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10-K
Candel Therapeutics, Inc. · Mar 12, 8:17 AM ET
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Candel Therapeutics, Inc. 10-K
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Contents
71
ARTICLE 1DEFINITIONS
Section 1.1 Definitions. The following terms, as used herein, shall have the following meanings:
Section 1.2 Certain Interpretations. Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement:
ARTICLE 2PURCHASE, SALE AND ASSIGNMENT OF THE REVENUE PARTICIPATION RIGHT
Section 2.1 Purchase, Sale and Assignment.
Section 2.2 Purchase Price. At the Closing and upon the terms and subject to the conditions of this Agreement, the purchase price to be paid as consideration to the Seller for the sale, transfer, assignment and conveyance of the Revenue Participation Right to the Buyer is $100,000,000 in cash (the “Purchase Price”) less any Transaction Expenses that have not been reimbursed to the Buyer hereunder prior to the Closing.
Section 2.3 No Assumed Obligations; Excluded Assets. Notwithstanding any provision in this Agreement to the contrary, the Buyer is only agreeing, on the terms and conditions set forth in this Agreement, to purchase, acquire and accept the Revenue Participation Right and is not assuming any liability or obligation of the Seller or any of its Affiliates of whatever nature, whether presently in existence or arising or asserted hereafter. Except as specifically set forth herein in respect of the Revenue Participation Right purchased, acquired and accepted hereunder, the Buyer does not, by such purchase, acquisition and acceptance, acquire any other assets of the Seller or its Affiliates.
ARTICLE 3CLOSING
Section 3.1 Closing. The Closing shall take place remotely via the exchange of documents and signatures on the 20th Business Day, or such period as mutually agreed upon by the parties hereto, after the date on which the conditions set forth in ARTICLE 5 are satisfied or waived.
Section 3.2 Payment of Purchase Price. At the Closing, the Buyer shall deliver (or cause to be delivered) payment of the Purchase Price to the Seller by electronic funds transfer or wire transfer of immediately available funds to one or more accounts specified by the Seller.
Section 3.3 Bill of Sale. At the Closing, upon confirmation of the receipt of the Purchase Price, the Seller shall deliver to the Buyer a duly executed bill of sale evidencing the sale, transfer, assignment and conveyance of the Revenue Participation Right in substantially the form attached hereto as Exhibit B (the “Bill of Sale”).
ARTICLE 4REPRESENTATIONS AND WARRANTIES
Section 4.1 Seller’s Representations and Warranties. Except as set forth on the Disclosure Schedule attached hereto (provided, the list of Existing Licenses under Schedule 4.1(h)(i) of the Disclosure Schedule and the list of Existing Patent Rights under Schedule 4.1(k)(i) of the Disclosure Schedule may be updated as of the Closing to the extent such updates would not have a material and adverse effect on any Product, any Product Rights or the Revenue Participation Right or be materially adverse to the Buyer’s interests under this Agreement), the Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:
Section 4.2 Buyer’s Representations and Warranties. The Buyer hereby represents and warrants to the Seller that:
Section 4.3 No Implied Representations and Warranties. The Buyer acknowledges and agrees that, other than the express representations and warranties of the Seller specifically contained in this Agreement, (a) there are no representations or warranties of the Seller either expressed or implied with respect to the Patent Rights or Royalty Payment and that the Buyer shall have no remedies in respect of, any representation or warranty not specifically set forth in this Agreement, and all other representations and warranties are hereby expressly disclaimed, and (b) nothing contained herein guarantees that sales of any Product or the aggregate Royalty Payments due to the Buyer will achieve any specific amounts (it being understood and agreed that nothing in this Section 4.3 shall limit in any way the Seller’s obligations under ARTICLE 8). Notwithstanding the foregoing, claims for fraud, gross negligence, or willful misconduct shall not be waived or limited in any way by this Section 4.3.
ARTICLE 5CONDITIONS TO CLOSING
Section 5.1 Effective Date Actions. Prior to or contemporaneously with the execution of this Agreement:
Section 5.2 Conditions to the Buyer’s Obligations. The obligations of the Buyer to consummate the transactions contemplated hereunder on the Closing Date are subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions precedent:
Section 5.3 Conditions to the Seller’s Obligations. The obligations of the Seller to consummate the transactions contemplated hereunder on the Closing Date are subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions precedent:
Section 5.4 Frustration of Closing Conditions. No party may rely on the failure of any condition set forth in this ARTICLE 5 to be satisfied, including for purposes of exercising any such party’s termination rights under ARTICLE 9, if such failure was directly or indirectly caused by such party’s breach of this Agreement.
