EX-10.7
STOCKHOLDERS' AGREEMENT
BY AND AMONG
HEMOBIOTECH, INC.
AND
THE INVESTORS NAMED IN SCHEDULE I
AND
THE COMMON HOLDERS NAMED IN SCHEDULE II
Dated as of
October 31, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I Covenants of the Company ..................................... 1
1.1 Right of First Offer ........................................... 1
1.2 Tag Along Rights ............................................... 3
1.3 Registration Rights ............................................ 3
1.4 Termination of Covenants ....................................... 4
ARTICLE II Voting ....................................................... 4
2.1 Size and Composition of Board of Directors ..................... 4
2.2 Vacancies; Removal ............................................. 4
2.3 Expense Reimbursement .......................................... 5
2.4 Indemnification Agreements ..................................... 5
2.5 Termination of Voting Covenants ................................ 5
ARTICLE III General ...................................................... 5
3.1 Notices ........................................................ 5
3.2 Successors and Assigns ......................................... 6
3.3 Severability ................................................... 6
3.4 Entire Agreement; Amendments and Waivers ....................... 6
3.5 Governing Law .................................................. 6
3.6 Counterparts ................................................... 7
3.7 Specific Performance ........................................... 7
3.8 Aggregation of Stock ........................................... 7
-i-
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "AGREEMENT") is made as of the 31st
day of October, 2003, by and among Hemobiotech, Inc., a Delaware corporation
(the "Company"), the investors listed on SCHEDULE I attached. hereto (the
"INVESTORS"), and each of the individuals and entities listed on SCHEDULE II
attached hereto (the "COMMON HOLDERS"). The Investors and the Common Holders are
sometimes collectively referred to herein as the "STOCKHOLDERS."
RECITALS:
WHEREAS, Xxxxxxx Xxxx previously held 2,000,000 shares of Class A
Common Stock of HemoBioTech, Inc. a Texas corporation ("Hemo-TX") and all of the
issued and outstanding Class B Common Stock of Hemo-TX, and held other
protective rights with respect to Hemo-TX, including anti-dilution rights and
approval rights with respect to certain action to be taken by Hemo-TX;
WHEREAS, Xxxxxx Xxxx and other Nino family members (collectively, with
Xxxxxxx Xxxx, the "NINO FAMILY MEMBERS") held shares of Class A Common Stock of
Hemo-Tx, and Xxx. Xxxx held anti-dilution rights with respect to her holdings of
Class A Common Stock of Hemo-TX;
WHEREAS, Ascend Mobility, Inc. a Texas corporation ("ASCEND MOBILITY")
held shares of Class A Common Stock of Hemo-TX.
WHEREAS, in order to facilitate the equity financing of the Company,
the Nino Family Members and Ascend Mobility hace (i) caused all of the shares of
Hemo-Tx held by the Nino Family Members and Ascend Mobility (other than the
2,000,000 shares of Class A Common Stock of Hemo-TX previously held by Xxxxxxx
Xxxx) to be contributed to Nino Partners, LLC, a Texas limited liability
corporation ("NINO PARTNERS") and (ii) caused Nino Partners to contribute all of
the Class A Common Stock and Class B Common Stock of Hemo-TX held by Nino
Partners to the Company in exchange for shares of common stock, par value $0.001
per share of the Company (the "COMPANY STOCK"); and
WHEREAS, the Company wishes to provide the Investors with the
opportunity to participate on the terms provided for herein in subsequent sales
of the Company's securities by the Company, and the Common Holders and the
Investors wish to establish rights to designate directors of the Company.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises, the
respective representations, warranties and covenants contained herein and
certain other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
COVENANTS OF THE COVENANTS OF THE COMPANY
1.1 RIGHT OF FIRST OFFER. Subject to the terms and conditions specified
in this Section 1.1, the Company hereby grants to each Investor a right of first
offer with respect to future sales by the Company of its Shares (as hereinafter
defined). Each time the Company proposes to offer any shares of securities
convertible into or excercisable for any shares of any class of its capital
stock ("Shares"), the Company shall first make an offering of such Shares to
each investor in accordance with the following provisions;
(a) The Company shall deliver notice to the Investor stating (i) its
bona fide intention to offer such Shares, (ii) the number of such Shares to be
offered, and (iii) the price and terms, if any, upon which it proposes to offer
such Shares.
(b) Within 10 calendar days after receipt of the Notice, the
Investor may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to that portion of such Shares which equals the
proportion that the number of shares of Common Stock then held by, such Investor
(assuming full conversion and exercise of all convertible and exercisable
securities) bears to the total number of shares of Common Stock of the Company
then outstanding (assuming full conversion and exercise of all convertible or
exercisable securities) held by all stockholders of the Company.
