Exhibit 1
BIOKEYS PHARMACEUTICALS, INC.
SERIES C CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
This SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this
"AGREEMENT") is dated as of the 27th day of September, 2002 by and among Biokeys
Pharmaceuticals, Inc., a Delaware corporation (the "COMPANY"), and each of the
individuals and entities listed on Exhibit A attached to this Agreement (each, a
"PURCHASER," and together, the "PURCHASERS").
WHEREAS, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to purchase from the Company, up to an aggregate of
100,000 authorized but unissued shares of the Company's Series C Convertible
Preferred Stock, $0.01 par value per share ("SERIES C SHARES"), convertible into
the Company's Common Stock, $0.001 par value per share ("COMMON STOCK"), for a
per share purchase price of $10.00, for a maximum aggregate purchase price of
$1,000,000.00, on the terms and subject to the conditions set forth in this
Agreement.
WHEREAS, in September 2001 and October 2001, the Company issued
promissory notes to certain individuals and entities (the "BRIDGE INVESTORS"),
including some of the Purchasers, in the aggregate principal amount of
$450,000.00 (the "BRIDGE NOTES") and issued warrants to purchase shares of
Common Stock to each of the Bridge Investors (the "BRIDGE WARRANTS").
WHEREAS, at the Closing, as such term is herein defined, certain of the
Bridge Investors will convert a portion of the Bridge Notes into Series C
Shares.
WHEREAS, at the Closing, each holder of a Bridge Warrant will be
entitled to a reduction of the exercise price to purchase Common Stock pursuant
to such warrants to fifty cents ($0.50) per share in exchange for waiving such
holder's right to repayment of principal, with respect to the sale and issuance
of the Series C Shares, pursuant to the terms of the Bridge Note held by such
holder.
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have the
following respective meanings:
"AFFILIATE" means, with respect to any person or entity, any person or
entity that, directly or indirectly, through one or more intermediaries,
controls,
is controlled by, or is under common control with, such person or entity.
"CLOSING" shall mean the Initial Closing and any Subsequent Closings.
"CLOSING DATE" means, with respect to each Closing, the date of such
Closing.
"CLOSING LOCATION" shall have the meaning set forth in Section 2.3.
"COMPANY LICENSED INTELLECTUAL PROPERTY" means all (i) licenses of
Intellectual Property to the Company or the Subsidiary by any third party, and
(ii) licenses of Intellectual Property by the Company or the Subsidiary to any
third party.
"COMPANY OWNED INTELLECTUAL PROPERTY" means all Intellectual Property
owned by the Company or the Subsidiary.
"SUBSIDIARY" shall have the meaning set forth in Section 3.2.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and all of the rules and regulations promulgated thereunder.
"FDA" means the United States Food and Drug Administration, or any
successor entity.
"GOVERNMENTAL AUTHORITY" means any: (a) nation, state, commonwealth,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local municipal, foreign or other government; or (c)
governmental or quasi-governmental authority of any nature.
"INITIAL CLOSING" shall have the meaning set forth in Section 2.3.
"INTELLECTUAL PROPERTY" means intellectual property or proprietary
rights of any description including (i) rights in any patent, patent application
(including any provisionals, continuations, divisions, continuations-in-part,
extensions, renewals, reissues, revivals and reexaminations, any national phase
PCT applications, any PCT international applications, and all foreign
counterparts), copyright, industrial design, URL, domain name, trademark,
service ▇▇▇▇, logo, trade dress or trade name, (ii) related registrations and
applications for registration, (iii) trade secrets, moral rights or publicity
rights, (iv) inventions, discoveries, or improvements, modification, know-how,
technique, methodology, writing, work of authorship, design or data, whether or
not patented, patentable, copyrightable or reduced to practice, including any
inventions, discoveries, improvements, modification, know-how, technique,
methodology, writing, work of authorship, design or data embodied or disclosed
in any: (1) computer source codes (human readable format) and object codes
2
(machine readable format); (2) specifications; (3) manufacturing, assembly,
test, installation, service and inspection instructions and procedures; (4)
engineering, programming, service and maintenance notes and logs; (5) technical,
operating and service and maintenance manuals and data; (6) hardware reference
manuals; and (7) user documentation, help files or training materials, and (v)
good will related to any of the foregoing.
"MATERIAL ADVERSE EFFECT" shall mean, any event, circumstance, change
or effect that, when taken individually or together with all other adverse
events, circumstances, changes or effects, is or is reasonably likely to be
materially adverse to the business, results of operations, financial condition
or prospects of the Company and the Subsidiary.
"PERSON" (whether such term is capitalized or not) means an individual,
corporation, partnership, limited liability company, joint venture, syndicate,
person (including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act), trust, association or entity.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
all of the rules and regulations promulgated thereunder.
"SUBSEQUENT CLOSING" shall have the meaning set forth in Section 2.3.
2. PURCHASE AND SALE OF SHARES; CLOSINGS.
2.1 CERTIFICATE OF DESIGNATION. The Company shall adopt and file on or
before the Closing Date (defined below) the Certificate of Designation of Series
C Convertible Preferred Stock in substantially the form attached hereto as
Exhibit B (the "SERIES C CERTIFICATE OF DESIGNATION") with the Secretary of
State of the state of Delaware.
2.2 SALE AND ISSUANCE OF SERIES C CONVERTIBLE PREFERRED STOCK. Subject
to the terms and conditions of this Agreement, each Purchaser agrees to purchase
at the Closing, and the Company agrees to sell and issue to each Purchaser, the
number of Series C Shares specified opposite such Purchaser's name on Exhibit A
attached hereto at a purchase price of Ten Dollars ($10.00) per share. The
Company's agreement with each Purchaser is a separate agreement, and the sale of
the Series C Shares to each of the Purchasers is a separate sale.
2.3 CLOSING. The initial closing of the purchase and sale of the Series
C Shares shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, (the "CLOSING LOCATION") at 10:00
a.m., on September 27, 2002, or at such other time and place as the Company and
the Purchasers mutually agree upon, orally or in writing (which time and place
are
3
designated as the "INITIAL CLOSING"). Subject to the terms and conditions set
forth in this Agreement, the Company may issue and sell up to the balance of the
Series C Shares not sold at the initial Closing at any time, but in any event
not later than October 4, 2002, to such purchasers as shall be approved by the
Board of Directors (the "BOARD") of the Company (each a "SUBSEQUENT PURCHASER").
