SERIES A RIGHTS AGREEMENT
This
Series A Rights Agreement (this “Agreement”)
is
made as of March 15, 2005, by and among Cleveland BioLabs, Inc., a Delaware
corporation (the “Corporation”),
each
Person who holds Common Stock (as defined below) as of the date hereof (each
such person to be listed on the Common
Stockholders Schedule
attached
hereto and to execute a counterpart of this Agreement) (collectively, the
“Common
Stockholders”
and
each individually a “Common Stockholder”),
and
the purchasers identified on the Schedule
of Purchasers
(as may
be amended from time to time up until the Final Closing (as defined below))
(each such person to execute a counterpart to this Agreement) (collectively
the
“Purchasers”
and
each individually a “Purchaser”).
Pursuant
to that Stock Purchase Agreement, dated as of the date hereof, by and between
the Purchasers and the Corporation (as amended and modified from time to time,
the “Purchase
Agreement”),
the
other documents and instruments referred to therein and consummation of the
transactions contemplated thereby, the Purchasers are acquiring shares of the
Corporation’s Series A Participating Convertible Preferred Stock, $0.005 par
value per share (collectively, the “Series
A Preferred Shares”).
Except as otherwise indicated herein, capitalized terms used herein shall have
the meanings set forth in Section
1
hereof,
or if not defined herein, the meanings for such capitalized terms set forth
in
the Purchase Agreement.
As
partial consideration for services rendered to the Corporation in connection
with the sale of Series A Preferred Shares under the Purchase Agreement and
pursuant to that Investment Banking Agreement, dated September 30, 2004, between
the Corporation and Sunrise Securities Corp. (“Sunrise”),
the
Corporation has and/or will issue to Sunrise and/or its designees shares of
Common Stock (“Fee
Shares”)
and
warrants to acquire shares of Common Stock (the “Fee
Warrants”
and
together with the Fee Shares and the shares of Common Stock issued or issuable
upon exercise of the Fee Warrants, the “Fee
Securities”).
In
order
to induce the Purchasers to enter into the Purchase Agreement and the other
agreements contemplated thereby and to purchase the Series A Preferred Shares
in
the manner contemplated thereby, and in order to induce Sunrise and/or its
designees to accept as consideration for services rendered, the Fee Shares
and
the Fee Warrants, the Corporation and the Common Stockholders have agreed to
the
terms and conditions herein.
AGREEMENTS
In
consideration of the recitals and the mutual promises, covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as
follows:
1. Definitions.
In
addition to the capitalized terms defined elsewhere in this Agreement, the
following capitalized terms shall have the following meanings when used in
this
Agreement:
“Agreement”
means
this Series A Rights Agreement, as may be amended.
“Board”
means
the Board of Directors of the Corporation.
“Commission”
means
the United States Securities and Exchange Commission or any successor
thereto.
“Common
Stock”
means
the common stock, par value $0.005 per share, of the Corporation.
“Common
Stockholder”
has
the
meaning specified in the Preamble hereto.
“Corporation”
shall
mean Cleveland BioLabs, Inc., a Delaware corporation, and its successors and
permitted assigns.
“Effectiveness
Deadline”
has
the
meaning specified in Section 4 hereof.
“Effective
Period”
shall
mean the period commencing on the date as of which the subject registration
statement is declared effective and ending on the eighteen-month anniversary
thereof, or such earlier date as of which all of the Registrable Securities
registered for resale thereunder have been sold; provided, that, (a) the
Effective Period shall be extended, as necessary to comply with the Securities
Act, and (b) with respect to an underwritten offering, the Effective Period
shall be extended as requested by the underwriter(s) or as otherwise necessary
to allow the underwriter(s) to complete the distribution of all securities
registered thereunder.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Fee
Securities”
has
the
meaning specified in the Recitals hereto.
“Fee
Shares”
has
the
meaning specified in the Recitals hereto.
“Fee
Warrants”
has
the
meaning specified in the Recitals hereto.
“Final
Closing”
means
the final closing of the purchase and sale of Series A Preferred Shares pursuant
to the Purchase Agreement.
“Filing
Deadline”
has
the
meaning specified in Section 4 hereof.
“Indemnified
Party”
has
the
meaning specified in Section 9(c) hereof.
“Indemnifying
Party”
has
the
meaning specified in Section 9(c) hereof.
“IPO”
means
the Corporation’s first underwritten offering of its Common Stock to the public
pursuant to an effective registration statement on Form S-1 (or other
appropriate form) under the Securities Act.
“Common
Stockholder Shares”
means
the Securities originally issued to Common Stockholders or any Securities
acquired by any Common Stockholder after the date hereof (after which time
such
shares shall be deemed to be “Common
Stockholder Shares”
hereunder). For all purposes of this Agreement, Common Stockholder Shares will
continue to be Common Stockholder Shares in the hands of any holder (except
for
the Corporation or any Purchaser hereunder, and purchasers pursuant to an
offering registered under the Securities Act or purchasers pursuant to a Rule
144 transaction), and each such other holder of Common Stockholder Shares will
succeed to all rights and obligations attributable to any Common Stockholder,
as
a holder of Common Stockholder Shares hereunder. Common Stockholder Shares
will
also include shares of the Corporation’s capital stock issued with respect to
any Common Stockholder Shares by way of a stock split, stock dividend or other
recapitalization.
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“Liabilities”
has
the
meaning specified in Section 9(a) hereof.
“Merger”
means
a
merger of the Corporation with a United States fully reporting and trading
public company whether or not such company has any ongoing active business
operations.
“New
York Courts”
has
the
meaning specified in Section 22 hereof.
“Person”
means
an individual, corporation, partnership, limited liability company, limited
partnership, syndicate, person (including, without limitation, a “Person” as
defined in Section 13(d)(3) of the Exchange), trust, association or entity
or
government, political subdivision, agency or instrumentality of a
government.
“Penalty
Shares”
means
Series A Preferred Shares and shares of Common Stock which are issued pursuant
to Section 5 hereof.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Public
Trigger Date”
has
the
meaning specified in Section 3 hereof.
“Purchase
Agreement”
has
the
meaning specified in the Recitals hereto.
