UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 7, 2005
BIOACCELERATE HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
Nevada 333-43126 87-0650219
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
712 Fifth Avenue, 19th Floor, New York, N Y 10019
(Address of principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 897-6849
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
SECTION 1. REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 Entry into a Material Definitive Agreement.
(a) The Registrant has commenced a private placement (the "Private Placement")
of the Registrant's Series A Convertible Preferred Stock, par value $0.001 per
share (the "Series A Preferred Stock"), to accredited investors. The Registrant
reasonably believes that the securities have been and will be sold in the
Private Placement only to "accredited investors," as such term is defined under
Rule 501(e) under Regulation D promulgated pursuant to the Securities Act of
1933, as amended (the "Act"). The Registrant will use the proceeds of the
Private Placement for general working capital and other corporate purposes,
including, without limitation, the development of various compounds.
Shares of Series A Preferred Stock are being offered in the Private Placement
for $6.00 per share of Series A Preferred Stock. Each share of Series A
Preferred Stock may initially convert into four (4) shares of the Registrant's
common stock , par value $0.001 per share (the "Common Stock"), which equates to
an initial conversion price of $1.50 per share of Common Stock. The shares of
Common Stock issued upon conversion of shares of Series A Preferred Stock are
hereafter referred to as Conversion Shares.
Also, each purchaser in the Private Placement will receive one (1) warrant (a
"Warrant") to acquire one (1) share of Common Stock for every two (2) shares of
Common Stock initially underlying the shares of Series A Preferred Stock
purchased in the Private Placement. The shares of Common Stock which may be
acquired upon exercise of the Warrants are hereafter referred to as the "Warrant
Shares." The Warrants are exercisable initially at $2.00 per share of Common
Stock, subject to adjustment, and are exercisable for three (3) years after
issuance or until the market price of the Common Stock has been at least three
hundred percent (300%) of the then applicable exercise price of the Warrant for
a period of at least thirty (30) days, and the average trading volume of the
Common Stock has been at least one hundred thousand (100,000) shares per day
during such thirty (30) day period (subject to adjustment of such trading volume
threshold in the event of stock splits, reverse stock splits, stock dividends,
recapitalizations or similar events) and the shares of Common Stock which may be
acquired upon exercise of the Warrants are registered at the time under an
effective registration statement, whichever is earlier.
The Series A Preferred Stock and Warrants were sold to the investors by the
Registrant on the terms and conditions set forth in the Securities Purchase
Agreement (the "Agreement"), filed as Exhibit 10.8 to this Current Report, which
Agreement is specifically incorporated herein by reference.
The description of the terms of the Warrants set forth here and elsewhere in
this Current Report on Form 8-K are qualified in its entirety by reference to
the Warrant which is set forth in Exhibit 10.11 to this Current Report on Form
8-K, and specifically incorporated herein by reference.
In addition, each purchaser in the Private Placement will receive four (4)
shares of the common stock of Cynat Oncology, Inc. ("Cynat") and four (4) shares
of the common stock of Genaderm Inc. ("Genaderm"), being referred to as the
"Cynat Shares" and the "Genaderm Shares", respectively, for each share of Series
A Preferred Stock acquired by such purchaser in the Private Placement.
On October 7, 2005, the Registrant sold 3,128,769 shares of its Series A
Preferred Stock for an aggregate purchase price of $18,772,580, and issued to
those investors Warrants to acquire, in the aggregate, 6,257,523 Warrant Shares.
The Registrant also delivered 12,515,056 Cynat Shares and 12,515,056 Genaderm
Shares, in the aggregate, to those investors. In addition, the Registrant issued
162,755 shares of its Series A Preferred Stock, in the aggregate, to investors
to whom it had previously agreed to issue a lesser number of shares of Series A
Preferred Stock, in order to give those investors the benefit of the same terms
on their investment, as well as Warrants to acquire, in the aggregate, 325,510
Warrant Shares and 651,020 Cynat Shares and 651,020 Genaderm Shares. The
aggregate investment by those investors was $976,530. Of the aggregate
$19,749,110 invested in the Private Placement to date, $1,978,530 was paid in
cash and $17,770,580 was paid through conversion, on a dollar-for-dollar basis,
of outstanding indebtedness of the Registrant to investors.
The Registrant has agreed to pay to its placement agent and to any other
participating agent a cash fee equal to ten percent (10%) of the aggregate gross
proceeds to the Registrant from the sale of Series A Preferred Stock in the
Private Placement to investors introduced to the Registrant by the applicable
placement agent or participating agent (without duplication of introduction).
In addition, the Registrant has agreed to issue to its placement agent and to
any other participating agent a warrant (the "Placement Agent Warrants") to
purchase that number of shares of Common Stock (the "Placement Agent Warrant
Shares") equal to ten percent (10%) of the number of shares of Common Stock
initially issuable upon conversion of the Series A Preferred Stock sold in the
Private Placement to investors introduced to the Registrant by the applicable
placement agent or participating agent (without duplication of introduction).
