SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of January
31, 1996 by and among ENZON, INC., a Delaware corporation, with
headquarters located at 00 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000 (the
"COMPANY"), and the undersigned (collectively, the "BUYER").
WHEREAS:
A. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D ("REGULATION D") as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 ACT");
B. The Buyer wishes to purchase, in the amounts and upon the terms
and conditions stated in this Agreement, (i) shares of the Company's common
stock, par value $.01 per share (the "COMMON STOCK"), and (ii) shares of
the Company's preferred stock, $.01 par value per share (the "PREFERRED
STOCK"); and
C. Contemporaneous with the issuance of the Preferred Stock pursuant
to this Agreement, the Company is issuing to the Buyer certain warrants to
purchase shares of the Common Stock (the "WARRANTS"), and contemporaneous
with the closing pursuant to this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company has agreed to provide
certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws;
NOW THEREFORE, the Company and the Buyer hereby agrees as follows:
1. PURCHASE AND SALE OF COMMON STOCK AND PREFERRED STOCK.
a. PURCHASE OF COMMON STOCK. The Company shall issue and sell to
the Buyer and the Buyer shall purchase 1,094,890 shares of Common Stock
(the "COMMON SHARES"), which number of shares shall not result in
beneficial ownership (as that term is defined under Rule 13d-3 promulgated
under the 1934 Act (as hereinafter defined)) by the Buyer of more than four
and nine-tenths percent (4.9%) of the outstanding shares of Common Stock.
The per share purchase price for the Common Shares shall be $2.74, which is
equal to eighty percent (80%) of the average (rounded to the nearest
thousandth) closing bid price for the Common Stock as reported on the
National Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ-NMS") during the five (5) consecutive trading days
ending one trading day prior to the Closing Date, as defined below (such
closing bid price being the "CLOSING DATE AVERAGE MARKET PRICE").
b. PURCHASE OF PREFERRED STOCK. The Company shall issue and sell to
the Buyer and the Buyer shall purchase 40,000 shares of Series B
Convertible Preferred Stock (the "PREFERRED SHARES"), which shall be
convertible into shares of Common Stock (the "CONVERSION SHARES") in
accordance with the terms of the Certificate of Designations, Preferences
and Rights of Series B Convertible Preferred Stock attached hereto as
EXHIBIT A (the "CERTIFICATE OF DESIGNATION"). The per share purchase price
for the Preferred Shares shall be One Hundred Dollars ($100).
c. ISSUANCE OF THE WARRANTS. In consideration of the Buyer's
purchase of the Common Shares and the Preferred Shares, the Company agrees
to issue to the Buyer in accordance with Sections 1(e) and (f) below,
without separate consideration, the Warrants to purchase 638,686 shares of
Common Stock (the "WARRANT SHARES"). The exercise price of the Warrants
shall be $4.11 per Warrant Share. The Warrants shall expire five (5) years
from the date of issuance and shall be in the form attached hereto as
EXHIBIT B. The Common Shares, the Preferred Shares, and the Warrants are
hereafter collectively referred to as the "SECURITIES."
d. ALLOCATION OF SECURITIES. The Securities shall be allocated
among the parties which are the Buyer as specified on their respective
counterpart signature pages to this Agreement.
e. FORM OF PAYMENT. The Buyer shall pay the purchase price for the
Common Shares and the Preferred Shares (the "PURCHASE PRICE") by wire
transfer of United States Dollars to the Company. Three Million Dollars
($3,000,000), representing payment for the Common Shares, shall be paid on
the Closing Date (as defined below). Four Million Dollars ($4,000,000),
representing payment for the Preferred Shares, shall be paid on February 7,
1996. The Company shall promptly deliver stock certificates, duly executed
on behalf of the Company, representing the Common Shares and the Preferred
Shares (the "STOCK CERTIFICATES") on the Closing Date and on February 7,
1996, respectively, and shall deliver the Warrants on February 7, 1996, all
to Buyer's counsel, no later than 4:00 p.m. Eastern Standard Time on the
respective dates.
f. CLOSING DATE. The date and time of the issuance and sale of the
Common Shares (the "CLOSING DATE") shall be no later than 4:00 Eastern
Standard Time on January 31, 1996. The date and time of the issuance and
sale of the Preferred Shares and of the issuance of the Warrants shall be
no later than 4:00 Eastern Standard Time on February 7, 1996. After the
Closing Date, the Buyer's obligation to pay the purchase price for the
Preferred Shares shall be conditioned only on the contemporaneous receipt
of the Preferred Shares and Warrants and the Company's obligation to issue
the Preferred Shares and Warrants shall be conditioned only on the
contemporaneous payment of the purchase price for the Preferred Shares.
2. BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants to the Company that:
a. INVESTMENT PURPOSE. The Buyer is purchasing the Common Shares,
the Preferred Shares and the Warrants for its own account for investment
only and not with a view towards the public sale or distribution thereof
except pursuant to sales registered under the 0000 Xxx.
b. ACCREDITED INVESTOR STATUS. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. RELIANCE ON EXEMPTIONS. The Buyer understands that the
Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying upon the truth and
accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such exemptions and
the eligibility of the Buyer to acquire the Securities.
d. INFORMATION. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by the Buyer. The Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of
the Company and have received complete and satisfactory answers to any such
inquiries. The Buyer understands that its investment in the Securities
involves a high degree of risk.
e. GOVERNMENTAL REVIEW. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities.
f. TRANSFER OR RESALE. The Buyer understands that (i) except as
provided in the Registration Rights Agreement, the Common Shares, the
Preferred Shares, the Conversion Shares, the Warrants, the Warrant Shares,
and the shares of Common Stock that may be issued to the Buyer pursuant to
Section 2(c) of the Registration Rights Agreement and pursuant to Section
(2)(b) of the Certificate of Designation (collectively, the "DAMAGE
SHARES") have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be transferred unless (a)
subsequently registered thereunder, or (b) the Buyer shall have delivered
to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the securities to be
sold or transferred may be sold or transferred pursuant to an exemption
from such registration; (ii) any sale of such securities made in reliance
on Rule 144 promulgated under the 1933 Act may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable,
any resale of such securities under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any
other person is under any obligation to register such securities (other
than pursuant to the Registration Rights Agreement) under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
g. LEGENDS. The Buyer understands that the Warrants, the Preferred
Shares and, until such time as the Common Shares, the Conversion Shares,
the Warrant Shares, and the Damage Shares (collectively, the "REGISTRABLE
SECURITIES") have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement, the stock certificates for the Registrable
Securities may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such
stock certificates):
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or an
opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, that registration is not required under
said Act.
h. AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Buyer and is a
valid and binding agreement of the Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
i. RESIDENCY. The Buyer is a resident of the country specified in
its address on the signature page hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that:
a. ORGANIZATION AND QUALIFICATION. Each of the Company and its
subsidiaries is a corporation duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated, except, in
the case of any such subsidiaries, as would not have a Material Adverse
Effect (as defined below), and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. Each of
the Company and its subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the
nature of the business conducted by it makes such qualification necessary
and where the failure so to qualify would have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the
operations, properties or financial condition of the Company and its
subsidiaries taken as a whole.
b. AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and
the Registration Rights Agreement, and to issue the Registrable Securities,
the Preferred Shares and the Warrants, in accordance with the terms hereof
and thereof, (ii) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby
have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board or Directors, or
its stockholders, except with respect to the reverse stock split referred
to in Section 4(g), is required, (iii) this Agreement has been duly
executed and delivered by the Company, and (iv) this Agreement constitutes
a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies or by other equitable
principles of general application.
c. CAPITALIZATION. As of January 26, 1996, the authorized capital
stock of the Company consists of (i) 40,000,000 shares of Common Stock of
which 26,334,056 shares were issued and outstanding, and (ii) 3,000,000
shares of Preferred Stock $.01 par value, of which 109,000 shares
designated as Series A Cumulative Convertible Preferred Stock and no shares
designated as Series B Convertible Preferred Stock were issued and
outstanding. All of such outstanding shares have been validly issued and
are fully paid and nonassessable. No shares of Common Stock or Preferred
Stock are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances. Except as
disclosed in SCHEDULE 3(C), as of January 26, 1996, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or any
of its subsidiaries, or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its subsidiaries, and (ii) there are no
agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act (except the Registration Rights Agreement).
The Company has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation as in effect on the date hereof
("CERTIFICATE OF INCORPORATION") and the Company's By-laws, as in effect on
the date hereof (the "BY-LAWS"). The Company shall provide the Buyer with
a written update of this representation signed by the Company's Chief
Executive or Chief Financial Officer on behalf of the Company as of the
Closing Date.
d. ISSUANCE OF SHARES. The Registrable Securities, the Preferred
Shares and the Warrants are duly authorized and, upon issuance in
accordance with the terms hereof and thereof, shall be validly issued,
fully paid and non-assessable, and free from all taxes, liens and charges
with respect to the issue thereof.
e. NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation or By-laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is
a party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). The
businesses of the Company and its subsidiaries are not being conducted, and
shall not be conducted through the date of the expiration of any
unexercised Warrants issued to the Buyer, in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations which either singly or in the aggregate do not have a Material
Adverse Effect. Except as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement in accordance with the terms
hereof.
f. SEC DOCUMENTS, FINANCIAL STATEMENTS. Since June 30, 1992, the
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act of 1934, as amended (the "1934 ACT") (all
of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other
than exhibits) incorporated by reference therein, being hereinafter
referred to herein as the "SEC DOCUMENTS"). The Company has delivered to
the Buyer true and complete copies of the SEC Documents, except for such
exhibits, schedules and incorporated documents. As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent
they may include footnotes or may be condensed or summary statements) and
fairly present in all material respects the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on behalf
of the Company to the Buyer and referred to in Section 2(d) of this
Agreement, when made, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they were
made, not misleading. In the aggregate, the information provided by or on
behalf of the Company to the Buyer and referred to in Section 2(d),
including without limitation the SEC Documents, does not omit to state a
material fact or contain material inaccuracies.
g. ABSENCE OF CERTAIN CHANGES. Since June 30, 1995, there has been
no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of
operations or prospects of the Company, except as disclosed in the
documents referred to in Section 2(d) hereof or in the SEC Documents.
h. ABSENCE OF LITIGATION. Except as disclosed in SCHEDULE 3(H),
there is no action, suit, proceeding,inquiry or investigation before or by
any court, public board or body pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against or affecting the Company or
any of its subsidiaries, wherein an unfavorable decision, ruling or finding
would have a Material Adverse Effect or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company
to perform its obligations under, this Agreement or any of the documents
contemplated herein.
