U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 AND 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Event Date: January 14, 1999
__________________________
THERMOGENESIS CORP.
(Exact name of Registrant as specified in its charter)
DELAWARE 0--16375 94-3018487
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
3146 GOLD CAMP DRIVE
RANCHO CORDOVA, CA 95670
(916) 858-5100
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
______________________________________________________________________________
Item 5. Other
Financing: On January 14, the Company completed a private financing with
the assistance of Oscar Gruss & Son, Incorporated as placement agent.
Pursuant to the terms of the financing, the Company sold 1,077,540 shares
of Series A Convertible Redeemable Preferred Stock ("Preferred Stock") at a
price of $6.25 per share. Each share of Preferred Stock can be converted
into 5 shares of the Company's common stock, and the Company can force
conversion if the Company's common stock trades above $5.00 per share. In
addition to the conversion provision, the following summarizes key rights
that holders of the Preferred Stock have. All summarized information is
qualified by the Certificate of Designation for the Preferred Stock which
was filed with the Delaware Secretary of State.
VOTING. So long as in excess of 35% of the number of Shares of Series
A Preferred Stock sold pursuant to this Offering remains outstanding, the
holders of the Series A Preferred Stock will be entitled to vote for one
director, as a separate class, and approval by holders of at least a
majority of the Series A Preferred Stock, voting together as a separate
class, is required for certain events including (i) any issuance of a new
series of shares having rights, preferences, or privileges with respect to
liquidation preference, redemption or dividend rights senior or equivalent
to the Series A Preferred Stock, (ii) any payment or declaration of any
dividends rights or any other distribution or redemption of any capital
stock of the Company, (iii) any sale or disposition of all or substantially
all of the Company's property or business or any consolidation or merger
with any entity in which the Company is not the survivor, (iv) an amendment
to the Company's Articles of Incorporation or Bylaw, and (v) any
investments of another business exceeding $1 million in the aggregate.
Unless required by law, the holders of the Series A Preferred Stock will be
entitled to vote on all other matters with class, on an as converted
basis.
DIVIDENDS. Each Series A Preferred Stock is entitled to receive non-
cumulative dividends at the same rate and same time as any dividends
declared on the Company's Common Stock determined on an as converted basis.
LIQUIDATION PREFERENCE. Upon liquidation, dissolution, or winding up
of the Company, the holder of each Series A Preferred Stock shall be
entitled to received a liquidation preference equal to $6.25 per share
which shall increase at the rate of 8% per share, per year, compounded
annually on each anniversary date ("Liquidation Preference Amount") of the
issuance of the Series A Preferred Stock before there are any distributions
to the holders of shares of Common Stock or any other securities ranking
junior to the Series A Preferred Stock. After payment to the holders of
the Series A Preferred Stock of the Liquidation Preference Amount, the
holders of the Series A Preferred Stock shall not be entitled to any
further distribution. If upon any liquidation, dissolution or winding up,
the assets to distributed among the holders of the Series A Preferred Stock
shall be insufficient to permit the payment in full to the holders of all
Series A Preferred Stock, then the amount to be distributed shall be
distributed ratably to the holders of Series A Preferred Stock and any
other holders of Preference Shares of equal rank.
REDEMPTION. After five years, each holder of the Series A Preferred
Stock will have the right to require the Company to repurchase from such
holder each Series A Preferred Stock for the Liquidation Preference
Amount.
The Company received net proceeds of approximately $6,270,985 after
deducting sales agent commissions and expenses of the offering of
approximately $463,640. The Company will use the proceeds to finance the
manufacturing of the CryoSeal{TM} and BioArchive{TM} Systems and
disposables, other clinical studies, obtaining regulatory approvals, and
for general working capital.
Item 7(c). Exhibits
EXHIBIT NO. EXHIBIT
10 Stock Purchase Agreement [Form]
3 Certificate of Designation of Series A Convertible Preferred Stock
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THERMOGENESIS CORP.
Dated: January 25, 1999 By: Philip H. Coelho, Chairman & CEO
(Principal Executive Officer)
Dated: January 25, 1999 By: Renee M. Ruecker, V.P. Finance
(Principal Financial Officer)
THERMOGENESIS CORP.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the
__ day of December, 1998, by and among THERMOGENESIS CORP., a Delaware
corporation (the "Company") and the persons listed on the attached
Exhibit A (the "Purchasers").
BACKGROUND
The Company wishes to sell to the Purchasers, and the Purchasers
wish to purchase, up to 1,077,540 shares of the Company's Series A
Convertible Preferred Stock.
AGREEMENT
1 SALE AND PURCHASE OF PURCHASED SHARES: CLOSING
1.1 AGREEMENT TO SELL AND PURCHASE PURCHASED SHARES; DESIGNATION
OF PREFERRED STOCK.
(a) The Company agrees to sell to the Purchasers and each
Purchaser agrees to purchase from the Company, subject to the terms and
conditions hereof and in reliance upon the representations and
warranties contained herein, on the Closing Date (as hereinafter
defined) the number of shares of the Company's Series A Convertible
Preferred Stock, par value $.001per share, (the "Preferred Stock") set
forth opposite each Purchaser's name on Exhibit A hereto. The purchase
price for such shares shall be $6.25 per share (the "Purchase Price")
which shall be payable on the Closing Date by certified or bank
cashier's check or by wire transfer to an account designated by the
placement agent, Oscar Gruss & Son.
(b) Each share of Preferred Stock shall be convertible, at the
option of any Purchaser, into five (5) shares of Common Stock of the
Company, par value $.001 per share (the "Common Stock"), subject to
adjustment as provided herein or in the certificate of designation (the
"Certificate of Designation") filed by the Company with the Secretary
of State of the State of Delaware. The Preferred Stock shall be
entitled to such other powers, preferences and rights as are provided
in the Certificate of Designation, a copy of which is attached as
Exhibit B.
(c) The shares of Common Stock issued or issuable to the
Purchasers upon the conversion of the Preferred Shares are sometimes
referred to as the Conversion Shares. The shares of Preferred Stock
issued pursuant to Section 1.1(a) and the Conversion Shares shall be
collectively referred to in this Agreement as the Purchased Shares.
<PAGE> 1
1.2 CLOSING. The closing of the delivery of and payment for the
Purchased Shares purchased pursuant to Section 1.1 (a) shall be held
simultaneously with the execution and delivery of this Agreement, or
such other date and at such place as is mutually agreed upon by the
Company and the Purchasers (the "Closing Date"). On the Closing Date,
the Company will deliver to the Purchasers, against payment of the
Purchase Price therefore, certificates dated as of the Closing Date and
registered in the name of the respective Purchasers for the number of
shares of Preferred Stock set forth opposite the Purchaser's name on
Exhibit A hereto. The closing is subject to the sale of the minimum
offering as provided in the Private Placement Memorandum.
1.3 ADDITIONAL EQUITY CAPITAL: RIGHT TO PURCHASE.
(a) Except for (a) shares of the Company's capital stock (the
"Stock") issued as compensation or in conjunction with any existing
employee benefit plan or program; (ii) shares of Stock issued in
connection with the conversion of currently outstanding debentures or
exercise of currently issued options or warrants; or (iii) shares of
Stock issued as a result of a stock split, stock dividend or
reclassification of Common Stock distributable on a pro rata basis to
all holders of Common Stock, in the event that the Company after the
date of this Agreement issues any New Issue (as defined below), each
Purchaser, for so long as such Purchaser holds any Preferred Shares,
shall have the pre-emptive right to purchase a percentage of such New
Issue equal to the percentage of the Common Stock issued to or issuable
to such Purchaser hereunder to the then total issued and outstanding
Common Stock and Preferred Stock (on a fully-diluted basis, but prior
to giving effect to the New Issue). The purpose of the foregoing pre-
emptive right is so that each Purchaser shall have the option of
maintaining its proportionate share of the equity of the Company on a
fully-diluted basis. The Purchaser may exercise this pre-emptive right
at any time within ten days after it receives written notice from the
Company of the contemplated offer, sale or issuance of the New Issue,
by delivery of a written notice to the Company within such ten (10) day
period stating the number of shares of the New Issue it elects to so
purchase at the same price offered to third party purchasers of the New
Issue.
