Seadragon : 2019-05-02 SEA gives notice of Special Meeting

2 May 2019

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF SEADRAGON

LIMITED

Notice is hereby given to all shareholders that a special meeting of shareholders (Meeting) of SeaDragon Limited (SeaDragon or Company) will be held in Auckland at the Centenary Lounge, Eden Park on Friday, 17 May 2019, at 10:30 a.m.

AGENDA

A.Apologies and Chairman's introduction

B.Resolutions

To consider and, if thought fit, pass the following ordinary resolutions:

Resolution 1 - Issue of ordinary shares on conversion of 2019 Pescado Loan

"That, for the purposes of Listing Rule 7.3.10(b)(ii), the Company may issue such number of ordinary shares to Pescado as may be required on conversion of the convertible loan notes issued under the 2019 Pescado Loan, being up to a maximum of 2,000,000,000 ordinary shares."

Resolution 2 - Listing Rules and Takeovers Code

"That, for the purposes of Listing Rule 7.5 and rule 7(d) of the Takeovers Code, the issue of the ordinary shares to Pescado on conversion of the convertible loan notes issued under the 2019 Pescado Loan, is approved."

Resolution 3 - Listing Rules

"That, for the purposes of Listing Rule 9.2.1, SeaDragon's entry into the transactions relating to the 2019 Pescado Loan, including the issue of convertible loan notes under the 2019 Pescado Loan, the issue of ordinary shares on conversion of the convertible loan notes issued under the 2019 Pescado Loan and the extension of the existing security arrangements over all of SeaDragon's and its subsidiaries assets, each as a Material Transaction with a Related Party (as those terms are defined in Listing Rule 9.2.2), is approved."

Resolution 4 - Listing Rules

"That, for the purposes of Listing Rule 9.2.1, the waiver by each Existing Noteholder of its right to receive interest under the Existing Loans in respect of the period on and from 1 April 2019, as an amendment to a Material Transaction with a Related Party (as those terms are defined in Listing Rule 9.2.2), is approved."

Please see the Explanatory Notes in respect of Resolutions 1, 2, 3 and 4 below.

Each of Resolutions 1, 2, 3 and 4 is interdependent, and requires that each of those Resolutions be passed by shareholders of the Company (Shareholders) in order for the transactions referred to in those resolutions being effected. If any of Resolutions 1, 2, 3 or 4 is not approved, then none of those Resolutions will have been approved.

The directors of the Company not associated with Pescado, BioScience or Comvita unanimously recommend that Shareholders vote in favour of all Resolutions

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By Order of the Board

ENDS

Contact:
Bryan Mogridge	Colin Groves
Independent Chairman	Independent Director
Tel: [phone]	[phone]

This notice of meeting is an important document and requires your immediate attention. It should be read in its entirety. It has been prepared to advise you of the forthcoming Meeting and to assist you in understanding the Resolutions to be put to Shareholders for consideration at the Meeting. The Directors encourage you to read this notice of meeting and exercise your right to vote.

If you do not understand any part of this document or are in doubt as to how to deal with it, you should consult your broker or other professional adviser as soon as possible.

Please call Bryan Mogridge at SeaDragon Limited on [phone] if you have any queries about the Resolutions or this notice of meeting.

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EXPLANATORY NOTES

These explanatory notes set out the details of the transactions the subject of Resolutions 1, 2, 3 and 4 and the approvals required by the Shareholders under the NZX Limited Main Board/Debt Market Listing Rules (the Listing Rules) and the Schedule to the Takeovers Regulations (the Takeovers Code).

Resolutions

1.If the Resolutions set out in the notice of meeting are passed:

(a)the issue of the ordinary shares referred to in the resolutions will be approved in terms of:

(i)Listing Rule 7.3.10(b)(ii);

(ii)Listing Rule 7.5; and

(iii)rule 7(d) of the Takeovers Code as an exception to rule 6 of the Takeovers Code;

(b)the entry into the transactions referred to below by the Company will be approved in terms of Listing Rule 9.2.1; and

(c)the waiver by each Existing Noteholder (as defined below) of its right to receive interest under the Existing Loans (as defined below) will be approved in terms of Listing Rule 9.2.1,

as applicable and as set out in the particular Resolution.

