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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER 0-24913
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BIOSHIELD TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
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GEORGIA 58-2181628
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4405 INTERNATIONAL BLVD.
SUITE B-109
NORCROSS, GA 30093
(Address of principal executive office) (Zip Code)
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(770) 925-3432
(Issuer's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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None None
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock and Warrants
(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
Issuer's revenues for the fiscal year ended December 31, 1999 were:
$13,769,000.
The aggregate market value of the registrant's voting stock held by
non-affiliates as of June 30, 1999 was: $52,949,400.
The number of shares outstanding of each class of registrant's common stock
as of June 30, 1999 was: Common Stock, par value $0.10 per share, 6,322,315
shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement to be furnished to
stockholders in connection with its Annual Meeting of Stockholders to be held on
November 22, 1999 are incorporated by reference in Part III of this Form 10-KSB.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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PART I
ITEM 1. BUSINESS
BioShield Technologies, Inc. is a Georgia corporation, which was organized
in 1995 to research, develop, and implement the use of the Company's surface
modifying antimicrobials and biostatic products into a variety of end use
markets. On April 7, 1999, BSTI created a subsidiary, Allergy Superstore.com,
Inc. to develop electronic commerce via the Internet. The subsidiary
subsequently changed its name to Electronic Medical Distribution, Inc. to better
describe the scope of business activities anticipated by the subsidiary. As used
in this report, the term "Company" refers to BioShield Technologies, Inc.
("BSTI") and its majority owned subsidiary Electronic Medical Distribution, Inc.
("eMD.com"), which is currently in a developmental phase and has not as yet
commenced operations. The Company from its formation to date has been in the
development stage, which means that its primary focus has been organizational
activities, raising capital, regulatory approvals, research and development, and
further investigation into new markets. The Company currently operates in two
distinct business segments, antimicrobial and biostatic products for use within
the retail and institutional markets (through BSTI) and pharmaceutical
healthcare via the Internet (through eMD.com).
EMD.COM MEDICAL MANAGEMENT SOLUTION
The advance of digital technology is creating a transformation of the
healthcare industry. Patients are becoming empowered, knowledgeable consumers of
healthcare and providers are striving to maintain a respected, leadership
position in managing the health of their patients while maintaining their
current income level. Evidence of this transformation is the 15,000 healthcare
Web sites(1), many of which are attempting to become the "trusted" partner of
the consumers and/or the providers in this emerging industry.
eMD.com's unique vision is under development and is being designed as a
solution for consumers with chronic medical conditions and their physicians that
integrates point of care medication management, prescription fulfillment,
pharmaceutical care services, electronic medical records, and a
consumer-oriented healthcare Web site. eMD.com's strategy is to capture the
patient and their prescription at the first possible opportunity -- in the
physician's office during the encounter. Our integrated solution will improve
the patient's knowledge, self-care capabilities, and convenience while
simultaneously enhancing the efficiency and quality of the medical management by
their physician. eMD.com currently intends to launch to the public in mid-
December 1999.
BSTI is comprised of four business divisions for the sale, distribution,
and development of antimicrobial, biostatic, and medical related products for
the Internet, retail, industrial, institutional, and OEM markets. BSTI has
formed eMD.com, with an initial focus on asthma, allergy, and upper respiratory
conditions, as a natural extension of its core expertise in controlling viruses
and infectious diseases and to take advantage of its relationships with leading
medical experts in these medical areas.
Comprehensive Integrated Solution
eMD.com's mission is to provide a point of care medication management
system to providers that allows us to capture the patient and their prescription
during the encounter with the doctor. This system will be integrated with our
fulfillment services such that the prescription will be "in the mail" when the
patient leaves the provider's office; requiring no further action by the
patient. Additionally, we currently anticipate launching a medical call center
service which will proactively manage the patient's use of their prescription
medication. Our solution will be rounded out with a healthcare Web site that
will offer comprehensive health information and services to the patient and the
provider. All the information gathered throughout our solution will, subject to
applicable law, be captured and made available to both the provider and the
patient.
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1E*OFFERING, July 27, 1999
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Point of Care Medication Management System and Optional Fulfillment
Service. We intend to build a superior offering for physicians that we expect
will increase their ability to practice state-of-the-art medicine for
prescribing pharmaceutical products and managing medical information. We believe
that we will be the first to market a physician-oriented point of care
medication management system. Our state-of-the-art provider solution is
currently expected focus initially on enhancing the patient-provider interaction
for prescription drugs for physicians specializing in allergy, pulmonology and
ENT. We intend to provide, at no cost to the provider, a point of care system
that we currently anticipate will, subject to applicable law:
- automate prescription writing
- provide real-time verification of patient and product insurance/PBM
coverage
- evaluate the potential for allergy and drug interactions
- optionally route the prescription order to the eMD.com fulfillment
service
At the point of prescription entry, the patient will have the option to
access the eMD.com fulfillment service that will mail requested prescriptions,
OTC medications, nutraceuticals, and ancillary products. Our prescription system
will be designed to allow the provider to collect the patient's co-pay and will
submit the remaining expense directly to the appropriate managed care
organization. Since the patient will be introduced to the eMD.com fulfillment
service in the physician's office, it is anticipated that the rate of capture
will be high. When necessary, the physician will hand out a 3-day sample supply
to the patient for use until the mail shipment arrives.
As the patient checks out from the physician's office, our system will
automatically print prescription records for both the patient and the provider.
These records may contain coupons for product discounts on the eMD.com Web site,
which will give us a unique promotional capability typically only found in
retail establishments or direct mail. For those patients who elect not to use
our fulfillment service, we will allow the prescription to be printed on demand.
Electronic Medical Records. To improve physician productivity, our
professional offering may in the future expand into online charting at the point
of care and under certain conditions may lead to the development of a
comprehensive electronic medical record system (EMR). However, no assurances can
be given that such a system will be developed and/or implemented. While
automating the medication management process is a first step for physician
productivity, charting at the point of care would enable physicians to go beyond
medication management to capture the encounter electronically.
Pharmaceutical Care Services. The point of care medication management
solution and EMR will be complimented by pharmaceutical care services. Consumers
are frequently confused by their prescription instructions and often do not
comply with the recommended regimen. The medical call center which is still
under development will focus on these education and compliance issues with a
reactive and proactive service for consumers. From a reactive perspective, it is
currently anticipated that consumers will be able to call the eMD.com medical
call center 24 hours a day and speak with a qualified pharmacist or physician
for education and advice. In addition, for patients that require a more
intensive compliance or case management regimen the medical call center which is
still under development will be designed to proactively contact and case manage
these designated patients under certain conditions. Selection of patients for
the proactive, outbound call center service will be determined by the patients'
physician.
Healthcare Web site. Our ultimate goal is to become the largest provider
of information, services and products (prescription drugs, OTC medications,
nutraceuticals, and ancillary medical supplies) for consumers with chronic
medical conditions and their providers. We will achieve this by building chronic
condition-specific Internet solutions that exceed the needs of target customer
segments.
Initially, our focus will be on allergy, asthma, and upper respiratory
conditions in order to leverage BioShield's extensive allergy/respiratory
knowledge base and relationships with leading medical experts in these
specialties. Our goal is to integrate these individual chronic condition
solutions into a comprehensive health offering that creates scale advantages in
systems, infrastructure and contractual relationships.
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Underlying our consumer Web site will be a strong personalization capability
that we expect will allow us to tailor our solution to the unique needs of each
individual.
eMD.com will seek to distinguish itself from other healthcare sites by
simultaneously providing consumers with access to content, community, and
commerce areas that specifically target the needs of people who deal with
chronic medical conditions. Peer reviewed content from reputable sources will be
provided to ensure that a high level of quality content is included on the site.
This content will be consistently maintained and updated to guarantee that the
site is the most current and comprehensive source for condition-specific
information. Community areas will provide consumers with the ability to interact
with other sufferers and experts in the field to learn more about managing their
medical conditions. Through targeted e-commerce offerings, the site will also
provide access to products and services that will help consumers more
effectively cope with their health issues.
Distinct Competitive Advantages
While many of the components of eMD.com's proposed solution have been tried
by others, eMD.com believes that it has unique abilities, approaches, and
relationships that will provide competitive advantage in the market. BioShield
brings established and respectable physicians who specialize in the target
disease conditions to eMD.com. These physicians will be involved with the
eMD.com throughout development of both the point of care medication management
system and the healthcare Web site. They will provide active guidance to ensure
the eMD.com offering will be valued highly by physicians, their patients, and
the general public using the Web site. These physicians will bring instant
credibility to eMD.com as we approach medical practitioners to join our team.
BioShield also anticipates in the future to be able to open doors to
practitioners through strong relationships with many pharmaceutical
manufacturers.
Aggressive Marketing Plan
eMD.com has established a "physician-push", "consumer-pull" marketing
strategy that it currently anticipates will result in rapid growth of the
eMD.com physician network, high awareness of the healthcare Web site, and
significant revenue growth. Physician marketing will be initially driven by a
"networking" model, where physicians on the Medical Advisory Board will recruit
an initial cadre of physicians who will, in turn, recruit others successively.
We presently expect to commence our physician marketing in the next calendar
quarter. An aggressive combination of traditional off line and online
advertising, along with "push" from network physicians will drive traffic to the
healthcare Web site. eMD.com believes that the combination of these efforts will
rapidly allow eMD.com to achieve critical mass. However, no assurances can be
given that eMD's strategy, focus and or marketing plan will be achieved or will
otherwise be successful. Successful implementation of its strategy may involve
the compliance with a myriad of state and federal laws, rules and regulations.
eMD's efforts will require the immediate procurement of substantial additional
capital. No assurances can be given that the Company will be able to raise the
necessary capital.
STRONG PARTNERSHIP OPPORTUNITIES
The Company is establishing relationships with organizations that can bring
significant value to eMD.com. The Company will seek to collaborate with top
medical institutions for educational content. eMD.com intends to form media
partnerships with traditional and online news channels and publications oriented
towards health related issues. The Company is currently in discussions with
"brick and mortar" pharmacies to establish a complimentary physical presence and
to lever the pharmacies' existing PBM relationships. Relationships with
pharmaceutical manufacturers are being pursued in an effort to lower the cost of
prescription drugs and to develop co-promotion and advertising for their
products on the eMD.com healthcare Web site. The Company will seek develop other
partnerships in the areas of fulfillment, technology, content, and marketing,
which will strengthen the value of the eMD.com offering.
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Revenue Model
eMD.com believes that it will generate revenue from several key sources
including:
- Prescription sales through the point of care medication management system
and the healthcare Web site
- Sales of OTC, nutraceutical, and ancillary products and services on the
healthcare Web site
- Advertising and sponsorships on the healthcare Web site
- Subscriptions from the online doctor service (to be offered free
initially and as a subscription service later)
eMD believes that the bulk of revenues will be driven by sales of
pharmaceutical products through the point of care medication management system.
Thus, the Company's efforts will focus heavily on recruiting physicians into
this network to drive revenues and profitability. No assurances can be given
that eMD will be successful in this regard. The Company also expects to generate
substantial revenue from the healthcare Web site and will focus on promoting the
site heavily to increase awareness, drive traffic, enroll subscribers, and
increase sales.
ANTIMICROBIAL BUSINESS
The Company's primary focus in this area is to exploit its proprietary
technology to become the leader in topical antimicrobials and biocides for
consumer, industrial, institutional, environmental services, and medical device
markets. BioShield products are an easily applied reactive coating technology
that modifies surfaces of all types, by creating an invisible covalent bond
between surfaces and a variety of chemical agents. Through the cross linking
technology, these antimicrobial properties and other chemical agents can impart
many performance-enhancing characteristics, such as residual antimicrobial
activity, removal of surface-borne and air-borne allergens which may cause
respiratory discomfort or asthma, infection resistance, anti-inflammation,
lubricity and drug delivery onto many surfaces without changing the dimensions
or physical properties of the modified surfaces.
The Company believes that its antimicrobial technologies have revolutionary
properties that make its products significantly more durable, effective and
safer than currently available conventional antimicrobials, non-antibiotics,
preservatives or biocides. The Company also believes that certain manufacturers
who utilize its technologies will be able to significantly improve the
performance of their products and in some situations differentiate their
products in a highly competitive marketplace.
Retail-Household Care Market
The Company believes that its largest near-term opportunities for revenue
generation exist in the mass-market retail outlets including supermarkets mass
merchandisers, drug outlets, home improvement centers, and selected chain
specialty retailers. Household cleaners and odor eliminator products represent a
retail market value in supermarkets alone of over $l.5 billion per year.
To capitalize on this opportunity, the Company is aggressively seeking to
acquire additional retail product lines with the mass food and drug categories
and is also developing a network of manufacturers' representative firms to
assist in the marketing of its own retail products as well as all brand
additions acquired from future acquisition of existing consumer brands. The
Company has made no such acquisition to date.
The Company is also currently marketing its unique odor eliminator products
primarily under the OdorFree(TM) brand in most outlets and under the
DuraLast(TM) brand within selected channels and outlets. New consumer products
are being developed for use in virtually all mass-market channels and outlets.
At this point, representatives have been appointed for all of the
Southwest, Mid-west and Southeastern portions of the United States.
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In April 1999, the Company began shipping its OdorFree(TM) product, an odor
eliminator and fabric refresher, into its initial test markets within Texas.
OdorFree(TM) products are now available in all major Supermarket customers in
Texas, Oklahoma and Louisiana. In addition, OdorFree(TM) products are available
in Kmart Stores in most of Texas.
Within the Texas markets, the Company is utilizing the services of The
Christal Company and Marketing Specialists Sales Company to support the
distributions and marketing of its OdorFree(TM) product. Discussions are
underway with Marketing Specialists to represent the Company in markets outside
of Texas and with specific key customers.
The Company is aggressively pursuing the opportunity to provide a private
label fabric refresher to selected retailer customers. Private label fabric
refresher produced by the Company is currently available in over 1000 outlets
operated by two customers, Ingles Supermarkets and the Great A&P Tea Company.
Product testing and introductory discussions are currently underway with a
number of other North American food retailers.
The Company will initially be required to expend a significant percentage
of revenues from these retail outlets towards slotting fees and trade
promotions. The creative plan that is now being executed features a digitally
animated television commercial message supporting the OdorFree(TM) product. The
advertising plan incorporates both cable and local spot television as well as
in-store trade promotion to give the product added value.
The Company has entered into an agreement with Fritz-Firestone Advertising
Agency in Atlanta, Georgia, to support all creative activities required for the
introduction of the OdorFree(TM) product, including creative development,
graphic design, and media solution and buying.
Industrial and Institutional Markets (I&I)
The Company intends to follow a path taken by many other proprietary
chemical manufacturers and has targeted leading industrial and institutional
products companies that currently formulate and market to this industry. The
Company does not anticipate generating significant revenues until EPA approval
has been obtained for these products.
The following products have been developed for sale to the industrial and
institutional markets but have not received regulatory approval (see "Government
Regulation"). No assurances can be given that EPA approvals will be obtained and
in what time frame.
BioShield AM500
- molecular bonding additive for formulating institutional and industrial
disinfectants
- molecular bonding additive for formulating sanitizers and microbiocides
for use in laundry additives
- additive for carpet treatment products for use in upholstery and drapery
treatment products for use in building cleaning and treatment products
- additive for household cleaning products
- for use in food processing plants
BioShield AM36.OI
- molecular bonding additive for formulating institutional and industrial
disinfectants
- molecular bonding additive for formulating sanitizers and microbiocides
for use in laundry additives
- additive for carpet treatment products for use in upholstery and drapery
treatment products for use in building cleaning and treatment products
- additive for household cleaning products for use in food processing
plants
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- higher strength than BioShield AM500
BioShield AM3651P
- molecular bonding additive for formulating institutional and industrial
disinfectants
- can be used similar to BioShield AM36.OI
- produces coating with migrating properties
- for use as preservative in personal care products
GOVERNMENT REGULATIONS AND APPROVAL
Filings Made With the EPA to Date and Current Applications and Future Filings.
In October 1998, the EPA conditionally registered certain uses for AM500
and AM500I. The EPA approved AM500I for use in formulating for laundry
additives, carpet treatment products, upholstery and drapery treatment products
to impart bacteriostatic/fungistatic activity in many of the foregoing products
and others. The EPA also approved the use of AM500 against fungi (including mold
and mildew) as a static agent. EPA approved AM500 and AM500I to be used to
impart durable, bacteriostatic and fungistatic protection to substrates for the
following applications:
air filters/materials; aquarium filter material; bed sheets, blankets
and bedspreads; buffer pads (abrasive and polishing); carpets and
draperies; fiberfill; fiberglass ductboard; fire hose fabric; humidifier
belts; mattress pads and ticking; men's underwear and outerwear; non-woven
disposable diapers; non-woven polyester; outerwear apparel; disposable
polyurethane foam cushions for Lapidus Airfloat Systems; polyurethane and
polyethylene foam, when covered; polyurethane foam for packaging and
cushioning in non-food contact applications; roofing materials; sand bags,
tents, tarpaulins, sails, and ropes; athletic and causal shoes; shoe
insoles; shower curtains; socks; throw rugs; toilet tank and seat covers;
umbrellas; upholstery vacuum cleaner bags and filters; women's hosiery; and
women's intimate apparel.
The Company has also requested EPA approval for three products with the
same active ingredient as AM500. These products are water based products and are
called BST Protectant Concentrate C15, BST Protectant 75 and BST Protectant 50.
These products provide bacteriostatic and fungistatic protection to substrates
noted above.
The Company has submitted, for EPA registration, its concentrated active
ingredient, AMS 1860. This active ingredient is highly concentrated and is
solvent based. It can be used to formulate microbiostatic agents and will be the
Company's own source of active ingredient for formulated BioShield products. It
will be manufactured by the Company and eliminate the need to obtain this active
ingredient from other registered sources.
Future Filings
The Company intends to submit applications to the EPA for registration of
BioShield AM36.OI and AM3651P, to enable it to make certain claims regarding the
antimicrobial or microbiostatic properties of the products. The Company believes
AM36.OI and AM3651 are unique products. Whereas both are formulations of the
silane-integrated system, neither product is water based. However, AM36.OI and
AM3651P provide stable aqueous solutions.
The intended use to be included in the application for AM36.OI is to give a
surface durable microbiostatic treatment. The primary use claims, intended to be
included in the application for AM3651P, are as an active ingredient for
formulating disinfectants and sanitizers for use on hard non-porous surfaces,
and as a microbiocide for use in laundry additives, carpet treatment products,
upholstery and drapery treatment products, and treatment products, and to give
surface microbiostatic treatment effective against a wide variety of bacteria,
fungi, algae and yeast.
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Whereas AM36.OI is a concentrate designed for ease of application and
durability, the strength of AM3651P lies in its intended use in sanitizers and
disinfectants. AM3651P is a blend of active ingredients chosen for their
performance. The interplay of the ingredients of the active blend provides high
efficiency in small concentrations. The Company believes that because of this
interplay of the ingredients and the resulting independence from toxic compounds
such as chlorine, formaldehyde or formaldehyde donors, AM3651P is ideally suited
as a preservative and as active components of sanitizers and disinfectants.
Materials treated with formulations containing the microbiostatic agent
AM36.OI or antimicrobial agent AM3651P are preserved by the bacteriostatic,
fungistatic and action imparted by the active ingredient. AM36.OI and AM3651P
inhibit the growth of microorganisms that are responsible for causing odor,
discoloration and deterioration. They also provide residual inhibition of
microorganisms to aid in the control of these deleterious effects. AM36.OI and
AM3651P form a coating on a wide variety of substrates and microbiostatic action
is exhibited on contact.
The Company intends to seek approval that AM36.OI and AM36.51P can be used
to impart durable, microbiostatic protection to substrates for the following
applications:
air filters/materials; aquarium filter material; bed sheets, blankets,
and bedspreads; buffer pads (abrasive and polishing); carpets and
draperies; fiberfill; fiberglass ductboard; fire hose fabric; humidifier
belts; mattress pads and ticking; men's underwear and outerwear; non-woven
disposable diapers; non-woven polyester; outerwear apparel; disposable
polyurethane foam cushions for Lapidus Airfloat Systems; polyurethane foam
polyethylene foam, polyurethane foam used as a growth medium for non-food
crops and plants; roofing materials; sand bags, tents, tarpaulins, sails,
and ropes; athletic and casual shoes; shoe insoles; shower curtains; socks;
toilet tank and seat covers; umbrellas; upholstery vacuum cleaner bags and
filters; vinyl wallpaper and wallpaper for non-food contact surfaces;
women's hosiery; and women's intimate apparel.
The Company also intends to seek approval on AM3651P as a disinfectant and
sanitizer on hard non-porous surfaces or to be incorporated into formulations.
AM3651 can be used to disinfect and sanitize hard surfaces in areas such as
homes, offices, hospitals, institutions, schools, restaurants, locker rooms,
medical facilities and other like areas that are prone to bacteria and odors.
AM3651P disinfects and sanitizes hard surfaces such as: sinks; tiles; tubs;
toilets: countertops: bathroom fixtures; stoves; exercise equipment; walls;
doorknobs; telephones; garbage cans; floors; cabinets; and shower stalls.
It is also planned to seek approval for use of BioShield products as
preservatives in FDA regulated products, including cosmetic articles, such as
skin creams; hair treatment products, for example shampoos; non-regulated
products, including detergents and detergent formulations; other preservative
applications, such as interior and exterior paints, latex, concrete materials,
machine oils, and lubricants; cutting fluids; water for cooling systems and
swimming pools which may require EPA registration. However, no assurances can be
given that the Company will be successful in commercializing any of these
products or will receive any of the required regulatory approvals.
RESEARCH AND DEVELOPMENT
The Company's core technologies are in aqueous reactive silanes and
antimicrobial products. Combinations of both technologies are producing
compounds with new properties and are setting new standards. The Company's new
product releases in the near future will be based on these core technologies.
Research on silane based and non-silane based antimicrobials will expand
application of antimicrobial Company products from pesticides to medications and
treatments to preventive care. Research on silane based durable products will
provide the applicator with the opportunity to give surfaces new desired
properties.
Future development efforts are anticipated to focus on development of
antimicrobial products for medical applications, specifically, human and animal
skin treatments, new formaldehyde-free product preservatives, agricultural and
food antimicrobials, and new active ingredients and formulations useful in the
markets currently providing antimicrobial products. Products range from
antimicrobial absorbents to cleaning solutions and disinfectants and household
products. Products in this category include materials treated by the
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manufacturer, for example socks, shower curtains and carpets. Product
development in this category is anticipated on a market-need basis in
collaboration with the manufacturers. In addition, a number of new applications
based on the uniqueness of the Company's products are anticipated. There can be
no assurance that the Company will be successful in developing these or other
products.
During the fiscal years ended June 30, 1998, and 1999, the Company incurred
expenses of approximately $232,000 and $718,000, respectively, resulting from
Company-sponsored research and development activities. Research and development
is expected to remain a significant component of the Company's business.
However, the Company may abandon or de-emphasize its research and development
activities with respect to the primary development projects and expand research
and development of other products as circumstances warrant. The Company has
contracted out a substantial part of its research and intends to continue to do
so while utilizing its staff for monitoring such research.
Antimicrobial Biobarriers: Burn Care/Synthetic Skin. Commonly, the greater
the skin damage, the greater the risk of infection. The skin damage and the risk
of infection are especially serious in burn victims. To this day, proper
treatment of burn patients remains a challenge to the healthcare professional.
In addition to direct wound application, the Company believes that the Company's
technology may, under certain conditions, be appropriate for application to skin
grafts, either manufactured or harvested from cadavers and most importantly,
animal collagen matrixes. Collagen matrix based products are frequently applied
graft materials. In addition to their importance as skin grafts, their chemical
composition is such that a very favorable bonding with the Company's
antimicrobial products and the graft may be possible. The Company believes that
the unique properties of the Company's core technology may, under certain
circumstances, allow certain products based upon its technology to form a bound
protective layer that allows the grafted skin to breath and transport liquids,
but reduce/prohibit the entry of microorganisms.
Integration of the Company's products and research may lead to new skin
treatment products that the Company believes may provide effective skin
condition treatment. Adverse skin conditions caused by microbes may be
susceptible to treatment by the Company's products. However, no assurances can
be given that the Company will be successful in commercializing any of these
products or will receive any of the required regulatory approvals.
Transplant/Medical Device Treatments. A common problem in the transplant
of organs or artificial implants is rejection by the receiving body's immune
system. The rejection is often based on the recognition of the implant as a
foreign body. This recognition is affected by the surface of the implant. Silane
treatment of implants changes the surface of the implant. The treatment can be
durable or temporary. One approach may be to chemically bond currently available
anti-rejection medication to the silane. This application will require FDA
approval prior to clinical testing and commercial introduction. However, no
assurances can be given that the Company will be successful in commercializing
any of these products or will receive any of the required regulatory approvals.
Cleaning and Maintenance Products. The residual activity of the Company
products provides protection to many surfaces. Application of the products is
primarily to clean surfaces. Integration of the Company products into new
cleaning products may lead to new products providing protection to surfaces and
equipment while cleaning. These new cleaning and maintenance products will be
developed for industrial and institutional applications, for example, hospitals,
food processing plants and commercial cleaning and consumer applications, for
example, bathroom, carpet and kitchen cleaning. However, no assurances can be
given that the Company will be successful in commercializing any of these
products or will receive any of the required regulatory approvals. OdorFree(TM)
is a new odor eliminator product that was recently developed which does not
require regulatory approval. The product incorporates one of BioShield's
proprietary chemical additives and is available for household use on upholstery,
rugs and clothing. Odorfree(TM) is effective in eliminating odors, which include
odors associated with food , cigarette smoke, tobacco and fire smoke; mold or
mildew (musty), certain human body odors (on fabrics) and garbage odors, among
others. Odorfree(TM) is available in regular and extra strength. OdorFree(TM)
has been clinically tested and is hypoallergenic.
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EMPLOYEES
The Company and its subsidiary on June 30, 1999 had twenty-one employees.
Four of these employees are executive officers, two are involved in research and
development, five are in marketing and sales, four are in website and content
development, one is overseeing the set-up of the pharmacy department and five
are in administrative and clerical functions. Since year-end, hiring activities
have accelerated as a result of the activities of eMD.com with the total number
of employees as of September 20, 1999 standing at 39.
ITEM 2. PROPERTY
The Company's executive and administrative offices are located at 4405
International Blvd., Suite B109, Norcross, Georgia in a 6,900 square foot
facility leased by the Company. The building contains offices, meeting rooms and
an organic chemistry lab with a biological storage area. In addition, the
Company currently leases a 5,000 square foot manufacturing facility in Lithonia,
Georgia for the production and storage of the Company's active antimicrobial
agent.
Subsequent to June 30, 1999 the Company entered into a contract to lease
55,300 square feet in a free standing building in a high-tech executive office
park. The facility is located at 5655 Peachtree Parkway, Atlanta, Georgia. This
building contains offices, meeting rooms, computer facilities and an area for a
pharmacy. The executive offices and staff of eMD.com have already moved into the
facility. The Company believes that these facilities are adequate for its
present and anticipated needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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<PAGE> 11
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
From September 30, 1998, the effective date of the Company's initial public
offering, to March 30, 1999, the Company's common stock was traded in the form
of units which contained two shares of common stock and two warrants under the
symbol "BSTIU". Since March 30, 1999, the Company's common stock ("Common
Stock") has been publicly traded in the NASDAQ Small Cap Market on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") under
the symbol "BSTI" and its warrants have traded under the symbol "BSTIW".
The following table sets forth the range of the Common Stock on NASDAQ for
the fiscal quarters indicated, as reported by NASDAQ.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH BID LOW BID
- ------------- -------- -------
<S> <C> <C>
December 31, 1998........................................... N/A N/A
March 31, 1999.............................................. $ 5.75 $5.25
June 30, 1999............................................... $21.25 $5.00
</TABLE>
Prices represent final daily transactions between dealers without retail
mark-up, mark-down or commissions, and may not represent actual transactions.
As of September 24, 1999 the Company had approximately 1,320 shareholders
of record. This does not include shareholders who hold stock in their accounts
at broker/dealers.
The Company has not paid cash dividends on its common stock in the past and
does not expect to pay a cash dividend in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL INFORMATION
The Company was initially organized in Georgia in June 1995 to research,
develop, and implement the use of the Company's antimicrobial and biostatic
products into multiple industries. In April 1999, the Company created a new
subsidiary, eMD.com to provide medical managed care solutions to physicians and
consumers over the Internet. The Company is a development stage Company engaged
primarily in research and development, patent filings, regulatory approvals and
related activities geared towards the sale of products using its core anti-viral
chemical agent in multiple business divisions.
Revenues generated from operations to date have primarily been limited to
test marketing of the Company's antimicrobial products in all division areas.
The Company experienced regulatory scrutiny during its initial launch in
the retail division. The Company was required by the Environmental Protection
Agency (EPA) to stop the sale of its two retail products due to conflicts in
label interpretation. The EPA decided the current labeling was outside of the
prior approvals received by the Company in October 1998. This caused the Company
to stop distribution and recall all products which had these labels. The Company
has resolved these issues with the EPA and has proceeded with the distribution
of these retail products in new initial test markets during the fourth quarter
of fiscal 1999 (April 1 to June 30, 1999).
In April, the Company successfully processed the initial shipments of its
new OdorFree(TM) product line. This brand will compete in the $544,000,000 odor
elimination packaged goods category. The initial rollout was limited to the
Texas marketplace with shipments made to H. E. Butt Grocery, Grocers Supply,
Albertsons, Kroger and Randalls Food & Drugs during the fourth quarter. The
initial shipment of the Company's private label odor elimination product was
also shipped during the quarter to Ingle's Markets.
During the quarter, the Company announced the formation of an e-commerce
subsidiary named eMD.com. This business unit will seek to integrate three
product offerings for providers (point of care
10
<PAGE> 12
medication management, electronic medical records, and pharmaceutical care
services) with a comprehensive healthcare web site. The Company's web site and
business unit is currently under development and operations are currently
expected to commence during the end of the fourth calendar quarter of 1999.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparison of year ended June 30, 1999 to June 30, 1998
Fiscal year 1999 net sales of $305,336 were 34% lower than fiscal year 1998
net sales of $462,471. This decrease was caused primarily by initial shipments
of certain new products to chain store customers during 1998, which created an
initial surge in sales to fill the pipeline in fiscal 1998 and due to the slow
down in certain product sales due to the EPA's interpretation that the labelling
for certain products were outside of prior EPA approvals received. This resulted
in the recall and relabelling of certain products. The Company also made initial
shipments to certain industrial customers in fiscal 1998. In fiscal 1999, the
Company reduced its marketing efforts for certain of the products, which were
sold in fiscal 1998 in order to analyze the market acceptance of these products
and to launch new products in test markets. The Company's objective has been to
identify the proper product mix at retail before launching larger advertising
programs to boost sales.
Gross profit was $116,423 in fiscal year 1999, or 38% of net sales as
compared to $307,813 for fiscal year 1998, which was 67% of net sales. This
decrease was due primarily to the recall and relabelling of certain products as
required by the EPA and to a shift in product mix weighted more toward the
retail market, which traditionally has a lower profit margin than the industrial
market. Gross profit also declined as a result of inventory adjustments recorded
to write-off obsolete product.
Marketing and selling expenses were $780,566 in fiscal year 1999 compared
to $472,945 in fiscal year 1998. This change represents an increase of $307,621
or 39% over fiscal 1998. The increase reflects the investment made in additional
staff and related expenses to support the retail and private label sales program
as well as an increase in advertising and media production costs associated with
the initial phases of the OdorFree(TM) product line rollout.
General and administrative expenses for fiscal 1999 were $2,067,669; a 95%
increase over fiscal 1998 expenses $1,060,417. These higher costs were primarily
due to an increase in staff and expenses associated with building the Company's
corporate infrastructure and the start-up and organization costs directly
related to eMD.com, Inc. Included in eMD.com start-up expenses was approximately
$165,000 related to web site development and $300,000 related to increased
staffing and legal costs of organization.
Research and development expenses in fiscal year 1999 were $717,978
compared to $231,547 in fiscal 1998. The $486,431 increase was due to additional
staff and costs associated with ongoing projects and testing related to future
EPA filings and applications.
Other income (expense) increased from $(14,833) in fiscal 1998 to $160,174
in fiscal 1999. During fiscal 1999, the Company recognized royalty fees of
$75,000 and income from the sale of certain research and development of $16,000.
This income was the result of an exclusive sales and distribution agreement with
a third party entered into during 1998.
Interest and dividend income in fiscal 1999 was $102,134. This represents a
$98,590 increase over fiscal 1998 interest income of $3,544. The increase was
due to a larger invested cash balance as a result of proceeds from the initial
public offering completed in September, 1998.
Interest expense was $16,960 in fiscal year 1999 compared to $18,377 in
fiscal year 1998. The interest expense relates mainly to interest paid to
private note holders who loaned an aggregate of $450,000 to the Company in the
third and fourth quarters of 1998. All such notes were repaid from proceeds of
the initial public offering during the second quarter of fiscal 1999.
As a result of the reasons set forth above, the Company's operations
generated a net loss of $3,289,616 or ($ 0.57) per common share for the year
ended June 30, 1999 compared to a net loss of $1,471,929 or ($0.33) for the year
ended June 30, 1998. The Company's operations have generated a cumulative net
loss from inception to June 30, 1999 of $5,632,320 or ($1.22) per common share.
11
<PAGE> 13
LIQUIDITY
The Company's cash and cash equivalents totaled $2,500,561 at June 30,
1999, and $1,636 at June 30, 1998. The significantly higher cash position at the
end of fiscal year 1999 was due to the completion of the initial public offering
during the first quarter of fiscal 1999. The Company believes that it has
sufficient resources to meet its short term operating needs. Subsequent to June
30, 1999 the Company received a cash commitment from several investors to fund
the initial costs of the eMD.com web site. To date $6 million of these funds
have been received. In addition, a private equity credit agreement has been
established for $6.25 million, which the Company can draw against. The Company
expects to continue to incur substantial operating losses and use substantial
sums of cash in its operations for an indefinite period. Accordingly, the
Company will be required to obtain additional capital in the very near future.
The development of eMD will require substantial additional capital in order to
successfully launch the site and related business. The failure to raise the
necessary additional capital in the very near future will cause substantial
delay or reduction of the scope of the business. No assurance can be given that
either the Company or eMD will be successful in its efforts to obtain additional
capital, that capital will be available on terms acceptable to the Company or
eMD or on terms that will not significantly dilute the interests of existing
shareholders.
On June 30, 1999 the Company, eMD.com and certain investors entered into a
securities purchase agreement whereby eMD.com would sell up to an aggregate of
3,218,884 shares of common stock to investors at a price of $4.67 per share. As
of June 30, 1999 investors had purchased 1,070,664 shares for an aggregate
purchase price of $5,000,000 under the agreement. The net proceeds of
$4,798,750, which was received from escrow on July 6, 1999, was included in
current assets under the caption Stockholders' subscription receivable at June
30, 1999.
A significant investment has been made in expanding the business and hiring
new employees during fiscal 1999. The total number of employees at June 30, 1999
was 21. This represents an increase of 17 people when compared to the four
employees at June 30, 1998. Since year-end hiring activities have continued with
the total number of employees as of September 20, 1999 standing at 39.
FORWARD-LOOKING STATEMENTS
When used in this form 10-KSB, the words or phrases "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "project," or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in the Company's market area, changes in policies by
regulatory agencies, fluctuations in interest rates, demand for loans in the
Company's market area and competition, that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as to the date made. The
Company wishes to advise readers that the factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ materially from any opinions or statements expressed
with respect to future periods in any current statements. The Company does not
undertake, and specifically disclaims any obligation, to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
YEAR 2000 ISSUES
The Company has developed and is implementing a comprehensive plan to
address issues related to Year 2000. The organization of the Company's business
structure, which relies heavily on third party manufacturers and a network of
third party distributors, greatly limits the direct financial impact on the
Company to become fully Year 2000 compliant.
The Company's management believes that the risks facing the Company related
to Year 2000 issues are minimal. The Company is currently upgrading all
computers and software to insure Year 2000 compliance.
12
<PAGE> 14
Critical raw material and manufacturing requirements are available from multiple
sources and the Company can serve its customers without reliance on computers.
RECENTLY ISSUED ACCOUNTING STANDARDS
Recently Adopted Pronouncements
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
130, Reporting Comprehensive Income, for its fiscal year ended June 30, 1999.
The statement establishes standards for reporting and presentation of
comprehensive earnings and its components (revenues, expenses, gains and losses)
in a full set of general purpose financial statements. The statement requires
retroactive application for all periods presented in the financial statements.
The adoption of SFAS No. 130 did not have a material effect on the Company's
results of operations or its financial position.
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
131, Disclosure About Segments of An Enterprise and Related Information, for its
fiscal year ended June 30, 1999. SFAS No. 131 establishes standards for the way
in which information about operating segments is reported. SFAS No. 131 also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The adoption of SFAS No. 131 did not have
a material effect on the Company's results of operations or its financial
position.
During 1999, the Company adopted Statement of Positions (SOP) No. 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use, which requires certain costs incurred in connection with developing or
obtaining internal-use software to be capitalized and other costs to be
expensed. During 1999, the Company expensed $166,000 related to the development
of internet software.
Recently Issued Pronouncements
In April 1998, the American Institute of Certified Public Accountants'
Accounting Standards Executive Committee (AcSEC) issued Statement of Position
No. SOP 98-5, Reporting on the Costs of Start-Up Activities. SOP 98-5
establishes standards on accounting for start-up and organization costs and, in
general, requires such costs to be expensed as incurred. This standard is
required to be adopted on July 1, 1999.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, which must be adopted by July 1,
1999, with early adoption permitted. SFAS No. 133 requires that all derivative
financial instruments be recorded as either assets or liabilities on the balance
sheet and measure those instruments at their fair value. Changes in the fair
value of derivatives will be recorded each period in earnings or other
comprehensive income, depending on whether a derivative as part of a hedge
transaction and, if it is, the type of hedge transactions.
The adoption of these two pronouncements is not expected to have a material
effect on the Company's results of operations or financial position.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are set forth on pages F-1 through F-16 attached
as an exhibit to this document.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No response required.
13
<PAGE> 15
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table sets forth certain information regarding the directors,
executive officers, and significant employees of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Timothy C. Moses....................... 43 Co-Chairman of the Board, President,
Chief Executive Officer and Director
Jacques Elfersy........................ 49 Co-Chairman of the Board, Senior Vice
President, Secretary, Treasurer and
Director
Jeffrey A. Parker...................... 41 Chief Operating Officer and Vice
President of Marketing and Sales
Daniel E. Swaye........................ 47 Chief Financial Officer
Dr. Joachim Berkner.................... 32 Director of Research and Development,
Organic Chemistry
Carl T. Garner......................... 51 Director
Michel Azran........................... 54 Director
</TABLE>
Mr. Timothy C. Moses, a Director and Founder, is the Company's Co-Chairman,
President, and Chief Executive Officer, and Director of Marketing and Sales. For
over a decade, Mr. Moses has been an independent businessman and entrepreneur
with Mr. Elfersy, the Senior Vice President of the Company. His career has
spanned from sales and marketing to Director of Securities and Investment. He
has developed knowledge in the chemical and chemical siloxane industry and
business since leaving his former employer, Dow Corning Corporation in 1986,
where he acted as liaison between management and technical sales in the role of
new product planning and launches. As President of his former Company, DCI,
Inc., a silicone and siloxane based technology Company, Mr. Moses was
instrumental in seeking and raising of investment capital as well as Director of
Marketing and Sales to clients on a direct basis. Mr. Moses co-developed a new
antimicrobial silicone based coating system for textile applications and
coordinated sales from the European Economic Community countries to the United
States. Mr. Moses is also a co-inventor of three inventions for which patent
applications have been filed by the Company on its core antimicrobial
technologies. Mr. Moses is a graduate of a division of Georgia Institute of
Technology where he received his B.S. degree in 1980.
Mr. Jacques Elfersy, a Director and Founder/Co-Founder, is the Company's
Co-Chairman, Senior Vice President, acting Chief Financial Officer, Secretary,
and Treasurer. Mr. Elfersy has been instrumental in the discovery, development,
and patent filing of the Company's core antimicrobial technology. In addition to
his duties, Mr. Elfersy continues to oversee the Company's research and
development activities and objectives. Mr. Elfersy is a graduate of the McGill
University where he earned his Bachelor's Degree in Civil Engineering in 1979.
For a decade, Mr. Elfersy has been an independent businessman and entrepreneur.
His career reflects extensive knowledge of silicone-based technology and
silane-based antimicrobial (as a result of his past employment and business
relationship with Dow Corning) program management and supervision of large-
scale projects and installations, contract negotiations and implementation, and
customer support services and communications. As Executive Vice President of his
former Company, DCI, Inc., a silicone-based technology and silane-based
antimicrobial, Mr. Elfersy was instrumental in the implementation of research
and development on projects requiring antimicrobial-based coating processes and
production application. In addition, he acted as senior management of
engineering and production and was responsible for meeting critical time frames
and budgets as well as manpower constraint requirements.
Mr. Jeffrey A. Parker has agreed to become the Chief Operating Officer and
Vice President of Marketing and Sales for the Company upon completion of the
proposed Initial Public Offering. Mr. Parker began his
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<PAGE> 16
career in 1981 at Oscar Mayer Foods Corporation where he was promoted through a
variety of positions from Sales Representative, Corporate Recruiting Manager,
Assistant Product Manager, and Product Manager in just three and one-half years.
In 1985, he joined Schering-Plough Corporation for approximately one year as
Product Manager for Seasonal Products. In 1986, he was recruited and joined Con
Agra Incorporation to become General Manager, Frozen Convenience Foods. In his
three years with Con Agra, Mr. Parker was promoted to Division General Manager.
In 1989, Mr. Parker joined Sara Lee Corporation, Bryan Foods Grocery Division
where he became President and Chief Executive Officer of Sweet Sue Kitchens
after its acquisition by Sara Lee. Additionally, he assumed presidency at Bryan
Grocery Products in January 1991. In 1992, Mr. Parker joined Foster Farm as the
Vice President and General Manager, Food Service, Processed Meats and Turkey
Products. In 1995, Mr. Parker became President and Chief Executive Officer of
Crider Incorporated and Crider Poultry Incorporated where he was instrumental in
improving product mix and profitability. Mr. Parker received his Bachelors'
degree in Business Administration in 1980 and his Masters in Public
Administration in 1981 from Jacksonville State University. Mr. Parker has
terminated his employment with the Company effective August 1999.
Mr. Daniel E. Swaye has been the Company's Chief Financial Officer since
November, 1998. Mr. Swaye began his career in 1974 as an auditor with Arthur
Andersen & Co. In 1976 he was recruited and joined U.S. Specialty Retailing to
manage the financial and retail accounting departments. In 1979 he joined
Scientific Atlanta, Inc. as the Corporate Internal Audit Supervisor. During his
six years with that Company, Mr. Swaye was promoted to the positions of Division
Controller and International Group Controller. In 1985 he joined Dental One,
Inc. as Corporate Controller and in 1987 joined Delta International Marketing,
Ltd. as General Manager. In 1988, he joined AVL Scientific Corporation as
Corporate Controller where he was a key member of the Senior Management Team
responsible for all strategies and major decisions. Mr. Swaye received a
Bachelors' of Science degree in Accounting in 1974 from Lehigh University. He
received his CPA Certificate in 1976.
Dr. Joachim Berkner is a significant employee and has been Director of
Research and Development, Organic Chemistry, of the Company since January 1996.