(b) "New Issue" means (i) any Common Stock, preferred stock or
other security of the Company; (ii) any security convertible, with or
without consideration, into any Common Stock, preferred stock or other
security (including any option to purchase such a convertible
security); (iii) any security carrying any warrant or right to
subscribe to or purchase any Common Stock, preferred stock or other
security; or (iv) any such warrant or right.
<PAGE> 2
(c) Not less than twenty (20) days prior to the issuance of any
New Issue, the Company shall give Purchaser written notice of such
intention, describing the type of New Issue to be issued, the price
thereof and the general terms upon which the Company proposes to effect
such issuance.
2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Purchaser as of the date hereof,
and after giving effect to the transactions contemplated by this
Agreement, as follows:
2.1 ORGANIZATION AND QUALIFICATION. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware with full power and authority
to own, lease and operate its properties and to conduct its business as
described in its most annual report on Form 10-K for the fiscal year
ended June 30, 1998 (the "1998 10-K") and to enter into and perform its
obligations under this Agreement and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property, the conduct of
business, or otherwise except where the failure to so quality would not
have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company.
2.2 SUBSIDIARIES. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation,
association or other business entity except as set forth on Schedule
2.2. The Company is not a participant in any joint venture,
partnership or similar arrangement.
2.3 NO MATERIAL ADVERSE CHANGE. Except (i) as disclosed in the
Company's Quarterly Report on form 10-Q for the period ended September
30, 1998, and (ii) for a continuing decline in the Corporation's cash
assets since September 30, 1998, since June 30, 1998, (A) there has
been no material adverse change in the condition, financial or
otherwise, or in the earnings or business affairs of the Company,
whether or not arising in the ordinary course of business; (B) there
have been no transactions entered into by the Company other than those
in the ordinary course of business, which are material with respect to
the Company; (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its Stock; and
(D) the Company has not acquired any shares of any class of its Stock.
This Agreement and the Private Placement Memorandum and any
exhibits thereto, furnished to the Purchasers by or on behalf of the
Company in connection with the transactions contemplated hereby do not
contain any untrue statement of a material fact and do not omit to
state a material fact necessary in order to make the statements
contained herein or therein not misleading.
<PAGE> 3
2.4 AUTHORIZATION; ENFORCEMENT. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein and compliance by the Company with its obligations
hereunder (including, without limitation, the issuance of the Preferred
Shares and the issuance and reservation for issuance of the Conversion
Shares have been duly authorized by all necessary corporate action and
will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company is a party or by which it may be bound, or to which
any of the property or assets of the Company is subject, nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any applicable law,
administrative regulation or administrative or court decree. The
Certificate of Designation has been duly filed by the Company with the
Secretary of State of Delaware and the Company has all requisite
corporate power to file and perform its obligations thereunder. Upon
filing, the Certificate of Designation will constitute a legal, valid
and binding obligation of the Company, enforeceable against the Company
in accordance with its terms.
2.5 CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of (i) 50,000,000 shares of Common Stock
of which 18,925,669 shares are issued and outstanding; 5,233,867 shares
are reserved for issuance pursuant to the Company's stock option plans
and for issuance pursuant to securities (other than the Preferred
Shares) exercisable for, or convertible into or exchangeable for shares
of Common Stock. The Company agrees to reserve for issuance that
number of shares of Common Stock equal to one and one half (1 1/2)
times the number of shares of Common Stock then issuable upon
conversion of the outstanding Preferred Shares (subject to adjustment
pursuant hereto or to the Certificate of Designation; and (ii) after
giving effect to the filing of the Certificate of Designation,
2,000,000 shares of Preferred Stock of which 1,200,000 have been
designated as Series A Convertible Preferred Stock, no shares of which
are currently issued and outstanding. All of such outstanding shares
of Stock are, or upon issuance will be, duly authorized, validly
issued, fully paid and nonassessable. Except as disclosed in the 1998
10-K, no shares of the Stock of the Company are subject to preemptive
rights or any other similar rights of the Shareholders of the Company
or any liens or encumbrances imposed through the actions or failure to
act of the Company. Except as disclosed in Schedule 2.5, as of the
effective date of this Agreement, (i) there are no outstanding options,
warrants, rights to subscribe for, puts, calls, rights of first
refusal, agreements, understandings, claims or other commitments or
rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for shares of Stock of the Company, or
arrangements by which the Company is or may become bound to issue
additional shares of Stock of the Company, (ii) there are no agreements
or arrangements under which the Company is obligated to register the
sale of any of its securities under the Securities Act of 1933, as
amended (the "Securities Act") (except as provided herein or in the
Certificate of Designation), and (iii) except as disclosed on Schedule
2.5, there are no antidilution or price adjustment provisions contained
in any security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance of
the Preferred Shares or the Conversion Shares. The Company has
furnished to the Purchaser true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof, the
Company's By-laws as in effect on the date hereof, and the terms of all
securities convertible into or exercisable for Stock of the Company and
the rights of the holders thereof in respect thereto.
<PAGE> 4
2.6 DILUTION. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock upon the issuance of
the Conversion Shares. The Company further acknowledges that its
obligation to issue Conversion Shares in accordance with this Agreement
and the Certificate of Designation is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the
ownership interests of other Shareholders of the Company.
2.7 SERIES OF PREFERRED STOCK. The terms, designations, powers,
preferences and rights, and the qualifications, limitations and
restrictions of the Preferred Shares are as stated in the Certificate
of Designation and any action taken by the Board of Directors in
connection therewith is duly authorized by the Company's Certificate of
Incorporation and all necessary shareholder approvals have been duly
obtained.
2.8 FORM D; BLUE SKY LAWS. The Company has filed, or will file
on a timely basis, a Form D with respect to Preferred Shares as
required under Regulation D. The Company has taken such action as is
necessary to qualify the Purchased Shares for sale to the Purchaser on
the Closing Date under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such
qualification).
2.9 LITIGATION. Except as disclosed in Schedule 2.9, there is no
action, suit, claim, proceeding, inquiry or investigation before or by
any court, public board, government agency, stock exchange or similar
self-regulatory organization or body pending or, to the knowledge of
the Company, threatened against or affecting the Company, or its
officers or directors in their capacity as such that could have a
material adverse effect on the Company.
2.10 FURTHER AUTHORIZATION. No further authorization, approval or
consent of any court or governmental authority or agency, stock
exchange or self-regulatory agency, (including, without limitation, the
Nasdaq SmallCap Market) is necessary in connection with the offering,
issuance or sale of the Preferred Stock hereunder.
2.11 SEC DOCUMENTS; FINANCIAL STATEMENTS. Within the past twelve
(12) months, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing filed prior to
the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to herein as the "SEC
Documents"). The Company has delivered or made available to Purchaser
true and complete copies of the SEC Documents. As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC, 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. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto. The financial statements of the Company, together with
related notes and schedules, included in the SEC Documents present
fairly the financial position of the Company as at the dates indicated
and the results of its operations for the periods specified and such
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, except as
stated therein and all adjustments necessary for a fair presentation of
results for such periods have been made. All filings required to be
filed by the Company with the SEelve months have been filed in a timely
manner.
