EX-10.4 5 f8k121815ex10iv_cleveland.htm ACKNOWLEDGEMENT AGREEMENT, DATED AS OF DECEMBER 18, 2015, AMONG CLEVELAND BIOLABS, INC., PANACELA LABS, INC. AND OPEN JOINT STOCK COMPANY "RUSNANO" ACKNOWLEDGMENT AGREEMENT
Exhibit 10.4
This ACKNOWLEDGMENT AGREEMENT (this “Acknowledgment”), is effective as of the 18 day of December, 2015 (the “Effective Date”), and is executed by and among Panacela Labs, Inc., a Delaware corporation (the “Company”), Cleveland BioLabs, Inc., a Delaware corporation (“CBLI”), and Open Joint Stock Company “Rusnano”, a company organized under the laws of the Russian Federation (“Rusnano”).
WHEREAS, CBLI and Rusnano are stockholders of the Company;
(a) As used in this Acknowledgment, the following terms shall have the following meanings:
(i) “CBLI Common Stock” means the Common Stock, $0.005 par value per share, of CBLI.
(ii) “Governmental Authority” means any United States federal, state or local or any foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.
(iii) “Intercompany Loan Agreement” means that certain Loan Agreement dated as of September 3, 2013, between the Company and the LLC, as amended by Amendment No. 1 to Loan Agreement dated as of October 8, 2013.
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(iv) “Intercompany Loan Amendment” means that certain Amendment No. 2 to Loan Agreement to be entered into by the Company and the LLC, substantially in the form of Exhibit B attached hereto.
(v) “Lien” means any security interest, pledge, mortgage, lien (including, without limitation, environmental and tax liens), charge, encumbrance, adverse claim, preferential arrangement or restriction of any kind, including, without limitation, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.
(vi) “LLC” means Panacela Labs, LLC, a company organized under the laws of the Russian Federation.
(vii) “Material Adverse Effect” means, with respect to any Person, any circumstance, change in or effect on such Person or any of its Subsidiaries that, individually or in the aggregate with all other circumstances, changes in, or effects on, such Person and/or its Subsidiaries is materially adverse to the business, operations, assets, liabilities, results of operations or financial condition of such Person and its Subsidiaries, taken as a whole.
(viii) “Minority Stockholder” means any stockholder of the Company, other than CBLI or Rusnano.
(ix) “Panacela Common Stock” means the Common Stock, $0.001 par value per share, of the Company.
(x) “Person” means an individual, corporation, limited liability company, partnership, association, trust, joint stock company, or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
(xi) “Proportionate Percentage” means the percentage that expresses the ratio of (x) the number of issued and outstanding shares of capital stock of the Company (on an as converted basis) then owned of record by such stockholder over (y) the aggregate number of outstanding shares of capital stock of the Company (on an as converted basis).
(xii) “Securities Act” means the United States Securities Act of 1933, as amended.
(xiii) “Stockholders’ Agreement” means that certain Stockholders and Investor Rights Agreement, by and among the Company and the stockholders listed on Schedule 1 thereto, as amended by that certain First Amendment to Stockholders and Investor Rights Agreement dated as of September 3, 2013.
(xiv) “Subsidiary” or “Subsidiaries” means, with respect to any Person, any entity of which (i) securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions, (ii) more than 50% of the interest in the capital or profits of such Person or entity or (iii) more than 50% of the beneficial interest in such trust or estate, is at the time of determination directly or indirectly owned or controlled by such Person.
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(xv) “Supplemental Agreement” means that certain Amendment and Supplemental Agreement No. 1 to Convertible Loan Agreement dated as of the date hereof between Rusnano and the Company.
(xvi) “Transaction Documents” means this Acknowledgment, the CBLI/Rusnano Subscription Agreement, the Panacela/Rusnano Subscription Agreement, the CBLI Subscription Agreement, the Supplemental Agreement, the Intercompany Loan Amendment and other documents, agreements, certificates and instruments delivered pursuant to any of the foregoing.
(b) The terms not defined in Section 1(a) above shall have the meanings set forth in this Acknowledgment.