Dr. Berkner has served as consultant to Alpha Gamma Research; a Company involved
in cancer research since 1992 and as a consultant to Chemical Products
Technology, a Company involved in dye synthesis and process development since
1995. He has published several articles on Organic Chemistry and polymers and
has co-authored several sections of the Encyclopedia of Reagents for Organic
Synthesis. Dr. Berkner received his Ph.D. in Chemistry and BioChemistry from the
Georgia Institute of Technology in the fall of 1996 and received his valdiplom
in Chemistry from Philipps Univeritat Marburg in Marburg, Germany, in 1990.
Carl T. Garner has been a Director of the Company since 1996. Since 1995,
Mr. Garner has been a partner in Garner and Nevins (a division of Nevins
Marketing Group, Inc.), a promotional and advertising agency based in Atlanta,
Georgia. Mr. Garner received a B.S. in Business/Accounting from Jacksonville
State University in 1969, a masters degree in Management from Georgia College in
1977, and a masters degree in Business Administration from Jacksonville State
University in 1978. Mr. Garner also acts as an Advisory Director to the Company.
Mr. Michel M. Azran has been a Director of the Company since December 1997.
Since August 1994, he has been a partner at J.C. Bradford & Co., a securities
and brokerage firm. From 1982 through 1994, Mr. Azran was employed by The
Robinson-Humphrey Company, Inc. and last served in the capacity of Senior Vice
President -- Investments. He holds an Accounting and Finance degree from
University of Lyons (1967) and Paris (1975) and was in public accounting in
France until October 1977.
The Company's directors are divided into three classes which serve
staggered three-year terms or until their successors have been duly elected and
qualified. Currently, Michel M. Azran is serving in Class I with a term ending
at the Company's 1999 annual meeting of shareholders, Carl T. Garner is serving
in Class II with a term expiring at the Company's 1999 annual meeting of
shareholders, and Jacques Elfersy and Timothy C. Moses are serving in Class III
directors with a term expiring at the 2000 annual meeting of shareholders. The
Company currently pays directors who are not employees of the Company a fee of
(i) $1,000 per regularly scheduled Board meeting attended (or $250 for
participation in a regularly scheduled Board meeting by
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<PAGE> 17
conference telephone) and (ii) $12,000 annually. The Company also reimburses all
directors for their expenses in connection with their attendance at such
meetings.
The Company maintains an audit committee that consists of its two
independent directors, Michel M. Azran and Carl T. Garner. The Company will
maintain at least two independent directors on the board of directors.
Officers are elected annually by the board of directors and serve at the
discretion of the Board.
The Company currently maintains $1,000,000 key man life insurance policies
on the lives of each of Mr. Moses and Mr. Elfersy.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth for the three years ended June 30, 1999,
compensation paid by the Company to its Co-Chairman of the Board, Chief
Executive Officer, and Director, its Co-Chairman of the Board, Senior Vice
President, Acting Chief Financial Officer, Secretary, Treasurer, and Director,
and Chief Operating Officer. None of the Company's other executive officers had
annual compensation in excess of $100,000 for services rendered during any of
the three years ended June 30, 1999, 1998 or 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------- ------------------------- PAYOUT
OTHER RESTRICTED SECURITIES -------
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
--------------------------- ---- ------- ----- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Timothy C. Moses.............. 1999 140,000 -- 10,000 -- 150,000 -- --
Co-Chairman of the Board, 1998 120,000 -- -- -- -- -- --
President, Chief Executive 1997 120,000 -- -- -- -- -- --
Officer and Director
Jacques Elfersy............... 1999 140,000 -- 10,200 -- 150,000 -- --
Co-Chairman of the Board, 1998 120,000 -- -- -- -- -- --
Executive, Vice President, 1997 120,000 -- -- -- -- -- --
Acting Chief Financial
Officer,
Director of Regulatory
Affairs,
Secretary, Treasurer, and
Director
Jeff Parker................... 1999 102,000 -- -- -- 150,000 -- --
Chief Operating Officer
</TABLE>
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS/SARS
NUMBER OF GRANTED TO EXERCISE
SECURITIES UNDERLYING EMPLOYEES IN OR BASE EXPIRATION
NAME OPTIONS/SARS FISCAL YEAR PRICE DATE
- ---- --------------------- ------------ -------- ----------
<S> <C> <C> <C> <C>
Timothy C. Moses.............................. 150,000 20% $ 2.94 2/1/03
Jacques Elfersy............................... 150,000 20% $ 2.94 2/1/03
Jeff Parker................................... 150,000 20% $ 5.00 10/8/03
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into Employment Agreements, each dated January 1,
1998, with Mr. Moses and Mr. Elfersy. The agreements have an initial term
commencing January 1, 1998, and expiring December 31, 2003. However, the
remaining term of each agreement will be extended automatically for one year on
each July 1, beginning July 1, 2001, so that each agreement expires three (3)
years from such date, unless either party notifies the other party in writing of
an intent not to renew at least ninety (90) days prior to the applicable July
1st. Under the agreements, each of Mr. Moses and Mr. Elfersy is required to
devote their full
16
<PAGE> 18
business time to the affairs of the Company. The agreements also contain certain
non-compete provisions, which provisions a state court may determine not to
enforce or only to partially enforce.
Each agreement currently provides for a base salary at the rate of
$250,000. The base salaries are then subject to increase, but not decrease, as
of January 1, in the case of Messrs. Moses and Elfersy, of each year during the
term of the agreements as determined by the Company's Board of Directors. Each
agreement also provides for an annual performance bonus based upon a matrix of
dollar sales levels and dollar before-tax profitability. Cells within the matrix
represent specific combinations of sales and profits, with performance falling
within a particular cell resulting in a bonus to the Mr. Moses or Mr. Elfersy
expressed as a percent of his base salary. This matrix, which allows for bonuses
running from 0% to 150% of base salary, is constructed to reward the executive
for reaching specific combinations of sales and profit levels with higher sales
and profit resulting in a larger bonus. The maximum amount paid to either Mr.
Moses or Mr. Elfersy pursuant to the matrix cannot exceed $50,000 per year.
In addition, each agreement provides a severance package in the event the
executive is terminated other than for cause (as defined) or the executive
terminates his agreement for good reason (as defined) an amount equal to the sum
of (A) the greater of two (2) years of the base salary applicable to the
executive on the date of termination or the base salary (assuming no increases)
payable for remaining term of his agreement assuming no termination, plus (B)
two (2) times the average of the annual bonuses paid or payable to the executive
during the term of his agreement, payable in six (6) equal, consecutive monthly
installments commencing no later than thirty (30) days after the date of
termination. In addition, all outstanding options, stock grants, share of
restricted stock or any other equity, incentive compensation shall be and become
fully vested and nonforfeitable and the executive and the executive's family
will be entitled to receive welfare plan benefits (other than continued group
long-term disability coverage) generally available to executives with comparable
responsibilities or positions for a period of two (2) years from the date of
termination at the same cost to the executive as is charged to such executives
from time to time for comparable coverage.
The Company has entered into an employment agreement, dated as of September
18, 1998, with Mr. Parker. The agreement has an initial term commencing upon the
closing of the initial public offering of the Company, and expiring on the third
anniversary thereof. Under the agreement, Mr. Parker is required to devote his
substantially full time and attention to the affairs of the Company. The
agreements also contain certain non-compete provisions, which provisions a state
court may determine not to enforce or only to partially enforce. The agreement
provides for a base salary at the rate of $150,000. In addition, the agreement
provides a severance package in the event Mr. Parker is terminated other than
for cause (as defined) or the executive terminates his agreement for good reason
(as defined) an amount equal to the lessor of (i) the remaining unexpired term
of the agreement or (ii) one year from the date of termination. He shall also be
entitled to medical insurance, benefits provided to other executives and the
issuance by the Company, upon each of the first three anniversary dates of his
employment, of options to acquire 50,000 shares of the Company's common stock.
Such options shall be exercisable at five dollars per share and which will also
be subject to certain additional terms, conditions, and restrictions.
The Company has entered into an employment agreement, dated as of October
8, 1998, with Mr. Swaye. The agreement has an initial term commencing on October
27, 1998, and expiring on the third anniversary thereof. Under the agreement,
Mr. Swaye is required to devote his substantially full time and attention to the
affairs of the Company. The agreements also contain certain non-compete
provisions, which provisions a state court may determine not to enforce or only
to partially enforce. The agreement provides for a base salary at the rate of
$130,000. In addition, the agreement provides a severance package in the event
Mr. Swaye is terminated other than for cause (as defined) or the executive
terminates his agreement for good reason (as defined) an amount equal to the
lessor of (i) the remaining unexpired term of the agreement or (ii) nine months
from the date of termination. He shall also be entitled to medical insurance,
benefits provided to other executives and the issuance by the Company, upon each
of the first two anniversary dates of his employment, of options to acquire
30,000 shares of the Company's common stock and options to acquire 40,000 shares
of the Company's common stock on the third anniversary date of his employment.
Such options shall be exercisable at five dollars per share and which will also
be subject to certain additional terms, conditions, and restrictions.
17
<PAGE> 19
ADVISORY BOARD
The Company's advisory board was organized to review and evaluate the
Company's research and development programs and to advise the Company generally
in addressing various scientific and business issues. The Company generally
selects for membership persons who have experience in finance, marketing and
science. Members of the advisory board may meet as a group or individually with
management of the Company. They are not employed by the Company and may have
commitments to, or consulting or advisory agreements with, other entities that
may limit their availability to the Company. These entities may also be
competitors of the Company. The Company is not aware of any conflict of interest
between work performed by advisors on behalf of the Company and work performed
by them on behalf of other parties. The Company requires each advisor to execute
a confidentiality agreement upon the commencement of his or her relationship
with the Company. The agreements generally provide that all confidential
information made known to the individual during the term of the relationship is
the exclusive property of the Company and shall be kept confidential and not
disclosed to third parties. The current members of the advisory board are as
follows:
Mr. Martin Savarick, age 60, is currently President of The Printstar Group,
Inc., a marketing and management consulting firm. He has been the Chairman of
the Board, President, and Chief Executive Officer of two publicly traded
companies -- Beacon Photo Service, Inc. and Imprint Products, Inc. Both
companies dealt with retail customers throughout the United States exclusively
on a mail-order basis. The companies employed various innovative marketing
techniques to advertise and sell its products. Mr. Savarick also served as
President of a fund raising organization and of a direct mail marketing
consulting firm.
Dr. Cecil R. Smith, age 46, is currently Chief Executive Officer and
Director in BioShield Research Corporation, a Company based in Powell, Ohio,
which conducts biohazard control evaluations for indoor environmental quality of
such buildings and develops contamination control protocols for the
biotechnology/pharmaceutical industry and provides site safety analysis. Since
1987, Dr. Smith has also been Assistant Vice President of Environmental Health
and Safety of the Ohio State University. In that capacity, Dr. Smith is
responsible for the administration of an environmental, occupational health and
radiation safety program that includes biological/chemical safety, safety
engineering, industrial hygiene, infectious/hazardous waste management, safety
training and environmental compliance. Since 1991, Mr. Smith has also served as
Assistant Professor to the Ohio State University, School of Public Health. Dr.
Smith received his Ph.D. in Public Health and Masters Degree in Public Health
from the University of North Carolina. In 1983 and 1980, respectively, Dr. Smith
received his B.S. in Microbiology from North Dakota State University in 1977 and
his B.A. in Biology and Natural Science from Gustavus Adolphus College in 1975.
Advisors receive reimbursement of travel expenses, connected with Company
business, and stock options, for consultation services, which include assisting
the Company in the development of a marketing plan as well as research plan to
elucidate the biological effects, safety and efficacy of the Company's products
and assisting the Company in analyzing data from research trials and other
studies concerning the Company's products. The Company anticipates that each
advisor will devote approximately six days per year to the affairs of the
Company in his capacity as an advisor, consisting of approximately three one-day
meetings of the advisory board to be held each year and preparation for such
meetings.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's bylaws provide for the Company to indemnify each director and
officer of the Company against liabilities imposed upon him (including
reasonable amounts paid in settlement) and expenses incurred by him in
connection with any claim made against him or any action, suit or proceeding to
which he may be a party by reason of his being or having been a director or
officer of the Company. The Company has also entered into Indemnification
Agreements with each officer and director pursuant to which the Company will, in
general, indemnify such persons to the maximum extent permitted by the Company's
bylaws and the laws of the State of Georgia against any expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement incurred in
connection with any actual or threatened action or proceeding to which such
director or officer is made or threatened to be made a party by reason of the
fact that such person is or was a director or
18
<PAGE> 20
officer of the Company. The foregoing provisions may reduce the likelihood of
derivative litigation against directors and may discourage or deter shareholders
or management from suing directors for breaches of their duty of care, even
though such an action, if successful, might otherwise benefit the Company and
its shareholders.
Insofar as indemnification of liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, or persons controlling the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of his counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
STOCK OPTION PLANS
In December 1997, the board of directors adopted and the shareholders of
the Company approved the 1997 Stock Incentive Plan. The board of directors and
shareholders approved the 1996 Directors Stock Option Plan in 1996 and amended
on the plan in December 1998. The incentive plan was amended by the board of
directors in December 1998 to increase the number of shares which could be
issued thereunder to 1,200,000. In May 1999, the Company registered the shares
subject to the incentive plan with the Commission on Form S-8.
TERMS OF INCENTIVE PLAN
The incentive plan provides the Company with increased flexibility to grant
equity-based compensation to key employees, officers and consultants of the
Company. The purpose of the incentive plan is to: (i) provide incentives to
stimulate individual efforts toward the Company's long-term growth and
profitability; (ii) encourage stock ownership by officers, key employees and
consultants by enabling them to acquire a proprietary interest in the Company in
the form of shares of common stock or to receive compensation based on
appreciation in the value of the common stock; and (iii) provide a means of
obtaining, rewarding and retaining key personnel. The Company has reserved
1,200,000 shares of common stock for issuance pursuant to awards that may be
made under the incentive plan. As of May 21, 1999, awards of 645,000 shares of
common stock have been granted under the incentive plan to key employees of
which 55,000 options are currently exercisable at a price of $1.00 per share and
300,000 are currently exercisable at $2.94 per share.
The nature, terms and conditions of awards under the incentive plan will be
determined by the stock option committee of the board of directors. The members
of the committee are selected by the board of directors. The current members of
the committee are Messrs. Garner and Azran. The incentive plan permits the
committee to make awards of common stock, incentive or non-qualified stock
options with the following terms and conditions:
Terms and Conditions of all Stock Incentives. The number of shares of
common stock as to which a stock incentive may be granted will be determined by
the committee in its sole discretion. Each stock incentive will either be
evidenced by a stock incentive agreement or stock incentive program, in each
case containing such terms, conditions and restrictions as the committee may
deem appropriate. Stock incentives are not transferable or assignable except by
will or by the laws of descent and distribution and are exercisable only by the
recipient during his or her lifetime or by the recipient's legal representative
in the event of the recipient's death or disability.
Stock Awards. The number of shares of common stock, subject to a stock
award and restrictions or conditions on such shares, if any, will be determined
by the committee. The committee may require a cash
19
<PAGE> 21
payment from the recipient in an amount no greater than the aggregate fair
market value of the shares of common stock awarded, as determined at the date of
grant.
Options. Options may be either incentive stock options, as described in
Section 422 of the Code, or non-qualified stock options. The exercise price of
each option will be determined by the committee and set forth in a stock
incentive agreement but may not be less than the fair market value of the common
stock on the date the option is granted. The exercise price for an incentive
stock option may not be less than 110% of the fair market value of the common
stock on the date the option is granted. The exercise price may not be changed
after the option is granted, and options may not be surrendered in consideration
of, or exchanged for, a grant of a new option with a lower exercise price.
Incentive stock options will expire 10 years after the date of grant.
Non-qualified stock options will expire on the date set forth in the respective
stock incentive agreement. Payment for shares of common stock purchased upon
exercise of an option may be made in any form or manner authorized by the
committee in the stock incentive agreement or by amendment thereto. In the event
of a recipient's termination of employment, the option or unexercised portion
thereof will expire no later than three months after the date of termination,
except that in the case of the recipient's death or disability, such period will
be extended to one year. The committee may set forth longer time limits in the
stock incentive agreement, although in such cases incentive stock option
treatment will not be available under the Code.
TERMINATION AND AMENDMENT OF THE INCENTIVE PLAN
The board of directors may amend or terminate the incentive plan without
stockholder approval at any time; provided, however, that the board may
condition any amendment on the approval of the stockholders if such approval is
necessary or advisable with respect to tax, securities or other applicable laws.
No such termination or amendment without the consent of the holder of a stock
incentive may adversely affect the rights of a holder under the terms of that
stock incentive. The incentive plan was amended by the board in December of
1998, to increase the total number of shares that may be issued to 1,200,000 and
to permit 10% or more shareholders/officers to participate in the plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of May 21, 1999 based upon
information obtained from the persons named below, relating to the beneficial
ownership of shares of common stock by (i) each person known to the Company to
own five percent or more of the outstanding common stock, (ii) each director of
the Company, and (iii) all officers and directors of the Company as a group.
<TABLE>
<CAPTION>
PERCENT
OWNED
NAME AND ADDRESS OF
OF BENEFICIAL OWNER(1) SHARES CLASS
- ---------------------- --------- -------
<S> <C> <C>
Timothy C. Moses(2)......................................... 1,507,930 22.7%
405 North Errol Court, N.W
Atlanta, Georgia 30327
Jacques Elfersy(2).......................................... 1,655,117 24.9
1771 East Clifton Road
Atlanta, Georgia 30307
Carl T. Garner.............................................. 60,000 *
Michel Azran................................................ 10,000 *
All officers and directors as a group(6 persons)............ 3,233,447 48.6
</TABLE>
- ---------------
* Less than 1%
(1) A person is deemed to be a beneficial owner of securities that can be
acquired by such person within 60 days from the date of this prospectus upon
the exercise of options or warrants. Each beneficial owner's percentage
ownership is determined by assuming that options held by such person (but
not those held by any other person) and that are exercisable within 60 days
from the date of this prospectus have been exercised as of May 21, 1999.
20
<PAGE> 22
(2) Does not include 138,834 shares of common stock owned by each of the wives
of Messrs. Moses and Elfersy for which each of them disclaim beneficial
ownership.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1998, Timothy C. Moses and Jacques Elfersy contributed
approximately $50,000 of capital to the Company. Subsequent to June 30, 1998,
Messrs. Moses and Elfersy contributed an additional $325,000 of capital to the
Company. Such contributions were funded by the private sale to accredited
investors of 124,995 shares of common stock of the Company owned by such persons
since 1995 at a purchase price of $3.00 per share.
In January, March, and June 1998, Judith B. Turner, the mother-in-law of
Timothy C. Moses, lent the Company $30,000, $25,000, and $25,000, respectively.
The Company has agreed to repay such sums to Mrs. Turner pursuant to three
promissory notes, dated January 16, 1998, February 27, 1998, and June 5, 1998.
The Notes were paid off by the Company from the proceeds of the initial public
offering.
Upon consummation of the initial public offering, Messrs. Moses and Elfersy
received $307,133 in the aggregate from the Company representing repayment of
accrued and unpaid salary due and payable by the Company to such persons for
their employment for the period June 1995 through June 30, 1998.
In May of 1999, the board of directors granted to each of Messrs. Moses and
Elfersy five year fully vested options to purchase 2,250,000 shares of its
subsidiary Electronic Medical Distribution, Inc. at a price of $2.00 per share.
Although the Company believes that the foregoing transactions were on terms
no less favorable to the Company than would have been available from
unaffiliated third parties in arm's length transactions, there can be no
assurance that this is the case. The Company will comply with Sections VII A and
B of the NASAA Statement of Policy Regarding Loans and Other Material Affiliated
Transactions, amended November 18, 1997, regarding future material affiliated
transactions. Pursuant to these Sections, the Company represents that (i) all
future material affiliated transactions and loans will be made or entered into
on terms that are no less favorable to the Company than those that could be
obtained from unaffiliated third parties and (ii) all future material affiliated
transactions and loans, and any forgiveness of loans, will be approved by a
majority of the Company's independent directors who do not have an interest in
the transactions and who will have access, at the Company's expense, to the
Company's counsel or to independent legal counsel. There can be no assurance,
however, that future transactions or arrangements between the Company and its
affiliates will be advantageous, that conflicts of interest will not arise with
respect thereto or that if conflicts do arise, that they will be resolved in
favor of the Company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Index to Exhibits.
21
<PAGE> 23
CONSOLIDATED FINANCIAL STATEMENTS
AND REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
BIOSHIELD TECHNOLOGIES, INC.
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
June 30, 1998 and 1999
<PAGE> 24
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......... F-2
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS............................... F-3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
EARNINGS............................................... F-4
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT).............................................. F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS..................... F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................ F-7
</TABLE>
F-1
<PAGE> 25
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
BioShield Technologies, Inc.
We have audited the accompanying consolidated balance sheets of BioShield
Technologies, Inc. and Subsidiary as of June 30, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for the years then ended and for the period June 1, 1995 (inception) to
June 30, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of BioShield
Technologies, Inc. and Subsidiary as of June 30, 1998 and 1999, and the
consolidated results of their operations and their cash flows for the years then
ended and for the period June 1, 1995 (inception) to June 30, 1999, in
conformity with generally accepted accounting principles.
/s/ Grant Thornton LLP
Atlanta, Georgia
August 19, 1999 (except for Note N for
which the date is September 2, 1999)
F-2
<PAGE> 26
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
-----------------------
1998 1999
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 1,636 $2,500,561
Marketable securities..................................... -- 103,250
Accounts receivable....................................... 110,081 102,013
Stockholders' subscription receivable..................... - 4,798,750
Inventories............................................... 157,784 151,403
Prepaid expenses and other current assets................. 2,500 171,073
---------- ----------
Total current assets.............................. 272,001 7,827,050
PROPERTY AND EQUIPMENT, NET................................. 104,711 202,400
DEPOSITS AND OTHER LONG-TERM ASSETS......................... 60,911 194,293
---------- ----------
$ 437,623 $8,223,743
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable............................................. $ 450,000 $ --
Notes payable -- other.................................... 205,000 --
Accounts payable.......................................... 309,538 597,877
Accrued liabilities....................................... -- 195,044
Accrued payroll........................................... 315,361 58,085
Accrued interest payable.................................. 18,377 839
---------- ----------
Total current liabilities......................... 1,298,276 851,845
MINORITY INTEREST........................................... -- 4,798,750
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock -- no par value; 50,000,000 shares
authorized; 4,395,040 and 6,322,315 issued and
outstanding at June 30, 1998 and 1999, respectively.... 1,153,001 7,336,318
Additional paid-in capital................................ 329,050 870,900
Accumulated other comprehensive earnings (loss)........... -- (1,750)
Deficit accumulated during the development stage.......... (2,342,704) (5,632,320)
---------- ----------
(860,653) 2,573,148
---------- ----------
$ 437,623 $8,223,743
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 27
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE EARNINGS
<TABLE>
<CAPTION>
JUNE 1, 1995 YEAR ENDED YEAR ENDED
(INCEPTION) TO JUNE 30, JUNE 30,
JUNE 30, 1999 1998 1999
-------------- ----------- -----------
<S> <C> <C> <C>
Net sales............................................... $ 1,543,122 $ 462,471 $ 305,336
Cost of sales........................................... 659,393 154,658 188,913
----------- ----------- -----------
Gross profit.................................. 883,729 307,813 116,423
Operating expenses
Marketing and selling................................. 1,472,506 472,945 780,566
General and administrative............................ 4,023,785 1,060,417 2,067,669
Research and development.............................. 1,208,401 231,547 717,978
----------- ----------- -----------
6,704,692 1,764,909 3,566,213
----------- ----------- -----------
Loss from operations.......................... (5,820,963) (1,457,096) (3,449,790)
Other income (expense)
Royalty fees.......................................... 75,000 -- 75,000
Consulting income, net of consulting expenses of
$19,474 for the period ended June 30, 1997......... 39,908 -- --
Interest and dividend income.......................... 109,072 3,544 102,134
Interest expense...................................... (35,337) (18,377) (16,960)
----------- ----------- -----------
188,643 (14,833) 160,174
----------- ----------- -----------
Net loss before income taxes.................. (5,632,320) (1,471,929) (3,289,616)
Income tax (expense) benefit............................ -- -- --
----------- ----------- -----------
NET LOSS...................................... (5,632,320) (1,471,929) (3,289,616)
Other comprehensive earnings (loss)
Unrealized holding loss on securities................. (1,750) -- (1,750)
----------- ----------- -----------
COMPREHENSIVE LOSS............................ $(5,634,070) $(1,471,929) $(3,291,366)
=========== =========== ===========
Net loss per common share
Basic................................................. $ (1.22) $ (0.33) $ (0.57)
=========== =========== ===========
Weighted average common shares outstanding.............. 4,617,751 4,395,040 5,814,191
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 28
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ACCUMULATED DEFICIT
COMMON STOCK OTHER ACCUMULATED
NO PAR VALUE ADDITIONAL COMPREHENSIVE DURING THE
---------------------- PAID-IN EARNINGS DEVELOPMENT
SHARES AMOUNT CAPITAL (LOSS) STAGE TOTAL
--------- ---------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 1, 1995........... -- $ -- $ -- $ -- $ -- $ --
Proceeds from original issuance of
shares.......................... 3,907,086 500 -- -- -- 500
Proceeds from issuance of shares
under private placement
offering........................ 62,612 115,000 -- -- -- 115,000
Stock warrants issued for services
rendered........................ -- -- 60,000 -- -- 60,000
Net loss -- June 1, 1995
(inception) through June 30,
1996............................ -- -- -- -- (356,316) (356,316)
--------- ---------- -------- ------- ----------- -----------
Balance at June 30, 1996.......... 3,969,698 115,500 60,000 -- (356,316) (180,816)
Proceeds from issuance of shares
under private placement
offering........................ 149,723 275,001 -- -- -- 275,001
Proceeds from issuance of shares
under private placement
offering........................ 245,000 600,000 -- -- -- 600,000
Stock issuance costs related to
private placement offerings..... -- (25,000) -- -- -- (25,000)
Stock warrants issued for services
rendered........................ -- -- 62,400 -- -- 62,400
Net loss for the year ended June
30, 1997........................ -- -- -- -- (514,459) (514,459)
--------- ---------- -------- ------- ----------- -----------
Balance at June 30, 1997.......... 4,364,421 965,501 122,400 -- (870,775) 217,126
Proceeds from issuance of shares
under private placement
offering........................ 30,619 187,500 -- -- -- 187,500
Stock options issued for services
rendered........................ -- -- 156,650 -- -- 156,650
Contribution to capital........... -- -- 50,000 -- -- 50,000
Net loss for the year ended June
30, 1998........................ -- -- -- -- (1,471,929) (1,471,929)
--------- ---------- -------- ------- ----------- -----------
Balance at June 30, 1998.......... 4,395,040 1,153,001 329,050 -- (2,342,704) (860,653)
Proceeds from issuance of shares
under initial public offering... 1,300,000 5,102,794 -- -- -- 5,102,794
Proceeds from exercise of stock
warrants........................ 612,275 1,065,523 -- -- -- 1,065,523
Proceeds from exercise of stock
options......................... 15,000 15,000 -- -- -- 15,000
Stock options issued for services
rendered........................ -- -- 95,250 -- -- 95,250
Compensation related to previously
issued options.................. -- -- 121,600 -- -- 121,600
Contribution to capital........... -- -- 325,000 -- -- 325,000
Unrealized loss on securities..... -- -- -- (1,750) -- (1,750)
Net loss for the year ended June
30, 1999........................ -- -- -- -- (3,289,616) (3,289,616)
--------- ---------- -------- ------- ----------- -----------
Balance at June 30, 1999.......... 6,322,315 $7,336,318 $870,900 $(1,750) $(5,632,320) $ 2,573,148
========= ========== ======== ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 29
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
JUNE 1, 1995 YEAR ENDED YEAR ENDED
(INCEPTION) TO JUNE 30, JUNE 30,
JUNE 30, 1999 1998 1999
-------------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $(5,632,320) $(1,471,929) $(3,289,616)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization...................... 60,681 14,426 28,215
Issuance of stock and stock options for services
rendered......................................... 495,900 156,650 216,850
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable........................... (102,013) (80,787) 8,068
Inventory..................................... (151,403) (15,590) 6,381
Prepaid expenses and other current assets..... (185,315) 17,568 (168,573)
Deposits and other assets..................... (195,156) (1,107) (133,382)
Increase in:
Accounts payable.............................. 597,877 140,658 288,339
Accrued liabilities and payroll............... 253,968 26,806 (79,770)
----------- ----------- -----------
Net cash used in operating activities......... (4,857,781) (1,213,305) (3,123,488)
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures.................................. (247,976) (76,480) (125,904)
Purchase of marketable securities..................... (105,000) -- (105,000)
----------- ----------- -----------
Net cash used by investing activities......... $ (352,976) $ (76,480) $ (230,904)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from debt.................................... $ 655,000 $ 655,000 $ --
Repayment of debt..................................... (655,000) -- (655,000)
Contribution to capital............................... 375,000 50,000 325,000
Proceeds from stock warrants exercised................ 1,065,523 -- 1,065,523
Stock issued under stock option plan.................. 15,000 -- 15,000
Proceeds from stock issuances, net.................... 6,255,795 187,500 5,102,794
----------- ----------- -----------
Net cash provided by financing activities..... 7,711,318 892,500 5,853,317
----------- ----------- -----------
Net increase (decrease) in cash............... 2,500,561 (397,285) 2,498,925
Cash at beginning of period............................. -- 398,921 1,636
----------- ----------- -----------
Cash at end of period................................... $ 2,500,561 $ 1,636 $ 2,500,561
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest.............. $ 34,498 $ -- $ 34,498
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE> 30
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1999
NOTE A -- NATURE OF OPERATIONS
BioShield Technologies, Inc. ("BSTI"), was incorporated on June 1, 1995.
BSTI was formed to develop, manufacture and distribute certain antimicrobial
agents and products. Patents for these new agents and products are currently
pending. BSTI is in the process of developing distribution channels for these
products throughout the United States and internationally. On April 27, 1999,
BSTI formed a subsidiary, Electronic Medical Distribution, Inc. (formerly known
as Allergy Superstore.com, Inc.) ("eMD.com") to develop electronic commerce in
the medical industry (see Note M).
BSTI and eMD.com are in the development stage and their efforts though June
30, 1999, have been principally devoted to organizational activities, raising
capital, regulatory approvals, research and development and further
investigation into new markets.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Presentation
The consolidated financial statements include the accounts of BSTI, and its
majority owned (95%) subsidiary, eMD.com, from the date of its formation
(collectively, the "Company"). All material intercompany accounts and
transactions have been eliminated in the consolidated financial statements.
2. Cash and cash equivalents
The Company considers all highly liquid debt instruments with a maturity of
three months or less to be cash equivalents. The carrying value of cash and cash
equivalents approximates fair value due to the relatively short-term nature of
the instruments.
3. Marketable securities
The Company categorizes marketable securities as available-for-sale
securities, as defined by the Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities." A
separate component of stockholders' equity reports the net amount of unrealized
holding gains and losses until realized.
4. Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. Inventories consist primarily of
raw materials, work in progress and finished goods.
5. Property, Equipment and Depreciation
Property and equipment are recorded at historical cost. Depreciation
is provided for in amounts sufficient to relate the cost of depreciable
assets to operations over their estimated service lives on a straight-line
basis. Depreciation expense related to property and equipment charged to
operations was approximately $14,000 and $28,000 for the years ended June
30, 1998 and 1999, respectively.
Estimated service lives are as follows:
<TABLE>
<S> <C>
Office equipment............................................ 3 years
Machinery, leasehold improvements, furniture and 5-10 years
equipment.................................................
</TABLE>
F-7
<PAGE> 31
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
7. Revenue recognition
The Company recognizes revenue and provides for the estimated cost of
returns and allowances in the period the products are shipped and title
transfers to the customer.
8. Income taxes
The Company accounts for income taxes using the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates applied to taxable income. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is provided for deferred
tax assets when it is more likely than not that the asset will not be realized.
9. Research and development costs
The costs of research and development include, among other things,
consumable supplies and materials to be used for the development of the
Company's intended products, and the cost of testing and consulting related to
filing with the Environmental Protection Agency (EPA) and patent filings.
Research and development costs are expensed when incurred and amounted to
$231,547 and $717,978 for the years ending June 30, 1998 and 1999, respectively.
10. Advertising costs
The Company expenses the cost of advertising the first time advertising
takes place. Costs of developing advertising materials are expensed at the time
the advertising materials are produced and distributed to customers. Advertising
expense was $228,192 and $597,550 for the years ended June 30, 1998 and 1999,
respectively. Advertising expense for the year ended June 30, 1999 included the
creation of media advertising materials of $158,000.
11. Reverse stock split
Effective December 11, 1997, the Company's shareholders approved a reverse
split, which had the following effect on all outstanding securities:
<TABLE>
<S> <C>
Common stock................................................ 2.45 for 3.00
Warrants.................................................... 1 for 2
</TABLE>
The exercise price on all warrants issued prior to December 11, 1997 was
reduced to $0.50 in connection with the reverse split.
All share and per share amounts and warrant amounts have been restated
retroactively to reflect these reverse splits.
F-8
<PAGE> 32
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. Loss per common share
Basic loss per common share has been calculated using the weighted average
number of shares of common stock outstanding during each period as adjusted for
the reverse split as discussed in Note B-11. Diluted loss per common share is
not disclosed because the effect of the exchange or exercise of common stock
equivalents would be antidilutive.
13. Stock-Based Compensation
Financial Accounting Statement No. 123, Accounting for Stock Based
Compensation, encourages, but does not require companies to record compensation
cost for stock-based employee compensation plans at fair value. The Company has
chosen to continue to account for stock-based compensation using the intrinsic
method prescribed in Accounting Principles Board Opinion No. 25, Accounting for
Stock issued to Employees, and related interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock (see Note F).
14. Reclassifications
Certain reclassifications have been made to the 1998 financial statements
to conform to the 1999 presentation.
NOTE C -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1998 1999
-------- --------
<S> <C> <C>
Raw Materials............................................... $ 83,482 $ 60,273
Work in Process............................................. 42,893 47,993
Finished Goods.............................................. 31,409 43,137
-------- --------
$157,784 $151,403
======== ========
</TABLE>
NOTE D -- PROPERTY AND EQUIPMENT
Property and Equipment consists of the following:
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1998 1999
-------- --------
<S> <C> <C>
Leasehold improvements...................................... $ 33,385 $ 33,385
Office furniture and equipment.............................. 28,433 125,891
Machinery and equipment..................................... 60,254 88,700
-------- --------
Total property and equipment...................... 122,072 247,976
Less accumulated depreciation............................... (17,361) (45,576)
-------- --------
$104,711 $202,400
======== ========
</TABLE>
NOTE E -- COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases certain office and operating facilities and certain
equipment under operating lease agreements that expire on various dates through
2009 and require the Company to pay all maintenance costs.
F-9
<PAGE> 33
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Rent expense under these leases was $64,835 and $72,082 for the years ended June
30, 1998 and 1999, respectively.
Commitments under noncancelable operating leases including leases entered
into after June 30, 1999 are summarized as follows:
<TABLE>
<CAPTION>
BSTI EMD.COM TOTAL
-------- ---------- ----------
<S> <C> <C> <C>
Fiscal Year:
2000.............................................. $143,106 $ 359,606 $ 502,712
2001.............................................. 60,798 733,596 794,394
2002.............................................. -- 748,534 748,534
2003.............................................. -- 763,471 763,471
2004.............................................. -- 778,962 778,962
Thereafter........................................ -- 4,134,363 4,134,363
-------- ---------- ----------
Total..................................... $203,904 $7,518,532 $7,722,436
======== ========== ==========
</TABLE>
NOTE F -- STOCK OPTIONS AND WARRANTS
The Company's Board of Directors has approved two stock options plans.
Under the 1997 Stock Incentive Plan, the Company may grant options to officers
and key employees for up to 1,200,000 shares of common stock. This plan provides
for the expiration of options ten years from the date of grant, with the
exception of options issued to an over 10% owner, for which expiration is five
years from the date of grant. The exercise price of options granted must equal
at least 100% of the market value, or 110% of the market value for over 10%
owners, on the date granted. Under the 1996 Directors' Stock Option Plan, the
Company may grant options to directors of the company for up to 1,000,000 shares
of common stock. This plan provides for options to be immediately exercisable
and provides for the expiration of options five years from the date of grant.
The plan requires initial options to be granted at an exercise price of $2.00
per share. Subsequent options are issued at market value.
Employee stock option transactions for the years ended June 30, 1999 and
1998 are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1998 JUNE 30, 1999
------------------ ------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
------- -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding, beginning of period................. 60,000 $2.00 90,000 $ 1.67
Granted.......................................... 30,000 1.00 745,000 6.27
Exercised........................................ -- -- (15,000) 1.00
Forfeited........................................ -- -- -- --
------- ----- ------- --------
Outstanding, end of year......................... 90,000 $1.67 820,000 $ 5.87
======= ===== ======= ========
Options exercisable at year end.................. 90,000 410,000
Weighted average fair value of options granted
during the year................................ $ 3.88 $ 3.15
</TABLE>
F-10
<PAGE> 34
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes information about employee stock options
outstanding at June 30, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- -------------------------------
WEIGHTED WEIGHTED
NUMBER AVERAGE AVERAGE NUMBER WEIGHTED
OUTSTANDING AT CONTRACTUAL EXERCISE EXERCISABLE AT AVERAGE
RANGE OF EXERCISE PRICE JUNE 30, 1999 LIFE (YEARS) PRICE JUNE 30, 1999 EXERCISE PRICE
- ----------------------- -------------- ------------ -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
$1.00................................ 40,000 4.25 $1.00 40,000 $1.00
2.00-3.00............................ 360,000 3.94 2.78 360,000 2.78
5.00................................. 267,000 4.30 5.00 -- --
5.75-6.00............................ 20,000 4.75 5.88 10,000 5.75
12.25-19.06.......................... 133,000 4.94 17.41 -- --
------- ---- ----- ------- -----
820,000 4.25 $5.87 410,000 $2.68
======= ==== ===== ======= =====
</TABLE>
The Company follows the practice of recording amounts received upon the
exercise of certain options by crediting common stock. No charges are reflected
in the statements of operations as a result of the grant or exercise of options
to or by employees. The Company realizes an income tax benefit from the exercise
of certain stock options and the exercise and early disposition of the shares
acquired via certain other stock options. This benefit results in a reduction to
income taxes payable and an increase to additional paid-in capital.
The Company uses the intrinsic value method in accounting for stock options
issued to employees and directors. In applying this method, compensation cost of
$116,250 and $61,250 has been recognized for the years ended June 30, 1998 and
1999, respectively. Had compensation cost for the Company's option plans been
determined based on the fair value at the grant dates for awards under those
plans, the Company's net loss and loss per share would have resulted in the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
JUNE 30, 1998 JUNE 30,1999
------------- -------------
<S> <C> <C> <C>
Net loss.................................... As reported $(1,471,929) $(3,291,366)
Pro forma (1,471,929) (4,045,637)
Basic net loss per common share............. As reported $ (0.33) $ (0.57)
Pro forma (0.33) (0.70)
</TABLE>
The fair values were estimated using the Black Scholes options-pricing
model with the following weighted average assumptions for 1998 and 1999:
expected dividend yield of 0.0%, expected price volatility of 84.96%, risk-free
rate of return of 6.5%, and expected life of options of 3.0 years.
Stock Options Issued to Non-Employees
As of the beginning of fiscal 1998, options to purchase 60,000 shares of
common stock were outstanding related to options issued to a member of the
Company's advisory board during 1996. These options vest over a three-year
period allowing the optionee to acquire 20,000 shares beginning on each
anniversary date of the grant date and expiring five years from the date of
grant.
During the year ended June 30, 1998, the Company issued options to purchase
120,000 shares of common stock at an exercise price of $5.00 per share to two
members of its advisory board. The options vest over a three-year period
allowing each optionee to acquire 20,000 shares beginning on each anniversary
date of the grant and expiring five years from the date of grant. Compensation
cost of $121,600 and $40,400 has been recognized in the accompanying financial
statements for the years ended June 30, 1998 and June 30, 1999.
During the year ended June 30, 1999, the Company issued options to purchase
4,000 shares of common stock at an exercise price of $8.94 per share and 4,000
shares of common stock at an exercise price of $14.81
F-11
<PAGE> 35
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
per share to a non-employee for consulting services. These options vest one year
from the grant date and expire five years from the grant date. Compensation cost
of $34,000 has been recognized for the year ended June 30, 1999 related to these
options.
Warrants
At June 30, 1997, warrants for the purchase of 959,004 shares were issued
in connection with various private placement offerings. In connection with the
reverse split discussed in Note B-11, the restated number of warrants
outstanding at June 30, 1997 was 479,502, with an exercise price of $0.50. The
expiration date was also restated to reflect a five-year term expiring in April
2003.
In connection with a private placement offering during the year ended June
30, 1998, warrants for the purchase of 490,000 shares were issued with an
exercise price ranging from $5.00 to $5.25 expiring April 2003. Also, during the
year ended June 30, 1998, warrants for the purchase of 18,750 shares were issued
in connection with private placement offerings. These warrants have a five-year
term and an exercise price of $0.50.
In connection with its initial public offering during the year ended June
30, 1999, warrants for the purchase of 1,365,000 shares were issued with an
exercise price ranging from $6.00 to $7.50 expiring September 2003. Also during
the year ended June 30, 1999, warrants for the purchase of 612,275 shares were
exercised. The number of warrants outstanding as of June 30, 1999, including
150,000 issued for services in lieu of cash, was 1,890,977.
NOTE G -- INCOME TAXES
The Company's temporary differences result in a deferred income tax asset
which is reduced to zero by a related valuation allowance are summarized as
follows:
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1998 1999
-------- ----------
<S> <C> <C>
Deferred income tax assets:
Operating loss carryforwards.............................. $658,883 $1,867,560
Payroll tax accruals...................................... 119,837 121,080
Options for services...................................... 106,039 142,234
-------- ----------
Gross deferred tax assets.............................. 884,759 2,130,874
Deferred tax asset valuation allowance................. (884,759) (2,130,874)
-------- ----------
Net deferred income tax asset..................... $ -- $ --
======== ==========
</TABLE>
The income tax provisions for the years ended June 30, 1998 and 1999,
differ from the amounts determined by applying the applicable U.S. statutory
federal income tax rate to pretax results of operations. These differences are
the result of applying valuation allowances against the deferred tax assets.
F-12
<PAGE> 36
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reconciliations of statutory Federal tax rates to the effective tax rate
for the years ended June 30, 1998 and 1999 are as follows:
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1998 1999
-------- ----------
<S> <C> <C>
Income tax benefit at applicable Federal rate of 34%........ $500,456 $1,118,469
State tax benefit, net of Federal income tax effect......... 58,877 131,585
Other....................................................... (1,638) (3,939)
-------- ----------
557,695 1,246,115
Increase in deferred income tax asset valuation allowance... (557,695) (1,246,115)
-------- ----------
Net income tax benefit............................ $ -- $ --
======== ==========
</TABLE>
At June 30, 1999, the Company had operating loss carryforwards for U.S.
income tax purposes of approximately $4,400,000 available to reduce future
taxable income. These loss carryforwards will expire in fiscal years 2004
through 2019.
The Company has experienced a change in control, as defined under Section
382 of the Internal Revenue Code, during 1999. As a result, the utilization of
the net operating losses that expire in 2019 and prior will be limited to a
maximum amount annually as defined by the Internal Revenue Code. As a result of
these limitations, a significant portion of the tax loss carryforwards could
expire unused.