Any such issuance and sale shall be made upon the same terms and conditions as
those set forth herein, and each Subsequent Purchaser shall become a party to
this Agreement (and Exhibit A hereto shall be amended to include such Subsequent
Purchaser) and shall have the rights and obligations of a Purchaser hereunder.
Each and any subsequent closing of the sale and purchase of the Series C Shares
to a Subsequent Purchaser and shall be held at the Closing Location (such
closings are referred to as "SUBSEQUENT CLOSINGS," and each, with the Initial
Closing, a "CLOSING").
2.4 MAXIMUM PURCHASE. No Purchaser may, together with its affiliates,
purchase more than 10,000 Series C Shares pursuant to the terms of this
Agreement for consideration other than the conversion or cancellation of Bridge
Notes.
2.5 DELIVERY. Subject to the terms of this Agreement, at each Closing
the Company will deliver to each Purchaser (or, upon written request of such
Purchaser, to such Purchaser's custodian) a stock certificate representing the
number of Series C Shares to be purchased by such Purchaser at the Closing from
the Company, against payment of the purchase price therefor by check, wire
transfer (pursuant to the wire transfer instructions attached hereto as Exhibit
C), cancellation or conversion of indebtedness of the Company or by such other
form of payment as may be mutually agreed upon by the Company and that
Purchaser. In the event that payment by a Purchaser is made, in whole or in
part, by cancellation or conversion of indebtedness, then such Purchaser shall
surrender to the Company for cancellation at the Closing any evidence of such
indebtedness or shall execute an instrument of cancellation in form and
substance reasonably acceptable to the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser as follows as of the date hereof and
as of each Closing Date:
3.1 INCORPORATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware, is
qualified to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification, and has
all requisite corporate power and authority and all authorizations, licenses and
permits necessary to own its properties and to carry on its businesses as now
conducted, except where the failure to hold such authorizations, licenses and
permits would not have a Material Adverse Effect.
4
3.2 SUBSIDIARIES. The Company does not have any subsidiaries except for
its wholly-owned subsidiary Biokeys, Inc. (the "SUBSIDIARY"). The Subsidiary is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware and has all requisite corporate power and
authority and all authorizations, licenses and permits necessary to own its
properties and to carry on its businesses as now conducted, except where the
failure to hold such authorizations, licenses and permits or to be so qualified
would not have a Material Adverse Effect. The Subsidiary is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
its properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a Material Adverse Effect. Except
as set forth on Schedule 3.2 hereto, neither the Company nor the Subsidiary
owns, beneficially or otherwise, or holds the right to acquire any stock,
partnership interest or joint venture interest or other equity ownership
interest in any other Person. The Company owns all of the issued and outstanding
capital stock of the Subsidiary. The Company has made available to each
Purchaser complete and correct copies of the charter, by-laws, minute books and
other applicable organizational documents of the Company and the Subsidiary, in
each case with all amendments thereto.
3.3 CAPITALIZATION. The authorized capital stock of the Company is
50,000,000 shares of Common Stock, $0.001 per share par value, and 1,000,000
shares of Preferred Stock, $0.01 per share par value, of which 8,000 shares have
been designated Series A 8% Convertible Preferred Stock ("SERIES A STOCK"),
200,000 shares have been designated Series B Convertible Preferred Stock and
140,000 shares have been designated Series C Convertible Preferred Stock.
Immediately prior to the time of the Initial Closing, there were issued and
outstanding 15,574,965 shares of the Company's Common Stock, 3,337 shares of
Series A Stock, 200,000 shares of Series B Convertible Preferred Stock and no
shares of Series C Convertible Preferred Stock. In addition, the Company has
issued warrants to purchase an aggregate of 3,166,992 shares of Common Stock.
The Company has reserved for issuance 834,250 shares of Common Stock upon
conversion of the outstanding Series A 8% Convertible Preferred Stock, 200,000
shares of Common Stock upon conversion of the outstanding Series B Convertible
Preferred Stock and 3,166,992 shares of Common Stock upon exercise of
outstanding warrants to purchase Common Stock. All outstanding shares of the
capital stock of the Company have been duly authorized and are validly issued,
fully paid and nonassessable. Except as set forth on Schedule 3.3 hereto, as of
the date hereof, there are no existing options, warrants, calls, preemptive (or
similar) rights, subscriptions or other rights, agreements, arrangements or
commitments of any character obligating the Company to issue, transfer or sell,
or cause to be issued, transferred or sold, any shares of the capital stock of
the Company or other equity interests in the Company or any securities
convertible into or exchangeable for such shares of capital stock or other
equity interests, and there are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interests.
5
3.4 AUTHORIZATION.
(a) All corporate action on the part of the Company and its
officers, directors and stockholders necessary for the authorization, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein has been taken. When executed and delivered by
the Company and each of the other parties hereto, this Agreement shall
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as such
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. The Company has
full legal right, all requisite corporate power and all authority and approvals
required to execute and deliver this Agreement and to carry out and perform
fully the obligations of the Company hereunder. This Agreement has been duly
executed and delivered by the Company and, assuming due execution and delivery
hereof by the other parties hereto, this Agreement will be legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms.
(b) The execution and delivery by the Company of this Agreement,
the consummation of the transactions contemplated hereby, and the performance by
the Company of this Agreement in accordance with their respective terms and
conditions will not:
(i) violate the Company's Certificate of Incorporation,
including the Company's Certificate of Designations, Preferences, Rights and
Limitations of Series A 8% Convertible Preferred Stock, or Bylaws (or corporate
instruments);
(ii) require the Company to obtain any consents, approvals,
authorizations or actions of, or make any filings with or give any notices to,
any Governmental Authority or any other Person, except as set forth on Schedule
3.4(b) hereto (the "COMPANY CONSENTS AND NOTICES");
(iii) if the Company Consents and Notices are obtained or
made, violate, conflict with or result in the breach of any of the terms and
conditions of, otherwise cause the termination of or give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a default under, or accelerate any rights of any party to, any
material indenture, mortgage, lease, loan agreement or other material agreement
or instrument to which the Company is bound; or
(iv) if the Company Consents and Notices are obtained or made,
violate any laws or orders of any Governmental Authority applicable to the
Company.
