RESTRICTED STOCK AGREEMENT
THIS
RESTRICTED STOCK AGREEMENT
(this
“Agreement”)
is
made as of July 5, 2003, between Cleveland BioLabs, Inc., a Delaware
corporation (the “Company”),
and
Xxxxxx Xxxxxx (“Executive”).
The
Executive has subscribed for and the Company has accepted a subscription
agreement pursuant to which Executive has committed to purchase, and the Company
has committed to sell, 2,650 shares of the Company’s Common Stock, par value
$0.005 per share (the “Common
Stock”).
All
of such shares of Common Stock are referred to herein as “Executive
Shares.”
Certain definitions are set forth in Section 6
of this
Agreement.
As
an
inducement for the Company to issue and sell the Executive Shares to Executive,
the Company is requiring Executive to enter into this Agreement.
The
parties hereto agree as follows:
1. Executive
Shares.
(a) Upon
execution of this Agreement, Executive will purchase, and the Company will
sell,
2,650 shares of Common Stock at a price of $0.005 per share. The Company will
deliver to Executive the certificates representing such Executive Shares, and
Executive will deliver to the Company cash or a check in the aggregate amount
of
$13.25.
(b) Within
thirty (30) days after the purchase by Executive of Executive Shares pursuant
to
this Agreement, Executive will make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder in the form of Annex A
attached
hereto.
(c) In
connection with the purchase and sale of the Executive Shares pursuant hereto,
Executive represents and warrants to the Company that:
(i) Executive
is an employee, officer or director of the Company, is sophisticated in
financial matters and is able to evaluate the risks and benefits of the
investment in the Executive Shares;
(ii) This
Agreement and each of the other agreements contemplated hereby to which
Executive is a party constitute legal, valid and binding obligations of
Executive, enforceable in accordance with their terms, and the execution,
delivery and performance of this Agreement and such other agreements by
Executive does not and will not conflict with, violate or cause a breach of
any
agreement, contract or instrument to which Executive is a party or any judgment,
order or decree to which Executive is subject; and
(iii) Executive
is not a party to or bound by any other employment agreement, noncompete
agreement or confidentiality agreement which conflicts with the obligations
set
forth in this Agreement.
(d) As
an
inducement for the Company to commit to issue the Executive Shares to Executive,
and as a condition thereto, Executive acknowledges and agrees that neither
any
future issuance of capital stock of the Company to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company, or affect the right of the Company to terminate Executive’s employment
at any time for any reason, subject to the terms and conditions of any
employment agreement.
2. Vesting
of Shares.
(a) Except
as
otherwise provided in. Section 2(b)
below,
the Executive Shares purchased hereunder will become vested (determined as
nearly as practicable to the nearest share) in accordance with the following
schedule, if as of each such date Executive is still employed by the
Company:
Date
|
Cumulative
Percentage of
Executive
Shares to be Vested
|
|
Date
of This Agreement
|
25%
|
|
1st
Anniversary of this Agreement
|
50%
|
|
2nd
Anniversary of this Agreement
|
75%
|
|
3rd
Anniversary of this Agreement
|
100%
|
|
(b) If
Executive ceases to be employed by the Company on any date other than any
anniversary date prior to the third anniversary of this Agreement, the
cumulative percentage of Executive Shares to become vested will be determined
on
a pro rata basis according to the number of days elapsed from the prior
anniversary date to the date of termination (but including in such calculation
all unused vacation and personal days as if the Executive had worked such days);
provided,
however,
that no
Executive Shares shall become vested until the first anniversary of this
Agreement. Notwithstanding the foregoing or anything herein to the contrary,
upon the occurrence of a Sale of the Company, all Executive Shares which have
not yet become vested shall become vested at the time of such Sale of the
Company (such portion being referred to herein as the “Accelerated
Shares”);
provided,
however,
that
the Accelerated Shares shall at all times be subject to any restrictions or
limitations with respect to the Transfer thereof contained herein or as
otherwise provided by law, Executive Shares which have become vested hereunder
are referred to herein as “Vested
Shares,”
and
all other Executive Shares are referred to herein as “Unvested
Shares.”
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3. Repurchase
Option.
