UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
BIOENVISION, INC.
-----------------
(Name of Issuer)
Common Stock, $0.001 Par Value Per Share
----------------------------------------
(Title of Class of Securities)
09059N100
---------
(CUSIP Number)
Keith Tarleton
Perseus-Soros BioPharmaceutical Fund, L.P.
888 Seventh Avenue, 29th Floor
New York, NY 10106
(212) 651-6400
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 13, 2004
------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Continued on following pages
Page 1 of 70 Pages
Exhibit Index: Page 17
SCHEDULE 13D
CUSIP No. 09059N100 Page 2 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
PERSEUS-SOROS BIOPHARMACEUTICAL FUND, L.P.
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
WC
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 9,450,053 /1/
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 9,450,053 /1/
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
PN
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 3 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
PERSEUS-SOROS PARTNERS, LLC
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 9,450,053 /1/
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 9,450,053 /1/
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
OO
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 4 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
PERSEUS BIOTECH FUND PARTNERS, LLC
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 9,450,053 /1/
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
9,450,053 /1/
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
OO
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 5 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
SFM PARTICIPATION, LP
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 9,450,053 /1/
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
9,450,053 /1/
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
PN
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 6 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
SFM AH LLC
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 9,450,053 /1/
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
9,450,053 /1/
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
OO
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 7 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
FRANK H. PEARL (in the capacity described herein)
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 9,450,053 /1/
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
9,450,053 /1/
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
IA
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 8 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
GEORGE SOROS (in the capacity described herein)
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 9,450,053 /1/
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
9,450,053 /1/
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
IA
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 9 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
SOROS FUND MANAGEMENT LLC
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 9,450,053 /1/
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
9,450,053 /1/
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
OO; IA
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 10 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
PERSEUS EC, LLC
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 9,450,053 /1/
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
9,450,053 /1/
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
OO
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
SCHEDULE 13D
CUSIP No. 09059N100 Page 11 of 70 Pages
1 Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
PERSEUSPUR, LLC
2 Check the Appropriate Box if a Member of a Group (See Instructions)
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds (See Instructions)
AF
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 9,450,053 /1/
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
9,450,053 /1/
11 Aggregate Amount Beneficially Owned by Each Reporting Person
9,450,053 /1/
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
[ ]
13 Percent of Class Represented By Amount in Row (11)
26.9%
14 Type of Reporting Person (See Instructions)
OO
-----------------------------------
/1/ Assuming full conversion of the Series A Convertible Participating Preferred
Stock and including: (A) a Warrant to purchase an aggregate of 3,000,000 shares
of Common Stock; and (B) a Warrant to purchase 75,009 shares of Common Stock.
See Item 5 herein.
Page 12 of 70 Pages
This Amendment No. 2 to Schedule 13D relates to the Common Stock,
$0.001 par value per share (the "Shares"), of Bioenvision, Inc., a Delaware
corporation (the "Issuer"). This Amendment No. 2 supplementally amends the
initial statement on Schedule 13D, dated May 20, 2002, and Amendment No. 1
thereto, dated January 8, 2003 (together, the "Initial Statement"), filed by the
Reporting Persons (as defined herein). This Amendment No. 2 is being filed by
the Reporting Persons to report the number of Shares which the Reporting Persons
may be deemed to beneficially own has decreased by more than one percent of the
current amount of outstanding Shares. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Initial Statement. The
Initial Statement is supplementally amended as follows.
Item 2. Identity and Background
This Statement is being filed on behalf of each of the following
persons (collectively, the "Reporting Persons"):
(i) Perseus-Soros BioPharmaceutical Fund, LP, a Delaware limited
partnership (the "Purchaser");
(ii) Perseus-Soros Partners, LLC, a Delaware limited liability
company ("Perseus-Soros Partners");
(iii) Perseus BioTech Fund Partners, LLC, a Delaware limited
liability company ("Perseus Partners");
(iv) SFM Participation, LP, a Delaware limied partnership ("SFM
Participation");
(v) SFM AH LLC, a Delaware limited liability company ("SFM AH");
(vi) Mr. Frank H. Pearl ("Mr. Pearl");
(vii) Mr. George Soros ("Mr. Soros");
(viii) Soros Fund Management LLC, a Delaware limited liability
company ("SFM LLC");
(ix) Perseus EC, LLC ("Perseus EC"); a Delaware limited liability
company; and
(x) Perseuspur, LLC, a Delaware limited liability company
("Perseuspur").
This Statement relates to the Shares held for the accounts of the
Purchaser.
Item 3. Source and Amount of Funds or Other Consideration
The information set forth in Item 6 hereof is hereby incorporated
by reference into this Item 3.
The Purchaser expended approximately $2,344,025.00 of its working
capital to purchase the securities reported herein as being acquired since March
18, 2004 (60 days prior to the date hereof). This number consists of
approximately $2,344,025.00 to purchase 375,044 Shares and warrants (the "May
Warrants") to purchase 75,009 Shares pursuant to the Common Stock and Warrant
Purchase Agreement, dated as of May 13, 2004 (the "Common Stock and Warrant
Purchase Agreement").
Page 13 of 70 Pages
Item 5. Interest in Securities of the Issuer
According to information provided by the Issuer to the Reporting
Persons, 26,002,829 Shares were outstanding as of May 14, 2004.
(a) Each of the Reporting Persons may be deemed the beneficial
owner of the 9,450,053 Shares held for the account of the Purchaser
(approximately 26.9% of the total number of Shares outstanding assuming the
exercise and conversion of all of the securities held for the account of the
Purchaser). This number consists of A) 375,044 Shares held for the account of
the Purchaser, B) 6,000,000 Shares issuable upon the conversion of 3,000,000
Shares of the Issuer's Series A Convertible Participating Preferred Stock,
$0.001 par value per share (the "Series A Preferred Stock") held for the account
of the Purchaser, C) 3,000,000 Shares issuable upon the exercise of a warrant
held for the account of the Purchaser, and D) 75,009 Shares issuable upon the
exercise of the May Warrants held for the account of the Purchaser.
(b) (i) Each of the Purchaser and Perseus-Soros Partners may be
deemed to have the sole power to direct the voting and disposition of the
9,450,053 Shares beneficially owned by the Purchaser assuming the exercise and
conversion of all of the securities held for the account of the Purchaser.
(ii) Each of Perseus Partners, SFM Participation, SFM AH,
Mr. Pearl, Mr. Soros, SFM LLC, Perseus EC and Perseuspur may be deemed to
have shared power to direct the voting and disposition of the 9,450,053
Shares beneficially owned by the Purchaser assuming the exercise and conversion
of all of the securities held for the account of the Purchaser.
(c) Except for the transactions set forth in Item 6 herein, all
of which were effected in private transactions with the Issuer, there have been
no transactions effected with respect to the Shares since March 18, 2004 (60
days prior to the date hereof) by any of the Reporting Persons.
(d) The partners of the Purchaser have the right to participate
in the receipt of dividends from, or proceeds from the sales of, the Shares held
for the account of the Purchaser in accordance with their ownership interests in
the Purchaser.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Common Stock and Warrant Purchase Agreement
-------------------------------------------
On May 13, 2004, the Issuer entered into the Common Stock and
Warrant Purchase Agreement (a copy of the form of such agreement is incorporated
by reference hereto as Exhibit 9 and is incorporated herein by reference in
response to this Item 6) with certain investors, including the Purchaser.
Pursuant to the terms of the Common Stock and Warrant Purchase Agreement, the
Purchaser purchased 375,044 Shares for an aggregate purchase price of
approximately $2,344,025.00. Also pursuant to the Common Stock and Warrant
Purchase Agreement, the Purchaser received the May Warrants at a rate of one May
Warrant for every five Shares purchased under the Common Stock and Warrant
Purchase Agreement. As a result, the Purchaser received May Warrants to purchase
75,009 Shares. A copy of the form of the May Warrant is incorporated by
reference hereto as Exhibit 10 and is incorporated herein by reference in
response to this Item 6.
Page 14 of 70 Pages
The foregoing descriptions of the Common Stock and Warrant
Purchase Agreement and the May Warrant does not purport to be complete and is
qualified in its entirety by the terms of such document which is incorporated
herein by reference in response to this Item 6.
Registration Rights Agreement
-----------------------------
On May 13, 2004, the Issuer entered into a Registration Rights
Agreement (the "Registration Rights Agreement") (a copy of the form of such
agreement is incorporated by reference hereto as Exhibit 11 and is incorporated
herein by reference in response to this Item 6) with the investors that entered
into the Common Stock and Warrant Purchase Agreement, including the Purchaser.
Pursuant to the Registration Rights Agreement, among other things, the Issuer
agreed to prepare and file with the SEC a registration statement (the
"Registration Statement") no later than 30 days following the closing of the
transactions contemplated in the Common Stock and Warrant Purchase Agreement.
The Registration Statement would cover the resale of all Shares and the warrants
to purchase Shares issued and issuable pursuant to the Common Stock and Warrant
Purchase Agreement.
The foregoing description of the Registration Rights Agreement
does not purport to be complete and is qualified in its entirety by the terms of
the Registration Rights Agreement, which is incorporated herein by reference in
response to this Item 6.
Except as set forth herein, the Reporting Persons do not have any
contracts, arrangements, understandings or relationships with respect to any
securities of the Issuer.
Item 7. Material to be Filed as Exhibits
The Exhibit Index is incorporated herein by reference.
Page 15 of 70 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
Date: May 17, 2004 PERSEUS-SOROS BIOPHARMACEUTICAL FUND, LP
By: Perseus-Soros Partners, LLC
General Partner
By: SFM Participation, L.P.,
Managing Member
By: SFM AH LLC
General Partner
By: Soros Fund Management LLC
Managing Member
By: /s/ Jodye Anzalotta
-------------------------
Name: Jodye Anzalotta
Title: Assistant General Counsel
PERSEUS-SOROS PARTNERS, LLC
By: SFM Participation, L.P.,
Managing Member
By: SFM AH LLC
General Partner
By: Soros Fund Management LLC
Managing Member
By: /s/ Jodye Anzalotta
-------------------------
Name: Jodye Anzalotta
Title: Assistant General Counsel
PERSEUS BIOTECH FUND PARTNERS, LLC
By: Perseuspur EC, L.L.C.
Managing Member
By: Perseuspur, LLC
Member
By: /s/ Rodd Macklin
-------------------------
Name: Rodd Macklin
Title: Secretary and Treasurer
Page 16 of 70 Pages
PERSEUS EC, L.L.C.
By: Perseuspur, LLC
Member
By: /s/ Rodd Macklin
-------------------------
Name: Rodd Macklin
Title: Secretary and Treasurer
PERSEUSPUR, LLC
By: /s/ Rodd Macklin
-------------------------
Name: Rodd Macklin
Title: Secretary and Treasurer
FRANK H. PEARL
By: /s/ Rodd Macklin
-------------------------
Name: Rodd Macklin
Title: Attorney-in-Fact
SFM PARTICIPATION, L.P.
By: SFM AH LLC
General Partner
By: Soros Fund Management LLC
Managing Member
By: /s/ Jodye Anzalotta
-------------------------
Name: Jodye Anzalotta
Title: Assistant General Counsel
SFM AH LLC
By: Soros Fund Management LLC
Managing Member
By: /s/ Jodye Anzalotta
-------------------------
Name: Jodye Anzalotta
Title: Assistant General Counsel
GEORGE SOROS
By: /s/ Jodye Anzalotta
-------------------------
Name: Jodye Anzalotta
Title: Attorney-in-Fact
SOROS FUND MANAGEMENT LLC
By: /s/ Jodye Anzalotta
-------------------------
Name: Jodye Anzalotta
Title: Assistant General Counsel
Page 17 of 70 Pages
EXHIBIT INDEX
Exhibit Page No.
------- --------
9. Form of the Common Stock and Warrant Purchase Agreement,
by and among Bioenvision, Inc. and certain Investors
set forth therein............................................ 18
10. Form of the Warrant to Purchase Shares of Bioenvision,
Inc.......................................................... 41
11. Form of the Registration Rights Agreement, by and among
Bioenvision, Inc. and the Investors named in the Common
Stock and Warrant Purchase Agreement......................... 52
Page 18 of 70 Pages
EXHIBIT 9
---------
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT ("Agreement") is
made as of this __th day of May, 2004, by and among Bioenvision, Inc., a
Delaware corporation (the "Company"), and the Investors set forth on Schedule I
affixed hereto, as such Schedule may be amended from time to time in accordance
with the terms of this Agreement (each an "Investor" and collectively the
"Investors").
