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Exhibit 10.94
PRIVATE EQUITY CREDIT AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇ LLC
AND
BIOSHIELD TECHNOLOGIES, INC.
Dated as of June 14, 2000
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ARTICLE I CERTAIN DEFINITIONS....................................................................... 1
Section 1.1 Defined Terms.............................................................. 1
ARTICLE II PURCHASE AND SALE OF COMMON STOCK......................................................... 8
Section 2.1 Investments................................................................ 8
Section 2.2 Mechanics.................................................................. 8
Section 2.3 Closings................................................................... 9
Section 2.4 Special Circumstances; Adjustment Period................................... 9
Section 2.5 Termination of Investment Obligation............................. 10
Section 2.6 Blackout Shares............................................................ 10
Section 2.7 Liquidated Damages......................................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR................................................ 11
Section 3.1 Intent..................................................................... 11
Section 3.2 Sophisticated Investor..................................................... 11
Section 3.3 Authority........................................................ 11
Section 3.4 Not an Affiliate........................................................... 11
Section 3.5 Organization and Standing.......................................... 12
Section 3.6 Absence of Conflicts............................................... 12
Section 3.7 Disclosure; Access to Information.................................. 12
Section 3.8 Manner of Sale..................................................... 12
Section 3.9 Financial Capacity................................................. 12
Section 3.10 No SEC or NASD Proceedings................................................. 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................. 13
Section 4.1 Organization of the Company........................................ 13
Section 4.2 Authority.......................................................... 13
Section 4.3 Capitalization..................................................... 13
Section 4.4 Common Stock....................................................... 14
Section 4.5 SEC Documents...................................................... 14
Section 4.6 Exemption from Registration; Valid Issuances....................... 14
Section 4.7 No General Solicitation or Advertising in Regard to this
Transaction........................................................ 15
Section 4.8 Corporate Documents................................................ 15
Section 4.9 No Conflicts....................................................... 15
Section 4.10 No Material Adverse Change................................................. 16
Section 4.11 No Undisclosed Liabilities................................................. 16
Section 4.12 No Undisclosed Events or Circumstances..................................... 16
Section 4.13 No Integrated Offering..................................................... 16
Section 4.14 Litigation and Other Proceedings........................................... 16
Section 4.15 No Misleading or Untrue Communication...................................... 17
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Section 4.16 Material Non-Public Information............................................ 17
ARTICLE V COVENANTS OF INVESTOR..................................................................... 17
Section 5.1 Compliance with Law................................................ 17
Section 5.2 Limitation on Short Sales.......................................... 17
ARTICLE VI COVENANTS OF THE COMPANY.................................................................. 17
Section 6.1 Registration Rights................................................ 17
Section 6.2 Reservation of Common Stock........................................ 17
Section 6.3 Listing of Common Stock............................................ 18
Section 6.4 Exchange Act Registration.......................................... 18
Section 6.5 Legends............................................................ 18
Section 6.6 Corporate Existence................................................ 18
Section 6.7 Additional SEC Documents........................................... 18
Section 6.8 Notice of Certain Events Affecting Registration; Suspension of
Right to Make a Put................................................ 18
Section 6.9 Expectations Regarding Put Notices................................. 19
Section 6.10 Consolidation; Merger...................................................... 19
Section 6.11 Issuance of Put Shares..................................................... 19
Section 6.12 Legal Opinion on Subscription Date......................................... 20
Section 6.13 Limitations on Other Offerings by the Company.............................. 20
ARTICLE VII CONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO CLOSING........................... 20
Section 7.1 Conditions Precedent to the Obligation of the Company to Issue
and Sell Common Stock.............................................. 20
Section 7.2 Conditions Precedent to the Right of the Company to Deliver a Put
Notice and the Obligation of Investor to Purchase Put Shares....... 20
Section 7.3 Due Diligence Review; Non-Disclosure of Non-Public Information..... 23
ARTICLE VIII LEGENDS................................................................................... 24
Section 8.1 Legends............................................................ 24
Section 8.2 No Other Legend or Stock Transfer Restrictions..................... 25
Section 8.3 Investor's Compliance.............................................. 25
ARTICLE IX NOTICES; INDEMNIFICATION.................................................................. 25
Section 9.1 Notices............................................................ 25
Section 9.2 Indemnification.................................................... 27
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Section 9.3 Method of Asserting Indemnification Claims......................... 27
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ARTICLE X MISCELLANEOUS............................................................................. 30
Section 10.1 Governing Law; Jurisdiction................................................ 30
Section 10.2 Assignment................................................................. 30
Section 10.3 Third Party Beneficiaries.................................................. 31
Section 10.4 Termination................................................................ 31
Section 10.5 Entire Agreement, Amendment; No Waiver..................................... 31
Section 10.6 Fees and Expenses.......................................................... 31
Section 10.7 No Brokers................................................................. 31
Section 10.8 Counterparts............................................................... 31
Section 10.9 Survival; Severability..................................................... 31
Section 10.10 Further Assurances......................................................... 32
Section 10.11 No Strict Construction..................................................... 32
Section 10.12 Equitable Relief........................................................... 32
Section 10.13 Title and Subtitles........................................................ 32
Section 10.14 Reporting Entity for the Common Stock...................................... 32
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PRIVATE EQUITY CREDIT AGREEMENT is entered into as of the 14th day of
June, 2000 (this "Agreement"), by and between ▇▇▇▇▇▇▇, LLC, an entity organized
and existing under the laws of the Cayman Islands ("Investor"), and BioShield
Technologies, Inc., a corporation organized and existing under the laws of the
State of Georgia (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to Investor, from
time to time as provided herein, and Investor shall purchase, up to fifty
million dollars ($50,000,000) of the Common Stock (as defined below); and
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") of the Securities Act of 1933 and the rules and
regulations promulgated thereunder (the "Securities Act"), and/or upon such
other exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments in Common Stock to be
made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings specified or indicated (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined)
"Adjustment Period" shall have the meaning specified in
Section 2.4(b).
"Adjustment Period Notice" shall have the meaning specified
in Section 2.4(a).
"Agreement" shall have the meaning specified in the
preamble hereof.
"Ask Price" shall mean the closing ask price of the Common
Stock on the Principal Market.
"Average Daily Price" for any date shall mean the average
of the Bid Price and the Ask Price for that date.
"Average Daily Trading Volume" for any date shall mean the
daily trading volume for the Common Stock on the Principal Market multiplied by
the Bid Price.
"Bid Price" shall mean the closing bid price of the Common
Stock on the Principal Market.
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"By-Laws" shall have the meaning specified in Section 4.8.
"Certificate" shall have the meaning specified in Section
4.8.
"Claim Notice" shall have the meaning specified in Section
9.3(a).
"Closing" shall mean one of the closings of a purchase and
sale of shares of Common Stock pursuant to Section 2.1.
"Closing Date" shall mean, with respect to a Closing, the
eleventh (11th) Trading Day following the Put Date related to such Closing.
"Commitment Period" shall mean the period commencing on the
earlier to occur of (a) the Effective Date or (b) such earlier date as the
Company and Investor shall agree, and expiring on the earlier to occur of (i)
the date on which Investor shall have purchased Put Shares pursuant to this
Agreement for an aggregate Purchase Price of the Maximum Commitment Amount, (ii)
the date this Agreement is terminated pursuant to Section 2.5, or (iii) the date
occurring twenty-four (24) months from the date of commencement of the
Commitment Period.
