EXHIBIT 2
to SCHEDULE 13D
SECURITIES PURCHASE AGREEMENT
Securities Purchase Agreement (together with the schedules and exhibits
hereto, this "AGREEMENT"), dated as of May 7, 2002, by and between Bioenvision,
Inc., a Delaware corporation (the "COMPANY"), and each of the Persons (as
defined below) who has executed a signature page to this Agreement (each a
"PURCHASER," and together, the "PURCHASERS").
W I T N E S S E T H:
WHEREAS, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to purchase from the Company, the Securities (as such term
is defined below) as set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound, the parties hereto hereby agree as
follows:
1. AUTHORIZATION AND SALE OF PURCHASED SHARES.
1.1 AUTHORIZATION. The Company has duly authorized the issuance
and sale of up to 5,920,000 shares of its Series A Preferred Stock, par value
$0.001 per share (the "SERIES A PREFERRED STOCK"), with the powers,
designations, preferences, rights, qualifications, limitations and restrictions
contained in the Certificate of Designations of the Series A Preferred Stock, in
the form of EXHIBIT A hereto (the "CERTIFICATE OF Designations"), to be acquired
by the Purchasers in accordance with the terms of this Agreement. With the
purchase of each share of Series A Preferred Stock, the Purchasers will also
receive one (1) warrant (the "Warrant") to purchase one (1) share of Common
Stock, par value $0.001 per share (the "COMMON STOCK"), in the form of EXHIBIT B
hereto. The Series A Preferred Stock and the Warrants are collectively referred
to herein as the "SECURITIES". The Purchasers of the Series A Preferred Stock
shall have the benefit of certain registration rights in respect of the shares
of Common Stock underlying the Securities on the terms and conditions of a
Registration Rights Agreement, in the form of EXHIBIT C hereto (the
"REGISTRATION RIGHTS AGREEMENT"). The Company is making the offering of the
Securities (the "OFFERING") for sale only to individuals, entities or groups,
including, without limitation, corporations, limited liability companies,
limited or general partnerships, joint ventures, associations, joint stock
companies, trusts, unincorporated organizations, or governments or any agencies
or political subdivisions thereof (each, a "PERSON") who are "accredited
investors" (as defined herein). All subscription proceeds received will be
deposited directly into an Escrow Account (as defined below) as described in
Section 2.1 herein. SCO Securities LLC ("SCO SECURITIES" or the "PLACEMENT
Agent") is the Company's placement agent for the Offering, but other registered
broker-dealers ("OTHER PARTICIPATING AGENTS") may also place Securities with the
consent of SCO Securities.
1.2 SUBSCRIPTION.
Subject to the terms and conditions hereinafter set forth in this
Agreement, each Purchaser hereby offers to purchase, at a price of $3.00 per
share, the number of shares of Series A Preferred Stock set forth beneath each
such Purchaser's name on the signature pages of this Agreement, for an aggregate
purchase price (the "Purchase Price") to be paid by such Purchaser in the amount
set forth on the signature page beneath such Purchaser's name. The Purchasers
understand that the Purchasers will receive one (1) Warrant to purchase one (1)
share of Common Stock for every share of Series A Preferred Stock for which this
subscription is accepted. The Company may accept or reject subscriptions, in
whole or in part, or accept subscriptions for less than the $60,000 minimum
subscription, in its sole discretion.
1.3 SUBSCRIPTION PROCEDURES. To submit this Subscription, each
Purchaser must deliver (i) this Agreement, including, without limitation, the
annexed Purchaser Questionnaire, both duly completed and executed, (ii) an
executed Registration Rights Agreement, and (iii) the purchase price, in full,
for the Securities, in the amount of $3.00 for each share of Series A Preferred
Stock for which such Purchaser is subscribing. The payment must be made in U.S.
dollars, in immediately available funds, and must be delivered by certified
check or wire transfer of immediately available funds. Certified checks must be
made payable to ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP. The wire instructions are as follows:
BANK NAME: CITIBANK, N.A.
ADDRESS: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
BANK PHONE #: ▇▇▇-▇▇▇-▇▇▇▇
ACCOUNT NAME: ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP ESCROW ACCOUNT
ACCOUNT #: ▇▇▇▇▇▇▇▇
ABA TRANSIT #: ▇▇▇▇▇▇▇▇▇
REFERENCE: BIOENVISION, INC.----301140-1
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇---212-835-6000
Payment, and the other documents required for subscription must be
delivered to the following address:
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTENTION: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ESQ.
REFERENCE: BIOENVISION, INC.---301140-1
2. CLOSING.
Upon acceptance of subscriptions totaling $12,000,000 (the "INITIAL
MINIMUM OFFERING"), the Company shall hold a closing of the purchase and sale of
such Securities (the "INITIAL CLOSING"); provided that the Company satisfies the
Purchasers with reasonable assurance that at least $3,000,000 of additional
Securities will be invested in the Company on similar terms as soon as
practicable (but no more than 30 days) after the Initial Closing. Upon
acceptance of subscriptions totaling $17,750,000, the Company shall hold a final
closing (the "FINAL CLOSING," and together with the Initial Closing, the
"CLOSINGS"). The Initial Closing and the Final Closing will take place at such
location as may be agreed upon by the Company and the Placement Agent; however,
the Final Closing will take place within thirty (30) days after the Initial
Closing. The date of the Initial Closing will be referred to as the "Initial
Closing Date" and the date of the Final Closing is referred to as the "FINAL
CLOSING DATE." At the Closing with respect to the subscription by each
Purchaser, to the extent the same is accepted by the Company, the Company will
register in the name of each such Purchaser that number of Securities being
purchased by such Purchaser in accordance with the information on the applicable
signature page of this Agreement.
2.1 ESCROW. Pending the Closings, all funds paid in respect of
this Agreement shall be deposited in an attorney escrow account (the "ESCROW
ACCOUNT") maintained by ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP (the "ESCROW AGENT") pursuant to an
Escrow Agreement, dated as of the date hereof, by and among the
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Company, each Purchaser and the Escrow Agent (the "ESCROW AGREEMENT"). The
Escrow Account shall not be interest bearing. If the Company accepts
subscriptions for the Securities at or prior to the Initial Closing Date or the
Final Closing Date, as the case may be, then all subscription proceeds received
for subscriptions accepted by the Company prior to such Closing Date shall be
paid over to the Company at each Closing, net of the placement fee and offering
expenses, which shall be paid to the appropriate parties at each such Closing.
If the Company shall not have received and accepted each Purchaser's
subscription, then that subscription shall be void and all funds paid hereunder
by such Purchaser, without deduction therefrom or interest thereon, shall be
promptly returned to such Purchaser.
2.2. RETURN OF FUNDS. If the Company does not receive subscriptions
for the Initial Minimum Offering, then the Escrow Agent shall return each
Purchaser's subscription amount within ten (10) business days of the date
hereof. Each Purchaser hereby authorizes and directs the Escrow Agent to return
or direct the return of any funds from the Escrow Account, without deduction
therefrom or interest thereon, to the same account from which the funds were
originally drawn, to the extent that such Purchaser's subscription is not
accepted prior to the termination of the Offering.
3. CONDITIONS TO THE OBLIGATIONS OF EACH PURCHASER AT CLOSING.
The obligation of each Purchaser to purchase and pay for the Securities
subscribed for by such Purchaser at the applicable Closing is subject to the
satisfaction on or prior to the Initial Closing Date or the Final Closing Date,
as the case may be, of the following conditions, each of which may be waived by
the applicable Purchaser:
3.1 OPINION OF COUNSEL TO THE COMPANY. Each Purchaser or its
Representative (as defined in the Escrow Agreement) shall have received from
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel for the Company, its opinion dated as of the Initial
Closing Date or Final Closing Date, as the case may be, and addressed to the
Purchasers (to the extent purchasing securities on such Closing Date), covering
the matters attached hereto as EXHIBIT D.
3.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement which are qualified as to
materiality must be true and correct in all respects and the representations and
warranties of the Company contained in this Agreement which are not qualified as
to materiality must be true and correct in all material respects as of the
Closing Date except to the extent that the representations and warranties relate
to an earlier date in which case the representations and warranties must be true
and correct as written or true and correct in all material respects, as the case
may be, as of the earlier date.
3.3 PERFORMANCE OF COVENANTS. The Company will have performed or
complied with in all material respects all covenants and agreements required to
be performed by it on or prior to the Closing pursuant to this Agreement,
including, without limitation, the delivery of certificates evidencing the
shares of Series A Preferred Stock for which the Subscription made hereby is
accepted and one Warrant for each such share of Series A Preferred Stock.
3.4 NO INJUNCTIONS; ETC. No court or governmental injunction,
order or decree prohibiting the purchase and sale of the Securities will be in
effect. There will not be in effect any law, rule or regulation prohibiting or
restricting the sale or requiring any consent or approval of any Person that has
not been obtained to issue and sell the Securities to the Purchasers.