“Purchaser”
has
the
meaning specified in the Preamble hereto.
“Registrable
Securities”
means
at any time (i) any shares of Common Stock then outstanding which were issued
upon conversion of Series A Preferred Shares (including Series A Preferred
Shares issued as Penalty Shares); (ii) any shares of Common Stock then issuable
upon conversion of then outstanding Series A Preferred Shares originally issued
to the Purchasers (including Series A Preferred Shares issued as Penalty
Shares); (iii) Fee Securities; (iv) any shares of Common Stock then outstanding
which were issued as Penalty Shares or upon conversion of Series A Preferred
Shares which were issued as Penalty Shares and any shares of Common Stock then
issuable upon conversion of Series A Preferred Shares which were issued as
Penalty Shares; (v) any shares of Common Stock then outstanding which were
issued as, or were issued directly or indirectly upon the conversion or exercise
of other securities issued as, a dividend or other distribution with respect
to
or in replacement of any shares referred to in (i), (ii), (iii) or (iv); and
(vi) any shares of Common Stock then issuable directly or indirectly upon the
conversion or exercise of other securities which were issued as a dividend
or
other distribution with respect to or in replacement of any shares referred
to
in (i), (ii), (iii), (iv) or (v); provided, however, that Registrable Securities
shall cease to be Registrable Securities when such Registrable Securities have
been (a) disposed of pursuant to an effective registration statement under
the
Securities Act, (b) sold or otherwise transferred in a transaction in which
the
rights under the provisions of this Agreement have not been properly assigned,
or (c) sold pursuant to Rule 144. For purposes of this Agreement, a Person
will
be deemed to be a holder of Registrable Securities whenever such Person has
the
then-existing right to acquire such Registrable Securities (by conversion or
otherwise), whether or not such acquisition actually has been effected. Subject
to the foregoing, Registrable Securities shall continue to constitute
Registrable Securities in the hands of any permitted transferee of a
Purchaser.
3
“Registration
Expenses”
has
the
meaning specified in Section 8(a) hereof.
“Required
Transaction”
has
the
meaning specified in Section 3 hereof.
“Resale
Registration”
means
the registration by the Corporation pursuant to an effective resale registration
statement on Form ▇-▇, ▇▇-▇, ▇-▇ or other applicable form under the Securities
Act, of the Registrable Securities.
“Resale
Registration Statement”
has
the
meaning specified in Section 4 hereof.
“Rule
144”
means
Rule 144 (including Rule 144(k)) of the Commission under the Securities Act
or
any similar provision then in force under the Securities Act.
“Securities”
means
shares of Common Stock or shares of capital stock or other securities directly
or indirectly exercisable for, or convertible into, shares of Common Stock;
provided, however, that Securities shall not include any securities which have
been sold to the public pursuant to a registration statement declared effective
by the Commission or, after a “public offering” pursuant to Rule
144.
“Securities
Act”
means
the Securities Act of 1933, as amended, or any similar federal statute, as
the
same shall be in effect from time to time.
“Sellers’
Counsel”
has
the
meaning specified in Section 6(a) hereof.
“Series
A Majority”
means
holders of at least a majority of the then outstanding Series A Preferred
Shares.
“Series
A Preferred Shares”
has
the
meaning specified in the Recitals hereto.
“Sunrise”
has
the
meaning specified in the Recitals hereto.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ National Market, the NASDAQ SmallCap Market, the Over-The-Counter
Bulletin Board or the “Pink Sheets” published by the National Quotation Bureau
Incorporated Sheets on which the Common Stock is listed or quoted for trading
on
the date in question.
4
2. Board
of Directors.
(a) In
General.
So long
as any Series A Preferred Shares remain outstanding, the Corporation, the Common
Stockholders and the Purchasers shall take all actions to cause the Board to
consist of up to seven directors, comprised as follows:
(i) Up
to two
individuals, designated by a Series A Majority (each, a “Series
A Designee”
and,
together, the “Series
A Designees”);
and
(ii) Up
to
five individuals, to be designated by holders of a plurality of the Common
Stock.
Notwithstanding
the foregoing, or any other provision of this Section 2, the holders of Series
A
Preferred Shares shall be under no obligation to designate and elect any Series
A Designee. Any matter presented to the Board shall be approved and be deemed
to
be the act of the Board only upon the affirmative vote of a majority of all
of
the members of the Board then serving. Quorum of the Board and of any Committee
(as defined below) shall be a majority in number of the members thereof,
provided, that, at any time that there is a Series A Designee then serving
as a
member of the Board or a Committee, quorum shall require the presence (by phone
or in person) of at least one Series A Designee. No action by the Board or
a
Committee by written consent in lieu of a meeting shall be effective unless
executed by each Series A Designee then serving on the Board or such
Committee.
(b) Committees.
Upon
request by a Series A Majority or otherwise with the approval of the Board,
the
Board shall establish one or more committees of the Board, which may include,
among others, an audit committee and/or compensation committee (each such
committee, a “Committee”).
Each
Committee shall be comprised of (i) so long as there is a Series A Designee
then
serving, at the option of a Series A Majority, one Series A Designee, and (ii)
such other members of the Board as a majority in number of the Board shall
agree.
(c) Board
Observer.
At the
option of a Series A Majority, in lieu of designating a Series A Designee,
a
Series A Majority shall have the right to designate an individual to serve
as
observer to attend any meeting of the Board or any Committee. Any such observer
shall be designated by a Series A Majority at or in advance of such meeting
by
written notice to the Corporation. Such observer(s) shall be entitled to receive
all notices, minutes, consents and other materials as the Corporation provides
to its Board or any Committee members, at the time such materials are
distributed to the directors or members, as applicable. If no observer has
been
designated at the time notice of a meeting or any other documentation is
distributed, such notice and documentation shall be sent to the Series A
Representatives, if any have been designated. Notwithstanding the foregoing,
the
Corporation reserves the right to exclude any observer from access to any
material or meeting or portion thereof if (i) the Corporation believes, upon
written advice of counsel, that such exclusion is reasonably necessary to
preserve the attorney-client privilege, (ii) the Board is addressing any rights
of the Corporation vis-à-vis the Purchasers or the Corporation’s financial
relationship with the Purchasers or (iii) the Board determines in its good
faith
reasonable judgment that such observer otherwise has a conflict of interest,
contrary to the best interest of the Corporation, with respect to the matters
being addressed by the Board.
