THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK ISSUABLE UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY NOT BE
OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR
ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY STATING THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE RIGHTS OF HOLDERS OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THAT CERTAIN INVESTOR RIGHTS
AGREEMENT BETWEEN BIOSYNTECH, INC. AND CERTAIN OF THE HOLDERS OF ITS COMMON
STOCK DATED JUNE 26th, 2002 (AS AMENDED FROM TIME TO TIME, THE "STOCKHOLDERS
AGREEMENT"), A COPY OF WHICH WILL BE PROVIDED BY BIOSYNTECH, INC. AT THE REQUEST
OF THE HOLDER HEREOF.
JUNE 26TH, 2002 No.A-1
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
BIOSYNTECH, INC.
This certifies that Business Development Bank of Canada, a
corporation duly constituted under the Business Development Bank of Canada Act,
having a place of business at 5, Place Ville-Marie, Suite 1450, Montreal
(Quebec), H3B 5E7, and its successors and assigns (the "Holder"), for value
received, is entitled to purchase from BioSyntech, Inc., a corporation duly
constituted under the laws of the State of Nevada (the "Company"), having a
place of business at 475, Armand-Frappier Blvd., Laval (Quebec), H7V 4B3, for
cash at a price per share of $0.33 (the "Strike Price") at any time or from time
to time up to and including 5:00 p.m. (Eastern time) on [ ], 2007 (the
"Expiration Date"), 1,000,000 fully paid and nonassessable shares of the
Company's Common Stock, $0.001 par value per share (the "Common Stock"), upon
surrender to the Company at its principal office (or at such other location as
the Company may advise the Holder in writing) of this Warrant properly endorsed
with the Form of Subscription attached hereto duly filled in and signed and upon
payment in cash or by check of the aggregate Strike Price for the number of
shares for which this Warrant is being exercised determined in accordance with
the provisions hereof.
This Warrant is subject to the following terms and conditions.
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 General. This Warrant is exercisable at the option of the
Holder, at any time or from time to time up to and including the Expiration Date
for all or any part of the shares of Common Stock which may be purchased
hereunder. The Company agrees that the shares of Common Stock purchased under
this Warrant shall be and are deemed to be issued to the Holder hereof as the
record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered (the "Exercise Date"), properly
endorsed, together with the completed, executed Form of Subscription specifying
the number of warrants the Holder wishes to exercise (the "Exercised Warrants"),
and payment made for such shares. Certificates for the shares of Common Stock so
purchased, together with any other securities or property to which the Holder
hereof is entitled upon such exercise, shall be delivered to the Holder hereof
by the Company at the Company's expense within a reasonable time after the
rights represented by this Warrant have been so exercised. In case of a purchase
of less than all the shares of Common Stock which may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares of Common Stock
purchasable under the Warrant surrendered to the Holder hereof within a
reasonable time. Each stock certificate so delivered shall be in such
denominations of Common Stock as may be reasonably requested by the Holder
hereof and shall be registered in the name of such Holder.
1.2 Net Issue Exercise. Notwithstanding any provisions herein to
the contrary, if the fair market value of one share of the Company's Common
Stock is greater than the Strike Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares of Common Stock equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with the properly endorsed Form of
Subscription and notice of such election in which event the Company shall issue
to the Holder a number of shares of Common Stock computed using the following
formula:
X = Y(A-B)
------
A
Where X = the number of shares of Common Stock to be issued
to the Holder
Y = the number of Exercised Warrants
A = the Closing Price on the Exercise Date
-2-
B = the Strike Price
For purposes of the above calculation, the "Closing Price" means
the highest closing price per Common Share on the closing board lot sale price
or, in case no such sale takes place on such date, the highest average of the
closing bid and asked prices for each Common Share as reported by the NASDAQ:BB
or any US or Canadian principal stock exchange, principal consolidated
transaction reporting system or over-the-counter market on which the Common
Shares are listed and posted for trading. If on any such date the Common Shares
are not listed or admitted to trading on any exchange or over-the-counter
market, or the highest average of the closing bid and asked prices for each
Common Share cannot be obtained, the closing price per share of the Common
Shares on such date shall mean the fair value per Common Share on such date as
determined in good faith by a nationally or internationally recognized
investment dealer or investment banker, acting reasonably and named by the BDC,
after consultation with respect to the fair value of the Common Shares.
2. Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable, free from all
preemptive rights of any stockholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription rights evidenced
by this Warrant, a sufficient number of shares of authorized but unissued Common
Stock when and as required to provide for the exercise in full of the rights
represented by this Warrant. The Company will take all such action as may be
reasonably necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed; provided, however, that, subject to the terms and conditions set
forth in the present Warrant, the Company shall not be required to effect a
registration under federal or state securities laws with respect to such
exercise and shall not be responsible for Holder's compliance with any banking
laws, if applicable. If at any time the total number of shares of Common Stock
issuable pursuant hereto, together with the maximum number of shares of Common
Stock issuable upon conversion, exchange or exercise of (i) all then-outstanding
securities (whether debt or equity) of the Company convertible or exchangeable
for Common Stock and (ii) all then-outstanding warrants and options to purchase
Common Stock, would exceed the total number of shares of Common Stock then
authorized by the Company's certificate of incorporation but unissued, the
Company shall promptly amend its certificate of incorporation to increase the
number of authorized shares of Common Stock such that there shall be a
sufficient number of authorized and unissued shares of Common Stock available at
all times to effect the exercise hereof.
-3-
3. Antidilution Adjustments. The shares of Common Stock purchasable
hereunder shall be subject to adjustment from time to time upon the occurrence
of certain events described in this Section 3.
3.1 Stock Dividend, Split or Combination. If at any time the
Company shall (i) pay a dividend in shares of Common Stock, (ii) subdivide any
outstanding shares of Common Stock into a greater number of shares of Common
Stock, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or (iv) issue, by reclassification of its
shares of Common Stock, any shares of its capital stock, the amount and type of
shares purchasable upon the exercise of this Warrant immediately prior thereto
shall be adjusted thereafter, until further adjusted pursuant to this Section 3,
so that the Holder shall be entitled to receive upon exercise of this Warrant
that number and class or series of shares of Common Stock or other capital stock
which such Holder would have owned or have been entitled to receive after the
happening of such event had such Holder exercised this Warrant immediately prior
to the record date, in the case of any such dividend, or the effective date in
the case of any such subdivision, combination, reclassification, or issuance. An
adjustment made pursuant to this Section 3.1 shall be made whenever any of such
events shall occur, but shall become effective, retroactively after such record
date or such effective date, as the case may be, as to any Warrant exercised
between such record date or effective date and the date of happening of any such
event.
3.2 Dividends in Other Stock and Property; Reclassification. If
at any time or from time to time the holders of Common Stock (or any shares of
stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received or become entitled to receive, without payment
therefor,
(A) any shares of stock or other securities which are at any
time directly or indirectly convertible into or exchangeable for Common Stock,
or any rights or options to subscribe for, purchase or otherwise acquire any of
the foregoing by way of dividend or other distribution,
(B) any cash paid or payable otherwise than as a cash
dividend, or
(C) additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification, combination of
shares or similar corporate rearrangement (other than an event for which
adjustment is otherwise made pursuant to Section 3.3 below), then and in each
such case, the Holder hereof shall, upon the exercise of this Warrant, be
entitled to receive, in addition to the number of shares of Common Stock
receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (other than cash
paid or payable as a cash dividend) which such Holder would hold on the date of
such exercise had he been the holder of record of such Common Stock as of the
date on which holders of Common Stock received or became entitled to receive
such other shares of stock and other securities and property.