ARTICLE 6
COVENANTS
Section 6.1 Reporting. As long as the Seller is subject to the reporting requirements of the Exchange Act, the Seller shall provide, or otherwise make available, to the Buyer copies of the Seller SEC Documents, it being understood and acknowledged that the Seller’s provision of Seller SEC Documents through the SEC’s EDGAR database or any successor thereto shall be deemed to satisfy the Seller’s requirement to provide or make available the Seller SEC Documents; provided that if the Seller ceases to be subject to the reporting requirements of the Exchange Act, including as a result of a Change of Control, the following clauses (a)-(e) shall apply:
Section 6.2 Royalty Payments; Royalty Reports; Change of Control.
Section 6.3 Disclosures. Except (a) for a press release previously approved in form and substance by the Seller and the Buyer or any other public announcement using substantially the same text as such press release and (b) any disclosure required by applicable law, by the rules and regulations of any securities exchange or market on which any security of such party hereto may be listed or traded or by any Governmental Entity of competent jurisdiction, neither the Buyer nor the Seller shall, and each party hereto shall cause its Affiliates not to, without the prior written consent of the other party hereto (which consent shall not be unreasonably withheld, delayed or conditioned), issue any press release or make any other public disclosure with respect to this Agreement or any of the other Transaction Documents or any of
the transactions contemplated hereby or thereby. The Buyer acknowledges that it will be necessary for the Seller to file this Agreement with the SEC and to make other public disclosures regarding the terms of this Agreement and payments made under this Agreement in its reports filed with the SEC, and the Seller agrees that it will provide the Buyer a reasonable opportunity to review and comment on any proposed redactions to the copy of this Agreement to be filed with the SEC, as well as on such other public disclosures made by the Seller relating to the Buyer or this Agreement or the transactions contemplated hereby (e.g., press releases or Current Report on Form 8-K), provided that the Seller shall not be required to provide the Buyer the opportunity to review and comment on any disclosure substantively identical to any disclosure previously reviewed and commented upon by the Buyer.
Section 6.4 Inspections and Audits of the Seller. Following the Closing, upon at least [***] Business Days written notice and during normal business hours, no more frequently than once per Calendar Year, the Buyer may cause an inspection and/or audit by an independent public accounting firm reasonably acceptable to the Seller to be made of the Seller’s books of account for the three Calendar Years prior to the audit for the purpose of determining the correctness of the calculation of the Royalty Payments made under this Agreement. Upon the Buyer’s reasonable request, no more frequently than once per Calendar Year while any Out-License for Commercializing Product in the Territory remains in effect, the Seller shall use Commercially Reasonable Efforts to exercise any rights it may have under such Out-License to cause an inspection and/or audit by an independent public accounting firm to be made of the books of account of any counterparty thereto for the purpose of determining the correctness of the calculation of the Royalty Payments made under this Agreement. Seller shall notify Buyer in writing if it initiates an inspection and/or audit of the books of account of any counterparty to an Out-License to the extent such inspection and/or audit is related to the Royalty Payments, and shall provide to Buyer a redacted copy of any report relating thereto within [***] Business Days of receipt thereof; provided that any redactions to such report shall not include any information necessary to determine the correctness of the calculation of the Royalty Payments made under this Agreement. All of the out-of-pocket expenses of any inspection or audit requested by the Buyer hereunder (including the fees and expenses of such independent public accounting firm designated for such purpose) shall be borne solely by the Buyer, unless the independent public accounting firm determines that Royalty Payments previously paid to Buyer during the period of the audit were underpaid by an amount greater than 5% of the Royalty Payments actually paid during such period, in which case such expenses shall be borne by the Seller. Any such accounting firm or Seller shall not disclose the confidential information of the Seller or any such Licensee relating to any Product to the Buyer, except to the extent such disclosure is necessary to determine the correctness of Royalty Payments or otherwise would be included in a Report. All information obtained by the Buyer as a result of any such inspection or audit shall be Confidential Information subject to ARTICLE 8. If any audit discloses any underpayments by the Seller to the Buyer, then such underpayment shall be paid by the Seller to the Buyer within [***] calendar days of it being so disclosed (and such underpayment shall not be deemed an Event of Default during such [***] calendar days period). If any audit discloses any overpayments by the Seller to the Buyer, then the Seller shall have the right to credit the amount of the overpayment against each subsequent quarterly Royalty Payment due to the Buyer until the overpayment has been fully applied. If the overpayment is not fully applied prior to the final quarterly Royalty Payment due hereunder, the Buyer shall promptly refund an amount equal to any such remaining overpayment.
