Item 1.01
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Entry into a Material Definitive Agreement.
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On May 11, 2016, Stellar Biotechnologies, Inc.
(“Stellar”), through its wholly-owned subsidiary, entered into a joint venture agreement (the “Agreement”)
with Neovacs, S.A. (“Neovacs”) relating to the formation of a joint venture company, Neostell SAS (the “Joint
Venture”), to manufacture and sell conjugated therapeutic vaccines using Stellar’s proprietary Keyhole Limpet Hemocyanin
(“KLH”) and Neovacs’ cytokine antigens conjugated to KLH, including Neovacs’ Kinoid immunotherapy product
candidates and other KLH-based immunotherapy vaccine products, for human or veterinary use. The Joint Venture will be organized
as a French simplified corporation.
Stellar will hold a 30% equity interest in
the Joint Venture in exchange for an initial capital contribution in the amount of €120,000. Neovacs will hold the remaining
70% of the equity interest in the Joint Venture in exchange for an initial contribution in the amount of €280,000. One-half
of the initial contribution by each of Stellar and Neovacs will be paid upon incorporation of the Joint Venture (the “Requisite
Contribution”), which is scheduled to occur no later than May 31, 2016. The balance of each party’s initial capital
contribution will be paid upon the occurrence of certain future events as set forth in the Agreement. Following the formation of
the Joint Venture, Stellar and Neovacs shall provide the Joint Venture, pro rata to their interest in the share capital of the
Joint Venture, additional financing as may be required to satisfy the financing needs of the Joint Venture. If the Joint Venture
does not achieve certain milestones by December 31, 2017, the Joint Venture will be dissolved, unless (i) the parties mutually
agree to pursue the joint venture arrangement, or (ii) either Stellar or Neovacs decides to purchase the equity interests of the
other party, for a price and in a manner as set forth in the Agreement.
The Joint Venture will be governed by a three-member
board of directors (the “JV Board”), two of whom will be appointed by Neovacs and one by Stellar. Stellar will have
certain minority shareholder rights requiring, among other things, unanimity for approval by the JV Board and/or the Joint Venture
shareholders of certain key decisions. The Joint Venture will be managed on a day-to-day basis by its president and chief executive
officer, each of whom will be proposed by Neovacs and appointed by a majority vote of the Joint Venture shareholders. Each of Neovacs
and Stellar are entitled, upon the occurrence of certain events, including a material breach (as defined in the Agreement), to
acquire the interest of the other party in the Joint Venture.
In connection with the formation of the Joint
Venture and the performance of the goals and projects thereunder, (a) Stellar and the Joint Venture shall enter into (a) an exclusive
supply agreement for the supply of Stellar KLH™ to the Joint Venture, (b) a supply agreement between Neovacs and the Joint
Venture designating the Joint Venture as the exclusive manufacturer and supplier of Neovacs’ Kinoid vaccines to Neovacs,
and (c) services agreements for the provision of various knowledge and expertise by each of Stellar and Neovacs to the Joint Venture.
Neovacs and the Joint Venture will also enter into a license agreement pursuant to which Neovacs will license to the Joint Venture
certain of its intellectual property. The formation of the Joint Venture is expected to close on or before June 30, 2016.
The Joint Venture has an initial ten-year term,
renewable for successive five-year terms. If Stellar or Neovacs provides notice at least six months prior to the expiration date
of an applicable term that it does not wish to continue the joint venture transaction, the other party shall have a right to acquire
all of such terminating party’s equity interests in the Joint Venture.
The Agreement contains customary restrictions
on transfer of the equity interests, tag-along and drag-along rights, non-competition, non-solicitation, confidentiality and termination
provisions.
The foregoing summary of the Agreement does
not purport to be complete, and is qualified in its entirety by reference to the Agreement, a copy of which is filed as Exhibit
10.1 to this report and is incorporated herein by reference.