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3.5 CLOSING DOCUMENTS. The Company will have delivered to each
Purchaser or its Representative the following:
(a) a certificate of the President of the Company certifying that
the conditions in Sections 3.2 and 3.3 have been satisfied;
(b) Prior to the Initial Closing, a certificate of the Secretary
of the Company, dated as of that Closing Date, certifying (i) the attached
copies of the Certificate of Incorporation and By-laws of the Company, (ii) the
resolutions of the Board of Directors of the Company (the "BOARD") authorizing
the execution, delivery and performance of this Agreement and the issuance of
the Securities (including, but not limited to, for purposes of Section 203 of
the Delaware General Corporation Law) and (iii) the incumbency of the officers
duly authorized to execute this Agreement and the other documents contemplated
by this Agreement; and for every other Closing, a certificate certifying that
the foregoing certificate continues to be true, correct and complete;
(c) a certificate of the Secretary of State of the State of
Delaware, dated as a recent date (but no more than five business days) prior to
the Closing Date, to the effect that the Company is in good standing in the
State of Delaware and that all annual reports, if any, have been filed as
required and that all taxes and fees have been paid in connection therewith;
(d) a copy of the Certificate of Designations certified by the
Secretary of State of the State of Delaware;
(e) a certificate evidencing the shares of Series A Preferred
Stock as to which the Company has accepted such Purchaser's subscription;
(f) a certificate evidencing a Warrant to purchase one share of
Common Stock for each share of Series A Preferred Stock for which the Company
has accepted such Purchaser's subscription pursuant to this Agreement;
(g) the Registration Rights Agreement duly executed by the
Company; and
(h) the Escrow Agreement duly executed by the Company.
3.6 WAIVERS AND CONSENTS. The Company will have obtained all
consents and waivers necessary to execute and deliver this Agreement and all
related documents and agreements and to issue and deliver the Securities, and
all consents and waivers will be in full force and effect.
3.7 BOARD OF DIRECTORS. At Closing, the Board shall adopt a
resolution pursuant to which the Board shall consist of the following five (5)
persons:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, C.A.
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
3.8 CONFIDENTIALITY AGREEMENTS. The Company shall have received
signed confidentiality agreements and assignment of invention agreements
substantially in the form of EXHIBIT E attached hereto (a "CONFIDENTIALITY
AGREEMENT") with all employees of the Company.
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4. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AT CLOSING.
The obligation of the Company to issue and sell the Securities to any
Purchaser at the applicable Closing with respect to the Securities for which the
Company has accepted the Subscription made by the such Purchaser by means of
this Agreement is subject to the satisfaction on or prior to each Closing Date
of the following conditions, each of which may be waived by the Company:
4.1 RECEIPT OF PURCHASE PRICE. The Company shall have received
payment in full in immediately available funds in U.S. dollars of the Purchase
Price with respect to the Securities for which the Company has accepted the
Subscription made by such Purchaser by means of this Agreement; PROVIDED THAT
the Company may only have an Initial Closing upon the receipt of subscriptions
in the amount of the Initial Minimum Offering.
4.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of such Purchaser contained in this Agreement which are qualified as
to materiality must be true and correct in all respects and the representations
and warranties of such Purchaser contained in this Agreement which are not
qualified as to materiality must be true and correct in all material respects as
of the applicable Closing Date.
4.3 PERFORMANCE OF COVENANTS. Such Purchaser will have performed
or complied with in all material respects all covenants and agreements required
to be performed by such Purchaser on or prior to the Closing pursuant to this
Agreement.
4.4 PURCHASER QUESTIONNAIRE. All of the information furnished by
such Purchaser in the confidential purchaser questionnaire accompanying this
Agreement (the "PURCHASER QUESTIONNAIRE") shall have been accurate and complete
in all material respects.
4.5 NO INJUNCTIONS. No court or governmental injunction, order or
decree prohibiting the purchase or sale of the Securities will be in effect.
4.6 CLOSING DOCUMENTS. Each Purchaser will have delivered to the
Company the Registration Rights Agreement and the Escrow Agreement duly executed
by such Purchaser.
5. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER.
Each Purchaser, in order to induce the Company to accept this offer,
hereby represents and warrants, severally and not jointly, as follows:
5.1 DUE AUTHORIZATION. Each Purchaser represents for such
Purchaser to the Company that such Purchaser has full power and authority and
has taken all action necessary to authorize such Purchaser to execute, deliver
and perform such Purchaser's obligations under this Agreement. This Agreement is
the legal, valid and binding obligation of such Purchaser in accordance with its
terms.
5.2 ACCREDITED INVESTOR. Each Purchaser represents that such
Purchaser is an Accredited Investor as that term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended (the "SECURITIES ACT").
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5.3 NO INVESTMENT ADVICE. The Company has not made any other
representations or warranties to such Purchaser other than as set forth herein
or incorporated herein by reference with respect to the Company or rendered any
investment advice.
5.4 INVESTMENT EXPERIENCE. Each Purchaser represents that such
Purchaser has not authorized any Person to act as such Purchaser's Purchaser
Representative (as that term is defined in Regulation D of the General Rules and
Regulations under the Securities Act) in connection with this transaction. Such
Purchaser has such knowledge and experience in financial, investment and
business matters that such Purchaser is capable of evaluating the merits and
risks of the prospective investment in the securities of the Company. Such
Purchaser has consulted with such independent legal counsel or other advisers as
such Purchaser has deemed appropriate to assist such Purchaser in evaluating the
proposed investment in the Company.
5.5 ADEQUATE MEANS. Each Purchaser represents as to such Purchaser
that such Purchaser (i) in the case of an individual only, has adequate means of
providing for such Purchaser's current financial needs and possible
contingencies; and (ii) can afford (a) to hold unregistered securities for an
indefinite period of time as required; and (b) sustain a complete loss of the
entire amount of the subscription.
5.6 ACCESS TO INFORMATION. Each Purchaser represents that such
Purchaser has been afforded the opportunity to ask questions of, and receive
answers from the officers and/or directors of the Company acting on its behalf
concerning the terms and conditions of this transaction and to obtain any
additional information, to the extent that the Company possesses such
information or can acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information furnished; and has had such
opportunity to the extent such Purchaser considers appropriate in order to
permit such Purchaser to evaluate the merits and risks of an investment in the
Company. It is understood that all documents, records and books pertaining to
this investment have been made available for inspection, and that the books and
records of the Company will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business. The foregoing shall in no way be deemed to limit the ability of each
Purchaser to rely on the representations and warranties set forth herein or
incorporated herein by reference.
5.7 NO ENDORSEMENT. Each Purchaser further acknowledges that this
Offering has not been passed upon or the merits thereof endorsed or approved by
any state or federal authorities.
5.8 NON-REGISTERED SECURITIES. Each Purchaser acknowledges that
the offer and sale of the Securities have not been registered under the
Securities Act or any state securities laws and the Securities and the
underlying shares of Common Stock may be resold only if registered pursuant to
the provisions thereunder or if an exemption from registration is available.
Each Purchaser understands that the Offering of the Securities is intended to be
exempt from registration under the Securities Act, based, in part, upon the
representations, warranties and agreements of such Purchaser contained in this
Agreement.
5.9 NO RESALE. Each Purchaser represents that the Securities being
subscribed for, and the securities underlying the subscription, are being
acquired solely for the account of such Purchaser for such Purchaser's
investment and not with a view to, or for resale in connection with, any
distribution in any jurisdiction where such sale or distribution would be
precluded. By such representation, such Purchaser means that no other Person has
a beneficial interest in the Securities or the securities underlying the
subscription, and that no other Person has furnished or will furnish directly or
indirectly, any part of or guarantee the payment of any part of the
consideration to be paid by such Purchaser to the Company in connection
therewith. Such Purchaser does not intend to dispose of all or any part of the
Securities or the securities underlying the subscription except in compliance
with the provisions of the Securities Act and
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applicable state securities laws, and understands that the Securities and the
securities underlying the subscription are being offered pursuant to a specific
exemption under the provisions of the Securities Act, which exemption(s)
depends, among other things, upon the compliance with the provisions of the
Securities Act.
5.10 LEGEND. Each Purchaser hereby acknowledges and agrees that the
Company may insert the following or similar legend on the face of the
certificates evidencing the Securities purchased by such Purchaser and the
shares of Common Stock issued upon the conversion or exercise thereof, as the
case may be, if required in compliance with the Securities Act or state
securities laws:
"These securities have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or any state securities laws
and may not be sold or otherwise transferred or disposed of except
pursuant to an effective registration statement under the Securities
Act and any applicable state securities laws, or an exemption from
registration under the Securities Act and any applicable state
securities laws; provided that, if requested by the Company, an opinion
of counsel reasonably satisfactory in form and substance is furnished
to the Company that an exemption from the registration requirements of
the Securities Act is available."
