STOCK PURCHASE AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is made and entered into as of December 5,
2013 (the “Effective Date”), by and among Synthetic Biologics, Inc., a Nevada
corporation (the “Company”), Synthetic Biomics, Inc., a Nevada corporation and
wholly-owned subsidiary of the Company (“Synbiomics”), and Cedars-Sinai Medical
Center, a California nonprofit public benefit corporation (“CSMC”).

 

A.           The Company and Synbiomics may (or may not) enter into license and
option agreements with CSMC (the “License Agreement”), pursuant to which CSMC
may license and option the rights to certain technology to Synbiomics; and

 

B.           In advance of such potential License Agreement (which may or may
not be entered into), Synbiomics has agreed to issue to CSMC certain shares of
Synbiomics’ common stock in exchange for $0.0001 per share (“Common Stock”),
accordance with the terms and conditions of this Agreement.

 

AGREEMENT

 

In consideration of the mutual covenants contained in this Agreement and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:

 

sECTION 1.        AUTHORIZATION OF SALE OF SHARES; ANTI-DILUTION; EXCHANGE OF
SHARES.

 

1.1           Authorization. Subject to the terms and conditions of this
Agreement, Synbiomics has duly authorized the issuance to CSMC of five million
sixty thousand (5,060,000) shares of Common Stock (such shares, together with
any Additional Shares issued in accordance with Section 1.2, the “Shares”) in
exchange for Five Hundred and Six Dollars ($506.00) payable immediately by cash
or check, which shares shall represent eleven and one-half percent (11.5%) of
the shares of Synbiomics’ issued and outstanding capital stock on a
Fully-Diluted Basis on the Effective Date. For purposes of this Agreement, the
term “Fully Diluted Basis” shall include all of the issued and outstanding
equity securities of Synbiomics (including, without limitation, all common
stock, preferred stock and units of any kind) calculated on an “as-converted”
basis plus all outstanding options, warrants and other securities exercisable or
exchangeable for or convertible into equity securities of Synbiomics calculated
on an “as-converted” basis plus any securities issued under any stock plan or
other equity incentive plan or arrangement of Company then in effect or
contemplated calculated on an “as-converted” basis.

 

 

 

 

1.2           Anti-Dilution Protection. Until such time as Synbiomics has
received an aggregate of at least Three Million Dollars ($3,000,000) in cash
proceeds from one or more investors in a bona fide equity financing transaction,
including financing received from the Company (the “Funding Threshold”), CSMC
and its affiliates shall continue to own not less than eleven and one-half
percent (11.5%) of the shares of Synbiomics’ issued and outstanding capital
stock on a Fully-Diluted Basis (or such lesser percentage if CSMC shall sell or
transfer any of the Shares to any person or entity other than an affiliate, the
“Percentage Interest”). To the extent any security, including any security
convertible into or exercisable for shares of capital stock of Synbiomics, is
issued to any entity or person that would cause CSMC’s equity ownership to fall
below the Percentage Interest calculated on a Fully-Diluted Basis prior to the
Synbiomics’ achievement of the Funding Threshold, then Synbiomics shall issue to
CSMC, without further consideration from CSMC, additional shares of Common Stock
in an amount sufficient to maintain the Percentage Interest calculated on a
Fully Diluted Basis through the achievement of the Funding Threshold (the
“Additional Shares”). Not later than five (5) business days after the
consummation of any transaction triggering the issuance of Additional Shares,
Synbiomics shall cause to be delivered to CSMC a certificate representing the
number of Additional Shares issued hereunder, registered in the name of CSMC.
Each of the representations and warranties of the Company and Synbiomics in this
Agreement shall be true and correct as of the date of any issuance of the
Additional Shares, except for representations and warranties that speak as of a
particular date, which shall be true and correct as of such date.