(a) In
the
event Executive ceases to be employed by the Company for any reason (a
“Separation”), the Unvested Shares (whether held by Executive or one or more of
Executive’s transferees, other than the Company) will be subject to repurchase,
in each case by the Company pursuant to the terms and conditions set forth
in
this Section 3
(the
“Repurchase
Option”).
(b) In
the
event of a Separation, the Executive Securities purchased hereunder representing
Unvested Shares shall be subject to repurchase by the Company at a purchase
price per share equal to the Executive’s Original Cost for such
share.
(c) In
the
event of a Separation, the Company may elect to purchase all or any portion
of
the Unvested Shares by delivering written notice (the “Repurchase
Notice”)
to the
holder or holders of the Executive Securities within 60 days after the
Separation. The Repurchase Notice will set forth the number of Unvested Shares
to be acquired from each holder, the aggregate consideration to be paid for
such
securities and the time and place for the closing of the transaction. The number
of securities to be repurchased by the Company shall first be satisfied to
the
extent possible from the Unvested Shares held by Executive at the time of
delivery of the Repurchase Notice. If the number of Unvested Shares then held
by
Executive is less than the total number of such securities which the Company
has
elected to purchase, the Company shall purchase the remaining securities elected
to be purchased from the other holder(s) of Executive Securities under this
Agreement, pro rata according to the number of Executive Securities held by
such
other holder(s) at the time of delivery of such Repurchase Notice (determined
as
nearly as practicable to the nearest share).
(d) The
closing of the purchase of the Unvested Shares pursuant to the Repurchase Option
shall take place on the date designated by the Company in the Repurchase Notice,
which date shall not be more than 2 months nor less than 5 days after
the delivery of such notice. The Company will pay for the Executive Securities
to be purchased by it pursuant to the Repurchase Option by first offsetting
amounts outstanding under any bona fide debts owed by Executive to the Company
and will pay the remainder of the purchase price to the extent reasonably
permissible under the Company’s equity financing agreements and agreements
evidencing indebtedness for borrowed money, by a check or wire transfer of
funds. The Company will be entitled to receive customary representations and
warranties from the sellers of Executive Securities (including representations
and warranties regarding good title to the Executive Securities, the absence
of
any liens on such title or other encumbrances with respect to the Transfer
of
the Executive Securities and the ability of such sellers to consummate the
sale).
(e) Notwithstanding
anything to the contrary contained in this Agreement, all repurchases of
Executive Securities by the Company shall be subject to applicable restrictions
contained in the Delaware General Corporation Law and as may be required by
other parties in the Company’s equity financing agreements or agreements
evidencing indebtedness for borrowed money, if any. If any such restrictions
prohibit the repurchase of Executive Securities hereunder which the Company
is
otherwise entitled to make, the Company may make such repurchases as soon as
it
is permitted to do so under such restrictions.
4. Restrictions
on Transfer of Executive Securities.
(a) Transfer
of Executive Securities.
Executive shall not Transfer any interest in any Executive Securities, except
at
such time as the restrictions herein terminate as provided in Section 4(b)
below.
Notwithstanding the foregoing, the restrictions contained in this Section 4
will not
apply with respect to (i) Transfers of shares of Executive Securities
pursuant to applicable laws of descent and distribution or (ii) Transfer of
shares of Executive Securities among Executive’s Family Group; provided
that in
each case such restrictions will continue to be applicable to the Executive
Securities irrespective of any such Transfer. Any transferee of Executive
Securities pursuant to a Transfer in accordance with the provisions of this
Section 4(a)
is
herein referred to as a “Permitted
Transferee.”
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(b) Termination
of Restrictions.
The
restrictions on the Transfer of Executive Securities set forth in this
Section 4
will
continue with respect to each Executive Security until the earlier of (i) a
Qualified Public Offering; or (ii) a Sale of the Company.
5. Additional
Restrictions on Transfer of Executive Securities.
(a) Legend.
The
certificates representing the Executive Securities will bear a legend in
substantially the following form:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF
JULY 5, 2003, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO
ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT BETWEEN THE COMPANY
AND AN EXECUTIVE OF THE COMPANY DATED AS OF JULY 5, 2003. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE
OF BUSINESS WITHOUT CHARGE.”
