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EXHIBIT 10.40
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SECURITIES PURCHASE AGREEMENT
Among
GERON CORPORATION,
XXXXX XXXXXXX STRATEGIC GROWTH FUND, LTD.,
XXXXX XXXXXXX STRATEGIC GROWTH FUND, L.P.,
LB I GROUP INC.
and
RGC INTERNATIONAL INVESTORS, LDC
Dated as of December 10, 1998
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as
of December 10, 1998, among Geron Corporation, a Delaware corporation (the
"Company"), Xxxxx Xxxxxxx Strategic Growth Fund, Ltd., a Cayman Islands exempt
company ("Xxxxx Xxxxxxx Limited"), Xxxxx Xxxxxxx Strategic Growth Fund, L.P., a
New York limited partnership ("Xxxxx Xxxxxxx XX"), LB I Group Inc., a Delaware
corporation ("LB Group") and RGC International Investors, LDC, a Cayman Islands
limited duration company ("RGC"). Xxxxx Xxxxxxx Limited, Xxxxx Xxxxxxx XX, LB
Group and RGC are each referred to herein as a "Purchaser" and are collectively
referred to herein as the "Purchasers."
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, an aggregate of seven million
five hundred thousand dollars ($7,500,000) principal amount of Series A
Zero-Coupon Convertible Debentures (the "Tranche A Debentures"), and warrants
(the "Tranche A Warrants") to purchase up to $7,500,000 of the Company's common
stock, par value $.001 per share (the "Common Stock"); and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, an aggregate of seven million
five hundred thousand dollars ($7,500,000) principal amount of Series B
Zero-Coupon Convertible Debentures (the "Tranche B Debentures" and, together
with the Tranche A Debentures, the "Debentures"), and warrants (the "Tranche B
Warrants", and together with the Tranche A Warrants, the "Warrants") to purchase
up to $7,500,000 of the Company's Common Stock.
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and each Purchaser agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE DEBENTURES AND WARRANTS
I.1 Purchase and Sale.
(a) Subject to the terms and conditions set forth herein, the
Company shall issue and sell to each Purchaser, and each Purchaser, severally
and not jointly, shall purchase from the Company:
(i) On the Tranche A Closing Date (as defined below),
the principal amount of Tranche A Debentures as set forth for such Purchaser on
Schedule I; and
(ii) On the Tranche B Closing Date (as defined below),
the principal amount of Tranche B Debentures as set forth for such Purchaser on
Schedule I.
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(b) Each Purchaser shall purchase that principal amount of
Debentures set forth opposite such Purchaser's name on Schedule I attached
hereto and each Purchaser shall deliver to the Company the portion of the
purchase price for each of the Tranche A Debentures and the Tranche B Debentures
as set forth next to its name on Schedule I.
I.2 The Closings.
(a) The Tranche A Closing. The closing of the purchase and sale
of the Tranche A Debentures (the "Tranche A Closing") shall take place at the
offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or by transmission by facsimile and overnight courier,
immediately following the execution hereof or such later date or different
location as the parties shall agree, but not prior to the date that the
conditions set forth in Section 4.1 have been satisfied or waived by the
appropriate party (the "Tranche A Closing Date"). At the Tranche A Closing:
(i) Each Purchaser shall deliver to the Company its
portion of the purchase price as set forth next to its name on Schedule I in
United States dollars in immediately available funds to an account designated in
writing by the Company;
(ii) The Company shall deliver to each Purchaser a
Debenture, substantially in the form of Exhibit A hereto, representing the
principal amount purchased by such Purchaser as set forth on Schedule I hereto;
(iii) The Company shall deliver to each Purchaser a
Warrant, substantially in the form of Exhibit B hereto, representing the number
of Tranche A Warrants purchased by such Purchaser as set forth on Schedule I
hereto;
(iv) The parties shall execute and deliver each of the
documents referred to in Section 4.1 hereof; and
(v) The Company shall pay to Xxxxx Xxxxxxx Asset
Management, LLC ("Xxxxx Xxxxxxx Asset") a fee of $25,000 (the "Xxxxx Xxxxxxx
Asset Fee") in United States dollars in immediately available funds to an
account designated in writing by Xxxxx Xxxxxxx Asset.
(b) The Tranche B Closing. Subject to the terms and conditions
set forth in Section 4.2 and elsewhere in this Agreement, the closing of the
purchase and sale of the Tranche B Debentures (the "Tranche B Closing") shall
take place in the same manner as the Tranche A Closing, on the date after the
Company fulfills the conditions set forth in Section 4.2 (the "Tranche B Closing
Date"); provided that in no case shall the Tranche B Closing take place unless
and until the conditions listed in Section 4.2 have been satisfied or waived by
the appropriate party. At the Tranche B Closing:
(i) Each Purchaser shall deliver to the Company its
portion of the purchase price as set forth next to its name on Schedule I in
United States dollars in immediately available funds to an account designated in
writing by the Company;
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(ii) The Company shall deliver to each Purchaser a
Debenture, substantially in the form of Exhibit A hereto, representing the
principal amount of Tranche B Debentures purchased by such Purchaser as set
forth on Schedule I hereto;
(iii) The Company shall deliver to each Purchaser a
Warrant, substantially in the form of Exhibit B hereto, representing the number
of Tranche B Warrants purchased by such Purchaser as set forth on Schedule I
hereto; and
(iv) The parties shall execute and deliver each of the
documents referred to in Section 4.2 hereof.
With respect to the Tranche B Debentures and Tranche B Warrants,
in no event shall any Purchaser have the right or be required to purchase
Tranche B Debentures or Tranche B Warrants if the aggregate number of shares of
Common Stock beneficially owned by such Purchaser and its affiliates exceeds
9.9% of the outstanding shares of the Common Stock following such conversion.
For purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
II.1 Representations, Warranties and Agreements of the Company.
The Company hereby makes the following representations and warranties to each of
the Purchasers:
(a) Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Except as set forth on Schedule 2.1(a), the Company has no
subsidiaries (collectively, the "Subsidiaries"). Each of the Subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with the full corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not, individually or
in the aggregate, (x) adversely affect the legality, validity or enforceability
of any of this Agreement or the Transaction Documents (as defined below) or any
of the transactions contemplated thereby, (y) have or result in a material
adverse effect on the results of operations, assets, prospects, or financial
condition of the Company and its Subsidiaries, taken as a whole or (z) adversely
impair the Company's ability to perform fully on a timely basis its obligations
under any Transaction Document (any of (x), (y) or (z), being a "Material
Adverse Effect").
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(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Debentures, the Warrants and the
Registration Rights Agreement (as defined below) (collectively, the "Transaction
Documents"), and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of this Agreement and the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action and no further action is required by the Company, its
Board of Directors or its stockholders. Each of this Agreement and the
Transaction Documents has been duly executed by the Company and when delivered
in accordance with the terms hereof will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
(c) Capitalization. As of the date hereof and immediately prior
to the Tranche A Closing Date, the authorized capital stock of the Company is as
set forth on Schedule 2.1(c). The issuance and sale of all interests in such
capital stock have been in compliance with all applicable federal and state
securities laws. No shares of Common Stock are entitled to preemptive or similar
rights, nor is any holder of the Common Stock entitled to preemptive or similar
rights arising out of any agreement or understanding with the Company by virtue
of any of this Agreement or the Transaction Documents. Except as disclosed on
Schedule 2.1(c), other than the Debentures and the Warrants, there are no
outstanding options, warrants, rights to subscribe to, calls or commitments of
any character whatsoever relating to securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire any shares of Common Stock, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. No anti-dilution or
similar adjustment provision of securities of the Company will be triggered by
the issuance of the Debentures or the Warrants, except as described on Schedule
2.1(c). The Company is not subject (contingent or otherwise) to repurchase or
otherwise acquire or retire any units of its capital stock or any security
convertible into or exchangeable for any of its capital stock. Except as
specifically disclosed in the SEC Documents (as defined below), to the Company's
best knowledge, no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) or has the
right to acquire by agreement with or by obligation binding upon the Company
beneficial ownership of in excess of 5% of the Common Stock. "Person" means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
(d) Authorization and Validity; Issuance of Shares. All of the
Debentures and the Warrants have been duly authorized, and when delivered
against payment therefor as contemplated hereby, will be validly issued, fully
paid and non-assessable, free and clear of all liens, encumbrances and Company
rights of first refusal, other than liens and encumbrances
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created by the Purchasers (collectively, "Liens") and will not be subject to
any preemptive or similar rights. The shares of Common Stock issuable upon
exercise of the Debentures and the Warrants (collectively, the "Underlying
Shares") are and will at all times hereafter continue to be duly authorized and
reserved for issuance and the shares of Common Stock issued upon conversion of
the Debentures (the "Debenture Shares") and exercise of the Warrants (the
"Warrant Shares") will be validly issued, fully paid and non-assessable, free
and clear of all Liens.