 

1.3         Exchange of Shares.

 

(a)          As of the 18-month anniversary of the Effective Date, if the Shares
are not then freely tradeable, CSMC shall have the right to exchange up to fifty
percent (50%) of the Shares then held by CSMC (such shares, the “Initial
Exchange Shares”) for shares of common stock, $0.001 par value, of the Company
(“Company Stock”) pursuant to the terms set forth in this Section 1.3 by
delivering a written notice to the Company (the “First Exchange Notice”) at
least ninety (90) days prior to the 18-month anniversary of the Effective Date.
The right of CSMC to exchange the Initial Exchange Shares is referred to as the
“First Exchange Right.” The number of shares of Company Stock for which the
Initial Exchange Shares may be exchanged shall equal the quotient obtained by
dividing (i) the aggregate Fair Market Value of the Initial Exchange Shares to
be exchanged as determined in accordance with Section 1.3(e) below by (ii) the
Current Market Price of a single share of Company Stock as determined in
accordance with Section 1.3(f) below. The parties intend to exchange the Initial
Exchange Shares for Company Stock pursuant to one (1) Exchange Closing
transaction.

 

(b)          As of the 36-month anniversary of the Effective Date, if the Shares
are not then freely tradeable, CSMC shall have the right to exchange up to the
number of Shares then held by CSMC excluding any Initial Exchange Shares
(whether or not exchanged pursuant to this Section 1.3) (the “Remaining Exchange
Shares”) for shares of Company Stock pursuant to the terms of this Section 1.3
by delivering a written notice to the Company (the “Second Exchange Notice”) at
least ninety (90) days prior to the 36-month anniversary of the Effective Date.
The right of CSMC to exchange the Remaining Exchange Shares is referred to as
the “Second Exchange Right.” The number of shares of Company Stock for which the
Remaining Exchange Shares may be exchanged shall equal the quotient obtained by
dividing (i) the aggregate Fair Market Value of the Remaining Exchange Shares to
be exchanged as determined in accordance with Section 1.3(e) below by (ii) the
Current Market Price of a single share of Company Stock as determined in
accordance with Section 1.3(f) below. The parties intend to exchange the
Remaining Exchange Shares for Company Stock pursuant to one (1) Exchange Closing
transaction.

 

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(c)          Unless the parties involved mutually agree otherwise, delivery to
the Company of the share certificates representing the Initial Exchange Shares
or the Remaining Exchange Shares, as applicable, to be exchanged pursuant to
this Section 1.3 shall take place at a closing (each, an “Exchange Closing”) to
be held at the offices of Gracin & Marlow, LLP, The Chrysler Building, 405
Lexington Avenue, 26th Floor, New York, New York 10174 or at such other place as
the Company and CSMC may agree at 10:00 a.m. within two (2) calendar days
following approval of the NYSE MKT with respect to such issuance. The Company
shall promptly apply to the NYSE MKT for approval of the issuance of the shares
of Company Stock after the determination of the applicable Fair Market Value for
the Initial Exchange Shares or the Remaining Exchange Shares to be exchanged
pursuant to this Section 1.3. Immediately prior to the transfer of title to the
Initial Exchange Shares or the Remaining Exchange Shares, as applicable, to be
exchanged at an Exchange Closing and issuance of Company Stock, CSMC shall
provide the representations and warranties set forth in this Agreement as well
as representations and warranties as to CSMC’s good and marketable title to the
Initial Exchange Shares or the Remaining Exchange Shares, as applicable, and the
absence of any liens, security interests or adverse claims of any kind arising
by, through or under such CSMC, all as of a recent date, and CSMC shall deliver
to the Company a certificate signed by an authorized officer on behalf of CSMC,
dated as of the applicable Exchange Closing, regarding such representations and
warranties. It shall be a condition to CSMC’s transfer of title to the Initial
Exchange Shares or the Remaining Exchange Shares, as applicable, to be exchanged
at an Exchange Closing that each of the representations and warranties of the
Company and Synbiomics in this Agreement shall be true and correct as of the
date of the applicable Exchange Closing, except for representations and
warranties that speak as of a particular date, which shall be true and correct
as of such date, and the Company shall deliver to CSMC a certificate signed by
its Chief Executive Officer on behalf of the Company, dated as of the applicable
Exchange Closing, certifying that such condition has been satisfied. CSMC agrees
that as a condition to its receipt of any Company Stock pursuant to the terms of
this Section 3 that it will enter into a customary “lockup” or “market standoff”
agreement with a term no longer than four (4) months in a form reasonably
satisfactory to the Company, and such agreement shall include customary
exceptions including for transfers to affiliates.

 

(d)          No fractional shares or scrip representing fractional shares shall
be issued upon the exchange of any Shares pursuant to this Section 1.3. As to
any fraction of a share which CSMC would otherwise be entitled to purchase upon
such exchange, 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 Current Market Price of a share of Company Stock or round up to the next
whole share.

