PROVENTION BIO, INC. VOTING AGREEMENT
This Voting Agreement (the “Agreement”) is made and entered into as of April 25, 2017, by and among PROVENTION BIO, INC., a Delaware corporation (the “Company”), and certain holders of the Company’s Series A Preferred Stock, $0.0001 par value per share (the “Preferred Stock”) listed on the Schedule of Investors attached as Schedule A hereto (together with any subsequent investors, or transferees, who become parties hereto as “Investors” pursuant to Subsections 11.8 or 11.9 below, the “Investors”), and those certain holders of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) listed on the Schedule of Key Holders attached as Schedule B hereto (together with any subsequent shareholders, or any transferees, who become parties hereto as “Key Holders” pursuant to Subsections 11.8 or 11.9 below, the “Key Holders”). Each of the Investors and the Key Holders are individually referred to herein as a “Shareholder” and are collectively referred to herein as the “Shareholders”. Each of the Shareholders and the Company are sometimes individually referred to herein as a “Party” and are sometimes collectively referred to herein as the “Parties.” The Company’s Board of Directors is referred to herein as the “Board.”
WHEREAS, the Company and the Investors have entered into a Securities Purchase Agreement, dated April 25, 2017 (the “Securities Purchase Agreement”), pursuant to which, among other things, the Company has agreed to issue and sell to the Investors, and the Investors have agreed to purchase, up to [●] shares of the Company’s Preferred Stock;
WHEREAS, as a condition to the willingness of the Investors to enter into the Securities Purchase Agreement and to consummate the transactions contemplated thereby, the Investors have required that the Shareholders agree, and in order to induce the Investors to enter into the Securities Purchase Agreement, each Shareholder has agreed, to enter into this Agreement with respect to all of the shares of Preferred Stock and/or Common Stock now owned and which may hereafter be acquired by the Shareholder and any other securities, if any, which the Shareholder is currently entitled to vote, or after the date hereof, becomes entitled to vote, at any meeting of shareholders of the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
2. Voting Provisions Relating to the Board.
(a) In any election of the members of the Board (each member a “Director” and collectively, the “Directors”), the Shareholders agree to vote, or cause to be voted, at any regular or special meeting of shareholders (or by written consent) all Shares then owned by such Shareholder (or as to which such Shareholder then has voting control) to elect the following individuals as Directors on the Board:
(i) Subject to Subsection 2.2(d), one individual to be designated by Xxxxxxx & Xxxxxxx Innovation - JJDC, Inc. (“JJDC”), who shall initially be Xxxxxxxxx Xxxx;
(ii) one individual to be designated jointly by Xxxxxxxx Xxxxxx and Xxxxxxxxx Xxxx (together, the “Founders”), who shall initially be Xxxxxxxx Xxxxxx;
(iii) two individuals to be designated by MDB Capital Group, LLC (“MDB”), who shall initially be Xxxxxxx Xxxx and Xxxxxxx XxXxxxxxxxxxxx; and
(iv) one individual not otherwise an Affiliate (as defined below) of the Company or any Shareholder who is mutually acceptable to the Founders, JJDC and MDB.
For purposes of this Agreement, an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity (collectively, a “Person”) shall be deemed an “Affiliate” of another Person who, directly or indirectly, controls, is controlled by or is under common control with such Person, including, without limitation, any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.
(b) In the absence of any nomination from the Persons with the right to designate a Director as specified above, the Director or Directors previously nominated by such Persons and then serving shall be reelected if still eligible to serve as provided herein.
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(c) To the extent that the application of Subsection 2.2(a) above shall result in the designation of less than all of the authorized Directors, then any remaining vacancies shall be filled by individuals nominated and elected by the shareholders of the Company entitled to vote thereon in accordance with, and pursuant to, the Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”).
(d) Notwithstanding anything to the contrary set forth in Subsection 2.2(a)(i), during the period commencing on the date of this Agreement and ending immediately following the closing of a Qualified Equity Financing (as defined below), the Director designated by JJDC pursuant to Subsection 2.2(a)(i) shall be an individual not otherwise an Affiliate of JJDC nor a current or former employee of JJDC.
A “Qualified Equity Financing” shall mean the Company’s first equity financing completed after the date hereof pursuant to which the Company sells shares of its capital stock, to one or more investors, for an aggregate amount of gross cash proceeds that, when added to the aggregate cash proceeds received by the Company in connection with all other equity financings completed after the date hereof, exceeds $5,000,000.