Section 6.5 Intellectual Property Matters.
Section 6.6 In-Licenses.
Section 6.7 Out-Licenses.
Section 6.8 Royalty Transactions; Indebtedness.
Section 6.9 Diligence. The Seller shall use Commercially Reasonable Efforts to (i) complete clinical development of the Product in the Territory as required for U.S. Marketing Approval, (ii) obtain and maintain the U.S. Marketing Approval, and (iii) obtain and maintain Marketing Approvals for the Product for the Approved Indication in the Territory, and (iv) following Marketing Approval of any Product in the Territory, Commercialize such Product in the Territory. In furtherance of the foregoing, the Seller shall use Commercially Reasonable Efforts to prepare, execute, deliver and file any and all agreements, documents or instruments that are necessary or desirable to secure and maintain such Marketing Approvals for the Product in the Territory, and the Seller shall use Commercially Reasonable Efforts to not withdraw or abandon, or fail to take any action necessary to prevent the withdrawal or abandonment of the such Marketing Approvals for the Product in the Territory.
Section 6.10 Efforts to Consummate Transactions. Subject to the terms and conditions of this Agreement, each of the Seller and the Buyer will use its commercially reasonable efforts prior to the Closing to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary under applicable law to consummate the transactions contemplated by this Agreement. Each of the Buyer and the Seller agrees to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary in order to consummate or implement expeditiously the transactions contemplated by this Agreement and to vest in Buyer good and valid right, title, and interest in and to the Revenue Participation Right, which is, as of the Closing, free and clear of all Liens.
Section 6.11 Further Assurances.
Section 6.12 No Impairment of Revenue Participation Right or Back-Up Security Interest. Notwithstanding anything herein to the contrary, the Seller shall not, and shall not permit any Subsidiary to, as may be applicable (i) enter into or propose or deliver any Contract (or make or propose any amendments, modifications waivers or notices in connection with any Contract) that imposes a Lien upon, or otherwise sells, transfers, hypothecates, assigns, conveys title (in whole or in part), grants any right to, or otherwise disposes of any portion of the Revenue Participation Right or the Product Collateral (except for (a) a Permitted Lien on the Product Collateral pursuant to any agreement evidencing any secured Indebtedness permitted by clause (b) of the definition of Permitted Indebtedness, (b) for those grants of licenses and sublicenses contemplated by and granted pursuant to Section 6.7(a), or (c) a Change of Control subject to the requirements of (x) Section 6.2(c) or (y) if neither Seller nor Buyer elects the Buy-Back Option or the Buy-Back Requirement in accordance with Section 6.2(c), respectively, Section 11.4); (ii) knowingly take any action or knowingly fail to act in a manner, in each case that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; or (iii) take any action or engage in any transaction (or series of actions or transactions), whether by reorganization, transfer of assts, merger, dissolution, amendment of organization documents or otherwise, the primary purpose of which is to evade, avoid or seek to avoid the performance or observance of the covenants, agreements or obligations of the Seller under the Transaction Documents. At the Closing Date, the Seller shall grant in favor of Buyer, and take such additional actions as reasonably requested by Buyer to ensure that thereafter Buyer has a valid, continuing, first priority security interest in and to all right, title and interest in, to and under the Revenue Participation Right, the Royalty Payments, and the Product Collateral in accordance with the terms set forth in Section 2.1.
Section 6.13 Certain Tax Matters.
ARTICLE 7INDEMNIFICATION
Section 7.1 General Indemnity. From and after the Closing:
Section 7.2 Notice of Claims. If either a Buyer Indemnified Party, on the one hand, or a Seller Indemnified Party, on the other hand (such Buyer Indemnified Party on the one hand and such Seller Indemnified Party on the other hand being hereinafter referred to as an “Indemnified Party”), has suffered or incurred any Losses for which indemnification may be sought under this ARTICLE 7, the Indemnified Party shall so notify the other party from whom indemnification is sought under this ARTICLE 7 (the “Indemnifying Party”) promptly in writing describing such Loss, the amount or estimated amount thereof, if known or reasonably capable of estimation, and the method of computation of such Loss, all with reasonable particularity and containing a reference to the provisions of this Agreement in respect of which such Loss shall have occurred. If any claim, action, suit or proceeding is asserted or instituted by or against a Third Party with respect to which an Indemnified Party intends to claim any Loss under this ARTICLE 7, such Indemnified Party shall promptly notify the Indemnifying Party of such claim, action, suit or proceeding and tender to the Indemnifying Party the defense of such claim, action, suit or proceeding. A failure by an Indemnified Party to give notice and to tender the defense of such claim, action, suit or proceeding in a timely manner pursuant to this Section 7.2 shall not limit the obligation of the Indemnifying Party under this ARTICLE 7, except to the extent such Indemnifying Party is actually prejudiced thereby.