(a) Issuance of Panacela Shares.
(i) Prior to the Closing, the Company has offered for sale to all stockholders of the Company 24,724 shares of Panacela Common Stock (“Panacela Shares”), at $117.4 per share, with each stockholder entitled to purchase such stockholder’s Proportionate Percentage of such Panacela Shares, which offer and sale, subject to Section 2(e)(i) and (ii), was conducted in accordance with the Stockholders’ Agreement and applicable U.S. federal and state securities laws. None of the Minority Stockholders have elected to subscribe for or purchase any Panacela Shares.
(ii) Subject to the satisfaction or waiver of the conditions set forth in Section 4, at the Closing:
(A) Rusnano shall subscribe for and purchase, and the Company shall issue and deliver to Rusnano, 6,014 Panacela Shares;
(B) Rusnano shall pay the aggregate consideration for such Panacela Shares by acknowledging the repayment of $706,043.60 of the Rusnano Obligations as set forth in Section 2(b)(i)(B) (as it relates to Section 2(b)(i)(A)(3)); and
(C) In connection with transactions contemplated by this Section 2(a)(ii), Rusnano and the Company shall enter into a Stock Subscription Agreement substantially in the form of Exhibit C attached hereto (the “Panacela/Rusnano Subscription Agreement”).
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(iii) Subject to the satisfaction or waiver of the conditions set forth in Section 4, at the Closing:
(A) CBLI shall subscribe for and purchase, and the Company shall issue and deliver to CBLI, 18,710 Panacela Shares;
(B) CBLI shall pay the aggregate consideration for such Panacela Shares of $2,196,554 as set forth in Sections 2(b)(i)(A)(1) and (2) and Sections 2(b)(ii) and (iii);
(C) In connection with transactions contemplated by this Section 2(a)(iii), CBLI and the Company shall enter into a Stock Subscription Agreement substantially in the form of Exhibit D attached hereto (the “CBLI Subscription Agreement”);
(A) Rusnano shall subscribe for and purchase, and CBLI shall issue and deliver to Rusnano, 256,215 shares of CBLI Common Stock (the “CBLI Shares”), at $4.45 per share (the closing market price of a share of CBLI Common Stock on the NASDAQ Capital Market as of October 13, 2015);
(B) Rusnano shall pay the aggregate consideration for such CBLI Shares of $1,140,156.75 by accepting CBLI Shares in partial satisfaction of the Rusnano Obligations, as described in Section 2(b)(i)(A)(2) and (B) (to the extent related to Section 2(b)(i)(A)(2)); and
(C) In connection with the transactions contemplated by Section 2(a)(iv), Rusnano and CBLI shall enter into a Stock Subscription Agreement substantially in the form of Exhibit E attached hereto (the “CBLI/Rusnano Subscription Agreement”).
(v) All CBLI Shares and Panacela Shares shall be issued free and clear of all Liens other than any restrictions pursuant to U.S. federal and state securities laws and, in the case of Panacela Shares, any additional Liens created by or arising under the Stockholders’ Agreement.
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(b) Repayment of the Obligations.
(i) Rusnano Obligations.
(A) As of the Effective Date, prior to the consummation of the transactions contemplated hereby, provided that the transactions contemplated in this Acknowledgment are consummated prior to December 30, 2015, the Company owes $2,137,165.96 to Rusnano pursuant to the Convertible Loan Agreement (the “Rusnano Obligations”) of which $1,530,000.00 is the outstanding initial principal amount (the “Principal Amount”) and $607,165.96 is the accrued and unpaid interest as of October 13, 2015, as further set forth on Exhibit A. Provided the transactions contemplated in this Acknowledgment are consummated prior to December 30, 2015, Rusnano hereby waives any interest accrued on the Principal Amount after October 13, 2015 through the Effective Date. At the Closing, the Rusnano Obligations shall be satisfied in full as follows and as set forth in the Supplemental Agreement:
(1) CBLI shall pay Rusnano, on behalf of the Company, $290,965.61 (the “Cash Amount”) by wire transfer of immediately available funds to the account of Rusnano as notified by Rusnano in writing prior to the Closing;
(2) CBLI shall pay $1,140,156.75 of the Rusnano Obligations (the “CBLI Shares Amount”), on behalf of the Company, by issuing and delivering the CBLI Shares to Rusnano, as described in Section 2(a)(iv); and
(3) The Company shall pay $706,043.60 of the Rusnano Obligations by issuing and delivering 6,014 Panacela Shares to Rusnano pursuant to the Panacela/Rusnano Subscription Agreement as described in Section 2(a)(ii).
