Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report: (Date of earliest event reported): February 13, 2009
CLEVELAND
BIOLABS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-32954
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20-0077155
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(State
or other jurisdiction
of
incorporation or organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
Number)
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73
High Street
Buffalo,
New York 14203
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (716) 849-6810
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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x
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 1.01. Entry
into a Material Definitive Agreement
Securities Purchase
Agreement
On
February 13, 2009,
Cleveland BioLabs, Inc. (the “Company”) entered into a
Securities Purchase Agreement (the “Purchase Agreement”) with
various accredited investors (the “Purchasers”), pursuant to
which the Company agreed to sell to the Purchasers an aggregate of approximately
170 shares (the “Shares”) of Series D
Convertible Preferred Stock, with a par value of $0.005 per share and a stated
value of $10,000 per share (“Series D Preferred”), and
Common Stock Purchase Warrants (the “Warrants”) to purchase an
aggregate of 919,876 shares of the Company’s Common Stock, par value $0.005 per
share (“Common
Stock”). Each share of Series D Preferred is convertible
initially into approximately 5,405.5 shares of Common Stock, subject to the
adjustment as described below. The sale of the Shares and the
Warrants pursuant to the Purchase Agreement (the “Transaction”) was consummated
on February 13, 2009.
The aggregate purchase price paid by
the Purchasers for the Shares and the Warrants was approximately $1,700,000
(representing $10,000 for each Share together with a Warrant to purchase
approximately 5,405.5 shares of Common Stock). After related fees and
expenses, the Company received net proceeds of approximately
$1,250,000. The Company intends to use the proceeds for working
capital purposes.
In
consideration for its services, the placement agent will receive cash
compensation and Warrants to purchase an aggregate of approximately 91,988
shares of Common Stock.
In the aggregate, the Series D
Preferred and Warrants issued in the transaction (including those to be issued
to the placement agent) are convertible into, and exercisable for, as of the
date hereof, approximately 1,931,740 shares of Common
Stock.
The Purchasers have certain rights to
participate in future equity or equity linked financings of the
Company. Also, until February 13, 2012, if the Company effects a
preferred stock or debt financing, each Purchaser that still holds Shares may
elect to exchange them for the preferred stock or debt issued in the financing
on the basis of $0.90 in stated value or principal amount, as applicable, of
such preferred stock or debt for each $1.00 of outstanding stated value of
Series D Preferred. There are various other affirmative and negative
covenants in the Purchase Agreement.
Terms of the Series D
Preferred
To designate and establish the shares
of Series D Preferred, the Company’s Board of Directors approved, and on
February 13, 2009, the Company filed with the Delaware Secretary of State, a
Certificate of Designation of Preferences, Rights and Limitations of Series D
Convertible Preferred Stock (the “Certificate of
Designation”).
Dividends, Liquidation and
Distributions; Rank
No dividends are payable on the Series
D Preferred, except that if the Company pays any dividends on the Common Stock,
the Series D Preferred will participate on an as-converted basis. The
Series D Preferred ranks junior to the Company’s Series B Convertible Preferred
Stock (“Series B
Preferred”) and senior to all shares of Common Stock and other capital
stock of the Company. As long as any share of Series B Preferred is
outstanding, (a) the Company may not make any distributions on the Series D
Preferred, unless either (i) each holder of the outstanding Series B Preferred
has been paid in full all dividends and other distributions to which such holder
is then entitled or (ii) the holders of a majority of the Series B Preferred
have consented to the distribution, and (b) the Company may not redeem any of
the Series D Preferred. In no event may the Company redeem or pay any
cash distributions on Series D Preferred except in each case out of funds
legally available therefor.
Conversion
Each
share of Series D Preferred is convertible into a number of shares of Common
Stock equal to (1) the stated value of the share ($10,000), divided by (2)
$1.85, subject to adjustment as discussed below (the “Conversion
Price”).
If the
Company does not (i) receive authorization from the FDA to initiate
“double-blind” clinical trials to evaluate the safety, pharmacokinetics and
pharmacodynamics of CBLB502 in healthy human volunteers by December 31, 2009, or
(ii) file its biologic license application for use of CBLB502 for the mitigation
of acute radiation syndrome in individuals exposed to whole body radiation by
December 31, 2010 (each a “Milestone”), then, upon
missing either Milestone, the Conversion Price will, unless the closing price of
the Common Stock is greater than $3.69 (subject to adjustment) on the date the
Milestone is missed, be reduced to 80% of the Conversion Price in effect on that
date (the “Milestone
Adjustment”). In
addition to the Milestone Adjustment, (a) on August 13, 2009 (the “Initial Adjustment Date”), the
Conversion Price shall be reduced to 95% of the then Conversion Price, and (b)
on each three month anniversary of the Initial Adjustment Date (each, an “Adjustment Date”), the then
Conversion Price shall be reduced by $0.05 (subject to
adjustment). The Conversion Price is also subject to proportional
adjustment in the event of any stock split, stock dividend, reclassification or
similar event with respect to the Common Stock and to “full ratchet”
anti-dilution adjustment in the event of any Dilutive Issuance (as defined in
the Certificate of Designation).