6
3.5 VALID ISSUANCE OF THE SHARES. The Series C Shares to be purchased
by the Purchasers hereunder will, upon issuance pursuant to the terms hereof, be
duly authorized and validly issued, fully paid and nonassessable and not subject
to any liens, encumbrances, preemptive rights or any other similar contractual
rights of the stockholders of the Company or others, and will be issued in
compliance with applicable federal and state securities laws.
3.6 FINANCIAL STATEMENTS; SEC DOCUMENTS.
(a) The Company has made available to each Purchaser its audited
Statements of Income, Stockholders' Equity and Cash Flows for each of its three
most recently completed fiscal years ending prior to the date hereof, its
audited Consolidated Balance Sheet as of the end of each of its two most
recently completed fiscal years ending prior to the date hereof, its unaudited
Statements of Income, Stockholders' Equity and Cash Flows for the period
covering its two most recently completed fiscal quarters ending prior to the
date hereof, and its unaudited Balance Sheet as of its most recently completed
fiscal quarter ending prior to the date hereof (all such financial statements
are hereinafter referred to collectively as the "FINANCIAL STATEMENTS"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved,
and fairly present, in all material respects, the financial position of the
Company and the Subsidiary and the results of their operations as of the date
and for the periods indicated thereon, except that the unaudited financial
statements may not be in accordance with generally accepted accounting
principles because of the absence of footnotes normally contained therein and
are subject to normal year-end audit adjustments which, individually and in the
aggregate, will not be material.
(b) The Company has made available to each Purchaser a true and
complete copy of the Company's Annual Report on Form 10-KSB for its most
recently completed fiscal year ending prior to the date hereof (the "LATEST
10-KSB"), the Company's Quarterly Reports on Form 10-QSB for the two most
recently completed fiscal quarters ending prior to the date hereof (collectively
the "PRIOR TWO 10-QSBS"), and any amendments thereto, and any other statement,
report, registration statement (other than registration statements on Form S-8)
or definitive proxy statement filed by the Company with the SEC during the
period commencing as of the start of its most recently completed fiscal year and
ending on the date hereof. The Company will, promptly upon the filing thereof,
also make available to each Purchaser all statements, reports (including,
without limitation, Quarterly Reports on Form 10-QSB and Current Reports on Form
8-K), registration statements and definitive proxy statements filed by the
Company with the SEC during the period commencing on the date hereof and ending
on each Closing Date (all such materials required to be furnished to the
Purchasers pursuant to this sentence or pursuant to the next preceding sentence
of this Section 3.6 being called, collectively, the "SEC DOCUMENTS"). As of
their respective filing dates, the SEC
7
Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, as of their respective filing dates. Except as set forth on Schedule
3.6 hereto, the Company has, during the period that the Company has been subject
to the requirements of Section 12 or 15(d) of the Exchange Act, filed in a
timely manner all reports and other material required to be filed by it pursuant
to Sections 13, 14 or 15(d) of the Exchange Act. Except as set forth on Schedule
3.6 hereto, the Company has not filed any amendment to its Latest 10-KSB or
either of its Prior Two 10-QSBs. The Company has not filed any Current Reports
on Form 8-K with the SEC.
3.7 CONSENTS. All consents, approvals, orders and authorizations
required on the part of the Company and each Subsidiary in connection with the
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated herein have been obtained and will be effective as of
each Closing Date.
3.8 NO CONFLICT. The execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the organizational documents of the Company
or the Subsidiary or (ii) any agreement or instrument, permit, franchise,
license, judgment, order, statute, law, ordinance, rule or regulations,
applicable to the Company, the Subsidiary or their respective properties or
assets.
3.9 INSURANCE. All the insurable properties of the Company and of the
Subsidiary are insured for the benefit of the Company or the Subsidiary, as the
case may be, against all risks usually insured against by persons operating
similar properties in the locality where such properties are located under valid
and enforceable policies issued by insurance companies of recognized
responsibility in sufficient amounts.
3.10 OVER THE COUNTER BULLETIN BOARD. The Common Stock is currently
quoted and traded on the OTC Bulletin Board (the "OTCBB"), the Company has
maintained all requirements for the continued quotation of the Common Stock on
the OTCBB, and there are no proceedings to revoke or suspend such continued
quotation. The sale of the Series C Shares as contemplated hereby will not
result in a violation of any rules or regulations applicable to issuers that
quote shares of their capital stock on the OTCBB and will not require any
stockholder approval under any rules or regulations applicable to issuers that
quote shares of their capital stock on the OTCBB.
8
3.11 PRIVATE OFFERING. The offer, sale and issuance of the Series C
Shares will not be integrated with any other offer, sale or issuance of the
Company's securities. During the six months preceding the date of this
Agreement, neither the Company nor any person acting on its behalf has offered
or sold any Series C Shares by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act. Assuming
the accuracy of the Purchasers' representations in Section 4 hereof, the
offering and sale of the Series C Shares will satisfy the requirements of Rule
506 under the Securities Act.
3.12 ABSENCE OF LITIGATION. There is no action, suit or proceeding or,
to the Company's knowledge, any investigation, pending, or to the Company's
knowledge, threatened against the Company or the Subsidiary and in which an
unfavorable outcome, ruling or finding in any said matter, or for all matters
taken as a whole, might have a Material Adverse Effect. The foregoing includes,
without limitation, any such action, suit, proceeding or investigation that
questions this Agreement or the right of the Company to execute, deliver and
perform under the same.
3.13 TITLE TO PROPERTIES AND ASSETS, LIENS, ETC. The Company has good
and marketable title to its properties and assets, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance, or charge, other than (i) those resulting from taxes which have not
yet become delinquent, (ii) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or have a Material
Adverse Effect, and (iii) those that have otherwise arisen in the ordinary
course of business.
3.14 COMPLIANCE WITH LAWS. Each of the Company and the Subsidiary has
complied, and is in compliance with, all federal, state, county, local and
foreign laws, rules, regulations, ordinances, decrees and orders applicable to
the operation of its business or to the real property or personal property that
it owns or leases (including, without limitation, all such laws, rules,
ordinances, decrees and orders relating to antitrust, consumer protection,
currency exchange, environmental protection, equal opportunity, health,
occupational safety, pension, securities and trading-with-the-enemy matters),
the failure to comply with which would, individually or in the aggregate, have a
Material Adverse Effect. Neither the Company nor the Subsidiary has received any
notification of any asserted present or past unremedied failure by it to comply
with any of such laws, rules, regulations, ordinances, decrees or orders.
