EXHIBIT 10.4
BOARD REPRESENTATION AGREEMENT, dated as of October 12, 2007, by and
between HAPC, Inc., a Delaware corporation (the "Company") and the other persons
named on the signature pages hereto (the "GP Entities").
WHEREAS, as a result of certain transactions between the GP Entities
and various third parties, the GP Entities may become the beneficial owners of
4,500,000 shares of the Common Stock, par value $0.0001 per share of the Company
("Common Stock") and warrants to acquire an additional 1,666,666 shares of
Common Stock; and
WHEREAS, due to the potential significant investment of the GP Entities
in the Company, the Company is willing to enter into this Agreement with the GP
Entities, which shall become effective in accordance with Section 3.7 of the
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, the Company and the GP Entities agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the following
meanings:
(a) "Beneficial ownership" and "beneficially own" shall have
the meanings set forth in Rule 13d-3 under the Exchange Act.
(b) "GP Representative" means any natural person who has been
chosen in writing, with notice thereof to the Company, by the GP Entities
holding beneficial ownership of Voting Securities representing in the aggregate
a majority of the Total Voting Power held by the GP Entities.
(c) "Total Voting Power" means, at any time, the aggregate
number of votes which may be cast by holders of outstanding Voting Securities.
(d) "Voting Securities" means the Common Stock and any other
securities (including voting preferred stock) issued by the Company which are
entitled to vote generally for the election of directors of the Company, whether
currently outstanding or hereafter issued (other than securities having such
powers only upon the occurrence of a contingency).
ARTICLE 2
BOARD REPRESENTATION
2.1 INITIAL BOARD REPRESENTATION. Upon the execution and delivery of
this Agreement, the Company will (a) take such action as may be necessary to
increase the size of the Board of Directors of the Company (the "Board of
Directors") by one, and (b) use its best efforts to cause the vacancy thereby
created to be filled with a director designated by the GP Representative (the
"GP Director").
2.2 CONTINUING BOARD REPRESENTATION. Until such time as the GP Entities
no longer beneficially own Voting Securities representing in the aggregate at
least 10% of the Total Voting Power, the Company covenants and agrees to use its
best efforts to cause the Nominating Committee (or if the Nominating Committee
makes no such recommendation, the Board of Directors) to recommend for election
each year, one GP Director as designated by the GP Representative; PROVIDED,
that if despite such best efforts, such GP Director is not elected by the
stockholders of the Company, the Company shall have no further obligations under
this Section 2.2 for the applicable year.
2.3 COMMITTEE REPRESENTATION; SUBSIDIARY BOARD REPRESENTATION. (a)
Until such time as the GP Entities no longer beneficially own Voting Securities
representing in the aggregate at least 10% of the Total Voting Power, the
Company shall use its best efforts to cause the Board of Directors to designate
the GP Director to serve on committees of the Board of Directors to the same
extent, and on the same basis, as the other members of the Board of Directors.
(b) Until such time as the GP Entities no longer beneficially
own Voting Securities representing in the aggregate at least 10% of the Total
Voting Power, the Company shall, at the election of the GP Director, cause the
GP Director to be a member of the Board of each subsidiary of the Company.
2.4 VACANCIES. In the event that a GP Director for any reason ceases to
serve as a member of the Board of Directors during his or her term of office and
at such time the GP Representative would have the right to a designation
hereunder if an election for the resulting vacancy were to be held, the GP
Representative shall designate an individual to fill such vacancy and the
Company shall use its best efforts to cause such vacancy to be filled by such
designee.
2.5 RESIGNATION. In the event that the percentage of Total Voting Power
represented by the Voting Securities beneficially owned in the aggregate by the
GP Entities at any time decreases below 10%, the GP Entities shall cause the GP
Director to resign from the Board of Directors and the boards of any subsidiary.
2.6 FIDUCIARY DUTIES. The obligations of the Company set forth in this
Agreement are subject to the fiduciary duties of the Board of Directors and the
Nominating Committee, if any, to the Company's stockholders. Nothing contained
herein shall require any director of the Company to breach any such fiduciary
duty.
2.7 NO DUTY TO DESIGNATE; OBSERVER RIGHTS. Nothing contained in this
Agreement shall be construed as requiring the GP Entities to designate any GP
Directors or, once designated and elected, to require any GP Director to
continue to serve in office if such GP Director elects to resign. Until such
time as the GP Entities no longer beneficially own Voting Securities
representing in the aggregate at least 10% of the Total Voting Power, in the
event of any vacancy created by the resignation or removal of a GP Director or
the failure of the GP Representative to designate a GP Director, the GP
Representative, or the designee thereof, shall have the right to receive at the
same notice as received by the members of the Board of Directors, and to
participate in as an observer, each meeting of the Board of Directors or of any
committee thereof.
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ARTICLE 3
MISCELLANEOUS
3.1 NOTICES. All notices, requests and other communications with
respect to this Agreement must be in writing and will be deemed to have been
duly given only if delivered personally against written receipt or by facsimile
transmission or mailed (by registered or certified mail, return receipt
requested) or by reputable overnight courier, fee prepaid to the parties at the
following addresses or facsimile numbers:
if to the Company:
HAPC, INC.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: CEO
if to the GP entities, the address set forth on the signature
page hereto.
3.2 AMENDMENTS. This Agreement may not be amended, modified or
supplemented in any manner, whether by course of conduct or otherwise, except by
an instrument in writing signed on behalf of each party
3.3 WAIVER. No failure or delay of any party in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, or any course of
conduct, preclude any other or further exercise thereof or the exercise of any
other right or power. Any agreement on the part of any party to any such waiver
shall be valid only if set forth in a written instrument executed and delivered
by a duly authorized officer on behalf of such party.
3.4 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement may be assigned or delegated, in whole or in
part, by operation of law or otherwise, by any party without the prior written
consent of the other parties, and any such assignment without such prior written
consent shall be null and void.
3.5 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among the parties hereto relating to the subject matter hereof and
supersedes any prior agreements or understandings relating to such subject
matter.
3.6 GOVERNING LAW. This Agreement and all disputes or controversies
arising out of or relating to this Agreement or the transactions contemplated
hereby, shall be governed by, and construed in accordance with, the internal
laws of the State of New York, without regard to the laws of any other
jurisdiction that might be applied because of the conflicts of laws principles
of the State of New York.
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3.7 EFFECTIVE DATE. This Agreement shall only become effective upon the
"Closing Date" of that certain Letter Agreement, dated as of October 12, 2007,
between you and certain other stockholders of the Company attached hereto as
Exhibit A.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
HAPC, INC.
By: /s/ Xxx Xxxxxxxxx
------------------------------------
Name: Xxx Xxxxxxxxx
Title: Secretary
GP Entities:
GREAT POINT PARTNERS, LLC
By: /s/ Xxxxx Xxx
------------------------------------
Name: Xxxxx Xxx
Title: Principal
Address: Great Point Partners, LLC
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
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Exhibit A
See Exhibit 10.1 to the Company's Schedule 13D, filed on October 25, 2007.
