false
0001755237
NASDAQ
0001755237
2023-05-11
2023-05-11
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 11, 2023
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CYCLERION THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
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Massachusetts 001-38787 83-1895370
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification Number)
245 First Street, 18th Floor
Cambridge
,
Massachusetts
02142
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code:
(
857
)
327-8778
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, no par value CYCN The Nasdaq Capital Market LLC
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s)230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 ((s)240.12b-2 of this
chapter). Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
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Item 1.01. Entry into a Material Definitive Agreement.
The Asset Purchase Agreement
On May 11, 2023, Cyclerion Therapeutics, Inc., a Massachusetts corporation
(the "
Company
", "
we
", "
us
" or "
our
") entered into an Asset Purchase Agreement (the "
Asset Purchase Agreement
") with JW Celtics Investment Corp., a Delaware corporation ("
Buyer Parent
") and JW Cycle Inc., a Delaware corporation ("
Buyer
" and together with Buyer Parent, "
Buyers
"), pursuant to which the Company has agreed, subject to certain conditions,
including the authorization and approval of the Asset Purchase Agreement by
its shareholders, to sell to Buyer specified assets relating to the Company's
zagociguat (previously known as CY6463) and CY3018 programs (the "
Purchased Programs
", and such assets, the "
Purchased Assets
"), and Buyer has agreed to assume certain liabilities relating to the
Purchased Programs, including, but not limited to (i) liabilities, costs and
expenses arising after the date of the Asset Purchase Agreement relating to
the employment of certain individuals prior to the Employee Expenses End Date
(as defined in the Asset Purchase Agreement) ("
Employee Expenses
") and the conduct of certain preclinical and clinical trial activities prior
to the closing of the transactions contemplated by the Asset Purchase
Agreement ("
R&D Expenses
"), and (ii) liabilities relating to the Purchased Assets or the Purchased
Programs to the extent relating to the period after the closing of the
transaction, in each case, subject to the terms and conditions of the Asset
Purchase Agreement (the "
Asset Sale Transaction
"). Cyclerion will retain the assets comprising the olinciguat, praliciguat
and preclinical programs (the "
Retained Programs
"), which the Company intends to continue to develop and/or out-license
following the closing of the Asset Sale Transaction.
As consideration for the Asset Sale Transaction, Buyers agreed to (a) pay the
Company (i) $8,000,000 at the closing of the Asset Sale Transaction, plus (ii)
the amount of any Employee Expenses and R&D Expenses for which Buyers are
obligated to reimburse the Company pursuant to the Asset Purchase Agreement
and which remain unpaid as of the closing of the Asset Sale Transaction; and
(b) deliver to the Company a number of shares of common stock, par value
$0.0001 per share, of Buyer Parent, such that following the issuance thereof,
such shares comprise 10% of the issued and outstanding shares of Buyer Parent
immediately following the closing of the Asset Sale Transaction, subject to
certain protections against dilution up to a $100 million valuation of Buyer
Parent on a fully diluted basis.
The transaction has been unanimously approved by the Company's board of
directors (the "
Board
")
without participation of Peter M. Hecht, Ph.D., our Chief Executive Officer,
and Terrence McGuire, due to their interests in Buyer Parent
. The affirmative vote of the holders of a majority of all shares entitled to
vote on the proposal, in person or by proxy, is required to approve the Asset
Sale Transaction (the "
Stockholder Approval
"). The Board has recommended that the Company's shareholders vote in favor of
the Asset Sale Transaction.
In addition to the receipt of Stockholder Approval, the obligation of the
Company, on the one hand, and Buyers, on the other hand, to consummate the
Asset Sale Transaction is conditioned upon certain other customary closing
conditions, including the accuracy of the other party's representations and
warranties as of closing, subject, in certain instances, to certain
materiality and other thresholds, the performance by the other party of its
obligations and covenants under the Asset Purchase Agreement, the absence of
any law or government order of any nature that restrains, enjoins or otherwise
prohibits, or has the effect of restraining, enjoining or otherwise
prohibiting, the Asset Sale Transaction from being consummated, the absence of
a material adverse effect with respect to the Company, the Company having
received evidence that Buyer Parent closed on the second tranche of its $81
million financing, and the delivery of certain documentation by the other
party, in each case, as set forth in the Asset Purchase Agreement.
The Asset Purchase Agreement also contains representations, warranties,
covenants, indemnification and termination rights of the applicable parties
customary for transactions similar to those contemplated by the Asset Purchase
Agreement. Such representations and warranties are made solely for purposes of
the Asset Purchase Agreement and, in some cases, may be subject to
qualifications and limitations agreed to by the parties in connection with the
negotiated terms of the Asset Purchase Agreement and may have been qualified
by disclosures that were made in connection with the parties' entry into the
Asset Purchase Agreement.
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The Asset Purchase Agreement requires that Cyclerion, from signing until the
earlier of the termination of the Asset Purchase Agreement or closing of the
Asset Sale Transaction, not initiate contact with or solicit any inquiry or
proposal or engage in any discussions with third parties in connection with
possible proposals regarding a sale or licensing of the Purchased Assets and
certain other strategic transactions involving the Company. The Company has
agreed to promptly provide notice to Buyer of any solicitation or offer made
by any third party in connection with such alternative transaction. If Buyers
terminate the Asset Purchase Agreement because there is a Cyclerion Adverse
Recommendation Change (as defined in the Asset Purchase Agreement), the
Company must pay a termination fee of $500,000 as well as reimburse
out-of-pocket expenses of Buyers in an amount equal to $1,000,000 and
reimbursement of Employee Expenses and R&D Expenses actually reimbursed or
paid by Buyers.
The Asset Purchase Agreement may be terminated by either party if the
transaction is not completed by September 11, 2023 or otherwise under certain
specified conditions.
The foregoing description of the Asset Purchase Agreement does not purport to
be complete and is qualified in its entirety by reference to the full text of
such agreement filed herewith as
Exhibit 2.1
and incorporated herein by reference.
Fairness Opinion
In connection with the Asset Sale Transaction, our financial advisor, Stifel,
Nicolaus & Company, delivered to our Board its opinion, dated May 10, 2023,
that, as of the date thereof, the consideration to be received by the Company
from Buyer in the Asset Sale Transaction pursuant to the Asset Purchase
Agreement is fair to the Company, from a financial point of view.
Item 2.02. Results of Operations and Financial Condition.
The disclosure set forth in Item 7.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
As previously announced, on March 31, 2023,
the Company
entered into an agreement (the "
Subscription Agreement
") with Peter M. Hecht, Ph.D., our Chief Executive Officer and a member of the
Board, for him to make an equity investment in the Company of $5,000,000 in
cash for common stock or nonvoting Series A convertible preferred stock of the
Company, the purchase price, consistent with Nasdaq rules, to be at or above
the market price at the time of signing that agreement of $0.434 per share
(subject to appropriate adjustment for the reverse stock split anticipated to
be implemented after our 2023 annual meeting of stockholders, if such reverse
stock split is approved by shareholders, or any other change in our common
stock). With the signing of the Asset Purchase Agreement, all contingencies to
the investment have been met and the closing of the equity investment is
scheduled to take place on May 19, 2023. Pursuant to the Subscription
Agreement, the Board intends to solicit our shareholders to vote in favor of
approval of the issuance of shares of common stock to Dr. Hecht upon
conversion of such Series A convertible preferred stock.
Each share of Series A convertible preferred stock is initially convertible
into one share of common stock, subject to customary anti-dilution protections.
The Company relied upon the exemptions from registration afforded by
Regulation D under, and Section 4(a)(2) of, the Securities Act of 1933, as
amended (the
"
Securities Act
"
), as transactions not involving any public offering.
Additionally, Dr. Hecht and Mr. McGuire, directly, beneficially or through
affiliates, are equity investors in Buyer Parent, and each has committed to,
directly, beneficially or through affiliates, purchase shares of Buyer
Parent's preferred stock.
Item 7.01 Regulation FD Disclosure.
On May 11, 2023, the Company issued press releases regarding the execution of
the Asset Purchase Agreement and its financial and operating results for the
first quarter of 2023, respectively. Copies of the press releases are
furnished as
Exhibits 99.1
and
99.2
, respectively, to this Current Report on Form 8-K. Such exhibits and the
information set forth therein shall not be deemed to be filed for purposes of
Section 18 of the Securities Exchange Act of 1934 (the "
Exchange Act
") or otherwise be subject to the liabilities of that section, nor shall they
be deemed to be incorporated by reference in any filing under the Securities
Act or the Exchange Act.
3
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Item 8.01 Other Events.
Voting and Support Agreements
Simultaneously with the execution of the Asset Purchase Agreement, Buyer
Parent entered into voting and support agreements (each, a "
Voting and Support Agreement
") with each equityholder (and certain affiliates of any such equityholder) of
Buyer Parent or any subsidiary of Buyer Parent that is also a shareholder of
the Company, which shareholders collectively held approximately 21.3% of the
total outstanding voting shares of the Company and include Dr. Hecht and The
Invus Group, LLC, each of whom owns more than five percent of our total
outstanding voting shares, as well as certain funds managed by Polaris
Partners, an affiliate of Mr. McGuire.
Pursuant to the Voting and Support Agreements, each shareholder signatory
thereto has agreed, with respect to all of the shares of the Company's common
stock that such shareholder beneficially owns as of the date thereof or
thereafter (the "
Covered Stock
"), to, among other things, (a) vote in favor of the Asset Sale Transaction;
and (b) not transfer any such Covered Stock during the term of such Voting and
Support Agreement. The Voting and Support Agreements will terminate upon the
earlier of the termination of the Asset Purchase Agreement in accordance with
its terms, the consummation of the closing of the Asset Sale Transaction,
Buyer Parent's receipt of notice of a Cyclerion Adverse Recommendation Change,
the mutual written consent of the parties thereto, and the entry into any
amendment to the Asset Purchase Agreement without the prior written consent of
the applicable shareholder that is materially adverse to such shareholder. The
Company is an express third-party beneficiary of the Voting and Support
Agreements.
The foregoing description of the Voting and Support Agreements does not
purport to be
complete and is qualified in its entirety by reference to the full text of the
form of Voting and Support Agreement, a copy of which is filed herewith as
Exhibit 10.1
and incorporated herein by reference.
Forward-Looking Statements
This Current Report on Form 8-K and the attached exhibits contain
"forward-looking statements" within the meaning of the federal securities
laws. These forward-looking statements include statements concerning our
outlook for the future, as well as other statements of beliefs, future plans
and strategies or anticipated events, and similar expressions concerning
matters that are not historical facts. These statements can be identified by
the use of forward-looking terminology such as "predicts," "believes,"
"potential," "continues," "estimates," "anticipates," "expects," "plans,"
"intends," "may," "could," "might," "will," "should," "positive," "projects,"
"targets," "optimistic," aims," or the negative thereof or other variations
thereon or other comparable terminology. The forward-looking statements
included in this Current Report on Form 8-K or the attached exhibits are based
on management's current expectations and assumptions about future events,
which are inherently subject to uncertainties, risks and changes in
circumstances that are difficult to predict and could cause actual results to
differ materially from those expressed in, or implied by, the forward-looking
statements. These risks and uncertainties include, but are not limited to, the
following: our shareholders failing to approve the Asset Sale Transaction; the
failure of one or more conditions to the closing of the Asset Sale Transaction
to be satisfied or waived by the applicable party; an increase in the
anticipated amount of costs, fees, expenses and other charges related to the
Asset Purchase Agreement or Asset Sale Transaction, including the expenses of
any claims or litigation seeking to challenge the transaction or disclosures
in connection therewith or recover any damages alleged to arise therefrom;
expenses associated with the potential exercise of appraisal rights and any
related adjudication of the fair value of our common stock; the occurrence of
any event, change or other circumstances that could give rise to the
termination of the Asset Purchase Agreement; risks arising from the diversion
of management's attention from our ongoing business operations; risks
associated with our ability to monetize the Retained Programs and/or to
identify and realize business opportunities following the Asset Sale
Transaction; fluctuations in demand for our technology; risks of losing key
personnel, customers, distributors, or suppliers; protection of the Company's
intellectual property and government policies and regulations, including, but
not limited to those affecting the Company's industry; and the matters
discussed under "Item 1A. Risk Factors" of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2022, as amended and updated from
time to time in the Company's subsequent filings with the SEC. Readers are
cautioned not to place undue reliance on forward-looking statements. Any
forward-looking statement speaks only as of the date that it was made and the
Company undertakes no obligation to update any forward-looking statement,
whether as a result of new information or otherwise.
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Additional Information and Where to Find It
This Current Report on Form 8-K may be deemed to be a solicitation of proxies
from the Company's shareholders in connection with the proposed transaction.
In connection with the proposed transaction, the Company intends to file a
proxy statement and relevant documents with respect to the special meeting to
be held in connection with the proposed transaction with the U.S. Securities
and Exchange Commission ("
SEC
"). The definitive proxy statement will be mailed to the Company's
shareholders in advance of the special meeting. Investors and security holders
of the Company are urged to read the proxy statement and any other relevant
documents filed with the SEC when they become available because they will
contain important information about the Company, Buyers and the proposed
transaction. The proxy statement, when it becomes available, and any other
documents filed by the Company with the SEC may be obtained free of charge at
the SEC's website at www.sec.gov. In addition, investors and security holders
may obtain free copies of the documents filed with the SEC by the Company by
sending a written request to Cyclerion Therapeutics, 245 First Street, 18th
Floor, Cambridge, Massachusetts 02142, Attention: Corporate Secretary.
Participants in the Solicitation
The Company and its directors and executive officers may, under SEC rules, be
deemed to be participants in the solicitation of proxies from the Company's
shareholders in connection with the proposed transaction. Information about
the directors and executive officers, including their interests in the
transaction, will be included in the Company's proxy statement relating to the
transaction when it becomes available.
No Offer or Solicitation
This Current Report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the Securities
Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
2.1* Asset Purchase Agreement, dated as of May 11, 2023, among the Company, JW Celtics Investment Corp. and JW Cycle Inc.
10.1 Form of Voting and Support Agreement
99.1 Press Release dated May 11, 2023, announcing the Asset Sale Transaction
99.2 Press Release dated May 11, 2023, announcing financial and operating results for the first quarter of 2023
104 Cover Page Interactive Data File
*Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The
Company hereby undertakes to furnish supplemental copies of any of the omitted
schedules upon request by the U.S. Securities and Exchange Commission.
5
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cyclerion Therapeutics, Inc.
Dated: May 11, 2023 By: /s/ Anjeza Gjino
Name: Anjeza Gjino
Title: Chief Financial Officer
6
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and among
JW CELTICS INVESTMENT CORP.,
JW CYCLE, INC.
and
CYCLERION THERAPEUTICS, INC.
Dated as of May 11, 2023
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Page(s)
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. General 1
Section 1.2. References; Interpretation 16
ARTICLE II
THE ASSETS AND LIABILITIES
Section 2.1. Purchase and Sale of the Purchased Assets 16
Section 2.2. Excluded Assets 18
Section 2.3. Assumption of Liabilities 19
Section 2.4. Excluded Liabilities 19
Section 2.5. Transfers not Effected at or Prior to the Closing Date; Transfers Deemed Effective as of the Closing Date 20
Section 2.6. Further Assurances 22
Section 2.7. Closing 23
ARTICLE III
THE PURCHASE PRICE
Section 3.1. Purchase Price 24
Section 3.2. Withholding Taxes 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CYCLERION
Section 4.1. Incorporation; Authority 25
Section 4.2. The Purchased Assets 25
Section 4.3. Compliance with Law 25
Section 4.4. Consents and Approvals; No Conflicts 26
Section 4.5. Contracts 26
Section 4.6. Assigned Intellectual Property 26
Section 4.7. Licenses, Permits and Authorizations 27
Section 4.8. Taxes 27
Section 4.9. Broker Fees 27
Section 4.10. Representations with Respect to Consideration Shares 27
Section 4.11. Acknowledgement by Buyers 29
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER
Section 5.1. Incorporation; Ownership and Authority 31
Section 5.2. Capitalization 32
Section 5.3. No Operations 32
Section 5.4. Consents and Approvals; No Violations 32
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Section 5.5. Financing 33
Section 5.6. Broker's Fees 33
ARTICLE VI
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 6.1. Operation of the Business 33
Section 6.2. Corporate Examinations and Investigations 34
Section 6.3. Know-How Licenses 35
Section 6.4. Efforts 35
Section 6.5. Employee Matters 36
Section 6.6. Use of Retained Names and Marks 37
Section 6.7. Interim Period Preclinical and Clinical Trial Activities 37
Section 6.8. Exclusivity 38
Section 6.9. Matters related to Cyclerion Stockholders Meeting 41
Section 6.10. Buyer Parent Purchase Agreement 43
Section 6.11. Taxes 43
Section 6.12. FDA Letters 44
Section 6.13. Post-Closing Matters 45
Section 6.14. Joint Confidentiality Agreements 46
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1. Conditions to the Obligations of All Parties 46
Section 7.2. Conditions to Buyer Parent's and Buyer's Obligations at Closing 47
Section 7.3. Conditions to Cyclerion's Obligations at Closing 48
ARTICLE VIII
TERMINATION
Section 8.1. Events of Termination 49
Section 8.2. Effect of Termination 51
Section 8.3. Termination Fee 51
ARTICLE IX
INDEMNIFICATION
Section 9.1. Indemnification by Cyclerion 54
Section 9.2. Indemnification by Buyers 54
Section 9.3. Procedures for Indemnification 54
Section 9.4. Indemnification Obligations Net of Insurance Proceeds and Other Amounts 57
Section 9.5. Contribution 58
Section 9.6. Additional Matters; Survival of Indemnities 58
Section 9.7. Nonsurvival of Representations and Warranties and Pre-Closing Covenants 58
ARTICLE X
ACCESS TO INFORMATION; CONFIDENTIALITY
Section 10.1. Provision of Information 59
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Section 10.2. Witness Services; Cooperation 61
Section 10.3. Reimbursement; Other Matters 61
Section 10.4. Confidentiality 62
Section 10.5. Ownership of Information 63
ARTICLE XI
DISPUTE RESOLUTION
Section 11.1. Governing Law 63
Section 11.2. Proceedings 64
Section 11.3. Immunity 64
Section 11.4. Waiver of Jury Trial 64
ARTICLE XII
MISCELLANEOUS
Section 12.1. Complete Agreement 64
Section 12.2. Counterparts 65
Section 12.3. Survival of Agreements 65
Section 12.4. Fees, Costs and Expenses 65
Section 12.5. Notices 65
Section 12.6. Waivers 66
Section 12.7. Assignment 66
Section 12.8. Successors and Assigns 66
Section 12.9. Payment Terms 67
Section 12.10. Subsidiaries 67
Section 12.11. Third Party Beneficiaries 67
Section 12.12. Bulk Sales 67
Section 12.13. Titles and Headings 67
Section 12.14. Exhibits and Disclosure Schedules 67
Section 12.15. Severability 68
Section 12.16. Public Announcements 68
Section 12.17. Specific Performance 69
Section 12.18. No Recourse 69
Section 12.19. Interpretation 69
Section 12.20. No Admission of Liability 69
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List of Exhibits and Schedules
DISCLOSURE SCHEDULES
Exhibit A - Form of Voting Agreement
Exhibit B - Bill of Sale and Assignment and Assumption Agreement
Exhibit C - Stockholder Agreements
Exhibit D - Domain Name Assignment Agreement
Exhibit E - Employee Expenses Allocation Schedule
Exhibit F Patent Assignment Agreement
Exhibit G - Cyclerion Stockholder Letter
Exhibit H - Buyer Parent Purchase Agreement
Exhibit I-1 - Cyclerion IND 147088 FDA Letter
Exhibit I-2 - Cyclerion IND 138999 FDA Letter
Exhibit I-3 - Cyclerion IND 155952 FDA Letter
Exhibit J - Cyclerion Orphan Designation Letter
Exhibit K - Transition Services Agreement
Exhibit L-1 - Buyer IND 147088 FDA Letter
Exhibit L-2 - Buyer IND 138999 FDA Letter
Exhibit L-3 - Buyer IND 155952 FDA Letter
Exhibit M - Buyer Orphan Designation Letter
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "
Agreement
"), dated as of May 11, 2023, is entered into by and among JW Celtics
Investment Corp. ("
Buyer Parent
"), a Delaware corporation, JW Cycle Inc. ("
Buyer
" and collectively with Buyer Parent, the "
Buyers
"), a Delaware corporation, and Cyclerion Therapeutics, Inc. ("
Cyclerion
"), a Massachusetts corporation. "Party" or "Parties" means Buyer Parent,
Buyer or Cyclerion, individually or collectively, as the case may be. Each
capitalized term used and not elsewhere defined herein has the meaning set
forth in
Section 1.1
.
W I T N E S S E T H:
WHEREAS, Cyclerion owns certain assets comprising the Purchased Assets;
WHEREAS, Cyclerion desires to sell, transfer and assign the Purchased Assets
and the Assumed Liabilities to Buyer and Buyer wishes to purchase, acquire and
assume the Purchased Assets and the Assumed Liabilities on the terms and
conditions set forth in this Agreement;
WHEREAS, concurrently herewith, each equityholder (and certain affiliates of
any such equityholder) of a Buyer Group entity that is also an equityholder of
Cyclerion has executed and delivered to Cyclerion, a duly signed voting
agreement in the form attached hereto as
Exhibit A
with respect to voting at the Stockholders Meeting all shares of Cyclerion
Common Stock that such person owns or otherwise has the right to vote in favor
of the approval and authorization of this Agreement and the transactions
relating hereto (each, a "
Voting Agreement
"); and
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements,
provisions and covenants contained in this Agreement, the Parties hereby agree
as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1.
General
. As used in this Agreement, the following terms shall have the following
meanings:
(1) "
Acquisition Agreement
" shall have the meaning set forth in
Section 6.8(e)
.
(2) "
Acquisition Proposal
" means, other than the transactions contemplated hereby, any inquiry, proposal, indication of interest or
offer (whether written or oral) with respect to any direct or indirect: (i) purchase or sale, in a single
transaction or a series of related transactions, of Cyclerion's Common Stock representing more than twenty-five
percent (25%) of the voting power in Cyclerion, other than pursuant to that certain Stock Purchase
Agreement, dated March 31, 2023, by and between Cyclerion and Mr. Peter M. Hecht; (ii) merger, consolidation,
other business combination, reorganization, recapitalization, share exchange, dissolution, liquidation
or similar transaction involving Cyclerion or its Subsidiary; (iii) purchase or sale of assets, businesses,
securities or ownership interests (including the securities of Cyclerion's Subsidiary) representing
more than twenty-five percent (25%) of the net assets of Cyclerion, taken as a whole, or of Cyclerion and
its Subsidiary, taken as a whole, other than pursuant to this Agreement; (iv) spin-off, sale or license
of any assets of Cyclerion or its Subsidiary related to either of the Purchased Programs, whether specific
to those assets or as part of a sale of a larger set of assets, which spin-off, sale or license would
reasonably be expected to impede, interfere with, prevent or materially delay the transactions contemplated
hereby; or (v) any tender offer or exchange offer in which any Person or "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) offers to acquire beneficial ownership, or the right to acquire
beneficial ownership, of twenty-five percent (25%) or more of the outstanding shares of Common Stock.
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(3) "
Action
" means any demand, action, audit, claim, suit, countersuit, arbitration,
inquiry, subpoena, case, litigation, proceeding or investigation (whether
civil, criminal, administrative or investigative) by or before any court or
grand jury, any Governmental Entity or any arbitration or mediation tribunal.
(4) "
Affiliate
" means, when used with respect to a specified Person and at a point in, or with respect to a period of, time, a
Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with, such specified Person at such point in or during such period of time. For the purposes of
this definition, "control", when used with respect to any specified Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or other interests, by Contract or otherwise. It is expressly agreed
that no Party or member of its Group shall be deemed to be an Affiliate of the other Party or a member of such
other Party's Group solely by reason of having common stockholders or one or more directors or officers in common.
(5) "
Agreement
" shall have the meaning set forth in the
Preamble
.
(6) "
Ancillary Agreements
" means the Stockholders Agreements, the Buyer Parent Purchase
Agreement, the Cyclerion Stockholder Letter, each Voting Agreement,
the FDA Letters, the Orphan Designation Letters, the Transition
Services Agreement, all Conveyancing and Assumption Instruments, the
Novation and Waiver Agreement and any and all other agreements entered
into by the Parties or members of their respective Groups (but
as to which no Third Party is a party) in connection with this
Agreement or the other transactions contemplated by this Agreement.
(7) "
Assets
" means all rights, title and ownership interests in and to all rights, properties, claims, Contracts, businesses, or assets
(including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every
kind, character and description, whether real, personal or mixed, tangible or intangible, whether accrued, contingent or
otherwise, in each case, whether or not recorded or reflected on the books and records or financial statements of any Person.
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(8) "
Assume
," "
Assumed
" and "
Assumption
" shall have the respective meanings set forth in
Section 2.3
.
(9) "
Assumed Contracts
" shall have the meaning set forth in
Section 2.1(b)
.
(10) "
Assumed Liabilities
" means: (i) the Employee Expenses; (ii) the R&D Expenses; (iii) Liabilities under
the Assumed Contracts to the extent relating to the period after the Closing
Date; (iv) any and all Liabilities relating to the PTC Grant, whether incurred
prior to or after the Closing; (v) 50% of any Transfer Taxes (in accordance with
Section 6.11(b)
); and (vi) any Liabilities relating to the
Purchased Assets, Assumed Liabilities or
the Purchased Programs to the extent relating
to the period after the Closing Date.
(11) "
Assumed Names and Marks
" shall have the meaning set forth in
Section 6.6
.
(12) "
Backup Compound
"
means any CNS-penetrant sGC Stimulator that has been declared a development candidate by Cyclerion
.
(13) "
Bill of Sale and Assignment
and Assumption Agreement
" means that certain Bill of Sale and Assignment and Assumption Agreement by
and between Cyclerion and Buyer in substantially the form attached hereto as
Exhibit B
.
(14) "
Board
" means the Board of Directors of Cyclerion.
(15) "
Board Recommendation
" means the Board's recommendation that the Cyclerion stockholders authorize and approve this Agreement
and the transactions contemplated hereby, including the consideration to be received by Cyclerion.
(16) "
Business Day
" means any day other than Saturday or Sunday and any other day on which commercial banking institutions
located in the Commonwealth of Massachusetts are required, or authorized by Law, to remain closed.
(17) "
Buyer
" shall have the meaning set forth in the
Preamble
.
(18) "
Buyers
" shall have the meaning set forth in the
Preamble
.
(19) "
Buyer Claim
" shall have the meaning set forth in
Section 9.1
.
(20) "
Buyer Expense Reimbursement
" shall have the meaning set forth in
Section 8.3(a)(i)
.
(21) "
Buyer FDA Letters
" shall have the meaning set forth in
Section 7.3(a)(iv)
.
(22) "
Buyer Group
" means Buyer Parent and each Subsidiary of Buyer Parent.
3
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(23) "
Buyer Hydroxy-Compound Notice
" shall have the meaning set forth in
Section 6.13(c)
.
(24) "
Buyer Indemnitees
" means the members of the Buyer Group and their respective past, present
and future directors, officers, employees and agents, in each case
in their respective capacities as such, and each of the heirs, executors,
administrators, successors and assigns of any of the foregoing.
(25) "
Buyer Orphan Designation Letter
" shall have the meaning set forth in
Section 7.3(a)(iv)
.
(26) "
Buyer Parent Purchase Agreement
" means the Series A Preferred Stock Purchase Agreement, dated on or about the date hereof,
by and among Buyer Parent and the investors set forth on the signature pages thereto.
(27) "
Buyer Parties
" shall have the meaning set forth in
Section 8.3(a)(ii)
.
(28) "
Change of Control
" means (i) a purchase or sale, in a single transaction or a series of related transactions, of
Cyclerion's Common Stock representing more than fifty percent (50%) of the voting power in Cyclerion
by a Third Party; (ii) a merger, consolidation, other business combination, share exchange, or similar
transaction involving Cyclerion or its Subsidiary in which more than fifty percent (50%) of the
voting power in Cyclerion is acquired by a Third Party; or (iii) the purchase or sale of assets,
businesses, securities or ownership interests (including the securities of Cyclerion's Subsidiary)
representing more than fifty percent (50%) of the net assets of Cyclerion, taken as a whole, or of
Cyclerion and its Subsidiary, taken as a whole, other than pursuant to this Agreement, by a Third Party.
(29) "
Claiming Party
" shall have the meaning set forth in
Section 9.3(b)
.
(30) "
Closing
" shall have the meaning set forth in
Section 2.5
.
(31) "
Closing Date
" shall have the meaning set forth in
Section 2.5
.
(32) "
Closing Payment
" means $8,000,000 plus the amount of any Employee Expenses or R&D Expenses that Buyers are obligated to reimburse
Cyclerion for pursuant to this Agreement to the extent such amounts remain unpaid as of the Closing Date.
(33) "
CNS-penetrant sGC Stimulator
" means an sGC stimulator with cerebral spinal fluid brain to free plasma
ratio of > 0.5 when dosed 1mg/kg at steady state in rat. For clarity, the
definition of CNS-penetrant sGC Stimulator specifically excludes the following
compounds: praliciguat, olinciguat, and the preclinical candidate MM-500822.
(34) "
Code
" means the United States Internal Revenue Code of 1986, as amended.
4
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(35) "
Common Stock
" shall have the meaning set forth in
Section 3.1
.
(36) "
Confidential Information
" means, with respect to a Party, all
confidential or proprietary
information to the
extent concerning: (i) such Party or any
of its Subsidiaries and (ii) the Purchased
Assets, Assumed Liabilities, any Excluded
Assets or any Excluded Liabilities, in
each case (clauses (i)-(ii)) including any
such information furnished pursuant to
Article X
or otherwise pursuant to this
Agreement or any Ancillary Agreement;
provided
,
however
, that "Confidential Information" shall not include any information that is (A) in the public domain or
known to the public through no fault of the receiving Party or any of its Subsidiaries, (B) lawfully
acquired after the Closing Date by the receiving Party or any of its Subsidiaries from Third Parties
not known to be subject to confidentiality obligations with respect to such information or (C)
independently developed by the receiving Party or any of its Subsidiaries after the Closing Date
without reference to any Confidential Information of the disclosing Party or any of its Subsidiaries.
Notwithstanding anything to the contrary in this Agreement, subject to the foregoing proviso, from and
after the Closing, all information included in the Purchased Assets and owned or Controlled by Buyer
as of the Closing will be the Confidential Information of Buyer, and Buyer will be considered the
disclosing Party and Cyclerion the receiving Party with respect thereto. Furthermore, for the avoidance
of doubt, subject to the foregoing proviso, any information that Buyer receives from any Third
Party pursuant to a Contract that is retained by Cyclerion regarding Buyer's technology, products,
business or objectives shall be deemed to be Confidential Information of Cyclerion. Likewise, from
and after the Closing, for the avoidance of doubt, subject to the foregoing proviso, any information
that Cyclerion received from any Third Party pursuant to an Assumed Contract regarding Cyclerion's
technology, products, business or objectives shall be deemed to be Confidential Information of Buyer.
(37) "
Consents
" means any consents, waivers, notices, reports or other filings to be obtained
from or made, including with respect to any Contract, or any registrations,
licenses, permits, authorizations to be obtained from, or approvals from, or
notification requirements to, any Third Parties, including any Governmental Entity.
(38) "
Consideration Shares
" shall have the meaning set forth in
Section 3.1
.