2.Based on management's current estimates, the funding available through the 2019 Pescado Loan (as defined below) if Resolutions 1, 2, 3 and 4 are approved, together with anticipated revenues arising from the Company's ordinary business, is currently expected to provide the Company with sufficient capital to meet its working capital and capital and operational expenditure requirements through to April/May 2020. These estimates are subject to a number of assumptions and expectations as to future events. If Shareholders do not approve Resolutions 1, 2, 3 and 4, then, it is highly likely that, on or about July 2019, SeaDragon will be unable to repay its debts as they fall due (including interest payable on the Existing Loans) and the directors will have no option but to place the Company into receivership or liquidation.

3.The effect that passing of Resolutions 1, 2, 3 and 4 may have on the number of shares held by Pescado Holdings Limited (Pescado) and the other Shareholders following the possible allotment of shares to Pescado on conversion of the convertible loan notes issued under the 2019 Pescado Loan is summarised at paragraph 22. Paragraph 22 also considers the effect of the possible allotment of shares:

(a)to Pescado on conversion of the convertible loan notes issued under the Existing Pescado Loan (as defined below);

(b)to BioScience (as defined below) on conversion of the convertible loan notes issued under the Existing BioScience Loan (as defined below); and

(c)to Comvita (as defined below) upon exercise of the Comvita Option (as defined below) and on conversion of the convertible loan notes issued under the Existing Comvita Loan (as defined below).

Please refer to section 1.7 of the IAR (as defined below) for a detailed analysis of the impact on the ownership of SeaDragon.

We encourage all Shareholders to read the IAR that accompanies this notice of meeting in full.

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BACKGROUND

Existing Loans

4.Pescado, Comvita Limited (Comvita), One Funds Management Limited as trustee of Asia Pacific Healthcare Fund II (OFM), BioScience Managers Ventures Pty Ltd as general partner of BioScience Management Partnership LP (BMV and, together with OFM, BioScience and, together with Pescado and Comvita, the Existing Noteholders) and the Company entered into an amended and restated convertible loan note agreement (second amendment and restatement) originally dated 30 May 2016 as amended and restated as of 30 June 2018 and further amended and restated on 8 August 2018 (the Existing Convertible Loan Note Agreement). Pursuant to the Existing Convertible Loan Note Agreement:

(a)Pescado agreed to provide convertible loan note facilities (the Existing Pescado Loan) to SeaDragon of up to $3 million, of which the full $3 million has been advanced;

(b)BioScience agreed to provide convertible loan note facilities (the Existing BioScience Loan) to SeaDragon of up to $3 million, of which the full $3 million has been advanced; and

(c)Comvita agreed to provide convertible loan note facilities (the Existing Comvita Loan) to SeaDragon of up to $3 million, of which the full $3 million has been advanced,

together, the Existing Loans. The convertible loan notes that have been issued under the Existing Loans are convertible at 0.0033 per share. Unless previously repaid or converted, the Existing Loans will mature at 5:00 p.m. on 31 March 2020. On maturity, unless SeaDragon is in default under the Existing Loans or insolvent, the outstanding amount under the Existing Loans will automatically convert into ordinary shares in SeaDragon at $0.0033 per share.

2019 Pescado Loan

5.On 25 March 2019, SeaDragon announced that it had entered into a term sheet with Pescado under which it committed, subject to definitive documentation (which would include drawdown conditions), to advance up to $4 million via a new convertible loan note facility (the 2019 Pescado Loan).

6.On 1 April 2019, SeaDragon announced that it had entered into a convertible loan note agreement 2019 (the New Convertible Loan Note Agreement) with Pescado to give effect to the 2019 Pescado Loan.

7.The New Convertible Loan Note Agreement requires SeaDragon to seek shareholder approval to the following terms:

(a)the convertible loan notes to be issued under the 2019 Pescado Loan are convertible at $0.002 per share - on that basis, if the 2019 Pescado Loan is fully drawn from Pescado to the maximum of $4 million, then the convertible loan notes issued by SeaDragon under the 2019 Pescado Loan could be converted into a maximum of 2,000,000,000 ordinary shares in SeaDragon for Pescado;