4. COVENANTS.
a. BEST EFFORTS. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 6 and 7 of this
Agreement.
b. FORM D; BLUE SKY LAWS. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a
copy thereof to the Buyer promptly after such filing. The Company shall,
on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or obtain
exemption for the Securities for, sale to the Buyer at the closing pursuant
to this Agreement under applicable securities or "blue sky" laws of the
states of the United States, and shall provide evidence of any such action
so taken to the Buyer on or prior to the Closing Date.
c. REPORTING STATUS. Until such date as is the earlier of (i) at
least three (3) years after the date of the expiration of all the Warrants,
or (ii) the date on which (a) all of the Warrants have been exercised or
expired, (b) no Registrable Securities are held by any Investor (as that
term is defined in the Registration Rights Agreement), and (c) none of the
Preferred Shares is outstanding (the "REGISTRATION PERIOD"), the Company
shall file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.
d. USE OF PROCEEDS. Without the consent of a majority in interest
of the Registrable Securities, the Company shall not use the proceeds from
the sale of the Common Shares and the Preferred Shares for anything other
than the Company's internal working capital purposes and shall not,
directly or indirectly, use such proceeds for any loan to or investment in
any other corporation, partnership, enterprise or other person; provided
that it is understood that the Company may be required to pay a finder's
fee in connection with the transactions provided for herein.
e. ADDITIONAL EQUITY CAPITAL. The Company agrees that, for a period
of 180 days following February 7, 1996, the Company will not, without the
prior written approval of the Buyer, negotiate or contract with any outside
party to issue additional equity financing in any form, provided that such
restriction shall not apply to the issuance of equity securities in
connection with a license or development agreement between the Company or
one of its subsidiaries and a corporate strategic partner. Notwithstanding
the foregoing, during such 180 day period the Company may negotiate and
contract with an outside party to obtain up to $3,000,000 of additional
equity capital provided that (i) no sale of such securities shall take
place unless the Company first offers such securities to the Buyer on terms
no less favorable in any respect than those subsequently offered to the
eventual purchaser and the Buyer declines such purchase or does not
exercise its right to purchase all of the securities so offered within
fifteen (15) days of receiving a written offer in reasonable detail from
the Company; provided that, the Buyer shall not have the right to purchase
only a portion of the offered securities but must purchase all of the
securities offered, (ii) the terms and conditions on which such equity
securities are sold shall not be more favorable to the purchaser than those
under which the Buyer is purchasing the Common Shares and the Preferred
Shares, and (iii) the sale by such outside party of any such equity
securities shall not be registered on the same registration statement as
registers the sale of the Registrable Securities.
f. EXPENSES. The Company shall pay all expenses incurred in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the Registration Rights Agreement,
including, without limitation, Buyer's attorneys' fees and expenses up to
an aggregate amount of Forty Thousand Dollars ($40,000).
g. REVERSE STOCK SPLIT. The Company agrees to use its best efforts
to effect a reverse one-for-two stock split of the outstanding shares of
Common Stock as soon as practicable after the Closing Date. The Company
shall not be required to seek stockholder approval prior to the annual
meeting thereof.
h. FINANCIAL INFORMATION. The Company agrees to send the following
reports to the Buyer until the Buyer transfers, assigns, or sells all of
the Securities, Conversion Shares, Warrant Shares, and Damage Shares: (i)
within ten (10) days after the filing with the SEC, a copy of its Annual
Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current
Reports on Form 8-K; and (ii) within one day after release, copies of all
press releases issued by the Company or any of its subsidiaries.
i. RESERVATION OF SHARES. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number
of shares of Common Stock to provide for the exercise of the Warrants,
conversion of the Preferred Shares and issuance of the Damage Shares.
j. LISTING. The Company shall promptly secure the listing of the
Registrable Securities upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares
of Registrable Securities from time to time issuable under the terms of
this Agreement and the Registration Rights Agreement.
k. MAJOR TRANSACTIONS. The Company shall not consummate a Major
Transaction (as that term is defined in the Certificate of Designation)
without the prior written approval of the holders of a majority of the
Preferred Shares; PROVIDED, HOWEVER, that this Section shall terminate and
be of no further force and effect if the Company reasonably determines that
performance hereunder would violate NASDAQ rules with regard to the
issuance of voting securities having super-majority voting rights.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall instruct its transfer agent to issue certificates,
registered in the name of the Buyer or its nominee, for the Conversion
Shares, Warrant Shares and Damage Shares in such amounts as specified from
time to time by the Company to the transfer agent in accordance with the
terms of the applicable security. Prior to sale of the Registrable
Securities, pursuant to an effective registration statement all such
certificates shall bear the restrictive legend specified in Section 2(g) of
this Agreement. The Company shall provide instructions and opinions of
counsel to its transfer agent in accordance with Section 3(o) of the
Registration Rights Agreement. The Company warrants that no instruction
other than such instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof prior to
registration of the Registrable Securities under the 1933 Act, will be
given by the Company to its transfer agent and that the Securities and the
Registrable Securities shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement. Nothing in this Section shall
affect in any way the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities and the
Registrable Securities. If the Buyer provides the Company with an opinion
of counsel, reasonably satisfactory in form, scope and substance to the
Company, that registration of a resale by the Buyer of any of the
Securities or the Registrable Securities is not required under the 1933
Act, the Company shall permit the transfer, and, in the case of the Common
Shares, the Preferred Shares, the Conversion Shares, the Warrant Shares or
the Damage Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denominations as specified by
the Buyer.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell the Common Shares is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion:
a. The parties shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to each other.
b. The Buyer shall have delivered $3,000,000 of the Purchase Price
to the Company.
c. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer at or prior to the
Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Common Shares
and the Preferred Shares is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Buyer's sole benefit and may be waived by the Buyer
at any time in its sole discretion:
a. The parties shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to each other.
b. The Company shall have caused the Certificate of Designation to
be filed with Secretary of State for the State of Delaware at or before the
Closing Date.
c. Until the Closing Date, the Common Stock shall be authorized for
quotation on NASDAQ-NMS, and trading in the Common Stock (or on NASDAQ-NMS
generally) shall not have been suspended by the SEC or NASDAQ.
d. The representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing Date. The Buyer shall have received a certificate, executed by the
chief executive officer of the Company, dated as of the Closing Date, to
the foregoing effect and as to such other matters as may be reasonably
requested by the Buyer.
e. The Buyer shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer and in substantially the same form as
EXHIBIT C attached hereto.
f. The Buyer shall have received the officer's certificate described
in Section 3(c) above, dated as of the Closing Date.
g. The Company shall have delivered to the Buyer the Stock
Certificate for the Common Shares.
8. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware without
regard to the principles of conflict of laws.
b. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party
and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the
execution and delivery hereof.
c. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the party to be charged
with enforcement.
f. NOTICES. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, or upon receipt, if delivered personally or by courier, in each
case addressed to a party. The addresses for such communications shall be:
If to the Company:
Enzon, Inc.
00 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Corporate Secretary
With copy to:
Xxxx & Xxxxxxx
00 Xxxx 00xx Xxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to the Buyer, at the addresses on the signature pages.
With copy to:
Genesee Advisers
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxx
And:
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Each party shall provide notice to the other party of any change in
address.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other
(which consent may be withheld for any reason in the sole discretion of the
party from whom consent is sought). Notwithstanding the foregoing, the
Buyer may assign its rights hereunder to any of its "affiliates," as that
term is defined under the 1934 Act, without the consent of the Company.
h. THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not the benefit of, nor may any provision hereof be
enforced by, any other person.
i. SURVIVAL. The representations and warranties of the Company and
the Buyer contained in Sections 2 and 3 and the agreements and covenants
set forth in Sections 1(b), 1(c), 1(e), 1(f), 4, 5, 8(g), 8(h), 8(k) and
8(l), and this subsection shall survive the closing; provided that, in the
event the Buyer fails to deliver payment for the Preferred Shares on or
before February 7, 1996, the covenants contained in the Sections 4(e), 4(g)
and 4(k) shall terminate and be of no further effect, all references to
Preferred Shares and Warrants contained in Section 4 herein and in the
Registration Rights Agreement shall be eliminated and be of no further
effect and the term Registrable Securities used herein and in the
Registration Rights Agreement shall not include the Conversion Shares and
the Warrant Shares (as defined herein) and the Company shall be entitled to
file a Certificate of Elimination with respect to the Certificate of
Designation.
k. PUBLICITY. The Company and the Buyer shall have the right to
approve before issuance any press releases, SEC or NASD filings, or any
other public statements with respect to the transactions contemplated
hereby; PROVIDED, HOWEVER, that the Company shall be entitled, without the
prior approval of the Buyer, to make any press release or SEC or NASD
filings with respect to such transactions as is required by applicable law
and regulations (although the Buyer shall be consulted by the Company in
connection with any such press release prior to its release and shall be
provided with a copy thereof).
l. FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
m. TERMINATION. In the event that the Closing Date shall not have
occurred on or before thirty (30) days from the date hereof, this Agreement
shall terminate at the close of business on such date.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Agreement to be duly executed under seal.
ENZON, INC.
By:/S/ XXXXX X. XXXXXXX
Name: XXXXX X. XXXXXXX
Its: PRESIDENT AND CEO
GFL ADVANTAGE FUND LTD.
By:/S/ X.X. XX XXXXX
Name: X.X. XX XXXXX
Its: PRESIDENT
Address:Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
Allocated Portion of Securities: Preferred Shares purchased pursuant to
Section 1(b) and Warrant for 364,963 Warrant Shares.
GFL PERFORMANCE FUND LTD.
By:/S/ X.X. XX XXXXX
Name: X.X. XX XXXXX
Its: PRESIDENT
Address: Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
Allocated portion of Securities: Common Shares purchased pursuant to
Section 1(a) and Warrant for 273,723 Warrant Shares.
EXHIBIT A
TO
SECURITIES PURCHASE
AGREEMENT
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES B CONVERTIBLE
PREFERRED STOCK
OF
ENZON, INC.
ENZON, Inc. (the "COMPANY"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the Board of Directors
of the Company by the Certificate of Incorporation, as amended, of the
Company, and pursuant to Section 151 of the General Corporation Law of the
State of Delaware, the Board of Directors of the Company at a meeting duly
held on January 31, 1996, adopted resolutions providing for the
designations, preferences and relative, participating, optional or other
rights, and the qualifications, limitations or restrictions thereof, of
forty thousand (40,000) shares of Series B Convertible Preferred Stock (the
"SERIES B PREFERRED SHARES") of the Company, as follows:
RESOLVED, that the Company is authorized to issue 40,000 shares
of Series B Convertible Preferred Stock (the "SERIES B PREFERRED
SHARES") which shall have the following powers, designations,
preferences and other special rights:
(1) DIVIDENDS. The holders of the Series B Preferred
Shares shall not be entitled to dividends.
