Exhibit 10.1
BIONOVO, INC.
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT made as of this ____ day of _________
2005, between Bionovo, Inc., a Delaware corporation (the "COMPANY"), and the
undersigned subscriber (the "SUBSCRIBER"). All terms not defined herein shall
have the meaning ascribed to them in the Company's Confidential Private Offering
Memorandum dated March 1, 2005 (the "MEMORANDUM").
WHEREAS, the Company desires to secure equity financing by
issuing up to $10,000,000 in Units at a purchase price of $100,000 per Unit and
has engaged Xxxxxx Capital (the "PLACEMENT AGENT") as its exclusive placement
agent in connection therewith; and
WHEREAS, the Subscriber desires to purchase the number of
Units set forth on the signature page hereof.
NOW, THEREFORE, in consideration of the promises and the
mutual covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
I. SUBSCRIPTION FOR UNITS; REPRESENTATIONS AND WARRANTIES BY THE
SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase the number of Units from
the Company set forth on the signature page hereof, and the Company agrees to
issue the Common Stock and Warrants comprising the Units to the Subscriber at a
purchase price equal to the product of (x) the number of Units subscribed for
and (y) $100,000 per Unit. The subscription price is payable by check made
payable to the order of "Continental Stock Transfer & Trust Co. AAF BIONOVO INC
#11" or by wire transfer of immediately available funds delivered
contemporaneously herewith as follows:
CST&T AAF BIONOVO INC #11
Bank: XX Xxxxxx Chase Bank
Account: 530-058626
ABA: 021 000021
REF: [Subscriber's name]
The Common Stock and Warrants comprising the Units purchased by the Subscriber
will be delivered by the Company promptly following the Termination Date (as
hereinafter defined).
1.2 The Subscriber recognizes that the purchase of the Units and
the shares of Common Stock and Warrants included therein (collectively, the
"SECURITIES") involves a high degree of risk and is suitable only for persons of
adequate financial means who have no need for liquidity in this investment in
that (i) he may not be able to liquidate his investment in the event of an
emergency; (ii) transferability is extremely limited; and (iii) in the event of
a disposition, he could sustain a complete loss of his entire investment.
1
1.3 The Subscriber acknowledges that he is (i) a qualified
investor, as described herein, to qualify for the purchase of the Securities;
(ii) competent to understand and does understand the nature of the investment;
and (iii) able to bear the economic risk of this investment.
1.4 The Subscriber represents that he is an "accredited investor,"
as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
1.5 The Subscriber acknowledges that he has significant prior
investment experience, including investment in non-listed and non-registered
securities. The Subscriber has a sufficient net worth to sustain a loss of its
entire investment in the Company in the event such a loss should occur. The
Subscriber's overall commitment to investments which are not readily marketable
is not excessive in view of the Subscriber's net worth and financial
circumstances and the purchase of the Securities will not cause such commitment
to become excessive. The Subscriber recognizes the highly speculative nature of
this investment.
1.6 The Subscriber: (i) if a natural person, represents that the
Subscriber has reached the age of 21 and has full power and authority to execute
and deliver this Subscription Agreement and all other related agreements or
certificates and to carry out the provisions hereof and thereof; (ii) if a
corporation, partnership, or limited liability company or partnership, or
association, joint stock company, trust, unincorporated organization or other
entity, represents that such entity was not formed for the specific purpose of
acquiring the Securities, such entity is duly organized, validly existing and in
good standing under the laws of the state of its organization, the consummation
of the transactions contemplated hereby is authorized by, and will not result in
a violation of state law or its charter or other organizational documents, such
entity has full power and authority to execute and deliver this Subscription
Agreement and all other related agreements or certificates and to carry out the
provisions hereof and thereof and to purchase and hold the Securities, the
execution and delivery of this Subscription Agreement has been duly authorized
by all necessary action, this Subscription Agreement has been duly executed and
delivered on behalf of such entity and is a legal, valid and binding obligation
of such entity; or (iii) if executing this Subscription Agreement in a
representative or fiduciary capacity, represents that it has full power and
authority to execute and deliver this Subscription Agreement in such capacity
and on behalf of the subscribing individual, xxxx, partnership, trust, estate,
corporation, or limited liability company or partnership, or other entity for
whom the Subscriber is executing this Subscription Agreement, and such
individual, partnership, xxxx, trust, estate, corporation, or limited liability
company or partnership, or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the Company,
and represents that this Subscription Agreement constitutes a legal, valid and
binding obligation of such entity. The execution and delivery of this
Subscription Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which the Subscriber
is a party or by which it is bound.