No such fee or Placement Agent Warrants are due with respect to certain
investors or with respect to the conversion of Series A Preferred Stock or the
exercise of Warrants.
The Placement Agent Warrants are initially exercisable at one dollar and fifty
cents ($1.50) per share of Common Stock, subject to adjustment, commencing upon
the date of issuance and continuing for five (5) years after issuance or until
the market price of the Common Stock has been at least three hundred percent
(300%) of the then applicable exercise price of the Placement Agent Warrant for
a period of at least thirty (30) days, and the average trading volume of the
Common Stock has been at least one hundred thousand (100,000) shares per day
(subject to adjustment of such trading volume threshold in the event of stock
splits, reverse stock splits, stock dividends, recapitalizations or similar
events) during such thirty (30) day period and the shares of Common Stock which
may be acquired upon exercise of the Placement Agent Warrants are registered at
the time under an effective registration statement, whichever is earlier. The
Placement Agent Warrants contain a cashless exercise provision. The Placement
Agent Warrants are transferable by the Placement Agent or other Participating
Agent receiving the same only to its officers, directors, shareholders and
employees, as well as by such persons to their immediate family affiliates in
connection with estate planning, provided that no such transfer or disposition
may be made other than in compliance with applicable securities laws and
furnishing satisfactory evidence of such compliance to the Registrant.
The Registrant also agreed to indemnify the placement agent and participating
agents against certain liabilities. The Registrant also agreed to pay its own
costs of the Private Placement. The Registrant has also agreed to pay to the
placement agent a non-accountable expense allowance (the "Non-Accountable
Expense Allowance") equal to 3% of the gross proceeds received by the Registrant
from the sale of Series A Preferred Stock to investors (other than investors
introduced by management or affiliates of the Registrant or management).
In connection with the Private Placement to date, the Registrant has paid to its
placement agent and other participating agents, in the aggregate, cash fees of
$196,053, issued Placement Agent Warrants to acquire 130,703 Placement Agent
Warrant Shares, and paid to its placement agent the aggregate sum of $58,815.90
for the Non-Accountable Expense Allowance.
The Series A Preferred Stock, the Conversion Shares, the Warrants, the Warrant
Shares, the Cynat Shares, the Genaderm Shares, the Placement Agent Warrants and
the Placement Agent Warrant Shares are "restricted securities" and, therefore,
may be transferred, to the extent permissible, only pursuant to registration or
qualification under federal and state securities laws or pursuant to an
exemption from registration or qualification. In addition, the Warrants are not
transferable in blocks of less than the lesser of (i) one hundred twenty
thousand (120,000) Warrants or, if applicable, (ii) the number of Warrants
acquired by the applicable purchaser in the Private Placement.
In connection with the Private Placement, the Registrant entered into the BACL
Registration Rights Agreement. The descriptions of terms of the BACL
Registration Rights Agreement set forth here and elsewhere in this Current
Report on Form 8-K are qualified in their entirety by reference to the BACL
Registration Rights Agreement which is set forth in Exhibit 10.09 to this
Current Report on Form 8-K, and which is specifically incorporated herein by
reference. The BACL Registration Rights Agreement imposes certain registration
obligations upon the Registrant with respect to the shares of Common Stock
underlying the Series A Convertible Preferred Stock acquired in the Private
Placement by each investor who executed and delivered to the Registrant the
Securities Purchase Agreement. The Registration Rights Agreement also grants
registration rights in favor of such investors with respect to the shares of
Common Stock underlying Warrants received by them in the Private Placement.
Placement agents and participating agents who execute and deliver the
Registration Rights Agreement to the Registrant have similar rights with respect
to the shares of Common Stock underlying Placement Agent Warrants. The shares
with respect to which the Registration Rights Agreement grants such rights are
referred to as "Registrable Securities", and shall continue to be Registrable
Securities until those shares have either been effectively registered under the
Act and disposed of in accordance with a registration statement covering them,
(y) have been sold to the public pursuant to Rule 144 or by similar provision
under the Act, or (z) are eligible for resale under Rule 144(k) or by similar
provision under the Act without any limitation on the amount of securities that
may be sold under paragraph (e) thereof.
Pursuant to the Registration Rights Agreement, the Registrant is required to use
its reasonable best efforts to accomplish the following:
(x) prepare and file a registration statement covering the Common Shares and the
Warrant Shares (a "Required Registration Statement") with the U.S. Securities
and Exchange Commission (the "SEC") by the date (the "Required Filing Date")
which is not more than sixty (60) days after the first date to occur (the
"Commencement Date") of the following dates: the Final Closing Date (as such
term is defined in the Securities Purchase Agreement) or the termination of the
Offering, if there is no Final Closing Date; and
(y) cause either of the following (the "Effectiveness Actions") to occur by a
date (the "Required Effectiveness Date") which is not more than ninety (90) days
after the Commencement Date: (A) cause the SEC to declare the Required
Registration Statement to be effective or (B) cause the SEC to communicate to
the Registrant, orally or in writing, that the Required Registration Statement
will not be reviewed or that the Commission has no further comments thereupon,
whereupon the Registrant shall cause the Required Registration Statement to be
effective.