 

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(e)          The “Fair Market Value” of the Initial Exchange Shares and the
Remaining Exchange Shares shall be determined based primarily upon the relative
contribution of the valuation of Synbiomics to the public market capitalization
of Company and as provided in this Section 1.3(e). Upon the Company’s receipt of
the First Exchange Notice or the Second Exchange Notice, as applicable, CSMC and
the Company shall forthwith attempt to agree upon the Fair Market Value of the
Initial Exchange Shares or the Remaining Exchange Shares, as applicable. If CSMC
and the Company cannot agree on the Fair Market Value of the Initial Shares or
the Remaining Exchange Shares, as applicable, within ten (10) days of the
Company’s receipt of the First Exchange Notice or the Second Exchange Notice, as
applicable, then CSMC and the Company shall, within ten (10) days of the end of
such initial 10-day period (such period, the “Mutual Selection Period”), choose
one mutually acceptable qualified independent appraiser to determine the Fair
Market Value of the Initial Exchange Shares or the Remaining Exchange Shares, as
applicable, and such appraiser shall deliver its written appraisal within twenty
(20) days of the date of its selection and the Fair Market Value of the Initial
Exchange Shares or the Remaining Exchange Shares, as applicable, shall be as set
forth in such appraisal. If CSMC and the Company cannot agree on a mutually
acceptable qualified independent appraiser within the Mutual Selection Period,
then each of CSMC and the Company shall select a qualified independent appraiser
to determine the Fair Market Value of the Initial Exchange Shares or the
Remaining Exchange Shares, as applicable, within five (5) days after the end of
the Mutual Selection Period. The appraisers so selected shall attempt to agree
to the Fair Market Value of the Initial Exchange Shares or the Remaining
Exchange Shares, as applicable.  If they are unable to do so within twenty (20)
days of the date of selection of the last of the appraisers selected, they shall
furnish each party with their respective written appraisals within thirty (30)
days of the date of selection of the last of the appraisers selected, which
written appraisals shall set forth the Fair Market Value of the Initial Exchange
Shares or the Remaining Exchange Shares, as applicable.  If each valuation is
within ten percent (10%) of the other valuation, the Fair Market Value shall be
the numerical average (mean) of both valuations.  If each valuation is not
within ten percent (10%) of the other valuation, then the two appraisers, within
ten (10) days after submitting their respective valuations, shall mutually
select and appoint a third appraiser, similarly qualified, and give written
notice of that appointment to the Company and CSMC.  Within thirty (30) days
after the appointment of the third appraiser, the third appraiser shall submit
in writing its determination of the Fair Market Value of the Initial Exchange
Shares or the Remaining Exchange Shares, as applicable.  Thereafter, the Fair
Market Value of the Initial Exchange Shares or the Remaining Exchange Shares, as
applicable, shall be the numerical average (mean) of the two (2) valuations
which are numerically closest together, unless one of the values is the
numerical average (mean) of the three (3) values, in which case such value shall
be the Fair Market Value. The Fair Market Value, as determined above, shall be
conclusive, final and binding upon the Company and CSMC.  If either the Company
or CSMC shall fail to appoint an appraiser within five (5) days after the end of
the Mutual Selection Period referred to above, then, the appraiser appointed by
the party which does appoint an appraiser shall alone determine the Fair Market
Value of the Initial Exchange Shares or the Remaining Exchange Shares, as
applicable, and such appraisal shall be binding. Any appraiser appointed in
accordance with this Section 1.3(d) shall value Synbiomics as a going concern
and shall not apply any illiquidity and minority discount to the Initial
Exchange Shares or the Remaining Exchange Shares, as applicable. Each party
shall compensate the appraiser appointed by such party, and the compensation of
the first, mutually acceptable appraiser and the third appraiser, if any, and
the expenses of the appraisal shall be borne equally by the Company and CSMC.
Company shall have no lost opportunity liability to CSMC for CSMC’s decision to
exchange or not exchange the Initial Exchange Shares or the Remaining Exchange
Shares, or any delays or disputes associated with the valuation process and
subsequent price fluctuations of the public market price of the Company Stock.