Recitals:
A. The Company desires to raise up to approximately $16,250,000
through the issuance and sale of up to approximately 2,600,000 shares of the
Company's common stock, par value $0.001 per share (the "Common Stock"), to the
Investors at a per share purchase price of $6.25, together with a warrant to
acquire one-fifth of a share of Common Stock, at an exercise price of $7.50, in
the form of Exhibit A annexed hereto and made a part hereof (the "Investor
Warrants"), for each share of Common Stock purchased by the Investors pursuant
to this Agreement (the "Private Placement"); and
B. The Investors wish to purchase from the Company, and the
Company wishes to sell and issue to the Investors, upon the terms and conditions
stated in this Agreement, such number of shares of the Company's Common Stock as
is set forth next to each such Investor's name on Schedule I affixed hereto; and
C. The Company has agreed that, upon consummation of the purchase
of the Common Stock, the Company will issue to each Investor, or its designee,
Investor Warrants to purchase such number of shares of the Company's Common
Stock as is set forth next to each such Investor's name on Schedule I affixed
hereto; and
D. The Company has engaged SCO Securities LLC as its placement
agent (the "Placement Agent") for the Private Placement on a "best efforts"
basis; and
E. Contemporaneous with the sale of the Common Stock, the parties
hereto will enter into a Registration Rights Agreement, in the form attached
hereto as Exhibit B (the "Registration Rights Agreement"), pursuant to which,
among other things, the Company will agree to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, and applicable state securities laws (the
"1933 Act"); and
F. The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the 1933 Act, as
amended, and Section 4(2) under the 1933 Act.
NOW, THEREFORE, in consideration of these premises, the mutual
promises made herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings set forth in this Section 1:
Page 19 of 70 Pages
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly Controls, is Controlled by, or is under common Control
with, such Person.
"Business Day" means a day, other than a Saturday or Sunday, on which
banks in New York City are open for the general transaction of business.
"Common Stock" has the meaning set forth in the Recitals, and also
includes any securities into which the Common Stock may be reclassified.
"Common Stock Equivalents" means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
"Company's Knowledge" means the actual knowledge of the Chief
Executive Officer and the Chief Financial Officer of the Company.
"Confidential Information" means trade secrets, confidential
information and know-how (including but not limited to ideas, formulae,
compositions, processes, procedures and techniques, research and development
information, computer program code, performance specifications, support
documentation, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information).
"Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Intellectual Property" means all of the following: (i) patents,
patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; (v) trade secrets, Confidential Information
and know-how (including, but not limited to, ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information); and (vi) computer
software (including, but not limited to, data, data bases and documentation).
"Material Adverse Effect" means a material adverse effect on (i) the
assets, liabilities, results of operations, condition (financial or otherwise)
or business of the Company and its Subsidiaries taken as a whole, (ii) the
ability of the Company to issue and sell the securities contemplated hereby or
to perform on a timely basis its obligations under any of the Transaction
Documents, or (iii) a material adverse effect on the legality, validity or
enforceability of any Transaction Document.
"Material Contract" means any contract of the Company or any
Subsidiary that was or should have been filed as an exhibit to the SEC Filings
pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.
"Person" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
Page 20 of 70 Pages
"Placement Agent Agreement" means that certain Agreement, dated as of
November 16, 2001, by and between the Company and the Placement Agent.
"SEC Filings" has the meaning set forth in Section 4.6.
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Shares" means the shares of Common Stock being purchased by the
Investors hereunder.
"Subsidiary" has the meaning set forth in Section 4.1.
"Trading Market" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market
or the Nasdaq SmallCap Market.
"Transaction Documents" means this Agreement, the Warrants, the
Registration Rights Agreement, and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
"Warrants" means the Investor Warrants and the Placement Agent
Warrants (as defined in Section 4.20).
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants and the Placement Agent Warrants.
"1934 Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2. Purchase and Sale of the Shares. Subject to the terms and conditions of
this Agreement, at the Closing (as defined in Section 3), the Investors listed
on Schedule I attached hereto, which Schedule I may be amended from time to time
to add additional Investors who agree to purchase Common Stock in the Private
Placement by executing a counterpart to this Agreement as of the date hereof
(collectively, the "Investors"), shall severally, and not jointly, purchase, and
the Company shall sell and issue to the Investors, the Shares in the respective
amounts set forth opposite their names on Schedule I affixed hereto, in exchange
for the cash consideration set forth opposite their respective names on Schedule
I affixed hereto. Also at the Closing, the Company shall issue the Warrants to
the Investors, or their respective designees, in such amounts as set forth
opposite their respective names on Schedule I affixed hereto.
3. Closing. On the day of the Closing ("Closing Date"), the Company shall
issue to each Investor a certificate or certificates, registered in such name or
names as each such Investor may designate, representing the number of shares of
Common Stock as is set forth opposite such Investor's name on Schedule I affixed
hereto, and Company shall also issue to each such Investor, or such Investor's
respective designees, the number of Investor Warrants as is set forth opposite
such Investor's name on Schedule I affixed hereto (the "Closing"). The purchase
and sale of the Shares and the issuance of the Investor Warrants in the Closing
shall take place at such location as the Company and the Placement Agent shall
mutually agree.
Page 21 of 70 Pages
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors and the Placement Agent on and as of
the Closing Date, that, except as set forth in the disclosure schedules
concurrently delivered herewith (collectively, the "Disclosure Schedules"):
4.1. Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries, a complete list of which is set forth in Schedule
4.1 of the Disclosure Schedules ("Subsidiaries"), is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and to own its properties.
Each of the Company and its Subsidiaries is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or its leasing of property makes such
qualification or licensing necessary, unless the failure to so qualify would not
have a Material Adverse Effect.
4.2. Authorization. The Company has all requisite corporate power and
authority and has taken all requisite action on the part of the Company, its
officers, directors and stockholders necessary for (i) the authorization,
execution and delivery of the Transaction Documents, (ii) authorization of the
performance of all obligations of the Company under this Agreement or the other
Transaction Documents, and (iii) the authorization, issuance (or reservation for
issuance) and delivery of the Securities. The Transaction Documents have been
duly executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors' rights generally.
4.3. Capitalization.
(a) Schedule 4.3 of the Disclosure Schedules sets forth (i) the
authorized capital stock of the Company as of February 23, 2004, (ii) the number
of shares of each class of capital stock issued and outstanding, (iii) the
number of shares of capital stock issuable pursuant to the Company's stock
option plans, and (iv) the number of shares of capital stock issuable and/or
reserved for issuance pursuant to securities (other than the Securities)
exercisable for, or convertible into or exchangeable for any shares of capital
stock of the Company. All of the issued and outstanding shares of the Company's
capital stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights and were issued in full compliance
with applicable law and any rights of third parties. All of the issued and
outstanding shares of capital stock of each Subsidiary are owned by the Company,
beneficially and of record. Except as described on Schedule 4.3 of the
Disclosure Schedules or in the SEC Filings, there are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements of
any character under which the Company or any Subsidiary is or may be obligated
to issue any equity securities of any kind and, except as contemplated by this
Agreement, neither the Company nor any Subsidiary is currently in negotiations
for the issuance of any equity securities of any kind. Except as described on
Schedule 4.3 of the Disclosure Schedules or in the SEC Filings, and except for
the Registration Rights Agreement, there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among the Company and any of the security holders of the Company
relating to the securities of the Company. Except as described on Schedule 4.3
of the Disclosure Schedules or in the SEC Filings, the Company has not granted
any Person the right to require the Company to register any securities of the
Company under the 1933 Act, whether on a demand basis or in connection with the
registration of securities of the Company for its own account or for the account
of any other Person. No securities issued by the Company from the date of its
incorporation to the date hereof were issued in violation of any statutory or
common law preemptive rights. There are no dividends which have accrued or been
declared but are unpaid on the capital stock of the Company. All taxes required
Page 22 of 70 Pages
to be paid by the Company in connection with the issuance and any transfers of
the Company's capital stock have been paid. All securities of the Company have
been issued in all material respects in accordance with the provisions of all
applicable securities and other laws. Except as set forth on Schedule 4.3 of the
Disclosure Schedules, no Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. The issue and sale of
the Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Investors) and will not result in
a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.
Except as set forth on Schedule 4.3 of the Disclosure Schedules or in
the SEC Filings, the Company does not have outstanding shareholder purchase
rights or any similar arrangement in effect giving any Person the right to
purchase any equity interest in the Company upon the occurrence of certain
events.
4.4. Valid Issuance. The Shares have been duly and validly authorized
and, when issued and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws. The Warrants
have been duly and validly authorized. Upon the due exercise of the Warrants in
accordance with the terms thereof, the Warrant Shares will be validly issued,
fully paid and non-assessable, free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws. The Company has reserved a
sufficient number of shares of Common Stock for issuance upon the exercise of
the Warrants, free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws.
4.5. Consents. Except as set forth on Schedule 4.5 of the Disclosure
Schedules, the Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(a) the filing with the SEC of the Registration Statement, the application(s) to
each Trading Market for the listing of the Shares and Warrant Shares for trading
thereon in the time and manner required thereby, Form D and applicable Blue Sky
filings and (b) such as have already been obtained or such exemptive filings as
are required to be made under applicable securities laws.
4.6. Delivery of SEC Filings. The Company has provided or made
available to the Investors copies of the Company's most recent Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2003 (the "10-K"), the Company's
quarterly report on Form 10-QSB for the three month period ended December 31,
2003, the Company's Proxy Statement on Schedule 14 filed December 15, 2003, and
all other reports or other documents filed by the Company pursuant to the 1933
Act and 1934 Act for the 12 months preceding the date hereof (collectively, the
"SEC Filings").
4.7. Use of Proceeds. The proceeds of the sale of the Shares hereunder
shall be used by the Company for sales, research and development and general
corporate purposes consistent with its business as of the Closing Date.
4.8. No Material Adverse Change. Except as identified and described in
the SEC Filings or as described on Schedule 4.8(a) of the Disclosure Schedules,
since September 30, 2003, there has not been:
Page 23 of 70 Pages
(i) any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the SEC Filings, except for changes in the
ordinary course of business which have not and could not reasonably be expected
to have a Material Adverse Effect, individually or in the aggregate;
(ii) any material damage, destruction or loss, whether or not
covered by insurance to any assets or properties of the Company or its
Subsidiaries;
(iii) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or a Subsidiary, except
in the ordinary course of business and which is not material to the assets,
properties, financial condition, operating results, prospects or business of the
Company and its Subsidiaries, taken as a whole;
(iv) any change or amendment to the Company's Articles of
Incorporation or by-laws, or material change to any material contract or
arrangement by which the Company or any Subsidiary is bound or to which any of
their respective assets or properties is subject;
(v) any material labor difficulties or labor union organizing
activities with respect to employees of the Company or any Subsidiary;
(vi) the loss of the services of any key employee, or material
change in the composition or duties of the senior management of the Company or
any Subsidiary;
(vii) any other event or condition of any character that has had
or could reasonably be expected to have a Material Adverse Effect;
(viii) any declaration or making any payment or distribution to
stockholders or purchase or redemption of any share of its capital stock or
other security other than to directors, officers and employees of the Company or
its Subsidiaries as compensation for services rendered to the Company or its
Subsidiary (as applicable) or for reimbursement of expenses incurred on behalf
of the Company or its Subsidiary (as applicable);
(ix) any transfer or grant of a right with respect to the
patents, trademarks, trade names, service marks, trade secrets, copyrights or
other intellectual property rights owned or licensed by the Company or its
Subsidiaries, except as among the Company and its Subsidiaries.; or
(x) any:
(A) sale, assignment or transfer of any of its intangible assets
except in the ordinary course of business, consistent with past practice, or
cancellation of any debt or claim except in the ordinary course of business,
consistent with past practice;
(B) waiver of any right of substantial value whether or not in the
ordinary course of business; or
(C) material change in officer compensation, except in the ordinary
course of business and consistent with past practice.
4.9. SEC Filings. At the time of filing thereof, the SEC Filings
complied in all material respects with the requirements of the 1933 Act and 1934
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder, and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
Page 24 of 70 Pages
therein, in the light of the circumstances under which they were made, not
misleading.
4.10. No Conflict, Breach, Violation or Default. The execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated thereby do not and
will not conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default or event that, with notice or lapse
of time or both, would become a breach or default under (i) the Company's or any
Subsidiary's Articles of Incorporation or the Company's or any Subsidiary's
by-laws, each as in effect on the date hereof (true and accurate copies of the
Company's Articles of Incorporation and by-laws have been provided to the
Investors before the date hereof), or (ii)(a) any material statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company, its Subsidiaries or any of their
respective assets or properties, or (b) except as set forth on Schedule 4.10 of
the Disclosure Schedules, any agreement or instrument to which the Company or
its Subsidiaries is a party or by which the Company or its Subsidiaries is bound
or to which any of their respective assets or properties is subject. The Company
is not (with or without the lapse of time or the giving of notice, or both) in
breach or default of any Material Contract. Neither the Company nor any of its
Subsidiaries has received any notice of the intention of any party to terminate
any Material Contract.