(b)interest on the 2019 Pescado Loan is nil prior to an event of default, and 9.95% per annum while an event of default is subsisting. Accrued and unpaid interest is payable in cash and does not convert to ordinary shares in SeaDragon. An event of default includes SeaDragon failing to pay amounts when due under documents relating to the 2019 Pescado Loan and/or the Existing Loans, SeaDragon committing a breach of undertakings or obligations under the same documents relating to the 2019 Pescado Loan and/or the Existing Loans, SeaDragon making materially untrue, inaccurate or misleading representations or warranties, and SeaDragon becoming insolvent;

(c)Pescado has the option to convert all outstanding amounts advanced by it under the 2019 Pescado Loan to ordinary shares in SeaDragon for so long as the 2019 Pescado Loan remains unpaid by SeaDragon;

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(d)SeaDragon may repay its indebtedness under the 2019 Pescado Loan at any time in full. All payments under the 2019 Pescado Loan must be made pari passu with payments under the Existing Convertible Loan Note Agreement (under which SeaDragon may repay its indebtedness at any time in full). In other words, SeaDragon may only repay all indebtedness under the 2019 Pescado Loan if it also repays all indebtedness under the Existing Convertible Loan Note Agreement and vice versa;

(e)unless previously repaid or converted, the 2019 Pescado Loan will mature at 5:00 p.m. on 31 March 2021. On maturity, unless SeaDragon is in default under the 2019 Pescado Loan or insolvent, the outstanding amount under the 2019 Pescado Loan will automatically convert into ordinary shares in SeaDragon at $0.002 per share;

(f)shares issued on conversion of the convertible loan notes issued under the 2019 Pescado Loan will be ordinary shares in SeaDragon and will rank equally with all other ordinary shares on issue;

(g)all indebtedness under the 2019 Pescado Loan will be secured over all of the assets of SeaDragon and its subsidiaries, in each case under existing security arrangements (which secure indebtedness under the Existing Loans);

(h)until the 2019 Pescado Loan is repaid in full or converted, the Company will be required to obtain the prior written approval of Pescado to the appointment, replacement or removal of any member of the senior management of the Company or any of its subsidiaries and the appointment by the board of SeaDragon of any person as a director of the Company or any of its subsidiaries. This Pescado approval right in respect of a director of the Company applies only to the appointment of such person by the board of SeaDragon and, therefore, does not restrict the right of Shareholders to nominate and appoint a director of the Company at SeaDragon's annual or special meeting of Shareholders; and

(i)if Comvita has at any time exercised its contractual right (if any) to appoint a director to the board of SeaDragon who is not Mark Sadd or to remove or replace Mark Sadd as a director on the board of SeaDragon, then drawdown under the 2019 Pescado Loan is conditional on the Company procuring that the board of SeaDragon appoints an individual nominated by Pescado as a director of the Company. This Pescado appointment right in respect of a director of the Company applies only to the appointment of such person by the board of SeaDragon and, therefore, does not restrict the right of Shareholders to nominate and appoint a director of the Company at SeaDragon's annual or special meeting of Shareholders.

Interest Waiver

8.Drawdown under the 2019 Pescado Loan is also conditional on each Existing Noteholder waiving its right to receive interest under the Existing Loans in respect of the period on and from 1 April 2019 (the Interest Waiver). The interest rate on the Existing Loans was 7.95% per annum (post tax) prior to the Interest Waiver. The Interest Waiver is consistent with interest on the 2019 Pescado Loan being nil prior to an event of default, and alleviates the Company of paying interest of $927,500 per annum (pre tax) on the maximum amount of the Existing Loans of $9 million. As set out in Section 2.2 of the IAR, Simmons Corporate Finance Limited considers that the Interest Waiver "is extremely favourable to the Company (and therefore to the Other Shareholders [being the Shareholders not associated with Pescado, BioScience or Comvita])". The Company does not consider there to be any disadvantage to the Company (or the Other Shareholders) from the Interest Waiver. The Interest Waiver was received by the Company on 25 March 2019, but is conditional on approval of Shareholders in terms of Resolution 4.

Comvita Option

9.With effect on and from 8 August 2018, SeaDragon has granted Comvita an option to subscribe for 909,090,909 shares in SeaDragon at an exercise price of $0.0033 per share (for an aggregate exercise price of $3 million), exercisable by 5:00 p.m. on 31 March 2020 (the Comvita Option). The Comvita Option has mandatory exercise milestones which, if met, would enable the Company to require Comvita to exercise the Comvita Option. If the mandatory exercise milestones are met,

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