 

(f)          The “Current Market Price” of a share of Company Stock shall be
determined as provided in this Section 1.3(f). If the Company Stock is traded
regularly in a public market, the fair market value of a share of Company Stock
shall be the average of the closing prices of the Company Stock over a five (5)
trading day period ending three (3) days before the applicable Exchange Closing.
If the Company Stock is not regularly traded in a public market, the Board of
Directors of the Company shall determine fair market value in its reasonable
good faith judgment.

 

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1.4           Tag-Along Rights. CSMC shall have tag-along rights with respect to
the Shares in the event that the Company proposes to sell, transfer or otherwise
dispose of any of the Company’s shares of Synbiomics’ capital stock. If the
Company proposes to engage, directly or indirectly, in a sale, transfer or other
disposition (a “Sale”) of any shares of Synbiomics’ capital stock (the “Offered
Shares”), and the Company receives a bona fide written offer (the “Purchase
Offer”) from a person (the “Offeror”) to purchase the Offered Shares for a
purchase price (the “Offer Price”) denominated and payable in United States
dollars at closing or according to specified terms, with or without interest,
then before making such a transfer, the Company shall, prior to consummating any
Sale contemplated by this Section 1.4, immediately give to CSMC written notice
(such notice being referred to herein as the “Notice of Transfer”) setting froth
the price and the terms of payment, and any other material terms of such
proposed Sale. The Notice of Transfer shall constitute an offer by the Company
to CSMC to permit CMSC to sell its shares of Synbiomics in the proposed Sale,
for the same price and form of consideration to be received by the Company and
otherwise upon the terms and subject to the conditions set forth in the Notice
of Transfer, on a pro rata basis with the Company (based on respective shares of
Synbiomics capital stock). For a period of twenty (20) days following receipt of
the Notice of Transfer, CSMC may, by delivering to the Company written notice of
its election, elect irrevocably to participate as a seller in such proposed Sale
on a pro rata basis with the Company. If CSMC fails to respond within such
20-day period, CSMC shall be deemed to have elected not to participate in the
proposed Sale and shall have waived any and all rights under this Section with
respect thereto. Within ten (10) days of the expiration of such 20-day period,
the Company may consummate the transaction proposed in the applicable Purchase
Offer and Notice of Transfer. Any such Synbiomics capital stock not so
transferred during such 10-day period shall thereafter again be subject to the
tag-along rights of CSMC set forth in this Section 1.4.

 

1.5           Exchange Approval. Subject to the provisions of Section 6.2 below,
the parties acknowledge that any issuance of stock by the Company of its common
stock hereunder is subject to the prior approval of the NYSE MKT or any other
exchange upon which the shares of the Company are listed and if required by such
exchange or any other rule or regulation applicable to Synbiomics or the
Company, shareholder approval.

 

sECTION 2.        CLOSING AND DELIVERY

 

2.1           Issuance of Shares. Subject to the terms and conditions of this
Agreement and in reliance upon the representations, warranties and agreements
contained herein, on the date hereof, the Company will cause Synbiomics to issue
to CSMC, and CSMC will acquire from Synbiomics, the Shares.

 

2.2           Closing. The closing of the purchase and sale of the Shares to be
issued pursuant to Section 2.1 of this Agreement shall be held at the offices of
Gracin & Marlow, LLP, The Chrysler Building, 405 Lexington Avenue, 26th Floor,
New York, New York 10174 or at such other place as the Company and CSMC may
agree on simultaneously with the execution of this Agreement.

 

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2.3           Delivery of the Shares. Promptly following the date hereof, the
Company shall cause to be delivered to CSMC a certificate representing the
number of Shares purchased hereunder, registered in the name of CSMC.

 

sECTION 3.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SYNBIOMICS.

 

Subject to and except as set forth in the SEC Documents (as defined below), the
Company and Synbiomic, jointly and severally, hereby represent and warrant to
CSMC as of the date hereof as follows:

 

3.1           Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada and has the requisite corporate power to own, lease
and operate its properties and assets and to conduct its business as it is now
being conducted and as described in the reports filed by the Company with the
Securities and Exchange Commission (the “Commission”) pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), since the end of its most recently completed fiscal year through the date
hereof, including, without limitation, its most recent report on Form 10-Q.
Synbiomics is a corporation wholly owned by the Company and duly incorporated,
validly existing and in good standing under the laws of the State of Nevada with
the requisite corporate power to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted. Other than
Synbiomics and those subsidiaries identified in its most recent report on Form
10-Q, the Company does not have any subsidiaries. Each of the Company and
Synbiomics is qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except for any
jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect. For the purposes of this
Agreement, “Material Adverse Effect” means any effect on the business,
operations, properties or financial condition of the Company or Synbiomics, as
applicable, that is material and adverse to the Company or Synbiomics, as
applicable, taken as a whole, and any condition, circumstance or situation that
would prohibit the Company or Synbiomics, as applicable, from entering into and
performing any of its obligations hereunder.

