EXHIBIT 4.1
WARRANT EXCHANGE
AGREEMENT
This Warrant Exchange Agreement
(this “ Agreement ”) is dated as of May 17,
2009, among Cell Genesys, Inc. a Delaware corporation (the “
Company ”), and Capital Ventures International (the
“ Holder ”).
WHEREAS , the Holder is the holder of a Warrant, dated
as of May 14, 2008, exercisable for 8,530,806 shares of the
Company’s Common Stock at an exercise price of $10.00 per
share (the “ Existing Warrant ”).
WHEREAS , in connection with a Fundamental Change (as
defined in the Existing Warrant), Holder may be entitled to receive
a cash payment equal to the Black Scholes Value (as defined in the
Existing Warrant) at Holder’s election by surrendering the
unexercised portion of the Existing Warrant.
WHEREAS , the Black Scholes Value is subject to
substantial fluctuation and may limit the Company’s ability
to pursue a Fundamental Transaction at any point in the
future.
WHEREAS , subject to the terms and conditions set forth
in this Agreement and pursuant to Section 3(a)(9) of the
Securities Act of 1933, as amended (the “ Securities
Act ”), (i) the Company desires to exchange the
Existing Warrant with the Holder, and the Holder desires to
exchange the Existing Warrant with the Company, for the Initial
Exchanged Shares (as defined below) and the Remainder Warrant (as
defined below), and (ii) each of the Company and the Holder
shall have the right or obligation, as applicable, during the
periods set forth below, to exchange the Remainder Warrant, for the
applicable consideration specified below.
NOW, THEREFORE
, in consideration of the mutual
covenants contained in this Agreement, and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Holder agree as follows (with
capitalized terms used here in and not otherwise defined having the
meanings set forth in the Remainder Warrant):
1. Initial Exchange of the
Existing Warrant for the New Warrant . On the terms and
subject to the conditions set forth herein, as of the date hereof
(the “ Closing ”), the Holder hereby sells,
assigns, delivers and transfers to the Company all of its right,
title and interest in and to warrants to purchase 8,530,806 shares
of Common Stock (the “ Initial Exchange ”) in
exchange for 4,000,000 freely tradable shares of the
Company’s Common Stock (the “ Initial Exchanged
Shares ”) and a new warrant to purchase 4,265,403 shares
of the Company’s Common Stock (the “ Remainder
Warrant ”), substantially in the form of
Exhibit A hereto.
2. Company Call Right and
Purchase Obligation .
(a) In the event that during the
period beginning on the date hereof and ending one hundred twenty
(120) days from the date hereof (the “ Company Call
Period ”), the Company publicly announces that it has
entered into a definitive agreement relating to a Fundamental
Transaction (as defined in the Existing Warrant) (such public
announcement being referred to as a “ Call Event
”), the Company shall be obligated to purchase from the
Holder, and
the Holder shall be obligated to
sell, assign, deliver and transfer to the Company all but not less
than all, of the remaining portion of the Remainder Warrant for a
purchase price of $2,000,000 in cash (the “ Company Call
Consideration ”) upon consummation of the Fundamental
Transaction (the “ Fundamental Transaction Closing
Date ”). In the event that the Holder has not exchanged
any of the Remainder Warrant prior to the payment of the Company
Call Consideration, the aggregate Company Call Consideration shall
be equal to $2,000,000 in cash. Upon the occurrence of a Call Event
during the Company Call Period, the Company Call Period shall be
extended until the Fundamental Transaction Closing Date. The
Company will provide written notice to the Holder of (i) the
occurrence of a Call Event (the “ Call Event Notice
”) within one (1) Business Day (as defined in the
Remainder Warrant) following the occurrence of a Call Event and
(ii) the anticipated Fundamental Transaction Closing Date;
such notice to be provided at least fifteen (15) Business Days
prior to the Fundamental Transaction Closing Date. The Holder shall
continue to have the right to exchange all or any portion of the
Remainder Warrant pursuant to Section 3 below, and the portion
of the Remainder Warrant not so exchanged shall remain outstanding,
in each case, until payment in full of the Company Call
Consideration; provided, however, that in the event that the
Company specifies a fixed Fundamental Transaction Closing Date in
the Call Notice, which date is not less than fifteen
(15) Business Days from the Holder’s receipt of the Call
Notice; the Holder shall not be permitted to exchange all or any
portion of the Remainder Warrant during the period beginning five
(5) Business Days prior to the Fundamental Transaction Closing
Date specified in the Call Notice (the “ Exchange
Limitation Period ”). In the event that Fundamental
Transaction Closing Date does not occur prior to the expiration of
the Exchange Limitation Period, the Holder shall thereafter
continue to have the right to exchange all or any unexercised
portion of the Remainder Warrant until receipt of payment in full
of the Company Call Consideration. The failure of the Company to
send the Call Notice within the specified time frames shall not
affect the Company’s obligation to purchase the Remainder
Warrant from the Holder for the Company Call Consideration upon the
consummation of the Fundamental Transaction.
(b) To the extent not previously
exchanged by the Holder, on the Fundamental Transaction Closing
Date (even if such date is later, or with the consent of the
Holder, earlier than the anticipated Fundamental Transaction
Closing Date specified in the Call Notice), or such earlier time as
may be agreed by the parties, the Company shall pay to the Holder
the Company Call Consideration by wire transfer of immediately
available funds in accordance with the instructions set forth on
Schedule A hereto. Within three (3) Business Days
following receipt of the Company Call Consideration, the Holder
shall remit the Remainder Warrant to the Company for
cancellation.
3. Holder Remainder Warrant
Exchange Right .