Section 7.3 Limitations on Liability.
Section 7.4 Exclusive Remedy. Except as set forth in Section 11.11, from and after Closing, the rights of the parties hereto pursuant to (and subject to the conditions of) this ARTICLE 7 shall be the sole and exclusive remedy of the parties hereto and their respective Affiliates with respect to any Losses (whether based in contract, tort or otherwise) resulting from or relating to any breach of the representations, warranties covenants and agreements made under this Agreement or any certificate, document or instrument delivered hereunder, and each party hereto hereby waives, to the fullest extent permitted under applicable law, and agrees not to assert after Closing, any other claim or action in respect of any such breach. Notwithstanding anything to the contrary in this Agreement, claims for fraud, gross negligence, or willful misconduct shall not be waived or limited in any way by this ARTICLE 7.
Section 7.5 Tax Treatment of Indemnification Payments. For all purposes hereunder, any indemnification payments made pursuant to this ARTICLE 7 will be treated as an adjustment to the Purchase Price for U.S. federal income tax to the fullest extent permitted by applicable law.
ARTICLE 8CONFIDENTIALITY
Section 8.1 Confidentiality. Except as provided in this ARTICLE 8, Section 11.4 or otherwise agreed in writing by the parties, the parties hereto agree that, during the term of this Agreement and for [***] years thereafter, each party (the “Receiving Party”) shall keep confidential and shall not publish or otherwise disclose and shall not use for any purpose other than as provided for in this Agreement (which includes the exercise of any rights or the performance of any obligations hereunder) any information furnished to it by or on behalf of the other party (the “Disclosing Party”) pursuant to this Agreement (such information, “Confidential Information” of the Disclosing Party), except for that portion of such information that:
Section 8.2 Authorized Disclosure.
ARTICLE 9TERMINATION
Section 9.1 Mutual Termination. This Agreement may be terminated by mutual written agreement of the Buyer and the Seller.
Section 9.2 Buyer Termination Upon Failure to Achieve Closing Conditions. [***].
Section 9.3 Buyer Termination for BlackBox Warnings or Unexpected Contraindications. On or prior to the Marketing Approval Deadline (including any extension thereof), if the Seller receives U.S. Marketing Approval with any BlackBox Warnings or one or more Unexpected Contraindications, then the Buyer may terminate this Agreement immediately by delivering written notice to the Seller of such election.
Section 9.4 Automatic Termination Following Royalty Termination Date. Unless earlier terminated as provided in Section 9.1, Section 9.2, Section 9.3 or Section 9.4, following the date hereof, this Agreement shall continue in full force and effect until [***] calendar days after the Royalty Termination Date, at which point this Agreement shall automatically terminate, except with respect to any rights that shall have accrued prior to such termination.
Section 9.5 Automatic Termination upon CoC Payment. Upon Buyer’s receipt of the applicable CoC Payment, this Agreement shall automatically terminate.
Section 9.6 Effect of Termination. If the Buyer terminates this Agreement under Section 9.2(b) due to the Seller failing to achieve the Indebtedness Condition, then the Seller shall pay to the Buyer [***] within [***] Business Days of receipt of the applicable notice under Section 9.2(b). Upon termination of this Agreement, all rights and obligations of the parties hereunder and in respect of the Revenue Participation Right (other than any obligation or right accruing prior to such termination or as a result of such termination) shall automatically be deemed to be released and irrevocably terminated without any further action of the parties hereunder.
Section 9.7 Survival. Notwithstanding anything to the contrary in this ARTICLE 9, the following provisions shall survive termination of this Agreement: Section 6.3 (Disclosures), Section 6.4 (Inspections and Audits of the Seller) (unless terminated prior to Closing), ARTICLE 7 (Indemnification), ARTICLE 8 (Confidentiality), Section 9.6 (Effect of Termination) (solely if the Buyer terminates this Agreement under Section 9.2(b)), this Section 9.7 (Survival) and ARTICLE 11 (Miscellaneous). Termination of the Agreement shall not relieve any party hereto of any obligation or right accruing prior to such termination or as a result of such termination, including any liability in respect of breaches under this Agreement by any party on or prior to such termination.