Pursuant to the Registration Rights Agreement, the failure to file or become
effective within the applicable time period shall be deemed to be a
"Non-Registration Event". For each thirty (30) day period during the pendency of
any such Non-Registration Event, the Registrant shall deliver to each investor
in the Private Placement, as liquidated damages, an amount equal to one percent
(1.0%) of the aggregate purchase price paid by such investor for shares of
Series A Preferred Stock in the Offering, with such payment being pro-rated for
any Non-Registration Event of less than thirty (30) days, subject to the maximum
penalty of 18.5% of the gross proceeds. Each such payment is hereinafter
referred to as a "Non-Registration Event Penalty Payment". Notwithstanding the
foregoing, in no event shall the Registrant be obligated to pay more than one
Non-Registration Event Penalty Payment to the same Purchaser in respect of a
substantively concurrent failure to perform. The Registrant, at its sole
discretion, shall pay the Non-Registration Event Penalty Payment to all holders
in cash or in shares of its Common Stock.
The Registrant agreed to use its reasonable best efforts to keep such Required
Registration Statement continuously effective (the "Effective Period") for a
period of two years after the Required Registration Statement first becomes
effective plus whatever period of time as shall equal any period, if any, during
such two year period in which the Registrant was not current with its reporting
requirements under the Exchange Act. To the extent the Registrable Securities
are not sold under the Required Registration Statement, the investors in the
Private Placement shall have the following registration rights pursuant to the
Registration Rights Agreement:
If the Registrant is eligible to use Form S-3 under the Act (or any similar
successor form) and shall receive from the holders of the Common Shares and any
permitted transferees (the "S-3 Initiating Holders") a written request that the
Registrant effect a registration on such Form S-3 pursuant to Rule 415 of the
Act and any related qualification or compliance with respect to all or part of
the Registrable Securities owned by the S-3 Initiating Holders (provided, that
the S-3 Initiating Holders registering Registrable Securities in such
registration (together with all other holders of Registrable Securities to be
included in such registration) propose to sell their Registrable Securities at
an aggregate price (calculated based upon the Market Price of the Registrable
Securities on the date of filing of the Form S-3 with respect to such
Registrable Securities) to the public of no less than the lesser of $5,000,000
or the remaining Registrable Securities), the Company shall (i) promptly give
written notice of the proposed registration, and any related qualification or
compliance, to all other holders of Registrable Securities; and (ii) as soon as
practicable, use reasonable best efforts to file and effect such registration
and all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of the
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other holder in the group of
holders joining in such request as is specified in a written request given
within fifteen (15) days after the holder's receipt of such written notice from
the Registrant.
In addition, for so long as the Registration Rights Agreement shall be
applicable, whenever the Registrant proposes to register any of its securities
under the Securities Act (other than pursuant to any of the registration rights
described above, or a registration on Form S-4 or S-8 or any successor or
similar forms) and the registration form to be used may be used for the
registration of Registrable Securities, whether or not for sale for its own
account, the Registrant will give prompt written notice (but in no event less
than twenty five (25) days before the anticipated filing date) to all holders of
Registrable Securities, and such notice shall describe the proposed registration
and distribution and offer to all holders of Registrable Securities the
opportunity to register the number of Registrable Securities as each such holder
may request. The Registrant will include in such registration all Registrable
Securities with respect to which the Registrant has received written requests
for inclusion therein within fifteen (15) days after the holders' receipt of the
Registrant's notice. The Registrant shall use all reasonable efforts to cause
the managing underwriter of a proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggyback Registration to
be included on the same terms and conditions as any similar securities of any
other security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. The performance of these registration rights is
subject to customary investor representations and warranties, customary
indemnifications by investors, customary allocations of fees and expenses and,
where applicable, customary cutback and blackout provisions.
In connection with the Private Placement, the Registrant entered into the Cynat
and Genaderm Registration Rights Agreement. The descriptions of terms of the
Cynat and Genaderm Registration Rights Agreement set forth here and elsewhere in
this Current Report on Form 8-K are qualified in their entirety by reference to
the Cynat and Genaderm Registration Rights Agreement which is filed as Exhibit
10.10 to this Current Report on Form 8-K, and which is specifically incorporated
herein by reference. The Cynat and Genaderm Registration Rights Agreement
imposes certain registration obligations upon the Registrant with respect to the
Cynat Shares and the Genaderm Shares, respectively, acquired in the Private
Placement by each investor who executed and delivered to the Registrant the
Securities Purchase Agreement. The Cynat Shares and the Genaderm Shares with
respect to which the Registration Rights Agreement grants such rights are
referred to as "Cynat Registrable Shares" and the "Genaderm Registrable Shares",
respectively, and shall continue to be Cyant Registrable Shares or Genaderm
Registrable Shares, as the case may be, until those shares have either been
effectively registered under the Act and disposed of in accordance with a
registration statement covering them, (y) have been sold to the public pursuant
to Rule 144 or by similar provision under the Act, or (z) are eligible for
resale under Rule 144(k) or by similar provision under the Act without any
limitation on the amount of securities that may be sold under paragraph (e)
thereof.