(2) CONVERSION OF SERIES B PREFERRED SHARES. The holders
of the Series B Preferred Shares shall have the right, at their
option, to convert the Series B Preferred Shares into shares of
Common Stock on the following terms and conditions:
(a) Each Preferred Share shall be convertible at any
time after seventy (70) days after the date of issuance (or, if
such Series B Preferred Share is called for redemption, at any
time up to and including, but not after, the close of business on
the fifth full business day prior to the date fixed for such
redemption, unless default shall be made by the Company in
providing the funds for the payment of the redemption price),
into fully paid and nonassessable shares (calculated to the
nearest whole share) of Common Stock of the Company as
constituted at the time of such conversion, at the conversion
price (the "CONVERSION PRICE") in effect at the time of
conversion determined as hereinafter provided; PROVIDED, HOWEVER,
that in no event shall any holder be entitled to convert Series B
Preferred Shares if, after giving effect to such conversion, the
number of shares of Common Stock purchased pursuant to the
Securities Purchase Agreement dated January 31, 1996 by and among
the Company and certain investors (the "SECURITIES PURCHASE
AGREEMENT") set forth therein providing for the purchase of
Common Stock, the Series B Preferred Shares and Warrants or
issued on exercise of such Warrants, or conversion of Series B
Preferred Shares and beneficially owned by such holder and all
other holders whose holdings would be aggregated with such holder
for purposes of calculating beneficial ownership in accordance
with Sections 13(d) and 16 of the Securities Exchange Act of
1934, as amended, and the regulations thereunder ("SECTIONS 13(D)
AND 16"), including, without limitation, any person serving as an
adviser to any holder (collectively, the "RELATED PERSONS"),
would exceed four and nine-tenths percent (4.9%) of the
outstanding shares of Common Stock (calculated in accordance with
Sections 13(d) and 16). Common Stock issuable upon conversion of
Series B Preferred Shares or exercise of the warrants for the
purchase of Common Stock held by such holder or the Related
Persons shall not be deemed to be beneficially owned by such
holder or the Related Persons for this purpose. Each Preferred
Share shall have a value of $100 (the "STATED VALUE") for the
purpose of such conversion and the number of shares of Common
Stock issuable upon conversion of each of the Series B Preferred
Shares shall be determined by dividing the Stated Value thereof
by the Conversion Price then in effect. Every reference herein
to the COMMON STOCK of the Company (unless a different intention
is expressed) shall be to the shares of the Common Stock of the
Company, $.01 par value, as such stock exists immediately after
the issuance of the Series B Preferred Shares provided for
hereunder, or to stock into which such Common Stock may be
changed from time to time thereafter.
(b) The Conversion Price shall be eighty percent (80%)
(the "CONVERSION PERCENTAGE") of the Average Market Price (as
defined below) for the Common Stock for the five (5) consecutive
trading days ending one trading day prior to the date the
Conversion Notice (as defined below) is received by the Company,
subject to adjustment as provided herein. If the registration
statement (the "REGISTRATION STATEMENT") covering the shares of
Common Stock issuable upon conversion of the Series B Preferred
Shares required to be filed by the Company pursuant to the
Registration Rights Agreement between the Company and initial
holders of the Series B Preferred Shares (the "REGISTRATION
RIGHTS AGREEMENT") has not been declared effective by the U.S.
Securities and Exchange Commission ("SEC") within ninety (90)
days after the date of issuance of the Series B Preferred Shares,
or if, after the Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to the
Registration Statement by reason of stop order, the Company's
failure to update the Registration Statement or otherwise, or if
the Common Stock is not listed or included for quotation on the
National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System (the "NASDAQ-NMS"), the New
York Stock Exchange (the "NYSE"), the American Stock Exchange
(the "AMEX"), or the NASDAQ SmallCap Market (the "NASDAQ
SMALLCAP") then, as partial relief for the damages to the holder
by reason of any such delay in or reduction of its ability to
sell the shares of Common Stock (which remedy shall not be
exclusive of any other remedies available at law or in equity,
except that such remedy shall be the exclusive remedy for any
delay in the effectiveness of the Registration Statement provided
the Registration Statement is declared effective by the SEC
within 180 days after the date of issuance of the Series B
Preferred Shares), the Conversion Percentage shall be reduced by
a number of percentage points equal to three (3) times the sum
of: (i) the number of months (prorated for partial months) after
the end of such 90 day period and prior to the date the
Registration Statement is declared effective by the SEC,
provided, however, that there shall be excluded from such period
(and from any period under clause (ii) immediate below) delays
which are attributable to changes in the Registration Statement
required by the Investors (as that term is defined in the
Registration Rights Agreement), including, without limitation,
changes in the plan of distribution; (ii) the number of months
(prorated for partial months) that sales cannot be made pursuant
to the Registration Statement (by reason of stop order, the
Company's failure to update the Registration or otherwise) after
the Registration Statement has been declared effective; and (iii)
the number of months (prorated for partial months) that the
Common Stock is not listed or included for quotation on the
NASDAQ-NMS, NYSE, AMEX, or NASDAQ SmallCap after the Registration
Statement has been declared effective; provided that the
aggregate number of months that are the basis of a reduction in
the Conversion Percentage pursuant to the foregoing clauses (i),
(ii) and (iii) shall not exceed twelve (12). (For example, if
the Registration Statement becomes effective one and one-half
(1 1/2 ) months after the end of such 90 day period, the
Conversion Percentage would be 75.5% until any subsequent
adjustment; if thereafter sales could not be made pursuant to the
Registration Statement for a period of two (2) months, the
Conversion Percentage would then be 69.5%.) If the holder
converts Series B Preferred Shares into Common Stock and an
adjustment to the Conversion Percentage is required subsequent to
such conversion, but prior to the sale of such Common Stock by
such holder, the Company shall pay to such holder, within five
(5) days after receipt of a notice of the sale of such Common
Stock from such holder, an amount equal to the Average Market
Price of the Common Stock obtained upon conversion of such Series
B Preferred Shares for the five (5) trading days ending one (1)
trading day prior to the date of conversion multiplied by three-
hundredths (.03) times the number of months (prorated for partial
months) for which an adjustment was required; provided that the
aggregate number of months for which such an adjustment is
required (when added to the number of months for which an
adjustment is made pursuant to clauses (i), (ii) and (iii) above)
shall not exceed twelve (12). Such amount may be paid at the
Company's option in cash or Common Stock valued based on the
Average Market Price of the Common Stock for the period of five
(5) consecutive trading days ending on the date of the sale of
such Common Stock; PROVIDED, HOWEVER, that any amounts due as to
that period during which the shares are not traded or included
for quotation on the NASDAQ-NMS, NYSE, AMEX or NASDAQ SmallCap
shall be paid in cash only; PROVIDED, FURTHER, HOWEVER, that in
no event shall shares be issued hereunder if, after giving effect
to such issuance, the number of shares of Common Stock purchased
pursuant to the Securities Purchase Agreement or issued on
exercise of the Warrants or conversion of the Series B Preferred
Shares and beneficially owned by such holder and all Related
Persons would exceed four and nine-tenths percent (4.9%) of the
outstanding shares of Common Stock (calculated in accordance with
Sections 13(d) and 16; cash shall be paid in lieu of any shares
which cannot be issued pursuant to this second proviso. Common
Stock issuable upon conversion of Series B Preferred Shares or
exercise of the warrants for the purchase of Common Stock held by
such holder or the Related Persons shall not be deemed to be
beneficially owned by such holder or the Related Persons for this
purpose. (For example, if the Conversion Percentage was 75.5% at
the time of conversion of $1,000,000 in Stated Value of Series B
Preferred Shares (such that the Series B Preferred Shares were
converted into Common Stock having an Average Market Price for
the applicable period in aggregate of $1,324,503) and subsequent
to conversion there was a further two (2) month delay in the
Registration Statement's being declared effective, and such
Common Stock was sold at the end of such two (2) month period,
the Company would pay to the holder $79,470.20 in cash or Common
Stock.)
"AVERAGE MARKET PRICE" of any security for any period
shall be computed as the arithmetic average of the closing bid
prices for such security for each trading day in such period on
the NASDAQ-NMS, or, if the NASDAQ-NMS is not the principal
trading market for such security, on the principal trading market
for such security, or, if market value cannot be calculated for
such period on any of the foregoing bases, the average fair
market value during such period as reasonably determined in good
faith by the Board of Directors of the Company.
(c) If the Company shall consolidate with or merge
into any corporation or reclassify its outstanding shares of
Common Stock (other than by way of subdivision or reduction of
such shares) (each a "MAJOR TRANSACTION"), then each Series B
Preferred Share shall thereafter be convertible into the number
of shares of stock or securities (the "RESULTING SECURITIES") or
property of the Company, or of the entity resulting from such
consolidation or merger, to which a holder of the number of
shares of Common Stock delivered upon conversion of such Series B
Preferred Share would have been entitled upon such Major
Transaction had the holder of such Series B Preferred Share
exercised its right of conversion and had such Common Stock been
issued and outstanding and had such holder been the holder of
record of such Common Stock at the time of such Major
Transaction, and the Company shall make lawful provision therefor
as a part of such consolidation, merger or reclassification;
PROVIDED, HOWEVER, that the Company shall give the holders of the
Series B Preferred Shares written notice of any Major Transaction
promptly upon the execution of any agreement whether or not
binding in connection therewith (including without limitation a
letter of intent or agreement in principle) and in no event shall
a Major Transaction be consummated prior to ninety (90) days
after such notice.
(d) The Company shall not issue any fraction of a
share of Common Stock upon any conversion, but shall pay in cash
therefor at the Conversion Price then in effect multiplied by
such fraction.
(e) On presentation and surrender to the Company (or
at any office or agency maintained for the transfer of the Series
B Preferred Shares) of the certificates of Series B Preferred
Shares so to be converted, duly endorsed in blank for transfer or
accompanied by proper instruments of assignment or transfer in
blank (a "CONVERSION NOTICE"), with signatures guaranteed, the
holder of such Series B Preferred Shares shall be entitled,
subject to the limitations herein contained, to receive in
exchange therefor a certificate or certificates for fully paid
and nonassessable shares, which certificates shall be delivered
by the second trading day after the date of delivery of the
Conversion Notice, and cash for fractional shares, of Common
Stock on the foregoing basis. The Series B Preferred Shares
shall be deemed to have been converted, and the person converting
the same to have become the holder of record of Common Stock, for
all purposes as of the date of delivery of the Conversion Notice.
(f) The Company shall, so long as any of the Series B
Preferred Shares are outstanding, reserve and keep available out
of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Series B Preferred
Shares, such number of shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all of the
Series B Preferred Shares then outstanding.
(g) The Company shall pay any and all taxes which may
be imposed upon it with respect to the issuance and delivery of
Common Stock upon the conversion of the Series B Preferred Shares
as herein provided. The Company shall not be required in any
event to pay any transfer or other taxes by reason of the
issuance of such Common Stock in names other than those in which
the Series B Preferred Shares surrendered for conversion are
registered on the Company's records, and no such conversion or
issuance of Common Stock shall be made unless and until the
person requesting such issuance has paid to the Company the
amount of any such tax, or has established to the satisfaction of
the Company and its transfer agent, if any, that such tax has
been paid.
(3) VOTING RIGHTS. Holders of Series B Preferred Shares
shall have no voting rights, except as required by law and by
Section 7 hereof.
(4) REDEMPTION. The Company may, but shall not be
obligated to, at any time subsequent to ninety (90) days after
the issuance of the Series B Preferred Shares, redeem the whole
or any part of the Series B Preferred Shares then outstanding at
a redemption price of $127 per Preferred Share, in accordance
with the following redemption procedures:
(a) In case of redemption of only part of the Series B
Preferred Shares at any time outstanding, the Company shall
designate the amount of Series B Preferred Shares so to be
redeemed and shall redeem such Series B Preferred Shares on a PRO
RATA basis. Subject to the limitations and provisions herein
contained, the Board of Directors shall have the power and
authority to prescribe the terms and conditions upon which the
Series B Preferred Shares shall be redeemed from time to time.