2.6 No “Bad Actor” Designees. Each Person with the right to designate or participate in the designation of a Director as specified above hereby represents and warrants to the Company that, to such Person’s knowledge, none of the “bad actor” disqualifying events described in Rule 506(d)(1)(i)-(viii) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) (each, a “Disqualification Event”), is applicable to such Person’s initial designee named above except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. Any Director designee to whom any Disqualification Event is applicable, except for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable, is hereinafter referred to as a “Disqualified Designee”. Each Person with the right to designate or participate in the designation of a Director as specified above hereby covenants and agrees (A) not to designate or participate in the designation of any Director designee who, to such Person’s knowledge, is a Disqualified Designee and (B) that in the event such Person becomes aware that any individual previously designated by any such Person is or has become a Disqualified Designee, such Person shall as promptly as practicable take such actions as are necessary to remove such Disqualified Designee from the Board and designate a replacement designee who is not a Disqualified Designee.
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(a) in the event such Sale of the Company is to be brought to a vote at a shareholder meeting, after receiving proper notice of any meeting of shareholders of the Company, to be present, in person or by proxy, as a holder of Shares, at such meeting and be counted for the purposes of determining the presence of a quorum at such meetings and to vote (in person, by proxy or by action by written consent, as applicable) all Shares in favor of, and to adopt, such Sale of the Company and in opposition to any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such Sale of the Company;
(b) to refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company;
(c) to execute and deliver all related documentation and take such other action in support of the Sale of the Company as shall reasonably be requested by the Company or the Requisite Parties;
(d) if the Sale of the Company is structured as a Stock Sale, to sell the same proportion of his, her or its Shares as is being sold by the Requisite Parties, and, except as permitted in Subsection 3.3 below, on the same terms and conditions as the Requisite Parties;
(e) not to deposit, and to cause their Affiliates not to deposit, except as provided in this Agreement, any Shares owned by such Shareholder or Affiliate in a voting trust or subject any such Shares to any arrangement or agreement with respect to the voting of such Shares, unless specifically requested to do so by the acquirer in connection with the Sale of the Company; and
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(f) if the consideration to be paid in exchange for the Shares pursuant to this Section 3 includes any securities and due receipt thereof by any Shareholder would require under applicable law (i) the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities or (ii) the provision to any Shareholder of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the Securities Act, the Company may cause to be paid to any such Shareholder in lieu thereof, against surrender of the Shares which would have otherwise been sold by such Shareholder, an amount in cash equal to the fair value (as determined in good faith by the Company) of the securities which such Shareholder would otherwise receive as of the date of the issuance of such securities in exchange for the Shares.
(a) any representations and warranties to be made by such Shareholder in connection with the Proposed Sale are limited to representations and warranties related to authority, ownership and the ability to convey title to such Shareholder’s Shares, including, without limitation, representations and warranties that (i) the Shareholder holds all right, title and interest in and to the Shares such Shareholder purports to hold, free and clear of all liens and encumbrances, (ii) the obligations of the Shareholder in connection with the transaction have been duly authorized, if applicable, (iii) the documents to be entered into by the Shareholder have been duly executed by the Shareholder and delivered to the acquiror and are enforceable against the Shareholder in accordance with their respective terms and (iv) neither the execution and delivery of documents to be entered into in connection with the transaction, nor the performance of the Shareholder’s obligations thereunder, will cause a breach or violation of the terms of any agreement, law or judgment, order or decree of any court or governmental agency by which such Shareholder is subject or bound;
(b) the Shareholder shall not be liable for the inaccuracy of any representation or warranty made by any other Person in connection with the Proposed Sale, other than the Company;
(c) the liability for indemnification, if any, of such Shareholder in the Proposed Sale and for the inaccuracy of any representations and warranties made by the Company in connection with such Proposed Sale, is several and not joint with any other Person, and is pro rata in proportion to the amount of consideration paid to such Shareholder in connection with such Proposed Sale (in accordance with the provisions of the Certificate of Incorporation);
(d) liability shall be limited to such Shareholder’s applicable share (determined based on the respective proceeds payable to each Shareholder in connection with such Proposed Sale in accordance with the provisions of the Certificate of Incorporation) of a negotiated aggregate indemnification amount that applies equally to all Shareholders but that in no event exceeds the amount of consideration otherwise payable to such Shareholder in connection with such Proposed Sale, except with respect to claims related to fraud by such Shareholder, the liability for which need not be limited as to such Shareholder;
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(e) upon the consummation of the Proposed Sale, (i) each holder of each class or series of the Company’s stock will receive the same form of consideration for their shares of such class or series as is received by other holders in respect of their shares of such same class or series of stock, (ii) each holder of a series of Preferred Stock will receive the same amount of consideration per share of such series of Preferred Stock as is received by other holders in respect of their shares of such same series, (iii) each holder of Common Stock will receive the same amount of consideration per share of Common Stock as is received by other holders in respect of their shares of Common Stock, and (iv) unless the holders of a majority of Preferred Stock elect otherwise by written notice given to the Company at least thirty (30) days prior to the effective date of any such Proposed Sale, the aggregate consideration receivable by all holders of the Preferred Stock and Common Stock shall be allocated among the holders of Preferred Stock and Common Stock on the basis of the relative liquidation preferences to which the holders of each respective series of Preferred Stock and the holders of Common Stock are entitled in a Liquidation Event (assuming for this purpose that the Proposed Sale is a Liquidation Event) in accordance with the Certificate of Incorporation in effect immediately prior to the Proposed Sale; and
(f) subject to Subsection 3.3(e) above, requiring the same form of consideration to be available to the holders of any single class or series of capital stock, if any holders of a series or class of capital stock of the Company are given an option as to the form and amount of consideration to be received as a result of the Proposed Sale, all holders of such series or class of capital stock will be given the same option; provided, however, that nothing in this Subsection 3.3(f) shall entitle any holder to receive any form of consideration that such holder would be ineligible to receive as a result of such holder’s failure to satisfy any condition, requirement or limitation that is generally applicable to the Company’s shareholders.
“THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE ISSUER), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.”
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If to the Company:
000 Xxx Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy (for informational purposes only) to:
Xxxxxxxxxx Xxxxxxx LLP,
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000,
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
email: xxxxxxx@xxxxxxxxxx.xxx.
Attention: Xxxxxxx Xxxxxx, Esq.
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And
If to any Shareholder, at the address for such Shareholder on the records of the Company, which may include the address and fax number set forth immediately below such Shareholder’s name on the counterpart signature pages hereto, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service.
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(i) any provision hereof may be waived by the waiving Party on such Party’s behalf, without the written consent of any other Party;
(ii) this Agreement may not be amended or terminated and the observance of any term of this Agreement may not be waived with respect to any Investor or Key Holder without the written consent of such Investor or Key Holder unless such amendment, termination or waiver applies to all Investors or Key Holders, as the case may be, in the same fashion;
(iii) Subsections 2.2(a)(i), 2.2(a)(iv), 2.2(d), 3.2 and 11.5(iii) of this Agreement shall not be amended or waived without the written consent of JJDC;
(iv) Subsections 2.2(a)(ii), 2.2(a)(iv), 3.2 and 11.5(iv) of this Agreement shall not be amended or waived without the written consent of the Founders; and
(v) Subsections 2.2(a)(iii), 2.2(a)(iv), 3.2 and 11.5(v) of this Agreement shall not be amended or waived without the written consent of MDB
The Company shall give prompt written notice of any amendment, termination, or waiver hereunder to any Party that did not consent in writing thereto.
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(a) Notwithstanding Subsection 11.5, no consent shall be necessary to add additional Investors as signatories to this Agreement, provided that such Investors have (i) purchased Preferred Stock pursuant to the subsequent closing provisions of Subsection 1.3 of the Purchase Agreement and (ii) executed and delivered either (A) an Adoption Agreement substantially in the form attached hereto as Exhibit A or (B) a counterpart signature page hereto agreeing to be bound by and subject to the terms of this Agreement as a Shareholder hereunder. In either event, each such Person thereafter shall be deemed an Investor and Shareholder for all purposes under this Agreement.
(b) In the event that after the date of this Agreement, the Company enters into an agreement with any Person to issue shares of capital stock to such Person (other than to a purchaser of Preferred Stock described in Subsection 11.9(a) above), following which such Person would hold Shares representing one percent (1%) or more of the Company’s then outstanding capital stock (treating for this purpose all shares of Common Stock issuable upon exercise or conversion of all then outstanding options, warrants or convertible securities (whether or not then exercisable or convertible) as outstanding), then (i) the Company shall cause such Person, as a condition precedent to the issuance of such capital stock, to become a party to this Agreement by executing an Adoption Agreement substantially in the form attached hereto as Exhibit A, agreeing to be bound by and subject to the terms of this Agreement as a Key Holder and Shareholder hereunder and thereafter such Person shall be deemed a Key Holder and Shareholder for all purposes under this Agreement and (ii) notwithstanding Subsection 10.5, no consent shall be necessary to add such Person as a signatory to this Agreement.
11.10 Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware without regard to the choice of law principles thereof. Each of the Parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Delaware and the United States District Court for the District of Delaware for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each Party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the Parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each Party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
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[Signature Pages to Follow]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
PROVENTION BIO, INC. | ||
By: | ||
Name: | Xxxxxxxx Xxxxxx | |
Title: | President & Chief Executive Officer |
[Signature Page to Voting Agreement for Provention Bio, Inc.]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
INVESTOR: | ||
[Name]: | ||
By: | ||
Name: | ||
Title: | ||
Address: |
[Signature Page to Voting Agreement for Provention Bio, Inc.]