5.11 BROKER'S OR FINDER'S COMMISSIONS. No finder, broker, agent,
financial person or other intermediary has acted on behalf of any Purchaser in
connection with the sale of the Securities by the Company or the consummation of
this Agreement or any of the transactions contemplated hereby. No Purchaser has
had any direct or indirect contact with any other investment banking firm (or
similar firm) with respect to the offer of the Securities by the Company to the
Purchasers or the Purchasers' subscriptions for the Securities.
Each Purchaser certifies that each of the foregoing representations and
warranties by such Purchaser sets forth in this Section 5 are true as of the
date hereof and shall survive such date.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
For purposes of this Section 6 only, references to the Company shall
mean the Company and Pathagon, Inc., a Delaware corporation and wholly-owned
subsidiary of the Company ("Pathagon"), taken as a whole, except where reference
to Pathagon would be inappropriate in the context of a representation or
warranty. The Company represents and warrants to the Purchasers that:
6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has full corporate power and
authority to own and hold its properties and to conduct its business. The
Company is duly licensed or qualified to do business, and in good standing, in
each jurisdiction in which the nature of its business requires licensing,
qualification or good standing, except for any failure to be so licensed or
qualified or in good standing that would not have a material adverse effect on
the Company or its results of operations, assets or financial condition or on
its ability to perform its obligations under this Agreement or to issue the
Securities (a "MATERIAL ADVERSE EFFECT").
6.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of 50,000,000 shares of Common Stock and
10,000,000 shares of Preferred Stock, par value $0.001 per share (the "PREFERRED
STOCK"). As of the date hereof, (i) 16,887,786 shares of Common Stock were
issued and outstanding, (ii) 2,200,000 shares of Common Stock were reserved for
issuance upon exercise of outstanding options issued to certain officers of the
Company, (iii) 2,904,544 shares of
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Common Stock were reserved for issuance upon exercise of outstanding options
issued to persons other than officers of the Company, (iv) 1,800,000 shares of
Common Stock were reserved for issuance upon the exercise of outstanding
warrants and (v) no shares of Preferred Stock were issued or outstanding. The
Company has also agreed to issue options to purchase up to $3 million of shares
of Common Stock to Ilex Oncology, Inc. ("ILEX") pursuant to that certain
Co-Development Agreement, dated as of March 12, 2001, by and between the Company
and Ilex in the event that certain milestones are achieved under such agreement,
but no shares have been reserved in respect to those contingent options. In
addition, there are 7,473,082 shares of Common Stock reserved for a stock option
plan for the Company's employees; none of which such options are outstanding
(the "AVAILABLE UNISSUED STOCK OPTION POOL"). All the outstanding shares of
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights created by or through the Company,
and have been issued in compliance with all federal and state securities laws,
and were not issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Except as set forth prior to the date
hereof in the Commission Documents (as defined below) or in this Section 6.2 or
on SCHEDULE 6.2 hereof, there are no other options, warrants or other rights,
convertible debt, agreements, arrangements or commitments of any character
obligating the Company to issue or sell any shares of capital stock of or other
equity interests in the Company. The Company is not obligated to retire, redeem,
repurchase or otherwise reacquire any of its capital stock or other securities.
Except as disclosed in the Commission Documents or on SCHEDULE 6.2, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Common Stock to which the Company is a party. Except as disclosed
on Schedule 6.2, neither the Company nor any of its Subsidiaries directly or
indirectly own or have any investment in any of the capital stock of, or any
other proprietary interest in, any Person that is not a Subsidiary. Upon
consummation of the transactions contemplated hereby, assuming all of the
Securities offered hereunder have been issued and are outstanding, the
Securities shall represent, on a fully diluted basis, approximately 42% of the
Company's outstanding capital stock, which does not include the Available
Unissued Stock Option Pool but does include the Warrants issuable to SCO
Securities (the "SCO WARRANTS") in connection with this Offering. The Company
has not adopted a stockholders rights plan, poison pill or similar arrangement.
The consummation of the transactions contemplated by this Agreement will not
accelerate the vesting schedule of any of the Company's outstanding options or
warrants. For purposes of the foregoing, "FULLY DILUTED" means: (i) all shares
of Company capital stock outstanding immediately following the Final Closing;
(ii) all securities, including options and warrants, convertible into or
exercisable for shares of Company capital stock, as if exercised and converted
to the fullest extent of their terms; (iii) all securities issuable pursuant to
contractual or other obligations of the Company existing at the Final Closing;
and (iv) all shares of Company capital stock reserved for issuance to employees,
consultants or directors of the Company or other Persons not including the
securities described in clause (ii). "FULLY DILUTED" does not include the
Available Unissued Stock Option Pool.
SCHEDULE 6.2 sets forth, as of the Closing Date, a true and complete
list of each of the Subsidiaries of the Company. The Company owns all of the
issued and outstanding capital stock of the Subsidiaries, free and clear of all
Liens. All of such shares of capital stock are duly authorized, validly issued,
fully paid and non-assessable, and were issued in compliance with the
registration and qualification requirements of all applicable federal, state and
foreign securities laws. Except as set forth on SCHEDULE 6.2, there are no
options, warrants, conversion privileges, subscription or purchase rights or
other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued, unauthorized or treasury shares of capital stock or
other securities of, or any proprietary interest in, any of the Subsidiaries,
and there is no outstanding security of any kind convertible into or
exchangeable for such shares or proprietary interest. Other than Pathagon, none
of the Subsidiaries conducts any material business or operations, owns any
material assets or is liable for any material Liabilities.
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"SUBSIDIARIES" means, as of the relevant date of determination, with
respect to any Person, a corporation or other Person of which 50% or more of the
voting power of the outstanding voting equity securities or 50% or more of the
outstanding economic equity interest is held, directly or indirectly, by such
Person. Unless otherwise qualified, or the context otherwise requires, all
references to a "SUBSIDIARY" or to "SUBSIDIARIES" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.
6.3 CORPORATE POWER, AUTHORIZATION; ENFORCEABILITY. The Company
has full corporate power and authority to execute, deliver and enter into this
Agreement, the Certificate of Designations, the Registration Rights Agreement
and the Warrants (collectively, the "TRANSACTION DOCUMENTS") and to consummate
the transactions contemplated hereby and thereby. All action on the part of the
Company, its directors or stockholders necessary for the authorization,
execution, delivery and performance of the Transaction Documents by the Company,
the authorization, sale, issuance and delivery of the Securities contemplated
hereby and the performance of the Company's obligations hereunder and thereunder
has been taken. The Securities to be purchased on each Closing Date and the
shares of Common Stock issuable upon the conversion of the Series A Preferred
Stock and the exercise of the Warrants have been duly authorized and, when
issued in accordance with this Agreement, the Certificate of Designations and
the Warrants, as the case may be, will be validly issued, fully paid and
nonassessable and will be free and clear of any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority, right or other security interest or preferential arrangement of any
kind or nature whatsoever (excluding preferred stock and equity related
preferences) (collectively, "LIENS") imposed by or through the Company other
than restrictions imposed by this Agreement, the Certificate of Designations,
the Warrants and the Registration Rights Agreement, as the case may be, and
applicable securities laws. Except as set forth in SCHEDULE 6.2, no preemptive
or other rights to subscribe for or purchase equity securities of the Company
exists with respect to the issuance and sale of the Securities or the shares of
Common Stock issuable upon conversion of the Series A Preferred Stock or
exercise of the Warrants. 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 terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
6.4 FINANCIAL STATEMENTS AND COMMISSION FILINGS; UNDISCLOSED
LIABILITIES. (a) Included in the Company's Form 10-KSB/A for the year ended June
30, 2001 (the "2001 10-KSB") are true and complete copies of the audited
consolidated balance sheet (the "BALANCE SHEET") of the Company as of June 30,
2001, and the related audited consolidated statements of operations, and cash
flows for the years ended June 30, 2001, June 30, 2000 and the period from
August 16, 1996 through June 30, 2001; and the related audited consolidated
statements of stockholders' equity (deficit) for the period from August 16, 1996
through June 30, 2001 (the "FINANCIAL STATEMENTS"), accompanied by the report of
each of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Ernst & Young LLP. As of their respective dates,
the Financial Statements complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Securities and Exchange Commission (the "COMMISSION") with respect thereto.
The Financial Statements have been prepared in accordance with U.S. generally
accepted accounting principles ("GAAP"), consistently applied, during the
periods involved (except in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the consolidated financial position of
the Company as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). The Company keeps proper
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accounting records in which all material assets and liabilities and all material
transactions of the Company are recorded in conformity with GAAP.