1.7 The Subscriber hereby represents that the Subscriber and the
Subscriber's attorney, accountant, purchaser representative and/or tax advisor,
if any (collectively, "ADVISORS") have been furnished by the Company or the
Placement Agent during the course of this transaction with the Memorandum and
with all information regarding the Company which the Subscriber and his Advisors
have requested or desired to know, subject in all cases to
2
existing confidentiality obligations and applicable law; and that the Subscriber
and his Advisors have been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other representatives of the
Company and the Placement Agent concerning the terms and conditions of the
offering, prior to the execution of this Subscription Agreement and all such
questions have been answered to the full satisfaction of the Subscriber and its
Advisors, if any.
1.8 The Subscriber hereby acknowledges that the offering of the
Securities has not been filed with or reviewed by the Securities and Exchange
Commission (the "SEC") because of the Company's representations that this is
intended to be a nonpublic offering pursuant to Section 4(2) and Rule 506 of
Regulation D promulgated under the Securities Act. The Subscriber represents
that the Securities are being purchased for his own account, for investment and
not for distribution or resale to others except pursuant to the Registration
Rights Agreement (defined in SECTION 4.3 below). The Subscriber agrees that he
will not sell, transfer or otherwise dispose of any of the Securities unless
they are registered under the Securities Act or unless an exemption from such
registration is available.
1.9 The Subscriber understands that the Securities have not been
registered under the Securities Act by reason of a claimed exemption under the
provisions of the Securities Act which depends, in part, upon his investment
intention. In this connection, the Subscriber understands that it is the
position of the SEC that the statutory basis for such exemption would not be
present if his representation merely meant that his present intention was to
hold the Securities for a short period, for a deferred sale, for a market rise,
assuming that a market develops and is maintained, or for any other fixed
period. The Subscriber realizes that, in the view of the SEC, a purchase now
with an intent to resell would represent a purchase with an intent inconsistent
with his representation to the Company, and the SEC might regard such a sale,
transfer or disposition as a deferred sale to which the exemption is not
available.
1.10 The Subscriber consents that the Company may, if it desires,
permit the transfer of the shares of Common Stock or Warrants by the Subscriber
out of his name only when his request for transfer (except for transfers
pursuant to the Registration Rights Agreement) is accompanied by an opinion of
counsel reasonably satisfactory to the Company that the proposed sale, transfer
or disposition does not result in a violation of the Securities Act or any
applicable state "blue sky" laws (collectively, "SECURITIES LAWS"). The
Subscriber agrees to hold the Company, the Placement Agent and any of their
respective directors, executive officers and controlling persons and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of any sale, transfer or disposition of the Securities by the undersigned
Subscriber in violation of any Securities Laws or any misrepresentation herein.
1.11 The Subscriber consents to the placement of a legend on the
certificates evidencing the shares of Common Stock and the instruments
evidencing the Warrants stating that they have not been registered under the
Securities Act and setting forth or referring to the restrictions on the sale,
transfer or disposition thereof. The Subscriber is aware that the Company will
make a notation in its appropriate records with respect to the restrictions on
the sale, transfer or disposition of the shares of Common Stock and the
Warrants.
1.12 The Subscriber acknowledges and agrees that the Company is
relying on the Subscriber's representations contained in this Agreement in
determining whether to accept this
3
subscription. The Subscriber hereby gives the Company authority to call his bank
or place of employment or otherwise review the financial standing of the
Subscriber and it is further agreed that the Company reserves the unrestricted
right to reject or limit any subscription and to close the offer at any time.
1.13 The Subscriber represents and warrants that all
representations made by the Subscriber hereunder are true and correct in all
material respects as of the date of execution hereof, and the Subscriber
covenants that until the closing on the Securities subscribed for he shall
inform the Company and the Placement Agent immediately of any changes in any of
the representations provided by the Subscriber hereunder.
1.14 The Subscriber is unaware of, is in no way relying on, and did
not become aware of the offering of the Securities through or as a result of,
any form of general solicitation or general advertising including, without
limitation, any article, notice, advertisement or other communication published
in any newspaper, magazine or similar media or broadcast over television, radio
or over the Internet, in connection with the offering and sale of the Securities
and is not subscribing for Units and did not become aware of the offering of the
Units through or as a result of any seminar or meeting to which the Subscriber
was invited by, or any solicitation of a subscription by, a person not
previously known to the Subscriber in connection with investments in securities
generally.