NOTE H -- SIGNIFICANT CUSTOMERS
During 1997, the Company entered into sales agreements with two customers
that included provision for certain exclusive marketing rights and preferential
payment terms. The customers terminated these agreements during 1999. Sales to
two customers totaled approximately $151,000 or 33% of total sales for the year
ended June 30, 1998. Sales to four customers totaled approximately $185,000 or
61% of total sales during the year ended June 30, 1999. No other customer
represented more than 10% of sales during the periods presented.
NOTE I -- NEW ACCOUNTING PRONOUNCEMENTS
Recently Adopted Pronouncements
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
130, Reporting Comprehensive Income, for its fiscal year ended June 30, 1999.
The statement establishes standards for reporting and presentation of
comprehensive earnings and its components (revenues, expenses, gains and losses)
in a full set of general purpose financial statements. The statement requires
retroactive application for all periods presented in the financial statements.
The adoption of SFAS No. 130 did not have a material effect on the Company's
results of operations or its financial position.
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
131, Disclosure About Segments of An Enterprise and Related Information, for its
fiscal year ended June 30, 1999. SFAS No. 131 establishes standards for the way
in which information about operating segments is reported. SFAS No. 131 also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The adoption of SFAS No. 131 did not have
a material effect on the Company's results of operations or its financial
position.
During 1999, the Company adopted Statement of Positions (SOP) No. 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use, which requires certain costs incurred in connection with developing or
obtaining internal-use software to be capitalized and other costs to be
expensed. During 1999, the Company expensed $166,000 related to the development
of internet software.
F-13
<PAGE> 37
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Recently Issued Pronouncements
In April 1998, the American Institute of Certified Public Accountants'
Accounting Standards Executive Committee (AcSEC) issued Statement of Position
No. SOP 98-5, Reporting on the Costs of Start-Up Activities. SOP 98-5
establishes standards on accounting for start-up and organization costs and, in
general, requires such costs to be expensed as incurred. This standard is
required to be adopted on July 1, 1999.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, which must be adopted by July 1,
1999, with early adoption permitted. SFAS No. 133 requires that all derivative
financial instruments be recorded as either assets or liabilities on the balance
sheet and measure those instruments at their fair value. Changes in the fair
value of derivatives will be recorded each period in earnings or other
comprehensive income, depending on whether a derivative as part of a hedge
transaction and, if it is, the type of hedge transactions.
The adoption of these two pronouncements is not expected to have a material
effect on the Company's results of operations or financial position.
NOTE J -- NOTES PAYABLE
Notes payable consisted of ninety $5,000 notes payable to individuals
totaling $450,000 at June 30, 1998. The notes bear interest at 10% per annual
during the first twelve months, 13% per annum during the second twelve months,
and 15% per annum during the third twelve months. In connection with these
notes, warrants for the purchase of 450,000 shares at an exercise price of $5.00
per share (see Note F). The value attributable to these warrants is not
significant to the accompanying financial statements and accordingly, the value
has not been included therein.
Other notes payable consisted of a $80,000 note payable to a relative of a
principle stockholder bearing interest at 8% and a $125,000 note payable to an
individual bearing interest at prime plus 2%.
The Company repaid all notes payable that were outstanding as of June 30,
1998 upon receiving the proceeds of the initial public offering.
NOTE K -- SEGMENT INFORMATION
The following information is presented in accordance with SFAS No. 131,
which was adopted by the Company during 1999.
The Company operates primarily in the antimicrobial and biostatic products
segment. During 1999, the company established a subsidiary, eMD.com which will
operate in the pharmaceutical distribution segment via the internet.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and marketing strategies.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based on gross profit.
See Note H regarding sales to significant customers. Sales reported in Note
H relate to the antimicrobial and biostatic products segment only.
F-14
<PAGE> 38
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table provides summarized information concerning the
Company's reportable segments.
<TABLE>
<CAPTION>
ANTIMICROBIAL
AND BIOSTATIC PHARMACEUTICAL
PRODUCTS DISTRIBUTION TOTAL
------------- -------------- -----------
<S> <C> <C> <C>
Revenues from products/services................ $ 305,336 $ -- $ 305,336
Gross profit................................... 116,423 -- 116,423
Segment profit (loss).......................... (2,824,391) (465,225) (3,289,616)
Interest income................................ 102,134 -- 102,134
Interest expense............................... 16,960 -- 16,960
Depreciation and amortization.................. 26,857 1,358 28,215
Segment assets................................. 3,239,449 4,984,294 8,223,743
</TABLE>
For the years ended June 30, 1998, all operations and assets related to the
antimicrobial and biostatic products segment.
NOTE L -- RELATED PARTY TRANSACTIONS AND SUBSEQUENT EVENT
During 1998, the Company entered an exclusive sales and distributorship
agreement with a related party. Under this agreement, the Company receives
royalty payments based on the level of sales of its products made by the
distributor. Royalty payments are subject to an annual minimum amount. In
addition, the distributor has agreed to pay the Company $50,000 in monthly
installments over two years to be used by the Company to continue its research
and development of products, product improvement and patent execution. Payments
related to this agreement did not begin until 1999. The Company recorded $75,000
related to royalties which is reported as royalty fees in the financial
statements. The Company recorded income of $16,667 related to research and
development under this agreement and has been netted against research and
development expense in the accompanying financial statements.
At June 30, 1999, the Company had $79,667 due from related parties included
in accounts receivable.
During 1999, two principal stockholders contributed $325,000 to additional
paid-in capital of the Company without further consideration. In June 1998, a
principal stockholder contributed $50,000 to additional paid-in capital of the
Company without further consideration.
NOTE M -- FORMATION OF ELECTRONIC MEDICAL DISTRIBUTION, INC.
On April 27, 1999, the Company acquired 99% of the outstanding common stock
of a newly formed entity, Allergy Superstore.com, Inc. The corporate name of the
newly acquired subsidiary was subsequently changed to Electronic Medical
Distribution, Inc. (eMD.com). On June 30, 1999, eMD.com, BSTI, and certain
investors entered into a securities purchase agreement whereby eMD.com would
sell up to an aggregate of 3,218,884 shares of common stock to the investors at
a price of $4.67 per share. As of June 30, 1999, investors had purchased
1,070,664 shares for an aggregate purchase price of $5,000,000 under this
agreement. The net proceeds of $4,798,750, which was received from escrow on
July 6, 1999, was included in current assets under the caption Stockholder
subscription receivable at June 30, 1999. In connection with the purchase of
stock, the investors also received warrants for the purchase of 100,000 shares
of eMD.com common stock at an exercise price of $5.126 per share. These warrants
have a five year term. At June 30, 1999, there were 29,070,664 of issued and
outstanding shares of eMD.com.
The securities purchase agreement provides for a conversion feature which
allows the holder of eMD.com common stock to exchange their shares for BSTI
common stock at a predetermined exchange rate provided eMD.com has not
consummated an initial public offering within twelve months of the purchase of
stock under
F-15
<PAGE> 39
BIOSHIELD TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
this agreement. BioShield has agreed to reserve the number of shares of common
stock needed in connection with the conversion right and warrants issued by
eMD.com.
eMD.com has also granted options for the purchase of 4,740,000 shares of
common stock pursuant to various stock options plans to members of its board of
directors and members of its advisory board. All options have a 5 year term and
an exercise price of $2.00 per share.
NOTE N -- SUBSEQUENT EVENTS
As of September 2, 1999, investors had purchased an additional 214,133
shares of eMD.com common stock for an aggregate purchase price of $1,000,000
under the aforementioned securities purchase agreement (Note M). Warrants for
the purchase of 60,000 shares of eMD.com common stock at an exercise price of
$5.126 per share were issued in connection with the eMD.com securities purchase
agreements.
On July 9, 1999, eMD.com entered into an agreement with iXL Enterprises,
Inc. (iXL), a subsidiary of iXL, Inc. Under the agreement, iXL will provide
strategic planning and marketing advice in exchange for 600,000 shares of
eMD.com common stock. The Company also entered into a separate agreement with
iXL, Inc for the design and development of an internet website. Under the
agreement, eMD.com will pay iXL a total of approximately $1,890,700 as work
progresses on the development of the website.
On July 6, 1999, the Company entered into a lease agreement with an
unrelated party to lease an office building for a term of ten years (see Note E
for future minimum lease payments).
F-16
<PAGE> 40
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BioShield Technologies, Inc.
Date: September 28, 1999 /s/ Timothy C. Moses
----------------------------------------
TIMOTHY C. MOSES
President and Chief Executive Officer
Date: September 28, 1999 /s/ Daniel E. Swaye
----------------------------------------
DANIEL E. SWAYE
Vice President Finance
(Principal Financial Officer)
<PAGE> 41
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<C> <S> <C>
3.3 -- Certificate of Amendment of Certificate of Incorporation of
Allergy Superstore.com, Inc., dated as of August 27, 1999
10.31 -- Amended 1999 Directors Stock Option Plan of Allergy
Superstore.com, Inc.
10.32 -- Amended Form of Directors Non-Qualified Initial Stock Option
Grant of Allergy
Superstore.com, Inc.
10.33 -- Allergy Superstore.com, Inc. Initial Directors Non-Qualified
Stock Option Grant to
Carl T. Garner
10.34 -- Allergy Superstore.com, Inc. Initial Directors Non-Qualified
Stock Option Grant to
Michel M. Azran
10.35 -- Allergy Superstore.com, Inc. Initial Directors Non-Qualified
Stock Option Grant to Kevin Smith
10.36 -- Allergy Superstore.com, Inc. Initial Directors Non-Qualified
Stock Option Grant to Chip Howes
10.37 -- Allergy Superstore.com, Inc. Initial Directors Non-Qualified
Stock Option Grant to
U. Bertram Ellis, Jr.
10.38 -- Allergy Superstore.com, Inc. Initial Directors Non-Qualified
Stock Option Grant to
Duncan James
10.39 -- Allergy Superstore.com, Inc. Initial Directors Non-Qualified
Stock Option Grant to
Mark Spargo
10.40 -- Amended 1999 Medical Advisory Directors Stock Option Plan
for Allergy Superstore.com, Inc.
10.41 -- Form of Medical Advisory Directors Non-Qualified Initial
Stock Option Grant for Allergy Superstore.com, Inc.
10.42 -- Form of Non-Qualified Succeeding Stock Option Grant for
Allergy Superstore.com, Inc.
10.43 -- Allergy Superstore.com, Inc. Initial Medical Advisory
Directors Non-Qualified Stock Option Grant for Gerald
Vanderpool
10.44 -- Allergy Superstore.com, Inc. Initial Medical Advisory
Directors Non-Qualified Stock Option Grant for Scott Carroll
10.45 -- Allergy Superstore.com, Inc. Initial Medical Advisory
Directors Non-Qualified Stock Option Grant for Richard Stout
10.46 -- Allergy Superstore.com, Inc. Form of 1999 Equity Incentive
Plan
10.47 -- Allergy Superstore.com, Inc. Form of 1999 Equity Incentive
Plan Stock Option Agreement
10.48 -- Allergy Superstore.com, Inc. Stock Option Agreement, dated
as of May 6, 1999, to
Jacques Elfersy for 2,250,000 Option Shares of Allergy
Superstore.com, Inc.
10.49 -- Allergy Superstore.com, Inc. Stock Option Agreement, dated
as of May 6, 1999, to Timothy C. Moses for 2,250,000 Option
Shares of Allergy Superstore.com, Inc.
10.50 -- Allergy Superstore.com, Inc. 1999 Employee Stock Purchase
Plan
10.51 -- BioShield Technologies, Inc. Directors Stock Option
Agreement for the grant to
Michel M. Azran of 10,000 shares of common stock, dated as
of April 1, 1999
10.52 -- BioShield Technologies, Inc. Stock Incentive Agreement,
dated as of December 1, 1998 for an option to purchase
150,000 shares for Jacques Elfersy
10.53 -- BioShield Technologies, Inc. Stock Incentive Agreement,
dated as of December 1, 1998 for an option to purchase
150,000 shares for Timothy C. Moses
10.54 -- Employment letter for Maggie M. Perritt, dated as of May 20,
1999
10.55 -- Employment Agreement for John T. Adams, dated as of June 14,
1999
10.56 -- iXL Master Service Agreement between iXL, Inc. and BioShield
Technologies, Inc., dated as of June 7, 1999
</TABLE>
<PAGE> 42
<TABLE>
<CAPTION>
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<C> <S> <C>
10.57 -- Strategic Alliance Agreement between iXL Enterprises, Inc.
and Allergy Superstore.com, Inc., dated as of July 9, 1999
10.58 -- Securities Purchase Agreement, dated as of June 30, 1999 by
and among Allergy Superstore.com, Inc. and Jackson, LLC
10.59 -- Registration Rights Agreement, dated as of June 30, 1999 by
and among BioShield Technologies and Jackson, LLC
10.60 -- Registration Rights Agreement, dated as of June 30, 1999 by
and among Allergy Superstore.com, Inc. and Jackson, LLC
10.61 -- Transfer Agent Instructions, dated as of June 30, 1999
10.62 -- Warrant Agreement, dated as of June 30, 1999 by and among
Allergy Superstore.com, Inc. and Jackson, LLC
10.63 -- Securities Purchase Agreement, dated as of August 25, 1999
by and among Allergy Superstore.com, Inc. and Cache Capital
(USA) L.P.
10.64 -- Registration Rights Agreement, dated as of August 25, 1999
by and among BioShield Technologies and Cache Capital (USA)
L.P.
10.65 -- Registration Rights Agreement, dated as of August 25, 1999
by and among Allergy Superstore.com, Inc. and Cache Capital
(USA) L.P.
10.66 -- Transfer Agent Instructions, dated as of August 25, 1999
10.67 -- Warrant Agreement, dated as of August 25, 1999 by and among
Allergy Superstore.com, Inc. and Cache Capital (USA) L.P.
10.68 -- Securities Purchase Agreement, dated as of August 25, 1999
by and among Allergy Superstore.com, Inc. and GPS America
Fund Ltd
10.69 -- Registration Rights Agreement, dated as of August 25, 1999
by and among BioShield Technologies and GPS America Fund Ltd
10.70 -- Registration Rights Agreement, dated as of August 25, 1999
by and among Allergy Superstore.com, Inc. and GPS America
Fund Ltd
10.71 -- Transfer Agent Instructions, dated as of August 25, 1999
10.72 -- Warrant Agreement, dated as of August 25, 1999 by and among
Allergy Superstore.com, Inc. and GPS America Fund Ltd
10.73 -- Securities Purchase Agreement, dated as of September 2, 1999
by and among Allergy Superstore.com, Inc. and Atlantis
Capital Fund Limited
10.74 -- Registration Rights Agreement, dated as of September 2, 1999
by and among BioShield Technologies and Atlantis Capital
Fund Limited
10.75 -- Registration Rights Agreement, dated as of September 2, 1999
by and among Allergy Superstore.com, Inc. and Atlantis
Capital Fund Limited
10.76 -- Transfer Agent Instructions, dated as of September 2, 1999
10.77 -- Warrant Agreement, dated as of September 2, 1999 by and
among Allergy Superstore.com, Inc. and Atlantis Capital Fund
Limited
10.78 -- Warrant Agreement, dated as of September 2, 1999 by and
among Allergy Superstore.com, Inc. and J.P. Carey
Securities, Inc.
10.79 -- Warrant Agreement, dated as of September 2, 1999 by and
among Allergy Superstore.com, Inc. and Greenfield Capital
Partners, LLC
10.80 -- Legal Opinion of Sims Moss Kline & Davis LLP, dated as of
June 30, 1999
10.81 -- Placement Agent Agreement, dated as of June 30, 1999 between
Allergy Superstore.com, Inc. and J.P. Carey Securities, Inc.
10.82 -- Private Equity Credit Agreement by and between Jackson, LLC
and BioShield Technologies, Inc., dated as of June 30, 1999
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<C> <S> <C>
10.83 -- Registration Rights Agreement, dated as of June 30, 1999
between BioShield Technologies, Inc. and Jackson, LLC
10.84 -- Transfer Agent Letter, dated as of June 30, 1999
10.85 -- Lease Agreement with Technology Park, dated as of July 6,
1999
10.86 -- Guaranty of BioShield Technologies, Inc. to Lease Agreement,
dated as of July 7, 1999
10.87 -- Financial Advisory and Consulting Agreement, dated as of
August 1, 1999 between BioShield Technologies, Inc. and
White Capital Group, Ltd.
10.88 -- Harwood House Contract for Interior Design, dated as of
August 18, 1999
10.89 -- Summit Marketing Group, Inc. Marketing Proposal, dated as of
August 19, 1999
10.90 -- Employment Agreement dated as of August 30, 1999 between
eMD.com, Inc. and Sharon Kay Allred
10.91 -- Contract for Purchase of NDC Managed Care Mail Order
Pharmacy System, dated as of September 7, 1999
10.92 -- Offer of Employment to Eric B. Adams, dated as of June 12,
1999
10.93 -- Employment agreement, dated as of September 10, 1999 between
eMD.com, Inc. and
Wayne A. Roberts
10.94 -- Construction Agreement between Beers Construction Company
and eMD.com, Inc., dated as of September 13, 1999
23.1 -- Consent of Independent Auditors
27 -- Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3.003
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALLERGY SUPERSTORE.COM, INC.
Pursuant to Section 242 of the General Corporation
Law of the State of Delaware
The undersigned, pursuant to the provisions of the General Corporation
Law of the State of Delaware, does hereby certify and set forth as follows:
FIRST: The name of the corporation is Allergy Superstore.com, Inc.
SECOND: The amendment to the Certificate of Incorporation to be
effected hereby is as follows:
Article I of the Certificate of Incorporation, relating to the
name of the corporation is amended to read as follows:
Article I
The name of the corporation is Electronic Medical
Distribution, Inc.
THIRD: The amendment effected herein was authorized by the
affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon at a meeting of
shareholders pursuant to Section 242 of the General
Corporation Law of the State of Delaware.
FOURTH: The capital of the corporation will not be reduced under or by
reason of this amendment.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 27th day
of August, A.D., 1999.
-------------------------------------------------
Timothy C. Moses
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 10.031
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
As Adopted July 2, 1999
1. PURPOSE. This 1999 Directors Stock Option Plan (this "PLAN") is
established to provide equity incentives for certain nonemployee members of the
Board of Directors of Allergy Superstore.com, Inc. (the "COMPANY"), who are
described in Section 6.1 below, by granting such persons options to purchase
shares of stock of the Company.
2. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective upon
the adoption by the Board of Directors (the "BOARD") of the Company (the
"EFFECTIVE DATE"). This Plan shall be approved by the stockholders of the
Company, consistent with applicable laws, within twelve (12) months after the
date this Plan is adopted by the Board.
3. TYPES OF OPTIONS AND SHARES. Options granted under this Plan shall be
non-qualified stock options ("NQSOS"). The shares of stock that may be
purchased upon exercise of Options granted under this Plan (the "SHARES") are
shares of the Common Stock of the Company.
4. NUMBER OF SHARES. The maximum number of Shares that may be issued
pursuant to Options granted under this Plan (the "MAXIMUM NUMBER") is 2,000,000
Shares, subject to adjustment as provided in this Plan. If any Option is
terminated for any reason without being exercised in whole or in part, the
Shares thereby released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during the
term of this Plan, the Company shall reserve and keep available such number of
Shares as shall be required to satisfy the requirements of outstanding Options
granted under this Plan; provided, however that if the aggregate number of
Shares subject to outstanding Options granted under this Plan plus the
aggregate number of Shares previously issued by the Company pursuant to the
exercise of Options granted under this Plan equals or exceeds the Maximum
Number, then notwithstanding anything herein to the contrary, no further
Options may be granted under this Plan until the Maximum Number is increased or
the aggregate number of Shares subject to outstanding Options granted under
this Plan plus the aggregate number of Shares previously issued by the Company
pursuant to the exercise of Options granted under this Plan is less than the
Maximum Number.
5. ADMINISTRATION. This Plan shall be administered by the Board or by a
committee of not less than two members of the Board appointed to administer
this Plan (the "COMMITTEE"). As used in this Plan, references to the Committee
shall mean either such Committee or the Board if no Committee has been
established. The interpretation by the Committee of any of the provisions of
this Plan or any Option granted under this Plan shall be final and binding upon
the Company and all persons having an interest in any Option or any Shares
purchased pursuant to an Option.
6. ELIGIBILITY AND AWARD FORMULA.
6.1 Eligibility. Options shall be granted only to directors of the
Company who are not employees of the Company or any Parent, Subsidiary or
Affiliate of the Company, as those terms are defined in Section 17 below (each
such person referred to as an "OPTIONEE").
6.2 Initial Grant. Each Optionee who first becomes a member of the
Board on or after the Effective Date will automatically be granted an Option
for 30,000 Shares (an "INITIAL GRANT") on the earlier of the Effective Date or
on the date such Optionee first becomes a member of the Board.
<PAGE> 2
6.3 Succeeding Grants. At each Annual Meeting of the Company, each
Optionee will automatically be granted an Option for 5,000 Shares (a
"SUCCEEDING GRANT"), provided the Optionee is a member of the Board on such
date and has served continuously as a member of the Board since the date of
such Optionee's Initial Grant or, if such Optionee was ineligible to receive an
Initial Grant, since the Effective Date.
7. TERMS AND CONDITIONS OF OPTIONS. Subject to the following and to
Section 6 above:
7.1 Form of Option Grant. Each Option granted under this Plan shall
be evidenced by a written Stock Option Grant ("GRANT") in such form (which need
not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
7.2 Vesting. The date an Optionee receives an Initial Grant or a
Succeeding Grant is referred to in this Plan as the "START DATE" for such
Option.
(a) Initial Grants. Each Initial Grant will vest immediately.
(b) Succeeding Grants. Each Succeeding Grant will vest in twelve
equal monthly installments from the Start Date for such Succeeding Grant, so
long as the Optionee continuously remains a director or a consultant of the
Company.
7.3 Exercise Price. The exercise price of an Option shall be the Fair
Market Value (as defined in Section 17.4) of the Shares, at the time that the
Option is granted.
7.4 Termination of Option. Except as provided below in this Section,
each Option shall expire ten (10) years after its Start Date (the "EXPIRATION
DATE"). The Option shall cease to vest when the Optionee ceases to be a member
of the Board or a consultant of the Company. The date on which the Optionee
ceases to be a member of the Board or a consultant of the Company shall be
referred to as the "TERMINATION DATE". An Option may be exercised after the
Termination Date only as set forth below:
(a) Termination Generally. If the Optionee ceases to be a member
of the Board or a consultant of the Company for any reason except death of the
Optionee or disability of the Optionee (whether temporary or permanent, partial
or total, as determined by the Committee), then each Option then held by such
Optionee, to the extent (and only to the extent) that it would have been
exercisable by the Optionee on the Termination Date, may be exercised by the
Optionee no later than seven (7) months after the Termination Date, but in no
event later than the Expiration Date.
(b) Death or Disability. If the Optionee ceases to be a member
of the Board or a consultant of the Company because of the death of the
Optionee or the disability of the Optionee (whether temporary or permanent,
partial or total, as determined by the Committee), then each Option then held
by such Optionee to the extent (and only to the extent) that it would have been
exercisable by the Optionee on the Termination Date, may be exercised by the
Optionee (or the Optionee's legal representative) no later than twelve (12)
months after the Termination Date, but in no event later than the Expiration
Date.
8. EXERCISE OF OPTIONS.
8.1 Exercise Period. Subject to the provisions of Section 8.5 below,
Options shall be exercisable as they vest; provided that the Committee may
provide that such Options shall be immediately exercisable subject to
repurchase in accordance with the vesting schedule set forth in Section 7.
8.2 Notice. Options may be exercised only by delivery to the Company
of an exercise agreement in a form approved by the Committee stating the number
of Shares being purchased, the restrictions imposed on the Shares and such
representations and agreements regarding the Optionee's investment intent
2
<PAGE> 3
and access to information as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
8.3 Payment. Payment for the Shares purchased upon exercise of an
Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by the Optionee for more than
six (6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the exercise price of the Option; (c) by waiver of compensation due or
accrued to the Optionee for services rendered; (d) provided that a public
market for the Company's stock exists, through a "same day sale" commitment
from the Optionee and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD DEALER") whereby the Optionee
irrevocably elects to exercise the Option and to sell a portion of the Shares
so purchased to pay for the exercise price and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the exercise price
directly to the Company; (e) provided that a public market for the Company's
stock exists, through a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or (f) by any combination
of the foregoing.
8.4 Withholding Taxes. Prior to issuance of the Shares upon exercise
of an Option, the Optionee shall pay or make adequate provision for any federal
or state withholding obligations of the Company, if applicable.
8.5 Limitations on Exercise. Notwithstanding the exercise periods set
forth in the Grant, exercise of an Option shall always be subject to the
following limitations:
(a) An Option shall not be exercisable unless such exercise is
in compliance with the Securities Act and all applicable state securities laws,
as they are in effect on the date of exercise.
(b) The Committee may specify a reasonable minimum number of
Shares that may be purchased upon any exercise of an Option, provided that such
minimum number will not prevent the Optionee from exercising the full number of
Shares as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, an
Option shall be exercisable only by the Optionee or by the Optionee's guardian
or legal representative, unless otherwise determined by the Committee. No
Option may be sold, pledged, assigned, hypothecated, transferred or disposed of
in any manner other than by will or by the laws of descent and distribution,
unless otherwise determined by the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the
rights of a stockholder with respect to any Shares subject to an Option until
the Option has been validly exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior
to the date of exercise, except as provided in this Plan. The Company shall
provide to each Optionee a copy of the annual financial statements of the
Company at such time after the close of each fiscal year of the Company as they
are released by the Company to its stockholders.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares subject
to outstanding Options and the exercise price per share of such outstanding
Options shall be proportionately adjusted, subject to any required action by
the Board or stockholders of the Company and compliance with applicable
securities laws; provided, however, that no fractional shares shall be issued
upon exercise of any Option and any resulting fractions of a Share shall be
rounded up to the nearest whole Share.
3
<PAGE> 4
12. NO OBLIGATION TO CONTINUE AS DIRECTOR. Nothing in this Plan or any
Option granted under this Plan shall confer on any Optionee any right to
continue as a director of the Company.
13. COMPLIANCE WITH LAWS. The grant of Options and the issuance of Shares
upon exercise of any Options shall be subject to and conditioned upon
compliance with all applicable requirements of law, including without
limitation compliance with the Securities Act, compliance with all other
applicable state securities laws and compliance with the requirements of any
stock exchange or national market system on which the Shares may be listed. The
Company shall be under no obligation to register the Shares with the SEC or to
effect compliance with the registration or qualification requirement of any
state securities laws, stock exchange or national market system.
14. ACCELERATION OF OPTIONS ON CERTAIN CORPORATE TRANSACTIONS. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative
stock holdings and the Options granted under this Plan are assumed, converted
or replaced by the successor corporation, which assumption, conversion or
replacement will be binding on all Optionees), (c) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company (other than any stockholder which merges (or which owns or controls
another corporation which merges) with the Company in such merger) cease to own
their shares or other equity interests in the Company, (d) the sale of
substantially all of the assets of the Company, or (e) the acquisition, sale or
transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction, the vesting of all options granted pursuant to
this Plan will accelerate and the options will become exercisable in full prior
to the consummation of such event at such times and on such conditions as the
Committee determines, and must be exercised, if at all, within seven months of
the consummation of said event. Any options not exercised within such
seven-month period shall expire.
15. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend this Plan or any outstanding option, provided that the Board may not
terminate or amend the terms of any outstanding option without the consent of
the Optionee. In any case, no amendment of this Plan may adversely affect any
then outstanding Options or any unexercised portions thereof without the
written consent of the Optionee.
16. TERM OF PLAN. Options may be granted pursuant to this Plan from time
to time within a period of ten (10) years from the Effective Date.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms shall
have the following meanings:
17.1 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
17.2 "SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
17.3 "AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct
or indirect, of the power to cause the direction of the management and policies
of the corporation, whether through the ownership of voting securities, by
contract or otherwise.
4
<PAGE> 5
17.4 "FAIR MARKET VALUE" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the date of
determination as reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of determination on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading as reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the
date of determination as reported in The Wall Street Journal;
(d) in the case of an Option granted on the Effective Date, the price
per share at which shares of the Company's Common Stock are initially offered
for sale to the public by the Company's underwriters in the initial public
offering of the Company's Common Stock pursuant to a registration statement
filed with the SEC under the Securities Act; or
(e) if none of the foregoing is applicable, by the Committee in good
faith.
5
<PAGE> 1
EXHIBIT 10.032
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Director's Stock Option Plan
(the "PLAN").
Optionee:
-------------------------------------------------------
Optionee's Address:
-----------------------------------------------
-----------------------------------------------
Total Shares Subject to Option: 30,000
Exercise Price Per Share:
-----------------------------------------
Date of Grant:
----------------------------------------------------
Expiration Date:
--------------------------------------------------
(unless earlier terminated under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively,
the "SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be exercisable as it vests.
Subject to the terms and conditions of the Plan and this Grant, this Option
shall vest as to twenty-five percent (25%) of the Shares on the first annual
anniversary of the Date of Grant and as to 2.08333% of the Shares on each
subsequent monthly anniversary of the Date of Grant, so long as the Optionee
continuously remains a member of the Board of Directors (a "BOARD MEMBER") or a
consultant of the Company.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable
state securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Board
Member or consultant of the Company for any reason except death or disability,
then this Option, to the extent that it has vested as of the Termination Date,
may be exercised by Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board Member
or consultant of the Company because of the death of Optionee or the disability
of Optionee (whether temporary or permanent,
<PAGE> 2
partial or total, as determined by the Committee) then this Option, to the
extent that it has vested as of the Termination Date, may be exercised by
Optionee (or Optionee's legal representative) no later than twelve (12) months
after the Termination Date, but in no event later than the Expiration Date.
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as
may be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of
this Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company.
5.4 Issuance of Shares. Provided that such notice and payment are
in form and substance satisfactory to counsel for the Company, the Company
shall cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by
2
<PAGE> 3
reference. This Grant, the Plan and the Directors Stock Option Exercise
Agreement constitute the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof and supersede all prior
understandings and agreements with respect to such subject matter.
ALLERGY SUPERSTORE.COM, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax
advisor prior to such exercise or disposition.
------------------------------------------
----------------------------------, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION
GRANT]
4
<PAGE> 1
EXHIBIT 10.033
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Director's Stock Option Plan
(the "PLAN").
Optionee: Carl T. Garner
Optionee's Address:
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: June 2, 1999
Expiration Date: June 2, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively,
the "SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable
state securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Board
Member or consultant of the Company for any reason except death or disability,
then this Option, to the extent that it has vested as of the Termination Date,
may be exercised by Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board Member
or consultant of the Company because of the death of Optionee or the disability
of Optionee (whether temporary or permanent, partial or total, as determined by
the Committee) then this Option, to the extent that it has vested as of the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date,
but in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as
may be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of
this Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment are
in form and substance satisfactory to counsel for the Company, the Company
shall cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Directors Stock Option Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with
respect to such subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax
advisor prior to such exercise or disposition.
------------------------------------------
Carl T. Garner, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION
GRANT]
4
<PAGE> 1
EXHIBIT 10.034
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Director's Stock Option Plan
(the "PLAN").
Optionee: Michel M. Azran
Optionee's Address: 3060 Peachtree Road, N.W., Suite 1200
Atlanta, Georgia 30305
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: June 2, 1999
Expiration Date: June 2, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively,
the "SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable
state securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Board Member
or consultant of the Company for any reason except death or disability, then
this Option, to the extent that it has vested as of the Termination Date, may
be exercised by Optionee no later than seven (7) months after the Termination
Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board Member
or consultant of the Company because of the death of Optionee or the disability
of Optionee (whether temporary or permanent, partial or total, as determined by
the Committee) then this Option, to the extent that it has vested as of the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date,
but in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as
may be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of
this Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment are
in form and substance satisfactory to counsel for the Company, the Company
shall cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Directors Stock Option Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with
respect to such subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax
advisor prior to such exercise or disposition.
--------------------------------------
Michel Azran, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION
GRANT]
4
<PAGE> 1
EXHIBIT 10.35
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Director's Stock Option Plan
(the "PLAN").
Optionee: Kevin Smith
Optionee's Address:
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: June 2, 1999
Expiration Date: June 2, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively, the
"SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable state
securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or list
the Shares with the SEC, any state securities commission or any stock exchange
or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Board Member
or consultant of the Company for any reason except death or disability, then
this Option, to the extent that it has vested as of the Termination Date, may be
exercised by Optionee no later than seven (7) months after the Termination Date,
but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board Member
or consultant of the Company because of the death of Optionee or the disability
of Optionee (whether temporary or permanent, partial or total, as determined by
the Committee) then this Option, to the extent that it has vested as of the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date, but
in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as may
be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and agreements
as may be required by the Company to comply with applicable securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of
this Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144 and,
if such shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares) or were obtained by the
Optionee in the open public market, having a Fair Market Value equal to the
Exercise Price of the Option; (c) by waiver of compensation due or accrued to
Optionee for services rendered; (d) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to the Company; (e) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment are
in form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and conditions
thereof, are incorporated herein by reference. This Grant, the Plan and the
Directors Stock Option Exercise Agreement constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior understandings and agreements with respect to such
subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax advisor
prior to such exercise or disposition.
----------------------------------
Kevin Smith, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT]
4
<PAGE> 1
EXHIBIT 10.036
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Director's Stock Option Plan
(the "PLAN").
Optionee: Chip Howes
Optionee's Address:
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: June 2, 1999
Expiration Date: June 2, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively, the
"SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable state
securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or list
the Shares with the SEC, any state securities commission or any stock exchange
or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Board Member
or consultant of the Company for any reason except death or disability, then
this Option, to the extent that it has vested as of the Termination Date, may be
exercised by Optionee no later than seven (7) months after the Termination Date,
but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board Member
or consultant of the Company because of the death of Optionee or the disability
of Optionee (whether temporary or permanent, partial or total, as determined by
the Committee) then this Option, to the extent that it has vested as of the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date, but
in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as may
be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and agreements
as may be required by the Company to comply with applicable securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of
this Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144 and,
if such shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares) or were obtained by the
Optionee in the open public market, having a Fair Market Value equal to the
Exercise Price of the Option; (c) by waiver of compensation due or accrued to
Optionee for services rendered; (d) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to the Company; (e) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment are
in form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and conditions
thereof, are incorporated herein by reference. This Grant, the Plan and the
Directors Stock Option Exercise Agreement constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior understandings and agreements with respect to such
subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax advisor
prior to such exercise or disposition.
-------------------------
Chip Howes, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT]
4
<PAGE> 1
EXHIBIT 10.037
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Director's Stock Option Plan
(the "PLAN").
Optionee's Address: 1888 Emery Street NW
Atlanta, Georgia 30318
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: July 1, 1999
Expiration Date: July 1, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively,
the "SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable
state securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Board
Member or consultant of the Company for any reason except death or disability,
then this Option, to the extent that it has vested as of the Termination Date,
may be exercised by Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board
Member or consultant of the Company because of the death of Optionee or the
disability of Optionee (whether temporary or permanent, partial or total, as
determined by the Committee) then this Option, to the extent that it has vested
as of the Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date,
but in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as
may be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise
of this Option may be made (a) in cash or by check; (b) by surrender of shares
of Common Stock of the Company that have been owned by Optionee for more than
six (6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares
upon exercise of this Option, Optionee shall pay or make adequate provision for
any applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment
are in form and substance satisfactory to counsel for the Company, the Company
shall cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Directors Stock Option Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with
respect to such subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
------------------------
Name:
----------------------
Title:
---------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax
advisor prior to such exercise or disposition.
------------------------------------------
U. Bertram Ellis, Jr., Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION
GRANT]
4
<PAGE> 1
EXHIBIT 10.038
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Director's Stock Option Plan
(the "PLAN").
Optionee: Duncan James
Optionee's Address: 1888 Emery Street NW
Atlanta, Georgia 30318
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: July 1, 1999
Expiration Date: July 1, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively,
the "SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable
state securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Board
Member or consultant of the Company for any reason except death or disability,
then this Option, to the extent that it has vested as of the Termination Date,
may be exercised by Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board
Member or consultant of the Company because of the death of Optionee or the
disability of Optionee (whether temporary or permanent, partial or total, as
determined by the Committee) then this Option, to the extent that it has vested
as of the Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date,
but in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as
may be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise
of this Option may be made (a) in cash or by check; (b) by surrender of shares
of Common Stock of the Company that have been owned by Optionee for more than
six (6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares
upon exercise of this Option, Optionee shall pay or make adequate provision for
any applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment
are in form and substance satisfactory to counsel for the Company, the Company
shall cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Directors Stock Option Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with
respect to such subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
------------------------
Name:
----------------------
Title:
---------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax
advisor prior to such exercise or disposition.
------------------------------------------
Duncan James, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION
GRANT]
4
<PAGE> 1
EXHIBIT 10.039
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Director's Stock Option Plan
(the "PLAN").
Optionee: Mark Spargo
Optionee's Address:
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: June 2, 1999
Expiration Date: June 2, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively,
the "SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable
state securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Board
Member or consultant of the Company for any reason except death or disability,
then this Option, to the extent that it has vested as of the Termination Date,
may be exercised by Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board
Member or consultant of the Company because of the death of Optionee or the
disability of Optionee (whether temporary or permanent, partial or total, as
determined by the Committee) then this Option, to the extent that it has vested
as of the Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date,
but in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as
may be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise
of this Option may be made (a) in cash or by check; (b) by surrender of shares
of Common Stock of the Company that have been owned by Optionee for more than
six (6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares
upon exercise of this Option, Optionee shall pay or make adequate provision for
any applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment
are in form and substance satisfactory to counsel for the Company, the Company
shall cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Directors Stock Option Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with
respect to such subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
------------------------
Name:
----------------------
Title:
---------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax
advisor prior to such exercise or disposition.
------------------------------------------
Mark Spargo, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION
GRANT]
4
<PAGE> 1
EXHIBIT 10.040
ALLERGY SUPERSTORE.COM, INC.
1999 MEDICAL ADVISORY DIRECTORS STOCK OPTION PLAN
As Adopted as of July 1, 1999
1. PURPOSE. This 1999 Medical Advisory Directors Stock Option Plan (this
"PLAN") is established to provide equity incentives for certain nonemployee
members of the Medical Advisory Board of Allergy Superstore.com, Inc. (the
"COMPANY"), who are described in Section 6.1 below, by granting such persons
options to purchase shares of stock of the Company.
2. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective upon
the adoption by the Board of Directors (the "BOARD") of the Company (the
"EFFECTIVE DATE"). This Plan shall be approved by the stockholders of the
Company, consistent with applicable laws, within twelve (12) months after the
date this Plan is adopted by the Board.
3. TYPES OF OPTIONS AND SHARES. Options granted under this Plan shall be
non-qualified stock options ("NQSOS"). The shares of stock that may be
purchased upon exercise of Options granted under this Plan (the "SHARES") are
shares of the Common Stock of the Company.
4. NUMBER OF SHARES. The maximum number of Shares that may be issued
pursuant to Options granted under this Plan (the "MAXIMUM NUMBER") is 1,000,000
Shares, subject to adjustment as provided in this Plan. If any Option is
terminated for any reason without being exercised in whole or in part, the
Shares thereby released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during the
term of this Plan, the Company shall reserve and keep available such number of
Shares as shall be required to satisfy the requirements of outstanding Options
granted under this Plan; provided, however that if the aggregate number of
Shares subject to outstanding Options granted under this Plan plus the
aggregate number of Shares previously issued by the Company pursuant to the
exercise of Options granted under this Plan equals or exceeds the Maximum
Number, then notwithstanding anything herein to the contrary, no further
Options may be granted under this Plan until the Maximum Number is increased or
the aggregate number of Shares subject to outstanding Options granted under
this Plan plus the aggregate number of Shares previously issued by the Company
pursuant to the exercise of Options granted under this Plan is less than the
Maximum Number.
5. ADMINISTRATION. This Plan shall be administered by the Board or by a
committee of not less than two members of the Board appointed to administer
this Plan (the "COMMITTEE"). As used in this Plan, references to the Committee
shall mean either such Committee or the Board if no Committee has been
established. The interpretation by the Committee of any of the provisions of
this Plan or any Option granted under this Plan shall be final and binding upon
the Company and all persons having an interest in any Option or any Shares
purchased pursuant to an Option.
6. ELIGIBILITY AND AWARD FORMULA.
6.1 Eligibility. Options shall be granted only to Medical Advisory Board
director of the Company who are not employees of the Company or any Parent,
Subsidiary or Affiliate of the Company, as those terms are defined in Section
17 below (each such person referred to as an "OPTIONEE"). The position of the
Medical Advisory Board is not a position of the Company's Board of Directors
and is only in an advisory role position in which optionee serves as to the
pleasure of the Board of Directors. Optionee may be dismissed as a Medical
Advisory Board Member at any time.
6.2 Initial Grant. Each Optionee who first becomes a member of the Board
on or after the Effective Date will automatically be granted an Option for
30,000 Shares (an "INITIAL GRANT") on the earlier of the Effective Date or on
the date such Optionee first becomes a member of the Medical Advisory Board.
<PAGE> 2
6.3 Succeeding Grants. On the anniversary of the grant of an option,
each Optionee will automatically be granted an Option for 5,000 Shares (a
"SUCCEEDING GRANT"), provided the Optionee is a member of the Board on such date
and has served continuously as a member of the Medical Advisory Board since the
date of such Optionee's Initial Grant or, if such Optionee was ineligible to
receive an Initial Grant, since the Effective Date.
7. TERMS AND CONDITIONS OF OPTIONS. Subject to the following and to Section 6
above:
7.1 Form of Option Grant. Each Option granted under this Plan shall
be evidenced by a written Stock Option Grant ("GRANT") in such form (which need
not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
7.2 Vesting. The date an Optionee receives an Initial Grant or a
Succeeding Grant is referred to in this Plan as the "START DATE" for such
Option.
(a) Initial Grants. Each Initial Grant will vest immediately.
(b) Succeeding Grants. Each Succeeding Grant will vest in twelve
equal monthly installments from the Start Date for such Succeeding Grant, so
long as the Optionee continuously remains a Medical Advisory Board director of
the Company.
7.3 Exercise Price. The exercise price of an Option shall be the
Fair Market Value (as defined in Section 17.4) of the Shares, at the time that
the Option is granted.
7.4 Termination of Option. Except as provided below in this
Section, each Option shall expire ten (10) years after its Start Date (the
"EXPIRATION DATE"). The Option shall cease to vest when the Optionee ceases to
be a member of the Board or a consultant of the Company. The date on which the
Optionee ceases to be a Medical Advisory Board member of the Company shall be
referred to as the "TERMINATION DATE". An Option may be exercised after the
Termination Date only as set forth below:
(a) Termination Generally. If the Optionee ceases to be a member
of the Medical Advisory Board of the Company for any reason except death of the
Optionee or disability of the Optionee (whether temporary or permanent, partial
or total, as determined by the Committee), then each Option then held by such
Optionee, to the extent (and only to the extent) that it would have been
exercisable by the Optionee on the Termination Date, may be exercised by the
Optionee no later than seven (7) months after the Termination Date, but in no
event later than the Expiration Date.
(b) Death or Disability. If the Optionee ceases to be a member
of the Medical Advisory Board of the Company because of the death of the
Optionee or the disability of the Optionee (whether temporary or permanent,
partial or total, as determined by the Committee), then each Option then held
by such Optionee to the extent (and only to the extent) that it would have been
exercisable by the Optionee on the Termination Date, may be exercised by the
Optionee (or the Optionee's legal representative) no later than twelve (12)
months after the Termination Date, but in no event later than the Expiration
Date.