<PAGE> 5
2.12 INVESTMENT COMPANY. The Company is not, and does not intend
to conduct its business in a manner in which it would become, an
"investment company" as defined in Section 3(a) of the Investment
Company Act of 1940, as amended.
2.13 FORM S-3. The Company satisfies the registrant and
transaction requirements contained in the instructions for use of the
Form S-3 in effect as of the date hereof in order to use the Form S-3
to register for resale the Purchased Shares.
2.14 USE OF PROCEEDS. The net proceeds to the Company of the
transactions contemplated hereby will be used to fund clinical trials
through an independent clinical research group to support claims for
the Company's CryoSeal Autologous Fibrin Glue System and to support
claims for the Company's CryoFactor Autologous Platelet Derived Growth
Factor System as applied to wound healing and for general corporate
purposes, including additional working capital and for the repayment of
loans made to the Company by certain members of its Board of Directors
in the aggregate principal amount of $450,000.
2.15 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates nor any person acting on their behalf, has directly or
indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would require
registration under the Securities Act for the issuance of the Purchased
Shares to the Purchaser.
2.16 NO GENERAL SOLICITATION. The Company has not conducted any
general solicitation or general advertisement in connection with the
transactions contemplated in this Agreement.
<PAGE> 6
2.17 EXEMPTION FROM REGISTRATION. Based in part on the
representations and warranties made by the Purchasers herein, the sale
of the Preferred Stock by the Company to the Purchasers is exempt from
the registration provisions of the Securities Act.
3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Each Purchaser
represents and warrants to the Company, as to itself only, as
follows:
3.1 ORGANIZATION
(a) If the Purchaser is a corporation, the Purchaser is a
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction where it is organized, with
corporate power and authority to perform its obligations under this
Agreement;
(b) If the Purchaser is a partnership or limited liability
company, the Purchaser is duly or organized, validly existing and in
good standing under the laws of the jurisdiction where it is organized,
with full power and authority to perform its obligations under this
Agreement;
(c) If the Purchaser is an individual, the Purchaser has the
legal capacity to enter into this Agreement;
(d) This agreement has been duly authorized, executed and
delivered by Purchaser and constitutes a valid and binding agreement of
the Purchaser enforceable in accordance with its terms.
3.2 INVESTMENT REPRESENTATIONS.
(a) Each Purchaser is purchasing the Purchased Shares for its
own account for investment and not with a view to or for sale in
connection with any unregistered distribution (as that term is defined
under the Securities Act or the rules and regulations thereunder, the
"Securities Act Regulations") thereof;
(b) The Purchaser is experienced in evaluating companies such
as the Company, has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
its investment, and has the ability to bear the economic risks of such
investment for an indefinite period.
(c) The Purchaser represents that, prior to the closing of the
transactions contemplated hereby, the Purchaser is not an "affiliate"
(as defined in Rule 144 under the Securities Act) of the Company or
acting on behalf of the Company, and the Purchaser is an "accredited
investor" within the meaning of subparagraph (a) of Rule 501 under the
Securities Act or, if the Preferred Stock are to be purchased for one
or more accounts ("investor accounts") for which it is acting as
fiduciary or agent (except if it is a bank as defined in Section
3(a)(2) of the Securities Act, or a savings and loan association or
other institution as described in Section 3(a)(5)(A) of the Securities
Act, whether acting in its individual or in a fiduciary capacity), each
such investor account is an Accredited Investor on a like basis; the
Purchaser agrees to furnish any additional information requested to
assure compliance with applicable Federal and state securities laws in
connection with the purchase and sale of the Preferred Stock;
<PAGE> 7
(d) Each Purchaser understands that the Preferred Stock may not
be sold, transferred or otherwise disposed of without registration
under the Securities Act or an exemption therefrom and that in the
absence of an effective registration statement covering the Preferred
Stock or an available exemption from registration under the Securities
Act, the Preferred Stock must be held indefinitely. Each Purchaser
understands that the benefits of Rule 144 promulgated under the
Securities Act may not be presently available to each Purchaser;
(e) The Purchaser further represents that the Purchaser has
received and reviewed a copy of the Private Placement Memorandum;
(f) The Purchaser is not (i) acquiring the Preferred Stock with
"plan assets" of an employee benefit plan or other plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") of Section 4975 of the Internal Revenue Code of 1986
(the "Code") (each a "Plan"), an entity whose underlying assets include
"plan assets" by reason of any Plan's investment in the entity, or (ii)
is acquiring and holding the Preferred Stock in a transaction that is
not otherwise prohibited by either ERISA or the Code;
(g) The Purchaser understands and acknowledges that the Company
and others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations, warranties and agreements on behalf
of each such account;
(h) The Purchaser's true and correct federal tax identification
or social security number, as applicable, is indicated below on the
signature page below; and
(i) NO ADDITIONAL REPRESENTATION. In entering into this
Agreement, the Purchaser acknowledges that the Company has not made any
representations or warranties of any kind whatsoever, except as
expressly provided in this Agreement and in the Private Placement
Memorandum and the exhibits thereto. The Purchaser acknowledges that
it has relied solely upon its own investigation and analysis in
determining to acquire the Preferred Stock, and acknowledges that
neither the Company nor any of its directors, officers, employees,
affiliates, agents or representatives makes any representation or
warranty, either express or implied, as to the Company.
<PAGE> 8
3.3 STATUS OF INVESTOR.
(a) Each Purchaser is an Accredited Investor as that term is
defined in Regulation D (17 C.F.R. 230.501 - 230.506).
(b) Each Purchaser was not organized for the specific purpose
of acquiring the Purchased Shares.
(c) The address set forth on Schedule 1.1 opposite each
Purchaser's name is the Purchaser's principal place of business or home
address unless otherwise disclosed to the Company in writing.
3.4 RESTRICTIONS. Each Purchaser is aware that the Purchased
Shares delivered hereunder have not been registered under the
Securities Act or under applicable state securities laws, and that the
Company in issuing the Purchased Shares will be relying upon, among
other things, the Purchaser's representations and warranties contained
in this Section in concluding that such issuance is a "private
offering" and does not require compliance with the registration
provisions of the Securities Act and applicable state securities laws.
Such Purchaser will not sell, transfer or otherwise dispose of the
Purchased Shares except in compliance with the Securities Act and
applicable state securities laws. In addition, such Purchaser is aware
that the Purchased Shares shall contain the following legend:
NEITHER THE SHARES OF PREFERRED STOCK EVIDENCED BY THIS
CERTIFICATE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THE PREFERRED STOCK HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.
NEITHER THE SHARES OF PREFERRED STOCK EVIDENCED HEREBY NOR ANY
INTEREST OR PARTICIPATION THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION
REQUIREMENTS;
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER SELL OR OTHERWISE TRANSFER THE PREFERRED STOCK EVIDENCES
HEREBY PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS CERTIFICATE
(OR ANY PREDECESSOR OF THIS CERTIFICATE) ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, OR (C) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. SUCH HOLDER
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.
<PAGE> 9
4 REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements
contained in this Agreement, or contained in certificates of
officers of the Company or any Purchaser submitted pursuant
hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any
Purchaser or any controlling person, or by or on behalf of the
Company or any controlling person, and shall survive delivery of
the Purchased Shares to each such Purchaser.
5 COVENANTS OF THE COMPANY. The Company hereby covenants and agrees
as follows:
5.1 REPORTING STATUS; ELIGIBILITY TO USE FORM S-3. The Company's
Common Stock is registered under Section 12 (g) of the Exchange Act.