4.11. Tax Matters. Each of the Company and each Subsidiary has timely
prepared and filed all tax returns required to have been filed by the Company or
such Subsidiary with all appropriate governmental agencies and timely paid all
taxes shown thereon or otherwise owed by it. The charges, accruals and reserves
on the books of the Company in respect of taxes for all fiscal periods are
adequate in all material respects, and there are no material unpaid assessments
against the Company or any Subsidiary nor, to the Company's Knowledge, any basis
for the assessment of any additional taxes, penalties or interest for any fiscal
period or audits by any federal, state or local taxing authority except for any
assessment which is not material to the Company and its Subsidiaries, taken as a
whole. All taxes and other assessments and levies that the Company or any
Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due. There are no tax liens or claims pending or, to the Company's
Knowledge, threatened against the Company or any Subsidiary or any of their
respective assets or property. Except as described on Schedule 4.11 of the
Disclosure Schedules, there are no outstanding tax sharing agreements or other
such arrangements between the Company and any Subsidiary or other corporation or
entity. Neither the Company nor any Subsidiary is presently undergoing any audit
by a taxing authority, or has waived or extended any statute of limitations at
the request of any taking authority.
4.12. Title to Properties. Except as disclosed in the SEC Filings or
as set forth on Schedule 4.12 of the Disclosure Schedules, the Company and each
Subsidiary has good and marketable title to all real properties and all other
properties and assets owned by it, in each case free from liens, encumbrances
and defects that would materially affect the value thereof or materially
interfere with the use made or currently planned to be made thereof by them; and
except as disclosed in the SEC Filings, the Company and each Subsidiary holds
any leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or currently
planned to be made thereof by them.
4.13. Licenses; Compliance With FDA and Other Regulatory Requirements.
(a) The Company and each Subsidiary holds all material authorizations,
consents, approvals, franchises, licenses and permits required under applicable
law or regulation for the operation of the business of the Company and its
Subsidiaries as presently operated (the "Governmental Authorizations"). All the
Governmental Authorizations have been duly issued or obtained and are in full
Page 25 of 70 Pages
force and effect, and the Company and its Subsidiaries are in material
compliance with the terms of all the Governmental Authorizations. The Company
and its Subsidiaries have not engaged in any activity that, to their knowledge,
would cause revocation or suspension of any such Governmental Authorizations.
The Company has no knowledge of any facts which could reasonably be expected to
cause the Company to believe that the Governmental Authorizations will not be
renewed by the appropriate governmental authorities in the ordinary course.
Neither the execution, delivery nor performance of this Agreement shall
adversely affect the status of any of the Governmental Authorizations.
(b) Without limiting the generality of the representations and
warranties made in sub-paragraph (a) above, the Company represents and warrants
that (i) the Company and each of its Subsidiaries is in material compliance with
all applicable provisions of the United States Federal Food, Drug and Cosmetic
Act and the rules and regulations promulgated thereunder (the "FDC Act") and
equivalent laws, rules and regulations in jurisdictions outside the United
States in which the Company or its Subsidiaries do business, (ii) its products
and those of each of its Subsidiaries that are in the Company's control are not
adulterated or misbranded and are in lawful distribution, (iii) all of the
products marketed by and within the control of the Company comply in all
material respects with any conditions of approval and the terms of the
application by the Company to the appropriate Regulatory Authorities, (iv) no
Regulatory Authority has initiated legal action with respect to the
manufacturing of the Company's products, such as seizures or required recalls,
and the Company is in compliance with applicable good manufacturing practice
regulations, (v) its products are labeled and promoted by the Company and its
representatives in substantial compliance with the applicable terms of the
marketing applications submitted by the Company to the Regulatory Authorities
and the provisions of the FDC Act and foreign equivalents, (vi) all adverse
events that were known to and required to be reported by Company to the
Regulatory Authorities have been reported to the Regulatory Authorities in a
timely manner, (vii) neither the Company nor any of its Subsidiaries is, to
their knowledge, employing or utilizing the services of any individual who has
been debarred under the FDC Act or foreign equivalents, (viii) all stability
studies required to be performed for products distributed by the Company or any
of its Subsidiaries have been completed or are ongoing in material compliance
with the applicable Regulatory Authority requirements, (ix) any products
exported by the Company or any of its Subsidiaries have been exported in
compliance with the FDC Act and (x) the Company and its Subsidiaries are in
compliance in all material respects with all applicable provisions of the
Controlled Substances Act. For purposes of this Section 4.13, "Regulatory
Authority" means any governmental authority in a country or region that
regulates the manufacture or sale of Company's products, including, but not
limited to, the United States Food and Drug Administration.
4.14. No Labor Disputes. No material labor dispute with the employees
of the Company or any Subsidiary exists or, to the Company's Knowledge, is
imminent.
4.15. Intellectual Property.
(a) All Intellectual Property of the Company and its Subsidiaries is
currently in compliance with all legal requirements (including timely filings,
proofs and payments of fees) and is valid and enforceable. Except as listed on
Schedule 4.15(a) of the Disclosure Schedules or in the SEC Filings, no
Intellectual Property of the Company or its Subsidiaries, which is necessary for
the conduct of the Company's and each of its Subsidiaries' respective businesses
as currently conducted or as currently proposed to be conducted, has been or is
now involved in any cancellation, dispute or litigation, and, to the Company's
Knowledge, no such action is threatened. Except as listed on Schedule 4.15(a) of
the Disclosure Schedules or in the SEC Filings, no patent of the Company or its
Subsidiaries has been or is now involved in any interference, reissue,
re-examination or opposition proceeding.
(b) All of the licenses and sublicenses and consent, royalty or other
agreements concerning Intellectual Property which are necessary for the conduct
Page 26 of 70 Pages
of the Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted to which the
Company or any Subsidiary is a party or by which any of their assets are bound
(other than generally commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than $10,000 per
license) (collectively, "License Agreements") are valid and binding obligations
of the Company or its Subsidiaries that are parties thereto and, to the
Company's Knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally, and
there exists no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company or any of its Subsidiaries under any such License
Agreement.
(c) The Company and its Subsidiaries own or have the valid right to
use all of the Intellectual Property that is necessary for the conduct of the
Company's and each of its Subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted, free and clear of all liens,
encumbrances, adverse claims or obligations to license all such owned
Intellectual Property and Confidential Information, other than licenses entered
into in the ordinary course of the Company's and its Subsidiaries' businesses.
The Company and its Subsidiaries have a valid and enforceable right to use all
third party Intellectual Property and Confidential Information used or held for
use in the respective businesses of the Company and its Subsidiaries as
currently conducted or as currently proposed to be conducted.
(d) The conduct of the Company's and its Subsidiaries' businesses as
currently conducted and as currently proposed to be conducted does not and will
not infringe any Intellectual Property rights of any third party or any
confidentiality obligation owed to a third party. To the Company's Knowledge,
the Intellectual Property and Confidential Information of the Company and its
Subsidiaries which are necessary for the conduct of the Company's and each of
its Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted are not being infringed by any third party. Except as
set forth on Schedule 4.15(d) of the Disclosure Schedules or in the SEC Filings,
there is no litigation or order pending or outstanding or, to the Company's
Knowledge, threatened or imminent, that seeks to limit or challenge or that
concerns the ownership, use, validity or enforceability of any Intellectual
Property or Confidential Information of the Company and its Subsidiaries and the
Company's and its Subsidiaries' use of any Intellectual Property or Confidential
Information owned by a third party, and, to the Company's Knowledge, there is no
valid basis for the same.
(e) The consummation of the transactions contemplated hereby will not
result in the alteration, loss, impairment of or restriction on the Company's or
its Subsidiaries' ownership or right to use any of the Intellectual Property or
Confidential Information which is necessary for the conduct of the Company's and
its Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted.
(f) To the Company's knowledge, all software owned by the Company or
its Subsidiaries, and, to the Company's Knowledge, all software licensed from
third parties by the Company or its Subsidiaries, (i) is free from any material
defect, bug, virus, or programming, design or documentation error; (ii) operates
and runs in a reasonable and efficient business manner; and (iii) conforms in
all material respects to the specifications and purposes thereof.
(g) The Company and its Subsidiaries have taken reasonable steps to
protect the Company's and its Subsidiaries' rights in their Intellectual
Property and Confidential Information. Each employee, consultant and contractor
Page 27 of 70 Pages
who has had access to Confidential Information which is necessary for the
conduct of the Company's and its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted has executed an
agreement to maintain the confidentiality of such Confidential Information and
has executed appropriate agreements that are substantially consistent with the
Company's standard forms therefor. To the Company's knowledge, there has been no
material disclosure of any of the Company's or its Subsidiaries' Confidential
Information to any third party without the Company's consent.
4.16. Environmental Matters. Neither the Company nor any Subsidiary
(i) is in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "Environmental Laws"), (ii) owns or operates any
real property contaminated with any substance that is subject to any
Environmental Laws, (iii) is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and (iv) is subject to any claim relating to
any Environmental Laws; which violation, contamination, liability or claim has
had or could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate; and there is no pending or, to the Company's
Knowledge, threatened investigation that might lead to such a claim. 4.17.
Litigation. Except as disclosed in the SEC Filings, there are no pending
actions, suits or proceedings against or affecting the Company, its Subsidiaries
or any of its or their properties; and to the Company's Knowledge, no such
actions, suits or proceedings are threatened or contemplated before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action"). Neither
the Company nor any Subsidiary, nor, to the knowledge of the Company, any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. To the knowledge of the Company, there has
not been and there is not pending any investigation by the SEC involving the
Company or any current or former director or officer of the Company. The SEC has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the 1934 Act
or the 1933 Act.
4.18. Financial Statements. The financial statements included in each
SEC Filing comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in
effect at the time of filing. Such financial statements fairly present the
consolidated financial position of the Company as of the dates shown and its
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis. Except
as set forth in the financial statements of the Company included in the SEC
Filings filed prior to the date hereof, neither the Company nor any of its
Subsidiaries has incurred any liabilities, contingent or otherwise, except those
which, individually or in the aggregate, have not had or could not reasonably be
expected to have a Material Adverse Effect.
4.19. Insurance Coverage. The Company and each Subsidiary maintains in
full force and effect insurance coverage listed on Schedule 4.19 of the
Disclosure Schedules and the Company reasonably believes such insurance coverage
is adequate.
4.20. Brokers and Finders. Except for the cash commission to be paid
(the "Cash Placement Agent Fee") and warrants to be issued (the "Placement Agent
Warrants") to the Placement Agent pursuant to the terms of the Placement Agent
Agreement, no Person will have, as a result of the transactions contemplated by
this Agreement, any valid right, interest or claim against or upon the Company,
any Subsidiary or any Investor for any commission, fee or other compensation
Page 28 of 70 Pages
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Company. For all purposes under this Agreement and the other
Transaction Documents, the Placement Agent shall be deemed to be an "Investor"
and the Placement Agent Warrants shall be deemed to be "Warrants."
4.21. No Directed Selling Efforts or General Solicitation. Neither the
Company nor any Person acting on its behalf has conducted any "general
solicitation" or "general advertising" (as those terms are used in Regulation D)
in connection with the offer or sale of any of the Securities.
4.22. No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) of the 1933 Act for the exemption from
the registration requirements imposed under Section 5 of the 1933 Act for the
transactions contemplated hereby or would require such registration under the
1933 Act.
4.23. Private Placement. Assuming the accuracy of the representations
and warranties of the Investors contained in Section 5 hereof, the offer and
sale of the Securities to the Investors as contemplated hereby does not require
registration of the Securities under the 1933 Act. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of any
Trading Market.
4.24. Transactions with Affiliates. Except as disclosed in SEC Filings
made on or prior to the date hereof, none of the officers or directors of the
Company and, to the Company's Knowledge, none of the employees of the Company is
presently a party to any transaction with the Company or a Subsidiary or to a
presently contemplated transaction (other than for services as employees,
officers and directors) that would be required to be disclosed pursuant to Item
404 of Regulation S-K promulgated under the 1933 Act, without regard to the
dollar thresholds contained in such Item.
4.25 Compliance. Neither the Company nor any Subsidiary (i) is in
material default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any material indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business.
4.26 Listing and Maintenance Requirements. The Company has not, in the
12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.
4.27 Disclosure. The Company confirms that neither the Company nor, to
its knowledge, any other Person acting on its behalf and at the direction of the
Company has provided any of the Investors or their agents or counsel with any
information that in the Company's reasonable judgment, at the time such
information was furnished, constitutes material, non-public information. The
Company understands and confirms that the Investors will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Investors regarding the Company included
in this Agreement and the Disclosure Schedules to this Agreement are true and
correct in all material respects.