8. EXERCISE OF OPTIONS.
8.1 Exercise Period. Subject to the provisions of Section 8.5 below,
Options shall be exercisable as they vest; provided that the Committee may
provide that such Options shall be immediately exercisable subject to repurchase
in accordance with the vesting schedule set forth in Section 7.
8.2 Notice. Options may be exercised only by delivery to the Company
of an exercise agreement in a form approved by the Committee stating the number
of Shares being purchased, the restrictions imposed on the Shares and such
representations and agreements regarding the Optionee's investment intent
2
<PAGE> 3
and access to information as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
8.3 Payment. Payment for the Shares purchased upon exercise of an Option
may be made (a) in cash or by check; (b) by surrender of shares of Common Stock
of the Company that have been owned by the Optionee for more than six (6)
months (and which have been paid for within the meaning of SEC Rule 144 and, if
such shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares) or were obtained by the
Optionee in the open public market, having a Fair Market Value equal to the
exercise price of the Option; (c) by waiver of compensation due or accrued to
the Optionee for services rendered; (d) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
exercise price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company; (e) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the exercise price
directly to the Company; or (f) by any combination of the foregoing.
8.4 Withholding Taxes. Prior to issuance of the Shares upon exercise of
an Option, the Optionee shall pay or make adequate provision for any federal or
state withholding obligations of the Company, if applicable.
8.5 Limitations on Exercise. Notwithstanding the exercise periods set
forth in the Grant, exercise of an Option shall always be subject to the
following limitations:
(a) An Option shall not be exercisable unless such exercise is in
compliance with the Securities Act and all applicable state securities laws, as
they are in effect on the date of exercise.
(b) The Committee may specify a reasonable minimum number of Shares
that may be purchased upon any exercise of an Option, provided that such
minimum number will not prevent the Optionee from exercising the full number of
Shares as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, an
Option shall be exercisable only by the Optionee or by the Optionee's guardian
or legal representative, unless otherwise determined by the Committee. No
Option may be sold, pledged, assigned, hypothecated, transferred or disposed of
in any manner other than by will or by the laws of descent and distribution,
unless otherwise determined by the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the rights
of a stockholder with respect to any Shares subject to an Option until the
Option has been validly exercised. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to the date of
exercise, except as provided in this Plan. The Company shall provide to each
Optionee a copy of the annual financial statements of the Company at such time
after the close of each fiscal year of the Company as they are released by the
Company to its stockholders.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of outstanding
shares of Common Stock of the Company is changed by a stock dividend, stock
split, reverse stock split, combination, reclassification or similar change in
the capital structure of the Company without consideration, the number of
Shares available under this Plan and the number of Shares subject to
outstanding Options and the exercise price per share of such outstanding
Options shall be proportionately adjusted, subject to any required action by
the Board or stockholders of the Company and compliance with applicable
securities laws; provided, however, that no fractional shares shall be issued
upon exercise of any Option and any resulting fractions of a Share shall be
rounded up to the nearest whole Share.
3
<PAGE> 4
12. NO OBLIGATION TO CONTINUE AS DIRECTOR. Nothing in this Plan or any
Option granted under this Plan shall confer on any Optionee any right to
continue as a director of the Company.
13. COMPLIANCE WITH LAWS. The grant of Options and the issuance of Shares
upon exercise of any Options shall be subject to and conditioned upon
compliance with all applicable requirements of law, including without
limitation compliance with the Securities Act, compliance with all other
applicable state securities laws and compliance with the requirements of any
stock exchange or national market system on which the Shares may be listed. The
Company shall be under no obligation to register the Shares with the SEC or to
effect compliance with the registration or qualification requirement of any
state securities laws, stock exchange or national market system.
14. ACCELERATION OF OPTIONS ON CERTAIN CORPORATE TRANSACTIONS. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative
stock holdings and the Options granted under this Plan are assumed, converted
or replaced by the successor corporation, which assumption, conversion or
replacement will be binding on all Optionees), (c) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company (other than any stockholder which merges (or which owns or controls
another corporation which merges) with the Company in such merger) cease to own
their shares or other equity interests in the Company, (d) the sale of
substantially all of the assets of the Company, or (e) the acquisition, sale or
transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction, the vesting of all options granted pursuant to
this Plan will accelerate and the options will become exercisable in full prior
to the consummation of such event at such times and on such conditions as the
Committee determines, and must be exercised, if at all, within seven months of
the consummation of said event. Any options not exercised within such
seven-month period shall expire.
15. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or
amend this Plan or any outstanding option, provided that the Board may not
terminate or amend the terms of any outstanding option without the consent of
the Optionee. In any case, no amendment of this Plan may adversely affect any
then outstanding Options or any unexercised portions thereof without the
written consent of the Optionee.
16. TERM OF PLAN. Options may be granted pursuant to this Plan from time to
time within a period of ten (10) years from the Effective Date.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms shall
have the following meanings:
17.1 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
17.2 "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
17.3 "AFFILIATE" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct
or indirect, of the power to cause the direction of the management and policies
of the corporation, whether through the ownership of voting securities, by
contract or otherwise.
4
<PAGE> 5
17.4 "FAIR MARKET VALUE" means, as of any date, the value of a share of
the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National Market,
its closing price on the Nasdaq National Market on the date of determination as
reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of determination on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading as reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the
date of determination as reported in The Wall Street Journal;
(d) in the case of an Option granted on the Effective Date, the price per
share at which shares of the Company's Common Stock are initially offered for
sale to the public by the Company's underwriters in the initial public offering
of the Company's Common Stock pursuant to a registration statement filed with
the SEC under the Securities Act; or
(e) if none of the foregoing is applicable, by the Committee in good
faith.
5
<PAGE> 1
EXHIBIT 10.041
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 MEDICAL ADVISORY DIRECTORS STOCK OPTION PLAN
MEDICAL ADVISORY DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Medical Advisory Director's
Stock Option Plan (the "PLAN").
Optionee:
Optionee's Address:
Total Shares Subject to Option:
Exercise Price Per Share:
Date of Grant:
Expiration Date: (unless earlier terminated under Section 4
hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively,
the "SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable
state securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Medical Advisory Board Member of the Company. The date on which Optionee ceases
to be a Medical Advisory Board Member of the Company shall be referred to as
the "TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Medical
Advisory Board Member of the Company for any reason except death or disability,
then this Option, to the extent that it has vested as of the Termination Date,
may be exercised by Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Medical
Advisory Board Member of the Company because of the death of Optionee or the
disability of Optionee (whether temporary or permanent, partial or total, as
determined by the Committee) then this Option, to the extent that it has vested
as of the Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date,
but in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by delivery
to the Company of an executed written Directors Stock Option Exercise Agreement
in the form attached hereto as Exhibit A, or in such other form as may be
approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of this
Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment are in
form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this Grant
shall be submitted by Optionee or the Company to the Committee that administers
the Plan, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Committee shall be final and binding on the
Company and on Optionee. Nothing in the Plan or this Grant shall confer on
Optionee any right to continue as a Medical Advisory Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Advisory Directors Stock Option
Exercise Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Advisory Directors Stock Option Exercise Agreement constitute the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof and supersede all prior understandings and agreements
with respect to such subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee also acknowledges that his position as a Medical Advisory
Board Member is not a position on the Company's Board of Directors and is only
an advisory role position in which he serves at the pleasure of the Company.
Optionee understands that Optionee may be dismissed as a Medical Advisory Board
Member at any time. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee has been advised by the Company that Optionee should consult a
qualified tax advisor prior to such exercise or disposition.
---------------------------------------
-----------------------, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION
GRANT]
4
<PAGE> 1
EXHIBIT 10.042
SUCCEEDING GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED SUCCEEDING STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Directors Stock Option Plan
(the "PLAN").
<TABLE>
<S> <C>
Optionee:
---------------------------------------------------------
Optionee's Address:
---------------------------------------------------------
---------------------------------------------------------
Total Shares Subject to Option: 5,000
---------------------------------------------------------
Exercise Price Per Share:
---------------------------------------------------------
Date of Grant:
---------------------------------------------------------
Expiration Date:
---------------------------------------------------------
(unless earlier terminated under Section 4 hereof)
</TABLE>
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (this
"OPTION") to purchase up to the total number of shares of Common Stock of the
Company set forth above as Total Shares Subject to Option (collectively, the
"SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions of
the Plan and this Grant, this Option shall be exercisable as it vests. Subject
to the terms and conditions of the Plan and this Grant, this Option shall vest
as to twenty-five percent (25%) of the Shares on the first annual anniversary
of the Date of Grant and as to 2.08333% of the Shares on each subsequent
monthly anniversary of the Date of Grant, so long as the Optionee continuously
remains a member of the Board of Directors (a "BOARD MEMBER") or a consultant
of the Company.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless such
exercise is in compliance with the Securities Act, and all applicable state
securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section, this
Option shall terminate and may not be exercised if Optionee ceases to be a
Board Member or consultant of the Company. The date on which Optionee ceases to
be a Board Member or consultant of the Company shall be referred to as the
"TERMINATION DATE".
<PAGE> 2
4.1 Termination Generally. If Optionee ceases to be a Board Member or
consultant of the Company for any reason except death or disability, then this
Option, to the extent that it has vested as of the Termination Date, may be
exercised by Optionee no later than seven (7) months after the Termination
Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Board Member or
consultant of the Company because of the death of Optionee or the disability of
Optionee (whether temporary or permanent, partial or total, as determined by
the Committee) then this Option, to the extent that it has vested as of the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date,
but in no event later than the Expiration Date.
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by delivery to
the Company of an executed written Directors Stock Option Exercise Agreement in
the form attached hereto as Exhibit A, or in such other form as may be approved
by the Committee, which shall set forth Optionee's election to exercise some or
all of this Option, the number of Shares being purchased, any restrictions
imposed on the Shares and such other representations and agreements as may be
required by the Company to comply with applicable securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of this
Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon exercise
of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company.
5.4 Issuance of Shares. Provided that such notice and payment are in form
and substance satisfactory to counsel for the Company, the Company shall cause
the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee, this
Option shall be exercisable only by Optionee or by Optionee's guardian or legal
representative, unless otherwise permitted by the Committee. This Option may
not be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent and distribution.
2
<PAGE> 3
7. INTERPRETATION. Any dispute regarding the interpretation of this Grant
shall be submitted by Optionee or the Company to the Committee that administers
the Plan, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Committee shall be final and binding on the
Company and on Optionee. Nothing in the Plan or this Grant shall confer on
Optionee any right to continue as a Board Member or to provide services to the
Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by this reference. This Grant, the
Plan and the Directors Stock Option Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with
respect to such subject matter.
ALLERGY SUPERSTORE.COM, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee acknowledges that there may be adverse tax consequences
upon exercise of this Option or disposition of the Shares and that Optionee has
been advised by the Company that Optionee should consult a qualified tax
advisor prior to such exercise or disposition.
----------------------------------
, Optionee
------------------------
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED SUCCEEDING STOCK OPTION
GRANT]
4
<PAGE> 5
EXHIBIT A
DIRECTORS STOCK OPTION EXERCISE AGREEMENT
5
<PAGE> 6
EXHIBIT A
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN (THE "PLAN")
DIRECTORS STOCK OPTION EXERCISE AGREEMENT
I hereby elect to purchase the number of shares of Common Stock of
ALLERGY SUPERSTORE.COM, INC. (the "COMPANY") as set forth below:
Optionee:
-------------------------------------------------
Number of Shares Purchased:
-------------------------------
Social Security Number:
-----------------------------------
Purchase Price per Share:
---------------------------------
Address:
--------------------------------------------------
Aggregate Purchase Price:
---------------------------------
Date of Stock:
--------------------------------------------
Option Grant:
---------------------------------------------
Type of Stock Option:
-------------------------------------
Exact Name of Title to Shares:
----------------------------
Nonqualified Stock Option:
--------------------------------
1. DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price, to the extent permitted in the Directors Nonqualified
Stock Option Grant referred to above (the "GRANT") as follows (check as
applicable and complete):
[ ] in cash or by check in the amount of $___________________________,
receipt of which is acknowledged by the Company;
[ ] by delivery of _______________________ fully-paid, nonassessable
and vested shares of the Common Stock of the Company owned by Optionee
for at least six (6) months prior to the date hereof (and which have
been paid for within the meaning of SEC Rule 144), or obtained by
Optionee in the open public market, and owned free and clear of all
liens, claims, encumbrances or security interests, valued at the
current Fair Market Value of $ _________________ per share;
[ ] by the waiver hereby of compensation due or accrued to Optionee
for services rendered in the amount of
$ ______________________________ ;
[ ] through a "same-day-sale" commitment, delivered herewith, from
Optionee and the NASD Dealer named therein, in the amount of
$ _____________________________ ; or
[ ] through a "margin" commitment, delivered herewith from Optionee
and the NASD Dealer named therein, in the amount of
$ ___________________________ .
2. MARKET STANDOFF AGREEMENT. Optionee, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by Optionee during the period requested by the managing
underwriter following the effective date of a registration statement of the
Company filed under the Securities Act, provided that all officers and
directors of the Company are required to enter into similar agreements. Such
agreement shall be in writing in a form satisfactory to the Company and such
underwriter. The Company may impose stop-transfer instructions with respect to
the shares (or other securities) subject to the foregoing restriction until the
end of such period.
6
<PAGE> 7
3. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES.
OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S)
OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE
SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
4. ENTIRE AGREEMENT. The Plan and the Grant are incorporated herein by
reference. This Agreement, the Plan and the Grant constitute the entire
agreement of the parties and supersede in their entirety all prior
understandings and agreements of the Company and Optionee with respect to the
subject matter hereof, and are governed by Georgia law except for that body of
law pertaining to conflict of laws.
DATE:
----------------------------- ---------------------------------------
SIGNATURE OF OPTIONEE
7
<PAGE> 8
ALLERGY SUPERSTORE.COM, INC.
1999 DIRECTORS STOCK OPTION PLAN
SPOUSE'S CONSENT
I acknowledge that I have read the foregoing Directors Stock Option
Exercise Agreement (the "AGREEMENT") and that I know its contents. I hereby
consent to and approve all of the provisions of the Agreement and agree that
the shares of the Common Stock of Allergy Superstore.Com, Inc. purchased
thereunder (the "SHARES") and any interest I may have in such Shares are
subject to all the provisions of the Agreement. I will take no action at any
time to hinder operation of the Agreement on these Shares or any interest I may
have on them.
Date:
----------------------------
------------------------------------
SIGNATURE OF OPTIONEE'S SPOUSE
------------------------------------
SPOUSE'S NAME - TYPED OR PRINTED
------------------------------------
OPTIONEE'S NAME - TYPED OR PRINTED
8
<PAGE> 1
EXHIBIT 10.043
INITIAL GRANT
ALLERGY SUPERSTORE.COM, INC.
1999 MEDICAL ADVISORY DIRECTORS STOCK OPTION PLAN
MEDICAL ADVISORY DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Medical Advisory Director's
Stock Option Plan (the "PLAN").
Optionee: Gerald Vanderpool
Optionee's Address: #308 Medical Pavilion Building
Hilton Head Island, South Carolina 29925
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: June 2, 1999
Expiration Date: June 2, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (this
"OPTION") to purchase up to the total number of shares of Common Stock of the
Company set forth above as Total Shares Subject to Option (collectively, the
"SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions of
the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless such
exercise is in compliance with the Securities Act, and all applicable state
securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or
list the Shares with the SEC, any state securities commission or any stock
exchange or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section, this
Option shall terminate and may not be exercised if Optionee ceases to be a
Medical Advisory Board Member of the Company. The date on which Optionee ceases
to be a Medical Advisory Board Member of the Company shall be referred to as
the "TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Medical Advisory
Board Member of the Company for any reason except death or disability, then
this Option, to the extent that it has vested as of the Termination Date, may
be exercised by Optionee no later than seven (7) months after the Termination
Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Medical Advisory
Board Member of the Company because of the death of Optionee or the disability
of Optionee (whether temporary or permanent, partial or total, as determined by
the Committee) then this Option, to the extent that it has vested as of the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date,
but in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by delivery
to the Company of an executed written Directors Stock Option Exercise Agreement
in the form attached hereto as Exhibit A, or in such other form as may be
approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and
agreements as may be required by the Company to comply with applicable
securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of this
Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a promissory
note, such note has been fully paid with respect to such shares) or were
obtained by the Optionee in the open public market, having a Fair Market Value
equal to the Exercise Price of the Option; (c) by waiver of compensation due or
accrued to Optionee for services rendered; (d) provided that a public market
for the Company's stock exists, through a "same day sale" commitment from the
Optionee and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the Shares so purchased to pay
for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price directly to the Company;
(e) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment are in
form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee, this
Option shall be exercisable only by Optionee or by Optionee's guardian or legal
representative, unless otherwise permitted by the Committee. This Option may
not be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this Grant
shall be submitted by Optionee or the Company to the Committee that administers
the Plan, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Committee shall be final and binding on the
Company and on Optionee. Nothing in the Plan or this Grant shall confer on
Optionee any right to continue as a Medical Advisory Board Member or to provide
services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Advisory Directors Stock Option
Exercise Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Advisory Directors Stock Option Exercise Agreement constitute the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof and supersede all prior understandings and agreements
with respect to such subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee also acknowledges that his position as a Medical Advisory
Board Member is not a position on the Company's Board of Directors and is only
an advisory role position in which he serves at the pleasure of the Company.
Optionee understands that Optionee may be dismissed as a Medical Advisory Board
Member at any time. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee has been advised by the Company that Optionee should consult a
qualified tax advisor prior to such exercise or disposition.
------------------------------------------
Gerald Vanderpool, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION
GRANT]
4
<PAGE> 1
INITIAL GRANT EXHIBIT 10.044
ALLERGY SUPERSTORE.COM, INC.
1999 MEDICAL ADVISORY DIRECTORS STOCK OPTION PLAN
MEDICAL ADVISORY DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Medical Advisory Director's
Stock Option Plan (the "PLAN").
Optionee: Scott Carroll
Optionee's Address:
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: June 2, 1999
Expiration Date: June 2, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively, the
"SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable state
securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or list
the Shares with the SEC, any state securities commission or any stock exchange
or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Medical Advisory Board Member of the Company. The date on which Optionee ceases
to be a Medical Advisory Board Member of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Medical
Advisory Board Member of the Company for any reason except death or disability,
then this Option, to the extent that it has vested as of the Termination Date,
may be exercised by Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Medical
Advisory Board Member of the Company because of the death of Optionee or the
disability of Optionee (whether temporary or permanent, partial or total, as
determined by the Committee) then this Option, to the extent that it has vested
as of the Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date, but
in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as may
be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and agreements
as may be required by the Company to comply with applicable securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of
this Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144 and,
if such shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares) or were obtained by the
Optionee in the open public market, having a Fair Market Value equal to the
Exercise Price of the Option; (c) by waiver of compensation due or accrued to
Optionee for services rendered; (d) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to the Company; (e) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment are
in form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Medical Advisory Board Member or
to provide services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Advisory Directors Stock Option
Exercise Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Advisory Directors Stock Option Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect
to such subject matter.
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee also acknowledges that his position as a Medical Advisory
Board Member is not a position on the Company's Board of Directors and is only
an advisory role position in which he serves at the pleasure of the Company.
Optionee understands that Optionee may be dismissed as a Medical Advisory Board
Member at any time. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee has been advised by the Company that Optionee should consult a
qualified tax advisor prior to such exercise or disposition.
------------------------------------------
Scott Carroll, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT]
4
<PAGE> 1
INITIAL GRANT EXHIBIT 10.045
ALLERGY SUPERSTORE.COM, INC.
1999 MEDICAL ADVISORY DIRECTORS STOCK OPTION PLAN
MEDICAL ADVISORY DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT
This Stock Option Grant (this "GRANT") is made and entered into as of
the Date of Grant set forth below (the "DATE OF GRANT") by and between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and the Optionee
named below ("OPTIONEE"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the Company's 1999 Medical Advisory Director's
Stock Option Plan (the "PLAN").
Optionee: Richard Stout
Optionee's Address:
Total Shares Subject to Option: 30,000
Exercise Price Per Share: $2.00
Date of Grant: June 2, 1999
Expiration Date: June 2, 2004 (unless earlier terminated
under Section 4 hereof)
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Shares Subject to Option (collectively, the
"SHARES") at the Exercise Price Per Share set forth above (the "EXERCISE
PRICE"), subject to all of the terms and conditions of this Grant and the Plan.
2. EXERCISE AND VESTING OF OPTION. Subject to the terms and conditions
of the Plan and this Grant, this Option shall be immediately exercisable.
3. RESTRICTION ON EXERCISE. This Option may not be exercised unless
such exercise is in compliance with the Securities Act, and all applicable state
securities laws, as they are in effect on the date of exercise, and the
requirements of any stock exchange or national market system on which the
Company's Common Stock may be listed at the time of exercise. Optionee
understands that the Company is under no obligation to register, qualify or list
the Shares with the SEC, any state securities commission or any stock exchange
or national market system to effect such compliance.
4. TERMINATION OF OPTION. Except as provided below in this Section,
this Option shall terminate and may not be exercised if Optionee ceases to be a
Medical Advisory Board Member of the Company. The date on which Optionee ceases
to be a Medical Advisory Board Member of the Company shall be referred to as the
"TERMINATION DATE."
4.1 Termination Generally. If Optionee ceases to be a Medical
Advisory Board Member of the Company for any reason except death or disability,
then this Option, to the extent that it has vested as of the Termination Date,
may be exercised by Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date.
4.2 Death or Disability. If Optionee ceases to be a Medical
Advisory Board Member of the Company because of the death of Optionee or the
disability of Optionee (whether temporary or permanent, partial or total, as
determined by the Committee) then this Option, to the extent that it has vested
as of the Termination Date, may be exercised by Optionee (or Optionee's legal
representative) no later than twelve (12) months after the Termination Date, but
in no event later than the Expiration Date.
<PAGE> 2
5. MANNER OF EXERCISE.
5.1 Exercise Agreement. This Option shall be exercisable by
delivery to the Company of an executed written Directors Stock Option Exercise
Agreement in the form attached hereto as Exhibit A, or in such other form as may
be approved by the Committee, which shall set forth Optionee's election to
exercise some or all of this Option, the number of Shares being purchased, any
restrictions imposed on the Shares and such other representations and agreements
as may be required by the Company to comply with applicable securities laws.
5.2 Payment. Payment for the Shares purchased upon exercise of
this Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by Optionee for more than six
(6) months (and which have been paid for within the meaning of SEC Rule 144 and,
if such shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares) or were obtained by the
Optionee in the open public market, having a Fair Market Value equal to the
Exercise Price of the Option; (c) by waiver of compensation due or accrued to
Optionee for services rendered; (d) provided that a public market for the
Company's stock exists, through a "same day sale" commitment from the Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD DEALER") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to the Company; (e) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company; or (f) by any combination of the foregoing.
5.3 Withholding Taxes. Prior to the issuance of the Shares upon
exercise of this Option, Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company, if
applicable.
5.4 Issuance of Shares. Provided that such notice and payment are
in form and substance satisfactory to counsel for the Company, the Company shall
cause the Shares to be issued in the name of Optionee or Optionee's legal
representative. To enforce any restrictions on Optionee's Shares, the Committee
may require Optionee to deposit all certificates, together with stock powers or
other instruments of transfer approved by the Committee appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates.
6. NONTRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Option shall be exercisable only by Optionee or by Optionee's guardian or
legal representative, unless otherwise permitted by the Committee. This Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Grant shall be submitted by Optionee or the Company to the Committee that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on the Company and on Optionee. Nothing in the Plan or this Grant shall
confer on Optionee any right to continue as a Medical Advisory Board Member or
to provide services to the Company as a consultant.
8. ENTIRE AGREEMENT. The Plan and the Advisory Directors Stock Option
Exercise Agreement in the form attached hereto as Exhibit A, and the terms and
conditions thereof, are incorporated herein by reference. This Grant, the Plan
and the Advisory Directors Stock Option Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect
to such subject matter.
2
<PAGE> 3
ALLERGY SUPERSTORE.COM, INC.
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
3
<PAGE> 4
ACCEPTANCE OF STOCK OPTION GRANT
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all of the terms and conditions of the Plan and
this Grant. Optionee also acknowledges that his position as a Medical Advisory
Board Member is not a position on the Company's Board of Directors and is only
an advisory role position in which he serves at the pleasure of the Company.
Optionee understands that Optionee may be dismissed as a Medical Advisory Board
Member at any time. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee has been advised by the Company that Optionee should consult a
qualified tax advisor prior to such exercise or disposition.
------------------------------------------
Richard Stout, Optionee
[ACCEPTANCE SIGNATURE PAGE TO DIRECTORS NONQUALIFIED INITIAL STOCK OPTION GRANT]
4
<PAGE> 1
EXHIBIT 10.046
ALLERGY SUPERSTORE.COM, INC.
1999 EQUITY INCENTIVE PLAN
AS ADOPTED _______________ ________, 1999
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses.
Capitalized terms not defined in the text are defined in Section 23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 18,
the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 4,500,000 Shares plus Shares that are subject to:
(a) issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option; (b) an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price; and (c) an Award that otherwise terminates without Shares being
issued. At all times the Company shall reserve and keep available a sufficient
number of Shares as shall be required to satisfy the requirements of all
outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
2.2 Adjustment of Shares. In the event that the number of
outstanding shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. No person will be eligible to receive more than 1,000,000* Shares
in any calendar year under this Plan pursuant to the grant of Awards hereunder,
other than new employees of the Company or of a Parent or Subsidiary of the
Company (including new employees who are also officers and directors of the
Company or any Parent or Subsidiary of the Company), who are eligible to receive
up to a maximum of 2,250,000* Shares in the calendar year in which they commence
their employment. A person may be granted more than one Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and
any other agreement or document executed pursuant to this
Plan;
<PAGE> 2
(b) prescribe, amend and rescind rules and regulations relating
to this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent
or Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award
Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not Insiders of the
Company.
5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOS"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan
will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 Exercise Period. Options may be exercisable within the times
or upon the events determined by the Committee as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
exercisable after the expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration of
five (5) years from the date the ISO is granted. The Committee also may provide
for Options to become
<PAGE> 3
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the Committee determines.
5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant.
Payment for the Shares purchased may be made in accordance with Section 8 of
this Plan.
5.5 Method of Exercise. Options may be exercised only by delivery
to the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set forth
in the Stock Option Agreement, exercise of an Option will always be subject to
the following:
(a) If the Participant is Terminated for any reason except death or
Disability, then the Participant may exercise such Participant's Options only to
the extent that such Options would have been exercisable upon the Termination
Date no later than three (3) months after the Termination Date (or such shorter
or longer time period not exceeding five (5) years as may be determined by the
Committee, with any exercise beyond three (3) months after the Termination Date
deemed to be an NQSO), but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's death or
Disability (or the Participant dies within three (3) months after a Termination
other than for Cause or because of Participant's Disability), then Participant's
Options may be exercised only to the extent that such Options would have been
exercisable by Participant on the Termination Date and must be exercised by
Participant (or Participant's legal representative or authorized assignee) no
later than twelve (12) months after the Termination Date (or such shorter or
longer time period not exceeding five (5) years as may be determined by the
Committee, with any such exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or Disability, or (b) twelve (12) months after the
Termination Date when the Termination is for Participant's death or Disability,
deemed to be an NQSO), but in any event no later than the expiration date of the
Options.
(c) Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is terminated for Cause, neither the Participant, the Participant's
estate nor such other person who may then hold the Option shall be entitled to
exercise any Option with respect to any Shares whatsoever, after termination of
service, whether or not after termination of service the Participant may receive
payment from the Company or Subsidiary for vacation pay, for services rendered
prior to termination, for services rendered for the day on which termination
occurs, for salary in lieu of notice, or for any other benefits. In making such
determination, the Board shall give the Participant an opportunity to present to
the Board evidence on his behalf. For the purpose of this paragraph, termination
of service shall be deemed to occur on the date when the Company dispatches
notice or advice to the Participant that his service is terminated.
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISO are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the
<PAGE> 4
Company) will not exceed $100,000. If the Fair Market Value of Shares on the
date of grant with respect to which ISO are exercisable for the first time by a
Participant during any calendar year exceeds $100,000, then the Options for the
first $100,000 worth of Shares to become exercisable in such calendar year will
be ISO and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISO, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective
date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision in
this Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to
a Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock Awards
shall be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set out
in advance in the Participant's individual Restricted Stock Purchase Agreement.
Restricted Stock Awards may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to
the payment of any Restricted Stock Award, the Committee shall determine the
extent to which such Restricted Stock Award has been earned. Performance Periods
may overlap and Participants may participate
<PAGE> 5
simultaneously with respect to Restricted Stock Awards that are subject to
different Performance Periods and having different performance goals and other
criteria.
6.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that will
be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.
7.2 Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the Participant. If the Stock Bonus is being
earned upon the satisfaction of performance goals pursuant to a Performance
Stock Bonus Agreement, then the Committee will: (a) determine the nature, length
and starting date of any Performance Period for each Stock Bonus; (b) select
from among the Performance Factors to be used to measure the performance, if
any; and (c) determine the number of Shares that may be awarded to the
Participant. Prior to the payment of any Stock Bonus, the Committee shall
determine the extent to which such Stock Bonuses have been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Bonuses that are subject to different Performance Periods and different
performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be
paid currently or on a deferred basis with such interest or dividend equivalent,
if any, as the Committee may determine. Payment may be made in the form of cash
or whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.
<PAGE> 6
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this Plan
may be made in cash (by check) or, where expressly approved for the Participant
by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for within
the meaning of SEC Rule 144 (and, if such shares were purchased from
the Company by use of a promissory note, such note has been fully paid
with respect to such shares); or (2) were obtained by Participant in
the public market;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that Participants who are not
employees or directors of the Company will not be entitled to purchase
Shares with a promissory note unless the note is adequately secured by
collateral other than the Shares;
(d) by waiver of compensation due or accrued to the
Participant for services rendered;
(e) with respect only to purchases upon exercise of an Option,
and provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant
and a broker-dealer that is a member of the National Association
of Securities Dealers (an "NASD DEALER") whereby the Participant
irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased to pay for the Exercise Price, and
whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the Company; or
(2) through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to the
NASD Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant pay
for Shares purchased under this Plan by authorizing a guarantee by the Company
of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be
<PAGE> 7
determined. All elections by a Participant to have Shares withheld for this
purpose will be made in accordance with the requirements established by the
Committee and be in writing in a form acceptable to the Committee
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.
10.2 Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Award Agreement with respect to Awards that are not ISOs.
During the lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares
<PAGE> 8
purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not
be effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction, any or all outstanding Awards may be assumed, converted or
replaced by the successor corporation (if any), which assumption, conversion or
replacement will be binding on all Participants. In the alternative, the
successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Participants as was provided to stockholders (after
taking into account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event such
successor corporation (if any) refuses to assume or substitute Awards, as
provided above, pursuant to a transaction described in this Subsection 18.1,
such Awards will expire on such transaction at such time and on such conditions
as the Committee will determine. Notwithstanding anything in this Plan to the
contrary, the Committee may, in its sole discretion, provide that the vesting of
any or all Awards granted pursuant to this Plan will accelerate upon a
transaction described in this Section 18. If the Committee exercises such
discretion with respect to Options, such Options will become exercisable in full
prior to the consummation of such event at such time and on such conditions as
the
<PAGE> 9
Committee determines, and if such Options are not exercised prior to the
consummation of the corporate transaction, they shall terminate at such time as
determined by the Committee.
18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.
18.3 Assumption of Awards by the Company. The Company, from time
to time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective
on the date on which the registration statement filed by the Company with the
SEC under the Securities Act registering the initial public offering of the
Company's Common Stock is declared effective by the SEC (the "EFFECTIVE DATE").
This Plan shall be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the
Effective Date, the Committee may grant Awards pursuant to this Plan; provided,
however, that: (a) no Option may be exercised prior to initial stockholder
approval of this Plan; (b) no Option granted pursuant to an increase in the
number of Shares subject to this Plan approved by the Board will be exercised
prior to the time such increase has been approved by the stockholders of the
Company; (c) in the event that initial stockholder approval is not obtained
within the time period provided herein, all Awards granted hereunder shall be
cancelled, any Shares issued pursuant to any Awards shall be cancelled and any
purchase of Shares issued hereunder shall be rescinded; and (d) in the event
that stockholder approval of such increase is not obtained within the time
period provided herein, all Awards granted pursuant to such increase will be
cancelled, any Shares issued pursuant to any Award granted pursuant to such
increase will be cancelled, and any purchase of Shares pursuant to such increase
will be rescinded.
20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval. This Plan
and all agreements thereunder shall be governed by and construed in accordance
with the laws of the State of Georgia.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by
the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
23. DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:
<PAGE> 10
"AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means the commission of an act of theft, embezzlement,
fraud, dishonesty or a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation Committee of the Board.
"COMPANY" means Allergy Superstore.Com, Inc. or any successor
corporation.
"DISABILITY" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXERCISE PRICE" means the price at which a holder of an Option
may purchase the Shares issuable upon exercise of the Option.
"FAIR MARKET VALUE" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the date of
determination as reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed
on a national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which
the Common Stock is listed or admitted to trading as reported in The
Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted
on the Nasdaq National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and asked
prices on the date of determination as reported in The Wall Street
Journal;
(d) in the case of an Award made on the Effective Date, the
price per share at which shares of the Company's Common Stock are
initially offered for sale to the public by the Company's underwriters
in the initial public offering of the Company's Common Stock pursuant
to a registration statement filed with the SEC under the Securities
Act; or
(e) if none of the foregoing is applicable, by the Committee
in good faith.
"INSIDER" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"OPTION" means an award of an option to purchase Shares pursuant
to Section 5.
"PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock
<PAGE> 11
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
"PARTICIPANT" means a person who receives an Award under this
Plan.
"PERFORMANCE FACTORS" means the factors selected by the Committee
from among the following measures to determine whether the performance goals
established by the Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total stockholder return and/or total stockholder return
growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
"PERFORMANCE PERIOD" means the period of service determined by
the Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.
"PLAN" means this Allergy Superstore.Com, Inc. 1999 Equity
Incentive Plan, as amended from time to time.
"RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"STOCK BONUS" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
<PAGE> 12
"TERMINATION" or "TERMINATED" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").
"UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.
"VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.
<PAGE> 1
NO. ______ EXHIBIT 10.047
ALLERGY SUPERSTORE.COM, INC.
1999 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "AGREEMENT") is made and entered
into as of the Date of Grant set forth below (the "DATE OF GRANT") by and
between Allergy Superstore.com, Inc., a Delaware corporation (the "COMPANY"),
and the Optionee named below ("OPTIONEE"). Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 1999 Equity Incentive
Plan (the "PLAN").
OPTIONEE:
--------------------------------------
SOCIAL SECURITY NUMBER:
--------------------------------------
OPTIONEE'S ADDRESS:
--------------------------------------
TOTAL OPTION SHARES:
--------------------------------------
EXERCISE PRICE PER SHARE:
--------------------------------------
DATE OF GRANT:
--------------------------------------
VESTING START DATE:
--------------------------------------
EXPIRATION DATE:
--------------------------------------
(unless earlier terminated under Section
3 hereof)
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Option Shares (collectively, the "SHARES")
at the Exercise Price Per Share set forth above (the "EXERCISE PRICE"), subject
to all of the terms and conditions of this Agreement and the Plan. If designated
as an Incentive Stock Option above, this Option is intended to qualify as an
"incentive stock option" ("ISO") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE"), to the extent permitted
under Code Section 422.
2. VESTING; EXERCISE PERIOD.
2.1 Vesting of Shares. This Option shall be exercisable as it
vests. Subject to the terms and conditions of the Plan and this Agreement, this
Option shall become exercisable as to portions of the Shares as follows: (a)
this Option shall not be exercisable with respect to any of the Shares until
______________ ___, 19___ (the "FIRST VESTING DATE"); (b) if Optionee has
continuously provided
<PAGE> 2
services to the Company, or any Parent or Subsidiary of the Company, then on the
First Vesting Date, this Option shall become exercisable as to ________ percent
(___%) of the Shares; and (c) thereafter this Option shall become exercisable as
to an additional _____ percent (___%) of the Shares upon the expiration of each
full calendar month for the next succeeding ________ (___) months provided that
Optionee has continuously provided services to the Company, or any Parent or
Subsidiary of the Company; provided that this Option shall cease to vest upon
Optionee's Termination and provided further that Optionee shall in no event be
entitled under this Option to purchase a number of shares of the Company's
Common Stock greater than the "Total Option Shares."
2.2 Vesting of Options. Shares that are vested pursuant to the
schedule set forth in Section 2.1 hereof are "VESTED SHARES." Shares that are
not vested pursuant to the schedule set forth in Section 2.1 hereof are
"UNVESTED SHARES."
2.3 Expiration. This Option shall expire on the Expiration
Date set forth above and must be exercised, if at all, on or before the earlier
of the Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3 hereof.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or
Cause. If Optionee is Terminated for any reason except Optionee's death,
Disability or Cause, then this Option, to the extent (and only to the extent)
that it is vested in accordance with the schedule set forth in Section 2.1
hereof on the Termination Date, may be exercised by Optionee no later than three
(3) months after the Termination Date, but in any event no later than the
Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause or because of
Disability), then this Option, to the extent that it is vested in accordance
with the schedule set forth in Section 2.1 hereof on the Termination Date, may
be exercised by Optionee (or Optionee's legal representative or authorized
assignee) no later than twelve (12) months after the Termination Date, but in
any event no later than the Expiration Date. Any exercise after three months
after the Termination Date when the Termination is for any reason other than
Optionee's disability, within the meaning of Code Section 22(e)(3), shall be
deemed to be the exercise of a nonqualified stock option.
3.3 Termination for Cause. If Optionee is Terminated for
Cause, this Option will expire on the Optionee's date of Termination.
3.4 No Obligation to Employ. Nothing in the Plan or this
Agreement shall confer on Optionee any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Optionee's employment or other relationship at any time,
with or without Cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
from time to time (the "EXERCISE AGREEMENT"), which shall set forth, inter alia,
Optionee's election to exercise this Option, the number of shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Optionee's investment intent and access to
information as may be required by the Company to comply with applicable
securities laws. If someone other than Optionee exercises this Option, then such
person must submit documentation reasonably acceptable to the Company that such
person has the right to exercise this Option.
2
<PAGE> 3
4.2 Limitations on Exercise. This Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares unless it is exercised as to all
Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Optionee;
(b) by surrender of shares of the Company's Common Stock that
either: (1) have been owned by Optionee for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has been fully
paid with respect to such shares); or (2) were obtained by Optionee in the open
public market; and (3) are clear of all liens, claims, encumbrances or security
interests;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code; provided, however, that Participants who are not employees or directors of
the Company shall not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to Optionee for
services rendered;
(e) provided that a public market for the Company's stock
exists: (1) through a "same day sale" commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an "NASD DEALER") whereby Optionee irrevocably elects to exercise this Option
and to sell a portion of the Shares so purchased to pay for the Exercise Price
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or (2) through a "margin"
commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects
to exercise this Option and to pledge the Shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares upon
exercise of this Option, Optionee must pay or provide for any applicable federal
or state withholding obligations of the Company. If the Committee permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Optionee by deducting the
Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Optionee, Optionee's
authorized assignee, or Optionee's legal representative, and shall deliver
certificates representing the Shares with the appropriate legends affixed
thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. To the extent
this Option is an ISO, if Optionee sells or otherwise disposes of any of the
Shares acquired pursuant to the ISO on or before the later of (a) the date two
(2) years after the Date of Grant, and (b) the date one (1) year after transfer
of such Shares to Optionee upon exercise of this Option, then Optionee shall
immediately notify the Company in writing of such disposition.
3
<PAGE> 4
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Optionee understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, successors and
assigns of Optionee.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
the Board adopted the Plan of some of the federal and California tax
consequences of exercise of this Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
8.1 Exercise of Incentive Stock Option. To the extent this Option
qualifies as an ISO, there will be no regular federal or California income tax
liability upon the exercise of this Option, although the excess, if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price
will be treated as a tax preference item for federal income tax purposes and may
subject the Optionee to the alternative minimum tax in the year of exercise.
8.2 Exercise of Nonqualified Stock Option. To the extent this
Option does not qualify as an ISO, there may be a regular federal and California
income tax liability upon the exercise of this Option. Optionee will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Shares on the date
of exercise over the Exercise Price. The Company may be required to withhold
from Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
8.3 Disposition of Shares. The following tax consequences may
apply upon disposition of the Shares.
a. Incentive Stock Options. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an ISO and are disposed of more than two (2) years after the
Date of Grant, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal and California income tax purposes. If Shares
purchased under an ISO are disposed of within the applicable one (1) year or two
(2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price.
b. Nonqualified Stock Options. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long-term capital gain.
c. Withholding. The Company may be required to withhold from
Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Optionee.
4
<PAGE> 5
10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan and the Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect
to such subject matter.
12. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Optionee and Optionee's heirs, executors, administrators, legal representatives,
successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Gorgia, without regard to that
body of law pertaining to choice of law or conflict of law.
15. ACCEPTANCE. Optionee hereby acknowledges receipt of a copy of the
Plan and this Agreement. Optionee has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee acknowledges that there may
be adverse tax consequences upon exercise of this Option or disposition of the
Shares and that the Company has advised Optionee to consult a tax advisor prior
to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Optionee has executed
this Agreement in duplicate as of the Date of Grant.
ALLERGY SUPERSTORE.COM, INC. OPTIONEE
By:
------------------------------ -----------------------------------
Name: Name:
----------------------------- ------------------------------
Title: Title:
---------------------------- -----------------------------
5
<PAGE> 6
EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
6
<PAGE> 7
EXHIBIT A
ALLERGY SUPERSTORE.COM, INC.
1999 EQUITY INCENTIVE PLAN (THE "PLAN")
STOCK OPTION EXERCISE AGREEMENT
I hereby elect to purchase the number of shares of Common Stock of Allergy
Superstore.com, Inc. (the "Company") as set forth below:
Optionee:
---------------------------------------------------------
Number of Shares Purchased:
---------------------------------------
Social Security Number:
-------------------------------------------
Purchase Price per Share:
-----------------------------------------
Address:
----------------------------------------------------------
Aggregate Purchase Price:
-----------------------------------------
------------------------------------------------------------------
Date of Option Agreement:
-----------------------------------------
------------------------------------------------------------------
Type of Option: [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
Exact Name of Title to Shares:
-------------------------------------
1. DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price, to the extent permitted in the Option Agreement (the
"Option Agreement") as follows (check as applicable and complete):
[ ] in cash (by check) in the amount of $_____________________, receipt
of which is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to Optionee in the
amount of $___________________________________;
[ ] by delivery of ______________________________ fully-paid,
nonassessable and vested shares of the Common Stock of the Company
owned by Optionee for at least six (6) months prior to the date hereof
(and which have been paid for within the meaning of SEC Rule 144), or
obtained by Optionee in the open public market, and owned free and
clear of all liens, claims, encumbrances or security interests, valued
at the current Fair Market Value of $____________________ per share;
[ ] by tender of a full recourse promissory note in the principal
amount of $__________________________, secured by a Pledge Agreement of
even date herewith (the par value of the Shares is tendered in cash (by
check) receipt of which is acknowledged by the Company);
[ ] by the waiver hereby of compensation due or accrued to Optionee for
services rendered in the amount of $__________________________________;
[ ] through a "same-day-sale" commitment, delivered herewith, from
Optionee and the NASD Dealer named therein, in the amount of
$_______________________________; or
[ ] through a "margin" commitment, delivered herewith from Optionee and
the NASD Dealer named therein, in the amount of $____________________.