(39) "
Contract
" means any agreement, contract, subcontract, obligation, binding understanding, note,
indenture, instrument, option, lease, promise, arrangement, release, warranty, license,
sublicense, insurance policy, benefit plan, purchase order or legally binding commitment
or undertaking of any nature (whether written or oral and whether express or implied).
5
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(40) "
Control
" means, with respect to any Intellectual Property, the possession by a Party or its Affiliates (whether by
ownership or license, other than a license granted pursuant to this Agreement) of, (i) with respect to any
tangible Know-How, the legal authority or right to possession of such tangible Know-How, with the right to
provide such tangible Know-How to the other Party on the terms set forth herein, or (ii) with respect to Patents
and intangible Know-How, or other Intellectual Property, the legal authority or right to grant a license,
sublicense, access, or right to use (as applicable) to the other Party under such Patents, intangible Know-How,
or other Intellectual Property on the terms set forth herein, in each case ((i) and (ii)), without breaching
or otherwise violating the terms of any Contract with a Third Party in existence as of the Closing Date.
(41) "
Conveyancing and Assumption Instruments
" means, collectively, the various Contracts by and between or among
Cyclerion, on the one hand, and any member(s) of the Buyer Group, on the
other hand, including the Bill of Sale, Assignment and Assumption
Agreement, Domain Name Assignment Agreement, Patent Assignment Agreement,
and other documents entered into prior to the Closing Date and to be
entered into, in each case to effect the transfer of Assets and the
Assumption of Liabilities in the manner contemplated by the Transaction
Agreements, in such form or forms as the applicable parties thereto agree.
(42) "
Copyrights
" shall have the meaning set forth in
Section 1.1(80)
.
(43) "
Cyclerion
" shall have the meaning set forth in the
Preamble
.
(44) "
Cyclerion Adverse Recommendation Change
" shall have the meaning set forth in
Section 6.8(e)
.
(45) "
Cyclerion Claim
" shall have the meaning set forth in
Section 9.2
.
(46) "
Cyclerion Common Stock
" means the common stock of Cyclerion, no par value.
(47) "C
yclerion Competing Product
" shall have the meaning set forth in
Section 6.13(a)
.
(48) "
Cyclerion FDA Letters
" shall have the meaning set forth in
Section 7.2(a)(iii)
.
(49) "
Cyclerion Hydroxy-Compound Notice
" shall have the meaning set forth in
Section 6.13(c)
.
(50) "
Cyclerion Indemnitees
" means Cyclerion, its Subsidiary, and their respective past, present
and future directors, officers, employees and agents, in each case
in their respective capacities as such, each of the heirs, executors,
administrators, successors and assigns of any of the foregoing.
(51) "
Cyclerion Orphan Designation Letter
" shall have the meaning set forth in
Section 7.2(a)(iii)
.
(52) "
Cyclerion Parties
" shall have the meaning set forth in
Section 8.3(a)(ii)
.
6
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(53) "
Cyclerion Stockholder Letter
" means the letter agreement by and between Cyclerion and Buyer Parent in the form attached hereto as
Exhibit G
.
(54) "
Direct Claim
" shall have the meaning set forth in
Section 9.3(a)(ii)
.
(55) "
Disclosure Schedules
" means the final disclosure schedules to this Agreement that are being executed and delivered by Buyer,
Buyer Parent and Cyclerion, as applicable, in connection with the execution and delivery of this Agreement.
(56) "
Domain Name Assignment Agreement
" means that certain Domain Name Assignment Agreement by and between
Cyclerion and Buyer in substantially the form attached hereto as
Exhibit D
.
(57) "
Employee Expenses
" means any and all direct and indirect costs and expenses
relating to the employment of the Employees, including, salary or
other base pay and the employer portion of payroll taxes in
connection with the foregoing, costs incurred in connection with
providing and administering retirement benefits and health and
welfare benefits, and overhead expenses (including without
limitation IT, HR and payroll expenses) that are allocated to
such Employees pursuant to an Allocation Schedule as set forth in
Exhibit E
, in each case that are incurred from
and after the date of this Agreement
through and including the applicable
Employee Expenses End Date;
provided
,
however
, that Employee Expenses shall exclude (i) any severance or termination costs attributable
to any Employees or any other employees or other service providers of Cyclerion
who do not become Transferred Employees regardless of when such severance or termination
costs are incurred, (ii) any direct or indirect costs or expenses incurred or
accrued with respect to any Employees with respect to any time period prior to the date
of this Agreement and (iii) with respect to the period after the Closing Date through
and including the applicable Employee Expenses End Date, any amounts paid from any
of Cyclerion's third party disability insurance providers to any Inactive Employees.
(58) "
Employee Expenses End Date
" shall have the meaning set forth in
Section 6.5(a)
.
(59) "
Employees
" means the individuals listed on
Section 1.1(59)
of the Disclosure Schedules.
(60) "
Encumbrance
" means any charge, claim, condition, equitable interest, lien, encumbrance,
option, pledge, security interest, hypothecation, mortgage, right of first
refusal, or any restriction on use, voting, transfer, receipt of income, right
of set-off, title retention, or exercise of any other attribute of ownership.
(61) "
Equity Financing
" means the purchase and sale of the First Tranche Shares (as defined in the Buyer Parent Purchase Agreement)
and the consummation of the Second Tranche, each pursuant to the terms of the Buyer Parent Purchase Agreement.
7
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(62) "
Exchange Act
" means the Securities Exchange Act of 1934.
(63) "
Excluded Assets
" shall have the meaning set forth in
Section 2.2
.
(64) "
Excluded Contracts
" shall have the meaning set forth in
Section 2.2(f)
.
(65) "
Excluded Liabilities
" shall have the meaning set forth in
Section 2.4
.
(66) "
Excluded Programs
" means any and all current or future programs operated by Cyclerion, other than the Purchased Programs, including
Cyclerion's Onlinciguat program, Cyclerion's Praliciguat program, and Cyclerion's preclinical programs.
(67) "
FDA
" means the United States Food and Drug Administration.
(68) "
FDA Letters
" means the Buyer FDA Letters and the Cyclerion FDA Letters.
(69) "
Fully-Diluted Basis
" shall mean, as of a specified date, the number of shares of common
stock of Buyer Parent then-outstanding plus the number of shares
of common stock of Buyer Parent issuable upon exercise or conversion
of then-outstanding shares of preferred stock of Buyer Parent.
(70) "
Governmental Entity
" means any nation or government, any state, municipality or other political subdivision thereof and
any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign,
multinational, or supranational exercising executive, legislative, judicial, regulatory, self-regulatory
or administrative functions of or pertaining to government and any executive official thereof.
(71) "
Group
" means (i) with respect to Buyer, the Buyer Group and (ii) with respect
to Cyclerion, Cyclerion and its Subsidiary, as the context requires.
(72) "
Hydroxy-Compounds
" shall have the meaning set forth in
Section 6.13(c)
.
(73) "
Inactive Employee
" shall have the meaning set forth in
Section 6.5(a)
.
(74) "
IND
" means an Investigational New Drug application required pursuant to 21 C.F.R.
Part 312 or any comparable filings outside of the United States required
to commence human clinical trials in such country or region, and all
supplements or amendments that may be filed with respect to the foregoing.
(75) "
Indemnifiable Losses
" means any and all Liabilities, including damages, losses, obligations,
penalties, judgments, settlements, claims, payments, fines and other
costs and expenses (but excluding consequential, punitive, incidental and
similar damages except to the extent paid to a third party) of any and
all Actions and demands, assessments, judgments, settlements and compromises
relating thereto and the reasonable fees and expenses of attorneys,
accountants, consultants and other professionals incurred in the
investigation or defense thereof or the enforcement of rights hereunder.
8
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(76) "
Indemnifying Party
" means, with respect to any Direct Claim or Third Party Claim, the Party which is or may be required pursuant to
Article IX
to provide indemnification pursuant to such claim.
(77) "
Indemnitee
" means, with respect to any Direct Claim or Third Party Claim, the Buyer Indemnitee or Cyclerion Indemnitee,
as the case may be, that may be entitled to indemnification hereunder with respect to such claim.
(78) "
Indemnity Payment
" shall have the meaning set forth in
Section 9.4(a)
.
(79) "
Insurance Proceeds
" means those monies (i) received by an insured from a Third Party insurance carrier or (ii) paid by a Third
Party insurance carrier on behalf of an insured, in either case net of any applicable deductible or retention.
(80) "
Intellectual Property
" means all intellectual property, whether registered or unregistered
and whether granted, pending or expired, of every kind and
description throughout the world, including all U.S. and non-U.S.:
(i) trademarks, trade dress, service marks, certification marks,
logos, slogans, design rights, names, corporate names, trade names,
internet domain names, social media accounts and addresses and
other similar designations of source or origin, together with the
goodwill symbolized by any of the foregoing (collectively, "
Trademarks
"); (ii) patents and patent applications, and
any and all related national or international
counterparts thereto and utility models,
including any provisionals, divisionals,
continuations, continuations-in-part,
reissues, reexaminations, substitutions and
extensions thereof (including supplementary
protection certificates) (collectively, "
Patents
"); (iii) copyrights and
copyrightable subject
matter, excluding Know-How (collectively, "
Copyrights
"); (iv) rights in software and computer systems;
(v) all applications and registrations for
the foregoing; (vi) trade secrets, and all
other confidential or proprietary information,
know-how, clinical data, non-clinical data,
pre-clinical data, in vitro data, inventions,
ideas, processes, formulae and methodologies,
excluding Patents (collectively, "
Know-How
"); and (vii) all rights and
remedies against past, present, and
future infringement, misappropriation,
or other violation thereof.
(81) "
Intervening Event
" means any event, fact, circumstance, development or occurrence that
affects the business, assets or operations of Cyclerion or its Subsidiary
in any material respect that is unknown to, and not reasonably
foreseeable by, the Board as of the date of this Agreement and becomes
known to the Board prior to obtaining the Stockholder Approval, except
that in no event shall an Acquisition Proposal or any event, fact,
circumstance, development or occurrence relating to the receipt, existence
or terms of an Acquisition Proposal constitute an Intervening Event.
9
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(82) "
Joint Confidentiality Agreement
" means any confidentiality agreement between Cyclerion and a prospective purchaser, in each case that relates
both to (i) all or any portion of the Purchased Assets and (ii) all or any portion of the Excluded Assets.
(83) "
Know-How
" shall have the meaning set forth in
Section 1.1(80)
.
(84) "
Knowledge of Cyclerion
" means the actual knowledge of Cheryl Gault and Anjeza Gjino, in each case, following due inquiry.
(85) "
Law
" means any applicable U.S. or non-U.S. federal, national, supranational, state,
provincial, local or similar statute, law, ordinance, regulation, rule, code, income
tax treaty, order, requirement or rule of law (including common law) or other binding
directives promulgated, issued, entered into or taken by any Governmental Entity.
(86) "
Liabilities
" means any and all indebtedness, liabilities, costs, expenses, Taxes, interest
and obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured, known or unknown, reserved or unreserved, or determined or determinable,
including those arising under any Law, Action, or in connection with any
dispute, whether asserted or unasserted, or order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity and those arising under any Contract or any fines, damages or equitable
relief which may be imposed and including all costs and expenses related thereto.
10
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(87) "
Material Adverse Effect
" means, with respect to
Cyclerion, any change, effect,
event, occurrence, state of
facts or development that,
individually or in the
aggregate, (x) is materially
adverse to the assets,
liabilities, business, results
of operations or the financial
condition of such Person
or (y) would materially
and adversely affect the
ability of Cyclerion to
perform its obligations under
this Agreement and the other
Transaction Agreements;
provided
,
however
, that none of the following or the results thereof, either alone or in combination,
shall be considered in determining whether there has been a "Material Adverse
Effect" or be deemed, either alone or in combination, to constitute, and none of
the following shall be taken into account in determining whether there would be a
"Material Adverse Effect": (i) any failure by Cyclerion to meet any internal or
published projections, forecasts, budgets or estimates relating to any period,
including with respect to revenue, earnings, cash flow or cash position (it being
understood that the underlying causes of such failure may, if they are not otherwise
excluded from the definition of Material Adverse Effect, be taken into account
in determining whether a Material Adverse Effect has occurred), (ii) any adverse
change, effect, event, occurrence, state of facts or development attributable to the
announcement, pendency or consummation of the transactions contemplated by this
Agreement or any of the Ancillary Agreements (including any cancellations of or
delays in customer orders, any reduction in sales, any termination or disruption in
supplier, distributor, partner or similar relationships, or any loss of employees),
(iii) any adverse change, effect, event, occurrence, state of facts or development
attributable to conditions affecting (A) the industries in which Cyclerion participates
(including industries from which Cyclerion obtains or purchases supplies for
use in their products or services) or (B) national, regional, local, international
or global economies (including, in each case, legal and regulatory changes), (iv)
any adverse change, effect, event, occurrence, state of facts or development resulting
from or relating to compliance with the terms of, or the taking of any action
pursuant to, in accordance with, or required, by or the inability to take any action
prohibited by, this Agreement or any of the other Transaction Agreements, (v)
any adverse change, effect, event, occurrence, state of facts or development arising
from or relating to any change in accounting requirements or principles or any
actual, threatened or proposed change in applicable Laws, rules or regulations or the
interpretation or enforcement of any of the foregoing, (vi) political conditions
or events or conditions, including the results of primary or general elections,
(vii) any adverse change, effect, event, occurrence, state of facts or development
arising in connection with natural disasters or acts of nature (including any
earthquakes, floods, hurricanes, tropical storms or fires), any national, international
or regional calamity, hostilities, civil unrest, acts of war, sabotage or terrorism
or military actions or any escalation or material worsening of any such hostilities,
civil unrest, acts of war, sabotage or terrorism or military actions existing or
underway as of the date hereof, (viii) the effect of any action taken by Buyer
Parent or any of its Subsidiaries with respect to the transactions contemplated
hereby, (ix) the effect of the coronavirus (COVID-19) pandemic (or any mutation or
variation of the SARS-CoV-2 virus), taking into account any "shelter-in-place" or
similar order, directive, or recommendation issued by a Governmental Entity or
Cyclerion with respect thereto, (x) any labor strike, stoppage, slowdown, lockout, labor
dispute, or the loss, absence, illness, disability, death, quarantine, diminished
productivity or work schedule, termination, layoff or furlough of employees,
independent contractors or service providers of Cyclerion or its Subsidiary (including
in connection with the coronavirus (COVID-19) pandemic (or any mutation or variation
of the SARS-CoV-2 virus), taking into account any "shelter-in-place" or similar
Order, directive, or recommendation issued by a Governmental Entity), (xi) actions
or omissions of Cyclerion that are consented to, following disclosure of all
relevant facts and circumstances, or requested by Buyer Parent or any of its
Subsidiaries pursuant to the terms of this Agreement, (xii) any adverse change, effect,
event, occurrence, state of facts or development to the extent attributable to
changes in any financial, debt, credit, capital or banking markets or conditions
(including any disruption thereof), or changes in interest, currency or exchange
rates or the price of any commodity, security or market index, (xiii) any acts of
terrorism, sabotage or war (including the military conflict between Russia and Ukraine
and any military conflicts arising therefrom or related thereto), the outbreak or
escalation of hostilities, weather conditions, change in geopolitical, political or
social conditions, cyberattacks, disruptions in supply chains or other force majeure
events, in each case, including any worsening thereof, or (xiv) any items set forth
in the Disclosure Schedules hereto); provided that the exceptions in clauses
(iii), (v), (vi) and (vii), (xii) (xiii) above shall apply only to the extent such
change, effect, event, occurrence, state of facts or development referred to in
such exception does not have a materially disproportionate impact on Cyclerion
relative to other Persons operating in the industries in which Cyclerion operates.
11
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(88) "
Negotiation Period
" shall have the meaning set forth in
Section 6.13(c)
.
(89) "
Non-Separable Information
" shall have the meaning set forth in
Section 2.5(f)
.
(90) "
Novation and Waiver Agreement
" means that certain Novation and Waiver Agreement, dated May 2, 2023 among Cyclerion, Buyer and the Alzheimer's Association.
(91) "
Orphan Designation Letters
" means the Buyer Orphan Designation Letter and the Cyclerion Orphan Designation Letter.
(92) "
Patents
" shall have the meaning set forth in
Section 1.1
(80)
.
(93) "
Patent Assignment Agreement
" means that certain Patent Assignment Agreement by and between
Cyclerion and Buyer in substantially the form attached hereto as
Exhibit F
.
(94) "
Permits
" shall mean all licenses, permits, franchises, approvals, registrations, authorizations,
consents or orders of, or filings with, or issued by any Governmental Entity.
(95) "
Permitted Encumbrance
" means (i) Encumbrances for Taxes, assessments or other governmental charges or levies
which are not yet due and payable (and for which adequate reserves have been made on
Cyclerion's books and records in accordance with GAAP), (ii) statutory or common law
Encumbrances to secure landlords, lessors or renters under leases or rental agreements
confined to the premises rented, (iii) mechanics', carriers', workers', repairers' and
other similar Encumbrances arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the part of Cyclerion or the
validity or amount of which is being contested in good faith by appropriate proceedings,
or pledges, deposits or other Encumbrances securing the performance of bids, trade
contracts, leases or statutory obligations (including workers' compensation, unemployment
insurance or other social security legislation), (iv) Encumbrances on leases, subleases,
easements, licenses, rights of use, rights to access and rights of way arising
therefrom or which, individually or in the aggregate, do not or would not materially
impair the use or occupancy of the real property or materially detract from the value
of Cyclerion, (v) all covenants, conditions, restrictions, easements, charges, rights-of-way,
other Encumbrances and other similar matters of record set forth in any state,
local or municipal recording or like office which, individually or in the aggregate, do
not materially interfere with the present use or materially detract from the value of
the properties or assets of Cyclerion, (vi) minor encroachments, including to foundations
and retaining walls, variations, if any, between tax lot lines and property lines,
and deviations, if any, of fences or shrubs from designated property lines, all of
which are insurable or which would be shown by a current accurate survey that do not
impair in any material respect the continue use and operation of the real property as
is currently used and operated, (vii) any Encumbrances reflected or identified in the
most recent financial statements of Cyclerion, and (viii) nonexclusive licenses of
Intellectual Property entered into in the ordinary course of business (A) granted to service
providers (such as contract research organizations, contract manufacturers, and
consultants) for the purpose of enabling them to perform services to Cyclerion (B) granted
under material transfer agreements, confidentiality agreements, or evaluation agreements
to enable a Third Party to evaluate Cyclerion's Intellectual Property solely for the
purposes of allowing the Third Party to determine whether to pursue a potential
transaction, in each case ((A) and (B)), entered into in the ordinary course of business.
12
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(96) "
Person
" means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an
unincorporated organization, a limited liability entity, any other entity and any Governmental Entity.
(97) "
Pre-Closing Period
" shall have the meaning set forth in
Section 6.1
.
(98) "
Pre-Closing Tax Period
" means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning
before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.
(99) "
Preclinical and Clinical Trial Activities
" shall have the meaning set forth in
Section 6.7(a)
.
(100) "
Program Indication
" means any neuropsychiatric, neurodegenerative and primary mitochondrial
genetic disease or disorder, as well as stroke and stroke recovery.
(101) "
Proxy Statement
" shall have the meaning set forth in
Section 6.9(a)
.
(102) "
PTC Grant
" means the Part the Cloud Grant dated August 15, 2021 between Cyclerion and
the Alzheimer's Association, as modified by the Novation and Waiver Agreement.
(103) "
Purchased Assets
" means all of the properties, rights, interests and other tangible and intangible assets
of Cyclerion primarily related to the Purchased Programs, as more fully described in
Section 2.1
, but excluding any of the Excluded Assets.
(104) "
Purchased Intellectual Property
" shall have the meaning set forth in
Section 2.1(a)
.
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(105) "
Purchase Price
" means the Closing Payment plus the Consideration Shares.
(106) "
Purchased Programs
" means Cyclerion's zagociguat program (also known as the CY6463 program) and Cyclerion's CY3018 program
.
(107) "
R&D Expenses
" shall have the meaning set forth in
Section 6.7(b)
.
(108) "
Representatives
" means, with respect to any Person, any of such Person's directors, officers, employees,
agents, consultants, advisors, accountants, attorneys or other representatives.
(109) "
Retained Names and Marks
" shall have the meaning set forth in
Section 6.6
.
(110) "
Reverse Termination Fee
" shall have the meaning set forth in
Section 8.3(b)(i)
.
(111) "
Right of First Negotiation
" means the right, but not an obligation, of Buyer to negotiate, before any
other Person, a license of the applicable Hydroxy-Compound from Cyclerion.
(112) "
Second Tranche
" means the purchase and sale of the Second Tranche Shares (as defined in the Buyer
Parent Purchase Agreement) pursuant to the terms of the Buyer Parent Purchase Agreement.
(113) "
Securities Act
" means the Securities Act of 1933.
(114) "
Specified Employees
" shall have the meaning set forth in
Section 6.5(a)
.
(115) "
Stockholder Agreements
" means the Voting Rights Agreement, Investor Rights Agreement and Right of First Refusal
and Co-Sale Agreement of Buyer Parent, in each case in substantially the form set forth on
Exhibit C
as well as the Cyclerion Stockholder Letter.
(116) "
Stockholder Approval
" shall have the meaning set forth in
Section 6.9(a).
(117) "
Stockholders Meeting
" shall have the meaning set forth in
Section 6.9(a)
.
(118) "
Straddle Period
" means any taxable period beginning on or prior to the Closing Date and ending after the Closing Date.
(119) "
Subsidiary
" means with respect to any Person (i) a corporation, fifty percent (50%) or more of the voting or capital stock of which
is, as of the time in question, directly or indirectly owned by such Person and (ii) any other Person in which such
Person, directly or indirectly, owns fifty percent (50%) or more of the equity or economic interest thereof or has the
power to elect or direct the election of fifty percent (50%) or more of the members of the governing body of such Person.
14
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(120) "
Superior Proposal
" means a bona fide written Acquisition
Proposal (with all references to
"twenty-five percent (25%)" in the definition
thereof deemed to be "fifty percent
(50%)" for the purposes of this
definition) made after the date hereof by
any Person that (a) is not received
as a result of a material breach of
Section 6.8
by Cyclerion and (b) is on terms that the Board determines in good faith, after consultation with Cyclerion's
outside legal counsel and financial advisor, taking into account all legal, financial, regulatory and other aspects
of the proposal the Board determines is appropriate (including any termination or break-up fees, the conditionality,
the likelihood and timing of required governmental approvals, time likely to be required to consummate
such Acquisition Proposal, ability of the Person making the proposal to finance and pay the contemplated consideration
and the likelihood of success of such Acquisition Proposal), such Acquisition Proposal is more favorable
to Cyclerion's stockholders from a financial perspective than the transactions contemplated hereby (including
any adjustment to the terms and conditions proposed by Buyer in response to such Acquisition Proposal).
(121) "
Tax
" means any United States federal, state or local, or non-United
States, net income, gross income, gross receipts, windfall profit,
severance, property, production, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad
valorem, value-added, transfer, stamp, or environmental tax, or any
other tax of any kind or any charge in the nature of (or similar to)
taxes, together with any interest or penalty or addition to tax imposed
by any Governmental Entity, in each case whether disputed or not.
(122) "
Tax Return
" means any return, declaration, report, claim for refund, information
return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof
or any related or supporting information of any of the foregoing.
(123) "
Termination Date
" shall have the meaning set forth in
Section 8.1(a)(ii)
.
(124) "
Termination Fee
" shall have the meaning set forth in
Section 8.3(a)(i)
.
(125) "
Third Party
" means any Person other than the Parties or any of their respective Subsidiaries.
(126) "
Third Party Claim
" shall have the meaning set forth in
Section 9.3(b)
.
(127) "
Third Party Proceeds
" shall have the meaning set forth in
Section 9.4(a)
.
(128) "
Trademarks
" shall have the meaning set forth in
Section 1.1
(80)
.
(129) "
Transaction Agreements
" means any of this Agreement and the Ancillary Agreements.
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(130) "
Transfer Taxes
" means any sales, use, transfer, value-added, real property transfer or gains, documentary, recordation,
filing, conveyance, stamp or similar Taxes incurred in connection with the consummation of the transactions
contemplated by this Agreement (together with any interest thereon, penalties, fines, fees, additions to
tax or additional amounts with respect thereto), excluding, for the avoidance of doubt, any income Taxes.
(131) "
Transferred Employees
" shall have the meaning set forth in
Section 6.5(a)
.
(132) "
Transferred Records
" shall have the meaning set forth in
Section 2.1(f)
.
(133) "
Transition Period
" shall have the meaning set forth in
Section 2.5(c)(ii)
.
(134) "
Transition Services Agreement
" shall have the meaning set forth in
Section 7.2(a)(v)
.
(135) "
Voting Agreement
" shall have the meaning set forth in the
Recitals
Section 1.2.
References; Interpretation
. References in this Agreement to any gender include references to all
genders, and references to the singular include references to the plural and
vice versa. Unless the context otherwise requires, the words "include",
"includes" and "including" when used in this Agreement shall be deemed to be
followed by the phrase "without limitation". Unless the context otherwise
requires, references in this Agreement to Articles, Sections, Exhibits and
Disclosure Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Disclosure Schedules to, this Agreement. Unless the context
otherwise requires, the words "hereof", "hereby" and "herein" and words of
similar meaning when used in this Agreement refer to this Agreement in its
entirety and not to any particular Article, Section or provision of this
Agreement. The words "written request" when used in this Agreement shall
include email. Reference in this Agreement to any time shall be to Eastern
time unless otherwise expressly provided herein. The word "or" shall not be
exclusive. References to any "statute" or "regulation" are to such statute or
regulation as amended, modified, supplemented or replaced from time to time
(and, in the case of any statute, include any rules and regulations
promulgated under such statute) and to any "section of any statute or
regulation" include any successor to such section. References to any
Governmental Entity include any successor to such Governmental Entity, and
references to any Affiliate include any successor to such Affiliate. Whenever
the last day for the exercise of any right or the discharge of any duty under
this Agreement falls on a day other than a Business Day, the Party having such
right or duty shall have until the next Business Day to exercise such right or
discharge such duty. Unless otherwise indicated, the word "day" shall be
interpreted as a calendar day.
ARTICLE II
THE ASSETS AND LIABILITIES
Section 2.1.
Purchase and Sale of the Purchased Assets
. Subject to the terms and conditions of this Agreement, Buyer agrees to
purchase at the Closing (as defined below) and Cyclerion agrees to and shall
sell and cause to be sold, assigned, transferred, and conveyed to Buyer at the
Closing, all of Cyclerion's rights, title, and interests, in and to the
Purchased Assets, including without limitation, the following assets:
16
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(a)
Intellectual Property rights owned by Cyclerion that are primarily related to
the research, development, manufacture, commercialization, or other
exploitation of the Purchased Programs, including the Intellectual Property
set forth in
Section 2.1(a)
of the Disclosure Schedules, and, except to the extent constituting an
Excluded Asset identified on
Section 2.2(l)
of the Disclosure Schedules, all claims and causes of action with respect to
any of the foregoing, whether accruing before, on, or after the Closing Date,
including all rights to and claims for damages, restitution and injunctive and
other legal and equitable relief for past, present, and future infringement,
misappropriation or violation thereof (the "
Purchased Intellectual Property
");
(b)
Contracts to which Cyclerion is a party to the extent primarily related to the
research, development, manufacture or commercialization of the Purchased
Programs, including those contracts listed in
Section 2.1(b)
of the Disclosure Schedules (the "
Assumed Contracts
");
(c)
all physical assets, wherever located, that are used or held for use primarily
in connection with the Purchased Programs;
(d)
inventories used, held for use, or intended to be used primarily in operating
or developing the Purchased Programs, wherever located, including inventories
of raw materials, finished goods, drug substance, intermediates, operating
supplies, work-in-process, products, supplies, packaging, packaging materials,
parts and other inventories used, held for use, or intended to be used in
operating or developing the Purchased Programs, including all: (i) of the
foregoing listed on
Section 2.1(d)
of the Disclosure Schedules, and (ii) of the foregoing being held on
consignment, bailment, or other arrangement;
(e)
books and records relating to the Purchased Assets, including all technical
literature used primarily for the Purchased Programs and all rights to receive
mail (including e-mail) and other communications related to the Purchased
Programs (including mail (including e-mail) and communications from customers,
suppliers, distributors, agents and others with respect to the Purchased
Programs);
(f)
all INDs, Permits and regulatory documentation with respect to the Purchased
Programs (including any drug designations), including those set forth on
Section 2.1(f)
of the Disclosure Schedules, all correspondence with the FDA or other
Governmental Entity regarding the Purchased Programs, all preclinical and
clinical study data supporting the Purchased Programs and all related
historical safety and pharmacovigilance data, provided that Cyclerion will
have the right to make copies of all such records and will retain the right to
access and use any such records following the Closing (the "
Transferred Records
");
(g)
all personnel files for the Transferred Employees;
(h)
all claims, causes of action, defenses and rights of offset or counterclaim
against Third Parties primarily related to any Purchased Asset or any Assumed
Liability, except to the extent constituting an Excluded Asset identified on
Section 2.2(l)
of the Disclosure Schedules;
17
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(i)
all assets listed in Section 2.1(i) of the Disclosure Schedules; and
(j)
all goodwill primarily associated with the categories of Purchased Assets set
forth in Section 2.1(a)-(i).
Section 2.2.
Excluded Assets
. Notwithstanding anything contained herein to the contrary, Cyclerion shall
retain, and Buyer shall not acquire or assume, any and all assets of Cyclerion
not included in Purchased Assets, including the following assets, properties
and rights (collectively, the "
Excluded Assets
"):
(a)
all cash and cash equivalents of Cyclerion, together with all rights to all
bank accounts of Cyclerion;
(b)
all accounts receivable of Cyclerion;
(c)
all minute books, organizational documents, stock registers and such other
books and records of Cyclerion that pertain to the ownership, organization and
existence of Cyclerion and its Subsidiary;
(d)
all personnel files for all current and former employees of Cyclerion who do
not become Transferred Employees;
(e)
all assets and Contracts related to, or assets held with respect to, the
benefit plans of Cyclerion;
(f)
all rights of Cyclerion under the Transaction Agreements;
(g)
all Contracts of Cyclerion and its Subsidiary that are not Assumed Contracts,
including those Contracts set forth in
Section 2.2(g)
of the Disclosure Schedules (the "
Excluded Contracts
");
(h)
all insurance policies and related Contracts of Cyclerion and all rights
thereunder (including the right to make claims thereunder and to the proceeds
thereof);
(i)
all assets, properties and rights, including all Contracts, primarily related
to Cyclerion's business other than the Purchased Assets;
(j)
all abandoned or unclaimed property reportable under any state or local
unclaimed property, escheat or similar Law and associated with periods prior
to the Closing Date;
(k)
all Intellectual Property rights owned or controlled by Cyclerion that are not
primarily related to the research, development, manufacture, commercialization
and other exploitation of the Purchased Programs, including the Intellectual
Property rights set forth in
Section 2.2(k)
of the Disclosure Schedules, and all the goodwill associated therewith;
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(l)
Cyclerion's or its Subsidiary's claims, causes of action, defenses and rights
of offset or counterclaim against third parties not primarily related to any
Purchased Asset or any Assumed Liability, as well as any claims, defenses,
rights of offset or counterclaims made by Cyclerion or its Subsidiary against
Third Parties related to any Purchased Assets but only to the extent in
respect of the claims, causes of action, defenses and rights of offset or
counterclaim against Third Parties set forth in
Section 2.2(l)
of the Disclosure Schedules;
(m)
all Joint Confidentiality Agreements, all bids and expressions of interest
received from third parties with respect to the Purchased Assets (but
excluding any confidentiality agreement that exclusively relates to the
Purchased Programs);
(n)
all privileged materials, documents and records of Cyclerion or Cyclerion's
Subsidiary that are not related to the Purchased Assets;
(o)
all Tax assets of Cyclerion or its Subsidiary, or that relate to the Purchased
Assets for a Pre-Closing Tax Period, including (i) Tax losses, refunds,
credits, credit carry forwards and other Tax attributes, (ii) all deposits,
prepaid or advance payments with respect to Taxes, and (iii) any claims,
rights, and interest in and to any Tax asset, refund, credit, deduction or
reduction of Taxes; and
(p)
all Tax Returns, Tax information and Tax records related to Cyclerion or its
Affiliates.
