Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
November 19,
2007
Date
of Report (Date of Earliest Event Reported)
Neurologix,
Inc.
(Exact
name of Registrant as Specified in its Charter)
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Delaware
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000-13347
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06-1582875
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(State
or other Jurisdiction of Incorporation or
Organization)
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(Commission
File Number)
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(I.R.S.
Employer Identification
No.)
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One
Bridge Plaza, Fort Lee, New Jersey 07024
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (201)
592-6451
(Former
Name or Former Address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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□
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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□
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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□
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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□
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement
On
November 19, 2007 (the “Closing Date”), Neurologix, Inc. (the
“Company”) issued and sold 428,571 shares of a newly created series
of
preferred stock, par value $0.10 per share, designated as Series D Convertible
Preferred Stock (the “Series D Stock”), and warrants (the
“Warrants”) to purchase approximately 3,232,758 shares of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), to General
Electric Pension Trust (“GE”) and Corriente Master Fund, L.P.
(“Corriente” and, together with GE, the “Series D Investors”),
pursuant to a Stock and Warrant Subscription Agreement (the “Series D
Subscription Agreement”), dated as of November 19, 2007, by and among the
Company, the Series D Investors and, solely with respect to Sections 3.2 and
3.3
thereof, Martin J. Kaplitt, M.D. and Palisade Private Holdings
LLC. The Series D Stock was issued and sold at a price of $35 per
share for an aggregate consideration of $15,000,000.
The
Company also entered into a Registration Rights Agreement (the “Registration
Rights Agreement”), dated as of November 19, 2007, by and among the Company,
the Series D Investors and the holders (the “Series C Investors”) of the
Company’s Series C Convertible Preferred Stock, par value $0.10 per share (the
“Series C Stock”), which provides, collectively to the Series D Investors
and the Series C Investors, certain registration rights for the shares of Common
Stock underlying the securities of the Company owned by them.
As
part
of this transaction, each share of Series C Stock, held by a Series C Investor
who purchased at least the same dollar amount of Series D Stock as its initial
purchase of Series C Stock, was automatically converted, effective as of the
Closing Date, into 0.710172 shares of Series D Stock and 0.408109 additional
shares of Series C Stock (hereinafter, the “Series C
Conversion”). As a result, an aggregate of 230,184 shares of
Series C Stock was converted into 163,470 shares of Series D Stock and 93,940
shares of Series C Stock.
As
a
condition to the closing of this transaction, the Series C Investors were
required to consent to (i) the issuance of the Series D Stock, (ii) certain
amendments to the Stock and Warrant Subscription Agreement (the “Series C
Subscription Agreement”), dated as of May 10, 2006, among the Company, the
Series C Investors and the other parties named therein and (iii) changes to
the
terms of the Series C Stock as contained in the Certification of Designations,
Preference and Rights of Series C Stock filed on May 10, 2006 (the “Original
Series C Certificate”). A brief description of the material
amendment or changes to the Series C Subscription Agreement and the Original
Series C Certificate are set forth below.
The
following is a brief summary of the material documents. This summary
is qualified in its entirety by reference to the full text of the documents
and
agreements which are set forth as Exhibits to this Form 8-K.
Series
D Subscription Agreement
Pursuant
to the Series D Subscription Agreement, the Company issued and sold 428,571
shares of Series D Stock and Warrants to purchase approximately 3,232,758 shares
of Common Stock to the Series D Investors. Each share of Series D
Stock is presently convertible into 30.1724 shares of Common Stock. A
description of the terms of the Series D Stock is provided in Item 5.03 below
and is incorporated herein by reference.
Under
the
terms of the Series D Subscription Agreement, transfers of the Series D Stock
are required to be in compliance with the Securities Act of 1933, as amended
(the “Securities Act”), and all shares of Series D Stock must bear an
appropriate legend regarding restrictions on transferability. The
Series D Subscription Agreement also provides the Series D Investors with a
right of first refusal with respect to private sales of securities by the
Company and by certain of the Company’s principal stockholders. In
addition, the Series D Investors are granted tag-along rights with respect
to
private sales of securities by such principal stockholders. Under the
Series D Subscription Agreement, each Series D Investor is indemnified against
certain losses, liabilities and costs relating to matters with respect to such
Agreement, including breaches of representations, warranties and covenants
of
the Company.