Page 29 of 70 Pages
5. Representations and Warranties of the Investors. Each of the Investors
hereby severally, and not jointly, represents and warrants to the Company and
the Placement Agent that:
5.1. Authorization. The execution, delivery and performance by the
Investor of the Transaction Documents to which such Investor is a party have
been duly authorized and will each constitute the valid and legally binding
obligation of the Investor, enforceable against the Investor in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors' rights generally.
5.2. Purchase Entirely for Own Account. The Securities to be received
by the Investor hereunder will be acquired for the Investor's own account, not
as nominee or agent, and not with a view to the resale or distribution of any
part thereof in violation of the 1933 Act, and the Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of the 1933 Act. The Investor is not a registered broker
dealer or an entity engaged in the business of being a broker dealer.
5.3. Investment Experience. The Investor acknowledges that it can bear
the economic risk and complete loss of its investment in the Securities and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby. The Investor is experienced in making private investments in public
equities, similar to the purchase of the Securities hereunder.
5.4. Disclosure of Information. The Investor has had an opportunity to
receive all additional information related to the Company requested by it and to
ask questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the Securities. The
Investor acknowledges receipt of copies of and its satisfactory review of the
SEC Filings.
5.5. Restricted Securities. The Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
5.6. Legends.
(a) It is understood that certificates evidencing such Securities may
bear the following or any similar legend:
"The securities represented hereby may not be transferred
unless (i) such securities have been registered for sale
pursuant to the Securities Act of 1933, as amended, or (ii)
the Company has received an opinion of counsel satisfactory
to it that such transfer may lawfully be made without
registration under the Securities Act of 1933 or
qualification under applicable state securities laws."
(b) If required by the authorities of any state in connection with the
issuance of sale of the Securities, the legend required by such state authority.
(c) Notwithstanding the foregoing, the Company acknowledges and agrees
Page 30 of 70 Pages
that the Investors may transfer the Securities in compliance with applicable law
at any time and that certificates evidencing the Shares and Warrant Shares shall
not contain any legend (including without limitation the legend set forth in
Section 5.6(a)), (i) following any valid sale of such Shares or Warrant Shares
pursuant to Rule 144, or (ii) if such Shares or Warrant Shares are eligible for
sale under Rule 144(k). The Company agrees that at such time as such legend is
no longer required under this Section 5.6(c)(i), it will, no later than three
(3) Trading Days following the delivery by a Purchaser to the Company or the
Company's transfer agent of a certificate representing Shares or Warrant Shares,
as the case may be, issued with a restrictive legend, deliver or cause to be
delivered to such Investor a certificate representing such Securities that is
free from all restrictive and other legends.
5.7. Accredited. The Investor is an "accredited investor" as defined
in Rule 501(a) of Regulation D, as amended, under the 1933 Act.
5.8. No General Solicitation. The Investor did not learn of the
investment in the Securities as a result of any "general advertising" or
"general solicitation" as those terms are contemplated in Regulation D, as
amended Investor, under the 1933 Act.
5.9. Brokers and Finders. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Investors.
6. Conditions to Closing.
6.1. Conditions to the Investors' Obligations. The obligation of the
Investors to purchase the Securities at the Closing is subject to the
fulfillment to the Placement Agent's satisfaction, on or prior to the Closing
Date, of the following conditions:
(a) The representations and warranties made by the Company in Section
4 hereof shall be true and correct in all material respects at all times prior
to and on the Closing Date. The Company shall have performed in all material
respects all obligations and conditions herein required to be performed or
observed by it on or prior to the Closing Date.
(b) The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities, and all of which
shall be and remain so long as necessary in full force and effect.
(c) The Company shall have executed and delivered this
Agreement and the Registration Rights Agreement to the Placement Agent (which
shall constitute delivery to each Investor).
(d) No judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy court or judge,
or any order of or by any governmental authority, shall have been issued, and no
action or proceeding shall have been instituted by any governmental authority,
or self-regulatory organization enjoining or preventing the consummation of the
transactions contemplated hereby or in the other Transaction Documents.
(e) The Company shall have delivered a Certificate, executed on behalf
of the Company by its Chief Executive Officer or its Chief Financial Officer,
dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b) and (d) of this Section 6.1.
Page 31 of 70 Pages
(f) The Company shall have delivered a Certificate, executed on behalf
of the Company by its Secretary, dated as of the Closing Date, certifying the
resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by this Agreement and the other Transaction Documents
and the issuance of the Securities, certifying the current versions of the
Articles of Incorporation and by-laws of the Company and certifying as to the
signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company.
(g) The Investors and the Placement Agent shall have received an
opinion from Paul, Hastings, Janofsky & Walker LLP, the Company's counsel, dated
as of the Closing Date, in the form attached hereto as Exhibit C.
(h) The Company shall have delivered, or caused to be delivered to
each Investor (i) an original stock certificate evidencing the number of shares
of Common Stock purchased by such Investor as described in Schedule I and (ii)
an original Warrant certificate, registered in the name of such Investor
pursuant to which such Investor shall have the right to purchase up to the
number of shares of Common Stock as described in Schedule I.
6.2. Conditions to Obligations of the Company. The Company's
obligation to sell and issue the Securities at the Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the Closing Date
of the following conditions, any of which may be waived by the Company:
(a) The representations and warranties made by the Investors in
Section 5 hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of said date.
(b) The Investors shall have executed and delivered this Agreement and
the Registration Rights Agreement to the Placement Agent at or prior to Closing;
provided, that, this condition shall be satisfied with respect to each Investor
who has executed and delivered this Agreement and the Registration Rights
Agreement.
(c) Each of the Investors shall have delivered to the Company at or
prior to Closing the "Aggregate Purchase Price" set forth opposite such
Investor's name on Schedule I affixed hereto.
(d) No judgment, writ, order, injunction, award or decree of or by any
court, or judge, justice or magistrate, including any bankruptcy court or judge,
or any order of or by any governmental authority, shall have been issued, and no
action or proceeding shall have been instituted by any governmental authority,
or self-regulatory organization enjoining or preventing the consummation of the
transactions contemplated hereby or in the other Transaction Documents.
7. Covenants and Agreements of the Company.
7.1. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of providing for the exercise of the Warrants,
such number of shares of Common Stock as shall from time to time equal the
number of shares sufficient to permit the exercise of the Warrants (including
the Placement Agent Warrants) issued pursuant to this Agreement in accordance
with their respective terms. 7.2. No Conflicting Agreements. The Company will
not take any action, enter into any agreement or make any commitment that would
breach in any material respect the obligations of the Company to the Investors
under the Transaction Documents.
Page 32 of 70 Pages
7.3. Termination of Certain Covenants. The provisions of Section 7.2
shall terminate and be of no further force and effect upon the date on which the
Company's obligations under the Registration Rights Agreement to register and
maintain the effectiveness of any registration covering the Registrable
Securities (as such term is defined in the Registration Rights Agreement) shall
terminate.
7.4 Furnishing of Information. As long as any Investor owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the 1934
Act. Upon the request of any such holder of Securities, the Company shall
deliver to such holder a written certification of a duly authorized officer as
to whether it has complied with the preceding sentence. The Company further
covenants that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable such
Person to sell such Securities without registration under the 1933 Act within
the limitation of the exemptions provided by Rule 144.
7.5 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the 1933 Act) that would be integrated with the offer or sale of
the Securities in a manner that would require the registration under the 1933
Act of the sale of the Securities to the Investors or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.
7.6 Publicity. As soon as reasonably practicable following the Closing
Date, the Company shall file a Current Report on Form 8-K, disclosing the
transactions contemplated hereby and make such other filings and notices in the
manner and time required by the SEC. The Company and SCO Securities LLC shall
consult with each other in issuing any press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Investor nor
SCO Securities LLC shall issue any such press release or otherwise make any such
public statement without the prior consent of the Company, with respect to any
press release of any Investor or SCO Securities LLC, or without the prior
consent of SCO Securities LLC, with respect to any press release of the Company,
except if such disclosure is required by law, in which case the disclosing party
shall promptly provide the other party with prior notice of such public
statement or communication.
7.7 Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Investor
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Investor
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Investor shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
7.8 Use of Proceeds. The Company covenants and agrees that the
proceeds from the sale of the Common Stock and Warrants shall be used by the
Company for working capital and general corporate purposes; under no
circumstances shall any portion of the proceeds be applied to:
(i) the payment of dividends or other distributions on any capital
stock of the Company;
(ii) the purchase of debt or equity securities of any Person,
including the Company and its Subsidiaries, except in connection
with investment of excess cash in high quality (A1/P1 or better)
money market instruments having maturities of one year or less;
or
(iii) any expenditure not related to the business of the Company.
Page 33 of 70 Pages
7.9 Reservation of Common Stock. As of the date hereof, the Company
has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to the Warrants.
7.10 Listing of Common Stock. The Company hereby agrees to use
commercially reasonable efforts to maintain the listing of the Common Stock on
the American Stock Exchange or any applicable Trading Market, and, if required,
as soon as reasonably practicable following the Closing to list the applicable
Shares and Warrant Shares on the American Stock Exchange or any applicable
Trading Market. The Company further agrees, if the Company applies to have the
Common Stock traded on any other Trading Market, it will include in such
application the Shares and the Warrant Shares, and will take such other action
as is necessary to cause the Shares and Warrant Shares to be listed on such
other Trading Market as promptly as possible.
7.11 Securities Law Compliance. The Company shall timely prepare and
file with the SEC the form of notice of the sale of securities pursuant to the
requirements of Regulation D regarding the sale of the Common Stock and Warrants
under this Agreement.
8. Survival and Indemnification.
8.1. Survival. All representations, warranties, covenants and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants and agreements as of the date hereof and shall survive the
Closing Date for a period of eighteen (18) months; provided, however, that the
provisions contained in Section 7 hereof shall survive in accordance therewith.
The Company's representations and warranties shall in no way be affected or
diminished in any way by any investigation of (or failure to investigate) the
subject matter thereof made by or on behalf of the Investors.
8.2. Indemnification. The Company agrees to indemnify and hold
harmless, each Investor and the Placement Agent and its respective Affiliates
and the directors, officers and employees, the Placement Agent and their
respective Affiliates, from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorney fees
and disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement hereof) (collectively, "Losses") to which such
Person may become subject as a result of any breach of representation, warranty,
covenant or agreement made by, or to be performed on the part of, the Company
under the Transaction Documents, and will reimburse any such Person for all such
amounts as they are incurred by such Person.
8.3. Conduct of Indemnification Proceedings. Promptly after receipt by
any Person (the "Indemnified Person") of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8.2, such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is actually and materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of such counsel;
or (ii) in the reasonable judgment of counsel to such Indemnified Person
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them. The Company shall not be
Page 34 of 70 Pages
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned, but if settled with such consent, or if there be a final judgment
for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any Losses by reason of such settlement or
judgment. Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, delayed or conditioned, the Company
shall not effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.
9. Miscellaneous.
9.1. Successors and Assigns. This Agreement may not be assigned by a
party hereto without the prior written consent of the Company or the Investors,
as applicable; provided, however, that an Investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some or all of its Securities in a private transaction effected
in compliance with applicable laws (including applicable securities laws)
without the prior written consent of the Company or the other Investors, after
notice duly given by such Investor to the Company, provided, that no such
assignment or obligation shall affect the obligations of such Investor
hereunder. The provisions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Except for Placement Agent, which is an express intended third party beneficiary
of this Agreement, nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
9.2. Counterparts; Faxes. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
9.3. Titles and Subtitles; Interpretation. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. Throughout this
Agreement, where a form of the word "include" occurs, it shall be deemed to be
followed by the phrase "without limitation."
9.4. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one day after delivery to
such carrier. All notices shall be addressed to the party to be notified at the
address as follows, or at such other address as such party may designate by ten
days' advance written notice to the other party:
Page 35 of 70 Pages
If to the Company:
Bioenvision, Inc.
509 Madison Avenue,
Suite 404
New York, New York 10022
Attention: David P. Luci, General Counsel
Fax: 212-750-6777
With a copy to:
Paul, Hastings, Janofsky & Walker LLP
75 E. 55th Street
New York, New York 10022
Attention: Luke P. Iovine, III, Esq.
Fax: 212-319-4090
If to any of the Investors:
to the addresses set forth on Schedule I hereto.
With a copy to:
SCO Securities LLC
1285 Avenue of the Americas
35th Floor
New York, New York 10019
Attn: Mr. Jeffrey B. Davis, President
Fax: 212-554-4058
9.5. Expenses. The Company shall be responsible for the payment of the
Investors' reasonable and documented legal fees and other third-party expenses
relating to the preparation, negotiation and execution of this Agreement and the
Transaction Documents and the consummation of the transactions contemplated
herein.