 

3.2           Authorization; Enforcement. Each of the Company and Synbiomics has
the requisite corporate power and authority to enter into and perform this
Agreement and Synbiomics has the requisite power and authority to issue and sell
the Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and Synbiomics and the consummation
by each of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company, Synbiomics, either of its board of directors or
stockholders is required for the issuance of the Shares, the issuance of the
Company Stock or the consummation of the transactions contemplated hereby. When
executed and delivered by the Company and Synbiomics, this Agreement shall
constitute a valid and binding obligation of the Company and Synbiomics
enforceable against each in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by other equitable principles of general application.

 

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3.3           Issuance of Shares and Company Stock. The Shares and Company Stock
to be issued and sold hereunder have been duly authorized by all necessary
corporate action and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable. In addition, when issued such
Shares and Company Stock, as applicable, will be free and clear of all liens,
claims, charges, security interests or agreements, pledges, assignments,
covenants, restrictions or other encumbrances created by, or imposed by,
Synbiomics or the Company and rights of first refusal of any kind imposed by
Synbiomics or the Company, as applicable (other than restrictions on transfer
under applicable securities laws) and the holder of such Shares or Company
Stock, as applicable, shall be entitled to all rights accorded to a holder of
Common Stock of Synbiomics or the Company, as applicable. As of the date hereof,
no shares of Synbiomics’ Common Stock are issued and outstanding. Synbiomics is
authorized to issue fifty million (50,000,000) shares of Common Stock, of which
forty-four million (44,000,000) shares of Common Stock will be outstanding after
the issuance of the Shares. The Shares, when issued, will represent eleven and
one half percent (11.5%) of the outstanding shares of common stock of Synbiomics
of a Fully Diluted Basis. As of the date hereof, 44,654,414 shares of Company
Stock are issued and outstanding.

 

3.4           No Conflicts; Governmental Approvals. The execution, delivery and
performance of the Agreement by the Company and Synbiomics and the consummation
by the Company and Synbiomics of the transactions contemplated hereby do not and
will not: (i) violate any provision of the Company’s or Synbiomics’ Articles of
Incorporation or Bylaws, each as amended to date; (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company or Synbiomics is a party or by which the Company’s or
Synbiomics’ properties or assets are bound; or (iii) result in a violation of
any federal, state, local or foreign statute, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations)
applicable to the Company or Synbiomics or by which any property or asset of the
Company or Synbiomics is bound or affected, except for such conflicts, defaults,
terminations, amendments, acceleration, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect. Neither
the Company nor Synbiomics is required under federal, state, foreign or local
law, rule or regulation to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement or issue the Shares in accordance with the terms hereof (other than
any filings, consents and approvals required to be made by the Company or
Synbiomics under applicable state and federal securities laws, securities and
exchange commission rules or regulations, rules or regulations of any stock
exchange upon which shares of common stock of the Company may be listed or rules
or regulations prior to or subsequent to the date hereof).

 

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3.5           SEC Documents, Financial Statements. The Company Stock is
registered pursuant to Section 12(b) of the Exchange Act. During the two year
period preceding the execution of this Agreement, the Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the Commission pursuant to the reporting requirements of the
Exchange Act (the “SEC Documents”). At the times of their respective filing, all
such reports, schedules, forms, statements and other documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder. At the times of their
respective filings, such reports, schedules, forms, statements and other
documents did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, other than with respect to
its initial Annual Report on Form 10-K for the year ended December 31, 2011 the
financial statements of the Company included in the SEC Documents complied in
all material respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the consolidated financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

 

3.6           Brokers. Neither the Company, Synbiomics nor any of the officers,
directors or employees of the Company or Synbiomics has employed any broker or
finder in connection with the transaction contemplated by this Agreement

 

sECTION 4.        REPRESENTATIONS, WARRANTIES AND COVENANTS OF CSMC.

