Item 1.01 Entry Into a Material Definitive Agreement
On November 22, 2017 (the “Effective Date”), Argos Therapeutics, Inc. (the
“Company”) entered into a satisfaction and release agreement (the “Satisfaction and Release Agreement”)
with Saint-Gobain Performance Plastics Corporation (“Saint-Gobain”). The Company and Saint-Gobain are parties to a
Development Agreement, dated January 5, 2015, as amended (the “Development Agreement”), under which Saint-Gobain has
agreed to develop a range of disposables for use in the Company’s automated production systems to be used 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 Saint-Gobain (i) a cash payment of $500,000, (ii) 689,995 shares of the Company’s common stock (the “Common
Shares”), (iii) an unsecured convertible promissory note in the original principal amount of $2,360,000 (the “Note”)
and (iv) certain specified equipment originally provided to the Company under the Development Agreement, on account of and in full
satisfaction and release of all payment obligations of the Company to Saint-Gobain arising under the Development Agreement, including
the development fees and charges owed by the Company to Saint-Gobain under the Development Agreement. In connection with entering
into the Satisfaction and Release Agreement, the Company and Saint-Gobain entered into an amendment to the Development Agreement
to extend the term of the Development Agreement to December 31, 2019.
Note
The original principal amount of the Note is $2,360,000. 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 quarterly. 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 $340,000, 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 $140,000 of shares of the Company’s common stock. For the fiscal quarters ending June 30, 2018 and September 30, 2018,
the Company is required to make quarterly installment payments under the Note, each in an aggregate amount of up to $245,000, consisting
of (i) cash in the amount of $125,000 and (ii) if certain specified conditions are met as of the corresponding payment date, up
to $120,000 of shares of the Company’s common stock. For the fiscal quarters ending December 31, 2018 and March 31, 2019,
the Company is required to make quarterly installment payments under the Note, each in an aggregate amount of up to $220,000, consisting
of (i) cash in the amount of $100,000 and (ii) if certain specified conditions are met as of the corresponding payment date, up
to $120,000 of shares of the Company’s common stock. For the fiscal quarter ending December 31, 2017, March 31, 2018, June
30, 2018, September 30, 2018, December 31, 2018 and March 31, 2019, if the conditions required for the issuance of common stock
are not met solely because the stock price of the common stock at the time is less than $0.2029 per share (as adjusted for any
stock dividend, stock split, stock combination, reclassification or similar transaction), then the Company will be required to
pay in each such quarter cash equal to 50% of the value of the common stock that would otherwise have been issued. 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 $100,000, payable in cash.
As detailed further below, Saint-Gobain may exercise its conversion
rights upon: (i) maturity of the Note, (ii) certain change of control events (as defined in the Note), and (iii) certain events
of default (as defined in the Note). 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).
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Maturity of the Note
. Upon maturity of the Note or at any
time during the 75 day period prior to the maturity date of the note, Saint-Gobain 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.
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Change of Control
. Upon a change of control pursuant to
which Saint-Gobain has a redemption right, Saint-Gobain 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.
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Default
. Upon the occurrence of certain events of default,
Saint-Gobain 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.
Unless Saint-Gobain has elected to exercise these conversion rights, the Company, subject
to specified exceptions, may prepay the Note in whole or in part, in cash, at any time without penalty or premium.
Registration Rights Agreement
On November 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 Saint-Gobain, 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 Saint-Gobain, 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 Saint-Gobain, 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.
Saint-Gobain 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 7.5% of the average daily volume over the previous twenty
trading days.
The Company has granted Saint-Gobain, and Saint-Gobain has granted
to the Company, customary indemnification rights in connection with the Registration Rights Agreement.
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