(e) No Conflicts. The execution, delivery and performance of
this Agreement and the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby do not and
will not (i) conflict with or violate any provision of the certificate of
incorporation, bylaws or other charter documents of the Company or any of the
Subsidiaries, (ii) subject to obtaining the consents referred to in Section
2.1(f), conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument (evidencing a Company or Subsidiary debt or
otherwise) to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or any Subsidiary is subject (including Federal and state
securities laws and regulations), or by which any material property or asset of
the Company or any Subsidiary is bound or affected (except for such conflicts,
defaults, terminations, amendments, accelerations or cancellations that are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect).
(f) Consents and Approvals. Except as specifically set forth on
Schedule 2.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other person in connection with the execution,
delivery and performance by the Company of this Agreement or the Transaction
Documents, other than (i) the filing of a registration statement with the
Securities and Exchange Commission (the "Commission"), which shall be filed in
accordance with and in the time periods set forth in the Registration Rights
Agreement, (ii) the application(s) or any letter(s) acceptable to the National
Market System of Nasdaq Stock Market ("Nasdaq") for the listing of the
Underlying Shares with Nasdaq (and with any other national securities exchange
or market on which the Common Stock is then listed), and (iii) any filings,
notices or registrations under applicable state securities laws (together with
the consents, waivers, authorizations, orders, notices and filings referred to
on Schedule 2.1(f), the "Required Approvals").
(g) Litigation; Proceedings. Except as specifically set forth on
Schedule 2.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of this Agreement or
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the Transaction Documents or (ii) would individually or in the aggregate, have a
Material Adverse Effect.
(h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound except for such defaults or
violations that are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect, (ii) is in violation of any order of any court,
arbitrator or governmental body applicable to it, or (iii) is in violation of
any statute, rule or regulation of any governmental authority to which it is
subject.
(i) Disclosure; Absence of Certain Changes. Neither this
Agreement, the Schedules to this Agreement, the Transaction Documents nor the
SEC Documents contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements made herein and
therein, in light of the circumstances under which they were made, not
misleading. Except as disclosed on Schedule 2.1(i) or the SEC Documents filed on
XXXXX at least five business days prior to the date hereof, since December 31,
1997, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
liabilities or results of operations or, insofar as can reasonably be foreseen,
prospects of the Company or the Subsidiaries. The Company has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or any of its Subsidiaries
have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings. No event, liability, development or
circumstance has occurred or exists, or is contemplated to occur, with respect
to the Company or its Subsidiaries or their respective businesses, properties,
operations or financial condition or, insofar as can reasonably be foreseen,
prospects, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement (including by way of
incorporation by reference) filed with the SEC, on the date this representation
is made or deemed to be made, relating to an issuance and sale by the Company of
its Common Stock and which has not been publicly disclosed.
(j) Private Offering. The Company and all Persons acting on its
behalf have not directly or indirectly made, and will not make, offers or sales
of any securities or solicited any offers to buy any security under
circumstances that would require registration of the Debentures, the Warrants,
the Debentures Shares, the Warrant Shares or the Underlying Shares or the
issuance of such securities under the Securities Act of 1933, as amended (the
"Act"). The issuance of the Debentures, the Warrants, the Debenture Shares and
the Warrant Shares to the Purchasers will not be integrated with any other
issuance of the Company's securities (past, current, or future). Subject to the
accuracy and completeness of the representations and warranties of the
respective Purchasers contained in Section 2.2 hereof, the offer and sale by the
Company to the Purchasers of the Debentures and the Warrants is exempt from the
registration requirements of the Act.
(k) SEC Documents; Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Exchange Act. The Company
has filed all reports
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required to be filed by it under the Exchange Act, including pursuant to Section
13, 14 or 15(d) thereof (the foregoing materials being collectively referred to
herein as the "SEC Documents"), on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Documents prior to
the expiration of any such extension. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the Act and
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject have been filed
as exhibits to the SEC Documents as required; neither the Company nor any of its
Subsidiaries is in breach of any agreement where such breach, individually or in
the aggregate, would have a Material Adverse Effect. The financial statements of
the Company included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the Company as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal year-end audit adjustments.
(l) Investment Company. The Company is not, and is not
controlled by or under common control with an affiliate (an "Affiliate") of an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(m) Broker's Fees. Except for a $25,000 fee paid to Xxxxx
Xxxxxxx Asset upon execution of that certain letter agreement dated November 25,
1998 between the Company and Xxxxx Xxxxxxx Asset and an additional fee of
$25,000 payable by the Company to Xxxxx Xxxxxxx Asset at the Tranche A Closing,
no fees or commissions or similar payments with respect to the transactions
contemplated by this Agreement or the Transaction Documents have been paid or
will be payable by the Company to any broker, financial advisor, finder,
investment banker, or bank. The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section 2.1(m) that may be due in
connection with the transactions contemplated by this Agreement and the
Transaction Documents.
(n) Form S-3 Eligibility. The Company is, and at the Tranche A
Closing Date and the Tranche B Closing Date will be, eligible to register
securities (including the Underlying Shares) for resale with the Commission
under Form S-3 (or any successor form) promulgated under the Securities Act.
(o) Listing and Maintenance Requirements Compliance. The
principal market on which the Common Stock is currently traded is Nasdaq. Except
as disclosed on Schedule 2.1(o),
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the Company has not in the three years preceding the date hereof received notice
(written or oral) from Nasdaq (or any stock exchange, market or trading facility
on which the Common Stock is or has been listed (or on which it has been
quoted)) to the effect that the Company is not in compliance with the listing or
maintenance requirements of such market or exchange. The Company is not aware of
any facts which would reasonably lead to delisting or suspension of the Common
Stock by Nasdaq. After giving effect to the transactions contemplated by this
Agreement and the Transaction Documents, the Company believes that it is and
will be in compliance with all such maintenance requirements.
(p) Patents and Trademarks. To the Company's best knowledge, the
Company or its Subsidiaries has, or has rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and rights (collectively, the "Intellectual Property
Rights") which are necessary for use in connection with its business, as
currently conducted and as described in the SEC Documents. To the best knowledge
of the Company, there is no existing infringement by another Person of any of
the Intellectual Property Rights which are necessary for use in connection with
the Company's business which would, individually or in the aggregate, have a
Material Adverse Effect and the Company is not infringing on any other person's
Intellectual Property Rights.
(q) Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. Neither the
Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that relations with
their employees are good. Except as set forth on Schedule 2.1(q), no executive
officer (as defined in Rule 501(f) of the Act) has notified the Company that
such officer intends to leave the Company or otherwise terminate such officer's
employment with the Company.
(r) Registration Rights; Rights of Participation. Except as
described on Schedule 2.1(r) hereto, (i) the Company has not granted or agreed
to grant to any Person any rights (including "piggy-back" registration rights)
to have any securities of the Company registered with the Commission or any
other governmental authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former stockholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any Transaction Document.
(s) Title. Except as disclosed on Schedule 2.1(s), the Company
and the Subsidiaries have good and marketable title in fee simple to all real
property and personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all Liens,
except for Liens that do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting
and, to the Company's best knowledge, enforceable leases with such exceptions as
are not material and do not interfere
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with the use made and proposed to be made of such property and buildings by the
Company and the Subsidiaries.