(b) Except as set forth on SCHEDULE 6.4(B), since June 30, 2001,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") (all of the foregoing, including, but not limited to, the 2001
10-KSB, filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "COMMISSION DOCUMENTS")
and all such Commission Documents were filed within the time periods specified
in the Exchange Act. As of their respective filing dates, each Commission
Document complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder applicable to the Commission Documents, and no
Commission Document contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, subject to the planned restatement of certain quarterly
reports in fiscal year 2001 as disclosed by the Company in the press release
announcing its fiscal year 2001 results. As of their respective filing dates,
the financial statements of the Company included in the Commission Documents
complied as to form in all material respects with then applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, were prepared in accordance with GAAP and as of their
respective dates, fairly presented in all material respects the consolidated
financial position of the Company and the results of its operations as of the
time and for the periods indicated therein (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by Form
10-QSB, and Regulations S-B and S-X of the Commission), subject to the planned
restatement of certain quarterly reports in fiscal year 2001 as disclosed by the
Company in the press release announcing its fiscal year 2001 results.
(c) Since June 30, 2001, the Company has not incurred any
liabilities or obligations of any nature, whether or not accrued, absolute,
contingent or otherwise ("LIABILITIES"), other than liabilities (i) disclosed in
the Commission Documents filed prior to the date of this Agreement, (ii)
adequately provided for in the Balance Sheet or disclosed in any related notes
thereto, (iii) incurred in connection with this Agreement, or (iv) incurred in
the ordinary course of business.
6.5 NO MATERIAL ADVERSE CHANGES. Since June 30, 2001, except as
disclosed in the Commission Documents filed subsequent to that date, there has
not been any material adverse change in the business, financial condition or
operating results of the Company.
6.6 ABSENCE OF CERTAIN DEVELOPMENTS. Except as contemplated by
this Agreement and the Commission Documents, since June 30, 2001, through the
date immediately preceding each Closing Date, the Company has not (a) issued any
stock, options, bonds or other corporate securities other than as reflected in
Section 6.2 hereof, (b) borrowed any amount or incurred or became subject to any
Liabilities (absolute, accrued or contingent), other than current Liabilities
incurred in the ordinary course of business and Liabilities under contracts
entered into in the ordinary course of business, (c) discharged or satisfied any
material Lien or adverse claim or paid any obligation or Liability (absolute,
accrued or contingent), other than current Liabilities shown on the Balance
Sheet and current Liabilities incurred in the ordinary course of business, (d)
declared or made any payment or distribution of cash or other property to the
stockholders of the Company or purchased or redeemed any securities of the
Company, (e) mortgaged, pledged or subjected to any material Lien or adverse
claim any of its properties or assets, except for Liens for taxes not yet due
and payable or otherwise in the ordinary course of business, (f) sold, assigned
or transferred any of its assets, tangible or intangible, except in the ordinary
course of business or in an
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amount less than $250,000, (g) suffered any extraordinary losses or waived any
rights of material value other than in the ordinary course of business, (h) made
any capital expenditures or commitments therefor other than in the ordinary
course of business or in an amount less than $250,000, (i) entered into any
other transaction other than in the ordinary course of business in an amount
less than $250,000 or entered into any material transaction, whether or not in
the ordinary course of business, (j) made any charitable contributions or
pledges, (k) suffered any damages, destruction or casualty loss, whether or not
covered by insurance, affecting any of the properties or assets of the Company
or any other properties or assets of the Company which could, individually or in
the aggregate, have or result in a Material Adverse Effect, (l) made any
material change in the nature or operations of the business of the Company, (m)
participated in any transaction that would have a Material Adverse Effect or
otherwise acted outside the ordinary course of business, (n) the Company has not
increased the compensation of any of its officers or the rate of pay of any of
its employees, except as part of regular compensation increases in the ordinary
course of business, (o) subject to the planned restatement of certain quarterly
reports in fiscal year 2001 as disclosed by the Company in the press release
announcing its fiscal year 2001 results, effected any material change in the
accounting principles or practice of the Company except as required by reason of
a change in GAAP or (p) entered into any agreement or commitment to do any of
the foregoing.
6.7 NO CONFLICT; GOVERNMENTAL CONSENTS. (a) The execution and
delivery by the Company of this Agreement, the Registration Rights Agreement and
the Warrant and the consummation of the transactions contemplated hereby and
thereby will not (i) result in the violation of any provision of the Certificate
of Incorporation or By-laws or other organizational documents of the Company,
(ii) result in any violation of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or Governmental Authority to or by
which the Company is bound, or (iii) conflict with, or result in a breach or
violation of, any of the terms or provisions of, or constitute (with due notice
or lapse of time or both) a default under, any bond, debenture, note or other
evidence of indebtedness, or any material lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument to
which the Company is a party or by which it or its property is bound, nor result
in the creation or imposition of any Lien upon any of the properties or assets
of the Company, except for, in the case of clauses (ii) and (iii) of this
subsection 6.7(a), any violation, conflict, breach or default which would not
have a Material Adverse Effect.
(b) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other Governmental Authority or Person,
and no lapse of any waiting period under any Requirements of Law, remains to be
obtained (or lapsed) or is otherwise required to be obtained by the Company in
connection with the authorization, execution and delivery of this Agreement, the
Registration Rights Agreement and the Warrant or the consummation of the
transactions contemplated hereby or thereby, including, without limitation the
issue and sale of the Securities and the shares of Common Stock underlying such
Securities, except filings as may be required to be made by the Company after
each Closing with (i) the Commission, (ii) the National Association of
Securities Dealers, Inc. ("NASD"), (iii) the Nasdaq Stock Market, Inc. and (iv)
state blue sky or other securities regulatory authorities. For purposes of this
Agreement, "REQUIREMENTS OF LAW" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing (each, a "GOVERNMENTAL AUTHORITY") or stock exchange, in each case
applicable or binding upon such Person or any of its property or to which such
Person or any of its property is subject or pertaining to any or all of the
transactions contemplated or referred to herein.
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6.8 LITIGATION. Except as set forth in the Commission Documents,
there are no claims, actions, suits, investigations or proceedings pending or,
to the Company's knowledge, threatened proceedings against the Company or its
respective assets, at law or in equity, by or before any Governmental Authority,
or by or on behalf of any third party, except for any claim, action, suit,
investigation or proceeding which would not have a Material Adverse Effect nor
does the Company have knowledge that there is any reasonable basis for any of
the foregoing. There are no claims, actions, suits, investigations or
proceedings pending or, to the Company's knowledge, threatened proceedings
against the Company contesting the right of the Company to use, sell, import,
license, or make available to any Person any of the Company's products or
services currently or previously sold, offered, licensed or made available to
any Person or used by the Company or opposing or attempting to cancel any of the
Company's Intellectual Property rights, except for any claim, action, suit,
investigation or proceeding which would not have a Material Adverse Effect.
6.9 COMPLIANCE WITH LAWS; NO DEFAULT OR VIOLATION; CONTRACTS. The
Company is in compliance in all material respects with all Requirements of Law
and all orders issued by any court or Governmental Authority against the Company
in all material respects. To the Company's knowledge, there is no existing or
currently proposed Requirement of Law which could reasonably be expected to
prohibit or restrict the Company from, or otherwise materially adversely affect
the Company in, conducting its business in any jurisdiction in which it now
conducts or proposes to conduct such business. The Company has all material
licenses, permits and approvals of any Governmental Authority (collectively,
"PERMITS") that are necessary for the conduct of the business of the Company;
(ii) such Permits are in full force and effect; and (iii) no violations are or
have been recorded in respect of any Permit. No material expenditure is
presently required by the Company to comply with any existing Requirements of
Law or order. Except as would not be reasonably expected to have a Material
Adverse Effect, the Company is not (i) in default under or in violation of any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party of by which it or any of its properties is bound or (ii) in
violation of any order, decree or judgment of any court, arbitrator or other
Governmental Authority. The contracts described in the Commission Documents or
incorporated by reference therein that are material to the Company
(collectively, the "CONTRACTUAL OBLIGATIONS") are in full force and effect on
the date hereof, and neither the Company nor, to the Company's knowledge, any
other party to such contracts is in breach of or default under any of such
contracts nor, to the Company's knowledge, does any condition exist that with
notice or lapse of time or both would constitute a default by such other party
thereunder. The Company has not received notice of a default and is not in
default under, or with respect to, any Contractual Obligation nor, to the
Company's knowledge, does any condition exist that with notice or lapse of time
or both would constitute a default thereunder. All of such Contractual
Obligations are valid, subsisting, in full force and effect and binding upon the
Company and, to the Company's knowledge, the other parties thereto, and the
Company has paid in full or accrued all amounts due thereunder and has satisfied
in full or provided for all of its liabilities and obligations thereunder.
Without limiting the foregoing, the Company has provided to the Purchasers true
and correct copies, as in effect on the date hereof, of that certain (i)
Co-Development Agreement (including all amendments, waivers, consents and other
documents relating thereto), dated August 31, 1998, among the Company and
Southern Research Institute, and (ii) Co-Development Agreement (including all
amendments, waivers, consents and other documents relating thereto), March 12,
2001, among the Company and Ilex (collectively, the "CO-DEVELOPMENT
AGREEMENTS"), and there exists no violation, breach, event of default or event
that, but for the giving of notice or the lapse of time or both, would
constitute an event of default thereunder, and the Company has no knowledge that
any Person is terminating or may seek to terminate or challenge the terms of, or
rights set forth in, either of the Co-Development Agreements.