(b) Opinion
of Counsel.
No
holder of Executive Securities may transfer any Executive Securities (except
pursuant to an effective registration statement under the Securities Act)
without first delivering to the Company an opinion of counsel (reasonably
acceptable in form and substance to the Company) that neither registration
nor
qualification under the Securities Act and applicable state securities laws
is
required in connection with such Transfer.
6. Definitions.
“Executive’s
Family Group”
means
Executive’s spouse and descendants (whether natural or adopted), any trust
solely for the benefit of Executive and/or Executive’s spouse and/or descendants
and any retirement plan for the Executive.
“Executive
Securities”
means
the Executive Shares and any other securities of the Company held by Executive
or any of Executive’s transferees permitted hereunder. All Executive Securities
will continue to be Executive Securities in the hands of any holder other than
Executive (except for the Company and except for transferees in a Public Sale).
Except as otherwise provided herein, each such other holder of Executive
Securities will succeed to all rights and obligations attributable to Executive
as a holder of Executive Securities hereunder. Executive Securities will also
include shares of the Company’s capital stock or other securities of the Company
issued with respect to Executive Securities by way of a stock split, dividend
or
other recapitalization or reclassification.
4
“Original
Cost”
means
with respect to each share of Common Stock purchased hereunder, $0.005 (as
proportionately adjusted for all subsequent stock splits, stock dividends and
other recapitalizations).
“Person”
means
an individual, a partnership, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or, any department agency or political
subdivision thereof.
“Public
Sale”
means
any sale pursuant to a registered public offering under the Securities Act
or
any sale to the public pursuant to Rule 144 promulgated under the
Securities Act effected through a broker, dealer or market maker.
“Qualified
Public Offering”
means
the sale in an underwritten public offering registered under the Securities
Act
of shares of the Company’s Common Stock approved by the Board resulting in net
proceeds to the Company of no less than $20 million.
“Sale
of the Company”
means
any transaction or series of transactions pursuant to which (A) any
Person(s) acquire(s) (i) capital stock of the Company possessing the voting
power (other than voting rights accruing only in the event of a default, breach
or event of noncompliance) to elect a majority of the Company’s board of
directors (whether by merger, consolidation, reorganization, combination, sale
or transfer of the Company’s capital stock, shareholder or voting agreement,
proxy, power of attorney or otherwise) or (ii) all or substantially all of
the Company’s assets determined on a consolidated basis; provided
that the
term “Sale of the Company” shall not include any sale of equity or debt
securities by the Company in a private offering to other investors; or
(B) more than 50% of the assets of the Company is spun off, split off or
otherwise distributed.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Transfer”
means
to sell, transfer, assign, pledge or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by operation
of law).
7. Notices.
Any
notice provided for in this Agreement must be in writing and must be either
personally delivered, mailed by first class mail (postage prepaid and return
receipt requested), sent by reputable overnight courier service (charges
prepaid), or sent via facsimile to the recipient at the address or facsimile
number below indicated:
If
to the Company:
Cleveland
BioLabs, Inc.
0000
Xxxxxxxxxx Xxxx
Xxxxx
Xxxxx, Xxxx 00000
Attn: Xxxxxxx
Xxxxxxxx
|
5
With
a copy to:
Xxxxxx
Xxxxxx Rosenman LLP
000
Xxxx Xxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxxxxx 00000
Fax: (000)
000-0000
Tel: (000)
000-0000
Attn: Xxxx
X. Xxxxxxx, Esq.
|
If
to Executive:
Xxxxxx
Xxxxxx
0000
Xxxxxxxxxx Xxxx
Xxxxx
Xxxxx, Xxxx 00000
|
or
such
other address, facsimile number or to the attention of such other person as
the
recipient party shall have specified by prior written notice to the sending
party. Any notice under this Agreement will be deemed to have been given when
so
delivered, sent or transmitted or, if mailed, five days after deposit in the
U.S. mail.
8. General
Provisions.
(a) Transfers
in Violation of Agreement.