Section 2.3.
Assumption of Liabilities
. Subject to the terms and conditions of this Agreement, at the Closing, Buyer
shall assume from Cyclerion and agree to pay, perform and discharge in
accordance with their respective terms ("Assume"; "Assumed" and "Assumption"
shall have the correlative meaning), all of the Assumed Liabilities regardless
of (A) except as set forth in the definition of Assumed Liabilities, when or
where such Liabilities arose or arise, (B) where or against whom such
Liabilities are asserted or determined, and (C) which entity is named in any
action associated with any Liability; provided that Buyer shall not assume
(and the Assumed Liabilities shall not be deemed to include) Liabilities: (a)
to the extent arising out of or relating to a breach by Cyclerion or its
Subsidiary of an Assumed Contract or (b) to the extent relating to the period
prior to the Closing Date.
Section 2.4.
Excluded Liabilities
. Except for the Assumed Liabilities, Buyer shall not assume pursuant to this
Agreement or the transactions contemplated hereby, and shall have no liability
for, any Liabilities of Cyclerion or any of its Affiliates (the "
Excluded Liabilities
"), all of which shall be retained by and continue to be Liabilities of
Cyclerion or its Affiliates, as applicable. Without limiting the generality
or effect of the foregoing, Excluded Liabilities shall include the following
Liabilities:
(a)
all Liabilities and obligations relating to, based in whole or in part on
events or conditions occurring or existing in connection with, or arising out
of, Cyclerion or the Purchased Assets as operated prior to the Closing Date,
or the ownership, possession, use, operation or sale or other disposition
prior to the Closing Date of any of the Purchased Assets (other than the PTC
Grant, the Employee Expenses and R&D Expenses,);
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(b)
all Liabilities based upon, arising out of or otherwise in respect of any
employment, compensation, equity-based, incentive or other benefit plans,
contracts, programs or agreements of Cyclerion, other than the Employee
Expenses;
(c)
all Liabilities based upon, arising out of or otherwise in respect of any
current or former employees, independent contractors, consultants, or other
service providers of Cyclerion or any other member of its Group regardless of
whenever occurring, other than (i) the Employee Expenses and (ii) solely with
respect to the period following the Closing (or, if later, the date a
Transferred Employee becomes employed by Buyer or its Affiliates as provided by
Section 6.5(a)
, except for the Employee Expenses related to any Inactive Employees who
become Transferred Employees with respect to the period following the
Closing), Liabilities related to the employment or termination of employment
of the Transferred Employees;
(d)
except as otherwise provided in
Section 6.11(b),
all Liabilities for (i) Taxes of Cyclerion (or its Subsidiary) or (ii) Taxes
relating to the Purchased Assets for any Pre-Closing Tax Period;
(e)
all Liabilities arising in connection with, or relating to, any real property
owned, leased or otherwise used or occupied by Cyclerion or its Subsidiary;
(f)
all royalties or other Liabilities owed under the Excluded Contracts; and
(g)
all Liabilities relating to abandoned or unclaimed property reportable under
any state or local unclaimed property, escheat or similar Law where the
dormancy period elapsed on or prior to the Closing Date.
Section 2.5.
Transfers not
Effected at or Prior to the Closing Date;
Transfers Deemed Effective as of the Closing Date
.
(a)
If and to the extent that the transfer to the Buyer Group of any Purchased
Asset or Assumption by the Buyer Group of any Assumed Liability, in each case
contemplated hereby, would be a violation of applicable Law or require any
Consent that has not been obtained or made by the Closing Date then, unless
the Parties mutually shall otherwise agree, the transfer to the Buyer Group of
such Purchased Assets or the Assumption by the Buyer Group of such Assumed
Liabilities, as the case may be, shall be automatically deemed deferred and
any such purported transfer or Assumption shall be null and void until such
time as all legal impediments are removed or such Consent has been obtained or
made. Notwithstanding the foregoing, any such Purchased Asset or Assumed
Liability shall continue to constitute a Purchased Asset or Assumed Liability,
as applicable, for all other purposes of this Agreement.
(b)
With respect to Assets and Liabilities described in
Section 2.5(a)
, taking into account any applicable restrictions or considerations relating
to the contemplated Tax treatment of the transactions contemplated hereby,
each of Cyclerion and Buyer shall, and shall cause the members of its
respective Group to, (i) treat for all Tax purposes (A) the deferred Assets as
assets having been transferred to and owned by the Person entitled to such
Assets not later than the Closing Date and (B) the deferred Liabilities as
having been assumed by the Person intended to be subject to such Liabilities
not later than the Closing Date and (ii) neither report nor take any Tax
position (on a Tax Return or otherwise) inconsistent with such treatment,
except as required by applicable Law.
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(c)
In the event that any transfer of Assets or Assumption of Liabilities intended
to be effected hereunder has not been consummated at or prior to the Closing
Date, whether as a result of the provisions of
Section 2.5(a)
or for any other reason:
(i)
unless the Parties shall otherwise agree, the Parties and their respective
Group members shall cooperate and use commercially reasonable efforts to seek
to obtain, in accordance with applicable Law, any necessary Consents for the
transfer of all Purchased Assets and the Assumption of all Assumed Liabilities
contemplated to be transferred or Assumed, as applicable, pursuant to this
Article II
to the fullest extent permitted by applicable Law;
provided
,
however
, that, except as otherwise agreed between Cyclerion and Buyer in writing,
neither Cyclerion nor Buyer shall be obligated to make any payment, incur any
Liability or offer or grant any accommodation (financial or otherwise,
regardless of any provision to the contrary in any underlying Contract,
including any requirements for the securing or posting of any bonds, letters
of credit or similar instruments, or the furnishing of any guarantees) to any
Third Party to obtain or make such Consent; and
(ii)
for the period beginning on the Closing Date and ending on the six (6)-month
anniversary of the Closing Date (the "
Transition Period
"), (A) the Party (or the applicable member of its Group) retaining such Asset
shall thereafter hold (or shall cause such member in its Group to hold) such
Asset in trust for the use and benefit of the Party entitled thereto (at the
expense of the Party entitled thereto) and (B) the Party intended to Assume
such Liability shall, or shall cause the applicable member of its Group to,
pay or reimburse the Party retaining such Liability for all amounts paid or
incurred in connection with the retention of such Liability. In addition,
during the Transition Period, Cyclerion (or the applicable member of its
Group) shall (or shall cause such member in its Group to) treat, insofar as
reasonably possible and to the extent permitted by applicable Law, such
Purchased Asset in the ordinary course of business in accordance with past
practice and take such other actions as may be reasonably requested by Buyer
in order to place Buyer, insofar as reasonably possible and to the extent
permitted by applicable Law, in the same position as if such Purchased Asset
had been transferred as contemplated hereby, and so that all the benefits and
burdens relating to such Purchased Asset, including possession, use, risk of
loss, potential for income and gain, and dominion, control and command over
such Purchased Asset, are to inure from and after the Closing Date to the
applicable member or members of the Buyer Group entitled to the receipt of
such Purchased Asset. In furtherance of the foregoing, the Parties agree
that, as of the Closing Date, Buyer shall be deemed to have acquired complete
and sole beneficial ownership over all Purchased Assets, together with all
rights, powers and privileges incident thereto, and shall be deemed to have
Assumed in accordance with the terms of this Agreement all Assumed
Liabilities, and all duties, obligations and responsibilities incident
thereto, which Buyer is entitled to acquire or required to Assume pursuant to
the terms of the Transaction Agreements.
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(d)
If and when the Consents or conditions, the absence or non-satisfaction of
which caused the deferral of transfer of any Asset or deferral of the
Assumption of any Liability pursuant to
Section 2.5(a)
are obtained or satisfied, the transfer or Assumption of the applicable Asset
or Liability shall be effected without further consideration in accordance
with and subject to the terms of this Agreement (including
Section 2.2
and
Section 2.3
) or the applicable Ancillary Agreement, and shall, to the extent possible
without the imposition of any undue cost on any Party, be deemed to have
become effective as of the Closing Date.
(e)
The Party (or the applicable member of its Group) retaining any Asset or
Liability due to the deferral of the transfer of such Asset or the deferral of
the Assumption of such Liability pursuant to
Section 2.5(a)
or otherwise shall (i) not be obligated, in connection with the foregoing, to
expend any money unless the necessary funds are advanced, assumed, or agreed
in advance to be reimbursed by the Party (or the applicable member of its
Group) entitled to such Asset or the Person intended to be subject to such
Liability, other than reasonable attorneys' fees and recording or similar or
other incidental fees, all of which shall be promptly reimbursed by the Party
(or the applicable member of its Group) entitled to such Asset or the Person
intended to be subject to such Liability and (ii) be indemnified, pursuant to
the provisions of
Article IX
, for all Indemnifiable Losses or other Liabilities arising out of any actions
(or omissions to act) of such retaining Party taken (or not taken) at the
written direction of the other Party (or the applicable member of its Group)
in connection with and relating to such retained Asset or Liability, as the
case may be.
(f)
To the extent that any Transferred Records, in the form that Cyclerion is able
to deliver to Buyer, is inseparable from any data or information constituting
Excluded Assets (the "
Non-Separable Information
"), notwithstanding the fact that such Non-Separable Information may have been
delivered to Buyer along with the Transferred Records, no right, title or
interest shall be transferred to any member of the Buyer Group with respect to
such Non-Separable Information. No member of the Buyer Group shall use or
exploit in any manner such Non-Separable Information except to the extent
expressly permitted pursuant to
Section 6.3
.
Section 2.6.
Further Assurances
.
(a)
In addition to and without limiting the actions specifically provided for
elsewhere in this Agreement and subject to the limitations expressly set forth
in this Agreement, including
Section 2.5
, each of the Parties shall cooperate with each other and shall use (and shall
cause its respective Subsidiaries to use) commercially reasonable efforts,
from and after the date of this Agreement, to take, or to cause to be taken,
all actions, and to do, or to cause to be done, all things reasonably
necessary on its part under applicable Law or contractual obligations to
consummate and make effective the transactions contemplated by this Agreement
and the Ancillary Agreements as promptly as reasonably practicable.
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(b)
Without limiting the foregoing, from and after the date of this Agreement:
(i)
each Party shall cooperate with the other Party to execute and deliver, and
use commercially reasonable efforts to cause to be executed and delivered, all
instruments, including instruments of transfer or title, and to make all
filings with, and to obtain all Consents, and to take or cause to be taken all
such other actions as such Party may reasonably be requested to take by any
other Party from time to time, as promptly as reasonably practicable,
consistent with the terms of this Agreement and the Ancillary Agreements, in
order to effectuate the provisions and purposes of this Agreement and the
Ancillary Agreements and the transfers of the applicable Assets and the
assignment and Assumption of the applicable Liabilities and the other
transactions contemplated hereby and thereby;
(ii)
Cyclerion will take (and cause its Subsidiary and their respective employees,
agents, and contractors to take) such further actions reasonably requested by
Buyer to evidence the assignment of the Purchased Intellectual Property and to
assist Buyer in obtaining Patent rights and other Intellectual Property
protection for inventions within the Purchased Intellectual Property,
including executing further assignments, consents, releases, and other
commercially reasonable documentation and providing good faith testimony by
affidavit, declaration, in-person, or other proper means in support of any
effort by Buyer to establish, perfect, defend, or enforce its rights in any
Purchased Intellectual Property through prosecution of governmental filings,
regulatory proceedings, litigation, and other means; and
(iii)
in the event that any Party (or member of such Party's Group) receives any
Assets (including the receipt of payments made pursuant to Contracts and
proceeds from accounts receivable with respect to such Asset) or is liable for
any Liability that is otherwise assigned to any Person that is a member of the
other Group pursuant to this Agreement or the Ancillary Agreements, such Party
agrees to promptly transfer, or cause to be transferred, without further
consideration such Asset or Liability to the other Party so entitled thereto
(or to a member of such other Party's Group as designated by such other Party)
and, prior to any such transfer, such Asset or Liability, as the case may be,
shall be held in accordance with the provisions of
Section 2.5
; provided, that the provisions of this
Section 2.6(b)(iii)
are not intended to, and shall not, be deemed to constitute an authorization
by any Party to permit the other to accept service of process on its behalf
and no Party is or shall be deemed to be the agent of any other Party for
service of process purposes.
(c)
From and after the date of this Agreement, with respect to any Action where
any Party hereto is a defendant, when and if requested by such Party, the
other Party shall use commercially reasonable efforts to petition the
applicable court to remove the requesting Party as a defendant to the extent
that such Action relates solely to Assets or Liabilities that the other Party
(or any member of such other Party's Group) has been assigned pursuant to this
Article II
, and the other Party shall cooperate and assist in any required communication
with any plaintiff or other related Third Party.
Section 2.7.
Closing
. On the terms and subject to the conditions set forth in this Agreement, the
closing of the transactions contemplated by this agreement (the "
Closing
") shall take place: (a) at 10:00 a.m. Eastern time, on the fifth Business Day
after the conditions to the Closing set forth in
Section 7.1
,
Section 7.2
, and
Section 7.3
(other than those conditions that by their terms require the delivery of any
such documents or the taking of other action at the Closing) are satisfied or
waived; or (b) at such other time or on such other date as may be agreed upon
by Buyer Parent and Cyclerion. The date on which the Closing is to occur is
herein referred to as the "
Closing Date
." The Closing shall take place at the offices of Hughes Hubbard & Reed LLP,
One Battery Park Plaza, New York, NY or at such other place as may be agreed
upon in writing by Buyer Parent and Cyclerion.
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ARTICLE III
THE PURCHASE PRICE
Section 3.1.
Purchase Price
. As payment for the Purchased Assets, Buyers shall at Closing pay and deliver:
(a)
to Cyclerion, an amount in cash equal to the Closing Payment by wire transfer
of immediately available funds to Cyclerion to such bank account designated in
writing by Cyclerion (such designations to be made prior to the Closing Date);
and
(b)
a number of shares of common stock, par value 0.0001 ("
Common Stock
" and such shares of Common Stock, the "
Consideration Shares
") of Buyer Parent, such that following the issuance of the Consideration
Shares, the Consideration Shares comprise ten percent (10%) of all of Buyer
Parent's outstanding equity securities on a Fully-Diluted Basis immediately
following the Closing.
(c)
The Parties intend that the cash and Consideration Shares received by
Cyclerion with respect to the transactions contemplated by this Agreement
shall be treated as consideration received in a taxable sale in exchange for
the Purchased Assets pursuant to Section 1001 of the Code. This Agreement and
the transactions contemplated hereby do not constitute a "plan of
reorganization" within the meaning of Section 368 of the Code. Neither Party
(nor any of their respective Representatives or Affiliates) shall take a
position inconsistent with the tax-treatment described in this
Section 3.1(c)
absent a "determination" within the meaning of Section 1313 of the Code to the
contrary.
Section 3.2.
Withholding Taxes
. Buyers shall not deduct or withhold any Taxes from any amounts payable
pursuant to this Agreement unless such deduction or withholding of Taxes is
required under any applicable Law to be so deducted or withheld. If any
applicable Law requires such deduction or withholding of any Tax from any such
payments, then Buyers shall make such deduction or withholding and shall
timely pay the full amount deducted or withheld to the relevant Governmental
Entity in accordance with the applicable Law. Any amount so deducted and
withheld that is timely paid to the relevant Governmental Entity in accordance
with applicable Law shall be treated by the parties hereto for all purposes as
having been delivered and paid to such Person in respect of which such
deduction and withholding was made;
provided
,
however
, that Buyers shall use commercially reasonable efforts to provide such Person
with written notice of the intent to deduct and withhold such amount at least
five (5) Business Days prior to making the relevant payment (except in the
case of any failure to deliver an Internal Revenue Service Form W-9 pursuant to
Section 7.2(a)(ii)
); and
provided
further
that so long as Cyclerion delivers a properly completed and executed Internal
Revenue Service Form W-9 to Buyer pursuant to
Section 7.2(a)(ii)
, Buyers shall not deduct or withhold any Taxes under U.S. federal, U.S. state
or U.S. local Law, from any payment to Cyclerion except to the extent
resulting from a change in applicable Law (or guidance) on or after the date
of this Agreement. Buyers and Cyclerion shall cooperate in good faith and take
reasonable steps to minimize any such deduction and withholding.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CYCLERION
Except as otherwise set forth in the Disclosure Schedules or as disclosed in
any reports, forms, statements or other documents (including exhibits and all
other information incorporated therein) required to be filed or furnished by
Cyclerion with the SEC under the Exchange Act after December 31, 2022
(excluding any disclosures in "risk factors" or otherwise relating to
"forward-looking statements" to the extent that they are cautionary,
predictive or forward-looking in nature), Cyclerion hereby represents and
warrants to Buyers as follows:
Section 4.1.
Incorporation; Authority
. Cyclerion has been duly incorporated, is validly existing as a corporation,
and is in good standing under the laws of the State of Massachusetts and,
except as would not individually or in the aggregate have a Material Adverse
Effect, any other jurisdiction in which it is qualified to carry on its
business, and, except as would not individually or in the aggregate have a
Material Adverse Effect, has the requisite power to carry on its business as
now conducted. Cyclerion has the requisite corporate power and authority to
sign and deliver this Agreement and the other Transaction Agreements, and to
perform its obligations hereunder and thereunder. This Agreement has been duly
authorized, executed and delivered by Cyclerion and, assuming the due
authorization, execution and delivery hereof by Buyers, constitutes a legal,
valid and binding obligation of Cyclerion enforceable against Cyclerion in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity.
Section 4.2.
The Purchased Assets
. Cyclerion is the legal and beneficial owner of all rights, title, and
interests in and to all of the Purchased Assets and has good, valid, and
marketable title to the Purchased Assets. The Purchased Assets are free and
clear of all Encumbrances other than Permitted Encumbrances. Cyclerion's
Subsidiary does not own any right, title or interest in or to any of the
Purchased Assets. The Purchased Assets, together with the Know-How licensed to
Buyer pursuant to
Section 6.3
, constitutes all of the assets, tangible and intangible, owned or controlled
by Cyclerion or its Subsidiary that are reasonably necessary for the operation
of the Purchased Programs following the Closing
.
There are no Backup Compounds relating to the Purchased Programs.
Other than the Patents included in the Purchased Intellectual Property,
Cyclerion and its Subsidiary do not own or Control any Patent that, absent a
license, would be infringed by the development, manufacture, commercialization,
or other exploitation of the Purchased Programs.
Section 4.3.
Compliance with Law
. Except as would not individually or in the aggregate be material to
Cyclerion, Cyclerion is not in violation of any Law, and to the Knowledge of
Cyclerion, no event has occurred or circumstance exists that (with or without
notice or lapse of time) would constitute or result in a violation by
Cyclerion or its Subsidiary of, or failure on the part of Cyclerion or its
Subsidiary to comply with, any Law that is or was applicable to the Purchased
Programs (including research, development, manufacturing, and regulatory
interactions). Except as would not individually or in the aggregate be
material to Cyclerion, there is no (i) action or investigation pending or, to
the Knowledge of Cyclerion, threatened, by any Governmental Entity or (ii) any
legal or administrative proceeding pending or, to the Knowledge of Cyclerion,
threatened, in each case ((i) and (ii)), against Cyclerion or its Subsidiary
related to the Purchased Assets.
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Section 4.4.
Consents and Approvals; No Conflicts
. Except for the Cyclerion FDA Letters and the Cyclerion Orphan Designation
Letter, and as set forth on
Section 4.4
of the Disclosure Schedules, no filing with, and no permit, authorization,
consent or approval of, any third party, public body or governmental authority
is necessary for the consummation by Cyclerion of the transactions
contemplated by this Agreement. Neither the execution and delivery of this
Agreement by Cyclerion nor the consummation by Cyclerion of the transactions
contemplated hereby, nor compliance by Cyclerion with any of the provisions
hereof, will (a) conflict with or result in any breach of any provisions of
the charter or bylaws or equivalent governing documents of Cyclerion, as may
be amended, (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which Cyclerion is a
party or by which Cyclerion or any of the Purchased Assets may be bound or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Cyclerion, or any of the Purchased Assets, except in the case of
clauses (b) and (c) for violations, breaches or defaults which would not
individually or in the aggregate have a Material Adverse Effect.
Section 4.5.
Contracts
. Neither Cyclerion nor its Subsidiary is a party to any material Contract
pursuant to which (i) Cyclerion or its Subsidiary has granted to any Third
Party a license, covenant not to sue, option, or other right with respect to
any Purchased Intellectual Property; and (ii) any Third Party has granted to
Cyclerion or any of its Affiliates a license, covenant not to sue, option or
other right with respect to any Purchased Intellectual Property. Cyclerion
has made available to Buyer true and complete copies of each of Assumed
Contract (including all amendments and modifications, extensions, and renewals
thereof and waivers thereunder). Cyclerion has not provided to or received
from any other party to any Assumed Contract written notice of any material
breach or default under any Assumed Contract. Cyclerion has not given any
written notice of termination of any Assumed Contract to a Third Party that is
a party thereto and has not received any written notice of termination of any
Assumed Contract from any such Third Party that is a party thereto.
Section 4.6.
Assigned Intellectual Property
.
Section 2.1(a)
of the Disclosure Schedules sets forth a true, complete and accurate list of
all of the Patents owned by Cyclerion or its Subsidiary that are necessary
for the research, development, manufacture, commercialization, or other
exploitation of any Purchased Program. In addition,
Section 2.1(a)
of the Disclosure Schedules sets forth a true, complete and accurate list of
all registered Trademarks or applications therefor, registered copyrights or
applications therefor, and domain names owned by Cyclerion or its Subsidiary
that, in each case, are primarily used in connection with any Purchased
Program.
26
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Section 4.7.
Licenses, Permits and Authorizations
. Cyclerion has obtained, and is in material compliance with, all of the
Permits that are material to the development, manufacture, testing, and
distribution of the Purchased Programs under applicable Laws.
Section 4.8.
Taxes
.
(a)
All material amounts of Taxes of Cyclerion and its Subsidiary relating to the
Purchased Assets (whether or not shown on any Tax Return) have been timely
paid in full. Each of Cyclerion and its Subsidiary have timely filed all
material Tax Returns related to the Purchased Assets which are required to be
filed by it and all such Tax Returns are true, correct and complete in all
material respects.
(b)
No Action concerning any Taxes relating to the Purchased Assets has been
raised or threatened by a Governmental Entity in writing, other than any such
Action that has been fully resolved or fully withdrawn.
(c)
No written claim has ever been made by a Governmental Entity in a jurisdiction
where Cyclerion does not pay a specific Tax or file a specific Tax Return that
it is or may be subject to pay such Tax or file such Tax Return, in each case,
relating to the Purchased Assets, by that jurisdiction.
(d)
Notwithstanding anything to the contrary in this Agreement, nothing in this
Section 4.8
is or shall be construed as a representation or warranty with respect to the
proper treatment of any item by Buyer or its Affiliates after the Closing.
Section 4.9.
Broker Fees
. Except as set forth in
Section 4.9
of the Disclosure Schedules, neither Cyclerion nor anyone on its behalf, has
any liability to any broker, finder, investment banker or agent, or has agreed
to pay any brokerage fees, finder's fees or commissions, or to reimburse any
expenses of any broker, finder, investment banker or agent in connection with
this Agreement.
Section 4.10.
Representations with Respect to Consideration Shares
.
(a)
The Consideration Shares will be issued by Buyer Parent to Cyclerion in
reliance upon Cyclerion's representation to Buyer Parent, which by Cyclerion's
execution of this Agreement, Cyclerion hereby confirms, that the Consideration
Shares to be issued to Cyclerion will be acquired for investment for
Cyclerion's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that Cyclerion has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, Cyclerion further represents that
Cyclerion does not presently have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant participations to such
Person or to any third Person, with respect to any of the Consideration
Shares. Cyclerion has not been formed for the specific purpose of acquiring
the Consideration Shares.
(b)
Cyclerion has had an opportunity to discuss Buyer Parent's business,
management, financial affairs and the terms and conditions of the issuance of
the Consideration Shares with Buyer Parent's management and has had an
opportunity to review Buyer Parent's facilities. The foregoing, however, does
not limit or modify the representations and warranties of Buyer and Buyer
Parent in
Article V
of this Agreement or the right of Cyclerion to rely thereon.
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(c)
Cyclerion understands that the Consideration Shares have not been, and will
not be, registered under the Securities Act, by reason of a specific exemption
from the registration provisions of the Securities Act which depends upon,
among other things, the bona fide nature of the investment intent and the
accuracy of Cyclerion's representations as expressed herein. Cyclerion
understands that the Consideration Shares are "restricted securities" under
applicable U.S. federal and state securities laws and that, pursuant to these
laws, Cyclerion must hold the Consideration Shares indefinitely unless they
are registered with the Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available. Cyclerion acknowledges that Buyer Parent has no
obligation to register or qualify the Consideration Shares for resale.
Cyclerion further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Consideration Shares, and on requirements relating to Buyer Parent
which are outside of Cyclerion's control, and which Buyer Parent is under no
obligation and may not be able to satisfy.
(d)
Cyclerion understands that no public market now exists for the Consideration
Shares, and that Buyer Parent has made no assurances that a public market will
ever exist for the Consideration Shares.
(e)
Cyclerion understands that the Consideration Shares and any securities issued
in respect of or exchange for the Consideration Shares, may be notated with
one or all of the following legends:
(i)
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."
(ii)
Any legend set forth in, or required by, the Stockholder Agreements.
(iii)
Any legend required by the securities laws of any state to the extent such
laws are applicable to the Consideration Shares represented by the
certificate, instrument, or book entry so legended.
(f)
Cyclerion is an accredited investor as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
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Section 4.11.
Acknowledgement by Buyers
.
(a)
Each of Buyer and Buyer Parent, on behalf of itself and its Affiliates,
acknowledges that it has conducted, to its satisfaction, an independent
investigation and verification of the financial condition, results of
operations, assets, liabilities, properties and projected operations of the
Purchased Programs, and, in making its determination to proceed with the
transactions contemplated by this Agreement and the other Transaction
Agreements, each of Buyer and Buyer Parent: (i) has relied solely on the
results of its own independent investigation and verification and the
representations and warranties of Cyclerion, and Cyclerion expressly and
specifically sets forth in
Article IV
(each as qualified by the Disclosure Schedules), and (ii) has not relied on
the accuracy or completeness of any other information provided to (or
otherwise acquired by) Buyer or Buyer Parent or any of their respective
Affiliates. The representations and warranties of Cyclerion expressly and
specifically set forth in this
Article IV
(each as qualified by the Disclosure Schedules) and any certificate delivered
in connection with this Agreement are the sole and exclusive representations,
warranties and statements (including omissions) of any kind made to Buyer or
Buyer Parent in connection with the transactions contemplated by this
Agreement or the other Transaction Agreements, and each of Buyer and Buyer
Parent, on behalf of itself and each of its Affiliates, understands,
acknowledges and agrees that all other representations, warranties or
statements (including omissions) of any kind or nature expressed or implied
(including any relating to the future or historical financial condition,
results of operations, assets or liabilities of the Purchased Programs) are
specifically disclaimed by Cyclerion. In particular, Cyclerion disclaims any
representation, warranty or statement (including any omission), and each of
Buyer and Buyer Parent, on behalf of itself and each of its Affiliates, agrees
that there shall be no liability, with respect to any information concerning
Cyclerion not expressly represented and warranted to in this Agreement,
including, without limitation (to the extent no representation or warranty is
made herein with respect thereto), any information provided by Cyclerion to
Buyer, Buyer Parent or any of their respective Affiliates, including, for the
avoidance of doubt, with respect to the accuracy or completeness of any other
information provided to (or otherwise acquired by) Buyer, Buyer Parent or any
of their respective Affiliates. None of Buyer, Buyer Parent or any of their
respective Affiliates shall have any claim against Cyclerion or its Subsidiary
with respect to any such disclaimed information. To the fullest extent
permitted by applicable Law, none of Cyclerion, its Subsidiary or their
respective Affiliates or any of its or their respective equityholders,
controlling Persons or Representatives shall have any liability or
responsibility whatsoever to either of Buyer or Buyer Parent, or their
respective Affiliates, equityholders, controlling Persons or Representatives
on any basis (including in contract or tort, at law or in equity, under any
Laws or otherwise) based upon any information provided or made available, or
statements made (or any omissions therefrom), to Buyer, Buyer Parent, or their
respective Affiliates, stockholders, controlling Persons or Representatives,
except as and only to the extent expressly set forth in this Agreement or an
certificate delivered in connection herewith. Cyclerion does not make or
provide, and each of Buyer and Buyer Parent hereby waives, any warranty or
representation, express or implied, as to the quality, merchantability,
fitness for a particular purpose, conformity to samples, or condition of the
assets or any part thereof of any Purchased Assets. BUYER AND BUYER PARENT
SPECIFICALLY ACKNOWLEDGE AND AGREE THAT, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES OF CYCLERION EXPRESSLY AND SPECIFICALLY SET FORTH IN
ARTICLE IV
(AS QUALIFIED BY THE DISCLOSURE SCHEDULES) AND ANY CERTIFICATE DELIVERED IN
CONNECTION WITH THIS AGREEMENT, (X) BUYER IS ACQUIRING THE PURCHASED ASSETS
AND THE ASSUMED LIABILITIES ON AN "AS IS, WHERE IS" BASIS, AND (Y) NEITHER
CYCLERION NOR ANY OTHER PERSON, WHETHER IN ANY INDIVIDUAL, CORPORATE OR ANY
OTHER CAPACITY, IS MAKING, AND, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO
BUYER, BUYER PARENT OR ANY OF THEIR RESPECTIVE REPRESENTATIVES, OR ANY OTHER
PERSON, OF ANY DOCUMENTATION OR OTHER INFORMATION BY CYCLERION OR ITS
SUBSIDIARY OR ANY OF THEIR RESPECTIVE REPRESENTATIVES, OR ANY OTHER PERSON,
NEITHER BUYER NOR BUYER PARENT IS RELYING ON, ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR
IMPLIED, AT LAW OR IN EQUITY, STATUTORY OR OTHERWISE, AS TO ANY MATTER
CONCERNING THE PURCHASED ASSETS, THE ASSUMED LIABILITIES, THE VALIDITY OF ANY
PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES, FUTURE REVENUE, PROFITABILITY OR SUCCESS, OR IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER TRANSACTION AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, OR THE ACCURACY OR COMPLETENESS OF ANY INFORMATION PROVIDED
TO (OR OTHERWISE ACQUIRED BY) BUYER, BUYER PARENT OR ANY OF THEIR RESPECTIVE
AFFILIATES (INCLUDING BY WAY OF ANY DOCUMENTS OR OTHERWISE), OR STATEMENT
MADE, BY CYCLERION, ITS SUBSIDIARY OR THEIR RESPECTIVE REPRESENTATIVES IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR PURSUANT TO THE OTHER
TRANSACTION AGREEMENTS.
