On June 20, 2022, Celldex Therapeutics Inc. (the "Company") reported that entered into a binding settlement term sheet (the "Term Sheet") with Shareholder Representatives Services LLC ("SRS"), relating to the previously disclosed litigation brought by the Company (the "Litigation") arising under the Agreement and Plan of Merger, dated November 1, 2016 (the "Merger Agreement"), by and among Kolltan Pharmaceuticals, Inc., the Company, Connemara Merger Sub 1 Inc., Connemara Merger Sub 2 LLC and SRS, solely in its capacity as the Stockholders Representative, which, upon execution of a definitive settlement agreement and the payment of the Initial Payment (as defined below), will result in the joint dismissal, with prejudice, of all claims and counterclaims in the Litigation (Filing, 8-K, Celldex Therapeutics, JUN 20, 2022, View Source [SID1234616207]).
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Pursuant to the terms of the Term Sheet, all milestone payments provided for by the Merger Agreement are replaced in their entirety with the following payments, each of which is payable only once:
(i)The Company shall pay $15,000,000 upon execution of the Settlement Agreement (the "Initial Payment").
(ii)The Company shall pay $15,000,000 upon the Successful Completion (as defined in the Term Sheet) of a Phase 2 Clinical Trial (as defined in the Merger Agreement) of CDX-0159, subject to the $2,500,000 contractual credit as set forth in the Merger Agreement.
(iii)The Company shall pay $52,500,000 upon the first United States Food and Drug Administration or European Medicines Agency, or, in each case, any successor organization, regulatory approval of a Surviving Company Product (as defined the Term Sheet).
The above payment obligations replace, in their entirety, the contingent consideration in the form of development, regulatory approval and sales-based milestones of up to $172.5 million contained in the Merger Agreement.
Each of the Company and SRS will provide broad mutual releases of all claims relating to or arising out of the Merger Agreement, including without limitation, all claims brought in the Litigation or that could have been brought in the Litigation. The Term Sheet is binding pending the execution of a formal settlement agreement on or before July 15, 2022.
The Company has elected to pay the Initial Payment in cash. When and if any of the remaining payments described above become due, they shall be payable, at the Company’s sole election, in either cash or stock (as set forth in the Merger Agreement) or a combination thereof.