(B) Rusnano hereby accepts repayment of the Rusnano Obligations as set forth in Section 2(b)(i)(A)(1) through (3) above and acknowledges and agrees that, after (i) the consummation of the transactions contemplated by clauses (1) through (3) above (including, without limitation, the receipt by Rusnano of the Cash Amount, the CBLI Shares and the Panacela Shares) and subject to Section 2(b)(i)(D) (including, without limitation, Section 9 of the Convertible Loan Agreement): (w) the Rusnano Obligations shall automatically and without any further action by the parties be deemed fully paid and satisfied, (x) that certain Warrant dated as of September 3, 2013 by and between CBLI and Rusnano (the “Warrant”) shall be deemed cancelled, (y) Rusnano hereby releases any and all liens, security interests, assignments, pledges and other similar interests Rusnano may have in respect of the Convertible Loan Agreement, the Warrant and the Rusnano Obligations, and (z) Rusnano for itself and for its successors and assigns, fully and unconditionally releases and forever discharges the Company and its employees, officers, directors, agents, representatives successors and assigns from all of its obligations and liabilities under or claims relating to the Convertible Loan Agreement and the Warrant.
(C) After consummation of the transactions set forth in Section 2(b)(i)(A)(1) through (3) above, the Company does hereby for itself and for its successors and assigns, fully and unconditionally release and forever discharge Rusnano and its employees, officers, directors, agents, representatives successors and assigns from all of its obligations and liabilities under or claims relating to the Convertible Loan Agreement and the Warrant.
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(D) Notwithstanding anything to the contrary in this Acknowledgment, (i) all obligations and duties of the Company under the Convertible Loan Agreement which, by their express terms, specifically survive the repayment of the Rusnano Obligations (and, in all events, Sections 9 and 11.3 of the Convertible Loan Agreement) and any claims related thereto first arising after the Effective Date shall not be deemed to have been terminated, released or discharged pursuant to this Acknowledgment and (ii) in the event of occurrence of events described in Section 9 of the Convertible Loan Agreement, each of the waiver set forth in Section 2(b)(i)(A) and Section 1 of the Supplemental Agreement shall be null and void and of no force and effect.
(E) For the avoidance of doubt and notwithstanding anything to the contrary in this Acknowledgment, the payment provisions set forth in Section 3 of the Supplemental Agreement shall not be in addition to, but shall be a mere restatement of, certain agreements of the parties as set forth in this Acknowledgment.
(ii) CBLI Obligations. As of the Effective Date and prior to the consummation of the transactions contemplated hereby, the Company owes $333,337.89 to CBLI as further set forth on Exhibit A (the “CBLI Obligations”). At the Closing, (i) the Company and CBLI shall set off the CBLI Obligations against CBLI’s purchase price obligation under the CBLI Subscription Agreement, whereby, after giving effect to such set-off, the amount to be remitted by CBLI pursuant to the CBLI Subscription Agreement as the purchase price shall be reduced by the amount of the CBLI Obligations and (ii) upon receipt by CBLI of 18,710 Panacela Shares, the CBLI Obligations shall automatically and without any further action by the parties be deemed fully paid and satisfied and (iii) upon and subject to receipt of 18,710 Panacela Shares, CBLI hereby releases any and all liens, security interests, assignments, pledges and other similar interests CBLI may have in respect of the CBLI Obligations.