Any
Transfer or attempted Transfer of any Executive Securities in violation of
any
provision of this Agreement shall be void, and the Company shall not record
such
Transfer on its books or treat any purported transferee of such Executive
Securities as the owner of such securities for any purpose.
(b) 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 will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
(c) Complete
Agreement.
This
Agreement, those documents expressly referred to herein and other documents
of
even date herewith embody the complete agreement and understanding among the
parties and 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.
(d) Counterparts.
This
Agreement may be executed in separate counterparts, each of which is deemed
to
be an original and all of which taken together constitute one and the same
agreement.
6
(e) Successors
and Assigns.
Except
as otherwise provided herein, this Agreement shall bind and inure to the benefit
of and be enforceable by Executive and the Company and their respective
successors and assigns (including subsequent holders of Executive Securities);
provided that the rights and obligations of Executive under this Agreement
shall
not be assignable except in connection with a permitted transfer of Executive
Securities hereunder.
(f) Choice
of Law.
This
Agreement shall be construed in accordance with the laws of the State of
Delaware, without regard to principals of conflicts of law. Any and all
litigation arising out of this Agreement shall be conducted only in courts
located in the State of Delaware.
(g) Remedies.
Each of
the parties to this Agreement will be entitled to enforce its rights under
this
Agreement specifically, to recover damages and costs (including attorney’s fees)
caused by 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 (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this
Agreement.
(h) Amendment
and Waiver.
The
provisions of this Agreement may be amended and waived only with the prior
written consent of the Company and Executive. No course of conduct or failure
or
delay in enforcing the provisions of this Agreement shall affect the validity,
binding effect or enforceability of this Agreement.
(i) Business
Days.
If any
time period for giving notice or taking action hereunder expires on a day which
is a Saturday, Sunday or holiday in the state in which the Company’s chief
executive office is located, the time period shall be automatically extended
to
the business day immediately following such Saturday, Sunday or
holiday.
(j) Indemnification
and Reimbursement of Payments on Behalf of Executive.
The
Company shall be entitled to deduct or withhold from any amounts owing from
the
Company to the Executive any federal, state, local or foreign withholding taxes,
excise taxes, or employment taxes (“Taxes”)
imposed with respect to the Executive’s compensation or other payments from the
Company or the Executive’s ownership interest in the Company, including, but not
limited to, wages, bonuses, dividends, the receipt or exercise of stock options
and/or the receipt or vesting of restricted stock. The Executive shall indemnify
the Company for any amounts paid with respect to any such Taxes, together with
any interest, penalties and related expenses thereto.
(k) Termination.
This
Agreement shall survive the termination of Executive’s employment with the
Company and shall remain in full force and effect after such
termination.
(l) Generally
Accepted Accounting Principles; Adjustments of Numbers.
Where
any accounting determination or calculation is required to be made under this
Agreement or the exhibits hereto, such determination or calculation (unless
otherwise provided) shall be made in accordance with generally accepted
accounting principles, consistently applied. All numbers set forth herein which
refer to share prices or amounts will be appropriately adjusted to reflect
stock
splits, stock dividends, combinations of shares, recapitalizations or other
similar transactions affecting the subject class of stock.
7
(m) Waiver
of Jury Trial.
Each of
the parties hereto hereby irrevocably waives any and all right to trial by
jury
of any claim or cause of action in any legal proceeding arising out of or
related to this Agreement or the transactions or events contemplated hereby
or
any course of conduct, course of dealing, statements (whether verbal or written)
or actions of any party hereto. The parties hereto each agree that any and
all
such claims and causes of action shall be tried by a court trial without a
jury.
Each of the parties hereto further waives any right to seek to consolidate,
any
such legal proceeding in which a jury trial has been waived with any other
legal
proceeding in which a jury trial cannot or has not been waived.
*****
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IN
WITNESS WHEREOF,
the
parties hereto have executed this Restricted Stock Agreement as of the date
first written above.
CLEVELAND BIOLABS, INC. | ||
|
|
|
By: | /s/ Xxxxxxx Xxxxxxxx | |
Name: Xxxxxxx Xxxxxxxx |
||
Its: Chief Financial Officer | ||
/s/ Xxxxxx Xxxxxx
|
||
Xxxxxx Xxxxxx
|
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