Pursuant to the Cynat and Genaderm Registration Rights Agreement, the Registrant
is required to use its reasonable best efforts to cause Cynat and Genaderm to
accomplish the following:
(x) prepare and file a registration statement covering the Cynat Registrable
Shares and the Genaderm Registrable Shares with the SEC by the date (the "Cynat
and Genaderm Required Filing Date") which is not more than one hundred twenty
(120) days after the first date to occur (the "Commencement Date") of the
following dates: the Final Closing Date (as such term is defined in the
Securities Purchase Agreement) or the termination of the Offering, if there is
no Final Closing Date (it being understood that Cynat shall prepare and file the
required registration statement with respect to Cynat Registrable Shares (the
"Cynat Required Registration Statement), and that Genaderm shall prepare and
file the required registration statement with respect to Genaderm Registrable
Shares (the "Genaderm Required Registration Statement"); and
(y) cause either of the following (the "Effectiveness Actions") to occur by a
date (the "Cynat and Genaderm Required Effectiveness Date") which is not more
than ninety (90) days after the Commencement Date: (A) cause the SEC to declare
the Cynat Required Registration Statement and the Genaderm Required Registration
Statement to be effective or (B) cause the SEC to communicate to Cynat or
Genaderm, whichever is applicable, orally or in writing, that the Cynat Required
Registration Statement and the Genaderm Required Registration Statement will not
be reviewed or that the Commission has no further comments thereupon, whereupon
the Registrant shall use its reasonable best efforts to cause Cynat and
Genaderm, as applicable, to cause the Cynat Required Registration Statement and
Genaderm Required Registration Statement to be effective.
The Registrant agreed to use its reasonable best efforts to cause Cynat and
Genaderm to keep such Cynat Required Registration Statement and Genaderm
Required Registration Statement continuously effective (the "Effective Period")
for a period of two years after the Cynat Required Registration Statement and
Genaderm Required Registration Statement first becomes effective plus whatever
period of time as shall equal any period, if any, during such two year period in
which Cynat or Genaderm, as applicable, was not current with its reporting
requirements under the Exchange Act.
To the extent the Cynat Registrable Shares or the Genaderm Registrable Shares
are not sold under the Cynat Required Registration Statement or the Genaderm
Required Registration Statement, the investors in the Private Placement shall
have registration rights with respect to their Cynat Registrable Shares and
their Genaderm Registrable Shares, pursuant to the Cynat and Genaderm
Registration Rights Agreement, substantially similar to the Form S-3
registration rights and the piggyback registration rights of investors in
respect of the BACL Registration Rights Agreement.
The terms of the Series A Preferred Stock have been set forth in the
Restated Certificate of Designations, Preferences and Rights of Series A
Convertible Preferred Stock of the Registrant (the "Certificate of
Designations") which has been filed with the Secretary of State of Nevada. The
Certificate of Designations is filed as Exhibit 10.12 to this Current Report on
Form 8-K, and is specifically incorporated herein by reference.
The descriptions of terms of the Series A Preferred Stock here and elsewhere in
this Current Report on Form 8-K are qualified in their entirety by reference to
the Certificate of Designations.
Each share of Series A Preferred Stock shall carry a cumulative dividend at a
rate of six per cent (6%) per annum, payable out of funds legally available
therefor, prior and in preference to the payment of all other dividends on the
Registrant's Common Stock or junior equity securities, quarterly in arrears
(with the first payment on December 31, 2005) in cash or shares of the Company's
Common Stock, at the Registrant's option, whether or not declared by the Board
of Directors. The shares of the Registrant's Common Stock issued in payment of
the dividend hereunder shall be valued at the twenty (20) trading day trailing
average market price of the Common Stock as of the date five (5) days prior to
the dividend payment date. In the event that the shares of Common Stock issued
in payment of dividends payable more than one hundred eighty (180) days after
the issuance of the Series A Preferred Stock to which such dividends relate are
not then registered under an effective registration statement, the Company shall
only pay such dividends in cash.
