-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PO8PZDXwEyA7JXDlY+8Bz+ilYXwqAZQa2IWjPBVe6vyn2w5TICsmdklQS1JTOagA dZ45ojo7/jvNSWh/I/Nu8g== 0000950142-02-000493.txt : 20020520 0000950142-02-000493.hdr.sgml : 20020520 20020520163504 ACCESSION NUMBER: 0000950142-02-000493 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020520 GROUP MEMBERS: FRANK H. PEARL GROUP MEMBERS: GEORGE SOROS GROUP MEMBERS: PERSEUS BIOTECH FUND PARTNERS, LLC GROUP MEMBERS: PERSEUS EC, LLC GROUP MEMBERS: PERSEUS-SOROS BIOPHARMACEUTICAL FUND, L.P. GROUP MEMBERS: PERSEUS-SOROS PARTNERS, LLC GROUP MEMBERS: PERSEUSPUR, LLC GROUP MEMBERS: SFM AH, INC. GROUP MEMBERS: SFM PARTICIPATION, L.P. GROUP MEMBERS: SOROS FUND MANAGEMENT LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BIOENVISION INC CENTRAL INDEX KEY: 0001028205 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 113375915 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-78274 FILM NUMBER: 02657873 BUSINESS ADDRESS: STREET 1: ONE ROCKEFELLER PLAZA STREET 2: SUITE 1600 CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2124456581 MAIL ADDRESS: STREET 1: ONE ROCKEFELLER PLAZA STREET 2: SUITE 1600 CITY: NEW YORK STATE: NY ZIP: 10020 FORMER COMPANY: FORMER CONFORMED NAME: ASCOT GROUP INC DATE OF NAME CHANGE: 19961205 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SOROS GEORGE CENTRAL INDEX KEY: 0000900203 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 888 SEVENTH AVENUE STREET 2: 33RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10106 BUSINESS PHONE: 212-262--6 MAIL ADDRESS: STREET 1: 888 SEVENTH AVE STREET 2: 33RD FLR CITY: NEW YORK STATE: NY ZIP: 10106 SC 13D 1 sc13d-bioenvision.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (AMENDMENT NO. ___) BIOENVISION, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $.001 PER SHARE (Title of Class of Securities) 09059N100 (CUSIP Number) KEITH TARLETON PERSEUS-SOROS BIOPHARMACEUTICAL FUND, L.P. 888 SEVENTH AVENUE, 29TH FLOOR NEW YORK, NY 10106 TEL. NO.: (212) 651-6400 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) with a copy to BRUCE A. GUTENPLAN, ESQ. PAUL, WEISS, RIFKIND, WHARTON & GARRISON 1285 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019-6064 MAY 8, 2001 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject to this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes.) CUSIP NO. 98241108 PAGE 2 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus-Soros BioPharmaceutical Fund, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 9,000,000 (1) NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 9,000,000 (1) PERSON WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 3 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus-Soros Partners, LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 9,000,000 (1) NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 0 OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 9,000,000 (1) PERSON WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% (1) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 4 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus BioTech Fund Partners, LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 9,000,000 (1) OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 9,000,000 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 5 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SFM Participation, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 9,000,000 (1) OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 9,000,000 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 6 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SFM AH, Inc. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 9,000,000 (1) OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 9,000,000 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 7 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Frank H. Pearl (in the capacity described herein) - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 9,000,000 (1) OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 9,000,000 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 8 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON George Soros (in the capacity described herein) - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION United States - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 9,000,000 (1) OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 9,000,000 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 9 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Soros Fund Management LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 9,000,000 (1) OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 9,000,000 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO; IA - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 10 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseus EC, LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 9,000,000 (1) OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 9,000,000 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 11 OF 23 SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Perseuspur, LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY 9,000,000 (1) OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 9,000,000 (1) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,000,000 (1) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT - ------------------------ 1 Assuming full conversion of the Series A Convertible Participating Preferred Stock and including Warrant to purchase an aggregate of 3,000,000 shares of Common Stock. See Item 5 herein. CUSIP NO. 98241108 PAGE 12 OF 23 ITEM 1. SECURITY AND ISSUER. This Statement on Schedule 13D relates to the common stock, par value $.001 per share (the "Common Stock"), issued by Bioenvision, Inc., a Delaware corporation (the "Company"), whose principal executive office is located at One Rockefeller Plaza, Suite 1600, New York, New York 10020. ITEM 2. IDENTITY AND BACKGROUND. (a), (b), (c) and (f). This Statement on Schedule 13D is being filed on behalf of each of the following persons (each a "Reporting Person" and collectively, the "Reporting Persons"): (i) Perseus-Soros BioPharmaceutical Fund, LP, a Delaware limited partnership (the "Purchaser"); (ii) Perseus-Soros Partners, LLC, a Delaware limited liability company ("Perseus-Soros Partners"); (iii) Perseus BioTech Fund Partners, LLC, a Delaware limited liability company ("Perseus Partners"); (iv) SFM Participation, L.P., a Delaware limited partnership ("SFM Participation"); (v) SFM AH, Inc., a Delaware corporation ("SFM AH"); (vi) Perseus EC, LLC, a Delaware limited liability company ("Perseus EC"); (vii) Perseuspur, LLC, a Delaware limited liability company ("Perseuspur"); (viii) Mr. Frank H. Pearl ("Mr. Pearl"); (ix) Mr. George Soros ("Mr. Soros"); and (x) Soros Fund Management LLC, a Delaware limited liability company ("SFM LLC"). The Purchaser was formed in order to engage in the acquiring, holding and disposing of investments in various companies. Perseus-Soros Partners is the general partner of the Purchaser and was formed to act as the general partner of the Purchaser. Perseus Partners and SFM Participation are the managing members of Perseus-Soros Partners. Perseus Partners was formed in order to engage in the acquiring, holding and disposing of investments in various companies. Perseus EC is the managing member of Perseus Partners. Perseus EC was formed in order to manage Perseus Partners and to make investments through Perseus Partners and to fulfill such other purposes as may be determined by Perseus Partners from time to time. Set forth on Annex A hereto and incorporated by reference in response to this Item 2 and elsewhere in this Schedule 13D as applicable is a list of executive officers of Perseus EC. Perseuspur is a member of Perseus EC. Perseuspur was formed in order to engage in the acquiring, holding and disposing of investments in various companies for investment purposes. Set forth on Annex B hereto and incorporated by reference in response to this Item 2 and elsewhere in this Schedule 13D as applicable is a list of executive officers of CUSIP NO. 98241108 PAGE 13 OF 23 Perseuspur. Mr. Pearl is the sole member of Perseuspur and in such capacity, he may be deemed a beneficial owner of the Common Stock held for the account of the Purchaser. Accordingly, pursuant to the regulations promulgated under Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Perseus-Soros Partners, Perseus Partners, Perseus EC, Perseuspur and Mr. Pearl each may be deemed to be a beneficial owner of the Common Stock held for the account of the Purchaser. SFM Participation was formed in order to engage in the acquiring, holding and disposing of investments in various companies. SFM AH is the general partner of SFM Participation. Mr. Soros is the sole shareholder of SFM AH. Mr. Soros has entered into an agreement dated as of January 1, 1997 with SFM LLC pursuant to which Mr. Soros has, among other things, agreed to use his best efforts to cause SFM AH, as the general partner of SFM Participation, to act at the direction of SFM LLC, which agreement to so act shall terminate upon the earlier of (a) the assignment to SFM LLC of the legal and beneficial ownership in SFM AH and (b) the assignment to SFM LLC of the general partnership interest in SFM Participation (the "SFM AH Contract"). Set forth on Annex C hereto and incorporated by reference in response to this Item 2 and elsewhere in this Schedule 13D as applicable is a list of the executive officers of SFM AH. Accordingly, pursuant to the regulations promulgated under Section 13(d) of the Securities Exchange Act of 1934, SFM Participation and SFM AH each may be deemed a beneficial owner of the Common Stock held for the account of the Purchaser. Pursuant to regulations promulgated under Section 13(d) of the Exchange Act, SFM LLC, pursuant to the provisions of the SFM AH Contract, Mr. Soros, in his capacity as Chairman and President of SFM LLC, may be deemed a beneficial owner of the Common Stock held for the account of the Purchaser. The address of the principal business and principal office of the Purchaser is 888 Seventh Avenue, 29th Floor, New York, NY 10106. The address of the principal business and principal office of (i) Perseus-Soros Partners, (ii) Perseus Partners, (iii) Perseus EC, (iv) Perseuspur and (v) Mr. Pearl is 2099 Pennsylvania Avenue, Suite 9001, Washington, D.C. 20006-1813. The present principal occupation or employment of Mr. Pearl is as executive officer of Perseus, LLC and its related entities. Mr. Pearl is a United States citizen. CUSIP NO. 98241108 PAGE 14 OF 23 The address of the principal business and principal offices of (i) SFM Participation, (ii) Mr. Soros, (iii) SFM AH and (iv) SFM LLC is 888 Seventh Avenue, 33rd Floor, New York, New York 10106. The principal occupation of Mr. Soros, a United States citizen, is his direction of the activities of SFM LLC, which is carried out in his capacity as Chairman of SFM LLC at SFM LLC's principal office. (d) and (e). During the past five years, neither any Reporting Person nor, to the best knowledge of each Reporting Person, any individual otherwise identified in response to Item 2, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Information contained herein concerning SFM Participation, SFM AH, SFM LLC and Mr. Soros has been provided by SFM LLC and the other Reporting Persons assume no responsibility for such information. Information contained herein concerning Perseus Partners, Perseus EC, Perseuspur and Mr. Pearl has been provided by each such Reporting Person and the other Reporting Persons assume no responsibility for such information. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Pursuant to a Securities Purchase Agreement, dated as of May 7, 2002 (the "Securities Purchase Agreement"), among the Purchaser and the Company, the Company issued and the Purchaser acquired 3,000,000 shares of the Company's Series A Convertible Participating Preferred Stock, par value $.001 per share (the "Series A Preferred Stock"), and a warrant (the "Warrant" and, together with the Series A Preferred Stock, the "Securities") to purchase 3,000,000 shares of Common Stock for an aggregate purchase price of $9,000,000 (the "Purchase Price"). The source of the Purchase Price was capital contributions from the partners of the Purchaser. ITEM 4. PURPOSE OF TRANSACTION. Except as disclosed herein, the Reporting Persons have acquired the shares of Series A Preferred Stock and the Warrant for investment purposes. A copy of the Securities Purchase Agreement is attached hereto as Exhibit 2 and incorporated by reference herein, a copy of the Certificate of Designation for the Series A Preferred Stock CUSIP NO. 98241108 PAGE 15 OF 23 (the "Series A Certificate") is attached hereto as Exhibit 3 and incorporated herein by reference, a copy of the Warrant is attached hereto as Exhibit 4 and incorporated herein by reference and a copy of the Registration Rights Agreement (the "Registration Rights Agreement") is attached hereto as Exhibit 5 and incorporated herein by reference. Set forth below is a summary of the material terms of the Securities Purchase Agreement, Series A Certificate, the Warrant and the Registration Rights Agreement. The following summary is qualified in its entirety by reference to the Securities Purchase Agreement, the Series A Certificate, the Warrant and the Registration Rights Agreement. TERMS OF THE SECURITIES PURCHASE AGREEMENT BOARD REPRESENTATION. Pursuant to the Securities Purchase Agreement, the Board of Directors of the Company (the "Board") appointed two Purchaser representatives to the Board, Steve Elms and Andrew Schiff, M.D. In addition, pursuant to the Securities Purchase Agreement, at any time that the Purchaser and its affiliates (as such term is defined in Rule 405 of the Securities Act of 1933, as amended) are not represented on the Board and hold at least: (i) 25% of the shares of Series A Preferred Stock or (ii) 10.0% of the outstanding Common Stock on an "as-converted basis," the Purchaser shall have certain consultation rights, including but not limited to (a) appointing a non-voting representative to attend meetings of the Board and (b) to 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 the Purchaser (the Company will not be required to accept such proposals, recommendations or suggestions). TERMS OF THE SERIES A PREFERRED STOCK DIVIDENDS. The holders of the outstanding shares of Series A Preferred Stock shall be entitled to receive cumulative dividends in cash (except as set forth below), quarterly in arrears on the 30th day of January, April, July and October of each year (each a "Dividend Payment Date") equal to the 5% of the initial Liquidation Preference (as defined in the Series A Certificate) per share of Series A Preferred Stock, whether or not declared by the Board. Dividends shall begin to accrue on the Series A Preferred Stock as of May 7, 2002. Dividends on each share of Series A Preferred Stock shall be cumulative; therefore, if a full or partial dividend on the shares of Series A Preferred Stock with respect to any quarter is not declared by the Board, the Company shall remain obligated to pay a full dividend with respect to that quarter, provided, however, that any unpaid dividends shall not bear interest. At the election of the Company, any CUSIP NO. 98241108 PAGE 16 OF 23 accrued but unpaid dividends may be paid in cash at any time. At the election of the Company, each dividend on the Series A Preferred Stock may be paid in shares of Common Stock. Dividends paid in shares of Common Stock shall be paid in full shares only, with cash payment equal to the value of any fractional shares. The issuance of such shares of Common Stock shall be valued at the average of the per share Market Price (as defined in the Series A Certificate) for the ten Trading Day (as defined in the Series A Certificate) period immediately preceding the date on which the dividend becomes due. CONVERSION. Each share of Series A Preferred Stock shall be convertible into a number of shares of Common Stock equal to the applicable Liquidation Amount (as discussed below) divided by the then applicable Conversion Price (as discussed below) upon the earlier to occur of (i) the election of the holder to convert, at any time after the issue date, or (ii) if, at any time after May 8, 2003, the first anniversary of the issue date, upon which both (x) the average of the Market Price per share of Common Stock for 30 consecutive Trading Days exceeds $10.00 (with appropriate adjustment made for any stock dividend, split-up or subdivision or any combination or reclassification made or effected subsequent to the issue date) and (y) the average trading volume for the Common Stock during such period exceeds 150,000 shares (subject to adjustment in the event of stock split, reverse stock splits, stock dividends, recapitalizations or similar events)per Trading Day. On May 8, 2002, the issue date, "Liquidation Amount" is equal to $3.00 per share of Common Stock, the "Conversion Price" is equal to $1.50 per share of Common Stock and the Common Stock conversion rate is two for one. The Conversion Price and the number of shares issuable upon conversion of the Series A Preferred Stock will be subject to adjustment upon the occurrence of certain events as set forth in the Series A Certificate. LIQUIDATION PREFERENCES. Upon a voluntary or involuntary liquidation, under applicable bankruptcy or reorganization legislation, or dissolution or winding up of the Company (each, a "Liquidation"), before any distribution of assets shall be made to the holders of junior securities, the holder of each share of Series A Preferred Stock then outstanding shall be paid out of the assets of the Company legally available for distribution to its stockholders an amount per share equal to the original issue price per share of the Series A Preferred Stock ($3.00, as adjusted for stock splits, dividends, combinations or other recapitalization of the Series A Preferred Stock) plus all dividends accrued but unpaid on such share (whether or not declared) up to the date of the liquidation. Upon the completion of the distribution described in the foregoing sentence, and any other distribution to any other class or series of senior securities, if CUSIP NO. 98241108 PAGE 17 OF 23 assets remain in the Company, the remaining assets of the Company available for distribution to stockholders shall be distributed among the holders of shares of Series A Preferred Stock, the holders of shares of any series of preferred stock entitled to a participating payment and the holders of Common Stock pro rata based on the number of shares of the Common Stock held by each (as if their shares had been converted into Common Stock immediately prior to the record date for determining the stockholders of the Company eligible to receive such dividends). At the election of a holders of the Series A Preferred Stock, certain change of control events will be deemed a Liquidation. VOTING RIGHTS. Each share of Series A Preferred Stock shall entitle the holder thereof to vote, in person or by proxy, at a special or annual meeting of stockholders, on all matters entitled to be voted on by holders of Common Stock voting together as a single class with other shares entitled to vote thereon. With respect to any such vote, each share of Series A Preferred Stock shall entitle the holder thereof to cast that number of votes per share as is equal to the number of votes that such holder would be entitled to cast had such holder converted its shares of Series A Preferred Stock into shares of Common Stock on the record date for determining the stockholders of the Company eligible to vote on any such matters. So long as the shares of Series A Preferred Stock are outstanding, the Company shall not, take, approve or otherwise ratify any of the following actions without the consent of at least a majority of the then outstanding shares of Series A Preferred Stock: (a) authorize or issue any new class or series of parity securities or senior securities; (b) purchase, repurchase or redeem any securities of the Company; (c) increase or decrease the number of members constituting the size of the Board; (d) increase the authorized number of shares of Common Stock or Series A Preferred Stock; (e) effect any merger, combination, reorganization, or sale of all or substantially all of the Company's assets; (f) declare or pay dividends or any other distribution on shares of Common Stock or any other capital stock of the Company (other than a contemplated by the Series A Certificate); (g) amend its charter documents; or (h) increase the number of shares of Common Stock reserved for the employee option pool by more than 5% per year. TERMS OF THE WARRANT EXERCISE RIGHTS. The Common Stock underlying the Warrant may be purchased at a price per share equal to $2.00 (the "Exercise Price"). The Exercise Price may be paid in cash. The Exercise Price CUSIP NO. 98241108 PAGE 18 OF 23 and the number of shares issuable upon exercise of the Warrant will be subject to adjustment upon the occurrence of certain events as set forth in the Warrant. EXERCISE PERIOD. The Warrant is exercisable at any time, or from time to time, from the date of issuance, May 8, 2002 until May 7, 2007. TERMS OF THE REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS. Pursuant to the Securities Purchase Agreement, the Company granted the Purchaser certain demand registration rights, "piggy-back" registration rights and Form S-3 registration rights as described more fully in the Registration Rights Agreement in connection with shares of Common Stock issued or issuable upon conversion of the Series A Preferred Stock or exercise of the Warrant ("Registrable Securities"). The Company has an obligation under the Registration Rights Agreement to prepare and file with the Securities and Exchange Commission (the "Commission") within sixty days following May 8, 2002 a registration statement on Form SB-1 or successor form registering the Registrable Securities. The purpose of such registration rights is to facilitate the Purchaser's ability to dispose of its Registrable Securities in a public sale. ADDITIONAL DISCLOSURE The Reporting Persons may from time to time acquire additional shares of Common Stock in the open market or in privately negotiated transactions, subject to availability of Common Stock at prices deemed favorable, the Company's business or financial condition and other factors and conditions the Reporting Persons deem appropriate. Alternatively, the Reporting Persons may sell all or a portion of the Series A Preferred Stock, Warrant, or Common Stock issued upon exercise of the Warrant or conversion of the Series A Preferred Stock in privately negotiated transactions or in the open market pursuant to the exercise of certain registration rights granted pursuant to the Securities Purchase Agreement as described above, in each case subject to the factors and conditions referred to above and to the terms of the Securities Purchase Agreement, the Series A Preferred Stock, the Warrant and the Registration Rights Agreement, as the case may be. In addition, the Reporting Persons may formulate other purposes, plans or proposals regarding the Company or any of its securities to the extent deemed advisable in light of general investment and trading policies, market conditions or other factors. Except as described in the Securities Purchase Agreement, the Warrant, the Series A Certificate or the Registration Rights Agreement, and as otherwise set forth in this Schedule 13D, no CUSIP NO. 98241108 PAGE 19 OF 23 Reporting Person or any individual otherwise identified in Item 2 has any present plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer or a material amount of assets of the Company or of any of its subsidiaries; (d) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g) changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (j) any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) As set forth above, on May 8, 2002, the Company issued to the Purchaser, and the Purchaser acquired, (i) 3,000,000 shares of the Series A Preferred Stock and (ii) a Warrant to purchase 3,000,000 shares of Common Stock, subject to adjustment under certain circumstances. Shares of the Preferred Stock are convertible into shares of Common Stock at any time. The Warrant is exercisable at any time until May 7, 2007. Accordingly, as of the date hereof and giving effect to the conversion of the Series A Preferred Stock and Warrants, each of the Reporting Persons may be deemed to beneficially own an aggregate of 9,000,000 shares of Common Stock which, based on calculations made in accordance with Rule 13d-3(d) and there being 16,687,786 shares of Common Stock outstanding as of March 12, 2002 as disclosed by the Company in its Proxy Statement filed with the Commission on April 10, 2002, represents approximately 35.0% of the outstanding shares of Common Stock on a diluted basis in accordance with Rule 13d-3(d). CUSIP NO. 98241108 PAGE 20 OF 23 (b) (i) Each of the Purchaser and Perseus-Soros Partners may be deemed to have sole power to direct the voting and disposition of the 9,000,000 shares of Common Stock beneficially owned by the Purchaser. (ii) By virtue of the relationships between and among the Reporting Persons described in Item 2 of this Statement on Schedule 13D, each of the Reporting Persons, other than the Purchaser and Perseus-Soros Partners may be deemed to share the power to direct the voting and disposition of the 9,000,000 shares of Common Stock beneficially owned by the Purchaser. (c) Except as set forth above, no Reporting Person nor, to the best knowledge of each Reporting Person, any person identified in Item 2 hereof, beneficially owns any shares of Common Stock or has effected any transaction in shares of Common Stock during the preceding 60 days. (d) Each of the Reporting Persons affirms that no person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock owned by the Reporting Persons. The partners of the Purchaser have the right to participate in the receipt of dividends from, or proceeds from the sale of, the Securities held for the account of the Purchaser in accordance with their ownership interests in the Purchaser. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. As described in Items 3 and 4 above, on May 8, 2002, the Purchaser and the Company entered into to the Securities Purchase Agreement pursuant to which the Purchaser agreed to purchase an aggregate of 3,000,000 shares of Series A Preferred Stock, having the rights, privileges and preferences set forth in the Series A Certificate, and Warrants exercisable for an aggregate of 3,000,000 shares of Common Stock. The Purchaser and the Company also entered into the Registration Rights Agreement pursuant to which the Purchaser has certain demand registration rights, "piggy-back" registration rights and Form S-3 registration rights as described more fully in the Registration Rights Agreement. The Company has an obligation under the Registration Rights Agreement to prepare and file with the Commission within sixty days following May 8, 2002 a registration statement on Form SB-1 or successor form registering the Registrable Securities. The foregoing summaries of the Securities Purchaser Agreement, the Warrant and the Registration Rights Agreement are qualified in their entirety by reference to Exhibits 2, 3, 4 and 5. CUSIP NO. 98241108 PAGE 21 OF 23 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1: Joint Filing Agreement, dated May 20, 2002, among (i) Perseus-Soros BioPharmaceutical Fund, L.P., (ii) Perseus-Soros Partners, LLC, (iii) Perseus BioTech Fund Partners, LLC, (iv) SFM Participation L.P., (v) SFM AH, Inc., (vi) Frank H. Pearl, (vii) George Soros, (viii) Soros Fund Management LLC, (ix) Perseus EC, LLC and (x) Perseuspur, LLC. Exhibit 2: Securities Purchase Agreement, dated as of May 7, 2002, between Bioenvision, Inc. and Perseus-Soros BioPharmaceutical Fund, L.P. Exhibit 3: Certificate of Designations, Preferences and Rights, dated as of May 7, 2002, governing the Series A Convertible Participating Preferred Stock of Bioenvision, Inc. Exhibit 4: Warrant, dated as of May 7, 2002, for 3,000,000 shares of Common Stock, par value $.001 per share, of Bioenvision, Inc. issued to Perseus-Soros BioPharmaceutical Fund, L.P. Exhibit 5: Registration Rights Agreement, dated as of May 7, 2002, between Bioenvision, Inc. and Perseus-Soros BioPharmaceutical Fund, L.P. Exhibit 6: Power of Attorney dated January 15, 2002 appointing each of Armando T. Belly, Jodye Anzalotta, Maryann Canfield, Sean Cullinan, Richard D. Holahan, Jr. and Robert Soros as Attorney-In-Fact for George Soros. CUSIP NO. 98241108 PAGE 22 OF 23 SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: May 20, 2002 PERSEUS-SOROS BIOPHARMACEUTICAL FUND, LP By: Perseus-Soros Partners, LLC, General Partner By: SFM Participation, L.P., Managing Member By: SFM AH, Inc. General Partner By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary PERSEUS-SOROS PARTNERS, LLC By: SFM Participation, L.P. Managing Member By: SFM AH, Inc. General Partner By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary PERSEUS BIOTECH FUND PARTNERS, LLC By: Perseuspur EC, L.L.C. Managing Member By: Perseuspur, LLC Member By: /s/ Rodd Macklin --------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS EC, L.L.C. By: Perseuspur, LLC Member By: /s/ Rodd Macklin --------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer CUSIP NO. 98241108 PAGE 23 OF 23 PERSEUSPUR, LLC By: /s/ Rodd Macklin --------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer MR. FRANK H. PEARL By: /s/ Frank H. Pearl --------------------------------------- Name: Frank H. Pearl SFM PARTICIPATION, L.P. By: SFM AH, Inc. General Partner By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary SFM AH, INC. By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary MR. GEORGE SOROS By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Attorney-in-Fact SOROS FUND MANAGEMENT LLC By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Assistant General Counsel ANNEX A EXECUTIVE OFFICERS OF PERSEUS EC, L.L.C.
NAME/TITLE/CITIZENSHIP PRINCIPAL OCCUPATION BUSINESS ADDRESS - ---------------------- -------------------- ---------------- Frank H. Pearl Executive officer of Perseus, 2099 Pennsylvania Avenue Chairman, President and Chief LLC and its related entities Suite 900 Executive Officer Washington, D.C. 20006-1813 United States Kenneth M. Socha Executive officer of Perseus, 2099 Pennsylvania Avenue Executive Vice President LLC and its related entities Suite 900 United States Washington, D.C. 20006-1813 Rodd Macklin Executive officer of Perseus, 2099 Pennsylvania Avenue Secretary and Treasurer LLC and its related entities Suite 900 United States Washington, D.C. 20006-1813
Except as otherwise disclosed elsewhere in this Schedule 13D, to the best of the Reporting Persons' knowledge: (a) None of the above persons hold any Common Stock or securities derivative thereof. (b) None of the above persons has any contracts, arrangements, understandings or relationships with respect to the Common Stock or securities derivative thereof. ANNEX B EXECUTIVE OFFICERS OF PERSEUSPUR, LLC
NAME/TITLE/CITIZENSHIP PRINCIPAL OCCUPATION BUSINESS ADDRESS - ---------------------- --------------------- ---------------- Frank H. Pearl Executive officer of Perseus, 2099 Pennsylvania Avenue Chairman, President and Chief LLC and its related entities Suite 900 Executive Officer Washington, D.C. 20006-1813 United States Kenneth M. Socha Executive officer of Perseus, 2099 Pennsylvania Avenue Executive Vice President LLC and its related entities Suite 900 United States Washington, D.C. 20006-1813 Rodd Macklin Executive officer of Perseus, 2099 Pennsylvania Avenue Secretary and Treasurer LLC and its related entities Suite 900 United States Washington, D.C. 20006-1813
Except as otherwise disclosed elsewhere in this Schedule 13D, to the best of the Reporting Persons' knowledge: (a) None of the above persons hold any Common Stock or securities derivative thereof. (b) None of the above persons has any contracts, arrangements, understandings or relationships with respect to the Common Stock or securities derivative thereof. ANNEX C EXECUTIVE OFFICERS OF SFM AH, INC.
NAME/TITLE/CITIZENSHIP PRINCIPAL OCCUPATION BUSINESS ADDRESS - ---------------------- -------------------- ---------------- Dan Eule Director of Tax of SFM LLC 888 Seventh Avenue President 33rd Floor United States New York, NY 10106 Sean Cullinan Chief Financial Officer of SFM 888 Seventh Avenue Vice President LLC 33rd Floor United States New York, NY 10106 Eve Mongiardo Chief Financial Officer of Soros 888 Seventh Avenue Treasurer Private Funds Management, LLC 33rd Floor United States New York, NY 10106 Richard D. Holahan Assistant General Counsel of SFM 888 Seventh Avenue Secretary LLC 33rd Floor United States New York, NY 10106
To the best of the Reporting Persons' knowledge: (a) None of the above persons hold any Common Stock or securities derivative thereof. (b) None of the above persons has any contracts, arrangements, understandings or relationships with respect to the Common Stock or securities derivative thereof. EX-99 3 ex1sc13d-bioenvision.txt EXHIBIT 1 EXHIBIT 1 to SCHEDULE 13D JOINT FILING AGREEMENT Each of the undersigned hereby acknowledges and agrees, in compliance with the provisions of Rule 13d-1(k)(1) promulgated under the Securities Exchange Act of 1934, as amended, that the Schedule 13D to which this Agreement is attached as an Exhibit (the "Schedule 13D"), and any amendments thereto, will be filed with the Securities and Exchange Commission jointly on behalf of the undersigned. This Agreement may be executed in one or more counterparts. Dated: May 20, 2002 PERSEUS-SOROS BIOPHARMACEUTICAL FUND, LP By: Perseus-Soros Partners, LLC, General Partner By: SFM Participation, L.P., Managing Member By: SFM AH, Inc., General Partner By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary PERSEUS-SOROS PARTNERS, LLC By: SFM Participation, L.P. Managing Member By: SFM AH, Inc. General Partner By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary PERSEUS BIOTECH FUND PARTNERS, LLC By: Perseuspur EC, L.L.C. Managing Member By: Perseuspur, LLC Member By: /s/ Rodd Macklin --------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUS EC, L.L.C. By: Perseuspur, LLC Member By: /s/ Rodd Macklin --------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer PERSEUSPUR, LLC By: /s/ Rodd Macklin --------------------------------------- Name: Rodd Macklin Title: Secretary and Treasurer MR. FRANK H. PEARL By: /s/ Frank H. Pearl --------------------------------------- Name: Frank H. Pearl SFM PARTICIPATION, L.P. By: SFM AH, Inc. General Partner By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary SFM AH, INC. By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary MR. GEORGE SOROS By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Attorney-in-Fact SOROS FUND MANAGEMENT LLC By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Assistant General Counsel EX-10 4 ex2sc13d-bioenvision.txt EXHIBIT 2 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 Piper Rudnick LLP. The wire instructions are as follows: BANK NAME: CITIBANK, N.A. ADDRESS: 153 EAST 53RD STREET, 20TH FLOOR NEW YORK, NY 10019 ATTN.: TRINA SCHAEFER BANK PHONE #: 212-559-3809 ACCOUNT NAME: PIPER RUDNICK LLP ESCROW ACCOUNT ACCOUNT #: 37311689 ABA TRANSIT #: 021000089 REFERENCE: BIOENVISION, INC.----301140-1 ANDREW J. COSENTINO---212-835-6000 Payment, and the other documents required for subscription must be delivered to the following address: PIPER RUDNICK LLP 1251 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10020-1104 ATTENTION: ANDREW J. COSENTINO, 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 Piper Rudnick LLP (the "ESCROW AGENT") pursuant to an Escrow Agreement, dated as of the date hereof, by and among the -2- 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 Piper Rudnick 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. -3- 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: Christopher B. Wood, M.D. Jeffrey B. Davis Thomas S. Nelson, C.A. Steven A. Elms Andrew Schiff, 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. -4- 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"). -5- 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 -6- 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 -7- 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. -8- "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 Grant Thornton 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 -9- 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 -10- 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. -11- 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 -12- 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, -13- 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 -14- 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 -15- 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) -16- 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-Soros BioPharmaceutical Fund, LP ("PERSEUS-SOROS") and its Affiliates (as such term is defined in Rule 405 of the Securities Act) are not represented on -18- the Board pursuant to Section 3.7, so long as Perseus-Soros 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-Soros 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-Soros 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-Soros 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-Soros; (d) have access to such other information relating to the affairs of the Company as Perseus-Soros 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-Soros. In addition, the Company shall provide Perseus-Soros 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-Soros 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-Soros's 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-Soros 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-Soros 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-Soros or its affiliates or their respective representatives, (2) was within Perseus-Soros's possession prior to its being furnished to Perseus-Soros 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-Soros 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-Soros. If Perseus-Soros 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-Soros 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-Soros 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 -19- 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-Soros (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-Soros. 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. One Rockefeller Plaza Suite 1600 New York, New York 10020 Attention: President Facsimile: (212) 265-4680 With a copy to: Piper Rudnick LLP 1251 Avenue of the Americas New York, New York 10020-1104 Attention: Andrew J. Cosentino, Esq. Facsimile: (212) 884-8588 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 Americas 35th Floor New York, New York 10019 Attention: Jeffrey B. Davis Facsimile: (212) 554-4058 -21- 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-Soros 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-SOROS BIOPHARMACEUTICAL FUND, LP - ---- By: Perseus-Soros Partners, LLC, General Partner By: SFM Participation, L.P., Managing Member By: SFM AH, Inc. By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. 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/ Christopher B. Wood ----------------------- Name: Dr. Christopher B. Wood 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 Piper Rudnick 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 EX-10 5 ex3sc13d-bioenvision.txt EXHIBIT 3 EXHIBIT 3 to SCHEDULE 13D CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK OF BIOENVISION, INC. (Pursuant to Section 151 of the Delaware General Corporation Law) ------------------------------------ Bioenvision, Inc., a corporation organized and existing under the laws of the State of Delaware (the "COMPANY"), hereby certifies that, pursuant to the authority vested in the Board of Directors of the Company (the "BOARD") by the Certificate of Incorporation of the Company (the "CERTIFICATE OF INCORPORATION"), as amended, the following resolution was adopted as of May 7, 2002 by the Board pursuant to Section 141 of the Delaware General Corporation Law: RESOLVED, that pursuant to the authority granted to and vested in the Board in accordance with the provisions of the Certificate of Incorporation, as amended, there shall be created a series of Preferred Stock, $0.001 par value, which series shall have the following designations and number thereof, powers, preferences, rights, qualifications, limitations and restrictions: 1. DESIGNATION AND NUMBER OF SHARES. There shall hereby be created and established a series of Preferred Stock designated as "Series A Convertible Participating Preferred Stock" (the "SERIES A PREFERRED STOCK"). The authorized number of shares of Series A Preferred Stock shall be 5,920,000. 