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(b)
CYCLERION HAS NOT MADE ANY REPRESENTATIONS, WARRANTIES OR STATEMENTS
(INCLUDING BY OMISSION) OF ANY KIND OR NATURE EXPRESS OR IMPLIED (INCLUDING
ANY RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION, RESULTS OF
OPERATIONS, PROSPECTS, ASSETS OR LIABILITIES OF THE PURCHASED PROGRAMS OR THE
QUALITY, QUANTITY OR CONDITION OF THE PURCHASED ASSETS) TO BUYER, BUYER PARENT
OR ANY OF THEIR RESPECTIVE AFFILIATES IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND THE OTHER TRANSACTION AGREEMENTS, EXCEPT
FOR ANY REPRESENTATIONS AND WARRANTIES OF CYCLERION EXPRESSLY AND SPECIFICALLY
IN
ARTICLE IV
(EACH AS QUALIFIED BY THE DISCLOSURE SCHEDULES) AND IN ANY CERTIFICATE
DELIVERED IN CONNECTION WITH THIS AGREEMENT.
(c)
Neither Cyclerion nor its Subsidiary, whether in an individual, corporate or
any other capacity, will have or be subject to any liability or obligation
(indemnification or otherwise) to Buyer, Buyer Parent or any of their
respective Affiliates resulting from (nor shall Buyer, Buyer Parent or any of
their respective Affiliates have any claim with respect to) the distribution
to Buyer, Buyer Parent or any of their respective Affiliates, or Buyer's,
Buyer Parent's or any of their respective Affiliates' use of, or reliance on,
any information, documents, projections, forecasts or other material made
available to Buyer, Buyer Parent or any of their respective Affiliates in
presentations (including, for the avoidance of doubt, in any Confidential
Information presentation or other "management presentations") in expectation
of, or in connection with, the transactions contemplated by this Agreement,
the other Transaction Agreements or otherwise, regardless of the legal theory
under which such liability or obligation may be sought to be imposed, whether
sounding in contract or tort, or whether at law or in equity, or otherwise.
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(d)
In connection with the investigation by Buyers of the Purchased Assets, Buyers
may have received certain projections, forward-looking statements and other
forecasts and certain business plan information. Without in any way limiting
the generality of the foregoing, each of Buyer and Buyer Parent, on its own
behalf and on behalf of its Affiliates, acknowledges that there are
uncertainties inherent in attempting to make such estimates, projections and
other forecasts and plans, that Buyer, Buyer Parent and their respective
Affiliates are familiar with such uncertainties, that Buyer, Buyer Parent and
their respective Affiliates are taking full responsibility for making their
own evaluation of the adequacy and accuracy of all estimates, projections and
other forecasts and plans so furnished to them (including the reasonableness
of the assumptions underlying such estimates, projections, forecasts or
plans), and that Buyer, Buyer Parent and their respective Affiliates shall
have no claim against anyone with respect thereto. Accordingly, each of Buyer
and Buyer Parent, on its own behalf and on behalf of its Affiliates,
acknowledges that neither Cyclerion nor its Subsidiary is making any
representation or warranty with respect to, and none of Buyer, Buyer Parent or
any of its Affiliates is relying on, such estimates, projections, forecasts or
plans (including the reasonableness of the assumptions underlying such
estimates, projections, forecasts or plans).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER
Buyer Parent and Buyer hereby jointly and severally represent and warrant to
Cyclerion as follows:
Section 5.1.
Incorporation; Ownership and Authority
. Each of Buyer Parent and Buyer has been duly incorporated, is validly
existing as a corporation, and is in good standing under the laws of the State
of Delaware, and, except as would not materially and adversely affect the
ability of Buyer Parent or Buyer to perform its respective obligations under
this Agreement and the other Transaction Agreements, is in good standing under
the laws of any other jurisdiction in which it is qualified to carry on its
business, and, except as would not materially and adversely affect the ability
of Buyer or Buyer Parent to perform its obligations under this Agreement and
the other Transaction Agreements, has the requisite power to carry on its
business as now conducted. Each of Buyer Parent and Buyer has the requisite
corporate power and authority to sign and deliver this Agreement and to
perform its obligations hereunder. This Agreement has been duly authorized,
executed and delivered by Buyer Parent and Buyer and, assuming the due
authorization, execution and delivery hereof by Cyclerion, constitutes a
legal, valid and binding obligation of Buyer Parent and Buyer enforceable
against each of Buyer Parent and Buyer in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally or by general
principles of equity.
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Section 5.2.
Capitalization
.
(a)
Buyer Parent's authorized capital stock as of the date of this Agreement
consists of (i) 25,000,000 shares of common stock, of which one (1) share is
issued and outstanding and held of record by the person identified in
Section 5.2(a)
of the Disclosure Schedules, and (ii) 17,799,974 shares of preferred stock,
2,199,996 of which are issued and outstanding and held of record by the
persons identified in
Section 5.2(a)
of the Disclosure Schedules. Buyer's authorized capital stock consists of 100
shares of common stock, all of which are issued and outstanding and held by
Buyer Parent.
(b)
Buyer Parent's authorized capital stock as of immediately after Closing (and
after the Consideration Shares and all stock issuable in connection with the
Buyer Parent Purchase Agreement has been issued) will consist of (i)
25,000,000 shares of common stock, of which 1,022,222 will be issued and
outstanding and held of record by the persons identified in
Section 5.2(b)
of the Disclosure Schedules, and (ii) 17,799,974 shares of preferred stock,
9,199,985 of which will be issued and outstanding and held of record by the
persons identified in
Section 5.2(b)
of the Disclosure Schedules.
(c)
When issued, the Consideration Shares will be duly authorized, validly issued,
fully paid and non-assessable. Except as disclosed in
Section 5.2(c)
of the Disclosure Schedules or pursuant to the terms and conditions of the
Stockholder Agreements, there are no outstanding or authorized securities
providing for the issuance by Buyer Parent or transfer by Buyer Parent of
additional shares of Buyer Parent's capital stock and Buyer Parent has not
reserved any shares of its capital stock for issuance, nor are there any
outstanding stock option rights, phantom equity or similar rights, contracts,
arrangements or commitments to issue capital stock of Buyer Parent. Other than
the Stockholder Agreements, there are no voting trusts, shareholder agreements
or other agreements or understandings with respect to the voting of Buyer
Parent's capital stock.
Section 5.3.
No Operations
. Since the inception of each of Buyer Parent and Buyer, each of Buyer Parent
and Buyer has not engaged in any activity, other than actions in connection
with (i) its organization, (ii) the preparation, negotiation and execution of
this Agreement, the Ancillary Agreements and the transactions contemplated
hereby and thereby and (iii) the preparation, negotiation and execution of the
Buyer Parent Purchase Agreement, the Stockholder Agreements and the
transactions contemplated thereby. Neither Buyer nor Buyer Parent have not
generated any revenues and has no assets or liabilities other than those
incurred in connection with the foregoing and in associated with the
transactions set forth in this Agreement.
Section 5.4.
Consents and Approvals; No Violations
. Except for the consents to be obtained by the Buyers' shareholders, the
Buyer FDA Letter, the Buyer Orphan Designation Letter and the consent of
certain counterparties to the Assumed Contracts, no filing with, and no
permit, authorization, consent or approval of, any third party, public body or
governmental authority is necessary for the consummation by Buyers of the
transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by Buyers nor the consummation by Buyers of the
transactions contemplated hereby, nor compliance by Buyers with any of the
provisions hereof, will (a) conflict with or result in any breach of any
provisions of the charter or bylaws or equivalent governing documents of
Buyers, as may be amended, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which Buyer of Buyer Parent is a party or by which Buyer, Buyer Parent or any
their respective properties or assets may be bound or (c) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Buyer or
Buyer Parent, or any of their respective properties or assets, except in the
case of clauses (b) and (c) for violations, breaches or defaults which would
not materially and adversely affect the ability of Buyer Parent and Buyer to
perform their respective obligations under this Agreement and the other
Transaction Agreements.
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Section 5.5.
Financing
.
(a)
Attached hereto as
Exhibit H
is a true and complete copy of the Buyer Parent Purchase Agreement. The Buyer
Parent Purchase Agreement is a legal, valid and binding obligation of Buyer
Parent and, to Buyer's knowledge, each of the other parties thereto, and is in
full force and effect and enforceable against Buyer Parent, and to Buyer's
knowledge, each other party thereto (except in each case as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws relating to or affecting creditors'
rights generally and general equitable principles). As of the date hereof,
Buyer Parent is not, and to the knowledge of Buyer, none of the parties to the
Buyer Parent Purchase Agreement are, in default or breach of the terms of the
Buyer Parent Purchase Agreement. There are no conditions precedent or
contingencies related to the funding of the full amount of any Equity
Financing other than as described in the Buyer Parent Purchase Agreement.
Buyer Parent shall have at the Closing, sufficient cash to enable it to make
the Closing Payment and any other amounts to be paid by Buyer Parent and/or
Buyer hereunder and in connection with the Equity Financing.
(b)
Buyers acknowledges and agrees that, notwithstanding anything to the contrary
in this Agreement, neither the availability of financing nor the consummation
of any financing transaction shall be a condition to the obligation of Buyers
to consummate the transactions contemplated by this Agreement or the other
Transaction Agreements.
Section 5.6.
Broker's Fees
. None of Buyer Parent, Buyer nor anyone on their behalf, has any liability
to any broker, finder, investment banker or agent, or has agreed to pay any
brokerage fees, finder's fees or commissions, or to reimburse any expenses of
any broker, finder, investment banker or agent in connection with this
Agreement.
ARTICLE VI
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 6.1.
Operation of the Business
. Except as otherwise consented to in writing by Buyer (such consent not to
be unreasonably withheld, conditioned or delayed), as required by applicable
Law or as required or contemplated by this Agreement, during the period
commencing on the date of this Agreement and ending at the Closing or the date
on which this Agreement is earlier validly terminated pursuant to
Article VIII
(the "
Pre-Closing Period
"), Cyclerion shall not:
33
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(a)
sell, lease, abandon or otherwise dispose of or permit any Encumbrance (other
than Permitted Encumbrances) on any Purchased Asset except in the ordinary
course of business consistent with past practice;
(b)
(A) enter into, extend, modify, amend, terminate or renew under any Assumed
Contract (or any Contract that would be an Assumed Contract if entered into
prior to the date hereof) or (B) knowingly take, or fail to take, any action
that would constitute a breach, violate the terms, conditions or provisions
of, or result in a default under, or give to others any rights of termination,
amendment, acceleration or cancellation of any Assumed Contract;
(c)
sell, license or otherwise dispose of any Purchased Intellectual Property, and
shall maintain in full force and effect issuances and registrations included
in the Purchased Intellectual Property and enforce its rights in and to such
Purchased Intellectual Property;
(d)
except as otherwise expressly permitted or required under this Agreement,
terminate or materially modify the Purchased Programs;
(e)
terminate any Employee without cause, increase or promise to increase the
compensation or benefits of any Employee or grant any new compensation or
benefits to, or enter into any employment, severance, change in control,
bonus, retention or other similar agreement or arrangement with, any Employee
excluding the entrance into any consulting agreements with the Specified
Employees for consulting services following the Closing as contemplated by
Section 6.5(a)
;
(f)
liquidate, dissolve, reorganize or otherwise wind up the business and
operations of Cyclerion; or
(g)
enter into any agreement, or otherwise become obligated, to do any action
prohibited by
Section 6.1(a)
-
(f)
.
Section 6.2.
Corporate Examinations and Investigations
.
(a)
During the Pre-Closing Period, Buyer shall be entitled, through its officers,
employees, representatives and agents, to make such investigations and
examinations of the books and records of Cyclerion, solely in connection with
the Purchased Programs and the transactions contemplated by the Transaction
Agreements. Cyclerion shall furnish to Buyer Parent, Buyer and their
respective officers, employees, representatives or agents during such period
with all such information concerning the affairs of Cyclerion as Buyer Parent,
Buyer or their respective officers, employees, representatives or agents may
reasonably request in connection with the Purchased Programs and the
transactions contemplated by the Transaction Agreements and cause Cyclerion
and its officers, employees, consultants, agents, accountants and attorneys to
cooperate fully with each Party's representatives in connection with such
review and examination and to make disclosure of the information and documents
so requested by each other Party or its representatives. Any such
investigations and examinations shall be conducted at reasonable times and
under reasonable circumstances, it being agreed that any examination of
original documents will be at Cyclerion's premises where such original
documents are located, with copies thereof to be provided to Buyer or its
representatives upon request.
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(b)
During the Pre-Closing Period, Cyclerion shall be entitled, through its
officers, employees, representatives and agents, to make such investigations
and examinations of the books, records and financial condition of Buyer Parent
and Buyer. Buyer and Buyer Parent shall furnish to Cyclerion and its officers,
employees, representatives or agents during such period with all such
information concerning the affairs of Buyer Parent and Buyer as Cyclerion or
its officers, employees, representatives or agents may reasonably request in
connection with the transactions contemplated by the Transaction Agreements
and the ability to fund such transactions, and cause Buyer Parent, Buyer and
their respective officers, employees, consultants, agents, accountants and
attorneys to cooperate fully with each Party's representatives in connection
with such review and examination and to make disclosure of the information and
documents so requested by each other Party or its representatives. Any such
investigations and examinations shall be conducted at reasonable times and
under reasonable circumstances, it being agreed that any examination of
original documents will be at Buyer's or Buyer Parent's premises where such
original documents are located, with copies thereof to be provided to
Cyclerion or its representatives upon request.
Section 6.3.
Know-How Licenses
.
(a)
Buyer hereby, effective as of the Closing, grants to Cyclerion a perpetual,
irrevocable, worldwide, non-exclusive, royalty-free license (which, for the
avoidance of doubt, shall include the right to grant sublicenses through
multiple tiers), to any Know-How included in the Purchased Assets and owned or
Controlled by any member of the Buyer Group that also relates to an Excluded
Program (including any Know-How contained in books and records included in the
Purchased Assets to which Cyclerion has the right to keep copies of, maintain
access to or use pursuant to
Section 2.1(e))
, in each case solely to develop, manufacture, commercialize, or otherwise
exploit, such Excluded Program existing as of the Closing Date, but subject to
any Assumed Contract that relates to such Know-How. All such Know-How will be
kept confidential by Cyclerion and treated as Buyer's trade secret information.
(b)
Cyclerion (on behalf of itself and its Subsidiary) hereby, effective as of the
Closing Date, grants to Buyer a perpetual, irrevocable, worldwide,
non-exclusive, royalty-free license (which, for the avoidance of doubt, shall
include the right to grant sublicenses through multiple tiers), to any
Know-How owned or Controlled by Cyclerion or its Subsidiary relating to an
Excluded Asset that also relates to a Purchased Program, in each case solely
to develop, manufacture, commercialize or otherwise exploit, the Purchased
Programs, but subject to any existing Contract of Cyclerion with respect to
such Excluded Assets. All such Know-How will be kept confidential by Buyer and
treated as Cyclerion's trade secret information.
(c)
Except as expressly provided in this
Section 6.3
(
Know-How Licenses
), nothing in this Agreement will be construed as conferring by implication,
estoppel, or otherwise any license, right, or immunity under any Patent or
other Intellectual Property that a Party (or its successors, Affiliates or
assigns) now owns or holds a license to, or acquires or obtains a license to
in the future.
Section 6.4.
Efforts
. Subject to the terms and conditions of this Agreement, each Party shall use
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
this Agreement and applicable Law to satisfy the conditions to Closing set
forth herein and consummate the transactions contemplated hereby as soon as
practicable after the date of this Agreement and in any event no later than
the Termination Date.
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Section 6.5.
Employee Matters
.
(a)
Promptly after the date of this Agreement (and in any case within ten (10)
Business Days thereafter), Buyer Parent shall (or shall cause one of its
Subsidiaries to) make a written offer of employment to each Employee, subject
to Buyer Parent's or its Subsidiaries' standard hiring procedures, which
offers of employment shall be effective as of and contingent on the occurrence
of the Closing on terms and conditions set forth in this
Section 6.5(a)
; provided, however, that with respect to any Employee who is on an approved
leave of absence as of the Closing (each such Employee, an "
Inactive Employee
"), such offer will be effective as of the date, not to exceed six (6) months
following the Closing or such longer period to the extent required by
applicable Law (such six month period or such longer period to the extent
required by applicable Law), when such Employee returns to active employment
in accordance with the terms of his or her leave. Each Employee who accepts
an offer of employment with Buyer Parent or its Subsidiaries and becomes an
employee of Buyer Parent or its Subsidiaries on the Closing or upon return to
active employment (if later) as provided for herein shall be referred to
herein as a "
Transferred Employee
" and collectively as the "
Transferred Employees
", and the date as of which such an Employee becomes a Transferred Employee,
shall be referred to herein as the "
Employee Expenses End Date
"); provided that, if an Inactive Employee does not become a Transferred
Employee, Buyer shall provide Cyclerion a written invoice in respect of any
Employee Expenses borne by Buyers with respect to such Inactive Employee
solely with respect to the period following the Closing and Cyclerion shall
promptly, and in any event within thirty (30) calendar days of receiving an
invoice therefor, reimburse Buyers for such invoiced amount. Notwithstanding
anything to the contrary contained in this
Section 6.5(a)
, Cyclerion shall, in its sole discretion, be permitted to engage the
Employees listed on
Section 6.5(a)
of Disclosure Schedule (the "
Specified Employees
") as consultants to Cyclerion or any member of its Group following the
Closing until the earlier to occur of the eighteen (18)-month anniversary of
the Closing Date and such Specified Employee's termination of employment with
Buyer or any of its Affiliates and enter into consulting agreements with such
Specified Employees to provide consulting services to Cyclerion or any member
of its Group for up to twenty (20) hours per month per Specified Employee, and
Buyers agree that such Specified Employees shall be permitted to provide such
consulting services to Cyclerion or any member of its Group, subject to
Buyers' review and approval of the applicable consulting agreement (such
approval not to be unreasonably withheld, conditioned or delayed), and Buyers
will not (and will cause their Subsidiaries not to) prohibit, prevent or
otherwise discourage any Specified Employee from providing (or agreeing to
provide) such services; provided that the foregoing shall not effect Buyers'
ability to enforce any then-existing confidentiality and non-use Contracts to
which such Specified Employee is bound.
(b)
Buyers shall be responsible for all Employee Expenses and shall reimburse
Cyclerion for any and all such Employee Expenses promptly upon (but in no
event later than five (5) Business Days following) the presentation of
invoices detailing such Employee Expenses to Buyer following at the end of
each two-week period beginning on the date of this Agreement.
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(c)
Notwithstanding anything to the contrary contained herein, nothing in this
Section 6.5
shall: (i) confer any rights, remedies or claims upon any director, officer,
employee or independent contractor of Cyclerion or Buyer or any of their
respective Affiliates in their capacity as such, (ii) be considered or deemed
an amendment of any benefit plan of Cyclerion or Buyer, (iii) guarantee
employment for any period of time or preclude the ability of Buyer or any of
its Subsidiaries to terminate any employee or independent contractor for any
reason at any time, or (iv) require Buyer or any of its Subsidiaries to
continue or amend any employee compensation or benefit plans or arrangements,
or prevent the amendment, modification or termination thereof after the
consummation of the Closing.
Section 6.6.
Use of Retained Names and Marks
. Buyers hereby acknowledge that Cyclerion or its Affiliates or its or their
licensors own all right, title and interest in and to Trademarks and all other
identifiers of source or goodwill containing, incorporating or associated with
Trademarks, excluding Trademarks included in the Purchased Assets
(collectively, the "
Retained Names and Marks
"), and that any and all right of Buyers to use the Retained Names and Marks
shall terminate as of the Closing Date and shall immediately revert to
Cyclerion or its Affiliates, along with any and all goodwill associated
therewith. For clarity, Buyer may nonetheless make fair use of the mark
"Cyclerion" after the Closing Date, such as, for example, to accurately
describe the origins and history of the Purchased Programs.
Buyers further acknowledge that they have no rights in any of the Retained
Names and Marks, and that it is not acquiring any rights, directly or
indirectly, to use the Retained Names and Marks, except as expressly provided
herein. Cyclerion hereby acknowledges that, on and after the Closing Date,
Buyer or its Affiliates or its or their licensors own all right, title and
interest in and to the Trademarks associated with the Purchased Assets (the "
Assumed Names and Marks
"), and that any and all right of Cyclerion to use the Assumed Names and Marks
shall terminate as of the Closing Date. For clarity, Cyclerion may
nonetheless make fair use of the Assumed Names and Marks after the Closing
Date. Cyclerion further acknowledges that, on and after the Closing Date, it
will have no rights in any of the Assumed Names and Marks.
Section 6.7.
Interim Period Preclinical and Clinical Trial Activities
.
(a)
Following the date of this Agreement and at the times set forth in
Section 6.7
of the Disclosure Schedules, Cyclerion shall commence certain preclinical and
clinical trial activities as set forth in
Section 6.7
of the Disclosure Schedules (such activities, the "
Preclinical and Clinical Trial Activities
").
(b)
The estimated out-of-pocket costs of Cyclerion and its Affiliates for the
conduct in connection with the Preclinical and Clinical Trial Activities is
set forth on
Section 6.7
of the Disclosure Schedules. At the end of each two-week period during the
Pre-Closing Period (and in any event no later than the fifth day following
month end), Cyclerion or its Affiliates or Representatives shall provide Buyer
with an invoice listing in reasonable detail all out-of-pocket costs and
expenses related to the Preclinical and Clinical Trial Activities, including
costs and expenses for prosecution and maintenance of Intellectual Property as
well as an allocation of the costs of Cyclerion that relate to both the
Purchased Programs and the Excluded Programs, as set forth on
Section 6.7
of the Disclosure Schedules (the "
R&D Expenses
"). Buyers shall as promptly as practicable (but in no event later than five
(5) Business Days following receipt of such invoice) pay to Cyclerion by wire
transfer of immediately available funds any such R&D Expenses set forth in
such invoice.
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Section 6.8.
Exclusivity
.
(a)
Acquisition Proposal
. Cyclerion shall, and shall cause its Subsidiary and Representatives to,
immediately cease and cause to be terminated all existing activities,
discussions or negotiations with any Persons (other than Buyer) conducted
heretofore or that may be on-going with respect to, or that would reasonably
be expected to lead to, any Acquisition Proposal. From and after the date of
this Agreement until the earlier of Closing or the termination of this
Agreement in accordance with
Article VIII
, Cyclerion shall not, shall cause its Subsidiary not to, and shall use
reasonable best efforts to cause their respective Representatives not to,
directly or indirectly, (i) initiate, knowingly facilitate, solicit or
knowingly encourage (including by way of furnishing non-public information),
directly or indirectly, inquiries or the making of any proposals that
constitute, or would reasonably be expected to lead to, any Acquisition
Proposal, (ii) initiate, engage or participate with any third party in any
discussions or negotiations regarding, or furnish or disclose any non-public
information (including by providing access to its properties, assets, books
and records or personnel) to any third party in connection with, or take any
other action to knowingly facilitate or knowingly encourage any inquiries or
the making of any proposal that constitutes, or would reasonably be expected
to lead to, any Acquisition Proposal (except solely to notify such third party
of the existence of the provisions of this
Section 6.8
) or (iii) enter into any Acquisition Agreement or, except as expressly
permitted pursuant to
Section 6.8(e)
below, approve or resolve to approve any Acquisition Proposal, or enter into
any agreement, arrangement or understanding that would require Cyclerion to
abandon, terminate or fail to consummate the transactions contemplated by this
Agreement. Without limiting the foregoing, it is agreed that any violation of
the foregoing restrictions by any Representative, acting on behalf of
Cyclerion or its Subsidiary, will be deemed to be a breach of this
Section 6.8
by Cyclerion, and Cyclerion will cause its Representatives to comply with the
terms of this
Section 6.8
.
(b)
Notwithstanding the restrictions set forth in
Section 6.8(a)
, at any time prior to obtaining Stockholder Approval, in response to an
unsolicited bona fide written Acquisition Proposal that the Board determines
in good faith (after consultation with outside counsel and its financial
advisor) constitutes or would reasonably be expected to lead to a Superior
Proposal, Cyclerion may, subject to compliance with
Section 6.8(e)
, (i) contact the Person making such Acquisition Proposal (and its
Representatives) solely to clarify the terms and conditions thereof, (ii)
furnish non-public information with respect to Cyclerion and its Subsidiary to
the Person making such Acquisition Proposal (and its Representatives) pursuant
to a customary confidentiality agreement not less restrictive of such Person
than that certain Confidentiality Agreement, dated as of September 4, 2022, by
and between J. Wood Capital Advisors LLC and Cyclerion;
provided
,
however
, that all such information has previously been provided to Buyer or is
promptly made available to Buyer, and (iii) participate in discussions or
negotiations with the Person making such Acquisition Proposal (and its
Representatives) regarding such Acquisition Proposal.
38
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(c)
Notice of Acquisition Proposal
. From and after the date of this Agreement until the earlier of Closing or
the termination of this Agreement, Cyclerion shall promptly (and in any event
within twenty-four (24)
hours) notify Buyer in the event that Cyclerion receives, directly or
indirectly: (i) any Acquisition Proposal; (ii) any request for nonpublic
information relating to Cyclerion or its Subsidiary by any Person that informs
Cyclerion, its Subsidiary or its Representatives that such Person is
considering making, or has made, an Acquisition Proposal; or (iii) any request
for discussions or negotiations relating to a possible Acquisition Proposal.
Such notice shall be made in writing and shall include (x) the identity of the
Person or group making such Acquisition Proposal or request, and (y) the
material terms and conditions of any Acquisition Proposal or request and, if
written, a copy thereof. Cyclerion will (A) keep Buyer reasonably apprised of
any material developments, discussions and negotiations with respect to such
Acquisition Proposal or inquiry, as well as any material modification of or
amendment thereto and if written, provide to Buyer a copy thereof and (B)
promptly make available to Buyer any non-public information of Cyclerion and
its Subsidiary furnished to any third party in connection therewith that has
not previously been provided to Buyer.
(d)
Nothing contained in this
Section 6.8
prohibits or will be construed as prohibiting Cyclerion or the Board from (i)
complying with its disclosure obligations under federal or state Law with
regard to an Acquisition Proposal, including taking and disclosing to
Cyclerion stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a)
promulgated under the Exchange Act or (ii) making any disclosure to
Cyclerion's stockholders if, in the good faith judgment of the Board, after
consultation with outside legal counsel, failure to make such disclosure would
be inconsistent with its fiduciary duties under applicable Law, or otherwise
required under applicable Law;
provided
,
however
, a Cyclerion Adverse Recommendation Change (as defined below) shall only be
made in accordance with
Section 6.8(e)
.
(e)
Actions by Cyclerion
. Neither the Board nor any committee thereof shall (x) approve or recommend,
or propose publicly to approve or recommend, any Acquisition Proposal, or
cause or permit Cyclerion or its Subsidiary to execute or enter into any
letter of intent, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement, joint venture agreement, partnership
agreement or similar agreement constituting or related to, or that is intended
to or would reasonably be expected to lead to, any Acquisition Proposal (other
than a confidentiality agreement referred to in
Section 6.8(b)
) or requiring Cyclerion or its Subsidiary to abandon, terminate or fail to
consummate the transactions contemplated by this Agreement (an "
Acquisition Agreement
"), or (y)(A) withdraw, amend or modify in a manner adverse to Buyer, or
publicly propose to withdraw, amend or modify in a manner adverse to Buyer,
the Board Recommendation or (B) recommend, authorize or approve, or propose
publicly to recommend authorize or approve, or fail to reject, any Acquisition
Proposal or (C) fail to include the Board Recommendation in the Proxy
Statement (any action described in this clause (y) being referred to as a "
Cyclerion Adverse Recommendation Change
").
(i)
Notwithstanding anything to the contrary contained herein (including the terms
of
Section 6.8(e)(ii)(C)
), at any time prior to obtaining Stockholder Approval, the Board may, in
response to a Superior Proposal or an Intervening Event, make a Cyclerion
Adverse Recommendation Change if the Board determines, in good faith, after
consultation with its outside legal counsel and financial advisor, that the
failure to take such action would reasonably be expected to be inconsistent
with the directors' fiduciary duties under applicable Law.
39
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(ii)
Notwithstanding anything to the contrary contained in this Agreement, the
Board shall not be entitled to make a Cyclerion Adverse Recommendation Change
pursuant to
Section 6.8(e)(i)
, unless (x) Cyclerion shall have provided to Buyer four (4) Business Days'
prior written notice advising Buyer that the Board intends to take such
action, and if relating to an Intervening Event, such notice shall contain
the material facts and circumstances of such Intervening Event and (y) (A)
during such four (4)-Business Day period, if requested by Buyer, Cyclerion
shall have, and shall have used reasonable best efforts to cause its
Representatives to have, engaged in negotiations with Buyer to enable Buyer to
propose revisions to the terms of this Agreement or other agreements
contemplated hereby, (B) the Board shall have considered in good faith any
adjustments to this Agreement (including a change to the price terms hereof)
and the other agreements contemplated hereby that may be proposed in writing
by Buyer, (C)(1) with respect to a Superior Proposal, the Board shall have
determined in good faith, after consultation with Cyclerion's outside legal
counsel and financial advisor, taking into account all legal, financial,
regulatory and other aspects of the proposal the Board determines is
appropriate (including any termination or break-up fees, the conditionality,
the likelihood and timing of required governmental approvals, time likely to
be required to consummate such Acquisition Proposal, ability of the Person
making the proposal to finance and pay the contemplated consideration and the
likelihood of success of such Acquisition Proposal), that the Acquisition
Proposal still constitutes a Superior Proposal after taking into account the
adjustments to this Agreement that were offered by Buyer and that the failure
to make a Cyclerion Adverse Recommendation Change would reasonably be expected
to be inconsistent with the directors' fiduciary duties under applicable Law
and (2) with respect to an Intervening Event, the Board shall have determined
in good faith that failure to make a Cyclerion Adverse Recommendation Change
would be reasonably expected to be inconsistent with the directors' fiduciary
duties under applicable Law, and (D) in the event of any change to (1) any of
the terms (including the form, amount and timing of payment of consideration)
of an Acquisition Proposal, or
(2)
the facts or circumstances relating to an Intervening Event, Cyclerion shall,
in each case, have delivered to Buyer an additional notice consistent with
that described in
clause (i)
above and a new notice period under
clause (i)
of this proviso shall commence (except that four (4) Business Day notice
period referred to above shall instead be equal to two (2) Business Day)
during which time Cyclerion shall be required to comply with the requirements
of this
Section 6.8(e)(ii)
anew with respect to such additional notice.
(f)
Cyclerion shall not release nor permit the release of any Person from, or
waive or permit the waiver of any provision of, and Cyclerion shall use its
reasonable efforts to enforce or cause to be enforced, any confidentiality,
"standstill" or similar agreement to which any of Cyclerion or its Subsidiary
is a party, unless the Board determines in good faith (after consultation with
outside legal counsel) that the failure to take such action would be a breach
of its fiduciary duties under applicable Law.
(g)
Immediately following the execution of this Agreement, Cyclerion shall request
each Person which has heretofore executed a confidentiality agreement in
connection with such Person's consideration of acquiring Cyclerion to return
or destroy all confidential information heretofore furnished to such Person by
or on Cyclerion's behalf.
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Section 6.9.
