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On June 29, 2016,  the Company and Intrexon entered into a Third Amendment to Exclusive Channel Partner Agreement  (the “ECP Amendment”), amending their existing Exclusive Channel Partner Agreement, effective January 6, 2011 and as amended to date, (hereinafter referred to as the “Existing ECP Agreement”), and an Amendment to Exclusive Channel Collaboration Agreement (the “ECC Amendment”), amending their existing Exclusive Channel Collaboration Agreement, effective September 28, 2015 (hereinafter referred to as the “Existing GvHD Agreement”). The Existing ECP Agreement and ECP Amendment govern the “channel partnering” arrangement in which the Company uses Intrexon’s technology to research, develop and commercialize products in which DNA is administered to humans for expression of anti-cancer effectors for the purpose of treatment or prophylaxis of cancer, which the Company collectively refers to as the Cancer Program. The Existing GvHD Agreement and the ECC Amendment govern the collaboration between the Company and Intrexon for the research, development and commercialization of products for use in the treatment or prevention of graft-versus-host disease, or GvHD.

The ECP Amendment reduces the royalty percentage that the Company will pay Intrexon on a quarterly basis from 50% to 20% of net profits derived in that quarter from the sale of products developed under the Cancer Program, referred to as ZIOPHARM Products, calculated on a ZIOPHARM Product-by-ZIOPHARM Product basis, subject to certain expense allocations and other offsets provided in the Existing ECP Agreement. The ECC Amendment reduces the royalty percentage that the Company will pay Intrexon on a quarterly basis from 50% to 20% of net profits derived in that quarter from the sale of products developed under the GvHD collaboration program, subject to certain expense allocations and other offsets provided in the Existing GvHD Agreement.

In consideration for the execution and delivery of the ECP Amendment and the ECC Amendment (hereinafter referred to as the “Amendments”), the Company has agreed to issue to Intrexon certain shares of the Company’s preferred stock pursuant to the terms of a securities issuance agreement discussed further below.

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On June 29, 2016, the Company and Intrexon entered into a Securities Issuance Agreement (“Preferred Shares Securities Issuance Agreement”), pursuant to which the Company agreed to issue and sell 100,000 shares of its newly designated Series 1 Preferred Stock (the “Issued Shares”), in consideration of the parties entering into the Amendments to amend the royalty percentage terms. The Issued Shares were issued to Intrexon by the Company as of July 1, 2016.

The parties agreed pursuant to the terms of the Preferred Shares Securities Issuance Agreement that the holders of Common Stock issued upon the conversion of the Issued Shares shall be entitled to piggy-back registration rights with respect to any Common Stock registered by the Company following such conversion.

The foregoing description of each of the ECP Amendment, the ECC Amendment and the Preferred Shares Securities Issuance Agreement is only a summary and is qualified in its entirety by reference to such agreements, which are filed as Exhibits 10.1, 10.2 and 10.3 to the Company’s Current Report on Form 8-K dated June 29, 2016 and filed on June 30, 2016, respectively, and are incorporated herein by reference. The benefits of the representations and warranties set forth in the Preferred Shares Securities Issuance Agreement are intended to be relied upon by the parties to such agreement only and, except as otherwise expressly provided therein, do not constitute continuing representations and warranties to any other party or for any other purpose.

As indicated above, in consideration of entering into the Amendments, the Company agreed to issue to Intrexon 100,000 shares of the Company’s Series 1 Preferred Stock, a new class of preferred stock authorized by the Company’s board of directors.

The rights, preferences, privileges, restrictions and other matters relating to the Preferred Shares, are set forth in the Amended and Restated Certificate of Designation, Preferences and Rights of Series 1 Preferred Stock (the “A&R Certificate of Designation”), which was filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K/A dated July 1, 2016 and filed on July 1, 2016. The A&R Certificate of Designation authorizes the Company to issue 250,000 of its 30,000,000 authorized shares of preferred stock as shares of Series 1 Preferred Stock.

Each Preferred Share has a stated value of $1,200, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other recapitalization with respect to the Preferred Shares.

