WARRANT NO. D-_
NEITHER THIS
SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT 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 AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE FORM AND
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
COMMON STOCK PURCHASE
WARRANT
CLEVELAND BIOLABS,
INC.
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Warrant Shares:
________
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Initial Exercise Date: __________,
2009
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THIS COMMON STOCK PURCHASE WARRANT (the “
Warrant ”) certifies that, for value received,
_________ ( “ Holder ”) is entitled, upon the
terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the
“ Initial Exercise Date ”) and on or prior to
the close of business on the seven year anniversary of the Initial
Exercise Date (the “ Termination Date ”) but not
thereafter, to subscribe for and purchase from Cleveland BioLabs,
Inc., a Delaware corporation (the “ Company ”),
up to ______ shares (the “ Warrant Shares ”) of
Common Stock. The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as
defined in Section 2(b).
Section 1 .
Definitions . Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that
certain Securities Purchase Agreement (the “ Purchase
Agreement ”), dated ________, 2009, among the Company and
the purchasers signatory thereto.
a)
Exercise of Warrant . Exercise of
the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to
the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the
address of Holder appearing on the books of the Company) of a duly
executed facsimile copy of the Notice of Exercise Form annexed
hereto; and, within three (3) Trading Days of the date said Notice
of Exercise is delivered to the Company, the Company shall have
received payment of the aggregate Exercise Price of the
shares thereby purchased by wire transfer or cashier’s check
drawn on a United States bank. Notwithstanding anything
herein to the contrary (but subject to Sections 4(a) and 4(b),
Holder shall not be required to physically surrender this Warrant
to the Company until Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in
which case, Holder shall surrender this Warrant to the Company for
cancellation within three (3) Trading Days of the date the final
Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of
the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares
purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. Holder and the Company
shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Company
shall deliver any objection to any Notice of Exercise Form within
two (2) Business Days of receipt of such notice. In the
event of any dispute or discrepancy, the records of the Company
shall be controlling and determinative in the absence of manifest
error. Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount
stated on the face hereof.
b)
Exercise Price . The exercise
price per share of the Common Stock under this Warrant shall be
$2.60, subject to adjustment hereunder (the “
Exercise Price ”).
c)
Cashless Exercise . If at any time
after the earlier of (i) the one year anniversary of the date of
the Purchase Agreement and (ii) the completion of the
then-applicable holding period required by Rule 144, or any
successor provision then in effect, there is no effective
Registration Statement registering, or no current prospectus
available for, the resale of the Warrant Shares by Holder, then
this Warrant may also be exercised at such time by means of a
“cashless exercise” in which Holder shall be entitled
to receive a certificate for the number of Warrant Shares equal to
the quotient obtained by dividing [(A-B) (X)] by (A),
where:
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(A)
=
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the VWAP on the
Trading Day immediately preceding the date on which Holder elects
to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of
Exercise;
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(B)
=
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the Exercise
Price of this Warrant, as adjusted hereunder; and
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(X)
=
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the number of
Warrant Shares that would be issuable upon exercise of this Warrant
in accordance with the terms of this Warrant if such exercise were
by means of a cash exercise rather than a cashless
exercise.
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d)
Exercise Limitations .
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Holder’s Restrictions
. The Company shall not
effect any exercise of this Warrant, and a Holder shall not have
the right to exercise any portion of this Warrant, pursuant to
Section 2 or otherwise, to the extent that after giving effect to
such issuance after exercise as set forth on the applicable Notice
of Exercise, Holder (together with Holder’s Affiliates, and
any other Persons acting as a group together with Holder or any of
Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by Holder and its Affiliates shall include
the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which such determination is being made, but
shall exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion
of this Warrant beneficially owned by Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
Holder or any of its Affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 2(d)(i),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by Holder that the Company is not
representing to Holder that such calculation is in compliance with
Section 13(d) of the Exchange Act and Holder is solely responsible
for any schedules required to be filed in accordance
therewith. To the extent that the limitation
contained in this Section 2(d)(i) applies, the determination of
whether this Warrant is exercisable (in relation to other
securities owned by Holder together with any Affiliates) and of
which portion of this Warrant is exercisable shall be in the sole
discretion of Holder, and the submission of a Notice of Exercise
shall be deemed to be Holder’s determination of whether this
Warrant is exercisable (in relation to other securities owned by
Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial
Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such
determination. In addition, a determination as to
any group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this
Section 2(d)(i), in determining the number of outstanding shares of
Common Stock, a Holder may rely on the number of outstanding shares
of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case
may be, (B) a more recent public announcement by the Company or (C)
a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder,
the Company shall within two Trading Days confirm orally and in
writing to Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by Holder or its Affiliates since the date as of which
such number of outstanding shares of Common Stock was
reported. The “ Beneficial Ownership
Limitation ” shall be 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this
Warrant. Holder, upon not less than 61 days’ prior
notice to the Company, may decrease the Beneficial Ownership
Limitation provisions of this Section 2(d)(i), provided that the
provisions of this Section 2(d)(i) shall continue to
apply. Any such decrease will not be effective until the
61st day after such notice is delivered to the
Company. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(d)(i) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Warrant.