In the event of any liquidation or winding up of the Company, before any
distribution of assets to the holders of Junior Securities, the holder of each
share of Series A Preferred Stock then outstanding shall be paid out of the
assets of the Company legally available for distribution to its stockholders a
per share amount equal to the original issue price per share of Series A
Preferred Stock ($6.00 per share), as adjusted for stock splits, dividends,
combinations or other recapitalization of the Series A Preferred Stock) plus any
declared and unpaid dividends thereon (the "Liquidation Preference"). Upon the
completion of all required distribution to any other class or series of Senior
Securities, if assets remain in the Company, the remaining assets of the Company
available for distribution to stockholders shall be distributed among the
holders of shares of any other series of preferred stock in accordance with
their respective terms, then to the holders of Common Stock pro rata based on
the number of shares of the Common Stock actually outstanding and held by
holders of shares of Common Stock. Notwithstanding the foregoing, if the holders
of the Series A Preferred Stock would receive on an as-converted basis an amount
greater than the Liquidation Preference, such holders shall be entitled to
receive such greater amount.
Each holder of Series A Preferred Stock has the right to convert such shares, at
any time, into a number of shares of Common Stock equal to the original issue
purchase price ($6.00 per share) divided by the conversion price (initially
$1.50 per share) (an "Optional Conversion"). Alternatively, a Series A Preferred
Stock will automatically convert into Common Stock calculated in the same manner
as an Optional Conversion upon the earliest to occur of the following dates (an
"Automatic Conversion"): (i) the date, at any time after the one year
anniversary of the issuance date, upon which both (x) the average of the market
price for a share of Common Stock for a period of at least thirty (30)
consecutive trading days exceeds three hundred percent (300%) of the
then-applicable conversion price and (y) the average of the trading volume for
the Common Stock during such period exceeds 100,000 shares per day (subject to
adjustment of such trading volume threshold in the event of stock splits,
reverse stock splits, stock dividends, recapitalizations or similar events)
shares per trading day; (ii) upon the affirmative vote of the holders of a
majority of the then outstanding shares of Series A Preferred Stock; or (iii)
immediately prior to the closing of an underwritten public offering of the
Registrant's Common Stock for aggregate gross proceeds to the Registrant of not
less than one hundred million dollars ($100,000,000) if the public offering
price of the Registrant's Common Stock is at least two (2) times the
then-applicable conversion price and the shares of Common Stock issued in
exchange for each share of the Registrant's Series A Preferred Stock so
converted are registered at the time of such conversion under an effective
registration statement. The terms "market price" and "trading day" are defined
in the Certificate of Designations.
The number and kind of securities issuable upon the conversion of the Series A
Preferred Stock and the conversion price shall be adjusted appropriately in the
event of stock splits, reverse stock splits, stock dividends, recapitalizations
or similar events. In addition, the conversion price shall be subject to
appropriate adjustment, on a weighted average basis, in the event that the
Registrant issues, or is deemed to issue under the applicable provisions of the
Certificate of Designations, additional shares of Common Stock at a purchase
price less than the then-effective conversion price, except for certain
issuances excluded from any such calculation.
The Series A Preferred Stock will vote together with the Common Stock and not as
a separate class except as specifically provided in the Certificate of
Designations or as otherwise required by law. Each holder of outstanding shares
of Series A Preferred Stock shall have a number of votes equal to the number of
whole shares of Common Stock into which the Series A Preferred Stock would
convert as of the applicable record date at each meeting of stockholders of the
Registrant.
So long as the Series A Preferred Stock is outstanding, the Registrant will not
do any of the following without the consent of at least a majority in interest
of the Series A Preferred Stock voting as a separate group: (a) authorize, issue
or agree to authorize or issue any new class or series of senior equity
securities or parity equity securities or securities or rights of any kind
convertible into or exercisable or exchangeable for any such senior equity
securities or parity equity securities, or offer, sell or issue any senior
equity securities or parity equity securities or securities or rights of any
kind convertible into or exercisable or exchangeable for any such senior equity
securities or parity equity securities; (b) purchase, repurchase or redeem
shares of (i) Common Stock, (ii) securities or rights of any kind convertible
into or exercisable or exchangeable for Common Stock or (iii) other securities
of the Company, (except in the case of a termination of an employee, at which
the Company may repurchase or redeem such shares of Common Stock at cost and
pursuant to any agreement under which such shares of Common Stock were issued);
(c) increase the authorized number of shares of Series A Preferred Stock, or (d)
amend the Certificate of Incorporation or Bylaws of the Registrant or alter or
change the rights, preferences or privileges of the Series A Preferred Stock or
any parity equity securities or senior equity securities in each case so as to
affect adversely the rights, preferences or privileges of the Series A Preferred
Stock.
SECTION 3 - SECURITIES AND TRADING MARKETS
ITEM 3.02 Unregistered Sales of Equity Securities.
(a) The Registrant has commenced a private placement (the "Private Placement")
of the Registrant's Series A Convertible Preferred Stock, par value $0.001 per
share (the "Series A Preferred Stock"), to accredited investors. The Registrant
reasonably believes that the securities have been and will be sold in the
Private Placement only to "accredited investors," as such term is defined under
Rule 501(e) under Regulation D promulgated pursuant to the Securities Act of
1933, as amended (the "Act"). The Registrant will use the proceeds of the
Private Placement for general working capital and other corporate purposes,
including, without limitation, the development of various compounds.
