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EXHIBIT 10.058
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 30,
1999, by and among Allergy ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation, with
headquarters located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the
"COMPANY"), BioShield Technologies, Inc, a Georgia corporation located at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ("BSTI ")and the investors listed on the
Schedule of Buyers attached hereto (individually, a "BUYER" or collectively
"BUYERS").
WHEREAS:
A. The Company, BSTI, and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) and/or Regulation D ("REGULATION D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT");
B. The Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, an aggregate amount of up to 3,218,884 shares of common stock
of the Company, par value $0.001 per share (such shares referred to herein as
the "COMMON STOCK"), in the respective amounts set forth opposite each Buyer's
name on the Schedule of Buyers;
C. Contemporaneously with the execution and delivery of this Agreement,
BSTI and the Buyers hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit "A" (the "BSTI
REGISTRATION RIGHTS AGREEMENT") pursuant to which BSTI has agreed to provide
certain registration rights under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws;
D. Contemporaneously with the execution and delivery of this Agreement,
the Company and Buyers hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as Exhibit "B" (the
"COMPANY REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has
agreed to provide certain registration rights under the 1933 Act and rules and
regulations promulgated thereunder and applicable state securities laws; and
E. The holders of the Common Stock will receive stock purchase warrants
(the "WARRANTS") to acquire the Common Stock substantially in the form attached
as Exhibit "C."
NOW THEREFORE, the Company, the Buyer, and BSTI hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON STOCK.
a. Purchase of Common Stock. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 5 and 6 below, the
Company shall issue and sell to the Buyers and the Buyers shall
purchase from the Company an aggregate principal amount of 3,218,884
shares of Common Stock and Warrants for an aggregate purchase price of
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$15,000,000 (the "PURCHASE PRICE"), in the respective amounts set forth
opposite each Buyer's name on the Schedule of Buyers (the "CLOSING").
b. Closing Date. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Eastern Standard Time, within five
(5) business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 5 and 6 below (or such later date as is mutually agreed to by
the Company and the Buyer). The Closing shall occur on the Closing Date
at the offices of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
c. Form of Payment. On the Closing Date, (i) each Buyer shall
pay his portion of the Purchase Price to the Company for the Common
Stock to be issued and sold to such Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) the Company shall deliver
to each Buyer certificates representing such Common Stock and Warrants
that such Buyer is then purchasing (as indicated opposite such Buyer's
name on the Schedule of Buyers), duly executed on behalf of the Company
and registered in the name of such Buyer or its designee (the
"CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer is acquiring the Common
Stock and Warrants and any shares of Common Stock issuable upon
exercise thereof ("WARRANT SHARES"), for its own account for investment
only and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold
any Common Stock, Conversion Shares (as defined in Section 8 hereof),
Warrants, or Warrant Shares for any minimum or other specific term and
reserves the right to dispose of Common Stock or Warrant Shares at any
time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. Notwithstanding anything contained herein
to the contrary, each Buyer agrees to enter into any contractual
lock-up agreements with respect to the Common Stock, Warrants, Warrant
Shares, or Conversion Shares that may be required by the Company's
underwriters in connection with an underwritten public offering of the
Company's common stock or other securities or any public offering of
the Conversion Shares or other securities of BSTI.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
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c. Reliance on Exemptions. Such Buyer understands that the
Common Stock, Conversion Shares, Warrants, and Warrant Shares 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 in part upon the truth and
accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such
Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire such
securities.
d. Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and BSTI and materials relating to the offer
and sale of the Common Stock which have been requested by such Buyer.
Such Buyer and its advisors, if any, have been afforded the opportunity
to ask questions of the Company and BSTI. Neither such inquiries nor
any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect
such Buyer's right to rely on the Company's or BSTI's representations
and warranties contained in Section 3 below. Such Buyer understands
that its investment in the Common Stock, Conversion Shares, Warrants,
and Warrant Shares involve a high degree of risk. Such Buyer has sought
such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of
the Common Stock, Conversion Shares, Warrants, and Warrant Shares.
e. No Governmental Review. Such 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 Common Stock, Conversion Shares, Warrants, and
Warrant Shares, or the fairness or suitability of the investment in the
Common Stock, nor have such authorities passed upon or endorsed the
merits of the offering of the Common Stock and Warrants.
f. Transfer or Resale. Such Buyer understands that: (i) the
Common Stock and Warrants have not been and are not being registered
under the 1933 Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, (b) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the
effect that such securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such
registration, or (c) such Buyer provides the Company with reasonable
assurance that such securities can be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) ("RULE 144"); (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) may be made only in accordance with the terms of Rule 144
and further, if Rule 144 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 ▇▇▇▇ ▇▇▇) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) other than the
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Company Registration Rights Agreement and the BSTI Registration Rights
Agreement (collectively, the "REGISTRATION RIGHTS AGREEMENTS"), neither
the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Common Stock, Conversion Shares,
Warrants, and Warrant Shares shall 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, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Common Stock,
Conversion Shares, Warrants and Warrant Shares upon which it is
stamped, if, unless otherwise required by state securities laws, (i)
the sale of the Common Stock, Conversion Shares, or Warrant Shares is
registered under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of the Common Stock, Conversion Shares,
Warrants, or Warrant Shares may be made without registration under the
1933 Act, or (iii) such holder provides the Company with reasonable
assurances that the Common Stock, Conversion Shares, Warrants, or
Warrant Shares can be sold pursuant to Rule 144 without any restriction
as to the number of securities acquired as of a particular date that
can then be immediately sold.
h. Authorization, Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer
and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization,
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moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights
and remedies.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BSTI.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company, BSTI , and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each
of the Company, BSTI 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, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company, BSTI and its subsidiaries taken as a
whole.
b. Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company and BSTI each have the requisite corporate
power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and any related agreements, and to issue
the Common Stock, Conversion Shares, Warrants, and Warrant Shares in
accordance with the terms hereof and thereof, (ii) the execution and
delivery of this Agreement, the Registration Rights Agreements and any
related agreements by the Company and BSTI and the consummation by it
of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Common Stock and the reservation for
issuance and the issuance of the Conversion Shares issuable upon
conversion or exercise thereof as provided in Section 8 hereof, have
been duly authorized by each of the Company's and BSTI's Board of
Directors and no further consent or authorization is required by each
of the Company, BSTI, its respective Board of Directors, or its
respective stockholders, (iii) this Agreement and the Registration
Rights Agreements and any related agreements have been duly executed
and delivered by the Company and BSTI, and (iv) this Agreement, the
Registration Rights Agreements and any related agreements constitute
the valid and binding obligations of the Company and BSTI enforceable
against the Company and BSTI in accordance with their terms, except as
such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of Common
Stock, of which as of the date hereof 30,000,000 shares were issued and
outstanding, and no series of preferred stock or debentures or notes
were issued and outstanding. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), no shares of Common Stock or preferred
stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in Schedule 3(c), as of the effective date of this
Agreement, (i) there are no
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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 contracts, commitments, understandings 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 or 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, (ii) there are no
outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except the Company Registration Rights Agreement). There are
no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Common Stock
or the Conversion Shares as described in this Agreement. The Company
has furnished to or made available to Buyer, via the SEC ▇▇▇▇▇ site,
true and correct copies of BSTI's filings with the U.S. Securities and
Exchange Commission (the "SEC DOCUMENTS"), the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), the Company's By-laws, as in effect on
the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Common Stock are duly
authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and nonassessable, are free
from all taxes, liens and charges with respect to the issue thereof and
are entitled to the rights and preferences set forth in the Common
Stock. The Conversion Shares issuable upon conversion of the Common
Stock have been duly authorized and reserved for issuance by BSTI. The
Warrants and Warrant Shares, and upon exchange of the Common Stock into
Conversion Shares as provided in Section 8 of this Agreement, the
Warrant Shares and the Conversion Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all
rights accorded to a holder of common stock of BSTI and the Company,
respectively.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company
and BSTI and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any certificate of designations,
preferences, and rights of any outstanding series of preferred stock of
the Company or BSTI 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, BSTI, 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 and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to
the Company, BSTI, or any of its subsidiaries or by which any
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property or asset of the Company, BSTI, or any of its subsidiaries is
bound or affected. Except as disclosed in Schedule 3(e), neither the
Company, BSTI nor its subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation or Bylaws or their
organizational charter or by-laws, respectively, or any material
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable
to the Company, BSTI, or its subsidiaries. Except as specifically
contemplated by this Agreement and 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 or
contemplated by this Agreement or the Company Registration Rights
Agreement in accordance with the terms hereof or thereof. Except as
disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company and BSTI is required to
obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company, BSTI, and its
subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing.
f. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company , BSTI, or any of its subsidiaries,
threatened against or affecting the Company, the Common Stock, BSTI, or
any of the Company's subsidiaries, wherein an unfavorable decision,
ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company or BSTI
to perform its obligations under, this Agreement or any of the
documents contemplated herein or (iii), except as expressly set forth
in Schedule 3(h), have a material adverse effect on the business,
operations, properties, financial condition or results of operation of
the Company, BSTI, and its subsidiaries taken as a whole.
g. Acknowledgment Regarding Buyer's Purchase of Common Stock.
The Company and BSTI acknowledge and agree that the Buyer is acting
solely in the capacity of an arm's length purchaser with respect to
this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Company or BSTI (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of their
respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Common Stock. The Company and BSTI further
represent to the Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the
Company, BSTI, and its representatives.
h. No General Solicitation. Neither the Company, BSTI, nor any
of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation
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or general advertising (within the meaning of Regulation D under the
▇▇▇▇ ▇▇▇) in connection with the offer or sale of the Common Stock,
Conversion Shares, Warrants, or Warrant Shares.
j. No Integrated Offering. Neither the Company, BSTI , nor any
of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of the Common Stock, the Conversion Shares,
the Warrants or Warrant Shares under the 1933 Act or cause this
offering of Common Stock or the Conversion Shares to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions.
k. Employee Relations. Neither the Company, BSTI, nor any of
its subsidiaries is involved in any labor dispute nor, to the knowledge
of the Company, BSTI, or any of its subsidiaries, is any such dispute
threatened. None of the Company's, BSTI's or its subsidiaries'
employees is a member of a union and the Company, BSTI, and its
subsidiaries believe that their relations with their employees are
good.
l. Intellectual Property Rights. The Company, BSTI, and its
subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service ▇▇▇▇ registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 3(n), none of the Company's
or BSTI's trademarks, trade names, service marks, service ▇▇▇▇
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade
secrets, or other intellectual property rights have expired or
terminated, or are expected to expire or terminate, in the near future.
The Company, BSTI and its subsidiaries do not have any knowledge of any
infringement by the Company, BSTI or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service ▇▇▇▇ registrations,
trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical
information by others and, except as set forth on Schedule 3(n), there
is no claim, action or proceeding being made or brought against, or to
the Company's or BSTI's knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents,
patent rights, invention, copyright, license, service names, service
marks, service ▇▇▇▇ registrations, trade secret or other infringement;
and the Company, BSTI and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
m. Environmental Laws. The Company, BSTI, and its subsidiaries
are (i) in material compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
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LAWS"), (ii) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in material
compliance with all terms and conditions of any such permit, license or
approval.
n. Title. The Company, BSTI and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company, BSTI, and its subsidiaries, in
each case free and clear of all liens, encumbrances and defects except
such as are described in Schedule 3(p) or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company, BSTI, and
its subsidiaries. Any real property and facilities held under lease by
the Company, BSTI, and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company, BSTI, and its
subsidiaries.
o. Insurance. The Company, BSTI, and each of its subsidiaries
are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company
and believes to be prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor BSTI
any such subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor BSTI or any such subsidiary has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or
operations of the Company, BSTI and its subsidiaries, taken as a whole.
p. No Materially Adverse Contracts, Etc. Neither the Company,
BSTI, nor any of its subsidiaries is subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's or BSTI's officers
has or is expected in the future to have a material adverse effect on
the business, properties, operations, financial condition, results of
operations or prospects of the Company, BSTI, or its subsidiaries.