3.15 NO UNDISCLOSED LIABILITIES. Since June 30, 2002, neither the
Company nor the Subsidiary has incurred any liabilities or obligations, fixed or
contingent, matured or unmatured or otherwise, except for liabilities or
obligations that, individually or in the aggregate, do not or would not have a
Material Adverse Effect.
9
3.16 CHANGES. Except as set forth on Schedule 3.16 hereto, since the
end of the Company's last completed fiscal quarter, there has not been with
respect to the Company and the Subsidiary:
(a) Any change in the assets, liabilities, financial condition
or operations of the Company or the Subsidiary from that reflected in the
Financial Statements, other than changes in the ordinary course consistent with
past practices, none of which individually or in the aggregate constitutes a
Material Adverse Effect;
(b) Any resignation or termination of any key officers or
employees of the Company or the Subsidiary; and to the knowledge of the Company,
there is no impending resignation or termination of employment of any such
officer or employee;
(c) Any material change, except in the ordinary course consistent
with past practices, in the contingent obligations of the Company or the
Subsidiary by way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, which constitutes a Material Adverse Effect;
(e) Any waiver by the Company or the Subsidiary of a right or of
a debt owed to it other than in the ordinary course consistent with past
practices;
(f) Any direct or indirect loans made by the Company or the
Subsidiary to any stockholder, employee, officer or director of the Company or
the Subsidiary, other than advances made in the ordinary course consistent with
past practices;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder other than in the
ordinary course consistent with past practices;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company or the Subsidiary;
(i) Any labor organization activity;
(j) Any indebtedness for borrowed money, obligation or liability
incurred, assumed or guaranteed by the Company or the Subsidiary, except those
for immaterial amounts and for current liabilities incurred in the ordinary
course consistent with past practices;
10
(k) Any sale, assignment, license or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets except in the
ordinary course consistent with past practices;
(l) Any change in any material agreement to which the Company or
the Subsidiary is a party or by which it is bound that constitutes or could with
the passage of time constitute a Material Adverse Effect; or
(m) Any other event or condition of any character that
constitutes a Material Adverse Effect with respect to the Company or the
Subsidiary.
3.17 LABOR MATTERS. The Company has no collective bargaining agreement
with any of its employees and, to the Company's knowledge, there is no labor
union organizing activity pending or threatened with respect to the Company or
the Subsidiary. There are no disputes pending or, to the knowledge of the
Company, threatened between the Company or the Subsidiary, on the one hand, and
any employees, on the other hand, other than employee grievances arising in the
ordinary course of business which would not, individually or in the aggregate,
have a Material Adverse Effect.
3.18 MATERIAL CONTRACTS. Except as set forth on Schedule 3.18 hereto,
the contracts listed as exhibits to the SEC Documents are all of the material
contracts (as defined in the Exchange Act) to which the Company is a party or by
which it or its assets may be bound. The Company is, and, to the best of the
Company's knowledge, all other parties to such material contracts are, in
compliance in all material respects with their obligations thereunder.
3.19 INTELLECTUAL PROPERTY.
(a) Schedule 3.19(a) hereto sets forth a complete and accurate
list of (i) all Intellectual Property owned, licensed or used by the Company or
the Subsidiary, all applications therefor, and all licenses, assignments and
other agreements relating thereto to which the Company is a party, and (ii) all
written agreements relating to technology, know-how and processes which the
Company or the Subsidiary has licensed or authorized for use by others.
(b) The operation of the business of each of the Company and the
Subsidiary as currently conducted or as currently contemplated by the Company or
the Subsidiary to be conducted does not interfere with, conflict with, infringe
upon, misappropriate or otherwise violate the Intellectual Property rights of
any third party, and no action or claim is pending or threatened alleging that
the operation of such business interferes with, conflicts with, infringes upon,
misappropriates or otherwise violates the Intellectual Property rights of any
third party and, to the knowledge of the Company, there is no basis therefor.
11
(c) The Company is the sole owner of the entire right, title and
interest in and to, or has a valid license or other legal right under, Company
Owned Intellectual Property and the Company Licensed Intellectual Property used
in or necessary to the operation of its business as presently conducted or as
currently contemplated by the Company to be conducted, subject to the terms of
the license agreements governing the Company Licensed Intellectual Property.
(d) Except as set forth on Schedule 3.19(d) hereto, there are no
outstanding options, licenses, or agreements of any kind relating to the
Company's Intellectual Property, nor is the Company or the Subsidiary bound by
or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other person or
entity.
(e) The Company has no present knowledge from which it could
reasonably conclude that the Company Owned Intellectual Property and any
Intellectual Property licensed to the Company under the Company Licensed
Intellectual Property, are invalid or unenforceable, and the same have not been
adjudged invalid or unenforceable in whole or in part. The Company Owned
Intellectual Property and the Company Licensed Intellectual Property constitute
all of the Intellectual Property necessary for the operation of the business of
the Company and the Subsidiary as currently conducted or as currently
contemplated by the Company to be conducted. The Company has complied with all
of its obligations of confidentiality in respect of the claimed trade secrets or
proprietary information of others and knows of no violation of such obligations
of confidentiality as are owed to it.
(f) No claims or actions have been asserted, are pending or, to
the Company's knowledge, threatened against the Company or the Subsidiary (i)
based upon or challenging or seeking to deny or restrict the ownership by or
license rights of the Company or the of the Subsidiary of any of the Company
Owned Intellectual Property or Company Licensed Intellectual Property, (ii)
alleging that any services provided by, processes used by, or products
manufactured or sold by the Company or the Subsidiary infringe or misappropriate
any Intellectual Property right of any third party, or (iii) alleging that the
Company Licensed Intellectual Property is being licensed or sublicensed in
conflict with the terms of any license or other agreement, and, to the knowledge
of the Company, there is no basis for such a claim.
(g) As of the date hereof, to the knowledge of the Company, no
person is engaging in any activity that infringes or misappropriates the Company
Owned Intellectual Property or Company Licensed Intellectual Property. Except as
set forth on Schedule 3.19(g) hereto, neither the Company nor the Subsidiary has
granted any license or other right to any third party with respect to the
Company Owned Intellectual Property or Company Licensed Intellectual Property.