9.6. Amendments and Waivers. No term of this Agreement may be amended
and the observance of any term of this Agreement shall not be waived (either
generally or in a particular instance and either retroactively or
prospectively), without the prior written consent of the Company and the
Placement Agent; provided, however, that any provision hereof which impairs the
rights or increases the obligations of a specific Investor shall not be amended
or waived without the prior written consent of the Company, the Placement Agent
and that particular Investor; provided, further, that any provision affecting
the rights or obligations of Placement Agent, shall not be waived or amended
without the prior written consent of the Placement Agent. Any amendment or
waiver effected in accordance with this Section 9.6 shall be binding upon each
holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such Securities, and the Company.
9.7. Publicity. No public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investors
without the prior consent of the Company (in the case of a release or
announcement by the Investors) or the Placement Agent, as representative of the
Investors (in the case of a release or announcement by the Company) (which
consents shall not be unreasonably withheld), except as such release or
Page 36 of 70 Pages
announcement may be required by law or the applicable rules or regulations of
any securities exchange or securities market on which the Securities are then
listed and trading, in which case the Company or the Placement Agent, as the
case may be, shall allow the Investors or the Company, as applicable, to the
extent reasonably practicable in the circumstances, reasonable time to comment
on such release or announcement in advance of such issuance.
9.8. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
9.9. Entire Agreement. This Agreement, including the Schedules,
Exhibits and the Disclosure Schedules, and the other Transaction Documents
constitute the entire agreement among the parties hereof with respect to the
subject matter hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof. Prior drafts or versions of this Agreement
shall not be used to interpret this Agreement.
9.10. Further Assurances. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
9.11. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the choice of law principles thereof. Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of the courts
of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
9.12 Replacement of Securities. If any certificate or instrument
evidencing any Shares or Warrant Shares is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested by the Company.
9.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
Page 37 of 70 Pages
9.14 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose.
Each Investor acknowledges that it has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. For
reasons of administrative convenience only, the Investors and their respective
counsel have chosen to communicate with the Company through Wiggin and Dana LLP,
but Investors acknowledge that such counsel does not represent any of the
Investors in this transaction other than SCO Securities LLC. The Company has
elected to provide all Investors with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by the Investors.
9.15 Waiver of Trial by Jury. THE PARTIES HERETO IRREVOCABLY WAIVE
TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
[signature page follows]
Page 38 of 70 Pages
[Company Signature Page]
IN WITNESS WHEREOF, the undersigned has executed this Purchase
Agreement or caused its duly authorized officers to execute this Purchase
Agreement as of the date first above written.
BIOENVISION, INC.
By:
-----------------------------------------------
Name: David P. Luci
Title: Chief Financial Officer and
General Counsel
Page 39 of 70 Pages
[Investor Signature Page]
IN WITNESS WHEREOF, the undersigned has executed this Purchase Agreement or
caused its duly authorized officers to execute this Purchase Agreement as of the
date first above written.
Date:
-------------------
IF AN INDIVIDUAL: IF A CORPORATION, PARTNERSHIP,
TRUST, ESTATE OR OTHER ENTITY:
-----------------------------------
(Signature)
------------------------------------
Print name of entity
-----------------------------------
(Printed Name) By:
--------------------------------
Name:
--------------------------
Title:
--------------------------
Address: Address:
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
Aggregate dollar amount of shares of Common Stock committed to be purchased
pursuant to the terms of the Agreement:
[Insert dollar amount] $___________________ (the "Investment Amount").
Page 40 of 70 Pages
SCHEDULE I
Investors
------------------------ -------------------- ----------------- --------------
Name Number of Shares of Number of Aggregate
of Investor Common Stock Investor Warrants Purchase Price
------------------------ -------------------- ----------------- --------------
Fax:
Phone:
------------------------ -------------------- ----------------- --------------
Fax:
Phone:
------------------------ -------------------- ----------------- --------------
------------------------ -------------------- ----------------- --------------
Page 41 of 70 Pages
EXHIBIT 10
----------
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.
THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON MAy 13, 2004 (THE
"EXPIRATION DATE").
No. ____
BIOENVISION, INC.
WARRANT TO PURCHASE [insert number] SHARES OF
COMMON STOCK, PAR VALUE $0.001 PER SHARE
FOR VALUE RECEIVED, [insert holder's name] ("Warrantholder"), is
entitled to purchase, subject to the provisions of this Warrant, from
Bioenvision, Inc., a Delaware corporation ("Company"), at any time not later
than 5:00 P.M., Eastern time, on the Expiration Date (as defined above),
one-fifth of a share of Common Stock, at an exercise price of $7.50 (the
exercise price in effect being herein called the "Warrant Price"), [insert
number] shares ("Warrant Shares") of the Company's Common Stock, par value
$0.001 per share ("Common Stock"). The number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as described herein. Capitalized terms used herein and not
defined have the respective meanings given to them in that certain Purchase
Agreement, dated the date hereof, by and among the Company, the holder and the
other parties named therein.
Section 1. Registration. The Company shall maintain books for the transfer
and registration of the Warrant. Upon the initial issuance of this Warrant, the
Company shall issue and register the Warrant in the name of the Warrantholder.
Section 2. (a) Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended (the "Securities Act"), or an exemption from such
registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as
may be reasonably required by the Company, including, if required by the
Company, an opinion of its counsel to the effect that such transfer is exempt
from the registration requirements of the Securities Act, to establish that such
transfer is being made in accordance with the terms hereof, and a new Warrant
shall be issued to the transferee and the surrendered Warrant shall be canceled
by the Company.
(b) Division and Combination; Expenses; Books. This Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Warrantholder or its agent or attorney. Subject to compliance with
Section 2(a) as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. Subject to the foregoing, the Company shall prepare, issue and
deliver at its own expense the new Warrant or Warrants under this Section 2(b).
The Company agrees to maintain, at its aforesaid office or agency, books for the
registration and the registration of transfer of the Warrants.
Section 3. Exercise of Warrant.
(a) Subject to the provisions hereof, the Warrantholder may exercise
this Warrant in whole or in part at any time prior to its expiration upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached hereto as Appendix A (the "Exercise Agreement") and
payment by cash, certified check or wire transfer of funds for the aggregate
Warrant Price for that number of Warrant Shares then being purchased, to the
Company during normal business hours on any business day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof). The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered (or evidence of loss, theft or
destruction thereof and security or indemnity satisfactory to the Company), the
Warrant Price shall have been paid and the completed Exercise Agreement shall
Page 42 of 70 Pages
have been delivered. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the holder hereof within a reasonable time, not exceeding
three (3) business days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised. As used in this Agreement,
"business day" means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.
(b) Notwithstanding anything herein to the contrary, in no event shall
the Warrantholder be entitled to exercise any portion of this Warrant in excess
of that portion of this Warrant upon exercise of which the sum of (1) the number
of shares of Common Stock beneficially owned by the Warrantholder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of the Warrant or the
unexercised or unconverted portion of any other security of the Warrantholder
subject to a limitation on conversion analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the exercise
of the portion of this Warrant with respect to which the determination of this
proviso is being made, would result in beneficial ownership by the Warrantholder
and its Affiliates of more than 9.99% of the then outstanding shares of Common
Stock. As used herein, the term "Affiliate" means any person or entity that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a person or entity, as such terms
are used in and construed under Rule 144 under the Securities Act. For purposes
of the proviso to the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Regulations 13D-G thereunder, except
as otherwise provided in clause (1) of such proviso. The Warrantholder may waive
the limitations set forth herein by sixty-one (61) days written notice to the
Company.
Section 4. Compliance with the Securities Act of 1933. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant, unless counsel for the Company is of the opinion as to any such
security that such legend is unnecessary.
Section 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's reasonable satisfaction that such tax
has been paid. The holder shall be responsible for income taxes due under
federal, state or other law, if any such tax is due.
Section 6. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Page 43 of 70 Pages
Section 7. Reservation of Common Stock. The Company hereby represents and
warrants that there have been reserved, and the Company shall at all applicable
times keep reserved until issued (if necessary) as contemplated by this Section
7, out of the authorized and unissued shares of Common Stock, sufficient shares
to provide for the exercise of the rights of purchase represented by this
Warrant. The Company agrees that all Warrant Shares issued upon due exercise of
the Warrant shall be, at the time of delivery of the certificates for such
Warrant Shares, duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock of the Company and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the Warrant
Price below the then par value, if any, of the shares of Common Stock issuable
upon exercise of the Warrants, the Company shall take any corporate action which
may be necessary in order that the Company may validly and legally issue fully
paid and non-assessable shares of such Common Stock at such adjusted Warrant
Price.
Section 8. Adjustments. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall, at any time or from time to time while this
Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares or issue by reclassification of its
outstanding shares of Common Stock any shares of its capital stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant
had been fully exercised immediately prior to such event upon payment of a
Warrant Price that has been adjusted to reflect a fair allocation of the
economics of such event to the Warrantholder. Such adjustments shall be made
successively whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company with another
corporation in which the Company is not the survivor, or sale, transfer or other
disposition of all or substantially all of the Company's assets to another
corporation shall be effected, then, the Company shall use its best efforts to
ensure that lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise thereof.
The Company shall not effect any such consolidation, merger, sale, transfer or
other disposition unless prior to or simultaneously with the consummation
thereof the successor corporation (if other than the Company) resulting from
such consolidation or merger, or the corporation purchasing or otherwise
acquiring such assets or other appropriate corporation or entity shall assume
the obligation to deliver to the holder of the Warrant, at the last address of
such holder appearing on the books of the Company, such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase, and the other obligations under this
Warrant. The provisions of this paragraph (b) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers or other dispositions.
Page 44 of 70 Pages
(c) In case the Company shall fix a payment date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Warrant Price to be in effect after such
payment date shall be determined by multiplying the Warrant Price in effect
immediately prior to such payment date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price (as defined below) per share of Common Stock immediately prior
to such payment date, less the fair market value (as determined by the Company's
Board of Directors in good faith) of said assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, and the denominator of
which shall be the total number of shares of Common Stock outstanding multiplied
by such Market Price per share of Common Stock immediately prior to such payment
date. "Market Price" as of a particular date (the "Valuation Date") shall mean
the following: (p) if the Common Stock is then listed on a national stock
exchange, the Market Price shall be the closing sale price of one share of
Common Stock on such exchange on the last trading day prior to the Valuation
Date, provided that if such stock has not traded in the prior ten (10) trading
sessions, the Market Price shall be the average closing price of one share of
Common Stock in the most recent ten (10) trading sessions during which the
Common Stock has traded; (q) if the Common Stock is then included in The Nasdaq
Stock Market, Inc. ("Nasdaq"), the Market Price shall be the closing sale price
of one share of Common Stock on Nasdaq on the last trading day prior to the
Valuation Date or, if no such closing sale price is available, the average of
the high bid and the low ask price quoted on Nasdaq as of the end of the last
trading day prior to the Valuation Date, provided that if such stock has not
traded in the prior ten (10) trading sessions, the Market Price shall be the
average closing price of one share of Common Stock in the most recent ten (10)
trading sessions during which the Common Stock has traded; (s) if the Common
Stock is then included in the Over-the-Counter Bulletin Board, the Market Price
shall be the closing sale price of one share of Common Stock on the
Over-the-Counter Bulletin Board on the last trading day prior to the Valuation
Date or, if no such closing sale price is available, the average of the high bid
and the low ask price quoted on the Over-the-Counter Bulletin Board as of the
end of the last trading day prior to the Valuation Date, provided that if such
stock has not traded in the prior ten (10) trading sessions, the Market Price
shall be the average closing price of one share of Common Stock in the most
recent ten (10) trading sessions during which the Common Stock has traded, (t)
if the Common Stock is then included in the "pink sheets," the Market Price
shall be the closing sale price of one share of Common Stock on the "pink
sheets" on the last trading day prior to the Valuation Date or, if no such
closing sale price is available, the average of the high bid and the low ask
price quoted on the "pink sheets" as of the end of the last trading day prior to
the Valuation Date, provided that if such stock has not traded in the prior ten
(10) trading sessions, the Market Price shall be the average closing price of
one share of Common Stock in the most recent ten (10) trading sessions during
which the Common Stock has traded. The Board of Directors of the Company shall
respond promptly, in writing, to an inquiry by the Warrantholder prior to the
exercise hereunder as to the Market Price of a share of Common Stock as
determined by the Board of Directors of the Company.
(d) In the event that, as a result of an adjustment made pursuant to
this Section 8, the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.
Page 45 of 70 Pages
(e) Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock,
other than the payment of dividends permitted by Section 8 or any other action
described in Section 8, then, unless such action will not have a materially
adverse effect upon the rights of the holder of this Warrant, the number of
shares of Common Stock or other stock into which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
(f) Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
Section 9. Fractional Interest. The Company shall not be required to issue
fractions of Warrant Shares upon the exercise of this Warrant. If any fractional
share of Common Stock would, except for the provisions of the first sentence of
this Section 9, be deliverable upon such exercise, the Company, in lieu of
delivering such fractional share, shall pay to the exercising holder of this
Warrant an amount in cash equal to the Market Price of such fractional share of
Common Stock on the date of exercise.