The
full
text of the Series D Subscription Agreement is attached hereto as Exhibit 10.1
and is incorporated herein by reference.
Registration
Rights Agreement
The
Registration Rights Agreement provides the Series C Investors and Series D
Investors with certain demand and piggyback registration rights for the shares
of Common Stock underlying the Series C Stock, the Series D Stock, the warrants
issued to the Series C Investors and the Warrants. The Registration
Rights Agreement, by its terms, amends the Series C Subscription Agreement
by
deleting the registration rights which were included therein.
Until
the
Company is eligible to file a shelf registration statement on Form S-3, the
Company will effect a registration statement on Form S-1 or Form SB-1 for all
or
any portion of the Registrable Securities (as defined in the Registration Rights
Agreement), provided that the reasonably anticipated aggregate price thereof
exceeds $1,000,000, upon the request of holders of at least 50% of the
Registrable Securities (the “Requesting Holders”). The Company
will not be required to effect more than three registration statements on Form
S-1, except that the Company may be required to effect one additional
registration statement on Form S-1 if the number of shares requested by any
Requesting Holder had been reduced by an aggregate of 25%, or more, by the
underwriters in all prior registration statements on Form S-1 for which
registration had been requested by the Requesting Holder.
Once
the
Company becomes eligible to file a registration statement on Form S-3, any
Series C Investor or Series D Investor may request an unlimited number of
registrations on Form S-3, provided that the aggregate value of securities
being
registered is at least $500,000. The Company may be required to
maintain the effectiveness of a registration statement on either Form S-1 or
S-3, as the case may be, for up to two years following it being declared
effective by the Securities and Exchange Commission.
The
Registration Rights Agreement also provides for unlimited piggyback registration
rights with respect to the Registrable Securities.
The
full
text of the Registration Rights Agreement is attached hereto as Exhibit 10.2
and
is incorporated herein by reference.
Warrants
As
described above, the Company has issued Warrants to purchase an aggregate of
approximately 3,232,758 shares of Common Stock. The per share
exercise price of the Warrants is $1.39, subject to adjustment as provided
therein. The Warrants are exercisable at the option of the holder
thereof, at any time and from time to time, prior to their expiration date
which
is the seventh anniversary of their issuance. The Warrants provide
for a cashless exercise and also provide for an automatic exercise at the end
of
their term if they are in the money. The Warrants are subject to
weighted average anti-dilution protection.
The
full
text of the form of warrant certificate is attached hereto as Exhibit 10.3
and
is incorporated herein by reference.
Series
D Certificate
On
November 19, 2007, the Company filed with the Secretary of State of the State
of
Delaware a Certificate of Designations, Preferences and Rights of the Series
D
Stock (the “Series D Certificate”) which sets forth the terms of the
Series D Stock, as more fully described in Item 5.03 of this Form
8-K.
Series
C Certificate
On
November 19, 2007, the Company filed with the Secretary of State of the State
of
Delaware a Certificate of Designations, Preferences and Rights of the Series
C
Stock (the “Series C Certificate”) which contained changes to the
Original Series C Certificate, as more fully described in Item 5.03 of this
Form
8-K.
Amendment
of the Series C Subscription Agreement
On
November 19, 2007, the Series C Subscription Agreement was amended as
follows: (i) Section 3.1(a) was amended so that all holders of Series
C Stock and all holders of a security that is pari passu with the Series C
Stock
will be entitled to participate, pro rata, in the right of first refusal set
forth therein in respect of the Offered Securities (as defined therein), (ii)
Section 3.1(c)(i) was amended to extend the period between the expiration of
the
15-day notice period to holders of the Series C Stock of a potential stock
sale
and the closing of the sale from 45 days to 75 days, (iii) Section 3.2(a) was
amended so that all holders of Series C Stock and all holders of Series D Stock
will be factored into the calculation for determining the pro rata participation
in the right of first refusal with respect to any equity securities of the
Company proposed to be sold by a Holder (as defined therein) and (iv) Section
3.3 was amended so that all holders of Series C Stock and all holders of a
security that is pari passu with the Series C Stock will be treated, on a pari
passu basis, in connection with any tag-along rights associated with any sale
of
the Company’s securities by a Holder. The Registration Rights
Agreement also amended the Series C Subscription Agreement by deleting the
registration rights in Section 3.9 in its entirety.