Shares of Series A Preferred Stock are being offered in the Private Placement
for $6.00 per share of Series A Preferred Stock. Each share of Series A
Preferred Stock may initially convert into four (4) shares of the Registrant's
common stock , par value $0.001 per share (the "Common Stock"), which equates to
an initial conversion price of $1.50 per share of Common Stock. The shares of
Common Stock issued upon conversion of shares of Series A Preferred Stock are
hereafter referred to as Conversion Shares.
Also, each purchaser in the Private Placement will receive one (1) warrant (a
"Warrant") to acquire one (1) share of Common Stock for every two (2) shares of
Common Stock initially underlying the shares of Series A Preferred Stock
purchased in the Private Placement. The shares of Common Stock which may be
acquired upon exercise of the Warrants are hereafter referred to as the "Warrant
Shares." The Warrants are exercisable initially at $2.00 per share of Common
Stock, subject to adjustment, and are exercisable for three (3) years after
issuance or until the market price of the Common Stock has been at least three
hundred percent (300%) of the then applicable exercise price of the Warrant for
a period of at least thirty (30) days, and the average trading volume of the
Common Stock has been at least one hundred thousand (100,000) shares per day
during such thirty (30) day period (subject to adjustment of such trading volume
threshold in the event of stock splits, reverse stock splits, stock dividends,
recapitalizations or similar events). and the shares of Common Stock which may
be acquired upon exercise of the Warrants are registered at the time under an
effective registration statement, whichever is earlier.
The Series A Preferred Stock and Warrants were sold to the investors by the
Registrant on the terms and conditions set forth in the Securities Purchase
Agreement (the "Agreement"). The descriptions of terms of the Agreement set
forth here and elsewhere in this Current Report on Form 8-K are qualified in
their entirety by reference to the Agreement, which is filed as Exhibit 10.8 to
this Current Report, and which Agreement is specifically incorporated herein by
reference.
The terms and conditions of the Warrants are set forth in the Warrant filed as
Exhibit 10.11 to this Current Report on Form 8-K and specifically incorporated
herein by reference. The descriptions of the terms of the Warrant set forth here
and elsewhere in this Current Report on Form 8-K are qualified in their entirety
by reference to the Warrant.
In addition, each purchaser in the Private Placement will receive four (4)
shares of the common stock of Cynat Oncology, Inc. ("Cynat") and four (4) shares
of the common stock of Genaderm Inc. ("Genaderm"), being referred to as the
"Cynat Shares" and the "Genaderm Shares", respectively, for each share of Series
A Preferred Stock acquired by such purchaser in the Private Placement.
On October 7, 2005, the Registrant sold 3,128,769 shares of its Series A
Preferred Stock for an aggregate purchase price of $18,772,580 in the aggregate,
and issued to those investors Warrants to acquire, in the aggregate, 6,257,523
Warrant Shares. The Registrant also delivered 12,515,056 Cynat Shares and
12,515,056 Genaderm Shares, in the aggregate, to those investors. In addition,
the Registrant issued 162,755 shares of its Series A Preferred Stock, in the
aggregate, to investors to whom it had previously agreed to issue a lesser
number of shares of Series A Preferred Stock, in order to give those investors
the benefit of the same terms on their investment, as well as Warrants to
acquire, in the aggregate, 325,510 Warrant Shares and 651,020 Cynat Shares and
651,020 Genaderm Shares. The aggregate investment by those investors was
$976,530. Of the aggregate $19,749,110 invested in the Private Placement to
date, $1,978,530 was paid with cash and $17,770,580 was paid through conversion,
on a dollar-for-dollar basis, of outstanding indebtedness of the Registrant to
investors.
(c) The Registrant has commenced a private placement (the "Private Placement")
of the Registrant's Series A Convertible Preferred Stock, par value $0.001 per
share (the "Series A Preferred Stock"), to accredited investors. The Registrant
reasonably believes that the securities have been and will be sold in the
Private Placement only to "accredited investors," as such term is defined under
Rule 501(e) under Regulation D promulgated pursuant to the Securities Act of
1933, as amended (the "Act"). The Registrant will use the proceeds of the
Private Placement for general working capital and other corporate purposes,
including, without limitation, the development of various compounds.
Shares of Series A Preferred Stock are being offered in the Private Placement
for $6.00 per share of Series A Preferred Stock. Each share of Series A
Preferred Stock may initially convert into four (4) shares of the Registrant's
common stock , par value $0.001 per share (the "Common Stock"), which equates to
an initial conversion price of $1.50 per share of Common Stock. The shares of
Common Stock issued upon conversion of shares of Series A Preferred Stock are
hereafter referred to as Conversion Shares.