(a) For a period beginning on the
date hereof and ending on the expiration of the Company Call Period
(as the same may be extended pursuant to Section 2(a) hereof),
from time to time the Holder shall have the right, by providing
written notice to the Company (the “ Put Notice
”, and the date of such notice being the “ Put
Notice Date ”) to put the Remainder Warrant to the
Company to be exchanged for a total number of freely tradable
shares of the Company’s Common Stock equal to
(i) $2,000,000, divided by (ii) the Market Price (as
defined below) of the Company’s Common Stock on the Put
Notice Date (the “ Subsequent Exchanged Shares
”, and together with the Initial Exchanged Shares, the
“ Exchanged Shares ”). The Holder
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shall have the right to partially
exchange the Remainder Warrant at multiple increments and in the
event that the Holder elects to exchange less than all the
Remainder Warrant on any Put Notice Date, the number of Subsequent
Exchanged Shares to be delivered in connection with any such
exchange shall be adjusted proportionately and remaining portion of
the Remainder Warrant not so exchanged shall remain outstanding and
continue to be subject to future exchange pursuant to this
Section 3 and the Company call right and purchase obligation
pursuant to Section 2 of this Agreement. Any Put Notice
provided by the Holder shall provide for the exchange of not less
than the lesser of (x) 500,000 shares of the Company’s
Common Stock then underlying the Remainder Warrant and (y) all
shares of the Company’s Common Stock then underlying the
Remainder Warrant then outstanding, at any one time. Provided that
the Equity Conditions (as defined below) are satisfied from the
date of the Call Notice until the beginning of the Exchange
Limitation Period, the Holder agrees to exchange an amount of the
Remainder Warrant such that the Company Call Consideration payable
to the Holder pursuant to Section 2(a) hereof shall not exceed
$1,500,000. For purposes hereof, “ Market Price
” shall mean the arithmetic average of the Weighted Average
Price (as defined in the Existing Warrant) for the Company’s
Common Stock on each of the five (5) trading days ending on
the date immediately preceding the Put Notice Date, but in no event
greater than (A) the Weighted Average Price of Common Stock on
the day immediately preceding the Put Notice Date or (B) $0.50
per share. For purposes hereof, “ Equity Conditions
” shall mean (i) all Subsequent Exchanged Shares shall
be eligible for sale without restriction and without the need for
registration under any applicable federal or state securities laws;
(ii) the Common Stock is listed or designated for quotation on
the principal market on which the Company’s Common Stock is
then listed or quoted (the” Principal Market” ),
(iii) the Weighted Average Price of the Common Stock is not
less than $0.15, (iv) the minimum aggregate dollar volume
(i.e. the Weighted Average Price multiplied by the daily volume) of
the Common Stock is not less than $350,000 and (v) the Company
shall not have previously failed to timely deliver any Subsequent
Exchanged Shares.
(b) On or before the
first (1 st ) Business Day following
the date on which the Company has received the Put Notice, the
Company shall transmit by facsimile an acknowledgment of
confirmation of receipt of the Put Notice to the Holder and the
Company’s transfer agent (the “ Transfer Agent
”). On or before the third (3 rd ) Business Day following
the date on which the Company has received the Put Notice (the
“ Share Delivery Date ”), the Company shall
credit such aggregate number of Subsequent Exchanged Shares to
which the Holder is entitled to the Holder’s balance account
with DTC in accordance with the instructions on Schedule A
hereto. If by the third (3 rd ) trading day from the Put
Notice Date the Company shall fail for any reason or for no reason
to issue to the Holder the Subsequent Exchanged Shares by
electronic delivery at the applicable balance account at DTC, and
if on or after such Trading Day the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of such Subsequent
Exchanged Shares that the Holder anticipated receiving from the
Company (a “ Buy-In ”), then the Company shall,
within three (3) Business Days after the Holder’s
request and in the Holder’s discretion, either (i) pay
cash to the Holder in an amount equal to the holder’s total
purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “ Buy-In
Price ”), at which point the Company’s obligation
to deliver the Subsequent Exchanged Shares shall terminate, or
(ii) promptly honor its obligation to deliver to the Holder
such Subsequent Exchanged Shares as provided above and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common
Stock, times (B) the lesser of (i) Closing Bid Price on
the Put Notice Date and (ii) the Closing Bid Price on the
Share Delivery Date.
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4. Closing Deliveries . On
the date hereof, the Company shall deliver to the Holder
(a) the Initial Exchanged Shares by electronic delivery at the
applicable balance account at the Depositary Trust Company (“
DTC ”) in accordance with the instructions set forth
on Schedule A hereto and (b) the Remainder Warrant. The
Holder shall deliver the Existing Warrant to the Company within
three (3) Business Days from of the Closing.
5. Representations and
Warranties .
(a) Mutual Representations and
Warranties . Each party hereto hereby makes the following
representations and warranties to the other party
hereto:
i. It is duly organized and validly
existing, in good standing under the laws of its jurisdiction of
incorporation or organization.
ii. (A) It has full power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby, and (B) the person who has
executed this Agreement on its behalf is duly authorized to do so
and thereby bind the party on whose behalf he or she is purporting
to act.
iii. This Agreement is its valid and
binding agreement, enforceable against it in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors’ rights generally (including, without limitation,
fraudulent conveyance laws) and by general principles of equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance or injunctive relief,
regardless of whatever consideration in a proceeding in equity or
at law.
iv. Neither the execution and
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will violate, result in a breach
of any of the terms or provisions of, constitute a default (or any
event that, with the giving of notice or the passage of time or
both would constitute a default) under, accelerate any obligations
under, or conflict with, (i) its charter, articles or
certificate of incorpor