-4-
3.3 Reorganization, Reclassification, Consolidation, Merger or
Sale. If any reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made whereby the Holder hereof shall thereafter
have the right to purchase and receive (in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares of stock, securities or
other assets or property as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In any
reorganization described above, appropriate provisions shall be made with
respect to the rights and interests of the Holder of this Warrant to the end
that the provisions hereof (including, without limitation, provisions for
adjustments of the number of shares of Common Stock purchasable and receivable
upon the exercise of this Warrant) shall thereafter be applicable, as nearly as
may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Company will not effect any such
consolidation, merger or sale unless, prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or the corporation purchasing such assets shall assume by written
instrument, executed and mailed or delivered to the registered Holder hereof at
the last address of such Holder appearing on the books of the Company, the
obligation to deliver to such Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Holder may be entitled to
purchase.
3.4 Below Strike Price Issuances. In the event that the Company
shall, during the period commencing on the Closing Date and ending on the
Exercise Date:
(A) issue additional shares of Common Stock (the "Additional
Shares") for a consideration per share less than the Strike Price,
(B) issue any options, warrants or other rights entitling the
holder thereof to subscribe for or purchase Additional Shares (each, an
"Option") or other securities of the Company convertible or exchangeable for
Additional Shares (each, a "Convertible Security") at a price per share which,
when added to the amount of consideration received or receivable by the Company
for such Options or Convertible Securities, is less than the Strike Price,
then and in such event, the Strike Price shall be reduced,
concurrently with such issue, to a price equal to the price paid for such
Additional Shares.
-5-
(C) For purposes of determining the adjusted Strike Price
under this Section 3.4, the following shall be applicable:
(i)Issuance of Rights or Options. If the Company in any manner
grants or sells any Option and the lowest price per share for which any one
share of Common Stock is issuable upon the exercise of any such Option, or upon
conversion or exchange of any Convertible Security issuable upon exercise of any
such Option, plus the purchase price per share of such Option, is less than the
Strike Price in effect immediately prior to the time of the granting or sale of
such Option, then such share of Common Stock shall be deemed to be outstanding
and to have been an Additional Share issued and sold by the Company at the time
of the granting or sale of such Option for such price per share. For purposes of
this subsection, the "lowest price per share for which any one share of Common
Stock is issuable" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon the granting or sale of the Option, upon exercise
of the Option and upon conversion or exchange of any Convertible Security
issuable upon exercise of such Option. No further adjustment of the Strike Price
shall be made upon the actual issue of such Common Stock or such Convertible
Security upon the exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Security.
(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Security and the lowest price per share
for which any one share of Common Stock is issuable upon conversion or exchange
thereof is less than the Strike Price in effect immediately prior to the time of
such issue or sale, then such share of Common Stock shall be deemed to be
outstanding and to have been an Additional Share issued and sold by the Company
at the time of the issuance or sale of such Convertible Securities for such
price per share. For the purposes of this subsection, the "lowest price per
share for which any one share of Common Stock is issuable" shall be equal to the
sum of the lowest amounts of consideration (if any) received or receivable by
the Company with respect to any one share of Common Stock upon the issuance or
sale of the Convertible Security and upon the conversion or exchange of such
Convertible Security. No further adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock upon conversion or exchange of
any Convertible Security, and if any such issue or sale of such Convertible
Security is made upon exercise of any Options for which adjustments of the
Strike Price had been or are to be made pursuant to other provisions of this
Section 3.4, no further adjustment of the Strike Price shall be made by reason
of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Option, the additional consideration (if any) payable
upon the issue, conversion or exchange of any Convertible Security or the rate
at which any Convertible Security is convertible into or exchangeable for Common
Stock changes at any time, the Strike Price in effect at the time of such change
shall be adjusted immediately to the Strike Price which would have been in
effect at such time had such Option or Convertible Security originally provided
-6-
for such changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold; provided that if
such adjustment of the Strike Price would result in an increase in the Strike
Price then in effect, such adjustment shall not be effective until fifteen (15)
days after written notice thereof has been given to all Holders.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Strike Price then in effect hereunder shall be adjusted
immediately to the Strike Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Security, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that no such readjustment under this clause shall have the
effect of increasing the Strike Price to an amount which exceeds the lower of
the Strike Price on the original adjustment date, or the Strike Price that would
have resulted from any other adjustment under this Section 3.4 between the
original adjustment date and such readjustment date.