(t) Permits. The Company and the Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals, orders
and permits necessary to own, lease and operate their respective properties and
to conduct their respective businesses as currently conducted except where the
failure to possess such permits would not, individually or in the aggregate,
have a Material Adverse Effect ("Material Permits"), and there is no proceeding
pending, or, to the knowledge of the Company, threatened relating to the
revocation, modification, suspension or cancellation of any Material Permit.
Neither the Company nor any of the Subsidiaries is in conflict with or default
or violation of any Material Permit.
(u) Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverages as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business.
(v) Internal Accounting Controls. The Company and each of the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(w) Tax Status; Firpta. The Company and each of the Subsidiaries
has made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on it books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company
is not a "United States real property holding corporation" within the meaning of
Section 847(c)(2) of the Internal Revenue Code of 1986, as amended.
(x) Transactions With Affiliates. Except as set forth on
Schedule 2.1(c) or Schedule 2.1(x), none of the officers, directors, or
employees of the Company is presently a party
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to any transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
(y) [Intentionally omitted.]
(z) Environmental Laws. The Company and its Subsidiaries (i) are
in compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permits, licenses or other approvals except where the
failure of any of the foregoing would not result in a Material Adverse Effect.
(aa) Foreign Corrupt Practices. To the Company's best knowledge,
neither the Company, nor any of its Subsidiaries, nor any director, officer,
agent, employee or other person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee form corporate funds; violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
(bb) Solicitation Materials. The Company has not (i) distributed
any offering materials in connection with the offering and sale of the
Debentures or the Warrants, other than the SEC Documents, the Schedules to this
Agreement, any amendments and supplements thereto and the materials listed on
Schedule 2.1(bb), or (ii) solicited any offer to buy or sell the Debentures or
the Warrants by means of any form of general solicitation or advertising.
II.2 Representations and Warranties of the Purchasers. Each of
the Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Purchaser is a corporation or
a limited duration company duly incorporated or a limited liability company or
limited partnership duly formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation with the requisite
power and authority, corporate or otherwise, to enter into and to consummate the
transactions contemplated hereby and by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The purchase by such
Purchaser of the Debentures and the Warrants hereunder has been duly authorized
by all necessary action
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on the part of such Purchaser. Each of this Agreement and the Registration
Rights Agreement has been duly executed and delivered by such Purchaser and
constitutes the valid and legally binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity.
(b) Investment Intent. Such Purchaser is acquiring the
Debentures and the Warrants for its own account for investment purposes only and
not with a view to or for distributing or reselling the Debentures, the
Warrants, the Debentures Shares or the Warrant Shares or any part thereof or
interest therein in violation of any securities laws; provided, however, that by
making the representations herein, such Purchaser does not agree to hold any of
the Debentures, the Warrants, the Debentures Shares or the Warrant Shares for
any minimum or other specific term and reserves the right to dispose of the
securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Act.
(c) Purchaser Status. At the time such Purchaser was offered the
Debentures and the Warrants, and at the Tranche A Closing Date and the Tranche B
Closing Date, (i) it was and will be an "accredited investor" as defined in Rule
501 under the Act or (ii) such Purchaser, either alone or together with its
representatives, had and will have such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of the prospective investment in the Debentures and the Warrants.
(d) Reliance. Each Purchaser understands and acknowledges that
(i) the Debentures and the Warrants are being offered and sold to the Purchaser
without registration under the Act in a private placement that is exempt from
the registration provisions of the Act under Section 4(2) of the Act or
Regulation D promulgated thereunder and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the representations set forth in this Section 2.2 and such Purchaser hereby
consents to such reliance.
(e) Information. Each Purchaser and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Debentures and Warrants which have been requested by the Purchaser or its
advisors. The Purchaser and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received what the Purchaser
believes to be satisfactory answer to any such inquiries. Neither such inquiries
nor any other due diligence investigation conducted by Purchaser or any of its
advisors or representatives shall modify, amend or affect Purchaser's right to
rely on the Company's representations and warranties contained in Section 2.1
above. The Purchaser understands that its investment in the Debentures and
Warrants involves a significant degree of risk.
(f) Governmental Review. The Purchaser understands that no
United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Debentures or Warrants.
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(g) Residency. Each Purchaser is a resident of the jurisdiction
set forth immediately below such Purchaser's name on the signature pages hereto.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III.
OTHER AGREEMENTS
III.1 Transfer Restrictions.
(a) If any Purchaser should decide to dispose of the Debentures,
the Warrants, the Debentures Shares or the Warrant Shares held by it, each
Purchaser understands and agrees that it may do so only pursuant to an effective
registration statement under the Act, to the Company or pursuant to an available
exemption from the registration requirements of the Act. In connection with any
transfer of any Debentures, Warrants, Debenture Shares or Warrant Shares other
than pursuant to an effective registration statement or to the Company, the
Company may require the transferor thereof to provide to the Company a written
opinion of counsel experienced in the area of United States securities laws
selected by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred securities under the Act; provided,
however, that if the Debentures, Warrants, Debenture Shares or Warrant Shares
may be sold pursuant to Rule 144(k), no written opinion of counsel shall be
required unless a written opinion of counsel is required by any transfer agent.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register any transfer by any Purchaser to an Affiliate of such Purchaser,
provided that the transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Act. Any such transferee shall be
bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement.
(b) Each Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Debentures, the
Warrants, the Debenture Shares and the Warrant Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT.
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Neither the Debentures, the Warrants, the Debenture Shares, nor
the Warrant Shares shall contain the legend set forth above if (i) the issuance
of any of such securities occurs at any time while the Registration Statement
(as defined in the Registration Rights Agreement) is effective under the Act,
(ii) in the written opinion of counsel to the Company experienced in the area of
United States securities laws such legend is not required under applicable
requirements of the Act (including judicial interpretations and pronouncements
issued by the staff of the Commission) or (iii) such Debentures, Warrants,
Debenture Shares or Warrant Shares may be sold pursuant to Rule 144. The Company
agrees that it will provide each Purchaser, upon request, with a certificate or
certificates representing Debentures, Warrants, Debenture Shares or Warrant
Shares, free from such legend at such time as such legend is no longer required
hereunder.
III.2 Stop Transfer Instruction. The Company may make notations
on its records or give instructions to any transfer agent with regard to the
restrictions on transfer set forth in Section 3.1; provided, however, the
Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions on transfer set
forth in Section 3.1.
III.3 Furnishing of Information. As long as any Purchaser owns
the Debentures, the Warrants, the Debenture Shares or the Warrant Shares, the
Company will cause the Common Stock to continue at all times to be registered
under 12(g) of the Exchange Act, will timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13, 14 or 15(d) of the Exchange Act and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules thereunder)
to terminate or suspend such reporting and filing obligations. The Company
further covenants that it will take such further action as any holder of the
Debentures, the Warrants, the Debenture Shares or the Warrant Shares may
reasonably request, all to the extent required from time to time to enable such
Person to sell the Debentures, the Warrants, the Debenture Shares, or the
Warrant Shares without registration under the Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Act.
III.4 Blue Sky Laws. In accordance with the Registration Rights
Agreement, the Company shall qualify the Debentures Shares and the Warrant
Shares under the securities or Blue Sky laws of such jurisdictions as the
Purchasers may request and shall continue such qualification at all times
through the third anniversary of the Tranche B Closing Date.
III.5 Integration. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Act) that would be integrated with the offer or sale
of the Debentures, the Warrants, the Debenture Shares or the Warrant Shares in a
manner that would require the registration under the Act of the sale of the
Debentures, the Warrants, the Debenture Shares or the Warrant Shares to any
Purchaser.
III.6 Listing and Reservation of Debenture Shares and Warrant
Shares.