So long as Purchaser owns any of the Purchased Shares, the Company
shall timely file all reports required to be filed with the SEC
pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act
even if the rules and regulations thereunder would permit such
termination. The Company currently meets, and will take all necessary
action to continue to meet, the "registrant eligibility" requirements
set forth in the general instructions to Form S-3.
5.2 RESERVATION OF SHARES. The Company shall at all times have
authorized and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the full conversion of
the outstanding Preferred Shares and issuance of the Conversion Shares
in connection therewith. The Company shall use its best efforts at all
times to maintain the number of shares of Common Stock so reserved for
issuance at no less than one and one half (1 1/2) times the number that
is then actually issuable upon full conversion of the Preferred Shares.
If at any time the number of shares of Common Stock authorized and
reserved for issuance is below the number of Conversion Shares issued
and issuable upon conversion of the Preferred Shares, the Company will
promptly take all corporate action necessary to authorize and reserve a
sufficient number of shares, including, without limitation, calling a
special meeting of shareholders to authorize additional shares to meet
the Company's obligations under this Section, in the case of an
insufficient number of authorized shares, and using its best efforts to
obtain shareholder approval of an increase in such authorized number of
shares.
<PAGE> 10
5.3 LISTING. On or before the Closing Date the Company shall
have filed for the listing of the Conversion Shares upon each national
securities exchange or automated quotation system upon which shares of
Common Stock shall be so listed and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all
Common Stock issuable upon conversion of the Preferred Shares. The
Company will maintain the listing and trading of its Common Stock on
Nasdaq, the Nasdaq SmallCap Market ("Nasdaq SmallCap") or the New York
Stock Exchange ("NYSE"), and will comply in all respects with the
Company's reporting, filing and other obligations under the By-laws or
rules of the National Association of Securities Dealers ("NASD") and
such exchanges, as applicable. The Company shall promptly provide to
Purchasers copies of any notices it receives from Nasdaq and any other
exchanges or quotation systems on which the Common Stock is then listed
regarding the continued eligibility of the Common Stock for listing on
such exchanges and quotation systems.
5.4 CORPORATE EXISTENCE. So long as any Purchased Shares remain
outstanding, the Company shall take all reasonable steps necessary to
maintain its corporate existence and shall not sell all or
substantially all of the Company's assets, except (subject to the
voting rights of the holders of the Preferred Shares set forth in the
Certificate of Designation) in the event of a merger or consolidation
or sale of all or substantially all of the Company's assets where the
surviving or successor entity in such transaction (i) assumes the
Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith; and (ii) the
consideration to be received for such transaction is equity securities
in a publicly traded corporation whose Common Stock is listed for
trading on Nasdaq, Nasdaq SmallCap or NYSE.
6 REGISTRATION RIGHTS.
6.1 FILING AND EFFECTIVENESS. The Company hereby agrees to file
with the Securities and Exchange Commission (the "SEC"), as soon as
practicable, but in no event later than forty-five (45) days following
the Closing Date, a registration statement on Form S-3 (the
"Registration Statement") registering the Conversion Shares. The
Company will furnish the Purchaser with copies of the Registration
Statement prior to the filing of the same. The Company will use its
best efforts to have such Registration Statement declared effective by
the SEC as soon as is practicable but in no event later than one
hundred-twenty (120) days following the Closing Date. Since it is the
intent of the parties that the Purchasers receive freely tradable
securities, in the event the Company does not file the Registration
Statement within forty-five (45) days or if the Registration Statement
is not declared effective by the SEC within one hundred-twenty (120)
days of the Closing Date, the aggregate number of Conversion Shares
issuable upon the conversion of the Preferred Shares will be
immediately increased by 5% and will thereafter be increased by an
additional 5% per month for each additional thirty (30) days beyond the
forty-five (45) day period or the one hundred-twenty (120) day period,
as the case may be, in which the Company is not in compliance with the
provisions of this Section and the Company will take all required
action, necessary for the solicitation of such shareholder approval as
shall be necessary for the issuance of the additional shares.
<PAGE> 11
6.2 ADDITIONAL OBLIGATIONS. The Company hereby agrees to:
(a) Supply to each of the Purchasers one true copy of the
Registration Statement (and any supplement or amendment thereto) and
such number of the preliminary, final and any other prospectus and
amendments thereto, prepared in conformity with the requirements of the
Securities Act Regulations as each Purchaser may request in order to
facilitate the public sale of shares.
(b) Notify each of the Purchasers immediately, and conform the
notice in writing, (i) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective
amendment), (ii) of the receipt of any comments from the SEC, (iii) of
any request by the SEC for any amendment to the Registration Statement
or any amendment or supplement to any prospectus relating thereto or
for additional information, (iv) of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose and (v) immediately
notify each of the Purchasers at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or incomplete in the light of the circumstances then
existing. The Company will use its best efforts to prevent the
issuance of any stop order and, if any stop order is issued, to obtain
the lifting thereof at the earliest possible moment.
(c) Use its best efforts to cause the Registration Statement to
remain effective until the earlier of (a) the third anniversary of the
Closing Date; (b) sixty (60) days after the Company gives written
notice to the Purchaser that all of the Purchased Shares may be resold
pursuant to Rule 144 of the Securities Act Regulations ("Rule 144")
within any three (3) month period without compliance with the
registration requirements of the Securities Act and without other
restrictions other than as provided in Rule 144.
(d) Give the Purchasers notice of its intention to file or
prepare any amendment to the Registration Statements (including any
post-effective amendment) or any amendment or supplement to the final
Prospectus (including any revised prospectus which the Company proposes
for use by the Purchasers in connection with the offering of the
Purchased Shares which differs from the prospectus on file at the SEC
at the time the Registration Statement becomes effective, whether or
not such revised prospectus is required to be filed pursuant to Rule
424(b) under the Securities Act) and furnish each of the Purchasers
with copies of any such amendment or supplement a reasonable amount of
time prior to such proposed filing or use, as the case may be. The
term "Prospectus" shall refer to the final prospectus and any revised
prospectus provided to the Purchasers from time to time thereafter and
all material incorporated by reference therein.
<PAGE> 12
(e) If any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at
the time it is delivered to a Purchaser, amend or supplement the
Prospectus so that, as so amended or supplemented, the Prospectus as
soon as possible will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the
time it is delivered to a Purchaser, not misleading, and furnish to
each of the Purchasers such copies of such amendment or supplement as
such Purchaser shall request.
(f) In the event of an underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering.
(g) Cause its Common Stock to be listed on each securities
exchange on which the Common Stock is listed.
(h) In the event that the Company files a Registration
Statement on a form, other than Form S-3, or any substitute therefor,
furnish to each of the Purchasers at the effective date of such
Registration Statement upon request a signed counterpart, addressed to
Purchaser, of
(i) an opinion of counsel for the Company, covering such
matters as are typically addressed in opinions rendered by Company
counsel to underwriters of public securities of the Company, dated the
effective date of the Registration Statement and in form reasonably
acceptable to the Company and each of the Purchasers, and
(ii) "comfort" letters signed by the Company's independent
public accountants who have examined and reported on the Company's
financial statements included in the registration statement, to the
extent permitted by the standards of the American Institute of
Certified Public Accountants,
In the case of (i) and (ii) covering substantially the same
matters with respect to such Registration Statement (and the prospectus
included therein) and (in the case of the accountants' "comfort"
letter) with respect to events subsequent to the date of the financial
statements, as are customarily covered in opinions of issuer's counsel
and in accountants' `'comfort" letters delivered to the underwriters in
underwritten public offerings of securities.