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Issuance
Restrictions . If the Company has not obtained
Stockholder Approval, then the Company may not issue upon exercise
of this Warrant a number of shares of Common Stock, which, when
aggregated with any shares of Common Stock issued (A) pursuant to
the conversion of any Preferred Stock issued pursuant to any of the
Purchase Agreements, (B) upon prior exercise of this or any other
Warrant issued pursuant to any of the Purchase Agreements and (C)
pursuant to any warrants issued to any registered broker-dealer as
a fee in connection with the issuance of Securities pursuant to the
Purchase Agreements, would exceed 2,770,160 shares of
Common Stock, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of the
Purchase Agreement (such number of shares, the “ Issuable
Maximum ”). Holder and the holders of the
other Warrants issued pursuant to the Purchase Agreement shall be
entitled to a portion of the Issuable Maximum equal to the quotient
obtained by dividing (x) Holder’s original Subscription
Amount by (y) the aggregate original Subscription Amount of all
holders pursuant to the Purchase Agreements. In addition, Holder
may allocate its pro-rata portion of the Issuable Maximum among
Warrants held by it in its sole discretion. Such portion shall be
adjusted upward ratably in the event a Purchaser no longer holds
any Warrants and the amount of shares issued to such Purchaser
pursuant to its Warrants was less than such Purchaser’s
pro-rata share of the Issuable Maximum. In the event
that any Holder shall sell or otherwise transfer any of such
Holder’s Warrants, the transferee shall be allocated a pro
rata portion of such Holder’s portion of the Issuable
Maximum. For avoidance of doubt, unless and until any required
Stockholder Approval is obtained and effective, warrants issued to
any registered broker-dealer as a fee in connection with the
Securities issued pursuant to the Purchase Agreements as described
in clause (C) above shall provide that such warrants shall not be
allocated any portion of the Issuable Maximum and shall be
unexercisable unless and until such Stockholder Approval is
obtained and effective.
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e)
Mechanics of Exercise .
i.
Delivery of Certificates Upon Exercise
. Certificates for shares purchased hereunder shall be
transmitted by the Transfer Agent to Holder by crediting the
account of Holder’s prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent Commission (“
DWAC ”) system if the Company is then a participant in
such system and either (A) there is an effective Registration
Statement permitting the resale of the Warrant Shares by Holder or
(B) the shares are eligible for resale by Holder without volume or
manner-of-sale limitations pursuant to Rule 144, and otherwise by
physical delivery to the address specified by Holder in the Notice
of Exercise by the date that is three (3) Trading Days after the
latest of (A) the delivery to the Company of the Notice of Exercise
Form, (B) surrender of this Warrant (if required), and (C) payment
of the aggregate Exercise Price as set forth above (such date, the
“ Warrant Share Delivery Date
”). This Warrant shall be deemed to have been
exercised on the first date on which all of the foregoing have been
delivered to the Company. The Warrant Shares shall be
deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by Holder, if any, pursuant to Section
2(e)(vi) prior to the issuance of such shares, having been paid. If
the Company fails for any reason to deliver to Holder certificates
evidencing the Warrant Shares subject to a Notice of Exercise by
the Warrant Share Delivery Date, the Company shall pay to Holder,
in cash, as liquidated damages and not as a penalty, for each
$1,000 of Warrant Shares subject to such exercise (based on the
VWAP of the Common Stock on the date of the applicable Notice of
Exercise), $10 per Trading Day (increasing to $20 per Trading Day
on the fifth Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such second Trading Day
following the Warrant Share Delivery Date until such certificates
are delivered or Holder rescinds such exercise.
ii.
Delivery of New Warrants Upon Exercise . If this
Warrant shall have been exercised in part, the Company shall, at
the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iii.
Rescission Rights . If the Company fails to cause
the Transfer Agent to transmit to Holder a certificate or the
certificates representing the Warrant Shares pursuant to Section
2(e)(i) by the Warrant Share Delivery Date, then, Holder will have
the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise . In addition to any
other rights available to Holder, if the Company fails to cause the
Transfer Agent to transmit to Holder a certificate or the
certificates representing the Warrant Shares pursuant to an
exercise on or before the Warrant Share Delivery Date, and if after
such date Holder is required by its broker to purchase (in an open
market transaction or otherwise) or Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by Holder of the Warrant Shares which Holder
anticipated receiving upon such exercise (a “ Buy-In
”), then the Company shall (A) pay in cash to Holder the
amount by which (x) Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of Holder, either
reinstate the portion of the Warrant and equivalent number of
Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to Holder
the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery
obligations hereunder. For example, if Holder purchases
Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common
Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay Holder
$1,000. Holder shall provide the Company written notice indicating
the amounts payable to Holder in respect of the Buy-In and, upon
request of the Company, written evidence of the Buy-In and the
amount of such loss. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip
. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.
vi.
Charges, Taxes and Expenses . Issuance of
certificates for Warrant Shares shall be made without charge to
Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall
be issued in the name of Holder or in such name or names as may be
directed by Holder; provided , however , that in the
event certificates for Warrant Shares are to be issued in a name
other than the name of Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached
hereto duly executed by Holder and the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it
for any transfe
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