2. CONVERSION. (a) RIGHT TO CONVERT. Each share of Series A Preferred Stock shall be convertible into a number of shares of Common Stock equal to the applicable Liquidation Amount (as defined in Section 5 herein) divided by the then applicable Conversion Price (as defined herein) upon the earlier to occur of (i) the election of the holder to convert (an "OPTIONAL CONVERSION"), in whole or in part, at any time, or from time to time, commencing with date of the issuance of Series A Preferred Stock (the "ISSUANCE DATE") or (ii) the date, at any time after the one year anniversary of the Issuance Date, upon which both (x) the average of the Market Price (as defined herein) for a share of Common Stock for thirty consecutive Trading Days (as defined herein) exceeds $10.00 (subject to adjustment in the event of stock splits, reverse stock splits, stock dividends, recapitalizations or similar events) and (y) the average of the trading volume for the Common Stock during such period exceeds 150,000 (subject to adjustment in the event of stock splits, reverse stock splits, stock dividends, recapitalizations or similar events) shares per Trading Day (an "AUTOMATIC Conversion"). (b) As used herein, "Market Price" means, with respect to the shares of Common Stock, (i) if the shares are listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the last reported sales price as reported on such exchange or market; (ii) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the average of the last reported closing bid and asked quotation for the shares as reported on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or a similar service if NASDAQ is not reporting such information; or (iii) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market or quoted by NASDAQ or a similar service, the average of the last reported bid and asked quotation for the shares as quoted by a market maker in the shares (or if there is more than one market maker, the bid and asked quotation shall be obtained from two market makers and the average of the lowest bid and highest asked quotation) (such applicable trading market to be referred to the "TRADING MARKET"). In the absence of any available public quotations for the Common Stock, the Board shall determine in good faith the fair value of the Common Stock, which determination shall be set forth in a certificate by the Secretary of the Company. As used herein, "Trading Day" means a day on which the principal Trading Market with respect to the Common Stock is open for the transaction of business. (c) EFFECTING A CONVERSION. The holder shall effect any Optional Conversion by surrendering the certificate or certificates representing the shares of Series A Preferred Stock to be converted to the Company, together with written notice of its election to convert and specifying the name or names (with address) in which a certificate or certificates for shares of Common Stock are to be issued (a "STOCKHOLDER CONVERSION NOTICE"). Each Stockholder Conversion Notice shall specify the number of shares of Series A Preferred Stock to be converted and the date on which such conversion is to be effected, which date may be neither prior to, nor more than ten days after, the date the holder delivers such Stockholder Conversion Notice. If no conversion date is specified in a Stockholder Conversion Notice, the conversion date shall be the date that the Stockholder Conversion Notice is delivered. Each Stockholder Conversion Notice, once given, shall be irrevocable. A holder of Series A Preferred Stock may only convert shares of Series A Preferred Stock in blocks equal to the lesser of (i) the number of shares of Series A Preferred Stock convertible into 1,000 shares of Common Stock and (ii) all shares of Series A Preferred Stock then held by the stockholder. If the holder is converting less than all shares of Series A Preferred Stock represented by the certificate or certificates tendered by the holder with the Stockholder Conversion Notice, the Company shall convert the number of shares of Series A Preferred Stock so specified and shall promptly deliver (but not more than three business days later) to such holder a certificate for such number of shares as have not been converted. Upon an Automatic Conversion, the Company shall notify each holder thereof and each holder shall surrender the certificate or certificates representing all of the shares of Series A Preferred Stock owned by such holder and each holder of shares of Series A Preferred Stock shall be deemed to be the holder of record of the Common Stock issued upon such Automatic Conversion. All fractional shares resulting from the conversion of the Series A Preferred Stock shall be rounded up to the next highest whole share. All certificates representing shares of Series A Preferred Stock surrendered for conversion shall be delivered to the Company for cancellation and canceled by it. As promptly as practicable (but no more than three business days) -2- after the surrender of any shares of Series A Preferred Stock, the Company shall (subject to compliance with the applicable provisions of federal and state securities laws) deliver to the holder of such shares so surrendered certificate(s) representing the number of fully paid and nonassessable shares of Common Stock into which such shares are entitled to be converted. Upon a conversion, any accrued and unpaid dividends shall be paid either in cash, to the extent funds are legally available therefor, or shares of Common Stock valued at the Market Price, in the sole discretion of the Company. (d) CONVERSION PRICE. The initial conversion price per share of the Series A Preferred Stock (the "CONVERSION PRICE") shall be equal to $1.50 per share of Common Stock into which such number of shares of Series A Preferred Stock is convertible, subject to adjustment as provided in Section 3. (e) RESERVATION OF SHARES. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of Series A Preferred Stock, as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the holders of Series A Preferred Stock, not less than such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding shares of Series A Preferred Stock. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, nonassessable and freely tradeable. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Preferred Stock, in addition to such other remedies as shall be available to the holders of such Series A Preferred Stock, the Company will take such corporate action necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. (f) ISSUE TAXES. The Company shall pay all issue taxes, if any, incurred in respect of the issue of shares of Common Stock on conversion. If a holder of shares of Series A Preferred Stock specifies that the shares of Common Stock to be issued on Automatic Conversion are to be issued in a name or names other than the name or names in which such Series A Preferred Stock stand, then the Company shall not be required to pay any additional transfer or other taxes incurred by reason of the issuance of such shares of Common Stock to the name of another, and if the appropriate transfer taxes shall not have been paid to the Company or the transfer agent for the Series A Preferred Stock at the time of Automatic Conversion of the Series A Preferred Stock, the shares of Common Stock issued upon conversion thereof may be registered in the name or names in which the Series A Preferred Stock were registered, despite the instructions to the contrary. 3. ADJUSTMENT OF CONVERSION PRICE. (a) DEFINITION OF ADDITIONAL STOCK. For purposes of this Section 3, "Additional Shares of Common Stock" includes all shares of Common Stock issued by the Company after the Issuance Date, other than: -3- (i) Shares of Common Stock issued upon conversion of shares of Series A Preferred Stock; (ii) Shares of Common Stock (subject to appropriate adjustment for any stock dividend, stock split, combination or other similar recapitalization affecting such shares) issuable or issued to the Company's employees, directors or consultants pursuant to a stock option plan or restricted stock plan approved by the Board; (iii) Shares of Common Stock issued or issuable pursuant to subsection 3(d) below; (iv) Shares of Common Stock or Preferred Stock issuable upon exercise of options, warrants or upon conversion of convertible securities or other rights outstanding as of the Issuance Date; and (v) Shares of capital stock or options or warrants to purchase capital stock issued to financial institutions or lessors in connections with commercial credit agreements, equipment financings or similar transactions or to other corporations, persons or entities in connection with acquisitions, mergers or similar business combinations, partnership arrangements, strategic alliances, licensing arrangements or similar non-capital raising transactions approved by the Board; PROVIDED THAT if more than 33% of the currently outstanding shares of capital stock are issued in connection with one or a series of related acquisitions, then any shares issued in excess of 33% of the currently outstanding shares of capital stock shall be deemed Additional Shares of Common Stock; PROVIDED, FURTHER, THAT in no event shall the foregoing apply to any issuances to private equity or venture capital firms or any private equity division of any investment bank or commercial bank unless such issuances are made pursuant to contracts or other obligations existing as of the date hereof. The number and kind of securities issuable upon the conversion of the Series A Preferred Stock and the Conversion Price shall be subject to adjustment from time to time in accordance with the following provisions: (b) SUBDIVISION OR COMBINATION OF SHARES. In the event that the Company shall at any time or from time to time, prior to conversion of shares of Series A Preferred Stock (x) subdivide the outstanding shares of Common Stock into a larger number of shares or (y) combine the outstanding shares of Common Stock into a smaller number of shares, then, and in each such case, the Conversion Price in effect immediately prior to such event shall be adjusted (and any other appropriate actions shall be taken by the Company) so that the holder of any share of Series A Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other securities of the Company that such holder would have owned or would have been entitled to receive upon or by reason of any of the events described above, had such share of Series A Preferred Stock been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 3(b) shall become effective retroactively in the case of any such subdivision or combination, to the close of business on the day upon which such corporate action becomes effective. -4- (c) STOCK DIVIDENDS. In case Additional Shares of Common Stock are issued as a dividend or other distribution on the Common Stock (or such dividend is declared), the Conversion Price shall be reduced, as of the date a record is taken of the holders of Common Stock for the purpose of receiving such dividend or other distribution (or if no such record is taken, as at the earliest of the date of such declaration, payment or other distribution), to the Conversion Price determined by multiplying the Conversion Price in effect immediately prior to such declaration, payment or other distribution by a fraction (i) the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the declaration or payment of such dividend or other distribution, and (ii) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after the declaration or payment of such dividend or other distribution. In the event that the Company shall declare or pay any dividend on the Common Stock payable in any right to acquire Common Stock for no consideration, then the Company shall be deemed to have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of shares issuable upon exercise of such rights to acquire Common Stock. (d) RECAPITALIZATION OR RECLASSIFICATION OF COMMON STOCK. In case of any (i) capital reorganization or any reclassification (other than a change in par value) of the capital stock of the Company, or (ii) exchange or conversion of the Common Stock for or into securities of another corporation or other entity, or (iii) consolidation or merger of the Company with or into any other person (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock) or (iv) sale, lease or other conveyance of all or substantially all of the assets of the Company, then in each instance referred to in the preceding clauses (i) through (iv), the Board and the person formed by such consolidation or resulting from such capital reorganization, reclassification or merger or which acquires (by sale, lease or other conveyance) such assets, as the case may be, shall make provision upon the election of the holder of Series A Preferred Stock pursuant to Section 5 below such that the Series A Preferred Stock shall thereafter be convertible for the kind and amount of shares of stock, other securities, cash and other property receivable upon such capital reorganization, reclassification, consolidation, merger, sale, lease or other conveyance, as the case may be, by a holder of shares of Common Stock equal to the number of shares of Common Stock underlying the Series A Preferred Stock issuable upon the conversion of the Series A Preferred Stock immediately prior to the effective date of such capital reorganization, reclassification, merger, consolidation, sale, lease or other conveyance and, in each instance referred to in the preceding clauses (i)through (iv) (each, a "TRANSACTION"), appropriate adjustment (as reasonably determined in good faith by the Board) shall be made in the application of the provisions herein set forth with respect to rights and interests thereafter of the holder of the Series A Preferred Stock, to the end that the provisions set forth herein (including the specified changes in and other adjustments of the number of shares underlying the Series A Preferred Stock) shall thereafter be applicable, as near as reasonably may be, in relation to any such shares of stock or other securities or other property thereafter deliverable upon conversion of the Series A Preferred Stock. The Company shall not enter into any Transaction unless effective provision shall be made so as to give effect to the provisions set forth in this subsection (d). The Company shall not effect any transaction described in this subsection 3(d) unless (i) it first gives, to the extent practical, twenty (20) days' prior written notice (but in any event at least ten (10) days prior written notice) of such merger, consolidation, exchange of shares, recapitalization, -5- reorganization or other similar event or sale of assets (during which time the holders of Series A Preferred Stock shall be entitled to convert the Series A Preferred Stock) and (ii) the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligations of this subsection 3(d). The provisions of this subsection 3(d) shall similarly apply to successive consolidations, reorganizations, reclassifications, exchanges, conversions, mergers, sales, leases and other conveyances. (e) ISSUANCE OF STOCK AT LESS THAN CONVERSION PRICE. If the Company shall issue any Additional Shares of Common Stock after the Issuance Date (other than as provided in the foregoing subsections 3(b) through 3(d)), for no consideration or for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue, then in such event, the Conversion Price shall be reduced, concurrently with such issue, to a price equal to the quotient obtained by dividing: (A) an amount equal to (x) the total number of shares of Common Stock outstanding immediately prior to such issuance or sale multiplied by the Conversion Price in effect immediately prior to such issuance or sale, plus (y) the aggregate consideration received or deemed to be received by the Company upon such issuance or sale, by (B) the total number of shares of Common Stock outstanding immediately after such issuance or sale. (f) ISSUANCE OF OPTIONS AND CONVERTIBLE SECURITIES DEEMED ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If the Company, at any time or from time to time after the Issuance Date, shall issue any options, warrants or rights to purchase Common Stock (collectively, "OPTIONS") or securities that, by their terms, directly or indirectly, are convertible into or exchangeable for shares of Common Stock ("CONVERTIBLE SECURITIES") or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued under this Certificate as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued: (i) no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities and, upon the expiration of any such Option or the termination of any such right to convert or exchange such Convertible Securities, the Conversion Price then in effect hereunder shall forthwith be increased to the Conversion Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination, never been issued, and the Common Stock issuable thereunder shall no longer be deemed to be outstanding; -6- (ii) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities, provided that no readjustment pursuant to this clause (B) shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price on the original adjustment date, or (ii) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; and (iii) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any decrease in the consideration payable to the Company, or increase in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such decrease or increase becoming effective, be recomputed to reflect such decrease or increase insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities, provided that no readjustment pursuant to this clause (C) shall have the effect of decreasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price on the original adjustment date, or (ii) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date. (iv) DETERMINATION OF CONSIDERATION. For purposes of this Subsection 3(f), the aggregate consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows: (A) CASH AND PROPERTY: Such consideration shall: (1) insofar as it consists of cash, be computed at the aggregate of cash received by the Company, excluding amounts paid or payable for accrued interest or accrued dividends; (2) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board; and in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (1) and (2) above, as determined in good faith by the Board. (B) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per share -7- received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 3(f)(ii), relating to Options and Convertible Securities, shall be determined by dividing (1) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (2) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (g) OTHER PROVISIONS APPLICABLE TO ADJUSTMENT UNDER THIS SECTION 3. The following provisions shall be applicable to the adjustments in the Conversion Price as provided in this Section 3. (i) TREASURY SHARES. The number of shares of Common Stock at any time outstanding shall not include any shares thereof then directly or indirectly owned or held by or for the account of the Company. (ii) OTHER ACTION AFFECTING COMMON STOCK. If the Company shall take any action affecting the outstanding number of shares of Common Stock other than an action described in any of the foregoing subsections 3(b) through 3(f) hereof, inclusive, which would have an inequitable effect on the holders of the Series A Preferred Stock, then the Conversion Price shall be adjusted in such manner and at such times as the Board on the advice of the Company's independent public accountants may in good faith determine to be equitable in the circumstances. (iii) MINIMUM ADJUSTMENT. No adjustment of the Conversion Price shall be made if the amount of any such adjustment would be an amount less than one percent (1%) of the Conversion Price then in effect, but any such amount shall be carried forward and an adjustment in respect thereof shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate an increase or decrease of one percent (1%) or more. (iv) CERTAIN ADJUSTMENTS. The Conversion Price shall not be adjusted upward -8- except in the event of a combination of the outstanding shares of Common Stock into a smaller number of shares of Common Stock. (i) NO IMPAIRMENT. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series A Preferred Stock against impairment. (j) NOTICES OF ADJUSTMENTS. Whenever the Conversion Price is adjusted as herein provided, the Chief Financial Officer (or other senior executive officer in the absence of such person) of the Company shall, in good faith, compute the adjusted Conversion Price in accordance with the foregoing provisions and shall prepare a written certificate setting forth such adjusted Conversion Price and showing in detail the facts upon which such adjustment is based, and such written instrument shall promptly be delivered to each record holder of the Series A Preferred Stock. 4. RANKING. The Series A Preferred Stock shall rank, as to dividends, rights upon liquidation, dissolution or winding up, senior and prior to (i) the Common Stock and (ii) each other class or series of Capital Stock of the Company hereafter created which does not expressly rank PARI PASSU with or senior to the Series A Preferred Stock, except as otherwise approved by the affirmative vote or consent of the holders of shares of Series A Preferred Stock pursuant to Section 9 hereof. (All equity securities of the Company to which the Series A Preferred Stock ranks senior to, whether with respect to dividends, rights upon liquidation, dissolution, winding up or otherwise, including the Common Stock, are collectively referred to herein as "Junior Securities," all equity securities of the Company to which the Series A Preferred Stock ranks on a parity with, whether with respect to dividends or upon liquidation, dissolution, winding up or otherwise, are collectively referred to herein as "Parity Securities" and all equity securities of the Company to which the Series A Preferred Stock ranks junior, whether with respect to dividends or upon liquidation, dissolution, winding up or otherwise are collectively referred to herein as "Senior Securities"). 