 

4.1           Purchaser Sophistication. CSMC represents and warrants to, and
covenants with, the Company and Synbiomics that CSMC: (a) is knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to, investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by Synbiomics and investments in comparable companies, and has requested,
received, reviewed and considered all information it deemed relevant in making
an informed decision to purchase the Shares; (b) CSMC, in connection with its
decision to purchase the Shares, relied only upon the documents of the Company
filed with the Commission, other publicly available information, and the
representations and warranties of the Company and Synbiomics contained herein.
CSMC is an “accredited investor” pursuant to Rule 501 of Regulation D under the
Securities Act; (c) CSMC is acquiring the Shares for its own account for
investment only and with no present intention of distributing any of such Shares
or any arrangement or understanding with any other persons regarding the
distribution of such Shares; (d) CSMC has not been organized, reorganized or
recapitalized specifically for the purpose of investing in the Shares; (e) CSMC
will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire to take
a pledge of) any of the Shares except in compliance with the Securities Act of
1933 and applicable state securities laws; (f) CSMC understands that the Shares
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of the Securities Act of 1933 and state securities
laws, and that the Company and Synbiomics are relying upon the truth and
accuracy of, and CSMC’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of CSMC set forth herein in order
to determine the availability of such exemptions and the eligibility of CSMC to
acquire the Shares; (g) CSMC understands that its investment in the Shares
involves a significant degree of risk, including a risk of total loss of CSMC’s
investment; and (h) CSMC understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Shares.

 

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4.2           Authorization and Power. CSMC has the requisite power and
authority to enter into and perform this Agreement and to purchase the Shares
being sold to it hereunder. The execution, delivery and performance of this
Agreement by CSMC and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action, and no
further consent or authorization of CSMC or its board of directors or
stockholders is required. When executed and delivered by CSMC, this Agreement
shall constitute a valid and binding obligation of CSMC enforceable against CSMC
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

 

4.3           No Conflict. The execution, delivery and performance of this
Agreement by CSMC and the consummation by CSMC of the transactions contemplated
hereby do not and will not: (i) violate any provision of CSMC’s charter or
organizational documents; (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which CSMC is a party or
by which CSMC’s properties or assets are bound; or (iii) result in a violation
of any federal, state, local or foreign statute, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations)
applicable to CSMC or by which any property or asset of CSMC are bound or
affected, except, in all cases, other than violations (with respect to federal
and state securities laws) above, for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, materially and adversely affect CSMC’s ability
to perform its obligations under the Agreement.

 

4.4           Restricted Shares. CSMC acknowledges that the Shares are
restricted securities and must be held indefinitely unless subsequently
registered under the Securities Act of 1933 or Synbiomics receives an opinion of
counsel reasonably satisfactory to Synbiomics that such registration is not
required.

 

4.5           Stock Legends. CSMC acknowledges that certificates evidencing the
Shares shall bear a restrictive legend in substantially the following form (and
including related stock transfer instructions and record notations):

 

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THESE SECURITIES HAVE NOT 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 OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

 

sECTION 5.        SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

 

Notwithstanding any investigation made by any party to this Agreement, all
representations and warranties made by the Company, Synbiomics and CSMC herein
shall survive the execution of this Agreement and the issuance and sale to CSMC
of the Shares.

 

sECTION 6.        COVENANTS.

 

6.1           Approval. In each case where the Company determines that the
approval of the Company’s shareholders or any exchange or other listing upon
which the Company Stock may be listed is required for the issuance of Company
Stock to CSMC, the Company shall use commercially reasonable efforts to secure
such approval as promptly as possible. In the event, notwithstanding the
foregoing obligation, the Company is unable to secure the approval with respect
to the issuance of any Company Stock to be issued hereunder, then CSMC shall
have a one-time demand registration right, at its own expense, to request that
Synbiomics register the Shares held by CSMC with the Securities and Exchange
Commission, subject to any Securities and Exchange Commission limitations;
provided that such request is made within sixty (60) days of the date of
notification from the Company to CSMC of the position of the NYSE MKT.   If such
registration is an underwritten  public offering then it shall be subject to
standard underwriter cut backs and lock ups. If the managing underwriter of an
underwritten public offering determines and advises Synbiomics in writing that
the inclusion of all securities proposed to be included by CSMC and Synbiomics
and any other holders of Licensee securities requesting inclusion of their
securities in the underwritten public offering would materially and adversely
interfere with the successful marketing of the offering, then CSMC shall not be
permitted to include any Shares in excess of the amount, if any, of securities
which the managing underwriter of such underwritten public offering shall
reasonably and in good faith agree in writing to include in such public
offering.