6.10 INSURANCE. The Company maintains and will continue to maintain
insurance of the types and in the amounts that the Company reasonably believes
is adequate for its business, including, but not
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limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
6.11 ENVIRONMENTAL MATTERS. The Company is in compliance, in all
material respects, with all applicable Environmental Laws. There is no civil,
criminal or administrative judgment, action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter pending
or, to the Company's knowledge, threatened against the Company pursuant to
Environmental Laws. To the Company's knowledge, there are no past or present
events, conditions, circumstances, activities, practices, incidents, agreements,
actions or plans which could reasonably be expected to prevent compliance with,
or which have given rise to or will give rise to liability which would have a
Material Adverse Effect, under Environmental Laws. For purposes of the
foregoing, "ENVIRONMENTAL LAWS" means federal, state, local and foreign laws,
principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees, judgments or injunctions, issued, promulgated, approved or
entered thereunder relating to pollution, protection of the environment or
public health and safety.
6.12 TAXES. The Company has paid or caused to be paid, or has
established reserves in accordance with GAAP for all Tax liabilities applicable
to the Company for all fiscal years that have not been examined and reported on
by the taxing authorities (or closed by applicable statutes). No additional Tax
assessment against the Company has been heretofore proposed or, to the Company's
knowledge, threatened by any Governmental Authority for which provision has not
been made on its balance sheet.
No tax audit is currently in progress and there is no unassessed
deficiency proposed or, to the Company's knowledge, threatened against the
Company. The Company has no knowledge of any change in the rates or basis of
assessment of any Tax (other than federal income tax), of the Company which
would reasonably be expected to have a Material Adverse Effect. The Company has
not agreed to or is required to make any adjustments under section 481 of the
Code by reason of a change of accounting method or otherwise. None of the assets
of the Company is required to be treated as being owned by any Person, other
than the Company or any of its subsidiaries, pursuant to the "safe harbor"
leasing provisions of Section 168(f)(8) of the Code. The company is not a
"United States real property holding corporation" (a "USRPHC") as that term is
defined in Section 897(c)(2) of the Code and the regulations promulgated
thereunder.
For purposes of this Agreement, "CODE" means the Internal Revenue Code
of 1986, as amended, and "TAXES" means any federal, state, provincial, county,
local, foreign and other taxes (including, without limitation, income, profits,
windfall profits, alternative, minimum, accumulated earnings, personal holding
company, capital stock, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll and property taxes,
import duties and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.
6.13 INTELLECTUAL PROPERTY.
(a) "INTELLECTUAL PROPERTY" shall mean all of the following as
they are necessary in connection with the business of the Company as presently
conducted and as they exist in all jurisdictions throughout the world, in each
case, to the extent owned by or licensed to the Company: (i) patents, patent
applications and inventions, designs and improvements described and claimed
therein, patentable inventions and other patent rights (including any divisions,
continuations, continuations-in-part, reissues,
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reexaminations, or interferences thereof, whether or not patents are issued on
any such applications and whether or not any such applications are modified,
withdrawn, or resubmitted) ("PATENTS"); (ii) trademarks, service marks, trade
dress, trade names, brand names, designs, logos, or corporate names, whether
registered or unregistered, and all registrations and applications for
registration thereof ("TRADEMARKS"); (iii) copyrights and mask works, including
all renewals and extensions thereof, copyright registrations and applications
for registration thereof, and non-registered copyrights ("COPYRIGHTS"); (iv)
trade secrets, inventions, know-how, process technology, databases, confidential
business information, customer lists, technical data and other proprietary
information and rights ("TRADE Secrets"); (v) computer software programs,
including, without limitation, all source code, object code, and documentation
related thereto ("SOFTWARE"); (vi) Internet addresses, domain names, web sites,
web pages and similar rights and items ("INTERNET ASSETS"); and (vii) all
licenses, sublicenses and other agreements or permissions including the right to
receive royalties, or any other consideration related to the property described
in (i)-(vi). The Intellectual Property contains all of the intellectual property
necessary to operate the business of the Company as currently conducted.
(b) The Company exclusively owns (or otherwise has the right to
use the Intellectual Property pursuant to a valid license, sublicense or other
agreement), free and clear of all Liens, and has the unrestricted right (subject
to any such license terms, if applicable) to use, sell, license, or sublicense
all Intellectual Property.
(c) SCHEDULE 6.13(C) sets forth all issued Patents, registrations,
filings and applications for any Patents, Trademarks and Copyrights filed by the
Company, specifying as to each item, as applicable: the title; the
jurisdiction(s) in which the item is issued or registered or in which an
application for issuance or registration has been filed; and the issuance,
registration, or application numbers and dates.
(d) SCHEDULE 6.13(D) sets forth all material licenses,
sublicenses, distributor agreements and other agreements or permissions ("IP
LICENSES") under which the Company is a (i) licensor, or (ii) licensee,
distributor, or reseller, except such licenses, sublicenses and other agreements
relating to off-the-shelf software which is commercially available on a retail
basis for less than $200 per license and $5,000 in the aggregate and used solely
on the computers of the Company ("OFF-THE-SHELF SOFTWARE"). To the knowledge of
the Company, all of the IP Licenses are valid, enforceable, and in full force
and effect, and, with respect to the Company, will continue to be on identical
terms immediately following the completion of the transactions contemplated by
this Agreement.
(e) All products made, used or sold by the Company under the
Patents have been marked with the proper patent notice.
(f) All products and materials made, used or sold by the Company
containing Trademarks bear the proper federal registration notice where
permitted by law.
(g) All works encompassed by the Copyrights and used by the
Company have been marked with the proper copyright notice.
(h) To the Company's knowledge, upon reasonable inquiry in
accordance with sound business practice and business judgment, all the Company's
Intellectual Property rights are valid and enforceable. The Company has taken
all reasonably necessary actions to maintain and protect each item of
Intellectual Property owned by the Company.
(i) The Company has taken all reasonable precautions to protect
the secrecy, confidentiality, and value of its Trade Secrets and the proprietary
nature and value of its Intellectual Property. To the best
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of the Company's knowledge, none of the Trade Secrets, wherever located, the
value of which is contingent upon maintenance of confidentiality thereof, have
been disclosed to any employee, representative or agent of the Company or any
other person not obligated to maintain such Trade Secret in confidence pursuant
to a confidentiality agreement entered into with the Company, except as required
pursuant to the filing of a patent application by the Company.
(j) The Company is diligently prosecuting all Patent applications
it has filed, as instructed by patent counsel. The Company is diligently filing
and preparing to file Patent applications for all inventions in a manner and
within a sufficient time period to avoid statutory disqualification of any
potential Patent application.
(k) Each present or past employee, officer, consultant or any
other person who developed any part of any Company product or any Intellectual
Property that is or will be made, used or sold by the Company has executed a
valid and enforceable Confidentiality Agreement with the Company.
(l) Unless otherwise disclosed by the Company or pursuant to a
current license, it is not necessary for the Company's business to use any
Intellectual Property owned by any present or past director, officer, employee
or consultant of the Company (or persons the Company presently intends to hire).
Except as set forth on SCHEDULE 6.13(L), to the knowledge of the Company, at no
time during the conception or reduction to practice of any of the Company's
Intellectual Property was any developer, inventor or other contributor to such
Intellectual Property operating under any grants from any Governmental Authority
or subject to any employment agreement, invention and assignment, nondisclosure
agreement or other Contractual Obligation with any Person that could adversely
affect the Company's rights to its Intellectual Property.
(m) To the knowledge of the Company, upon reasonable inquiry in
accordance with sound business practice and business judgment, none of the
Intellectual Property, products or services owned, used, developed, provided,
sold or licensed by the Company, or made for, used or sold by or licensed to the
Company by any person infringes upon or otherwise violates any Intellectual
Property rights of others.
(n) To the knowledge of the Company, upon reasonable inquiry in
accordance with sound business practice and business judgment, no Person is
infringing upon or otherwise violating the Intellectual Property rights of the
Company.
6.14 EMPLOYEE BENEFIT PLANS.
(a) Neither the Company nor any entity which is or was under
common control within the meaning of Section 414(b), (c), (m) or (o) of the Code
maintains or contributes to, or has within the preceding six years maintained or
contributed to, or may have any liability with respect to any employee benefit
plan subject to Title IV of Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 412 of the Code or any "multiple employer plan"
within the meaning of the Code or ERISA. Each employee benefit plan,
arrangement, policy, program, agreement or commitment which the Company
maintains, contributes to or may have any liability in respect to (each, a
"PLAN") has been established and administered in accordance with its terms, and
complies in form and in operation with the applicable requirements of ERISA, the
Code and other applicable Requirements of Law. No claim with respect to the
administration or the investment of the assets of any Plan (other than routine
claims for benefits) is pending. No event has occurred in connection with which
the Company or any Plan, directly or indirectly, could be subject to any
material liability under ERISA, the Code or any other law, regulation or
governmental order applicable to any Plan, or under any agreement, instrument,
statute, rule
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of law or regulation pursuant to or under which the Company has agreed to
indemnify any person against liability incurred under, or for a violation or
failure to satisfy the requirement of, any such statute, regulation or order.