Matters related to Cyclerion Stockholders Meeting
.
(a)
Except as otherwise provided in
Section 6.9(a)
of the Disclosure Schedules, as promptly as reasonably practicable following
the date of this Agreement (and in any event no later than thirty (30)
calendar days after the date hereof), Cyclerion shall at its own expense
prepare (with Buyer's reasonable cooperation) and use its reasonable best
efforts to file with the SEC in preliminary form a proxy statement (the "
Proxy Statement
") with respect to a special meeting of the stockholders of Cyclerion (the "
Stockholders Meeting
") for the purpose of obtaining the approval of the sale of the Purchased
Assets to the Buyer contemplated by this Agreement by the holders of a
majority of the outstanding shares of Cyclerion Common Stock (the "
Stockholder Approval
"). Cyclerion shall use reasonable best efforts to file with the SEC the
definitive Proxy Statement and to cause the mailing of the definitive Proxy
Statement to the stockholders of Cyclerion to occur as promptly as practicable
following the earlier of (i) the notification of no further comments from the
SEC and (ii) if the staff of the SEC has not informed Cyclerion that they
intend to review the Proxy Statement, the tenth (10th) day after the date the
preliminary Proxy Statement is filed. Cyclerion shall use reasonable best
efforts to respond as promptly as practicable, to any comments of the SEC with
respect to the Proxy Statement and to have the Proxy Statement cleared by the
SEC as promptly as practicable after filing. Buyer Parent and Buyer shall
furnish all information concerning Buyer to Cyclerion as may be reasonably
requested in connection with the preparation, filing and distribution of the
Proxy Statement, including furnishing and using reasonable best efforts to
cause its accountants and other agents and service providers to furnish to
Cyclerion all information concerning itself, its directors, officers and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Proxy Statement. Cyclerion shall promptly
notify Buyer upon the receipt of any comments from the SEC or its staff or any
request from the SEC or its staff for amendments or supplements to the Proxy
Statement. Notwithstanding the foregoing, prior to filing or mailing the Proxy
Statement (or any amendment or supplement thereto) or responding to any
comments of the SEC with respect thereto, Cyclerion shall provide Buyer a
reasonable opportunity to review and comment on such document or response
which comments Cyclerion will consider in good faith. If at any time prior to
the Stockholders Meeting, any information relating to Cyclerion, Buyer or any
of their respective affiliates, officers or directors, should be discovered by
Cyclerion or Buyer which should be set forth in an amendment or supplement to
the Proxy Statement, so that the Proxy Statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading, the Party
which discovers such information shall promptly notify the other Parties
hereto and an appropriate amendment or supplement describing such information
shall be filed with the SEC and, to the extent required by applicable law,
disseminated to the stockholders of Cyclerion.
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(b)
Cyclerion agrees that the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder and that none of the information included
or incorporated by reference in the Proxy Statement or any amendment or
supplement thereto will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the date the Proxy
Statement is filed with the SEC or mailed to the stockholders of Cyclerion or
at the time of the Stockholders Meeting, or at the time of any amendment or
supplement thereof, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading, except that no covenant is made by Cyclerion with
respect to statements made in the Proxy Statement based on information
supplied in writing by or on behalf of Buyer or Buyer Parent for inclusion or
incorporation for reference therein. Buyers shall cause the information
relating to Buyer or Buyer Parent supplied by Buyers for inclusion in the
Proxy Statement or any amendments or supplement thereto not to, at the date
the Proxy Statement is filed with the SEC or mailed to the stockholders of
Cyclerion or at the time of the Stockholders Meeting, or at the time of any
amendment or supplement thereof (except to the extent revised or superseded by
amendments or supplements contemplated hereby), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(c)
Cyclerion shall, as promptly as practicable after the date of this Agreement,
establish a record date (which will be as promptly as reasonably practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold the Stockholders Meeting for purposes of seeking the Stockholder
Approval, which meeting Cyclerion shall cause to occur as soon as practicable
(and in any event within twenty-five (25) Business Days) following the mailing
of the Proxy Statement. Cyclerion may not postpone, recess or adjourn the
Stockholders Meeting without the prior written consent of Buyer.
Notwithstanding the foregoing, Cyclerion shall be permitted to postpone,
recess or adjourn the Stockholders Meeting without the prior consent of Buyer
(and shall do so if requested by Buyer): (i) if Cyclerion is unable to obtain
a quorum of its stockholders at the Stockholders Meeting,
(ii) such postponement, recess or adjournment is required by applicable Law or
a request from the SEC or its staff, or (iii) in the good faith judgement of
the Board, following consultation with outside legal counsel and Buyer Parent
(or, in the case of a request by Buyer, in Buyer Parent's good faith
judgement) the failure to postpone, recess or adjourn the Stockholders Meeting
would be reasonably likely to not allow reasonably sufficient time for the
distribution and review of any required or appropriate supplement or amendment
to the Proxy Statement by Cyclerion's stockholders prior to the Stockholders
Meeting as then-scheduled; provided that Cyclerion shall not be required to
adjourn the Stockholders Meeting more than once at such request of Buyer, no
such adjournment shall be required to be for a period exceeding five (5)
Business Days and in no event will Cyclerion be required by this Agreement to
change such record date. Cyclerion agrees that no matters shall be brought
before the Stockholders' Meeting other than the approval of the transactions
contemplated by this Agreement and any related and customary procedural
matters (including a proposal to adjourn the meeting to allow additional
solicitation of votes). In no event will the record date of the Company
Stockholders' Meeting be changed without Buyer's prior written consent (which
consent shall not be unreasonably withheld, delayed or conditioned), unless
required by applicable Law.
(d)
Subject to
Section 6.8(e)
, Cyclerion shall (A) through the Board, recommend to the Cyclerion
stockholders, the approval and authorization of this Agreement and the
transactions contemplated hereby (including the consideration to be received
by the Company), and include in the Proxy Statement such recommendation and
(B) use its reasonable best efforts to solicit from the Cyclerion stockholders
proxies in favor of the approval and authorization of this Agreement, and (C)
use reasonable best efforts to take all actions reasonably necessary to secure
the Stockholder Approval.
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(e)
Cyclerion acknowledges that its obligations pursuant to
Section 6.9(a)
,
(b)
and
(c)
, will not be affected by any Cyclerion Adverse Recommendation Change or the
commencement, public proposal, public disclosure or communication to Cyclerion
or the Cyclerion stockholders of any Acquisition Proposal.
(f)
The Buyers shall, and shall cause the equityholders party thereto, not amend
the applicable Voting Agreement in any respect without Cyclerion's prior
written consent, which may not be unreasonably withheld, conditioned or
delayed.
Section 6.10.
Buyer Parent Purchase Agreement
. Buyer and Buyer Parent shall use reasonable best efforts to consummate the
closing of the Second Tranche on or prior to the Closing Date as contemplated
in the Buyer Parent Purchase Agreement. Buyers shall not agree to any
amendments or modifications to, or grant any waivers of, any condition
(including any of the financing conditions) or other provision or remedy under
the Buyer Parent Purchase Agreement without the prior written consent of
Cyclerion (which consent shall not be unreasonably withheld, conditioned or
delayed) to the extent such amendments, modifications or waivers would (x)
reduce the aggregate amount of aggregate cash proceeds available to Buyer
Parent under the Buyer Parent Purchase Agreement, or (y) impose new or
additional conditions precedent or otherwise expand, amend or modify any of
the conditions or other terms therein in a manner adverse to Buyer Parent,
Buyer or Cyclerion, including any expansion, waiver, amendment or modification
that would be reasonably likely to (A) prevent, impair or materially delay the
ability of Buyer Parent or Buyer to consummate the transactions contemplated
by this Agreement or the other Transaction Agreements, (B) adversely impact
the ability of Buyer or Buyer Parent to enforce its rights or remedies against
the counterparties to the Buyer Parent Purchase Agreement or (C) make the
timely funding of the Equity Financing or satisfaction of the financing
conditions set forth in the Buyer Parent Purchase Agreement materially less
likely to occur. Buyer Parent shall promptly (and in any event within three
(3) Business Days) notify Cyclerion of
(1)
any amendment, waiver or modification, or agreement to do any of the foregoing
of any term of the Buyer Parent Purchase Agreement,
(2)
the expiration or termination (or attempted or purported termination, whether
or not valid) of the Buyer Parent Purchase Agreement, or
(3)
any refusal by any counterparty to Buyer Parent Purchase Agreement to
consummate, or any notice in writing by any such counterparty to refuse to
consummate, the closing contemplated under the Buyer Parent Purchase Agreement.
Section 6.11.
Taxes
.
(a)
Cyclerion and Buyers shall reasonably cooperate with each other and make
available or cause to be made available to each other in a timely fashion such
data (including Tax Returns) regarding the Purchased Assets which relates to
Taxes, Tax Returns or filings with respect thereto and other information
reasonably requested and required for the preparation by Buyers or Cyclerion
of any Tax Returns, elections, consents or certificates required to be
prepared and filed by Buyers or Cyclerion and any audit or other examination
by any Governmental Entity or administrative Action relating to liability for
Taxes.
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(b)
The Buyer and Buyer Parent (on the one hand) and Cyclerion (on the other hand)
shall each bear fifty percent (50%) of any Transfer Taxes. The party required
by applicable Law to file a Tax Return relating to Transfer Taxes shall
prepare and timely file, or shall cause to be prepared and timely filed such
Tax Return and shall promptly after filing such Tax Return, provide evidence
to the non-filing party that such Tax Return has been duly and timely filed
and the relevant Transfer Taxes have been duly and timely paid. The non-filing
party shall, promptly following receipt of the evidence of payment of such
Transfer Taxes, reimburse the filing party in an amount equal to fifty percent
(50%) of any Transfer Taxes due on such Tax Return. Cyclerion and Buyers agree
to timely sign and deliver such certificates or forms as may be reasonably
necessary or appropriate to establish any exemption from (or otherwise reduce)
such Transfer Taxes for which each party is eligible. For the avoidance of
doubt, the Purchase Price set forth in this Agreement is exclusive of Transfer
Taxes.
(c)
For purposes of apportioning Liabilities for ad valorem and similar Taxes
relating to the Purchased Assets, such Liabilities for Taxes payable with
respect to a Straddle Period shall be apportioned as follows: (i) Cyclerion
shall be apportioned an amount equal to the total amount of such Taxes for the
entire Straddle Period multiplied by a fraction, the numerator of which is the
number of days in the portion of the Straddle Period ending on the Closing
Date and the denominator of which is the number of days in such Straddle
Period, and (ii) Buyers shall be apportioned an amount equal to the excess of
the total amount of such Taxes over the amount determined in clause (i) hereof.
(d)
Buyer shall prepare an allocation of the Purchase Price and any applicable
Assumed Liabilities among the Purchased Assets in accordance with applicable
Law, including Section 1060 of the Code and the Treasury Regulations
thereunder, which allocation and any adjustments thereto shall be subject to
the comments and approval of Cyclerion. The Buyer shall deliver a proposed
allocation to Cyclerion within 120 days after the Closing Date. Such
allocation shall become final and binding twenty (20) days after Buyer
provides it to Cyclerion, unless Cyclerion notifies Buyer in writing that
Cyclerion objects in good faith to such allocation. In that case, the Parties
will resolve any disagreement in good faith and, if they are unable to do so
within fifteen (15) days of the objection from Cyclerion, the matter shall be
submitted to a mutually agreed upon independent accounting firm to resolve
such dispute, which resolution will be final and binding on the parties. Buyer
and Buyer Parent (on the one hand) and Cyclerion (on the other hand) will each
pay 50% of any costs or fees to retain the applicable accounting firm. The
Parties (and their respective Representatives and Affiliates) shall report,
act and file their respective Tax Returns in accordance with such allocation,
as finally determined pursuant to this
Section 6.11(d)
, and any adjustments thereto and shall not take any position or action
inconsistent with such allocation and any adjustments thereto, absent a
"determination" within the meaning of Section 1313 of the Code to the contrary.
Section 6.12.
FDA Letters
. Promptly after Closing (but in no event later than five (5) Business Days
following the Closing):
(a)
Cyclerion shall file, or cause to be filed, with the FDA the Cyclerion FDA
Letters and the Cyclerion Orphan Designation Letter, and shall provide an
as-filed copy of each such letter to Buyer.
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(b)
Buyers shall file, or cause to be filed, with the FDA the Buyer FDA Letters
and the Buyer Orphan Designation Letter and shall provide an as-filed copy of
each such letter to Cyclerion.
Section 6.13.
Post-Closing Matters
.
(a)
From the Closing Date until the five (5) year anniversary of the Closing Date,
subject to
Section 6.13(b)
, Cyclerion will not (and will cause its Affiliates not to), (i) either alone
or directly or indirectly with or through any Affiliate or Third Party,
initiate IND-enabling preclinical development, develop, commercially
manufacture, commercialize, or otherwise exploit any compound or product
(including any compound or product that is part of an Excluded Program) that
is (A) a CNS-penetrant sGC Stimulator, (B) developed for the treatment of a
Program Indication, and (C) reasonably expected to compete with any compound
or product in a Purchased Program for the treatment of a Program Indication
(any such compound or product, a "
Cyclerion Competing Product
") anywhere in the world, or (ii) license, convey, grant, or otherwise
transfer any rights to any Third Party (including any rights under any
Intellectual Property included in the Excluded Assets) to initiate
IND-enabling preclinical development, develop, commercially manufacture,
commercialize, or otherwise exploit a Cyclerion Competing Product anywhere in
the world.
(b)
If there is a Change of Control of Cyclerion, then the obligations of
Section 6.13(a)
will not apply to any program or product of an acquirer or its Affiliates
(other than any successor entity to Cyclerion or any Affiliate of Cyclerion
that existed prior to the closing of such Change of Control) (an "
Acquirer Program
") that becomes an Affiliate of Cyclerion as a result of such Change of
Control; provided, that Cyclerion and such Affiliates establish and enforce
internal processes, policies, procedures, and systems to reasonably segregate
any Confidential Information of Buyer that Cyclerion or its Affiliates may
have with respect to the Purchased Programs (including any Know-How licensed
to Cyclerion pursuant to
Section 6.3
of this Agreement) from any Acquirer Program for
a product that would be a Cyclerion Competing Product if developed by
Cyclerion or a pre-Change of Control Affiliate of Cyclerion, including
ensuring that such Affiliates do not use or practice,
directly or indirectly, any Purchased Intellectual Property or Buyer's
Confidential Information in such program.
(c)
From the Closing Date until the five (5) year anniversary of the Closing Date,
if from time to time Cyclerion determines that it will abandon the prosecution
or maintenance of any Patent covering any or all of the hydroxy-compounds set
forth on
Section 6.13(c)
of the Disclosure Schedules (the "
Hydroxy-Compounds
") Cyclerion shall promptly thereafter deliver a written notice (the "
Cyclerion Hydroxy-Compound Notice
") to Buyer specifying such determination. To exercise its Right of First
Negotiation, Buyer shall deliver an irrevocable written notice (the "
Buyer Hydroxy-Compound Notice
") to Cyclerion notifying Cyclerion that Buyer intends to exercise its Right
of First Negotiation with respect to the applicable Hydroxy-Compounds within
fifteen (15) days of receipt of the Cyclerion Hydroxy-Compound Notice. During
the thirty (30) day period following Cyclerion's receipt of the Buyer
Hydroxy-Compound Notice (such period, the "
Negotiation Period
"), Cyclerion shall not negotiate the terms of a license agreement with
respect to the applicable Hydroxy-Compounds with any Person, other than the
Buyer, and, subject to Buyer complying with its obligations included in the
immediately following sentence, shall not abandon the maintenance or
prosecution of the applicable Patents). During the Negotiation Period, Buyer
shall be responsible for all maintenance and prosecution costs with respect to
the applicable Patents. Following the expiration of the Negotiation Period,
Cyclerion may negotiate the licensing of the applicable Hydroxy-Compounds with
any Person or may abandon the prosecution or maintenance of the applicable
Patents, in each case as determined in its sole discretion.
45
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Section 6.14.
Joint Confidentiality Agreements
. Following the Closing, in the event that Cyclerion becomes aware of a breach
or potential breach of any of the confidentiality or non-use covenants of any
Joint Confidentiality Agreement exclusively related to any Purchased Assets,
Cyclerion shall promptly, and in any case within five (5) Business Days,
notify Buyer of any such breach or potential breach. Cyclerion shall,
promptly following receipt of a written notice from Buyer directing Cyclerion
to take the actions contemplated by this
Section 6.14
with respect to any such breach (whether or not Cyclerion delivered notice
thereof to Buyer), specifically enforce the confidentiality and non-use
covenants included in the applicable Joint Confidentiality Agreement against
the counterparty thereto. Buyers shall be responsible for any and all
Liabilities, costs and expenses of Cyclerion or any of its Affiliates or any
of their respective representatives to the extent arising out of or relating
to any such enforcement action and shall promptly, and in any event within
thirty (30) calendar days of receiving an invoice therefor, reimburse
Cyclerion for any such Liabilities, costs or expenses. Cyclerion shall
promptly, and in any event within thirty (30) calendar days, pay Buyer any
amounts recovered or received in respect of any such enforcement actions, net
of any costs or expenses not reimbursed by Buyers in accordance with the
immediately preceding sentence.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1.
Conditions to the Obligations of All Parties
. The obligations of the Parties to consummate the transactions contemplated
hereby are subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions precedent (any of which may be waived in
whole or in part by each of the parties in its sole discretion):
(a)
Applicable Law and Approvals
. Prior to the Closing, the following conditions precedent have been satisfied:
(i)
there will be no Law of any nature issued by a Governmental Entity of
competent jurisdiction that restrains, enjoins or otherwise prohibits, or has
the effect of restraining, enjoining or otherwise prohibiting, the
transactions contemplated by any Transaction Agreement from being consummated
as herein provided; and
(ii)
the Stockholder Approval shall have been obtained.
(b)
Novation and Waiver Agreement
. The Novation and Waiver Agreement is in full force and effect, has not been
amended or modified in any respect (except with the express written consent of
Cyclerion and Buyer), and there is no dispute, outstanding with respect
thereto.
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Section 7.2.
Conditions to Buyer Parent's and Buyer's Obligations at Closing
. The obligations of Buyer Parent and Buyer to consummate the transactions
contemplated hereby are subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions precedent (any one or more
of which may be waived in whole or in part by Buyer in its sole discretion):
(a)
Closing Deliveries
. At the Closing, Cyclerion shall deliver or have caused to be delivered to
Buyer the following:
(i)
the Stockholder Agreements, duly executed by Cyclerion;
(ii)
a properly completed and executed Internal Revenue Service Form W-9 of
Cyclerion dated no more than ten (10) Business Days prior to the Closing Date;
(iii)
letters from Cyclerion to the FDA transferring to Buyer or any of its
designees ownership of (i) the INDs relating to the Purchased Programs in
substantially the form attached hereto as
Exhibit I-1
(the "
Cyclerion IND 147088 FDA Letter
"),
Exhibit I-2
(the "
Cyclerion IND 138999 FDA Letter
") and
Exhibit I-3
(the "
Cyclerion IND 155952 FDA Letter
", together with the Cyclerion IND 147088 FDA Letter and Cyclerion IND 138999
FDA Letter, the "
Cyclerion FDA Letters
") and (ii) the orphan drug designations relating to the Purchased Programs in
substantially the form attached hereto as
Exhibit J
(the "
Cyclerion Orphan Designation Letter
"), each duly executed by Cyclerion.
(iv)
the Conveyancing and Assumption Instruments, duly executed by Cyclerion;
(v)
a Transition Services Agreement between Cyclerion and Buyer in substantially
the form attached hereto as
Exhibit K
(the "
Transition Services Agreement
"), duly executed by Cyclerion; and
(vi)
a certificate of the Chief Financial Officer of Cyclerion that each of the
conditions set forth in
Section 7.2(b)
and
Section 7.2(c)
have been satisfied.
(b)
Representations and Warranties to be True
. The representations and warranties of Cyclerion herein contained (i) that
are qualified or limited by materiality or "Material Adverse Effect" shall be
true and correct as of the Closing with the same effect as if made as of the
Closing (other than such representations that are made as of a specified date,
which shall be true and correct on and as of such date) and (ii) that are not
so qualified or limited shall be true and correct in all material respects as
of the Closing with the same effect as if made as of the Closing (other than
such representations that are made as of a specified date, which shall be true
and correct in all material respects as of such date).
(c)
Covenants
. Cyclerion shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or
complied with by such respective Party at or prior to the Closing. For
purposes of this
Section 7.2(c)
, a covenant of Cyclerion shall only be deemed to have not been performed if
Cyclerion has materially breached such covenant and failed to cure within
fifteen (15) calendar days after notice (or if earlier, the Termination Date);
provided that Buyer shall not be required to consummate the Closing unless and
until such material breach of any covenant has been cured.
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(d)
No Material Adverse Effect
. Since the date of this Agreement, there shall not have occurred and be
continuing a Material Adverse Effect.
Section 7.3.
Conditions to Cyclerion's Obligations at Closing
. The obligations of Cyclerion under this Agreement shall be subject to each
of the following conditions, unless waived by Cyclerion:
(a)
Closing Deliveries
. On Closing, Buyers shall deliver or have caused to be delivered to
Cyclerion the following:
(i)
the Closing Payment in accordance with this Agreement;
(ii)
evidence of issuance of the Consideration Shares;
(iii)
the Stockholder Agreements, duly executed by all of the parties thereto, other
than Cyclerion;
(iv)
letters from Buyer to the FDA accepting ownership of (i) the INDs relating to
the Purchased Assets in substantially the form attached hereto as
Exhibit L-1
(the "
Buyer IND 147088 FDA Letter
"),
Exhibit L-2
(the "
Buyer IND 138999 FDA Letter
") and
Exhibit L-3
(the "
Buyer IND 155952 FDA Letter
", together with the Buyer IND 147088 Letter and Buyer IND 138999 FDA Letter,
the "
Buyer FDA Letters
") and (ii) the orphan drug designations relating to the Purchased Assets in
substantially the form attached hereto as
Exhibit M
, each duly executed by Buyer;
(v)
the Conveyancing and Assumption Instruments, duly executed by Buyer;
(vi)
the Transition Services Agreement, duly executed by Buyer;
(vii)
evidence of the consummation of the closing of the Second Tranche as
contemplated by the Buyer Parent Purchase Agreement; and
(viii)
a certificate of a duly authorized officer of Buyer Parent that each of the
conditions set forth in
Section 7.3(b)
and
Section 7.3(c)
has been satisfied.
(b)
Representations and Warranties to be True
. The representations and warranties of Buyer Parent and Buyer herein
contained (i) that are qualified or limited by materiality or "Material
Adverse Effect" shall be true and correct as of the Closing with the same
effect as if made as of the Closing (other than such representations that are
made as of a specified date, which shall be true and correct on and as of such
date) and (ii) that are not so qualified or limited shall be true and correct
in all material respects as of the Closing with the same effect as if made as
of the Closing (other than such representations that are made as of a
specified date, which shall be true and correct in all material respects as of
such date);.
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(c)
Covenants
. Buyer and Buyer Parent shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by Buyer and Buyer Parent, as applicable, at or
prior to the Closing. For purposes of this
Section 7.3(c)
, a covenant of Buyer or Buyer Parent shall only be deemed to have not been
performed if Buyer or Buyer Parent, as applicable, has materially breached
such covenant and failed to cure within fifteen (15) calendar days after
notice (or if earlier, the Termination Date); provided that Cyclerion shall
not be required to consummate the Closing unless and until such material
breach of any covenant has been cured.
ARTICLE VIII
TERMINATION
Section 8.1.
Events of Termination
.
(a)
This Agreement may, by notice given in the manner hereinafter provided, be
terminated and abandoned at any time prior to completion of the Closing, as
follows:
(i)
at any time by mutual written agreement of Buyer and Cyclerion;
(ii)
by either Party if the Closing will not have been consummated on or before
September 11, 2023, unless such date is extended by the mutual written
agreement of Buyer and Cyclerion (the "
Termination Date
"); provided that the right to terminate this Agreement pursuant to this
Section 8.1(a)(ii)
shall not be available to any Party whose breach of any provision of this
Agreement has primarily caused or primarily resulted in the failure of the
Closing to be consummated by such time;
(iii)
by Buyer, if any representation or warranty of Cyclerion set forth in this
Agreement shall have become untrue or if a failure to perform any covenant or
agreement on the part of Cyclerion set forth in this Agreement shall have
occurred, in each case, such that if the breach or untruth was occurring on
the Closing Date any of the conditions set forth in
Section 7.1
or
Section 7.2
(as applicable) would not be satisfied, and such condition is incapable of
being satisfied by the Termination Date; provided that Buyer may not terminate
this Agreement under this
Section 8.1(a)(iii)
unless (i) such breach has not been cured by the date which is twenty (20)
days after Buyer notifies Cyclerion of such breach in writing and (ii) neither
of the Buyers is then in breach of this Agreement so as to cause any of the
conditions set forth in
Section 7.1
or
Section 7.3
not to be satisfied;
(iv)
by Cyclerion, if any representation or warranty of Buyer or Buyer Parent set
forth in this Agreement shall have become untrue or if a failure to perform
any covenant or agreement on the part of Buyer or Buyer Parent set forth in
this Agreement shall have occurred, in each case, such that if the breach or
untruth was occurring on the Closing Date any of the conditions set forth in
Section 7.1
or
Section 7.3
(as applicable) would not be satisfied, and such condition is incapable of
being satisfied by the Termination Date; provided that Cyclerion may not
terminate this Agreement under this
Section 8.1(a)(iv)
unless (i) such breach has not been cured by the date which is twenty (20)
days after Cyclerion notifies Buyer or Buyer Parent, as applicable, of such
breach in writing and (ii) Cyclerion is not then in breach of this Agreement
so as to cause any of the conditions set forth in
Section 7.1
or
Section 7.2
not to be satisfied;
49
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(v)
by either Party if the Stockholders' Meeting (including any adjournment or
postponement thereof in accordance with the terms of this Agreement) has
concluded, the Cyclerion stockholders have voted, and the Stockholder Approval
was not obtained;
(vi)
by either Party, if any Governmental Entity has issued any Law enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
Law will have become final and nonappealable, except that the right to
terminate this Agreement and abandon the transactions contemplated by this
Agreement under this paragraph will not be available to any Party whose
failure to fulfill or comply with any obligation or covenant under this
Agreement has been the cause of, or resulted in, the issuance of such
nonappealable Law;
(vii)
by Cyclerion if, after the sixth Business Day following the public
announcement of the execution of this Agreement, the $5,000,000 aggregate
purchase price payable pursuant to the Stock Purchase Agreement, dated as of
March 31, 2023 between Cyclerion and Mr. Peter M. Hecht has not been paid;
(viii)
by Cyclerion if: (A) the conditions precedent set forth in
Section 7.1
and
Section 7.2
have been satisfied (other than those conditions that by their terms require
the delivery of any documents or the taking of other action at the Closing,
provided such conditions precedent would reasonably be expected to be
satisfied at the Closing) on the date the Closing should have been consummated
by Buyer and Buyer Parent pursuant to
Section 2.7
, (B) Cyclerion notified Buyer in writing that:
(1)
all such conditions precedent set forth in
Section 7.1
and
Section 7.2
have been satisfied or waived, and (2) Cyclerion stands ready, willing and
able to consummate the Closing, and (C) Buyer or Buyer Parent fails to
consummate the Closing within two (2) Business Days after the delivery of the
notification referred to in clause (B) herein; or
(ix)
by Buyer if a Cyclerion Adverse Recommendation Change shall have been made,
provided
that Buyer may only terminate this Agreement pursuant to this
Section 8.1(a)(ix)
if it delivers notice to Cyclerion pursuant to
Section 8.1(b)
within ten (10) Business Days of such Cyclerion Adverse Recommendation Change.
(b)
If Buyer or Cyclerion terminates this Agreement pursuant to the foregoing
provisions of this
Section 8.1
, such termination shall be effected by written notice to the other Party
specifying the provision pursuant to which such termination is made.
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Section 8.2.
Effect of Termination
. If this Agreement is validly terminated as permitted by
Section 8.1
, all rights and obligations of the Parties hereto under this Agreement shall
terminate, there shall be no Liability of any Party hereto (or any of its
Representatives or Affiliates) in connection with this Agreement or the
transactions contemplated hereby, whether arising from or relating to any
breaches by such party of this Agreement or otherwise;
provided
,
however
, that: (a) nothing herein is intended or shall be construed to limit the
liability of the either Party for actual fraud or willful breach of any
provision of this Agreement; and (b) the rights and obligations of the parties
under
Article I
,
Section 6.5(b)
(solely with respect to the obligation of Buyers to reimburse accrued but
unpaid Employee Expenses to Cyclerion in the event such expenses are not
otherwise repayable to Buyer in connection with a termination of this
Agreement),
Section 6.7(b)
(solely with respect to the obligation of Buyers to reimburse accrued but
unpaid R&D Expenses to Cyclerion in the event such expenses are not otherwise
repayable to Buyer in connection with a termination of this Agreement),
Section 8.2
,
Section 8.3
,
Section 10.4
, and
Article XII
will survive any termination hereof pursuant to
Section 8.1
.
Section 8.3.
Termination Fee
.
(a)
Termination Fee; Expense Reimbursement.
(i)
If this Agreement is validly terminated by Buyer pursuant to
Section 8.1(a)(ix)
(for the avoidance of doubt, within ten (10) Business Days of such Cyclerion
Adverse Recommendation Change), then Cyclerion shall (A) pay to Buyer $500,000
in cash (the "
Termination Fee
") and (B) reimburse Buyer for
(1)
Buyers' expenses in connection with this Agreement and the transactions
contemplated hereby (excluding the Employee Expenses and R&D Expenses) in an
amount equal to $1,000,000,
(2)
the Employee Expenses actually reimbursed or paid by Buyer or Buyer Parent,
and (3) the R&D Expenses actually reimbursed or paid by Buyer or Buyer Parent
(collectively, the expenses in items
(1)
,
(2)
and (3), the "
Buyer Expense Reimbursement
"), in each case, in immediately available funds within three (3) Business
Days after such termination. If this Agreement is validly terminated by Buyer
pursuant to
Section 8.1(a)(iii)
, or by Cyclerion or Buyer pursuant to
Section 8.1(a)(ii)
at a time when Buyer had a right to terminate pursuant to
Section 8.1(a)(iii)
(without giving effect to any notice requirement, cure period or waiting
period set forth therein), then Cyclerion shall pay to Buyer the Buyer Expense
Reimbursement in immediately available funds within five (5) Business Days
after such termination. If this Agreement is validly terminated by either
Party pursuant to
Section 8.1(a)(v)
, Cyclerion shall reimburse Buyer for 50% of the Employee Expenses and R&D
Expenses actually paid or reimbursed to Cyclerion by Buyer or Buyer Parent, in
immediately available funds within five (5) Business Days after such
termination. Any payment of the Termination Fee or Buyer Expense
Reimbursement shall be deemed to be liquidated damages and not a penalty, and
in no event shall Cyclerion be required to pay the Termination Fee or Buyer
Expense Reimbursement on more than one occasion.
