On April 19, 2023, the Company executed a non-binding agreement in principle with its landlord with respect to the early termination of its lease for its headquarters (“Early Termination”). Pursuant to this non-binding agreement in principle. If the proposed Early Termination is consummated prior to the consummation of the Offer, the Final Lease Amount would be $5,250,000 and the amount of potential lease savings would be $7,350,000 (the “Potential Lease Savings”) ($12,600,000 minus $5,250,000), or approximately $0.1377 per CVR, assuming that the Company Net Working Capital (as finally determined pursuant to clause (b)(iv) of Exhibit A to the Merger Agreement) is no less than $110 million. However, since the agreement in principle with the landlord is non-binding, there is a risk that the Potential Lease Savings may not be realized if the Company cannot execute a binding agreement. Further, if at Closing, there is Company Net Working Capital of less than $110,000,000, then such shortfall would reduce the amount to be paid and stockholders under the CVR.
Risks
Certain Litigation
Subsequent to the filing of the Schedule 14D-9 and as of the date hereof, six civil actions have been filed in United States District Courts by putative stockholders of the Company: Wong v. Jounce Therapeutics, Inc., et al., Case No. 1:23-cv-03044, filed April 11, 2023 in the Southern District of New York (“S.D.N.Y.”) (the “Wong Complaint”), Diamond v. Jounce Therapeutics, Inc., et al., Case No. 1:23-cv-03053, filed April 12, 2023 (S.D.N.Y.) (the “Diamond Complaint”), Elliot v. Jounce Therapeutics, Inc., et al., Case No. 1:23-cv-03093, filed April 13, 2023 (S.D.N.Y.) (the “Elliot Complaint”), Scott v. Jounce Therapeutics, Inc., et al., Case No. 1:23-cv-00412-UNA, filed April 13, 2023 in the District of Delaware (the “Scott Complaint”), O’Dell v. Jounce Therapeutics, Inc., et al., Case No. 1:23-cv-03168, filed April 17, 2023 (S.D.N.Y) (the “O’Dell Complaint”), Wang v. Jounce Therapeutics, Inc., et al., Case No. 1:23-cv-03267, filed April 19, 2023 (S.D.N.Y) (the “Wang Complaint” and together with the Wong Complaint, the Diamond Complaint, the Elliot Complaint, the Scott Complaint and the O’Dell Complaint, the “Complaints”). All of the Complaints name the Company and the members of the Company Board as defendants.
The Complaints assert claims under the federal securities laws in connection with the Schedule 14D-9 that was filed with the SEC by the Company on April 6, 2023, alleging that the document contains materially incomplete and misleading information. The Complaints seek, among other things, an order enjoining consummation of the Transactions; rescission of the Transactions if they have already been consummated or awarding rescissory damages to plaintiff; an order directing the Company Board to file a Solicitation/Recommendation Statement that does not contain any untrue statements of material fact and that states all material facts required in it or necessary to make the statements contained therein not misleading; an award of plaintiff’s costs, including reasonable allowance for attorneys’ fees and experts’ fees; and such other and further relief as the court may deem just and proper.
Subsequent to the filing of the Schedule 14D-9 and as of the date hereof, the Company has received eight demand letters on behalf of individuals purporting to be shareholders of the Company, each generally seeking that certain information allegedly omitted from the Schedule 14D-9 be disclosed or alleged misstatements in the Schedule 14D-9 to be corrected. Additionally, subsequent to the filing of the Schedule 14D-9 and as of the date hereof, the Company received two demand letters from purported stockholders to review specified books and records of the Company relating to the Transactions.
The outcome of these lawsuits and demand letters cannot be predicted with certainty. If a preliminary injunction were to be granted it could delay or jeopardize the completion of the Transactions, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin the completion of such Transactions. If additional similar complaints, or complaints relating to the demand letters disclosed herein, are filed or additional similar demand letters are received, absent new or different allegations that are material, the Company will not necessarily announce such additional filings.