5
(d) Voting
Agreement.
So long
as any Series A Preferred Shares remain outstanding, each holder of Common
Stockholder Shares shall vote all of the Common Stockholder Shares, and each
Purchaser shall vote all Series A Preferred Shares, in each case which are
voting securities of the Corporation, and in each case, any other voting
securities of the Corporation over which such holder has voting control, and
shall take all other necessary or desirable actions within such holder’s control
(whether in such Person’s capacity as a stockholder, director, member of a Board
committee or officer of the Corporation or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings),
and
the Corporation shall take all necessary or desirable actions within its control
(including, without limitation, calling special Board and stockholder meetings),
so that:
(i) Board
Composition.
The
Board shall consist of up to seven members and a Series A Majority shall have
the right to elect the Series A Designee(s).
(ii) Removal.
A
Series A Majority may, by written consent or at a special meeting of the holders
of Series A Preferred Shares, remove any Series A Designee or observer appointed
in lieu thereof, with or without cause. No Series A Designee or observer
appointed in lieu thereof shall be subject to removal except in accordance
with
the immediately preceding sentence.
(iii) Vacancies.
If a
Series A Designee or observer appointed in lieu thereof shall cease to serve
as
a director or observer for any reason before his or her term expires, a Series
A
Majority may, by written consent or at a special meeting of the holders of
Series A Preferred Shares, elect a successor director or observer, as the case
may and, in the case of a Series A Designee, to hold office for the unexpired
term of the director whose place shall be vacant.
(e) Director
Fees and Expenses; Indemnification.
The
Corporation shall pay the reasonable out-of-pocket expenses incurred by the
Series A Designee(s) in connection with attending the meetings of the Board
and
any Committee. If, at any time, any Board representative receives any
compensation (whether in cash, securities or otherwise) for serving on the
Board
or any Committee, then all directors having similar responsibilities in their
capacity as Series A Designee shall be entitled to receive the same
compensation.
(f) D&O
Insurance; Indemnification.
If
requested by a Series A Majority, the Corporation shall obtain and maintain
directors’ and officers’ indemnity insurance covering all members of the Board
and each Committee, which insurance shall be satisfactory in all respects to
a
Series A Majority as they shall determined from time to time. Further,
commensurate with the election of any Series A Designee, the Corporation shall
enter into an indemnification agreement, in form and substance satisfactory
to
such Series A Designee, which indemnification agreement shall provide for
indemnification and exculpation of such Series A Designee to the fullest extent
permitted under applicable law.
(g) Termination.
Notwithstanding anything contained herein to the contrary, the provisions of
Section 2(d) shall terminate and become null and void effective upon the
registration of any equity security of the Corporation pursuant to Section
12 of
the Exchange Act, whether by reason of an IPO, a Merger, a Resale Registration
or otherwise, whether or not all Registrable Securities are included in the
registration statements relating thereto.
6
(h) Series
A Representatives.
The
holders of Series A Preferred Shares shall have the right, but shall not be
required to, designate up to two individuals as representatives of such holders,
which individuals shall serve as the “Series A Representatives” as such term is
used in the Certificate of Designation of the Series A Preferred Shares. To
be
effective, the designation of any individual as a Series A Representative,
or
the removal of any individual as a Series A Representative, must be in writing,
signed by holders of Series A Preferred Shares constituting a Series A Majority
and delivered to the Corporation. The Purchasers agree, on behalf of themselves
and their respective successors and permitted assigns, that no Series A
Representative shall be responsible for any loss, liability, claim, damage
or
expense of any kind suffered by any holder of Series A Preferred Shares in
connection with or by reason of such Series A Representative’s acceptance of
such designation or performance of his or her duties under the Certificate
of
Designation, unless and to the extent such loss, liability, claim, damage or
expense arises from such Series A Representative’s gross negligence or willful
misconduct.
3. Obligation
to Become Public.
The
Corporation and Common Stockholders acknowledge and agree that to induce the
Purchasers to enter into the Purchase Agreement and to consummate the
transactions contemplated thereby, and to induce Sunrise and/or its designees
to
accept the Fee Shares and Fee Warrants as partial consideration for services
rendered to the Corporation, not later than six months following the earlier
of
(a) the date as of which at least $6,000,000 or more of Series A Preferred
Shares are purchased by the Purchasers, and (b) the Termination Date (as such
term is defined in the Purchase Agreement) and, if later, the Final Closing
(as
defined below) of the purchase and sale of Series A Preferred Shares under
the
Purchase Agreement (the “Public
Trigger Date”),
the
Corporation shall have either (x) received a declaration of effectiveness from
the Commission with respect to a registration statement on Form S-1 (or other
appropriate form) filed with the Commission for an IPO of the Corporation’s
Common Stock (at a $2.00 price per share or greater) which, to the extent
acceptable to the Corporation’s underwriters, shall include all Registrable
Securities, (y) completed a Merger and received a declaration of effectiveness
from the Commission with respect to a resale registration statement on Form
▇-▇,
▇▇-▇, ▇-▇ or other applicable form with the Commission to register for resale
all Registrable Securities, or (z) received a declaration of effectiveness
from
the Commission with respect to a Resale Registration covering the resale of
Registrable Securities (collectively, a “Required
Transaction”).
If an
underwritten registration is consummated pursuant to this Section
3
and the
managing underwriters advise the Corporation in writing that in their opinion
the number of shares of Common Stock requested to be included in such
registration exceeds the number which can be marketed (i) within a price range
acceptable to the Corporation, and (ii) without materially and adversely
affecting the entire offering, the Corporation will include in such registration
only up to the amount of Common Stock determined advisable by the underwriters;
provided, however, that Registrable Securities shall be included in such
registration prior to the inclusion of Common Stock owned by any Common
Stockholders.
7
4. Registration
of Shares.