<PAGE> 13
(i) Make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with
the first month after the Effective Date, which earnings statement
shall satisfy the provisions of Section 11 (a) of the Securities Act;
and
(j) In connection with the preparation and filing of the
Registration Statement, give the underwriters, if any, and their
respective counsel and accountants, the opportunity to participate in
the preparation of such Registration Statement, each prospectus
included therein or filed with the SEC, and each amendment thereof or
supplement thereto, and will give such persons such access to the
Company's books and records and such opportunities to discuss the
business of the Company with its officers, its counsel and the
independent public accountants who have certified the Company financial
statements, as shall be necessary, in the opinion of Purchasers or such
underwriters or their respective counsel, in order to conduct a
reasonable and diligent investigation within the meaning of the
Securities Act. Without limiting the foregoing, each Registration
Statement, prospectus, amendment, supplement or any other document
filed with respect to a registration shall be subject to review and
approval by the Purchasers and their counsel.
(k) The Company acknowledges that the acquisition of the
Purchased Shares hereunder may cause one or more Purchasers to be
deemed to be an "affiliate" under Rule 144 of the Securities Act
Regulations and may limit such Purchaser's ability to sell shares of
the Company not covered by an effective registration statement.
Therefore, the Company agrees to maintain the effectiveness of any
Registration Statement on Form S-3 covering shares of Common Stock
acquired by a Purchaser other than in connection herewith for so long
as the Registration Statement to be filed hereunder remains effective.
6.3 EXPENSE OF REGISTRATION. All expenses, other than
underwriting discounts and selling commissions, incurred in effecting
any registration pursuant to this Section 6, including, without
limitation, all costs of preparation and registration, filing fees,
printing expenses, expenses of compliance with Blue Sky laws, fees and
disbursements of counsel for the Company and reasonable fees and
disbursements of counsel for the Purchasers shall be borne by the
Company.
6.4 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Purchaser, its officers and directors and each person, if any, who
controls the Purchaser within the meaning of Section 15 of the
Securities Act against any and all loss, liability, claim, damage and
expense whatsoever arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the information deemed
to be part of the Registration Statement pursuant to Rule 430A(b) of
the Securities Act Regulations, if applicable, or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written
information furnished to the Company by the Purchaser expressly for use
in the Registration Statement (or any amendment or supplement thereto).
<PAGE> 14
(b) Each Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company, its directors, each of its
officers who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity
with written information to the Company by such Purchaser for use in
the Registration Statement (or any amendment thereto) or such final
Prospectus (or any amendment or supplement thereto); PROVIDED HOWEVER,
that the obligations of each such Purchaser hereunder shall be limited
to an amount not to exceed the net proceeds received by the Purchaser
in connection with the sale of shares under the Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability which it may have
otherwise than on account of this indemnity agreement. In case such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and, after notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof
and so long as the indemnifying party continues to defend the matter,
the indemnifying party shall not be liable under this indemnity for any
legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof, provided however, that the
indemnified party shall have the right to employ separate counsel at
its expense in any such action and participate in the defense thereof.
No indemnifying party shall be liable for any settlement entered into
without its consent. An indemnifying party who elects not to assume
the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by the
indemnifying party with respect to the claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist
between the indemnified party and any other indemnified party with
respect to the claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of no more than one additional
counsel for the indemnified parties per venue.
<PAGE> 15
6.5 CONTRIBUTION. If the indemnification provided for in Section
6 is unavailable to an indemnified party in respect of any losses,
liabilities, claims, damages, or expenses referred to therein, then
each indemnifying party thereunder shall contribute to the amount paid
or payable by such indemnified party as a result of such losses,
liabilities, claims, damages or expenses in such proportion as is
appropriate to reflect the relative fault of the Company and each
Purchaser in connection with the statements or omissions that resulted
in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations; PROVIDED, HOWEVER, that no
Purchaser shall be required to contribute an amount not to exceed the
net proceeds to it from the sale of shares by it pursuant to the
Registration Statement. The relative fault of the Company and each
Purchaser shall be determined by reference to, among other things,
whether the untrue or alleged statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or by each Purchasers and the
parties' relative intent and knowledge.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section were determined by pro rata
allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each
director of each Purchaser, each officer of any Purchaser and each
person, if any, who controls any Purchaser within the meaning of
Section 15 of the Securities Act shall have the same rights to
contributions as such Purchaser, and each director of the Company,
eachtration Statements, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act shall
have the same rights to contribution as the Company.
7 TRANSFER AGENT INSTRUCTIONS.
(a) The Company shall issue irrevocable instructions to its
transfer agent (the "Irrevocable Transfer Agent Instructions") to
issue certificates, registered in the name of each Purchaser or its
nominee, for the Conversion Shares in such amounts as specified from
time to time by any Purchaser to the Company within four days of the
date a conversion notice together with one or more certificates
representing the Preferred Stock being converted ("Conversion Package")
are received by the Company or the Transfer Agent pursuant to the terms
of the Certificate of Designation. Prior to registration of the
Conversion Share under the Securities Act, all such certificates shall
bear the restrictive legend specified in Section 3 of this Agreement.
The Company warrants that no instruction other than the Irrevocable
Transfer Agent Instructions and stop transfer instructions to give
effect to Section 3.3 hereof (in the case of the Conversion Shares,
prior to registration of the Conversion Shares under the Securities
Act), will be given by the Company to its transfer agent and that the
Conversion Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this
Agreement except for the prospectus delivery requirements under the
Securities Act and the Securities Act Regulations. If during such time
as the Registration Statement is effective or the Purchaser provides
the Company with an opinion of counsel, reasonably satisfactory to the
Company in form, substance and scope, that registration of a resale by
such Purchaser of any of the Securities is not required under the
Securities Act (whether pursuant to Rule 144 or otherwise), the Company
shall permit the transfer, and, in the case of the Conversion Shares,
immediately instruct its transfer agent to issue one or more
certificates (without "stop transfer orders" or restrictive legends, if
appropriate) in such name and in such denominations as specified by the
Purchaser. The Company acknowledges that a breaobligations hereunder
will cause irreparable harm to the Purchasers, by vitiating the intent
and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach or threatened
breach by the Company of the provisions of this Section will be
inadequate and agrees that the Purchasers shall be entitled, in
addition to all other available remedies, to an injunction restraining
any breach and requiring immediate transfer, without the necessity of
showing economic loss and without any bond or other security being
required.
<PAGE> 16
Without limiting the foregoing, in the event the Company does not
deliver the foregoing certificates within four (4) days of the date the
Conversion Package is delivered, the aggregate number of shares of
Common Stock issuable upon the conversion of such Preferred Shares will
immediately be increased by 5% and will thereafter be increased by an
additional 5% per month for each additional month in which the Company
has failed to deliver such certificates.
8 ADDITIONAL REMEDY. In addition to any other remedy available to
the Purchasers, in the event of any breach by the Company of any
representation, warranty or covenant made by the Company in this
Agreement or in any other document executed or delivered in
connection herewith, any Purchaser may, at its option, redeem all
or any portion of the Preferred Shares or Common Stock received
upon conversion of the Preferred Shares held by such Purchaser at
a redemption price of $6.25 per share, plus interest at a rate of
8% per annum accruing from the Closing Date compounded daily.
9 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when
received. Notices to the Purchaser shall be directed to their
respective addresses set forth on Exhibit A and notices to the
Company shall be directed to it at Thermogenesis Corp., 3146 Gold
Camp Drive, Rancho Cordova, California 95670, attention: David
Adams, Esq.
10 PARTIES. This Agreement shall inure to the benefit of and be
binding upon each Purchaser and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or
corporation, other than each Purchaser and the Company and their
respective successors and the controlling persons and officers and
directors and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this
Agreement or any provision herein or therein contained. This
Agreement and all conditions and provisions hereof and thereof are
intended to be for the sole and exclusive benefit of each
Purchaser and the Company and their respective successors, and
said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of the Purchased Shares
from the Purchasers shall be deemed to be a successor by reason
merely of such purchase.