Section 10. Benefits. Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Company and the Warrantholder)
any legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the
Warrantholder.
Section 11. Notices to Warrantholders.
11.1 Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Current Warrant Price, the Company, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to the holder of this Warrant a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon the written request at any time of the holder of this Warrant,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Current Warrant Price at the
time in effect and (iii) the number of shares of Common Stock and the amount, if
any, or other property which at the time would be received upon the exercise of
Warrants owned by such holder.
11.2. Notice of Corporate Action.
If at any time:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend (other than a cash
dividend payable out of earnings or earned surplus legally available for the
payment of dividends under the laws of the jurisdiction of incorporation of the
Company) or other distribution, or any right to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation, or
Page 46 of 70 Pages
(c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(d) the Company shall cause the holders of its Common Stock to be
entitled to receive (i) any dividend or other distribution of cash, (ii) any
evidences of its indebtedness, or (iii) any shares of stock of any class or any
other securities or property or assets of any nature whatsoever (other than cash
or additional shares of Common Stock as provided in Section 4.1 hereof); or (iv)
any warrants or other rights to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property or assets of any nature whatsoever;
then, in any one or more of such cases, the Company shall give to the holder (i)
at least ten (10) days' prior written notice of the date on which a record date
shall be selected for such dividend, distribution or right or for determining
rights to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least fifteen (15) days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause also shall
specify (i) the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and the
amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
holder at the last address of the holder appearing on the books of the Company
and delivered in accordance with Section 13.
11.3 Notices of Adjustments. Upon the happening of any event requiring
an adjustment of the Warrant Price, the Company shall promptly give written
notice thereof to the Warrantholder at the address appearing in the records of
the Company, stating the adjusted Warrant Price and the adjusted number of
Warrant Shares resulting from such event and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
Failure to give such notice to the Warrantholder or any defect therein shall not
affect the legality or validity of the subject adjustment.
Section 12. Identity of Transfer Agent. The Transfer Agent for the
Common Stock is Liberty Transfer Co. Upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrant, the Company will mail to the Warrantholder a statement setting forth
the name and address of such transfer agent.
Section 13. Notices. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or facsimile, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one day after delivery to
such carrier. All notices shall be addressed as follows: if to the
Warrantholder, at its address as set forth in the Company's books and records
and, if to the Company, at the address as follows, or at such other address as
the Warrantholder or the Company may designate by ten days' advance written
notice to the other:
If to the Company:
Bioenvision, Inc.
509 Madison Avenue, Suite 404
New York, NY 10022
Attention: David P. Luci
Fax: 212-750-6777
Page 47 of 70 Pages
With a copy to:
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, NY 10022
Attention: Luke P. Iovine, III, Esq.
Fax: 212-319-4090
Section 14. Registration Rights. The initial holder of this Warrant is
entitled to the benefit of certain registration rights with respect to the
shares of Common Stock issuable upon the exercise of this Warrant as provided in
the Registration Rights Agreement, and any subsequent holder hereof shall be
entitled to such rights to the extent provided in the Registration Rights
Agreement.
Section 15. Successors. All the covenants and provisions hereof by or for
the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 16. Governing Law. This Warrant shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without
reference to the choice of law provisions thereof. The Company and, by accepting
this Warrant, the Warrantholder, each irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Warrant and the transactions contemplated hereby. Service of process
in connection with any such suit, action or proceeding may be served on each
party hereto anywhere in the world by the same methods as are specified for the
giving of notices under this Warrant. The Company and, by accepting this
Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any
such court in any such suit, action or proceeding and to the laying of venue in
such court. The Company and, by accepting this Warrant, the Warrantholder, each
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 17. No Rights as Shareholder. Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
shareholder of the Company by virtue of its ownership of this Warrant.
Section 18. Cashless Exercise. Notwithstanding anything to the contrary
contained herein, the Warrantholder may elect to receive, without the payment by
the Warrantholder of the aggregate Warrant Price in respect of the shares of
Common Stock to be acquired upon exercise hereof, shares of Common Stock equal
to the value of this Warrant or any portion hereof being exercised pursuant to
this Section 18 by the surrender of this Warrant (or such portion of this
Warrant being so exercised) together with the Net Issue Election Notice annexed
hereto as Appendix B duly executed, at the office of the Company. Thereupon, and
in no event later than three business days after the Company receipt of the Net
Issue Election Notice, the Company shall issue to the Warrantholder
certificate(s) for such number of fully paid, validly issued and nonassessable
shares of Common Stock as is computed using the formula immediately below. The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
X = Y (A - B)
-------------
A
where
Page 48 of 70 Pages
X = the number of shares of Common Stock to be issued to the
Warrantholder upon exercise of this Warrant pursuant to this Section 18;
Y = the total number of shares of Common Stock covered by this
Warrant which the Warrantholder has surrendered at such time for cashless
exercise (including both shares to be issued to the Warrantholder and shares to
be canceled as payment therefor);
A = the Market Price of one share of Common Stock as at the time
the net issue election is made; and
B = the Warrant Price in effect under this Warrant at the time
the net issue election is made.
The Warrant Shares issued pursuant to this Section 18 shall be
deemed to be issued to the exercising holder or such holder's designee, as the
record owner of such shares, as of the close of business on the date on which
the Net Issue Election Notice shall have been surrendered (or evidence of loss,
theft or destruction thereof and security or indemnity satisfactory to the
Company) to the Company.
Section 19. Office of the Company. As long as any of the Warrants
remain outstanding, the Company shall maintain an office or agency (which may be
the principal executive offices of the Company) where the Warrants may be
presented for exercise, registration of transfer, division or combination as
provided in this Warrant.
Section 20. Registration Rights. The resale of the Warrant Shares
shall be registered in accordance with the terms and conditions contained in
that certain Registration Rights Agreement dated of even date hereof, among the
original holder of this Warrant, the Company and the other parties named therein
(the "Registration Rights Agreement"). The holder of this Warrant acknowledges
that pursuant to the Registration Rights Agreement, the Company has the right to
request that the holder furnish information regarding such holder and the
distribution of the Warrant Shares as is required by law or the Commission to be
disclosed in the Registration Statement (as such term is defined in the
Registration Rights Agreement), and the Company may exclude from such
registration the Warrant Shares acquirable hereunder if holder fails to furnish
such information within a reasonable time prior to the filing of each
Registration Statement, supplemented prospectus included therein and/or amended
Registration Statement.
Section 21. Amendments. This Warrant shall not be amended without the
prior written consent of the Company and the then current Warrantholder.
Section 22. Section Headings. The section headings in this Warrant are
for the convenience of the Company and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.
[Signature Page Follows]
Page 49 of 70 Pages
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, as of the 13th day of May, 2004.
BIOENVISION, INC.
By:
-----------------------------------------
Name: Christopher B. Wood, M.D.
Title: Chief Executive Officer
Page 50 of 70 Pages
APPENDIX A
BIOENVISION, INC.
WARRANT EXERCISE FORM
To: Bioenvision, Inc.
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant ("Warrant") for, and to purchase thereunder by
the payment of the Warrant Price and surrender of the Warrant, _______________
shares of Common Stock ("Warrant Shares") provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:
-------------------------------
Name
--------------------------------
Address
--------------------------------
--------------------------------
Federal Tax ID or SSN
and delivered by
|_| certified mail to the above address, or
|_| electronically (provide DWAC Instructions:_______), or
|_| other (specify: ____________________________________).
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Warrantholder or the undersigned's Assignee as below
indicated and delivered to the address stated below.
Dated: ___________________, ______ Signature:______________________
Note: The signature must correspond
with the name of the registered holder ------------------------------
as written on the first page of Name (please print)
the Warrant in every particular,
without alteration or enlargement ------------------------------
or any change whatever, unless the Warrant Address
has been assigned.
------------------------------
Federal Tax ID or SSN
Assignee:
-------------------------------
-------------------------------
-------------------------------
Page 51 of 70 Pages
APPENDIX B
BIOENVISION, INC.
NET ISSUE ELECTION NOTICE
To: Bioenvision, Inc.
Date:_________________________
The undersigned hereby elects under Section 18 of this Warrant to surrender
the right to purchase ____________ shares of Common Stock pursuant to this
Warrant and hereby requests the issuance of _____________ shares of Common
Stock. The certificate(s) for the shares issuable upon such net issue election
shall be issued in the name of the undersigned or as otherwise indicated below.
-----------------------------------------
Signature
-----------------------------------------
Name for Registration
-----------------------------------------
Mailing Address
Page 52 of 70 Pages
EXHIBIT 11
----------
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of this __ day of May, 2004, by and among Bioenvision, Inc., a Delaware
corporation (the "Company"), the "Investors" named in that certain Purchase
Agreement, dated May __, 2004, by and among the Company and the Investors (the
"Purchase Agreement"), and SCO Securities LLC, a Delaware limited liability
company (the "Placement Agent"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Purchase Agreement.
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" shall mean, with respect to any person, any other person which
directly or indirectly Controls, is Controlled by, or is under common Control
with, such person.
"Business Day" shall mean a day, other than a Saturday or Sunday, on which
banks in New York City are open for the general transaction of business.
"Common Stock" shall mean the Company's common stock, par value $0.001 per
share, and any securities into which such shares may hereinafter be
reclassified.
"Control" means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract or otherwise.
"Holders" shall mean the Investors, the Placement Agent and any permitted
transferee thereof who is a subsequent holder of any Warrants, the Placement
Agent Warrants or Registrable Securities.
"Investors" shall mean the Investors identified in the Purchase Agreement.
"Placement Agent Counsel" means Wiggin and Dana LLP.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Register," "registered" and "registration" refer to a registration made by
preparing and filing a Registration Statement or similar document in compliance
with the 1933 Act (as defined below), and the declaration or ordering of
effectiveness of such Registration Statement or document.
Page 53 of 70 Pages
Registrable Securities" means (a) the Shares and the Warrant Shares
(without regard to any limitations on beneficial ownership contained in the
Purchase Agreement or Warrants) or other securities issued or issuable to each
Purchaser or its transferee or designee (i) upon exercise of the Warrants, or
(ii) upon any distribution with respect to, any exchange for or any replacement
of such Shares or Warrant Shares or (iii) upon any conversion, exercise or
exchange of any securities issued in connection with any such distribution,
exchange or replacement; (b) securities issued or issuable upon any stock split,
stock dividend, recapitalization or similar event with respect to the foregoing;
and (c) any other security issued as a dividend or other distribution with
respect to, in exchange for, in replacement or redemption of, or in reduction of
the liquidation value of, any of the securities referred to in the preceding
clauses; provided, however, that such securities shall cease to be Registrable
Securities when such securities have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction or
when such securities may be sold without any restriction pursuant to Rule
144(k).
"Registration Statement" shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in such
Registration Statement.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"1933 Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
2. Registration.
(a) Registration Statements.
(i) Promptly following the closing of the purchase and sale of
the securities contemplated by the Purchase Agreement (the "Closing Date"), but
in no event later than thirty (30) days following the Closing Date (the "Filing
Deadline"), the Company shall prepare and file with the SEC one Registration
Statement on Form S-3 (or, if Form S-3 is not then available to the Company, on
such form of Registration Statement as is then available to effect a
registration for resale of the Registrable Securities, subject to the Holders'
consent), covering the resale of all of the Registrable Securities without
regard to any limitation on the exercise of the Warrants or the Placement Agent
Warrants. Such Registration Statement also shall cover, to the extent allowable
under the 1933 Act and the rules promulgated thereunder (including Rule 416),
such indeterminate number of additional shares of Common Stock resulting from
stock splits, stock dividends or similar transactions with respect to the
Registrable Securities. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to the Holders and Placement
Agent Counsel not less than five (5) Business Days prior to its filing or other
submission.
(ii) Additional Registrable Securities. If at any time
Registrable Securities other than the Shares and Warrant Shares registered
pursuant to Section 2(a)(i) are issued or become issuable, the Company shall
prepare and file with the SEC one or more Registration Statements on Form S-3
Page 54 of 70 Pages
(or, if Form S-3 is not then available to the Company, on such form of
Registration Statement as is then available to effect a registration for resale
of such additional Registrable Securities (the "Additional Shares")) covering
the resale of the Additional Shares, but only to the extent the Additional
Shares are not at the time covered by an effective Registration Statement. Such
Registration Statement also shall cover, to the extent allowable under the 1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Additional
Shares. The Registration Statement (and each amendment or supplement thereto,
and each request for acceleration of effectiveness thereof) shall be provided in
accordance with Section 3(c) to the Holders and the Placement Agent Counsel not
less than 5 (five) Business Days prior to its filing or other submission.