(v)Calculation of Consideration Received. If any Common Stock,
Option or Convertible Security is issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor (net of discounts, commissions and
related expenses). If any Common Stock, Option or Convertible Security is issued
or sold for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be the fair market value of such
consideration, except where such consideration consists of securities, in which
case the amount of consideration received by the Company shall be the Closing
Price thereof as of the date of receipt. If any Common Stock, Option or
Convertible Security is issued to the owners of the non-surviving entity in
connection with any merger in which the Company is the surviving corporation,
the amount of consideration therefore shall be deemed to be the fair market
value of such portion of the net assets and business of the non-surviving entity
as is attributable to such Common Stock, Option or Convertible Security, as the
case may be. The fair market value of any consideration other than cash and
securities shall be determined jointly by the Corporation and the Holders. If
such parties are unable to reach agreement within a reasonable period of time,
the fair market value of such consideration shall be determined by an
independent appraiser experienced in valuing such types of consideration jointly
selected by the Company and the Holders. The determination of such appraiser
shall be final and binding upon the parties, and the fees and expenses of such
appraiser shall be borne by the Company.
(vi) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Option by the parties thereto, the Option shall be deemed to
have been issued for a consideration of $.01.
-7-
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(viii) No Adjustment to Conversion for Certain Events.
Notwithstanding the foregoing Section 3.4(C), there shall be no adjustment in
the Strike Price as a result of any issue or sale (or deemed issue or sale) of
Common Stock to employees, directors and consultants of the Company and its
Subsidiaries pursuant to stock option plans and stock ownership plans approved
by the Company's Board of Directors (as such number of shares is proportionately
adjusted for subsequent stock splits, combinations and dividends affecting the
Common Stock).
3.5 Notice of Adjustment. Upon any adjustment pursuant to this
Section 3, the Company shall give written notice thereof, by first class mail,
postage prepaid, addressed to the registered Holder of this Warrant at the
address of such Holder as shown on the books of the Company, and, in case of a
Holder with an address of record outside of the United States, by facsimile, and
confirmed in writing by first air mail. The notice shall be signed by the
Company's chief financial officer and shall state the nature of such adjustment,
setting forth in reasonable detail the method of effecting the adjustment and
the facts upon which such adjustment is based. If at any time in addition to any
of the adjustments set forth in this Section 3, an increase in the number of
authorized and unissued shares of Common Stock is required pursuant to Section 2
hereof, the Company shall promptly provide to the Holder a certificate of the
Secretary of the Company certifying that the requisite number of shares of
Common Stock have been authorized to permit the exercise of the Warrant.
3.6 Other Notices. If at any time:
(A) the Company shall declare any cash dividend upon its
Common Stock;
(B) the Company shall declare any dividend upon its Common
Stock payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
(C) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(D) there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company; or consolidation or merger of the Company with, or sale of all
or substantially all of its assets to, another corporation; or
(E) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
-8-
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) to the extent possible, at
least ten (10) business days' prior written notice (by the method set forth in
Section 3.5 above) of the date on which the books of the Company shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, at least
ten (10) business days' prior written notice to the extent possible of the date
when the same shall take place. Any notice given in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto. Any notice given in accordance with the
foregoing clause (b) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding-up or conversion, as the case
may be.
3.7 Certain Events. If any change in the outstanding Common Stock
or the capital structure of the Company occurs as to which the other provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of the Company
shall make an adjustment in the number and class of shares purchasable upon
exercise of this Warrant or the application of such provisions, so as to protect
such purchase rights as aforesaid. The adjustment shall be such as will give the
Holder of the Warrant upon exercise for the same aggregate Stock Purchase Price
the total number, and kind of shares as he would have owned had the Warrant been
exercised prior to the event and had he continued to hold such shares until
after the event requiring adjustment.