(b) Notice of every redemption shall be given by mail
to every holder of record of any Series B Preferred Shares then
to be redeemed, at least thirty (30), but no more than ninety
(90), days prior to the date fixed as the date for the redemption
thereof, at the respective addresses of such holders as the same
shall appear on the stock transfer books of the Company. The
notice shall state that the Series B Preferred Shares shall be
redeemed by the Company at the redemption price specified above,
upon the surrender for cancellation, at the time and place
designated in such notice, of the certificates representing the
Series B Preferred Shares to be redeemed, properly endorsed in
blank for transfer, or accompanied by proper instruments of
assignment and transfer in blank, with signatures guaranteed, and
bearing all necessary transfer tax stamps thereto affixed and
cancelled. On and after the date specified in the notice
described above, each holder of Series B Preferred Shares called
for redemption shall be entitled to receive therefor the
specified redemption price upon presentation and surrender at the
place designated in such notice of the certificates for Series B
Preferred Shares called for redemption, properly endorsed in
blank for transfer or accompanied by proper instruments of
assignment or transfer in blank, with signatures guaranteed, and
bearing all necessary transfer tax stamps thereto affixed and
cancelled.
(c) If the Company shall give notice of redemption as
aforesaid (and unless the Company shall fail to pay the
redemption price of the Series B Preferred Shares presented for
redemption in accordance with such notice), all Series B
Preferred Shares called for redemption shall be deemed to have
been redeemed on the date specified in such notice, whether or
not the certificates for such Series B Preferred Shares shall be
surrendered for redemption, and such Series B Preferred Shares so
called for redemption shall from and after such date cease to
represent any interest whatsoever in the Company or its property,
and the holders thereof shall have no rights other than the right
to receive such redemption price without any interest thereof
from and after such date.
(5) LIQUIDATION, DISSOLUTION, WINDING UP. In the event of
any voluntary or involuntary liquidation, dissolution or winding
up of the Company, the holders of the Series B Preferred Shares
shall be entitled to receive in cash out of the assets of the
Company, whether from capital or from earnings, available for
distribution to its stockholders (the "PREFERRED FUNDS"), before
any amount shall be paid to the holders of the Common Stock, an
amount equal to the Stated Value per Series B Preferred Share,
provided that, if the Preferred Funds are insufficient to pay the
full amount due to the holders of Series B Preferred Shares and
holders of shares of other classes or series of preferred stock
of the Company that are of equal rank with the Series B Preferred
Shares as to payments of Preferred Funds (the "PARI PASSU
SHARES"), then each holder of Series B Preferred Shares and Pari
Passu Shares shall receive a percentage of the Preferred Funds
equal to the full amount of Preferred Funds payable to such
holder as a percentage of the full amount of Preferred Funds
payable to all holders of Series B Preferred Shares and Pari
Passu Shares. The purchase or redemption by the Company of
stock of any class, in any manner permitted by law, shall not,
for the purposes hereof, be regarded as a liquidation,
dissolution or winding up of the Company. Neither the
consolidation nor merger of the Company with or into any other
corporation or corporations, nor the sale or transfer by the
Company of less than substantially all of its assets, shall, for
the purposes hereof, be deemed to be a liquidation, dissolution
or winding up of the Company. No holder of Series B Preferred
Shares shall be entitled to receive any amounts with respect
thereto upon any liquidation, dissolution or winding up of the
Company other than the amounts provided for herein.
(6) PREFERRED RANK. All shares of Common Stock shall be of
junior rank to all Series B Preferred Shares in respect to the
preferences as to distributions and payments upon the
liquidation, dissolution or winding up of the Company. The
rights of the shares of Common Stock shall be subject to the
preferences and relative rights of the Series B Preferred Shares.
The Series B Preferred Shares shall be of equal rank with the
Company's Series A Cumulative Convertible Preferred Stock in
respect of distributions and payments upon the liquidation,
dissolution or winding up of the Company. Notwithstanding the
foregoing, the Company may authorize and issue additional or
other preferred stock which is of equal or junior rank with the
Series B Preferred Shares in respect of the preferences as to
distributions and payments upon the liquidation, dissolution or
winding up of the Company; PROVIDED, HOWEVER, that for so long as
the Series B Preferred Shares remain outstanding the Company
shall not issue any capital stock which is more senior in rank
than the Series B Preferred Shares in respect of the foregoing
preferences. In the event of the merger or consolidation of the
Company with or into another corporation, the Series B Preferred
Shares shall maintain their relative powers, designations and
preferences provided for herein.
(7) VOTE TO CHANGE THE TERMS OF SERIES B PREFERRED SHARES.
The affirmative vote at a meeting duly called for such purpose or
the written consent without a meeting of the holders of not less
than two-thirds (2/3) of the then outstanding Series B Preferred
Shares shall be required to amend, alter, change or repeal any of
the powers, designations, preferences and rights of the Series B
Preferred Shares.
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by Xxxxx X. Xxxxxxx, its President, and Xxxx X. Xxxxxx, its
Secretary, this 31st day of January 1996.
By:/S/ XXXXX X. XXXXXXX
President
Attest:/S/ XXXX X. XXXXXX
Secretary
EXHIBIT B
TO
SECURITIES PURCHASE
AGREEMENT
WARRANT TO PURCHASE 364,963 SHARES OF COMMON STOCK VOID AFTER 5:00
P.M. NEW JERSEY TIME, ON FEBRUARY 7, 2001. THIS WARRANT AND THE SHARES OF
COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN AND WILL BE ISSUED
IN TRANSACTIONS WHICH HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR BLUE SKY
LAWS. THIS WARRANT AND SUCH SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, IN WHOLE OR IN PART, IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
LAW, OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
NO. ______1_________ 364,963 SHARES
ENZON, INC.
This certifies that, for value received, GFL Advantage Fund Ltd., the
registered holder hereof, or assigns (the "WARRANTHOLDER") is entitled to
purchase from Enzon, Inc., a Delaware corporation (the "COMPANY"), at any
time on and after the earlier of the date the Registration Statement (filed
with the Securities and Exchange Commission (the "SEC") pursuant to Section
2(a) of a certain Registration Rights Agreement of even date herewith by
and among the parties hereto) is declared effective by the SEC or seventy
(70) days from the date of issuance of this Warrant and before 5:00 p.m.,
New Jersey time, on February 7, 2001 (the "TERMINATION DATE"), at the
purchase price of $4.11 per share (the "EXERCISE PRICE"), the number of
shares of Common Stock, par value $.01 per share (the "COMMON STOCK"), of
the Company set forth above (the "WARRANT STOCK"); PROVIDED, HOWEVER, that
in no event shall the Warrantholder be entitled to exercise this Warrant
if, after giving effect to such exercise, the number of shares of Common
Stock beneficially owned by the Warrantholder and all other holders of
Common Stock whose holdings would be aggregated with the Warrantholder for
purposes of calculating beneficial ownership in accordance with Sections
13(d) and 16 of the Securities Exchange Act of 1934, as amended, and the
regulations thereunder ("SECTIONS 13(D) AND 16"), including without
limitation any person serving as an adviser to any holder (collectively,
the "RELATED PERSONS"), would exceed four and nine-tenths percent (4.9%) of
the outstanding shares of Common Stock (calculated in accordance with
Sections 13(d) and 16). The Common Stock issuable upon conversion of
shares of the Company's preferred stock or exercise of warrants for the
purchase of Common Stock held by the Warrantholder or the Related Persons
shall not be deemed to be beneficially owned by the Warrantholder or such
Related Persons for this purpose. The number of shares of Warrant Stock,
the Termination Date and the Exercise Price per share of this Warrant shall
be subject to adjustment from time to time as set forth below.
SECTION I. TRANSFER OR EXCHANGE OF WARRANT
The Company shall be entitled to treat the Warrantholder as the owner
in fact hereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in this Warrant on the part of any
other person. This Warrant shall be transferable only on the books of the
Company, maintained at its principal office, upon delivery of this Warrant
Certificate duly endorsed by the Warrantholder or by its duly authorized
attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall deliver a new Warrant Certificate or
Certificates to the persons entitled thereto.
SECTION II. TERM OF WARRANT; EXERCISE OF WARRANTS
A. TERMINATION. The Company may, in its sole discretion, extend the
Termination Date with respect to the exercise of this Warrant upon notice
to the Warrantholder. As used herein, "TERMINATION DATE" shall be deemed
to include any such extensions.
B. EXERCISE. This Warrant shall be exercised by surrender to the
Company, at its principal office, of this Warrant Certificate, together
with the Purchase Form attached hereto duly completed and signed, and upon
payment to the Company of the Exercise Price for the number of shares of
Warrant Stock in respect of which this Warrant is then exercised. Payment
of the aggregate Exercise Price shall be made in cash or by certified or
official bank check.
C. WARRANT CERTIFICATE. Subject to Section III hereof, upon such
surrender of this Warrant Certificate and payment of the Exercise Price as
aforesaid, the Company shall issue and cause to be delivered to or upon the
written order of the Warrantholder, by the second trading day after
exercise, a certificate or certificates for the number of full shares of
Warrant Stock so purchased upon the exercise of such Warrant, together with
cash, as provided in Section VI hereof, in respect of any fractional shares
of Warrant Stock otherwise issuable upon such surrender. Such certificate
or certificates representing the Warrant Stock shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such shares of Warrant Stock as of the
date of receipt by the Company of this Warrant Certificate and payment of
the Exercise Price as aforesaid; PROVIDED, HOWEVER, that if, at the date of
surrender of this Warrant Certificate and payment of the Exercise Price,
the transfer books for the Warrant Stock or other class of stock
purchasable upon the exercise of this Warrant shall be closed, the
certificate or certificates for the shares of Warrant Stock in respect of
which this Warrant is then exercised shall be deemed issuable as of the
date on which such books shall next be opened (whether before or after the
Termination Date) and until such date the Company shall be under no duty to
deliver any certificate for such shares of Warrant Stock; PROVIDED FURTHER,
HOWEVER, that the transfer books of record, unless otherwise required by
law, shall not be closed at any one time for a period longer than twenty
(20) days. The rights of purchase represented by this Warrant shall be
exercisable, at the election of the Warrantholder, either in full or from
time to time in part, and, in the event that this Warrant is exercised in
respect of fewer than all of the shares of Warrant Stock purchasable on
such exercise at any time prior to the Termination Date, a new Warrant
Certificate evidencing the remaining Warrant or Warrants will be issued,
and the Company shall deliver the new Warrant Certificate or Certificates
pursuant to the provisions of this Section.
SECTION III. PAYMENT OF TAXES
The Company will pay all documentary stamp taxes, if any, attributable
to the initial issuance of the shares of Warrant Stock upon the exercise of
this Warrant; provided, however, that the Warrantholder shall pay any tax
or taxes which may be payable in respect of any transfer involved in the
issue or delivery of Warrant Certificates or the certificates for the
shares of Warrant Stock in a name other than that of the Warrantholder in
respect of which this Warrant or shares of Warrant Stock are issued.
SECTION IV. MUTILATED OR MISSING WARRANT CERTIFICATES
In case this Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warrantholder, issue
and deliver, in exchange and substitution for and upon cancellation of this
certificate if mutilated, or in lieu of and in substitution for this
certificate if lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of this Warrant Certificate and indemnity, if
requested, also reasonably satisfactory to the Company.
SECTION V. RESERVATION OF SHARES OF WARRANT STOCK.
