Item 1.01 Entry into a Material Definitive Agreement.
Separation and Distribution Agreement
On July 29, 2015, Emergent entered into a Separation and Distribution Agreement with Aptevo, that sets forth, among other things, the agreements between Emergent and Aptevo regarding the principal transactions necessary to effect the planned separation of Emergent's biosciences business, or the Separation, and the Distribution of Aptevo's outstanding common stock to Emergent's stockholders. It also sets forth other agreements that govern certain aspects of Emergent's ongoing relationship with Aptevo after the completion of the Separation and Distribution. A summary of important features of the Separation and Distribution Agreement can be found in the excerpts from Aptevo's information statement, which are contained in Exhibit 99.1 attached hereto, which is incorporated by reference into this Item 1.01.
Contribution Agreement and Promissory Note
Also on July 29, 2015, in anticipation of the Distribution, Emergent, Aptevo and certain other parties entered into a Contribution Agreement, or the Contribution Agreement, pursuant to which Aptevo issued to Emergent 20,228,849 shares of Aptevo common stock in exchange for Emergent's contribution to Aptevo of (i) $45,000,000 in cash; (ii) a non-negotiable promissory note made by Emergent in favor of Aptevo in the principal amount of $20,000,000, or the Promissory Note; and (iii) all of the equity interests in Aptevo Research and Development LLC and Aptevo BioTherapeutics LLC. The principal amount outstanding under the Promissory Note does not bear interest and is payable on Aptevo's demand within six to 12 months following the Distribution Date.
The foregoing descriptions of the Separation and Distribution Agreement, Contribution Agreement and the Promissory Note do not purport to be complete and are qualified in their entirety by reference to the complete text of the Separation and Distribution Agreement, Contribution Agreement and the Promissory Note, which are filed as Exhibits 2.1, 2.2 and 10 to this Current Report on Form 8-K, respectively, and incorporated herein by reference.
On the Distribution Date, Emergent completed the Distribution, making a pro rata distribution of 100% of the outstanding shares of Aptevo common stock to Emergent stockholders of record as of the Record Date. At the time of the Distribution, Aptevo held certain assets and liabilities of Emergent's former biosciences business. The Distribution was effectuated through the payment of a dividend to Emergent stockholders of record as of the Record Date, who received one share of Aptevo common stock for every two shares of Emergent common stock held of record as of the Record Date, except that any Emergent stockholder who otherwise would have received a fractional share of Aptevo common stock in the Distribution received in lieu of the fractional share a pro rata share of the net cash proceeds from the sale of aggregated fractional shares into the market. Emergent stockholders did not pay any consideration in the Distribution. Following the Distribution, Emergent does not own any shares of Aptevo common stock.
