Exhibit 10.2

 

GENOCEA BIOSCIENCES, INC.

100 Acorn Park Drive, 5th Floor
Cambridge, Massachusetts 02140

 

 

November 20, 2014

 

Hercules Technology Growth Capital, Inc.

400 Hamilton Avenue, Suite 310

Palo Alto, California 94301

 

Attention:  Mr. Manuel A. Henriquez

 

Ladies and Gentlemen:

 

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Genocea Biosciences, Inc., a Delaware corporation (the
“Company”), the Company and Hercules Technology Growth Capital, Inc., a Maryland
corporation, in its capacity under and pursuant to the Loan Agreement (as
defined below) as administrative agent for itself and the Lender (as defined in
the Loan Agreement) (“Hercules”), hereto enter into this letter (the “Letter”)
and agree to the following:

 

1.                                      Initial Equity Investment.

 

a.                                      Hercules Technology Growth Capital, Inc.
shall purchase 223,463 shares (the “Shares”) of the common stock of the Company,
$0.001 par value per share (the “Common Stock”) on the date hereof (the
“Purchase Date”) at a price per share of $8.95 (equal to the closing price of
the Common Stock as reported on The NASDAQ Global Market on November 19, 2014). 
Payment for the Shares to be sold by the Company shall be made on the Purchase
Date by wire transfer of immediately available funds to the order of the
Company.  The Company shall deliver, or cause to be delivered, as promptly as
possible following the Purchase Date, the Shares in book entry form. The Shares
shall be registered to Hercules Technology Growth Capital, Inc.

 

b.                                      The Shares shall be issued to Hercules
pursuant to an exemption provided by Section 4(a)(2) of the Securities Act of
1933, as amended (the “Securities Act”).  Accordingly, the Shares will be
subject to resale limitations and may be resold only pursuant to an effective
registration statement or an exemption from registration and the Shares will
contain a restricted securities legend to such effect.

 

c.                                       In connection with the purchase of the
Shares, the Company hereby represents and warrants to Hercules as follows:

 

i.                                          Organization and Qualification.  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the

 

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State of Delaware and has all requisite corporate power and authority to carry
on its business as presently conducted.

 

ii.                                       Authorization; Enforcement; Validity.
The Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Letter and otherwise to carry
out its obligations hereunder.  The Company’s execution and delivery of this
Letter and the consummation by it of the transactions contemplated hereby
(including, but not limited to, the sale and delivery of the Shares) have been
duly authorized by all necessary corporate action on the part of the Company,
and no further corporate action is required by the Company, its Board of
Directors or its stockholders in connection therewith.  This Letter has been
duly executed by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies generally and to  other equitable principles
of general application, (B) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies and (C)
insofar as indemnification and contribution provisions may be limited by
applicable law.

 

iii.                                    No Conflicts. The execution, delivery
and performance by the Company of this Letter and the consummation by the
Company of the transactions contemplated hereby (including, without limitation,
the issuance of the Shares) will not (A) conflict with or violate any provisions
of the Company’s certificate of incorporation, bylaws or otherwise result in a
violation of the organizational documents of the Company, (B) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would result in a default) under, result in the creation of any lien or
encumbrance upon any of the properties or assets of the Company or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any material contract, or (C)
conflict with or result in a material violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including federal and
state securities laws and regulations and the rules and regulations, assuming
the correctness of the representations and warranties made by Hercules herein).

 

iv.                                   Filings, Consents and Approvals.  The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other person or
entity in connection with the execution, delivery and performance by the Company
of this Letter  

 

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(including the issuance of the Shares), other than the post-sale filings
pursuant to applicable state and federal securities laws which the Company
undertakes to file within the applicable time periods.