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(a) The Company shall (i) not later than 5 days after the
Tranche A Closing Date prepare and file with Nasdaq (as well as any other
national securities exchange or market on which the Common Stock is then listed)
an additional shares listing application or a letter acceptable to Nasdaq
covering and listing a number of shares of Common Stock which is at least equal
to the aggregate amount of Underlying Shares sold or to be sold in the Tranche A
Closing and Tranche B Closing, (ii) take all steps necessary to cause the
Underlying Shares to be approved for listing on Nasdaq (as well as on any other
national securities exchange or market on which the Common Stock is then listed)
as soon as possible thereafter and (iii) provide to the Purchasers evidence of
such listing. Neither the Company nor any of its Subsidiaries shall take any
action which may result in the delisting or suspension of the Common Stock on
Nasdaq. The Company shall promptly provide to each Purchaser copies of any
notices it receives from Nasdaq regarding the continued eligibility of the
Common Stock for listing on such automated quotation system.
(b) The Company at all times shall reserve the number of shares
of its authorized but unissued Common Stock which would be issuable upon
conversion of the Debentures and exercise of the Warrants. Shares of Common
Stock reserved for issuance upon conversion of the Debentures and the exercise
of the Warrants shall be allocated pro rata to each of the Purchasers in
accordance with the amount of Debentures and Warrants issued and delivered to
such Purchaser at the Tranche A Closing and Tranche B Closing, as applicable.
III.7 Notice of Breaches.
(a) The Company and each Purchaser shall give prompt written
notice to the other of any breach by it of any representation, warranty or other
agreement contained in this Agreement or in the Registration Rights Agreement,
as well as any events or occurrences arising after the date hereof and prior to
the Tranche A Closing Date or the Tranche B Closing Date, as applicable, which
would reasonably be likely to cause any representation or warranty or other
agreement of such party, as the case may be, contained herein to be incorrect or
breached as of such Closing Date provided such notice will not constitute
material non-public information. However, no disclosure by either party pursuant
to this Section 3.7 shall be deemed to cure any breach of any representation,
warranty or other agreement contained herein or in the Registration Rights
Agreement.
(b) Notwithstanding the generality of Section 3.7(a), the
Company shall promptly notify, provided such notification will not constitute
material non-public information, each Purchaser of any notice or claim (written
or oral) that it receives from any lender of the Company or any Subsidiary to
the effect that the consummation of the transactions contemplated hereby and by
the Registration Rights Agreement violates or would violate any written
agreement or understanding between such lender and the Company or any
Subsidiary, and the Company shall promptly furnish by facsimile to the
Purchasers a copy of any written statement in support of or relating to such
claim or notice.
(c) The default by any Purchaser of any of its obligations,
representations or warranties under this Agreement or the Registration Rights
Agreement shall not be imputed to,
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and shall have no effect upon, any other Purchaser or affect the Company's
obligations under this Agreement or any Transaction Document to any
non-defaulting Purchaser.
III.8 Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Debentures and Warrants as required by Rule 506 under Regulation
D and to provide a copy thereof to each Purchaser promptly after such filing.
The Company shall, on or before the applicable closing, take such action as the
Company shall reasonably determine is necessary to qualify the Debentures and
Warrants for sale to the Purchasers at the applicable closing pursuant to this
Agreement under applicable securities or "blue sky" laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to each Purchaser on or prior to
the applicable closing.
III.9 Future Financings. Except for (i) those transactions contemplated
by the Company and Xxxx Xxxx Capital Management, L.P. and certain other
investors pursuant to which the Company intends to complete a private placement
of Common Stock (as described in Schedule 2.1(c) hereto); (ii) issuance of the
Underlying Shares; (iii) shares of Common Stock deemed to have been issued by
the Company in connection with any contract, plan or agreement which has been
approved by the Board of Directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer, director or
consultant of the Company; (iv) shares of Common Stock issuable upon the
exercise of any options or warrants outstanding on the date hereof and listed in
Schedule 2.1(c) hereto; (v) shares of Common Stock issued or deemed to have been
issued in a Strategic Venture (as defined below); or (vi) shares of Common Stock
issued or deemed to have been issued as consideration for an acquisition by the
Company of a division, assets or business (or stock constituting any portion
thereof) from another person, if the Company agrees to issue Securities prior to
the first anniversary of the Tranche A Closing Date at an effective price per
share of less than an amount equal to the Conversion Price (as defined in the
Debentures) of the Debentures as of the date hereof and Debentures are still
then outstanding (a "Future Financing"), the Company shall provide by 5:00 p.m.
(New York time) on the third (3rd) Trading Day after the decision to issue the
Securities has been made, written notice of the Future Financing containing in
reasonable detail (i) the proposed terms of the Future Financing, (ii) the
amount of the proceeds that will be raised and (iii) the Person with whom such
Future Financing shall be effected, and attached to which shall be a term sheet
or similar document relating thereto (the "Future Financing Notice"). Upon
receiving the Future Financing Notice, each Purchaser shall have the pro rata
right to purchase, on the same terms as the Future Financing, an amount of
Securities not to exceed the sum of (i) the number of Securities which may be
purchased by the amount of the then outstanding principal amount of and any
interest owing on such Purchaser's Debenture and (ii) the number of Securities
which is the product of the Exercise Price (as defined in the Warrants)
multiplied by that number of shares of Common Stock underlying the Warrant. In
the event a Purchaser desires to exercise the right granted under this Section
3.9, such Purchaser must notify the Company on or prior to the fifth (5th)
Trading Day after the Purchaser has received the Future Financing Notice. In the
event one or more Purchasers elects not to exercise its rights granted hereby,
the Company shall permit those Purchasers electing to exercise the right granted
under this Section 3.9 to purchase, on a basis equal to its percentage ownership
of the then aggregate outstanding principal of the Debentures, the sum of the
number of Securities that the other Purchaser(s) were eligible to
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Purchase, if they had exercised their right hereunder. Those Purchasers desiring
to purchase additional Securities must notify the Company of their intention to
do so within three (3) Trading Days after the Company has informed the
Purchasers of their right to purchase additional Securities. Within five (5)
Trading Days of the termination of the final notice period, the transactions
contemplated by this Section 3.9 shall close and the Company shall tender to
each Purchaser certificates representing that number of the Securities that it
agreed to purchase and the Purchasers shall make payment for the entire purchase
price in immediately available funds at the closing of such sale; provided,
however, that each Purchaser, in lieu of providing cash as consideration for the
purchase price, may retire all or a portion of the outstanding principal amount
of and any interest owing on the Debentures as payment of the purchase price for
the Securities that it desires to purchase pursuant to this Section 3.9.
"Strategic Venture" shall mean a venture between the Company and a
pharmaceutical or biotechnology company or an Affiliate thereof, the primary
purpose of which is not to raise capital in the form of equity (including
without limitation through the issuance of warrants, convertible securities,
phantom stock rights, stock appreciation rights or other rights with equity
features) and pursuant to which the Company contributes or issues securities of
the Company valued at less than 50% of the entire contribution of the Company.
III.10 Use of Proceeds. The Company shall use the proceeds from
the sale of the Debentures and the exercise of the Warrants for general
corporate purposes and shall not, directly or indirectly, other than in
connection with a strategic or research collaboration, use such proceeds for any
loan to or investment in any other corporation, partnership, enterprise or other
Person.
III.11 Reimbursement. In the event that any Purchaser, other
than by reason of its gross negligence or willful misconduct, becomes involved
in any capacity in any action, proceeding or investigation brought by or against
any person, including shareholders of the Company, in connection with or as a
result of (a) any misrepresentation or breach of any representation or warranty
made by the Company in this Agreement or the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement or the Transaction Documents or any other certificate, instrument or
document hereby or thereby, or (c) any cause of action, suit or claim brought or
made against such Purchaser and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, the Company will reimburse such Purchaser for its legal and other
actual out-of-pocket expenses (including the cost of any investigation and
preparation) incurred in connection therewith. The reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any affiliate of the Purchasers and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchasers and any such
affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchasers and
any such affiliate and any such Person. The Company also agrees that neither the
Purchasers or any
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such Affiliates, partners, directors, agents, employees or controlling persons
shall have any liability to the Company or any Person asserting claims on behalf
of or in right of the Company in connection with or as a result of the
consummation of this Agreement or any of the Transaction Documents except to the
extent that any losses, claims, damages, liabilities or expenses incurred by the
Company result from the gross negligence or willful misconduct of such Purchaser
or entity in connection with the transactions contemplated by this Agreement or
the Registration Rights Agreement. To the extent that the foregoing undertaking
by the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of its obligations
hereunder which is permissible under applicable law.