 

6.2           Upon request of CSMC, the Company agrees to provide an opinion of
counsel to its transfer agent regarding the removal of the legend on the Company
Stock issued to CSMC hereunder; provided that all legal requirements allowing
for such legend removal and all applicable conditions under Rule 144 promulgated
under the Securities Act of 1933 are met.

 

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sECTION 7.         NOTICES.

 

7.1           Any notice, request, instruction or other document required by
this Agreement shall be in writing and shall be deemed to have been given (a) if
mailed with the United States Postal Service by prepaid, first class, certified
mail, return receipt requested, at the time of receipt by the intended
recipient, (b) if sent by Federal Express or other overnight carrier, signature
of delivery required, at the time of receipt by the intended recipient, or (c)
if sent by facsimile transmission, when so sent and when receipt has been
acknowledged by appropriate telephone or facsimile receipt, addressed as
follows:

 

In the case of CSMC to:

 

Cedars-Sinai Medical Center
8700 Beverly Boulevard
Los Angeles, California 90048-1865

Attention: Senior Vice President for Academic Affairs

Fax No.:

 

with a copy to Senior Vice President for Legal Affairs & General Counsel

 

or in the case of the Company or Synbiomics to:

 

155 Gibbs Street, Suite 412

Rockville, MD 20850

Attention:

Fax No.: (734) 332-7878

 

or to such other address or to such other person(s) as may be given from time to
time under the terms of this Section 7.1.

 

sECTION 8.        MISCELLANEOUS.

 

8.1           Fees and Expenses. Each party shall pay the fees and expenses of
its advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.

 

8.2           Waivers and Amendments. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the parties hereto.

 

8.3           Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.

 

8.4           Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect, then, to the fullest extent permitted
by law: (a) all other provisions hereof shall remain in full force and effect
and shall be liberally construed in order to carry out the intentions of the
Parties as nearly as may be possible and (b) the parties shall use their best
efforts to replace the invalid, illegal or unenforceable provision(s) with
valid, legal and enforceable provision(s) which, insofar as practical, implement
the purposes of such provision(s) in this Agreement.

 

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8.5           Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in the State of California, without regard
to conflicts of law principles.

 

8.6           Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.

 

8.7           Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto, provided that CSMC shall not assign its rights or obligations
hereunder and Synbiomics shall only be able to assign its tights or obligations
hereunder to an affiliated entity if the License Agreement is also assigned to
such entity.

 

8.8           No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

 

8.9           Expenses. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement.

 

8.10         Entire Agreement. This Agreement (including the Schedule of
Exceptions), License Agreement and other documents delivered pursuant hereto and
thereto, including the exhibits, constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof.

 

8.11         Publicity. Except as otherwise provided herein, no party shall
issue any press releases or otherwise make any public statement with respect to
the transactions contemplated by this Agreement without the prior written
consent of the other party, except as may be required by applicable law or
regulations, in which case such party shall provide the other parties with
reasonable notice of such publicity and/or opportunity to review such
disclosure.

 

8.12         Waiver of Rule of Construction. Each Party has had the opportunity
to consult with counsel in connection with the review, drafting and negotiation
of this Agreement. Accordingly, the rule of construction that any ambiguity in
this Agreement shall be construed against the drafting Party shall not apply.

 

8.13         Further Assurances. From and after the date of this Agreement, upon
the reasonable request of CSMC or the Company, the Company and CSMC shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.

 

  SYNTHETIC BIOMICS, INC.         By: /s/ Steve Kanzer   Name: Steve Kanzer  
Title: CEO & President       SYNTHETIC BIOLOGICS, INC.       By: /s/ Jeff Riley
  Name: Jeff Riley   Title: CEO       CEDARS-SINAI MEDICAL CENTER       By: /s/
Shlomo Melmed, M.D.   Name: Shlomo Melmed, M.D.   Title: Senior Vice President
for Academic Affairs & Dean of the Medical Faculty       By: /s/ Edward M.
Prunchunas   Name: Edward M. Prunchunas   Title:    Senior Vice President for
Finance & CFO

 

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