Item 1.01 Entry into a Material Definitive Agreement
On May 4, 2021, iBio, Inc. (the "Company") and Fraunhofer USA, Inc. ("FhUSA")
entered into a Confidential Settlement Agreement and Mutual Release (the
"Settlement Agreement") to settle all claims and counterclaims in the litigation
captioned iBio, Inc. v. Fraunhofer USA, Inc. (Case No. 10256-VCF) in Delaware
Chancery Court (the "Lawsuit"). The Settlement Agreement, among other things,
resolves the Company's claims to ownership of certain plant-based technology
developed by FhUSA from 2003 through 2014, and sets forth the terms of a license
of intellectual property. The Lawsuit was commenced against FhUSA by the Company
in March 2015 in the Court of Chancery of the State of Delaware and is described
in more detail in the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 2020. The Settlement Agreement is not an admission of
liability or fault of the parties.
The terms of the Settlement Agreement provide for cash payments to the Company
of $28,000,000 as follows: (i) $16,000,000 to be paid no later than May 14, 2021
(which is expected to be paid 100% to cover legal fees and expenses); (ii) two
payments of $5,100,000 payable by March 31, 2022 and 2023 and (iii) as
additional consideration for a license agreement, two payments of $900,000 due
on March 1, 2022 and 2023. The license provides for a nonexclusive,
nontransferable, worldwide, fully paid-up license to all intellectual property
rights in and to certain plant-based technology developed by FhUSA from 2003
through 2014 that were the subject of the Lawsuit. After payment of the fees and
expenses of its attorneys and others retained by the Company, including the
litigation funding company, the Company's estimated aggregate net cash recovery
as a result of the Settlement Agreement will be approximately $12,000,000.
The Settlement Agreement provides that within three business days of
confirmation of receipt in full of the initial $16,000,000 payment, the Company
and FhUSA will submit a stipulated order dismissing all claims with prejudice
asserted in the Lawsuit. The Settlement Agreement also contains a mutual release
by the Company and FhUSA of all claims and counterclaims through the date of the
Settlement Agreement.
Item 1.01 of this Current Report on Form 8-K contains only a brief description
of the material terms of the Settlement Agreement and does not purport to be a
complete description of the rights and obligations of the parties thereunder,
and such description is qualified in its entirety by reference to the full text
of the Settlement Agreement. The Company intends to file a copy of the
Settlement Agreement with confidential terms redacted with the Securities and
Exchange Commission as an exhibit to its Annual Report on Form 10-K for the year
ended June 30, 2021. The Settlement Agreement contains confidentiality
provisions and therefore certain terms of the Settlement Agreement remain
confidential.
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