4. Transfer Tax. The issuance of certificates for shares of Common
Stock upon the exercise of the Warrant shall be made without charge to the
Holder of the Warrant for any transfer tax (other than any applicable income
taxes) in respect thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than that of the
then Holder of the Warrant being exercised.
5. Closing of Books. The Company will at no time close its transfer
books against the transfer of any Warrant or of any shares of Common Stock
issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant, subject to the Company's
right to require compliance with the Stockholders Agreement and applicable state
and federal securities laws and communications laws.
-9-
6. No Voting or Dividend Rights; Limitations of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a stockholder of
the Company or any other matters or any rights whatsoever as a stockholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until and only to the extent that this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the Stock Purchase Price or as a stockholder of the Company,
whether such liability is asserted by the Company or by its creditors.
7. Transfer and Exchange. This Warrant and all rights hereunder are
transferable, in whole or in part, subject to compliance with the Investors'
Rights Agreement, applicable state and federal securities laws. If such a
proposed transfer is effected, this Warrant is transferable on the books of the
Company maintained for such purpose at its principal office referred to above by
the Holder hereof in person or by duly authorized attorney, upon surrender of
this Warrant properly endorsed and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. Each taker and holder of
this Warrant, by taking or holding the same, consents and agrees that this
Warrant, when endorsed in blank, shall be deemed negotiable and that when this
Warrant shall have been so endorsed, the Holder hereof may be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding; but until such
transfer on such books, the Company may treat the registered Holder hereof as
the owner for all purposes.
8. Registration Rights. If the Company at any time proposes to
register any of its securities under the Securities Act for sale to the public,
whether for its own account or for the account of other security holders or both
(except with respect to registration statements on Forms S-4, S-8 or any
successor to such forms or another form not available for registering the Common
Stock issuable pursuant to this Warrant for sale to the public), each such time
it will promptly give written notice to Holder of its intention so to do. Upon
the written request of Holder, received by the Company within fifteen (15) days
after the giving of any such notice by the Company, to register any or all of
the shares of Common Stock issuable pursuant to this Warrant or issued
previously pursuant to this Warrant (the "Registrable Securities"), the Company
will use its best efforts to cause the Registrable Securities as to which
registration shall have been so requested to be included in the securities to be
covered by the registration statement proposed to be filed by the Company, all
to the extent requisite to permit the sale or other disposition by the holder
(in accordance with its written request) of such Registrable Securities so
registered. If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the holders of Registrable Securities as a part of the written notice
given pursuant to this Section 8. In such event the right of any holder of
-10-
Registrable Securities to registration pursuant to this Section 8 shall be
conditioned upon such holder's participation in such underwriting to the extent
provided herein. All security holders proposing to distribute their securities
through such underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for underwriting by the Company. Neither the Holder nor any security
holder may participate in any underwritten distribution hereunder unless such
Holder (i) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements in usual and customary form entered
into by the Company, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, (iii) agrees to pay
its pro rata share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company, and (iv) complies with all
applicable laws in connection therewith.
Notwithstanding any other provision of this Section 8, if the
underwriter determines that marketing factors require a limitation on the number
of shares to be underwritten, the underwriter may (subject to the allocation
priority set forth below) exclude from such registration and underwriting some
or all of the securities which would otherwise be underwritten pursuant hereto.
The Company shall so advise the Holder of any limitations on the number of
shares to be underwritten. Notwithstanding the foregoing provisions, the Company
may withdraw any registration statement referred to in this Section 8 without
thereby incurring any liability to the Holder. If the Holder disapproves of the
terms of any such underwriting, it may elect to withdraw therefrom by written
notice to the Company and the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
Any exclusion of Registrable Securities shall be made pro rata among
those seeking to include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such security holders; provided,
however, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in a registration statement or
are not entitled to pro rata inclusion with the Registrable Securities;
9. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities to the public without registration, except as
provided in paragraph (c) below, at all times the Company agrees to:
9.1 Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act (or any
successor rule);
9.2 Use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Act; and
-11-
9.3 Furnish to each holder of Registrable Securities forthwith
upon request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 (or any successor rule) and a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as such holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing such
holder to sell any Registrable Securities without registration.