1.15 The Subscriber has taken no action which would give rise to
any claim by any person for brokerage commissions, finders' fees or the like
relating to this Subscription Agreement or the transactions contemplated hereby
(other than commissions to be paid by the Company to the Placement Agent or as
otherwise described in the Memorandum).
1.16 The Subscriber has adequate means of providing for such
Subscriber's current financial needs and foreseeable contingencies and has no
need for liquidity of the investment in the Securities for an indefinite period
of time.
1.17 The Subscriber is aware that an investment in the Common Stock
and Warrants involves a number of very significant risks and has carefully read
and considered the matters set forth in the Memorandum and in particular the
matters under the caption "Risk Factors" therein.
1.18 The Subscriber acknowledges that any estimates or
forward-looking statements included in the Memorandum were prepared by the
Company in good faith, but that the attainment of any such estimates or
forward-looking statements cannot be guaranteed by the Company and should not be
relied upon.
1.19 No oral or written representations have been made, or oral or
written information furnished, to the Subscriber or its Advisors, if any, in
connection with the offering of the Units which are in any way inconsistent with
the information contained in the Memorandum.
1.20 Within five (5) days after receipt of a request from the
Company or the Placement Agent, the Subscriber shall provide such information
and deliver such documents as may reasonably be necessary to comply with any and
all laws and ordinances to which the Company or the Placement Agent are subject.
4
1.21 The Subscriber's substantive relationship with the Placement
Agent or, subagents through which the Subscriber is subscribing for Units
predates the Placement Agent's or such subagents' contact with the Subscriber
regarding an investment in the Common Stock and Warrants.
1.22 (For ERISA plans only) The fiduciary of the ERISA plan (the
"PLAN") represents that such fiduciary has been informed of and understands the
Company's investment objectives, policies and strategies, and that the decision
to invest "plan assets" (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require diversification of plan
assets and impose other fiduciary responsibilities. The Subscriber or Plan
fiduciary (a) is responsible for the decision to invest in the Company; (b) is
independent of the Company and any of its affiliates; (c) is qualified to make
such investment decision; and (d) in making such decision, the Subscriber or
Plan fiduciary has not relied primarily on any advice or recommendation of the
Company or any of its affiliates.
II. REPRESENTATIONS AND WARRANTIES BY THE COMPANY
The Company represents and warrants to the Subscriber as follows:
2.1 The Company is a corporation duly organized, existing and in
good standing under the laws of the state of its incorporation and has the
corporate power to conduct its business.
2.2 The execution, delivery and performance of this Agreement by
the Company has been duly approved by the Board of Directors of the Company.
2.3 The shares of Common Stock have been duly and validly
authorized and, when issued in accordance with the terms hereof, will be duly
and validly issued, fully paid and non-assessable. The Company has duly and
validly reserved, out of its authorized and unissued Common Stock, for issuance
upon exercise of the Warrants a number of shares sufficient for such purposes.
III. TERMS OF OFFERING
3.1 The subscription period will begin as of March 1, 2005 and
will terminate upon the occurrence of the earlier of (a) the 60th day
thereafter, unless extended by the Company and the Placement Agent for a period
of up to an additional 30 days, or (b) the Company's acceptance of subscriptions
for 100 Units offered and the receipt of payment therefor (the "TERMINATION
DATE").
3.2 The Subscriber hereby agrees to purchase the number of Units
from the Company set forth upon the signature page hereof payable to the escrow
agent, Signature Bank, by check in the amount thereof made payable to
"Continental Stock Transfer & Trust Co. AAF BIONOVO INC #11" or by wire transfer
of immediately available funds as set forth in SECTION 1.1. If (i) Subscriber's
subscription is rejected in whole, (ii) the Offering is terminated or the
Minimum Amount is not subscribed for and accepted, or (iii) the Subscriber shall
withdraw the within subscription in accordance with SECTION 3.4, all funds
received from the Subscriber will be returned without interest, penalty, expense
or deduction, and this Subscription Agreement shall thereafter be of no further
force or effect. If Subscriber's subscription is rejected in part,
5
the funds for the rejected portion of such subscription will be returned without
interest, penalty, expense or deduction and this Subscription Agreement will
continue in full force and effect to the extent such subscription was accepted.
3.3 The Company has retained the Placement Agent to coordinate the
offering as the Company's exclusive placement agent and financial advisor. See
the Memorandum for a description of the compensation payable to the Placement
Agent and other terms of the Offering.
