENT IN

ONCOBIOLOGICS, INC.

 

June 20, 2018

 

This Term Sheet summarizes the principal terms of the agreement to exchange
voting Series A Convertible Preferred Stock (“Series A Preferred”) held by GMS
Tenshi Holdings Pte. Ltd., a Singapore private limited company (“Investor”) into
newly created voting Series A-1 convertible preferred stock (the “Series A-1
Preferred”) of Oncobiologics, Inc., a Delaware corporation (the “Company”). Such
exchange is referred to herein as the “Transaction.” This Term Sheet is solely
intended as a basis for further discussion between Investor and the Company and
is not intended to be a complete description of the proposed Transaction and
does not address all the items that the parties would need to agree on before
entering into a definitive exchange agreement. Except for sections titled “Fees
and Expenses,” “Confidentiality”, “Authority; Efforts” and “Governing Law”
below, which constitute binding agreements and obligations of the parties, this
Term Sheet does not constitute a legally binding obligation on the part of
Investor or the Company.

 

Securities Exchange Following conversion of 208,836 shares of Series A Preferred
held by Investor on June 20, 2018, Investor will exchange its remaining 52,209
shares of Series A Preferred for Series A-1 Preferred.     Series A-1 Terms

Substantially identical to the existing Series A Preferred, subject to:

 

·     Redemption premium increased to $600.00 per share;

·     Liquidation preference increased to $550.00 per share;

·     Conversion into Company common stock/Voting rights subject to restriction
in the event such action would violate applicable Nasdaq rules absent
stockholder approval; and

·     Such other changes as may be necessary or appropriate to put the Investor
in a similar financial position to its position under the Series A Preferred
held immediately prior to the conversion described herein (other than increases
to the interest or modifications to the Series A Conversion Rate).

    Nasdaq Entry into binding definitive agreement subject to Nasdaq
notification of listing of additional shares and other requirements if such
Series A-1 Preferred is convertible into/represents more than 10%
pre-transaction outstanding voting power.     Investor Rights Agreement To be
amended to extend rights to shares of Common Stock issuable upon conversion of
Series A-1 Preferred.

 

   

 

    Documentation Documentation required to effect the transaction will be on
customary terms and will include an exchange agreement, certificate of
designation, amendment of investor rights agreement, and such other documents
and agreements (including any amendments or modifications to existing documents
or agreements between the Investor and the Company) as are required by the
Investor to effectuate the purpose of this exchange and as are reasonably
necessary or appropriate.       Fees and Expenses

In consideration of the significant time and resources expended to date and to
be expended by the Investor with respect to the transactions as described in
this Term Sheet, regardless of whether the transactions contemplated by this
Term Sheet are consummated, the Company shall pay and reimburse Investor for,
and Investor shall be entitled to, all reasonable and documented out of pocket
fees and expenses incurred by the Investor in connection with the negotiation,
execution, diligence, evaluation and structuring of this Transaction (including
costs of recovering any such fees or expenses from the Company in a dispute or
otherwise).

 

If Investor has converted at least 208,836 shares of Series A Preferred into
Company common stock on or prior to June 21, 2018, and the exchange of the
remaining issued and outstanding shares of Series A Preferred held by Investor
for newly created Series A-1 Preferred on substantially the terms as
contemplated hereby shall not have occurred on or prior to July 20, 2018, the
Transaction shall be terminated and abandoned without any further action
required by either the Investor or the Company, the unconverted Series A
Preferred then held by Investor will remain issued and outstanding and governed
by its terms, and Investor shall be entitled to payment by the Company of a
conversion premium equal to $10 million (as liquidated damages) via wire
transfer of immediately available funds to an account designated by the Investor
in writing within two Business Days of such termination and abandonment in lieu
of any such exchange.

    Confidentiality The existence and terms of this Term Sheet shall not be
disclosed to a third party by Investor or the Company unless such party
reasonably determines (based upon advice of outside counsel) that disclosure of
the existence or terms of this Term Sheet is required by law.  In such event,
the party proposing to disclose the existence or terms of this Term Sheet shall
provide the other party with as much prior notice as is practicable.    
Authority; Efforts This Term Sheet and the proposed Transaction contemplated
hereby have been duly approved by the Company’s special finance committee,
including the binding provisions hereof.  No other approvals or consents are
required by the Company.  The Company’s special finance committee has authorized
the officers of the Company to execute this Term Sheet and to negotiate,
memorialize and execute the proposed Transaction and to carry out the purpose of
this Term Sheet.  The Company hereby agrees to use its reasonable best efforts
acting in good faith to negotiate and execute the Transaction within 30 calendar
days of the date hereof.

 

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Governing Law

This Term Sheet is governed by the laws of the State of New York.

 

Each of the parties to this letter agreement hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and the United States of America, in each case located
in the County of New York, for any actions, suits or proceedings arising out of
or relating to this letter agreement (and each such party agrees not to commence
any action, suit or proceeding relating thereto except in such courts), and
further agrees that service of any process, summons, notice or document by
United States registered mail to its address set forth above shall be effective
service of process for any action, suit or proceeding brought against such party
in any such court. Each of the parties to this letter agreement hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this letter agreement, in the
courts of the State of New York and the United States of America, in each case
located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Term Sheet to be
executed as of the date first written above.

 

  INVESTOR:       GMS TENSHI HOLDINGS PTE. LTD.

 

  By: /s/ Faisal Sukhtian       Name:         Title:    

 

  COMPANY:       ONCOBIOLOGICS, INC.

 

  By: /s/ Lawrence A. Kenyon       Name: Lawrence A. Kenyon       Title:  
CFO                                                   

 

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