Spring 2022

The following series of hypotheticals and the related questions are intended to elicit your advice to a client. When preparing your responses, please assume that you are directing your responses in each case to an in-house counsel (a lawyer with some familiarity with securities laws), who would appreciate if you addressed legal issues. Reference briefly (where applicable) relevant securities laws and rules and regulations, no-action letters, and SEC Staff guidance. You should cite to these reference materials in footnotes. When you are citing to these materials, please use full blue book citation formatting. Also, in addition to addressing the relevant legal issues, you should ensure that your responses address practical business concerns given that in-house counsel will share the responses with the business team.

You should view each hypothetical on a standalone basis and your responses to each hypothetical should, therefore, be written in separate responses.

The hypotheticals are intended to focus on the topics we covered primarily in the second-half of the class, including the following topics: integration, Rule 144A, Regulation S, PIPE transactions, registered direct offerings, ATM offerings and bought deals.

There is no prescribed length for the responses; however, keep in mind that succinct well-written responses should always be your objective.

Finally, note that for most of these questions, there are multiple "right" answers or useful approaches to suggest.

Hypothetical 1

BioM is a privately held biotech company.BioM has undertaken various rounds of financing, from early stage financings to late stage private placements.BioM regularly seeks to recruit and retain talented scientists and in order to do so, the company issues to its employees restricted stock units. BioM intends to license to a large U.S. pharmaceutical company rights to certain patents. In connection with this out-licensing agreement, the pharma company will agree to make certain cash payments to BioM over time, which payments will be tied to the accomplishment of various milestones in its clinical development of the BioM drug (based on the patent family). The pharma company also intends to purchase an equity stake in BioM that will result in the pharma company owning 4.9% of BioM's pre-transaction voting shares outstanding.

BioM has presented at various industry conferences. At these industry conferences, BioM has limited itself to a discussion of the company, its patents, its drug candidates, and its development strategy. BioM has not discussed any potential financing plans. However, BioM has engaged JPMorgan Securities as its placement agent in order to introduce the company to institutional investors that would be willing to participate in a Series G convertible preferred stock financing. JPMorgan has begun to approach institutional investors to discuss terms with them and a few institutional investors who are familiar with the company have indicated their interest in proceeding with an investment and would be able to enter into a securities purchase agreement. Separately, Barclays has come to the company and identified a Nordic pharmaceutical company interested in making an investment in the company of up to 19.9% of the pre-transaction voting shares outstanding.

In the meantime, the company has been approached by another investment bank, Bank of America, which would like to take the company public. The company's general counsel has solicited your advice on the following:

• How should the issuances of restricted stock units to employees in the United States and outside of the United States be structured from a securities law perspective?
• Are there any concerns arising in connection with the issuances of stock to employees while the company pursues other financing opportunities?
• Can the company proceed with the pharma company and secure the 4.9% investment associated with the licensing transaction? How might this investment be structured?
• Must the company complete the Series G financing before it retains Bank of America to commence an IPO process? Or can the Series G financing be undertaken in parallel while the company begins to work on the preparations for its IPO?
• Can the company sell securities to the Nordic pharma company?How should this sale be structured from a securities offering perspective?
• In sequence, how would you suggest that the company approach each of these financing opportunities?
• Can all of these transactions be undertaken concurrently? Must certain offerings be undertaken prior to commencing others? Is there any particular period of time that must separate one offering from the other?

Hypothetical 2

Now, turn your attention to the Nordic pharma company as an issuer. The Nordic pharma company has a class of its equity securities listed on the Oslo stock exchange. The Nordic pharma company would like to seek investments from U.S. institutional investors while also raising capital in Europe, where the company is better known. The Nordic pharma company retains Barclays to assist with these financing plans.

• Can the Nordic pharma company offer equity securities to U.S. investors in reliance on Rule 144A?
• Is there any restriction on the Nordic pharma company's reliance on Rule 144A to raise capital?
• Are there any concerns about the type of security that is offered in a Rule 144A offering?
• Can the Nordic pharma company conduct an offering at the same time in Europe?
• Can it sell the same security, or must it sell a different security in the offering in Europe and the offering to US institutional investors?

Outline for the Nordic pharma company's in-house counsel the principal documents that would be used in connection with a Rule 144A offering, the company's disclosure requirements (if any) in connection with the Rule 144A offering, the company's disclosure requirements following completion of the Rule 144A offering, and how the securities sold in reliance on Rule 144A may be resold by the original purchasers in that offering.

Barclays calls you and the in-house counsel and asks whether the following entities can participate in the offering and which tranche of the offering they can participate in:

• A hedge fund that is not a registered investment company but is part of a fund complex that is registered in the United States under the Investment Company Act and that has assets under management of $90 million;
• A trust established in the Cayman Islands for a U.S. resident with assets of $150 million; and
• An investment adviser that is part of a fund complex having over $2 billion in assets under management with discretionary authority to invest for a non-U.S. resident.

Hypothetical 3

SpamBurger undertook an initial public offering in 2019. The company's stock is listed on the Nasdaq. SpamBurger has expanded and opened additional restaurants throughout the Northeast, which has required significant capital expenditures. In 2020, the company filed and had declared effective a shelf registration statement. The shelf registration statement allows the company to issue and sell common stock, preferred stock, and debt securities. SpamBurger had an unfortunate incident with a food-borne virus at various locations of its restaurants. As a result of the negative publicity, the company's stock price has declined. The company also is facing the threat of potential lawsuits. The company's financial performance has generally remained consistently positive despite COVID-19 and the negative publicity. The company has brought in a new CEO and the new CEO has announced a very ambitious plan to open an additional 20 stores by the end of 2022, and has committed to an all-organic and fair trade standard with rigorous new food handling procedures. Given her track record at her prior restaurant company, a hedge fund has approached the company and would like to invest in the company's stock; however, the hedge fund expects to purchase at a discount to the company's stock price and would like to acquire up to 19.9% of the company's stock in the transaction. The hedge fund has come forward with a term sheet for a PIPE transaction. The company has a number of financial advisors. It has hired a boutique advisor firm, FoodCo, to introduce the company to potential acquisition targets so that it can expand beyond burgers. FoodCo has identified a family-owned restaurant group with 12 stores and due to generational issues, the restaurant group is prepared to sell to SpamBurger for cash or some mix of cash and stock so long as the stock will be capable of being resold within six months of the closing. The acquisition would not be viewed as "significant" to SpamBurger from a financial perspective. Another investment bank, Raymond James, has come to the company and suggested that Spamburger undertake a convertible note offering, with the convert being priced at a premium to the company's then stock price.

The in-house counsel has called for advice on the following:

• Can the company use its shelf registration statement in order to complete the PIPE transaction? If so, how? If not, why not?
• Can the company pursue the PIPE transaction and the acquisition at the same time?
• How should the company structure the issuance of stock to the restaurant group that it is acquiring?
• Would the PIPE transaction be integrated with the offering of stock to the target in the acquisition?
• Can the funds raised in the PIPE transaction be used to pay the cash purchase price in the acquisition?
• Can the company issue the stock to target pursuant to the company's shelf registration statement?
• Can the company issue the convertible notes pursuant to the shelf registration statement?
• What if the company would like to issue a Rule 144A offering of convertible notes?
• Is there an advantage to undertaking the convertible notes offering in reliance on Rule 144A?
• Is there any particular magic to the sequence in which these transactions are undertaken?
• Are there any Nasdaq rules that ought to be considered?