3.4 The Company will deliver to the Subscriber a Memorandum
Supplement as contemplated by the Memorandum. This Agreement and the within
subscription may not be revoked or cancelled after receipt by the Company;
PROVIDED Subscriber shall have three (3) days following receipt of the
Memorandum Supplement to withdraw this Subscription Agreement and the within
subscription without penalty.
IV. CONDITIONS TO ACCEPTANCE OF SUBSCRIPTION
The Company's right to accept the subscription of the Subscriber is
conditioned upon satisfaction of the following conditions precedent on or before
the date the Company accepts such subscription (the "CLOSING DATE") (any or all
of which may be waived by the Subscriber in his sole discretion):
4.1 On the Closing Date, no legal action, suit or proceeding shall
be pending which seeks to restrain or prohibit the transactions contemplated by
this Agreement.
4.2 The closing of the Reverse Merger (as defined in the
Memorandum) shall occur concurrently with the acceptance of this subscription.
4.3 The publicly-traded company which is to acquire by merger the
business of the Company shall have executed and delivered a counterpart
signature page to the Registration Rights Agreement executed by Subscriber in
connection with the within subscription ("REGISTRATION RIGHTS AGREEMENT").
4.4 The representations and warranties of the Company contained in
this Agreement shall have been true and correct on the date of this Agreement
and shall be true and correct on the Closing Date as if made on the Closing
Date.
V. NOTICES TO SUBSCRIBERS
5.1 THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND SUCH LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC,
ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF
THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR
THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
6
5.2 THE COMMON STOCK AND WARRANTS ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT, AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. SUBSCRIBERS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
VI. MISCELLANEOUS
6.1 All notices that are required or may be given pursuant to this
Agreement must be in writing and delivered personally, by a recognized courier
service, by a recognized overnight delivery service, or by registered or
certified mail, postage prepaid, to the parties at the following addresses (or
to the attention of such other person or such other address as any party may
provide to the other parties by notice in accordance with this section): to the
Company, Bionovo, Inc. 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000,
Attention: Xxxxx Xxxxx, telephone number (000) 000-0000; and to the Subscriber
at his address indicated on the last page of this Agreement. Any such notice or
other communication will be deemed to have been given and received (whether
actually received or not) on the day it is personally delivered or delivered by
courier or overnight delivery service or, if mailed, when actually received.
6.2 This Agreement shall not be changed, modified, or amended
except by a writing signed by the parties to be charged, and this Agreement may
not be discharged except by performance in accordance with its terms or by a
writing signed by the party to be charged.
6.3 This Agreement shall be binding upon and inure to the benefit
of the parties hereto and to their respective heirs, legal representatives,
successors and assigns. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter thereof and merges
and supersedes all prior discussions, agreements and understandings of any and
every nature among them.
6.4 This Agreement and its validity, construction and performance
shall be governed in all respects by the laws of the State of California,
without reference to its rules and principles governing conflicts of laws.
6.5 This Agreement may be executed in counterparts. Upon the
execution and delivery of this Agreement by the Subscriber, this Agreement shall
become a binding obligation of the Subscriber with respect to the purchase of
the Units as herein provided.
[Signatures follow]
7
SUBSCRIBER SIGNATURE PAGE
IN WITNESS WHEREOF, the Subscriber has executed this Subscription
Agreement as of the day and year first written above.
Number of Units:
---------------------------
Total Purchase Price
($100,000 x number of Units):
---------------------------
IF A LEGAL ENTITY:
Entity Name: Tax ID No:
--------------------------------- -----------------
By (signature):
-----------------------------
Name (print):
-------------------------------
Title:
--------------------------------------
IF AN INDIVIDUAL:
Social Security No:
---------------------------------- -------------------------
Subscriber's Signature
---------------------------------
Printed Name of Subscriber
Social Security No:
---------------------------------- -------------------------
Co-Subscriber's Signature, if any
---------------------------------
Printed Name of Co-Subscriber
If more than one individual is purchasing, please check the applicable box:
[ ] Joint tenants, with right of survivorship
[ ] Tenants by the entirety
[ ] Tenants in common
MAILING ADDRESS OF SUBSCRIBER(S) (PLEASE PRINT OR TYPE):
Street Address:
--------------------------------
City, State, Zip Code:
--------------------------------
Telephone Number:
--------------------------------
Facsimile Number:
--------------------------------
IN WITNESS WHEREOF, the Company has accepted and executed this
Subscription Agreement of _______________________ effective as of the day and
year first written above with respect to ______________ Units.
BIONOVO, INC.
By:_______________________________________
Name:
Title:
Date of Execution: ______________, 2005