Also, each purchaser in the Private Placement will receive one (1) warrant (a
"Warrant") to acquire one (1) share of Common Stock for every two (2) shares of
Common Stock initially underlying the shares of Series A Preferred Stock
purchased in the Private Placement. The shares of Common Stock which may be
acquired upon exercise of the Warrants are hereafter referred to as the "Warrant
Shares." The Warrants are exercisable initially at $2.00 per share of Common
Stock, subject to adjustment, and are exercisable for three (3) years after
issuance or until the market price of the Common Stock has been at least three
hundred percent (300%) of the then applicable exercise price of the Warrant for
a period of at least thirty (30) days, and the average trading volume of the
Common Stock has been at least one hundred thousand (100,000) shares per day
during such thirty (30) day period (subject to adjustment of such trading volume
threshold in the event of stock splits, reverse stock splits, stock dividends,
recapitalizations or similar events) and the shares of Common Stock which may be
acquired upon exercise of the Warrants are registered at the time under an
effective registration statement, whichever is earlier.
The Series A Preferred Stock and Warrants were sold to the investors by the
Registrant on the terms and conditions set forth in the Securities Purchase
Agreement (the "Agreement"). The descriptions of terms of the Agreement set
forth here and elsewhere in this Current Report on Form 8-K are qualified in
their entirety by reference to the Agreement, which is filed as Exhibit 10.8 to
this Current Report, and which Agreement is specifically incorporated herein by
reference.
The terms and conditions of the Warrants are set forth in Exhibit 10.11 to this
Current Report on Form 8-K, and specifically incorporated herein by reference.
The descriptions of terms of the Warrant set forth here and elsewhere in this
Current Report on Form 8-K are qualified in their entirety by reference to the
Warrant.
In addition, each purchaser in the Private Placement will receive four (4)
shares of the common stock of Cynat Oncology, Inc. ("Cynat") and four (4) shares
of the common stock of Genaderm Inc. ("Genaderm"), being referred to as the
"Cynat Shares" and the "Genaderm Shares", respectively, for each share of Series
A Preferred Stock acquired by such purchaser in the Private Placement.
On October 7, 2005, the Registrant sold 3,128,769 shares of its Series A
Preferred Stock for an aggregate purchase price of $18,772,580 in the aggregate,
and issued to those investors Warrants to acquire, in the aggregate, 6,257,523
Warrant Shares. The Registrant also delivered 12,515,056 Cynat Shares and
12,515,056 Genaderm Shares, in the aggregate, to those investors. In addition,
the Registrant issued 162,755 shares of its Series A Preferred Stock, in the
aggregate, to investors to whom it had previously agreed to issue a lesser
number of shares of Series A Preferred Stock, in order to give those investors
the benefit of the same terms on their investment, as well as Warrants to
acquire, in the aggregate, 325,510 Warrant Shares and 651,020 Cynat Shares and
651,020 Genaderm Shares. The aggregate investment by those investors was
$976,530. Of the aggregate $19,749,110 invested in the Private Placement to
date, $1,978,530 was paid with cash and $17,770,580 was paid through conversion,
on a dollar-for-dollar basis, of outstanding indebtedness of the Registrant to
investors.
The Registrant has agreed to pay to its placement agent and to any other
participating agent a cash fee equal to ten percent (10%) of the aggregate gross
proceeds to the Registrant from the sale of Series A Preferred Stock in the
Private Placement to investors introduced to the Registrant by the applicable
placement agent or participating agent (without duplication of introduction).
In addition, the Registrant has agreed to issue to its placement agent and to
any other participating agent a warrant (the "Placement Agent Warrants") to
purchase that number of shares of Common Stock (the "Placement Agent Warrant
Shares") equal to ten percent (10%) of the number of shares of Common Stock
initially issuable upon conversion of the Series A Preferred Stock sold in the
Private Placement to investors introduced to the Registrant by the applicable
placement agent or participating agent (without duplication of introduction).
No such fee or Placement Agent Warrants are due with respect to certain
investors or with respect to the conversion of Series A Preferred Stock or the
exercise of Warrants.
The Placement Agent Warrants are initially exercisable at one dollar and fifty
cents ($1.50) per share of Common Stock, subject to adjustment, commencing upon
the date of issuance and continuing for five (5) years after issuance or until
the market price of the Common Stock has been at least three hundred percent
(300%) of the then applicable exercise price of the Placement Agent Warrant for
a period of at least thirty (30) days, and the average trading volume of the
Common Stock has been at least one hundred thousand (100,000) shares per day
(subject to adjustment of such trading volume threshold in the event of stock
splits, reverse stock splits, stock dividends, recapitalizations or similar
events) during such thirty (30) day period and the shares of Common Stock which
may be acquired upon exercise of the Placement Agent Warrants are registered at
the time under an effective registration statement. The Placement Agent Warrants
contain a cashless exercise provision. The Placement Agent Warrants are
transferable by the Placement Agent or other Participating Agent receiving the
same only to its officers, directors, shareholders and employees, as well as by
such persons to their immediate family affiliates in connection with estate
planning, provided that no such transfer or disposition may be made other than
in compliance with applicable securities laws and furnishing satisfactory
evidence of such compliance to the Registrant.