"Common Stock" shall mean the Company's common stock, no
par value, and any shares of any other class of common stock whether now or
hereafter authorized, having the right to participate in the distribution of
dividends (as and when declared) and assets (upon liquidation of the Company).
"Common Stock Equivalents" shall mean any securities that
are convertible into or exchangeable for Common Stock or any warrants, options
or other rights to subscribe for or purchase Common Stock or any such
convertible or exchangeable securities.
"Company" shall have the meaning specified in the preamble
to this Agreement.
"Condition Satisfaction Date" shall have the meaning
specified in Section 7.2.
"Damages" shall mean any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements and costs and expenses of expert witnesses and investigation).
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"Discount" shall mean ten percent (10%).
"Dispute Period" shall have the meaning specified in
Section 9.3(a).
"DTC" shall the meaning specified in Section 2.3.
"DWAC" shall the meaning specified in Section 2.3.
"Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement registering resale of the
Registrable Securities as set forth in Section 7.2(a).
"Exchange Act" shall mean the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder.
"FAST" shall the meaning specified in Section 2.3.
"Indemnified Party" shall have the meaning specified in
Section 9.3(a).
"Indemnifying Party" shall have the meaning specified in
Section 9.3(a).
"Indemnity Notice" shall have the meaning specified in
Section 9.3(b).
"Initial Registrable Securities" shall have the meaning
specified in the Registration Rights Agreement.
"Initial Registration Statement" shall have the meaning
specified in the Registration Rights Agreement.
"Investment Amount" shall mean the dollar amount (within
the range specified in Section 2.2) to be invested by Investor to purchase Put
Shares with respect to any Put Date as notified by the Company to Investor in
accordance with Section 2.2.
"Investor" shall have the meaning specified in the preamble
to this Agreement.
"Legend" shall have the meaning specified in Section 8.1.
"Market Price" as applicable to any Closing shall mean the
average of the three lowest Average Daily Prices for each of the ten (10)
Trading Days immediately preceding the date of such Closing.
"Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects or financial condition of the
Company that is material and
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adverse to the Company or to the Company and such other entities controlling or
controlled by the Company, taken as a whole, and/or any condition, circumstance,
or situation that would prohibit or otherwise materially interfere with the
ability of the Company to enter into and perform its obligations under any of
(a) this Agreement and (b) the Registration Rights Agreement.
"Maximum Commitment Amount" shall mean fifty million
dollars ($50,000,000), subject to increase as agreed to by the Company and
Investor.
"Maximum Put Amount" shall mean, with respect to any Put,
the lessor of five million dollars ($5,000,000) or 150% of the Average Daily
Trading Volume for the twenty (20) Trading Days immediately preceding the Put
Date, subject to increase as agreed to by the Company and Investor.
"Minimum Put Amount" shall mean, with respect to any Put,
two hundred fifty thousand dollars ($250,000), subject to decrease as agreed to
by the Company and Investor.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"New Bid Price" shall have the meaning specified in Section
2.6.
"Old Bid Price" shall have the meaning specified in Section
2.6.
"Outstanding" shall mean, with respect to the Common Stock,
at any date as of which the number of shares of Common Stock is to be
determined, all issued and outstanding shares of Common Stock, including all
shares of Common Stock issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock;
provided, however, that Outstanding shall not include any shares of Common Stock
then directly or indirectly owned or held by or for the account of the Company.
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Preferred Stock" shall mean the Company's preferred stock,
no par value.
"Principal Market" shall mean the Nasdaq National Market,
the Nasdaq SmallCap Market, the American Stock Exchange or the New York Stock
Exchange, whichever is at the time the principal trading exchange or market for
the Common Stock.
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"Purchase Price" shall mean, with respect to a Put, the
Market Price on the applicable Closing Date (or such other date on which the
Purchase Price is calculated in accordance with the terms and conditions of this
Agreement) less the product of the Discount and the Market Price.
"Put" shall mean each occasion that the Company elects to
exercise its right to tender a Put Notice requiring Investor to purchase shares
of Common Stock, subject to the terms and conditions of this Agreement.
"Put Date" shall mean the Trading Day during the Commitment
Period that a Put Notice is deemed delivered pursuant to Section 2.2(b).
"Put Notice" shall mean a written notice to Investor
setting forth the Investment Amount with respect to which the Company intends to
require Investor to purchase shares of Common Stock pursuant to the terms of
this Agreement.
"Put Shares" shall mean all shares of Common Stock issued
or issuable pursuant to a Put that has been exercised or may be exercised in
accordance with the terms and conditions of this Agreement.
"Registrable Securities" shall mean the (a) Put Shares, and
(b) any securities issued or issuable with respect to any of the foregoing by
way of exchange, stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (i) a
Registration Statement has been declared effective by the SEC and such
Registrable Securities have been disposed of pursuant to a Registration
Statement, (ii) such Registrable Securities have been sold under circumstances
under which all of the applicable conditions of Rule 144 are met, (iii) such
time as such Registrable Securities have been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (iv) in the opinion of counsel to
the Company, which counsel shall be reasonably acceptable to Investor, such
Registrable Securities may be sold without registration under the Securities Act
or the need for an exemption from any such registration requirements and without
any time, volume or manner limitations pursuant to Rule 144(k) (or any similar
provision then in effect) under the Securities Act.
"Registration Rights Agreement" shall mean the registration
rights agreement in the form of Exhibit A hereto.
"Registration Statement" shall mean a registration
statement on Form SB-2 (if use of such form is then available to the Company
pursuant to the rules of the SEC and, if not, on such other form promulgated by
the SEC for which the Company then qualifies
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and which counsel for the Company shall deem appropriate and which form shall be
available for the resale of the Registrable Securities to be registered
thereunder in accordance with the provisions of this Agreement and the
Registration Rights Agreement and in accordance with the intended method of
distribution of such securities), for the registration of the resale by Investor
of the Registrable Securities under the Securities Act.
"Regulation D" shall have the meaning specified in the
recitals of this Agreement.
"Remaining Put Shares" shall have the meaning specified in
Section 2.6.
"Rule 144" shall mean Rule 144 under the Securities Act or
any similar provision then in force under the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
"Section 4(2)" shall have the meaning specified in the
recitals of this Agreement.
"Securities Act" shall have the meaning specified in the
recitals of this Agreement.
"SEC Documents" shall mean, as of a particular date, all
reports and other documents filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since the beginning of the Company's then most
recently completed fiscal year as of the time in question (provided that if the
date in question is within ninety days of the beginning of the Company's fiscal
year, the term shall include all documents filed since the beginning of the
second preceding fiscal year).
"Subscription Date" shall mean the date on which this
Agreement is executed and delivered by the Company and Investor.
"Third Party Claim" shall have the meaning specified in
Section 9.3(a).
"Trading Cushion" shall mean a minimum of fifteen (15)
Trading Days between Put Dates, unless a shorter period is agreed to by the
Company and Investor.
"Trading Day" shall mean any day during which the Principal
Market shall be open for business.