Neither the Company nor BSTI or any of its subsidiaries is a party to
any contract or agreement which in the judgment of the Company's
officers has or is expected to have a material adverse effect on the
business, properties, operations, financial condition, results of
operations or prospects of the Company, BSTI, or its subsidiaries.
q. Tax Status. Except as set forth on Schedule 3(u), the
Company, BSTI, and each of its subsidiaries has made or filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company, BSTI, and each of its
subsidiaries has set aside on
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its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company and BSTI know of no basis for any such claim.
r. Certain Transactions. Except as set forth on Schedule 3(v)
and in BSTI's SEC Documents and except for arm's length transactions
pursuant to which the Company and BSTI make payments in the ordinary
course of business upon terms no less favorable than the Company or
BSTI could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company or BSTI is presently a party to any
transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company or BSTI, any corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner.
s. Dilutive Effect. BSTI understands and acknowledges that the
number of Conversion Shares issuable upon exchange of the Common Stock
will increase in certain circumstances. BSTI further acknowledges that
its obligation to issue Conversion Shares upon exchange of the Common
Stock in accordance with this Agreement is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the
ownership interests of other stockholders of BSTI.
t. Fees and Rights of First Refusal. Neither the Company nor
BSTI is obligated to offer the securities offered hereunder on a right
of first refusal basis or otherwise to any third parties including, but
not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
u. Shareholder Approval. BSTI covenants to submit to its,
shareholders at its next shareholder meeting a proposal for
ratification of the issuance of the Conversion Shares, if and as
required by the rules of the National Association of Securities
Dealers, Inc. (the "NASD") applicable to the transaction.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
Sections 5 and 6 of this Agreement.
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b. Form D. The Company agrees to file a Form D with respect to
the Common Stock and the Conversion Shares as required under Regulation
D and to provide a copy thereof to each 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 Common Stock and the Conversion Shares for, or obtain
exemption for the Common Stock and the Conversion Shares for, sale to
the Buyers 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 Buyers on or
prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date as of
which the Investors (as that term is defined in the Company
Registration Rights Agreement) may sell all of the Common Stock without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Investors shall
have sold all the Conversion Shares and (B) none of the Common Stock is
outstanding (the "REGISTRATION PERIOD"), the Company, once it becomes a
reporting company pursuant to the Securities Exchange Act of 1934, as
amended, 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 otherwise
permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the
sale of the Common Stock for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following to each Buyer once it becomes a reporting company pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, upon the
effective date of its filing on Form 10 or S-1, during the Registration
Period: (i) within five (5) days after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K, its Quarterly Reports on
Form 10-Q, any Current Reports on Form 8-K and any registration
statements or amendments filed pursuant to the 1933 Act; (ii) within
one (1) day after release thereof, copies of all press releases issued
by the Company or any of its subsidiaries and (ii) copies of the same
notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.
f. Reservation of Shares. BSTI shall take all action necessary
to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of common stock
needed to provide for the issuance of the Conversion Shares. The
Company shall take all action necessary to at all times have authorized
and reserved for the purpose of issuance no less than 100% of the
number of shares of Common Stock needed to provide for the issuance of
the Warrant Shares.
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g. Listings. Once the Company becomes a reporting company
pursuant to the 1934 Act, the Company shall use its best efforts
promptly secure the listing of the Conversion Shares 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 Conversion Shares from
time to time issuable under the terms of this Agreement and the Company
Registration Rights Agreement. The Company shall maintain the Common
Stock's authorization for quotation in the over-the counter market. The
Company shall promptly provide to each Buyer copies of any notices it
receives regarding the continued eligibility of the Common Stock for
trading in the over-the-counter market.
h. Expenses. Each of the Company and the Buyer shall pay all
costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreements. The placement fees of
▇.▇. ▇▇▇▇▇ Securities, Inc. and Greenfield Capital Partners, LLC shall
be paid for by the Company at Closing.
i. Corporate Existence. So long as any Common Stock remain
outstanding, the BSTI shall not directly or indirectly consummate any
merger, reorganization, restructuring, consolidation, sale of all or
substantially all of BSTI's assets or any similar transaction or
related transactions (each such transaction, a "SALE OF BSTI") except
if the surviving or successor entity in such transaction (i) expressly
assumes, in writing, BSTI's obligations hereunder and under the BSTI
Registration Rights Agreement, and any other agreements and instruments
entered into or delivered by the Company in connection herewith and
(ii) is a publicly traded corporation whose Common Stock is listed for
trading on the New York Stock Exchange, Inc., the American Stock
Exchange, or the NASDAQ Small Cap, National Market or Electronic
Bulletin Board.
(j) No Short Sales of the Common Stock. So long as a Buyer or
any of its affiliates beneficially owns any Common Stock, each Buyer
and its affiliates shall not directly or indirectly engage in any short
sales or third party short sales of the Common Shares or hold a "put
equivalent position" with respect to the Common Stock (as defined in
Rule 16a-1 under the 1934 Act).
(k) Limitation on Short Sales of Conversion Shares. Buyer and
its affiliates shall not engage in short sales of the Conversion
Shares; provided, however, that any holder may enter into any short
sale or other hedging or similar arrangement it deems appropriate with
respect to Conversion Shares to be issued pursuant to an Exchange
Notice after it delivers an Exchange Notice with respect to such
Conversion Shares to be issued pursuant to an Exchange Notice so long
as such sales or arrangements do not involve more than the number of
such Conversion Shares to be issued pursuant to an Exchange Notice
(determined as of the date of such Exchange Notice). Buyer and its
affiliates agree to provide to BSTI upon
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written request from time to time its securities trading records in
order to demonstrate that it has complied with this Section 4(k).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common
Stock to the Buyer at the Closing 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 Buyer shall have executed this Agreement and the
Registration Rights Agreements and delivered the same to the Company.
b. The Buyer shall have delivered to the Company the Purchase
Price for the Common Stock being purchased by the Buyer at the Closing
by wire transfer of immediately available funds pursuant to the wire
instructions provided by 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.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Common Stock at
the Closing 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 Company and BSTI shall have executed this Agreement,
the Company shall have executed the Company Registration Rights
Agreement and BSTI shall have executed the BSTI Registration Rights
Agreement, and delivered the same to the Buyer.
b. The representations and warranties of the Company and BSTI
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) 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 and BSTI
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
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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
each of the Company and BSTI, each dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by the Buyer including, without limitation an update as of
the Closing Date regarding the representation contained in Section 3(c)
above.
c. The Buyer shall have received the opinion of the Company's
and BSTI's counsel dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer and in substantially the
form of Exhibit "D" attached hereto.
d. The Company and BSTI shall have executed and delivered to
the Buyer the Certificates (in such denominations as the Buyer shall
request) for the Common Stock and Warrants being purchased by the Buyer
at the Closing.
e. The Board of Directors of the Company and BSTI shall have
adopted the resolutions in substantially the form of Exhibit "E"
attached hereto.
f. As of the Closing Date, BSTI shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of
effecting the exchange of the Common Stock for the Conversion Shares as
provided in Section 8 herein, such number of Conversion Shares equal to
or greater than 100% of the number of shares which are issuable upon
conversion of all of the Common Stock which could be issued under this
Agreement.
g. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered and
acknowledged in writing by the BSTI's transfer agent.
h. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have delivered
the voting proxies substantially in the form attached hereto as Exhibit
"F."
7. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Common Stock, the Conversion Shares, the Warrants
and the Warrant Shares hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company and BSTI jointly and severally
shall defend, protect, indemnify and hold harmless the Buyer and each other
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the
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Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company or BSTI in this Agreement, the Common Stock, the Conversion Shares, the
Warrants and the Warrant Shares or the Registration Rights Agreements or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any material breach of any covenant, agreement or obligation of the Company or
BSTI contained in this Agreement or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Indemnities, any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Common Stock and Warrants or the status of the Buyer or
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares, as an investor in the Company or BSTI. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company and
BSTI shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
8. EXCHANGE OF COMMON STOCK INTO CONVERSION SHARES
(a) Exchange Right. Subject to the provisions of Sections 9,
10, 12, and 13 herein, in the event that the Company has not
consummated an initial public offering of its Common Stock, at any time
or times after June 30, 2000, (the "EXCHANGE COMMENCEMENT DATE"), any
holder of Common Stock shall be entitled to exchange any Common Stock
into fully paid and nonassessable shares (rounded to the nearest whole
share in accordance with Section 8(f) below) of Conversion Shares (the
"EXCHANGE RIGHT"), at the Exchange Rate (as defined below); provided,
however, that in no event shall any holder be entitled to (i) exchange
Common Stock into Conversion Shares in excess of that number of Common
Stock which, upon giving effect to such conversion, would cause the
aggregate number of Conversion Shares beneficially owned by the holder
and its affiliates to exceed 4.9% of the outstanding shares of the
Common Stock following such conversion or (ii) exchange more than 10%
of the total number of Conversion Shares issued to such holder into
Conversion Shares (or any successor or assign) pursuant to this
transaction in any thirty (30) day period commencing on the Exchange
Commencement Date and any succeeding thirty (30) day period thereafter.
For purposes of the foregoing proviso, the aggregate number of shares
of Conversion Shares beneficially owned by the holder and its
affiliates shall include the number of shares of Conversion Shares
issuable upon exchange of the Common Stock with respect to which the
determination of such proviso is being made, but shall exclude the
number of shares of Conversion Shares which would be issuable upon (i)
exchange of the remaining, non-exchanged Common Stock beneficially
owned by the holder and its affiliates beneficially owned by the holder
and its affiliates. Except as set forth in the preceding sentence, for
purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934,
as amended.
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(b) Exchange Rate. The number of shares of Conversion Shares
issuable after the Exchange Commencement Date upon exchange of each
share of the Common Stock pursuant to Section 8(a) shall be determined
according to the following formula (the "EXCHANGE RATE"):
(ISSUE PRICE PER SHARE)(1.25)
-----------------------------
EXCHANGE PRICE
Notwithstanding anything contained herein to the contrary,
unless this transaction has been approved by the shareholders of BSTI
in accordance with Georgia law, then as long as the Common Stock of
BSTI is listed on the NASDAQ National Market or the NASDAQ Small Cap
Market, BSTI shall not issue Conversion Shares upon exchange of Common
Stock which would equal or exceed twenty percent (20%) of the issued
and outstanding Common Stock of BSTI on the date of issuance of the
Common Stock or such lesser amount as determined on a pro-rata basis
based upon the number of Common Stock issued.
For purposes of this Section 8, the following terms shall have
the following meanings:
(i) "EXCHANGE DATE" shall mean the Trading
Day that an Exchange Notice is deemed delivered
pursuant to Section 8(e);
(ii) "EXCHANGE PRICE" means the Average
Market Price for the Conversion Shares for the twenty
(20) consecutive Trading Days immediately following
the Exchange Date;
(iii) "AVERAGE MARKET PRICE" means, with
respect to any security for any period, that price
which shall be computed as the arithmetic average of
the Closing Bid Prices (as defined below) for such
security for each trading day in such period;
(iv) "CLOSING" shall mean one of the closing
of an exchange of Common Stock for Conversion Shares
pursuant to Section 8.
(v) "CLOSING DATE" shall mean with respect
to a closing, the twentieth Trading Day following the
Exchange Date related to such closings or such
earlier date as BSTI and the holder shall agree.
(vi) "CLOSING BID PRICE" means, for any
security as of any date, the last closing bid price
on the Nasdaq National Market System (the
"NASDAQ-NM") as reported by Bloomberg Financial
Markets ("BLOOMBERG"), or, if the Nasdaq-NM is not
the principal trading market for such security, the
last closing bid price of such security on the
principal securities exchange or
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trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price of such
security in the over-the-counter market on the pink
sheets or bulletin board for such security as
reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the last
closing trade price of such security as reported by
Bloomberg. If the Closing Bid Price cannot be
calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such
security on such date shall be the fair market value
as reasonably determined in good faith by the Board
of Directors of the Company (all as appropriately
adjusted for any stock dividend, stock split or other
similar transaction during such period); and
(vii) "CONVERSION SHARES" shall mean those
shares of common stock of BSTI, no par value,
issuable pursuant to an exchange of Common Stock
pursuant to Section 8 of this Agreement.
(viii) "ISSUANCE DATE" means the date of
issuance of the Common Stock as described herein.
(ix) "ISSUE PRICE PER SHARE" shall mean
$4.67 (as adjusted for stock splits and similar
events of the Company).
(x) "PRINCIPAL MARKET" shall mean the Nasdaq
National market, the NASDAQ SmallCap Market, the
American Stock Exchange or the New York Stock
Exchange, whichever at the time is the principal
trading exchange or market for the Conversion Shares.
