Item 1.01 Entry Into a Material Definitive Agreement
On September 22, 2017 (the “Effective Date”), Argos Therapeutics, Inc. (the
“Company”) entered into a satisfaction and release agreement (the “Satisfaction and Release Agreement”)
with Invetech Pty Ltd (“Invetech”). The Company and Invetech are parties to a Development Agreement, dated October
29, 2014 (the “Development Agreement”) under which Invetech has agreed to develop and provide prototypes of the automated
production system that the Company intends to use for the manufacture of the Company’s Arcelis-based products. Under
the Satisfaction and Release Agreement, the Company agreed to make, issue and deliver to Invetech (i) a cash payment of $500,000,
(ii) 1,142,857 shares of the Company’s common stock (the “Common Shares”) and (iii) an unsecured convertible
promissory note in the original principal amount of $5,200,000 (the “Note”) on account of and in full satisfaction
and release of all payment obligations of the Company to Invetech arising under the Development Agreement. The Satisfaction and
Release Agreement provides for a full satisfaction and release of any and all obligations of the Company to Invetech arising under
the Development Agreement prior to the date of the Satisfaction and Release Agreement.
Note
The original principal amount of the Note is $5,200,000. The maturity
date for the payment of principal and interest under the Note is September 30, 2020. The Note bears interest at a rate of 6.0%
per annum, which interest will compound annually. The Note is not secured by any assets of the Company.
The Company is required to make quarterly installment payments under
the Note for the fiscal quarters ending December 31, 2017 and March 31, 2018, each in an aggregate amount of up to $400,000, consisting
of (i) cash in the amount of $200,000 and (ii) if certain specified conditions are met as of the corresponding payment date, up
to $200,000 of shares of the Company’s common stock. For the fiscal quarters ending June 30, 2018 through March 31, 2019,
the Company is required to make quarterly installment payments under the Note, each in an aggregate amount of up to $300,000, consisting
of (i) cash in the amount of $150,000 and (ii) if certain specified conditions are met as of the corresponding payment date, up
to $150,000 of shares of the Company’s common stock. For the fiscal quarters ending June 30, 2019 through June 30, 2020,
the Company is required to make quarterly installment payments under the Note, each in an amount of $150,000, payable in cash.
The Note also provides that on the anniversary of the issue date
of the Note for each of the first three years following the issue date, the outstanding principal amount of the Note, if any, plus
accrued and unpaid interest thereon shall automatically be deemed to be reduced by $250,000, if and only if the Company has paid
all debt service payments due under the Note on or prior to the relevant anniversary date and no event of default, fundamental
transaction or change of control, each as defined in the Note, has occurred on or prior to such anniversary date.
As detailed further below, Invetech may exercise its conversion
rights upon: (i) maturity of the Note, (ii) certain change of control events, and (iii) certain events of default. In each case,
the number of shares of common stock issuable upon such complete or partial conversion of the Note is determined by dividing the
portion of the principal and accrued or unpaid interest to be converted by $0.50 per share (as adjusted for any stock dividend,
stock split, stock combination, reclassification or similar transaction).
|
|
•
|
Maturity
of the Note
. Upon maturity of the Note or at any time within 75 days of such maturity, Invetech may, at its option, elect
to convert any amount of the outstanding principal and accrued interest into shares of the Company’s common stock. The Company
will be required to pay any amount not so converted in cash.
|
|
|
•
|
Change
of Control
. Upon a change of control pursuant to which Invetech has a redemption right, Invetech may, at its option, elect
to convert any amount of the outstanding principal and accrued interest, less any remaining installment payments required to be
made in cash, into shares of the Company’s common stock. The Company will be required to pay any amount not so converted
in cash.
|
|
|
•
|
Default
.
Upon the occurrence of certain events of default, Invetech may, at its option, elect to convert any amount of the outstanding
principal and accrued interest into shares of the Company’s common stock. The Company will be required to pay any amount
not so converted in cash.
|
Subject to the aforementioned conversion rights of Invetech, the Company may prepay the
Note in whole or in part at any time without penalty or premium.
Registration Rights Agreement
On September 22, 2017, in connection with entering into the Satisfaction
and Release Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”)
with Invetech, under which the Company has agreed to register for resale the Common Shares and the shares of the Company’s
common stock issued or issuable upon conversion of the Note (the “Conversion Shares” and, together with the Common
Shares, the “Securities”). Under the Registration Rights Agreement, the Company has agreed to use its best efforts
to file a registration statement covering the Securities within 45 days of the Effective Date, and to use its best efforts to keep
such registration statement effective until the date the Securities 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 45 days of the Effective Date (subject to extension under certain circumstances), the Company has agreed to
pay to Invetech, as liquidated damages, $10,000 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 105th day following the Effective Date, or (ii) after the registration
statement has been declared effective by the SEC, the registration statement is not available to cover any sales of Securities,
then the Company has agreed to pay Invetech, as liquidated damages, $10,000 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.
Invetech has also agreed to limit the daily volume of any sales
it may decide to make of the Company’s common stock to no more than 10% of the average daily volume over the previous twenty
trading days.
The Company has granted Invetech, and Invetech has granted to the
Company, customary indemnification rights in connection with the registration statement.
The foregoing descriptions of the Satisfaction and Release Agreement
and the Registration Rights Agreement are qualified in their entirety by reference to the full text of the Satisfaction and Release
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 description of the Note is qualified in its entirety by reference to the full text
of the Note, the form of which is included as an exhibit to the Satisfaction and Release Agreement in Exhibit 10.1, and incorporated
by reference herein