"Transfer Agent" shall mean the transfer agent for the
Common Stock (and to any substitute or replacement transfer agent for the Common
Stock upon the Company's appointment of any such substitute or replacement
transfer agent).
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"Underwriter" shall mean any underwriter participating in
any disposition of the Registrable Securities on behalf of Investor pursuant to
a Registration Statement.
"Valuation Event" shall mean an event in which the Company
at any time during a Valuation Period takes any of the following actions:
(a) subdivides or combines the Common Stock;
(b) pays a dividend in shares of Common Stock or makes any
other distribution of shares of Common Stock, except for dividends paid
with respect to the Preferred Stock;
(c) issues any warrants, options or other rights to
subscribe for or purchase shares of Common Stock and the price per
share for which shares of Common Stock may at any time thereafter be
issuable pursuant to such warrants, options or other rights shall be
less than the Bid Price in effect immediately prior to such issuance;
(d) issues any securities convertible into or exchangeable
for shares of Common Stock and the consideration per share for which
shares of Common Stock may at any time thereafter be issuable pursuant
to the terms of such convertible or exchangeable securities shall be
less than the Bid Price in effect immediately prior to such issuance;
(e) issues shares of Common Stock otherwise than as
provided in the foregoing subsections (a) through (d), at a price per
share less, or for other consideration lower, than the Bid Price in
effect immediately prior to such issuance, or without consideration;
(f) makes a distribution of its assets or evidences of
indebtedness to the holders of Common Stock as a dividend in
liquidation or by way of return of capital or other than as a dividend
payable out of earnings or surplus legally available for dividends
under applicable law or any distribution to such holders made in
respect of the sale of all or substantially all of the Company's assets
(other than under the circumstances provided for in the foregoing
subsections (a) through (e); or
(g) takes any action affecting the number of Outstanding
Common Stock, other than an action described in any of the foregoing
subsections (a) through (f) hereof, inclusive, which in the opinion of
the Company's Board of Directors, determined in good faith, would have
a materially adverse effect upon the rights of Investor at the time of
a Put.
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"Valuation Period" shall mean the period of ten (10)
Trading Days immediately preceding the date on which the applicable Closing is
held and during which the Purchase Price of the Common Stock is valued;
provided, however, that if a Valuation Event occurs during any Valuation Period,
a new Valuation Period shall begin on the Trading Day immediately after the
occurrence of such Valuation Event and end on the tenth Trading Day thereafter.
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ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.1 Investments.
(a) Puts. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII), on any Put Date
the Company may exercise a Put by the delivery of a Put Notice. The number of
Put Shares that Investor shall receive pursuant to such Put shall be determined
by dividing the Investment Amount specified in the Put Notice by the Purchase
Price with respect to such Put Date.
(b) Maximum Amount of Puts. Unless the Company obtains the
requisite approval of its shareholders in accordance with the corporate laws of
the State of Georgia and the applicable rules of the Principal Market, no more
than 19.99% of the Outstanding Common Stock on the date hereof) may be issued
and sold to Investor pursuant to this Agreement.
Section 2.2 Mechanics.
(a) Put Notice. At any time during the Commitment Period,
the Company may deliver a Put Notice to Investor, subject to the conditions set
forth in Section 7.2; provided, however, the Investment Amount for each Put as
designated by the Company in the applicable Put Notice shall be neither less
than the Minimum Put Amount nor more than the Maximum Put Amount.
(b) Date of Delivery of Put Notice. A Put Notice shall be
deemed delivered on (i) the Trading Day it is received by facsimile or otherwise
by Investor if such notice is received on or prior to 12:00 noon New York time,
or (ii) the immediately succeeding Trading Day if it is received by facsimile or
otherwise after 12:00 noon New York time on a Trading Day or at any time on a
day which is not a Trading Day.
Section 2.3 Closings. On each Closing Date for a Put, (a) the Company
shall deliver to Investor one or more certificates, at Investor's option,
representing the Put Shares to be purchased by Investor pursuant to Section 2.1
herein, registered in the name of Investor and (b) Investor shall deliver to the
Company the Investment Amount specified in the Put Notice by wire transfer of
immediately available funds to an account designated by the Company on or before
the Closing Date. In lieu of delivering physical certificates representing the
Common Stock issuable in accordance with clause (a) of this Section 2.3, and
provided that the Transfer Agent then is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon
request of Investor, the Company shall use its commercially reasonable efforts
to cause the Transfer Agent to electronically transmit the Put Shares by
crediting the account of the holder's prime broker with DTC through its Deposit
Withdrawal Agent Commission ("DWAC") system. In
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addition, on or prior to such Closing Date, each of the Company and Investor
shall deliver to the other all documents, instruments and writings required to
be delivered or reasonably requested by either of them pursuant to this
Agreement in order to implement and effect the transactions contemplated herein.
Section 2.4 Termination of Investment Obligation. The obligation of
Investor to purchase shares of Common Stock shall terminate permanently without
penalty (including with respect to a Closing Date that has not yet occurred) in
the event that (a) there shall occur any stop order or suspension of the
effectiveness of any Registration Statement for an aggregate of thirty (30)
Trading Days during the Commitment Period, as a result of corporate developments
subsequent to the Subscription Date that would require such Registration
Statement to be amended to reflect such event in order to maintain its
compliance with the disclosure requirements of the Securities Act, (b) the
Company shall at any time fail to comply with the requirements of Section 6.3,
6.4, 6.5 or 6.6 and such failure shall continue for more than thirty (30) days,
or (c) the Company shall provide thirty (30) days notice of termination to
Investor.
Section 2.5 Blackout Shares. [INTENTIONALLY LEFT BLANK]
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor represents and warrants to the Company that:
Section 3.1 Intent. Investor is entering into this Agreement for its
own account and Investor has no present arrangement (whether or not legally
binding) at any time to sell the Common Stock to or through any person or
entity; provided, however, that by making the representations herein, Investor
does not agree to hold the Common Stock for any minimum or other specific term
and reserves the right to dispose of the Common Stock at any time in accordance
with federal and state securities laws applicable to such disposition.
Section 3.2 Sophisticated Investor. Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in Common Stock. Investor acknowledges
that an investment in the Common Stock is speculative and involves a high degree
of risk.
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Section 3.3 Authority. (a) Investor has the requisite power and
authority to enter into and perform its obligations under this Agreement and the
transactions contemplated hereby in accordance with its terms; (b) the execution
and delivery of this Agreement and the Registration Rights Agreement, and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action and no further consent or authorization
of Investor or its partners is required; and (c) this Agreement has been duly
authorized and validly executed and delivered by Investor and is a valid and
binding agreement of Investor enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application.
Section 3.4 Not an Affiliate. Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.
Section 3.5 Organization and Standing. Investor is a limited
partnership duly organized, validly existing and in good standing under the laws
of the Cayman Islands and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Investor 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 or property owned by it makes such qualification necessary, other than
those in which the failure so to qualify would not have a material adverse
effect on Investor.
Section 3.6 Disclosure; Access to Information. Investor has received
all documents, records, books and other information pertaining to Investor's
investment in the Company that have been requested by Investor. Investor has
reviewed or received copies of the SEC Documents.
Section 3.7 Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.