In the
event that the Corporation has not registered all of the Registrable Securities
as part of a Required Transaction, the Corporation shall, within 30 days
following the consummation of a Required Transaction (the “Filing
Deadline”),
file
a registration statement (a “Resale
Registration Statement”)
including all (or the remaining) Registable Securities, and will use its best
efforts to have the registration declared effective as soon as possible, but
in
any event prior to the 60th day after the Filing Deadline (or 90th day after
Filing Deadline in the event that the Registration Statement is reviewed and
commented upon by the Commission, collectively, the “Effectiveness
Deadline”).
5. Penalty
Shares.
(a) In
the
event that that Corporation has not consummated one of the Required Transactions
on or before the Public Trigger Date, the Corporation shall issue to each holder
of Registrable Securities, such number of additional Series A Preferred Shares
as shall equal 2% of the Series A Preferred Shares held by such holder (not
including any previously issued Penalty Shares), plus such number of additional
shares of Common Stock as shall equal 2% of the shares of Common Stock held
by
such holder (not including any previously issued Penalty Shares or shares of
Common Stock issuable upon conversion of Series A Preferred Stock, but including
Fee Securities and shares of Common Stock previously issued upon conversion
of
Series A Shares) for each thirty (30) day period beyond the Public Trigger
Date
that a Required Transaction has not been consummated; provided, however, that,
in the event that effectiveness of any registration statement is delayed due
to
Commission comments on the filed registration statement, the Public Trigger
Date
shall be extended (only once) for an additional forty-five (45) days, so long
as
the Corporation is in good faith responding to such comments in a timely manner
and such comments do not preclude the Corporation from going effective on such
registration statement entirely.
(b) In
the
event that the Corporation is required pursuant to Section 4 above to effect
a
Resale Registration Statement, and a Resale Registration Statement is not
declared effective by the Commission by the Effectiveness Deadline, the
Corporation shall issue to each holder of Registrable Securities, such number
of
additional Series A Preferred Shares as shall equal 2% of the Series A Preferred
Shares held by such holder (not including any previously issued Penalty Shares),
plus such number of additional shares of Common Stock as shall equal 2% of
the
shares of Common Stock held by such holder (not including any previously issued
Penalty Shares or shares of Common Stock issuable upon conversion of Series
A
Preferred Stock, but including Fee Securities and shares of Common Stock
previously issued upon conversion of Series A Shares) for each thirty (30)
day
period beyond the Effectiveness Deadline that the Resale Registration Statement
has not been declared effective.
(c) As
of the
date of this Agreement, the Corporation has authorized the issuance of 3,750,000
Series A Preferred Shares and the Purchase Agreement contemplates the sale
of up
to 3,000,000 Series A Preferred Shares. While it is expected that the excess
720,000 authorized Series A Preferred Shares will be more than sufficient to
issue any Penalty Shares which the Corporation may become obligated to issue,
the Corporation represents and warrants that it has obtained such Board
authorization and approval as is necessary to, in the future, increase the
number of authorized Series A Preferred Shares and to file an amendment to
the
Certificate of Designation of the Series A Preferred Shares so as to permit
the
valid issuance of Penalty Shares even if the Company becomes obligated to issue
in excess of 720,000 of Series A Preferred Shares as Penalty Shares. The
Corporation and each holder of Common Stockholder Shares further agree to take
such actions as may be necessary to permit the Corporation to validly issue
Series A Preferred Shares as Penalty Shares if required to do so by this Section
5.
8
6. Registration
Procedures.
Upon
the Corporation being required to register the Registrable Securities pursuant
to this Agreement, the Corporation will use its reasonable best efforts to
effect the registration of such Registrable Securities in accordance with the
intended method of disposition thereof, and, pursuant thereto, the Corporation
will as expeditiously as reasonably possible:
(a) prepare
and file with the Commission a
registration statement with respect to such Registrable Securities and
thereafter use its reasonable best efforts to cause such registration statement
to become and remain effective for the Effective Period; provided, that, before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Corporation will furnish to the counsel selected by the holders
of
a majority of the Registrable Securities or, if no such counsel is selected,
counsel to Sunrise (in either such case, “Sellers’
Counsel”),
copies of all such documents proposed to be filed, which documents will be
subject to review of such counsel);
(b) notify
each holder of Registrable Securities of the effectiveness of each registration
statement filed hereunder and prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to comply with the Securities
Act; and as may be necessary to keep such registration statement effective
for
the Effective Period, and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement until such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement;
(c) furnish
to each seller of Registrable Securities such number of copies of such
registration statement, each amendment and supplement thereto, the
prospectus(es) included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) notify
in
writing each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event (including the passage of time) as a result
of which the prospectus included in such registration statement, as then in
effect, contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and the Corporation will as soon
as
possible and, in any event, within four (4) business days of the happening
of
such event, prepare and file with the Commission a supplement or amendment
to
such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain any untrue statement
of
a material fact or omit to state any fact necessary to make the statements
therein not misleading in light of the circumstances under which they were
made;
9
(e) use
its
reasonable best efforts to cause all such Registrable Securities to be
registered or qualified with or approved by such other governmental agencies
or
authorities in such jurisdictions as may be necessary to consummate the
disposition of such Registrable Securities;
(f) provide
a
transfer agent and registrar (which shall be Continental Stock Transfer and
Trust Company or such other transfer agent as may be acceptable to holders
of a
majority of the Registrable Securities) for all such Registrable Securities
not
later than the effective date of such registration statement;
(g) enter
into such customary agreements (including underwriting agreements in customary
form) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable
Securities;
(h) make
available for inspection by any seller of Registrable Securities, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Corporation, and cause the Corporation’s
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller or underwriter, attorney,
accountant or agent in connection with such registration statement;
(i) otherwise
use its commercially reasonable efforts to comply with all applicable rules
and
regulations of the Commission, and make available to its security holders,
as
soon as reasonably practicable, an earnings statement covering the period of
at
least twelve months beginning with the first day of the Corporation’s first full
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(j) advise
in
writing each seller of such Registrable Securities, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order
by
the Commission suspending the effectiveness of such registration statement
or
the initiation or threatening of any proceeding for such purpose and promptly
use its reasonable best efforts to prevent the issuance of any stop order or
to
obtain its withdrawal if any such stop order shall be issued;