The
full
text of the amendments is included in the letters attached hereto as Exhibits
10.4, 10.5, and 10.6 and are incorporated herein by reference.
Item
3.02 Unregistered Sales of Equity Securities
As
disclosed under Item 1.01 hereof, the Company, on November 19, 2007, sold
428,571 shares of Series D Stock and Warrants to purchase approximately
3,232,758 shares of Common Stock pursuant to the Series D Subscription
Agreement. The aggregate consideration received by the Company in
connection with this transaction was $15,000,000. Also, as described
under Item 1.01 hereof, the Company issued 163,470 shares of Series D Stock
and
93,940 shares of Series C Stock pursuant to the Series C
Conversion. The Company did not receive any additional consideration
in connection with the Series C Conversion. No underwriting discounts
or commissions were paid by the Company in connection with the sale of shares
of
Series D Stock or the Series C Conversion. The sale of shares of
Series D Stock was exempt from registration under Section 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder. The Company
relied, as applicable, upon the representations made by the Series D Investors
in determining that such exemptions were available.
The
holders of both the Series C Stock and the Series D Stock have the right, at
any
time or from time to time, to convert their shares of Series C Stock or Series
D
Stock into shares of Common Stock at the applicable conversion prices set forth
in the respective Series C Certificate and Series D
Certificate. Currently, each share of Series C Stock is convertible
into 21.4724 shares of Common Stock, and each share of Series D Stock is
convertible into 30.1724 shares of Common Stock. In addition, the
shares of Series C Stock and Series D Stock are automatically converted into
Common Stock if there is a consummated public offering of the Common Stock
for
at least $50,000,000, at a per share price of $5.65 (in accordance with the
Series C Certificate) or $3.48 (in accordance with the Series D Certificate),
or
if 70% in interest of the Series C Investors or Series D Investors, as the
case
may be, agree to effect such a conversion.
The
Warrants are exercisable as more fully described under the heading, “Warrant”
set forth in Item 1.01 above, which is incorporated herein by
reference.
The
Series C Conversion and the full terms of the Series C Stock and the Series
D
Stock are set forth in the Series C Certificate and the Series D
Certificate. See Item 5.03 of this Form 8-K.
Item
3.03 Material Modification of Rights of Security
Holders
The
information disclosed in items 1.01 and 5.03 of this Form 8-K is incorporated
herein by reference.
Item
5.03 Amendments of Articles of Incorporation or Bylaws; Change in
Fiscal Year
As
noted
in Item 1.01 above, the Company, on November 19, 2007, filed the Series C
Certificate and the Series D Certificate with the Secretary of State of the
State of Delaware.
Series
C Certificate
Certain
terms of the Original Series C Certificate were changed in connection with
the
sale of the Series D Stock. The Original Series C Certificate was
changed (i) to provide for a 9% semi-annual cash dividend in lieu of the PIK
Dividends (as defined in the Original Series C Certificate) and the
participating dividends on the Series C Stock, (ii) to add a provision allowing
the Company to pay accrued and unpaid dividends in either cash or shares of
Common Stock upon a conversion of Series C Stock, (iii) to change the provision
requiring the consent of at least 70% of the holders of shares of Series C
Stock
for the authorization, creation or issuance of any security or convertible
security that is pari passu with, or senior to, the Series C Stock so that
it is
only applicable with respect to the issuance of a security that is senior to
the
Series C Stock and junior to the Series D Stock and (iv) to add provisions
for
the Series C Conversion.
The
full
text of the Series C Certificate is attached hereto as Exhibit 3.1 and is
incorporated herein by reference.