Section 3.8 Financial Capability. Investor presently has the financial
capacity and the necessary capital to perform its obligations hereunder and
shall and has provided to the Company such financial and other information that
the Company has requested to demonstrate such capacity.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Investor that:
Section 4.1 Organization of the Company. The Company is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Georgia and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. The
Company does not own more than fifty percent (50%) of the outstanding capital
stock of or control any other business entity other than Electronic Medical
Distribution, Inc. and Lab America, Inc. The Company 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 or property owned by it makes such
qualification necessary, other than those in which the failure so to qualify
would not have a Material Adverse Effect.
Section 4.2 Authority. (a) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement and the Registration Rights Agreement and to issue the Put Shares ;
(b) the execution and delivery of this Agreement and the Registration Rights
Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company or its
Board of Directors or stockholders is required; and (c) each of this Agreement
and the Registration Rights Agreement has been duly executed and delivered by
the Company and constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
Section 4.3 Capitalization. As of May 15, 2000, the authorized capital
stock of the Company consisted of 50,000,000 shares of Common Stock, of which
7,981,714 shares were issued and outstanding, and 10,000,000 shares of preferred
stock, of which 100 shares were issued and outstanding. All of the outstanding
shares of Common Stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable.
Section 4.4 Common Stock. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued listing or quotation of the Common
Stock, and such Common Stock is currently listed or quoted on the Principal
Market. As of the date of this Agreement, the Principal Market is the Nasdaq
SmallCap Market.
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Section 4.5 SEC Documents. The Company has delivered or made available
to Investor true and complete copies of the SEC Documents (including, without
limitation, proxy information and solicitation materials). The Company has not
provided to Investor any information that, according to applicable law, rule or
regulation, should have been disclosed publicly prior to the date hereof by the
Company, but which has not been so disclosed. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and other federal, state
and local laws, rules and regulations applicable to such SEC Documents, 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 therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents comply as to form and substance in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements or the
notes thereto or (b) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
Section 4.6 Exemption from Registration; Valid Issuances. The sale and
issuance of the Put Shares , in accordance with the terms and on the basis of
the representations and warranties set forth in this Agreement, may and shall be
properly issued by the Company to Investor pursuant to Section 4(2), Regulation
D and/or any applicable state law. When issued and paid for as herein provided,
the Put Shares, shall be duly and validly issued, fully paid, and nonassessable.
Neither the sales of the Put Shares , pursuant to, nor the Company's performance
of its obligations under, this Agreement or the Registration Rights Agreement
shall (a) result in the creation or imposition of any liens, charges, claims or
other encumbrances upon the Put Shares , or any of the assets of the Company, or
(b) entitle the holders of Outstanding Common Stock to preemptive or other
rights to subscribe to or acquire the Common Stock or other securities of the
Company. The Put Shares shall not subject Investor to personal liability by
reason of the ownership thereof.
Section 4.7 No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any person acting
on its or their behalf (a) has conducted or will conduct any general
solicitation (as that term is used in Rule 502(c) of Regulation D) or general
advertising with respect to any of the Put Shares , or (b) made any offers or
sales of any security or solicited any offers to buy any security under any
circumstances that would require registration of the Common Stock under the
Securities Act.
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Section 4.8 Corporate Documents. The Company has furnished or made
available to Investor true and correct copies of the Company's Certificate of
Incorporation, as amended and in effect on the date hereof (the "Certificate"),
and the Company's By-Laws, as amended and in effect on the date hereof (the
"By-Laws").
Section 4.9 No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including without limitation the issuance of
the Put Shares , do not and will not (a) result in a violation of the
Certificate or By-Laws or (b) conflict with, or constitute a material default
(or an event that with notice or lapse of time or both would become a material
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture, instrument
or any "lock-up" or similar provision of any underwriting or similar agreement
to which the Company is a party, or (c) result in a violation of any federal,
state, local or foreign law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or by which any property or asset of the Company is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect) nor is the Company otherwise in violation of,
conflict with or in default under any of the foregoing; provided, however, that
for purposes of the Company's representations and warranties as to violations of
foreign law, rule or regulation referenced in clause (c), such representations
and warranties are made only to the best of the Company's knowledge insofar as
the execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby are or may
be affected by the status of Investor under or pursuant to any such foreign law,
rule or regulation. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations that either singly or in the aggregate do not and will
not have a Material Adverse Effect. The Company is not required under federal,
state or local law, rule or regulation to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell the Common Stock in accordance with the
terms hereof (other than any SEC, NASD or state securities filings that may be
required to be made by the Company subsequent to any Closing, any registration
statement that may be filed pursuant hereto, and any shareholder approval
required by the rules applicable to companies whose common stock trades on the
Nasdaq National Market); provided that, for purposes of the representation made
in this sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of Investor herein.
Section 4.10 No Material Adverse Change. Since March 31, 2000, no event
has occurred that would have a Material Adverse Effect on the Company, except as
disclosed in the SEC Documents.
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Section 4.11 No Undisclosed Liabilities. The Company has no liabilities
or obligations that are material, individually or in the aggregate, and that are
not disclosed in the SEC Documents or otherwise publicly announced, other than
those incurred in the ordinary course of the Company's businesses since March
31, 2000 and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.
Section 4.12 No Undisclosed Events or Circumstances. Since March 31,
2000, no event or circumstance has occurred or exists with respect to the or its
businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.
Section 4.13 No Integrated Offering. Neither the Company, 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, other than pursuant to this Agreement, under circumstances
that would require registration of the Common Stock under the Securities Act.
Section 4.14 Litigation and Other Proceedings. Except as may be set
forth in the SEC Documents, there are no lawsuits or proceedings pending or to
the best knowledge of the Company threatened, against the Company, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which would have a Material Adverse Effect. Except as set
forth in the SEC Documents, no judgment, order, writ, injunction or decree or
award has been issued by or, so far as is known by the Company, requested of any
court, arbitrator or governmental agency which would have a Material Adverse
Effect.
Section 4.15 No Misleading or Untrue Communication. The Company, any
Person representing the Company, and, to the knowledge of the Company, any other
Person selling or offering to sell the Put Shares , in connection with the
transactions contemplated by this Agreement, have not made, at any time, any
oral communication in connection with the offer or sale of the same which
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
Section 4.16 Material Non-Public Information. The Company is not in
possession of, nor has the Company or its agents disclosed to Investor, any
material non-public information that (a) if disclosed, would reasonably be
expected to have a materially adverse effect on the price of the Common Stock or
(b) according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed.
ARTICLE V
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COVENANTS OF INVESTOR
Section 5.1 Compliance with Law. Investor's trading activities with
respect to shares of the Common Stock will be in compliance with all applicable
state and federal securities laws, rules and regulations and the rules and
regulations of the NASD and the Principal Market on which the Common Stock is
listed.
Section 5.2 Prohibition on Short Sales. Investor and its Affiliates
shall not directly or indirectly engage in any short sales or third party short
sales of the Company's Common Stock or hold a "put equivalent position" with
respect to the Common Stock (as defined in Rule 16a-1 under the 1934 Act). A
short sale or put equivalent position shall not be deemed to have occurred if
there is an offsetting long position in the Common Stock by way of conversion of
any convertible securities of the Company or any Put Notice. Notwithstanding the
foregoing restrictions on short sales, the foregoing restrictions shall not
apply in the event that there is a material adverse change with respect to the
Company which is likely to lead to the liquidation or bankruptcy of the Company.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all respects with the terms thereof.