If the closing price for each of any 20
consecutive trading days after the effective date of the initial registration
statement filed pursuant to the Registration Rights Agreement (as defined below)
(the “Effective Date”)
exceeds 300% of the then effective Conversion Price and various other equity
conditions are satisfied, the Series D Preferred will automatically convert into
shares of Common Stock.
Voting
The holders of the Series D Preferred
have no voting rights except with respect to specified matters affecting the
rights of the Series D Preferred.
Maturity
At any time after February 13, 2012,
the Company may, if various equity conditions are satisfied, elect either to
redeem any outstanding Series D Preferred in cash or to convert any outstanding
Series D Preferred into shares of Common Stock at the Conversion Rate then in
effect.
Sinking Fund
If the
Company (a) receives any cash funds from fees, royalties or revenues as a result
of the license of any of its intellectual property (such net proceeds the “IP Proceeds”), (b) pursuant to
awards made after the date hereof, receives cash funds from development grants
from any government agency for the development of (i) anti-cancer applications
of any of the Company’s curaxin compounds or (ii) anti-cancer or biodefense
applications for the Company’s CBLB502 compound (the “Governmental Grant Proceeds”),
then the Company must deposit (i) 40% of the IP Proceeds, (ii) 20% of the
Governmental Grant Proceeds and (iii) any other funds that the Company
voluntarily wants to contribute into an escrow account (the “Sinking Fund”). At
any time after the later of the Effective Date and the 6-month anniversary of
the initial contribution by the Company to the Sinking Fund, but no more than
once in every 6-month period, the Company will be required to use the funds then
in the Sinking Fund to redeem outstanding shares of Series D Preferred from the
holders on a pro rata basis, at a premium of 15% to the stated value through
February 13, 2010, and 20% thereafter, except those of such shares that the
holders elect to convert, which will be converted using the same premium to the
stated value. After the shares are redeemed or converted, any
remaining funds in the Sinking Fund (i.e., those funds that would have been used
to redeem shares that were instead converted) may be withdrawn from the Sinking
Fund by the Company and used by the Company in its discretion.
Triggering
Events
In the event of a Triggering Event (as
defined in the Certificate of Designation and described below), any holder of
Series D Preferred may require the Company (A) to redeem all of its Series D
Preferred shares, at a redemption price representing a premium to the stated
value of the Series D Preferred (determined in accordance with the Certificate
of Designation), payable in cash or shares of Common Stock (depending on the
nature of the Triggering Event, the election of the holder and/or limitations
imposed by the certificate of designation for the Series B Preferred), or (B)
under certain circumstances, reduce the Conversion Price then in effect as
provided in the Certificate of Designation. Triggering Events include, among
other things, bankruptcy related events, certain monetary judgments against the
Company, a Change of Control Transaction (as defined in the Certificate of
Designation) and various types of failures to perform under, and breaches of,
the transaction documents.
Warrants
The Warrants have a seven-year term and
an initial exercise price of $2.60. The Warrants are exercisable in
cash, but if the registration statement to be filed pursuant to the Registration
Rights Agreement is not effective and available to a holder of the Warrants
after the earlier of (1) the one year anniversary of the Purchase Agreement and
(2) the completion of the applicable holding period required pursuant to Rule
144 under the Securities Act of 1933, such holder may also exercise the Warrants
on a cashless (net issue) basis.
The exercise price of, and number of
shares subject to the Warrants are subject to proportional adjustment in the
event of any stock splits, stock dividend, reclassifications or similar event
with respect to the Common Stock. The exercise price is also subject
to reduction pursuant to “full ratchet” anti-dilution provisions similar to
those in the Certificate of Designation.
Registration Rights
Agreement
In connection with the Purchase
Agreement, the Company also entered into a Registration Rights Agreement with
the Purchasers, dated as of February 13, 2009 (the “Registration Rights
Agreement”). Under the Registration Rights Agreement, the
Company granted the Purchasers certain registration rights with respect to the
Common Stock issuable upon conversion of the Series D Preferred and exercise of
the Warrants.