(xi) "TRADING DAY" shall mean any day during
which the Principal Market shall be open for
business.
(c) Dispute Resolution. In the case of a dispute as to the
determination of the Average Market Price or the arithmetic calculation
of the Exchange Rate, BSTI shall promptly issue to the holder the
number of Conversion Shares that is not disputed and shall submit the
disputed determinations or arithmetic calculations to the holder via
facsimile within three (3) business days of the Closing Date. If such
holder and BSTI are unable to agree upon the determination of the
Average Market Price or arithmetic calculation of the Conversion Rate
within three (3) business days of such disputed determination or
arithmetic calculation being submitted to the holder, then BSTI shall
within one (1) business day submit via facsimile (A) the disputed
determination of the Average Market Price to an independent, reputable
investment bank or (B) the disputed arithmetic calculation of the
Exchange Rate to its independent, outside accountant. BSTI shall cause
the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify BSTI and the holder of
the results no later than forty-eight (48) hours from the time it
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receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may
be, shall be binding upon all parties absent manifest error. The person
or persons entitled to receive Conversion Shares issuable upon a
conversion of Common Stock shall be treated for all purposes as the
record holder or holders of such Conversion Shares on the Conversion
Date.
(d) Adjustment to Exchange Price - Dilution and Other Events.
In order to prevent dilution of the rights granted herein, the Exchange
Price will be subject to adjustment from time to time as provided in
this Section 8(d).
(i) Reorganization, Reclassification, Consolidation,
Merger, or Sale. Any recapitalization, reorganization
reclassification, consolidation. merger, sale of all or
substantially all of BSTI's assets to another Person (as
defined below) or other similar transaction which is effected
in such a way that holders of Conversion Shares are entitled
to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for
Conversion Shares is referred to herein as an "Organic
Change." Prior to the consummation of any Organic Change, BSTI
will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) to insure that each of the holders of the Common
Stock issued in connection with this transaction will
thereafter have the right to acquire and receive in lieu of or
in addition to (as the case may be) the Conversion Shares
immediately theretofore acquirable and receivable upon the
conversion of such holder's Common Stock, such shares of
stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of
Conversion Shares immediately theretofore acquirable and
receivable upon the exchange of such holder's Common Stock had
such Organic Change not taken place. In any such case, BSTI
will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) with respect to such holders' rights and
interests to insure that the provisions of this Section 8(d)
and Section 8(e) below will thereafter be applicable to the
Common Stock. BSTI will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the
successor entity (if other than BSTI) resulting from
consolidation or merger or the entity purchasing such assets
assumes, by written instrument (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding), the obligation to deliver to each holder of
Common Stock issued in connection with this transaction such
shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to
acquire. For purposes of this Agreement, "PERSON" shall mean
an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof.
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(ii) Notices.
(A) Immediately upon any adjustment of the
Exchange Price, BSTI will give written notice thereof
to each holder of Common Stock issued in connection
with this transaction, setting forth in reasonable
detail and certifying the calculation of such
adjustment.
(B) BSTI will give written notice to each
holder of Common Stock issued in connection with this
transaction at least twenty (20) days prior to the
date on which BSTI closes its books or takes a record
(I) with respect to any dividend or distribution upon
the Conversion Shares, (II) with respect to any pro
rata subscription offer to holders of Conversion
Shares, or (III) for determining rights to vote with
respect to any Organic Change, dissolution or
liquidation.
(C) BSTI will also give written notice to
each holder of Common Stock issued in connection with
this transaction at least twenty (20) days prior to
the date on which any Organic Change, dissolution, or
liquidation will take place.
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(e) Mechanics of Exchange of Common Stock into Conversion
Shares.
(i) Holder's Delivery Requirements. Such
notice exchanging Common Stock into Conversion Shares
in accordance with this Section 8 by the holder (the
"EXCHANGE NOTICE") shall (A) be delivered by
facsimile to the Company and BSTI for receipt on or
prior to 12:00 noon Eastern Standard Time or (B) the
immediately succeeding Trading Day if it is received
by facsimile or otherwise after 12:00 noon Eastern
Standard Time on a Trading Day (the "EXCHANGE DATE")
and (B) the holder shall surrender to a common
carrier for delivery to BSTI as soon as practicable
following such date, but in no event later than four
(4) Trading Days prior to a Closing Date, the
original certificates representing the Common Stock
being exchanged (or an indemnification undertaking
with respect to such shares in the case of their
loss, theft, or destruction) and the originally
executed conversion notice.
(ii) The Company and BSTI Response. Upon
receipt by the Company and BSTI of a facsimile copy
of the Exchange Notice, the Company and BSTI shall
send via facsimile, a confirmation of receipt of such
Exchange Notice to such holder. Upon receipt by the
Company of the Common Stock Certificates to be
exchanged pursuant to an Exchange Notice, together
with the originally executed Exchange Notice, BSTI or
the transfer agent (as applicable) shall, within
three (3) business days of each Closing Date (A)
issue and surrender to a common carrier for overnight
delivery to the address as specified in the Exchange
Notice, a certificate, registered in the name of the
holder or its designee, for the number of Conversion
Shares to which the holder shall be entitled. In lieu
of delivering physical certificates representing the
Conversion Shares issuable in accordance with this
Section 8(e) and provided that the transfer agent
then is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of a holder, BSTI shall use its
commercially reasonable efforts to cause the transfer
agent to electronically transmit the applicable
number of Conversion Shares by crediting the account
of the holder's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system.
In addition, on or prior to such Closing Date, each
of BSTI, the Company, and the holder shall deliver to
the others all documents, instruments, and writings
required to be delivered or reasonably requested by
any of them pursuant to this Agreement in order to
implement and effect the transactions contemplated
herein.
(iii) Record Holder. The person or persons
entitled to receive the Conversion Shares issuable
upon an exchange of Common Stock shall be treated for
all purposes as the record holder or holders of such
shares of Conversion Shares on the Exchange Date.