2. MARKET STANDOFF AGREEMENT. Optionee, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, agrees not to
sell or otherwise transfer or dispose
7
<PAGE> 8
of any Common Stock (or other securities) of the Company held by Optionee during
the period requested by the managing underwriter following the effective date of
a registration statement of the Company filed under the Securities Act, provided
that all officers and directors of the Company are required to enter into
similar agreements. Such agreement shall be in writing in a form satisfactory to
the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares (or other securities) subject to the
foregoing restriction until the end of such period.
3. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES.
OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S)
OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE
SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
4. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Agreement, the Plan and the Option Agreement constitute
the entire agreement and understanding of the parties and supersede in their
entirety all prior understandings and agreements of the Company and Optionee
with respect to the subject matter hereof, and are governed by California law
except for that body of law pertaining to choice of law or conflict of law.
Date:
-------------------------------- ----------------------------------
SIGNATURE OF OPTIONEE
8
<PAGE> 9
SPOUSAL CONSENT
I acknowledge that I have read the foregoing Stock Option Exercise
Agreement (the "AGREEMENT") and that I know its contents. I hereby consent to
and approve all of the provisions of the Agreement, and agree that the shares of
the Common Stock of Allergy Superstore.com, Inc. purchased thereunder (the
"SHARES") and any interest I may have in such Shares are subject to all the
provisions of the Agreement. I will take no action at any time to hinder
operation of the Agreement on these Shares or any interest I may have in or to
them.
Date:__________________
- ----------------------------------------
SIGNATURE OF OPTIONEE'S SPOUSE
- ----------------------------------------
SPOUSE'S NAME - TYPED OR PRINTED
- ----------------------------------------
OPTIONEE'S NAME - TYPED OR PRINTED
9
<PAGE> 1
EXHIBIT 10.048
NO. 2
ALLERGY SUPERSTORE.COM, INC.
1999 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "AGREEMENT") is made and entered
into as of the Date of Grant set forth below (the "DATE OF GRANT") by and
between Allergy Superstore.com, Inc., a Delaware corporation (the "COMPANY"),
and the Optionee named below ("OPTIONEE"). Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 1999 Equity Incentive
Plan (the "PLAN").
OPTIONEE: JACQUES ELFERSY
------------------------------------------
SOCIAL SECURITY NUMBER:
------------------------------------------
OPTIONEE'S ADDRESS: 5655 PEACHTREE PARKWAY
------------------------------------------
NORCROSS, GEORGIA 30092
------------------------------------------
TOTAL OPTION SHARES: 2,250,000
------------------------------------------
EXERCISE PRICE PER SHARE: $2.00
------------------------------------------
DATE OF GRANT: MAY 6, 1999
------------------------------------------
VESTING START DATE: MAY 6, 1999
------------------------------------------
EXPIRATION DATE: MAY 5, 2004
------------------------------------------
(unless earlier terminated under Section
3 hereof)
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[XX] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Option Shares (collectively, the "SHARES")
at the Exercise Price Per Share set forth above (the "EXERCISE PRICE"), subject
to all of the terms and conditions of this Agreement and the Plan. If designated
as an Incentive Stock Option above, this Option is intended to qualify as an
"incentive stock option" ("ISO") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE"), to the extent permitted
under Code Section 422.
2. VESTING; EXERCISE PERIOD.
2.1 Vesting of Shares. This Option shall be vested and
immediately exercisable.
1
<PAGE> 2
2.2 Vesting of Options. Shares that are vested pursuant to the
schedule set forth in Section 2.1 hereof are "VESTED SHARES." Shares that are
not vested pursuant to the schedule set forth in Section 2.1 hereof are
"UNVESTED SHARES."
2.3 Expiration. This Option shall expire on the Expiration
Date set forth above and must be exercised, if at all, on or before the earlier
of the Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3 hereof.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or
Cause. If Optionee is Terminated for any reason except Optionee's death,
Disability or Cause, then this Option, to the extent (and only to the extent)
that it is vested in accordance with the schedule set forth in Section 2.1
hereof on the Termination Date, may be exercised by Optionee no later than three
(3) months after the Termination Date, but in any event no later than the
Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause or because of
Disability), then this Option, to the extent that it is vested in accordance
with the schedule set forth in Section 2.1 hereof on the Termination Date, may
be exercised by Optionee (or Optionee's legal representative or authorized
assignee) no later than twelve (12) months after the Termination Date, but in
any event no later than the Expiration Date. Any exercise after three months
after the Termination Date when the Termination is for any reason other than
Optionee's disability, within the meaning of Code Section 22(e)(3), shall be
deemed to be the exercise of a nonqualified stock option.
3.3 Termination for Cause. If Optionee is Terminated for
Cause, this Option will expire on the Optionee's date of Termination.
3.4 No Obligation to Employ. Nothing in the Plan or this
Agreement shall confer on Optionee any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Optionee's employment or other relationship at any time,
with or without Cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
from time to time (the "EXERCISE AGREEMENT"), which shall set forth, inter alia,
Optionee's election to exercise this Option, the number of shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Optionee's investment intent and access to
information as may be required by the Company to comply with applicable
securities laws. If someone other than Optionee exercises this Option, then such
person must submit documentation reasonably acceptable to the Company that such
person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares unless it is exercised as to all
Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by
full payment of the Exercise Price for the Shares being purchased in cash (by
check), or where permitted by law:
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<PAGE> 3
(a) by cancellation of indebtedness of the Company to the
Optionee;
(b) by surrender of shares of the Company's Common Stock that
either: (1) have been owned by Optionee for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has been fully
paid with respect to such shares); or (2) were obtained by Optionee in the open
public market; and (3) are clear of all liens, claims, encumbrances or security
interests;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code; provided, however, that Participants who are not employees or directors of
the Company shall not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to Optionee for
services rendered;
(e) provided that a public market for the Company's stock
exists: (1) through a "same day sale" commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an "NASD DEALER") whereby Optionee irrevocably elects to exercise this Option
and to sell a portion of the Shares so purchased to pay for the Exercise Price
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or (2) through a "margin"
commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects
to exercise this Option and to pledge the Shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares upon
exercise of this Option, Optionee must pay or provide for any applicable federal
or state withholding obligations of the Company. If the Committee permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Optionee by deducting the
Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Optionee, Optionee's
authorized assignee, or Optionee's legal representative, and shall deliver
certificates representing the Shares with the appropriate legends affixed
thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. To the extent
this Option is an ISO, if Optionee sells or otherwise disposes of any of the
Shares acquired pursuant to the ISO on or before the later of (a) the date two
(2) years after the Date of Grant, and (b) the date one (1) year after transfer
of such Shares to Optionee upon exercise of this Option, then Optionee shall
immediately notify the Company in writing of such disposition.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Optionee understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.
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<PAGE> 4
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, successors and
assigns of Optionee.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
the Board adopted the Plan of some of the federal and California tax
consequences of exercise of this Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
8.1 Exercise of Incentive Stock Option. To the extent this Option
qualifies as an ISO, there will be no regular federal or Georgia income tax
liability upon the exercise of this Option, although the excess, if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price
will be treated as a tax preference item for federal income tax purposes and may
subject the Optionee to the alternative minimum tax in the year of exercise.
8.2 Exercise of Nonqualified Stock Option. To the extent this
Option does not qualify as an ISO, there may be a regular federal and Georgia
income tax liability upon the exercise of this Option. Optionee will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Shares on the date
of exercise over the Exercise Price. The Company may be required to withhold
from Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
8.3 Disposition of Shares. The following tax consequences may
apply upon disposition of the Shares.
a. Incentive Stock Options. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an ISO and are disposed of more than two (2) years after the
Date of Grant, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal and California income tax purposes. If Shares
purchased under an ISO are disposed of within the applicable one (1) year or two
(2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price.
b. Nonqualified Stock Options. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long-term capital gain.
c. Withholding. The Company may be required to withhold from
Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Optionee.
10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan and the Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect
to such subject matter.
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12. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Optionee and Optionee's heirs, executors, administrators, legal representatives,
successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Gorgia, without regard to that
body of law pertaining to choice of law or conflict of law.
15. ACCEPTANCE. Optionee hereby acknowledges receipt of a copy of the
Plan and this Agreement. Optionee has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee acknowledges that there may
be adverse tax consequences upon exercise of this Option or disposition of the
Shares and that the Company has advised Optionee to consult a tax advisor prior
to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Optionee has executed
this Agreement in duplicate as of the Date of Grant.
ALLERGY SUPERSTORE.COM, INC. OPTIONEE
By:
---------------------------------- --------------------------------
Name: Name: Jacques Elfersy
-------------------------------- ----------------------------
Title: Title: Senior Vice President
------------------------------- ---------------------------
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EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
6
<PAGE> 7
EXHIBIT A
ALLERGY SUPERSTORE.COM, INC.
1999 EQUITY INCENTIVE PLAN (THE "PLAN")
STOCK OPTION EXERCISE AGREEMENT
I hereby elect to purchase the number of shares of Common Stock of Allergy
Superstore.com, Inc. (the "Company") as set forth below:
Optionee:
--------------------------------------------------------
Number of Shares Purchased:
--------------------------------------
Social Security Number:
------------------------------------------
Purchase Price per Share:
----------------------------------------
Address:
---------------------------------------------------------
Aggregate Purchase Price:
----------------------------------------
-----------------------------------------------------------------
Date of Option Agreement:
----------------------------------------
-----------------------------------------------------------------
Type of Option: [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
Exact Name of Title to Shares:
-----------------------------------
1. DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price, to the extent permitted in the Option Agreement (the
"Option Agreement") as follows (check as applicable and complete):
[ ] in cash (by check) in the amount of $_____________________, receipt
of which is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to Optionee in the
amount of $___________________________________;
[ ] by delivery of ______________________________ fully-paid,
nonassessable and vested shares of the Common Stock of the Company
owned by Optionee for at least six (6) months prior to the date hereof
(and which have been paid for within the meaning of SEC Rule 144), or
obtained by Optionee in the open public market, and owned free and
clear of all liens, claims, encumbrances or security interests, valued
at the current Fair Market Value of $____________________ per share;
[ ] by tender of a full recourse promissory note in the principal
amount of $__________________________, secured by a Pledge Agreement of
even date herewith (the par value of the Shares is tendered in cash (by
check) receipt of which is acknowledged by the Company);
[ ] by the waiver hereby of compensation due or accrued to Optionee for
services rendered in the amount of $_________________________________;
[ ] through a "same-day-sale" commitment, delivered herewith, from
Optionee and the NASD Dealer named therein, in the amount of
$_______________________________; or
[ ] through a "margin" commitment, delivered herewith from Optionee and
the NASD Dealer named therein, in the amount of $_____________________.
2. MARKET STANDOFF AGREEMENT. Optionee, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, agrees not to
sell or otherwise transfer or dispose
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of any Common Stock (or other securities) of the Company held by Optionee during
the period requested by the managing underwriter following the effective date of
a registration statement of the Company filed under the Securities Act, provided
that all officers and directors of the Company are required to enter into
similar agreements. Such agreement shall be in writing in a form satisfactory to
the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares (or other securities) subject to the
foregoing restriction until the end of such period.
3. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES.
OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S)
OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE
SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
4. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Agreement, the Plan and the Option Agreement constitute
the entire agreement and understanding of the parties and supersede in their
entirety all prior understandings and agreements of the Company and Optionee
with respect to the subject matter hereof, and are governed by California law
except for that body of law pertaining to choice of law or conflict of law.
Date:
----------------------------------- -------------------------------
SIGNATURE OF OPTIONEE
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SPOUSAL CONSENT
I acknowledge that I have read the foregoing Stock Option Exercise
Agreement (the "AGREEMENT") and that I know its contents. I hereby consent to
and approve all of the provisions of the Agreement, and agree that the shares of
the Common Stock of Allergy Superstore.com, Inc. purchased thereunder (the
"SHARES") and any interest I may have in such Shares are subject to all the
provisions of the Agreement. I will take no action at any time to hinder
operation of the Agreement on these Shares or any interest I may have in or to
them.
Date:
-----------------------
- -----------------------------------------
SIGNATURE OF OPTIONEE'S SPOUSE
- -----------------------------------------
SPOUSE'S NAME - TYPED OR PRINTED
- -----------------------------------------
OPTIONEE'S NAME - TYPED OR PRINTED
9
<PAGE> 1
NO. 1 EXHIBIT 10.049
ALLERGY SUPERSTORE.COM, INC.
1999 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "AGREEMENT") is made and entered
into as of the Date of Grant set forth below (the "DATE OF GRANT") by and
between Allergy Superstore.com, Inc., a Delaware corporation (the "COMPANY"),
and the Optionee named below ("OPTIONEE"). Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 1999 Equity Incentive
Plan (the "PLAN").
OPTIONEE: TIMOTHY C. MOSES
-------------------------------------------
SOCIAL SECURITY NUMBER:
-------------------------------------------
OPTIONEE'S ADDRESS: 5655 PEACHTREE PARKWAY
-------------------------------------------
NORCROSS, GEORGIA 30092
-------------------------------------------
TOTAL OPTION SHARES: 2,250,000
-------------------------------------------
EXERCISE PRICE PER SHARE: $2.00
-------------------------------------------
DATE OF GRANT: MAY 6, 1999
-------------------------------------------
VESTING START DATE: MAY 6, 1999
-------------------------------------------
EXPIRATION DATE: MAY 5, 2004
-------------------------------------------
(unless earlier terminated under Section
3 hereof)
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[XX] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(this "OPTION") to purchase up to the total number of shares of Common Stock of
the Company set forth above as Total Option Shares (collectively, the "SHARES")
at the Exercise Price Per Share set forth above (the "EXERCISE PRICE"), subject
to all of the terms and conditions of this Agreement and the Plan. If designated
as an Incentive Stock Option above, this Option is intended to qualify as an
"incentive stock option" ("ISO") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE"), to the extent permitted
under Code Section 422.
2. VESTING; EXERCISE PERIOD.
2.1 Vesting of Shares. This Option shall be vested and
immediately exercisable.
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2.2 Vesting of Options. Shares that are vested pursuant to the
schedule set forth in Section 2.1 hereof are "VESTED SHARES." Shares that are
not vested pursuant to the schedule set forth in Section 2.1 hereof are
"UNVESTED SHARES."
2.3 Expiration. This Option shall expire on the Expiration
Date set forth above and must be exercised, if at all, on or before the earlier
of the Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3 hereof.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or
Cause. If Optionee is Terminated for any reason except Optionee's death,
Disability or Cause, then this Option, to the extent (and only to the extent)
that it is vested in accordance with the schedule set forth in Section 2.1
hereof on the Termination Date, may be exercised by Optionee no later than three
(3) months after the Termination Date, but in any event no later than the
Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause or because of
Disability), then this Option, to the extent that it is vested in accordance
with the schedule set forth in Section 2.1 hereof on the Termination Date, may
be exercised by Optionee (or Optionee's legal representative or authorized
assignee) no later than twelve (12) months after the Termination Date, but in
any event no later than the Expiration Date. Any exercise after three months
after the Termination Date when the Termination is for any reason other than
Optionee's disability, within the meaning of Code Section 22(e)(3), shall be
deemed to be the exercise of a nonqualified stock option.
3.3 Termination for Cause. If Optionee is Terminated for
Cause, this Option will expire on the Optionee's date of Termination.
3.4 No Obligation to Employ. Nothing in the Plan or this
Agreement shall confer on Optionee any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Optionee's employment or other relationship at any time,
with or without Cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
from time to time (the "EXERCISE AGREEMENT"), which shall set forth, inter alia,
Optionee's election to exercise this Option, the number of shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Optionee's investment intent and access to
information as may be required by the Company to comply with applicable
securities laws. If someone other than Optionee exercises this Option, then such
person must submit documentation reasonably acceptable to the Company that such
person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares unless it is exercised as to all
Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by
full payment of the Exercise Price for the Shares being purchased in cash (by
check), or where permitted by law:
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<PAGE> 3
(a) by cancellation of indebtedness of the Company to the
Optionee;
(b) by surrender of shares of the Company's Common Stock that
either: (1) have been owned by Optionee for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note has been fully
paid with respect to such shares); or (2) were obtained by Optionee in the open
public market; and (3) are clear of all liens, claims, encumbrances or security
interests;
(c) by tender of a full recourse promissory note having such
terms as may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code; provided, however, that Participants who are not employees or directors of
the Company shall not be entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to Optionee for
services rendered;
(e) provided that a public market for the Company's stock
exists: (1) through a "same day sale" commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an "NASD DEALER") whereby Optionee irrevocably elects to exercise this Option
and to sell a portion of the Shares so purchased to pay for the Exercise Price
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or (2) through a "margin"
commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects
to exercise this Option and to pledge the Shares so purchased to the NASD Dealer
in a margin account as security for a loan from the NASD Dealer in the amount of
the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing.
4.4 Tax Withholding. Prior to the issuance of the Shares upon
exercise of this Option, Optionee must pay or provide for any applicable federal
or state withholding obligations of the Company. If the Committee permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Optionee by deducting the
Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement
and payment are in form and substance satisfactory to counsel for the Company,
the Company shall issue the Shares registered in the name of Optionee,
Optionee's authorized assignee, or Optionee's legal representative, and shall
deliver certificates representing the Shares with the appropriate legends
affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. To the
extent this Option is an ISO, if Optionee sells or otherwise disposes of any of
the Shares acquired pursuant to the ISO on or before the later of (a) the date
two (2) years after the Date of Grant, and (b) the date one (1) year after
transfer of such Shares to Optionee upon exercise of this Option, then Optionee
shall immediately notify the Company in writing of such disposition.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this
Option and the issuance and transfer of Shares shall be subject to compliance by
the Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Optionee understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.
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<PAGE> 4
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, successors and
assigns of Optionee.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
the Board adopted the Plan of some of the federal and California tax
consequences of exercise of this Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
8.1 Exercise of Incentive Stock Option. To the extent this Option
qualifies as an ISO, there will be no regular federal or Georgia income tax
liability upon the exercise of this Option, although the excess, if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price
will be treated as a tax preference item for federal income tax purposes and may
subject the Optionee to the alternative minimum tax in the year of exercise.
8.2 Exercise of Nonqualified Stock Option. To the extent this
Option does not qualify as an ISO, there may be a regular federal and Georgia
income tax liability upon the exercise of this Option. Optionee will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Shares on the date
of exercise over the Exercise Price. The Company may be required to withhold
from Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
8.3 Disposition of Shares. The following tax consequences may
apply upon disposition of the Shares.
a. Incentive Stock Options. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an ISO and are disposed of more than two (2) years after the
Date of Grant, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal and California income tax purposes. If Shares
purchased under an ISO are disposed of within the applicable one (1) year or two
(2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price.
b. Nonqualified Stock Options. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long-term capital gain.
c. Withholding. The Company may be required to withhold from
Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Optionee.
10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan and the Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect
to such subject matter.
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12. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Optionee and Optionee's heirs, executors, administrators, legal representatives,
successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Gorgia, without regard to that
body of law pertaining to choice of law or conflict of law.
15. ACCEPTANCE. Optionee hereby acknowledges receipt of a copy of the
Plan and this Agreement. Optionee has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee acknowledges that there may
be adverse tax consequences upon exercise of this Option or disposition of the
Shares and that the Company has advised Optionee to consult a tax advisor prior
to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Optionee has executed
this Agreement in duplicate as of the Date of Grant.
ALLERGY SUPERSTORE.COM, INC. OPTIONEE
By:
------------------------------------ ------------------------------
Name: Name: Timothy C. Moses
----------------------------------- --------------------------
Title: Title: CEO
---------------------------------- ------------------------
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EXHIBIT A
STOCK OPTION EXERCISE AGREEMENT
6
<PAGE> 7
EXHIBIT A
ALLERGY SUPERSTORE.COM, INC.
1999 EQUITY INCENTIVE PLAN (THE "PLAN")
STOCK OPTION EXERCISE AGREEMENT
I hereby elect to purchase the number of shares of Common Stock of Allergy
Superstore.com, Inc. (the "Company") as set forth below:
Optionee:
-----------------------------------------------------------
Number of Shares Purchased:
-----------------------------------------
Social Security Number:
---------------------------------------------
Purchase Price per Share:
-------------------------------------------
Address:
-----------------------------------------------------------
Aggregate Purchase Price:
-------------------------------------------
--------------------------------------------------------------------
Date of Option Agreement:
-------------------------------------------
--------------------------------------------------------------------
Type of Option: [ ] Incentive Stock Option
[ ] Nonqualified Stock Option
Exact Name of Title to Shares:
--------------------------------------
1. DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price, to the extent permitted in the Option Agreement (the
"Option Agreement") as follows (check as applicable and complete):
[ ] in cash (by check) in the amount of $_____________________, receipt
of which is acknowledged by the Company;
[ ] by cancellation of indebtedness of the Company to Optionee in the
amount of $___________________________________;
[ ] by delivery of ______________________________ fully-paid,
nonassessable and vested shares of the Common Stock of the Company
owned by Optionee for at least six (6) months prior to the date hereof
(and which have been paid for within the meaning of SEC Rule 144), or
obtained by Optionee in the open public market, and owned free and
clear of all liens, claims, encumbrances or security interests, valued
at the current Fair Market Value of $____________________ per share;
[ ] by tender of a full recourse promissory note in the principal
amount of $__________________________, secured by a Pledge Agreement of
even date herewith (the par value of the Shares is tendered in cash (by
check) receipt of which is acknowledged by the Company);
[ ] by the waiver hereby of compensation due or accrued to Optionee for
services rendered in the amount of $_________________________________;
[ ] through a "same-day-sale" commitment, delivered herewith, from
Optionee and the NASD Dealer named therein, in the amount of
$_______________________________; or
[ ] through a "margin" commitment, delivered herewith from Optionee and
the NASD Dealer named therein, in the amount of $_____________________.
2. MARKET STANDOFF AGREEMENT. Optionee, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, agrees not to
sell or otherwise transfer or dispose
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of any Common Stock (or other securities) of the Company held by Optionee during
the period requested by the managing underwriter following the effective date of
a registration statement of the Company filed under the Securities Act, provided
that all officers and directors of the Company are required to enter into
similar agreements. Such agreement shall be in writing in a form satisfactory to
the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares (or other securities) subject to the
foregoing restriction until the end of such period.
3. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES.
OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S)
OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE
SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
4. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Agreement, the Plan and the Option Agreement constitute
the entire agreement and understanding of the parties and supersede in their
entirety all prior understandings and agreements of the Company and Optionee
with respect to the subject matter hereof, and are governed by California law
except for that body of law pertaining to choice of law or conflict of law.
Date:
---------------------------- -----------------------------------
SIGNATURE OF OPTIONEE
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<PAGE> 9
SPOUSAL CONSENT
I acknowledge that I have read the foregoing Stock Option Exercise
Agreement (the "AGREEMENT") and that I know its contents. I hereby consent to
and approve all of the provisions of the Agreement, and agree that the shares of
the Common Stock of Allergy Superstore.com, Inc. purchased thereunder (the
"SHARES") and any interest I may have in such Shares are subject to all the
provisions of the Agreement. I will take no action at any time to hinder
operation of the Agreement on these Shares or any interest I may have in or to
them.
Date:
--------------------
- ----------------------------------------
SIGNATURE OF OPTIONEE'S SPOUSE
- ----------------------------------------
SPOUSE'S NAME - TYPED OR PRINTED
- ----------------------------------------
OPTIONEE'S NAME - TYPED OR PRINTED
9
<PAGE> 1
EXHIBIT 10.050
ALLERGY SUPERSTORE.COM, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
As Adopted _________________ _______, 1999
1. ESTABLISHMENT OF PLAN. Allergy Superstore.com, Inc. (the "COMPANY")
proposes to grant options for purchase of the Company's Common Stock to eligible
employees of the Company and its Participating Subsidiaries (as hereinafter
defined) pursuant to this Employee Stock Purchase Plan (this "PLAN"). For
purposes of this Plan, "PARENT CORPORATION" and "SUBSIDIARY" shall have the same
meanings as "parent corporation" and "subsidiary corporation" in Sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"CODE"). "PARTICIPATING SUBSIDIARIES" are Parent Corporations or Subsidiaries
that the Board of Directors of the Company (the "BOARD") designates from time to
time as corporations that shall participate in this Plan. The Company intends
this Plan to qualify as an "employee stock purchase plan" under Section 423 of
the Code (including any amendments to or replacements of such Section), and this
Plan shall be so construed. Any term not expressly defined in this Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. A total of 300,000 shares of the Company's Common Stock is reserved for
issuance under this Plan. In addition, on each January 1, the aggregate number
of shares of the Company's Common Stock reserved for issuance under the Plan
shall be increased automatically by the number of shares purchased under this
Plan in the preceding calendar year; provided that the aggregate shares reserved
under this Plan shall not exceed 1,500,000 shares. Such number shall be subject
to adjustments effected in accordance with Section 14 of this Plan.
2. PURPOSE. The purpose of this Plan is to provide eligible employees of
the Company and Participating Subsidiaries with a convenient means of acquiring
an equity interest in the Company through payroll deductions, to enhance such
employees' sense of participation in the affairs of the Company and
Participating Subsidiaries, and to provide an incentive for continued
employment.
3. ADMINISTRATION. This Plan shall be administered by the Compensation
Committee of the Board (the "COMMITTEE"). Subject to the provisions of this Plan
and the limitations of Section 423 of the Code or any successor provision in the
Code, all questions of interpretation or application of this Plan shall be
determined by the Committee and its decisions shall be final and binding upon
all participants. Members of the Committee shall receive no compensation for
their services in connection with the administration of this Plan, other than
standard fees as established from time to time by the Board for services
rendered by Board members serving on Board committees. All expenses incurred in
connection with the administration of this Plan shall be paid by the Company.
4. ELIGIBILITY. Any employee of the Company or the Participating
Subsidiaries is eligible to participate in an Offering Period (as hereinafter
defined) under this Plan except the following:
(a) employees who are not employed by the Company or a Participating
Subsidiary ten (10) days before the beginning of such Offering Period, except
that employees who are employed on the Effective Date of the Registration
Statement filed by the Company with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended (the "SECURITIES ACT")
registering the initial public offering of the Company's Common Stock shall be
eligible to participate in the first Offering Period under the Plan;
(b) employees who are customarily employed for twenty (20) hours or
less per week;
(c) employees who are customarily employed for five (5) months or less
in a calendar year;
(d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code, own stock or
hold options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company
<PAGE> 2
or any of its Participating Subsidiaries or who, as a result of being granted an
option under this Plan with respect to such Offering Period, would own stock or
hold options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Participating Subsidiaries; and
(e) individuals who provide services to the Company or any of its
Participating Subsidiaries as independent contractors who are reclassified as
common law employees for any reason except for federal income and employment tax
purposes.
5. OFFERING DATES. The offering periods of this Plan (each, an "OFFERING
PERIOD") shall be of twenty-four (24) months duration commencing on May 1 and
November 1 of each year and ending on April 30 and October 31 of each year;
provided, however, that notwithstanding the foregoing, the first such Offering
Period shall commence on the first business day on which price quotations for
the Company's Common Stock are available on the Nasdaq National Market (the
"FIRST OFFERING DATE") and shall end on October 31, 2000. Except for the first
Offering Period, each Offering Period shall consist of four (4) six month
purchase periods (individually, a "PURCHASE PERIOD") during which payroll
deductions of the participants are accumulated under this Plan. The first
Offering Period shall consist of no more than five and no fewer than three
Purchase Periods, any of which may be greater or less than six months as
determined by the Committee. The first business day of each Offering Period is
referred to as the "OFFERING DATE". The last business day of each Purchase
Period is referred to as the "PURCHASE DATE". The Committee shall have the power
to change the duration of Offering Periods with respect to offerings without
stockholder approval if such change is announced at least fifteen (15) days
prior to the scheduled beginning of the first Offering Period to be affected.
6. PARTICIPATION IN THIS PLAN. Eligible employees may become participants
in an Offering Period under this Plan on the first Offering Date after
satisfying the eligibility requirements by delivering a subscription agreement
to the Company's treasury department (the "TREASURY DEPARTMENT") not later than
five (5) days before such Offering Date. Notwithstanding the foregoing, the
Committee may set a later time for filing the subscription agreement authorizing
payroll deductions for all eligible employees with respect to a given Offering
Period. An eligible employee who does not deliver a subscription agreement to
the Treasury Department by such date after becoming eligible to participate in
such Offering Period shall not participate in that Offering Period or any
subsequent Offering Period unless such employee enrolls in this Plan by filing a
subscription agreement with the Treasury Department not later than five (5) days
preceding a subsequent Offering Date. Once an employee becomes a participant in
an Offering Period, such employee will automatically participate in the Offering
Period commencing immediately following the last day of the prior Offering
Period unless the employee withdraws or is deemed to withdraw from this Plan or
terminates further participation in the Offering Period as set forth in Section
11 below. Such participant is not required to file any additional subscription
agreement in order to continue participation in this Plan.
7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an eligible employee in
this Plan with respect to an Offering Period will constitute the grant (as of
the Offering Date) by the Company to such employee of an option to purchase on
the Purchase Date up to that number of shares of Common Stock of the Company
determined by dividing (a) the amount accumulated in such employee's payroll
deduction account during such Purchase Period by (b) the lower of (i) eighty-
five percent (85%) of the fair market value of a share of the Company's Common
Stock on the Offering Date (but in no event less than the par value of a share
of the Company's Common Stock), or (ii) eighty-five percent (85%) of the fair
market value of a share of the Company's Common Stock on the Purchase Date (but
in no event less than the par value of a share of the Company's Common Stock),
provided, however, that the number of shares of the Company's Common Stock
subject to any option granted pursuant to this Plan shall not exceed the lesser
of (x) the maximum number of shares set by the Committee pursuant to Section
10(c) below with respect to the applicable Purchase Date, or (y) the maximum
number of shares which may be purchased pursuant to Section 10(b) below with
respect to the applicable Purchase Date. The fair market value of a share of the
Company's Common Stock shall be determined as provided in Section 8 below.
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<PAGE> 3
8. PURCHASE PRICE. The purchase price per share at which a share of Common
Stock will be sold in any Offering Period shall be eighty-five percent (85%) of
the lesser of:
(a) The fair market value on the Offering Date; or
(b) The fair market value on the Purchase Date.
For purposes of this Plan, the term "FAIR MARKET VALUE" means, as of
any date, the value of a share of the Company's Common Stock determined as
follows:
(a) if such Common Stock is then quoted on the Nasdaq National Market,
its closing price on the Nasdaq National Market on the date of determination as
reported in The Wall Street Journal;
(b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of determination on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading as reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the date
of determination as reported in The Wall Street Journal; or
(d) if none of the foregoing is applicable, by the Board in good faith,
which in the case of the First Offering Date will be the price per share at
which shares of the Company's Common Stock are initially offered for sale to the
public by the Company's underwriters in the initial public offering of the
Company's Common Stock pursuant to a registration statement filed with the SEC
under the Securities Act.
9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF
SHARES.
(a) The purchase price of the shares is accumulated by regular payroll
deductions made during each Offering Period. The deductions are made as a
percentage of the participant's compensation in one percent (1%) increments not
less than two percent (2%), nor greater than ten percent (10%) or such lower
limit set by the Committee. Compensation shall mean all W-2 cash compensation,
including, but not limited to, base salary, wages, commissions, overtime, shift
premiums and bonuses, plus draws against commissions, provided, however, that
for purposes of determining a participant's compensation, any election by such
participant to reduce his or her regular cash remuneration under Sections 125 or
401(k) of the Code shall be treated as if the participant did not make such
election. Payroll deductions shall commence on the first payday of the Offering
Period and shall continue to the end of the Offering Period unless sooner
altered or terminated as provided in this Plan.
(b) A participant may increase or decrease the rate of payroll
deductions during an Offering Period by filing with the Treasury Department a
new authorization for payroll deductions, in which case the new rate shall
become effective for the next payroll period commencing more than fifteen (15)
days after the Treasury Department's receipt of the authorization and shall
continue for the remainder of the Offering Period unless changed as described
below. Such change in the rate of payroll deductions may be made at any time
during an Offering Period, but not more than one (1) change may be made
effective during any Purchase Period. A participant may increase or decrease the
rate of payroll deductions for any subsequent Offering Period by filing with the
Treasury Department a new authorization for payroll deductions not later than
fifteen (15) days before the beginning of such Offering Period.
(c) A participant may reduce his or her payroll deduction percentage to
zero during an Offering Period by filing with the Treasury Department a request
for cessation of payroll deductions. Such reduction shall be effective beginning
with the next payroll period commencing more than fifteen (15) days after the
Treasury Department's receipt of the request and no further payroll deductions
will be made for the duration of the Offering Period. Payroll deductions
credited to the participant's account prior to the effective date of
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<PAGE> 4
the request shall be used to purchase shares of Common Stock of the Company in
accordance with Section (e) below. A participant may not resume making payroll
deductions during the Offering Period in which he or she reduced his or her
payroll deductions to zero.
(d) All payroll deductions made for a participant are credited to his
or her account under this Plan and are deposited with the general funds of the
Company. No interest accrues on the payroll deductions. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.
(e) On each Purchase Date, so long as this Plan remains in effect and
provided that the participant has not submitted a signed and completed
withdrawal form before that date which notifies the Company that the participant
wishes to withdraw from that Offering Period under this Plan and have all
payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company shall apply
the funds then in the participant's account to the purchase of whole shares of
Common Stock reserved under the option granted to such participant with respect
to the Offering Period to the extent that such option is exercisable on the
Purchase Date. The purchase price per share shall be as specified in Section 8
of this Plan. Any cash remaining in a participant's account after such purchase
of shares shall be refunded to such participant in cash, without interest;
provided, however that any amount remaining in such participant's account on a
Purchase Date which is less than the amount necessary to purchase a full share
of Common Stock of the Company shall be carried forward, without interest, into
the next Purchase Period or Offering Period, as the case may be. In the event
that this Plan has been oversubscribed, all funds not used to purchase shares on
the Purchase Date shall be returned to the participant, without interest. No
Common Stock shall be purchased on a Purchase Date on behalf of any employee
whose participation in this Plan has terminated prior to such Purchase Date.
(f) As promptly as practicable after the Purchase Date, the Company
shall issue shares for the participant's benefit representing the shares
purchased upon exercise of his or her option.
(g) During a participant's lifetime, his or her option to purchase
shares hereunder is exercisable only by him or her. The participant will have no
interest or voting right in shares covered by his or her option until such
option has been exercised.
10. LIMITATIONS ON SHARES TO BE PURCHASED.
(a) No participant shall be entitled to purchase stock under this Plan
at a rate which, when aggregated with his or her rights to purchase stock under
all other employee stock purchase plans of the Company or any Subsidiary,
exceeds $25,000 in fair market value, determined as of the Offering Date (or
such other limit as may be imposed by the Code) for each calendar year in which
the employee participates in this Plan. The Company shall automatically suspend
the payroll deductions of any participant as necessary to enforce such limit
provided that when the Company automatically resumes such payroll deductions,
the Company must apply the rate in effect immediately prior to such suspension.
(b) No more than two hundred percent (200%) of the number of shares
determined by using eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock on the Offering Date as the denominator may
be purchased by a participant on any single Purchase Date.
(c) No participant shall be entitled to purchase more than the Maximum
Share Amount (as defined below) on any single Purchase Date. Not less than
thirty (30) days prior to the commencement of any Offering Period, the Committee
may, in its sole discretion, set a maximum number of shares which may be
purchased by any employee at any single Purchase Date (hereinafter the "MAXIMUM
SHARE AMOUNT"). Until otherwise determined by the Committee, there shall be no
Maximum Share Amount. In no event shall the Maximum Share Amount exceed the
amounts permitted under Section 10(b) above. If a new Maximum Share Amount is
set, then all participants must be notified of such Maximum Share Amount prior
to the commencement of the next Offering Period. The Maximum Share Amount shall
continue to apply with
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<PAGE> 5
respect to all succeeding Purchase Dates and Offering Periods unless revised by
the Committee as set forth above.
(d) If the number of shares to be purchased on a Purchase Date by all
employees participating in this Plan exceeds the number of shares then available
for issuance under this Plan, then the Company will make a pro rata allocation
of the remaining shares in as uniform a manner as shall be reasonably
practicable and as the Committee shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of shares
to be purchased under a participant's option to each participant affected.
(e) Any payroll deductions accumulated in a participant's account
which are not used to purchase stock due to the limitations in this Section 10
shall be returned to the participant as soon as practicable after the end of the
applicable Purchase Period, without interest.
11. WITHDRAWAL.
(a) Each participant may withdraw from an Offering Period under this
Plan by signing and delivering to the Treasury Department a written notice to
that effect on a form provided for such purpose. Such withdrawal may be elected
at any time at least fifteen (15) days prior to the end of an Offering Period.
(b) Upon withdrawal from this Plan, the accumulated payroll deductions
shall be returned to the withdrawn participant, without interest, and his or her
interest in this Plan shall terminate. In the event a participant voluntarily
elects to withdraw from this Plan, he or she may not resume his or her
participation in this Plan during the same Offering Period, but he or she may
participate in any Offering Period under this Plan which commences on a date
subsequent to such withdrawal by filing a new authorization for payroll
deductions in the same manner as set forth in Section 6 above for initial
participation in this Plan.
(c) If the Fair Market Value on the first day of the current Offering
Period in which a participant is enrolled is higher than the Fair Market Value
on the first day of any subsequent Offering Period, the Company will
automatically enroll such participant in the subsequent Offering Period. Any
funds accumulated in a participant's account prior to the first day of such
subsequent Offering Period will be applied to the purchase of shares on the
Purchase Date immediately prior to the first day of such subsequent Offering
Period. Notwithstanding the foregoing, if the first Offering Date occurs prior
to November 1, 1998 and the Fair Market Value on the First Offering Date is
higher than the Fair Market Value on the first day of the second Offering
Period, any funds accumulated in a participant's account prior to the first day
of the second Offering Period will be applied to the purchase of shares on the
Purchase Date next following the first day of such second Offering Period. A
participant does not need to file any forms with the Company to automatically be
enrolled in the subsequent Offering Period.
12. TERMINATION OF EMPLOYMENT. Termination of a participant's employment
for any reason, including retirement, death or the failure of a participant to
remain an eligible employee of the Company or of a Participating Subsidiary,
immediately terminates his or her participation in this Plan. In such event, the
payroll deductions credited to the participant's account will be returned to him
or her or, in the case of his or her death, to his or her legal representative,
without interest. For purposes of this Section 12, an employee will not be
deemed to have terminated employment or failed to remain in the continuous
employ of the Company or of a Participating Subsidiary in the case of sick
leave, military leave, or any other leave of absence approved by the Board;
provided that such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.
13. RETURN OF PAYROLL DEDUCTIONS. In the event a participant's interest in
this Plan is terminated by withdrawal, termination of employment or otherwise,
or in the event this Plan is terminated by the Board, the Company shall deliver
to the participant all payroll deductions credited to such participant's
account. No interest shall accrue on the payroll deductions of a participant in
this Plan.
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<PAGE> 6
14. CAPITAL CHANGES. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each option under
this Plan which has not yet been exercised and the number of shares of Common
Stock which have been authorized for issuance under this Plan but have not yet
been placed under option (collectively, the "RESERVES"), as well as the price
per share of Common Stock covered by each option under this Plan which has not
yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Common Stock of the
Company resulting from a stock split or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
issued and outstanding shares of Common Stock effected without receipt of any
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the
Committee, whose determination shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Committee. The Committee may,
in the exercise of its sole discretion in such instances, declare that this Plan
shall terminate as of a date fixed by the Committee and give each participant
the right to purchase shares under this Plan prior to such termination. In the
event of (i) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the options under this Plan are
assumed, converted or replaced by the successor corporation, which assumption
will be binding on all participants), (ii) a merger in which the Company is the
surviving corporation but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company, (iii)
the sale of all or substantially all of the assets of the Company or (iv) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction, the Plan will continue with
regard to Offering Periods that commenced prior to the closing of the proposed
transaction and shares will be purchased based on the Fair Market Value of the
surviving corporation's stock on each Purchase Date, unless otherwise provided
by the Committee consistent with pooling of interests accounting treatment.
The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, or in the event of the Company being consolidated with or merged into any
other corporation.
15. NONASSIGNABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under this Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 22 below) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be void and
without effect.
16. REPORTS. Individual accounts will be maintained for each participant in
this Plan. Each participant shall receive promptly after the end of each
Purchase Period a report of his or her account setting forth the total payroll
deductions accumulated, the number of shares purchased, the per share price
thereof and the remaining cash balance, if any, carried forward to the next
Purchase Period or Offering Period, as the case may be.
17. NOTICE OF DISPOSITION. Each participant shall notify the Company in
writing if the participant disposes of any of the shares purchased in any
Offering Period pursuant to this Plan if such disposition occurs within two (2)
years from the Offering Date or within one (1) year from the Purchase Date
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<PAGE> 7
on which such shares were purchased (the "NOTICE PERIOD"). The Company may, at
any time during the Notice Period, place a legend or legends on any certificate
representing shares acquired pursuant to this Plan requesting the Company's
transfer agent to notify the Company of any transfer of the shares. The
obligation of the participant to provide such notice shall continue
notwithstanding the placement of any such legend on the certificates.
18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the grant of
any option hereunder shall confer any right on any employee to remain in the
employ of the Company or any Participating Subsidiary, or restrict the right of
the Company or any Participating Subsidiary to terminate such employee's
employment.
19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have equal
rights and privileges with respect to this Plan so that this Plan qualifies as
an "employee stock purchase plan" within the meaning of Section 423 or any
successor provision of the Code and the related regulations. Any provision of
this Plan which is inconsistent with Section 423 or any successor provision of
the Code shall, without further act or amendment by the Company, the Committee
or the Board, be reformed to comply with the requirements of Section 423. This
Section 19 shall take precedence over all other provisions in this Plan.
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with this Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. TERM; STOCKHOLDER APPROVAL. After this Plan is adopted by the Board,
this Plan will become effective on the First Offering Date (as defined above).
This Plan shall be approved by the stockholders of the Company, in any manner
permitted by applicable corporate law, within twelve (12) months before or after
the date this Plan is adopted by the Board. No purchase of shares pursuant to
this Plan shall occur prior to such stockholder approval. This Plan shall
continue until the earlier to occur of (a) termination of this Plan by the Board
(which termination may be effected by the Board at any time), (b) issuance of
all of the shares of Common Stock reserved for issuance under this Plan, or (c)
ten (10) years from the adoption of this Plan by the Board.
22. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under this Plan in the event of such participant's death subsequent to the end
of an Purchase Period but prior to delivery to him of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under this Plan in the event
of such participant's death prior to a Purchase Date.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under this
Plan who is living at the time of such participant's death, the Company shall
deliver such shares or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES.
Shares shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange or automated quotation system upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
7
<PAGE> 8
24. APPLICABLE LAW. The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of Georgia.
25. AMENDMENT OR TERMINATION OF THIS PLAN. The Board may at any time amend,
terminate or extend the term of this Plan, except that any such termination
cannot affect options previously granted under this Plan, nor may any amendment
make any change in an option previously granted which would adversely affect the
right of any participant, nor may any amendment be made without approval of the
stockholders of the Company obtained in accordance with Section 21 above within
twelve (12) months of the adoption of such amendment (or earlier if required by
Section 21) if such amendment would:
(a) increase the number of shares that may be issued under this Plan; or
(b) change the designation of the employees (or class of employees)
eligible for participation in this Plan.
Notwithstanding the foregoing, the Board may make such amendments to the
Plan as the Board determines to be advisable, if the continuation of the Plan or
any Offering Period would result in financial accounting treatment for the Plan
that is different from the financial accounting treatment in effect on the date
this Plan is adopted by the Board.