There has been reserved, and the Company shall at all times keep
reserved so long as this Warrant remains outstanding, out of its authorized
Common Stock a number of shares of Common Stock sufficient to provide for
the exercise of the rights of purchase represented by this Warrant. The
transfer agent for the Common Stock and every subsequent transfer agent for
any shares of the Company's capital stock issuable upon the exercise of
this Warrant will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be requisite for such
purpose.
SECTION VI. FRACTIONAL SHARES.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. With respect to any fraction of
a share called for upon the exercise of this Warrant, the Company shall pay
to the Warrantholder an amount in cash equal to such fraction multiplied by
the Exercise Price then in effect.
SECTION VII. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES.
A. COMPUTATION OF ADJUSTED EXERCISE PRICE. Except as hereinafter
provided, in case the Company shall at any time after the date hereof (i)
issue or sell any shares of Common Stock (except in those instances
referred to in subsection F of this Section VII), including shares held in
the Company's treasury and shares issued upon the exercise of any option,
rights or warrants (with the exception of this Warrant and any other
options, warrants and convertible securities outstanding on the date
hereof, and without duplicating any adjustments pursuant to clause (ii)
below) and shares issued upon the direct or indirect conversion or exchange
of securities for shares of Common Stock (with the exception of the
Company's Series A Cumulative Convertible Preferred Stock and Series B
Convertible Preferred Stock (collectively, the "PREFERRED STOCK"), and
without duplicating any adjustments pursuant to clause (ii) below) for a
consideration per share less than the Market Price (as hereinafter defined)
on the trading day immediately prior to the date of issuance or sale of
such share or without consideration, or (ii) issue any rights, options or
warrants to subscribe for or purchase or otherwise acquire Common Stock
(the "OPTION SECURITIES") or any evidences of indebtedness, shares of stock
or other securities (other than the Preferred Stock) which are convertible
into or exchangeable, with or without payment of consideration, for shares
of Common Stock (the "CONVERTIBLE SECURITIES"), whether or not the right to
exercise such Option Securities or to convert or exchange such Convertible
Securities is immediately exercisable or is conditioned upon the passage of
time, the occurrence or non-occurrence of some other event, or both, for a
consideration per share of Common Stock (calculated in accordance with
subsections A(iii) and A(iv) of this Article VII) less than the Market
Price on the trading day immediately prior to the date of issuance of such
Option Securities or Convertible Securities, then forthwith upon such
issuance or sale the Exercise Price shall (until another such issuance or
sale) be reduced to a price (calculated to the nearest full cent)
determined by multiplying the Exercise Price immediately prior to such
issuance or sale by a fraction, the numerator of which is an amount equal
to the sum of (X) the total number of shares of Common Stock outstanding
immediately prior to such issuance or sale, multiplied by the Market Price
in effect immediately prior to such issuance or sale, plus (Y) the
aggregate of the amount of all consideration, if any, received by the
Company upon such issuance or sale, and the denominator of which is the
Market Price in effect immediately prior to such issuance or sale
multiplied by the total number of shares of Common Stock outstanding
immediately after such issuance or sale; PROVIDED, HOWEVER, that in no
event shall the Exercise Price be adjusted pursuant to this computation to
an amount in excess of the Exercise Price in effect immediately prior to
such computation, except in the case of a combination of outstanding shares
of Common Stock, as provided by subsection B of this Section VII.
For the purposes of any computation to be made in accordance with this
subsection A, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock
for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the amount of the cash
received by the Company for such shares (or, if shares are offered by the
Company for subscription, the subscription price, or, if sold to
underwriters or dealers the public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection
therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of
Common Stock for a consideration part or all of which shall be other than
cash, the amount of the consideration therefor other than cash shall be
deemed to be the value of such consideration as determined in good faith by
the Board of Directors of the Company.
(iii)In case of the issuance of Convertible Securities (other
than the Convertible Securities described in (iv) below), the aggregate
consideration received therefor shall be deemed to be the consideration, if
any, received by the Company for the issuance of such Convertible
Securities, plus the additional minimum consideration, if any, to be
received by the Company upon the conversion or exchange thereof.
(iv) In the case of the issuance of Option Securities, the
aggregate consideration received therefor shall be deemed to be the
consideration, if any, received by the Company for the issuance of such
Option Securities, plus the additional minimum consideration, if any, to be
received by the Company upon the exercise thereof.
(v) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the date following the
record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued
without consideration.
(vi) The reclassification of securities of the Company, other
than shares of Common Stock into securities including shares of Common
Stock, shall be deemed to involve the issuance of such shares for a
consideration other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such
shares shall be determined as provided in subsection (ii) of this
subsection A.
(vii) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the
exercise of outstanding options, rights, warrants and upon the conversion
or exchange of outstanding convertible or exchangeable securities.
"MARKET PRICE," as of any date, (i) means the average of the last
reported sale prices for the shares of Common Stock as reported by National
Association of Securities Dealers Automated Quotation National Market
System ("NASDAQ-NMS") for the five consecutive trading days ending on such
date, or (ii) if the NASDAQ-NMS is not the principal trading market for the
shares of Common Stock, the average of the last reported sale prices on the
principal trading market for the Common Stock during the same period, or
(iii) if market value cannot be calculated as of such date on any of the
foregoing bases, the Market Price shall be the average fair market value as
reasonably determined in good faith by the Board of Directors of the
Company.
B. SUBDIVISION AND COMBINATION. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in case of combination.
C. ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section VII, the number
of shares of Warrant Stock issuable upon the exercise of this Warrant shall
be adjusted to the nearest full share by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number
of shares of Warrant Stock issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product so obtained
by the adjusted Exercise Price.
D. RECLASSIFICATION, CONSOLIDATION, MERGER, ETC. In case of any
reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in the case of
any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding shares of Common Stock,
except a change as a result of a subdivision or combination of such shares
or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation of all or substantially all of the
property of the Company, the Warrantholder shall thereafter have the right
to purchase upon the exercise of this Warrant the kind and number of shares
of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance as if
the Warrantholder were the owner of the shares of Warrant Stock underlying
this Warrant immediately prior to any such events at the Exercise Price in
effect immediately prior to the record date for such reclassification,
change, consolidation, merger, sale or conveyance as if such Warrantholder
had exercised this Warrant.
E. SPECIAL ADJUSTMENT. If the purchase price provided for in any
Option Securities, the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities or the rate at which
any Convertible Securities are convertible into or exchangeable for Common
Stock shall change, or if any Option Securities or Convertible Securities
terminate in whole or in part without being exercised, converted or
exchanged, the Exercise Price in effect at the time of such event shall
forthwith be readjusted. The Exercise Price shall be adjusted to that
amount which would have been in effect at such time had such Option
Securities or Convertible Securities outstanding at such time initially
been granted, issued or sold and the Exercise Price initially adjusted as
provided in subsection A of this Article VII, except that the minimum
amount of additional consideration payable and the total maximum number of
shares issuable shall be determined after giving effect to such event (and
any prior event or events).
F. NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
of the Exercise Price shall be made:
(i) Upon the issuance or sale of this Warrant or the shares of
Warrant Stock issuable upon the exercise of this Warrant, or the issuance
or sale of the Preferred Stock, or upon the issuance of shares of Common
Stock in connection with the conversion of such Preferred Stock, or the
issuance of shares of Common Stock pursuant to Section 2(c) of the
Registration Rights Agreement of even date herewith by and among the
Company and the Buyer and pursuant to Section 2(b) of the Certificate of
Designations, Preferences and Rights of Series B Convertible Preferred
Stock of the Company;
(ii) Upon the issuance of options, or shares upon the exercise
thereof, pursuant to the Company's Non-Qualified Stock Option Plan, or any
amendment or successor plan thereto;
(iii) If the amount of said adjustment shall be less than one
cent ($.01) per share; provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward
and shall be made at the time of and together with any adjustment so
carried forward, shall amount to at least one cent ($.01) per Share;
(iv) Upon the issuance or sale of shares of Common Stock or
securities which are exercisable or convertible into shares of Common Stock
to employees of the Company or its affiliates, under an Employee Stock
Purchase Plan;
(v) Upon the issuance of any Option Securities or the issuance
of shares of Common Stock upon the exercise thereof, where such Option
Security was issued for a consideration price per share of Common Stock
initially deliverable upon exercise of such Option Security equal to or
greater than the Market Price in effect immediately prior to the issuance
or sale of such Option Security;
(vi) Upon the issuance of Convertible Securities where the
conversion price is equal to or greater than the Market Price in effect
immediately prior to the issuance of such Convertible Securities;
(vii)Upon the issuance of Common Stock to non-management
directors of the Company in an amount up to Fourteen Thousand Dollars
($14,000) per such director per year, based upon such method of valuation
as may be established from time to time by the Company's Board of Directors
in its reasonable discretion; or
(viii)Upon the issuance of an aggregate of up to Three Million
Dollars ($3,000,000) of Common Stock or securities which are exercisable or
convertible into Common Stock at a discount to the Market Price as of the
date of such issuance that does not exceed twenty percent (20%).
SECTION VIII. NOTICES TO WARRANTHOLDERS.
So long as this Warrant shall be outstanding and unexercised (a)
if the Company shall pay any dividend or make any distribution upon the
Common Stock or (b) if the Company shall offer to the holders of Common
Stock for subscription or purchase by them any shares of stock of any class
or any other rights or (c) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or
transfer of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected,
then, in any such case, the Company shall cause to be delivered to the
Warrantholder, at least ten (10) days prior to the date specified in (i) or
(ii) below, as the case may be, a notice containing a brief description of
the proposed action and stating the date on which (i) a record is to be
taken for the purpose of such dividend or distribution, or (ii) such
reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if
any, as of which the holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation or winding up. Additionally,
so long as this Warrant shall be outstanding and unexercised, if the
Company shall make any adjustment to the Exercise Price, the Company shall
cause to be delivered to the Warrantholder, within twenty (20) days after
the date of such adjustment, a notice containing a description of the
calculations pertaining to such adjustment and stating the date on which
the adjustment to the Exercise Price became effective.
SECTION IX. DELIVERY OF NOTICES.
Any notice pursuant to this Warrant by the Company or by the
Warrantholder shall be in writing and shall be deemed to have been duly
given if delivered or mailed certified mail, return receipt requested, (a)
if to the Company, to it at 00 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000, Attention: Corporate Secretary and (b) if to the Warrantholder to it
at the address set forth on the signature page hereto. Each party hereto
may from time to time change the address to which such party's notices are
to be delivered or mailed hereunder by notice in accordance herewith to the
other party.
SECTION X. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrantholder shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SECTION XI. APPLICABLE LAW.
This Warrant shall be deemed to be a contract made under the laws
of the State of Delaware applicable to agreements made and to be performed
entirely in Delaware and for all purposes shall be construed in accordance
with the internal laws of Delaware without giving effect to the conflicts
of laws principles thereof.
SECTION XII. BENEFITS OF THIS AGREEMENT
Nothing in this Warrant shall be construed to give to any person
or corporation other than the Company and the Warrantholder any legal or
equitable right, remedy or claim under this Warrant and this Warrant shall
be for the sole and exclusive benefit of the Company and the Warrantholder.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant
Certificate or caused this Warrant Certificate to be duly executed as of
the 7th day of February, 1996.