Series
D Certificate
Under
the
terms of the Series D Certificate, the Series D Stock will accrue dividends
at a
rate of 7% per annum. Dividends are payable in semi-annual
installments and accrue, cumulatively, until paid. Accrued and unpaid
dividends on the Series D Stock may be paid in either cash or shares of Common
Stock upon a conversion thereof.
Upon
a
liquidation event (such as a liquidation, merger or sale of substantially all
of
the Company’s assets), the holders of the Series D Stock, on a pari passu basis
with the holders of the Company’s Series A Preferred Stock, will have a
liquidation preference prior and in preference to the holders of the Series
C
Stock and Common Stock or any other class or series of capital stock ranking
junior to the Series D Stock, and will be entitled to receive a per share amount
equal to the greater of: (i) $35 plus all accrued and unpaid
dividends thereon or (ii) the amount payable upon conversion of the Series
D
Stock into shares of Common Stock.
The
Series D Investors vote together with all other classes and series of capital
stock of the Company as a single class on all actions to be taken by the
Company’s stockholders, except that, as long as the Series D Stock comprises at
least 5% of the Company’s outstanding capital stock, the approval of the holders
in interest of 70% of the Series D Stock is required to (i) create any new
class
of capital stock that is senior to, or on parity with, the Series D Stock,
(ii)
amend the Company’s Certificate of Incorporation, including the Series D
Certificate, in any manner that adversely affects the Series D Stock and (iii)
purchase or redeem any of the Company’s capital stock or pay dividends
thereon. Each share of Series D Stock will be entitled to a number of
votes per share equal to the number of shares of Common Stock underlying such
share of Series D Stock.
The
Series D Stock is convertible into shares of Common Stock as more fully
described in Item 5.03 of this Form 8-K. Subject to certain
exceptions, the number of shares issuable upon any such conversion is subject
to
adjustment for future issuances of shares of Common Stock, or securities
exercisable for, or convertible or exchangeable into, shares of Common Stock,
at
prices below the conversion price then in effect for the Series D
Stock. There is no termination date
for
this anti-dilution protection. The Series D Stock is also subject to
customary adjustment for stock splits and reverse splits, and corporate
transaction such as mergers and reorganizations.
The
Company may not redeem the Series D Stock at any time.
The
full
text of the Series D Certificate is attached hereto as Exhibit 3.2 and is
incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits
(c) Exhibits.
See
Exhibit Index below.
EXHIBIT
INDEX
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Number
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Title
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3.1
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Certificate
of Designations, Preferences and Rights of Series C Convertible
Preferred
Stock of the Company.
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3.2
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Certificate
of Designations, Preferences and Rights of Series D Convertible
Preferred
Stock of the Company.
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10.1
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Stock
and Warrant Subscription Agreement, dated as of November 19, 2007,
by and
among the Company, General Electric Pension Trust, Corriente Master
Fund,
L.P. and, solely with respect to Sections 3.2 and 3.3 thereof,
Martin J.
Kaplitt, M.D. and Palisade Private Holdings LLC.
|
| |
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10.2
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Registration
Rights Agreement, dated as of November 19, 2007, by and among the
Company,
General Electric Pension Trust, DaimlerChrysler Corporation Master
Retirement Trust, certain funds managed by ProMed Asset Management
LLC and
Corriente Master Fund, L.P.
|
| |
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10.3
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Form
of Warrant Certificate.
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|
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10.4
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Letter,
dated as of November 8, 2007, by and between Neurologix, Inc. and
General
Electric Pension Trust.
|
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|
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10.5
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Letter,
dated as of November 8, 2007, by and between Neurologix, Inc. and
DaimlerChrysler Master Retirement Trust.
|
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10.6
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Letter,
dated as of November 8, 2007, by and between Neurologix, Inc. and
certain
funds managed by ProMed Asset Management
LLC.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto,
duly authorized.
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NEUROLOGIX,
INC.
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| Date: November
21, 2007 |
By:
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/s/ Marc
L. Panoff |
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Name:
Marc L.
Panoff |
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Title:
Chief Financial Officer, Secretary and
Treasurer |
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