(k) at
the
request of the managing underwriters in connection with an underwritten
offering, furnish on the date or dates provided for in the underwriting
agreement (i) an opinion of counsel, addressed to the underwriters and, if
permitted by applicable professional standards, to the sellers of Registrable
Securities, covering such matters as such underwriters and sellers may
reasonably request, including such matters as are customarily furnished in
connection with an underwritten offering; and (ii) a letter or letters from
the
independent certified public accountants of the Corporation addressed to the
underwriters and, if permitted by applicable professional standards, to the
sellers of Registrable Securities, covering such matters as such underwriters
or
sellers may reasonably request, in which letter(s) such accountants shall state,
without limiting the generality of the foregoing, that they are independent
certified public accountants within the meaning of the Securities Act and that
in their opinion the financial statements and other financial data of the
Corporation included in the registration statement, the prospectus(es), or
any
amendment or supplement thereto, comply in all material respects with the
applicable accounting requirements of the Securities Act;
10
(l) include
in any registration statement covering the resale of Registrable Securities
the
“Plan of Distribution” attached hereto as Annex
A
(subject
only to modification to expressly comply with comments made by the Commission
or
as otherwise requested by holders of at least a majority of the Registrable
Securities included in such registration statement or by Sellers’
Counsel);
(m) respond
as promptly as reasonably possible to any comments received from the Commission
with respect to each registration statement or any amendment thereto and, as
promptly as reasonably possible provide Sellers’ Counsel true and complete
copies of all correspondence from and to the Commission relating to such
Registration Statement that would not result in the disclosure to the holders
of
material and non-public information concerning the Corporation;
(n) comply
in
all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the registration statements and the disposition of all
Registrable Securities covered by each registration statement;
(o) as
soon
as practicable, and in any event within two business days, after obtaining
knowledge that the Commission and the Commission staff have no comments (or
no
further comments) concerning a registration statement, request acceleration
of
effectiveness of such registration statement;
(p) notify
the holders of Registrable Securities as promptly as reasonably possible (and,
in the case of (i)(A) below, not less than three business days prior to such
filing) and (if requested by any such holder) confirm such notice in writing
no
later than one business day following the day: (i)(A) when a prospectus or
any
prospectus supplement or post-effective amendment to a registration statement
is
proposed to be filed; (B) when the Commission notifies the Corporation whether
there will be a “review” of such registration statement and whenever the
Commission comments in writing on such registration statement (the Corporation
shall provide true and complete copies thereof and all written responses thereto
to each of the holders that pertain to the holders as a selling stockholder
or
to the Plan of Distribution, but not information which the Corporation believes
would constitute material and non-public information); and (C) with respect
to
each registration statement or any post-effective amendment, when the same
has
become effective; (ii) of any request by the Commission or any other Federal
or
state governmental authority for amendments or supplements to a registration
statement or prospectus or for additional information; and (iii) of the receipt
by the Corporation of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any
proceeding for such purpose;
(q) cooperate
with the holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to the registration statement, which certificates
shall
be free of all restrictive legends, and to enable such Registrable Securities
to
be in such denominations and registered in such names as any such holders may
request;
11
(r) in
the
time and manner required by each Trading Market, use reasonable best efforts
to
(i) prepare and file with such Trading Market an additional shares listing
application covering all the Registrable Securities, (ii) take all steps
necessary to cause such Registrable Securities to be approved for listing on
each Trading Market as soon as possible thereafter, (iii) if requested by any
holder of Registrable Securities, provide to such holder evidence of such
listing and (iv) maintain the listing of all such Registrable Securities on
each
such Trading Market; and
(s) hold
in
confidence and not make any disclosure of non-public information concerning
any
holder of Registrable Securities, except as approved by the subject holder
for
inclusion in a registration statement.
Notwithstanding
any provision of this Section
6
to the
contrary, the Corporation shall not be required to amend or supplement a
prospectus if (a) such amendment of supplement would require the Corporation
to
disclose a material financing, acquisition or other transaction then being
pursued by the Corporation, (b) the Board shall determine in good faith that
such disclosure is not in the best interests of the Corporation or would
materially interfere with such transaction and (c) such required amendment
or
supplement is filed with the Commission as soon as possible after such time
as
the disclosure would not contravene the best interests of the Corporation and
materially interfere with such transaction; provided, that the Corporation
shall
give immediate notice thereof to all holders of Registrable Securities included
in such Registration Statement.
7. Other
Provisions Regarding Registration.
(a) The
Corporation shall not, prior to the declaration by the Commission of
effectiveness of a registration statement covering all of the Registrable
Securities, prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others (other
than
as contemplated by Section 3 of this Agreement) of any of its equity
securities.
(b) Unless
otherwise agreed to by holders of no less than a majority of the Registrable
Securities, neither the Corporation nor any of its securities holders (other
than the holders) may include securities of the Corporation in any Resale
Registration Statement filed pursuant to Section 4 other than the Registrable
Securities, and that Corporation shall not after the date hereof enter into
any
agreement in contravention of the foregoing.
(c) If
at any
time during which there are outstanding Registrable Securities, there is not
one
or more registration statements covering the resale of all Registrable
Securities and the Corporation shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than of Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to
be
issued solely in connection with any acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Corporation shall send to each holder of Registrable
Securities written notice of such determination and if, within 15 business
days
after receipt of such notice any such holder shall so request in writing, the
Corporation shall include in such registration statement the Registrable
Securities requested by the holders to be so included.
12
8. Registration
Expenses.
(a) Corporation’s
Expenses.
All
expenses incident to the Corporation’s performance of or compliance with this
Agreement, including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, listing fees,
printing expenses, messenger, telephone and delivery expenses, fees of Security
Act liability insurance if the Corporation desires to obtain such insurance,
and
fees and disbursements of counsel for the Corporation and all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other Persons retained by the Corporation (all such expenses being herein
called “Registration
Expenses”)
shall
be borne by the Corporation. In addition, the Corporation shall be responsible
for all of its internal expenses incurred in connection with the consummation
of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
(b) Reimbursement.