The
12
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein by the Company will not breach, violate or
conflict with any instrument or agreement concerning the Company Owned
Intellectual Property, or cause the forfeiture or termination or give rise to a
right of forfeiture or termination of any of the Company Owned Intellectual
Property.
(h) The Company has made available to each Purchaser correct and
complete copies of all the licenses of the Company Licensed Intellectual
Property, except that such copies shall have redacted from them certain
confidential trace secret information, other than licenses of commercial
off-the-shelf computer software. With respect to each such license:
(i) such license is valid and binding and in full force and
effect and represents the entire agreement between the respective licensor and
licensee with respect to the subject matter of such license;
(ii) such license will not cease to be valid and binding and
in full force and effect on terms identical in all material respects to those
currently in effect as a result of the consummation of the transactions
contemplated by this Agreement, nor will the consummation of the transactions
contemplated hereby constitute a material breach or default under such license
or otherwise so as to give the licensor a right to terminate such license;
neither the Company nor the Subsidiary has (A)
received any notice of termination or cancellation under such
license, (B) received any notice of breach or default under
such license, which breach has not been cured, or (C) granted
to any other third party any rights, adverse or otherwise,
under such license that would constitute a material breach of
such license; and
neither the Company nor, to the knowledge of the
Company, any other party to such license (including the
Subsidiary) is in material breach or default thereof, and, to
the knowledge of the Company, no event has occurred that, with
notice or lapse of time, would constitute such a material
breach or default or permit termination, modification or
acceleration under such license.
Except as set forth on Schedule 3.19(h) hereto, the
Company is not aware that any of the respective employees,
officers, directors, agents or consultants of the Company or
the Subsidiary is (i) subject to confidentiality restrictions
in favor of any third person the breach of which could subject
the Company or the Subsidiary to any liability, or (ii)
obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to
any judgment, decree or order of any court or
13
administrative agency, that would interfere with their duties
to the Company or the Subsidiary, as applicable, or that would
conflict with the Company's or the Subsidiary's business as
presently proposed to be conducted. Each employee, officer and
consultant of the Company and the Subsidiary has executed a
proprietary information and inventions agreement in the form
of Exhibit D attached hereto. No current or former employee,
officer or consultant of the Company or the Subsidiary has
excluded works or inventions made prior to his or her
employment or relationship with the Company or the Subsidiary
from his or her assignment of inventions pursuant to such
employee, officer or consultant's proprietary information and
inventions agreement.
(i) Each of the Company and the Subsidiary has taken reasonable
steps in accordance with normal industry practice to maintain the
confidentiality of its trade secrets and other confidential Intellectual
Property. To the knowledge of the Company, (i) there has been no
misappropriation of any material trade secrets or other material confidential
Company Owned Intellectual Property by any person; (ii) no employee, independent
contractor or agent of the Company or the Subsidiary has misappropriated any
trade secrets of any other person in the course of such performance as an
employee, independent contractor or agent; and (iii) no employee, independent
contractor or agent of the Company or the Subsidiary is in material default or
breach of any term of any employment agreement, non-disclosure agreement,
assignment of invention agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of Company
Owned Intellectual Property.
(j) Neither the execution nor delivery of this Agreement nor the
carrying on of the Company's or the Subsidiary's business by the employees and
consultants of the Company or the Subsidiary, as the case may be, nor the
conduct of the Company's or the Subsidiary's business as presently conducted or
as proposed to be conducted, will, to the knowledge of the Company, conflict
with or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, covenant or instrument under which any
of such employees is now obligated. Except to the extent already assigned to the
Company or the Subsidiary, neither the Company nor the Subsidiary believes that
it is or will be necessary to utilize any inventions or proprietary information
of any of its respective employees (or people it currently intends to hire) made
prior to their employment by the Company or the Subsidiary, as the case may be.
3.20 FDA MATTERS.
(a) Neither the Company nor the Subsidiary has sold any products
anywhere in the world prior to receiving any required or necessary approvals or
consents from any Governmental Authority, including but not limited to the FDA
14
under the Food, Drug & Cosmetics Act of 1976, as amended, and the regulations
promulgated thereunder, or any corollary entity in any other jurisdiction.
Except as set forth on Schedule 3.20(a) hereto, each of the Company and each
Subsidiary has obtained in the United States and in all countries where it is
currently marketing its products, all applicable licenses, registrations,
approvals, consents, clearances and authorizations required by local, state or
federal agencies in such countries regulating the safety, effectiveness and
market clearance of such products to sell, promote and market such products.
Neither the Company nor the Subsidiary has received any notice of, and the
Company is not aware of, any outstanding, pending or threatened actions,
citations, decisions, product recalls, medical device reports, information
requests, warning letters or Section 305 notices from the FDA or similar issues
or notifications from any corollary entity in any other jurisdiction.
(b) Except as set forth on Schedule 3.20(b) hereto, each of the
Company and each Subsidiary has (i) complied in all material respects with all
applicable laws, regulations and specifications with respect to the design,
manufacture, labeling, testing and inspection of all of its products and the
operation of manufacturing facilities promulgated by the FDA or any corollary
entity in any other jurisdiction, and (ii) conducted all of its clinical trials
with reasonable care and in accordance with all applicable laws in all material
respects and in accordance with the stated protocols for such clinical trials.
(c) All of the Company's submissions to the FDA and any corollary
entity in any other jurisdiction whether oral, written or electronically
delivered were true, accurate and complete in all material respects as of the
date made, and together with any amendments to such submissions or supplemental
information provided to the FDA or such other corollary entity, remain true,
accurate and complete in all material respects as of the date hereof, and do not
materially misstate any of the statements or information included therein, or
omit to state a material fact necessary to make the statements therein not
misleading.
3.21 TAX MATTERS. Except as set forth on Schedule 3.21 hereto, the
Company and each Subsidiary has filed all federal, state, local, foreign and
other tax returns which were required to be filed on or before the date hereof
and has paid all taxes which have become due and payable. All such reports and
returns (copies of which have been made available to the Purchasers) were
materially accurate and complete when filed and reflect all taxes required to be
paid by the Company and the Subsidiary for the periods reported therein. No tax
returns or reports of the Company or the Subsidiary are or ever have been under
audit.