(c) If all Shares which Investors are entitled to obtain pursuant to
subsection 1.1 (b) are not elected to be obtained as provided in subsection 1.1
(b) hereof, the Company may, during the 60-day period following the expiration
of the period provided in subsection 1.1 (b) hereof, offer the remaining
unsubscribed portion of such Shares to any person or persons at a price not less
than, and upon terms no more favorable to the offeree than those specified in
the Notice. If the Company does not enter into an agreement for the sale of the
Shares within such period, or if such agreement is not consummated within 30
days of the execution thereof, the right provided hereunder shall be deemed to
be revived and such Shares shall not be offered unless first reoffered to the
Investors in accordance herewith.
(d) The right of first offer in this Section 1.1 shall not be
applicable to (i) Common Stock issued pursuant to a split or subdivision of the
outstanding shares of Common Stock approved by the Board; (ii) Common Stock
issuable or issued to employees, consultants or directors of the Company
directly or pursuant to any stock option or equity incentive plan approved by
the Board; (iii) securities issued in connection with acquisition transactions;
(iv) securities issued to financial institutions or lessors in connection with
commercial credit arrangements, equipment financings, property or equipment
leases or similar transactions; (v) securities issued in connection with
strategic transactions involving the Company and other entities, including (A)
joint ventures, manufacturing, marketing and distribution arrangements and (B)
licenses, technology transfers and development arrangements; (vi) Common Stock
issued upon conversion of preferred stock of the Company ("PREFERRED STOCK");
and (vii) Common Stock issued or issuable in a public offering before or in
connection with which all outstanding shares of Preferred Stock will be
converted to Common Stock.
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(e) The right of first refusal set forth in this Section 1.1 (i) may
not be assigned or transferred, except to a limited partner, general partner,
member or an affiliate of an Investor, and (ii) may be waived in writing by
Investors holding a majority of the Common Stock then were by all Investors
(assuming fully conversion and exercise of all convertible and exercisable
securities).
1.2 TAG ALONG RIGHTS. As a condition to the initial sale by the Company
of its Preferred Stock, the Company shall cause the purchasers of such Preferred
Stock to grant Investor a Tag Along Right in substantially the form described
below.
(a) If at any time holders of a majority of the Preferred Stock then
outstanding (the "CONTROL SELLERS") desire to sell a majority of the Preferred
Stock through a single transaction or a series of related transactions to any
person (a "PROPOSED TRANSFEREE"), such Control Sellers shall provide each
Investor with prior written notice (the "PARTICIPATION NOTICE") at least 10 days
prior to the date of consummation of such transaction (the "PROPOSED SALE
TRANSACTION") of (i) the number of Shares proposed to be sold by the Control
Seller, the type of Shares proposed to be sold by the Control Seller, the price
per Share and other terms of the proposed sale, and (ii) the number of Shares
which each Investor shall be permitted to sell pursuant to the Tag Along Rights
set forth in Section 1.2(b) if exercised in full.
(b) In the event of a Proposed Sale Transaction, each Investor shall
have the option ("TAG-ALONG RIGHTS") to sell to the Proposed Transferee a number
of Shares equal to the product of (i) the number of Shares (determined on an
as-converted to Common Stock basis) held by such Investor immediately prior to
such sale and (ii) a fraction, (A) the numerator of which is the number of
Shares (determined on an as-converted to Common Stock basis) that the Control
Sellers' elect to sell in the Proposed Sale Transaction, and (B) the denominator
of which is the number of Shares (determined on an as-converted to Common Stock
basis) held by all Control Sellers immediately prior to such Proposed Sale
Transaction. Any such sale by such Investor shall be at the same price and on
the same terms and conditions as apply to such sale by the Control Sellers.
Investors may exercise their Tag Along Rights by delivering written notice (the
"TAG ALONG NOTICE") to the Control Sellers within fifteen days after delivery of
the Participation Notice. The delivery of the Tag Along Notice shall constitute
an irrevocable commitment to sell such Shares.