The
Corporation will reimburse the holders of Registrable Securities covered by
registration for the reasonable fees and disbursements of one counsel chosen
by
the holders of a majority of the Registrable Securities. The Corporation shall
reimburse the holders of Registrable Securities included in such registration
for the reasonable fees and disbursements of each additional counsel retained
by
any holder of Registrable Securities for the purpose of rendering any legal
opinion required by the Corporation or the managing underwriter(s) to be
rendered on behalf of such holder in connection with any underwritten
registration.
(c) Holder’s
Expenses.
Notwithstanding anything to the contrary contained herein, each holder of
Registrable Securities shall bear and pay all underwriting discounts and
commissions and transfer taxes applicable to the Registrable Securities sold
for
such holder’s account.
9. Indemnification.
(a) By
the
Corporation.
Notwithstanding any termination of this Agreement, the Corporation agrees to
indemnify and hold harmless, to the extent permitted by law, each holder of
Registrable Securities, the officers, directors, agents, partners, members,
managers, stockholders, trustees and employees and each Person who controls
such
holder (within the meaning of the Securities Act or the Exchange Act) and the
officers, directors, agents, partners, members, managers, stockholders, trustees
and employees of each such controlling Person, against all losses, claims,
damages, liabilities and expenses (including without limitation, attorneys’
fees) (“Liabilities”)
as
incurred, arising out of or relating to (i) any untrue or alleged untrue
statement of material fact contained in any registration statement, prospectus
or preliminary prospectus, or any amendment thereof or supplement thereto,
or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii)
any
violation or alleged violation by the Corporation of the Securities Act, the
Exchange Act, state (“blue sky”) securities laws or any rule or regulation
promulgated thereunder and relating to action or inaction required of the
Corporation in connection with any such registration statement, except insofar
as the same are caused by or contained in any information furnished in writing
to the Corporation by such holder expressly for use therein or by such holder’s
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Corporation has furnished such
holder with a sufficient number of copies of the same. In connection with an
underwritten offering, the Corporation shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities. The
payments required by this Section
9(a)
will be
made periodically during the course of the investigation or defense, as and
when
bills are received or expenses incurred. The Corporation shall notify the
holders of Registrable Securities promptly of the institution, threat or
assertion of any Proceeding of which the Corporation is aware in connection
with
the transactions contemplated by this Agreement.
13
(b) By
Each Holder.
In
connection with any registration statement in which a holder of Registable
Securities is participating, each such holder shall furnish to the Corporation
in writing such information and affidavits as the Corporation reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Corporation,
its directors and officers and each Person who controls the Corporation (within
the meaning of the Securities Act) against any Liabilities resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus, or any amendment
thereof or supplement thereto, or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission
is
contained in any information or affidavit so furnished in writing by such holder
expressly for use in such registration statement or prospectus; provided that
the obligation to indemnify under this Section
9(b)
or to
contribute under Section
9(d)
below
will be several, not joint and several, among such holders of Registrable
Securities, and the liability of each such holder of Registrable Securities
under this Section
9(b)
and
under Section
9(c)
shall be
limited to the net amount received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) Procedures.
(i) If
any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination
is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying
Party.
14
(ii) An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (A) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (B) the Indemnifying Party shall have failed to promptly assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (C) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of
the
Indemnified Party, effect any settlement of any pending Proceeding in respect
of
which any Indemnified Party is a party, unless such settlement requires only
the
payment of cash or other consideration by the Indemnifying Party on behalf
of
the Indemnified Party and includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
Proceeding.
(iii) All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten business days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it
is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
(d) Contribution.
To the
extent any indemnification by an Indemnifying Party provided for in this
Section
9
is
prohibited or limited by law, the Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions which resulted
in such Liabilities, as well as any other relevant equitable considerations.
The
relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including an untrue or alleged untrue statement of material fact or omission
or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and
the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by
a
party as a result of any Liabilities shall be deemed to include, subject to
the
limitations set forth in Section
9(c),
any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have
been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section
9(d)
were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
paragraph; provided that the limits in the final proviso of Section
9(b)
shall
apply to this Section
9(d).
15
(e) Other
Indemnification Provisions.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties. No Person guilty of fraudulent misrepresentation (within the meaning
of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any
Person who was not guilty of such fraudulent misrepresentation. The
indemnification and contribution provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf
of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.
10. Compliance
with Rule 144.
In the
event that the Corporation (a) closes on the sale of the Corporation’s equity
securities pursuant to a registration statement or registers a class of
securities under Section 12 of the Exchange Act, (b) issues an offering circular
meeting the requirements of Regulation A under the Securities Act, or (c)
commences to file reports under Section 13 or 15(d) of the Exchange Act, then
the Corporation shall immediately following such event and
thereafter:
(i) use
its
reasonable best efforts to comply with the requirements of Rule 144(c) under
the
Securities Act with respect to making and keeping available current public
information about the Corporation;
(ii) use
its
reasonable best efforts to file with the Commission in a timely manner all
reports and other documents required of the Corporation under the Securities
Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements and for so long as it remains subject to such reporting
requirements); and
(iii) at
the
request of any holder of Registrable Securities, forthwith furnish to such
holder, a written statement of compliance with the requirements of said Rule
144(c) (as such rule may be amended from time to time), and the reporting
requirements of the Securities Act and the Exchange Act (at any time after
it
has become subject to such reporting requirements and for so long as it remains
subject to such reporting requirements), (B) a copy of the most recent annual
or
quarterly report of the Corporation, and (C) such other reports and documents
of
the Corporation as such holder may reasonably request to avail itself of any
similar rule or regulation of the SEC allowing it to sell any such securities
without registration, including, without limitation, Rule 144A.
16
11. Participation
in Underwritten Registrations.
No
Person may participate in any registration hereunder which is underwritten
unless such Person (a) agrees to sell its shares of Common Stock on the basis
provided in any underwriting arrangements approved by the Corporation or any
other Person or Persons entitled to approve such arrangements, and (b) completes
and executes all questionnaires, powers of attorney, custody agreements,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements. In addition, any underwriter
of Registrable Securities shall be selected by holders of at least a majority
of
the Registrable Securities and shall be reasonably acceptable to the
Corporation.