3.22 ENVIRONMENTAL COMPLIANCE. Neither the Company nor the Subsidiary
has generated, stored, treated, discharged or disposed of any hazardous
substances or hazardous waste in violation of any applicable law or regulation,
nor is the Company aware of any allegations that any such violations have
occurred. The Company is not aware of any claims, investigations, litigation or
administrative
15
proceedings, whether actual or threatened, against the Company or the Subsidiary
relating to any environmental contamination of any property owned, used or
leased by any of them or arising out of any alleged violation of any
environmental law or regulation.
3.23 FULL DISCLOSURE. The representations and warranties of the Company
set forth in this Agreement do not contain any untrue statement of a material
fact or omit any material fact necessary to make the statements contained
herein, in the light of the circumstances under which they were made, not
misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser represents
and warrants to the Company as follows as of the date hereof and as of the
Closing Date:
4.1 AUTHORITY. The Purchaser has the full right, power, authority and
capacity to enter into and perform this Agreement, and this Agreement
constitutes valid and binding obligations of the Purchaser enforceable in
accordance with its terms, except as the same may be limited by equitable
principles and by bankruptcy, insolvency, moratorium, and other laws of general
application affecting the enforcement of creditors' rights, and except to the
extent limited by applicable federal or state securities laws.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Purchaser is acquiring the
Series C Shares being purchased by the Purchaser hereunder for the Purchaser's
own account for investment and not for resale or with a view to distribution
thereof in violation of the Securities Act.
4.3 INVESTOR STATUS. The Purchaser certifies and represents to the
Company that it is an "Accredited Investor" as defined in Rule 501 of Regulation
D promulgated under the Securities Act, experienced and knowledgeable in
financial and business matters and capable of evaluating the merits and risks of
Purchaser's purchase of Series C Shares.
4.4 SHARES NOT REGISTERED. The Purchaser understands that the Series C
Shares have not been registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that the Series C Shares must continue
to be held by the Purchaser unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration.
4.5 NO CONFLICT. The execution and delivery of this Agreement by the
Purchaser and the consummation of the transactions contemplated hereby will not
conflict with or result in any violation of or default by the Purchaser (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under any agreement or instrument, permit, franchise, license,
judgment, order, statute,
16
law, ordinance, rule or regulations, applicable to the Purchaser or its
respective properties or assets.
4.6 CONSENTS. All consents, approvals, orders and authorizations
required on the part of the Purchaser in connection with the execution, delivery
or performance of this Agreement and the consummation of the transactions
contemplated herein have been obtained and will be effective as of the Closing
Date.
5. CONDITIONS PRECEDENT.
5.1 CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CONSUMMATE THE
CLOSINGS. The obligation of the Purchasers to consummate a Closing and to
purchase and pay for those Series C Shares being purchased by it pursuant to
such Closing is subject to the satisfaction of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein of the Company shall be true and correct in all
material respects on and as of such Closing Date with the same force and effect
as though made on and as of such Closing Date.
(b) PERFORMANCE. The Company shall have performed all obligations
and conditions herein required to be performed or observed by it on or prior to
such Closing Date.
(c) NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change (actual or threatened) in the assets, liabilities (contingent or
other), affairs, operations, prospects or condition (financial or other) of the
Company and the Subsidiary, taken as a whole, prior to such Closing Date; and
the Company shall have performed all obligations and conditions herein required
to be performed or observed by the Company on or prior to such Closing Date.
(d) COMPLIANCE CERTIFICATE. The Chief Executive Officer and Chief
Financial Officer of the Company shall deliver to the Purchasers at the Initial
Closing a certificate certifying that the conditions specified in Sections
5.1(a) to (c) have been fulfilled.
(e) PROCEEDINGS AND DOCUMENTS. All instruments and corporate
proceedings in connection with the transactions contemplated by this Agreement
to be consummated at the Closing shall be satisfactory in form and substance to
the Purchasers, and each Purchaser shall have received copies (executed or
certified, as may be appropriate) of all documents which the Purchaser may have
reasonably requested in connection with such transactions.
(f) OTCBB LISTING. The Common Stock shall be listed and eligible
for trading on the OTCBB, the Company shall have maintained all
17
requirements for such continued listing on the OTCBB, and there shall be no
proceedings to revoke or suspend such eligibility.
(g) EXCHANGE ACT COMPLIANCE. The Common Stock shall be registered
under Section 12 of the Exchange Act and the Company shall be in full compliance
with all reporting requirements of the Exchange Act.
(h) OPINION OF COUNSEL. Each Purchaser shall have received from
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Lever & ▇▇▇▇▇▇▇, LLP, counsel to the Company, an
opinion addressed to the Purchasers, dated as of such Closing Date and in the
form of Exhibit E hereto.
(i) CERTIFICATE OF DESIGNATION. The Company shall have filed the
Series C Certificate of Designation with the Secretary of State of the state of
Delaware on or prior to the Initial Closing, which shall continue to be in full
force and effect as of the Closing.
(j) SECRETARY'S CERTIFICATE. The Secretary of the Company shall
deliver to the Purchasers at the Initial Closing a certificate certifying (i)
the Company's Certificate of Incorporation, (ii) the Bylaws, and (iii)
resolutions of the Board approving this Agreement and the transactions
contemplated hereby.
(k) GOOD STANDING CERTIFICATES. The Company shall have delivered
to the Purchasers a certificate dated as of a recent date issued by the
Secretary of State of the state of Delaware to the effect that the Company is
legally existing and in good standing in such state. The Company shall have
delivered to the Purchasers a certificate dated as of a recent date issued by
the Secretary of State of the states of California and Texas to the effect that
the Company is legally qualified as a foreign corporation and in good standing
in such states.
(l) BOARD COMPOSITION. Prior to the Initial Closing, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇ shall resolve, that effective immediately after
the Initial Closing the size of the Board shall be fixed at six, and the Board
shall consist of ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ and that ▇▇▇▇ ▇▇▇▇▇▇▇ is appointed Chairman of the Board.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have resigned from the Board effective October 5, 2002
(the "RESIGNATION") and the Board shall have accepted such Resignation.
(m) RESTRUCTURING OF INDEBTEDNESS AND WAIVER. The Company and
each Bridge Investor that is not canceling its Bridge Note in consideration of
the purchase of Series C Shares hereby shall have executed and delivered an
Amendment to Promissory Note and Waiver substantially in the form attached
hereto as Exhibit F.