Section 6.2 Reservation of Common Stock. As of the date hereof, the
Company has available and the Company shall reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to satisfy an obligation to issue Put Shares having an
aggregate Purchase Price of up to the lesser of (a) $50,000,000 or (b) the
Maximum Commitment Amount less the aggregate Purchase Price of all Put Shares
purchased by Investor hereunder.
Section 6.3 Listing of Common Stock. The Company shall maintain the
listing of the Common Stock on a Principal Market, and will cause the Put Shares
to be listed on the Principal Market. The Company further shall, if the Company
applies to have the Common Stock traded on any other Principal Market, include
in such application the Put Shares and shall take such other action as is
necessary or desirable in the reasonable opinion of Investor to cause the Common
Stock to be listed on such other Principal Market as promptly as possible. The
Company shall use its commercially reasonable efforts to continue the listing
and trading of the Common Stock on the Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the NASD and the Principal Market.
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Section 6.4 Exchange Act Registration. The Company shall take all
commercially reasonable steps to cause the Common Stock to continue to be
registered under Section 12(g) or 12(b) of the Exchange Act, will use its
commercially reasonable efforts to comply in all material respects with its
reporting and filing obligations under said Act, and will not take any action or
file any document (whether or not permitted by said Act or the rules thereunder)
to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under said Act.
Section 6.5 Legends. The certificates evidencing the Put Shares shall
be free of legends, except as provided for in Article VIII.
Section 6.6 Corporate Existence. The Company shall take all
commercially reasonable steps necessary to preserve and continue the corporate
existence of the Company.
Section 6.7 Additional SEC Documents. The Company shall deliver to
Investor, promptly after the originals thereof are submitted to the SEC for
filing, copies of all SEC Documents so furnished or submitted to the SEC.
Section 6.8 Notice of Certain Events Affecting Registration; Suspension
of Right to Make a Put. The Company shall promptly notify Investor upon the
occurrence of any of the following events in respect of a registration statement
or related prospectus in respect of an offering of Registrable Securities: (a)
receipt of any request for additional information by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the registration statement for amendments or supplements to the registration
statement or related prospectus; (b) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for that purpose; (c) receipt of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (d) the happening of any event that makes any
statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
registration statement, related prospectus or documents so that, in the case of
a Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the related prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (e) the Company's reasonable
determination that a post-effective amendment to the registration statement
would be appropriate, and the Company shall promptly make available to Investor
any such supplement or amendment to the related prospectus. The Company shall
not deliver to Investor any Put Notice during the
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continuation of any of the foregoing events.
Section 6.9 Expectations Regarding Put Notices. Within ten (10) days
after the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company undertakes to notify Investor
as to its reasonable expectations as to the dollar amount it intends to raise
during such calendar quarter, if any, through the issuance of Put Notices. Such
notification shall constitute only the Company's good faith estimate with
respect to such calendar quarter and shall in no way obligate the Company to
raise such amount during such calendar quarter or otherwise limit its ability to
deliver Put Notices during such calendar quarter. The failure by the Company to
comply with this provision can be cured by the Company's notifying Investor at
any time as to its reasonable expectations with respect to the current calendar
quarter.
Section 6.10 Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver to Investor
such shares of stock and/or securities as Investor is entitled to receive
pursuant to this Agreement.
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Section 6.11 Issuance of Put Shares. The sale of the Put Shares shall
be made in accordance with the provisions and requirements of Regulation D and
any applicable state law.
Section 6.12 Legal Opinion on Subscription Date. The Company's legal
counsel shall deliver to Investor upon execution of this Agreement an opinion in
the form of Exhibit C, except for paragraph 7 thereof.
Section 6.13 Limitations on Other Offerings by the Company. Until the
earlier of (i) the date twelve months from the date of the first Closing
hereunder, (ii) the termination of this Agreement as provided herein or (iii)
the termination of Investors' obligations under Section 2.5 hereof, neither the
Company nor any of its subsidiaries shall issue, in any public or private
offering, Common Stock or securities convertible into or exchangeable for Common
Stock of the Company ("Common Stock Equivalents") in which the effective cost
per share of the Common Stock to the purchaser or acquiror thereof would be less
than the average of the Average Daily Prices for a share of Common Stock for the
ten Trading Days immediately preceding the closing of such offering; provided
that the Company may so issue Common Stock or Common Stock Equivalents: (a) in
exchange for, or upon conversion of, any securities convertible into or
exchangeable for Common Stock or Common Stock Equivalents outstanding on the
date hereof; (b) pursuant to any stock option plan, stock purchase plan or
similar employee benefit plan in effect on the date hereof or hereafter adopted
by the Company; (c) in any transaction to which the Investor has given its prior
consent (which consent shall in any case not be unreasonably withheld or
delayed), (d) to any entity or the holders of beneficial interest in such entity
in connection with the acquisition or merger of part or all of such entity or in
connection with proposed joint business efforts between such person or entity
and the Company; (e) in connection with the issuance of debt securities by the
Company; (f) in exchange for bona fide services rendered to the Company; (g) in
any offering for the primary benefit of any person or entity other than the
Company such as Electronic Medical Distribution, Inc. or any other Affiliate of
the Company; (h) any secondary underwritten public offering of Common Stock or
other securities of the Company; or (i) any investment by a strategic investor.
ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING
Section 7.1 Conditions Precedent to the Obligation of the Company to
Issue and Sell Common Stock. The obligation hereunder of the Company to issue
and sell the Put Shares to Investor incident to each Closing is subject to the
satisfaction, at or before each such Closing, of each of the conditions set
forth below.
(a Accuracy of Investor's Representation and Warranties. The
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representations and warranties of Investor shall be true and correct in all
material respects as of the date of this Agreement and as of the date of each
such Closing as though made at each such time, except for changes which have not
had a Material Adverse Effect.
(b Performance by Investor. Investor shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by Investor at or prior to such Closing.
Section 7.2 Conditions Precedent to the Right of the Company to Deliver
a Put Notice and the Obligation of Investor to Purchase Put Shares. The right of
the Company to deliver a Put Notice and the obligation of Investor hereunder to
acquire and pay for the Put Shares incident to a Closing is subject to the
satisfaction, on (a) the date of delivery of such Put Notice and (b) the
applicable Closing Date (each a "Condition Satisfaction Date"), of each of the
following conditions:
(a)Registration of Registrable Securities with the SEC. As set
forth in the Registration Rights Agreement, the Company shall have filed with
the SEC the Initial Registration Statement with respect to the resale of the
Initial Registrable Securities by Investor and such Registration Statement shall
have been declared effective by the SEC prior to the first Put Date. For the
purposes of any Put Notice with respect to the Registrable Securities other than
the Initial Registrable Securities, the Company shall have filed with the SEC a
Registration Statement with respect to the resale of such Registrable Securities
by Investor which shall have been declared effective by the SEC prior to the Put
Date therefor.