III.12 [Reserved.]
III.13 Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates, registered in the name of each Purchaser or its
respective nominee(s), for the Debenture Shares and the Warrant Shares in such
amounts as specified from time to time by each Purchaser to the Company in a
form acceptable to the Purchasers (the "Irrevocable Transfer Agent
Instructions"). Prior to registration of the Debenture Shares and Warrant Shares
under the Act, all such certificates shall bear the restrictive legend specified
in Section 3.1(b) of this Agreement. The Company warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this
Section 3.13, and stop transfer instructions to give effect to Section 3.1
hereof, prior to registration of the Debenture Shares and the Warrant Shares
under the Act, will be given by the Company to its transfer agent and that the
Debentures, the Warrants, the Debenture Shares and the Warrant Shares shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
If a Purchaser provides the Company with an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the effect that a public
sale, assignment or transfer of the Debentures, the Debenture Shares, the
Warrants and the Warrant Shares may be made without registration under the Act
or the Purchaser provides the Company with reasonable assurances that the
Warrants, the Debenture Shares and the Warrant Shares can be sold pursuant to
Rule 144 without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company shall permit the
transfer, and, in the case of the Debenture Shares and the Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by such Purchaser and without any
restrictive legend. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Purchasers by violating
the intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 3.13 will be inadequate and agrees, in the event of a beach
or threatened breach by the Company of the provisions of this Section 3.13, that
the Purchasers, shall be entitled, in addition to all other available remedies,
to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
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III.14 Filing of Form 8-K. On or before the 10th business day
following each of the Tranche A Closing Date and the Tranche B Closing Date, the
Company shall file a Form 8-K with the Commission describing the terms of the
transaction contemplated by this Agreement and the Transaction Documents in the
form required by the Exchange Act.
III.15 Ordinary Course Brokerage and Trading. Subject to
compliance with all applicable securities laws and Nasdaq regulations, no
Purchaser shall be prohibited from engaging in its ordinary course brokerage and
trading activities in respect of the Company's Common Stock (including
establishing short positions); provided that the personnel engaged in such
activities have not been involved with the transactions contemplated hereby and
have not been provided with confidential information with respect to the
Company.
ARTICLE IV.
CONDITIONS
IV.1 (a) Conditions Precedent to the Obligation of the Company
to Sell the Tranche A Debentures and Tranche A Warrants. The obligation of the
Company to sell the Tranche A Debentures and Tranche A Warrants (and to pay the
Xxxxx Xxxxxxx Asset Fee) hereunder is subject to the satisfaction or waiver
(with prior written notice to each Purchaser) by the Company, at or before the
Tranche A Closing, of each of the following conditions:
(i) Accuracy of the Purchasers' Representations and
Warranties. The representations and warranties of each Purchaser in this
Agreement shall be true and correct in all material respects as of the date when
made and as of the Tranche A Closing Date;
(ii) Performance by the Purchasers. Each Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Purchaser at or prior to the Tranche A
Closing; and
(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Transaction Documents.
(a) Conditions Precedent to the Obligation of the Purchasers to
Purchase the Tranche A Debentures and Tranche A Warrants. The obligation of each
Purchaser hereunder to acquire and pay for the Tranche A Debentures and Tranche
A Warrants is subject to the satisfaction or waiver (with prior written notice
to the Company) by such Purchaser, at or before the Tranche A Closing, of each
of the following conditions:
(i) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects as of the date when
made and as of the Tranche A Closing Date;
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(ii) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Tranche A Closing;
(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
(iv) No Suspensions of Trading in Common Stock. The
trading in the Common Stock shall not have been suspended by the Commission or
on Nasdaq which suspension shall remain in effect;
(v) Listing of Common Stock. The Common Stock shall have
been at all times since the date hereof, and on the Tranche A Closing Date shall
be, listed for trading on Nasdaq;
(vi) Required Approvals. All Required Approvals shall
have been obtained other than those relating solely to the Tranche B Debentures
and Tranche B Warrants;
(vii) Shares of Common Stock. The Company shall have
duly reserved the number of Underlying Shares required by this Agreement and the
Transaction Documents to be reserved for issuance upon conversion of the Tranche
A Debentures and the exercise of the Tranche A Warrants;
(viii) Change of Control. No Change of Control shall
have occurred between the date hereof and the Tranche A Closing Date. "Change of
Control" means the occurrence of any of (i) an acquisition after the date hereof
by an individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than the Purchasers or any of their
Affiliates, of in excess of 50% of the voting securities of the Company, (ii) a
replacement of more than one-half of the members of the Company's Board of
Directors which is not approved by those individuals who are members of the
Board of Directors on the date hereof in one or a series of related
transactions, (iii) the merger of the Company with or into another entity,
consolidation or sale of all or substantially all of the assets of the Company
in one or a series of related transactions or (iv) the execution by the Company
of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii) or (iii); and
(ix) Transfer Agent Instructions. The Irrevocable
Transfer Agent Instructions, in a form acceptable to the Purchasers, shall have
been delivered to and acknowledged in writing by the Company's transfer agent.
(b) Documents and Certificates. At the Tranche A Closing, the Company
shall have delivered to the Purchasers the following in form and substance
reasonably satisfactory to the Purchasers:
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(i) An opinion of the Company's legal counsel in the
form attached hereto as Exhibit C dated as of the Tranche A Closing Date;
(ii) A Debenture(s) representing the principal amount of
Tranche A Debentures purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of such Purchaser, each
in form satisfactory to the Purchaser;
(iii) A Warrant(s) representing the Tranche A Warrants
purchased by such Purchaser as set forth next to such Purchaser's name on
Schedule I, registered in the name of such Purchaser;
(iv) The Company shall have executed and delivered the
Registration Rights Agreement;
(v) Officer's Certificate. An Officer's Certificate
dated the Tranche A Closing Date and signed by an executive officer of the
Company confirming the accuracy of the Company's representations, warranties and
covenants as of such Closing Date and confirming the compliance by the Company
with the conditions precedent set forth in this Section 4.1 as of the Tranche A
Closing Date.
(vi) Secretary's Certificate. A Secretary's Certificate
dated the Tranche A Closing Date and signed by the Secretary or Assistant
Secretary of the Company certifying (A) that attached thereto is a true and
complete copy of the Certificate of Incorporation of the Company, as in effect
on the Tranche A Closing Date, (B) that attached thereto is a true and complete
copy of the by-laws of the Company, as in effect on the Tranche A Closing Date
and (C) that attached thereto is a true and complete copy of the resolutions
duly adopted by the Board of Directors of the Company authorizing the execution,
delivery and performance this Agreement and of the Transaction Documents, and
that such resolutions have not been modified, rescinded or revoked.
IV.2 (a) Conditions Precedent to the Obligation of the Company
to Sell the Tranche B Debentures and Tranche B Warrants. The obligation of the
Company to sell the Tranche B Debentures and Tranche B Warrants hereunder is
subject to the satisfaction or waiver (with prior written notice to each
Purchaser) by the Company, at or before the Tranche B Closing, of each of the
following conditions:
(i) Accuracy of the Purchasers' Representations and
Warranties. The representations and warranties of each Purchaser in this
Agreement shall be true and correct in all material respects as of the date when
made and as of the Tranche B Closing Date (except for representations and
warranties that speak as of a specific date);
(ii) Performance by the Purchasers. Each Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Purchaser at or prior to the Tranche B
Closing; and
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(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents.