 

v.                                      Issuance of the Shares. The Shares have
been duly authorized and, when issued and paid for in accordance with the terms
of this Letter , will be duly and validly issued, free and clear of all liens
and encumbrances, other than restrictions on transfer applicable securities
laws, and shall not be subject to preemptive or similar rights of stockholders. 
Assuming the accuracy of the representations and warranties of Hercules in this
Letter, the Shares will be issued in compliance with all applicable federal and
state securities laws.

 

vi.                                   SEC Reports. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it under the Shares Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder (the “Exchange
Act”), including pursuant to Section 13(a) or 15(d) thereof, since completing
its initial public offering on February 4, 2014 (or such shorter period as the
Company was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. 
As of their respective filing dates, or to the extent corrected by a subsequent
amendment, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the U.S. Securities and Exchange Commission (the “SEC”)
promulgated thereunder, and none of the SEC Reports, when filed, 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.

 

vii.                                Financial Statements.  The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing (or to the
extent corrected by a subsequent amendment).  Such financial statements have
been prepared in accordance with generally accepted accounting prinicples
(“GAAP”) (except as may be disclosed therein or in the notes thereto) applied on
a consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of the
Company as of and for the dates thereof and the results of

 

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operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial year-end audit adjustments.

 

viii.                             Sarbanes-Oxley; Disclosure Controls. The
Company is in compliance in all material respects with all of the provisions of
the Sarbanes-Oxley Act of 2002 which are applicable to it as of the date of this
Letter.

 

ix.                                   Rule 144 Compliance. The Company shall, at
all times prior to the date of sale or other disposition by Hercules of the
Shares, use all commercially reasonable efforts to timely file all reports
required under the Exchange Act and otherwise timely take all actions necessary
to permit Hercules to sell or otherwise dispose of the Shares pursuant to Rule
144 promulgated under the Securities Act as amended and in effect from time to
time.

 

No representation or warranty of the Company contained in this Letter and no
certificate furnished or to be furnished to Hercules pursuant to this Letter
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.

 

d.                                      In connection with the purchase of the
Shares, Hercules hereby represents and warrants to the Company as follows:

 

i.                                          Investment Purpose.  The Shares are
being acquired for investment and not with a view to the sale or distribution of
any part thereof in violation of applicable federal and state securities laws,
and Hercules has no present intention of selling or engaging in any public
distribution of the same except pursuant to a registration or exemption.

 

ii.                                       Private Issue.  Hercules understands
(A) that the Shares are not registered under the Act, or qualified under
applicable state securities laws, and (B) that the Company’s reliance on
exemption from such registration is predicated on the representations set forth
in this Letter.

 

iii.                                    Financial Risk.  Hercules 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 its investment.

 

iv.                                   Accredited Investor.  Hercules is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Act.

 

v.                                      No Short Sales.  Hercules has not at any
time on or prior to the Purchase Date engaged in any short sales or equivalent
transactions in the Common Stock.  Hercules agrees that at all times from and
after the Purchase Date, it shall not engage in any short sales or equivalent
transactions in the Common Stock.

 

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vi.                                   No Representations.  Hercules acknowledges
that, in connection with its purchase of the Shares, it is not relying on any
representation or warranty made by the Company other than those set forth in
Section 1(c) above.

 

No representation or warranty of Hercules contained in this Letter and no
certificate furnished or to be furnished to the Company pursuant to this Letter
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.

 

2.                                      Subsequent Equity Investments.

 

a.                                      Hercules may participate in and/or
designate one or more of its affiliates (Hercules, together with such
affiliates, collectively, “Hercules Purchasers”) to  participate in any one or
more Subsequent Financings (as defined below) selected by Hercules in its sole
discretion by permitting all Hercules Purchasers who participate in such
Subsequent Financings to purchase up to a maximum aggregate (cumulatively for
all Subsequent Financings) of $2,000,000.00 of Subsequent Financing Securities
(as defined below) therein.  Hercules Purchasers shall have no obligation to
purchase Subsequent Financing Securities.  Each Hercules Purchaser acquiring
Subsequent Financing Securities in a Subsequent Financing shall be an
“accredited investor” as defined in Regulation D promulgated under the Act.