18
(n) AMENDMENT OF BRIDGE WARRANTS. The Company and each Bridge
Investor that is a Purchaser shall have executed and delivered an Amendment to
Warrant substantially in the form attached hereto as Exhibit G.
(o) DIRECTORS AND OFFICERS INSURANCE. The Company shall have
obtained directors and officers liability insurance in the amount of $1,000,000
or shall deliver to the Purchasers reasonable evidence of its best efforts to
obtain such insurance.
5.2 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CONSUMMATE THE
CLOSING. The obligation of the Company to consummate each Closing and to issue
and sell the Series C Shares to the Purchasers to be purchased by it at such
Closing is subject to the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein of the Purchasers shall be true and correct in all
material respects on and as of such Closing Date with the same force and effect
as though made on and as of such Closing Date.
(b) PERFORMANCE. The Purchasers shall have performed all
obligations and conditions herein required to be performed or observed by it on
or prior to such Closing Date.
(c) CERTIFICATE OF DESIGNATION. The Company shall have filed the
Series C Certificate of Designation with the Secretary of State of the state of
Delaware on or prior to the Initial Closing, which shall continue to be in full
force and effect as of the Closing.
6. TRANSFER, LEGENDS.
6.1 TRANSFER OF SECURITIES. Each of the Purchasers shall not sell,
assign, pledge, transfer or otherwise dispose or encumber any of those Series C
Shares being purchased by it hereunder, except (i) pursuant to an effective
registration statement under the Securities Act or (ii) pursuant to an available
exemption from registration under the Securities Act and applicable state
securities laws and, if requested by the Company, upon delivery by the Purchaser
of either an opinion of counsel of the Purchaser reasonably satisfactory to the
Company to the effect that the proposed transfer is exempt from registration
under the Securities Act and applicable state securities laws or a
representation letter of the Purchaser reasonably satisfactory to the Company
setting forth a factual basis for concluding that such proposed transfer is
exempt from registration under the Securities Act and applicable state
securities laws. Any transfer or purported transfer of the Series C Shares in
violation of this Section 6.1 shall be void. The Company shall not register any
transfer of the Series C Shares in violation of this Section 6.1. The Company
may, and may instruct any transfer agent for the Company, to place such
19
stop transfer orders as may be required on the transfer books of the Company in
order to ensure compliance with the provisions of this Section 6.1.
6.2 LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the Series C Shares shall be endorsed with the legend
set forth below, and each of the Purchasers covenants that, except to the extent
such restrictions are waived by the Company, the Purchaser shall not transfer
the shares represented by any such certificate without complying with the
restrictions on transfer described in this Agreement and the legends endorsed on
such certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT
AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF EITHER AN OPINION OF
COUNSEL REASONABLE SATISFACTORY TO THE COMPANY THAT THE PROPOSED
TRANSFER IS EXEMPT FROM SAID ACT OR OF A REPRESENTATION LETTER SETTING
FORTH A FACTUAL BASIS FOR CONCLUDING THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT."
7. MISCELLANEOUS PROVISIONS.
7.1 RIGHTS CUMULATIVE. Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
7.2 NOTICES.
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "CORRESPONDENCE") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, courier or telecopy
or delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder. The date of giving any notice shall be the date
of its actual receipt.
(b) All correspondence to the Company shall be addressed as
follows:
20
Biokeys Pharmaceuticals, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ______________________
Fax:___________________________
(c) All correspondence to the Purchasers shall be sent to
their respective addresses as set forth on the Purchaser Signature Pages
attached to this Agreement.
7.3 CAPTIONS. The captions and paragraph headings of this Agreement are
solely for the convenience of reference and shall not affect its interpretation.
7.4 SEVERABILITY. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
7.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the state of California and
without regard to any conflicts of laws concepts that would apply the
substantive law of some other jurisdiction.
7.6 WAIVERS AND AMENDMENTS. This Agreement or any provision hereof may
be amended, waived, discharged or terminated only by a statement in writing
signed by the party against which enforcement of the amendment, waiver,
discharge or termination is sought; provided, however, that Purchasers holding
not less than 50 percent of the Series C Shares sold under this Agreement may
waive or amend any provision of this Agreement on behalf of all Purchasers and
all Purchasers will be bound thereby.
7.7 ASSIGNMENT. The rights and obligations of any party hereto shall
inure to the benefit of and shall be binding upon the authorized successors and
permitted assigns of such party whether so expressed or not.
7.8 EXPENSES. The Company and the Purchasers shall each bear their own
expenses and legal fees in connection with the consummation of this transaction,
provided, however, that the Company will pay the reasonable legal fees and
expenses of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel to the Purchasers, upon receipt of a
reasonably detailed invoice therefor.
7.9 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Purchasers contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the
21
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Purchasers or the Company. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
7.10 COUNTERPARTS AND FACSIMILE DELIVERY. This Agreement may be
executed in counterparts. Any signature page delivered by electronic facsimile
shall be binding to the same extent as an original signature page, with regard
to any agreement subject to the terms hereof or any amendment thereto. Any party
who delivers such a signature page agrees to later deliver an original
counterpart to any party who requests it.
7.11 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to the Company or to any holder of any securities
issued or to be issued hereunder shall impair any such right, power or remedy of
the Company or such holder, nor shall it be construed to be a waiver of any
breach or default under this Agreement, or an acquiescence therein, or any
similar breach or default thereafter occurring; nor shall any delay or omission
to exercise any right, power or remedy or any waiver of any single breach or
default be deemed a waiver of any other right, power or remedy or breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement or by law otherwise afforded to the Company or any holder, shall be
cumulative and not alternative.
7.12 FINDER'S FEES AND OTHER FEES.
(a) The Company (i) represents and warrants that it has retained
no finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Purchasers
harmless from and against any liability for commission or compensation in the
nature of a finder's fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or asserted liability) for
which the Company, or any of its employees or representatives, is responsible.
(b) Each of the Purchasers (i) represents and warrants that it
has retained no finder or broker in connection with the transactions
contemplated by this Agreement and (ii) hereby agrees to indemnify and to hold
the Company harmless from and against any liability for any commission or
compensation in the nature of a finder's fee to any broker or other person or
firm (and the costs and expenses of defending against such liability or asserted
liability) for which such Purchaser is responsible.