ENZON, INC.
By:/S/ XXXXX X. XXXXXXX
Name: Xxxxx X. Xxxxxxx
Title:President and CEO
GFL ADVANTAGE FUND, LTD.
By:/S/ X.X. XX XXXXX
Name:X.X. Xx Xxxxx
Title:President
Address of Warrantholder:
Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
GFL PERFORMANCE FUND LTD.
By:/S/ X.X. XX XXXXX
Name:X.X. Xx Xxxxx
Title:President
Address of Warrantholder:
Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the Warrant
represented by this Warrant Certificate to the extent of _____ shares of
Common Stock, par value $.01 per share, of Enzon, Inc., and hereby makes
payment of $__________ in payment of the actual exercise price thereof.
[__________________________]
By:________________________________
Name:
Title:
Employer Taxpayer
Identification Number:
Address for delivery of Stock
Certificate:
ASSIGNMENT FORM
FOR VALUED RECEIVED, ______________________ hereby sells, assigns
and transfers unto _____________________________ address
___________________ the right to purchase Common Stock, par value $.01 per
share, of Enzon, Inc., represented by this Warrant Certificate to the
extent of _______ shares as to which such right is exercisable and does
hereby irrevocably constitute and appoint _______________, to transfer the
same on the books of the Company with full power of substitution in the
premises.
_____________________
Signature
Dated: _______, ____
Notice: The signature of this assignment
must correspond with the name as it appears
upon the face of this Warrant Certificate in
every particular, without alteration or
enlargement or any change whatever.
SIGNATURE GUARANTEED:
__________________________
WARRANT TO PURCHASE 273,723 SHARES OF COMMON STOCK VOID AFTER
5:00 P.M. NEW JERSEY TIME, ON FEBRUARY 7, 2001. THIS WARRANT AND THE
SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN AND WILL
BE ISSUED IN TRANSACTIONS WHICH HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES OR BLUE SKY LAWS. THIS WARRANT AND SUCH SHARES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, IN WHOLE OR IN
PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND APPLICABLE STATE LAW, OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
NO. _______2________ 273,723 SHARES
ENZON, INC.
This certifies that, for value received, GFL Performance Fund
Ltd., the registered holder hereof, or assigns (the "WARRANTHOLDER") is
entitled to purchase from Enzon, Inc., a Delaware corporation (the
"COMPANY"), at any time on and after the earlier of the date the
Registration Statement (filed with the Securities and Exchange Commission
(the "SEC") pursuant to Section 2(a) of a certain Registration Rights
Agreement of even date herewith by and among the parties hereto) is
declared effective by the SEC or seventy (70) days from the date of
issuance of this Warrant and before 5:00 p.m., New Jersey time, on February
7, 2001 (the "TERMINATION DATE"), at the purchase price of $4.11 per share
(the "EXERCISE PRICE"), the number of shares of Common Stock, par value
$.01 per share (the "COMMON STOCK"), of the Company set forth above (the
"WARRANT STOCK"); PROVIDED, HOWEVER, that in no event shall the
Warrantholder be entitled to exercise this Warrant if, after giving effect
to such exercise, the number of shares of Common Stock beneficially owned
by the Warrantholder and all other holders of Common Stock whose holdings
would be aggregated with the Warrantholder for purposes of calculating
beneficial ownership in accordance with Sections 13(d) and 16 of the
Securities Exchange Act of 1934, as amended, and the regulations thereunder
("SECTIONS 13(D) AND 16"), including without limitation any person serving
as an adviser to any holder (collectively, the "RELATED PERSONS"), would
exceed four and nine-tenths percent (4.9%) of the outstanding shares of
Common Stock (calculated in accordance with Sections 13(d) and 16). The
Common Stock issuable upon conversion of shares of the Company's preferred
stock or exercise of warrants for the purchase of Common Stock held by the
Warrantholder or the Related Persons shall not be deemed to be beneficially
owned by the Warrantholder or such Related Persons for this purpose. The
number of shares of Warrant Stock, the Termination Date and the Exercise
Price per share of this Warrant shall be subject to adjustment from time to
time as set forth below.
SECTION I. TRANSFER OR EXCHANGE OF WARRANT
The Company shall be entitled to treat the Warrantholder as the
owner in fact hereof for all purposes and shall not be bound to recognize
any equitable or other claim to or interest in this Warrant on the part of
any other person. This Warrant shall be transferable only on the books of
the Company, maintained at its principal office, upon delivery of this
Warrant Certificate duly endorsed by the Warrantholder or by its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall deliver a new Warrant Certificate or
Certificates to the persons entitled thereto.
SECTION II. TERM OF WARRANT; EXERCISE OF WARRANTS
A. TERMINATION. The Company may, in its sole discretion,
extend the Termination Date with respect to the exercise of this Warrant
upon notice to the Warrantholder. As used herein, "TERMINATION DATE" shall
be deemed to include any such extensions.
B. EXERCISE. This Warrant shall be exercised by surrender to
the Company, at its principal office, of this Warrant Certificate, together
with the Purchase Form attached hereto duly completed and signed, and upon
payment to the Company of the Exercise Price for the number of shares of
Warrant Stock in respect of which this Warrant is then exercised. Payment
of the aggregate Exercise Price shall be made in cash or by certified or
official bank check.
C. WARRANT CERTIFICATE. Subject to Section III hereof, upon
such surrender of this Warrant Certificate and payment of the Exercise
Price as aforesaid, the Company shall issue and cause to be delivered to or
upon the written order of the Warrantholder, by the second trading day
after exercise, a certificate or certificates for the number of full shares
of Warrant Stock so purchased upon the exercise of such Warrant, together
with cash, as provided in Section VI hereof, in respect of any fractional
shares of Warrant Stock otherwise issuable upon such surrender. Such
certificate or certificates representing the Warrant Stock shall be deemed
to have been issued and any person so designated to be named therein shall
be deemed to have become a holder of record of such shares of Warrant Stock
as of the date of receipt by the Company of this Warrant Certificate and
payment of the Exercise Price as aforesaid; PROVIDED, HOWEVER, that if, at
the date of surrender of this Warrant Certificate and payment of the
Exercise Price, the transfer books for the Warrant Stock or other class of
stock purchasable upon the exercise of this Warrant shall be closed, the
certificate or certificates for the shares of Warrant Stock in respect of
which this Warrant is then exercised shall be deemed issuable as of the
date on which such books shall next be opened (whether before or after the
Termination Date) and until such date the Company shall be under no duty to
deliver any certificate for such shares of Warrant Stock; PROVIDED FURTHER,
HOWEVER, that the transfer books of record, unless otherwise required by
law, shall not be closed at any one time for a period longer than twenty
(20) days. The rights of purchase represented by this Warrant shall be
exercisable, at the election of the Warrantholder, either in full or from
time to time in part, and, in the event that this Warrant is exercised in
respect of fewer than all of the shares of Warrant Stock purchasable on
such exercise at any time prior to the Termination Date, a new Warrant
Certificate evidencing the remaining Warrant or Warrants will be issued,
and the Company shall deliver the new Warrant Certificate or Certificates
pursuant to the provisions of this Section.
SECTION III. PAYMENT OF TAXES
The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of the shares of Warrant Stock upon
the exercise of this Warrant; provided, however, that the Warrantholder
shall pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of Warrant Certificates or the
certificates for the shares of Warrant Stock in a name other than that of
the Warrantholder in respect of which this Warrant or shares of Warrant
Stock are issued.
SECTION IV. MUTILATED OR MISSING WARRANT CERTIFICATES
In case this Warrant Certificate shall be mutilated, lost, stolen
or destroyed, the Company shall, at the request of the Warrantholder, issue
and deliver, in exchange and substitution for and upon cancellation of this
certificate if mutilated, or in lieu of and in substitution for this
certificate if lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of this Warrant Certificate and indemnity, if
requested, also reasonably satisfactory to the Company.
SECTION V. RESERVATION OF SHARES OF WARRANT STOCK.
There has been reserved, and the Company shall at all times keep
reserved so long as this Warrant remains outstanding, out of its authorized
Common Stock a number of shares of Common Stock sufficient to provide for
the exercise of the rights of purchase represented by this Warrant. The
transfer agent for the Common Stock and every subsequent transfer agent for
any shares of the Company's capital stock issuable upon the exercise of
this Warrant will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be requisite for such
purpose.
SECTION VI. FRACTIONAL SHARES.
No fractional shares or scrip representing fractional shares
shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon the exercise of this Warrant, the
Company shall pay to the Warrantholder an amount in cash equal to such
fraction multiplied by the Exercise Price then in effect.
SECTION VII. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES.
A. COMPUTATION OF ADJUSTED EXERCISE PRICE. Except as
hereinafter provided, in case the Company shall at any time after the date
hereof (i) issue or sell any shares of Common Stock (except in those
instances referred to in subsection F of this Section VII), including
shares held in the Company's treasury and shares issued upon the exercise
of any option, rights or warrants (with the exception of this Warrant and
any other options and warrants outstanding on the date hereof, and without
duplicating any adjustments pursuant to clause (ii) below) and shares
issued upon the direct or indirect conversion or exchange of securities for
shares of Common Stock (with the exception of the Company's Series A
Cumulative Convertible Preferred Stock and Series B Convertible Preferred
Stock (collectively, the "PREFERRED STOCK"), and without duplicating any
adjustments pursuant to clause (ii) below) for a consideration per share
less than the Market Price (as hereinafter defined) on the trading day
immediately prior to the date of issuance or sale of such share or without
consideration, or (ii) issue any rights, options or warrants to subscribe
for or purchase or otherwise acquire Common Stock (the "OPTION SECURITIES")
or any evidences of indebtedness, shares of stock or other securities
(other than the Preferred Stock) which are convertible into or
exchangeable, with or without payment of consideration, for shares of
Common Stock (the "CONVERTIBLE SECURITIES"), whether or not the right to
exercise such Option Securities or to convert or exchange such Convertible
Securities is immediately exercisable or is conditioned upon the passage of
time, the occurrence or non-occurrence of some other event, or both, for a
consideration per share of Common Stock (calculated in accordance with
subsections A(iii) and A(iv) of this Article VII) less than the Market
Price on the trading day immediately prior to the date of issuance of such
Option Securities or Convertible Securities, then forthwith upon such
issuance or sale the Exercise Price shall (until another such issuance or
sale) be reduced to a price (calculated to the nearest full cent)
determined by multiplying the Exercise Price immediately prior to such
issuance or sale by a fraction, the numerator of which is an amount equal
to the sum of (X) the total number of shares of Common Stock outstanding
immediately prior to such issuance or sale, multiplied by the Market Price
in effect immediately prior to such issuance or sale, plus (Y) the
aggregate of the amount of all consideration, if any, received by the
Company upon such issuance or sale, and the denominator of which is the
Market Price in effect immediately prior to such issuance or sale
multiplied by the total number of shares of Common Stock outstanding
immediately after such issuance or sale; PROVIDED, HOWEVER, that in no
event shall the Exercise Price be adjusted pursuant to this computation to
an amount in excess of the Exercise Price in effect immediately prior to
such computation, except in the case of a combination of outstanding shares
of Common Stock, as provided by subsection B of this Section VII.