The Company has no liability, whether absolute or contingent, including any
obligations under any Plan, with respect to any misclassification of any person
as an independent contractor rather than as an employee.
(b) The Company does not have any obligations to provide or any
direct or indirect liability, whether contingent or otherwise, with respect to
the provision of health or death benefits to or in respect of any former
employee, except as may be required pursuant to Section 4980B of the Code and
the corresponding provisions of ERISA and the cost of which are fully paid by
such former employees.
(c) There are no unfunded obligations under any Plan which are not
fully reflected on the Financial Statements.
6.15 FDA MATTERS. After due investigation, (i) the Company
currently has no reasonable basis to believe that any Governmental Authority,
including, but not limited to, the United States Food and Drug Administration
(the "FDA"), will ultimately prohibit the marketing, sale, license or use in the
United States or elsewhere of any product developed, produced or marketed by the
Company or with third parties (including, without limitation, Ilex) (each, a
"PRODUCT"), (ii) the Company knows of no product or process which the FDA has
prohibited from being marketed or used in the United States which in function
and composition is substantially similar to any Product, (iii) the Company has
no Product on clinical hold nor any reason to expect that any Product is likely
to be placed on clinical hold, (iv) the Company has disclosed to the Purchaser
all submissions to the FDA made by the Company and the FDA responses (and other
material correspondence received from or submitted to the FDA by the Company),
including, but not limited to, all FDA warning letters, regulatory letters and
notice of adverse finding letters and the relevant responses, received by the
Company or any agent thereof relative to the development of its Products, (v)
none of the Company or, to the Company's knowledge, its employees, its
Affiliates or its agents, has ever been sanctioned, formally or otherwise, by
the FDA, and (vi) there has not been any suspensions or debarments by the FDA or
other federal departments and state regulatory bodies against the Company or, to
the Company's knowledge, any current or former employees of the Company.
6.16 INVESTMENT COMPANY. The Company is not an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.
6.17 COMPLIANCE. The Common Stock is registered pursuant to Section
12(g) of the Exchange Act, and is listed on the OTC bulletin board, and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the OTC bulletin board. The Company has complied
with all requirements with respect to the issuance of the Purchased Shares and
the listing thereof on the OTC bulletin board. The Company has not taken and
will not, in violation of applicable law, take, any action outside the ordinary
course of business designed to or that might reasonably be expected to cause or
result in unlawful manipulation of the price of the Common Stock to facilitate
the sale or resale of the Purchased Shares.
6.18 PRIVATE OFFERINGS. Assuming the truth of each Purchaser's
representations and acknowledgments contained in Section 5 hereof, neither the
Company nor any Person acting on its behalf (other than the Purchasers, as to
whom the Company makes no representations) has offered or sold the Securities by
means of any general solicitation or general advertising within the meaning of
Rule 502(c)
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under the Securities Act. The Company has not sold the Securities to anyone
other than the subscribers to this Agreement. Each Security shall bear
substantially the same legend set forth in Section 8 hereof for at least so long
as required by the Securities Act.
6.19 BROKER'S OR FINDER'S COMMISSIONS. Except as set forth on
SCHEDULE 6.19, no finder, broker, agent, financial person or other intermediary
has acted on behalf of the Company in connection with the sale of the Securities
by the Company or the consummation of this Agreement or any of the transactions
contemplated hereby. The Company has not had any direct or indirect contact with
any other investment banking firm (or similar firm) with respect to the offer of
the Securities by the Company to the Purchasers or the Purchasers' subscriptions
for the Securities.
6.20 DISCLOSURE. The Transaction Documents do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading. The Company does not
have any knowledge of any fact that has specific application to the Company
(other than general economic or industry conditions) and that can reasonably be
foreseen to cause a Material Adverse Effect that has not been set forth in the
Transaction Documents or the Commission Documents.
The Company certifies that each of the foregoing representations and
warranties by the Company sets forth in this Section 6 are true as of the date
hereof and shall survive such date as contemplated in Section 7.1.
7. INDEMNIFICATION.
7.1 The Company agrees to indemnify and hold harmless the
Purchasers, their affiliates and each of their respective directors, officers,
general and limited partners, principals, agents and attorneys (individually, an
"INDEMNIFIED PARTY" and collectively, the "INDEMNIFIED PARTIES") from and
against any and all losses, claims, damages, Liabilities, costs (including
reasonable attorneys' fees) and expenses (collectively, "LOSSES") to which any
Indemnified Party may become subject, insofar as such Losses arise out of, in
any way relate to, or result from (i) any breach of any representation or
warranty made by the Company contained in or made pursuant to this Agreement, or
(ii) the failure of the Company to fulfill any agreement or covenant contained
in or made pursuant to this Agreement. All of the representations and warranties
of the Company made herein shall survive the execution and delivery of this
Agreement until the date that is ninety (90) days after the filing by the
Company with the Commission of audited financial statements of the Company for
the fiscal year ending June 30, 2003 (or, if such fiscal year changes and no
such audited consolidated financial statements are available, then the successor
fiscal year), except for (a) Sections 6.1 (Organization, Good Standing and
Qualification), 6.2 (Capitalization), 6.3 (Corporate Power, Authorization;
Enforceability), 6.18 (Private Offerings) and 6.19 (Broker's or Finder's
Commission), which representations and warranties shall survive indefinitely (or
if indefinite survival is not permitted by law, then for the maximum period
permitted by applicable law), (b) Section 6.12 (Taxes), which representation and
warranty shall survive until the later to occur of (i) the lapse of the statute
of limitations with respect to the assessment of any tax to which such
representation and warranty relates (including any extensions or waivers
thereof) and (ii) sixty (60) days after the final administrative or judicial
determination of the Taxes to which such representation and warranty relates,
and no claim with respect to Section 6.12 may be asserted thereafter with the
exception of claims arising out of any fact, circumstance, action or proceeding
to which the party asserting such claim shall have given notice to the other
parties to this Agreement prior to the termination of such period of reasonable
belief that a tax liability will subsequently arise therefrom, and (c) Section
6.11 (Environmental Matters), which representation and warranty shall survive
until the lapse of the applicable statute of limitations. Except as set forth
herein, all of the covenants, agreements and obligations of the parties hereto
shall survive the
-17-
Final Closing indefinitely (or if indefinite survival is not permitted by law,
then for the maximum period permitted by applicable law).
7.2 Promptly after receipt by an Indemnified Party under Section
7.1 of notice of any claim as to which indemnity may be sought, including,
without limitation, the commencement of any action or proceeding, the
Indemnified Party will, if a claim in respect thereof may be made against the
indemnifying party under this Section, promptly notify the indemnifying party in
writing of the commencement thereof; provided that the failure of the
Indemnified Party to so notify the indemnifying party will not relieve the
indemnifying party from its obligations under this Section unless, and only to
the extent that, such omission results in the indemnifying party's forfeiture of
substantive rights or defenses or being materially prejudiced by the Indemnified
Person's failure to give such notice. In case any action or proceeding is
brought against any Indemnified Party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to assume the
defense thereof at its own expense, with counsel satisfactory to such
Indemnified Party in its reasonable approval (which approval will not be
withheld or delayed unreasonably); provided, however, that any Indemnified Party
may, at its own expense, retain separate counsel to participate in such defense
at its own expense. After notice from the indemnifying party to the Indemnified
Party of its election to so assume the defense thereof, the indemnifying party
will not be Liable to the Indemnified Party under that Section 7 for any legal
or any other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof (other than reasonable costs of
investigation) unless incurred at the written request of the indemnifying party.
Notwithstanding the above, the Indemnified Party will have the right to employ
counsel of its own choice in any action or proceeding (and be reimbursed by the
indemnifying party for the reasonable fees and expenses of the counsel and other
reasonable costs of the defense) if, in the written opinion of such Indemnified
Party's counsel, representation of the Indemnified Party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests or conflicts between the Indemnified Party and any other
party represented by the counsel in the action; PROVIDED, HOWEVER, that the
indemnifying party will not in connection with any one action or proceeding or
separate but substantially similar actions or proceedings arising out of the
same general allegations, be Liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for all Indemnified Parties,
except to the extent that local counsel, in addition to regular counsel, is
required in order to effectively defend against the action or proceeding. An
indemnifying party will not be Liable to any Indemnified Party for any
settlement or entry of judgment concerning any action or proceeding effected
without the consent of the indemnifying party, which consent shall not be
unreasonably withheld. The indemnifying party agrees that it will not, without
the prior written consent of the Indemnified Party, settle, compromise or
consent to the entry of any judgment in any pending or threatened claim relating
to the matters contemplated hereby (if any Indemnified Party is a party thereto
or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising or that may arise out of such
claim. The rights accorded to an Indemnified Party hereunder shall be in
addition to any rights that any Indemnified Party may have at common law, by
separate agreement or otherwise; PROVIDED, HOWEVER, that notwithstanding the
foregoing or anything to the contrary contained in this Agreement, (a) nothing
in this Section 7 shall restrict or limit any rights that any Indemnified Party
may have to seek equitable relief and (b) this Section 7 shall be the sole
remedy for any breach of the Company's representations and warranties contained
in Section 6 except with respect to claims arising out of fraud or willful
misconduct.