ARTICLE 10EVENTS OF DEFAULT REMEDIES
Section 10.1 Remedies Upon Event of Default. If any Event of Default under clause (d) of the definition thereof has occurred and is continuing, the Seller shall immediately pay the Royalty Cap amount (less the aggregate of all of the payments of the Seller in respect of the Royalty Payments made to the Buyer prior to such date) to the Buyer or the Buyer’s designee without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration or any other notice or declaration of any kind, all of which are hereby expressly waived by the Seller. In addition, if any other Event of Default has occurred and is continuing, the Buyer may declare any or all of the Royalty Cap amount (less the aggregate of all of the payments of the Seller in respect of the Royalty Payments made to the Buyer prior to such date) immediately due and payable (and all of such amounts shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration or any other notice or declaration of any kind, all of which are hereby expressly waived by the Seller) or otherwise exercise all rights and remedies available to it under this Agreement and applicable law. Subject to the exercise of any rights it may have under an Acceptable Intercreditor Agreement, after the occurrence and during the continuation of an Event of Default but prior to the occurrence of a Recharacterization Event, the Buyer shall not be entitled to, and the Buyer agrees that it shall not, exercise any rights as a secured creditor under the UCC other than rights provided to a purchaser of accounts or payment intangibles in respect of such purchased accounts or payment intangibles.
ARTICLE 11MISCELLANEOUS
Section 11.1 Headings. The table of contents and the descriptive headings of the several Articles and Sections of this Agreement and the Exhibits and Schedules are for convenience only, do not constitute a part of this Agreement and shall not control or affect, in any way, the meaning or interpretation of this Agreement.
Section 11.2 Notices. All notices and other communications under this Agreement shall be in writing and shall be by email with PDF attachment, courier service or personal delivery to the following addresses, or to such other addresses as shall be designated from time to time by a party hereto in accordance with this Section 11.2:
Section 11.3 Expenses. On the date hereof, the Seller shall reimburse the Buyer for the Transaction Expenses incurred prior to or on such date. Upon the earliest of (a) the Closing, (b) termination of this Agreement, and (c) termination of any of the transactions contemplated hereby, the Seller shall reimburse the Buyer for any and all other Transaction
Expenses incurred prior to or on such date. Except as otherwise provided herein, all fees, costs and expenses (including any legal, accounting and banking fees) incurred in connection with the preparation, negotiation, execution and delivery of this Agreement and to consummate the transactions contemplated hereby shall be paid by the party hereto incurring such fees, costs and expenses.
Section 11.4 Assignment.
Section 11.5 Amendment and Waiver.
Section 11.6 Entire Agreement. This Agreement and the Exhibits annexed hereto constitute the entire understanding between the parties hereto with respect to the subject matter hereof and supersede all other understandings and negotiations with respect thereto.
Section 11.7 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Seller and the Buyer and their permitted successors and assigns and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and such successors and assigns, any legal or equitable rights hereunder, except that the Indemnified Parties shall be third-party beneficiaries of the benefits provided for in Section 7.1.
Section 11.8 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
Section 11.9 Jurisdiction; Venue.
Section 11.10 Severability. If any term or provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any situation in any jurisdiction, then, to the extent that the economic and legal substance of the transactions contemplated hereby is not affected in a manner that is materially adverse to either party hereto, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect and the enforceability and validity of the offending term or provision shall not be affected in any other situation or jurisdiction.
Section 11.11 Specific Performance. Each of the parties acknowledges and agrees that the other party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached or violated. Accordingly, each of the parties agrees that, without posting bond or other undertaking, the other party will be entitled to seek an injunction or injunctions to prevent breaches or violations of the provisions of this Agreement and to seek to enforce specifically this Agreement and the terms and provisions hereof in any action, suit or other proceeding instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter in addition to any other remedy to which it may be entitled, at law or in equity. Each of the parties further agrees that, in the event of any action for specific performance in respect of such breach of violation, it will not assert the defense that a remedy at law would be adequate.
Section 11.12 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Copies of executed counterparts transmitted by telecopy, facsimile or other similar means of electronic transmission, including “PDF,” shall be considered original executed counterparts, provided receipt of such counterparts is confirmed.
Section 11.13 Relationship of the Parties. The relationship between the Buyer and the Seller is solely that of purchaser and seller, and neither the Buyer nor the Seller has any fiduciary or other special relationship with the other party or any of its Affiliates. This Agreement is not a partnership or similar agreement, and nothing contained herein shall be deemed to constitute the Buyer and the Seller as a partnership, an association, a joint venture or any other kind of entity or legal form for any purposes, including any Tax purposes. The Buyer and the Seller agree that they shall not take any inconsistent position with respect to such treatment in a filing with any Governmental Entity.
Section 11.14 Limited Recourse and Non-Petition.
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