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(iv) BSTI's Failure to Timely Exchange. If
BSTI shall fail to issue to a holder on a Closing
Date, a certificate for the number of shares of
Conversion Shares to which such holder is entitled
upon such holder's exchange of Common Stock, in
addition to all other available remedies which such
holder may pursue hereunder (including
indemnification pursuant to Section 7 hereof), the
Company shall pay additional damages to such holder
on each day after the fifth (5th) Trading Day
following the applicable Closing Date for which such
exchange is not timely effected, an amount equal to
1.0% of the product of number of Conversion Shares
not issued to such holder to which such holder is
entitled by the Exchange Price for each calendar
month until such exchange is made unless Buyer elects
to enforce the terms of Section 11 herein.
(f) Fractional Shares. BSTI shall not issue any
fraction of a Conversion Share upon any exchange. All
Conversion Shares (including fractions thereof) issuable upon
conversion of more than one share of Common Stock by a holder
thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of a
fraction of a Conversion Share. If, after the aforementioned
aggregation, the issuance would result in the issuance of a
fraction of its Conversion Share, BSTI shall round such
fraction of a Conversion Share up or down to the nearest whole
share.
(9) CASH PAYMENT OPTION BY BSTI.
In lieu of issuing the Conversion Shares in accordance with an Exchange
Notice, BSTI shall have the right, in its sole discretion, to pay to the holder
of the Common Stock an amount equal to $5.825 for each share of Common Stock so
exchanged (as adjusted for stock splits and similar events of the Company)
("CASH OUT PRICE"). The Company shall pay the Cash Out Price to that Holder
within seven (7) Trading Days following the receipt by the Company and BSTI of
an Exchange Notice.
(10) COMPANY'S RIGHT TO REDEEM AT ITS ELECTION.
(a) At any time, the Company shall have the right, in its sole
discretion, to redeem ("REDEMPTION AT COMPANY'S ELECTION"), from time
to time, any or all of the Common Stock; provided (i) the Company shall
first provide no more than seven (7) Trading Days and no less than one
(1) Trading Day advance written notice as provided in subparagraph
10(a)(ii) below, and (ii) that the Company shall only be entitled to
redeem Common Stock having an aggregate Stated Value (as defined above)
of at least Five Hundred Thousand Dollars ($500,000). If the Company
elects to redeem some, but not all, of the Common Stock, the Company
shall redeem a pro-rata amount from each Holder of the Common Stock.
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(i) Redemption Price At Company's Election.
The "REDEMPTION PRICE AT COMPANY'S ELECTION" shall be
calculated as $5.825 (as adjusted for stock splits
and similar events of the Company).
(ii) Mechanics of Redemption at Company's
Election. The Company shall effect each such
redemption by giving no more than seven (7) Trading
Days and no less than one (1) Trading Day prior
written notice ("NOTICE OF REDEMPTION AT COMPANY'S
ELECTION") to (A) the Holders of the Common Stock
selected for redemption at the address and facsimile
number of such Holder appearing in the Company's
Common Stock register and (B) the Transfer Agent,
which Notice of Redemption At Company's Election
shall be deemed to have been delivered three (3)
Trading Days after the Company's mailing (by
overnight or two (2) day courier, with a copy by
facsimile) of such Notice of Redemption at Company's
Election. Such Notice of Redemption At Company's
Election shall indicate (i) the number of shares of
Common Stock that have been selected for redemption,
(ii) the date which such redemption is to become
effective (the "DATE OF REDEMPTION AT COMPANY'S
ELECTION"), and (iii) the applicable Redemption Price
At Company's Election, as defined in subsection
(a)(i) above.
(b) Company Must Have Immediately Available Funds or
Credit Facilities. The Company shall not be entitled to send
any Redemption Notice and begin the redemption procedure under
Sections 10(a) unless it has:
(i) the full amount of the redemption price
in cash, available in a demand or other immediately
available account in a bank or similar financial
institution; or
(ii) immediately available credit
facilities, in the full amount of the redemption
price with a bank or similar financial institution,
or
(iii) an agreement with a standby
underwriter willing to purchase from the Company a
sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not
converted prior to redemptions; or
(iv) a combination of the items set forth in
(i), (ii), and (iii) above, aggregating the full
amount of the redemption price.
(c) Payment of Redemption Price. Each Holder
submitting Common Stock being redeemed under this Section 10
shall send their Common Stock Certificates to be redeemed to
the Company or its Transfer Agent, and the Company shall pay
the applicable redemption price to that Holder within five (5)
business days of the Date of Redemption at Company's Election.
-23-
24
(11) INABILITY TO FULLY EXCHANGE.
(a) Holder's Option if BSTI Cannot Fully Exchange. If at any
time after the Exchange Commencement Date, upon the Company's and
BSTI's receipt of an Exchange Notice, BSTI does not issue shares which
are registered for resale under the BSTI Registration Statement within
five (5) business days of the time required for any reason or for no
reason, including, without limitation, because BSTI (x) does not have a
sufficient number of Conversion Shares authorized and available, (y) is
otherwise prohibited by applicable law or by the rules or regulations
of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over BSTI or its
securities, including without limitation The Nasdaq Stock Market, Inc.
from issuing all of the Conversion Shares which is to be issued to a
holder of Common Stock pursuant to an Exchange Notice or (z) fails to
have a sufficient number of Conversion Shares registered and eligible
for resale under the BSTI Registration Statement, then BSTI shall issue
as many Conversion Shares as it is able to issue in accordance with
such holder's Exchange Notice and pursuant to Section 8(e) above and,
with respect to the unconverted Common Stock, the holder, solely at
such holder's option, can, in addition to any other remedies such
holder may have hereunder, under this Agreement (including
indemnification under Section 7 thereof), under the BSTI Registration
Rights Agreement, at law or in equity, elect to:
(i) require BSTI to redeem from such holder those
shares of Conversion Stock for which BSTI is unable to issue
Conversion Shares in accordance with such holder's Exchange
Notice ("MANDATORY REDEMPTION") at a price per share of Common
Stock (the "MANDATORY REDEMPTION PRICE") equal to $5.825 (as
adjusted for stock splits or similar events of the Company;
(ii) require BSTI to issue restricted shares of
Common Stock in accordance with such holder's Exchange Notice
and pursuant to Section 8(e) above, if BSTI's inability to
fully exchange Common Stock is pursuant to its inability to
deliver Conversion Shares registered pursuant to the 1933 Act;
or
(iii) void its Exchange Notice and retain or have
returned, as the case may be, the unexchanged Common Stock
that were to be exchanged pursuant to such holder's Exchange
Notice.