<PAGE> 17
11 GOVERNING LAW AND TIME: AMENDMENTS. This Agreement shall be
governed by and construed in accordance with the laws of the State
of California applicable to agreements made and to be performed in
said State. No amendment to this Agreement shall be enforceable
unless in writing and signed by the Company and the Purchaser.
12 SEVERABILITY. The provisions of this Agreement are severable and
if any provision hereof shall be held null, void, invalid,
unenforceable or contrary to law, no other provisions of this
Agreement shall be thereby affected but on the contrary shall
remain in full force and effect, and all parties hereto shall
remain bound under all such other provisions hereof.
13 HEADINGS. The section and subsection headings in this Agreement
are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
14 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed the Agreement as
of the __ day of December, 1998.
THERMOGENESIS CORP.
By:___________________________
Name: James H. Godsey, PhD
Title: President & C.O.O.
<PAGE> 18
CERTIFICATE OF DESIGNATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
THERMOGENESIS CORP.
Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware
THERMOGENESIS CORP., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in its Certificate of
Incorporation and in accordance with the provisions of Section 151(g) of
the General Corporation Law of the State of Delaware, its Board of
Directors (the "Board of Directors") has adopted the following resolution
creating a series of its Preferred Stock, $.001 par value, designating a
segment thereof as Series A Convertible Preferred Stock;
WHEREAS, the Certificate of Incorporation of the Corporation presently
authorizes the issuance of 2,000,000 shares of Preferred Stock, $.001 par
value, in one or more series upon terms and conditions that are to be
designated by the Board of Directors;
WHEREAS, in order to accommodate a business purpose deemed proper by
the Board of Directors, i.e., to facilitate a private placement of
securities, the Board of Directors does hereby seek to provide for the
designation of a segment of the Company's Preferred Stock as "Series A
Convertible Preferred Stock";
WHEREAS, the Board of Directors desires, pursuant to the authority
granted, to fix rights, preferences, privileges and restrictions relating
to such series, and the number of shares constituting the designation of
such series as provided in this Certificate of Designation.
NOW THEREFORE, be it:
RESOLVED, that a series of the class of authorized Preferred Stock,
$.001 par value, of the Corporation hereinafter designated "Series A
Convertible Preferred Stock," is hereby created, and that the designation
and amount thereof and the voting powers, preferences and relative
participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:
<PAGE> 1
SECTION 1. DESIGNATION AND AMOUNT.
The shares of such series shall be designated as Series A Convertible
Preferred Stock, par value $.001 per share (the "Series A Convertible
Preferred Stock") and the initial number of shares constituting such series
shall be 1,200,000.
SECTION 2. DIVIDEND RIGHTS.
The holders of shares of Series A Convertible Preferred Stock shall be
entitled to receive out of any funds legally available noncumulative
dividends at the same rate and at the same time as any dividends declared
on the Corporation's Common Stock, when, as and if declared by the Board of
Directors; provided that, for the purposes of this Section 2 only, the
holders of the Series A Convertible Preferred Stock shall be deemed to own
the number of shares of Common Stock into which such shares of Series A
Convertible Preferred Stock are convertible at the time such dividend is
declared.
SECTION 3. VOTING RIGHTS.
(a) GENERAL. Except as otherwise required by law or expressly
provided in this Section 3, the holders of Series A Convertible Preferred
Stock shall be entitled to notice of any shareholders' meeting and to vote
upon any matter submitted to shareholders for a vote, at any time on the
following basis:
(i) Each holder of Series A Convertible Preferred Stock shall be
entitled for each share of Series A Convertible Preferred Stock held by
such holder to the number of votes equal to the highest number of full
shares of Common Stock to which each share of Series A Convertible
Preferred Stock is convertible pursuant to Section 5 hereof at the record
date for the determination of shareholders entitled to vote on such
matters; and
(ii) Except as otherwise required by law or expressly provided herein,
the holders of Series A Convertible Preferred Stock and Common Stock shall
vote together and not as separate classes.
(b) RIGHT TO ELECT DIRECTORS.
(i) So long as in excess of 35% of the Aggregate Original Amount (as
defined in Section 9) of Series A Convertible Preferred Stock remains
outstanding, the holders of the Series A Convertible Preferred Stock shall
be entitled, voting as a separate class, to elect one (1) director, who
shall be one (1) of the authorized number of directors of the Corporation.
In the case of a vacancy in the office of the director elected by the
holders of Series A Convertible Preferred Stock, a successor shall be
elected to hold office for the unexpired term of such director by the
affirmative vote of the holders of a majority of the Series A Convertible
Preferred Stock given at a special meeting of such shareholders duly called
for that purpose, or by written consent of the holders of record of a
majority of the Series A Convertible Preferred Stock. Any director who
shall have been elected by the holders of the Series A k given at a special
meeting of such shareholders duly called for that purpose, or by written
consent of the holders of record of a majority of the Series A Convertible
Preferred Stock. Any vacancy created thereby may be filled by the holders
of Series A Convertible Preferred Stock represented at such meeting or by
written consent by holders of a majority of the Series A Convertible
Preferred Stock.
<PAGE> 2
(c) SERIES A CONVERTIBLE PREFERRED STOCK - SPECIAL VOTING RIGHTS.
Provided that at least 35% of the Aggregate Original Amount of the Series A
Convertible Preferred Stock remains outstanding, the Corporation shall not
without first obtaining the approval (by vote or written consent) of the
holders of at least a majority of the shares of the Series A Convertible
Preferred Stock from time to time outstanding:
(i) take any action that would result in (A) a sale, conveyance or
other disposition or distribution of all or substantially all of the assets
of the Corporation or (B) merger, consolidation, or similar transaction
with any other corporation or entity where the Corporation is not the
survivor.
(ii) declare any dividends or any other distributions on, or redeem or
repurchase any, Equity Securities (as defined in Section 9) of the
Corporation of any nature (except for any dividends, redemptions or
repurchases required by the terms of the governing instrument for the
related equity securities which have been approved by the holders of the
Series A Convertible Preferred Stock pursuant to Section 3(c)(iii) below);
(iii) issue or authorize the issuance of any shares of Preferred Stock
or any warrant, right, option, convertible security or other security which
has liquidation, redemption or dividend preference rights which are senior
to or on a parity with the preferences or rights afforded to the Series A
Convertible Preferred Stock, or which has redemption, repurchase, put or
similar rights;
(iv) amend the Corporation's Certificate of Incorporation or Bylaws;
or
(v) make or hold any direct or indirect investment in any corporation,
investment in the debt or equity securities of any corporation, or loans or
guaranties to one or more corporations in excess of $1,000,000 in the
aggregate.
SECTION 4.LIQUIDATION PREFERENCE.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation (any such event a
"Liquidation Event") then, and in that event, the holders of Series A
Convertible Preferred Stock shall be entitled to receive with respect to
any such Liquidation Event prior and in preference to any distribution of
any of the assets of the Corporation to the holders of Common Stock or to
the holders of any other series of preferred stock by reason of their
ownership thereof, an amount in cash or equivalent value in securities or
other consideration equal to the "liquidation preference" herein. If the
amount of such distribution is insufficient to permit full payment of the
"liquidation preference" herein, then such distribution shall be
distributed ratably to the holders of the Series A Convertible Preferred
Stock on the basis of the number of shares of Series A Convertible
Preferred Stock held. After payment in full of the "liquidation
preference" owed to the holders of the Series A Convertible Preferred
Stock, the holders of the Common Stock shall be entitled, to the exclusion
of the holders of the Series A Convertible Preferred Stock, to share in all
remaining assets of the Corporation in accordance with their respective
interests.