5. LIQUIDATION RIGHTS. (a) LIQUIDATION PREFERENCE. Upon a voluntary or involuntary liquidation, under applicable bankruptcy or reorganization legislation, or dissolution or winding up of the Company (each, but excluding Deemed Liquidations as defined in subsection (c), below, a "LIQUIDATION"), before any distribution of assets shall be made to the holders of Junior Securities, the holder of each share of Series A Preferred Stock then outstanding shall be paid out of the assets of the Company legally available for distribution to its stockholders (the "AVAILABLE ASSETS") an amount per share equal to the "LIQUIDATION AMOUNT." For purposes of a Liquidation other than a Deemed Liquidation, the Liquidation Amount shall mean the original issue price per share of the Series A Preferred Stock ($3.00, as adjusted for stock splits, dividends, combinations or other recapitalization of the Series A Preferred Stock) plus all dividends accrued but unpaid on such share (whether or not declared) up -9- to the date of the Liquidation (the "LIQUIDATION Preference"). Upon the completion of the distribution required by this subsection 4(a), and any other distribution to any other class or series of Senior Securities, if assets remain in the Company, the remaining assets of the Company available for distribution to stockholders shall be distributed among the holders of shares of Series A Preferred Stock, the holders of shares of any series of preferred stock entitled to a participating payment and the holders of Common Stock pro rata based on the number of shares of the Common Stock held by each (as if their shares had been converted into Common Stock pursuant to Section 2 above immediately prior to the record date for determining the stockholders of the Company eligible to receive such dividends). (b) PRIORITY. If the Available Assets are insufficient to pay the holders of Series A Preferred Stock the full amount of the Liquidation Amount, the holders of Series A Preferred Stock will share ratably in the distribution of the Available Assets in proportion to the respective amounts that would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. (c) DEEMED LIQUIDATION. For the purposes of this Section 5, the following shall be deemed to be a Liquidation (a "DEEMED LIQUIDATION"): (i) the merger, reorganization or consolidation of the Company into or with another corporation (unless the Company is the surviving entity) or other similar transaction or series of related transactions in which more than 50% of the voting power of the Company is disposed of or in which the stockholders of the Company immediately prior to such merger, reorganization or consolidation own less than 50% of the Company's voting power immediately after or (ii) the sale of all or substantially all the assets of the Company. If the holders of a majority of the then outstanding shares of Series A Preferred Stock, acting together as a single class, elect to waive application of this subsection (c) by giving written notice thereof to the Company, such event will not be a "Deemed Liquidation." Upon a Deemed Liquidation, holders of Series A Preferred Stock shall be entitled, at their election to receive either (i) the Liquidation Preference or (ii) the cash and/or the value of the property, rights or securities distributed to such holders by the acquiring person, firm or other entity pro rata based on the number of shares of the Common Stock held by each (as if their shares had been converted into Common Stock pursuant to Section 2 above immediately prior to the record date for determining the stockholders of the Company eligible to receive such dividends). The value of such property, rights or other securities shall be determined in good faith by the Board. (d) NOTICE. The Company will send a written notice of a Liquidation to the holders of record of the Series A Preferred Stock, stating a payment date, the Liquidation Amount and the place where the Liquidation Amount will be paid, using any of the following delivery methods: (i) in person; (ii) mailed by certified or registered mail, return receipt requested; (iii) sent by national courier; or (iv) sent by telecopier, not less than 25 days prior to the payment date stated therein. The notice will be addressed to each holder at its address as shown by the records of the Company. 6. APPRAISAL. If a majority in interest of the holders of the Series A Preferred Stock reasonably disagrees with any of the Board's determinations referred to in Section 2, Section 3 or Section 5 above (each, a "DETERMINATION"), then the Company and a majority in interest of such holders (the "SERIES A REPRESENTATIVE") shall use good faith efforts to mutually agree upon the -10- designation of a single Qualified Appraiser (as defined below) within seven (7) business days of such event requiring a Determination. The date of such event requiring a Determination shall be referred to as the "DETERMINATION DATE." If such a single Qualified Appraiser is designated, that person shall make a Determination. If the Company and the Series A Representative do not so agree upon the designation of a single Qualified Appraiser within such period, then within five (5) business days following the end of such period, each of the Company and the Series A Representative by written notice to the other shall designate a Qualified Appraiser (or if any party fails to select a Qualified Appraiser within the time period specified, the person selected by the other party shall be the Qualified Appraiser) and the two Qualified Appraisers so designated shall within ten (10) business days of their designation jointly designate a third Qualified Appraiser and solely such third Qualified Appraiser so designated shall independently make a Determination. If there is only a single Qualified Appraiser, the fees and expenses of the Qualified Appraiser shall be paid equally by the Company and the Series A Representative. If three Qualified Appraisers are appointed, the Company shall pay the fees and expenses of the Qualified Appraiser which it appoints, the Series A Representative shall pay the fees and expenses of the Qualified Appraiser which it appoints, and the fees and expenses of the third Qualified Appraiser shall be shared equally by the Company and the Series A Representative. The designated Qualified Appraiser shall make the Determination not later than ten (10) business days following the Determination Date. The Determination made by the Qualified Appraiser shall be final, conclusive and binding on the parties hereto. None of the Qualified Appraisers shall be affiliated with any of the Company, the Series A Representative or another Qualified Appraiser. For the purposes of this Agreement, "QUALIFIED APPRAISER" shall mean an individual who is engaged on a regular basis (although not necessarily full time) in valuing securities or arrangements similar to this Agreement, as the case may be, and may include (but shall not be limited to) professional business appraisers, investment bankers or accountants. 7. DIVIDENDS. The holders of outstanding Series A Preferred Stock shall receive cumulative dividends in cash (except as set forth below) quarterly in arrears on the 30th day of January, April, July and October of each year (each such date, a "DIVIDEND PAYMENT DATE") equal to 5% of the initial Liquidation Preference per share of Series A Preferred Stock, whether or not declared by the Board. Dividends shall begin to accrue on the Series A Preferred Stock as of May 7, 2002. Dividends payable on shares of Series A Preferred Stock shall be cumulative; therefore, if a full or partial dividend on the shares of Series A Preferred Stock with respect to any quarter is not declared by the Board, the Company shall remain obligated to pay a full dividend with respect to that quarter, provided, however, that any unpaid dividends shall not bear interest. At the election of the Company, any accrued but unpaid dividends may be paid in cash at any time. At the election of the Company, each dividend on the Series A Preferred Stock may be paid in shares of Common Stock. Dividends paid in shares of Common Stock shall be paid in full shares only, with a cash payment equal to the value of any fractional shares. The issuance of such shares of Common Stock shall be valued at the average of the per share Market Price for the ten Trading Day period immediately preceding the date on which the dividend becomes due. Each dividend paid in capital stock shall be mailed to the holders of record of the Series A Preferred Stock as their names and addresses appear on the share register of the Company or at the office of the transfer agent on the corresponding dividend payment date. Holders of Series A Preferred Stock will receive -11- written notification from the Company or the transfer agent if a dividend is paid in kind, which notification will specify the number of shares of Common Stock paid as a dividend. All holders of shares of Common Stock issued as dividends shall be entitled to all of the rights and benefits relating to shares of Common Stock as set forth in the Company's Certificate of Incorporation. If the Company at any time or from time to time makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, any cash dividends or distributions or other distribution payable in securities of the Company (including evidences of indebtedness or rights or warrants to subscribe for or purchase any such securities) or any other assets or property (a "DISTRIBUTION"), then the holders of the Series A Preferred Stock shall also be entitled to such Distribution, as if their shares the Series A Preferred Stock had been converted into Common Stock pursuant to Section 2 above immediately prior to the record date for determining the stockholders of the Company eligible to receive such Distribution, at such time when the Distribution is made to the holders of Common Stock. 8. VOTING RIGHTS. Each holder of outstanding shares of Series A Preferred Stock is entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock held of record by such holder are convertible at each meeting of stockholders of the Company (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Company for their action or consideration. Except as provided by law and by the provisions of Section 9 below, the holders of shares of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class. Notwithstanding the above, the Company shall provide each holder of Series A Preferred Stock with prior written notification of any meeting of the stockholders (and copies of proxy materials and other information sent to stockholders). In the event of any undertaking by the Company of a record of its stockholders for the purpose of determining stockholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining stockholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Company, or any proposed liquidation, dissolution or winding up of the Company, the Company shall mail a notice to each holder, at least ten (10) days prior to the record date specified therein (or twenty (20) days prior to the consummation of any transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. To the extent that under the Delaware General Corporation Law ("DGCL") the vote of the holders of the Series A Preferred Stock, voting separately as a class or series as applicable, is required to authorize a given action of the Company, the affirmative vote or consent of the holders of at least a majority of the shares of the Series A Preferred Stock represented at a duly held meeting at which a quorum is present or by written consent of a majority of the shares of Series A Preferred -12- Stock (except as otherwise may be required under the DGCL) shall constitute the approval of such action by the class. To the extent that under the DGCL holders of the Series A Preferred Stock are entitled to vote on a matter with holders of Common Stock, voting together as one class, each share of Series A Preferred Stock shall entitle the holder thereof to cast that a number of votes per share as is equal to the number of shares of Common Stock into which it is then convertible using the record date for determining the stockholders of the Company eligible to vote on such matters as the date as of which the Conversion Price is calculated. Holders of the Series A Preferred Stock shall be entitled to written notice of all stockholder meetings or written consents (and copies of proxy materials and other information sent to stockholders) with respect to which they would be entitled by vote, which notice would be provided pursuant to the Company's bylaws and the DGCL). 9. PROTECTIVE PROVISIONS. So long as the shares of Series A Preferred Stock are outstanding, the Company shall not, take, approve or otherwise ratify any of the following actions without the consent of at least a majority of the then outstanding shares of Series A Preferred Stock: (a) authorize, issue or agree to authorize or issue any new class or series of Parity Securities, Senior Securities or securities or rights of any kind convertible into or exercisable or exchangeable for any such Parity Securities or Senior Securities, or offer, sell or issue any Parity Securities, Senior Securities or securities or rights of any kind convertible into or exercisable or exchangeable for any such Parity Securities or Senior Securities; (b) purchase, repurchase or redeem shares of (i) Common Stock, (ii) securities or rights of any kind convertible into or exercisable or exchangeable for Common Stock or (iii) other securities of the Company, (except in the case of a termination of an employee, at which the Company may repurchase or redeem such shares of Common Stock at cost and pursuant to any agreement under which such shares of Common Stock were issued); (c) increase or decrease the number of members constituting the size of the Board; (d) increase the authorized number of shares of Common Stock or Series A Preferred Stock; (e) effect any merger, combination, reorganization, or sale of all or substantially all of the Company's assets; (f) declare or pay dividends or any other distribution on shares of Common Stock or any other capital stock of the Company except as contemplated herein; (g) amend the Certificate of Incorporation or Bylaws of the Company or alter or change the rights, preferences or privileges of the Series A Preferred Stock or any Parity Securities or Senior Securities in each case so as to affect adversely the rights, preferences or privileges of the Series A Preferred Stock; or (h) increase from 9,673,082 the number of shares of Common Stock reserved for the employee option pool by more than 5% per year. -13- In the event holders of at least a majority of the then outstanding shares of Series A Preferred Stock agree to allow the Company to alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock, pursuant to subsection (g) above, so as to affect the Series A Preferred Stock, then the Company will deliver notice of such approved change to the holders of the Series A Preferred Stock that did not agree to such alteration or change (the "DISSENTING HOLDERS") and Dissenting Holders shall have the right for a period of thirty (30) days to convert pursuant to the terms of this Certificate of Designations their shares of Series A Preferred Stock as they existed prior to such alteration or change or continue to hold their shares of Series A Preferred Stock. 10. PREEMPTIVE RIGHT. (a) The Company shall not issue or sell any shares of Common Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock (the securities issued in such transactions being referred to as the "NEWLY ISSUED Securities"), other than any such issuance or sale (i) which is made pursuant to a public offering pursuant to a registration statement declared effective by the Securities and Exchange Commission, (ii) pursuant to a stock option plan or similar plan or agreement approved by the Board, (iii) in exchange, at fair market value, for assets or equipment to be used by the Company in the ordinary course of business or (iv) pursuant to any of the purchase agreements or the documents executed, filed or delivered in connection therewith, unless prior to the issuance or sale of such Newly Issued Securities each holder of Series A Preferred Stock shall have been given the opportunity (such opportunity being herein referred to as the "PREEMPTIVE RIGHT") to purchase (on the same terms as such Newly Issued Securities are proposed to be sold) the same proportion of such Newly Issued Securities being issued or offered for sale by the Company as (x) the number of shares of Common Stock (calculated solely on account of outstanding Series A Preferred Stock on an as converted basis) held by such holder on the day preceding the date of the Preemptive Notice (as defined below) bears to (y) the total number of shares of Common Stock (calculated on a fully diluted basis with respect to the Series A Preferred Stock and any other Common Stock equivalents which are "in the money") outstanding on the day preceding the date of the Preemptive Notice (as defined below). (b) At least thirty (30) days prior to the issuance by the Company of any Newly Issued Securities, the Company shall give written notice thereof (the "PREEMPTIVE NOTICE") to each holder of Series A Preferred Stock. The Preemptive Notice shall specify (i) the name and address of the bona fide investor to whom the Company proposes to issue or sell Newly Issued Securities, (ii) the total amount of capital to be raised by the Company pursuant to the issuance or sale of Newly Issued Securities, (iii) the number of such Newly Issued Securities proposed to be issued or sold, (iv) the price and other terms of their proposed issuance or sale, (v) the number of such Newly Issued Securities which such holder is entitled to purchase (determined as provided in subsection (a) above), and (vi) the period during which such holder may elect to purchase such Newly Issued Securities, which period shall extend for at least thirty (30) days following the receipt by such holder of the Preemptive Notice (the "PREEMPTIVE ACCEPTANCE Period"). Each holder of Series A Preferred Stock who desires to purchase Newly Issued Securities shall notify the Company within the Preemptive Acceptance Period of the number of Newly Issued Securities he wishes to purchase, as well as the number, if any, of additional Newly Issued Securities he would be willing to purchase in the event that all of the Newly Issued Securities subject to the Preemptive Right are not subscribed for by the other holders of Series A Preferred Stock. -14- (c) After the conclusion of the Preemptive Acceptance Period, any Newly Issued Securities which none of the holders elect to purchase in accordance with the provisions of this Section 10, may be sold by the Company, within a period of four (4) months after the expiration of the Preemptive Acceptance Period, to any other person or persons at not less than the price and upon other terms and conditions not less favorable to the Company than those set forth in the Preemptive Notice. (d) The term "Newly Issued Securities" shall NOT include: (i) Shares of Common Stock issued upon conversion of shares of Series A Preferred Stock; (ii) Shares of Common Stock (subject to appropriate adjustment for any stock dividend, stock split, combination or other similar recapitalization affecting such shares) issuable or issued to the Company's employees, directors or consultants pursuant to a stock option plan or restricted stock plan approved by the Board; (iii) Shares of Common Stock issued or issuable pursuant to subsection 3(d); (iv) Shares of Common Stock or Preferred Stock issuable upon exercise of options, warrants or upon conversion of convertible securities or other rights outstanding as of the Issuance Date; (v) Shares of capital stock or options or warrants to purchase capital stock, issued to financial institutions or lessors in connections with commercial credit agreements, equipment financings or similar transactions or to other corporations, persons or entities in connection with acquisitions, mergers or similar business combinations, partnership arrangements, strategic alliances, licensing arrangements or similar non-capital raising transactions approved by the Board; PROVIDED THAT if more than 33% of the currently outstanding shares of capital stock are issued in connection with one or a series of related acquisitions, mergers or similar business combinations, then any shares issued in excess of 33% of the currently outstanding shares of capital stock shall be deemed Additional Shares of Common Stock; PROVIDED, FURTHER, THAT in no event shall the foregoing apply to any issuances to private equity or venture capital firms or any private equity division of any investment bank or commercial bank unless such issuances are made pursuant to contracts or other obligations existing as of the date hereof; (vi) Shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; and (vii) Securities that are issued by the Company pursuant to a registration statement filed under the Securities Act. 11. NO REISSUANCE OF SERIES A PREFERRED STOCK. No share or shares of Series A Preferred Stock acquired by the Company by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares of Series A -15- Preferred Stock shall be cancelled, retired and eliminated from the shares of Series A Preferred Stock which the Company shall be authorized to issue. Any such shares of Series A Preferred Stock acquired by the Company shall have the status of authorized and unissued shares of Preferred Stock issuable in undesignated Series and may be redesignated and reissued in any series other than as Series A Preferred Stock. 12. REGISTERED HOLDERS. A holder of Series A Preferred Stock registered on the Company's stock transfer books as the owner of shares of Series A Preferred Stock shall be treated as the owner of such shares of all purposes. All notices and all payments required to be mailed to a holder of shares of Series A Preferred Stock shall be mailed to such holder's registered address on the Company's stock transfer books, and all dividends and redemption payments to a holder of Series A Preferred Stock made hereunder shall be deemed to be paid in compliance hereof on the date such payments are deposited into the mail addressed to such holder at his registered address on the Company's stock transfer books. 13. CERTAIN REMEDIES. Any registered holder of shares of Series A Preferred Stock shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Certificate of Designations and to enforce specifically the terms and provisions of this Certificate of Designations in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which such holder may be entitled at law or in equity. 14. HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 15. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of the Series A Preferred Stock set forth herein (as may be amended) from time to time is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, such right, preference or limitation (including, without limitation, the dividend rate) shall be enforced to the maximum extent permitted by law and all other rights, preferences and limitations set forth herein (as so amended) which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] -16- IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer of the Company, has executed this Certificate of Designations as of May 7, 2002. BIOENVISION, INC. By: /s/ Christopher B. Wood --------------------------------------- Name: Dr. Christopher B. Wood Title: Chief Executive Officer EX-4 6 ex4sc13d-bioenvision.txt EXHIBIT 4 EXHIBIT 4 to SCHEDULE 13D WARRANT NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED UNLESS SO REGISTERED OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE. THIS LEGEND SHALL BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT. WARRANT AGREEMENT FOR COMMON STOCK OF BIOENVISION, INC. Warrant No. 1 Date of Issuance: May 7, 2002 Warrant to purchase an aggregate of 3,000,000 shares of Common Stock THIS CERTIFIES that, for value received, PERSEUS-SOROS BIOPHARMACEUTICAL FUND, LP, or its permitted transferees, successors or assigns (collectively, the "HOLDER"), is entitled to purchase from BIOENVISION, INC., a Delaware corporation (the "COMPANY"), at any time, and from time to time, during the exercise period referred to in Section 1 hereof, Three Million (3,000,000) fully paid, validly issued and nonassessable shares (the "WARRANT SHARES") of common stock of the Company, par value $0.00l per share (the "COMMON STOCK"), at the exercise price of $2.00 per share, subject to anti-dilution adjustments as provided herein (the "WARRANT SHARE PRICE"). Securities issuable upon exercise of this Warrant and the exercise price payable therefor are subject to adjustment from time to time as hereinafter set forth. As used herein, the term "Warrant" shall include any warrant or warrants hereafter issued in consequence of the exercise of this Warrant Agreement in part or transfer of this Warrant in whole or in part. Capitalized terms used herein and not defined have the respective meanings given to them in that certain Securities Purchase Agreement, dated the date hereof, by and among the Company, the Holder and the other parties named therein. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "WARRANT REGISTER"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, and the Company shall not be affected by notice to the contrary. Subject to Section 4 of this Warrant, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Transfer Agent (as defined herein) or to the Company. Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a "NEW WARRANT"), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant. Any transfer or assignment of this Warrant and Warrant Shares obtained by the Holder in exercise of this Warrant is subject to the requirements that such securities be registered under the Securities Act and applicable state securities laws or exempt from registration under such laws. 1. EXERCISE; PAYMENT FOR OWNERSHIP INTEREST. (a) Upon the terms and subject to the conditions set forth herein, this Warrant may be exercised in whole or in part by the Holder hereof at any time, or from time to time, on or after the date hereof and on or prior to 5 p.m. New York local time on May 7, 2007 (the "EXPIRATION DATE"), by presentation and surrender of this Warrant to the principal offices of the Company, or at the office of its Transfer Agent, if any, together with the Purchase Form annexed hereto, duly executed, and accompanied by payment to the Company of an amount equal to the Warrant Share Price multiplied by the number of Warrant Shares as to which this Warrant is then being exercised in U.S. dollars by certified or official bank check or wire transfer of immediately available funds of the cash purchase price; provided, however, that in each case, the minimum number of Warrant Shares as to which this Warrant is being exercised shall be the lesser of (i) 1,000 Warrant Shares or (ii) all Warrant Shares then held by the Holder on an as exercised basis; provided, further, that in the event of any merger, consolidation or sale, lease or transfer of all or substantially all of the assets of the Company, prior to the Expiration Date, the Holder shall have the right to exercise this Warrant commencing at such time through the Expiration Date into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. Any transfer of Warrant Shares obtained by the Holder in exercise of this Warrant is subject to the requirement that such securities be registered under the Securities Act, and applicable state securities laws or exempt from registration under such laws. The Holder of this Warrant shall be deemed to be a stockholder of the Warrant Shares as to which this Warrant is exercised in accordance herewith effective immediately after the close of business on the date on which the Holder shall have delivered to the Company this Warrant in proper form for exercise and payment in U.S. dollars by certified or official bank check or wire transfer of immediately available funds of the cash purchase price for the number of Warrant Shares as to which the exercise is being made, notwithstanding that the stock transfer books of the Company shall be then closed or that certificates representing such Warrant Shares shall not then be physically delivered to the Holder. The Company shall not enter into any merger, consolidation or sale, lease or transfer of all or substantially all of the assets of the Company -2- unless effective provision shall be made so as to give effect to the provisions set forth in this subsection (a). (b) If this Warrant shall be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, promptly execute and deliver (but in no event more than ten business days) a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder as to which the Warrant has not been exercised. If this Warrant is exercised in part, such exercise shall be for a whole number of Warrant Shares. Upon any exercise and surrender of this Warrant, the Company (i) will issue and deliver to the Holder a certificate or certificates in the name of the Holder for the largest whole number of Warrant Shares to which the Holder shall be entitled and, if this Warrant is exercised in whole, in lieu of any fractional Warrant Share to which the Holder otherwise might be entitled, cash in an amount equal to the fair value of such fractional Warrant Share (determined in such reasonable and equitable manner as the Board of Directors of the Company (the "BOARD") shall in good faith determine), and (ii) will promptly deliver (but in no event more than ten business days) to the Holder such other securities, properties and cash which the Holder may be entitled to receive upon such exercise, or the proportionate part thereof if this Warrant is exercised in part, pursuant to the provisions of this Warrant. 2. ANTI-DILUTION PROVISIONS. The Warrant Share Price in effect at any time and the number and kind of securities issuable upon exercise of this Warrant shall be subject to adjustment from time to time upon the happening of certain events as follows: 2.1 Adjustments. (a) DEFINITION OF ADDITIONAL STOCK. The term "Additional Shares of Common Stock" includes all shares of Common Stock issued by the Company after the Date of Issuance, other than: (i) Shares of Common Stock issued upon conversion of shares of Series A Preferred Stock; (ii) Shares of Common Stock (subject to appropriate adjustment for any stock dividend, stock split, combination or other similar recapitalization affecting such shares) issuable or issued to the Company's employees, directors or consultants pursuant to a stock option plan or restricted stock plan approved by the Board; (iii) Shares of Common Stock issued or issuable pursuant to subsection 2.1(b)(iv) below; (iv) Shares of Common Stock or Preferred Stock issuable upon exercise of options, warrants or upon conversion of convertible securities or other rights outstanding as of the Date of Issuance; and (v) Shares of capital stock or options or warrants to purchase capital stock issued to financial institutions or lessors in connections with commercial credit -3- agreements, equipment financings or similar transactions or to other corporations, persons or entities in connection with acquisitions, mergers or similar business combinations, partnership arrangements, strategic alliances, licensing arrangements or similar non-capital raising transactions approved by the Board; PROVIDED THAT if more than 33% of the currently outstanding shares of capital stock are issued in connection with one or a series of related acquisitions, mergers or similar business combinations, then any shares issued in excess of 33% of the currently outstanding shares of capital stock shall be deemed Additional Shares of Common Stock; PROVIDED, FURTHER, THAT in no event shall the foregoing apply to any issuances to private equity or venture capital firms or any private equity division of any investment bank or commercial bank unless such issuances are made pursuant to contracts or other obligations existing as of the date hereof. (b) DIVIDEND, SUBDIVISION, COMBINATION OR RECLASSIFICATION OF COMMON STOCK. In the event that the Company shall at any time or from time to time after the issuance of this Warrant but prior to the exercise hereof: (i) make a dividend or distribution on the outstanding shares of Common Stock payable in capital stock; (ii) subdivide or reclassify or reorganize its outstanding shares of Common Stock into a greater number of shares; (iii) combine or reclassify or reorganize its outstanding shares of Common Stock into a smaller number of shares; or (iv) issue, by reclassification of its Common Stock or other reorganization, any Additional Shares of Common Stock; then the number and kind of Warrant Shares purchasable upon exercise of this Warrant shall be adjusted so that the Holder upon exercise hereof shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company that the Holder would have owned or have been entitled to receive after the happening of any of the events described above had this Warrant been exercised immediately prior to the happening of such event or any record date with respect thereto. Whenever the number of Warrant Shares purchasable upon exercise hereof is adjusted as herein provided, the Warrant Price shall be adjusted by multiplying the Warrant Price by a fraction, the numerator of which is equal to the number of shares of Common Stock purchasable prior to the adjustment and the denominator of which is equal to the number of shares of Common Stock purchasable after the adjustment. An adjustment made pursuant to this Section 2.1(b) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or issuance. If, as a result of an adjustment made pursuant to this Section 2.1(b), the Holder of this Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and any other class of capital stock of the Company, the Board (whose good faith determination shall be applied fairly and ratably to all holders of Warrants and shall be conclusive and shall be -4- described in a written notice to all holders of Warrants promptly after such adjustment) shall determine in good faith the allocation of the adjusted Warrant Share Price between or among the shares of such classes of capital stock or shares of Common Stock and such other class of capital stock. The adjustment to the number of Warrant Shares purchasable upon the exercise of this Warrant described in this Section 2.1(b) shall be made each time any event listed in paragraphs (i) through (iv) of this Section 2.1(b) occurs. (c) ISSUANCE OF COMMON STOCK BELOW WARRANT SHARE PRICE. If the Company shall issue any Additional Shares of Common Stock after the date hereof (excluding any such issuance for which an adjustment is made under the foregoing subsection (b)), for no consideration or for a consideration per share less than the Warrant Share Price in effect on the date of and immediately prior to such issue, then in such event, the Warrant Share Price shall be reduced, concurrently with such issue, to a price equal to the quotient obtained by dividing: (A) an amount equal to (x) the total number of shares of Common Stock outstanding immediately prior to such issuance or sale multiplied by the Warrant Share Price in effect immediately prior to such issuance or sale, plus (y) the aggregate consideration received or deemed to be received by the Company upon such issuance or sale, by (B) the total number of shares of Common Stock outstanding immediately after such issuance or sale. As used herein, "Market Price" means, with respect to the shares of Common Stock, (a) if the shares are listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the last reported sales price as reported on such exchange or market; (b) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the average of the last reported closing bid and asked quotation for the shares as reported on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or a similar service if NASDAQ is not reporting such information; (c) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market or quoted by NASDAQ or a similar service, the average of the last reported bid and asked quotation for the shares as quoted by a market maker in the shares (or if there is more than one market maker, the bid and asked quotation shall be obtained from two market makers and the average of the lowest bid and highest asked quotation). In the absence of any available public quotations for the Common Stock, the Board shall determine in good faith the fair value of the Common Stock, which determination shall be set forth in a certificate by the Secretary of the Company. (d) ISSUANCE OF OPTIONS AND CONVERTIBLE SECURITIES DEEMED ISSUANCE OF ADDITIONAL SHARES OF COMMON Stock. If the Company, at any time or from time to time after the Date of Issuance, shall issue any options, warrants or other rights to purchase Common Stock -5- (collectively, "OPTIONS") or securities that, by their terms, directly or indirectly, are convertible into or exchangeable for shares of Common Stock ("CONVERTIBLE Securities") or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued: (i) no further adjustment in the Warrant Share Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities and, upon the expiration of any such Option or the termination of any such right to convert or exchange such Convertible Securities, the Warrant Share Price then in effect hereunder shall forthwith be increased to the Warrant Share Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination, never been issued, and the Common Stock issuable thereunder shall no longer be deemed to be outstanding; (ii) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Warrant Share Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities, provided that no readjustment pursuant to this clause (ii) shall have the effect of increasing the Warrant Share Price to an amount which exceeds the lower of (A) the Warrant Share Price on the original adjustment date, or (B) the Warrant Share Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; and (iii) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any decrease in the consideration payable to the Company, or increase in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Warrant Share Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such decrease or increase becoming effective, be recomputed to reflect such decrease or increase insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities, provided that no readjustment pursuant to this clause (iii) shall have the effect -6- of decreasing the Warrant Share Price to an amount which exceeds the lower of (A) the Warrant Share Price on the original adjustment date, or (B) the Warrant Share Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date. (iv) DETERMINATION OF CONSIDERATION. For purposes of this Subsection 2.1(d), the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows: (A) CASH AND PROPERTY: Such consideration shall: (1) insofar as it consists of cash, be computed at the aggregate of cash received by the Company, excluding amounts paid or payable for accrued interest or accrued dividends; (2) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board; and in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (1) and (2) above, as determined in good faith by the Board. (B) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 2.1(d)(ii), relating to Options and Convertible Securities, shall be determined by dividing (1) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (2) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent -7- adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. In the event that at any time, as a result of an adjustment made pursuant to this Section 2.1, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained herein. (e) EXTRAORDINARY DISTRIBUTIONS. In case the Company shall at any time or from time to time, after the issuance of the Warrant but prior to the exercise hereof, distribute to all holders of its Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation and the Common Stock is not changed or exchanged) cash, evidences of indebtedness, securities or other property or assets (excluding any such event for which adjustment is made under Section 2) or rights or warrants to subscribe for or purchase any of the foregoing, then, and in each such case, the Holder shall be entitled to participate in any such distribution based on the number of shares of Common Stock it would have been entitled to receive had the Warrant been exercised immediately prior to the occurrence of such distribution, as if the Holder were the owner of such shares of Common Stock at the time of such distribution. Notwithstanding the foregoing, this Section 2.1(e) shall be of no force or effect until and unless such time as the Company shall grant a similar right to holders of warrants issued after the date hereof, at which time the Holders shall be entitled to the same protection for extraordinary dividends as granted to such future holders of warrants, if any. 2.2 OTHER ACTION AFFECTING WARRANT SHARES. If the Company takes any action affecting its shares of Common Stock after the date hereof, that would be covered by Section 2.1 but for the manner in which such action is taken or structured, which would in any way diminish the value of this Warrant, then the Warrant Share Price shall be adjusted in such manner as the Board shall in good faith determine to be equitable under the circumstances. 2.3 NOTICE OF ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment of the Warrant Share Price pursuant to this Section 2, the Company at its expense will as promptly as possible, but in any event within ten (10) business days, compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment or readjustment, including a statement of the adjusted Warrant Share Price or adjusted number of shares of Common Stock, if any, issuable upon exercise of each Warrant, describing in reasonable detail the transaction giving rise to such adjustments and showing in detail the facts upon which such adjustment or readjustment is based. The Company will forthwith mail, by first class mail, postage prepaid, a copy of each such certificate to the Holder of this Warrant at the address of such Holder as shown on the books of the Company, and to its Transfer Agent. -8- 2.4 OTHER NOTICES. If at any time: (a) the Company shall (i) offer for subscription pro rata to the holders of shares of the Common Stock any additional equity in the Company or other rights; (ii) pay a dividend in additional shares of the Common Stock or distribute securities or other property or assets to the holders of shares of the Common Stock (including, without limitation, cash, evidences of indebtedness and equity and debt securities); or (iii) issue securities convertible into, or rights or warrants to purchase, securities of the Company; (b) there shall be any capital reorganization or reclassification or consolidation or merger of the Company with, or sale, transfer or lease of all or substantially all of its assets to, another entity; or (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give, by first class mail, postage prepaid, to the Holder of this Warrant at the address of such Holder as shown on the books of the Company, (x) at least 10 days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such subscription rights, dividend, distribution or issuance; PROVIDED THAT such ten (10) day period shall be increased to thirty (30) days in the case of Section 2.4(a)(ii), and (y) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, at least 10 days' prior written notice of the date when the same shall take place if no stockholder vote is required and at least 10 days' prior written notice of the record date for stockholders entitled to vote upon such matter if a stockholder vote is required. Such notice in accordance with the foregoing clause (x) shall also specify, in the case of any such subscription rights, the date on which the holders of shares of Common Stock shall be entitled to exercise their rights with respect thereto, and such notice in accordance with the foregoing clause (y) shall also specify the date on which the holders of shares of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 2.5 ADJUSTMENT CALCULATIONS. No adjustment in the Warrant Share Price shall be required unless such adjustment would require an increase or decrease of at least one cent ($0.01) in such price; provided, however, that any adjustments which by reason of this Section 2.5 are not required to be made shall be carried forward and taken into account in any subsequent adjustment required to be made hereunder. All calculations under this Section 2 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. 