(a) Conditions Precedent to the Obligation of the Purchasers to
Purchase the Tranche B Debentures and Tranche B Warrants. The obligation of each
Purchaser hereunder to acquire and pay for the Tranche B Debentures and Tranche
B Warrants is subject to the satisfaction or waiver (with prior written notice
to the Company) by each Purchaser, at or before the Tranche B Closing, of each
of the following conditions:
(i) Tranche A Closing. The Tranche A Closing shall have
occurred;
(ii) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company contained herein
shall be true and correct in all material respects as of the date when made and
in all material respects as of the Tranche B Closing Date (except for
representations and warranties that speak as of a specific date);
(iii) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Transfer Documents
to be performed, satisfied or complied with by the Company at or prior to the
Tranche B Closing Date;
(iv) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
(v) Effective Registration Statement. The Registration
Statement with respect to the Underlying Shares shall have been declared and
shall be effective under the Act by the Commission; not subject to any stop
order and not be subject to any suspension pursuant to Section 3(p) of the
Registration Rights Agreement, and shall have been effective and shall not have
been subject to any stop order for the thirty (30) business days prior to such
Closing Date and no stop order shall be pending or threatened as at such Closing
Date;
(vi) No Suspensions of Trading in Common Stock. The
trading in the Common Stock shall not have been suspended by the Commission or
on Nasdaq (except for any suspension of trading of limited duration solely to
permit dissemination of material information regarding the Company);
(vii) Listing of Common Stock. The Common Stock shall
have been at all times since the date hereof and, on the Tranche B Closing Date
the Common Stock, including the Underlying Shares, shall be listed for trading
on Nasdaq;
(viii) Required Approvals. All Required Approvals shall
have been obtained;
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23
(ix) Shares of Common Stock. The Company shall have duly
reserved the number of Underlying Shares required by this Agreement to be
reserved for issuance upon conversion of the Tranche B Debentures and exercise
of the Tranche B Warrants;
(x) Change of Control. No Change of Control in the
Company shall have occurred; and
(xi) Transfer Agent Instructions. The Irrevocable
Transfer Agent Instructions, in a form acceptable to the Purchasers, shall have
been delivered to and acknowledged in writing by the Company's transfer agent.
(b) Documents and Certificates. At the Tranche B Closing, the
Company shall have delivered to the Purchasers the following in form and
substance reasonably satisfactory to the Purchasers:
(i) An opinion of the Company's legal counsel, in
substantially the form attached hereto as Exhibit C dated as of the Tranche B
Closing Date;
(ii) A Debenture(s) representing the principal amount of
Tranche B Debentures purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of such Purchaser, each
in form satisfactory to the Purchaser;
(iii) a Warrant(s) representing the Tranche B Warrants
being purchased by such Purchaser as set forth next to such Purchaser's name on
Schedule I, registered in the name of such Purchaser;
(iv) Officer's Certificate. The Company shall deliver to
the Purchasers an Officer's Certificate dated the Tranche B Closing Date and
signed by an executive officer of the Company confirming the accuracy of the
Company's representations, warranties and covenants as of the Tranche B Closing
Date and confirming the compliance by the Company with the conditions precedent
set forth in this Section 4.2 as of the Tranche B Closing Date; and
(v) Secretary's Certificate. A Secretary's Certificate
dated the Tranche B Closing Date and signed by the Secretary or Assistant
Secretary of the Company certifying (A) that attached thereto is a true and
complete copy of the Certificate of Incorporation of the Company, as in effect
on the Tranche B Closing Date, (B) that attached thereto is a true and complete
copy of the bylaws of the Company, as in effect on the Tranche B Closing Date
and (C) that attached thereto is a true and complete copy of the resolutions
duly adopted by the Board of Directors of the Company authorizing the execution,
delivery and performance of the Agreement and the Transaction Documents and that
such resolutions have not been modified, rescinded or revoked.
ARTICLE V.
MISCELLANEOUS
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24
V.1 Fees and Expenses. Except as set forth in the Registration
Rights Agreement and as otherwise set forth in this Agreement, each party shall
pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Debenture Shares and the Warrant Shares pursuant
hereto.
V.2 Entire Agreement; Amendments. This Agreement, together with
the Exhibits and Schedules hereto and the Registration Rights Agreement contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters.
V.3 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if received by
8:00 p.m. EST where such notice is to be received), or the first business day
following such delivery (if delivered on a business day after during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications are (i) if to
the Company to Geron Corporation, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx
00000 attn: Xxxxx Xxxxxxxxx, fax no. (000) 000-0000 and (ii) if to any Purchaser
to the address as set forth on Schedule II hereto with copies to Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Xxxxx Xxxx, fax no. (000) 000-0000, or such other address as may be
designated in writing hereafter, in the same manner, by such Person.
V.4 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchasers or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter. Notwithstanding the
foregoing, no such amendment shall be effective to the extent that it applies to
less than all of the holders of the Debentures outstanding. The Company shall
not offer or pay any consideration to a Purchaser for consenting to such an
amendment or waiver unless the same consideration is offered to each Purchaser
and the same consideration is paid to each Purchaser which consents to such
amendment or waiver.
V.5 Headings; Interpretive Matters. The headings herein are for
convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof. No provision of this
Agreement will be interpreted in favor of, or against,
23
25
any of the parties hereto by reason of the extent to which any such party or its
counsel participated in the drafting thereof or by reason of the extent to which
any such provision is inconsistent with any prior draft hereof or thereof.
V.6 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of each of the Purchasers. The
Purchasers may assign this Agreement or any rights or obligations hereunder to
any Affiliate thereof without the prior written consent of the Company, except
that any assignees must make the representations and warranties set forth in
Section 2.2 and otherwise comply with the terms of this Agreement otherwise
applicable to its assignor. This provision shall not limit a Purchaser's right
to transfer securities in accordance with all of the terms of this Agreement or
under the Registration Rights Agreement.
V.7 No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
V.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the nonexclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
V.9 Survival. The agreements, covenants, representations,
warranties and provisions contained in this Agreement shall survive the delivery
of the Debentures and the Warrants pursuant to this Agreement and each closing
hereunder and any conversion of the Debentures or exercise of the Warrants.
V.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
24
26
V.11 Publicity. The Company and each Purchaser shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and neither
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such public
statement. The Company shall not publicly or otherwise disclose the names of any
of the Purchasers without each such Purchaser's prior written consent.
V.12 Severability. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
V.13 Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of the
Company under this Agreement or the Transaction Documents without the showing of
economic loss and without any bond or other security being required. Each of the
Company and the Purchasers (severally and not jointly) agree that monetary
damages would not be adequate compensation for any loss incurred by reason of
any breach of its obligations described in the foregoing sentence and hereby
agrees to waive in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
V.14 Independent Nature of Purchasers' Obligations and Rights.
The obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
V.15 Payment Set Aside. To the extent that the Company makes a
payment or payments to the Purchasers hereunder or pursuant to the Registration
Rights Agreement or the Purchasers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared fraudulent
or preferential, set aside, recovered from, disgorged by or are required to be
refunded, repaid or otherwise restored to the Company, a trustee, receiver or
any
25
27
other Person under any law (including, without limitation, any bankruptcy law,
state or federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not
occurred.
26
28
IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
GERON CORPORATION
By:
----------------------------------------
Name:
Title:
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, LTD.
By:
----------------------------------------
Name: Xxxxxxxx Xxxx
Title: Principal
Residence: Grand Cayman, Cayman Islands
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, L.P.
By:
----------------------------------------
Name: Xxxxxxxx Xxxx
Title: Principal
Residence: New York, New York
LB I GROUP INC.
By:
----------------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Senior Vice President
Residence: New York, New York
29
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P., Investment Manager
BY: RGC GENERAL PARTNER CORP.,
AS GENERAL PARTNER
By:
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
Residence: Grand Cayman, Cayman Islands
-28-
30
Schedule I
Principal Principal Amount
Amount of of Convertible
Convertible Debentures at
Debentures at Tranche B
Tranche A No. of Tranche A Closing Date No. of Tranche B
Name of Purchaser Closing Date Warrants Warrants(1)
----------------- ------------ -------- -----------
Xxxxx Xxxxxxx Strategic
Growth Fund, Ltd. $1,050,000 87,500 [$2,000,000 to
be allocated
between Xxxxx
Xxxxxxx
Strategic Growth
Fund, Ltd.,
Xxxxx Xxxxxxx
Strategic Growth
Fund, L.P. and
Xxxxx
Xxxxxxx-XXX
Investments LLC]
Xxxxx Xxxxxxx Strategic
Growth Fund, L.P. $450,000 37,500
Xxxxx Xxxxxxx-XXX $500,000 41,667
Investments LLC
LB I Group Inc. $3,000,000 250,000 $3,000,000
RGC International $2,500,000 208,333 $2,500,000
Investors, LDC
-----------------
(1) As may be adjusted from time to time in accordance with and subject to
paragraph 6 of the Warrant.