(ii)
If (A) prior to the date of the Stockholders' Meeting, an Acquisition Proposal
shall have been publicly made or otherwise publicly communicated to Cyclerion
and not publicly withdrawn, (B) this Agreement is validly terminated by Buyer
pursuant to
Section 8.1(a)(iii)
or by either Party pursuant to
Section 8.1(a)(ii)
or
Section 8.1(a)(v)
, and (C) within twelve (12) months of such termination, Cyclerion enters into
a definitive agreement with respect to, or consummates the transactions
contemplated by such Acquisition Proposal;
provided
, that references to "twenty-five percent (25%)" in the definition of
Acquisition Proposal shall be deemed to be references to "fifty percent
(50%)", then, (x) in respect of termination pursuant to
Section 8.1(a)(iii)
and
Section 8.1(a)(v)
, Cyclerion shall pay to Buyer the Termination Fee within three (3) Business
Days after the consummation of the transactions contemplated by such
Acquisition Proposal and (y) in respect of termination pursuant to
Section 8.1(a)(ii)
, Cyclerion shall pay to Buyer the Termination Fee and the Buyer Expense
Reimbursement within three (3) Business Days after the consummation of the
transactions contemplated by such Acquisition Proposal.
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(iii)
Notwithstanding anything to the contrary herein or in any other Transaction
Agreement, (i) in the event that a Termination Fee or Buyer Expense
Reimbursement is payable under
Section 8.3(a)
, Buyer's receipt of such Termination Fee in full and/or, the aggregate amount
of the Buyer Expense Reimbursement actually due to Buyer, as applicable, shall
be the sole and exclusive remedy of the Buyer Group and their respective
Affiliates and Representatives (collectively, the "
Buyer Parties
") against Cyclerion, its Subsidiary and their respective Affiliates and
Representatives (collectively, the "
Cyclerion Parties
") for any damages suffered as a result of the failure of the Closing to be
consummated or for a breach or failure to perform hereunder, and no Cyclerion
Party shall have any further Liability (including with respect to any other
Termination Fee or Buyer Expense Reimbursement) to any Person relating to or
arising out of this Agreement or the transactions contemplated hereby, and the
Buyer Parties shall be deemed to have waived all other remedies (including
equitable remedies) with respect to any and all damages or Liabilities
suffered or incurred in connection with this Agreement or the transactions
contemplated hereby and (ii) the maximum aggregate Liability of the Cyclerion
Parties, taken as a whole, under or in connection with this Agreement and the
transactions contemplated hereby shall be limited to an amount equal to the
amount of such Termination Fee plus the aggregate potential amount of the
Buyer Expense Reimbursement, and in no event shall any of the Buyer Parties
seek to recover, or be entitled to recover, any damages, Liabilities or other
losses of any kind, character or description in excess of such amount
(including to any other Termination Fee or Buyer Expense Reimbursement);
provided that the foregoing shall not limit the ability of Buyer to recover
reimbursement costs and expenses or indemnification pursuant to
Article IX
, and any such reimbursement, indemnification or interest shall not reduce the
amount of such Termination Fee; and
provided
,
further
, that nothing in this
Section 8.3(a)(iii)
shall restrict Buyer's entitlement to seek and obtain specific performance as
and to the extent permitted by
Section 12.17
.
(iv)
Cyclerion acknowledges that the agreements contained in this
Section 8.3(a)
are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, Buyer would not enter into this Agreement.
Accordingly, if Cyclerion fails promptly to pay the Termination Fee or Buyer
Expense Reimbursement when due pursuant to this
Section 8.3(a)
, it shall pay any reasonable and documented out-of-pocket costs and expenses
incurred by Buyer in connection with enforcing this Agreement to obtain
payment of such unpaid fee (including by legal action), together with interest
on the amount of such unpaid fee at a rate per annum equal to 2% from the date
such fee was required to be paid to (but excluding) the payment date.
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(b)
Reverse Termination Fee.
(i)
If this Agreement is validly terminated (i) by Cyclerion pursuant to
Section 8.1(a)(iv)
or
Section 8.1(a)(viii)
or (ii) by Cyclerion or the Buyer pursuant to
Section 8.1(a)(ii)
at a time when Cyclerion had a right to terminate pursuant to
Section 8.1(a)(iv)
or
Section 8.1(a)(viii)
(without giving effect to any notice requirement, cure period or waiting
period set forth therein) then Buyers shall pay to Cyclerion an amount in cash
equal to $1,000,000 in immediately available funds (the "Reverse Termination
Fee") within three (3) Business Days after such termination. Any payment of
the Reverse Termination Fee shall be deemed to be liquidated damages and not a
penalty, and in no event shall Buyers be required to pay the Reverse
Termination Fee on more than one occasion.
(ii)
Notwithstanding anything to the contrary herein or in any other Transaction
Agreement, (i) in the event that the Reverse Termination Fee is payable under
Section 8.3(a)
, Cyclerion's receipt of the Reverse Termination Fee in full shall be the sole
and exclusive remedy of the Cyclerion Parties against the Buyer Parties for
any damages suffered as a result of the failure of the Closing to be
consummated or for a breach or failure to perform hereunder, and no Buyer
Parties shall have any further Liability to any Person relating to or arising
out of this Agreement or the transactions contemplated hereby, and the
Cyclerion Parties shall be deemed to have waived all other remedies (including
equitable remedies) with respect to any and all damages or Liabilities
suffered or incurred in connection with this Agreement or the transactions
contemplated hereby and (ii) the maximum aggregate Liability of the Buyer
Parties, taken as a whole, under or in connection with this Agreement and the
transactions contemplated hereby shall be limited to an amount equal to the
amount of the Reverse Termination Fee, and in no event shall any of the
Cyclerion Parties seek to recover, or be entitled to recover, any damages or
other losses of any kind, character or description in excess of such amount;
provided that the foregoing shall not limit the ability of Cyclerion to
recover reimbursement for costs and expenses or indemnification under
Section 8.3(b)(iii)
and
Article IX
, and any such reimbursement, indemnification or interest shall not reduce the
amount of the Termination Fee; and
provided
,
further
, that nothing in this
Section 8.3(b)(ii)
shall restrict Cyclerion's entitlement to seek and obtain specific performance
as and to the extent permitted by
Section 12.17
.
(iii)
Each of Buyer and Buyer Parent acknowledges that the agreements contained in
this
Section 8.3(b)(iii)
are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, Cyclerion would not enter into this Agreement.
Accordingly, if Buyers fail promptly to pay the Reverse Termination Fee when
due pursuant to this
Section 8.3(b)
, they shall also pay any reasonable and documented out-of-pocket costs and
expenses incurred by Cyclerion in connection with enforcing this Agreement to
obtain payment of such unpaid fee (including by legal action), together with
interest on the amount of such unpaid fee at a rate per annum equal to 2% from
the date such fee was required to be paid to (but excluding) the payment dates.
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ARTICLE IX
INDEMNIFICATION
Section 9.1.
Indemnification by Cyclerion
. Except as otherwise specifically set forth in any provision of this
Agreement or of any Ancillary Agreement, following the Closing, Cyclerion
shall indemnify, hold harmless and defend the Buyer Indemnitees from and
against any and all Indemnifiable Losses of the Buyer Indemnitees to the
extent relating to, arising out of, by reason of or otherwise in connection
with: (i) the Excluded Liabilities, including the failure of Cyclerion or any
other Person to pay, perform or otherwise discharge any Excluded Liability in
accordance with its respective terms, whether arising prior to, on or after
the Closing, (ii) Cyclerion's breach of the covenants and agreements
applicable to it and contained in this Agreement or any Ancillary Agreement
which require performance following the consummation of the Closing, or (iii)
the terms of
Section 2.5(e)(ii)
(a "
Buyer Claim
").
Section 9.2.
Indemnification by Buyers
. Except as otherwise specifically set forth in any provision of this
Agreement, including as set forth in
Section 2.5(e)
of this Agreement, or of any Ancillary Agreement, following the Closing, Buyer
and Buyer Parent shall jointly indemnify, and shall cause the other members of
the Buyer Group to indemnify, hold harmless and defend the Cyclerion
Indemnitees from and against any and all Indemnifiable Losses of the Cyclerion
Indemnitees to the extent relating to, arising out of, by reason of or
otherwise in connection with: (i) the Assumed Liabilities, including the
failure of any member of the Buyer Group or any other Person to pay, perform
or otherwise discharge any Buyer Claim in accordance with its respective
terms, whether prior to, on or after the Closing, (ii) Buyer's or Buyer
Parent's breach of the covenants and agreements applicable to it and contained
in this Agreement or any Ancillary Agreement which require performance
following the consummation of the Closing or (iii) the terms of
Section 2.5(e)(ii)
, or (iv) the matter set forth in
Section 9.2
of the Disclosure Schedules solely in respect of Third Party Claims (a "
Cyclerion Claim
").
Section 9.3.
Procedures for Indemnification
.
(a)
Direct Claims
. Other than with respect to Third Party Claims, which shall be governed by
Section 9.3(b)
:
(i)
if a Buyer Indemnitee has made a determination that it is or may be entitled
to indemnification in respect of any Buyer Claim, the Buyer Indemnitee shall
so notify Cyclerion as promptly as reasonably possible after becoming aware of
the existence of such Buyer Claim; and
(ii)
if a Cyclerion Indemnitee has made a determination that it is or may be
entitled to indemnification in respect of any Cyclerion Claim, the Cyclerion
Indemnitee shall so notify Buyer as promptly as reasonably possible after
becoming aware of the existence of such Cyclerion Claim (any such claim made
pursuant to
Section 9.3(a)(i)
or this
Section 9.3(a)(ii)
, a "
Direct Claim
").
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Each such notice shall be in writing and shall describe in reasonable detail
the basis for the claim for indemnification hereunder and set forth, to the
extent known, the estimated amount of Indemnifiable Losses for which
indemnification may be sought hereunder relating to such claim (including, to
the extent practicable, the method of computation thereof);
provided
,
however
, that the failure to provide such written notice shall not release the
Indemnifying Party from any of its obligations except and solely to the extent
the Indemnifying Party shall have been actually materially prejudiced as a
result of such failure. The Indemnifying Party will have a period of
forty-five (45) days after receipt of any such notice under this
Section 9.3(a)
to respond to the claimant thereto. If the Indemnifying Party fails to
respond within such period, the claim specified in such notice from the
Indemnitee shall be conclusively determined to be an indemnifiable claim for
which the Indemnifying Party shall be liable to the applicable Indemnitee(s)
hereunder.
(b)
Third Party Claims
. If a claim or demand is made against an Indemnitee by any Third Party (a "
Third Party Claim
") as to which such Indemnitee is or may be entitled to indemnification
pursuant to this Agreement, Cyclerion (on behalf of the Cyclerion Indemnitees)
or Buyer (on behalf of the Buyer Indemnitees), as applicable (such claimant,
the "
Claiming Party
"), shall notify the Indemnifying Party of the Third Party Claim in writing
and in reasonable detail describing the basis for any claim for indemnification
hereunder, referring to the provisions of this Agreement or any Ancillary
Agreement in respect of which such right of indemnification is claimed by such
Indemnitee or arises and including copies of all Third Party written notices
and documents received by the Claiming Party (and any or all of its
Indemnitees) relating to the Third Party Claim promptly (and in any event
within twenty (20) days) after receipt by such Indemnitee of written notice of
the Third Party Claim;
provided
,
however
, that the failure to provide notice of any such Third Party Claim pursuant to
this sentence shall not release the Indemnifying Party from any of its
obligations except and solely to the extent the Indemnifying Party shall have
been actually materially prejudiced as a result of such failure. Thereafter,
the Claiming Party shall deliver to the Indemnifying Party, promptly (and in
any event within five (5) Business Days) after the receipt thereof by the
Claiming Party (or any of its Indemnitees), copies of any and all additional
Third Party written notices and documents (including court papers) received by
the Claiming Party (or any of its Indemnitees) relating to the Third Party
Claim.
(c)
Subject to the provisions of this
Section 9.3(c)
, the Indemnifying Party has the right, exercisable by written notice to the
Claiming Party within thirty (30) days after receipt of notice from the
Claiming Party pursuant to
Section 9.3(b)
, to assume and conduct the defense (including, subject to the conditions of
this
Section 9.3(c)
, settlement) of such Third Party Claim in accordance with the limits set
forth in this Agreement with counsel selected by the Indemnifying Party and
reasonably acceptable to the applicable Indemnitees. If the Indemnifying
Party does not assume the defense of a Third Party Claim in accordance with
this
Section 9.3(c)
, the Indemnitee may defend the Third Party Claim. If the Indemnifying Party
has assumed the defense of a Third Party Claim as provided in this
Section 9.3(c)
, the Indemnifying Party shall not be liable for any legal expenses
subsequently incurred by the Indemnitee in connection with the defense of the
Third Party Claim;
provided
,
however
, that if (w) in the reasonable judgment of the Indemnitee, after consultation
with outside counsel, there exists a conflict of interest between the
Indemnifying Party and the applicable Indemnitee(s) in the defense of such
Third Party Claim by the Indemnifying Party, (x) the party making such Third
Party Claim is a Governmental Entity with regulatory or other authority over
the Indemnitee or any of its material assets, (y) the Third Party Claim seeks
injunctive or other nonmonetary relief that, if granted, would reasonably be
expected to have a material and adverse effect on the Indemnitee's business or
(z) the Indemnifying Party fails to take reasonable steps necessary to defend
diligently such Third Party Claim, the Indemnitee may assume its own defense,
and the Indemnifying Party shall be liable for all reasonable costs or
expenses paid or incurred in connection with such defense. The Indemnifying
Party or the Indemnitee, as the case may be, has the right to participate in
(but, subject to the prior sentence, not control), at its own expense, the
defense of any Third Party Claim that the other Person is defending as
provided in this Agreement. The Indemnifying Party, if it has assumed the
defense of any Third Party Claim as provided in this Agreement, may not,
without the prior written consent of the Indemnitee (not to be unreasonably
withheld, conditioned or delayed), consent to a settlement or compromise of,
or the entry of any judgment arising from, any such Third Party Claim. The
Indemnitee may consent to a settlement or compromise of, or the entry of any
judgment arising from, any Third Party Claim, the defense of which has not
been assumed by the Indemnifying Party, only with the prior written consent of
the Indemnifying Party, not to be unreasonably withheld, conditioned or
delayed.
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(d)
The Claiming Party and the Indemnifying Party shall (and the Claiming Party
shall cause the applicable Indemnitee(s) to) make reasonably available to each
other and their respective agents and representatives all relevant records
available to them that are necessary or appropriate for the defense of any
Third Party Claim, subject to any
bona fide
claims of attorney-client privilege, and each of the Indemnifying Party and
the Claiming Party shall use its reasonable efforts to assist, and to cause
the employees and counsel of such party to assist, in the defense of such
Third Party Claim. If a Party asserts its right to participate in the defense
and investigation of any Third Party Claim, the Party controlling the defense
and investigation of such Third Party Claim shall act in good faith and
reasonably consult and cooperate with the Indemnitee or the Indemnifying
Party, as the case may be, in connection with any appearances, briefs,
arguments and proposals made or submitted by or on behalf of any party in
connection with the Third Party Claim (including considering in good faith all
reasonable additions, deletions or changes suggested by the Indemnitee or the
Indemnifying Party, as the case may be, in connection any filings made with
any Governmental Entity or proposals to the Third Party claimant in connection
therewith). With respect to any Third Party Claim that implicates both
Parties in any material respect due to the allocation of Liabilities,
responsibilities for management of defense and related indemnities pursuant to
this Agreement or any of the Ancillary Agreements, the Parties agree to use
commercially reasonable efforts to cooperate fully and maintain a joint
defense (in a manner that, to the extent reasonably practicable, will preserve
for all Parties any privilege with respect thereto). The Party that is not
responsible for managing the defense of any such Third Party Claim shall, upon
reasonable request, be consulted with respect to significant matters relating
thereto and may, if necessary or helpful, retain counsel to assist in the
defense of such claims. Notwithstanding the foregoing, nothing in this
Section 9.3(d)
shall derogate from a Party's right to control the defense of any Action in
accordance with
Section 9.3
.
(e)
Each of the Parties agrees that at all times from and after the Closing, if an
Action is commenced by a Third Party naming two
(2)
or more Parties (or any member of such Parties' respective Groups) as
defendants and with respect to which one or more named Parties (or any member
of such Party's Group) is a nominal defendant and/or such Action is related
solely to an Asset or Liability that the other Party has been assigned under
this Agreement, any Ancillary Agreement or any Assumed Contract, then the
other Party or Parties shall use commercially reasonable efforts to cause such
nominal defendant to be removed from such Action, as soon as reasonably
practicable.
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Section 9.4.
Indemnification Obligations Net of Insurance Proceeds and Other Amounts
.
(a)
Any recovery by any Party (including any of its Indemnitees) for any
Indemnifiable Loss subject to indemnification pursuant to this
Article IX
shall be calculated (i) net of Insurance Proceeds actually received by such
Party (or any of its Indemnitees) with respect to any Indemnifiable Loss, and
(ii) net of any proceeds actually received by such Party (or any of its
Indemnitees) from any Third Party with respect to any such Liability
corresponding to the Indemnifiable Loss ("
Third Party Proceeds
"), in the case of (i) and (ii) net of the costs of collection thereof and any
increase in premium attributable thereto under applicable Third Party
policies. Accordingly, the amount which any Indemnifying Party is required to
pay pursuant to this
Article IX
to any Indemnitee pursuant to this
Article IX
shall be reduced by any Insurance Proceeds or Third Party Proceeds theretofore
actually recovered by or on behalf of the Indemnitee corresponding to the
related Indemnifiable Loss. If an Indemnitee receives a payment required by
this Agreement from an Indemnifying Party corresponding to any Indemnifiable
Loss (an "
Indemnity Payment
") and subsequently receives Insurance Proceeds or Third Party Proceeds, then
the Indemnitee shall pay to the Indemnifying Party an amount equal to the
excess of the Indemnity Payment received over the amount of the Indemnity
Payment that would have been due if the Insurance Proceeds, or Third Party
Proceeds had been received, realized or recovered before the Indemnity Payment
was made.
(b)
Insurers and Other Third Parties Not Relieved
. The Parties hereby agree that an insurer or other Third Party that would
otherwise be obligated to pay any amount shall not be relieved of the
responsibility with respect thereto or have any subrogation rights with
respect thereto by virtue of any provision contained in this Agreement or any
Ancillary Agreement, and that no insurer or any other Third Party shall be
entitled to a "windfall" (e.g., a benefit they would not otherwise be entitled
to receive, or the reduction or elimination of an insurance coverage
obligation that they would otherwise have, in the absence of the indemnification
or release provisions) by virtue of any provision contained in this Agreement
or any Ancillary Agreement. Each Party shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to collect or recover, or
allow the Indemnifying Party to collect or recover, or cooperate with each
other in collecting or recovering, any Insurance Proceeds that may be
collectible or recoverable respecting the Liabilities for which indemnification
may be available under this
Article IX
. Notwithstanding the foregoing, an Indemnifying Party may not delay making
any indemnification payment required under the terms of this Agreement, or
otherwise satisfying any indemnification obligation, pending the outcome of
any Actions to collect or recover Insurance Proceeds, and an Indemnitee need
not attempt to collect any Insurance Proceeds prior to making a claim for
indemnification or receiving any Indemnity Payment otherwise owed to it under
this Agreement or any Ancillary Agreement.
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Section 9.5.
Contribution
. If the indemnification provided for in this
Article IX
is unavailable for any reason to an Indemnitee (other than failure to provide
notice with respect to any Third Party Claims in accordance with
Section 9.3(b)
) in respect of any Indemnifiable Loss, then the Indemnifying Party shall, in
accordance with this
Section 9.5
, contribute to the Indemnifiable Losses incurred, paid or payable by such
Indemnitee as a result of such Indemnifiable Loss in such proportion as is
appropriate to reflect the relative fault of Buyer, Buyer Parent and each
other member of the Buyer Group, on the one hand, and Cyclerion, on the other
hand, in connection with the circumstances which resulted in such
Indemnifiable Loss.
Section 9.6.
Additional Matters; Survival of Indemnities
.
(a)
The agreements contained in this
Article IX
shall survive the Closing.
(b)
The rights and obligations of each Party and their respective Indemnitees
under this
Article IX
shall survive (i) the sale or other transfer by any Party or its respective
Subsidiaries of any Assets or businesses or the assignment by it of any
Liabilities and (ii) any merger, consolidation, business combination, sale of
all or substantially all of the Assets, restructuring, recapitalization,
reorganization or similar transaction involving either Party or any of its
Subsidiaries.
(c)
The provisions of this
Article IX
shall be the sole and exclusive remedy of an Indemnitee for any monetary or
compensatory damages or losses resulting from any breach of this Agreement or
any Ancillary Agreement (other than the Stockholders Agreements, the Buyer
Parent Purchase Agreement, the Voting Agreements and the Transition Services
Agreement) and each Indemnitee expressly waives and relinquishes any and all
rights, claims or remedies such Person may have with respect to the foregoing
other than under this
Article IX
against any Indemnifying Party.
(d)
Notwithstanding the foregoing, to the extent the Stockholders Agreements,
Voting Agreements or the Transition Services Agreement provide procedures for
indemnification or contribution that differ from the provisions set forth in
this
Article IX
, the terms of the Stockholders Agreements, the Buyer Parent Purchase
Agreement. Voting Agreements or the Transition Services Agreement, as
applicable, will govern.
(e)
Any amounts payable pursuant to this
Article IX
shall be paid without duplication, and in no event shall any Party receive any
payment in respect of an Indemnifiable Loss or receive contribution under
different provisions of any Ancillary Agreement in respect of the same
Liabilities.
(f)
Any amount to be paid or reimbursed by an Indemnifying Party (or a member of
such Party's Group) to an Indemnitee pursuant to this
Article IX
shall be paid in accordance with the procedures set forth in
Section 12.9
.
(g)
All indemnification payments made under this Agreement shall be treated by the
parties as an adjustment to the Purchase Price for Tax purposes, unless
otherwise required by Law.
Section 9.7.
Nonsurvival of Representations and Warranties and Pre-Closing Covenants
. The Parties hereby agree that: (a) the respective representations and
warranties of Cyclerion and Buyers and (b) the covenants and agreements which
require performance prior to the consummation of the Closing, in each case
contained in this Agreement or in any instrument or other document delivered
pursuant to this Agreement shall expire with, and be terminated and
extinguished upon, the consummation of the Closing.
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ARTICLE X
ACCESS TO INFORMATION; CONFIDENTIALITY
Section 10.1.
Provision of Information
. Other than in circumstances in which indemnification is sought pursuant to
Article IX
(in which event the provisions of such
Article IX
shall govern) and subject to appropriate restrictions for Confidential
Information:
(a)
Cyclerion Provision of Information and Systems Access
. During the Transition Period, and subject to compliance with the terms of
this Agreement or the Ancillary Agreements, upon the prior written reasonable
request by, and at the expense of, Buyers for the following specific and
identified items, Cyclerion shall provide, as soon as reasonably practicable
following the receipt of such request, reasonable access to: (i) information
that relates to Buyer or the Purchased Assets, as the case may be; (ii)
information that is necessary or reasonably useful for Buyer to comply with
the terms of, or otherwise perform under, this Agreement or any Ancillary
Agreement to which Cyclerion and/or Buyers are parties; (iii) copies of
Cyclerion templates and form documents used in the operation of the Purchased
Programs; (iv) information that is otherwise required by Buyer or reasonably
useful with regard to reasonable compliance with reporting, disclosure, filing
or other requirements imposed on Buyer (including under applicable securities
laws) by a Governmental Entity having jurisdiction over Buyer; or (v)
information that is otherwise for use in any other judicial, regulatory,
administrative or other proceeding or in order to satisfy audit, accounting,
claims, regulatory, Action or other similar requirements, as applicable, in
each case to the extent such information is reasonably practicable to identify
and extract, copies of such information, templates or forms in the possession
or control of Cyclerion or its Subsidiary, but only to the extent such items
so relate and are not already in the possession or control of Buyer Parent or
any of its Subsidiaries, but only to the extent such items so relate and are
not already in the possession or control of Cyclerion. Nothing herein shall
require Cyclerion or its Subsidiary to: (A) permit any inspection, or to
disclose any information, that in the reasonable judgment of Cyclerion or the
applicable Affiliate would violate any of its obligations with respect to
confidentiality (but solely to the extent the applicable Party did not have
access to such information prior to the consummation of the Closing), (B)
permit any environmental sampling or testing, including, but not limited to
sampling of soil, groundwater, surface water, air or building materials or
other intrusive investigations of the real property, including, for the
avoidance of doubt, any "Phase II" or other testing, (C) take any action that
would cause material disruption to the business of such Party or any of its
Affiliates or cause competitive harm to such Party or its Affiliates, (D)
disclose any information, templates or forms that Cyclerion in its sole and
absolute discretion, determines would violate any Law or Contract between
Cyclerion and a Third Party (as such Contract may be amended or modified from
time to time) or waive any attorney-client privilege, rights under the work
product doctrine or other applicable privilege contravene any applicable Law,
fiduciary duty or binding agreement or (E) disclose any information that
Cyclerion reasonably determines upon the advice of counsel should not be
disclosed due to its competitively sensitive nature (but solely to the extent
such Party did not have access to such information prior to the consummation
of the Closing),
provided
, that in the event that the foregoing restrictions apply, Cyclerion shall
notify Buyer of any such restrictions and the request to which they apply and
thereafter, Cyclerion shall use commercially reasonable efforts to provide or
cause to be provided to Buyer such access or information in a manner that
would not be reasonably likely, in the reasonable determination of Cyclerion's
counsel, to result in any such disruption, harm, violation or waiver.
Notwithstanding anything to the contrary contained herein, the access provided
under this
Section 10.1(a)
may be limited to the extent Cyclerion reasonably determines, in light of the
coronavirus (COVID-19) pandemic or any mutation or variation of the SARS-CoV-2
virus (taking into account any "shelter-in-place" or similar order issued by a
Governmental Entity), that such access would jeopardize the health and safety
of its or its Subsidiary's and their respective Affiliates' employees;
provided
,
however
, that Cyclerion, its Subsidiary and their respective Affiliates shall use
their best reasonable efforts to allow for such access or as much of such
access as is possible in a manner that does not jeopardize the health and
safety of such employees.
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(b)
Buyer Provision of Information
. From and after the Closing, and subject to compliance with the terms of
this Agreement or the Ancillary Agreements, upon the prior written reasonable
request by, and at the expense of, Cyclerion for the following specific and
identified items, Buyers shall provide, as soon as reasonably practicable
following the receipt of such request, reasonable access to: (i) information
that relates to Cyclerion or the Excluded Assets, as the case may be; (ii)
information that is necessary or reasonably useful for Cyclerion to comply
with the terms of, or otherwise perform under, this Agreement or any Ancillary
Agreement to which Cyclerion and/or Buyers are parties; (iii) information that
is otherwise required by Cyclerion or reasonably useful with regard to
reasonable compliance with reporting, disclosure, filing or other requirements
imposed on Cyclerion (including under applicable securities laws) by a
Governmental Entity having jurisdiction over Cyclerion; or (iv) information
that is otherwise for use in any other judicial, regulatory, administrative or
other proceeding or in order to satisfy audit, accounting, claims, regulatory,
Action or other similar requirements, as applicable, in each case to the
extent such information is reasonably practicable to identify and extract,
copies of such information in the possession or control of Buyer Parent or any
of its Subsidiaries. Nothing herein shall require Buyer or any of its
Subsidiaries to: (A) permit any inspection, or to disclose any information,
that in the reasonable judgment of such Buyer Group company or the applicable
Affiliate would violate any of its obligations with respect to confidentiality
(but solely to the extent the applicable Party did not have access to such
information prior to the consummation of the Closing), (B) permit any
environmental sampling or testing, including, but not limited to sampling of
soil, groundwater, surface water, air or building materials or other intrusive
investigations of the real property, including, for the avoidance of doubt,
any "Phase II" or other testing, (C) take any action that would cause material
disruption to the business of such Party or any of its Affiliates or cause
competitive harm to such Party or its Affiliates, (D) disclose any
information, templates or forms that Buyer in its sole and absolute
discretion, determines would violate any Law or Contract with a Third Party
(as such Contract may be amended or modified from time to time) or waive any
attorney-client privilege, rights under the work product doctrine or other
applicable privilege contravene any applicable Law, fiduciary duty or binding
agreement or (E) disclose any information that Buyer reasonably determines
upon the advice of counsel should not be disclosed due to its competitively
sensitive nature (but solely to the extent such Party did not have access to
such information prior to the consummation of Closing,
provided
, that in the event that the foregoing restrictions apply, Buyer shall notify
Cyclerion of any such restrictions and the request to which they apply and
thereafter, Buyers shall use commercially reasonable efforts to provide or
cause to be provided to Cyclerion such access or information in a manner that
would not be reasonably likely, in the reasonable determination of Buyer's
counsel, to result in any such disruption, harm, violation or waiver.
Notwithstanding anything to the contrary contained herein, the access provided
under this
Section 10.1(b)
may be limited to the extent Buyer reasonably determines, in light of the
coronavirus (COVID-19) pandemic or any mutation or variation of the SARS-CoV-2
virus (taking into account any "shelter-in-place" or similar order issued by a
Governmental Entity), that such access would jeopardize the health and safety
of its or any Buyer Group companies' and their respective Affiliates'
employees;
provided
,
however
, that Buyer, such Buyer Group company and their respective Affiliates shall
use their best reasonable efforts to allow for such access or as much of such
access as is possible in a manner that does not jeopardize the health and
safety of such employees.
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(c)
In connection with the provision of information under this
Section 10.1
, the providing Party shall be entitled to redact any portion of the
information to the extent related to any matter other than those set forth in
Section 10.1(a)
and
(b)
, respectively. Each of Cyclerion and Buyers agree to make their respective
personnel available during regular business hours to discuss the information
exchanged pursuant to this
Section 10.1
.
Section 10.2.
Witness Services; Cooperation
. At all times from and after the Closing, each of Cyclerion, Buyer Parent
and Buyer shall use its commercially reasonable efforts to make available to
the other Parties, upon reasonable written request, its and its Subsidiaries'
officers, directors, employees and agents (taking into account the business
demands of such individuals) as witnesses to the extent that (i) such Persons
may reasonably be required to testify in connection with the prosecution or
defense of any Action in which the requesting Party may from time to time be
involved (except for claims, demands or Actions in which one or more members
of one Group is adverse to one or more members of the other Group) and (ii)
there is no conflict in the Action between the requesting Party and the other
Party. Notwithstanding any provisions of
Article X
to the contrary, after the Closing, each Party shall use commercially
reasonable efforts to assist (or cause the other members of its Group to
assist) the other with respect to any Action or potential Action upon the
request of such other Party, provided that any such expenses incurred in
connection therewith shall be at such other Party's sole expense.
Section 10.3.
Reimbursement; Other Matters
. Except to the extent otherwise contemplated by this Agreement or any
Ancillary Agreement, a Party providing information, access to information or
services to the other Party pursuant to this
Article X
shall be entitled to receive from the recipient, upon the presentation of
invoices therefor, payments for such amounts, relating to supplies,
disbursements and other out-of-pocket expenses (which shall not include the
costs of salaries and benefits of employees of such Party or any pro rata
portion of overhead or other costs of employing such employees which would
have been incurred by such employees' employer regardless of the employees'
service with respect to the foregoing), as may be reasonably incurred and
properly paid under applicable Law in providing such information, access to
such information or services.
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Section 10.4.
Confidentiality
.