2.6 APPRAISAL. If a majority in interest of the Holders reasonably disagrees with any of the Board's determinations referred to in this Section 2 (each, a "DETERMINATION"), then the Company and a majority in interest of such Holders (the "WARRANT REPRESENTATIVE") shall use good faith efforts to mutually agree upon the designation of a single Qualified Appraiser (as defined below) within seven (7) business days of such event requiring a Determination. The date -9- of such event requiring a Determination shall be referred to as the "DETERMINATION DATE." If such a single Qualified Appraiser is designated, that person shall make a Determination. If the Company and the Warrant Representative do not so agree upon the designation of a single Qualified Appraiser within such period, then within five (5) business days following the end of such period, each of the Company and the Warrant Representative by written notice to the other shall designate a Qualified Appraiser (or if any party fails to so select a Qualified Appraiser within the time period specified, the Person selected by the other party shall be the Qualified Appraiser) and the two Qualified Appraisers so designated shall within ten (10) business days of their designation jointly designate a third Qualified Appraiser and solely such third Qualified Appraiser so designated shall independently make a Determination. If there is only a single Qualified Appraiser, the fees and expenses of the Qualified Appraiser shall be paid equally by the Company and the Warrant Representative. If three Qualified Appraisers are appointed, the Company shall pay the fees and expenses of the Qualified Appraiser which it appoints, the Warrant Representative shall pay the fees and expenses of the Qualified Appraiser which it appoints, and the fees and expenses of the third Qualified Appraiser shall be shared equally by the Company and the Warrant Representative. The designated Qualified Appraiser shall make the Determination not later than ten (10) business days following the Determination Date. The Determination made by the Qualified Appraiser shall be final, conclusive and binding on the parties hereto. None of the Qualified Appraisers shall be affiliated with any of the Company, the Warrant Representative or another Qualified Appraiser. For the purposes of this Agreement, "QUALIFIED APPRAISER" shall mean an individual who is engaged on a regular basis (although not necessarily full time) in valuing securities or arrangements similar to this Agreement, as the case may be, and may include (but shall not be limited to) professional business appraisers, investment bankers or accountants. 3. NO VOTING RIGHTS AS STOCKHOLDERS OR LIABILITIES. Except as otherwise provided herein, this Warrant shall not be deemed to confer upon the Holder any right to vote or to consent to or receive notice as a stockholder of the Company, as such, in respect of any matters whatsoever, or any other rights or liabilities as a stockholder, prior to the exercise hereof. Nothing contained in this Warrant shall be deemed as imposing any liabilities on the Holder to purchase any securities whether such liabilities are asserted by the Company or by creditors or stockholders of the Company or otherwise. 4. WARRANTS TRANSFERABLE. Subject to the terms hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed Form of Assignment at the principal offices of the Company. This Warrant and the underlying shares of Common Stock may not be offered, sold or transferred except in compliance with the Securities Act, and any applicable state securities laws, or an exception therefrom, and then only against receipt of an agreement of the person to whom such offer or sale or transfer is made to comply with the provisions of this Warrant with respect to any resale or other disposition of such securities; provided that no such agreement shall be required from any person purchasing this Warrant or the underlying shares of Common Stock pursuant to a registration statement effective under the Securities Act. No such disposition shall occur without an opinion of such Holder's counsel, which opinion shall be reasonably satisfactory to the Company's counsel. -10- 5. WARRANTS EXCHANGEABLE; ASSIGNMENT; LOSS, THEFT, DESTRUCTION, ETC. This Warrant is exchangeable, without expense, upon surrender hereof by the Holder hereof at the principal offices of the Company, or at the office of its Transfer Agent, if any, for new Warrants of like tenor representing in the aggregate the right to subscribe for and purchase the Warrant Shares which may be subscribed for and purchased hereunder, each such new Warrant to represent the right to subscribe for and purchase such Warrant Shares as shall be designated by such Holder hereof at the time of such surrender. Upon surrender of this Warrant to the Company at its principal office, or at the office of its Transfer Agent, if any, with an instrument of assignment duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be cancelled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company, or at the office of its Transfer Agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of indemnity reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender or cancellation of this Warrant, the Company will issue to the Holder hereof a new Warrant of like tenor, in lieu of this Warrant, representing the right to subscribe for and purchase the Warrant Shares which may be subscribed for and purchased hereunder. Any such new Warrant executed and delivered shall constitute an additional contractual obligation of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. 6. LEGENDS; INVESTMENT REPRESENTATIONS. Any certificate evidencing the securities issued upon exercise of this Warrant shall bear a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER SECURITIES LAWS, AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED UNLESS SO REGISTERED OR AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY OTHER APPLICABLE SECURITIES LAWS IS AVAILABLE. 7. MODIFICATIONS AND WAIVERS. The Holder of this Warrant acknowledges and agrees that the terms of this Warrant may be amended, modified or waived only by the written agreement between the Holder and the Company. 8. EXPENSES. The Company shall pay all expenses and other charges payable in connection with the preparation, issuance and delivery of this Warrant and all substitute Warrants. The Holder shall pay all taxes in connection with any sale, assignment or other transfer of this Warrant. -11- 9. BOOKS. The Company shall maintain, at the office or agency of the Company maintained by the Company, books for the registration and transfer of the Warrant. 10. RESERVATION OF WARRANT SHARES. The Company covenants and agrees that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock or its authorized and issued Common Stock held in its treasury, solely for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise of this Warrant, the maximum number of shares of Common Stock which may then be deliverable upon the exercise of this Warrant. The Company or, if appointed, the transfer agent for the Common Stock (the "TRANSFER AGENT"), and every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of any of the rights of purchase aforesaid will be irrevocably authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Warrant on file with the Transfer Agent and with every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by this Warrant. The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto transmitted to the Holder pursuant to Section 2.5 hereof. The Company covenants that all Warrant Shares which may be issued upon exercise of this Warrant will, upon issue, be validly issued, fully paid and nonassessable, not subject to any preemptive rights, and free from all taxes, liens, security interests, charges, and other encumbrances with respect to the issuance thereof. 11. REGISTRATION. The Warrant Shares shall be registered under the Securities Act, to the extent provided in that certain Registration Rights Agreement of even date herewith, by and between the Company and the Holder of this Warrant. 12. LISTING ON SECURITIES EXCHANGES; REGISTRATION. If, and so long as, any class of the Company's Common Stock shall be listed on any national securities exchange (as defined in the Exchange Act) or NASDAQ, the Company shall use its reasonable best efforts to, at its expense, obtain and maintain the approval for listing upon official notice of issuance of all Warrant Shares and maintain the listing of Warrant Shares after their issuance; and the Company will so list on such national securities exchange or NASDAQ, if applicable, will register under the Exchange Act (or any similar statute then in effect), and will maintain such listing of, any other securities that at any time are issuable upon exercise of this Warrant if and at the time any securities of the same class shall be listed on such national securities exchange or NASDAQ by the Company. -12- 13. NO DILUTION OR IMPAIRMENT. The Company will not act for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms of this Warrant, by amendment of its certificate or articles of incorporation or other organizational documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, but will, at all times, in good faith, assist in the carrying out of all such terms. Without limiting the generality of the foregoing, the Company will not increase the par value of any shares of stock receivable on the exercise of this Warrant above the amount payable therefor on such exercise. 14. MISCELLANEOUS. 14.1 NOTICES. All notices and other communications shall be mailed by first-class certified or registered mail, postage prepaid, sent by reputable overnight delivery, delivered by hand or sent by facsimile as follows: If to the Company: Bioenvision, Inc. One Rockefeller Plaza Suite 1600 New York, New York 10020 Attention: President Facsimile: (212) 265-4680 With a copy to: Piper Rudnick LLP 1251 Avenue of the Americas New York, New York 10020-1104 Attention: Andrew J. Cosentino, Esq. Facsimile: (212) 884-8588 If to the Holder: The address and/or facsimile furnished to the Company in writing by the last registered Holder of this Warrant who shall have furnished an address and/or facsimile to the Company in writing. except that any of the foregoing may from time to time by written notice to the other designate another address which shall thereupon become its effective address for the purposes of this paragraph. Any notices, requests or consents hereunder shall be deemed given, and any instruments delivered, five days after they have been mailed by first-class certified or registered mail, postage prepaid, or upon receipt if delivered by a reputable overnight courier or if delivered personally or by facsimile transmission. 14.2 ENTIRE AGREEMENT. This Warrant, including the exhibits and documents referred to herein which are a part hereof, contain the entire understanding of the parties hereto with respect to the subject matter and may be amended only by a written instrument executed by the parties hereto or their successors or assigns. Any paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Warrant. -13- 14.3 GOVERNING LAW. This Warrant 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 Warrant, 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 undersigned 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 Warrant 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. 14.4 HEADINGS. The headings of this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] -14- IN WITNESS WHEREOF, this Warrant Agreement has been executed as of the date first written above. BIOENVISION, INC. By: /s/ Christopher B. Wood --------------------------------------- Name: Dr. Christopher B. Wood Title: Chief Executive Officer -15- PURCHASE FORM Dated: __________ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing _____ Warrant Shares and hereby makes full cash payment of $_____________ in payment of the exercise price thereof. The undersigned has had the opportunity to ask questions of and receive answers from the officers of the Company regarding the affairs of the Company and related matters, and has had the opportunity to obtain additional information necessary to verify the accuracy of all information so obtained. [The undersigned understands that the shares have not been registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction, and hereby represents to the Company that the undersigned is acquiring the shares for its own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such shares.] [THIS MAY NOT APPLY DEPENDING UPON WHETHER THE REGISTRATION STATEMENT IS EFFECTIVE.] ____________________________________________ (Signature) ____________________________________________ (Print or type name) ____________________________________________ (Address) ____________________________________________ ____________________________________________ NOTICE: The signature of this Purchase Form must correspond with the name as written upon the face of the within Warrant, or upon the assignment thereof, if applicable, in every particular, without alteration, enlargement or any change whatsoever. FORM OF ASSIGNMENT [To be completed and signed only upon transfer of Warrant) FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______________________ the right represented by the within Warrant to purchase ________ shares of Common Stock of _____________ to which the within Warrant relates and appoints _____________ attorney to transfer said right on the books of ___________________ with full power of substitution in the premises. Dated: __________________ ___, 200__ ____________________________________________ (Signature must conform in all respects to name of holder as specified on the face of the Warrant) Address of Transferee: ____________________________________________ ____________________________________________ ____________________________________________ In the presence of: _____________________________ CONSENT OF ASSIGNEE ------------------- I HEREBY CONSENT to abide by the terms and conditions of the within Warrant. Dated: ______________________ ____________________________________________ (Signature of Assignee) ____________________________________________ (Print or type name) EX-10 7 ex5sc13d-bioenvision.txt EXHIBIT 5 EXHIBIT 5 to SCHEDULE 13D REGISTRATION RIGHTS AGREEMENT Registration Rights Agreement, dated as of May 7, 2002 (this "AGREEMENT"), by and among Bioenvision, Inc., a Delaware corporation (the "COMPANY"), and the Purchasers (as defined below). W I T N E S S E T H : WHEREAS, the Company is offering (the "OFFERING") an aggregate of up to Seventeen Million Seven Hundred Fifty Thousand Dollars ($17,750,000) of shares of its Series A Preferred Stock, par value $.001 per share (the "SERIES A PREFERRED STOCK"), and common stock purchase warrants exercisable for shares of Common Stock (the "WARRANTS," together with the Series A Preferred Stock, the "SECURITIES"); WHEREAS, the Company desires to issue and sell to the persons listed on SCHEDULE A, attached hereto (each a "PURCHASER," and collectively, the "PURCHASERS"), the Securities as set forth in one or more Securities Purchase Agreements entered into or to be entered into by and between the Company and each Purchaser (the "SECURITIES PURCHASE AGREEMENT"); WHEREAS, the Company and the Purchasers have entered or will have entered into a Securities Purchase Agreement; WHEREAS, it is a condition precedent to the consummation of the transactions contemplated by the Securities Purchase Agreement that the Company provide for the rights set forth in this Agreement; and WHEREAS, certain terms used in this Agreement are defined in Section 3 hereof. 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. REGISTRATION RIGHTS. 1.1 REQUIRED REGISTRATION. The Company shall use its reasonable best efforts to prepare and file with the SEC within sixty (60) days following the Initial Closing Date (as such term is defined in the Securities Purchase Agreement), a registration statement on Form SB-1 or successor form or another form selected by the Company that is available to it under the Securities Act which conforms with all applicable rules and regulations (the "REQUIRED REGISTRATION STATEMENT") with respect to all the Registrable Securities beneficially owned by the Purchasers following the Final Closing (as such term is defined in the Securities Purchase Agreement) to permit the offer and re-sale from time to time of such Registrable Securities in accordance with the methods of distribution provided by the Purchasers. The Company shall keep such Required Registration Statement continuously effective (the "EFFECTIVE PERIOD") until the earliest to occur of (i) the date during which all Registrable Securities registered under the Required Registration Statement are sold, (ii) the date the Company delivers an opinion of counsel that each Designated Holder (as defined below) may sell in the open market in a single transaction all Registrable Securities then held by each such Designated Holder pursuant to Rule 144(k) of the Securities Act (or any successor provision then in effect) without being subject to the volume limitations thereof and (iii) the date (the "Form S-3 Date") that the Company is eligible to use Form S-3 or any successor form to register the offer and resale of the Registrable Securities; provided that the Company shall use its reasonable best efforts to convert the Required Registration Statement to a Form S-3 (or any successor form) pursuant to the rules and regulations of the SEC as soon as practicable after the From S-3 Date. The Company shall use its reasonable best efforts to cause the Required Registration Statement to become and remain effective not later than 105 days after the Initial Closing Date. To the extent that the Registrable Securities are not sold under the Required Registration Statement, the Purchasers shall have the registration rights as enumerated in Sections 1.2, 1.3 and 1.4. 1.2 DEMAND REGISTRATIONS. (a) REQUESTS FOR REGISTRATION. Subject to Sections 1.2(b) and 1.2(e) below, the Purchasers holding at least 33% of the Registrable Securities (the "INITIATING HOLDERS") may at any time after the completion of the Effective Period or if the Required Registration Statement has not been effective for more than ninety (90) days immediately preceding any request under this Section 1.2(a), request registration under the Securities Act of all or part of their Registrable Securities on Form S-1, Form S-2 or any successor form of registration, or, if available, on Form S-3 or any successor form of registration; PROVIDED that the Initiating Holders (together with all other holders of Registrable Securities to be included in such registration) propose to sell Registrable Securities at an aggregate price (calculated based upon the Market Price of the Registrable Securities on the date of filing of the Registration Statement with respect to such Registrable Securities) to the public of the lesser of (i) $1,000,000 or (ii) the remaining Registrable Securities. Each such registration request shall specify the number of Registrable Securities requested to be registered and if the offering is to be an underwritten offering. Within ten (10) days after receipt of any such request, the Company will give written notice of such requested registration to all other holders of Registrable Securities and, subject to the provisions hereof, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the holder's receipt of the Company's notice. A registration requested pursuant to this Section 1.2(a) are referred to herein as a "DEMAND REGISTRATION." (B) NUMBER OF REGISTRATIONS. The Purchasers and their permitted transferees are entitled to request two (2) Demand Registrations; PROVIDED that if the Company is eligible to file a registration statement on Form S-3, then the Initiating Holders shall not request a registration on Form S-1. The Company shall use its reasonable best efforts to cause any such -2- Demand Registration to become and remain effective not later than seventy five (75) days after it receives a request under Section 1.2(a) hereof; PROVIDED, that such seventy five (75) day period shall be reduced to sixty (60) days if the Company is filing a Registration Statement on Form S-3. Except as provided in Section 1.2(c) below, a registration shall not constitute a Demand Registration until it has become effective and remains continuously effective for the lesser of (i) the period during which all Registrable Securities registered in the Demand Registration are sold and (ii) 105 days; PROVIDED, HOWEVER, that a registration shall not constitute a Demand Registration if (x) after such Demand Registration has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason not attributable to the Initiating Holders and such interference is not thereafter eliminated or (y) the conditions specified in the underwriting agreement, if any, entered into in connection with such Demand Registration are not satisfied or waived, other than by reason of a failure by the Initiating Holders. (c) WITHDRAWAL. If a holder of Registrable Securities (each a "DESIGNATED HOLDER" and collectively, the "DESIGNATED HOLDERS") sends the Company a written request for inclusion of part or all of such Designated Holder's Registrable Securities in a registration, such Designated Holder shall not be entitled to withdraw or revoke such request without the prior written consent of the Company unless the Designated Holders reimburse the Company for the registration expenses set forth in Section 1.6(s) with respect to such Demand Registration. If the Designated Holders fail to reimburse the Company for such registration expenses, including, but not limited to legal and accounting expenses, within thirty (30) days of receipt of notice of such registration expenses, then such request shall constitute a Demand Registration, unless such withdrawal or revocation was due to a material adverse change to the Company which, upon the advice of the Company's counsel, required disclosure on a Current Report on Form 8-K. (d) PRIORITY IN DEMAND REGISTRATIONS. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering, exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without materially and adversely affecting the marketability of the offering (the "OFFERING QUANTITY"), then the Company will include in such registration securities in the following priority: (i) First, for a demand made by the Initiating Holders, all Registrable Securities owned by the Initiating Holders and the number of shares to be offered for the account of all other Designated Holders, pro rata, based on the amount of Registrable Securities held by each such holder and the amount of Registrable Securities held by all such holders, on an as converted basis. To the extent more than 22.5% of the Registrable Securities, so requested to be registered by the Initiating Holders and the other Designated Holders are excluded from an offering under this Section 1.2(d) (a "RELOAD Event"), then the Designated Holders shall have the right to one additional Demand Registration (but in -3- no event shall the number of additional Demand Registrations pursuant to this Agreement exceed a total of three additional Demand Registrations) under, and subject to the limitations of, Section 3.1 upon the occurrence of each Reload Event. (ii) Second, the number of shares to be offered for the account of the Company. (iii) Third, to the extent (and only to the extent) that the Offering Quantity exceeds the aggregate amount of securities to be sold in clauses (i) and (ii), the Company will include in such registration any other Registrable Securities requested to be included in such offering, and if the number of such other holders' securities requested to be included exceeds the Offering Quantity, then the Company shall include only each such requesting holder's pro rata share of the Offering Quantity, based on the amount of securities held by such holder, on an as converted basis; PROVIDED, THAT no shares under clauses (ii) and (iii) shall be included on the holder's first Demand Registration on Form S-3. (e) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company will not be obligated to effect any Demand Registration within 120 days after the effective date of a previous Demand Registration or other registration of securities of the Company (other than a shelf registration under Rule 415 of the Securities Act or a Registration Statement on Form S-8) for the account of the Initiating Holders (so long as at least two-thirds of the Registrable Securities requested to be included in such registration by the Initiating Holders were included) or any other Designated Holder (so long as they had the opportunity to participate in such registration and at least two-thirds of the Registrable Securities requested to be included in such registration by the Designated Holders were included). Such 120-day period shall be reduced to seventy five (75) days, if less than two-thirds of the Registrable Securities requested to be registered are included in such registration. In addition, the Company will not be obligated to effect more than one Demand Registration within a nine (9) month period. (f) SELECTION OF UNDERWRITERS. In connection with a Demand Registration that is an underwritten offering, at the request of the Initiating Holders or otherwise, the Company shall select a nationally recognized investment banking firm to administer the offering, such selection to be subject to the approval of the Initiating Holders which approval shall not be unreasonably withheld. 1.3 FORM S-3 REGISTRATION. If the Company is eligible to use Form S-3 under the Securities Act (or any similar successor form) and shall receive from a Purchaser and its permitted transferees (the "S-3 INITIATING HOLDERS") a written request or requests that the Company effect a registration on such Form S-3 pursuant to Rule 415 of the Securities Act and any related qualification or compliance with respect to all or part of the Registrable Securities owned by the S-3 Initiating Holders and its permitted transferees (PROVIDED, THAT the S-3 Initiating Holders registering Registrable Securities in such registration (together with all other holders of Registrable Securities to be included in such registration) propose to sell their Registrable -4- Securities at an aggregate price (calculated based upon the Market Price of the Registrable Securities on the date of filing of the Form S-3 with respect to such Registrable Securities) to the public of no less than $1,000,000), the Company shall (i) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other holders of Registrable Securities; and (ii) as soon as practicable, use reasonable best efforts to file and effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of the Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other holder in the group of holders joining in such request as is specified in a written request given within fifteen (15) days after the holder's receipt of such written notice from the Company. No registration requested by any S-3 Initiating Holders pursuant to this Section 1.3 shall be deemed a registration pursuant to Sections 1.1 or 1.2. 1.4 PIGGYBACK REGISTRATIONS. (a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any of its securities under the Securities Act (other than pursuant to a Demand Registration, a registration pursuant to Section 1.3 or a registration on Form S-4 or S-8 or any successor or similar forms) and the registration form to be used may be used for the registration of Registrable Securities, whether or not for sale for its own account, the Company will give prompt written notice (but in no event less than twenty five (25) days before the anticipated filing date) to all holders of Registrable Securities, and such notice shall describe the proposed registration and distribution and offer to all holders of Registrable Securities the opportunity to register the number of Registrable Securities as each such holder may request. The Company will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the holders' receipt of the Company's notice (a "PIGGYBACK REGISTRATION"). (b) REASONABLE EFFORTS. The Company shall use all reasonable best efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggyback Registration to be included on the same terms and conditions as any similar securities of the Company or any other security holder included therein and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method of distribution thereof. (c) WITHDRAWAL. Any Designated Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any Registration Statement pursuant to this Section 1.4 by giving written notice to the Company of its request to withdraw; PROVIDED, that in the event of such withdrawal (other than pursuant to Section 1.4(f) hereof, the Company shall not be required to reimburse such holder for the fees and expenses referred to in Section 1.6(s) hereof incurred by such holder prior to such withdrawal. The Company may withdraw a Piggyback Registration at any time prior to the time it becomes effective. -5- (d) OBLIGATIONS. No registration effected under this Section 1.4, and no failure to effect a registration under this Section 1.4, shall relieve the Company of its obligation to effect a registration upon the request of the Purchaser and its permitted transferees pursuant to Section 1.2 or Section 1.3, and no failure to effect a registration under this Section 1.4 and to complete the sale of Registrable Securities in connection therewith shall relieve the Company of any other obligation under this Agreement (including, without limitation, the Company's obligations under Section 1.7 and 1.8). (e) PRIORITY IN REGISTRATIONS. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that in their opinion the number of Registrable Securities requested to be included on a secondary basis in such registration exceeds the number which can be sold in such offering without materially and adversely affecting the marketability of such primary or secondary offering (the "COMPANY OFFERING QUANTITY"), then the Company will include in such registration securities in the following priority: (i) First, the Company will include the securities the Company proposes to sell. (ii) Second, the Company will include all Registrable Securities requested to be included by any Designated Holder, and if the number of such Designated Holders' securities requested to be included exceeds the Company Offering Quantity, then the Company shall include only each such requesting Designated Holders' pro rata share of the shares available for registration by the Purchaser, based on the amount of securities held by such holder, on an as converted basis. (f) CUTBACK. If, as a result of the proration provisions of this Section 1.4, any Designated Holders shall not be entitled to include all Registrable Securities in a Piggyback Registration that such Designated Holders has requested to be included, such holder may elect to withdraw his request to include Registrable Securities in such registration but the Company shall be required to reimburse such holder for the fees and expenses referred to in Section 1.7(b) hereof incurred by such holder prior to such withdrawal. 1.5 HOLDBACK AGREEMENTS. (a) To the extent not inconsistent with applicable law, upon the request of the Company or, in the case of an underwritten public offering, the underwriters managing such underwritten offering of the Company's securities, each holder of Registrable Securities who owns at least 5% of the outstanding capital stock of the Company on an "as-converted" basis will not effect any public sale or distribution (other than those included in the registration) of any securities of the Company, or any securities, options or rights convertible into or exchangeable or exercisable for such securities during the seven days prior to and the 90-day period beginning on such effective date, unless (in the case of an underwritten public offering) the managing -6- underwriters otherwise agree to a shorter period of time. Notwithstanding the foregoing, no Designated Holder shall be required to enter into any such "lock up" agreement unless and until all of the Company's executive officers and directors execute identical "lock up" agreements and the Company uses commercially reasonably efforts to cause each holder of more than 5% of its outstanding capital stock execute identical "lock up" agreements. Neither the Company nor the underwriter shall amend, terminate or waive a "lock up" agreement unless each "lock up" agreement with a Designated Holder is also amended or waived in a similar manner or terminated, as the case may be. (b) The Company shall have the right at any time to require that the Designated Holders of Registrable Securities suspend further open market offers and sales of Registrable Securities pursuant to a Registration Statement filed hereunder whenever in the reasonable judgment of the Company after consultation with counsel there is or may be in existence a Changing Event (as defined in Section 1.6(e)). The Company will give the Designated Holders notice of any such suspension and will use all reasonable best efforts to minimize the length of such suspension. (c) The Company agrees not to effect any public sale or distribution of any of its securities, or any securities convertible into or exchangeable or exercisable for such securities (except pursuant to registrations on Form S-4 or S-8 or any successor thereto), during the period beginning on the effective date of any Registration Statement in which the Designated Holders of Registrable Securities are participating and ending on the earlier of (i) the date on which all Registrable Securities registered on such Registration Statement are sold and (ii) forty five (45) days after the effective date of such Registration Statement (except securities covered by such Registration Statement). 1.6 REGISTRATION PROCEDURES. Whenever any Registrable Securities are required to be registered pursuant to this Agreement, the Company will use reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended methods of disposition thereof, and pursuant thereto the Company will as expeditiously as possible: (a) prepare and file with the SEC on any form, if not so otherwise provided for, for which the Company qualifies, as soon as practicable (but within 45 days) after the end of the period within which requests for registration may be given to the Company, a Registration Statement with respect to the offer and sale of such Registrable Securities and thereafter use reasonable best efforts to cause such Registration Statement to become effective and remain effective until the completion of the distribution contemplated thereby (and before filing such Registration Statement, the Company will furnish to the counsel selected by the holders of a majority of the Registrable Securities initiating such Registration Statement copies of all such documents proposed to be filed); PROVIDED, HOWEVER, that the Company may postpone for not more than thirty (30) calendar days the filing or effectiveness of a Demand Registration Statement if the Board of Directors, in its good faith judgment, determines that such registration -7- could reasonably be expected to have a material adverse effect on the Company and its stockholders including, but not limited to, any proposal or plan by the Company to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or similar transaction then under consideration (in which event, the Designated Holders shall be entitled to withdraw such request, and if such request is withdrawn such registration will not count as a Demand Registration) by delivering written notice to the Designated Holders who requested inclusion of Registrable Securities in such Registration Statement of its determination to postpone such Registration Statement; PROVIDED, FURTHER, THAT (i) the Company shall not disclose any information that could be deemed material non-public information to any holder of Registrable Securities included in a Registration Statement that is subject to such postponement, (ii) in no event may the Company postpone a filing requested hereunder more than twice in any twelve (12) month period; PROVIDED, THAT any two postponements must be at least three (3) months apart and (iii) in no event shall the foregoing apply to any registration pursuant to Section 1.2; PROVIDED, FURTHER, THAT the Company shall delay the effectiveness of any Demand Registration Statement if the SEC rules and regulations prohibit the Company from declaring a Registration Statement effective because its financial statements are stale at a time when its fiscal year has ended or it has made an acquisition reportable under Item 2 of Form 8-K or any other similar situation until the earliest time in which the SEC would allow the Company to declare a Registration Statement effective (provided that the Company shall use its reasonable best efforts to cure any such situation as soon as possible so that the Registration Statement can be made effective at the earliest possible time); (b) prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period provided for in the applicable Section above, or if not so provided, for a period of twenty four (24) months (for a registration pursuant to Rule 415 of the Securities Act) or, if such Registration Statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer or (ii) such shorter period as will terminate when all of the securities covered by such Registration Statement have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such Registration Statement (but in any event not before the expiration of any longer period required under the Securities Act), and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such Registration Statement. In the event the Company shall give any notice pursuant to Section 1.5(b), the applicable time period mentioned in this Section 1.6(b) during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 1.5(b) to and including the date when each seller of a Registrable Security covered by such Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 1.6(e); -8- (c) furnish to each seller of Registrable Securities, prior to filing a Registration Statement, such number of copies of such Registration Statement, each amendment and supplement thereto, the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (d) register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller and to keep each such registration or qualification (or exemption therefrom) effective during the period which the Registration Statement is required to be kept effective (provided, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction); (e) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event (a "CHANGING EVENT") as a result of which, the prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will as soon as possible prepare and furnish to such seller (a "CORRECTION EVENT") a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made; (f) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on The Nasdaq Stock Market or the Nasdaq SmallCap trading system; (g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such Registration Statement; (h) enter into such customary agreements (including underwriting agreements in customary form with any underwriter selected pursuant to 1.2(f)) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities, including causing its officers to participate in "road shows" and other information meetings organized by an underwriter selected pursuant to Section 1.2(f); -9- (i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such Registration Statement; (j) before filing a Registration Statement or prospectus or any amendments or supplements thereto, the Company shall provide counsel selected by the Designated Holders holding a majority of the Registrable Securities being registered in such registration ("HOLDERS' COUNSEL") and any other Inspector (as defined below) with an adequate and appropriate opportunity to review and comment on such Registration Statement and each prospectus included therein (and each amendment or supplement thereto) to be filed with the SEC, subject to such documents being under the Company's control, and the Company shall notify the Holders' Counsel and each seller of Registrable Securities of any stop order issued or threatened by the SEC; (k) otherwise comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company's first full calendar quarter after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (l) in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such Registration Statement for sale in any jurisdiction, the Company will use its reasonable best efforts promptly to obtain the withdrawal of such order; (m) obtain one or more comfort letters, dated the effective date of such Registration Statement (and, if such registration includes an underwritten offering, dated the date of the closing under the underwriting agreement), signed by the Company's independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the holders of a majority of the Registrable Securities being sold reasonably request; (n) provide a legal opinion of the Company's outside counsel, dated the effective date of such Registration Statement (and, if such registration includes an underwritten offering, dated the date of the closing under the underwriting agreement), with respect to the Registration Statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature; -10- (o) make available at reasonable times for inspection by any seller of Registrable Securities, any managing underwriter participating in any disposition of such Registrable Securities pursuant to a Registration Statement, Holders' Counsel and any attorney, accountant or other agent retained by any managing underwriter (each, an "INSPECTOR" and collectively, the "INSPECTORS"), all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, the "RECORDS") as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's and its subsidiaries' officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector in connection with such Registration Statement; (p) keep Holders' Counsel advised as to the initiation and progress of any registration hereunder including, but not limited to, providing Holders' Counsel with all correspondence with the SEC; (q) cooperate with each seller of Registrable Securities and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD; and (r) take all other steps reasonably necessary to effect the registration of the Registrable Securities contemplated hereby. (s) REGISTRATION EXPENSES. All expenses incident to the Company's performance of or compliance with this Agreement including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions, which will be paid by the sellers of Registrable Securities) and other Persons retained by the Company will be borne by the Company, and the Company will pay its internal expenses (including, without limitation, all salaries and expenses of its Employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on The Nasdaq National Market, Nasdaq SmallCap Market or the OTC Bulletin Board trading system. Without limitation, the foregoing shall include, with respect to each Registration Statement hereunder, the fees, charges and disbursements up to $25,000 of one counsel to the Designated Holders (which shall be designated by a majority in interest of the Designated Holders of Registrable Securities participating in the proposed sale pursuant to the Registration Statement in question); PROVIDED, HOWEVER, that the Company shall have no obligation to pay any underwriting discounts or commissions attributable to the sale of Registrable Securities and any of the expenses incurred by such Designated Holders which are not payable by the Company, such costs to be borne by such Designated Holder or Holders. -11- 1.7 INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities and its general or limited partners, officers, directors, members, managers, employees, advisors, representatives, agents and Affiliates (collectively, the "REPRESENTATIVES") from and against any loss, claim, damage, liability, attorney's fees, cost or expense and costs and expenses of investigating and defending any such claim (collectively, the "LOSSES"), joint or several, and any action in respect thereof to which such holder of Registrable Securities or its Representatives may become subject under the Securities Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereto) arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, prospectus or preliminary or summary prospectus or any amendment or supplement thereto or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company shall reimburse each such holder of Registrable Securities and its Representatives for any legal or any other expenses incurred by them in connection with investigating or defending or preparing to defend against any such Loss, action or proceeding; PROVIDED, HOWEVER, that the Company shall not be liable to any such holder or other indemnitee in any such case to the extent that any such Loss (or action or proceeding, whether commenced or threatened, in respect thereof) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission, made in such Registration Statement, any such prospectus or preliminary or summary prospectus or any amendment or supplement thereto, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such holder of Registrable Securities or its Representatives expressly for use therein or by failure of such holder of Registrable Securities to deliver a copy of the Registration Statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder of Registrable Securities with a sufficient number of copies of the same. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. (b) In connection with any Registration Statement in which the holders of Registrable Securities are participating pursuant to Sections 1.2, 1.3 and 1.4 hereof, the holders of Registrable Securities will furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or prospectus and, to the fullest extent permitted by law, each such holder of Registrable Securities will indemnify and hold harmless the Company and its Representatives from and against any Losses, severally but not jointly, and any action in respect thereof to which the Company and its Representatives may become subject under the Securities Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) the purchase or sale of Registrable Securities during a suspension as set forth in Section 1.5(b) after written receipt of notice of such suspension, (ii) any untrue or alleged -12- untrue statement of a material fact contained in the Registration Statement, prospectus or preliminary or summary prospectus or any amendment or supplement thereto, or (iii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but, with respect to clauses (ii) and (iii) above, only to the extent that such untrue statement or omission is made in such Registration Statement, any such prospectus or preliminary or summary prospectus or any amendment or supplement thereto, in reliance upon and in conformity with written information prepared and furnished to the Company by such holder of Registrable Securities expressly for use therein or by failure of such holder of Registrable Securities to deliver a copy of the Registration Statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder of Registrable Securities with a sufficient number of copies of the same, and such holder of Registrable Securities will reimburse the Company and each Representative for any legal or any other expenses incurred by them in connection with investigating or defending or preparing to defend against any such Loss, action or proceeding; PROVIDED, HOWEVER, that such holder of Registrable Securities shall not be liable in any such case to the extent that prior to the filing of any such Registration Statement or prospectus or amendment or supplement thereto, such holder of Registrable Securities has furnished in writing to the Company information expressly for use in such Registration Statement or prospectus or any amendment or supplement thereto which corrected or made not misleading information previously furnished to the Company; PROVIDED, FURTHER, HOWEVER, that the obligation to indemnify will be individual to each such holder of Registrable Securities and will be limited to the net amount of proceeds received by such holder of Registrable Securities from the sale of Registrable Securities pursuant to such Registration Statement. (c) Promptly after receipt by any Person in respect of which indemnity may be sought pursuant to Section 1.7(a) or 1.7(b) (an "INDEMNIFIED PARTY") of notice of any claim or the commencement of any action, the Indemnified Party shall, if a claim in respect thereof is to be made against the Person against whom such indemnity may be sought (an "INDEMNIFYING PARTY"), promptly notify the Indemnifying Party in writing of the claim or the commencement of such action; PROVIDED, that the failure to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which it may have to an Indemnified Party otherwise than under Section 1.7(a) or 1.7(b) except to the extent of any actual prejudice resulting therefrom. If any such claim or action shall be brought against an Indemnified Party, and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified Indemnifying Party, to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; PROVIDED, that the Indemnified Party shall have the right to employ separate counsel to represent the Indemnified Party and its Representatives who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, but the fees -13- and expenses of such counsel shall be for the account of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the written opinion of counsel to such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest between them, it being understood, however, that the Indemnifying Party shall not, in connection with any one such claim or action or separate but substantially similar or related claims or actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnified Parties. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding. Whether or not the defense of any claim or action is assumed by the Indemnifying Party, such Indemnifying Party will not be subject to any liability for any settlement made without its consent, which consent will not be unreasonably withheld. (d) If the indemnification provided for in this Section 1.7 is unavailable to the Indemnified Parties in respect of any Losses referred to herein, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the holders of the Registrable Securities on the other from the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company on the one hand and the holders of the Registrable Securities on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of each holder of the Registrable Securities on the other shall be determined by reference to, among other things, whether any action taken, including any untrue or alleged untrue statement of a material fact, or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the holders of the Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 1.7(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the Losses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 1.7, no holder of the Registrable Securities shall be required to contribute any amount in excess of the -14- amount by which the total price at which the Registrable Securities of such holder were offered to the public exceeds the amount of any Losses which such holder has otherwise paid by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Each holder's obligations to contribute pursuant to this Section 1.7 is several in the proportion that the proceeds of the offering received by such holder of the Registrable Securities bears to the total proceeds of the offering received by all the holders of the Registrable Securities and not joint. 1.8 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. (a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or "green shoe" option requested by the managing underwriter(s), PROVIDED, that each holder of Registrable Securities shall not be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and this Agreement. (b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 1.6(e) above, such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the Registration Statement until such Person's receipt of the copies of a supplemented or amended prospectus as contemplated by such Section 1.6(e). 1.9 CURRENT PUBLIC INFORMATION. The Company covenants that it will file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and will use reasonable best efforts to take such further action as the Purchaser may reasonably request, all to the extent required to enable the holders of Registrable Securities to sell Registrable Securities pursuant to Rule 144 or Rule 144A adopted by the SEC under the Securities Act or any similar rule or regulation hereafter adopted by the SEC. The Company shall, upon the request of a Designated Holder, deliver to such Designated Holder a written statement as to whether it has complied with such requirements. 2. TRANSFERS OF CERTAIN RIGHTS. 2.1 TRANSFER. The rights granted to the Purchaser under this Agreement may be transferred subject to the provisions of Sections 2.2 and 2.3; PROVIDED that nothing contained herein shall be deemed to permit an assignment, transfer or disposition of the Registrable -15- Securities in violation of the terms and conditions of the Securities Purchase Agreement, the Certificate of Designations of the Series A Preferred Stock, the Warrants or applicable law. 2.2 TRANSFEREES. Any transferee to whom rights under this Agreement are transferred shall, as a condition to such transfer, deliver to the Company a written instrument by which such transferee agrees to be bound by the obligations imposed upon the Purchaser under this Agreement to the same extent as if such transferee were a Purchaser hereunder. 2.3 SUBSEQUENT TRANSFEREES. A transferee to whom rights are transferred pursuant to this Section 2 may not again transfer such rights to any other person or entity, other than as provided in Sections 2.1 or 2.2 above. 3. CERTAIN DEFINITIONS. The following capitalized terms shall have the meanings ascribed to them below: "Affiliate" means any Person that directly or indirectly controls, or is under control with, or is controlled by such Person. As used in this definition, "control" (including with its correlative meanings, "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Closing Price" means, with respect to the Registrable Securities (a) if the shares are listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the last reported sales price as reported on such exchange or market; (b) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the average of the last reported closing bid and asked quotation for the shares as reported on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or a similar service if NASDAQ is not reporting such information; (c) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market or quoted by NASDAQ or a similar service, the average of the last reported bid and asked quotation for the shares as quoted by a market maker in the shares (or if there is more than one market maker, the bid and asked quotation shall be obtained from two market makers and the average of the lowest bid and highest asked quotation). In the absence of any available public quotations for the Common Stock, the Board and a majority of the Holders shall determine in good faith the fair value of the Common Stock "Common Stock" means the common stock, par value $0.001 per share, of the Company. "Employees" means any current, former, or retired employee, office consultant, advisor, independent contractor, agent, officer or director of the Company. -16- "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. "Market Price" means, on any date of determination, the average of the daily Closing Price of the Registrable Securities for the immediately preceding thirty (30) days on which the national securities exchanges are open for trading. "Person" means any individual, company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, governmental body or other entity. "Registrable Securities" means, subject to the immediately following sentence, (i) shares of Common Stock issued or issuable upon the conversion of shares of Series A Preferred Stock acquired from the Company pursuant to the Securities Purchase Agreement, (ii) shares of Common Stock issued or issuable upon the exercise of the Warrants acquired from the Company pursuant to the Securities Purchase Agreement and (iii) any shares of Common Stock issued or issuable directly or indirectly with respect to the securities referred to in clause (i) and (ii) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular shares of Common Stock constituting Registrable Securities, such shares of Common Stock will cease to be Registrable Securities when they (x) have been effectively registered under the Securities Act and disposed of in accordance with a Registration Statement covering them, (y) have been sold to the public pursuant to Rule 144 (or by similar provision under the Securities Act), or (z) are eligible for resale under Rule 144(k) (or by similar provision under the Securities Act) without any limitation on the amount of securities that may be sold under paragraph (e) thereof. "Registration Statement" means any registration statement of the Company filed under the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement. "SEC" means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. 4. MISCELLANEOUS. 4.1 RECAPITALIZATIONS, EXCHANGES, ETC. The provisions of this Agreement shall apply to the full extent set forth herein with respect to (i) the Securities, (ii) any and all shares of Common Stock into which the Securities are converted, exchanged or substituted in any recapitalization or other capital reorganization by the Company and (iii) any and all equity -17- securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in conversion of, in exchange for or in substitution of, the Securities and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof. The Company shall cause any successor or assign (whether by merger, consolidation, sale of assets or otherwise) to enter into a new registration rights agreement with the Designated Holders on terms substantially the same as this Agreement as a condition of any such transaction. 4.2 NO INCONSISTENT AGREEMENTS. The Company has not and shall not enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Purchasers in this Agreement or grant any additional registration rights to any Person or with respect to any securities which are not Registrable Securities which are prior in right to or inconsistent with the rights granted in this Agreement. 4.2 AMENDMENTS AND WAIVERS. The provisions of this Agreement may be amended and the Company may take action herein prohibited, or omit to perform any act herein required to be performed by it, if, but only if, the Company has obtained the written consent of holders of at least a majority of the Registrable Securities then in existence. 4.3 SEVERABILITY. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 4.4 COUNTERPARTS. This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 4.5 NOTICES. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy, telex or similar writing) and shall be deemed given or made as of the date delivered, if delivered personally or by telecopy (provided that delivery by telecopy shall be followed by delivery of an additional copy personally, by mail or overnight courier), one day after being delivered by overnight courier or three days after being mailed by registered or certified mail (postage prepaid, return receipt requested), to the parties at the following addresses (or to such other address or telex or telecopy number as a party may have specified by notice given to the other party pursuant to this provision): -18- If to the Company, to: Bioenvision, Inc. One Rockefeller Plaza Suite 1600 New York, New York 10020 Attention: President Facsimile: (212) 265-4680 With a copy (which shall by itself not constitute notice) to: Piper Rudnick LLP 1251 Avenue of the Americas New York, New York 10020-1104 Attention: Andrew J. Cosentino, Esq. Facsimile: (212) 884-8588 If to the Purchaser, to: The address or facsimile number of each Purchaser as recorded in the stockholders records of the Company. 4.6 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws rules or provisions. 4.7 FORUM; SERVICE OF PROCESS. Any legal suit, action or proceeding brought by any party or any of its affiliates arising out of or based upon this Agreement shall be instituted in any federal or state court in New York County, New York, and each party waives any objection which it may now or hereafter have to the laying of venue or any such proceeding, and irrevocably submits to the jurisdiction of such courts in any such suit, action or proceeding. 4.8 CAPTIONS. The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way limit or amplify the terms and provisions hereof. 4.9 NO PREJUDICE. The terms of this Agreement shall not be construed in favor of or against any party on account of its participation in the preparation hereof. 4.10 WORDS IN SINGULAR AND PLURAL FORM. Words used in the singular form in this Agreement shall be deemed to import the plural, and vice versa, as the sense may require. 4.11 REMEDY FOR BREACH. The Company hereby acknowledges that in the event of any breach or threatened breach by the Company of any of the provisions of this Agreement, -19- the holders of the Registrable Securities would have no adequate remedy at law and could suffer substantial and irreparable damage. Accordingly, the Company hereby agrees that, in such event, the holders of the Registrable Securities shall be entitled, and notwithstanding any election by any holder of the Registrable Securities to claim damages, to obtain a temporary and/or permanent injunction, without proving a breach therefor, to restrain any such breach or threatened breach or to obtain specific performance of any such provisions, all without prejudice to any and all other remedies which any holder of the Registrable Securities may have at law or in equity. 4.12 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto, each subsequent holder of the Registrable Securities and their respective successors and assigns and executors , administrators and heirs. Holders of the Registrable Securities are intended third party beneficiaries of this Agreement and this Agreement may be enforced by such holders. 4.13 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and understanding between 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. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] -20- IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed as of the date and year first written above. BIOENVISION, INC. By: /s/ Christopher B. Wood --------------------------------------- Name: Dr. Christopher B. Wood Title: Chief Executive Officer PURCHASER: PERSEUS-SOROS BIOPHARMACEUTICAL FUND, L.P. -------------------------------------------- (Name of Purchaser) By: Perseus-Soros Partners, LLC, General Partner By: SFM Participation, L.P., Managing Member By: SFM AH, Inc., General Partner By: /s/ Richard D. Holahan, Jr. --------------------------------------- Name: Richard D. Holahan, Jr. Title: Secretary EX-24 8 ex6sc13d-bioenvision.txt EXHIBIT 6 EXHIBIT 6 to SCHEDULE 13D POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENT, that I, GEORGE SOROS, hereby make, constitute and appoint each of Armando T. Belly, Jodye Anzalotta, Maryann Canfield, Sean Cullinan, Richard D. Holahan, Jr. and Robert Soros acting individually, as my agent and attorney-in-fact for the purpose of executing in my name, (a) in my personal capacity or (b) in my capacity as Chairman of, member of or in other capacities with Soros Fund Management LLC ("SFM LLC") and each of its affiliates or entities advised by me or SFM LLC, all documents, certificates, instruments, statements, filings and agreements ("documents") to be filed with or delivered to any foreign or domestic governmental or regulatory body or required or requested by any other person or entity pursuant to any legal or regulatory requirement relating to the acquisition, ownership, management or disposition of securities, futures contracts, or other investments, and any other documents relating or ancillary thereto, including but not limited to, all documents relating to filings with the Commodities Futures Trading Commission and National Futures Association, the United States Securities and Exchange Commission (the "SEC") pursuant to the Commodities Exchange Act and the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Act") and the rules and regulations promulgated thereunder, including all documents relating to the beneficial ownership of securities required to be filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act and information statements on Form 13F required to be filed with the SEC pursuant to Section 13(f) of the Act. All past acts of the attorney-in-fact in furtherance of the foregoing are hereby ratified and confirmed. Execution of this power of attorney revokes that certain Power of Attorney dated as of the 27th day of January 2000 with respect to the same matters addressed above. This power of attorney shall be valid from the date hereof until revoked by me. IN WITNESS WHEREOF, I have executed this instrument as of the 15th day of January, 2002. /s/ George Soros --------------------------------------- GEORGE SOROS -----END PRIVACY-ENHANCED MESSAGE-----