8
<PAGE> 1
EXHIBIT 10.051
BIOSHIELD TECHNOLOGIES, INC.
DIRECTOR STOCK OPTION AGREEMENT
PURSUANT TO
1996 DIRECTORS' STOCK OPTION PLAN
THIS AGREEMENT, made on the 1st day of April, 1999, by and between
BIOSHIELD TECHNOLOGIES, INC. (hereinafter referred to as the "Company") and
Michel M. Azran (hereinafter referred to as "Optionee").
WHEREAS, the Company has adopted a stock option plan known as the 1996
Directors' Stock Option Plan (hereinafter referred to as the "Plan") for the
purpose of advancing the interests of the Company and its shareholders by
strengthening the ability of the Company to attract and retain members of its
Board of Directors with experience and ability, and to furnish an additional
incentive to those Directors of the Company upon whose judgment, initiative and
efforts the successful conduct and growth of its and their business largely
depend, by encouraging Directors to have a material interest in the increase in
value of, and to become owners or increase their ownership of, the common stock
of the Company ("Common Stock"); and
WHEREAS, Optionee is now a Director of the Company, and the Company
desires to afford Optionee the opportunity to acquire or enlarge Optionee's
stock ownership in the Company, so that Optionee may have a direct proprietary
interest in the Company's success;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set
forth herein, the Company grants to Optionee a nonqualified stock option (the
"Option") to purchase from the Company all or any part of ten thousand (10,000)
shares of Common Stock ("Shares").
2. TERM OF EXERCISE OF OPTION.
(a) The term of the Option granted herein shall commence as of the
date of this Agreement and end on March 31, 2004 (the "Option Period").
(b) The option shall be exercisable at any time during the five-year
Option Period.
(c) The Option hereby granted shall be exercised by Optionee
delivering to the Treasurer of the Company, from time to time, on any business
day, written notice specifying the number of Shares Optionee then desires to
purchase and reaffirming that the representations made in Section 8 hereof are
true and correct as of the date of exercising the option. A copy of the form of
written notice to be used is attached hereto as Exhibit A.
3. EXERCISE PRICE.
(a) Optionee must pay Five and 75/100 Dollars ($5.75) per share
(subject to adjustment pursuant to Section 7 hereof) for the Shares acquired
pursuant to this Agreement.
(b) Payment of the option price of the Shares shall be made in cash at
the time an Option is exercised, or in any other form permitted by Section 4(e)
of the Plan.
4. RESTRICTION ON SHARES. The Company reserves to itself or its
assignee the right of first refusal to purchase the Shares, or any portion
thereof, that an Optionee (or a subsequent transferee) proposes to transfer to
a third party. The purchase shall be completed within thirty (30) days of the
receipt of notice by the Company that an offer has been made by a third party
to purchase the Shares. The price to be paid for the Shares shall be the lesser
of (i) their
<PAGE> 2
fair market value on the date of purchase, which fair market value shall be
determined by the Board of Directors of the Company who may use such methods
and methodology as it deems appropriate, and (ii) the price per Share offered
by the proposed purchaser. Payment shall be made in cash on the date of the
purchase unless the Optionee and Company shall agree otherwise. In the event
that the Company fails to exercise its option, then the Optionee may sell the
Shares to the proposed transferee at a price per Share not less than the price
offered by the proposed transferee at any time within 90 days following the
receipt by the Company of the original notice. By signing a copy of this
Agreement, Optionee agrees to be bound by the terms of this Section 4.
5. TERMINATION OF OPTION.
(a) Except as otherwise provided below, the Option hereby granted
shall terminate and be of no force or effect upon the happening of the first of
the following events:
(i) The expiration of the Option Period;
(ii) 60 days following the termination of the Optionee's
status as a Director of the Company, whether voluntary or involuntary,
including the death of the Optionee.
(b) The Option evidenced hereby is nontransferable except as
provided in subsection (c) below with respect to the death of an Optionee, and
shall be exercisable during the lifetime of Optionee only by Optionee.
(c) If Optionee ceases to be a Director of the Company for any
reason including death, any unexpired portion of the option held by Optionee
and not exercised may be exercised by a legatee or legatees under Optionee's
last will and testament or by his personal representative or representatives
(to the extent the option would have been exercisable by Optionee) at any time
within sixty days after the date of Optionee's last date as a member of the
Board of Directors.
6. RIGHTS AS A SHAREHOLDER. Optionee shall have no rights as a
shareholder of the Company with respect to any Shares covered by this Option
until the issuance of a stock certificate to him for such Shares.
7. CHANGE IN CAPITALIZATION.
(a) As provided in Sections 9 and 10 of the Plan, and upon the
occurrence of any of the conditions listed therein, the Committee in its sole
discretion shall make any adjustments as may be appropriate in the number and
kind of Shares as to which this Option shall be exercisable and in the option
rights granted. These adjustments shall be made without change in the total
price applicable to the Option and with a corresponding adjustment in the
option price per Share. Any adjustment may provide for the elimination of
fractional shares.
8. COVENANTS AND REPRESENTATIONS OF OPTIONEE. Optionee
represents, warrants, covenants and agrees with the Company as follows:
(a) The Option is being received for Optionee's own account
without the participation of any other person, with the intent of holding the
Option and the Shares issuable pursuant thereto for investment and without the
intent of participating, directly or indirectly, in a distribution of the
Shares and not with a view to, or for resale in connection with, any
distribution of the Shares or any portion thereof;
(b) Optionee is not acquiring the Option based upon any
representation, oral or written, by any person with respect to the future value
of, or income from, the Shares subject to this Option, but rather upon an
independent examination and judgment as to the prospects of the Company;
(c) Optionee has received a copy of the Plan and has had complete
access to and the opportunity to review and make copies of all material
documents related to the business of the Company; Optionee has examined all of
these documents as he wished, is familiar with the business and affairs of the
Company, and realizes that the receipt of the Shares is a speculative
investment and that any possible profit therefrom is uncertain;
2
<PAGE> 3
(d) Optionee has had the opportunity to ask questions of and
receive answers from the Company and any person acting on its behalf and to
obtain all information available with respect to the Plan, the Company and its
affairs, and has received all information and data with respect to the Plan and
the Company that he has requested and which he has deemed relevant in
connection with his receipt of the Option and the Shares subject thereto;
(e) Optionee is able to bear the economic risk of the investment,
including the risk of a complete loss of his investment, and Optionee
acknowledges that he must continue to bear the economic risk of the investment
in the Shares received upon Option exercise for an indefinite period;
(f) Optionee understands and agrees that the Shares subject to
the Option may be issued and sold to Optionee without registration under any
state or federal law relating to the registration of securities for sale, and
in that event will be issued and sold in reliance on exemptions from
registration under appropriate state and federal laws;
(g) The Shares issued to Optionee upon exercise of the option
will not be offered for sale, sold or transferred by Optionee other than
pursuant to:
(i) an effective registration under applicable state
securities laws or in a transaction which is otherwise in compliance with those
laws;
(ii) an effective registration under the Securities Act of
1933 (the "1933 Act") or a transaction otherwise in compliance with the 1933
Act; and
(iii) evidence satisfactory to the Company of compliance with
the applicable securities laws. The Company shall be entitled to rely upon an
opinion of counsel satisfactory to it with respect to compliance with the
foregoing laws;
(h) The Company will be under no obligation to register the
Shares issuable pursuant to the Option or to comply with any exemption
available for sale of the Shares by the Optionee without registration, and the
Company is under no obligation to act in any manner so as to make Rule 144
promulgated under the 1933 Act available with respect to sale of the Shares by
the Optionee;
(i) A legend indicating that the Shares issued pursuant to the
Option has not been registered under the applicable securities laws and
referring to any applicable restrictions on transferability and sale of the
Shares may be placed on the certificate or certificates delivered to Optionee,
and any transfer agent of the Company may be instructed to require compliance
therewith;
(j) Optionee will notify the Company in writing at least sixty
(60) days prior to any sale of Shares;
(k) The agreements, representations, warranties, and covenants
made by Optionee herein with respect to the Option shall also extend to and
apply to all of the Shares of the Company issued to Optionee from time to time
pursuant to this Option. Acceptance by Optionee of the certificate(s)
representing Shares shall constitute a confirmation by Optionee that all such
agreements, representations, warranties and covenants made herein shall be true
and correct at that time.
9. COMPLIANCE WITH SECURITIES LAWS. Anything in this agreement
to the contrary notwithstanding, if, at any time specified herein for the
issuance of Shares to Optionee, any federal or state securities law, any
regulation or requirement of the Securities and Exchange Commission or any
other governmental authority having jurisdiction shall require either the
Company or Optionee to take any action in connection with the Shares then to be
issued, the issuance of the Shares shall be deferred until that action shall
have been taken; however, the Company shall be under no obligation to take
action, and the Company shall have no liability whatsoever as a result of the
nonissuance of the Shares, except to refund to Optionee any consideration
tendered in respect of the exercise price.
10. RESOLUTION OF DISPUTES. Any dispute or disagreement which
shall arise under, as a result of, or pursuant to, this agreement shall be
determined by the President of the Company, in his absolute and sole
discretion,
3
<PAGE> 4
and any such determination or any other determination by the President under or
pursuant to this Agreement and any interpretation by the President of the terms
of this Agreement shall be final, binding and conclusive on all persons
affected thereby; provided, however, the Committee, as defined in the Plan,
shall have the right, in its absolute and sole discretion, to overrule or
modify any determination or interpretation made by the President, in which
event any determination or interpretation by the Committee shall be final,
binding and conclusive on all persons affected thereby.
11. NOTICE. Any notice which either party hereby may be required
or permitted to give to the other shall be in writing, and may be delivered
personally or by mail, postage prepaid, addressed as follows: to the President
of the Company, or to the Company (attention of the President), at 3340
Peachtree Road, N.E., Suite 1800, Atlanta, Georgia 30326, or at any other
address as the Company, by notice to Optionee, may designate in writing from
time to time; to Optionee, at Optionee's address as shown on the records of the
Company, or at any other address as Optionee, by notice to the Company, may
designate in writing from time to time.
12. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of the heirs, legal representatives, successors and permitted
assigns of the parties.
13. SEVERABILITY. In the event that any one or more of the
provisions or portion thereof contained in this Agreement shall for any reason
be held to be invalid, illegal or unenforceable in any respect, the same shall
not invalidate or otherwise affect any other provisions of this Agreement and
this Agreement shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.
14. ENTIRE AGREEMENT. Subject to the terms and conditions of the
Plan, which is incorporated herein by reference, this Agreement expresses the
entire understanding and agreement of the parties hereto. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed and sealed this
Directors' Stock Option Agreement on the date and year set forth above.
BIOSHIELD TECHNOLOGIES, INC.
Attest: By:
---------------------------- -----------------------------
Title: Title:
----------------------------- --------------------------
[CORPORATE SEAL]
4
<PAGE> 5
OPTIONEE:
---------------------------------------
Michel M. Azran
<PAGE> 6
EXHIBIT A
---------
Bioshield Technologies, Inc.
5655 Peachtree Parkway
Norcross, Georgia 30092
Attention: Treasurer
RE: Exercise of Directors' Option under the Bioshield
Technologies, Inc. Directors' Stock Option Agreement dated
April 1, 1999 (the "Agreement")
Dear Treasurer:
I desire to purchase _______ shares of Bioshield Technologies, Inc.
and hereby tender payment in full for such Shares in accordance with the terms
of the Agreement.
I hereby reaffirm that the representations made in Section 8 of the
Agreement are true and correct as of the date of exercising this option.
Very truly yours,
----------------------------------------
Name of Optionee:
---------------------
<PAGE> 1
EXHIBIT 10.052
BIOSHIELD TECHNOLOGIES, INC.
STOCK INCENTIVE AGREEMENT
Dear Jacques Elfersy:
The Board of Directors of BioShield Technologies, Inc. ("BioShield")
hereby notifies you (the "Employee") of BioShield's grant to you of a stock
option (the "Option") to purchase shares of BioShield's common stock (the
"Stock") on the following terms and conditions:
1. PLAN. This Option is granted pursuant to the provisions of
BioShield's 1997 Stock Incentive Plan (the "Plan") and the
terms and conditions of the Plan are incorporated herein by
reference and made a part hereof. This Option is subject to,
and BioShield and the Employee agree to be bound by, all of
the terms and conditions of the Plan under which this Option
was granted as the same shall have been amended from time to
time in accordance with the terms thereof. A copy of the Plan
has been delivered to, and receipt is hereby acknowledged by,
the Employee.
2. OPTION. BioShield hereby grants to the Employee the Option to
purchase all or any part of the aggregate of such number of
shares of the Stock subject to the terms and condition of the
Plan and as set forth on Exhibit "A" attached hereto and
incorporated herein by reference.
3. NON-TRANSFERABLE OPTION. This Option and all rights hereunder
are neither assignable nor transferable by the Employee
otherwise than by will or under applicable laws of descent
and distribution, and during the Employee's lifetime this
Option is exercisable only by him. Without limiting the
generality of the foregoing, this Option shall not be
transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be
subject to execution, attachment or similar process.
4. NOTICE OF EXERCISE OF OPTION. This Option may be exercised by
the Employee or by his administrators, executors or personal
representatives by written notice in substantially the form
of "Notice of Exercise" attached hereto as Exhibit "B", and
accompanied by a certified or cashier's check payable to
BioShield in payment of the Option exercise price applicable
to such Stock as provided herein. Upon receipt of such notice
and accompanying payment, subject to the terms hereof,
BioShield shall cause to be issued to the Employee or to his
representatives, executors, or personal representatives, as
the case may be, a certificate(s) for the number of shares of
Stock purchased hereunder which will be registered in the
name of the person exercising this Option.
<PAGE> 2
Acceptance by the Employee of the certificate(s) representing
the Stock purchased hereunder shall constitute a confirmation
by the Employee that the representations, warranties,
acknowledgments and agreements made herein shall be true and
correct at that time.
5. ENTIRE AGREEMENT. Subject to the terms and conditions of the
Plan, which is incorporated herein by reference, this
Agreement expresses the entire understanding and agreement of
the parties hereto.
Please execute this Agreement in the space provided below to
evidence your acceptance hereof.
BIOSHIELD TECHNOLOGIES, INC.
By:
-----------------------------------
Title:
--------------------------------
Date:
---------------------------------
READ AND AGREED TO:
- -------------------------------
Employee: Jacques Elfersy
Date:
--------------------------
<PAGE> 3
EXHIBIT "A"
TO STOCK INCENTIVE AGREEMENT
BETWEEN
BIOSHIELD TECHNOLOGIES, INC.
AND
JACQUES ELFERSY
1. Type of Option: this is an _____ "Incentive" or __XX___ "Nonqualified"
Option (as described in the Plan).
2. Number of Shares Subject to Option: One Hundred Fifty Thousand
(150,000) Shares.
3. Option Exercise Price: $2 7/16 per Share.
4. Date of Grant: December 1, 1998.
5. Option Vesting Schedule
Check one:
(X) Options are exercisable with respect to all Shares on or
after the date hereof.
( ) Options are exercisable with respect to the number of
Shares indicated below on or after the date set next to the
number of Shares:
No. of Shares Vesting Date
6. Option Exercise Period:
Check one:
(X) All options expire and are void unless exercised on or before
November 30, 2003.
( ) Options expire and are void unless exercised on or before the
date indicated next to the number of Shares:
No. of Shares Vesting Date
<PAGE> 4
7. Effect of Termination of Employment of Employee:
Check one:
( ) Options automatically terminate at the date of termination of
employment.
(X) Employee may exercise options for a period of up to three
months from the date of termination, but only to the extent
of the number of shares which could be exercised at such date
of termination.
<PAGE> 5
EXHIBIT "B"
NOTICE OF EXERCISE
(To Be Executed Upon Exercise of Stock Options)
TO: BIOSHIELD TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase _______ shares
of common stock (the "Shares") covered by the attached Stock Incentive
Agreement in accordance with the terms and conditions thereof, and herewith
makes payment of the Option Exercise Price for such Shares in full. The
undersigned hereby directs that the certificates for such Shares be issued in
the name of, and delivered to __________________________________________ whose
address is ____________________________________________. If the number of
Shares so purchased shall not be all of the Shares purchasable under such Stock
Incentive Agreement, a new Stock Incentive Agreement for the balance remaining
of the shares purchasable thereunder shall be issued in the name of and
delivered to the undersigned at the address shown below.
This _____ day of _____________, _________.
---------------------------------------------------
(Signature must conform in all respects to name of
Employee as specified on the face of the Employee
Incentive Stock Option Agreement)
----------------------------------------------------
Street Address
-----------------------------------------------------
City State Zip Code
-----------------------------------------------------
Social Security Number
<PAGE> 1
EXHIBIT 10.053
BIOSHIELD TECHNOLOGIES, INC.
STOCK INCENTIVE AGREEMENT
Dear Timothy C. Moses:
The Board of Directors of BioShield Technologies, Inc. ("BioShield")
hereby notifies you (the "Employee") of BioShield's grant to you of a stock
option (the "Option") to purchase shares of BioShield's common stock (the
"Stock") on the following terms and conditions:
1. PLAN. This Option is granted pursuant to the provisions of
BioShield's 1997 Stock Incentive Plan (the "Plan") and the
terms and conditions of the Plan are incorporated herein by
reference and made a part hereof. This Option is subject to,
and BioShield and the Employee agree to be bound by, all of
the terms and conditions of the Plan under which this Option
was granted as the same shall have been amended from time to
time in accordance with the terms thereof. A copy of the Plan
has been delivered to, and receipt is hereby acknowledged by,
the Employee.
2. OPTION. BioShield hereby grants to the Employee the Option to
purchase all or any part of the aggregate of such number of
shares of the Stock subject to the terms and condition of the
Plan and as set forth on Exhibit "A" attached hereto and
incorporated herein by reference.
3. NON-TRANSFERABLE OPTION. This Option and all rights hereunder
are neither assignable nor transferable by the Employee
otherwise than by will or under applicable laws of descent
and distribution, and during the Employee's lifetime this
Option is exercisable only by him. Without limiting the
generality of the foregoing, this Option shall not be
transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be
subject to execution, attachment or similar process.
4. NOTICE OF EXERCISE OF OPTION. This Option may be exercised by
the Employee or by his administrators, executors or personal
representatives by written notice in substantially the form
of "Notice of Exercise" attached hereto as Exhibit "B", and
accompanied by a certified or cashier's check payable to
BioShield in payment of the Option exercise price applicable
to such Stock as provided herein. Upon receipt of such notice
and accompanying payment, subject to the terms hereof,
BioShield shall cause to be issued to the Employee or to his
representatives, executors, or personal representatives, as
the case may be, a certificate(s) for the number of shares of
Stock purchased hereunder which will be registered in the
name of the person exercising this Option.
<PAGE> 2
Acceptance by the Employee of the certificate(s) representing
the Stock purchased hereunder shall constitute a confirmation
by the Employee that the representations, warranties,
acknowledgments and agreements made herein shall be true and
correct at that time.
5. ENTIRE AGREEMENT. Subject to the terms and conditions of the
Plan, which is incorporated herein by reference, this
Agreement expresses the entire understanding and agreement of
the parties hereto.
Please execute this Agreement in the space provided below to
evidence your acceptance hereof.
BIOSHIELD TECHNOLOGIES, INC.
By:
----------------------------------
Title:
-------------------------------
Date:
--------------------------------
READ AND AGREED TO:
- -------------------------------
Employee: Timothy C. Moses
Date:
--------------------------
<PAGE> 3
EXHIBIT "A"
TO STOCK INCENTIVE AGREEMENT
BETWEEN
BIOSHIELD TECHNOLOGIES, INC.
AND
TIMOTHY C. MOSES
1. Type of Option: this is an _____ "Incentive" or __XX___ "Nonqualified"
Option (as described in the Plan).
2. Number of Shares Subject to Option: One Hundred Fifty Thousand
(150,000) Shares.
3. Option Exercise Price: $2 7/16 per Share.
4. Date of Grant: December 1, 1998
5. Option Vesting Schedule
Check one:
(X) Options are exercisable with respect to all Shares on or
after the date hereof.
( ) Options are exercisable with respect to the number of Shares
indicated below on or after the date set next to the number
of Shares:
No. of Shares Vesting Date
6. Option Exercise Period:
Check one:
(X) All options expire and are void unless exercised on or before
November 30, 2003.
( ) Options expire and are void unless exercised on or before the
date indicated next to the number of Shares:
No. of Shares Vesting Date
<PAGE> 4
7. Effect of Termination of Employment of Employee:
Check one:
( ) Options automatically terminate at the date of termination of
employment.
(X) Employee may exercise options for a period of up to three
months from the date of termination, but only to the extent
of the number of shares which could be exercised at such date
of termination.
<PAGE> 5
EXHIBIT "B"
NOTICE OF EXERCISE
(To Be Executed Upon Exercise of Stock Options)
TO: BIOSHIELD TECHNOLOGIES, INC.
The undersigned hereby exercises the right to purchase _______ shares
of common stock (the "Shares") covered by the attached Stock Incentive
Agreement in accordance with the terms and conditions thereof, and herewith
makes payment of the Option Exercise Price for such Shares in full. The
undersigned hereby directs that the certificates for such Shares be issued in
the name of, and delivered to __________________________________________ whose
address is ____________________________________________. If the number of
Shares so purchased shall not be all of the Shares purchasable under such Stock
Incentive Agreement, a new Stock Incentive Agreement for the balance remaining
of the shares purchasable thereunder shall be issued in the name of and
delivered to the undersigned at the address shown below.
This _____ day of _____________, _________.
--------------------------------------------------
(Signature must conform in all respects to name of
Employee as specified on the face of the Employee
Incentive Stock Option Agreement)
--------------------------------------------------
Street Address
--------------------------------------------------
City State Zip Code
--------------------------------------------------
Social Security Number
<PAGE> 1
EXHIBIT 10.054
May 20, 1999
[BIOSHIELD(TM) LOGO]
BioShield Technologies Inc.
Ms. Maggie M. Perritt
1258 Vintage Pointe Drive
Lawrenceville, GA 30044
Dear Maggie:
I am pleased to offer you the position of Director of Pharmacy online. It is our
understanding you will begin work as soon as possible, but no later than June
21, 1999.
Your starting base salary will be $125,000 per year. You will be covered by the
company's health plan (the company pays 50% for the employee coverage, the
employee is responsible for the rest), and Employee Incentive Stock Option Plan
(3000-10000 options per year, based on performance and service), which will be
effective after the first six months of employment. You will be entitled to
three (3) weeks paid vacation, and ten (10) paid holidays. We are also working
on adding a 401K plan in six (6) months.
We look forward to your acceptance of our employment offer and look forward to
seeing you on June 21, 1999, to begin your employment at Allergy
Superstore/BioShield Technologies, Inc.
Duties include among other things:
1. Managing and directing the operations of Allergy Superstore's pharmacy
division and its shipping & handling department.
2. Implement policies and procedures to fully comply with all states
regulations online.
3. Provide support and training to pharmacists.
4. Provide analysis and leads for potential acquisitions.
5. Monitor budgets, expenses and margins.
6. Spearhead quality assurance programs.
7. Implement inventory controls security/emergency procedures.
We look forward to your acceptance of our offer and being part of our team!
Sincerely,
/s/ Jacques Effersy
Jacques Effersy
Senior Vice President
BioShield Technologies, Inc.
4405 International Boulevard Suite 3109, Norcross GA
<PAGE> 1
EXHIBIT 10.055
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is entered into
as of this 14th day of June 1999, between BIOSHIELD TECHNOLOGIES, INC., a
Georgia corporation (the "COMPANY"), and John T. Adams, a Georgia resident (the
"EXECUTIVE").
1. Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company, on
the terms and conditions set forth herein.
2. Term. The employment of the Executive by the Company as
provided in Section 1 will commence on June 14, 1999 (the "COMMENCEMENT DATE")
and will terminate at 12:01 a.m. on June 14, 2000 (the "INITIAL TERM") unless
same terminated as hereinafter provided. Thereafter, this Agreement can be
renewed annually for additional one (1) year terms (hereinafter referred to
individually a "RENEWAL TERM") after the end of the Initial Term or any Renewal
Term, unless terminated as hereinafter provided or either party notifies the
other party by giving written notice to the other party that they do not wish
to renew the Agreement for a subsequent term. Such notice must be given at
least ninety (90) days before the end of the Initial Term, or the then Renewal
Term, as the case may be. Compensation for renewal will be negotiated on a
year-to-year basis. The term of the Employee's employment with the Company
shall be referred to herein as the "EMPLOYMENT PERIOD."
3. Position, Duties and Responsibilities.
(a) Position. The Executive hereby agrees to serve as
Executive Vice President of Business Planning and Development of the Company.
The Executive shall devote his best efforts and substantially full time and
attention to the performance of services to the Business of the Company in his
capacity as an officer thereof and as may reasonably be requested by the Board.
The Company retains the right to direct the means and methods by which the
Executive performs the above services. For purposes of this Agreement,
"BUSINESS" shall mean development, marketing, and sale of products and services
provided by BioShield Technologies, Inc. and associated companies.
(b) Place of Employment. During the term of this Agreement,
the Executive shall perform the services required by this Agreement at the
Company's principal place of business in Atlanta, Georgia; provided, however,
that should the Company relocate its principal place of business to another
city or state more than fifty (50) miles from its principal place of business
as of the effective date of this Agreement and require Executive to relocate to
such principal place of business, Executive may terminate this Agreement in
accordance with Section 5(e) below.
<PAGE> 2
(c) Other Activities. Except with the prior written approval
of the Board (which the Board may grant or withhold in its sole and absolute
discretion), the Executive, during the Employment Period, will not (i) accept
any other employment, (ii) serve as an officer or on the board of directors or
similar body of any other business entity (except as otherwise set forth below)
that is or may be competitive with, or that might place him in a competing
position to, the Business of the Company or any of its affiliates, or (iii)
engage, directly or indirectly, in any other business activity (whether or not
pursued for pecuniary advantage) that is or may be competitive with, or that
might place him in a competing position to, the Business of the Company or any
of its affiliates. Notwithstanding the foregoing, the Company agrees that the
Executive (or affiliates of the Executive) shall be permitted (i) to undertake
the activities set forth in Section 8, (ii) to make any other passive personal
investment that is not in a business activity that is directly or indirectly
competitive with the Business of the Company, (iii) to participate in industry
organizations, and (iv) to participate in charitable or educational activities.
4. Compensation and Related Matters.
(a) Salary. During year one of the Employment Period, the
Company shall pay the Executive a salary of not less than $80,000 annually. All
salary is to be paid consistent with the standard payroll practices of the
Company (e.g., timing of payments and standard employee deductions, such as
income tax withholdings, social security), but not less frequently than monthly
with each payment being that portion of the annual salary which is payable
based upon the applicable period.
(b) Bonus. In addition to the Base Salary set forth above,
Employee shall be entitled to bonuses as indicated in the periodically adjusted
bonus guidelines that may be presented from time to time to Employee by the
President of Employer. Employee understands that Employer is under no
obligation to pay bonuses or create guidelines, and that such bonus guidelines
if adopted, will likely change, due in part to a changing emphasis of Employer
goals, focus and objectives.
(c) Business Expenses. The Company shall reimburse the
Executive in connection with the conduct of the Company's business upon
presentation of sufficient tangible evidence of such expenditures consistent
with the Company's policies as in place from time to time.
(d) Stock Option Benefits. The Company agrees to grant the
Executive a non- qualified stock option to acquire up to 80,000 shares of the
Company's common stock at an exercise price of the closing price on June 11,
1999, which was 19.0625 (19 1/16) per share pursuant to the Company's 1997
Stock Incentive Plan (the "OPTION PLAN"). The option shall vest at the first
anniversary of the Commencement Date. In the event the Executive is terminated
without cause pursuant to Section 5(d) below or the Executive terminates this
Agreement for Good Cause pursuant to Section 5(e) below, then the vesting
period shall be accelerated such that any option shares that would have vested
at the end of the year in which the Date of Termination occurs (the
"TERMINATION YEAR") shall become immediately vested; provided, however, that
the Executive shall exercise all options vested upon termination no later than
180 days following
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<PAGE> 3
Date of Termination. The Company agrees that within a reasonable time following
the execution of this Agreement it will execute an option agreement with the
Executive (the "OPTION AGREEMENT") on these terms. Except as otherwise set
forth in this Section 4 and except with respect to the Company's obligations
under this Agreement with respect to the Option Agreement and the Option Plan,
nothing herein is intended, or shall be construed to require the Company to
institute or continue any, or any particular, plan or benefits.
(e) Health and Similar Benefits. The Executive shall be
entitled to participate in or receive health, welfare, life insurance,
long-term disability insurance and similar benefits as the Company provides
generally from time to time to its executives.
(f) Fringe Benefits. The Executive will be entitled to fringe
benefits as may be determined or granted from time-to-time by the Board.
(g) Vacation. The Executive shall be entitled to four
vacation weeks (20 business days) in each calendar year on a pro-rated basis.
The Executive will be entitled to all Company holidays.
5. Termination. The Executive's employment hereunder shall be,
or may be, as the case may be, terminated under the following circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. The Executive's employment hereunder shall
terminate on the Executive's physical or mental disability or infirmity.
Disability shall be conclusively established if the Executive is unable to
perform his duties under this Agreement for more than 85 business days during
any 180 calendar day period.
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. "CAUSE" shall mean (i) Employee's material
breach of any of the terms of this Agreement, (ii) his conviction of a crime
involving moral turpitude or constituting a felony under the laws of any state,
the District of Columbia or of the United States, or (iii) his gross
negligence, willful misconduct or fraud in the performance of his duties
hereunder.
(d) Termination for Any Reason. Subject to Section 6 hereof,
the Executive hereby agrees that the Company may dismiss him at any time under
this Section 5(d) without regard (i) to any general or specific policies
(whether written or oral) of the Company relating to the employment or
termination of its employees, or (ii) to any statements made to the Executive,
whether made orally or contained in any document, pertaining to the Executive's
relationship with the Company. Notwithstanding anything to the contrary
contained herein, including Sections 2 and 4, the Executive's employment with
the Company is not for any specified term, is at will and may be terminated by
the Company at any time by delivery of a notice of termination to the
Executive, for any reason, with or without cause, without liability except with
respect to the payments provided for by Section 6.
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<PAGE> 4
(e) Voluntary Resignation. The Executive may voluntarily
resign his position and terminate his employment with the Company at any time
for any reason or for Good Cause. For purposes of this Agreement, "GOOD CAUSE"
shall mean, without the express written consent of Executive, the occurrence of
any of the following events unless such events are substantially corrected
within thirty (30) days following written notification by Executive to the
Company that he intends to terminate his employment hereunder for one of the
following reasons: (i) any material reduction or diminution in the duties,
responsibilities and status of Executive's position; (ii) a material breach by
the Company of any provision of this Agreement; (iii) a relocation by the
Company of its principal place of business to another city or state more than
fifty (50) miles from its principal place of business as of the effective date
of this Agreement and the Company requires the Executive to relocate to such
new principal place of business; and (iv) the occurrence of a Change in
Control. The Executive understands, acknowledges and agrees that any voluntary
resignation by him as a result of any personal or family reasons not otherwise
set forth in this Section 5(e) shall not constitute Good Cause. As used in this
Agreement, "CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the adoption of a plan relating to the liquidation or dissolution of the
Company, (ii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any person
or group, other than Jacques Elfersy or Timothy C. Moses or their affiliates
(the "PRINCIPALS"), becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934), directly
or indirectly, of more than eighty percent (80%) of the total voting power of
the total outstanding voting stock of the Company on a fully diluted basis or
(iii) the consummation of the first transaction (including, without limitation,
any merger or consolidation) the result of which is that any person or group,
other than the Principals, becomes the beneficial owner, directly or
indirectly, of more than eighty percent (80%) of the total voting power of the
total outstanding voting stock of the Company. If the Executive elects to
resign for any reason or for Good Cause, the Executive shall deliver written
notice of resignation to the Company (the "NOTICE OF RESIGNATION"). The Notice
of Resignation shall set forth the date such resignation shall become effective
(the "DATE OF RESIGNATION"), which date shall, in any event, be at least thirty
(30) days and no more than sixty (60) days from the date the Notice of
Resignation is delivered to the Company. At its option, the Company may reduce
such notice period to any length, upon ten (10) days written notice to the
Executive.
(f) Notice. Any termination of the Executive's employment by
the Company shall be communicated by written Notice of Termination to the
Executive. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean
a notice that shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(g) "DATE OF TERMINATION" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if the
Executive's employment is terminated by reason of his disability, the date that
the Company declares the disability referred to in Section 5(b), above, (iii)
if the Executive's employment is terminated by the Company for Cause pursuant
to subsection 5(c) above, or without Cause by the Company pursuant to
subsection 5(d)
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<PAGE> 5
above, the date specified in the Notice of Termination and (iv) if the Executive
voluntarily resigns pursuant to subsection 5(e) above, the date of the Notice
of Resignation.
(h) Termination Obligations.
(i) The Executive hereby acknowledges and agrees
that all Personal Property and equipment furnished to or prepared by the
Executive in the course of or incident to his employment, belongs to the
Company and shall be promptly returned to the Company upon termination of the
Employment Period. "PERSONAL PROPERTY" includes, without limitation, all books,
manuals, records, reports, notes, contracts, lists, formulae, blueprints, and
other documents, or materials, or copies thereof (including computer files),
and all other proprietary information relating to the business of the Company.
Following termination, the Executive will not retain any written or other
tangible material containing any proprietary information of the Company.
(ii) Upon termination of the Employment Period, the
Executive shall be deemed to have resigned from all offices then held
with the Company or any affiliate.
(iii) The representations and warranties contained
herein and the Executive's obligations under Sections 5(h), 6, 7, 8, 9
and 15 through 18 shall survive termination of the Employment Period
and the expiration of this Agreement.
(i) Release. In exchange for the Company entering into
the Agreement, the Executive agrees that, at the time of his resignation or
termination from the Company, he will execute a release acceptable to the
Company of all liability of the Company and its officers, shareholders,
employees and directors to the Executive in connection with or arising out of
his employment with the Company, except with respect to any then-vested rights
under the Company's Option Plan and except with respect to any Severance
Payments which may be payable to him under the terms of the Agreement.
6. Compensation Upon Termination.
(a) Death. If the Executive's employment shall be
terminated pursuant to Section 5(a), the Company shall pay the estate of the
Executive (the "ESTATE") his base salary payable pursuant to Section 4(a) and
benefits described in Sections 4.1(d) and 4(e) through the Date of Termination.
At the Estate's expense, the Executive's dependents shall also be entitled to
any continuation of health insurance coverage rights under any applicable law.
(b) Disability. If the Executive's employment shall be
terminated by reason of disability pursuant to Section 5(b), the Executive
shall receive his base salary payable pursuant to Section 4(a) and benefits
described in Sections 4(d) and 4(e) up to the Date of Termination and for 90
days thereafter; provided, however, that payments so made to the Executive
during the disability shall be reduced by the sum of the amounts, if any,
payable to the Executive at or prior to the time of any such payment under any
disability benefit plan of the Company. At the
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<PAGE> 6
Executive's own expense, the Executive and his dependents shall also be
entitled to any continuation of health insurance coverage rights under any
applicable law.
(c) Cause. If the Executive's employment shall be terminated
for Cause pursuant to Section 5(c) hereof, the Company shall pay the Executive
his base salary pursuant to Section 4(a) through the Date of Termination. At
the Executive's own expense, the Executive and his dependents shall also be
entitled to any continuation of health insurance coverage rights under any
applicable law.
(d) Other Terminations by the Company. If the Company shall
terminate the Executive's employment without cause pursuant to Section 5(d)
hereof, the Company shall pay the Executive his then current base salary at the
Date of Termination pursuant to Section 4(a) for a period of the lesser of (i)
the remaining unexpired term of this Agreement or (ii) nine (9) months from the
Date of Termination (the "SEVERANCE PAYMENT"). The Company shall pay on behalf
of the Executive the cost of any continuation of the then existing health
insurance coverage of the Executive for a period of the lesser of (i) the
remaining unexpired term of this Agreement, (ii) nine (9) months from the Date
of Termination or (iii) until the Executive obtains Full Time Employment (the
"SEVERANCE BENEFIT"). For purposes of this Agreement, "FULL TIME EMPLOYMENT"
shall mean employment at a subsequent full time employer or in connection with
a full time consulting practice or other self-employment or any full time
venture founded by the Executive.
(e) Voluntary Resignation. If the Executive terminates his
employment with the Company pursuant to Section 5(e) hereof for Good Cause, the
Company shall pay the Executive his Severance Payment and Severance Benefit.
(f) If the Executive terminates his employment with the
Company pursuant to Section 5(e) hereof without Good Cause, the Company shall
have no obligation to pay the Severance Payment or Severance Benefit or
otherwise compensate the Executive following the Date of Resignation.
(g) In the event of any Termination pursuant to Section 5,
the Executive shall be entitled to retain any and all options to purchase
capital stock of the Company granted to the Executive pursuant to the terms and
conditions of the Option Agreement that have vested, either by passage of time
or by virtue of acceleration pursuant to Section 4(c), as of the Date of
Termination.
(h) Any Severance Payment made pursuant to this Section 6
shall be payable in accordance with the regular pay schedule for the Company
over the required duration set forth in Sections 6(a) through 6(e).
(i) The continuing obligation of the Company to make the
Severance Payment to the Executive is expressly conditioned upon the Executive
complying and continuing to comply with his obligations and covenants under
Sections 7 and 8 of this Agreement following termination of employment with the
Company.
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<PAGE> 7
7. Confidentiality and Non-Solicitation Covenants.
(a) Confidentiality. In addition to the agreements set forth
in Section 5(h)(i), the Executive hereby agrees that the Executive will not,
during the Employment Period or at any time thereafter directly or indirectly
disclose or make available to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, any Confidential Information
(as defined below). The Executive agrees that, upon termination of his
employment with the Company, all Confidential Information in his possession
that is in written or other tangible form (together with all copies or
duplicates thereof, including computer files) shall be returned to the Company
and shall not be retained by the Executive or furnished to any third party, in
any form except as provided herein; provided, however, that the Executive shall
not be obligated to treat as confidential, or return to the Company copies of
any Confidential Information that (i) was publicly known at the time of
disclosure to the Executive, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Company by any person or entity or (iii) is lawfully disclosed
to the Executive by a third party. As used in this Agreement the term
"CONFIDENTIAL INFORMATION" means: information disclosed to the Executive or
known by the Executive as a consequence of or through his relationship with the
Company, about the owners, customers, employees, business methods, public
relations methods, organization, procedures or finances, including, without
limitation, information of or relating to owner or customer lists of the
Company and its affiliates.
(b) Non-Solicitation. In the event of termination for any
reason other than pursuant to Section 5(d) or Section 5(e) if termination is
for "GOOD CAUSE", the Executive agrees that during the Employment Period and
for one (1) year thereafter the Executive will not, either on his own account
or jointly with or as a manager, agent, officer, employee, consultant, partner,
joint venturer, owner or shareholder or otherwise on behalf of any other
person, firm or corporation, (i) carry on or be engaged or interested directly
or indirectly in, or solicit, the manufacture or sale of goods or provision of
services to any person, firm or corporation which, at any time during the
Employment Period has been or is a customer of or in the habit of dealing with
the Company in its Business, (ii) endeavor directly or indirectly to canvas or
solicit in competition with Company or to interfere with the supply of orders
for goods or services from or by any person, firm or corporation which during
the Employment Period has been or is a supplier of goods or services to Company
or (iii) directly or indirectly solicit or attempt to solicit away from Company
any of its officers or employees or offer employment to any person who, on or
during the six (6) months immediately preceding the date of such solicitation
or offer, is or was an officer or employee of Company.
8. Covenant Not to Compete.
(a) The Executive agrees that during the Employment Period he
will devote substantially full-time to the Business of the Company and not
engage in any type of business in competition with the Business of the Company.
Subject to such full-time requirement and the restrictions set forth below in
this Section 8 and Section 3(c) above, the Executive shall be permitted to
continue his existing business investments and activities and may pursue
additional
-7-
<PAGE> 8
business investments; provided, however, that the Executive shall not serve as
officer or director of any public company resulting from such business
investments. The Executive agrees that he shall not (i) invest in, manage,
consult or participate in any way in any other business in competition with the
Business (in either an active or passive manner), (ii) participate in or advise
any business wherein activities similar to the Business are a relevant business
segment or (iii) act for or on behalf of any business that intends to enter or
participate in the activities similar to the Business, in each case unless the
independent members of the Company's Board of Directors determine that such
action is in the best interest of the Company. Notwithstanding the foregoing,
the Executive may purchase stock as a stockholder in any publicly traded
company, including any company which is involved in activities similar to the
Business; provided, however, that the Executive does not own (together or
separately or through his affiliates) more than 5% of any company (other than
the Company) in such business.
(b) The provisions of this Section 8 shall survive for one
(1) year following any termination of employment, except in the event of
termination pursuant to Section 5(d) or Section 5(e) herein.
9. Injunctive Relief and Enforcement. In the event of breach by
the Executive of the terms of Sections 5(h), 5(i), 7 or 8, and only following
mediation or attempted mediation as set forth in Section 16 below (unless the
Company is suffering irreparable injury, in which case Section 16 will not
prevent the Company from seeking injunctive relief against the Executive in any
court or forum), the Company shall be entitled to institute legal proceedings
to enforce the specific performance of this Agreement by the Executive and to
enjoin the Executive from any further violation of Sections 5(h), 5(i), 7 or 8
and to exercise such remedies cumulatively or in conjunction with all other
rights and remedies provided by law and not otherwise limited by this
Agreement. The Executive acknowledges, however, that the remedies at law for
any breach by him of the provisions of Sections 5(h), 5(i), 7 or 8 may be
inadequate. In addition, in the event the agreements set forth in Sections
5(h), 5(i), 7 or 8 shall be determined by any court of competent jurisdiction
to be unenforceable by reason of extending for too great a period of time or
over too great a geographical area or by reason of being too extensive in any
other respect, each such agreement shall be interpreted to extend over the
maximum period of time for which it may be enforceable and to the maximum
extent in all other respects as to which it may be enforceable, and enforced as
so interpreted, all as determined by such court in such action.
10. Notice. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered when
transmitted by telecopy with receipt confirmed, or one day after delivery to an
overnight air courier guaranteeing next day delivery, addressed as follows:
If to the Executive: John T. Adams
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<PAGE> 9
If to the Company: BioShield Technologies, Inc.
4405 International Boulevard
Suite B-109
Norcross, Georgia 30093
Attention: Timothy C. Moses
With a copy to: Schreeder, Wheeler & Flint, LLP
127 Peachtree Street, N.E.
Suite 1600
Atlanta, Georgia 30303
Attention: Edward H. Brown, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect; provided, however, that if any one or more of the terms
contained in Sections 5(h), 7 or 8 hereto shall for any reason be held to be
excessively broad with regard to time, duration, geographic scope or activity,
that term shall not be deleted but shall be reformed and constructed in a
manner to enable it to be enforced to the extent compatible with applicable
law.