1.3 REGISTRATION RIGHTS. If at any time the Company proposes or
determines to register any Common Stock, other than in its initial public
offering of Common Stock or pursuant to a registration on Form S-4 or S-8 or any
successor forms, in an underwritten offering to the public for cash, the Company
will promptly give written notice thereof to Investors and will include in such
registration (and any related qualification under state securities laws), and in
the underwriting involved therein, all the Common Stock then held and specified
by Investors in a written request, received by the Company within (30) days
after the mailing of such written notice by the Company; PROVIDED, that if the
managing underwriters advise the Company that in their opinion marketing factors
require a limitation in the number of securities to be included, the Company
will include in such registration (a) first, any Common Stock offered by the
Company, and (b) second, if all the Company's Common Stock is included in the
registration, the number of shares of Common Stock requested to be included
that, in the opinion of such underwriters, can be sold, pro rata among the
respective stockholders of the Company on the basis of the
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amount of Common Stock owned by each such stockholder assuming conversion of all
convertible securities and exercise of all warrants and options to purchase
shares of Common Stock. The price at which the Investors' Common Stock being
registered in such offering shall be equal to the price at which the Company's
Common Stock is offered to the public in such registration. No securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. The Investors shall be
required to pay underwriting discounts and commissions, pay incremental expenses
of the offering attributable to registration of the Investors' Common Stock,
provide indemnification to the Company and the underwriters, provide a lockup
agreement, and comply with such other terms and conditions, in each case, only
to the extent required of the other stockholders selling Common Stock pursuant
to the offering.
1.4 TERMINATION OF COVENANTS. The covenants set forth in Sections 1.1
and 1.2 shall terminate and be of no further force or effect upon the
consummation of the sale of securities pursuant to a registered public offering
of the Common Stock (the "FIRST PUBLIC OFFERING"). The covenant set forth in
Section 1.3 shall terminate on the fifth year anniversary of the date of the
First Public Offering.
ARTICLE II
VOTING
2.1 SIZE AND COMPOSITION OF BOARD OF DIRECTORS. The Stockholders agree
that in any election of directors of the Company, they shall vote all Shares
owned or controlled by them, including all shares which they are entitled to
vote under any voting trust, voting agreement or proxy, to elect a Board of
Directors initially comprising five (5) directors, designed as follows:
(a) One (1) director (a "COMMON DIRECTOR") designated by the holders
of a majority of the shares of the Common Stock held by the Common Holders, who
initially shall be Xxxxxx Xxxxxx, Ph.D.;
(b) One (1) director (an "INVESTOR DIRECTOR") designated by the
Investors, who initially shall be Xxxxxxx Xxxx;
(c) Two (2) directors (each a "PREFERRED DIRECTOR") to be designated
by holder of a majority of the then outstanding Preferred Stock; and
(d) One (1) director (an "INDEPENDENT DIRECTOR") designated by the
holders of a majority of the shares held by the Common Holders, the Investors
and the holders of Preferred Stock (voting as one class on an as converted to
Common Stock basis).
2.2 VACANCIES; REMOVAL. In the event of any vacancy in the Board of
Directors, the Stockholders agree to vote all outstanding Shares owned or
controlled by them and to otherwise use their best efforts to fill such vacancy
so that the Board of Directors of the Company will be comprised of directors
designated as provided in Section 2.1. The Stockholders agree to vote all
outstanding Shares owned or controlled by them for the removal of a director
whenever (but only whenever) there shall be presented to the Board of Directors
the written direction that such director be removed, signed by (i) the holders
of a majority of the outstanding Shares held by the Common Holders, in the case
of a Common Director, (ii) the holders of a majority of the
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outstanding Shares held by the Investors, in the case of an Investor Director,
(iii) the holders of a majority of the outstanding Shares held by the holders of
Preferred Stock, in the case of a Preferred Director, and (iv) the holders of a
majority of the outstanding Shares held by the Common Holders, Investor and the
holders of Preferred Stock, in the case of an Independent Director.
2.3 EXPENSE REIMBURSEMENT. The Company shall reimburse each member of
the Board of Directors for all reasonable out-of-pocket expenses incurred by
such member in connection with his or her attendance at any meeting of the Board
of Directors and for any reasonable travel expenses incurred in connection with
his or her travel to any such meeting or on behalf of the Company.
2.4 INDEMNIFICATION AGREEMENTS. As of the date that any director is
first elected or appointed to the Company's Board of Directors, the Company
shall enter into an indemnification agreement in substantially the form attached
as ANNEX A hereto with each director of the Company who is elected or appointed
to the Company's Board of Directors.
2.5 TERMINATION OF VOTING COVENANTS. The rights and obligations of the
Stockholders set forth in Article II shall terminate upon the earliest to occur
of any of the following events:
(a) the liquidation, dissolution or indefinite cessation of the
business operations of the Company, or a merger, recapitalization,
reorganization or sale of all or substantially all of the assets of the Company
which will result in the stockholders of record immediately prior to such a
transaction not holding more than 50% of the voting power of the surviving,
continuing or purchasing entity;
(b) the execution by the Company of a general assignment for the
benefit of creditors or the appointment of a receiver or trustee to take
possession of the property and assets of the Company; or
(c) the consummation of the First Public Offering.