-29-
31
Schedule II
Name of Purchaser Address
----------------- -------
Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Xxxxx Xxxxxxx Strategic Growth Fund, L.P. 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
LB I Group Inc. c/x Xxxxxx Brothers, Inc.
3 World Financial Center
New York, New York 10285
Attn: Xxxxx Jenirs
Fax: (000) 000-0000
RGC International Investors, LDC c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Fax: (000) 000-0000
-30-
32
GERON CORPORATION
SCHEDULE 2.1(a) - SUBSIDIARIES
None
33
GERON CORPORATION
SCHEDULE 2.1(c) - CAPITALIZATION
Number of Shares Authorized
25,000,000 shares of Common Stock and 3,000,000 shares of Preferred Stock are
authorized for issuance.
Number of Shares Issued and Outstanding
As of November 17, 1998, 13,596,419 shares of Common Stock and 3,452 shares of
Preferred Stock were issued and outstanding.
Obligations for Future Issuance of Shares
1. Warrants
o In August 1997, in conjunction with a license agreement between
Geron Corporation and The Xxxxx Xxxxxxx University School of
Medicine, the Company issued a warrant to purchase [*] shares
of Common Stock at $6.75 per share. The warrant is exercisable
through [*].
o In June 1994, in conjunction with the Series C Preferred Stock
financing, the Company issued a warrant to purchase 2,766 shares
of Common Stock at $9.28 per share to Invemed Associates. The
warrant is exercisable through June 1999.
o In June 1994, in conjunction with the Series C Preferred Stock
financing, the Company issued a warrant to purchase 487 shares
of Common Stock at $9.30 per share to Xxxxxxxxx X. Xxxxxx. The
warrant is exercisable through June 1999.
o In February 1994, in conjunction with a research agreement
between Geron Corporation and Cold Spring Harbor Laboratory, the
Company issued a warrant to purchase 47,058 shares of Common
Stock at $7.65 per share. The warrant is exercisable through
February 2004.
2. 1992 Stock Option Plan
o The 1992 Stock Option Plan provides for grants to employees of
the Company of incentive stock options and for grants of
nonstatutory stock options to employees, directors and
consultants.
o As of November 17, 1998, options to purchase 2,449,001 shares of
Common Stock were outstanding and 556,224 shares remain
available for future grants. Expiration dates range from 3/12/01
to 9/16/08. Exercise prices range from $0.34 to $17.00.
3. 1996 Directors' Option Plan
o In July 1996, the Company adopted the 1996 Directors' Option
Plan and reserved an aggregate of 250,000 shares of Common Stock
for issuance thereunder. As of November 17, 1998, options to
purchase 125,000 shares of Common Stock were outstanding and
125,000 shares remain available for future grants. Expiration
dates range from 4/3/07 to 9/18/08. Exercise prices range from
$4.81 to $11.13.
* Certain portions of this schedule have been omitted for which confidential
treatment has been requested and filed separately with the Securities and
Exchange Commission.
34
4. 1996 Employee Stock Purchase Plan
o In July 1996, the Company adopted the 1996 Employee Stock
Purchase Plan and reserved an aggregate of 300,000 shares of
Common Stock for issuance thereunder. As of November 17, 1998,
44,079 shares of Common Stock had been issued and 255,921 shares
remain available for future purchases.
5. Xxxx Xxxxxx Stock Option Plan
o In August 1997, the Company adopted the Lander Stock Option Plan
for a nonstatutory stock option grant to Xxxx X. Xxxxxx, a
consultant and member of the Company's Scientific Advisory
Board. The Company had reserved 7,352 shares of Common Stock for
issuance under the Lander Stock Option Plan. As of November 17,
1998, an option to purchase 7,352 shares of Common Stock at
$0.816 per share was outstanding and no shares remain available
for future grants.
6. The Xxxxx Xxxxxxx University School of Medicine ("JHU")
o In August 1997, the Company signed a license agreement with JHU
relating to its Primordial Stem Cell Therapies program. Under
this agreement, certain milestone payments will be made upon
achievement of certain research and development milestones. The
milestones and their respective payment structures are outlined
below:
Milestone Event Equity (shares) Warrants (shares)
--------------- --------------- -----------------
Successfully transfer to Company [*] [*]
EG Cells isolated by JHU
Successfully transfer to Company [*] [*]
ES Cells isolated by JHU
Issuance of first United States [*] [*]
patent which prevents others from
making, using, selling the EG Cells
or ES Cells
IND filing for the first Licensed [*] [*]
Product or comparable regulatory
filing for first Licensed Product or
Licensed Service
NDA Approval for the first [*] [*]
Licensed Product or comparable
regulatory approval for first
Licensed Product or Licensed
Service
Total Shares for Future Issuance [*] [*]
o The exercise price for the warrants granted in connection with
the first three milestone events shall be equal to the average
closing price of the common stock during the [*] business
days immediately preceding the effective date of the license
agreement. The exercise price for the warrants granted in
connection with the last two milestone events shall be equal to
the average closing price of the common stock during the
[*] business days immediately preceding the date upon which the
milestone event in question occurred. All warrants shall vest
immediately and shall have a [*] year exercise period.
* Certain portions of this schedule have been omitted for which confidential
treatment has been requested and filed separately with the Securities and
Exchange Commission.
35
7. University Technology Corporation ("UTC")
o In December 1996, the Company signed a license agreement with
UTC relating to its Telomerase programs. Under this agreement, a
grant of 1,000 shares of Geron Common Stock and a nonstatutory
stock option grant to purchase 5,000 shares of Geron Common
Stock shall be awarded upon successful patent issuance that
claims recombinant methods and vectors encoding the human
telomerase protein component or components, which patent is not
subject to interference proceeding and is not dominated by a
patent owned by a third party with claims directed specifically
to human telomerase proteins or nucleic acids encoding the same.
8. Darwin Molecular Corporation (Chiroscience Group)
o In September 1997, the Company signed a research collaboration
agreement with Darwin/Chiroscience relating to the Xxxxxx'x
Xxxx. Under this agreement, after the creation or in-licensing
by Geron of a Xxxxxx'x Xxxx Knockout mouse and prior to
expiration of the Option Period, Geron shall either (i) identify
the mouse as having a premature aging phenotype, elect to extend
the Research Term by one year and xxxxx Xxxxxx/Chiroscience
20,000 shares of Geron Common Stock; (ii) identify the mouse as
not having a premature aging phenotype and offer to extend the
Research Term for one year under a Revised Plan in exchange for
10,000 shares of Geron Common Stock; or (iii) terminate the
Agreement.
9. Series A Convertible Preferred Stock
o In March 1998, the Company completed a private placement with
two institutional investors for the sale of 15,000 shares of
Series A Convertible Preferred Stock with a stated value of
$1,000 per share. The Series A Convertible Preferred Stock is
convertible into the number of shares of Common Stock of the
Company equal to the stated value plus a premium of 6% per annum
divided by a conversion price. The conversion price of the
Preferred Stock is based on the market price of the Common Stock
during a pricing period conversion, up to a conversion price cap
of $16.88. With limited exceptions, during the nine month period
following issuance, the Preferred Stock is convertible only
after the market price of the Common Stock equals or exceeds $15
per share. The Preferred Stock is subject to redemption at the
Company's option if the market price of the Common Stock exceeds
or falls below certain thresholds. The shares of Common Stock
into which the Series A Convertible Preferred Stock may be
converted have been registered pursuant to a Registration
Statement on Form S-3 that was filed on April 24, 1998 and
declared effective by the SEC on July 17, 1998.
o On November 6, 1998, 11,548 shares of the Company's Series A
Convertible Preferred Stock were converted into 2,173,446 shares
of the Company's Common Stock. As of this date, 3,452 shares of
Series A Convertible Preferred Stock remain outstanding.
