Verastem(VSTM) - 2024 Q4 - Annual Results

Agreement Details - Verastem, Inc. entered into a Note Purchase Agreement dated January 13, 2025, with RGCM SA LLC as the Purchaser Agent[17] - The agreement includes provisions for the purchase and sale of notes, with specific terms for payments of principal and interest outlined in Sections 2.2 and 2.3[3] - The agreement stipulates conditions precedent to the effective date and subsequent purchase dates, ensuring compliance with various financial covenants[3] - The agreement includes a grant of security interest, allowing the Purchasers to secure their investment against the Issuer's assets[4] - The agreement outlines negative covenants that restrict the Issuer from certain actions, such as mergers or acquisitions without prior consent[7] - The agreement includes provisions for events of default, detailing the circumstances under which the Purchasers can take remedial actions[9] - All financial references in the agreement are in United States Dollars, ensuring clarity in financial obligations[21] - The agreement includes schedules and exhibits that detail the commitments of the Purchasers and the structure of the notes being issued[14] Financial Obligations - The Issuer plans to issue and sell Notes in an aggregate principal amount of $75,000,000 for the First Purchase, $25,000,000 for the Second Purchase, and $50,000,000 for the Third Purchase, totaling a maximum of $150,000,000[23][24][25][26] - The Repayment Amount, along with any accrued and unpaid default interest, is due on the earlier of the Maturity Date or upon acceleration of all Obligations[27] - The Issuer has the option to repurchase all outstanding Notes, provided a five (5) Business Days' notice is given to the Purchaser Agent[28] - Revenue Participation Payments will be made quarterly based on the Issuer's good faith estimate of net cash receipts, subject to reconciliation based on final Net Sales[30][31] - Interest on the Notes will accrue at a per annum rate equal to the Applicable Rate, payable quarterly in arrears[36] - In the event of a Change of Control, the Required Purchasers may require the Issuer to repurchase outstanding Notes and pay all other Obligations[33] - The Issuer has the option to capitalize up to 50% of the interest owed as PIK Interest during the first eight Payment Dates[35] - The principal amount of the Notes will not exceed $150,000,000, excluding any PIK Interest[26] - The Default Rate for outstanding Obligations will increase by five percentage points (5.00%) upon an Event of Default[37] Compliance and Reporting - Verastem, Inc. is required to maintain financial statements in accordance with GAAP, ensuring transparency and accuracy in financial reporting[19] - The financial statements of the Issuer and its Subsidiaries fairly present their consolidated financial condition in accordance with GAAP[86] - The Issuer and its Subsidiaries are in compliance with all material Requirements of Law applicable to their operations[88] - Issuer must deliver unaudited financial statements within 45 days after each quarter, including cash flow projections[149] - Audited financial statements are required within 90 days after the fiscal year-end, with specific compliance certifications[150] - Issuer must provide quarterly reports detailing Clinical, Regulatory, and Commercial Updates, among other metrics[149] - A Revenue Report detailing gross and net sales of Included Products is required concurrently with financial statements[158] - The Issuer must maintain proper books of record and account in accordance with GAAP, ensuring all transactions are accurately recorded[160] Security Interests and Collateral - Each Obligor grants a continuing security interest in all rights, title, and interest in the Collateral to secure payment and performance of all Obligations[73] - The security interests granted will be a first priority perfected security interest in the Collateral, subject to Permitted Priority Liens[73] - Issuer must deliver Control Agreements for Collateral Accounts within twenty days of the First Purchase Date[64] - Issuer is required to provide a lender's loss payable endorsement in favor of Purchaser Agent within thirty days of the First Purchase Date[65] - Issuer must enter into appropriate security documentation to provide a first priority perfected security interest in all jurisdictions where Collateral exceeds $1,000,000 within ninety days of the First Purchase Date[68] - Purchaser Agent is authorized to file financing statements to perfect or protect its interest under the Note Documents[75] - Each Obligor pledges a security interest in all Shares and related proceeds as collateral for performance obligations[76] Legal and Regulatory Compliance - There are no pending or threatened legal actions involving more than $500,000 against the Issuer or its Subsidiaries[85] - The Issuer is solvent and will remain so after the issuance of the Notes[87] - The Issuer has not changed its jurisdiction of organization or incorporation in the past five years[78] - Issuer and its Subsidiaries have timely filed all required U.S. federal income and other material tax returns and reports, and have paid all taxes owed, with no claims or adjustments proposed that could result in additional taxes exceeding $50,000[95][96] - Issuer has maintained compliance with all Privacy Laws and has not experienced any unauthorized access or disclosure of Personal Data that would require notification under Privacy Laws[110][111] - All reports required to be filed under the Exchange Act have been duly filed and were in substantial compliance with the requirements, containing no untrue statements of material fact[97] - Issuer has taken commercially reasonable measures to protect and maintain the confidentiality of trade secrets related to Included Products, with no material trade secrets disclosed without confidentiality agreements[107] - Issuer has not received any warnings or notices from the FDA regarding material violations related to Included Products[118] Operational Compliance - Issuer and its Subsidiaries possess all necessary Regulatory Approvals for Included Products and have not received any notices that could lead to revocation or modification of these approvals[114] - All clinical trials related to Included Products were conducted in compliance with applicable laws and protocols, with no written communications from Regulatory Authorities recommending termination or suspension of these trials[115] - There have been no material violations or unresolved product complaints regarding Included Products that could result in a Material Adverse Change[119] - Issuer and its Subsidiaries have maintained compliance with good manufacturing practices and have not received any notices of deficiencies from Governmental Authorities[117] - No illegal payments or contributions have been made by Issuer or its Subsidiaries in the past six years, ensuring compliance with applicable laws[122] - Issuer has established a corporate compliance program addressing applicable Requirements of Law, ensuring adherence to regulations[125] Miscellaneous Provisions - The Issuer must keep its business and collateral insured for risks standard in its industry, with policies that are satisfactory to the Purchaser Agent[166] - The Issuer is obligated to maintain all properties and equipment necessary for its business in good working order, making necessary repairs and replacements[164] - The Issuer must provide prompt written notice of any litigation or governmental proceedings that could result in damages of $500,000 or more[184] - The Issuer must ensure that all material patents and trademarks are diligently maintained and defended against infringement[177] - The Issuer must provide Purchaser Agent with read-only online access to all Deposit Accounts, Securities Accounts, and Commodity Accounts[173] - The Issuer must notify Purchaser Agent of any Event of Default or events that could lead to an Event of Default within three business days[185] - The Issuer must conduct audits of its operations and collateral at least once a year, unless an Event of Default has occurred[161] - Any new office or business location with collateral valued over $500,000 requires a landlord or bailee waiver within 90 days of acquisition[186] - Transfers of assets exceeding $250,000 in aggregate per calendar year require prior written consent from the Required Purchasers[195] - Obligors are prohibited from engaging in businesses outside their current operations without prior consent[196] - Mergers or acquisitions require prior written consent from the Purchaser Agent, with specific financial limits on claims prior to closing[199] - The proceeds from the Notes must be used solely for working capital and general business requirements[190] - No employee pension benefit plans other than a customary 401(k) plan are permitted[189] - Unsecured and unsubordinated claims must rank at least pari passu with other unsecured creditors[188] - Any creation or acquisition of subsidiaries must be reported to the Purchaser Agent within 30 days[187]