(b) Effective Registration Statement. As set forth in the
Registration Rights Agreement, a Registration Statement shall have previously
become effective for the resale by Investor of the Registrable Securities
subject to such Put Notice and such Registration Statement shall remain
effective on each Condition Satisfaction Date and (i) neither the Company nor
Investor shall have received notice that the SEC has issued or intends to issue
a stop order with respect to such Registration Statement or that the SEC
otherwise has suspended or withdrawn the effectiveness of such Registration
Statement, either temporarily or permanently, or intends or has threatened to do
so (unless the SEC's concerns have been addressed and Investor is reasonably
satisfied that the SEC no longer is considering or intends to take such action),
and (ii) no other suspension of the use or withdrawal of the effectiveness of
such Registration Statement or related prospectus shall exist.
(c) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be true and correct in
all material respects as of each Condition Satisfaction Date as though made at
each such time (except for representations and warranties specifically made as
of a particular date) with respect to all periods, and as to all events and
circumstances occurring or existing to and including
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each Condition Satisfaction Date, except for any conditions which have
temporarily caused any representations or warranties herein to be incorrect and
which have been corrected with no continuing impairment to the Company or
Investor.
(d) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement and the Registration Rights
Agreement to be performed, satisfied or complied with by the Company at or prior
to each Condition Satisfaction Date.
(e) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or adopted by any court or governmental authority of competent
jurisdiction that prohibits or directly and materially adversely affects any of
the transactions contemplated by this Agreement, and no proceeding shall have
been commenced that may have the effect of prohibiting or materially adversely
affecting any of the transactions contemplated by this Agreement.
(f) Adverse Changes. Since the date of filing of the Company's
most recent SEC Document, no event that had or is reasonably likely to have a
Material Adverse Effect has occurred.
(g) No Suspension of Trading In or Delisting of Common Stock.
The trading of the Common Stock shall not have been suspended by the SEC, the
Principal Market or the NASD and the Common Stock shall have been approved for
listing or quotation on and shall not have been delisted from the Principal
Market.
(h) Legal Opinion. The Company shall have caused to be
delivered to Investor, within five (5) Trading Days of the effective date of the
Initial Registration Statement and each subsequent Registration Statement, an
opinion of the Company's legal counsel in the form of Exhibit C hereto,
addressed to Investor.
(i) Due Diligence. No dispute between the Company and Investor
shall exist pursuant to Section 7.3 as to the adequacy of the disclosure
contained in any Registration Statement.
(j) Ten Percent Limitation. On each Closing Date, the number
of Put Shares then to be purchased by Investor shall not exceed the number of
such shares that, when aggregated with all other shares of Registrable
Securities then owned by Investor beneficially or deemed beneficially owned by
Investor, would result in Investor owning no more than 9.9% of all of such
Common Stock as would be outstanding on such Closing Date, as determined in
accordance with Section 16 of the Exchange Act and the regulations promulgated
thereunder. For purposes of this Section 7.2(j), in the event that the amount of
Common Stock outstanding as determined in accordance with Section 16 of the
Exchange Act and the regulations promulgated thereunder is greater on a Closing
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Date than on the date upon which the Put Notice associated with such Closing
Date is given, the amount of Common Stock outstanding on such Closing Date shall
govern for purposes of determining whether Investor, when aggregating all
purchases of Common Stock made pursuant to this Agreement would own more than
9.9% of the Common Stock following such Closing Date.
(k) Minimum Volume and Bid Price. For the ten (10) Trading
Days immediately preceding both the Put Date and the Closing Date, (a) the
aggregate Average Daily Trading Volume for each such ten Trading Day period
shall have equaled or exceeded $500,000 and (b) the average of the Bid Prices
for such ten Trading Day period shall equal or exceed $7.50 (as adjusted for
stock splits, stock dividends, reverse stock splits, and similar events from and
after the date hereof).
(l) No Knowledge. The Company shall have no knowledge of any
event more likely than not to have the effect of causing such Registration
Statement to be suspended or otherwise ineffective (which event is more likely
than not to occur within the fifteen Trading Days following the Trading Day on
which such Notice is deemed delivered).
(m) Trading Cushion. The Trading Cushion shall have elapsed
since the immediately preceding Put Date.
(n) Shareholder Vote. The issuance of shares of Common Stock
with respect to the applicable Closing, if any, shall not violate the
shareholder approval requirements of the Principal Market.
(o) Other. On each Condition Satisfaction Date, Investor shall
have received and been reasonably satisfied with such other certificates and
documents as shall have been reasonably requested by Investor in order for
Investor to confirm the Company's satisfaction of the conditions set forth in
this Section 7.2., including, without limitation, a certificate in substantially
the form and substance of Exhibit D hereto, executed by an executive officer of
the Company and to the effect that all the conditions to such Closing shall have
been satisfied as at the date of each such certificate.
Section 7.3 Due Diligence Review; Non-Disclosure of Non-Public
Information.
(a) The Company shall make available for inspection and review
by Investor, advisors to and representatives of Investor (who may or may not be
affiliated with Investor and who are reasonably acceptable to the Company), any
Underwriter, any Registration Statement or amendment or supplement thereto or
any blue sky, NASD or other filing, all financial and other records, all SEC
Documents and other filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the purpose of such
review, and cause the Company's officers, directors and employees to supply all
such information reasonably requested by Investor or any such representative,
advisor or Underwriter in connection with such Registration
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Statement (including, without limitation, in response to all questions and other
inquiries reasonably made or submitted by any of them), prior to and from time
to time after the filing and effectiveness of such Registration Statement for
the sole purpose of enabling Investor and such representatives, advisors and
Underwriters and their respective accountants and attorneys to conduct initial
and ongoing due diligence with respect to the Company and the accuracy of such
Registration Statement.
(b) Each of the Company, its officers, directors, employees
and agents shall in no event disclose non-public information to Investor,
advisors to or representatives of Investor (including, without limitation, in
connection with the giving of the Adjustment Period Notice pursuant to Section
2.4) unless prior to disclosure of such information the Company identifies such
information as being non-public information and provides Investor, such advisors
and representatives with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a condition to disclosing
any non-public information hereunder, require Investor's advisors and
representatives to enter into a confidentiality agreement in form and substance
reasonably satisfactory to the Company and Investor.
(c) Nothing herein shall require the Company to disclose
non-public information to Investor or its advisors or representatives, and the
Company represents that it does not disseminate non-public information to any
investors who purchase stock in the Company in a public offering, to money
managers or to securities analysts; provided, however, that notwithstanding
anything herein to the contrary, the Company shall, as hereinabove provided,
immediately notify the advisors and representatives of Investor and any
Underwriters of any event or the existence of any circumstance (without any
obligation to disclose the specific event or circumstance) of which it becomes
aware, constituting non-public information (whether or not requested of the
Company specifically or generally during the course of due diligence by such
persons or entities), which, if not disclosed in the prospectus included in a
Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements therein, in light of the circumstances in which they were
made, not misleading. Nothing contained in this Section 7.3 shall be construed
to mean that such persons or entities other than Investor (without the written
consent of Investor prior to disclosure of such information) may not obtain
non-public information in the course of conducting due diligence in accordance
with the terms and conditions of this Agreement and nothing herein shall prevent
any such persons or entities from notifying the Company of their opinion that
based on such due diligence by such persons or entities, any Registration
Statement contains an untrue statement of a material fact or omits a material
fact required to be stated in such Registration Statement or necessary to make
the statements contained therein, in light of the circumstances in which they
were made, not misleading.