10. Right of First Offer
o Pursuant to a Securities Purchase Agreement dated as of March
27, 1998 among the Company and certain purchasers, the Company
agreed that it would not, without the prior written consent of
Xxxx Xxxx Capital Management, L.P. ("RGC") negotiate or contract
with any party to obtain additional equity financing (including
debt financing with an equity component) that (i) involves (A)
the issuance of Common Stock at a discount to the market price
of the Company's Common Stock on the date of issuance (taking
into account the value of any warrants or options to acquire
Common Stock issued in connection therewith) or (B) the issuance
of convertible securities that are convertible into an
indeterminate number of shares of Common Stock and (ii) allows
for the public resale of such Common Stock (or the Common Stock
issuable upon conversion or exercise of such securities ) during
the period beginning on March 27, 1998 and ending 270 days from
the date a registration statement on Form S-3 related to the
Securities Purchase Agreement was declared effective. The
Company also agreed that it would not offer any equity financing
36
(including debt with an equity component) during the period
beginning on March 27, 1998 and ending 180 days from the date
such registration statement was declared effective unless it
shall have first delivered to RGC a written notice stating its
intention to offer such financing and providing RGC an option to
purchase securities to be offered in such financing. The Company
intends to seek a waiver from RGC with respect to these
provisions.
11. Private Placement
o The Company intends to enter into a Securities Purchase
Agreement in December 1998 with certain investors under which
the Company intends to complete a private placement of shares of
its Common Stock to such investors, yielding gross proceeds to
the Company of approximately $3.6 million.
37
GERON CORPORATION
SCHEDULE 2.1(f) - NO CONFLICTS; CONSENTS AND APPROVALS
Conflicts
None
Consents and Approvals
See Schedule 2.1(c), paragraph 10
38
GERON CORPORATION
SCHEDULE 2.1(g) - LITIGATION
Current On-going Litigation
None
Possible Controversies
1. Third party alleged interference with an existing relationship with a
University and University has been contacted by another University
regarding alleged misconduct relating to patented technology.
o Geron signed a licensing and sponsored research agreement
relating to its Embryonic Stem Cell program with The Xxxxx
Xxxxxxx University School of Medicine ("JHU") on August 1, 1997,
after having been informed by a third party (Plurion) that the
Company and JHU would violate the rights of the third party and
another academic institution (Vanderbilt University) with which
that third party claimed to be affiliated by way of contract
(collectively "Third Party") in doing so. After a review of the
correspondence with the Third Party and JHU as well as related
documents, including an issued U.S. patent, the Company believes
that the Third Party's claims, if asserted, would fall into
three general categories: patent infringement, misuse of
confidential information and breach of contract. The Company
believes that it and JHU have substantial defenses to any claims
that might be asserted by such Third Party and has provided
indemnification to JHU relating to such potential claims.
2. FAA
o In July 1997, the FAA notified the Company that it was
conducting an investigation regarding the shipment of improperly
packaged hazardous materials from the Company that resulted in
leakage but no physical injury.
3. Former employee regarding authorship of a scientific paper
o In January 1998, counsel for a former employee contacted the
Company regarding authorship of a scientific paper from which he
was omitted as an author. No damages or awards have been
requested.
Current On-going Regulatory Inquiries
1. National Association of Securities Dealers ("NASD")
o In September 1997, the NASD began a review of trading in Geron
Corporation Common Stock surrounding the August 14, 1997
announcement wherein Geron disclosed it had successfully cloned
the gene for the human telomerase catalytic protein.
o The Company has responded to all requests for information.
o On March 25, 1998, the NASD notified Geron that the staff has
concluded its review and has referred the documents to the
Securities and Exchange Commission for whatever action, if any,
it deems appropriate.
o There has been no correspondence between NASD, the SEC and Geron
about this subject since March 1998.
39
2. Chicago Board of Options Exchange ("CBOE")
o In March 1998, the CBOE requested information relating to a
review of market activity in Geron Corporation prior to the news
announcement on January 13, 1998 regarding the Company's intent
to publish its successful study in human cell research.
o The Company has responded to all requests for information.
o There has been no correspondence between the CBOE and Geron
about this subject since April 1998.
3. Securities and Exchange Commission ("SEC")
o In April 1998, the SEC requested information relating to its
review of trading for certain individuals in connection with the
news announcement on January 13, 1998 regarding the study which
confirms the role of the enzyme telomerase.
o The Company has responded to all requests for information.
o There has been no correspondence between the SEC and Geron about
this subject since April 1998.
40
GERON CORPORATION
SCHEDULE 2.1(i) - SEC DOCUMENTS
In connection with the Form S-8 filed on August 14, 1997, the Company
incorrectly filed the 1992 Stock Option Plan as an exhibit instead of the Lander
Stock Option Plan.
41
GERON CORPORATION
SCHEDULE 2.1(o) - LISTING AND MAINTENANCE REQUIREMENTS
None
42
GERON CORPORATION
SCHEDULE 2.1(q) - EMPLOYEE RELATIONS
None
43
GERON CORPORATION
SCHEDULE 2.1(r) - REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION
Obligations to Register Securities
The Company is party to an Investor Rights Agreement dated November 5, 1995
where certain investors have a right to have their securities registered by the
Company.
The Company is party to a Registration Rights Agreement dated March 27, 1998
under which certain investors have a right to have their securities registered
by the Company.
The Company intends to enter into a Securities Purchase Agreement in December
1998 with certain investors under which the Company intends to complete a
private placement of shares of its Common Stock to such investors. These
investors would have a right to have their securities registered by the Company.
44
GERON CORPORATION
SCHEDULE 2.1(s) - TITLE
None
45
GERON CORPORATION
SCHEDULE 2.1(x) - TRANSACTIONS WITH AFFILIATES
Employee Loan
In December 1993, the Company provided an interest-free loan to Xxxxxx X.
Xxxxxx, Chief Scientific Officer, in the principal amount of $150,000, due
December 1, 1996, pursuant to a note secured by a second deed of trust to Dr.
Harley's residence in Palo Alto, California. On December 1, 1996, the Company
agreed to extend the due date of the interest-free loan to December 31, 1998. As
of November 17, 1998, $150,000 was outstanding under the note.
Consulting Agreements
In April 1996, the Company entered into a Consulting Agreement with Xxxxxx X.
Xxxxx, a Director of the Company, pursuant to which Xx. Xxxxx agreed to provide
such advice and consultation as reasonably requested by the Company to its
officers and scientists on the direction, implementation and operations of its
scientific programs, business plans and management of intellectual property. As
compensation for his services under this agreement, Xx. Xxxxx received an option
to purchase 7,352 shares of Geron Corporation Common Stock at an exercise price
of $2.04 per share, with monthly vesting over a five-year period. Unless
otherwise terminated by either the Company or Xx. Xxxxx, this agreement will
expire on April 10, 2001.
In April 1997, the Company entered into a Consulting Agreement with Xxxx X.
Xxxxxx, a Director of the Company, pursuant to which Xx. Xxxxxx agreed to
provide such advice and consultation as reasonably requested by the Company to
its officers and scientists on the direction, implementation and operations of
its scientific programs and business plans. As compensation for his services
under this agreement, Xx. Xxxxxx received an option to purchase 10,000 shares of
Geron Corporation Common Stock at an exercise price of $9.25 per share, with
annual vesting over a three year period. In addition, Xx. Xxxxxx will receive
cash compensation in the amount of $10,000 per year, payable quarterly. Unless
otherwise terminated by either the Company or Xx. Xxxxxx, this agreement will
expire on April 3, 2000.
46
GERON CORPORATION
SCHEDULE 2.1(bb) - SOLICITATION OF MATERIALS
None