SCHEDULE A
SCHEDULE OF INVESTORS
Xxxxxxx & Xxxxxxx Innovation - JJDC, Inc.
SCHEDULE B
SCHEDULE OF KEY HOLDERS
MDB Capital Group, LLC
Xxxxxxxx Xxxxxx
Xxxxxxxxx Xxxx
EXHIBIT A
ADOPTION AGREEMENT
This Adoption Agreement (“Adoption Agreement”) is executed by the undersigned (the “Holder”) pursuant to the terms of that certain Voting Agreement dated as of ______ __, 201_ (the “Agreement”) by and among the Provention Bio, Inc. (the “Company”) and certain of its shareholders. Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Adoption Agreement, the Holder agrees as follows:
[ ] | as a transferee of Shares from a party in such party’s capacity as an “Investor” bound by the Agreement, and after such transfer, Holder shall be considered an “Investor” and a “Shareholder” for all purposes of the Agreement. | |
[ ] | as a transferee of Shares from a party in such party’s capacity as a “Key Holder” bound by the Agreement, and after such transfer, Holder shall be considered a “Key Holder” and a “Shareholder” for all purposes of the Agreement. | |
[ ] | as a new Investor in accordance with Subsection 11.9(a) of the Agreement, in which case Holder will be an “Investor” and a “Shareholder” for all purposes of the Agreement. | |
[ ] | in accordance with Subsection 11.9(b) of the Agreement, as a new party who is not a new Investor, in which case Holder will be a “Key Holder” and a “Shareholder” for all purposes of the Agreement. |
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EXECUTED AND DATED this ______ day of _________________, 20___.
HOLDER: | ||
By: | ||
Name: | ||
Title: | ||
Address: | ||
Fax: |
Accepted and Agreed:
COMPANY
By: | ||
Name: | ||
Title: |
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EXHIBIT B
RULE 506(D) BAD ACTOR REPRESENTATIONS
No Shareholder:
(i) Has been convicted, within ten years before such sale (or five years, in the case of issuers, their predecessors and affiliated issuers), of any felony or misdemeanor:
(A) In connection with the purchase or sale of any security;
(B) Involving the making of any false filing with the Commission; or
(C) Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;
(ii) Is subject to any order, judgment or decree of any court of competent jurisdiction, entered within five years before such sale, that, at the time of such sale, restrains or enjoins such person from engaging or continuing to engage in any conduct or practice:
(A) In connection with the purchase or sale of any security;
(B) Involving the making of any false filing with the Commission; or
(C) Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;
(iii) Is subject to a final order of a state securities commission (or an agency or officer of a state performing like functions); a state authority that supervises or examines banks, savings associations, or credit unions; a state insurance commission (or an agency or officer of a state performing like functions); an appropriate federal banking agency; the U.S. Commodity Futures Trading Commission; or the National Credit Union Administration that:
(A) At the time of such sale, bars the person from:
( 1 ) Association with an entity regulated by such commission, authority, agency, or officer;
( 2 ) Engaging in the business of securities, insurance or banking; or
( 3 ) Engaging in savings association or credit union activities; or
(B) Constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct entered within ten years before such sale;
(iv) Is subject to an order of the Commission entered pursuant to section 15(b) or 15B(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78 o (b) or 78 o -4(c)) or section 203(e) or (f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(e) or (f)) that, at the time of such sale:
(A) Suspends or revokes such person’s registration as a broker, dealer, municipal securities dealer or investment adviser;
(B) Places limitations on the activities, functions or operations of such person; or
(C) Bars such person from being associated with any entity or from participating in the offering of any xxxxx stock;
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(v) Is subject to any order of the Commission entered within five years before such sale that, at the time of such sale, orders the person to cease and desist from committing or causing a violation or future violation of:
(A) Any scienter-based anti-fraud provision of the federal securities laws, including without limitation section 17(a)(1) of the Securities Act of 1933 (15 U.S.C. 77q(a)(1)), section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78j(b)) and 17 CFR 240.10b-5, section 15(c)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78 o (c)(1)) and section 206(1) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-6(1)), or any other rule or regulation thereunder; or
(B) Section 5 of the Securities Act of 1933 (15 U.S.C. 77e).
(vi) Is suspended or expelled from membership in, or suspended or barred from association with a member of, a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade;
(vii) Has filed (as a registrant or issuer), or was or was named as an underwriter in, any registration statement or Regulation A offering statement filed with the Commission that, within five years before such sale, was the subject of a refusal order, stop order, or order suspending the Regulation A exemption, or is, at the time of such sale, the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued; or
(viii) Is subject to a United States Postal Service false representation order entered within five years before such sale, or is, at the time of such sale, subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.
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