10. Modification and Waiver. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
11. Notices. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered or shall be sent by certified mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefor in the first paragraph of this Warrant or such
other address as either may from time to time provide to the other and shall be
sent to any such holder located outside of the United States by facsimile
confirmed in writing by first air mail.
12. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets. All of the obligations of
the Company relating to the Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof.
13. Descriptive Headings and Governing Law. The description headings
of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the Province of Quebec and the laws of
Canada applicable therein.
14. Lost Warrants. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 26th day of June, 2002.
BIOSYNTECH, INC.
a Nevada corporation
/s/ Amine Selmani
------------------------------
Name: Amine Selmani
Title: CEO
Exhibit A
SUBSCRIPTION FORM
Date: _________
Ladies and Gentlemen:
The undersigned hereby irrevocably elects to exercise the warrant
issued to it by BioSyntech, Inc. (the "Company"), dated _________, 2002, (the
"Warrant") to purchase thereunder _______ shares of the Common Stock of the
Company (the "Shares"), at a purchase price of _____ ($0.__) per share or an
aggregate purchase price of _______________________________ Dollars ($ ) (the
"Purchase Price").
Pursuant to the terms of the Warrant the undersigned has delivered
the Purchase Price herewith in full in cash or by certified check or wire
transfer. The undersigned also makes the representations set forth on the
attached Exhibit B of the Warrant.
Very truly yours,
By:
----------------------------
Title:
----------------------------
EXHIBIT B
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO BIOSYNTECH, INC., ALONG
WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE OF THE
WARRANT CERTIFICATE DATED __________, 2002 WILL BE ISSUED.
----------------------------
BioSyntech, Inc.
Attention: President
The undersigned ___________________________ ("Purchaser"), intends
to acquire up to ___________________ shares of the Common Stock (the "Common
Stock") of BioSyntech, Inc., a Nevada corporation (the "Company"), from the
Company pursuant to the exercise of a certain Warrant to purchase Common Stock
held by Purchaser. The Common Stock will be issued to Purchaser in a transaction
not involving a public offering and pursuant to an exemption from registration
under the Securities Act of 1933, as amended (the "Securities Act") and
applicable state securities laws. In connection with such purchase and in order
to comply with the exemptions from registration relied upon by the Company,
Purchaser represents, warrants and agrees as follows:
Purchaser is acquiring the Common Stock for its own account, to hold
for investment, and Purchaser shall not make any sale, transfer or other
disposition of the Common Stock in violation of the Securities Act or the
General Rules and Regulations promulgated thereunder by the Securities and
Exchange Commission (the "SEC") or in violation of any applicable state
securities law.
Purchaser has been advised that the Common Stock has not been
registered for initial issuance under the Securities Act or state securities
laws on the ground that this transaction is exempt from registration, and that
reliance by the Company on such exemptions is predicated in part on Purchaser's
representations set forth in this letter.
Purchaser has been informed that under the Securities Act and
applicable state securities laws, the Common Stock must be held indefinitely
unless it is subsequently registered under the Securities Act and applicable
state securities laws, or unless an exemption from such registration is
available with respect to any proposed transfer or disposition by Purchaser of
the Common Stock.
Purchaser also understands and agrees that there will be placed on
the certificate(s) for the Common Stock, or any substitutions therefor, a legend
stating in substance:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS.
Purchaser has carefully read this letter and has discussed its
requirements and other applicable limitations upon Purchaser's resale of the
Common Stock with Purchaser's counsel.
Very truly yours,
------------------------------
(Purchaser)
By:
------------------------------------
Title:
------------------------------------
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