The Registrant also agreed to indemnify the placement agent and participating
agents against certain liabilities. The Registrant also agreed to pay its own
costs of the Private Placement. The Registrant has also agreed to pay to the
placement agent a non-accountable expense allowance (the "Non-Accountable
Expense Allowance") equal to 3% of the gross proceeds received by the Registrant
from the sale of Series A Preferred Stock to investors (other than investors
introduced by management or affiliates of the Registrant or management).
In connection with the Private Placement to date, the Registrant has paid to its
placement agent and other participating agents, in the aggregate, cash fees of
$196,053, issued Placement Agent Warrants to acquire 130,703 Placement Agent
Warrant Shares, and paid to its placement agent the aggregate sum of $58,815.90
for the Non-Accountable Expense Allowance.
(d) The sales of securities at the closing were made by the Registrant in
reliance upon exemptions from registration under the Securities Act of 1933, as
amended (the "Act"), including Section 4(2) of the Act and/or Rule 506 under
Regulation D promulgated pursuant to the Act. The Registrant reasonably believes
that the securities were sold only to "accredited investors", as such term is
defined under Rule 501(e) under Regulation D promulgated pursuant to the Act,
without general solicitation or general advertising, and with limitations on
resale in accordance with Rule 502(d) under Regulation D promulgated pursuant to
the Act, and intends to file the necessary notice of sales pursuant to Rule 503
under Regulation D promulgated pursuant to the Act within the time period
required thereby. In any case, the Registrant reasonably believes that the
securities were sold to no more than thirty-five (35) purchasers of securities
from the Registrant, as such number of purchasers is calculated pursuant to Rule
501(e) under Regulation D promulgated pursuant to the Act (excluding, among
other things, accredited investors, as such term is defined under Rule 501(e)
under Regulation D promulgated pursuant to the Act).
(e) The Warrants are exercisable initially at $2.00 per share of Series A
Preferred Stock, subject to adjustment, and are exercisable for a period of
three (3) years after issuance or until the market price of the Common Stock has
been at least three hundred percent (300%) of the then applicable exercise price
of the Warrant for a period of at least thirty (30) days, and the average
trading volume of the Common Stock has been at least one hundred thousand
(100,000) shares per day during such thirty (30) day period (subject to
adjustment of such trading volume threshold in the event of stock splits,
reverse stock splits, stock dividends, recapitalizations or similar events) and
the shares of Common Stock which may be acquired upon exercise of the Warrants
are registered at the time under an effective registration statement. The terms
and conditions of the Warrants are set forth in Warrant filed as Exhibit 10.11
to this Current Report on Form 8-K, which is specifically incorporated herein by
reference. The descriptions of the terms and conditions of the Warrants set
forth here and elsewhere in this Current Report on Form 8-K are qualified in
their entirety by reference to the Warrant. The Placement Agent Warrants are
initially exercisable at $1.50 per share of Common Stock, subject to adjustment,
commencing upon the date of issuance and continuing for five (5) years after
issuance or until the market price of the Common Stock has been at least three
hundred percent (300%) of the then applicable exercise price of the Placement
Agent Warrant for a period of at least thirty (30) days, and the average trading
volume of the Common Stock has been at least 100,000 shares per day during the
preceding thirty (30) days (subject to adjustment of such trading volume
threshold in the event of stock splits, reverse stock splits, stock dividends,
recapitalizations or similar events) and the shares of Common Stock which may be
acquired upon exercise of the Placement Agent Warrants are registered at the
time under an effective registration statement. The Placement Agent Warrants
shall be transferable by the placement agent only to its officers, directors,
shareholders and employees, as well as by such persons to their immediate family
affiliates in connection with estate planning, provided that no such transfer or
disposition may be made other than in compliance with applicable securities laws
and furnishing satisfactory evidence of such compliance to the Registrant. The
Placement Agent Warrant includes a "cashless exercise" provision.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed with this report:
10.8 Securities Purchase Agreement
10.9 BACL Registration Rights Agreement
10.10 Cynat and Genaderm Registration Rights Agreement
10.11 Investor Warrant
10.12 Restated Certificate of Designations, Preferences and Rights
of Series A Convertible Preferred Stock
[Signature on following page.]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Bioaccelerate Holdings, Inc.
By: /s/ Linden Boyne
---------------------------------
Linden Boyne
Chief Financial Officer
Date: October 14, 2005
EXHIBIT INDEX
Exhibit Description
- ------- -----------
10.8 Securities Purchase Agreement
10.9 BACL Registration Rights Agreement
10.10 Cynat and Genaderm Registration Rights Agreement
10.11 Investor Warrant
10.12 Restated Certificate of Designations,
Preferences and Rights of Series A Convertible Preferred
Shares