12. Assignment. This Agreement may not be assigned by the
Executive, but may, subject to the provisions of Section 5(e), be assigned by
the Company to any successor to its Business and will inure to the benefit and
be binding upon any such successor.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
15. Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of Georgia, except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
16. LIMITATION ON LIABILITIES. IF EITHER THE EXECUTIVE OR THE
COMPANY IS AWARDED ANY DAMAGES AS COMPENSATION FOR ANY BREACH OR ACTION RELATED
TO THIS AGREEMENT, A BREACH OF ANY COVENANT CONTAINED IN THIS AGREEMENT
(WHETHER EXPRESS OR IMPLIED BY EITHER LAW OR FACT), OR ANY OTHER CAUSE OF
ACTION
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<PAGE> 10
BASED IN WHOLE OR IN PART ON ANY BREACH OF ANY PROVISION OF THIS AGREEMENT,
SUCH DAMAGES SHALL BE LIMITED TO CONTRACTUAL DAMAGES AND SHALL EXCLUDE (I)
PUNITIVE DAMAGES, AND (II) CONSEQUENTIAL AND/OR INCIDENTAL DAMAGES (E.G., LOST
PROFITS AND OTHER INDIRECT OR SPECULATIVE DAMAGES). THE MAXIMUM AMOUNT OF
DAMAGES THAT THE EXECUTIVE MAY RECOVER FOR ANY REASON SHALL BE THE AMOUNT EQUAL
TO ALL AMOUNTS OWED (BUT NOT YET PAID) TO THE EXECUTIVE PURSUANT TO THIS
AGREEMENT THROUGH ITS NATURAL TERM OR THROUGH ANY SEVERANCE PERIOD, PLUS
INTEREST ON ANY DELAYED PAYMENT AT THE MAXIMUM RATE PER ANNUM ALLOWABLE BY
APPLICABLE LAW FROM AND AFTER THE DATE(S) THAT SUCH PAYMENTS WERE DUE.
17. Entire Agreement. This Agreement contains the entire
agreement and understanding between the Company and the Executive with respect
to the employment of the Executive by the Company as contemplated hereby, and
no representations, promises, agreements or understandings, written or oral,
not herein contained shall be of any force or effect. This Agreement shall not
be changed unless in writing and signed by both the Executive and the Company
(by duly adopted resolution of its Board of Directors).
18. The Executive's Acknowledgment. The Executive acknowledges
(a) that he has had the opportunity to consult with independent counsel of his
own choice concerning this Agreement, and (b) that he has read and understands
the Agreement, is fully aware of its legal effect, and has entered into it
freely based on his own judgment.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the date and year first above written.
BIOSHIELD TECHNOLOGIES, INC.
By:
-------------------------------------
Title:
----------------------------------
"EXECUTIVE"
John T. Adams
Signed, sealed and
delivered this _____
day of
______________, 1998.
[SEAL]
-----------------------------------
NOTARY PUBLIC
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EXHIBIT 10.056
[IXL LOGO]
MASTER SERVICES AGREEMENT
This iXL Master Services Agreement (the "Agreement") is entered into this 7th
day of June, 1999 (the "Effective Date"), by and between iXL, Inc., a Delaware
corporation with a principal place of business at 1888 Emery Street ("iXL") and
the BioShield Technologies, Inc. identified below ("BioShield Technologies,
Inc."):
BioShield Technologies, Inc.
4405 International Blvd. Suite B-109
Norcross, GA 30093
770-925-3432
770-921-1065
- -------------------------------------------------------------------------------
RECITALS
--------
A. iXL is a full service interactive services provider offering various
services and products including but not limited to strategic
consulting, Web development, multimedia development, custom software
development, laptop based presentation products, Web site management
applications, Web site hosting, and Web site marketing (the "iXL
Services").
B. Client desires to engage iXL to provide Client with various iXL
Services on the terms provided herein.
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth below, the parties agree as follows:
1. The Agreement and Statement(s) of Work.
1.1. Client hereby engages iXL to provide services or products as
described in a Statement of Work, which shall at a minimum
include a description of the services to be provided and the
corresponding fees (a "Statement of Work").
1.2. If there is any difference between the terms and conditions
of any Statement of Work attached hereto and any other
portion of this Agreement, the terms of the Statement of Work
shall control, with the exception of Section 16.10 (which
confirms that no joint venture, partnership or other
relationship has been created in connection with this
Agreement). In the event of a conflict between Section 16.10
of this Agreement and any language in a Statement of Work,
Section 16.10 of this Agreement shall control.
2. Change Orders; Administration. Any modifications to the specifications
in a Statement of Work shall require execution of a written change
order by both parties to this Agreement (a "Change Order") which shall
substantially conform to the format of the document attached hereto.
Each Change Order complying with this section shall be deemed to be an
amendment to the applicable Statement of Work and will become part of
this Agreement.
3. Method of Performing Services. iXL shall determine the method,
details, and means of performing the services to be performed
hereunder, subject to the standards set forth in the Statement of Work
and the approval of Client, which shall not be unreasonably withheld.
iXL may, with the prior written consent of Client, engage
subcontractors to perform any of the services provided hereunder.
During the Term (defined below) and thereafter, iXL shall retain the
right to perform any and all services for other clients, and Client
shall retain the right to cause work of the same or a different kind
to be performed by its own personnel or other contractors.
4. Advertising and Credit.
Except as provided herein, no press release, announcement,
publication, or other use of the other party's insignia logos,
trademarks, tradename or service marks (collectively, the "Marks")
shall be made by either party without the other party's prior written
approval. During the term of this Agreement, iXL may list Client as a
client of iXL in all iXL marketing materials, and iXL may include
either a URL or plain text link to Client's Web site on iXL's Web
site. All use by either party of the other party's Marks will inure to
the benefit of the party owning the Marks. Upon termination of this
Agreement, neither party shall have any continuing right to use the
other party's Marks and each party shall immediately cease all such
use of the other party's Marks.
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5. Term and Termination.
5.1. Term. This Agreement shall be effective when signed by both
parties and thereafter shall remain in effect until
terminated pursuant to the provisions of this Section 5.
5.2. Termination for Cause.
5.2.1. Termination of Agreement. In the event that either
party hereto materially defaults in the performance of
any of its duties or obligations under the Agreement
(except for a default in payments to iXL) and does not
substantially cure such default within thirty (30) days
after being given written notice specifying the
default, then the non-defaulting party may, by giving
written notice thereof to the defaulting party,
terminate this Agreement as of a date specified in
such notice of termination.
5.2.2. Termination of Individual Statement of Work. In the
event that either party hereto materially defaults in
the performance of any of its duties or obligations
under a Statement of Work (except for a default in
payment to iXL) and does not substantially cure such
default within thirty (30) days after being given
written notice specifying the default, then the
non-defaulting party may, by given written notice
thereof to the defaulting party, terminate the
Statement of Work as of a date specified in such notice
of termination. Termination of a Statement of Work for
cause shall have no effect upon any other Statements of
Work that may be in effect under this Agreement.
5.3. Termination Upon Completion of all Statements of Work. If
there are no outstanding Statements of Work under which
services are still being provided by iXL to Client, upon
thirty (30) days written notice to the other, either party
may terminate this Agreement as of the date specified in such
notice of termination.
5.4. Termination for Nonpayment. In the event that Client defaults
in the payment when due of any amount due to iXL hereunder and
does not cure such default within thirty (30) days of the date
of the invoice, then iXL may, by giving written notice thereof
to Client, terminate this Agreement as of a date specified in
such notice of termination.
5.5. Termination for Insolvency. In the event that either party
hereto becomes or is declared insolvent or bankrupt, is the
subject of any proceedings relating to its liquidation,
insolvency or for the appointment of a receiver or similar
officer for it, makes an assignment for the benefit of all or
substantially all of its creditors, or enters into an
agreement for the composition, extension, or readjustment of
all or substantially all of its obligations, then the other
party hereto may, by giving written notice thereof to such
party, terminate this Agreement as of a date specified in
such notice of termination.
5.6 Termination at Will. Client may, upon ten days' prior written
notice to iXL and in its sole discretion, terminate this
Agreement and all Statements of Work hereunder.
5.7. Effect of Termination. Upon termination of this Agreement,
Client shall be obligated to pay iXL for all services rendered
pursuant to any outstanding Statements of Work (to the extent
such services were rendered in conformity with this Agreement,
including without limitation Section 10.3 hereof) through the
effective date of such termination. Upon termination of a
Statement of Work, Client shall be obligated to pay iXL for
all services rendered pursuant to the Statement of Work
through the effective date of such termination. In either
such event, payment for such services shall be made in
accordance with the rates set forth in the relevant Statement
of Work, or iXL's standard published rates, whichever is less.
In the event of any termination of this Agreement or any
Statement of Work (other than a termination pursuant to
Section 5.4 hereof), (i) iXL shall promptly deliver full and
complete copies of all work product completed through the
effective date of such termination, including all work in
process; (ii) if such work product shall include any software
or other materials or data owned by iXL, such software,
materials or data shall be deemed to be licensed to Client on
a non-exclusive, perpetual, worldwide and royalty-free basis;
and (iii) iXL shall cooperate in all reasonable respects with
a transition of such work to a new vendor or to Client's
internal information systems personnel.
5.8. Survival. Termination of this Agreement by either party
pursuant to the provisions of this Section 5 shall terminate
each party's obligations under this Agreement except for the
provisions of Section 6 (Payments to iXL), Section 7
(Confidentiality), Section 9 (Client Representations and
Warranties), Section 10 (iXL Warranties), Section 11
(Exclusion of Warranties), Section 12 (Limits of Liability),
Section 13 (Indemnification), Section 14 (Non-Solicitation),
Section 16.4 (Governing Law), and Section 16.10 (Non-Agency),
all of which shall survive termination of this Agreement.
6. Payments to iXL.
6.1. Charges. For the services provided hereunder, Client shall
pay to iXL the fees in the amount and manner set forth in a
Statement of Work. All fees and expenses incurred by iXL in
the performance of the services will be billed to Client on a
monthly basis or as set forth in a Statement of Work.
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<PAGE> 3
6.2. Expenses. Client will pay, or reimburse iXL for, any
out-of-pocket expenses, including, without limitation,
travel and travel-related expenses, incurred by iXL at the
request of or with the approval of Client in connection with
the performance of this Agreement. Reasonable and customary
expenses incurred by iXL, including without limitation
expenses incurred for travel, including local
transportation, lodging, meals, telephone, shipping and
duplicating, will be billed to Client at actual cost. Travel
expenses incurred by iXL personnel on behalf of Client shall
be consistent with iXL travel policy. Such travel policy is
available upon Client's request.
6.3. Taxes. Client will pay all sales, use, transfer, privilege,
excise or other taxes and all duties, whether international,
national, state or local, however designated, which are
levied or imposed by reason of the transactions contemplated
hereby; excluding, however, income taxes on profits which
may be levied against iXL.
6.4. Time of Payment. Any sum due iXL hereunder will be due and
payable within thirty (30) days after the due date of an
invoice therefor from iXL. If Client fails to pay any amount
due within thirty (30) days from the date of the invoice,
late charges may apply. In addition, failure of Client to
pay any invoiced amount within sixty (60) days after the
date of the invoice shall be deemed a material breach of
this Agreement, justifying iXL's suspension of the
performance of the Services, and shall be sufficient cause
for immediate termination of this Agreement by iXL. No
failure by iXL to request any such payment or to demand any
such performance shall be deemed a waiver by iXL of Client's
obligations hereunder or a waiver of iXL's right to
terminate this Agreement.
6.5. Legal Fees. If either party shall fail to fully perform its
obligations hereunder, such party agrees to pay, in addition
to any amount past due, plus interest accrued thereon, all
reasonable expenses incurred by the non-breaching party in
enforcing this Agreement, including, but not limited to, all
expenses of any legal proceeding related thereto and all
reasonable attorneys' fees incurred in connection therewith.
7. Confidentiality.
7.1. During the course of performance of this Agreement, each
party may disclose to the other certain confidential
information as defined in Section 7.2 below. Each party
shall hold the other party's Confidential Information in
confidence and shall use its best efforts to protect it.
Each party shall not disclose the other party's
Confidential Information to any third party, and shall use
it for the sole purpose of performing under this Agreement.
At the conclusion of this Agreement, each party shall
either return the other's Confidential Information in its
possession (including all copies) or shall, at the
disclosing party's direction, destroy the other party's
Confidential Information (including all copies) and certify
its destruction to the disclosing party.
7.2. "Confidential Information" means any information provided
by either party or prepared by either party (either oral,
written, or digital) upon review of such information,
technical data, or know-how provided to either party by the
other (including any director, officer, employee, agent, or
representative of the other) or obtained by either party
from the other (including any director, officer, employee,
agent, or representative of the other) including but not
limited to, that which relates to research, product plans,
products, services, Clients, markets, software,
developments, inventions, processes, designs, drawings,
engineering, hardware configuration information, marketing
or finances of the disclosing party.
7.3. The term "Confidential Information" shall not include any
information which: (a) is in the public domain at the time
of disclosure or enters the public domain following
disclosure through no fault of the receiving party, (b) the
receiving party can demonstrate as already in its
possession prior to disclosure hereunder or is subsequently
disclosed to the receiving party with no obligation of
confidentiality by a third party having the right to
disclose it or (c) is independently developed by the
receiving party without reference to the disclosing party's
Confidential Information.
7.4. Either party may disclose the other party's Confidential
Information upon the order of any competent court or
government agency; provided that prior to disclosure the
receiving party shall inform the other party of such order.
7.5. Each party agrees that its obligations provided in this
Section 7 are necessary and reasonable in order to protect
the disclosing party and its business, and each party
expressly agrees that monetary damages would be inadequate
to compensate the disclosing party for any breach by the
receiving party of its covenants and agreements set forth
in this Agreement. Accordingly, each party agrees and
acknowledges that any such violation or threatened
violation will cause irreparable injury to the disclosing
party and that, in addition to any other remedies that may
be available, in law, in equity or otherwise, the
disclosing party shall be entitled to obtain injunctive
relief against the threatened breach of this Agreement or
the continuation of any such breach by the receiving party,
without the necessity of proving actual damages.
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<PAGE> 4
8. Advertising.
8.1. No press release, announcement, publication, or other use
of the other party's insignia logos, trademarks, tradename
or service marks (collectively, the "Marks") shall be made
by either party without the other party's prior written
approval. All use by either party of the other party's
Marks will inure to the benefit of the party owning the
Marks. Upon termination of this Agreement, neither party
shall have any continuing right to use the other party's
Marks and each party shall immediately cease all such use
of the other party's Marks.
8.2. In no event shall either party alter, remove, obscure,
erase or deface or hide from view, any copyright, trademark
or other proprietary rights notice of the other party
contained on or incorporated into any deliverable developed
hereunder.
9. Client Representations and Warranties.
9.1. Client represents and warrants that Client has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby.
9.2. This Agreement has been duly and validly executed and
delivered by Client and constitutes the valid and binding
agreement of Client, enforceable against Client in
accordance with its terms.
10. iXL Warranties.
10.1. iXL represents and warrants that it has full corporate
power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby.
10.2. This Agreement has been duly and validly executed and
delivered by iXL and constitutes the valid and binding
Agreement of iXL, enforceable against iXL in accordance
with its terms.
10.3. iXL further represent and warrants that it will perform the
services in material conformity to the specifications set
forth in a Statement of Work contemplated hereunder in a
professional and workmanlike manner.
11. Exclusion of Warranties. APART FROM THE SPECIFIC WARRANTIES SET OUT
HEREIN OR IN A STATEMENT OF WORK ATTACHED HERETO, ALL SERVICES AND
PRODUCTS PROVIDED UNDER THIS AGREEMENT ARE PROVIDED ON AN "AS IS"
BASIS. NEITHER iXL NOR ANY OF ITS AFFILIATES, EMPLOYEES, OFFICERS,
DIRECTORS, AGENTS OR LICENSORS WARRANTS THAT THE SERVICES OR PRODUCTS
PROVIDED PURSUANT TO THIS AGREEMENT WILL BE UNINTERRUPTED OR ERROR
FREE, NOR DO THEY WARRANT THAT CERTAIN RESULTS MAY BE OBTAINED BY
CLIENT IN CONNECTION WITH iXL'S RENDERING OF SERVICES OR PROVISION OF
PRODUCTS HEREUNDER. iXL AND ITS AFFILIATES, EMPLOYEES, OFFICERS,
DIRECTORS, AGENTS AND LICENSORS MAKE NO WARRANTY, GUARANTEE OR
REPRESENTATION EITHER EXPRESS OR IMPLIED REGARDING THE
MERCHANTABILITY, TITLE, OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
SERVICES OR PRODUCTS PROVIDED UNDER THIS AGREEMENT. iXL DOES NOT MAKE
ANY WARRANTY OR GUARANTEE FOR ANY PRODUCTS OR SERVICES PROVIDED BY
VENDORS SUGGESTED BY iXL.
12. Limits of Liability.
12.1. NOTWITHSTANDING ANY TERM OR PROVISION CONTAINED IN THIS
AGREEMENT, IN NO EVENT WHATSOEVER SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY OR TO ANY OTHER PERSON, FIRM OR
CORPORATION, FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES, OR OTHER
SIMILAR TYPE OF DAMAGES, INCLUDING YET NOT LIMITED TO
DAMAGES BASED UPON LOSS OF PROFITS AND/OR LOSS OF BUSINESS
ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE
PERFORMANCE THEREOF, THE USE OF THE PRODUCTS PROMISED OR
SERVICES DELIVERED PURSUANT TO THIS AGREEMENT, AND/OR A
PARTY'S ALLEGED BREACH OF THIS AGREEMENT, WHETHER OR NOT
THE OTHER PARTY IS INFORMED, KNEW OR SHOULD HAVE KNOWN, OF
THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
12.2. UNDER NO CIRCUMSTANCES WHATSOEVER SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY OR TO ANY OTHER PERSON, FIRM OR
CORPORATION, FOR DAMAGES OF ANY KIND ARISING OUT OF OR IN
ANY WAY RELATED TO THIS AGREEMENT, THE PERFORMANCE THEREOF,
THE PRODUCTS OR SERVICES DELIVERED PURSUANT TO THIS
AGREEMENT, AND/OR A PARTY'S ALLEGED BREACH OF THIS
AGREEMENT, IN ANY AMOUNT OF MONEY WHICH SHALL EXCEED THE
AMOUNT OF THE FEE PAID BY CLIENT TO iXL WITH RESPECT TO THE
STATEMENT OF WORK UNDER WHICH THE CLAIM IS MADE.
12.3. THE LIMITATIONS ON LIABILITY SET FORTH IN THIS SECTION
SHALL APPLY TO ALL CAUSES OF ACTION,
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<PAGE> 5
INCLUDING, YET NOT LIMITED TO, BREACH OF CONTRACT, BREACH
OF WARRANTY, STRICT LIABILITY, NEGLIGENCE MISREPRESENTATION
AND OTHER TORTS, AND LIABILITY BASED UPON THE PROVISIONS OF
ANY PART OF THIS AGREEMENT AND ANY FEDERAL, STATE AND/OR
LOCAL LAW AND/OR ORDINANCE. THE LIMITATIONS ON LIABILITY
REPRESENT A FUNDAMENTAL TERM OF THIS AGREEMENT AND NEITHER
PARTY WOULD NOT HAVE ENTERED INTO THIS AGREEMENT WITHOUT
THEIR INCLUSION. THE LIMITATIONS ON LIABILITY SET FORTH IN
THIS SECTION SHALL HAVE NO APPLICABILITY TO ANY WARRANTY OF
TITLE, OR INDEMNITY AGAINST INFRINGEMENT, SET FORTH IN ANY
STATEMENT OF WORK, OR TO ANY CLAIM OF BREACH OF ANY TERM OF
SECTION 7 HEREOF.
13. Indemnification. Each party (the "Indemnifying Party") will indemnify
and hold the other party and its affiliates, officers, directors,
employees, agents and representatives harmless from and against all
damages, costs, expenses, and liabilities arising from claims of
third parties and as a direct result of a breach of this Agreement by
the Indemnifying Party, including without limitation, reasonable
attorneys fees and expenses.
14. Non-Solicitation. During the term of this Agreement and for two (2)
years after the termination of this Agreement, a party shall not,
directly or indirectly, induce or attempt to induce any employee of
the other party to leave the employ thereof. For purposes of this
Section 14, a party shall include that party and any of its
affiliates. Both parties acknowledge that in the event that it
breaches this obligation, the non-breaching party will suffer
irreparable harm for which no adequate remedy at law exists.
15. Notice. Any notice required or permitted to be given under this
Agreement shall be in writing and deemed given and effective upon
delivery if sent by personal delivery or by facsimile transmission or
five (5) days after posting if sent by certified United States mail,
return receipt requested, with postage pre-paid and addressed as
follows:
If to iXL: iXL Inc.
1888 Emery Street
Atlanta, GA 30318
Attn: Bert Ellis
Fax: 404-267-4099
Phone: 404-267-3800
With a copy to: iXL, Inc.
1888 Emery Street
Atlanta, GA 30318
Attn: T. William Alvey, III
Fax: (404) 267-3801
Phone: (404) 267-3800
If to Client: BioShield Technologies, Inc.
4405 International Blvd. Suite B-109
Norcross, GA 30093
Attn: Jacques Elfresy
Fax: 770-921-1065
Phone: 770-925-3432
With a copy to:
----------------------------
----------------------------
Attn:
-----------------------
Fax: ( )
--- -----------------
16. General.
16.1. Force Majeure. Neither party shall be liable to the other
for any delay or failure to perform any of the services set
forth in a Statement of Work or obligations set forth in
this Agreement due to causes beyond its reasonable control.
Performance times shall be considered extended for a period
of time equivalent to the time lost because of such delay.
5
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<PAGE> 6
16.2. Residual Knowledge. Nothing herein shall be construed to prevent or
in any way limit iXL from using general knowledge, skill, and
expertise acquired in the performance of this Agreement in any
current or subsequent endeavors. Client shall have no interest in
such endeavors.
16.3. Assignment. This Agreement may not be assigned by Client to any other
person(s), firm(s), corporation(s) or other entities without the
prior express written approval of iXL. Any attempt by Client to
assign or transfer any of the rights, duties, or obligations of this
Agreement without iXL's written consent is void.
16.4. Governing Law. This Agreement shall be governed by and construed
solely and exclusively in accordance with the laws of the state in
which iXL's office is located, without reference to its conflicts of
law principles. Any and all disputes between the parties that cannot
be settled by mutual agreement shall be resolved solely and
exclusively in the local and federal courts located within the state
in which iXL's office is located, and Client hereby consents to the
jurisdiction of such courts and irrevocably waives any objections
thereto, including without limitation, on the basis of improper venue
or forum non conveniens.
16.5. Severability. If any of the provisions of this Agreement is or
becomes illegal, unenforceable, or invalid (in whole or in part for
any reason), the remainder of this Agreement shall remain in full
force and effect without being impaired or invalidated in any way.
16.6. Headings. The titles and headings of the various sections and
paragraphs in this Agreement are intended solely for convenience of
reference and are not intended to explain, modify or place any
construction or limitation upon any of the provisions of this
Agreement.
16.7. Entire Agreement. No representations or statements of any kind made
by either party that are not expressly stated herein or in any
written amendment hereto shall be binding on such party. The parties
agree this Agreement, its Exhibits, and all Statements of Work
Exhibits and Change Orders thereto, shall constitute the complete and
exclusive statement of the agreement between them, and supersede all
prior or contemporaneous proposals, oral or written, and all other
communications between them relating to the subject matter hereof.
16.8. No Third-Party Beneficiaries. Nothing in this Agreement is intended
to, or shall, create any third-party beneficiaries, whether intended
or incidental, and neither party shall make any representations to
the contrary.
16.9. No Implied Waiver. No term, provision or clause of this Agreement
shall be deemed waived and no breach excused unless such waiver or
consent shall be in writing and executed by a duly authorized
representative of each party. Any consent by any party to, or waiver
of, a breach by the other, whether express or implied, shall not
constitute a consent to, waiver of, or excuse for any different or
subsequent breach.
16.10. Non-Agency. Nothing in this Agreement shall be construed to make the
parties partners, joint venturers, representatives or agents of each
other, nor shall either party so represent to any third person. The
parties hereunder are acting in performance of this Agreement as
independent contractors engaged in the operation of their own
respective businesses. A party's employees, agents or representatives
are not employees or agents of the other party and are not entitled
to any of the other party's benefits. Neither party shall be
responsible for payment of the other party's workers' compensation,
disability benefits or unemployment insurance, nor shall it be
responsible for withholding or paying employment related taxes for
the other party or its employees.
16.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute a single agreement.
IN WITNESS WHEREOF, this Agreement was executed by the parties as of the date
first written above.
iXL Inc. BioShield Technologies, Inc.
By: By:
-------------------------------- ----------------------------------
Name: Name:
------------------------------ --------------------------------
Title: Title:
----------------------------- -------------------------------
6
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--------------------------- -------------------------------
Date: Date:
---------------------------- --------------------------------
7
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CHANGE ORDER FORMAT
iXL MASTER SERVICES AGREEMENT STATEMENT OF WORK CHANGE ORDER
Change Order No.____ to Statement of Work No._____
Client or iXL shall complete Question 1. iXL shall complete the remainder of
the Change Order, except for the approval/rejection portion, which shall be
completed by Client in its sole discretion. Each section may be as long or
short as the circumstances require. Additional pages may be attached as
necessary.
1. Describe changes, modifications, or additions to the
services.
These modifications were requested by: ____ Client _____ iXL
- ------------------------------------ ------------------------
Signature of Client Project Manager Date
- ------------------------------------- -------------------------
Signature of iXL Project Manager Date
2. Modifications, clarifications or supplements by iXL or
Client to description of desired changes or additions
requested in Section 1 above, if any.
3. Necessity, availability and assignment of requisite iXL
personnel and/or resources to make requested modification
or additions.
4. Impact on Costs, delivery schedule, and other requirements.
a. Changes in Costs:
b. Changes in delivery schedule:
c. Changes to any other requirements:
Change Order Is:
_____Approved and Accepted _____Rejected
----------------------------------- -----------------------
Signature of Client Project Manager Date
----------------------------------- -----------------------
Signature of iXL Project Manger Date
<PAGE> 9
EXHIBIT A
WEB SITE DEVELOPMENT AND INTERACTIVE SERVICES TERMS AND CONDITIONS
The following terms and conditions apply to Statement of Work No. 1 to the
Master Service Agreement (the "Agreement") between iXL, Inc. ("iXL") and
BioShield Technologies, Inc. ("Bioshield").
1. DEFINITIONS. For purposes of this Agreement, capitalized terms shall
have the following meaning(s):
1.1. "Client Materials" are defined in Section 2.1 below.
1.2. "Client Web Site" means the Web Site for the public
Internet or for corporate intranets or extranets to be
developed by iXL and comprised of all the Works as
described in the Statement.
1.3. "Error" means any reproducible error, problem, or defect
resulting from: (a) an incorrect functioning of the
Software that affects the functionality of the Client Web
Site in any material respect; or (b) any failure of the
Works delivered to Client hereunder to meet the
specifications in the Statement.
1.4. "Final Deliverable" means the final version of the Client
Web Site or other interactive services product that will be
delivered to Client after successful completion of a
mutually agreed upon testing plan where iXL is responsible
for verifying the technical integrity of the Client Web
Site or other interactive services product and the Client
is responsible for verifying the business function
correctness of the Client Web Site or other interactive
services product.
1.5. "Internet" means the world-wide network of computers which
provides access to the World Wide Web.
1.6. "Marks" mean the marks used on or in connection with or
associated with the Client Web Site and owned by Client.
1.7. "Software" means computer programming/formatting code or
operating instructions developed pursuant to this Agreement
and used to create any portion of Client's Web Site,
incorporated into Client's Web Site, or used to operate the
Client Web Site or a Web Server in connection with the
Client Web Site (such as, for example, HTML, Perl, C, C++,
Java, Java Script, UNIX Shell, Visual Basic Script, and
VRML code), to the extent such code or operating
instructions were (i) previously developed by iXL or (ii)
developed pursuant to this Agreement and described in a
Schedule attached hereto.
1.8. Statement. The term "Statement" shall mean Statement of
Work No. 1 to the Agreement.
1.9. "Third Party Software" means any software or other material
(for example, a standard authoring program or platform or
off-the-shelf software) which is specifically identified in
the Statement as being owned by a company or individual
other than iXL, is generally
<PAGE> 10
available to the public, including Client, under published
licensing terms, and will be used in the development of or
to display or run the Client Web Site.
1.10. "Web Browser" means software designed to allow interactive
access to the World Wide Web, including without limitation,
Navigator, Explorer, Mosaic, MacWeb/WinWeb, Cello, and
Lynx.
1.11. "Web Page" means a document or file that is formatted using
HTML and that is intended to be accessible to Internet
users with a Web Browser.
1.12. "Web Server" means a computer operated by or for Client (a)
that iXL or others use in making the Client Web Site
available on the Internet or intranet; or (b) that has a
non-live version of the Client Web Site and that is used
for making and testing content or other changes to the
Client Web Site prior to making such changes available to
the public over the Internet.
1.13. "Web Site" means a series of interconnected Web Pages which
may either be dynamically generated or may reside in a
single directory or multiple directories on a single Web
Server or multiple Web Servers.
1.14. "Works" mean the items listed as "Works to be Delivered" in
the "Project Timetable, Works Delivery and Payment
Schedule" in the Statement, each in the form that iXL has
specifically agreed to deliver that item to Client.
1.15. "World Wide Web" means all of the Web Pages that are
accessible to a typical computer user with appropriate
access to the Internet using a Web Browser.
2. SOURCE OF CERTAIN MATERIALS.
2.1. Client Marks and Materials. Client will provide a copy of
all applicable Marks and all other concepts, methods, and
materials provided by Client (with all other materials
provided by Client, its advertising agency, or Client's
other agents, including any works of authorship, the
"Client Materials").
2.2. Third Party Software. Development and use of the Client Web
Site may involve Third Party Software. Unless otherwise
specified in the Statement, iXL will be responsible for
payment for, and entering into appropriate licensing
agreements concerning Third Party Software required for the
development of the Client Web Site. Unless otherwise
specified in the Statement, the Client will be responsible
for payment for, and entering into appropriate licensing
agreements concerning use of Third Party Software required
to run and display the Client Web Site.
2.3. iXL Provided Materials. With the exception of the Client
Materials and the Third Party Software, iXL will provide
all other graphics, text, drawings, and other materials
required to produce the Client Web Site or complete any
applicable interactive services as set forth in the
Statement.
3. TIMETABLE FOR COMPLETION. iXL will provide the services and products
to prepare and complete the Client Web Site on the timetable
established in
<PAGE> 11
the "Project Timetable, Works Delivery and Payment Schedule" in the
Statement (the "Project Timetable"). Client will provide to iXL the
Client Materials including all media elements, materials, timely
approvals, and assistance necessary for iXL to complete the Client
Web Site on the Project Timetable. Any delay by the Client in
providing materials, approvals, and assistance to iXL shall extend
the deadline for the subsequent tasks of iXL under the Project
Timetable by a period at least equal to Client's delay. In addition,
for any Client obligation described as time-sensitive or critical in
the Statement, failure of the Client to meet its deadline will
entitle iXL to prepare a revised Project Timetable based on a
realistic estimate of the effect of the delay on the completion of
the project, taking into account other work scheduled by iXL.
4. DELIVERY AND ACCEPTANCE. The following provisions will apply for
delivery and acceptance of the Works developed hereunder. The
standard for acceptance of the Works developed hereunder shall be
material conformity to the specifications set forth in the Statement.
4.1. Client will accept or reject the initial version and any
corrected version of each Work within thirty (30) business
days of receipt, notifying iXL in writing of the specific
nature of any Error, deficiencies or inadequacies in the
initial draft. If Client does not reject the initial draft
of any Work in writing in the manner and time period
described herein, it will be deemed to be accepted.
Notwithstanding anything to the contrary herein, Client
shall waive its right to reject any version of a Work at
such time as Client uses any portion of the Work in
productive use.
4.2. If Client rejects the initial version or any corrected
version of any Work, iXL shall have a period of seven (7)
business days from receipt of the written rejection to
correct all Errors, deficiencies or inadequacies specified
by Client and submit a revised draft.
4.3. In the event that Client and iXL cannot agree on acceptance
of, or acceptable modifications to, any Work within thirty
(30) business days following the later of (i) the date
indicated on the Project Timetable for delivery of that
Work; and (ii) the original submission of that Work to
Client, both Client and iXL shall have the option of
terminating the Statement on the terms described herein and
therein. Any such termination shall be subject to the
provisions of Section 5.7 of the Agreement.
5. ALLOCATION OF INTELLECTUAL PROPERTY RIGHTS.
5.1. RIGHTS IN THE SOFTWARE. The Software and all rights therein
including any patent, copyright, trademark, trade secret or
any other intellectual property right associated with the
Software and any source code related to the Software shall
be owned exclusively by iXL. Client shall have no claim of
ownership in any of the patent, copyright, trademark, trade
secret, or any other intellectual property right in the
Software or any source code. iXL shall retain the right to
reuse of incorporate Software whether previously developed
or developed pursuant to the Statement in other projects
for other customers.
5.2. RIGHTS IN THE WORKS (WORKS FOR HIRE AND ASSIGNMENT).
Subject to the rights of iXL in the Software described in
Sections 5.1 and with the exception of any Third Party
Software, (i) the services provided by iXL and the Works
shall constitute "works made for hire" for
<PAGE> 12
Client, as that phrase is defined in Sections 101 and 201
of the Copyright Act of 1976 (Title 17, United States
Code), and (ii) Client shall be considered the author and
shall be the copyright owner of the Works. If any of the
Works do not qualify for treatment as "works for hire" or
if iXL retains any interest in any components of the Works
for any other reason, iXL hereby grants, assigns and
transfers to Client ownership of all United States and
international copyrights and all other intellectual
property rights in the Works, subject to certain rights of
iXL described herein, and all the rights of use with
respect thereof which are intended to be conferred under
this Section 5, free and clear of any and all claims for
royalties or other compensation except as stated in the
Statement.
5.3. RIGHTS IN THE MARKS. iXL agrees that the Marks and any
goodwill appurtenant thereto shall be owned exclusively by
Client and shall inure solely to the benefit of Client.
5.4. LIMITED LICENSE TO THE SOFTWARE. iXL hereby grants Client
in perpetuity a nonexclusive, irrevocable, perpetual and
royalty-free license throughout the universe to copy,
distribute, transmit, display, perform, create derivative
works, and otherwise use the Software in object code form,
in whole or in part, including, without limitation, the
right to add to, subtract from, arrange, rearrange, revise,
modify, change and adapt the Software and any part or
element thereof. All rights under this license shall be
exercised by the Client solely to operate, maintain,
modify, improve and make the Client Web Site or any
successor web sites available to end users. Client is
prohibited from duplicating and or distributing any
Software without the prior written consent of iXL:
provided, however that Client may copy the Software only as
needed for backup or disaster recovery procedures. All
rights in the Software not expressly granted to Client
hereunder are resumed by iXL. Without limiting the
foregoing, Client may not reverse engineer, reverse
assemble, decompile, or otherwise attempt to derive the
source code from the Software.
5.5. LIMITED LICENSE TO THE WORKS. Client hereby grants to iXL
the limited, nonexclusive right and license to copy,
distribute, transmit, display, perform, create derivative
works, modify and otherwise use and exploit the Works, any
Client Materials provided to iXL hereunder, and the Marks
solely for the purpose of rendering iXL's services under
the Statement. Such limited right and license shall extend
to no other materials or for any other purpose and shall
terminate automatically upon termination of the Statement
for any reason.
5.6. THIRD PARTY SOFTWARE. iXL has identified in the Statement
certain Third Party Software which may be used in the
development of (or may need to be used by Client in the
operation or modification of) the Client Web Site for which
iXL cannot grant to Client the rights set forth in Sections
5.2 and 5.4 above. Except to the extent described in a
Statement, iXL represents and warrants to Client that there
are no restrictions or royalty terms applicable to iXL's or
Client's use of such Third Party Software in making the
Client Web Site available on the Internet or in preparing
modifications of the Client Web Site to the extent
permitted hereunder.
6. DELIVERY OF WORKS. Within ten (10) business days after Client's
approval of the Final Deliverable, iXL will deliver all Works related
to the Client Web Site or other interactive services product
developed hereunder to Client. Transfer of electronic materials will
be accomplished by copying them to media to be supplied by Client or
by modem, FTP transfer, LapLink, or electronic mail transfer. iXL
shall maintain its back-ups and one set of the Works provided to
Client for a period of six (6) months after Client's approval of the
Final Deliverable.
7. DEMONSTRATION OF CLIENT WEB SITE. After Client has approved the Final
Deliverable, (i) iXL may list Client as a client of iXL on iXL's Web
Site and in all other iXL marketing materials; (ii) iXL will be
authorized to create screen shots of the home page of Client's Web
Site and incorporate those screen shots into iXL's digital and print
marketing materials; (iii) iXL will be authorized to demonstrate the
Client Web Site in presentations to current or prospective clients,
subject to the confidentiality provisions of the Agreement; (iv) a
credit and logo will be included on the bottom of the home page of
the Client Web Site similar to "created by iXL internet excellence"
which links to iXL's Web Site; and (v) iXL may include either a URL
or plain text link to the Client Web Site on iXL's Web Site. For the
purposes of this Section 7, iXL shall include iXL and its corporate
parent. In the event that the Client substantially changes the Client
Web Site using its own employees or a company other than iXL, Client
may notify iXL that the rights under this Section 7 shall no longer
apply.
8. IXL'S REPRESENTATIONS AND WARRANTIES. iXL represents and warrants to
Client that:
<PAGE> 13
8.1. iXL is and will be the sole author of any and all Works
delivered to Client hereunder, with the exception of any
Third Party Software described in the Statement as being
used in preparing a Work;
8.2. All Works delivered to Client hereunder, excluding any
Third Party Software, do not and will not infringe any
patents, copyrights, trademarks, or other intellectual
property rights, including trade secrets, privacy or
similar rights of any person or entity, nor has any claim
of such infringement been threatened or asserted against
iXL;
8.3. The Final Deliverable accepted by Client will materially
comply with the specifications in the Statement and any
Change Orders; and
8.4. In no event whatsoever shall iXL's warranties and
representations hereunder extend or apply to any Final
Deliverables or Software modified by any party other than
iXL. Unless otherwise specified in the Statement, the Final
Deliverable will function, on the dates of delivery and
acceptance and for at least one hundred eighty (180) days
thereafter (the "Warranty Period"), with properly
configured Web Browsers and with MailServ, ListServ,
GopherServ, FTP servers, and Telnet. iXL's sole
responsibility in the event that Client discovers an Error
in the Final Deliverable during the Warranty Period, shall
be to correct such Errors, or option,if such Errors cannot
be corrected within a reasonable period of time, to refund
all Client fees paid for hereunder. All warranty claims not
made in writing within the Warranty Period shall be deemed
waived. iXL's warranty obligations are personal to Client
and may not be extended to any third party.
9. CLIENT'S REPRESENTATIONS AND WARRANTIES. Client represents and
warrants to iXL that:
9.1. Client either owns or has the right to the use (as
contemplated herein) of the Client Materials. Client
represents and warrants that the Client Materials are
either proprietary to Client or are the intellectual
property of third parties duly licensed to Client.
9.2. Client further represents and warrants that it has either
sole, exclusive title to the Client Materials or the right
to license or sub-license such Client Materials and that
such Client Materials do not and will not infringe upon or
violate any patent, copyright, trademark, trade secret, or
other proprietary or intellectual property rights of any
third party.
10. DEFENSE OF INFRINGEMENT ACTIONS.
10.1. If any action, claim, suit or proceeding is brought against
Client, alleging that the Client Web Site, the Software,
the Works, or any portion thereof (other than the Client
Materials or the Third Party Software) (the "Alleged
Infringing Material") infringes on a patent, copyright,
trademark, trade secret, or other intellectual property
rights of any third party, iXL will defend such action,
claim, suit or proceeding at its own expense and shall
indemnify and hold Client harmless from and against all
damages, liabilities, losses, expenses and costs, including
reasonable attorneys fees and expenses, incurred by Client
or arising in connection therewith. Client shall give iXL
prompt notice of any such claim, suit or proceeding in
writing (failure to give such notice shall not excuse iXL's
indemnity obligation hereunder, except to the extent such
failure shall materially prejudice the defense of such
claim) and give iXL full authority, control and full and
proper information and assistance (at iXL's expense) in the
defense and settlement of such claim, suit or proceeding.
iXL shall have no liability or obligation regarding any
infringement or claim which results, in whole or in part,
from any of the following: (i) Client's alteration or
modification of the Client Web Site (including any hardware
or software component contained therein); (ii) the
combination, operation, or use of the Client Web Site or
any portion thereof with equipment, software, apparatus, or
data not supplied or approved (in writing) by iXL if such
claim would have been avoided, in whole or in part, by the
use of other equipment, software, or data, whether or not
capable of achieving the same results; (iii) infringement
by a non-iXL product alone, as opposed to its combination
with items which iXL provides to Client as part of the
Client Web Site; (iv) use of superseded, altered or
allegedly infringing versions or releases of the Client Web
Site or any portion thereof if such alleged infringement
could be avoided by the use of a different version made
available by iXL; or (v) any information, design,
specification, instruction, software, data, or material not
furnished by iXL. If the Alleged Infringing Material is
finally determined by a court of competent jurisdiction to
constitute an infringement of any United States patent,
copyright or other trade secret of a third party and its
use is enjoined, iXL shall either (i) procure the right for
Client to continue to use the Alleged Infringing Material
as contemplated hereunder or (ii) replace or modify the
Alleged Infringing Material with a version thereof that is
not infringing and that satisfies the specifications in the
Statement. If iXL determines that none of these
alternatives is reasonably available, Client agrees to
return the Alleged Infringing Material to iXL within five
(5) business days of iXL's written request, iXL shall
refund all fees paid by Client in respect of such Alleged
Infringing Material, and the Statement shall then
terminate. This Section 10.1 states the entire liability of
iXL with respect to infringement of any third party
intellectual property rights by the Alleged Infringing
Material and iXL shall have no additional liability with
respect to any alleged or proven infringement.
<PAGE> 14
10.2. If any action, claim, suit or proceeding is brought against
iXL, alleging that any of the Client Materials or Client
Web Site specifications (including, but not limited to, any
links, frames, meta-tags, or functionally equivalent
features incorporated into the Client Web Site) infringe on
a patent, copyright, trademark, trade secret, or other
intellectual property rights of any third party, Client
will defend such action, claim, suit or proceeding at its
own expense and shall indemnify and hold iXL harmless from
and against all damages, liabilities, losses, expenses and
costs, including reasonable attorneys fees and expenses,
incurred by iXL or arising in connection therewith.
Indemnification is contingent on Client being notified
promptly of such claim, suit or proceeding in writing and
is given authority, control and full and proper information
and assistance in the defense and settlement of such claim,
suit or proceeding.
10.3. The provisions of this Section 10 shall survive the
termination of the Statement.
11. NO REPRESENTATIONS OR WARRANTIES RELATING TO COMMERCE WEB SITE.
Although iXL has used its professional judgment, knowledge and
expertise in recommending various hardware and software solutions on
the Client Web Site, iXL disclaims all liability in connection with,
the operation of the Client Web Site with respect to online
commercial transactions, and shall not have any responsibility or
liability for misuse of or failure to protect credit card or other
information provided by Client's customers on the Client Web Site.
Notwithstanding the foregoing limitation, upon reasonable notice from
Client, iXL shall use reasonable efforts to correct any defects with
regard to commercial transactions capabilities of the Client Web
Site, during the term of the Statement. Client assumes the risk of
loss and absolves iXL of any liability due to (a) Client offering any
products for sale through the Client Web Site that constitute "soft"
goods, for example, telephone usage cards, for which customers are
given authorization codes by Client that are effective with or
without physical delivery of the goods sold by Client; or (b) Client
maintaining personal identification numbers or other authorization
codes in connection with the Client Web Site.
<PAGE> 15
STATEMENT OF WORK NO. 1, PHASE I
TO THE iXL MASTER SERVICE AGREEMENT
BETWEEN IXL, INC. AND BIOSHIELD TECHNOLOGIES, INC.