ARTICLE VIII
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LEGENDS
Section 8.1 Legends. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend (the
"Legend"):
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Securities
Act") or qualified under applicable state securities laws.
These securities may not be offered, sold, pledged,
hypothecated, transferred or otherwise disposed of except
pursuant to (i) an effective registration statement and
qualification in effect with respect thereto under the
Securities Act and under any applicable state securities law,
(ii) to the extent applicable, Rule 144 under the Securities
Act, or (iii) an opinion of counsel reasonably acceptable to
BioShield Technologies, Inc. that such registration and
qualification is not required under applicable federal and
state securities laws.
As soon as practicable after the execution and delivery hereof, the
Company shall issue to the Transfer Agent instructions in substantially the form
of Exhibit E hereto. Such instructions shall be irrevocable by the Company from
and after the date thereof or from and after the issuance thereof except as
otherwise expressly provided in the Registration Rights Agreement. It is the
intent and purpose of such instructions, as provided therein, to require the
Transfer Agent to issue to Investor certificates evidencing shares of Common
Stock incident to a Closing, free of the Legend, without consultation by the
transfer agent with the Company or its counsel and without the need for any
further advice or instruction or documentation to the Transfer Agent by or from
the Company or its counsel or Investor; provided that (a) a Registration
Statement shall then be effective, (b) Investor confirms to the Transfer Agent
and the Company that it has or intends to sell such Common Stock to a third
party which is not an affiliate of Investor or the Company and Investor agrees
to redeliver the certificate representing such shares of Common Stock to the
Transfer Agent to add the Legend in the event the Common Stock is not sold, and
(c) if reasonably requested by the transfer agent or the Company, Investor
confirms to the transfer agent and the Company that Investor has complied with
the prospectus delivery requirement under the Securities Act. At any time after
the Effective Date, upon surrender of one or more certificates evidencing Common
Stock that bear the Legend, to the extent accompanied by a notice requesting the
issuance of new certificates free of the Legend to replace those surrendered
Section 8.2 No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 8.1 has been or shall be placed on the
share certificates representing the Common Stock and no instructions or "stop
transfers orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article VIII.
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Section 8.3 Investor's Compliance. Nothing in this Article VIII shall
affect in any way Investor's obligations under any agreement to comply with all
applicable securities laws upon resale of the Common Stock.
ARTICLE IX
NOTICES; INDEMNIFICATION
Section 9.1 Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (a) personally served,
(b) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable air courier service with charges
prepaid, or (d) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice given in accordance herewith. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service or on the fifth
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:
If to the Company:
BioShield Technologies, Inc.
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇ Moss Kline & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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if to Investor:
▇▇▇▇▇▇▇, LLC
Executive Pavilion
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party hereto may from time to time change its address
or facsimile number for notices under this Section 9.1 by giving at least ten
(10) days' prior written notice of such changed address or facsimile number to
the other party hereto.
Section 9.2 Indemnification.
(a) The Company agrees to indemnify and hold harmless Investor
and its officers, directors, employees, and agents, and each Person or entity,
if any, who controls Investor within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, together with the Controlling Persons (as
defined in the Registration Rights Agreement) from and against any Damages,
joint or several, and any action in respect thereof to which Investor, its
partners, affiliates, officers, directors, employees, and duly authorized
agents, and any such Controlling Person becomes subject to, resulting from,
arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Company contained in this Agreement, as such Damages are incurred, except to the
extent such Damages result primarily from Investor's failure to perform any
covenant or agreement contained in this Agreement or Investor's or its officers,
directors, employees, agents or Controlling Persons negligence, recklessness or
bad faith in performing its obligations under this Agreement.
(b) Investor agrees to indemnify and hold harmless the Company
and its officers, directors, employees, and agents, and each Person or entity,
if any, who controls Investor within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, together with the Controlling Persons
from and against any Damages, joint or several, and any action in respect
thereof to which Investor, its partners, affiliates, officers, directors,
employees, and duly authorized agents, and any such Controlling Person becomes
subject to, resulting from, arising out of or relating to any misrepresentation,
breach of warranty or nonfulfillment of or failure to perform any covenant or
agreement on the part of Company contained in this Agreement, as such Damages
are incurred, except to the extent such Damages result primarily from the
Company's failure to perform any covenant or agreement contained in this
Agreement or the Company's or its officers, directors, employees, agents or
Controlling Persons negligence, recklessness or bad faith in performing its
obligations under this Agreement.
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Section 9.3 Method of Asserting Indemnification Claims. All claims for
indemnification by any Indemnified Party (as defined below) under Section 9.2
shall be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which any
person claiming indemnification under any provision of Section 9.2 (an
"Indemnified Party") might seek indemnity under Section 9.2 is asserted against
or sought to be collected from such Indemnified Party by a person other than a
party hereto or an affiliate thereof (a "Third Party Claim"), the Indemnified
Party shall deliver a written notification, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for indemnification that is being
asserted under any provision of Section 9.2 against any person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been prejudiced by such failure of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party
as soon as practicable within the period ending thirty (30) calendar days
following receipt by the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its liability to the
Indemnified Party under Section 9.2 and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third
Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the Indemnifying Party desires
to defend the Indemnified Party with respect to the Third Party Claim pursuant
to this Section 9.3(a), then the Indemnifying Party shall have the right to
defend, with counsel reasonably satisfactory to the Indemnified Party, at the
sole cost and expense of the Indemnifying Party, such Third Party Claim by all
appropriate proceedings, which proceedings shall be vigorously and diligently
prosecuted by the Indemnifying Party to a final conclusion or will be settled at
the discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any relief
other than the payment of monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party shall not be indemnified in
full pursuant to Section 9.2). The Indemnifying Party shall have full control of
such defense and proceedings, including any compromise or settlement thereof;
provided, however, that the Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the Indemnifying Party's delivery
of the notice referred to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other action that the Indemnified
Party reasonably believes to be necessary or appropriate to protect its
interests; and provided further, that if requested by the Indemnifying Party,
the Indemnified Party will, at the sole
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cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnifying Party in contesting any Third Party Claim that the Indemnifying
Party elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause (i), and except as provided in the
preceding sentence, the Indemnified Party shall bear its own costs and expenses
with respect to such participation. Notwithstanding the foregoing, the
Indemnified Party may take over the control of the defense or settlement of a
Third Party Claim at any time if it irrevocably waives its right to indemnity
under Section 9.2 with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying Party desires
to defend the Third Party Claim pursuant to Section 9.3(a), or if the
Indemnifying Party gives such notice but fails to prosecute vigorously and
diligently or settle the Third Party Claim, or if the Indemnifying Party fails
to give any notice whatsoever within the Dispute Period, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted by the Indemnified Party in a reasonable manner
and in good faith or will be settled at the discretion of the Indemnified Party
(with the consent of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will have full control of such
defense and proceedings, including any compromise or settlement thereof;
provided, however, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnified Party and its counsel in contesting
any Third Party Claim which the Indemnified Party is contesting. Notwithstanding
the foregoing provisions of this clause (ii), if the Indemnifying Party has
notified the Indemnified Party within the Dispute Period that the Indemnifying
Party disputes its liability or the amount of its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and if such dispute is
resolved in favor of the Indemnifying Party in the manner provided in clause
(iii) below, the Indemnifying Party will not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this clause (ii) or of
the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation. The Indemnifying Party may participate in, but
not control, any defense or settlement controlled by the Indemnified Party
pursuant to this clause (ii), and the Indemnifying Party shall bear its own
costs and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability or the amount of its
liability to the Indemnified Party with respect to the Third Party Claim under
Section 9.2 or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes its liability or the amount of its
liability to the Indemnified Party with respect to such Third Party Claim, the
amount of Damages specified in the Claim Notice shall be conclusively deemed a
liability of the
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Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the
amount of such Damages to the Indemnified Party on demand. If the Indemnifying
Party has timely disputed its liability or the amount of its liability with
respect to such claim, the Indemnifying Party and the Indemnified Party shall
proceed in good faith to negotiate a resolution of such dispute; provided,
however, that it the dispute is not resolved within thirty (30) days after the
Claim Notice, the Indemnifying Party shall be enlisted to institute such legal
action as it deems appropriate.