For the purposes of any computation to be made in accordance with
this subsection A, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common
Stock for a consideration part or all of which shall be cash, the amount of
the cash consideration therefor shall be deemed to be the amount of the
cash received by the Company for such shares (or, if shares are offered by
the Company for subscription, the subscription price, or, if sold to
underwriters or dealers the public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection
therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of
Common Stock for a consideration part or all of which shall be other than
cash, the amount of the consideration therefor other than cash shall be
deemed to be the value of such consideration as determined in good faith by
the Board of Directors of the Company.
(iii)In case of the issuance of Convertible Securities
(other than the Convertible Securities described in (iv) below), the
aggregate consideration received therefor shall be deemed to be the
consideration, if any, received by the Company for the issuance of such
Convertible Securities, plus the additional minimum consideration, if any,
to be received by the Company upon the conversion or exchange thereof.
(iv) In the case of the issuance of Option Securities, the
aggregate consideration received therefor shall be deemed to be the
consideration, if any, received by the Company for the issuance of such
Option Securities, plus the additional minimum consideration, if any, to be
received by the Company upon the exercise thereof.
(v) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the date following the
record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued
without consideration.
(vi) The reclassification of securities of the Company,
other than shares of Common Stock into securities including shares of
Common Stock, shall be deemed to involve the issuance of such shares for a
consideration other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such
shares shall be determined as provided in subsection (ii) of this
subsection A.
(vii) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the
exercise of outstanding options, rights, warrants and upon the conversion
or exchange of outstanding convertible or exchangeable securities.
"MARKET PRICE," as of any date, (i) means the average of the
last reported sale prices for the shares of Common Stock as reported by
National Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ-NMS") for the five consecutive trading days ending
on such date, or (ii) if the NASDAQ-NMS is not the principal trading market
for the shares of Common Stock, the average of the last reported sale
prices on the principal trading market for the Common Stock during the same
period, or (iii) if market value cannot be calculated as of such date on
any of the foregoing bases, the Market Price shall be the average fair
market value as reasonably determined in good faith by the Board of
Directors of the Company.
B. SUBDIVISION AND COMBINATION. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in case of combination.
C. ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section VII, the number
of shares of Warrant Stock issuable upon the exercise of this Warrant shall
be adjusted to the nearest full share by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number
of shares of Warrant Stock issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product so obtained
by the adjusted Exercise Price.
D. RECLASSIFICATION, CONSOLIDATION, MERGER, ETC. In case of
any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in the case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding shares of Common Stock,
except a change as a result of a subdivision or combination of such shares
or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation of all or substantially all of the
property of the Company, the Warrantholder shall thereafter have the right
to purchase upon the exercise of this Warrant the kind and number of shares
of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance as if
the Warrantholder were the owner of the shares of Warrant Stock underlying
this Warrant immediately prior to any such events at the Exercise Price in
effect immediately prior to the record date for such reclassification,
change, consolidation, merger, sale or conveyance as if such Warrantholder
had exercised this Warrant.
E. SPECIAL ADJUSTMENT. If the purchase price provided for in
any Option Securities, the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities or the rate at
which any Convertible Securities are convertible into or exchangeable for
Common Stock shall change, or if any Option Securities or Convertible
Securities terminate in whole or in part without being exercised, converted
or exchanged, the Exercise Price in effect at the time of such event shall
forthwith be readjusted. The Exercise Price shall be adjusted to that
amount which would have been in effect at such time had such Option
Securities or Convertible Securities outstanding at such time initially
been granted, issued or sold and the Exercise Price initially adjusted as
provided in subsection A of this Article VII, except that the minimum
amount of additional consideration payable and the total maximum number of
shares issuable shall be determined after giving effect to such event (and
any prior event or events).
F. NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No
adjustment of the Exercise Price shall be made:
(i) Upon the issuance or sale of this Warrant or the shares
of Warrant Stock issuable upon the exercise of this Warrant, or the
issuance or sale of the Preferred Stock, or upon the issuance of shares of
Common Stock in connection with the conversion of such Preferred Stock, or
the issuance of shares of Common Stock pursuant to Section 2(c) of the
Registration Rights Agreement of even date herewith by and among the
Company and the Buyer and pursuant to Section 2(b) of the Certificate of
Designations, Preferences and Rights of Series B Convertible Preferred
Stock of the Company;
(ii) Upon the issuance of options, or shares upon the
exercise thereof, pursuant to the Company's Non-Qualified Stock Option
Plan, or any amendment or successor plan thereto;
(iii) If the amount of said adjustment shall be less than
one cent ($.01) per share; provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with any
adjustment so carried forward, shall amount to at least one cent ($.01) per
Share;
(iv) Upon the issuance or sale of shares of Common Stock or
securities which are exercisable or convertible into shares of Common Stock
to employees of the Company or its affiliates, under an Employee Stock
Purchase Plan;
(v) Upon the issuance of any Option Securities or the
issuance of shares of Common Stock upon the exercise thereof, where such
Option Security was issued for a consideration price per share of Common
Stock initially deliverable upon exercise of such Option Security equal to
or greater than the Market Price in effect immediately prior to the
issuance or sale of such Option Security;
(vi) Upon the issuance of Convertible Securities where the
conversion price is equal to or greater than the Market Price in effect
immediately prior to the issuance of such Convertible Securities;
(vii)Upon the issuance of Common Stock to non-management
directors of the Company in an amount up to Fourteen Thousand Dollars
($14,000) per such director per year, based upon such method of valuation
as may be established from time to time by the Company's Board of Directors
in its reasonable discretion; or
(viii)Upon the issuance of an aggregate of up to Three
Million Dollars ($3,000,000) of Common Stock or securities which are
exercisable or convertible into Common Stock at a discount to the Market
Price as of the date of such issuance that does not exceed twenty percent
(20%).
SECTION VIII. NOTICES TO WARRANTHOLDERS.
So long as this Warrant shall be outstanding and unexercised (a)
if the Company shall pay any dividend or make any distribution upon the
Common Stock or (b) if the Company shall offer to the holders of Common
Stock for subscription or purchase by them any shares of stock of any class
or any other rights or (c) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or
transfer of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected,
then, in any such case, the Company shall cause to be delivered to the
Warrantholder, at least ten (10) days prior to the date specified in (i) or
(ii) below, as the case may be, a notice containing a brief description of
the proposed action and stating the date on which (i) a record is to be
taken for the purpose of such dividend or distribution, or (ii) such
reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if
any, as of which the holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation or winding up. Additionally,
so long as this Warrant shall be outstanding and unexercised, if the
Company shall make any adjustment to the Exercise Price, the Company shall
cause to be delivered to the Warrantholder, within twenty (20) days after
the date of such adjustment, a notice containing a description of the
calculations pertaining to such adjustment and stating the date on which
the adjustment to the Exercise Price became effective.
SECTION IX. DELIVERY OF NOTICES.
Any notice pursuant to this Warrant by the Company or by the
Warrantholder shall be in writing and shall be deemed to have been duly
given if delivered or mailed certified mail, return receipt requested, (a)
if to the Company, to it at 00 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000, Attention: Corporate Secretary and (b) if to the Warrantholder to it
at the address set forth on the signature page hereto. Each party hereto
may from time to time change the address to which such party's notices are
to be delivered or mailed hereunder by notice in accordance herewith to the
other party.
SECTION X. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrantholder shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SECTION XI. APPLICABLE LAW.
This Warrant shall be deemed to be a contract made under the laws
of the State of Delaware applicable to agreements made and to be performed
entirely in Delaware and for all purposes shall be construed in accordance
with the internal laws of Delaware without giving effect to the conflicts
of laws principles thereof.
SECTION XII. BENEFITS OF THIS AGREEMENT
Nothing in this Warrant shall be construed to give to any person
or corporation other than the Company and the Warrantholder any legal or
equitable right, remedy or claim under this Warrant and this Warrant shall
be for the sole and exclusive benefit of the Company and the Warrantholder.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant
Certificate or caused this Warrant Certificate to be duly executed as of
the 7th day of February, 1996.
ENZON, INC.
By:/S/ XXXXX X. XXXXXXX
Name:Xxxxx X. Xxxxxxx
Title:President and CEO
GFL ADVANTAGE FUND, LTD.
By:/S/ X.X. XX XXXXX
Name:X.X. Xx Xxxxx
Title:President
Address of Warrantholder:
Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
GFL PERFORMANCE FUND LTD.
By:/S/ X.X. XX XXXXX
Name:X.X. Xx Xxxxx
Title:President
Address of Warrantholder:
Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the Warrant
represented by this Warrant Certificate to the extent of _____ shares of
Common Stock, par value $.01 per share, of Enzon, Inc., and hereby makes
payment of $__________ in payment of the actual exercise price thereof.
[__________________________]
By:________________________________
Name:
Title:
Employer Taxpayer
Identification Number:
Address for delivery of Stock
Certificate:
ASSIGNMENT FORM
FOR VALUED RECEIVED, ______________________ hereby sells, assigns
and transfers unto _____________________________ address
___________________ the right to purchase Common Stock, par value $.01 per
share, of Enzon, Inc., represented by this Warrant Certificate to the
extent of _______ shares as to which such right is exercisable and does
hereby irrevocably constitute and appoint _______________, to transfer the
same on the books of the Company with full power of substitution in the
premises.
_____________________
Signature
Dated: _______, ____
Notice: The signature of this assignment
must correspond with the name as it appears
upon the face of this Warrant Certificate in
every particular, without alteration or
enlargement or any change whatever.
SIGNATURE GUARANTEED:
__________________________
SCHEDULE 3(C)
OPTIONS, WARRANTS, SCRIPS, RIGHTS TO SUBSCRIBE TO SHARES OF CAPITAL STOCK
As of January 26, 1996, there were outstanding options to purchase
3,863,475 shares of the Company's common stock, $.01 par value per share
(the "Common Stock"), of which (i) 3,663,475 were reserved for issuance at
January 26, 1996 pursuant to the Company's Non-Qualified Stock Option Plan
and (ii) 200,000 were issued to Xxxxxxx Xxxxxxxxxx, the Company's Chairman
of the Board, pursuant to an employment agreement.
As of January 26, 1996, there were 109,000 shares of Series A
Cumulative Convertible Preferred Stock (the "Series A Preferred Stock") of
the Company outstanding which are convertible into an aggregate 247,727
shares of Common Stock.
As of January 26, 1996, there were 150,000 warrants outstanding to
purchase 150,000 shares of Common Stock at $2.50 per share. These warrants
expire on August 8, 2000.
On January 15, 1996, the Board of Directors approved a plan to
compensate non-employee directors which would compensate them with a
retainer of $2,500 per quarter and $500 per Board meeting payable in shares
of Common Stock at the market price of the Common Stock computed as of the
first trading date of the year in which the compensation is earned. The
final authorization of such compensation plan is contingent both on the
draft of such plan by Company counsel and its ratification by the Board and
approval by the shareholders.