 

b.                                      As used herein:

 

i.                                          “Subsequent Financing” means each
sale and issuance by the Company on or after the date hereof, in a single
transactions or series of related transactions, of shares of its common stock,
convertible preferred stock or other equity securities of the Company, whether
or not currently authorized (or instruments exercisable for or convertible into
shares of common stock, convertible preferred stock or other equity securities
of the Company), to one or more accredited investors for cash in a private
placement for financing purposes that is broadly marketed to multiple investors,
other than a sale effected pursuant to an effective registration statement under
the Act.

 

ii.                                       “Subsequent Financing Securities”
means, with respect to any Subsequent Financing, the class and series of common
stock, convertible preferred stock or other equity security of the Company,
whether or not currently authorized (or instruments exercisable for or
convertible into shares of common stock, convertible preferred stock or other
equity securities of the Company), sold and issued by the Company to the
investor purchasers in such Subsequent Financing.

 

c.                                       The purchase by each Hercules Purchaser
of Subsequent Financing Securities in any Subsequent Financing shall be made,
subject to the provisions of this Letter (and subject to Hercules’ rights set
forth in the Loan Agreement (as defined below)), upon the same terms and
conditions (including, without limitation, price) as purchases by the other
investor purchasers of

 

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a similar amount of Subsequent Financing Securities therein, and each such
Hercules Purchaser shall execute the definitive stock or securities purchase
agreement, investor rights agreement, stockholders agreement, voting agreement
and other agreements and documents (collectively, the “Operative Documents”)
executed by such other investor purchasers in connection with such Subsequent
Financing.  As used herein, “Loan Agreement” means that certain Loan and
Security Agreement of even date herewith between the Company and Hercules in its
capacity as administrative agent for itself and the Lenders as defined therein,
as amended and/or restated and in effect from time to time.

 

d.                                      The Company shall, where practicable,
give Hercules not less than ten (10) days written notice prior to the
anticipated closing of each Subsequent Financing summarizing the principal terms
and conditions of such Subsequent Financing (including, without limitation,
price and the principal institutional investor purchasers), and shall provide
such drafts and definitive copies of the Operative Documents and other documents
and information in connection with such Subsequent Financing as are provided to
the other investor purchasers or prospective investor purchasers of Subsequent
Financing Securities therein.  Any Hercules Purchaser may exercise its purchase
rights hereunder by delivering written notice thereof to the Company no later
than the later to occur of (i) five (5) days prior to such anticipated closing,
and (ii) five (5) days after Hercules’ actual receipt of such Company notice. 
The Operative Documents and other materials and information provided by the
Company to Hercules Purchasers in connection with each Subsequent Financing
shall be held and treated by each such Hercules Purchaser in confidence in
accordance with the provisions of Section 11.12 of the Loan Agreement.  All
notices and other communications from the Company to Hercules hereunder shall be
given in accordance with the requirements of the notice provisions set forth in
the Loan Agreement.

 

This Letter, and all rights and obligations hereunder, shall terminate upon the
earlier of (i) such time when the Hercules Purchasers have purchased
$2,000,000.00 of Subsequent Financing Securities in the aggregate and (ii) the
later of (a) the repayment of all indebtedness under the Loan Agreement and (b)
the expiration or termination of the exercise period for the Warrant (as defined
under the Loan Agreement).

 

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This Agreement shall be governed by, and interpreted and enforced in accordance
with, the laws of the State of California, excluding its conflict of laws
provisions that would cause the application of the laws of any other
jurisdiction.

 

 

Very truly yours,

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ Jonathan Poole

 

Name: Jonathan Poole

 

Title: Chief Financial Officer

 

Acknowledged and agreed to:

HERCULES TECHNOLOGY GROWTH

CAPITAL, INC.

 

 

By:

/s/ Ben Bang

 

Name: Ben Bang

Its: Associate General Counsel

 

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