7.13 ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall
22
be entitled to recover from the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect to this
Agreement, including, without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
7.14 SIZE OF THE BOARD. The Company covenants that promptly after
October 5, 2002 the Board will resolve to fix the size of the Board at five
members.
7.15 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto respecting the subject matter hereof and supersedes
all prior agreements, negotiations, understandings, representations and
statements respecting the subject matter hereof, whether written or oral. No
modification, alteration, waiver or change in any of the terms of this Agreement
shall be valid or binding upon the parties hereto unless made in writing and
duly executed by the parties hereto.
[signature page immediately follows]
23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
BIOKEYS PHARMACEUTICALS, INC.
By: ___________________________________
Name: ________________________________
Title: ________________________________
PURCHASER
Name: ________________________________
By: ___________________________________
Name: ________________________________
Title: _______________________________
24
EXHIBIT A
SCHEDULE OF PURCHASERS
NUMBER OF
NAME AND ADDRESS SERIES C SHARES TOTAL PURCHASE PRICE
---------------- --------------- --------------------
▇▇▇▇ Capital, LLC
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ Drive 20,000 $200,000(1)
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
c/o ▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc. 10,000 $100,000(2)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
BS Master Def Contti MIP Plan
c/o ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc. 2,000 $20,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ c/f ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ UGMA/NY
c/o ▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc. 1,300 $13,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ c/f ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ UGMA/NY
c/o ▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc. 1,300 $13,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Guarantee & Trust Co TTEE FBO ▇▇▇▇▇▇▇ ▇▇▇▇ GTC ▇▇▇ Rollover
c/o ▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc. 1,000 $10,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(1)The purchase price for ▇▇▇▇ Capital, LLC will be paid as follows: (i)
$100,000 by cash; and (ii) $100,000 by conversion of all of the outstanding
principal amount on the 12% Promissory Note issued by the Company to ▇▇▇▇
Capital, LLC, on November 1, 2001 into Series C Shares.
(2)The purchase price for ▇▇▇▇▇▇▇ ▇▇▇▇ will be paid as follows: (i) $50,000 by
cash; and (ii) $50,000 by conversion of all of the outstanding principal amount
on the 12% Promissory Note issued by the Company to ▇▇▇▇▇▇▇ ▇▇▇▇ on November 1,
2001 into Series C Shares.
25
NUMBER OF
NAME AND ADDRESS SERIES C SHARES TOTAL PURCHASE PRICE
---------------- --------------- --------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 6,000 $60,000(3)
▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
53524 ▇▇▇▇▇▇▇ 6,000 $60,000(4)
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 5,000 $50,000
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇ 3,000 $30,000(5)
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Cass ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, trustee
for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ UGMA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇ 1,000 $10,000
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇, trustees of the Ball Family
Trust under trust agreement dated October 23, 2001
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D. 2,000 $20,000
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(3)The purchase price for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., Inc. will be paid as
follows: (i) $30,000 by cash; and (ii) $30,000 by conversion of a portion of the
outstanding principal amount on the 12% Promissory Note issued by the Company to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., Inc. on November 1, 2001 into Series C Shares.
(4)The purchase price for ▇▇▇▇ ▇▇▇▇▇▇▇ will be paid as follows: (i) $30,000 by
cash; and (ii) $30,000 by conversion of all of the outstanding principal amount
on the 12% Promissory Note issued by the Company to ▇▇▇▇ ▇▇▇▇▇▇▇ on November 1,
2001 into Series C Shares.
(5)The purchase price for ▇▇▇▇▇ ▇▇▇▇▇▇▇ will be paid as follows: (i) $20,000 by
cash; and (ii) $10,000 by conversion of all of the outstanding principal amount
on the 12% Promissory Note issued by the Company to ▇▇▇▇▇ ▇▇▇▇▇▇▇ on November 1,
2001 into Series C Shares.
26
NUMBER OF
NAME AND ADDRESS SERIES C SHARES TOTAL PURCHASE PRICE
---------------- --------------- --------------------
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,000 $10,000
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Emisphere Technologies, Inc.
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ 1,000 $10,000
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Auf der Haltan 18 600 $6,000
CH -- 8706 Meilen
Switzerland
Bank ▇▇▇. ▇▇▇▇▇▇▇▇▇ jr. & Cie. (Schweiz)
AG, Zurich
c/o Swiss American Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 100 $1,000
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTALS: 61,300 $613,000
27
EXHIBIT B
CERTIFICATE OF DESIGNATION OF SERIES C CONVERTIBLE PREFERRED STOCK
EXHIBIT C
SILICON VALLEY BANK
WIRE TRANSFER INSTRUCTIONS
The following information is provided to assist clients in routing wire
transfers TO Silicon Valley Bank in the most expeditious manner.
For all incoming FOREIGN CURRENCY wires, please contact our INTERNATIONAL
DEPARTMENT AT (▇▇▇)▇▇▇-▇▇▇▇ for settlement instructions.
DOMESTIC WIRE TRANSFER:
Instruct the paying financial institution or the payor to route all domestic
wire transfers via FEDWIRE to the following ABA number:
TO: SIL VLY BK SJ
ROUTING & TRANSIT #: ▇▇▇▇▇▇▇▇▇
FOR CREDIT OF: Biokeys, Inc.
CREDIT ACCOUNT #: 3300340922
BY ORDER OF: [NAME OF SENDER]
INTERNATIONAL WIRE TRANSFER:
Instruct the paying financial institution to advise their U.S. correspondent to
pay as follows:
PAY TO: FC - SILICON VALLEY BANK
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇
ROUTING & TRANSIT #: \\FW▇▇▇▇▇▇▇▇▇
SWIFT CODE: ▇▇▇▇▇▇▇▇
FOR CREDIT OF: Biokeys, Inc.
FINAL CREDIT ACCOUNT #: FNC - 3300340922
BY ORDER OF: [NAME OF SENDER]
IMPORTANT!!!!
Wire instructions MUST designate your FULL TEN DIGIT ACCOUNT NUMBER. Wires
received by Silicon Valley Bank with INCOMPLETE or INVALID ACCOUNT NUMBERS may
be delayed and could possibly require return to the sending bank due to new
regulations.
EXHIBIT D
FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
Not applicable.
EXHIBIT E
FORM OF OPINION OF COUNSEL TO THE COMPANY
EXHIBIT F
AMENDMENT TO PROMISSORY NOTE AND WAIVER
EXHIBIT G
AMENDMENT TO WARRANT