REGISTRATION RIGHTS
SCHERING CORPORATION - STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement contains provisions for both demand and
"piggy-back" registration rights for 847,489 shares of Common Stock. The
demand registration rights provide generally for the right, upon the
request of 25% of the holders' of the shares of common stock sold pursuant
to the Stock Purchase Agreement (the "Common Stock") for a period beginning
six months after closing of the agreement and continuing without
limitation, which includes shares of Common Stock issued or issuable by way
of a stock split, or in connection with a combination of shares,
reclassification, recapitalization, merger or consolidation or
reorganization, the right to have such shares included in a registration
statement to be filed with the Securities and Exchange Commission. After
receiving such request, the Company must notify the holders of all shares
of Common Stock covered by the Stock Purchase Agreement, that such holders
may include the shares of Common Stock held by them in such registration
statement if they make a written request to that effect within 20 days.
Should the holders demanding registration of their shares intend to pursue
an underwritten offering, the holders of shares entitled to notice of the
intended registration shall also be entitled to notice of the intended
underwriting. Inclusion of any shares in such underwriting is subject to
the discretion of the underwriter. Any reduction of shares made by such
underwriter shall be made first out of the shares of holders of either
securities seeking inclusion in such underwriting and subsequently out of
the shares of the holders of the Common Stock. Any reduction of shares
included in such underwriting shall be made pro rata among the holders of
the Common Stock requesting inclusion of their shares.
The "piggy-back" registration rights provided for in the Stock
Purchase Agreement give the holders of the Common Stock the right to
include such shares in a registration statement to be filed with the
Commission for an unlimited period of time. Upon the Company's
determination to file such a registration statement, the stockholders of
the Common Stock must receive written notice, after which such holders have
the right to respond within 20 days and request the inclusion of such
shares in the registration statement. The Company covenants to use its
best efforts to cause such registration statement to become effective. In
the event of an underwritten offering, the holder of shares entitled to
notice pursuant to such "piggy-back" rights shall be advised that the
offering is being underwritten. Should the underwriter determine, however,
that the inclusion of certain Common Shares or other securities, will
render the Offering unmarketable, then those shares may be excluded except
for shares being issued by the Company in a public offering. Such reduced
number of shares shall be effected pro rata among such security holders.
In the event of such underwritten offering, the holders of such shares of
Common Stock must agree to distribute such shares through such underwriter
and sign an underwriting agreement with such underwriter.
The Stock Purchase Agreement also specifically provides that, upon
receipt of the request of any holder of Common Stock acquired under the
Agreement that such holder's shares be registered on Form S-3, the Company
shall provide written notice of the proposed registration to all holders of
such Common Stock, and as soon as practicable within 15 days of receipt of
notice by such Common Stock holders, include such shares in a registration
statement. If the Company has filed an S-3 Registration Statement during
the previous 12 months, such request may be denied. This provision is
separate from the demand registration rights outlined above. All expenses
of such registration or registrations will be borne by the Company.
WARRANT AGREEMENT WITH XXXXXX X. XXXXXX & CO. DATED AUGUST 9, 1995
This Warrant Agreement provides for both demand and "piggy-back"
registration rights with respect to 112,500 shares of Common Stock. The
Warrant Agreement provides that if the Company receives the written request
by the Warrant holder to prepare and file a registration statement covering
the shares issuable upon exercise of the Warrant (the "Warrant Shares"),
that the Company will use its best efforts to prepare and file such
registration statement and keep it effective for at least nine months.
Such demand registration rights shall be effective only for the
registration of more than 50,000 Warrant Shares, provided that in reaching
that threshold, any Warrant Shares included by the Xxxx Companies, a firm
affiliated with the Warrant holder, shall count towards that amount. In
the event of an underwritten offering in which the Warrant holder requests
inclusion, the underwriter has the discretion to deny inclusion of such
Warrant Shares or other securities, except for shares for which Schering
Corporation requests inclusion. The Warrant Shares and shares held by
Schering should be reduced on a pro rata basis. The denial of the
inclusion of Warrant Shares as shares held by Schering of which will
require the "lock-up" of such Warrant Shares for a period of 120 days.
The Warrant Agreement provides for "piggy-back" registration rights
whereby if the Company prepares to file a registration statement during a
period of five years and ninety days, other than one on Form X-0, X-0 or S-
1 (for an employee stock option plan), the Warrant holder is entitled to
notice of the planned registration and has 20 days to respond to the notice
and request the inclusion of their Warrant Shares in the registration
statement. If the registration statement will be prepared and filed in
connection with an underwritten offering, such underwriter has discretion
over the inclusion of such Warrant Shares or other securities in the
offering and may thereby exclude such shares from the registration
statement, except that any shares requested to be included in the offering
by Schering Corporation in connection with its demand registration rights
shall have priority over any of the Warrant Shares. Such reduced number of
shares shall be allocated pro rata among Warrant Share holders or holders
of other securities requesting inclusion of shares in the offering.
Finally, should the Company decide to use Form S-3 for registration of any
Warrant Shares and if necessary to effect such registration, the Company
may require the Warrant holder to exercise its Warrant as a condition
precedent to the inclusion of such shares in the registration statement.
All of the expenses of such registration or registrations will be borne by
the Company.
WARRANT AGREEMENT WITH THE XXXX COMPANIES DATED AUGUST 9, 1995
This Warrant Agreement provides for only "piggy-back" registration
rights with respect to 37,500 shares of Common Stock. Holders of Warrants
under the Warrant Agreement have the right to register shares of Common
Stock issuable upon exercise of Warrants (the "Warrant Shares") if the
Company prepares to file a registration statement during a period of five
years and ninety days other than one on Form X-0, X-0 or S-1 (for an
employee stock option plan). If the Company plans to file such
registration statement, the Warrant holder is entitled to notice of the
planned registration and has 20 days to respond to the notice and request
the inclusion of their Warrant Shares in the registration statement. If
the registration is part of a public offering, the Warrant holder is
entitled to notice of the same. If the registration statement will be
prepared and filed in connection with an underwritten offering, such
underwriter has discretion over the inclusion of such Warrant Shares or
other securities in the offering and may thereby exclude any such shares
from the registration statement, except that any shares requested to be
included in the offering by Schering Corporation in connection with its
demand registration rights or shares to be issued by the Company in a
public offering shall have priority over any of the Warrant Shares. Such
reduced number of shares shall be allocated pro rata among Warrant Share
holders or holders of other securities requesting inclusion of shares in
the offering. Finally, should the Company decide to use Form S-3 for
registration of any Warrant Shares and if necessary to effect such
registration, the Company may require the Warrant holder to exercise its
Warrant as a condition precedent to the inclusion of such shares in the
registration statement. All of the expenses of such registration or
registrations will be borne by the Company.
SCHEDULE 3(H)
PENDING OR THREATENED LITIGATION
The Company currently has no pending litigation. There are a number
of matters which the Company has determined to disclose pursuant to this
Stock Purchase Agreement and related documents, as matters which have the
potential to give rise to litigation in the future.
NEOPROBE/ENZON, AUGUST 15, 1992 LICENSE AGREEMENT AND "SCA PROTEIN
DEVELOPMENT" AGREEMENT.
This matter involves a dispute over sums of money due the Company
pursuant to an agreement between the Company and Neoprobe, whereby the
Company agreed to supply a certain amount of research grade single chain
antigen protein to Neoprobe and granted Neoprobe a license under the
Company's SCA patents. Under the agreements, Neoprobe was required to pay
Enzon by delivery of either a $400,000 interest-bearing note or warrants to
purchase 100,000 shares of Neoprobe common stock exercisable at 105% of the
initial public offering price of Neoprobe common stock or $4.00 per share,
and 200,000 shares exercisable at $10.00 per share. The parties disagree
over whether the samples provided by the Company to Neoprobe satisfy
contractual requirements, whether Enzon is entitled to recover a sum equal
to the amount of the note or exercise of the warrants, and whether Enzon
has breached the Agreements so as not to be entitled to either the note or
warrants. To date no litigation has been commenced in this matter.
PATENTS
The Company is aware of certain issued patents and patent
applications, and there may be other patents and applications, containing
subject matter which the Company or its licensees or collaborators may
require in order to research, develop or commercialize at least some of the
Company's products. There can be no assurance that licenses under such
subject matter will be available on acceptable terms. In particular, the
Company is aware of the following:
BIOPURE: US PATENT 5,084,558
In 1992, the Company received correspondence from a member of the
Board of Directors of Biopure Corporation which could be construed as
containing allegations that Biopure's patent for bovine hemoglobin would
cover the Company's PEG-Hemoglobin products. On March 17, 1992, the
Company obtained an opinion of counsel from the firm of Xxxxxx, David,
Littenburg, Xxxxxxxxx, & Mentlik, to the effect that the Company's PEG-
Hemoglobin does not infringe any claim of such patent which would be held
valid if litigated. However, there can be no assurance that a court would
find any of the claims of such patent to be invalid, that a court would not
hold that the Company's PEG-Hemoglobin product does infringe one or more
valid claims of such patent, or that a license could be obtained under such
patent on acceptable terms. In October, 1995 Biopure's patent was revoked
by the relevant patent authority of the European Communities.
OXIS U.S. PATENT 5,468,478.
In October, 1995, the Company received a letter from Oxis
International, Inc. (formerly known as "DDI Pharmaceuticals, Inc.")
advising that Claim 10 of this Oxis patent for PEG-Protein conjugates may
be relevant to PEG-protein conjugates with PEG of a less than 20,000
daltons. This claim recites water-soluble polyalkylene glycol (PEG)
protein conjugates in which there are no molecular weight limitations for
the PEG. The original Claim 10 was presented for examination to the U.S.
Patent Office with a limitation requiring the PEG to have a molecular
weight between approximately 35,000 to 200,000. This limitation was
removed by Oxis during the course of its patent prosecution without comment
by the Examiner. The patent was issued to Oxis without reference to the
molecular weight of the PEG. On January 24, 1996, the Company received an
opinion from the law firm of Xxxxxxxxx, Xxxxxx & Xxxxxxxx to the effect
that Claim 10 of the Oxis patent, when properly interpreted would be
limited by a U.S. Federal District Court judge to water-soluble
polyalkylene glycol conjugates wherein the PEG portion has a molecular
weight greater than that contemplated by Enzon for its formulations
currently in clinical trials and contemplated for commercialization.
AJINOMOTO, U.S. PATENT 4,301,144.
Ajinomoto, a Japanese corporation, received a patent on November 17,
1991 which applies to the combination of PEG and Hemoglobin and which was
originally scheduled to expire on November 17, 1998. In view of the GATT
treaty, the Company sought the opinion of patent counsel Learner, David,
Littenburg, Xxxxxxxxx, & Mentlik to evaluate any extension thereunder.
Such patent has been extended under the GATT Treaty until July 10, 2000.
Additionally, depending on the filing with the FDA for any product approval
by the patentee, or its licensees, the patent could be extended to as late
as November 17, 2003. Nonetheless, this extension until 2003 would depend
upon the patentee or its licensee filing a PLA or NDA prior to November 17,
1998. The Company does not expect that it will have a PEG-Hemoglobin
product approved before the end of 2000, and thus would not conflict with
the patent held by Ajinomoto. Also, although the Company understands that
a licensee of Ajinomoto has been conducting clinical trials of a PEG-
hemoglobin product since July, 1995, the Company believes it is unlikely
that an NDA or PLA can be filed for this product by November 17, 1998.