Dividend Rights. The holders of the Preferred Shares shall receive a monthly dividend, payable in additional Preferred Shares, equal to $12.00 per Preferred Share held by such holder per month divided by the stated value of the Preferred Shares, which is referred to as the PIK Dividend, rounded down to the nearest whole share. For the holders of any shares of Preferred Shares that are not converted on the Conversion Event Date (as defined below), the rate of PIK Dividend on all remaining unconverted Preferred Shares shall automatically increase from $12.00 to $24.00 per Preferred Share per month.

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Conversion. The Preferred Shares shall automatically convert into shares of Common Stock, upon the date the first approval in the United States of (i) a ZIOPHARM Product, as defined in and developed under the Existing ECP Agreement, (ii) a Product, as defined in and developed under the Existing GvHD Agreement or (iii) a Product, as defined in and developed under the License and Collaboration Agreement dated March 27, 2015 and as amended from time to time, by and among Intrexon, ARES TRADING, S.A. and the Company, is publicly announced. The public announcement of such an approval is referred to as the Conversion Event Date. Pursuant to the A&R Certificate of Designation, on the second business day following the Conversion Event Date (as defined in the A&R Certificate of Designation), each Preferred Share shall convert into a number of shares of the Company’s Common Stock equal to the stated value of such Preferred Share, divided by the greater of: (i) the volume weighted average closing price of Common Stock as reported by The NASDAQ Stock Market LLC over the 20 trading days ending on the Conversion Event Date or (ii) $1.00; however, the Company shall not effect any conversion of the Series 1 Preferred Stock into shares of Common Stock in excess of the Conversion Limitation (defined below) without stockholder approval. The Conversion Limitation is defined as 19.9% of the lesser of (i) the pre-transaction outstanding shares of Common Stock or (ii) the outstanding shares of Common Stock at the time of conversion.

Without stockholder approval in accordance with the Listing Rules of The NASDAQ Stock Market LLC, the Company shall not effect any conversion of the Preferred Shares into Common Stock to the extent that the number of shares of Common Stock issued in such conversion should constitute a change of control under the Listing Rules of The NASDAQ Stock Market LLC, taking into account for these purposes, the policy of The NASDAQ Stock Market LLC to calculate beneficial ownership in accordance with Section 13 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Voting Rights. The holders of the Series 1 Preferred Stock do not have any voting rights except that the Company may not, without the consent of the holders of a majority of the outstanding shares of the Series 1 Preferred Stock, voting as a separate class, (i) amend, alter or repeal any provision of the Company’s Certificate of Incorporation in a manner that adversely affects the powers, preferences or rights of the Series 1 Preferred Stock in a manner that is more adverse than the effect on any other class or series of the Company’s capital stock; (ii) (A) create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of the Company’s capital stock unless the same ranks junior or pari passu to the Series 1 Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of redemption, or (B) reclassify, alter or amend any existing security of the Company that is junior or pari passu to the Series 1 Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to the Series 1 Preferred in respect of any such right, preference or privilege; or (iii) enter into any transaction (or series of related transactions) the effect of which would adversely affect the holders of the Series 1 Preferred Stock in a manner that is more adverse than the effect on any other class or series of the Company’s capital stock.

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Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or a “Deemed Liquidation Event,” as defined in the A&R Certificate of Designation (which includes a change of control or the sale, lease transfer or exclusive license of all or substantially all of the Company’s assets), the holders of the Preferred Shares shall be entitled to receive a portion of all funds to be distributed in proportion to the holders’ proportionate share of Common Stock (on an as-converted to Common Stock basis). The portion of the funds payable to each Preferred Share is referred to as the Series 1 Liquidation Amount. For purposes of calculating the Series 1 Liquidation Amount, if such voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event occurs prior to the Conversion Event Date, then each Preferred Share shall be deemed to be convertible into the number of shares of Common Stock equal to (i) the stated value of such Preferred Share, divided by (ii) the volume weighted average price of Common Stock for the 20-day period ending on the date of the public announcement of such voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, rounded down to the nearest whole share. In addition, the Company may elect to redeem the Preferred Shares in connection with or following a Deemed Liquidation Event at a price per share equal to the Series 1 Liquidation Amount.

The foregoing description of the A&R Certificate of Designation is only a summary and is qualified in its entirety by reference to the A&R Certificate of Designation, which is filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K/A dated July 1, 2016 and filed on July 1, 2016 and incorporated herein by reference.

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