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
Date of report (Date of earliest event reported): May 10, 2006
Neurologix, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 0-13347 06-1582875
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(State or other jurisdiction of (Commission I.R.S. Employer
incorporation or organization) File Number) Identification No.)
ONE BRIDGE PLAZA, FORT LEE, NEW JERSEY 07024
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(Address of principal executive offices) (Zip Code)
(201) 592-6451
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(Registrant's telephone number,
including area code)
None
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(Former name, former address and former fiscal year,
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 (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On May 11, 2006, Neurologix, Inc. (the "Company") issued and sold
345,000 shares of a newly created series of preferred stock, par value $0.10
per share (the "Series C Stock"), and warrants (the "Warrants") to purchase
approximately 2,230,000 shares of the Company's common stock, par value $0.001
per share (the "Common Stock"), to certain investors led by General Electric
Pension Trust ("GE") and the DaimlerChrysler Corporation Master Retirement
Trust ("Chrysler" and collectively, the "Investors"), pursuant to a Stock and
Warrant Subscription Agreement, dated as of May 10, 2006 (the "Subscription
Agreement") and a warrant certificate.
The following is a brief summary of the transaction. This summary is
qualified in its entirety by reference to the full text of the Subscription
Agreement and the form of warrant certificate, which are attached hereto as
Exhibits 10.1 and 10.2, respectively.
Subscription Agreement
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Pursuant to the Subscription Agreement, the Company issued and sold to
the Investors 345,000 shares of Series C Stock for a price of $35.00 per share
or an aggregate price of $12,000,000. Each share of Series C Stock is
convertible into 19.66 shares of Common Stock. In addition, the Company issued
to the Investors Warrants to purchase approximately 2,230,000 shares of Common
Stock (see "Warrant" below). A description of the terms of the Series C Stock
is provided in Item 5.03 below.
The Subscription Agreement provides that the Investors may transfer
Series C Stock only in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and that shares of Series C Stock shall bear an
appropriate legend regarding the restriction on transferability.
The Subscription Agreement provides the Investors with a right of
first refusal with respect to private sales of securities by the Company and
certain of the Company's principal stockholders. Additionally, the Investors
have tag along rights with respect to private sales of securities by such
principal stockholders.
The Subscription Agreement also provides for registration rights with
respect to the shares of Common Stock underlying the Series C Stock and
Warrants. Until the Company is eligible to file a shelf registration statement
on Form S-3, Investors holding at least 40% of the outstanding Registrable
Securities may at any time request that the Company effect a registration
statement on Form S-1 (or Form SB-1) for any offering of at least $1,000,000.
The Company will not be required to effect more than three S-1 registrations,
provided that the Company may be required to effect one additional S-1
registration if, upon recommendation of the underwriters, any Investor is
unable to include twenty five percent (25%) or more of the shares it requested
to be registered.
Once the Company becomes S-3 eligible, the Investors 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.
Upon request, the Company must keep any S-1 or S-3 registration
statement, as the case may be, effective for up to two years.
The Subscription Agreement also provides for piggyback registration
rights with respect to the Registrable Securities.
Each of GE and Chrysler will have observation rights on the Company's
Board of Directors as long as they continue to own 50% of the shares originally
purchased.
Warrant
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As described above, pursuant to the Subscription Agreement, the
Company has issued the Investors Warrants to purchase an aggregate of
approximately 2,230,000 shares of Common Stock, pursuant to the form of warrant
substantially in the form attached hereto as Exhibit 10.2. The per share
exercise price of the Warrants is $2.05, subject to customary adjustment. The
Warrants are subject to anti-dilution protection if at any time the Company
issues Common Stock at a price less than $1.55 per share. The Warrants expire
in seven years.
Item 3.02 Unregistered Sales of Equity Securities
As disclosed under Item 1.01 hereof, on May 11, 2006 the Company sold
345,000 shares of Series C Stock and Warrants to purchase approximately
2,230,000 shares of Common Stock pursuant to the Subscription Agreement. The
aggregate consideration received by the Company in connection with this
transaction was $12,000,000. No underwriting discounts or commissions were paid
by the Company in connection with the transaction. The transaction was exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and Section 506 of Regulation D promulgated thereunder. The Company relied, as
applicable, upon the representations made by the Investors of such securities
in determining that such exemptions were available.
The description of the Warrants set forth in Item 1.01 above is
incorporated by reference herein.
Item 5.03 Amendments of Articles of Incorporation or Bylaws; Change
in Fiscal Year
On May 10, 2006, the Company filed with the Delaware Secretary of
State a Certificate of Designations, Preferences and Rights of Series C
Convertible Preferred Stock of Neurologix, Inc. setting forth the terms of the
Series C Stock.
The Series C Stock will accrue cumulative dividends in the form of
additional shares of Series C Stock at a rate of 9% per annum. Dividends will
be paid in quarterly installments.
Each share of Series C Stock will be convertible into 19.66 shares of
Common Stock, subject to customary adjustment for dividends, stock splits and
corporate transactions. The Series C Stock will automatically be converted into
shares of Common Stock upon the first public offering of Company securities
that results in gross proceeds of at least $50,000,000 or upon the written
consent of holders of at least 70% of the outstanding shares of Series C Stock.
Each share of Series C Stock will be entitled to a number of votes per
share equal to the number of shares of underlying Common Stock. As long as the
Series C Stock comprises at least 5% of the Company's outstanding securities,
the Company may not create any new class of stock that is senior to the Series
C Stock without the consent of the holders of at least 70% of the Series C
Stock.
Upon a liquidation event (such as a liquidation, merger or sale of
substantially all of the Company's assets), the Series C Stock will have a
liquidation preference that is equal to that of the Company's Series A Stock
and the Series B Stock. In the event of a voluntary liquidation, the holders of
Series C Stock will be entitled to receive a per share amount equal to the
greater of: (i) $35 plus unpaid dividends or (ii) the amount payable upon
conversion to Common Stock.
The Series C Stock will be adjusted if the Company issues common stock
(or convertible securities) at price per share that is less than $1.55. There
is no termination date for this anti-dilution protection. The Series C 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 C Stock at any time.
Item 7.01 Regulation FD Disclosure.
On May 11, 2006, the Registrant issued a press release announcing
that, on that date, it consummated the transactions described in Item 1.01
hereto. A copy of such press release is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
See Exhibit Index below.
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.
NEUROLOGIX, INC.
Date: May 11, 2006 By: /s/ Marc L. Panoff
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Name: Marc L. Panoff
Title: Chief Financial Officer
EXHIBIT INDEX
Number Title
3.1 Certificate of Designations, Preferences and Rights of Series
C Convertible Preferred Stock of Neurologix, Inc.
10.1 Subscription Agreement, dated as of May 10, 2006, by and
between Neurologix, Inc., General Electric Pension Trust, the
DaimlerChrysler Corporation Master Retirement Trust, ProMed
Partners, LP, ProMed Partners II, LP, ProMed Offshore Fund
Ltd., ProMed Offshore Fund II, Ltd., Paul Scharfer and David
B. Musket.
10.2 Form of Warrant Certificate
99.1 Press Release, dated May 11, 2006