<PAGE> 3
For the purposes this Section 4, the term "liquidation preference"
shall mean, with respect to the Series A Convertible Preferred Stock, an
amount equal to $6.25 per share (the Basic Preference Amount") which Basic
Preference Amount shall increase at the rate of eight percent (8%) per
share per year, compounded annually on each subsequent anniversary of the
Series A Original Issue Date (in the event of a Liquidation Event between
any such anniversaries, the Basic Preference Amount increase for such year
shall be prorated accordingly);
SECTION 5. CONVERSION RIGHTS.
(a) RIGHT TO CONVERT SERIES A CONVERTIBLE PREFERRED STOCK. Each share
of Series A Convertible Preferred Stock shall be convertible, without the
payment of any additional consideration and at the option of the holder
thereof, at any time after the Series A Originock) into shares of Common
Stock at the then effective Series A Conversion Rate (as defined in Section
5(c) hereof) and adjusted on a per share basis giving effect to any
adjustments required by Section 5 hereof.
(b) AUTOMATIC CONVERSION. Each share of Series A Convertible
Preferred Stock may, at the option of the Corporation, be converted into
shares of Common Stock at the then effective Series A Conversion Rate (as
defined in Section 5(c) hereof) and adjusted on a per share basis giving
effect to any adjustments required by Section 5 hereof provided that the
shares of the Corporation's Common Stock trade at an Average Price equal to
or greater than $5.00 per share (subject to any adjustments for events set
forth in Section 5(e) through (i)) for 30 consecutive trading days. The
Corporation shall give at least 20 days prior written notice to the holders
of the Series A Convertible Preferred Stock as to any automatic conversion
pursuant to this Section 5(b), such conversion being effective no later
than the twenty (20) days following receipt by the holders of the Series A
Convertible Preferred Stock of such notice; provided, however, that nothing
shall prohibit holders of the Series A Convertible Preferred Stock at any
time, including after such time as the Corporation has given notice under
this Section 5(b), to convert their Series A Convertible Preferred Stock
into shares of Common Stock pursuant to Section 5(a).
<PAGE> 4
(c) SERIES A CONVERSION RATE. Subject to the adjustments provided in
subsections (e) through (i) of this Section 5, each share of Series A
Convertible Preferred Stock shall be convertible into five (5) shares of
Common Stock
(d) MECHANICS OF CONVERSION. Before any holder of Series A
Convertible Preferred Stock shall be entitled to convert the same into full
shares of Common Stock pursuant to Section 5(a) hereof, the holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Series A
Convertible Preferred Stock and shall give written notice to the
Corporation at such office that such holder elects to convert the same and
shall state therein such holder's name or the name or names of the
nominees in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. The Corporation shall, as soon as
practicable thereafter but in no event later than four (4) business days
after the Corporation receives all documents, including notice and
certificates, necessary to effect the conversion or, with respect to
conversion pursuant to Section 5(b) on the date specified in the notice
(unless converted earlier), issue and deliver at the address of such holder
on the books and records of the Corporation, or to such holder's nominee or
nominees, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid, together with
cash in lieu of any fractional shares. Except as otherwise set forth in
Section 5(b) above, such conversion shall be deemed to occur immediately
prior to the close of business on the date of surrender of the shares of
Series A Convertible Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or
holders of such shares ontained herein, if any holder of Series A
Convertible Preferred Stock elects to convert such holder's shares at any
time prior to the record date for any vote, dividend, redemption,
liquidation, dissolution or winding up, or other actions for which a record
date is set and the holder receives prior notice pursuant to Section 7, or
prior to the effective date of any such event for which either no record
date is set or respecting which notice pursuant to Section 7 is not
received, then for all purposes such conversion shall be treated as having
occurred prior to such date or effective date and the holder shall be
treated as the owner of the Common Stock into which such Series A
Convertible Preferred Stock is convertible for all purposes.
(e) ADJUSTMENTS FOR SUBDIVISIONS AND COMBINATIONS. If the Corporation
shall at any time, or from time to time after the Series A Original Issue
Date, effect a subdivision of the outstanding Common Stock, the Series A
Conversion Rate then in effect immediately before such subdivision shall be
proportionately increased, and conversely, if the Corporation shall at any
time or from time to time after the Series A Original Issue Date combine
the outstanding shares of Common Stock, the Series A Conversion Rate then
in effect immediately before such combination shall be proportionately
decreased. Any adjustment under this Section 5(e) shall become effective at
the close of business on the date such subdivision or combination becomes
effective.
<PAGE> 5
(f) ADJUSTMENTS FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time, or from time to time after the Series A
Original Issue Date, shall make or issue or fix a record date for the
determination of holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock, then and
in each such event the Series A Conversion Rate then in effect shall be
increased as of the time of such issuance or, in the event such a record
date shall have been fixed, as of the close of business on such record
date, by multiplying the Series A Conversion Rate then in effect by a
fraction:
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or
distribution; and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; provided, however,
if such record date shall have been fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed therefor,
the Series A Conversion Rate shall be recomputed accordingly as of the
close of business on such record date and thereafter the Series A
Conversion Rate shall be adjusted pursuant to this Section 5(f) as of the
time of actual payment of such dividends or distributions.
(g) ADJUSTMENT FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event
the Corporation at any time, or from time to time after the Series A
Original Issue Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution pay, then and in each such event provisions shall be
made so that the holders of Series A Convertible Preferred Stock shall
receive upon conversion thereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount and type of securities of the
Corporation that they would have received on a per share basis had their
Series A Convertible Preferred Stock been converted into Common Stock on
the date of such event and had such holders thereafter, during the period
from the date of such event to and including the conversion date, retained
such securities receivable by them as aforesaid during such period giving
application to all adjustments called for during such period under this
Section 5 with respect to the rights of the holders of the Series A
Convertible Preferred Stock.
(h) ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. If
the Common Stock issuable upon the conversion of the Series A Convertible
Preferred Stock shall be changed into the same or a different number of
shares of any class or classes of stock of the Corporation, whether by
capital reorganization, reclassification or otherwise (other than by a
subdivision, a combination or a stock dividend as provided for elsewhere in
this Section 5), then and in each event the holder of each share of Series
A Convertible Preferred Stock shall have the right thereafter to convert
such share into the kind and amount of shares of stock or other securities
and property receivable upon such reorganization, reclassification or other
change by the holders of the number of shares of Common Stock into which
each such share of Series A Convertible Preferred Stock might have been
converted immediately prior to such reorganization, reclassification or
other change, all subject to further adjustment as provided elsewhere in
this Section 5.
<PAGE> 6
(i) SALE OF SHARES BELOW DILUTION PRICE. For purposes of this Section
5(i), the Dilution Price shall be initially equal -five cents ($1.25)..
(a) If at any time after the Series A Original Issue Date, the
Corporation shall issue for cash or other consideration shares of Common
Stock or any security convertible into or exchangeable or exercisable for
shares of Common Stock at a price per share of Common Stock calculated by
including the aggregate proceeds per share to the Corporation upon issuance
and any additional consideration per share payable to the Corporation upon
any such conversion, exchange or exercise (in each case before deduction of
any per share discounts, commissions, fees and other expenses of issuance
and marketing), (the "New Issue Price), that is less than the Dilution
Price then in effect, the Dilution Price shall be automatically adjusted
down to the new Issue Price and the aggregate number of shares of Common
Stock issuable upon the conversion of each share of Series A Preferred
Stock shall be automatically adjusted to equal the result obtained by
dividing the initial Purchase Price of $6.25 for each share of Series A
Preferred Stock by the New Issue Price. In the event that this Section 5(i)
applies, the Series A Conversion Rates shall determined by this Section
5(i)(a).