12. Discontinued
Disposition.
Each
Person that is participating in any registration hereunder agrees that, upon
receipt of written notice from the Corporation of the happening of any event
of
the kind described in Section
6(d)
above or
the issuance of a stop order by the Commission, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person’s receipt of the copies of a
supplemented or amended prospectus as contemplated by such Section
6(d)
or the
withdrawal of the stop order as contemplated by Section
6(j).
In the
event the Corporation shall give any such written notice, the Effective Period
shall be extended by the number of days during the period from and including
the
date of the giving of such written notice pursuant to this Section
12
to and
including the date when each seller of Registrable Securities covered by such
registration statement shall have received from the Corporation the copies
of
the supplemented or amended prospectus contemplated by Section
6(d)
or
written notice of the withdrawal of the stop order, as applicable.
13. Standstill.
Each
Common Stockholder agrees not to effect any sale, transfer or distribution
of
his, her or its equity securities in the Corporation, or any securities
convertible into or exchangeable or exercisable for such securities, during
the
period from the date of this Agreement until the date that is 90 days following
the date as of which a registration statement covering the resale of all
Registrable Securities has been filed with and declared effective by the
Commission unless (a) such sale, transfer or distribution is approved in writing
by holders of at least a majority of the Registrable Securities, and (b) the
transferee of such sold, transferred or distributed securities agrees in writing
to be bound by the terms of this Agreement to the same extent as if they had
originally been a party hereto.
14. Restrictions
on Transfer.
(a) Legends.
The
certificates representing the Series A Preferred Shares and the Registrable
Securities will bear the following legend:
17
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. ANY SUCH
SALE
OR DISTRIBUTION MAY BE EFFECTED ONLY PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE
FOREGOING, THE SHARES REPRESENTED HEREBY MAY BE PLEDGED IN CONNECTION WITH
A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
SUCH
SHARES.”
“THESE
SECURITIES ARE SUBJECT TO CERTAIN AGREEMENTS SET FORTH IN A SERIES A RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICE
OF
THE CORPORATION. ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR DISPOSITION IN
CONFLICT WITH, OR IN DEROGATION OF, THE SERIES A STOCKHOLDERS AGREEMENT IS
VOID
AND OF NO LEGAL FORCE, EFFECT OR VALIDITY WHATSOEVER.”
(b) Securities
Act.
No
holder of Series A Preferred Shares or Registrable Securities may sell,
transfer, or dispose of any of such Series A Preferred Shares or Registrable
Securities except pursuant to an effective registration statement under the
Securities Act or an exemption therefrom.
15. Assignment
of Rights.
The
rights of any Purchaser under this Agreement with respect to any Series A
Preferred Shares and the rights of any holder of Registrable Securities under
this Agreement with respect to any Registrable Securities may be assigned to
any
Person who acquires such Series A Preferred Shares or Registrable Securities;
provided
that (a)
the assigning Purchaser or other holders, as applicable, shall give the
Corporation written notice at or prior to the time of such assignment stating
the name and address of the assignee and identifying the shares with respect
to
which the rights under this Agreement are being assigned; (b) such assignee
shall agree in writing, in form and substance reasonably satisfactory to the
Corporation, to be bound by the provisions of this Agreement; and (c)
immediately following such assignment the further disposition of such securities
by such assignee is restricted under the Securities Act.
16. Execution;
Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered will be deemed an original, and such counterparts
together will constitute one instrument. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
18
17. Remedies.
Each of
the parties to this Agreement will be entitled to enforce its rights granted
by
law or under this Agreement specifically (without the necessity of a bond),
to
recover damages by reason of any breach of any provision of this Agreement
and
to exercise all other rights existing in its favor. The parties hereto agree
and
acknowledge that money damages may not be an adequate remedy for any breach
of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance or injunctive relief (without the necessity of a bond) in order
to
enforce or prevent any violations of the provisions of this Agreement. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
18. Notices.
Any
notices desired, required or permitted to be given hereunder shall be delivered
personally or mailed, certified or registered mail, return receipt requested,
or
delivered by overnight courier service, or confirmed facsimile transmission
to
the following addresses, or such other addresses as shall be given by notice
delivered hereunder, and shall be deemed to have been given (a) upon delivery,
if delivered personally, (b) three days after mailing, if mailed, (c) one
business day after delivery to the overnight courier service, if delivered
by
overnight courier service, or (d) on the date sent, if sent by confirmed
facsimile transmission during the normal business hours of the recipient, and
if
not during normal business hours, then on the following business day (provided,
that any notice sent by facsimile transmission be followed by delivery via
another method permitted hereby):
If
to the
Corporation, to:
Cleveland
BioLabs, Inc.
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With
a
copy to:
▇▇▇▇▇▇
▇▇▇▇▇▇ Rosenman LLP
▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If
to any
Purchaser or other holder of Registrable Securities, to the addresses set forth
on the stock record books of the Corporation.
19. Amendments
and Waivers.
The
provisions of this Agreement may be amended upon the written agreement of the
Corporation and the holder or holders of (a) at least a majority of the
outstanding Registrable Securities, and (b) the holder or holders of a majority
of the outstanding Common Stockholder Shares. Any waiver, permit, consent or
approval of any kind or character on the part of any holders of any provision
or
condition of this Agreement must be made in writing and shall be effective
only
to the extent specifically set forth in writing. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed
as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
19
20. Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or any
other
jurisdiction, but this Agreement shall be reformed, construed, and enforced
in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
21. Complete
Agreement.
This
Agreement and the Purchase Agreement, together with the Exhibits, Annexes and
Schedules hereto and thereto, supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
22. Successors
and Assigns.
All
covenants and agreements in this Agreement by or on behalf of any of the parties
hereto will bind and inure to the benefit of the respective successors and
assigns of the parties hereto, and each transferee of all or any portion of
the
Securities held by the parties hereto, whether so expressed or not; provided,
that, the Corporation may not assign its rights or obligations hereunder without
the prior written consent of holders of at least a majority of the Registrable
Securities.