8. COVENANTS.
8.1 OBSERVATION RIGHTS. At any time Perseus-▇▇▇▇▇
BioPharmaceutical Fund, LP ("PERSEUS-▇▇▇▇▇") and its Affiliates (as such term is
defined in Rule 405 of the Securities Act) are not represented on
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the Board pursuant to Section 3.7, so long as Perseus-▇▇▇▇▇ owns at least 25% of
the shares of the Series A Preferred Stock acquired by it on the date hereof or
10% of the outstanding shares of Common Stock on an "as-converted basis,"
Perseus-▇▇▇▇▇ shall have the right to (a) appoint a non-voting representative
(the "OBSERVER") to attend meetings of the Board, to change the non-voting
representative so appointed at any time and, upon the resignation of such
representative for any reason, to reappoint such a representative, if and for so
long as Perseus-▇▇▇▇▇ does not have a representative on the Board; (b) make
proposals, recommendations and suggestions to the Company's officers and
directors relating to the business and affairs of the Company at such reasonable
times as may be requested by Perseus-▇▇▇▇▇ but in no event shall the Company be
required to accept such proposals, recommendations or suggestions; (c) discuss
the Company's business and affairs with the Company's officers, directors and
independent accountants at such reasonable times as may be requested by
Perseus-▇▇▇▇▇; (d) have access to such other information relating to the affairs
of the Company as Perseus-▇▇▇▇▇ may reasonably request; and (e) have access to
the properties and facilities of the Company at such reasonable times as may be
requested by Perseus-▇▇▇▇▇. In addition, the Company shall provide Perseus-▇▇▇▇▇
with a copy of any materials to be distributed or discussed at such meetings at
the same time as provided to members of the Board. The Observer may be excluded
from any meeting or portion thereof and Perseus-▇▇▇▇▇ may be excluded from
access to certain information and the properties and facilities of the Company
if and to the extent a majority of the Board reasonably determines in good faith
that such Observer's attendance at such meeting or portion thereof or
Perseus-▇▇▇▇▇'▇ receipt of such information or access to the properties and
facilities of the Company would adversely affect the attorney-client privilege
between the Company and its counsel, involve a conflict of interest between the
Company and Perseus-▇▇▇▇▇ with respect to a material issue for the Company or
might violate any requirement of law, contract or confidentiality by which the
Company is bound. To the extent the information is non-public, Perseus-▇▇▇▇▇
covenants and agrees that it will not divulge such confidential information
until such time as such information (1) is or becomes generally available to the
public other than as a result of a disclosure by Perseus-▇▇▇▇▇ or its affiliates
or their respective representatives, (2) was within Perseus-▇▇▇▇▇'▇ possession
prior to its being furnished to Perseus-▇▇▇▇▇ by or on behalf of the Company
pursuant hereto, provided that the source of such information was not bound by a
non-disclosure or confidentiality agreement with respect to such information, or
(3) becomes available to Perseus-▇▇▇▇▇ on a non-confidential basis from a source
other than the Company or any of its representatives, provided that such source
is not bound by a non-disclosure or confidentiality agreement with the Company
with respect to such information or is not otherwise prohibited from
transmitting the information to Perseus-▇▇▇▇▇. If Perseus-▇▇▇▇▇ becomes legally
obligated to disclose confidential information by any governmental entity with
jurisdiction over it or pursuant to any proceeding (by oral questions,
interrogations, requests for information or documents, subpoena, civil
investigative demand or similar process) (each a "PROCEEDING"), Perseus-▇▇▇▇▇
will give the Company prompt written notice to allow the Company to seek a
protective order or other appropriate remedy. Such notice must include, without
limitation, identification of the information to be so disclosed and a copy of
the order (to the extent not prohibited in connection with any such Proceeding).
Perseus-▇▇▇▇▇ will disclose only such information as is legally required and
will use commercially reasonable efforts to obtain confidential treatment for
any confidential information that is so disclosed. Any such disclosure shall not
be in violation of this Section 8.1.
8.2 USE OF PROCEEDS. The Company will use the proceeds from this
Offering to continue the clinical development of clofarabine and trilostane; to
market and sell clofarabine and trilostane; and for general corporate purposes
and working capital.
8.2 BUSINESS DEVELOPMENT. As soon as practicable after the Final
Closing, the Company shall use commercially reasonable efforts to: (a) create
and implement an annual budget, approved by the Board, (b) hire additional
personnel where necessary; and (c) obtain appropriate product liability
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insurance to cover all risks associated with the Company's business that are
customarily insured against in the industry in such amounts as are customary in
the industry.
8.3 EXPENSES. The Company shall pay the reasonable direct expenses
of Perseus-▇▇▇▇▇ (or its designee) which may be incurred in connection with
their due diligence review and the negotiation, execution and delivery of this
Agreement, the Registration Rights Agreement and all other agreements relating
to the transactions contemplated hereby, including, but not limited to, legal
fees and expenses; provided, however, such fees and expenses to be reimbursed by
the Company are not to exceed $50,000 in the aggregate without the prior
approval of the Company.
8.4 CONDUCT OF THE COMPANY'S BUSINESS. Except as contemplated by
this Agreement, during the period from the date hereof to the Final Closing
Date, the Company will conduct its business and operations solely in the
ordinary course of business consistent with past practice and use reasonable
commercial efforts to keep available the services of its officers and employees
and preserve its current relationships with customers, suppliers, licensors,
creditors and others having business dealings with it.
8.5 REASONABLE BEST EFFORTS. Subject to the terms and conditions
of this Agreement, each of the parties hereto will use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement at the
earliest practicable date.
8.6 LIABILITY INSURANCE. Promptly following the Initial Closing,
the Company shall purchase officers' and directors' liability insurance in an
amount customary for a company of comparable size and in a comparable business
as the Company and reasonably satisfactory to Perseus-▇▇▇▇▇.
8.7 TAX MATTERS.
(a) The parties hereto agree and acknowledge that (i) no party
hereto will treat the Series A Preferred Stock as "preferred stock" within the
meaning of Section 305 of the Code (the "REPORTING AGREEMENT") unless otherwise
required by a change in law and (ii) no party hereto shall take any position
inconsistent with the Reporting Agreement upon examination of any Tax Return, in
any refund claim, in any litigation or otherwise.
(b) The Company covenants that it will use commercially reasonable
efforts not to become a USRPHC at any time while any Purchaser owns any of the
Series A Preferred Stock (or any Common Stock obtained upon a conversion of the
Series A Preferred Stock (the "CONVERSION STOCK")).
(c) In the event that a Purchaser desires to sell or dispose of
any of the Series A Preferred Stock or Conversion Stock, and upon demand by such
Purchaser, the Company agrees to deliver to such Purchaser a letter (the
"LETTER") which complies with Sections 1.1445-2(c)(3) and 1.897-2(h) of the
Treasury Regulations, addressed to such Purchaser, stating whether or not the
Company is a USRPHC. The Letter shall be delivered to the Purchaser one business
day prior to the close of any sale or disposition of the Series A Preferred
Stock or Conversion Stock by the Purchaser (the "DELIVERY DATE"). The Letter
shall be dated as of the Delivery Date and signed by a corporate officer who
must verify under penalties of perjury that the statement is correct to his
knowledge and belief pursuant to Section 1.897-2(h) of the Treasury Regulations.
9. FOR RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS.
-20-
THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
10. NO WAIVER.
Notwithstanding any of the representations, warranties, acknowledgments
or agreements made herein by the Purchasers, the Purchasers do not thereby or in
any manner waive any rights granted to the Purchasers under federal or state
securities laws.
11. MISCELLANEOUS.
11.1 NOTICES. Any notice or other communication given hereunder by
any party hereto to any other party hereto shall be in writing and delivered
personally or by facsimile transmission or sent by registered or certified mail
or by any express mail or overnight courier service, postage or fees prepaid:
If to the Company:
Bioenvision, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchasers:
To each Purchaser at such Purchaser's name and
address set forth on the signature page to this
Agreement
With a copy to:
SCO Securities LLC
1285 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Any notice that is delivered personally or by facsimile
transmission in the manner provided herein shall be deemed to have been duly
given to the party to whom it is directed upon actual receipt by such party or
its agent. Any notice that is addressed and mailed or sent by courier in the
manner herein provided shall be conclusively presumed to have been duly given to
the party to which it is addressed at the close of business, local time of the
recipient, on the fourth business day after the day it is so placed in the mail
or, if earlier, the time of actual receipt.
