Item 1.01 Entry Into a Material Definitive Agreement
On June 15, 2017, Argos Therapeutics, Inc. (the “Company”) entered into a
note purchase agreement (the “Note Purchase Agreement”) with Pharmstandard International S.A. (“Pharmstandard”),
pursuant to which the Company agreed to issue and sell to Pharmstandard a convertible secured promissory note in the original principal
amount of $6,000,000 (the “Note”) in a private placement (the “Financing”).
The Company will issue the note to Pharmstandard on the closing date of the Financing.
Under the Note, the maturity date for the payment of principal and interest will be the fifth anniversary of the issue date. The
Note will bear interest at a rate of 9.5% per annum, which interest will compound annually. The Note will be secured by a lien
on and security interest in all of the Company’s intellectual property. The Company may prepay the Note in whole or in part
at any time without penalty or premium. Upon the occurrence of certain events of default, Pharmstandard will have the option to
require the Company to repay the unpaid principal amount of the Note and any unpaid accrued interest.
In addition, at Pharmstandard’s election, Pharmstandard may convert the entire
principal and interest on the Note into shares of the Company’s common stock at a price per share equal to $0.50, which is
the product of 1.225 and the closing price of the Company’s common stock on The NASDAQ Global Market on June 14, 2017. However,
Pharmstandard will not be permitted to convert the entire Note if such conversion would result in Pharmstandard and its affiliates
holding shares that exceed 39.9% of the total number of outstanding shares of common stock of the Company or 39.9% of the combined
voting power of all outstanding securities of the Company. To the extent that conversion of the entire Note would cause Pharmstandard
and its affiliates to exceed these thresholds, Pharmstandard may convert a portion of the Note to the extent these thresholds are
not exceeded by such partial conversion.
Pharmstandard is the Company’s largest stockholder, and beneficially owned, in
the aggregate, shares representing approximately 39.52% of the Company’s outstanding common stock as of April 28, 2017. In
addition, two members of the Company’s board of directors are closely associated with Pharmstandard.
The Company has agreed to pay the legal expenses of Pharmstandard, including legal expenses
incurred in connection with the resale registration obligations of the Company set forth in the Registration Rights Agreement;
provided, however, that the Company shall have no obligation to pay more than a total of $100,000 with respect to such expenses.
The Company has granted Pharmstandard, and Pharmstandard has granted the Company, indemnification rights with respect to their
respective representations, warranties, covenants and agreements under the Note Purchase Agreement.
The closing is expected to occur on June 21, 2017, and is subject to the satisfaction
of certain customary closing conditions.
Security Agreement
In connection with the issuance of the Note, the Company will enter into a Security Agreement
with Pharmstandard on the date of the closing of the Financing. Pursuant to the Security Agreement, the Company will grant
to Pharmstandard a first-priority lien on, and security interest in, substantially all of its intellectual property collateral
and will agree, with certain exceptions, not to incur certain future indebtedness and liens or to sell, transfer, license or otherwise
dispose of any material portion of the intellectual property collateral. Upon the occurrence of events of default under the Note,
Pharmstandard will have certain rights to the intellectual property collateral as set forth in the Security Agreement.
Registration Rights Agreement
On June 15, 2017, in connection with entering into the Note Purchase Agreement, the Company
entered into a registration rights agreement (the “Registration Rights Agreement”) with Pharmstandard, pursuant to
which the Company has agreed to register for resale the shares of the Company’s common stock issued or issuable upon conversion
of the Note (the “Conversion Shares”). Under the Registration Rights Agreement, the Company has agreed to use its best
efforts to file a registration statement covering the Conversion Shares within 60 days of the closing, and to use its best efforts
to keep such registration statement effective until the date the Conversion Shares have been sold or may be sold pursuant to Rule
144 without restriction.
In the event that a registration statement has not been filed by the Company within 60
days of the closing (subject to extension under certain circumstances), the Company has agreed to pay to Pharmstandard, as liquidated
damages, an amount equal to 1% of the product of the number of registrable securities and the conversion price of the Conversion
Shares (the “Conversion Amount”) for each 30-day period or pro rata for any portion thereof during which no such registration
statement is filed. Moreover, in the event (i) the registration statement is not declared effective by the Securities and
Exchange Commission (the “SEC”) by the 120th day following the closing, or (ii) after the registration statement
has been declared effective by the SEC, the registration statement is not available to cover any sales of Conversion Shares, then
the Company has agreed to pay Pharmstandard, as liquidated damages, an amount equal to 1% of the Conversion Amount held by Pharmstandard
for each 30-day period or pro rata for any portion thereof following the date by which the Registration Statement should have been
effective, subject to specified exceptions.
The Company has granted Pharmstandard, and Pharmstandard has granted to the Company,
customary indemnification rights in connection with the registration statement.
The foregoing descriptions of the Note Purchase Agreement and the Registration Rights
Agreement are qualified in their entirety by reference to the full text of the Note Purchase Agreement and the Registration Rights
Agreement, copies of which are filed as Exhibits 10.1 and 10.2 hereto, respectively, and incorporated by reference herein. The
foregoing descriptions of the Note and the Security Agreement are qualified in their entirety by reference to the full text of
the Note and the Security Agreement, forms of which are included as exhibits to the Note Purchase Agreement in Exhibit 10.1, and
incorporated by reference herein.