Item 1.01 Entry into a Material Definitive Agreement.
On June 17, 2014, Cleveland BioLabs, Inc. (the "Company") entered into a
definitive securities purchase agreement (the "Purchase Agreement") with certain
accredited investors (the "Purchasers"), pursuant to which the Company agreed to
issue and sell to the Purchasers, subject to customary closing conditions, units
that are immediately separable into an aggregate of 6,167,400 shares (the
"Shares") of the Company's common stock, par value $0.005 per share (the "Common
Stock"), and warrants (the "Warrants") to purchase up to 3,083,700 additional
shares of Common Stock (the "Warrant Shares"), for an aggregate purchase price
of $3.5 million, or $0.5675 per unit (the "Private Placement"). The Company
closed the Private Placement on June 20, 2014. The Warrants, which may be
exercised for cash or by surrender of all or a portion of such Warrant in a
cashless exercise, will have a per share exercise price of $0.56 and a five year
term. Based on the number of shares of Common Stock issued and outstanding as of
June 17, 2014, upon completion of the Private Placement the Company has
57,110,198 shares of Common Stock issued and outstanding. Under the terms of the
Purchase Agreement, the Company shall use $3 million of the funds raised to pay
down its term loan from Hercules Technology II, L.P. ("Hercules").
The Purchasers consist of Dr. Mikhail Mogutov, Chairman of the Board of
Directors of Incuron, LLC and Chairman of the Investment Committee and founder
of Bioprocess Capital Ventures, as well as one institutional investor and its
affiliate that collectively beneficially own more than 5% of our Common Stock.
The securities issued by the Company pursuant to the Purchase Agreement and upon
exercise of the Warrants (collectively, the "Securities") have not been
registered under the Securities Act of 1933, as amended (the "Act"), and may not
be offered or sold in the United States absent registration or an applicable
exemption from registration requirements. The Company is relying on the private
placement exemption from registration provided by Section 4(a)(2) of the Act and
by Rule 506 of Regulation D, promulgated by the Securities and Exchange
Commission (the "SEC"), and in reliance on similar exemptions under applicable
state laws. Upon completion of the transaction, a Form D filing will be made in
accordance with the requirements of Regulation D. No underwriting discounts or
commissions are or will be payable as a result of the offer, sale and issuance
by the Company of the Securities. On January 9, 2014, the Company entered into a
letter agreement (the "Placement Agency Agreement") with H.C. Wainwright & Co.,
LLC ("HCW") pursuant to which the Company engaged HCW to act as its exclusive
placement agent in connection with the issuance and sale of its Common Stock and
warrants. Pursuant to the fee tail provision of the Placement Agency Agreement,
which specifically excludes BioProcess Capital Partners and its affiliates,
including Dr. Mogutov, the Company will pay $30,000 to HCW upon the completion
of this offering.
In connection with the Private Placement, the Company entered into a
Registration Rights Agreement with the Purchasers (the "Registration Rights
Agreement"). Pursuant to the Registration Rights Agreement, the Company has
agreed, upon the request of the Investors, subject to certain terms and
conditions, to file a registration statement under the Act covering the resale
of shares of Common Stock, including shares of Common Stock underlying the
warrants, within 30 days after receipt of such request. The Company shall cause
the registration statement to be declared effective under the Act within 60 days
(or in the event of a "full review" by the SEC, 120 days) if such request is
made within 60 days of June 17, 2014. The obligation to file a registration
statement pursuant to the Investors' request shall continue for three years.
Additionally, the Investors are entitled to piggyback registration rights in
certain circumstances. The Company will bear all expenses of such registration
of the resale of the Shares and the Warrant Shares.
Additionally, in connection with the Private Placement, the Company entered into
a Rights Agreement (the "Rights Agreement") with the Purchasers. Pursuant to the
Rights Agreement, Dr. Mogutov shall have the right to designate one director for
nomination for election to the Company's Board of Directors (the "Board") until
such time when Dr. Mogutov and his affiliates no longer hold in the aggregate
more than 3% of the issued and outstanding Common Stock of the Company.
The Company also entered into a First Amendment to the Loan and Security
Agreement with Hercules (the "Amendment") pursuant to which the Company agreed
to pay down $4 million of the amount outstanding under its term loan with
Hercules and Hercules agreed to (1) terminate the agreement between the Company
and Hercules pursuant to which the Company had granted Hercules a security
interest in and pledged to Hercules its ownership interest in Incuron, LLC, and
(2) waive any prepayment charges associated with the payment.
The foregoing descriptions of the Purchase Agreement, the Registration Rights
Agreement, the Rights Agreement, the Warrants and the Amendment are summaries of
the material terms of such agreements and documents, do not purport to be
complete and are qualified in their entirety by reference to the Purchase
Agreement, the Registration Rights Agreement, the Rights Agreement, the
Amendment and the form of Warrant and filed as Exhibit 10.1, Exhibit 10.2,
Exhibit 10.3, Exhibit 10.4 and Exhibit 4.1, respectively, to this Current Report
on Form 8-K and incorporated by reference herein.
Item 8.01 Other Events.
On June 18, 2014
, the Company issued a press release titled "Cleveland BioLabs
Reduces Debt with $3.5 Million
At-The-Market Private Placement of Unregistered
Stock." A copy of the press release is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
4.1 Form of Series J Warrant
10.1 Purchase Agreement
10.2 Registration Rights Agreement
10.3 Rights Agreement
10.4 First Amendment to Loan Agreement
99.1 Press release, dated June 18, 2014.
This Current Report on Form 8-K contains forward-looking statements within the
meaning of the federal securities laws. These forward-looking statements are
based on the Company's current expectations and beliefs concerning future
developments and their potential effects on the Company. There can be no
assurance that future developments affecting the Company will be those that the
Company has anticipated. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond the Company's control) or other
assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, the risks and
uncertainties described in the section entitled "Risk Factors" in the Company's
Annual Report on Form 10-K for the year ended December 31, 2013
and in its other
filings from time to time filed with the Securities and Exchange Commission
Should one or more of these risks or uncertainties materialize, or should any of
the Company's assumptions prove incorrect, actual results may vary in material
respects from those projected in these forward-looking statements. The Company
undertakes no obligation to publicly update or revise any forward-looking