23. Headings.
The
captions set forth in this Agreement are for convenience only and shall not
be
considered as part of this Agreement or as in any way limiting the terms and
provisions hereof.
24. Entire
Agreement.
This
Agreement represents the full and complete understanding and agreement of the
parties hereto with respect to the subject matter contained herein and
supersedes all prior oral or written agreements between the parties which may
conflict with the agreements contained herein, including, but not limited to,
those certain Common Stockholders Agreements and the Restricted Stock Agreements
(including, without limitation, the ChemBridge Agreement (as such term is
defined in the Purchase Agreement)) entered into between the Common Stockholders
and the Company. If any provision contained herein conflicts with a provision
contained in the Common Stockholder Agreements, the provisions of this Agreement
shall govern. Other than as set forth in this Section 24, the Common Stockholder
Agreements shall remain in full force and effect.
25. Governing
Law.
This
Agreement shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this
Agreement shall be governed by, the laws of the State of Delaware, without
giving effect to provisions thereof regarding conflict of laws. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective affiliates, employees or agents) may
be
commenced non-exclusively in the state and federal courts sitting in the City
of
New York, Borough of Manhattan, (the “New
York Courts”).
Each
party hereto hereby irrevocably submits to the non-exclusive jurisdiction of
the
New York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any Proceeding, any
claim
that it is not personally subject to the jurisdiction of any New York Court,
or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING
OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IF
EITHER PARTY SHALL COMMENCE A PROCEEDING TO ENFORCE ANY PROVISIONS OF THIS
AGREEMENT, THEN THE PREVAILING PARTY IN SUCH PROCEEDING SHALL BE REIMBURSED
BY
THE OTHER PARTY FOR ITS ATTORNEY’S FEES AND OTHER COSTS AND EXPENSES INCURRED
WITH THE INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH
PROCEEDING.
20
26. Further
Assurances.
Each
party agrees to execute such other documents, instruments, agreements and
consents, and take such other actions as may be reasonably requested by the
other parties hereto to effectuate the purposes of this Agreement.
27. Reliance.
The
Corporation acknowledges and agrees that, in accepting the Fee Shares and/or
Fee
Warrants as partial consideration for services rendered to the Corporation
in
connection with the transactions contemplated hereby, Sunrise and/or its
designees (and their respective successors and permitted assigns) are entitled
to rely on and enforce the Corporation’s representations and warranties,
covenants and agreements and as if a party hereto.
28. Additional
Common Stockholders.
The
Corporation agrees that, so long as there are outstanding Series A Preferred
Shares and/or Registrable Securities, (a) it will cause each Person who acquires
shares of Common Stock or shares of capital stock or other securities directly
or indirectly exercisable for, or convertible into, shares of Common Stock
that
represent at least 2% of then issued and outstanding shares of Common Stock
(on
a fully-diluted, as converted basis) to enter into this Agreement and thereby
to
be bound by the terms hereof as a Common Stockholder, all by execution of a
Stockholder Counterpart signature page to this Agreement, and (b) it will amend
the Common
Stockholder Schedule
to
include such additional Person.
{The
remainder of this page is left intentionally blank.}
{Counterpart
signature pages to follow.}
21
CORPORATION
COUNTERPART TO
IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
first set forth above.
| CLEVELAND BIOLABS, INC. | ||
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President
and Chief Executive Officer
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COMMON
STOCKHOLDER COUNTERPART TO
IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
first set forth above.
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INDIVIDUAL:
Print
Name
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Signature
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| ENTITY: | |
| Print Entity Name | |
| Signature | |
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Name
and Title of Signatory
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PURCHASER
COUNTERPART FO
IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
first set forth above.
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INDIVIDUAL:
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Print
Name
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Signature
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| ENTITY: | |
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Print
Entity Name
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Signature
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Name
and Title of Signatory
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ANNEX A
PLAN
OF
DISTRIBUTION
The
selling stockholders and any of their pledgees, donees, assignees and
successors-in interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which
the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use any one or more of the
following methods when selling shares:
• ordinary
brokerage transactions and transactions in which the broker-dealer solicits
Investors;
• block
trades in which the broker-dealer will attempt to sell the shares as agent
but
may position and resell a portion of the block as principal to facilitate the
transaction;
• purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
• an
exchange distribution in accordance with the rules of the applicable
exchange;
• privately
negotiated transactions;
• short
sales (other than short sales established prior to the effectiveness of the
Registration Statement to which this Prospectus is a part)
• broker-dealers
may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per share;
• a
combination of any such methods of sale; and
• any
other
method permitted pursuant to applicable law.
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the Registrable Securities owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell shares of Common Stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list
of
selling stockholders to include the pledgee, transferee or other successors
in
interest as selling stockholders under this prospectus.
Upon
the
Corporation being notified in writing by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common
Stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such selling stockholder and
of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such the shares of Common Stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference
in
this prospectus, and (vi) other facts material to the transaction. In addition,
upon the Corporation being notified in writing by a selling stockholder that
a
donee or pledge intends to sell more than 500 shares of Common Stock, a
supplement to this prospectus will be filed if then required in accordance
with
applicable securities law.
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this
prospectus.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each selling stockholder has represented
and
warranted to the Corporation that it does not have any agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock.
The
Corporation is required to pay all fees and expenses incident to the
registration of the shares. The Corporation has agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Common
Stockholders Schedule
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Krivosenko
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ChemBridge
Corporation
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The
Cleveland Clinic Foundation
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Schedule
of Purchasers
Smithfield
Fiduciary LLC
▇▇▇▇▇
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JGB
Capital L.P.
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
FCC
Ltd
New
Bank
Ltd.
DCOFI
Master LDC
▇▇▇▇▇▇
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▇.
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Sunrise
Equity Partners, LP
▇▇▇▇▇▇▇
▇▇▇▇▇
F
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Co LP
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▇.
▇▇▇▇▇▇▇▇▇
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▇.
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and ▇▇▇▇▇▇ ▇▇▇▇
Bear
▇▇▇▇▇▇▇ as Custodian for ▇▇▇▇▇▇ ▇. Low ▇▇▇▇ ▇▇▇
Crestview
Capital Master, LLC
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Sem-Tov
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