(a)
Except as otherwise provided herein, in any Ancillary Agreement, or in any
Contract (as such Contract may be amended or modified from time to time)
between a Party or its Subsidiaries, on the one hand, and their respective
employees, on the other hand, each of Cyclerion, Buyer and Buyer Parent shall
hold, and shall cause the other members of their respective Groups and their
respective Representatives to hold, in strict confidence, with at least the
same degree of care that applies to Cyclerion's Confidential Information
pursuant to policies and procedures in effect as of the Closing, and not
disclose or release, or permit to be disclosed or released, all Confidential
Information of the other Party that is either in the first Party's possession
(including Confidential Information in its possession prior to the Closing) or
furnished by the other Party or any member of its Group or their respective
Representatives at any time pursuant to this Agreement or any Ancillary
Agreement, and shall not use any such Confidential Information other than for
such purposes as may be expressly permitted hereunder or under any Ancillary
Agreement. If any Confidential Information is disclosed to any member of the
other Party's Group in connection with providing services to any member of
such first Party's Group under this Agreement or any Ancillary Agreement, then
such disclosed Confidential Information shall be used by the applicable member
of such other Party's Group only as required to provide such services.
(b)
Notwithstanding anything the contrary in this
Section 10.4
, each Party may disclose, or may permit disclosure of, the other Party's
Confidential Information: (i) to its Representatives who have a need to know
such information for non-commercial purposes and are informed of the
obligation to hold such information confidential and in respect of whose
failure to comply with such obligations, the first Party will be responsible
or (ii) if any Party or any other member of its Group is required or requested
to disclose any such Confidential Information by judicial or administrative
process or by other requirements of Law or stock exchange rule or is advised
by outside counsel in connection with an Action brought by a Governmental
Entity that it is advisable to do so. Notwithstanding the foregoing, in the
event that any demand or request for disclosure of Confidential Information is
made by a Third Party pursuant to clause (ii) above, each Party, as
applicable, shall promptly notify (to the extent permissible by Law) the Party
to whom the Confidential Information relates of the existence of such
requirement or request and shall provide such affected Party a reasonable
opportunity to seek an appropriate protective order or other remedy, which
such Party will cooperate in obtaining to the extent reasonably practicable.
In the event that such appropriate protective order or other remedy is not
obtained, the Party which faces the disclosure requirement shall furnish only
that portion of the Confidential Information that is required to be disclosed
and shall take commercially reasonable steps to ensure that confidential
treatment is accorded such Confidential Information.
(c)
Each of Cyclerion, Buyer and Buyer Parent shall inform their respective
Representatives who have or had access to the other Party's Confidential
Information of their obligation to hold such information confidential in
accordance with the provisions of this Agreement.
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(d)
Without limiting the foregoing, when any Confidential Information is no longer
needed for the purposes contemplated by this Agreement or any Ancillary
Agreement, each Party shall, at its option and as promptly as practicable
after receiving a written request from the other Party, either (i) return to
such other Party all such information in a tangible form (including all copies
thereof and all notes, extracts or summaries based thereon) or (ii) certify to
such other Party that the first Party has destroyed such information (and such
copies thereof and such notes, extracts or summaries based thereon);
provided
, that such first Party's Representatives may retain one
(1)
copy of such information to the extent required by applicable Law or
professional standards, and shall not be required to destroy any such
information located in back-up, archival electronic storage;
provided
further
, that any such information so retained shall remain subject to the
confidentiality provisions of this Agreement or any Ancillary Agreement.
(e)
Each Party acknowledges that it and its respective Subsidiaries may presently
have and, following the Closing, may gain access to or possession of
confidential or proprietary information of, or personal information relating
to, Third Parties (i) that was received under confidentiality or non-disclosure
agreements entered into between such Third Parties, on the one hand, and the
other Party (or another member of its Group), on the other hand, prior to the
Closing; or (ii) that, as between the two Parties, was originally collected by
the other Party (or another member of its Group) and that may be subject to
and protected by privacy, data protection or other applicable Laws. Each
Party agrees that it shall hold, protect and use, and shall cause the other
members of its Group and its and their respective Representatives to hold,
protect and use, in strict confidence the confidential and proprietary
information of, or personal information relating to, Third Parties in
accordance with privacy, data protection or other applicable Laws and the
terms of any agreements that were either entered into before the Closing or
affirmative commitments or representations that were made before the Closing
by, between or among the other Party (or other member(s) of its Group), on the
one hand, and such Third Parties, on the other hand.
(f)
Upon the consummation of the Closing, that certain Confidentiality Agreement,
dated as of September 4, 2022, by and between J. Wood Capital Advisors LLC and
Cyclerion shall be terminated and be of no further force and effect.
Section 10.5.
Ownership of Information
. Any information owned by one Party or any of its Subsidiaries that is
provided to a requesting Party pursuant to this
Article X
shall be deemed to remain the property of the providing Party. Unless
expressly set forth herein, nothing contained in this Agreement shall be
construed as granting a license or other rights to any Party with respect to
any such information, whether by implication, estoppel or otherwise.
ARTICLE XI
DISPUTE RESOLUTION
Section 11.1.
Governing Law
. This Agreement and (except to the extent, if any, expressly set forth
therein) the other Transaction Agreements, and any disputes arising hereunder
or (except to the extent, if any, expressly set forth therein) thereunder or
controversies related hereto, or (except to the extent, if any, expressly set
forth therein) thereto, shall be governed by and construed in accordance with
the internal laws, and not the laws of conflicts, of the Commonwealth of
Massachusetts that apply to contracts made and performed entirely within such
state.
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Section 11.2.
Proceedings
. Any proceeding with respect to this Agreement or (except to the extent, if
any, expressly set forth therein) any other Transaction Agreements, any matter
arising out of or in connection with this Agreement or (except to the extent,
if any, expressly set forth therein) any other Transaction Agreement shall be
brought exclusively in the state or federal courts located in the Commonwealth
of Massachusetts. By execution and delivery of this Agreement, each Party
hereby accepts for herself, himself or itself and in respect of such Person's
property, generally and unconditionally, the sole and exclusive jurisdiction
of the aforesaid courts and appellate courts thereof. Each Party irrevocably
consents to service of process in any proceeding in any of the aforementioned
courts by the mailing of copies thereof by registered or certified mail,
postage prepaid, or by recognized overnight delivery service, to such Party at
such Party's address referred to in
Section 12.5
. Each Party hereto hereby irrevocably and unconditionally waives any
objection which such Person may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or (except to the extent, if any, expressly set forth
therein) any other Transaction Agreement brought in the courts referred to
above and hereby further irrevocably waives and agrees, to the extent
permitted by applicable Law, not to plead or claim in any such court that any
such proceeding brought in any such court has been brought in an inconvenient
forum. Final judgment in any such proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Nothing herein shall affect the right of any Party hereto to
serve process in any other manner permitted by Law.
Section 11.3.
Immunity
. To the extent that any Party has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service
or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself, or to such Person's property,
each such Party hereto hereby irrevocably waives such immunity in respect of
such Person's obligations with respect to this Agreement or (except to the
extent expressly set forth therein) any other Transaction Agreement.
Section 11.4.
Waiver of Jury Trial
. EACH PARTY HERETO, FOR HIMSELF, HERSELF OR ITSELF AND HIS, HER OR ITS
AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY
PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES
PURSUANT TO THIS AGREEMENT OR (EXCEPT TO THE EXTENT EXPRESSLY SET FORTH
THEREIN) ANY OTHER TRANSACTION AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT.
ARTICLE XII
MISCELLANEOUS
Section 12.1.
Complete Agreement
. This Agreement, including the Exhibits and Disclosure Schedules, and the
Ancillary Agreements shall constitute the entire agreement between the Parties
with respect to the subject matter hereof and shall supersede all previous
negotiations, commitments, course of dealings and writings with respect to
such subject matter. In the event of any inconsistency between this Agreement
and any Disclosure Schedule hereto, the Disclosure Schedule shall prevail.
Except as otherwise provided in this Agreement, in the event and to the extent
that there shall be a conflict between the provisions of this Agreement and
the provisions of any Ancillary Agreement, this Agreement shall control.
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Section 12.2.
Counterparts
. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the Parties and
delivered to each of the Parties. The Agreement and any documents relating to
it may be executed and transmitted to any other party by email of a PDF, which
email or PDF shall be deemed to be, and utilized in all respects as, an
original, wet-inked document.
Section 12.3.
Survival of Agreements
. Except as otherwise contemplated by this Agreement or any Ancillary
Agreement, all covenants and agreements of the Parties contained in this
Agreement and each Ancillary Agreement shall survive the Closing and remain in
full force and effect in accordance with their applicable terms, provided that
the covenants and agreements which require performance prior to the
consummation of the Closing shall expire with, and be terminated and
extinguished upon, the consummation of the Closing.
Section 12.4.
Fees, Costs and Expenses
. Except as otherwise agreed to in writing by the Parties or as set forth in
Section 12.4
of the Disclosure Schedules, regardless of whether the transactions provided
for in this Agreement are consummated, each Party will pay its own costs and
expenses incident to this Agreement and the transactions contemplated herein.
Section 12.5.
Notices
. All notices, requests, claims, demands and other communications under this
Agreement and, to the extent applicable and unless otherwise provided therein,
under each of the Ancillary Agreements shall be in English, shall be in
writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by overnight courier
service, by email with receipt confirmed or by registered or certified mail
(postage prepaid, return receipt requested) to the respective Parties at the
following addresses (or at such other address for a Party as shall be
specified in a notice given in accordance with this
Section 12.5
):
To Buyer:
JW Celtics Investment Corp.
c/o Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036-8704
Attn: Suni Sreepada
Phone: (212) 596-9960
Email: suni.sreepada@ropesgray.com
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To Cyclerion:
Cyclerion Therapeutics, Inc.
245 First St, Riverview II, 18
th
Floor
Cambridge, MA 02142
United States
Attn: Anjeza Gjino
Phone: 857-327-8778
Email: agjino@cyclerion.com
Fax: 617-890-6595
With a copy, which shall not constitute notice to:
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, NY 10004
Attention: Gary Simon; Scott Naturman
Email: Gary.Simon@hugheshubbard.com; Scott.Naturman@hugheshubbard.com
Each Party may, by notice given in accordance herewith to the other Party,
designate any further or different address to which subsequent notices,
requests, claims, demands and other communications shall be sent.
Section 12.6.
Waivers
. The delay or failure of either Party to exercise or enforce any of its
rights under this Agreement will not constitute, or be deemed to be, a waiver
of those rights, nor will any single or partial exercise of any such rights
preclude any other or further exercise thereof or the exercise of any other
right. No waiver of any provision of this Agreement will be effective unless
it is in writing and signed by the Party against which it is being enforced.
Section 12.7.
Assignment
. No Party may assign any rights or delegate any obligations arising under
this Agreement, in whole or in part, directly or indirectly, without the prior
written consent of the other Party (such consent not to be unreasonably
withheld, conditioned or delayed), and any attempt to so assign any rights or
delegate any obligations arising under this Agreement without such consent
shall be void. Notwithstanding the foregoing, no such consent shall be
required for any such assignment or delegation (i) with respect to Cyclerion,
to a Subsidiary of Cyclerion (so long as such Subsidiary remains a Subsidiary
of Cyclerion), (ii) with respect to Buyer Parent or Buyer, to a Subsidiary of
Buyer Parent (so long as such Subsidiary remains a Subsidiary of Buyer Parent)
or (iii) to a bona fide Third Party in connection with a merger, reorganization,
consolidation or the sale of all or substantially all of the assets of a
Party so long as the resulting, surviving or transferee entity assumes all the
obligations of the assigning Party by operation of Law or pursuant to an
agreement in form and substance reasonably satisfactory to the non-assigning
Party;
provided
,
however
, that in the case of each of the preceding clauses (i) and (ii), no
assignment permitted by this
Section 12.7
shall release the assigning Party from liability for the full performance of
its obligations under this Agreement.
Section 12.8.
Successors and Assigns
. The provisions of this Agreement and the obligations and rights hereunder
shall be binding upon, inure to the benefit of and be enforceable by (and
against) the Parties and their respective successors (whether by merger,
acquisition of assets or otherwise) and permitted assigns.
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Section 12.9.
Payment Terms
. All payments to be made by either Cyclerion, Buyer Parent or Buyer under
this Agreement shall be made in U.S. dollars. Any amount which is not
expressed in U.S. dollars shall be converted into U.S. dollars by using the
exchange rate published on Bloomberg at 5:00 p.m., Eastern time, on the day
before the relevant date, or in The Wall Street Journal, Eastern Edition, on
such date if not so published on Bloomberg. In the event that any
indemnification payment required to be made hereunder or under any Ancillary
Agreement may be denominated in a currency other than U.S. dollars, the amount
of such payment shall be converted into U.S. dollars on the date notice of the
claim is given to the Indemnifying Party.
Section 12.10.
Subsidiaries
. Each of the Parties shall cause to be performed, and hereby guarantees the
performance of, all actions, agreements and obligations set forth herein to be
performed by any Subsidiary of such Party or by any entity that becomes a
Subsidiary of such Party at or after the date hereof, in each case to the
extent such Subsidiary remains a Subsidiary of the applicable Party.
Section 12.11.
Third Party Beneficiaries
. Except (i) as provided in
Article IX
relating to Indemnitees and (ii) as specifically provided in any Ancillary
Agreement, this Agreement is solely for the benefit of the Parties and shall
not be deemed to confer upon any Person other than the Parties any remedy,
claim, liability, reimbursement, cause of Action or other right beyond any
that exist without reference to this Agreement.
Section 12.12.
Bulk Sales
. Each of the Parties hereby waive compliance by itself and each and every
member of such Party's respective Group with the requirements and provisions
of any "bulk-sale" or "bulk transfer" Laws of any jurisdiction that may
otherwise be applicable with respect to the transfer or sale of any or all of
the Purchased Assets to Buyer or any member of the Buyer Group.
Section 12.13.
Titles and Headings
. Titles and headings to sections herein are inserted for the convenience of
reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
Section 12.14.
Exhibits and Disclosure
Schedules
.
(a)
The Exhibits and Disclosure Schedules shall be construed with and as an
integral part of this Agreement to the same extent as if the same had been set
forth verbatim herein.
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(b)
The disclosure of any matter, or reference to any Contract, in any Section of
the Disclosure Schedules to this Agreement shall not be deemed to constitute
an admission by Cyclerion, Buyer Parent or Buyer, or any member of such
Party's respective Group, or to otherwise imply that any such matter or
Contract is material for the purposes of this Agreement and shall not affect
the interpretation of such term for the purposes of this Agreement. In
particular, (a) certain matters may be disclosed on the Disclosure Schedules
that may not be required to be disclosed because of certain minimum thresholds
or materiality standards set forth in this Agreement, (b) the disclosure of
any such matter does not mean that it meets or surpasses any such minimum
thresholds or materiality standards, and (c) no disclosure in the Disclosure
Schedules relating to any possible breach or violation of any Contract or Law
shall be construed as an admission or indication that any such breach or
violation exists or has actually occurred. In no event shall the listing of
such matters in any Section of the Disclosure Schedules be deemed or
interpreted to expand the scope of any of Cyclerion's, Buyer Parent's or
Buyer's representations and warranties contained in this Agreement. Each
Section of the Disclosure Schedules is qualified in its entirety by reference
to specific provisions of the Agreement and does not constitute, and shall not
be construed as constituting, representations, warranties or covenants of
Cyclerion, Buyer Parent or Buyer, or any member of such Party's respective
Group, or their respective Affiliates, except as and to the extent provided in
this Agreement. Matters reflected in any Section of the Disclosure Schedule
are not necessarily limited to matters or Contracts required by this Agreement
to be disclosed in such Disclosure Schedules. Regardless of the existence or
absence of cross-references, any information disclosed in any Section of the
Disclosure Schedules shall be deemed fully disclosed for the purposes of all
Sections of the Disclosure Schedules and shall be deemed to qualify all
representations and warranties of Cyclerion, Buyer Parent or Buyer to which it
is reasonably apparent on the face of such disclosure that such disclosure is
or can reasonably be expected to be pertinent. The section headings in the
Disclosure Schedules are for convenience of reference only and shall not be
deemed to alter or affect the meaning or interpretation of any information
disclosed herein or any provision of this Agreement. All attachments to the
Disclosure Schedules are incorporated by reference into the Section of the
Disclosure Schedules in which they are directly or indirectly referenced. The
information contained in the Disclosure Schedules is in all events subject to
Section 10.4
and
Section 12.16
.
Section 12.15.
Severability
. In the event any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby. The Parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
Section 12.16.
Public Announcements
. From and after the date hereof, Cyclerion, Buyer and Buyer Parent shall
consult with each other before issuing, and each shall give the other the
opportunity to review and comment upon, that portion of any press release or
other public statement, including a public statement made to its investors,
that relates to the transactions contemplated by this Agreement or the
Ancillary Agreements, and shall not issue any such press release or make any
such public statement prior to such consultation, except (a) as may be
required by applicable Law, court process or obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system; or (b) for disclosures made that are substantially identical
to disclosure contained in any prior written public statement not made in
violation of this
Section 12.16
.
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Section 12.17.
Specific Performance
. The Parties hereby expressly recognize and acknowledge that irreparable
damage would result, no adequate remedy at law would exist, and damages would
be difficult to determine in the event that any provision of this Agreement is
not performed in accordance with its specific terms or otherwise breached.
Therefore, in addition to, and not in limitation of, any other remedy
available to any Party hereto, a party under this Agreement will be entitled
to specific performance of the terms hereof and injunctive relief, without the
necessity of proving the inadequacy of money damages as a remedy and without
bond or other security being required. Such remedies, and any and all other
remedies provided for in this Agreement, will, however, be cumulative in
nature and not exclusive and will be in addition to any other remedies
whatsoever which any Party may otherwise have. Each of the Parties hereby
acknowledges and agrees that it may be difficult to prove damages with
reasonable certainty, that it may be difficult to procure suitable substitute
performance, and that injunctive relief and/or specific performance will not
cause an undue hardship to the Parties. Each of the Parties hereby further
acknowledges that the existence of any other remedy contemplated by this
Agreement does not diminish the availability of specific performance of the
obligations hereunder or any other injunctive relief. Each Party hereby
further agrees that in the event of any action by any other Party for specific
performance or injunctive relief, it will not assert that a remedy at law or
other remedy would be adequate or that specific performance or injunctive
relief in respect of such breach or violation should not be available on the
grounds that money damages are adequate or any other grounds.
Section 12.18.
No Recourse
. Other than with respect to claims involving actual fraud, this Agreement
may only be enforced against, and any Action based upon, arising out of, or
related to this Agreement or the transactions contemplated hereby may only be
brought against, the entities that are expressly named as parties hereto.
Except to the extent they are a named party to this Agreement and other than
with respect to claims involving actual fraud, no past, present or future
director, officer, employee, incorporator, member, partner, stockholder,
Affiliate, agent, attorney, advisor or representative or Affiliate of any of
the foregoing shall have any Liability (whether in contract, tort, equity or
otherwise) for any one or more of the representations, warranties, covenants,
agreements or other obligations or liabilities of any one or more of
Cyclerion, Buyer Parent or Buyer under this Agreement (whether for
indemnification or otherwise) or of or for any Action based on, arising out
of, or related to this Agreement or the transactions contemplated hereby.
Section 12.19.
Interpretation
. The Parties have participated jointly in the negotiation and drafting of
this Agreement. This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the Party
drafting or causing any instrument to be drafted.
Section 12.20.
No Admission of Liability
. The allocation of Assets and Liabilities herein (including on the
Disclosure Schedules hereto) is solely for the purpose of allocating such
Assets and Liabilities between Cyclerion and Buyers and is not intended as an
admission of liability or responsibility for any alleged Liabilities vis-a-vis
any Third Party.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the day and year first above written.
JW CELTICS INVESTMENT CORP.
By: /s/ Jason Wood
Name: Jason Wood
Title: Director
JW CYCLE, INC.
By: /s/ Jason Wood
Name: Jason Wood
Title: Director
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the day and year first above written.
CYCLERION THERAPEUTICS, INC.
By: /s/ Cheryl Gault
Name: Cheryl Gault
Title: Chief Operating Officer
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Exhibit 10.1
VOTING AND SUPPORT AGREEMENT
THIS VOTING AND SUPPORT AGREEMENT, dated as of [______ __], 2023 (the "
Agreement
"), among JW Celtics Investment Corp., a Delaware corporation ("
Buyer Parent
"), and [ ], a stockholder (the "
Holder
").
WITNESSETH:
WHEREAS, Cyclerion Therapeutics, Inc., a Massachusetts corporation (the "
Company
"), Buyer Parent and JW Cycle Inc., a Delaware corporation ("
Buyer
"), are entering into an Asset Purchase Agreement dated as of the date hereof
(as the same may be amended or supplemented from time to time, the "
Asset Purchase Agreement
") providing for, among other things, Buyer's purchase of the Purchased Assets
(as defined in the Asset Purchase Agreement) and assumption of the Assumed
Liabilities (as defined in the Asset Purchase Agreement);
WHEREAS, the Holder is the Beneficial Owner (as defined below) of the number
of outstanding shares of the common stock of the Company (the "
Company Common Stock
") listed on Exhibit A (such shares of Company Common Stock, the Holder's "
Existing Shares
" and, such Existing Shares, together with any additional outstanding shares
of capital stock of the Company Beneficially Owned or acquired by the Holder
on or after the date hereof, the "
Shares
");
WHEREAS, as a condition and an inducement to the Company and Buyer Parent
entering into the Asset Purchase Agreement, the Holder is entering into this
Agreement with respect to all Company Common Stock that the Holder
Beneficially Owns and/or owns of record; and
WHEREAS, the Company and Buyer Parent desire that the Holder agree, and the
Holder is willing to agree, subject to the limitations herein, not to Transfer
(as defined below) any of its Shares, and to deliver a written consent with
respect to its Shares or vote its Shares, if applicable, in a manner so as to
facilitate consummation of the Asset Purchase Agreement and the other
transactions contemplated by the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
GENERAL
1.1.
Definitions
.
Capitalized terms used but not defined herein shall have the meanings set
forth in the Asset Purchase Agreement.
"
Beneficially Own
" or "
Beneficial Ownership
" has the meaning assigned to such term in Rule 13d-3 under the Exchange Act,
and a Person's beneficial ownership of securities shall be calculated in
accordance with the provisions of such Rule (in each case, irrespective of
whether or not such Rule is actually applicable in such circumstance). For
the avoidance of doubt, Beneficially Own and Beneficial Ownership shall also
include record ownership of securities.
"
Beneficial Owners
" shall mean Persons who Beneficially Own the referenced securities.
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"
Transfer
" means (a) any direct or indirect offer, sale, lease, assignment,
encumbrance, loan, pledge, grant of a security interest, hypothecation,
disposition or other transfer (including by gift, tender or exchange offer,
merger, by operation of law or otherwise), or entry into any contract, option
or other arrangement or understanding with respect to any offer, sale, lease,
assignment, encumbrance, loan, pledge, hypothecation, disposition or other
transfer (including by gift, tender or exchange offer, merger, operation of
law or otherwise), of any capital stock or interest in any capital stock (or
any security convertible or exchangeable into such capital stock), including
in each case through the Transfer of any Person or any interest in any Person
or (b) in respect of any capital stock or interest in any capital stock, to
enter into any hedge, swap, derivative instrument or any other agreement,
transaction or series of transactions that results in an amount of Shares
subject to
Article III
that is less than the amount of Shares subject to
Article III
immediately prior to the consummation of any such agreement, transaction or
series of transactions. For purposes of this Agreement, "capital stock" shall
include interests in a partnership or limited liability company.
ARTICLE II
AGREEMENT TO RETAIN SHARES
2.1.
Transfer and Encumbrance of Shares
.
From the date hereof until the Termination Date (as defined below), the Holder
shall not, with respect to the Shares, (a) Transfer any such Shares or (b)
deposit any such Shares into a voting trust or enter into a voting agreement
or arrangement with respect to such Shares or grant any proxy (except as
otherwise provided herein) or power of attorney with respect thereto.
Notwithstanding the foregoing, this
Section 2.1
shall not prohibit a Transfer of any Shares by the Holder to an affiliate of
the Holder (in which case such transferee shall be considered the "Holder"
hereunder)~
provided,
that a Transfer described in this sentence shall be permitted only if, as a
precondition to such Transfer, the transferee agrees in a writing to be bound
by the terms of this Agreement.
2.2.
Additional Purchases; Adjustments
.
(a)
The Holder agrees that any shares of Company Common Stock and any other shares
of capital stock or other equity of the Company that the Holder purchases or
otherwise acquires or with respect to which the Holder otherwise acquires
voting power after the execution of this Agreement and prior to the
Termination Date shall be subject to the terms and conditions of this
Agreement to the same extent as if they constituted the Shares as of the date
hereof and the Holder shall promptly notify the Company of the existence and
number of any such after-acquired Shares. In the event of any stock split,
reverse stock split, stock dividend, merger, reorganization, recapitalization,
reclassification, combination, exchange of shares or the like of the capital
stock of the Company affecting the Shares, the terms of this Agreement shall
apply to the resulting securities.
(b)
The Holder shall cause any of its controlled affiliates that purchases or
otherwise acquires or otherwise acquires voting power over shares of Company
Common Stock or any other shares of capital stock or other equity of the
Company after execution of this Agreement and prior to the Termination Date to
execute a voting and support agreement with Buyer Parent in the form of, and
on terms substantially similar to, this Agreement.
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2.3.
Unpermitted Transfers; Involuntary Transfers
.
Any Transfer or attempted Transfer of any Shares or other actions taken or
attempted to be taken in violation of this
Article II
shall, to the fullest extent permitted by Law, be null and void
ab initio.
In furtherance of the foregoing, the Holder hereby authorizes and instructs
the Company to instruct his, her or its transfer agent to enter a stop
transfer order with respect to all of the Shares. If any involuntary Transfer
of any of the Holder's Shares shall occur, the transferee (which term, as used
herein, shall include any and all transferees and subsequent transferees of
the initial transferee) shall take and hold such Shares subject to all of the
restrictions, liabilities and rights under this Agreement, which shall
continue in full force and effect until valid termination of this Agreement.
ARTICLE III
AGREEMENT TO CONSENT AND VOTE
3.1.
Agreement to Vote
.
Prior to the Termination Date, the Holder irrevocably and unconditionally
agrees that it shall, at any meeting of the stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed
meeting), however called, appear at such meeting or otherwise cause the Shares
entitled to vote to be counted as present thereat for purpose of establishing
a quorum and vote (or consent), or cause to be voted (in person or by proxy)
at such meeting (or validly execute and return and cause such consent to be
granted with respect to), all of the Shares entitled to vote:
(a)
in favor of (i) the adoption of the Asset Purchase Agreement and the approval
of the transactions contemplated thereby, including the purchase of the
Purchased Assets and the assumption of the Assumed Liabilities, (ii) the
adjournment of the Stockholders Meeting if necessary to solicit proxies in
favor of the adoption of the Asset Purchase Agreement and the consummation of
the transactions contemplated thereby or to establish a quorum, and (iii) any
other matter or action necessary to the consummation of the closing of the
Asset Purchase Agreement. In furtherance of the foregoing obligations of the
Holder, the Holder hereby agrees to deliver or deposit a proxy or voting
instruction form, as the case may be, duly completed and executed in respect
of all of the Shares, as directed in the Proxy Statement, as soon as
practicable following the mailing of the Proxy Statement to the Company
stockholders, and in any event at least 5 days prior to the Stockholders
Meeting, voting all such Shares in accordance with the foregoing sentence. The
Holder hereby agrees that neither he, her or it nor any person on his, her or
its behalf will take any action to withdraw, amend or invalidate any proxy or
voting instruction form deposited by the Holder pursuant to this Agreement
notwithstanding any statutory or other rights or otherwise which the Holder
might have, unless and until this Agreement is terminated in accordance with
Section 6.3
; and
(b)
against (i) any agreement, transaction or proposal that relates to an
Acquisition Proposal or any other transaction, proposal, agreement or action
made in opposition to adoption of the Asset Purchase Agreement or in
competition or inconsistent with the transactions or matters contemplated by
thereby; (ii) any action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement of
the Company or any of its Subsidiaries contained in the Asset Purchase
Agreement or of the Holder contained in this Agreement; (iii) any action or
agreement that would reasonably be expected to result in (A) any condition to
the consummation of the Asset Purchase Agreement set forth in Article VII of
the Asset Purchase Agreement not being fulfilled or (B) any change to the
voting rights of any class of shares of capital stock of the Company
(including any amendments to the Company's organizational documents); and (iv)
any other action that would reasonably be expected to impede, interfere with,
or frustrate the purposes of any of the transactions contemplated by the Asset
Purchase Agreement. Any attempt by the Holder to vote, consent or express
dissent with respect to (or otherwise to utilize the voting power of), the
Shares in contravention of this
Section 3.1
shall be null and void
ab initio.
If the Holder is the Beneficial Owner, but not the holder of record, of any
Shares, the Holder agrees to take all actions necessary to cause the holder of
record and any nominees to vote (or exercise a consent with respect to) all of
such Shares in accordance with this
Section 3.1
.
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ARTICLE IV
ADDITIONAL AGREEMENTS
4.1.
Litigation
.
The Holder agrees not to commence, participate in, facilitate, assist or
encourage, and agrees to take all actions necessary to opt out of any class in
any class action with respect to, any claim, derivative or otherwise, against
the Company or any of its affiliates and successors or directors (a)
challenging the validity of, or seeking to enjoin the operation of, any
provision of this Agreement or the Asset Purchase Agreement (including any
claim seeking to enjoin or delay the Closing) or (b) alleging a breach of any
fiduciary duty of the Board in connection with this Agreement, the Asset
Purchase Agreement or the transactions contemplated hereby or thereby, and
hereby irrevocably waives any claim or rights whatsoever with respect to any
of the foregoing.
4.2.
Further Assurances
.
The Holder agrees that from and after the date hereof and until the
Termination Date, the Holder shall and shall cause his, her or its
Subsidiaries to take no action that (a) would reasonably be likely to
adversely affect or delay the ability to obtain the Stockholder Approval or
the approval of any other Governmental Entity required for the transactions
contemplated by the Asset Purchase Agreement or to perform his, her or its
respective covenants and agreements under this Agreement, (b) would make any
representation or warranty of the Holder herein untrue or incorrect, or (c)
would have the effect of committing or agreeing to take any of the foregoing
actions or any other action that would reasonably be expected to make any of
the representations or warranties contained herein untrue or incorrect or
would have the effect of preventing or otherwise materially delaying, impeding
or impairing the Holder from performing any of his, her or its obligations
hereunder. The Holder shall, from time to time, execute and deliver, or cause
to be executed and delivered, such additional or further consents, documents
and other instruments as the Company may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement.
4.3.
Fiduciary Duties
.
The Holder is entering into this Agreement solely in his, her or its capacity
as the record or Beneficial Owner of the Shares and nothing herein is intended
to or shall limit or affect any actions taken by any of the Holder's designees
serving solely in his or her capacity as a director of the Company (or a
Subsidiary of the Company). The taking of any actions (or failures to act) by
the Holder's designees serving as a director of the Company shall not be
deemed to constitute a breach of this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1.
Holder Representations and Warranties
.
The Holder hereby represents and warrants as follows:
(a)
Ownership.
The Holder has, with respect to the Existing Shares, and at all times during
the term of this Agreement will continue to have, Beneficial Ownership of,
good and valid title to and full and exclusive power to deliver written
consent, vote, issue instructions with respect to the matters set forth in
Article III, agree to all of the matters set forth in this Agreement and to
Transfer the Shares. The Existing Shares constitute all of the shares of
Company Common Stock owned of record or beneficially by the Holder as of the
date hereof. Other than this Agreement, there are no agreements or
arrangements of any kind, contingent or otherwise, to which the Holder is a
party obligating the Holder to Transfer or cause to be Transferred to any
person any of the Shares. No Person has any contractual or other right or
obligation to purchase or otherwise acquire any of the Shares.