(b) Mechanics of Fulfilling Holder's Election. BSTI shall send
via facsimile to a holder of Common Stock, upon receipt of a facsimile
copy of an Exchange Notice from such holder which cannot be fully
satisfied as described in Section 11(a) above, a notice of BSTI's
inability to fully satisfy such holder's Exchange Notice (the
"INABILITY TO FULLY EXCHANGE NOTICE"). Such Inability to Fully Exchange
Notice shall indicate (i) the reason why BSTI is unable to fully
satisfy such holder's Exchange Notice, (ii) the number of shares of
Common Stock which cannot be exchanged, and (iii) the Mandatory
Redemption Price. Such holder must, within five (5) Trading Days of
receipt of such Inability to Fully Exchange
-24-
25
Notice, deliver written notice via facsimile to BSTI ("NOTICE IN
RESPONSE TO INABILITY TO EXCHANGE") of its election pursuant to Section
11(a) above.
(c) Payment of Redemption Price. If such holder shall elect to
have its shares redeemed pursuant to Section 11(a) above, BSTI shall
pay the Mandatory Redemption Price in cash to such holder within thirty
(30) days of BSTI's receipt of the holder's Notice in Response to
Inability to Exchange (the "MANDATORY REDEMPTION PRICE DEADLINE"). If
BSTI shall fail to pay the applicable Mandatory Redemption Price to
such holder on a timely basis as described in this Section 11(c) (other
than pursuant to a dispute as to the determination of the Closing Bid
Price or the arithmetic calculation of the Redemption Rate), such
unpaid amount shall bear interest at the rate of 1% for the first month
and a rate of 2.0% per month thereafter (prorated for partial months)
until paid in full. Following the Mandatory Redemption Price Deadline,
until the full Mandatory Redemption Price is paid in full to such
holder, such holder may void the Mandatory Redemption with respect to
those shares of Common Stock for which the full Mandatory Redemption
Price has not been paid and receive back such shares of Common Stock.
(d) Pro-rata Exchange and Redemption. In the event the Company
and BSTI each receives an Exchange Notice from more than one holder of
Common Stock on the same day and BSTI can exchange and redeem some, but
not all, of the Common Stock pursuant to this Section 11, BSTI shall
exchange and redeem from each holder of Common Stock electing to have
Common Stock exchanged and redeemed at such time an amount equal to
such holder's pro-rata amount (based on the number of shares of Common
Stock held by such holder relative to the number of shares of Common
Stock outstanding, pursuant to this Agreement) of all Common Stock
being exchanged and redeemed at such time.
12. ONE-TIME RIGHT TO SUSPEND EXCHANGE RIGHT OR EXCHANGE COMMON
STOCK INTO CONVERSION SHARES.
Notwithstanding anything contained herein to the contrary, BSTI shall
have the one-time right, without payment or penalty of any kind, for a period of
thirty (30) days from the date written notice is given to the holders of Common
Stock, to suspend the Exchange Right in the event that the Company has received
a letter of intent by the Exchange Commencement Date from a reputable investment
banking firm to underwrite the public offering of the Company's common stock or
other securities ("PUBLIC OFFERING"), and the Public Offering has not occurred
by the Exchange Commencement Date due to market conditions as determined by such
underwriter.
13. SUSPENSION OF EXCHANGE RIGHT UPON REGISTRATION OF COMMON STOCK
OF THE COMPANY UNDER THE 1934 ACT.
Notwithstanding anything contained herein to the contrary, so long as
(i) the Company becomes and remains a reporting company under the 1934 Act, (ii)
the Company has its Form 8A declared effective by the SEC, and (iii) the trading
price of the Common Stock as reported by
-25-
26
Bloomberg on its principal exchange or trading market remains equal to or
greater than $6.19 per share, the holders of the Common Stock shall have no
Exchange Right.
-26-
27
14. REISSUANCE OF CERTIFICATES.
In the event of an exchange or redemption pursuant to this Agreement of
less than all of the Common Stock represented by a particular Common Stock
certificate, the Company shall promptly cause to be issued and delivered, to the
holder of such Common Stock, a Common Stock certificate representing the
remaining shares of Common Stock which have not been so exchanged or redeemed.
15. TRANSFER AGENT INSTRUCTIONS.
BSTI shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Conversion Shares in such amounts as specified from time to
time by the Buyer to the Company upon conversion of the Common Stock (the
"Irrevocable Transfer Agent Instructions"), except as provided in Sections 9,
10, 11, 12, and 15 herein. Prior to registration of the Conversion Shares under
the 1933 Act, all such certificates shall bear the restrictive legend specified
in Section 2(g) of this Agreement. The Company and BSTI warrant that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 15, and stop transfer instructions to give effect to Section
2(f) hereof (in the case of the Conversion Shares, prior to registration of such
shares under the ▇▇▇▇ ▇▇▇) will be given by the Company or BSTI to its transfer
agent and that the Common Stock and the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company and BSTI as and to
the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section 15 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Common Stock or Conversion Shares. If the Buyer provides the Company and BSTI
with an opinion of counsel, reasonably satisfactory in form, and substance to
the Company, that registration of a resale by the Buyer of any of the Common
Stock or Conversion Shares is not required under the 1933 Act, the Company shall
permit the transfer, and, in the case of the Conversion Shares, BSTI shall
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by the Buyer. The Company and BSTI
acknowledge that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company and BSTI acknowledge
that the remedy at law for a breach of its obligations under this Section 15
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company or BSTI of the provisions of this Section 15, that the Buyer shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
16. CONFIDENTIALITY.
a. Nondisclosure. As much of the information and other
material furnished under or in connection with this Agreement (whether
furnished before, on or after the date hereof) as constitutes or
contains confidential business, financial or other information of the
Company, BSTI or its subsidiaries, each Buyer covenants for itself,
and, as applicable, for
-27-
28
its directors, officers, affiliates and partners, that it will use due
care to prevent its officers, directors, partners, employees, counsel,
accountants and other representatives from disclosing such information
to persons other than their respective authorized employees, counsel,
accountants, shareholders, partners, limited partners and other
authorized representatives. Notwithstanding the foregoing, if a Buyer
is advised by such counsel that such disclosure or delivery is required
by law, regulation or judicial or administrative order, then they may
disclose or deliver such information or other after giving written
notice to the Company and BSTI of such requirements. For purposes of
this Section 10a., "due care" means at least the same level of care
that a Buyer would use to protect the confidentiality of its own
sensitive or proprietary information, and this obligation shall survive
termination of this Agreement.
b. Possession of Material, Non-Public Information. To the
extent that any of the information furnished by the Company or BSTI to
the Buyers hereof would constitute material, nonpublic information for
purposes of the Exchange Act, Buyers agree not to engage in any
purchase or sale of securities while in possession of such information
and prior to the time that such information is made generally known to
the public and Buyers agree to use due care to prevent their officers,
directors, partners, employees, counsel and other representatives, who
have been given access to such material, nonpublic information, from
engaging in any such purchase or sale during such period.