For example, assume that (i) the Series A Conversion Rate was five (5)
shares of Common Stock for each share of Preferred Stock; (ii) the initial
Purchase Price was $6.25 per share, and (iii) the Purchaser had acquired
100 shares of Series A Preferred Stock for an aggregate purchase price of
$625.00. If the New Issue Price is $.50 per share, the new Dilution Price
would be $.50 per share and each share of Series A Preferred Stock would be
convertible into 12.5 shares of Common Stock.
(b) For the purpose of this Section 5(i), the issuance by the
Corporation of securities convertible into or exchangeable or exercisable
for Common Stock shall be deemed to involve the immediate issuance of the
maximum number of shares of Common Stock issuable upon the conversion,
exchimum aggregate consideration receivable by the Corporation upon such
conversion, exchange or exercise. In the event that securities are issued
by the Corporation that result in an adjustment to the Series A Conversion
Rate pursuant to this Section 5(i) and such securities are not converted,
exchanged or exercised prior to the expiration of the right of the holders
of such securities to effect any such action, then immediately upon such
expiration of the right of the holders of such securities to effect any
such action, the Series A Conversion Rate and Dilution Price shall be
recomputed (but such redetermination shall not affect the Series A
Conversion Rate of any shares of Series A Preferred Stock that have been
converted prior to such expiration) and effective immediately upon such
expiration the Dilution Price and Series A Conversion Rate shall be
increased to the ratio which it would have been (but reflecting and other
adjustments in the Series A Conversion Rate made pursuant to other
provisions of this Section 5 after the issuance of such securities) had
such adjustments to the Series A Conversion Rate and Dilution Price not
been made.
<PAGE> 7
(j) ISSUE TAXES. The Corporation shall pay any and all issue and
other taxes that maybe payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series A Convertible
Preferred Stock, excluding any tax or other charge imposed in connection
with any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that in which the shares of Series A Convertible
Preferred Stock so converted were registered, which tax or charge shall be
borne by the transferor.
(k) RESERVATION OF STOCK. The Corporation shall at all times reserve
and keep available out of its authorized but unissued shares of Common
Stock solely for the purpose of effecting the conversion of the shares of
the Series A Convertible Preferred Stock one and one-half times the number
of its shares of Common Stock as shall from time to time be sufficient to
effect any conversion of any or all outstanding shares of the Series A
Convertible Preferred Stock. If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A Convertible
Preferred Stock, the Corporation shall take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(l) FRACTIONAL SHARES. No fractional share shall be issued upon the
conversion of any share or shares of Series A Convertible Preferred Stock.
All shares of Common Stock (including fractions) issuable upon conversion
of more than one share of Series A Convertible Preferred Stock by a holder
of such stock shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share, if, after
aggregation, the conversion would result in the issuance of a fractional
share of Common Stock, the Corporation shall, in lieu of issuing any
fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the fair market value of such fraction on the date of
conversion (as determined in good faith by the Board of Directors).
(m) SUCCESSIVE CHANGES. The above provisions of this Section 5 shall
similarly apply to successive combinations, subdivisions, dividends and
distributions on or of the Common Stock after the Series A Original Issue
Date.
(n) SUBSEQUENT EVENTS. On the Series A Original Issue Date, and
thereafter, from time to time, within ten (10) Business Days of the
occurrence of any event which would have the result of changing the Series
A Conversion Rate, the Corporation shall notify the holders of the
Seriesting from such change and the calculation in reasonable detail.
<PAGE> 8
SECTION 6. REPURCHASE.
(a) REPURCHASE AT THE OPTION OF THE HOLDERS.
(i) At the date five years after the Series A Original Issue Date, and
at any time thereafter, the Corporation shall repurchase the shares of
Series A Convertible Preferred Stock, in whole or in part, upon the written
request of any holder of the Series A Convertible Preferred Stock,
specifying the amount of shares to be repurchased from such holder. The
Corporation shall effect the repurchase within 30 days of such written
request, to the extent not prohibited by applicable law. The repurchase
price for each share of Series A Convertible Preferred Stock shall be
payable, at the option of the Corporation, in cash or a three-year, 8%
interest bearing note. Alternatively, the Corporation may elect to redeem
not less than one-third of the shares of Series A Convertible Preferred
Stock specified in such notice in that year and each of the two succeeding
years. The repurchase price for each share of Series A Convertible
Preferred Stock shall be the liquidation preference as set forth in Section
4.
SECTION 7. NOTICES OF RECORD DATE.
In the event of (i) any taking by the Corporation of a record of the
holders of any class or series of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution or (ii) any reclassification or recapitalization of the
capital stock of the Corporation or any voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Corporation,
the Corporation shall send by (1) personal delivery to such holder, (2)
first class mail addressed, postage prepaid, and addressed to the holder at
the address appearing on the books of the Corporation, or (3) facsimile to
such holder at the facsimile number provided by such holder to the
Secretary of the Corporation, at least ten (10) days prior to the record
date specified therein, a notice specifying (A) the date on which any such
record is to be taken for the purpose of such dividend or other
distribution and a description of such dividend or distribution, (B) the
date on which any such reorganization, reclassification, dissolution,
liquidation or winding up is expected to become effective, and (C) the
time, if any is to be fixed, as to when the holders of record of Series A
Convertible Preferred Stock shall be entitled to exchange their Series A
Convertible Preferred Stock for securities or other property deliverable
upon such reorganization, reclassification, dissolution, liquidation or
winding up. For purposes of this notice provision, notice shall be deemed
to have been given (1) the next day in the case of notice by a national
courier service, or (2) in the case of facsimile, upon sending the
facsimile.
SECTION 8. REACQUIRED SHARES.
Any shares of Series A Convertible Preferred Stock converted,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof, and,
if necessary to provide for the lawful purchase of such shares, the capital
represented by such shares shall be reduced in accordance with the General
Corporation Law of the State of Delaware. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock,
$.001 par value, of the Corporation and may be reissued as part of another
series of Preferred Stock, $.001 par value, of the Corporation.
<PAGE> 9
SECTION 9. Certain Definitions.
Under the context otherwise required for the purposes of this
resolution, the terms defined in this Section 9 shall have the meanings
herein specified.
"Series A Original Issue Date" means the effective date of a written
agreement by the Corporation for the initial sale of the Series A
Convertible Preferred Stock.
"Aggregate Original Amount" means the aggregate number of shares of
Series A Convertible Preferred Stock issued on the Series A Original Issue
Date plus any amount of shares issued pursuant to subsequent sales of
Series A Convertible Preferred Stock by the Corporation, from and after the
date of issuance thereof all such shares as adjusted pursuant to this
Certificate of Designation.
"Equity Securities" means any and all shares of corporate stock,
including each class or series of common or preferred stock.
"Average Price" with respect to Common Stock means, on any day, the
trade weighted average of the sales prices for such shares as reported on
Bloomberg News Services (i) on the largest national securities exchange
(based on the aggregate dollar value of securities listed) on which such
shares are listed or traded or (ii) if such shares are not listed on any
national securities exchange, then the prices ares shall not be listed
thereon, the trade weighted average of all transactions in Common Stock in
an over-the-counter market.
<PAGE> 10
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations of Series A Convertible Preferred Stock to be duly executed by
its President and attested to by its Secretary and has caused its corporate
seal to be affixed hereto, this 22nd day of December, 1998.
THERMOGENSIS CORP.
By: James H. Godsey, President
ATTEST:
By: David C. Adams, Secretary
<PAGE> 11