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(iii) Trade Payables. As of the Effective Date and prior to the consummation of the transactions contemplated hereby, the Company owes (x) an aggregate amount of $397,217.36 in trade payables to third party creditors (other than CBLI and Rusnano) and (y) an aggregate amount of $15,000.00 to Rusnano pursuant to Section 6.2(a) of the Master Agreement dated as of September 3, 2013, as amended (the “Master Agreement Obligations”), for a total of $412,217.36, each as shown on Exhibit A (collectively, the “Trade Payables”). At or prior to the Closing, CBLI, on behalf of the Company, shall pay by wire transfer of immediately available funds to the account of each such third party creditor (including Rusnano) the respective amounts shown on Exhibit A and provide evidence of payment of such amounts to Rusnano and CBLI. Such payments made by CBLI shall be set-off against CBLI’s purchase price obligations under the CBLI Subscription Agreement (as further described in Section 2(a)(iii)(B)), thereby reducing the actual amount that CBLI shall be required to remit to the Company in immediately available funds pursuant thereto. The Company shall use its best efforts to obtain a pay-off letter substantially in the form of Exhibit F attached hereto from each such third party creditor (other than Rusnano) on or prior to the Closing. Subject to and upon receipt by Rusnano of $15,000.00 pursuant to this Section 2(b)(iii), (i) the Master Agreement Obligations shall automatically and without any further action by the parties be deemed fully paid and satisfied and (ii) Rusnano hereby releases any and all liens, security interests, assignments, pledges and other interests Rusnano may have in respect of the Master Agreement Obligations. For the avoidance of doubt, the preceding sentence shall not apply to the Rusnano Obligations, which are addressed in Section 2(b)(i).
(c) Additional Documentation. At or prior to the Closing:
(i) The Company shall enter, and shall cause the LLC to enter, into the Intercompany Loan Amendment, which amendment is to extend the term of the Intercompany Loan Agreement until October 8, 2017.
(ii) CBLI shall deliver to Rusnano a certificate duly executed by the Secretary of CBLI certifying and attaching all corporate approvals obtained by CBLI in connection with the Transaction Documents to which CBLI is a party.
(iii) The Company shall deliver to Rusnano a certificate duly executed by the Secretary of the Company certifying and attaching (i) all corporate approvals obtained in connection with the Transaction Documents to which the Company is a party and (ii) all executed waivers obtained from Minority Stockholders pursuant to Section 2(e)(ii).
(e) Waiver and Ratification of Stockholders’ Agreement.
(i) CBLI and Rusnano hereby waive the requirements of Section 4 of the Stockholders’ Agreement solely in respect of the transactions contemplated by this Acknowledgment.
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(ii) On or prior to the Closing, the Company shall obtain a waiver of Section 4 of the Stockholders’ Agreement in respect of the transactions contemplated by this Acknowledgment from each Minority Stockholder that does not participate in the offering by the Company to purchase Panacela Shares.
(iii) Except for the waivers described in clauses (i) and (ii) above, the Stockholders’ Agreement shall continue in full force and effect as originally constituted and is hereby ratified and affirmed by the parties hereto.
4. Condition to Closing. All transactions described in Section 2 shall occur contemporaneously.
5. Representations and Warranties of CBLI.
CBLI represents and warrants to Rusnano and the Company as follows as of the Effective Date:
(a) Organization, Standing, etc. CBLI is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. CBLI is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary or desirable, except where the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect with respect to CBLI.
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6. Representations and Warranties of the Company.
The Company represents and warrants to Rusnano and CBLI as follows as of the Effective Date:
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7. Representations and Warranties of the Company with respect to the LLC.
The Company represents and warrants to Rusnano and CBLI as follows as of the Effective Date:
(a) Organization, Standing, etc. The LLC is a limited liability company duly organized, validly existing and in good standing under the laws of the Russian Federation and has all requisite power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. The LLC is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary or desirable, except where the failure to be so licensed, qualified or in good standing would not have a Material Adverse Effect with respect to the LLC.