(b) Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with each securities exchange, quotation system, market or over-the-counter
bulletin board on which Registrable Securities are required hereunder to be
listed, (B) with respect to filings required to be made with the SEC, and (C) in
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable and documented fees and disbursements of Placement Agent
Counsel in connection with Blue Sky qualifications of the Registrable Securities
and determination of the eligibility of the Registrable Securities for
investment under the laws of such jurisdictions as the Holders of a majority of
Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing or photocopying prospectuses), (iii) messenger, telephone and
delivery expenses, (iv) 1933 Act liability insurance, if the Company so desires
such insurance, (v) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement, including, without limitation, the Company's independent public
accountants (including, in the case of an underwritten offering, the expenses of
any comfort letters or costs associated with the delivery by independent public
accountants of a comfort letter or comfort letters) and legal counsel, and (vi)
reasonable and documented fees and expenses of the Placement Agent Counsel in
connection with any Registration Statement hereunder, provided, such fees and
expenses do not exceed $10,000 in the aggregate. In addition, each of the
Investors, the Placement Agent and the Company shall be responsible for all of
their respective internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder.
(c) Effectiveness.
(i) The Company shall use reasonable best efforts to have the
Registration Statement declared effective not later than the earlier to occur of
(y) sixty (60) days after the date of filing of such Registration Statement, or
(z) five (5) Business Days following the Company's receipt of oral or written
(whichever is first) notice from the SEC that the Registration Statement will
not be "reviewed or not be subject to further review; provided, however, if the
Registration Statement is not declared effective within the time period set
forth above, the Company shall continue to use its reasonable best efforts to
have the Registration Statement declared effective as soon as possible
thereafter.
(ii) For not more than thirty (30) consecutive days or for a
total of not more than sixty (60) days in any twelve (12) month period, the
Company may delay the disclosure of material non-public information concerning
the Company which the Company is not otherwise required to disclose, by
Page 55 of 70 Pages
terminating or suspending effectiveness of any registration contemplated by this
Section 2, if the disclosure of such material non-public information would be
required by such registration and at the time is not, in the reasonable
determination of the Company's Board of Directors, in the best interests of the
Company (an "Allowed Delay"); provided, that the Company shall promptly (a)
notify the Holders in writing of the existence of (but in no event shall the
Company be required to disclose to such Holder any of the facts or circumstances
regarding) material non-public information giving rise to an Allowed Delay, and
(b) advise the Holders in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay.
(d) Underwritten Offering. If any offering pursuant to a Registration
Statement filed pursuant to Section 2(a) hereof involves an underwritten
offering, the Company shall have the right to select an investment banker and
manager to administer the offering, which investment banker or manager shall be
reasonably satisfactory to a majority of the Holders.
3. Company Obligations. The Company will use its reasonable best efforts to
effect the registration of the Registrable Securities in accordance with the
terms hereof, and pursuant thereto the Company will, as expeditiously as
possible:
(a) use its reasonable best efforts to cause such Registration
Statement to become effective and to remain continuously effective for a period
that will terminate upon the earlier of (x) the date when all Registrable
Securities covered by such Registration Statement have been sold or (y) with
respect to any Holder, such time as all Registrable Securities held by such
Holder may be sold without any restriction pursuant to Rule 144(k) (the
"Effectiveness Period");
(b) prepare and file with the SEC on or prior to the Filing Deadline,
a Registration Statement on Form S-3 (or if such form is not available to the
Company on another form appropriate for such registration in accordance
herewith) (which shall include a Plan of Distribution substantially in the form
of Exhibit A attached hereto), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not
less than five (5) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, the
Company shall (i) furnish to the Placement Agent Counsel, copies of all such
documents proposed to be filed, which documents (other than those incorporated
by reference) will be subject to the review of such Placement Agent Counsel, and
(ii) at the request of any Holder cause its officers, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of counsel to such Holders, to conduct a reasonable
investigation within the meaning of the 1933 Act. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the counsel(s) to the Holders of a majority of the Registrable
Securities or the Placement Agent Counsel shall reasonably object within three
(3) Business Days after their receipt thereof;
(c) (i) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective with respect to all Registrable
Securities for the Effectiveness Period; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the 1933 Act; (iii) respond as
promptly as possible, and in no event later than fifteen (15) Business Days to
the first set of comments and ten (10) Business Days to each set of comments
thereafter received from the SEC with respect to the Registration Statement or
any amendment thereto and as promptly as reasonably possible provide the Holders
true and complete copies of all correspondence from and to the SEC relating to
Page 56 of 70 Pages
the Registration Statement; and (iv) comply in all material respects with the
provisions of the 1933 Act and the 1934 Act with respect to the disposition of
all Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented;
(d) notify Holders of Registrable Securities to be sold and the
Placement Agent Counsel as promptly as possible (A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed (but in no event in the case of this subparagraph (A),
less than five (5) Business Days prior to date of such filing); (B) when the SEC
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the SEC comments in writing on such Registration
Statement; and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, and after the
effectiveness thereof: (i) of any request by the SEC or any other Federal or
state governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (iv) if the financial statements included in the Registration
Statement become ineligible for inclusion therein or of the occurrence of any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
Without limitation to any remedies to which the Holders may be entitled under
this Agreement, if any of the events described in Section 3(d)(C)(i),
3(d)(C)(ii) and 3(d)(C)(iii) occur, the Company shall use its best efforts to
respond to and correct the event;
(e) provide copies to and permit Placement Agent Counsel to review
each Registration Statement and all amendments and supplements thereto no fewer
than five (5) Business Days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects within three (3) Business Days
following receipt by the Holders and Placement Agent Counsel of such
Registration Statement and/or amendments and supplements thereto;
(f) furnish to the Holders and Placement Agent Counsel such number of
copies of a Prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as each Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder;
(g) if requested by any Holder of Registrable Securities, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(h) in the event the Company selects an underwriter for the offering,
the Company shall enter into and perform its reasonable obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriter of such offering;
Page 57 of 70 Pages
(i) if required by the underwriter, the Company shall furnish, on the
effective date of the Registration Statement (i) an opinion, dated as of such
date, from independent legal counsel representing the Company for purposes of
such Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriter and (ii)
a letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriter and the Holders;
(j) use its reasonable best efforts to (i) prevent the issuance of any
stop order or other suspension of effectiveness and, if such order is issued,
obtain the withdrawal of any such order at the earliest possible moment or (ii)
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the earliest
practicable time;
(k) prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the Holders and
their counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions reasonably requested by the Holders and do any and all
other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered by the
Registration Statement; provided, that, the Company shall not for any purpose be
required to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified or execute a general consent to service of
process in any jurisdiction;
(l) cause all Registrable Securities covered by a Registration
Statement to be listed on each securities exchange, interdealer quotation
system, market or over-the-counter bulletin board on which similar securities
issued by the Company are then listed;
(m) following the occurrence of any event contemplated by Section
3(d)(C)(iv), as promptly as possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and
(n) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC under the 1933 Act and the 1934 Act and take such
other actions as may be reasonably necessary to facilitate the registration of
the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act (for the purpose of this subsection 3(k), "Availability
Date" means the 45th day following the end of the fourth fiscal quarter that
includes the effective date of such Registration Statement, except that, if such
fourth fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter).
4. Due Diligence Review; Information. The Company shall make available, during
normal business hours, for reasonable inspection and review by the Holders,
advisors to and representatives of the Holders (who may or may not be affiliated
with the Holders), and any underwriter participating in any disposition of
Common Stock on behalf of the Holders pursuant to a Registration Statement or
amendments or supplements thereto or any blue sky, NASD or other filing, all
Page 58 of 70 Pages
financial and other records, all filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Holders or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Holders and such representatives, advisors and underwriters and their respective
accountants and attorneys to conduct initial and ongoing due diligence with
respect to the Company and the accuracy of such Registration Statement.
Notwithstanding the foregoing, the Company shall not disclose material
nonpublic information to the Holders, or to advisors to or representatives of
the Holders, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and provides
the Holders, such advisors and representatives with the opportunity to accept or
refuse to accept such material nonpublic information for review.
5. Obligations of the Holders.
(a) Each Holder shall furnish in writing to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least ten (10) Business Days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Holder of the information the Company requires from such
Holder if such Holder elects to have any of the Registrable Securities included
in the Registration Statement. A Holder shall provide such information to the
Company at least five (5) Business Days prior to the first anticipated filing
date of such Registration Statement if such Holder elects to have any of the
Registrable Securities included in the Registration Statement.
(b) Each Holder, by its acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder, unless such Holder has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration
Statement.
(c) In the event the Company, at the request of the Holders,
determines to engage the services of an underwriter, such Holder agrees to enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the dispositions of the Registrable Securities.
(d) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event rendering a Registration Statement no
longer effective, such Holder will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities, until the Holder's receipt of copies of the supplemented
or amended Prospectus filed with the SEC and declared effective and, if so
directed by the Company, the Holder shall deliver to the Company (at the expense
of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Holder's possession of the Prospectus covering
the Registrable Securities current at the time of receipt of such notice.
(e) No Holder may participate in any third party underwritten
registration hereunder unless it (i) agrees to sell the Registrable Securities
Page 59 of 70 Pages
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions. Notwithstanding the foregoing, no Holder (other than
Holders who are Affiliates of the Company) shall be required to make any
representations to such underwriter, other than those with respect to itself and
the Registrable Securities owned by it, including its right to sell the
Registrable Securities, and any indemnification in favor of the underwriter by
the Holders shall be several and not joint and limited in the case of any
Holder, to the net proceeds received by such Holder from the sale of its
Registrable Securities. The scope of any such indemnification in favor of an
underwriter shall be limited to the same extent as the indemnity provided in
Section 6(b) hereof.
6. Indemnification.
(a) Indemnification by the Company. The Company will indemnify and
hold harmless each Holder and their respective Affiliates, officers, directors,
members, employees and agents, successors and assigns, against any losses,
claims, damages or liabilities, joint or several, to which such Holder,
Affiliate, officer, director, member, employee, agent, successor or assign may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, prospectus or preliminary prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus or preliminary prospectus, in the light of the circumstances under
which they were made) not misleading; (ii) any blue sky application or other
document executed by the Company specifically for blue sky compliance or based
upon written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable Securities under
the securities laws thereof (any such application, document or information
herein called a "Blue Sky Application"); (iii) any violation by the Company, or
its directors, officers, employees or agents of any rule or regulation
promulgated under the 1933 Act applicable to the Company or its directors,
officers, employees or agents and relating to action or inaction required of the
Company or any of them in connection with such registration; or (iv) any failure
to use its best efforts to register or qualify the Registrable Securities
included in any such Registration Statement in any state where the Company or
its agents has affirmatively undertaken or agreed in writing that the Company
will undertake such registration or qualification on a Holder's behalf (the
undertaking of any underwriter chosen by the Company being attributed to the
Company) and will reimburse such Holder, and each such officer, director or
member and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in conformity with
information furnished in writing by such Holder or any such controlling person
specifically for use in such Registration Statement or Prospectus.
(b) Indemnification by the Holders. In connection with any
Registration Statement pursuant to the terms of this Agreement, each Holder will
furnish to the Company in writing such information as the Company reasonably
requests concerning such Holder or the proposed manner of such Holder's
distribution for use in connection with any Registration Statement or Prospectus
and agrees, severally but not jointly, to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its Subsidiaries and its and their
respective directors, officers, employees, shareholders and each person who
controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expenses (including reasonable attorney fees)
Page 60 of 70 Pages
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement or Prospectus
or preliminary prospectus or amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent that such untrue statement or omission is contained in any information
furnished in writing by such Holder to the Company specifically for inclusion in
such Registration Statement or Prospectus or amendment or supplement thereto. In
no event shall the liability of a Holder be greater in amount than the aggregate
dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities included in the Registration Statement giving rise to
such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon advice of its counsel, a conflict of interest exists between
such person and the indemnifying party with respect to such claims (in which
case, if the person notifies the indemnifying party in writing that such person
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such person); and provided, further, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it completely harmless, other than as expressly
specified therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. No person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be
entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a Holder be
greater in amount than the aggregate dollar amount of the proceeds received by
it upon the sale of the Registrable Securities giving rise to such contribution
obligation.
7. Rule 144
As long as any Holder owns Shares, Warrants, Placement Agent Warrants or
Warrant Shares, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the 1934 Act. As long as any Holder owns Shares, Warrants,
Placement Agent Warrants or Warrant Shares, if the Company is not required to
file reports pursuant to Section 13(a) or 15(d) of the 1934 Act, it will prepare
Page 61 of 70 Pages
and make publicly available in accordance with Rule 144(c) promulgated under the
1933 Act annual and quarterly financial statements, together with a discussion
and analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the 1934 Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the 1934 Act. The Company further
covenants that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Person to
sell Shares and Warrant Shares without registration under the 1933 Act within
the limitation of the exemptions provided by Rule 144 promulgated under the 1933
Act, including compliance with the provisions of the Purchase Agreement relating
to the transfer of the Shares and Warrant Shares. Upon the request of any
Holder, the Company shall deliver to such Holder a written certification of a
duly authorized officer as to whether it has complied with such requirements.
8. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder,
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. Except as otherwise disclosed in the
Purchase Agreement, neither the Company nor any of its subsidiaries is a party
to an agreement currently in effect, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
(c) Notice of Effectiveness. Within three (3) Business Days after the
Registration Statement which includes the Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement) confirmation that the Registration Statement has
been declared effective by the SEC in the form attached hereto as Exhibit B.
(d) Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering all of the Registrable Securities and
the Company is in breach of its obligations hereunder with respect thereto, the
Company shall determine to prepare and file with the SEC a registration
statement relating to an offering for its own account or the account of others
under the 1933 Act of any of its equity securities, other than on Form S-4 or
Form S-8 (each as promulgated under the 1933 Act) or its then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each Holder of Registrable Securities written notice of such
determination and, if within seven (7) Business Days after receipt of such
notice, any such Holder shall so request in writing (which request shall specify
the Registrable Securities intended to be disposed of by the Holder), the
Company will cause the registration under the 1933 Act of all Registrable
Securities which the Company has been so requested to register by the Holder, to
the extent required to permit the disposition of the Registrable Securities so
to be registered, provided that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
Page 62 of 70 Pages
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay expenses in accordance with Section 4 hereof), and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities being registered pursuant to this Section 8(d) for the
same period as the delay in registering such other securities. The Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered. In the case of an underwritten
public offering, if the managing underwriter(s) or underwriter(s) should
reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the managing
underwriter should reasonably determine that the inclusion of such Registrable
Securities, would materially adversely affect the offering contemplated in such
registration statement, and based on such determination recommends inclusion in
such registration statement of fewer or none of the Registrable Securities of
the Holders, then (x) the number of Registrable Securities of the Holders
included in such registration statement shall be reduced pro-rata among such
Holders (based upon the number of Registrable Securities requested to be
included in the registration), if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable Securities;
provided, however, that if securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable Securities intended to be offered
by the Holders than the fraction of similar reductions imposed on such other
persons or entities (other than the Company).
(e) Failure to File Registration Statement and Other Events. The
Company and the Holders agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Deadline and
maintained in the manner contemplated herein during the Effectiveness Period.
The Company and the Holders further agree that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, if (i) the
Registration Statement pursuant to Section 2(a)(i) is not filed on or prior to
the Filing Deadline or a Registration Statement required to be filed pursuant to
Section 2(a)(ii) has not been filed within thirty (30) days following the date
on which the Additional Shares are issued or become issuable, or (ii) the
Company fails to file with the SEC a request for acceleration in accordance with
Rule 461 promulgated under the 1933 Act within five (5) Business Days of the
date that the Company is notified (orally or in writing, whichever is earlier)
by the SEC that a Registration Statement will not be "reviewed," or not subject
to further review, or (iii) the Registration Statement is filed with and
declared effective by the SEC but thereafter ceases to be effective as to all
Registrable Securities at any time prior to the expiration of the Effectiveness
Period, without being succeeded immediately by a subsequent Registration
Statement filed with the SEC, except as otherwise permitted by this Agreement,
or (iv) trading in the Common Stock shall be suspended or if the Common Stock is
delisted from AMEX or any other securities exchange, quotation system, market or
over-the-counter bulletin board on which Registrable Securities are required
hereunder to be listed (each an "Exchange"), without immediately being listed on
any other Exchange, for any reason for more than one (1) Business Day, or (v)
the rights of the Holders to exercise into Warrant Shares are suspended for any
reason without the consent of the particular Holder other than as set forth in
the Purchase Agreement (any such failure or breach being referred to as an
"Event"), the Company will make pro rata payments to each Holder, as liquidated
damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount
invested by such Holder (for purposes of this Agreement, the Placement Agent
shall be deemed to have invested an amount equal to ten percent (10%) of the
aggregate purchase price of the Shares sold in the Private Placement, and for
all other Holders, the amount invested by a Holder shall include the purchase
price of the Shares acquired by such Holder and shall exclude any amount
attributable to the Warrants acquired by such Holder in the Private Placement)
Page 63 of 70 Pages
for each 20-day period or pro rata for any portion thereof following the date on
which the Event occurred. Such payments shall be in partial compensation to the
Holders, and shall not constitute the Holders' exclusive remedy for such Events.
Such payments shall be made to each Holder in cash. The amounts payable as
liquidated damages pursuant to this paragraph shall be payable in lawful money
of the United States, and amounts payable as liquidated damages shall be paid
within two (2) Business Days of the last day of each such 20-day period during
which the Registration Statement should have been filed for which no
Registration Statement was filed with respect to the Registrable Securities.
Notwithstanding the foregoing, the Company shall remain obligated to cure the
breach or correct the condition that caused the event, and the Holder shall have
the right to take any action necessary or desirable to enforce such obligation.
(f) Amendments and Waivers. This Agreement may be amended only by a
writing signed by the then current parties hereto. The Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of each then current Holder.
(g) Notices. All notices and other communications provided for or
permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement; provided, however, as the Placement Agent is not a party to the
Purchase Agreement, any notice or other communication to the Placement Agent
shall be sent to the address for the Placement Agent set forth on the signature
page hereof (which address the Placement Agent may change in accordance with
Section 9.4 of the Purchase Agreement).
(h) Assignments and Transfers by Holders. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Holders and
their respective successors and assigns. An Holder may transfer or assign, in
whole or from time to time in part, to one or more persons its rights hereunder
in connection with the transfer of Registrable Securities by such Holder to such
person, provided, that, such Holder complies with all applicable laws thereto
and provides written notice of assignment to the Company promptly after such
assignment is effected.
(i) Assignments and Transfers by the Company. This Agreement shall not
be assigned by the Company without the prior written consent of each Holder,
except that without the prior written consent of the Holders, but after notice
duly given, the Company shall assign its rights and delegate its duties
hereunder to any successor-in-interest corporation, and such
successor-in-interest shall assume such rights and duties, in the event of a
merger or consolidation of the Company with or into another corporation or the
sale of all or substantially all of the Company's assets.
(j) Benefits of the Agreement. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(k) Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
(l) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(m) Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
Page 64 of 70 Pages
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
(n) Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(o) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(p) Specific Enforcement; Governing Law; Consent to Jurisdiction. The
Company and the Holders acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
(q) Obligations of Holders. The Company acknowledges that the
obligations of each Holder under this Agreement, are several and not joint with
the obligations of any other Holder, and no Holder shall be responsible in any
way for the performance of the obligations of any other Holder under this
Agreement. The decision of each Holder to enter into this Agreement has been
made by such Holder independently of any other Holder. The Company further
acknowledges that nothing contained in this Agreement, and no action taken by
any Holder pursuant hereto, shall be deemed to constitute the Holders as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Holders are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated hereby.
Each Holder shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement, and it
shall not be necessary for any other Holder to be joined as an additional party
in any proceeding for such purpose.
Each Holder acknowledges that it was introduced to the Company by SCO
Capital Partners LLC which has acted solely as agent for the Company and not for
any Holder (other than itself). Each Holder acknowledges that it has been
Page 65 of 70 Pages
represented by its own separate legal counsel in its review and negotiation of
this Agreement and with respect to the transactions contemplated hereby. For
reasons of administrative convenience only, this Agreement has been prepared
with the assistance of the Placement Agent Counsel (counsel for SCO Capital
Partners LLC) and the Placement Agent Counsel will perform certain duties under
this Agreement. Each Holder acknowledges that such counsel does not represent
the Holders but only SCO Capital Partners LLC. The Company has elected to
provide all Holders with the same terms and Agreement for the convenience of the
Company and not because it was required or requested to do so by the Holders.
The Company acknowledges that such procedure with respect to this Agreement in
no way creates a presumption that the Holders are in any way acting in concert
or as a group with respect to this Agreement or the transactions contemplated
hereby or thereby.
[Signature Pages Follow]
Page 66 of 70 Pages
[Company Signature Page]
IN WITNESS WHEREOF, the Company has executed this Registration
Rights Agreement or caused its duly authorized officers to execute this
Registration Rights Agreement as of the date first above written.
The Company: BIOENVISION, INC.
By:_________________________
Name: David P. Luci
Title: Chief Financial Officer and
General Counsel
Page 67 of 70 Pages
[Holder Signature Page]
IN WITNESS WHEREOF, the undersigned has executed this Registration Rights
Agreement or caused its duly authorized officers to execute this Registration
Rights Agreement as of the date first above written.
Date:
-------------------
IF AN INDIVIDUAL: IF A CORPORATION, PARTNERSHIP,
TRUST, ESTATE OR OTHER ENTITY:
-----------------------------------
(Signature)
------------------------------------
Print name of entity
-----------------------------------
(Printed Name) By:
--------------------------------
Name:
--------------------------
Title:
--------------------------
Address: Address:
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
Page 68 of 70 Pages
EXHIBIT A
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
security holders. Sales of shares may be made by selling security holders,
including their respective donees, transferees, pledgees or other
successors-in-interest directly to purchasers or to or through underwriters,
broker-dealers or through agents. Sales may be made from time to time on the
American Stock Exchange, any other exchange or market upon which our shares may
trade in the future, in the over-the-counter market or otherwise, at market
prices prevailing at the time of sale, at prices related to market prices, or at
negotiated or fixed prices. The shares may be sold by one or more of, or a
combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction (including crosses in which the
same broker acts as agent for both sides of the transaction);
- purchases by a broker-dealer as principal and resale by such broker-dealer,
including resales for its account, pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchases;
- through options, swaps or derivatives;
- in privately negotiated transactions;
- in making short sales or in transactions to cover short sales; and
- put or call option transactions relating to the shares.
The selling security holders may effect these transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling security holders
and/or the purchasers of shares for whom such broker-dealers may act as agents
or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
selling security holders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities.
The selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with the selling
security holders. The selling security holders may also enter into options or
other transactions with broker-dealers or other financial institutions which
require the delivery of shares offered by this prospectus to those
broker-dealers or other financial institutions. The broker-dealer or other
financial institution may then resell the shares pursuant to this prospectus (as
amended or supplemented, if required by applicable law, to reflect those
transactions).
The selling security holders and any broker-dealers that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, and any commissions received by
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals may be deemed to be underwriting discounts or commissions
Page 69 of 70 Pages
under the Securities Act. The selling security holders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares against liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify each of the selling security holders
and each selling security holder has agreed, severally and not jointly, to
indemnify us against some liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.
The selling security holders will be subject to the prospectus delivery
requirements of the Securities Act. We have informed the selling security
holders that the anti-manipulative provisions of Regulation M promulgated under
the 1934 Act may apply to their sales in the market.
Selling security holders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon being notified by a selling security holder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required pursuant to Rule 424(b) under the Securities Act,
disclosing:
- the name of each such selling security holder and of the participating
broker-dealer(s);
- the number of shares involved;
- the initial price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
- other facts material to the transactions.
In addition, if required under applicable law or the rules or regulations
of the Commission, we will file a supplement to this prospectus when a selling
security holder notifies us that a donee or pledgee intends to sell more than
500 shares of common stock.
We are paying all expenses and fees customarily paid by the issuer in
connection with the registration of the shares. The selling security holders
will bear all brokerage or underwriting discounts or commissions paid to
broker-dealers in connection with the sale of the shares.
Page 70 of 70 Pages
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT
[Name and Address of Transfer Agent]
Re: Bioenvision, Inc.
Dear [______]:
We are counsel to Bioenvision, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Common Stock and Warrant Purchase Agreement (the "Purchase Agreement") dated as
of __________________, 2004 by and among the Company and the buyers named
therein (collectively, the "Holders") pursuant to which the Company issued to
the Holders shares of its Common Stock, par value $0.01 per share (the "Common
Stock"), and warrants to purchase shares of the Common Stock (the "Warrants").
Pursuant to the Purchase Agreement, the Company has also entered into an
Investor Rights Agreement with the Holders (the "Investor Rights Agreement")
pursuant to which the Company agreed, among other things, to register the shares
of Common Stock issued pursuant to the Purchase Agreement and the Common Stock
issuable upon exercise of the Warrants, under the Securities Act of 1933, as
amended (the "Securities Act"). In connection with the Company's obligations
under the Investor Rights Agreement, on ____________ ___, 2004, the Company
filed a Registration Statement on Form S-__ (File No. 333-_____________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names each of the Holders as
a selling securityholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the Securities Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the Securities Act pursuant to the
Registration Statement.
Very truly yours,
By: __________________________________
cc: [LIST NAMES OF HOLDERS]