11.2 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
and inure to the benefit of the parties hereto and to their respective heirs,
legal representatives, successors and assigns, provided, that no party may
assign this Agreement without the prior written consent of the other party, such
consent not to be unreasonably withheld; provided, further, that a Purchaser may
assign this Agreement to its affiliates without consent; PROVIDED THAT any
transfer of Securities or shares of Common Stock underlying such Securities must
be in compliance with the Transaction Documents and all applicable law.
11.3 ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding among the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them; provided that any confidentiality agreement
between the Company and any Purchaser shall remain in effect. This Agreement may
be amended only by mutual written agreement of the Company and the Purchaser,
and the Company may take any action herein prohibited or omit to take any action
herein required to be performed by it, and any breach of any covenant,
agreement, warranty or representation may be waived, only if the Company has
obtained the written consent or waiver of the Purchasers purchasing a majority
of the Securities offered hereby.
11.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York with respect to
contracts made and to be fully performed therein, without regard to the
conflicts of laws principles thereof. The parties hereto hereby agree that any
suit or proceeding arising under this Agreement, or in connection with the
consummation of the transactions contemplated hereby, shall be brought solely in
a federal or state court located in the County of New York and State of New
York. By its execution hereof, both the Company and the Purchasers hereby
consent and irrevocably submit to the in personam jurisdiction of the federal
and state courts located in the County of New York and State of New York and
agree that any process in any suit or proceeding commenced in such courts under
this Agreement may be served upon it personally or by certified or registered
mail, return receipt requested, or by Federal Express or other courier service,
with the same force and effect as if personally served upon the applicable party
in New York and in the city or county in which such other court is located. The
parties hereto each waive any claim that any such jurisdiction is not a
convenient forum for any such suit or proceeding and any defense of lack of in
personam jurisdiction with respect thereto.
11.5 SEVERABILITY. The holding of any provision of this Agreement
to be invalid or unenforceable by a court of competent jurisdiction will not
affect any other provision of this Agreement, which will remain in full force
and effect. If any provision of this Agreement is declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the provision will be interpreted so as to remain enforceable
to the maximum extent permissible consistent with applicable law and the
remaining conditions and provisions or portions thereof will nevertheless remain
in full force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions will be deemed dependent upon any other covenant
or provision unless so expressed herein.
11.6 NO WAIVER. A waiver by either party of a breach of any
provision of this Agreement will not operate, or be construed, as a waiver of
any subsequent breach by that same party.
-22-
11.7 FURTHER ASSURANCES. The parties agree to execute and deliver
all further documents, agreements and instruments and take further action as may
be necessary or appropriate to carry out the purposes and intent of this
Agreement.
11.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which will
together constitute the same instrument.
11.9 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement
creates in any Person not a party to this Agreement any legal or equitable
right, remedy or claim under this Agreement, and this Agreement is for the
exclusive benefit of the parties hereto. The parties expressly recognize that
this Agreement is not intended to create a partnership, joint venture or other
similar arrangement between any of the parties or their respective affiliates.
11.10 HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
11.11 PUBLICITY RESTRICTIONS. Except as may be required by
applicable Requirements of Law, none of the parties hereto shall issue a
publicity release or public announcement or otherwise make any disclosure
concerning this Agreement, the transactions contemplated hereby without prior
approval by the other party hereto; provided that each Purchaser may disclose on
its worldwide web pages and its offering materials, if any, the name of the
Company, the name of the Chief Executive Officer of the Company, a brief
description of the business of the Company consistent with the Commission
Documents or the Company's press releases or other public statements, the
Company's logo and the aggregate amount of such Purchaser's investment in the
Company. If any announcement is required by applicable law or the rules of any
securities exchange or market on which such shares of Common Stock are traded to
be made by any party hereto, prior to making such announcement such party will
deliver a draft of such announcement to the other parties and shall give the
other parties reasonable opportunity to comment thereon. The parties agree to
attribute and otherwise indicate ownership of the other party's trademarks and
logos.
11.12 CERTIFICATION. Each Purchaser certifies that such Purchaser
has read this entire Agreement and that every statement on such Purchaser's part
made and set forth herein is true and complete in all material respects.
[Remainder of page intentionally left blank.]
-23-
IN WITNESS WHEREOF, the undersigned has executed this Securities
Purchase Agreement on the date his signature has been subscribed and sworn to
below.
The shares of Series A Preferred Stock
and the common stock purchase warrants
are to be issued in:
Perseus-▇▇▇▇▇ BioPharmaceutical Fund, L.P.
------------------------------
Print Name of Investor
3,000,000 shares of Series A Preferred Stock
____ individual name subscribed for
3,000,000 Warrants subscribed for
____ joint tenants with rights of survivorship
Subscription price
paid herewith:
$9,000,000 (being $3.00 x the number of shares
____ tenants in the entirety of Series A Preferred Stock listed above)
______________________________
____ corporation (an officer must sign) Print Name of Joint Investor
(if applicable)
X partnership (all general partners must sign) PERSEUS-▇▇▇▇▇ BIOPHARMACEUTICAL FUND, LP
----
By: Perseus-▇▇▇▇▇ Partners, LLC,
General Partner
By: SFM Participation, L.P.,
Managing Member
By: SFM AH, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Secretary
______________________________
____ trust Signature of Joint Investor
______________________________
____ limited liability company
______________________________
(with a copy to:)
______________________________
______________________________
Address of Investor
-24-
Accepted as of the 7th day of May, 2002, as to 3,000,000 shares of Series A
Preferred Stock and 3,000,000 Warrants; Subscription price accepted being
$9,000,000, being $3.00 x the number of shares of Series A Preferred Stock as to
which this Subscription is accepted:
BIOENVISION, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
Name: ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATIONS
EXHIBIT B
FORM OF WARRANT
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT D TO FORM OF SECURITIES PURCHASE AGREEMENT
Matters to be Covered in Legal Opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2. The Company has all necessary corporate power and authority to
execute, deliver, enter into and perform its obligations under each of the
Transaction Documents and to consummate the transactions contemplated thereby,
including, without limitation, to issue, sell and deliver the Series A Preferred
Stock and Warrants and the shares of Common Stock issuable upon conversion and
exercise, respectively, thereof. The execution, delivery and performance of each
of the Transaction Documents has been duly authorized by all necessary corporate
action on the part of the Company.
3. The Transaction Documents have been duly executed and
delivered by the Company and constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy.
4. The Securities and the shares of Common Stock into which they
are convertible or for which they are exercisable have been duly authorized and,
when issued in accordance with the Securities Purchase Agreement, the
Certificate of Designations and the Warrants, as applicable, will be validly
issued, fully paid and nonassessable and will be free and clear of all Liens
imposed by or through the Company other than restrictions imposed by the
Securities Purchase Agreement, the Certificate of Designations, the Warrants and
applicable securities laws. No statutory or, to our knowledge, contractual
preemptive or other rights to subscribe for or purchase equity securities of the
Company exists with respect to the issuance and sale of the Securities by the
Company pursuant to the Transaction Documents.
5. The execution and delivery by the Company of the Transaction
Documents do not and the consummation of the transactions contemplated thereby
will not (A) violate any provision of the Certificate of Incorporation or
By-laws of the Company, (B) violate any law, statute, rule, regulation, order,
judgment or decree of any court or Governmental Authority which, to our
knowledge, is applicable to the Company, or (C) to our knowledge, breach or
constitute (with due notice or lapse of time or both) a default under, any
material agreement to which the Company is a party or by which it is bound or to
which any of its properties or assets is subject, nor result in the creation or
imposition of any Lien, other than Permitted Liens, upon any of the properties
or assets of the Company, except for, in the case of clauses (B) and (C), any
violation, breach or default which would not have a Material Adverse Effect.
6. Except for filings, authorizations or approvals contemplated
by the Securities Purchase Agreement, no authorizations or approvals of, and no
filings with, any Governmental Authority are necessary or required by the
Company for the execution and delivery of the Transaction Documents or the
consummation of the transactions contemplated thereby.
7. The Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
8. Assuming the accuracy of the representations and warranties of
the Purchasers in the Securities Purchase Agreement, the offer and sale of the
Securities is exempt from the registration requirements of the Securities Act of
1933, as amended, pursuant to Section 4(2) and/or Rule 506 under Regulation D of
the Securities Act.
The opinion will set forth the Firm's customary assumptions and qualifications.
The opinion will only be given as to matters of New York law and U.S. federal
law, and Delaware General Corporation law.
EXHIBIT E
FORM OF EMPLOYEE AGREEMENT