(b) Authorization, Noncontravention. The LLC has all requisite power and authority to enter into the Intercompany Loan Amendment, to perform its obligations thereunder and to consummate the transactions contemplated thereby. The execution and delivery by the LLC of the Intercompany Loan Amendment, the consummation of the transactions contemplated therein, and the fulfillment of and compliance with the terms, conditions and provisions thereof have been duly authorized by all requisite action on the part of the LLC and do not (i) conflict with or result in a breach of any of the terms, conditions or provisions of any (A) law or regulation of any Governmental Authority applicable to the LLC, (B) writ, injunction, award or decree of any court or arbitral tribunal applicable to the LLC, or (C) material agreement or instrument to which the LLC is a party, by which it is bound, or to which it is subject, (ii) result in (A) the creation or imposition of any Lien or (B) any violation of the Certificate of Incorporation or bylaws (or analogous documents) of the LLC or (iii) require filing with, notice to or consent of any Governmental Authority or other third Person.
(c) Binding Effect. The Intercompany Loan Amendment has been duly authorized, executed and delivered by the LLC, and assuming due authorization, execution and delivery by other parties thereto, the Intercompany Loan Agreement at Closing will constitute, a legal, valid and binding obligation of the LLC, enforceable against the LLC in accordance with its terms, except that enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance).
(d) No Other Action. No action by, or in respect of, or filing with, any Governmental Authority is required for the execution, delivery and performance of the Intercompany Loan Amendment by the LLC.
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8. Representations and Warranties of Rusnano.
Rusnano represents and warrants to CBLI and the Company as follows as of the Effective Date:
(c) Binding Effect. This Acknowledgment and each of the other Transaction Documents to which Rusnano is a party have been duly executed and delivered by Rusnano and (assuming due authorization, execution and delivery by the other parties thereto) this Acknowledgment Agreement constitutes, and each other Transaction Document to which Rusnano is a party, at Closing will constitute, legal, valid and binding obligations of Rusnano, enforceable against Rusnano in accordance with their respective terms, except that enforceability hereof and thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance).
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10. Governing Law. This Acknowledgment shall be construed, governed, interpreted and applied in accordance with the laws of the State of New York, without regard to principles of conflicts of laws.
(a) If to CBLI:
Cleveland BioLabs, Inc.
00 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxx XXX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
E-mail: xxxxxxx@xxxxxxxx.xxx
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With a copy to:
McGuireWoods LLP
0 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx XXX 00000
Attention: Xxxxx X. Xxxxxx, III
Facsimile: (000) 000-0000
E-mail: xxxxxxx@xxxxxxxxxxxx.xxx
(b) If to the Company:
Panacela Labs, Inc.
00 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxx XXX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
E-mail: xxxxxxx@xxxxxxxx.xxx
(c) If to Rusnano:
OJSC “RUSNANO”
10A Prospect 60-Letiya Oktyabrya
Moscow 117036
Russian Federation
Attention: Leysan Shaydullina, Investment Manager
Facsimile: 7-495-988-5399
E-mail: Xxxxxx.Xxxxxxxxxxx@xxxxxxx.xxx
With a copy to:
Dentons US LLP
0000 Xxxxxx xx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
XXX
Attention: Xxxx Xxxxxxx
Facsimile: x0-000-000-0000
Email: xxxx.xxxxxxx@xxxxxxx.xxx
15. Survival of Provisions. The representations, warranties, covenants and agreements contained in this Acknowledgment shall survive the consummation of the transactions contemplated hereby. This Section 15 shall not limit any covenant or agreement of the parties hereto which, by its terms, contemplates performance after the Closing. Without limiting the generality of the previous sentence, Section 16 shall survive beyond the Closing.
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[SIGNATURE PAGE FOLLOWS]
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PANACELA LABS, INC. | ||
By: | /s/ C. Xxxx Xxxxx | |
Name: | C. Xxxx Xxxxx, CPA | |
Title: | Chief Financial Officer | |
CLEVELAND BIOLABS, INC. | ||
By: | /s/ C. Xxxx Xxxxx | |
Name: | C. Xxxx Xxxxx, CPA | |
Title: | Executive Vice President & Chief Financial Officer | |
OPEN JOINT STOCK COMPANY “RUSNANO” | ||
By: | /s/ Yurii Udalstov | |
Name: | Yurii Udalstov | |
Title: | Deputy Chairman of the Management Board of Management company RUSNANO LLC acting on the basis of a power of attorney |
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