commercializing any collaboration products under the applicableCo-Co Collaboration Agreement or (b) if a party has exercised itsOpt-Out Right, the date of expiration of the last royalty term for the last collaboration product under the applicableCo-Co Collaboration Agreement.
The Form ofCo-Co Collaboration Agreement includes various representations, warranties, covenants, dispute escalation and resolution mechanisms, indemnities and other provisions customary for transactions of this nature.
Equity Placement
The Company has agreed to sell to Regeneron 4,444,445 shares of its common stock, par value $.01 per share (the “Common Stock”), for aggregate cash consideration of $400 million, or $90.00 per share, pursuant to the terms of a Stock Purchase Agreement, dated April 8, 2019 (the “Stock Purchase Agreement”), by and between Regeneron and the Company (the “Equity Transaction”). If at the time of closing of the Equity Transaction (which will occur no earlier than the conclusion of the Company’s 2019 annual meeting of stockholders) a sufficient number of authorized shares of Common Stock under the Company’s Restated Certificate of Incorporation is not available, the $400 million of equity under the Stock Purchase Agreement will instead be issued in the form of 1,481,482 shares of the Company’s Series A Redeemable Convertible Preferred Stock, par value $.01 per share (the “Preferred Stock”), at a purchase price of $270.00 per share, that will convert automatically into Common Stock on a1-for-3 basis upon stockholder approval of additional authorized shares of Common Stock. This sale does not involve a public offering and is therefore exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). Based on 106,437,145 shares of Common Stock outstanding as of April 8, 2019, following the Equity Transaction Regeneron will beneficially own approximately 4.0% of the outstanding shares of Common Stock (on a pro forma, and if Preferred Stock is issued, on an as converted, basis). The Stock Purchase Agreement contains customary representations, warranties, and covenants of each of the parties thereto. Subject to customary closing conditions, including the expiration or early termination of the applicablepre-merger waiting period under the HSR Act, the Equity Transaction is expected to close during the second quarter of 2019.
As a condition to consummating the transactions contemplated by the Stock Purchase Agreement, the Company and Regeneron have entered into an investor agreement dated April 8, 2019 (the “Investor Agreement”). Under the Investor Agreement, until the expiration or termination of the Research Term under the Master Agreement (subject to extension by one year if the Research Term or Master Agreement is terminated by Regeneron at will, or by up to two years if as of the expiration or termination of the Research Term, Regeneron owns more than 19.99% of the Company’s outstanding shares (on anas-converted basis)), Regeneron and its affiliates will be bound by certain “standstill” provisions. The standstill provisions include agreements not to acquire more than 30% of the Company’s outstanding shares of Common Stock and Preferred Stock (on anas-converted basis), call stockholder meetings, nominate directors other than those approved by the Company’s Board of Directors, subject to certain limited exceptions, or propose or support a proposal to acquire the Company.
Further, under the Investor Agreement, Regeneron has agreed to vote, and cause its affiliates to vote, all shares of the Company’s voting securities Regeneron is entitled to vote in a manner as recommended by the Company’s Board of Directors, except with respect to certain change of control transactions, liquidation or dissolution of the Company, or, after the standstill term, any contested election of directors.
Under the Investor Agreement, Regeneron has agreed not to dispose of any of the purchased shares or any shares of Common Stock beneficially owned by it immediately after the closing of the Master Agreement, until the earlier of (i) the four-year anniversary of the closing of the Equity Transaction and (ii) the termination of the Collaboration (the“Lock-Up Period”), subject to limited exceptions. Following the expiration of theLock-Up Period, if at any time Regeneron beneficially owns at least 9.9% of the Company’s outstanding shares (on anas-converted basis), then until such time as Regeneron beneficially owns less than 5% of the Company’s outstanding shares (on anas-converted basis), Regeneron will not dispose of any shares except (a) pursuant to a registered underwritten public offering pursuant to the Investor Agreement, (b) in a manner consistent with the volume limitations set forth in Rule 144 under the Securities Act, or (c) as otherwise approved by the Company.
Under the Investor Agreement, following theLock-Up Period, Regeneron will have three demand rights to require the Company to conduct a registered underwritten public offering with respect to the shares of Common Stock beneficially owned by Regeneron (or issued or issuable upon conversion of the Preferred Stock, if applicable)