ARTICLE III
GENERAL
3.1 NOTICES.
(a) Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally or by express
courier, telegraphed, telexed, sent by facsimile transmission or sent postage
prepaid by certified, or registered mail, return receipt requested, or by
express mail. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed, or sent by confirmed facsimile transmission
or, if mailed, three (3) business days after the date of deposit in the United
States mail, as follows:
(i) if to the Investors, at the address set forth below such
Investor's name on SCHEDULE I hereto.
(ii) if to the Company:
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Hemobiotech, Inc.
0000 Xxxxxxxx Xxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Fax: (_____)
with a copy (which shall not constitute notice) to:
Xxxxx Day
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
(iii) if to a Common Holder, to such Common Holder c/o the
Company or at the most recent address for such Common Holder set forth in the
stock records of the Company.
(b) Any party may, by not less than ten days notice given in
accordance with this Section 3.1 (b) to the other parties, designate another
address or person for receipt of notices hereunder. Notice given by personal
delivery, courier service or mail shall be effective upon actual receipt. Notice
given by telecopier shall be confirmed by appropriate answer back and shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next business day after receipt if
not received during the recipient's normal business hours. Any party may change
any address to which notice is to be given to it by giving notice as provided
above of such change of address.
3.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
3.3 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason be held to be invalid, illegal or
unenforceable, such provisions shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such provision had never
been contained herein.
3.4 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof. SCHEDULE I and SCHEDULE II hereto may be amended from
time to time to reflect additional Shares acquired by the Stockholders or to
reflect additional parties to this Agreement without formally amending this
Agreement. Except as otherwise provided herein, no waiver, modification or
amendment of this Agreement, or approval or consent granted or given in
connection with this Agreement, shall be binding unless it is in writing and
signed by (i) the Company; (ii) holders of a majority of the Shares held by the
Common Holders, and (iii) holders of a majority of the Shares held by the
Investors. Any waiver, modification or amendment of this Agreement, or approval
or consent granted or given in connection with this Agreement, which is made in
accordance with the requirements of this Section 3.4 shall be valid and binding
with respect to all Stockholders.
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3.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to choice of
law or conflicts of law principles.
3.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which, when
taken together, shall constitute one and the same instrument.
3.7 SPECIFIC PERFORMANCE. The parties hereto shall have all remedies
for breach of this Agreement available to them as provided by law or equity.
Without limiting the generality of the foregoing, the parties agree that in
addition to any other rights and remedies available at law or in equity, the
parties shall be entitled to obtain specific performance of the obligations of
each party to this Agreement and immediate injunctive relief and that, in the
event any action or proceeding is brought in equity or to enforce the same, no
party will urge, as a defense, that there is an adequate remedy at law.
3.8 AGGREGATION OF STOCK. All Shares held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement
[Signature Pages Follow]
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IN WITNESS WHEREOF, the undersigned party has executed this
Stockholders' Agreement as of the date first above written.
COMPANY:
HEMOBIOTECH, INC
By: /s/ Xxxxxx Xxxxxx
-------------------------
Xxxxxx Xxxxxx, Ph.D.
President and Chief Executive Officer
IN WITNESS WHEREOF, the undersigned parties have executed this
Stockholders' Agreement as of the date first above written.
INVESTORS:
NINO PARTNERS, LLC
By: /s/ Xxxxxxx Xxxx
------------------------------
Xxxxxxx Xxxx
Manager
IN WITNESS WHEREOF, the undersigned parties have executed this
Stockholders' Agreement as of the date first above written.
COMMON HOLDERS:
/s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx, Ph.D.
/s/ Xxxxxxx Xxxx
---------------------------------
Xxxxxxx Xxxx
BIOGRESS LLC
By /s/ Xxxxxxx Xxxx
------------------------------
Xxxxxxx Xxxx
Managing Partner
SCHEDULE I
TO
STOCKHOLDERS' AGREEMENT
----------------------------------------------------------------------
Name and Address of Investor: Number of Shares of
Common Stock Held
----------------------------------------------------------------------
Nino Partners, LLC 7,250,000
----------------------------------------------------------------------
----------------------------------------------------------------------
Total Common Shares: 7,250,000
----------------------------------------------------------------------
SCHEDULE II
TO
STOCKHOLDERS' AGREEMENT
----------------------------------------------------------------------
Number of Shares of
Name and Address of Common Holder: Common Stock Held
----------------------------------------------------------------------
Xxxxxx Xxxxxx, Ph.D.
00000 Xxxxx Xxxx 0,000,000
Xxxxxx, XX 00000
----------------------------------------------------------------------
Xxxxxxx Xxxx
00000 Xxxxxxx Xxxx
Xxxxx 0000 2,000,000
Xxxxxx, XX 00000
----------------------------------------------------------------------
Biogress LLC 400,000
----------------------------------------------------------------------
Total Common Shares: 4,200,000
----------------------------------------------------------------------