(b) In the event any Indemnified Party should have a claim
under Section 9.2 against the Indemnifying Party that does not involve a Third
Party Claim, the Indemnified Party shall deliver a written notification of a
claim for indemnity under Section 9.2 specifying the nature of and basis for
such claim, together with the amount or, if not then reasonably ascertainable,
the estimated amount, determined in good faith, of such claim (an "Indemnity
Notice") with reasonable promptness to the Indemnifying Party. The failure by
any Indemnified Party to give the Indemnity Notice shall not impair such party's
rights hereunder except to the extent that the Indemnifying Party demonstrates
that it has been irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim or the amount
of the claim described in such Indemnity Notice or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes the claim or the amount of the claim described in such Indemnity
Notice, the amount of Damages specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 9.2 and
the Indemnifying Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its liability or
the amount of its liability with respect to such claim, the Indemnifying Party
and the Indemnified Party shall proceed in good faith to negotiate a resolution
of such dispute; provided, however, that it the dispute is not resolved within
thirty (30) days after the Claim Notice, the Indemnifying Party shall be
enlisted to institute such legal action as it deems appropriate.
ARTICLE X
MISCELLANEOUS
Section 10.1 Governing Law; Jurisdiction. This Agreement shall
be governed by and interpreted in accordance with the laws of the State of
Georgia without regard to the principles of conflicts of law. Each of the
Company and Investor hereby submit to the exclusive jurisdiction of the United
States Federal and state courts located in Atlanta, Georgia with respect to any
dispute arising under this Agreement, the agreements entered into in connection
herewith or the transactions contemplated hereby or thereby.
Section 10.2 Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company and Investor and their respective
successors and
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permitted assigns. Neither this Agreement nor any rights of Investor or the
Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any transferee of any of the Common
Stock purchased or acquired by Investor hereunder with respect to the Common
Stock held by such person, and (b) Investor's interest in this Agreement may be
assigned at any time, in whole but not in part, to any affiliate of Investor.
Section 10.3 Third Party Beneficiaries. This Agreement is
intended for the benefit of the Company and Investor and their respective
successors and permitted assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
Section 10.4 Termination. This Agreement shall terminate
twenty-four (24) months after the commencement of the Commitment Period (unless
extended by the agreement of the Company and Investor); provided, however, that
the provisions of Article VI, VIII, and Sections 10.1, 10.2, and 10.4 shall
survive the termination of this Agreement.
Section 10.5 Entire Agreement, Amendment; No Waiver. This
Agreement and the instruments referenced herein contain the entire understanding
of the Company and Investor with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor Investor 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.
Section 10.6 Fees and Expenses. Each of the Company and
Investor agrees to pay its own expenses in connection with the preparation of
this Agreement and performance of its obligations hereunder.
Section 10.7 No Brokers. Each of the Company and Investor
represents that other than ▇.▇. ▇▇▇▇▇ Securities, Inc. and Greenfield Capital
Partners, LLC (the Company shall be responsible for the fees of such entity) it
has had no dealings in connection with this transaction with any finder or
broker who will demand payment of any fee or commission from the other party.
The Company on the one hand, and Investor, on the other hand, agree to indemnify
the other against and hold the other harmless from any and all liabilities to
any persons claiming brokerage commissions or finder's fees on account of
services purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.
Section 10.8 Counterparts. This Agreement may be executed in
multiple counterparts, each of which may be executed by less than all of the
Company and Investor and shall be deemed to be an original instrument which
shall be enforceable against the parties actually executing such counterparts
and all of which together shall
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constitute one and the same instrument. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the parties so delivering this
Agreement.
Section 10.9 Survival; Severability. The representations,
warranties, covenants and agreements of the parties hereto shall survive each
Closing hereunder for a period of one year. In the event that any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
Section 10.10 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.
Section 10.11 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.
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Section 10.12 Equitable Relief. The Company recognizes that in
the event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to Investor. The Company therefore agrees that Investor shall be entitled
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
Section 10.13 Title and Subtitles. The titles and subtitles
used in this Agreement are used for the convenience of reference and are not to
be considered in construing or interpreting this Agreement.
Section 10.14 Reporting Entity for the Common Stock. The
reporting entity relied upon for the determination of the trading price of the
Common Stock on any given Trading Day for the purposes of this Agreement shall
be Bloomberg L.P. or any successor thereto. The written mutual consent of
Investor and the Company shall be required to employ any other reporting entity.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Private Equity Credit Agreement to be executed by the undersigned, thereunto
duly authorized, as of the date first set forth above.
BIOSHIELD TECHNOLOGIES, INC.
By:
---------------------------------------
Name:
Title:
▇▇▇▇▇▇▇, LLC
BY: SOUTHRIDGE CAPITAL MANAGEMENT LLC,
MANAGER
By:
---------------------------------------
Name:
Title:
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EXHIBIT A
[FORM OF REGISTRATION RIGHTS AGREEMENT]
40
EXHIBIT B
LEFT INTENTIONALLY BLANK
41
EXHIBIT C
FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL
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EXHIBIT D
COMPLIANCE CERTIFICATE
In connection with the issuance of shares of common stock of BioShield
Technologies, Inc. (the "Company") pursuant to the Put Notice, dated
_____________ delivered by the Company to ▇▇▇▇▇▇▇, LLC, ("Investor") pursuant to
Article II of the Private Equity Credit Agreement (the "Agreement"), dated June
__, 2000, by and between the Company and Investor (the "Agreement"), the
undersigned hereby certifies as follows:
1. The undersigned is the duly elected Chief [Executive] [Financial]
Officer of the Company.
2. The representations and warranties of the Company set forth in
Article V of the Agreement are true and correct in all material respects as
though made on and as of the date hereof (other than representations and
warranties made as of a specific date), except for changes which have not had a
Material Adverse Effect.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Closing Date
related to the Put Notice and has complied in all material respects with all
obligations and conditions contained in Article VII of the Agreement.
The terms used herein but not defined herein shall have the meanings
specified in the Agreement.
The undersigned has executed this Certificate this day of , 200___.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
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EXHIBIT E
INSTRUCTIONS TO TRANSFER AGENT