(b)
Authority.
The Holder has all requisite authority (and in the case of an individual, the
capacity) to make, enter into and carry out the terms of this Agreement and to
perform his, her or its obligations hereunder. This Agreement has been duly
and validly executed and delivered by the Holder and (assuming due
authorization, execution and delivery by Buyer Parent) constitutes a valid and
binding agreement of the Holder, enforceable against the Holder in accordance
with its terms (except in all cases as such enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity), and no other
action is necessary to authorize the execution and delivery by the Holder or
the performance of the Holder's obligations hereunder.
(c)
No Violation.
The execution, delivery and performance by the Holder of this Agreement will
not (i) violate any provision of any Law applicable to the Holder; (ii)
violate any order, judgment or decree applicable to the Holder; or (iii)
conflict with, or result in a breach or default under, any agreement or
instrument to which the Holder is a party or, if the Holder is an entity, any
term or condition of its organizational documents, except where such conflict,
breach or default would not reasonably be expected to, individually or in the
aggregate, have an adverse effect on the Holder's ability to satisfy his, her
or its obligations hereunder.
(d)
Consents and Approvals.
The execution and delivery by the Holder of this Agreement does not, and the
performance of the Holder's obligations hereunder, require the Holder to
obtain any consent, approval, authorization or permit of, or to make any
filing with or notification to, any person or Governmental Entity, except such
filings and authorizations as may be required under the Exchange Act.
(e)
Absence of Litigation.
As of the date hereof, there is no action, suit, investigation, complaint or
other proceeding pending against the Holder or, to the knowledge of the
Holder, any other person, or, to the knowledge of the Holder, threatened
against the Holder or any other person that would reasonably be expected to
restrict or prohibit (or, if successful, would restrict or prohibit) the
performance by the Holder of his, her or its obligations under this Agreement
or to consummate the transactions contemplated hereby or by the Asset Purchase
Agreement on a timely basis.
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(f)
Absence of Other Voting Agreements.
None of the Shares is or will be subject to any voting trust, proxy or other
agreement, arrangement or restriction with respect to voting, in each case,
that is inconsistent with this Agreement. None of the Shares is subject to
any pledge agreement pursuant to which the Holder does not retain sole and
exclusive voting rights with respect to the Holder's Shares subject to such
pledge agreement at least until the occurrence of an event of default under
the related debt instrument.
(g)
Finder's Fee.
No investment banker, broker, finder or other intermediary is entitled to a
fee or commission from Buyer Parent in respect of this Agreement or the Asset
Purchase Agreement based upon any arrangement or agreement made by or on
behalf of the Holder.
5.2.
Buyer Parent Representations and Warranties
.
(a)
Organization; Authority.
Buyer Parent is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Buyer Parent is not in
violation of any of the provisions of its organizational documents. Buyer
Parent has full power and authority and is duly authorized to make, enter into
and carry out the terms of this Agreement and to perform its obligations
hereunder. This Agreement has been duly and validly executed and delivered by
Buyer Parent and (assuming due authorization, execution and delivery by the
Holder) constitutes a valid and binding agreement of Buyer Parent, enforceable
against Buyer Parent in accordance with its terms (except in all cases as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity), and no other action is necessary to authorize the
execution and delivery by Buyer Parent or the performance of Buyer Parent's
obligations hereunder.
(b)
No Violation.
The execution, delivery and performance by Buyer Parent of this Agreement will
not (i) violate any provision of any Law applicable to Buyer Parent; (ii)
violate any order, judgment or decree applicable to Buyer Parent; or (iii)
conflict with, or result in a breach or default under, any agreement or
instrument to which Buyer Parent is a party or any term or condition of its
organizational documents, except where such conflict, breach or default would
not reasonably be expected to, individually or in the aggregate, have an
adverse effect on Buyer Parent's ability to satisfy its obligations hereunder.
(c)
Consents and Approvals.
The execution and delivery by Buyer Parent of this Agreement, and the
performance of Buyer Parent's obligations hereunder, does not require Buyer
Parent to obtain any consent, approval, authorization or permit of, or to make
any filing with or notification to, any person or Governmental Entity, except
such filings and authorizations as may be required under the Exchange Act.
(d)
Absence of Litigation.
As of the date hereof, there is no action, suit, investigation, complaint or
other proceeding pending against Buyer Parent or, to the knowledge of Buyer
Parent, any other person, or, to the knowledge of Buyer Parent, threatened
against the Company or any other person that would reasonably be expected to
restrict or prohibit (or, if successful, would restrict or prohibit) the
performance by Buyer Parent of its obligations under this Agreement or to
consummate the transactions contemplated hereby or by the Asset Purchase
Agreement on a timely basis.
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ARTICLE VI
MISCELLANEOUS
6.1.
No Ownership Interest.
Nothing contained in this Agreement shall be deemed to vest in Buyer Parent
any direct or indirect ownership or incidence of ownership of or with respect
to the Shares. All rights, ownership and economic benefits of and relating to
the Shares shall remain vested in and belong to the Holder, and Buyer Parent
shall not have the authority to direct the Holder in the voting or disposition
of any Shares, except as otherwise expressly provided herein. Nothing in this
Agreement shall be interpreted as creating or forming a "group" with any other
Person for the purposes of Rule 13d-5(b)(l) of the Exchange Act or for any
other similar provision of applicable Law.
6.2.
Disclosure.
The Holder hereby authorizes the Company to publish and disclose in any
announcement or disclosure required by the SEC and in the Proxy Statement the
Holder's identity and ownership of the Shares and the nature of the Holder's
obligations under this Agreement.
6.3.
Termination.
This Agreement shall terminate automatically and without any further action by
the Holders, Buyer Parent or the Company at the earlier of (a) the date the
Asset Purchase Agreement is validly terminated in accordance with its terms,
(b) consummation of the Closing of the Asset Purchase Agreement, (c) Buyer
Parent's receipt of notice of an Cyclerion Adverse Recommendation Change, (d)
the mutual written consent of the parties hereto, or (e) the entry into any
amendment to the Asset Purchase Agreement without the prior written consent of
the Holder (which consent may be in the form of an e-mail) that is materially
adverse to the Holder (such date, the "
Termination Date
"). In the event of any such termination of this Agreement, this Agreement
shall forthwith become null and void and have no effect, without any liability
or obligation on the part of Buyer Parent or the Holder, other than liability
for any willful and material breach of this Agreement prior to such
termination.
6.4.
Amendment.
This Agreement may not be amended, modified or supplemented in any manner,
whether by course of conduct or otherwise, except by an instrument in writing
specifically designated as an amendment hereto, signed on behalf of each of
the parties hereto and the Company at the time of the amendment.
6.5.
Extension~ Waiver.
At any time prior to the Closing, the Holder and Buyer Parent may, to the
extent legally allowed:
(a)
extend the time for the performance of any of the obligations or acts of the
other party hereunder;
(b)
waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto; or
(c)
waive compliance with any of the agreements or conditions of the other party
contained herein.
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Notwithstanding the foregoing, no failure or delay by any party in exercising
any right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right hereunder. No agreement on the part of a party to any such extension or
waiver shall be valid unless set forth in an instrument in writing signed on
behalf of such party. No waiver by any of the parties hereto of any default,
misrepresentation or breach of representation, warranty, covenant or other
agreement hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation or breach or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.
6.6.
Expenses.
Regardless of whether the transactions provided for in this Agreement are
consummated, each party will pay its own costs and expenses incident to this
Agreement and the transactions contemplated herein.
6.7.
Notices.
All notices, requests, claims, demands and other communications under this
Agreement shall be in English, shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by overnight courier service, by facsimile or email with receipt
confirmed (followed by delivery of an original via overnight courier service)
or by registered or certified mail (postage prepaid, return receipt
requested), to the Holder at the addresses specified on Exhibit A and for
Buyer Parent at the following address (or at such other address for a Party as
shall be specified in a notice given in accordance with this
Section 6.7
):
if to Buyer Parent, to:
JW Celtics Investment Corp.
Address: 1820 Calistoga Road Santa Rosa, CA 95404
Attn: Jason Wood
Phone: (415) 577-5305
Email: jason@jwoodcapital.com
With a copy, which shall not constitute notice to
:
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036-8704
Attn: Suni Sreepada
Phone: (212) 596-9960
Email: Suni.sreepada@ropesgray.com
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6.8.
Interpretation.
The parties have participated jointly in the negotiation and drafting of this
Agreement. This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted. References in this Agreement
to any gender include references to all genders, and references to the
singular include references to the plural and vice versa. Unless the context
otherwise requires, the words "include", "includes" and "including" when used
in this Agreement shall be deemed to be followed by the phrase "without
limitation". Unless the context otherwise requires, references in this
Agreement to Articles and Sections shall be deemed references to Articles and
Sections of this Agreement. Unless the context otherwise requires, the words
"hereof", "hereby" and "herein" and words of similar meaning when used in this
Agreement refer to this Agreement in its entirety and not to any particular
Article, Section or provision of this Agreement. The words "written request"
when used in this Agreement shall include email. Reference in this Agreement
to any time shall be to Eastern time unless otherwise expressly provided
herein. The word "or" shall not be exclusive. References to any "statute" or
"regulation" are to such statute or regulation as amended, modified,
supplemented or replaced from time to time (and, in the case of any statute,
include any rules and regulations promulgated under such statute) and to any
"section of any statute or regulation" include any successor to such section.
References to any Governmental Entity include any successor to such
Governmental Entity, and references to any affiliate include any successor to
such affiliate. Whenever the last day for the exercise of any right or the
discharge of any duty under this Agreement falls on a day other than a
Business Day, the party having such right or duty shall have until the next
Business Day to exercise such right or discharge such duty. Unless otherwise
indicated, the word "day" shall be interpreted as a calendar day.
6.9.
Counterparts.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement, and shall become effective when one
or more such counterparts have been signed by each of the parties and
delivered to each of the parties. The Agreement and any documents relating to
it may be executed and transmitted to any other party by email of a PDF, which
email or PDF shall be deemed to be, and utilized in all respects as, an
original, wet-inked document.
6.10.
Complete Agreement.
This Agreement shall constitute the entire agreement between the parties with
respect to the subject matter hereof and shall supersede all previous
negotiations, commitments, course of dealings and writings with respect to
such subject matter.
6.11.
Governing Law; Venue; Waiver of Jury Trial
.
(a)
Governing Law
.
This Agreement and any disputes arising hereunder or controversies related
hereto, shall be governed by and construed in accordance with the internal
laws, and not the laws of conflicts, of the Commonwealth of Massachusetts that
apply to contracts made and performed entirely within such state
.
(b)
Proceedings
.
Any proceeding with respect to this Agreement, any matter arising out of or in
connection with this Agreement shall be brought exclusively in the state or
federal courts located in the Commonwealth of Massachusetts. By execution and
delivery of this Agreement, each party hereby accepts for herself, himself or
itself and in respect of such Person's property, generally and unconditionally,
the sole and exclusive jurisdiction of the aforesaid courts and appellate
courts thereof. Each party irrevocably consents to service of process in any
proceeding in any of the aforementioned courts by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
overnight delivery service, to such party at such party's address referred to
in
Section
6.7
. Each party hereto hereby irrevocably and unconditionally waives any
objection which such Person may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement brought in the courts referred to above and hereby further
irrevocably waives and agrees, to the extent permitted by applicable Law, not
to plead or claim in any such court that any such proceeding brought in any
such court has been brought in an inconvenient forum. Final judgment in any
such proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by Law. Nothing
herein shall affect the right of any party hereto to serve process in any
other manner permitted by Law
.
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(c)
Immunity
. To the extent that any party has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service
or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself, or to such Person's property,
each such party hereto hereby irrevocably waives such immunity in respect of
such Person's obligations with respect to this Agreement
.
(d)
Waiver of Jury Trial
. EACH PARTY HERETO, FOR HIMSELF, HERSELF OR ITSELF AND HIS, HER OR ITS
AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY
PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES
PURSUANT TO THIS AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
OR ENFORCEMENT HEREOF.
6.12.
Assignment
. No party may assign any rights or delegate any obligations arising under
this Agreement, in whole or in part, directly or indirectly, without the prior
written consent of the other party (such consent not to be unreasonably
withheld, conditioned or delayed), and any attempt to so assign any rights or
delegate any obligations arising under this Agreement without such consent
shall be void.
6.13.
Specific Performance.
The parties hereby expressly recognize and acknowledge that irreparable damage
would result, no adequate remedy at law would exist, and damages would be
difficult to determine in the event that any provision of this Agreement is
not performed in accordance with its specific terms or otherwise breached.
Therefore, in addition to, and not in limitation of, any other remedy
available to any party hereto, a party under this Agreement will be entitled
to specific performance of the terms hereof and injunctive relief, without the
necessity of proving the inadequacy of money damages as a remedy and without
bond or other security being required. Such remedies, and any and all other
remedies provided for in this Agreement, will, however, be cumulative in
nature and not exclusive and will be in addition to any other remedies
whatsoever which any party may otherwise have. Each of the parties hereby
acknowledges and agrees that it may be difficult to prove damages with
reasonable certainty, that it may be difficult to procure suitable substitute
performance, and that injunctive relief and/or specific performance will not
cause an undue hardship to the parties. Each of the parties hereby further
acknowledges that the existence of any other remedy contemplated by this
Agreement does not diminish the availability of specific performance of the
obligations hereunder or any other injunctive relief. Each party hereby
further agrees that in the event of any action by any other party for specific
performance or injunctive relief, it will not assert that a remedy at law or
other remedy would be adequate or that specific performance or injunctive
relief in respect of such breach or violation should not be available on the
grounds that money damages are adequate or any other grounds.
6.14.
Severability.
In the event any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby. The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
10
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6.15.
Third Party Beneficiaries
. The parties hereto acknowledge and agree that the Company is an express
third-party beneficiary of this Agreement, and as such the rights hereunder
will inure to the benefit of and be enforceable by the Company, including but
not limited to the right to fully enforce the Holder's obligations hereunder.
Except for the Company, this Agreement is solely for the benefit of Buyer
Parent and each Holder and shall not be deemed to confer upon any Person other
than the parties hereto any remedy, claim, liability, reimbursement, cause of
Action or other right beyond any that exist without reference to this
Agreement.
6.16.
No Recourse.
This Agreement may only be enforced against, and any claims or causes of
action that may be based upon, arise out of or relate to this Agreement, or
the negotiation, execution or performance of this Agreement may only be made
against the Holder and no former, current or future equity holders,
controlling persons, directors, officers, employees, agents or affiliates of
any party hereto or any former, current or future stockholder, controlling
person, director, officer, employee, general or limited partner, member,
manager, agent or affiliate (other than the Holder) of any of the foregoing,
including the Company (each, unless a permitted transferee contemplated by
Section 2.1, a "
Non-Recourse Party
") shall have any liability for any obligations or liabilities of the parties
to this Agreement or for any claim (whether in tort, contract or otherwise)
based on, in respect of, or by reason of, the transactions contemplated hereby
or in respect of any representations made or alleged to be made in connection
herewith. Without limiting the rights of any party against the other parties
hereto, in no event shall any party or any of its affiliates seek to enforce
this Agreement against, make any claims for breach of this Agreement against,
or seek to recover monetary damages from, any Non-Recourse Party. For the
avoidance of doubt, nothing in this
Section 6.16
shall be deemed to limit, restrict or otherwise affect in any way any rights
or remedies available under the Asset Purchase Agreement.
[Signature Page Follows]
11
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have executed or caused this Agreement to be executed in counterparts, all as
of the day and year first above written.
BUYER PARENT:
JW CELTICS INVESTMENT CORP.
By:
Name: Jason Wood
Title: Director
[Signature page to Voting and Support Agreement]
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HOLDERS:
[If Holder is an entity]
[Entity Name]
By:
Name:
Title:
[If Holder is an Individual]
Name:
[Signature page to Voting and Support Agreement]
-------------------------------------------------------------------------------
Exhibit A
Holder Existing Shares Notice Address
A-1
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Exhibit 99.1
Cyclerion Announces Definitive Agreement for Zagociguat and CY3018
Certain Cyclerion shareholders and new investors have agreed to invest $81M to
launch a new company targeting diseases of mitochondrial dysfunction
Cyclerion to receive $8M in cash and 10% equity in the new company in exchange
for its zagociguat and CY3018 assets
Definitive agreement signing triggers previously announced $5M equity
investment in Cyclerion
CAMBRIDGE, Mass., May 11, 2023
- Cyclerion Therapeutics, Inc. (Nasdaq: CYCN) announced today that it has
signed a definitive agreement with a new private company ("NewCo") to sell two
of its sGC stimulator assets in exchange for cash and equity ownership.
Investors in NewCo have agreed to invest $81M to develop zagociguat
(previously CY6463) to treat MELAS* and other diseases associated with
mitochondrial dysfunction and advance CY3018.
Under the terms of the asset purchase agreement, Cyclerion will receive an $8M
cash payment at closing, reimbursement for all expenses related to zagociguat
and CY3018 for the period between the signing and closing of the transaction,
and 10% equity ownership in NewCo that is subject to anti-dilution protection
through $100M in post-money valuation. Cyclerion will also have additional
future equity purchase rights in NewCo. Current Cyclerion shareholders
including Invus and CEO Peter Hecht are participating in the capitalization of
NewCo. They are joined in the NewCo investor syndicate by Venrock, J Wood
Capital and Sanofi Ventures. The transaction is subject to approval by
Cyclerion shareholders. Each of the current Cyclerion investors who are
participating in the NewCo capitalization have agreed to vote their Cyclerion
shares in favor of the transaction. Following the closing, NewCo will be
solely responsible for all activities and expenses related to developing and
commercializing zagociguat and CY3018.
-------------------------------------------------------------------------------
Signing of the definitive agreement triggered the previously announced $5M
equity investment by CEO Peter Hecht. This investment will take place on May
19, 2023, and Hecht will receive a mix of common stock and nonvoting
convertible preferred stock of Cyclerion at a minimum purchase price of $0.434
per share, subject to adjustment for any reverse stock split or similar event.
"We are pleased to see our zagociguat and CY3018 assets attracting the capital
and capabilities they will need to continue their development in mitochondrial
and CNS diseases. Over the past 12 months, our board, management and advisors
have carried out an exhaustive and thorough process to evaluate all available
opportunities to maximize the value of our assets for our shareholders in this
exceptionally challenging capital market while advancing potentially
life-changing medicines to patients," said Errol De Souza, Chair of the Board
at Cyclerion "With this transaction, we believe these compounds will receive
the focus they deserve, and Cyclerion shareholders will be able to benefit
from future value creation via Cyclerion's equity position in the new company
without any go-forward operational or financial obligations for these
programs."
Stifel is acting as financial advisor to Cyclerion; Hughes Hubbard & Reed LLP
is serving as legal counsel to the Board and the Company.
About Cyclerion Therapeutics
Cyclerion Therapeutics is a clinical-stage biopharmaceutical company on a
mission to develop treatments for serious diseases. Cyclerion's portfolio
includes novel sGC stimulators that modulate a key node in a fundamental
signaling network in both the CNS and the periphery. The multidimensional
pharmacology elicited by the stimulation of sGC has the potential to impact a
broad range of diseases. Zagociguat is a CNS-penetrant sGC stimulator that has
shown rapid improvements across a range of endpoints reflecting multiple
domains of disease activity, including mitochondrial disease-associated
biomarkers. CY3018 is a CNS-targeted sGC stimulator in preclinical development
that preferentially localizes to the brain and has a pharmacology profile that
suggests its potential for the treatment of neuropsychiatric diseases and
disorders. Praliciguat is a systemic sGC stimulator that is licensed to Akebia
and being advanced in rare kidney disease. Olinciguat is a vascular sGC
stimulator that the Company intends to out-license for cardiovascular
diseases. For more information about Cyclerion, please visit
https://www.cyclerion.com/
and follow us on Twitter
(
@Cyclerion
)
and LinkedIn
(
www.linkedin.com/company/cyclerion
).
-------------------------------------------------------------------------------
Forward Looking Statement
Certain matters discussed in this press release are "forward-looking
statements". We may, in some cases, use terms such as "predicts," "believes,"
"potential," "continue," "estimates," "anticipates," "expects," "plans,"
"intends," "may," "could," "might," "will," "should", "positive" or other
words that convey uncertainty of future events or outcomes to identify these
forward-looking statements. In particular, the Company's statements regarding
the potential of zagociguat and CY3018 for the treatment of mitochondrial and
CNS diseases, the potential for any successful development of zagociguat or
CY3018, any future value creation to the Company from the sale, all of which
depend on the successful development, commercialization and/or sales relating
to zagociguat and CY3018 (which cannot be assured and is not in the Company's
control), and other trends and potential future results are examples of such
forward-looking statements. The forward-looking statements include risks and
uncertainties, including, but not limited to, the risks that the Company may
never successfully close the referenced transactions, that if completed, the
referenced transactions may not be successful in generating future value for
Cyclerion shareholders,
that zagociguat and CY3018 may not demonstrate the desired safety and efficacy
in ongoing and future clinical trials, the ability of the new company to
successfully develop and/or commercialize zagociguat and CY3018, and the
receipt of regulatory approvals. The factors discussed herein could cause
actual results and developments to be materially different from those
expressed in or implied by such statements. The forward-looking statements are
made only as of the date of this press release and the Company undertakes no
obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstance.
* MELAS (Mitochondrial
Encephalopathy
, Lactic Acidosis, and Stroke-like episodes syndrome)
Investors and Media Inquiries
Cyclerion Investor Relations
Phone: 857-327-8778
Email: IR@cyclerion.com
###
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Exhibit 99.2
Cyclerion Announces Corporate Updates and Q1 2023 Financial Results
Definitive agreement reached with new company ("NewCo") established by certain
Cyclerion shareholders and new investors
Cyclerion to receive $8M in cash and 10% equity in NewCo in exchange for its
zagociguat and CY3018 assets
Definitive agreement signing triggers previously announced $5M equity
investment in Cyclerion
Cyclerion CEO Peter Hecht Ph.D. to lead NewCo while continuing to serve on the
Cyclerion board as one of the company's largest shareholders
Biopharma executive Errol De Souza Ph.D. elected as chair of the Cyclerion board
CAMBRIDGE, Mass., May 11, 2023
- Cyclerion Therapeutics, Inc. (Nasdaq: CYCN) today announced corporate
updates and first quarter 2023 financial results.
Definitive Agreement Signed
On May 11, 2023 Cyclerion entered into a definitive agreement to sell two of
its sGC* stimulator assets, zagociguat (formerly CY6463) and CY3018, to a new
private company ("NewCo") formed by certain current Cyclerion shareholders and
new investors who have agreed to invest $81M to advance these assets. Under
the terms of the agreement, Cyclerion will receive an $8M cash payment at
closing, reimbursement for all expenses related to zagociguat and CY3018 for
the period between signing and closing of the transaction, and 10% equity
ownership in NewCo that is subject to anti-dilution protection through $100M
in post-money valuation. Cyclerion will also have additional future equity
purchase rights in NewCo. The transaction is subject to approval by Cyclerion
shareholders and, once completed, will enable the assets to be developed in
NewCo with the capital and capabilities to advance them while giving Cyclerion
shareholders the opportunity to participate in future value creation without
having the obligation to make direct investments and take on the risk of these
early-stage programs.
Go Forward Strategy
Previously, Cyclerion out-licensed the peripherally active sGC stimulator
praliciguat to Akebia Therapeutics, Inc. ("Akebia"), a leading biopharmaceutical
company focused on kidney disease. Under the terms of that agreement, the
Company is eligible to receive up to $585M in development, regulatory, and
commercialization milestones, as well as sales-based royalties. Cyclerion
retains full rights to olinciguat, an oral, once-daily, peripheral sGC
stimulator, that has shown a favorable safety and tolerability profile, drug
characteristics, and dose-dependent pharmacological activity in several
placebo controlled clinical studies. Olinciguat has a strong patent estate
with intellectual property exclusivity to the late 2030s. sGC stimulators are
now approved for PAH** and HFrEF*** (both multibillion dollar opportunities).
In similar fashion to today's transaction and the Akebia license, Cyclerion
intends to identify a partner with deep cardiovascular experience to maximize
olinciguat's value while minimizing distraction and operating expense.
-------------------------------------------------------------------------------
These external development deals make up a growing diverse portfolio of upside
value for our shareholders and the potential for non-dilutive funds from
upfront and milestone payments and/or monetization of equity positions and
royalties. The externalization of the initial sGC assets means that Cyclerion
now has the opportunity to bring in new assets to develop using its highly
efficient and externalized model. The Company will initially target assets in
the CNS therapeutic area that are at a later stage of development and can be
advanced to approval more quickly.
Upon approval of the current transaction by Cyclerion shareholders, Peter
Hecht will transition out of his Cyclerion CEO role and join NewCo as its CEO.
Dr. Hecht, a major Cyclerion shareholder, will continue to serve as a
Cyclerion Director. Cyclerion has initiated a search to bring in a new leader
to drive the company's strategy going forward.
Board of Directors
Current independent board member Errol De Souza has been elected to serve as
the chair of the Cyclerion Board effective immediately. Dr. De Souza is a
seasoned R&D and business leader with broad experience - from large pharma to
start ups - in the discovery and development of therapeutics for the treatment
of CNS disorders.
"I am excited to have a unique platform from which to exercise my passion for
finding underappreciated and undervalued neuro assets. I've been fortunate to
have had multiple successful opportunities to uncover important neuro
therapies through approval that are having profound impacts on patients'
lives, and I've done so in a variety of circumstances, including small
biotechs" said Errol De Souza, Chair of the Cyclerion Board of Directors. "I
am looking forward to the opportunity to take learnings from each of those and
apply them to Cyclerion alongside a group of supportive, long-term, core
investors."
ADv Study Results
Cyclerion recently completed the analysis of its signal-seeking clinical study
of zagociguat for the potential treatment of Alzheimer's disease with vascular
pathology (ADv) (NCT04798989). This exploratory, randomized, placebo-controlled,
study of oral once-daily zagociguat was designed to evaluate safety,
tolerability, and pharmacokinetics as well as explore the impact on biomarkers
and cognitive performance over a twelve-week dosing period. The total number
of participants in the study was capped at 12 participants due to challenges
associated with enrollment. Data from this study show that the safety and
tolerability profile of once-daily zagociguat was consistent with prior
studies. Given the small number of participants Cyclerion is unable to draw
any conclusions from the data generated in the study.
Equity Investment
Signing of the definitive agreement today triggered the previously announced
$5M equity investment by CEO Peter Hecht. This investment will take place on
May 19, 2023 and Hecht will receive a mix of common stock and nonvoting
convertible preferred stock of Cyclerion at a minimum purchase price of $0.434
per share, subject to adjustment for any reverse stock split or similar event.
The proceeds from this investment and the $8M upfront from the sale of
zagociguat and CY3018 are expected to support ongoing operations for at least
12 months post-closing of the transaction.
-------------------------------------------------------------------------------
Financial Position
. Cash, cash equivalents, and restricted cash balance on March 31, 2023 was approximately
$7.2 million, as compared to approximately $13.4 million on December 31, 2022.
. Research and development expenses were approximately $3.8 million for Q1 2023, as compared to approximately
$9.7 million for Q1 2022. The decrease of approximately $6.0 million was primarily driven by decreases of $3.1
million in external research and development costs related to zagociguat and CY3018, $1.6 million in employee-related
expenses, $0.6 million in non-cash stock-based compensation, and $0.6 million in professional services.
. General and administrative expenses were approximately $3.3 million for Q1 2023, as compared to approximately $4.0 million for
Q1 2022. The decrease of approximately $0.7 million was primarily driven by a decrease in non-cash stock-based compensation.
. Net Loss: Net loss was approximately $7.0 million for Q1 2023, as compared to approximately $13.0 million for Q1 2022.
About Cyclerion Therapeutics
Cyclerion Therapeutics is a clinical-stage biopharmaceutical company on a
mission to develop treatments for serious diseases. Cyclerion's portfolio
includes novel sGC stimulators that modulate a key node in a fundamental
signaling network in both the CNS and the periphery. The multidimensional
pharmacology elicited by the stimulation of sGC has the potential to impact a
broad range of diseases. Zagociguat is a CNS-penetrant sGC stimulator that has
shown rapid improvements across a range of endpoints reflecting multiple
domains of disease activity, including mitochondrial disease-associated
biomarkers. CY3018 is a CNS-targeted sGC stimulator in preclinical development
that preferentially localizes to the brain and has a pharmacology profile that
suggests its potential for the treatment of neuropsychiatric diseases and
disorders. Praliciguat is a systemic sGC stimulator that is licensed to Akebia
and being advanced in rare kidney disease. Olinciguat is a vascular sGC
stimulator that the Company intends to out-license for cardiovascular
diseases. For more information about Cyclerion, please visit
https://www.cyclerion.com/
and follow us on Twitter (
@Cyclerion
) and LinkedIn (
www.linkedin.com/company/cyclerion
).
-------------------------------------------------------------------------------
Forward Looking Statement
Certain matters discussed in this press release are "forward-looking
statements". We may, in some cases, use terms such as "predicts," "believes,"
"potential," "continue," "estimates," "anticipates," "expects," "plans,"
"intends," "may," "could," "might," "will," "should", "positive" or other
words that convey uncertainty of future events or outcomes to identify these
forward-looking statements. In particular, the Company's statements regarding
the assessment of the best combination of capital, capabilities, and
transactions available to it resulting in the Company pursuing a transaction
or that any transaction, if pursued, will be completed on attractive terms,
the success of any such potential transactions in delivering any future value
to the Company, the sufficiency of any expected revenues to provide liquidity
and capital resources to pursue any of our go-forward business plans regarding
any product candidate, the potential for zagociguat in the treatment of
mitochondrial diseases, the potential for CY3018 in the treatment of CNS
diseases, the potential for olinciguat in the treatment of cardiovascular and
cardiopulmonary diseases, the potential for any successful development of any
of our assets, and other trends and potential future results are examples of
such forward-looking statements. The forward-looking statements include risks
and uncertainties, including, but not limited to, the success of any
transactions in delivering any future value to the company, our ability to
succeed with any go-forward business, the sufficiency of any expected proceeds
to provide liquidity and capital resources to pursue any of our go-forward
business plans regarding any product candidate (including without limitation
our ability to fund additional clinical trials); any ability to successfully
demonstrate the efficacy, safety and therapeutic effectiveness of any product
candidate; any results of clinical studies not necessarily being indicative of
or supported by the final results of subsequent clinical trials; the timing of
and ability to pursue, obtain and maintain U.S. Food and Drug Administration
("FDA") or other regulatory authority approval of, or other action with
respect to, product candidates; the Company's ability to successfully defend
its intellectual property or obtain necessary licenses at a cost acceptable to
the Company, if at all; the successful implementation of the Company's
research and development programs and collaborations; the success of the
Company's license agreements; the acceptance by the market of the product
candidates, if approved; and other factors, including general economic
conditions and regulatory developments, not within the Company's control. The
factors discussed herein could cause actual results and developments to be
materially different from those expressed in or implied by such statements.
The forward-looking statements are made only as of the date of this press
release and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstance.
* sGC (Soluble guanylate cyclase)
** PAH (Pulmonary arterial hypertension)
***
HFrEF (Heart failure with reduced ejection fraction)
Investors and Media Inquiries
Cyclerion Investor Relations
Phone: 857-327-8778
Email: IR@cyclerion.com
###
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{graphic omitted}
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