Stockholder Approval and
Voting Agreements
Under the NASDAQ rules, the Company may
not issue more than an aggregate of 2,770,160 shares of Common Stock upon the
conversion of the Series D Preferred and the exercise of the Warrants into
Common Stock unless stockholder approval is obtained, and the Certificate of
Designation reflects this limitation. In addition, stockholder
approval is also required for an amendment to the Company’s charter to provide
for an increase in authorized shares of Common Stock from 40,000,000 to no less
than 60,000,000. Under the Purchase Agreement, the Company is
required to seek these approvals at a meeting of its stockholders.
On February 13, 2009, the Company
entered into a Voting Agreement with Bernard L. Kasten, James J. Antal, Paul E.
DiCorleto, Michael Fonstein, Andrei Gudkov, Yakov Kogan, H. Daniel Perez, John
A. Marhofer, Jr. and The Cleveland Clinic Foundation, under which each of them
agreed to vote in favor of these approvals. In the aggregate, these
parties to the Voting Agreement held approximately 29.3% of the Company’s
outstanding voting stock as of February 12, 2009.
The Company intends to file a proxy
statement and other relevant documents concerning the transaction described
above with the SEC. The proxy statement will be distributed to the
Company’s stockholders in connection with a meeting of
stockholders. Stockholders are urged to read the proxy statement, the
documents incorporated by reference in the proxy statement, the other documents
filed with the SEC and the other relevant materials when they become available
because they will contain important information about the
transaction. Investors will be able to obtain these documents free of
charge at the SEC’s website (http://www.sec.gov). The directors,
executive officers, and certain other members of management and employees of the
Company and its subsidiaries are participants in the solicitation of proxies in
favor of approval of the transaction and related matters from the stockholders
of the Company. Information about the directors and executive
officers of the Company is set forth in its proxy statement for the 2008 annual
meeting of stockholders filed with the SEC on April 1,
2008. Additional information regarding the interests of such
participants will be included in the transaction-related proxy statement and the
other relevant documents filed with the SEC when they become
available.
Impact of the Transaction on
Series B Preferred, Series B Warrants and Series C Warrants
Immediately after the completion of the
Transaction, the conversion price of the Company’s Series B Preferred was
adjusted, pursuant to weighted-average anti-dilution provisions, from $7.00 to
$6.25, causing the conversion rate of Series B Preferred into Common Stock to
change from 1-to-1 to approximately 1-to-1.12. This has the effect of
increasing the number of shares of Common Stock into which the outstanding
Series B Preferred are convertible from 3,160,974 to 3,540,291. In
addition, the exercise prices of the Company’s Series B Warrants and Series C
Warrants were adjusted, pursuant to weighted-average anti-dilution provisions,
to $9.20 and $9.76, respectively, from the original exercise prices of $10.36
and $11.00. In
addition to the adjustment to the exercise prices of the Series B Warrants and
the Series C Warrants, the aggregate number of shares issuable upon exercise of
the Series B Warrants and the Series C Warrants increased to approximately
2,663,791 and
301,006 respectively, from 2,365,528 and
267,074.
Item 3.02. Unregistered
Sales of Equity Securities
The information contained in Item 1.01
is hereby incorporated by reference. The Series D Preferred and the Warrants
were sold in a transaction exempt from registration under the Securities Act of
1933, in reliance on Section 4(2) thereof and Rule 506 of Regulation D
thereunder. Each Purchaser represented that it was an “accredited investor” as
defined in Regulation D.
Item
5.03. Amendments
to Articles of Incorporation or Bylaws; Changes in Fiscal
Year
The information contained in Item 1.01
is hereby incorporated by reference. The Certificate of Designation, which
authorizes a total of 1,300 shares of Series D Preferred, was filed with the
Delaware Secretary of State on February 13, 2009 and was effective upon
filing.
On
February 17, 2009, the Company issued a press release announcing the Transaction
described in Item 1.01. A copy of the press release is attached as
Exhibit 99.1.
Item 9.01. Financial
Statements and Exhibits
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(d)
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Exhibits |
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Exhibit
No.
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Exhibit
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99.1
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Press
Release dated February 17, 2009.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CLEVELAND
BIOLABS, INC.
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Date: February 17,
2009
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By:
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/s/
Michael Fonstein
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Michael
Fonstein
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President
and Chief Executive Officer
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EXHIBIT
INDEX
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Exhibit
No.
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Exhibit
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99.1
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Press
Release dated February 17, 2009.
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