17. GOVERNING LAW: MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Georgia without
regard to the principles of conflict of laws. Buyer may at any time and
at its option, whether or not an arbitration action is then pending,
initiate a civil action for temporary and permanent injunctive and
other equitable relief against Company and BSTI. Company and BSTI
acknowledges that upon any breach of Buyer's conversion rights
hereunder, Buyer's resulting injury may not be adequately compensated
by a remedy at law. Accordingly, upon such breach, Buyer, at its
election and without limitation of its other remedies, shall be
entitled to pursue a claim for specific performance of this Agreement,
and Company and BSTI hereby waive the right to assert any defense
thereto that Purchaser has an adequate remedy at law. The parties
further agree that any action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the
Superior Court of ▇▇▇▇▇▇ County, Georgia, and the United States
District Court for the Northern District of Georgia, Atlanta Division
for the adjudication of any civil action asserted pursuant to this
Paragraph.
b. Counterparts. This Agreement may be executed in two or more
identical 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.
-28-
29
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 in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement, Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyer, the Company,
their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and 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 any
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, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (I) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to the Buyer's counsel as set forth on the Schedule
of Buyers. Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
-29-
30
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent
of the Buyer. The Buyer may assign its rights hereunder without the
consent of the Company, provided, however, that any such assignment
shall not release the Buyer from its obligations hereunder unless such
obligations are assumed by such assignee and the Company has consented
to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Buyer
contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4, 5 and 9, the indemnification provisions set forth in
Section 8, shall survive the Closing. The Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. Publicity. The Company, BSTI, and the Buyer shall have the
right to approve before issuance any press releases 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 other public
disclosure 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 or other
public disclosure prior to its release and shall be provided with a
copy thereof).
k. 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.
1. Termination. In the event that the Closing shall not have
occurred with respect to the Buyer on or before five (5) business days
from the date hereof due to the Company's or the Buyer's failure to
satisfy the conditions set forth in Sections 5 and 6 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party-
provided.
m. Independent Counsel. The parties to this Agreement
acknowledge that Company and BSTI have received independent counsel
from the law firm of ▇▇▇▇ Moss Kline & ▇▇▇▇▇ LLP which is acting as
their counsel. Buyers have been advised by ▇▇▇▇ Moss Kline & ▇▇▇▇▇ LLP
to seek independent advice with respect to the terms and conditions of
this Agreement and any related agreements before signing them.
-30-
31
n. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
"COMPANY"
ALLERGY ▇▇▇▇▇▇▇▇▇▇.▇▇▇., INC.
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President
BIOSHIELD TECHNOLOGIES, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"BUYER"
▇▇▇▇▇▇▇, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-31-
32
SCHEDULE OF BUYERS
NUMBER OF SHARES OF NUMBER OF
BUYER'S NAME ADDRESS AND FACSIMILE NUMBER OF BUYER COMMON STOCK WARRANTS
------------- -------------------------------------- ------------------- ---------
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇) Ltd. 1,072,961 100,000
▇▇▇▇▇▇▇ LLC Corporate Centre, Windwood One
West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
facsimile: ▇▇▇-▇▇▇-▇▇▇▇
33
SCHEDULE 3(C)
CAPITALIZATION
1. Options to purchase a total of 2,250,000 shares of Common Stock to
each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at $2.00 per share.
2. Options to purchase thirty thousand shares of common stock at $2.00
each have been issued to five of the Board Members and four of the Medical
Advisory Board Members of the Company, plus an option to purchase an additional
5,000 shares for each year of service thereafter.
34
SCHEDULE 3(E)
CONFLICTS
None.
35
SCHEDULE 3(H)
LITIGATION
None.
36
SCHEDULE 3(I)
INTELLECTUAL PROPERTY
None.
37
SCHEDULE 3(N)
LIENS
None.
38
SCHEDULE 3(U)
TAX STATUS
None.
39
SCHEDULE 4(D)
USE OF PROCEEDS
1. Intercompany Debt Repayment $ 250,000.00
2. Design, development of Allergy Superstore $ 2,250,000.00
3. Increase staffing & costs related to new building $ 1,150,000.00
4. General & Administrative Expenses $ 2,500,000.00
5. Marketing & Sales (advertising/promo) $ 2,500,000.00
6. Branding Campaign $ 1,500,000.00
7. Web Server & Web Serving Tech $ 550,000.00
8. State-of-the-art distribution center $ 2,500,000.00
9. State-of-the-art e-commerce platform $ 450,000.00
10. Lease & Commissions $ 1,350,000.00
TOTAL $15,000,000.00
40
EXHIBIT "A"
(BSTI REGISTRATION RIGHTS AGREEMENT)
(See tab 2 for executed document.)
41
EXHIBIT "B"
(COMPANY REGISTRATION RIGHTS AGREEMENT)
(See tab 3 for executed document.)
▇▇
▇▇▇▇▇▇▇ "▇"
(▇▇▇▇▇▇▇ AGREEMENT)
(See tab 4 for executed document.)
43
EXHIBIT "D"
(BSTI AND COMPANY COUNSEL'S OPINION)
(See tab 5 for executed document.)
44
EXHIBIT "E"
(BSTI'S AND COMPANY'S BOARD RESOLUTIONS)
(See tabs 6 and 7 for executed documents.)
45
EXHIBIT "F"
(VOTING PROXIES)
(See tab 8 for executed documents.)