The following is Statement of Work No. 1 (the "Statement"), made as of July 6,
1999, to the Master Service Agreement (the "Agreement") executed on July 6,
1999, between iXL, Inc. ("iXL") and BioShield Technologies, Inc. ("Client").
Except as specifically stated herein, each capitalized term used in this
Statement shall have the same meaning as is assigned to it in the Agreement.
1. GENERAL DESCRIPTION OF SERVICES. In addition to the work and services to
be performed by iXL pursuant to the Agreement and any other Statements of
Work existing under the Agreement, iXL shall perform services as specified
below the "Client Web Site. Such services shall be rendered in accordance
with and shall be deemed rendered pursuant to the terms and conditions of
the Agreement and the terms and conditions attached as Exhibit A to of
this Statement.
2. PAYMENT. Subject to the terms herein and those contained in the Agreement,
Client agrees to pay iXL Time and Materials in the estimated amount of
$1,890,700.
3. START DATE. iXL's services shall begin on June 8, 1999 and continue until
completion and delivery of the Client Web Site to Client or termination of
this Statement or of the Agreement.
4. SCOPE OF WORK. Bioshield Technologies vision for Allergy SuperStore.com is
to be recognized as the world's leading provider of allergy products,
services, and educational information. To realize this vision requires a
thorough understanding of strategic options and successful implementation
of the best strategy. To be effective, the chosen partner must possess the
following:
- - Expertise in merging business strategy and online strategies
- - Experience and know-how to successfully launch a new online business
- - A tightly integrated approach for realizing strategy through comprehensive
execution
- - Expertise in user-centered design, creative design and engineering
implementation
The iXL Solution
iXL possesses the expertise and know-how to develop a full-functioning Allergy
SuperStore.com Web site that maximizes Bioshield Technologies return on
investment. For AllergySuperStore.com, we are recommending a three-stage
solution that maps to our development process (see Section 8 for details on the
process we employ). Additionally, we recommend a marketing strategy engagement
that can be completed in parallel with the development effort.
Stage I of the proposed solution is an 6-week concept engagement intended to
maximize the business opportunity and provide a conceptual framework for
further decision-making. Upon validating the concept, iXL will enter into Stage
II: high-level design and solution prototype development. Finally, upon
validating the solution prototype, we complete Stage III: deployment of the
beta version and full-release versions of the solution.
iXL also recommends a marketing strategy to bring AllergySuperStore.com to
market quickly and maximize desired traffic upon release of the application.
Our strategic marketing group uses its expertise in online marketing to help
you choose the most effective programs and leverages it close relationship with
the development team to ensure the appropriate message is carried through to
the site itself.
(a) Project Specifications. Described below are details related to the
development of the Client Web Site. These details may include, but are not
limited to, information relating to proposed content, navigation, specific
features and functions, operating specifications, back-end functionality,
databases, Web Servers, and operating systems.
STAGE I -CONCEPT
Timeframe: 6 weeks
<PAGE> 16
Estimated Cost: $ 325,650
Major Deliverables: Solution Description & Conceptual Prototype
Overview
--------
iXL believes strategy is much more than communicating to you what you already
know about your business. A valuable Internet strategy incorporates a wealth of
Web experience and tackles implementation issues within the recommendations.
What makes iXL unique?
- We think about implementation when we think about strategy
- We have a proven process which brings together our full
suite of strategic, creative, and technical expertise
- We're dedicated to the Internet
- We understand the emerging digital business models and
processes that are shaping the future of business
- We can help your business succeed in the Digital Age
iXL recommends a six week concept engagement with Bioshield Technologies: six
weeks to develop viable concepts. We have not recommended including any
business requirements, but as these needs arise we notify Bioshield of the need
and the effect on the scope of work.
Rapid Assessment
----------------
Timeframe: 3 days
Estimated Cost: $32,000 estimate includes pre and post work including
the deliverable document
Major Deliverable: Assessment of allergysuperstore.com
To kick-off this engagement, iXL will conduct a rapid three
day workshop to get a strong understanding of
allergysuperstore.com's needs since allergysuperstore.com has
already completed a valuable amount of work. To ensure, we
effectively utilize the works to date. The days will be
broken out as follows:
I. Business Requirements
II. Interface Requirements
III. Technology Requirements
Concept Determination
---------------------
Timeframe: 6 weeks
Estimated Cost: $293,650
Major Deliverable: Solution Description & Conceptual Prototype
iXL's concept determination methodology creates solution ideas that provide
crucial direction for the design and development of the release. Successful
execution of the concept phase minimizes redesign costs in future phases by
basing the solution on a sound framework. Because sites with a sound framework
go through fewer major changes over time, customers are overwhelmed less with
new releases. This consistency can:
<PAGE> 17
- - Increase customer loyalty
- - Help retain market share
Concept determination brings together iXL's expertise in online strategy and
marketing, creative direction, information architecture and usability, and
technical implementation to formulate viable concepts that actualize the
proposed strategy. Each deliverable is detailed with it's purpose in the
project. During this phase the following tasks are completed:
1. CONDUCT AUDIENCE ANALYSIS
To gain an understanding of the customer segments and general goals in
order to make knowledgeable recommendations.
- - Conduct Client Interviews - To gain a macro-understanding of the current
customer-base, segments, behaviors, and needs for visiting the site.
- Conduct User Assumptions Research - In the event that users are
unavailable, role-playing exercises are undertaken to provide insight
as to specific user needs.
- Measurement Analysis - To gain insight as to the current capabilities
and metrics for measurement.
2. CONDUCT TASK ANALYSIS
To gain an understanding of the specific goals and priorities that
customers come to the site to accomplish.
- Use Cases - To understand the current user needs in order to provide
clear communication as to the requirements for the upcoming software
system.
- Conduct User Interviews - To gain a qualitative understanding of
detailed user needs, goals, activities, priorities, and desires.
- Goal Composition Workshop/Exercise - To document a complete set of
understood user goals and extract a super-set of potential goals.
3. ENTERPRISE ARCHITECTURE DOCUMENT
To document an understanding of the specific technical risks to track and
most beneficial initiatives to implement them.
- Conduct Software Capabilities Review - To document an understanding
of the current and upcoming platform, architecture, and other
technical characteristics.
- Conduct Platform Limitations Review - To provide involved testing
and/or hands on review and in-depth analysis to uncover hidden risks
and issues surrounding current systems.
4. DEVELOP CREATIVE STRATEGY
To document an understanding of the specific creative and brand assets and
give visual and experiential direction for the current development.
- Client Visioning Session - To determine visual and brand assets that
maintain the corporate message and brand personality.
5. STRUCTURAL SCREEN DESIGN
To clearly document the solution from a very high level.
- Describe Solution/Vision - To give a coherent written picture of the
solution.
- Define Objectives, Expected Outcomes, Key Success Criteria, and
Critical Issues - To list all of the current known objectives and the
expected results.
- Define Solution Treatment - To document the inherent characteristics
of a successful undertaking and detail the characteristics of
success.
<PAGE> 18
- Business Use Case Model - To clearly document the business changes,
definitions, processes, roles, responsibilities, and domains affected
by the new system.
- Vocabulary of Terms - To have a set of definitions that clear any
ambiguous terms.
- Supplementary Business Specification and Business Object Model - To
provide additional and detailed information about certain business
processes and give a conceptual model.
6. ROUGH COMPS
To paint an initial picture of the software system being built.
- Rough Comps - To paint an initial picture of the software system
being built.
7. CONCEPT VALIDATION
To elicit feedback and confirm thinking and direction to date.
- Focus Group - To elicit feedback and confirm thinking and direction
to date.
8. DOCUMENT SOLUTION DESCRIPTION
To holistically document the solution and create a milestone of
completion.
iXL's creative, human factors, and technical staff work closely in this phase
to ensure that the resulting recommended solution is innovative, user-focused,
and feasible to develop and maintain. We also test the concept to validate user
acceptance. Upon completion of the concept phase, the client is given rough
comps and a solution description. These deliverables play an important role in
demonstrating to others how the strategy will be realized.
STAGE II - SOLUTION REQUIREMENTS & FUNCTIONAL PROTOTYPE
Timeframe: 6-8 weeks
Estimated Range: $480,000
Major Deliverables: Solution Requirements & Tight Comps
Solution Standards & Functional Prototype
iXL's Solution Requirements and Functional Prototype focuses upon the design of
the defined solution. Documenting the design of the solution ensures that all
components and functionality have been considered and minimizes development
errors. The end deliverable of this phase is functional prototype.
The Solution Requirements document will provide a detailed scope of work for
the development team. Once the concept has been validated from Stage I, iXL can
provide more a more precise allocation of resources and cost estimated
associated with this stage. However, iXL's experience in developing solutions
of this nature allows us to identify the following tasks that will be completed
in this stage:
1. VALIDATE COMPONENTS ANALYSIS
The components analysis will document the media-based, interface, and
interactive requirements of the system.
- Client Interview - iXL will meet with Bioshield Technologies to
discuss and document in detail the requested requirements for the
system. This meeting will address the questions and the documentation
already provided to iXL by Bioshield Technologies. Issues addressed
in this facilitated meeting will be Code, Brand, Creative,
Information
<PAGE> 19
Architecture, Content, Design, and Navigation. This initial interview
will begin the development of three primary deliverables:
Business/User Functional Requirements; Interactive Narrative; and the
Organizational Schematic.
- Internal Components Determination Session - iXL will perform the same
task as listed in the Client Interview to determine and document the
team-driven requirements for the media-based, interface, and
interactive requirements of the systems based on information gathered
from Bioshield Technologies.
- Client Components Determination Session - iXL will conduct a workshop
with Bioshield Technologies to present the complete, harmonized
requirements. This process allows both iXL and Bioshield Technologies
the opportunity to recognize any components that perhaps were
overlooked in the client facilitated session and/or the internal iXL
team meeting.
- Components Determination Focus Group - iXL will test the defined
Business/User Functional Requirements, Interactive Narrative, and
Organizational Schematic against a focus group. iXL will use the
moderator's guide and the resulting research report to validate the
determined components.
- Requirements Attribute Document - iXL will clarify any additional or
dependent information in previous documents and gather requirement
attributes.
- Prioritize Use Cases - iXL will detail the use cases for the audience
and create the Use Case Workflow.
- Visual Linguistic/Message Studies - iXL will perform a series of
visual and linguistic studies to identify and define characteristics
desired in the development. This will allow iXL to explore and
capture various executions, document the beneficial and contrary
characteristics and prepare the requirements document.
2. CONDUCT FUNCTIONAL ANALYSIS
The functional analysis will document the engineering requirements of the
system. Within this analysis, iXL will review the business cases, business
models, and use cases with both the team and Bioshield Technologies. The
following tasks will allow iXL to prepare the functional and technical
requirements for the system:
- - Determine Software/System Architecture - iXL will document the technical
architecture for development. This will involve creating the initial
document, reviewing it both with internal and Bioshield Technologies
resources, and refining the Software/System Architecture.
- - Supplementary Specifications - iXL will identify and begin early
specifications of simple or risky areas, to be added to the solution
requirements document.
- - Risk List and Iteration Plan - Working with the Project Manager, the
Technical Lead will begin early risk mitigation and plan reasonable
development iterations.
- - Requirements Attributes Document - iXL will review the previous
documentation, update any additions and dependencies, and compose the
functional requirements attributes of the systems. This will provide
further clarification of the functional components.
<PAGE> 20
- - Design and Test Model - iXL will both write and test the code to begin
early testing of difficult or risky components. These findings will be
presented in code and test results.
3. PREPARE SOLUTION REQUIREMENTS
The Solution Requirements document will document and summarize all the software
and system requirements for the Allergy SuperStore.com. The Solution
Requirements document will be comprised of Business/User Functional
Requirements and Interaction Design, User Interface Modeling and High Level
Prototype, and Architecture and Technical Requirements.
4. COMPLETE TIGHT COMPS
Tight Comps will offer Bioshield Technologies one to three final options of the
creative direction and interface layout of the system, based on the previous
conceptual prototype (rough comps) and client feedback. The objective of a
tight comp is to select the final interface design format. The work presented
during the Tight Comp stage is resolved to the stage where color palette
issues, branding and load size requirements are all known and stated.
The following tasks are associated with the completion of the tight comps:
- - Client Review - iXL will elicit feedback and confirm thinking and
direction to date by reviewing the solution concept with Bioshield
Technologies and document the feedback.
- - Focus Group - iXL will conduct formal focus groups to test the tight comps
against the end users of the system. iXL will prepare the facility,
procure the respondents, and create a moderator's guide with Bioshield
Technologies's input. Once completed, iXL will conduct the focus groups
and consolidate the results in a report.
- - Individual Interviews - In conjunction with the focus groups, iXL will
conduct several individual interviews with users. As with the focus
groups, iXL will be responsible for procuring the respondents, creating
the moderator's guide with Bioshield Technologies's input, conducting the
interviews, and consolidating the findings in a report.
- - User Testing - iXL will further assign users specific tasks to be
performed within the system, and conduct usability tests. iXL will prepare
a testing guide, procure the respondents, and create a report from these
findings.
5. PREPARE REQUIREMENTS UPDATE
Upon completion of the validation exercises, iXL will review the findings with
Bioshield Technologies and prepare updates to the solution requirements based
on the intelligence gathered.
6. SET SOLUTION STANDARDS
Setting the solution standards is a critical task to be performed before
development of the system. Once the system is fully developed, the iXL
<PAGE> 21
Quality Assurance team will perform testing of the system based upon the
standards that were set before actual development. iXL will set solution
standards and document all of the component standards agreed to on the project
to date. To set these standards, iXL will hold several meetings both internally
and with Bioshield Technologies.
- - Internal Component Standards Session - iXL will agree upon all of the
components as a team
- - Internal Technical Standards Determination - iXL will agree upon al of the
technical standards as a team.
- - Client Standards Determination - iXL will present Bioshield Technologies
will their agreements, and confirm the components and technical standards
with Bioshield Technologies.
7. DEVELOP FUNCTIONAL PROTOTYPE
Development of a functional prototype is designed to paint a second picture of
the software/system to be built. Bioshield Technologies will decide which of
the three functional prototypes they would like to have developed. The three
functional prototypes offer a variety of development efforts, and the decision
will depend upon how much of the system Bioshield would like to review before
development. The available prototypes include:
- - High Fidelity Prototype - Create a prototype representative of the actual
deliverable in both form and function.
At the completion of this stage, the Allergy SuperStore.com solution and is
ready to enter the next stage for development.
STAGE III - BETA RELEASE & FULL RELEASE
Timeframe: 12-16 weeks
Estimated Range: $1,024,000
Major Deliverables: Beta Release
Full Release
iXL has developed a series of tasks and requirements to ensure that any
developed solution meets and exceeds all client expectations. Stage III
concentrates on developing the complete solution and preparing it for release.
iXL recommends the release of the solution in two phase, beta and full, to
ensure a fully functional release to the viewing public.
Through our experience in launching solution, iXL has determined the following
tasks that will be required to launch a complete solution:
1. VALIDATE SOLUTION PROTOTYPE
The validation of the solution prototype follows similar exercises associated
with completion of the tight comps. Listed below are the tasks involved in the
validation process. Please see Complete Tight Comps in Stage II for further
detail:
- - Client Review
- - Third Party Review
- - Focus Group
- - Individual Interviews
- - User Testing
<PAGE> 22
2. PREPARE STANDARDS UPDATE
Validation of the solution prototype will flush out any standards that need to
be changed or updated. IXL will update the solutions standards document based
on the findings gathered in the validation exercises and review them with
Bioshield Technologies.
3. DEFINE SOLUTION SPECIFICATIONS
Defining the solution specifications will require a compilation of all
documents prepared to date, and holistically prepare a single document of the
solution specifications. All of the solution specifications will be reviewed
with Bioshield Technologies, updated if necessary, and finalized. The solution
specifications document will include:
- - Style Guidelines - The Style Guidelines will document the reusable visual,
interface, navigational, and content components in specific detail.
- - Detailed Design Specifications - This design document will record every
instance of the visual, interface, navigational, and content components in
specific detail.
- - Application Design Specifications - iXL will identify and write the
specific code necessary to build the software system.
- - Database Design Specifications - iXL will document the specific
application code necessary to build the database system.
4. DEVELOP CONTENT
Based on the Style Guidelines and Detailed Design Specification, iXL will
allocate an Information Architect, Art Director, Web Programmer, and Graphic
Designer to develop the content of the system.
5. DEVELOP FRONT END INTERFACE
Based on the Style Guidelines and Detailed Design Specification, iXL will
allocate an Information Architect, Art Director, Web Programmer, and Graphic
Designer to develop the front end of the system.
6. DEVELOP BACK END SYSTEMS
Based on the Application Design Specifications and Database Design
Specifications, iXL will allocate an Application Developer, Systems
Analyst/Programmer, Database Developer/Architect, Software Engineer and
Technical Lead to develop the back end engineering of the system.
7. TEST FOR QUALITY ASSURANCE
The final stage of development is the testing phase. The iXL Quality Assurance
department will test the site for spelling, broken links, browser compliance,
and any portion of the site that does not match directly up to the solution
standards document. iXL will allocate a QA Engineer, QA Technician, and QA
Tester to test the system.
<PAGE> 23
8. RELEASE BETA SOLUTION
Once a full working version is the site has be through full testing, the site
will be launched to the identified user group.
9. VALIDATE BETA SOLUTION
To validate the beta solution, iXL will run the validation exercises described
in both the complete tight comps task in Stage II and the validate solution
prototype in Stage III. The validation exercises will include:
- - Client Review
- - Third Party Review
- - Focus Group
10. DEFINE IMPROVEMENT PLAN
Once the feedback has been received from the beta-testing phase, iXL will
develop a plan to implement any improvements to the site that are agreed upon.
11. UPDATE SOLUTION SPECIFICATIONS
After the improvement plan is outlined, iXL will update any and all
documentation effected by the changes.
12. IMPLEMENT DEVELOPMENT CHANGES
The changes will be integrated into the site
13. TEST FOR QUALITY ASSURANCE
Let's make sure the site is still stable with all of the changes incorporated
into the site.
14. LAUNCH FULL SOLUTION
Let's get the site out!
By documenting the aforementioned tasks and following a rigorous development
methodology, iXL can confidently release all solutions and ensure client
satisfaction.
STAGE IV - MARKETING STRATEGY
Timeframe: 8 weeks
Estimated Cost: $61,050
Major Deliverables: Online Marketing & Promotion Plan
iXL's expertise in leveraging the Internet to build brand awareness and drive
significant site traffic can play a critical role AllergySuperStore.com's
success. Additionally, our mechanisms for gathering customer feedback,
demographic information, and purchasing preferences can help us make decisions
that:
<PAGE> 24
- - Decrease costs in acquiring and retaining users
- - Shorten marketing cycles
- - Convert competitor's customers
- - Increase user loyalty over time
A wide range of options exists for marketing & promotion of an online business,
as well as mining & tracking market data. There is no single, silver bullet in
a successful online marketing and promotion plan. With that in mind, our
recommended strategy includes an integrated combination of tactics, which we
continuously monitor and refine. With this approach, iXL can help
AllergySuperStore.com design a flexible campaign that takes advantage of the
latest proven methods to maximize your marketing investment.
OUR ONLINE MARKETING & PROMOTION PLAN WILL INCLUDE:
- - Marketing Objectives: Clear statement of agreed upon quantitative and
qualitative
- - Communication Objectives
- - Target Audience Identification and Analysis
- - Internet Marketing & Promotion Strategy
- - Internet Marketing & Promotion Tactics
- Online Advertising
- Outbound/Opt-in Email
- Search Engine Optimization
- Promotional Programs: Membership Programs, Online Events,
Contests/Sweepstakes
- Syndicated Selling Recommendations
- - Creative & Messaging Strategy: Preliminary Creative Review
- - Internet Media Plan
- - Measurement & Tracking Recommendations
- - Timeline & Detailed Budget
6. CLIENT MATERIALS. Client or its advertising agency or other
representatives will provide iXL with the following in the formats set
forth below (except for items specifically described below as being
provided by iXL):
- All current materials will be released to iXL within two weeks of the
project initiation.
iXL anticipates that the content list may change throughout the
development process. The parties agree the iXL Project Manager and Client
Project Manager can authorize reasonable changes to the content list
without execution of a Change Order, but must confirm such changes in
writing by fax or email. If the iXL Project Manager determines that the
timing or scope of requested content changes is likely to effect
contracted project costs or milestones, a Change Order is required before
the changes contemplated will be executed by iXL.
- THIRD PARTY SOFTWARE. No fees have been added into the scope of work
for the purchase of third party software for the Client Web Site. As
the fees are defined in the requirements analysis they will be
documented and presented to the client for their final decision.
7. PROJECT TIMETABLE, WORKS DELIVERY AND PAYMENT SCHEDULE. iXL has described
the major milestones, dates for delivery of Works, and corresponding
payment amounts below. Client agrees that any delay with respect to the
provision of Client Materials, approvals, or other assistance to iXL shall
extend the deadline for subsequent tasks or milestones set forth in the
table below by a period at least equal to Client's delay. In addition, for
any Client obligation described as time-sensitive or critical in this
Statement, failure of the Client to meet its deadline will entitle iXL to
prepare a revised Project Timetable based on a realistic estimate of the
effect of the delay on the completion of the project, taking into account
other work scheduled by iXL.
<PAGE> 25
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
PROJECT ESTIMATE
---------------------------------------------------------------------------------------------------------------
MILESTONE DESCRIPTION OF MILESTONE WORKS TO BE DELIVERED DATE PAYMENT
---------------- --------------------------------------- ------------------------- -------------- -------------
<S> <C> <C> <C> <C>
Kick-Off Begin Concept Phase Deliverables outlined 06/14/99 $162,825
Meeting in scope of work 50% of
phase I
---------------- --------------------------------------- ------------------------- -------------- -------------
Concept Phase Finalize Concept Phase Deliverables Deliverables outlined 07/23/99 Detailed
in scope of work Below
---------------- --------------------------------------- ------------------------- -------------- -------------
Solution Finalize Solution Requirements & Deliverables outlined 09/03/99 Detailed
Requirements & Functional Prototype Deliverables in the scope of work Below
Functional outlined in the Scope of Work
Prototype
---------------- --------------------------------------- ------------------------- -------------- -------------
Beta Release & Delivery of beta & final version and Deliverables outlined 11/29/99 Detailed
Full Release debut of the Web Site. in the scope of work Below
FINAL DELIVERABLE
---------------- --------------------------------------- ------------------------- -------------- -------------
Marketing Delivery of go to Market Strategy Deliverables outlined 09/20/99- Detailed
Strategy in the scope of work 11/12/99 Below
---------------------------------------------------------------------------------------------------------------
TOTAL ESTIMATED PRICE $ 1,890,700
---------------------------------------------------------------------------------------------------------------
</TABLE>
8. PAYMENT SCHEDULE The client will be billed 50% of each estimated phase in
advance and will pay the remainder of that phases investment at the
completion of that phase.
9. WORKS DELIVERED TO CLIENT. Each item listed in the "Works to be Delivered"
column in the chart in above will be subject to delivery and acceptance by
the Client under the terms of the Agreement and those included in Exhibit
A. Upon iXL's request, and prior to iXL beginning work on the subsequent
Milestone, Client's Project Manager may be asked to execute a written
"Milestone/Deliverable Acknowledgement of Acceptance" indicating Client's
affirmative acceptance of a Milestone or other deliverable.
10. COMPLETION DATE. The Client Web Site is proposed for completion on
12/03/99, but is subject to change due to changes in the development
lifecycle.
11. DEVELOPMENT SITE. The URL for the development site which Client may use to
review progress under this Statement is:
http://www.atl.ixl.com/clients/bioshield
Username: allergies
Password: arenofun
12. IXL AND CLIENT CONTACTS.
<TABLE>
<S> <C>
iXL Client Manager(s) Client Project Manager(s)
Name: Tom Connolly Name: Jacques Elfresy
Title: Senior Sales Consultant Title: Senior Vice President
Address 1: 1888 Emery Street Address 1: 4405 International Blvd Suite B109
Address 2: Atlanta, GA 30319 Address 2: Norcross, GA 30093
Phone: 404-267-3808 Phone: 770-925-3432
Fax: 404-267-4099 Fax: 770-921-1065
Email: [email protected] Email:
</TABLE>
<PAGE> 26
15. SITE INDEXING. The payment to iXL under this Statement does not include
submitting the Web Site to index sites or other similar marketing services
except to the extent specifically described in the "Scope of Work" section
above.
16. IXL'S HOURLY RATES. iXL's standard hourly rates by category are presented
in the attached Exhibit B and will apply to any work performed in
connection with the Client Web Site that Client requests and that is not
included in the previously defined scope of work or in a Change Order:
Exhibit B iXL Rate Card(1)
--------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
HOURLY DAILY
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSULTING GENERAL MANAGER, PRINCIPAL, SENIOR ENGAGEMENT MANAGER 350
2,800
---------------------------------------------------------------------------------------------
SENIOR CONSULTANT, ENGAGEMENT MANAGER 300
2,400
---------------------------------------------------------------------------------------------
CONSULTANT 250
2,000
---------------------------------------------------------------------------------------------
ASSOCIATE CONSULTANT, ANALYST 200
1,600
---------------------------------------------------------------------------------------------
CONSULTING COORDINATOR 175
1,400
- -----------------------------------------------------------------------------------------------------------------
CLIENT DEVELOPMENT CLIENT PARTNER 275
& PROJECT 2,200
MANAGEMENT
---------------------------------------------------------------------------------------------
SENIOR PROGRAM MANAGER, TECHNICAL LEAD 250
2,000
---------------------------------------------------------------------------------------------
PROGRAM MANAGER, SENIOR PROJECT MANAGER 225
1,800
---------------------------------------------------------------------------------------------
PROJECT MANAGER, TECHNICAL PROJECT MANAGER 200
1,600
---------------------------------------------------------------------------------------------
ASSOCIATE PROJECT MANAGER/ PROJECT COORDINATOR 150
1,200
- -----------------------------------------------------------------------------------------------------------------
CREATIVE SERVICES CREATIVE DIRECTOR 275
2,200
---------------------------------------------------------------------------------------------
SENIOR ART DIRECTOR 225
1,800
---------------------------------------------------------------------------------------------
ART DIRECTOR, SENIOR GRAPHIC DESIGNER 175
1,400
---------------------------------------------------------------------------------------------
GRAPHIC DESIGNER, PRODUCTION ARTIST 140
1,120
- -----------------------------------------------------------------------------------------------------------------
INFORMATION INSTRUCTIONAL/INFORMATION DESIGN MANAGER, USABILITY/ COGNITIVE 275
ARCHITECT/ ENGINEERING MANAGER, HUMAN FACTORS MANAGER 2,200
INSTRUCTIONAL
DESIGNER/
USABILITY
ENGINEERING
---------------------------------------------------------------------------------------------
SENIOR USABILITY ENGINEER, SENIOR HUMAN FACTORS ENGINEER, SENIOR 225
COGNITIVE ENGINEER 1,800
---------------------------------------------------------------------------------------------
SENIOR INSTRUCTIONAL DESIGNER, SENIOR INFORMATION ARCHITECT, 200
SENIOR CONTENT DEVELOPER, USABILITY ENGINEER, HUMAN FACTORS 1,600
ENGINEER, COGNITIVE ENGINEER
---------------------------------------------------------------------------------------------
</TABLE>
(1) Once the investment totals are reached below the iXL rates will adjust down
to the most current rate card.
<PAGE> 27
<TABLE>
<CAPTION>
<S> <C> <C>
INSTRUCTIONAL DESIGNER, INFORMATION ARCHITECT, EDITOR, CONTENT 165
DEVELOPER 1,320
- -----------------------------------------------------------------------------------------------------------------
SITE DEVELOPER TECHNICAL SERVICES MANAGER, DIRECTOR SITE AUTHORING 225
1,800
---------------------------------------------------------------------------------------------
SENIOR SITE DEVELOPER/AUTHOR 200
1,600
---------------------------------------------------------------------------------------------
SITE DEVELOPER/AUTHOR II (HTML, SCRIPTING, AUTHORING) 175
1,400
---------------------------------------------------------------------------------------------
SITE DEVELOPER/AUTHOR (HTML, SCRIPTING, AUTHORING) 150
1,200
- -----------------------------------------------------------------------------------------------------------------
ENGINEERING DIRECTOR APPLICATIONS DEVELOPMENT, MANAGER APPLICATIONS SYSTEMS 275
& SYSTEMS ANALYSIS AND ANALYSIS, DIRECTOR DATABASE SERVICES 2,200
---------------------------------------------------------------------------------------------
SENIOR APPLICATIONS DEVELOPER, SENIOR SYSTEMS ANALYST/ 240
PROGRAMMER, SENIOR DATABASE DEVELOPER/ARCHITECT 1,920
---------------------------------------------------------------------------------------------
APPLICATIONS DEVELOPER, SYSTEMS ANALYST/ PROGRAMMER, DATABASE 200
DEVELOPER/ARCHITECT, SENIOR SOFTWARE ENGINEER 1,600
---------------------------------------------------------------------------------------------
PROGRAMMER/ANALYST, DATABASE DEVELOPER/ARCHITECT, SOFTWARE 175
ENGINEER 1,400
- -----------------------------------------------------------------------------------------------------------------
SALES ENGINEER SALES ENGINEERING MANAGER 300
2,400
---------------------------------------------------------------------------------------------
SENIOR SALES ENGINEER 275
2,200
---------------------------------------------------------------------------------------------
SALES ENGINEER 225
1,800
---------------------------------------------------------------------------------------------
ASSOCIATE SALES ENGINEER 175
1,400
- -----------------------------------------------------------------------------------------------------------------
QUALITY ASSURANCE QA ENGINEER, QA MANAGER, QA DIRECTOR 225
1,800
---------------------------------------------------------------------------------------------
QA COORDINATOR, QA TECHNICIAN, QA ASSISTANT 175
1,400
---------------------------------------------------------------------------------------------
QA TESTER, QA SPECIALIST 125
1,000
- -----------------------------------------------------------------------------------------------------------------
DOCUMENTATION SENIOR TECHNICAL WRITER, SENIOR COPYWRITER 200
1,600
---------------------------------------------------------------------------------------------
TECHNICAL WRITER, COPYWRITER 175
1,400
---------------------------------------------------------------------------------------------
DOCUMENTATION SPECIALIST 150
1,200
- -----------------------------------------------------------------------------------------------------------------
MARKETING SERVICES VP MARKETING SERVICES, SENIOR MARKETING CONSULTANT, SENIOR MEDIA 300
CONSULTANT 2,400
---------------------------------------------------------------------------------------------
MARKETING STRATEGIST, MEDIA STRATEGIST 250
2,000
---------------------------------------------------------------------------------------------
ADVERTISING MANAGER, ACCOUNT MANAGER 225
1,800
---------------------------------------------------------------------------------------------
ADVERTISING PLANNER, ONLINE PR PLANNER, INTERACTIVE MEDIA 210
PLANNER, RESEARCHER 1,680
---------------------------------------------------------------------------------------------
ADVERTISING SPECIALIST, ONLINE PR SPECIALIST 180
1,440
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 28
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Statement of Work No. 1 as of the date
stated above.
<TABLE>
<S> <C>
IXL, Inc. Bioshield Technologies, Inc.
By: By:
------------------------------------------ --------------------------------------------
Name: Name:
--------------------------------------- ----------------------------------------
Title: Title:
--------------------------------------- ----------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.057
STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT (this "Agreement") is made and
entered into as of July 9th, 1999 by and between IXL ENTERPRISES, INC. ("iXL")
and ALLERGY SUPERSTORE.COM, INC. ("Allergy").
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, iXL and Allergy agree as follows:
1. STRATEGIC ADVISOR. iXL shall advise Allergy with respect to
the development of Allergy's business and Allergy's business model. Such advice
shall include, on an as and when needed basis, strategic planning advice,
marketing advice relating to retailing and business to business commerce, and
general advice regarding current and future market trends in the healthcare and
internet markets. This advice will be on an ad hoc basis and will not require
specific deliverables related to these advisory services. These services will
not replace iXL's core business of strategic consulting.
2. BUSINESS RELATIONSHIP AND STRATEGIC ALLIANCE INTRODUCTIONS.
iXL shall use its commercially reasonable best efforts to introduce Allergy and
its executive officers to companies and individuals doing business and/or
investing in the healthcare industry with which iXL or its employees maintains
executive-level contacts.
3. ACCELERATION OF WEBSITE DEVELOPMENT. Contemporaneously with
the execution hereof, Allergy and iXL Inc., a wholly-owned subsidiary of iXL,
will execute a Master Services Agreement (the "Master Services Agreement"),
pursuant to which, among other things, iXL Inc. will develop Allergy's world
wide web site. iXL shall use its commercially reasonable best efforts to
accelerate and expedite the performance by iXL Inc. of its obligations under the
Master Services Agreement with respect to the development of Allergy's web site.
In consideration for acceleration of performance by iXL, Inc. of its obligations
under the Master Services Agreement, Allergy shall issue to iXL 300,000 shares
of its common stock.
4. BOARD OF DIRECTORS. iXL shall have the right for a period of
one year from the date of the Agreement (the "Initial Term") to designate two
members of Allergy's Board of Directors, one of whom shall have the right to
vote on all matters presented to the Board of Directors, and one who shall have
no right to vote on any matters presented to the Board of Directors
(collectively, the "iXL Designees"). One of the iXL Designees shall be
U. Bertram Ellis. Allergy shall have the right to replace any of the iXL
Designees with its own designees at any time with or without cause after the
Initial Term.
5. ISSUANCE OF COMMON STOCK. Allergy shall issue to iXL an
aggregate of 600,000 shares of its common stock (the "Advisor Common Stock")
inclusive of those
- 1 -
<PAGE> 2
shares issued pursuant to Section 3 hereof.) The Advisor Common Stock may yet be
sold, pledged or assigned ("a Disposition") without the prior written consent of
Allergy. In addition, the Advisor Common Stock shall be subject to usual and
customary lock-up agreements imposed by Allergy's underwriters in a public
offering of Allergy's common stock or other securities.
6. AGREEMENT OF NON-DISCLOSURE AND NON-COMPETITION.
6.1 iXL agrees Allergy has developed and uses both
technical and non technical information of significant commercial
value, some of which information is owned by Allergy, some of which is
owned by third parties. The information includes computer programs,
system documentation, manuals, customer lists and other materials
developed and used by Allergy that are subject to the proprietary
rights of Allergy and of third parties. Allergy and other holders of
proprietary rights in such information regard such information as
valuable trade secrets. iXL recognizes and agrees that it has a
fiduciary duty to Allergy and to each other to retain in confidence and
to use the information and other property of Allergy solely for the use
and benefit of Allergy.
6.2 iXL agree that except as may be required in the
performance of its duties on behalf of Allergy, or otherwise as
required by law, that it will not disclose or use at any time during
which it is a shareholder, or for a period of three years thereafter,
any secret or confidential information of Allergy.
6.3 iXL agrees that during the period of one year
immediately following cessation of iXL's employment with Allergy, iXL
shall not, on iXL's own behalf or on behalf of any person, firm,
partnership, association, corporation or business organization, entity
or enterprise, solicit, contact, call upon, communicate with or attempt
to communicate with any present employees of Allergy, nor any former
employees of Allergy who left Allergy's employ 80 days prior to such
cessation of employment by iXL. The actions prohibited in this section
shall not be engaged in by iXL directly or indirectly, including, but
not limited to a shareholder, employee, agent or affiliate of iXL.
7. LEGEND ON STOCK.
7.1 FORM OF LEGEND. The Secretary shall endorse each
certificate representing Advisor Common Stock with substantially the
following legend:
- 2 -
<PAGE> 3
The shares of Advisor Common Stock represented by this certificate are
held subject to, and transfer of such shares is restricted by, terms of
a Strategic Alliance Agreement dated July 9th, 1999, a copy of which is
on file at the office of the Corporation. No transfer of any share
represented by this certificate shall be valid unless made in
accordance with the terms of this Agreement.
The shares evidenced by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Federal Act"), in reliance
upon the exemption from registration provided by section 4(2) of the
Federal Act and have not been registered under the securities laws of
applicable states in reliance upon applicable exemptions from
registration under the securities laws of such states. These shares
have been acquired for registration under the securities laws of such
states. These shares have been acquired for investment purposes only
and may not be offered for sale, hypothecated, sold or transferred, nor
will any assignee or transferee thereof be recognized by the
Corporation as having any interest in these shares, in the absence of
(i) an effective registration statement with respect to the shares
under the Federal Act and applicable state securities laws or (ii)
compliance with applicable exemptions from registration under the
Federal Act and applicable state securities laws. The Corporation may,
if it deems appropriate in its sole discretion, require an opinion of
counsel satisfactory to the Corporation that the offer, sale,
hypothecation or transfer of these shares are exempt from registration
under the Federal Act and applicable state securities laws.
The shares evidenced by this certificate have been issued and sold in
reliance on paragraph (13) of code section 10-5-9 of the Georgia
Securities of 1973 and may not be sold or transferred except in a
transaction which is exempt under such Act or pursuant to an effective
registration under such Act.
7.2 INTENTION OF PARTIES. The parties to this Agreement
intend that the legend conform to the applicable provisions of the law.
This legend may be modified from time to time by the board of directors
of Allergy to conform to any amendments to said provisions or to this
Agreement.
8. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with
the Master Services Agreement, constitutes the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof
and thereof and supersedes any and all prior agreements and understandings,
written or oral, relating to the subject matter hereof. No amendment, alteration
or withdrawal of this Agreement shall be valid
- 3 -
<PAGE> 4
or binding unless made in writing and signed by the parties. Any purported
amendment, modification or withdrawal which is oral shall be void and of no
effect whatsoever.
9. FURTHER ASSURANCES. Each party hereto 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 any other party hereto 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.
10. GOVERNING LAW. The validity, interpretation, and construction
of this Agreement will be governed by the laws of the State of Georgia
applicable to contracts entered into and performed entirely with said state
without regard to the principles of conflict of laws. Any dispute or controversy
between the parties arising in connection with this Agreement or the subject
matter contemplated by this Agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including, but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. The parties further
agree that any arbitration action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the Superior
Court of Fulton County, Georgia, and the United States District Court for the
Northern District of Georgia, Atlanta Division for the adjudication of any civil
action asserted pursuant to this Section.
IN WITNESS WHEREOF, this Strategic Alliance Agreement has been duly
executed by the parties set forth below as of the date first written above.
IXL ENTERPRISES, INC.
By: /s/ M. Wayne Boylston
------------------------------
M. Wayne Boylston
Executive Vice President
ALLERGY SUPERSTORE.COM, INC.
By: /s/ Timothy C. Moses
------------------------------
Name: Timothy C. Moses
------------------------------
Title: CEO
------------------------------
- 4 -
<PAGE> 1
EXHIBIT 10.058
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 30,
1999, by and among Allergy Superstore.com, Inc., a Delaware corporation, with
headquarters located at 4405 International Blvd., Norcross, Georgia (the
"COMPANY"), BioShield Technologies, Inc, a Georgia corporation located at 4405
International Blvd., Norcross, Georgia ("BSTI ")and the investors listed on the
Schedule of Buyers attached hereto (individually, a "BUYER" or collectively
"BUYERS").
WHEREAS:
A. The Company, BSTI, and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) and/or Regulation D ("REGULATION D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT");
B. The Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, an aggregate amount of up to 3,218,884 shares of common stock
of the Company, par value $0.001 per share (such shares referred to herein as
the "COMMON STOCK"), in the respective amounts set forth opposite each Buyer's
name on the Schedule of Buyers;
C. Contemporaneously with the execution and delivery of this Agreement,
BSTI and the Buyers hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit "A" (the "BSTI
REGISTRATION RIGHTS AGREEMENT") pursuant to which BSTI has agreed to provide
certain registration rights under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws;
D. Contemporaneously with the execution and delivery of this Agreement,
the Company and Buyers hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as Exhibit "B" (the
"COMPANY REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has
agreed to provide certain registration rights under the 1933 Act and rules and
regulations promulgated thereunder and applicable state securities laws; and
E. The holders of the Common Stock will receive stock purchase warrants
(the "WARRANTS") to acquire the Common Stock substantially in the form attached
as Exhibit "C."
NOW THEREFORE, the Company, the Buyer, and BSTI hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON STOCK.
a. Purchase of Common Stock. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 5 and 6 below, the
Company shall issue and sell to the Buyers and the Buyers shall
purchase from the Company an aggregate principal amount of 3,218,884
shares of Common Stock and Warrants for an aggregate purchase price of
<PAGE> 2
$15,000,000 (the "PURCHASE PRICE"), in the respective amounts set forth
opposite each Buyer's name on the Schedule of Buyers (the "CLOSING").
b. Closing Date. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Eastern Standard Time, within five
(5) business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 5 and 6 below (or such later date as is mutually agreed to by
the Company and the Buyer). The Closing shall occur on the Closing Date
at the offices of Sims Moss Kline & Davis LLP, 400 Northpark Town
Center, Suite 310, 1000 Abernathy Road, N.E., Atlanta, Georgia 30328.
c. Form of Payment. On the Closing Date, (i) each Buyer shall
pay his portion of the Purchase Price to the Company for the Common
Stock to be issued and sold to such Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) the Company shall deliver
to each Buyer certificates representing such Common Stock and Warrants
that such Buyer is then purchasing (as indicated opposite such Buyer's
name on the Schedule of Buyers), duly executed on behalf of the Company
and registered in the name of such Buyer or its designee (the
"CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer is acquiring the Common
Stock and Warrants and any shares of Common Stock issuable upon
exercise thereof ("WARRANT SHARES"), for its own account for investment
only and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold
any Common Stock, Conversion Shares (as defined in Section 8 hereof),
Warrants, or Warrant Shares for any minimum or other specific term and
reserves the right to dispose of Common Stock or Warrant Shares at any
time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. Notwithstanding anything contained herein
to the contrary, each Buyer agrees to enter into any contractual
lock-up agreements with respect to the Common Stock, Warrants, Warrant
Shares, or Conversion Shares that may be required by the Company's
underwriters in connection with an underwritten public offering of the
Company's common stock or other securities or any public offering of
the Conversion Shares or other securities of BSTI.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
-2-
<PAGE> 3
c. Reliance on Exemptions. Such Buyer understands that the
Common Stock, Conversion Shares, Warrants, and Warrant Shares are being
offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and
accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such
Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire such
securities.
d. Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and BSTI and materials relating to the offer
and sale of the Common Stock which have been requested by such Buyer.
Such Buyer and its advisors, if any, have been afforded the opportunity
to ask questions of the Company and BSTI. Neither such inquiries nor
any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect
such Buyer's right to rely on the Company's or BSTI's representations
and warranties contained in Section 3 below. Such Buyer understands
that its investment in the Common Stock, Conversion Shares, Warrants,
and Warrant Shares involve a high degree of risk. Such Buyer has sought
such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of
the Common Stock, Conversion Shares, Warrants, and Warrant Shares.
e. No Governmental Review. Such Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Common Stock, Conversion Shares, Warrants, and
Warrant Shares, or the fairness or suitability of the investment in the
Common Stock, nor have such authorities passed upon or endorsed the
merits of the offering of the Common Stock and Warrants.
f. Transfer or Resale. Such Buyer understands that: (i) the
Common Stock and Warrants have not been and are not being registered
under the 1933 Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, (b) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the
effect that such securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such
registration, or (c) such Buyer provides the Company with reasonable
assurance that such securities can be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) ("RULE 144"); (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of such
securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) other than the
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<PAGE> 4
Company Registration Rights Agreement and the BSTI Registration Rights
Agreement (collectively, the "REGISTRATION RIGHTS AGREEMENTS"), neither
the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Common Stock, Conversion Shares,
Warrants, and Warrant Shares shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Common Stock,
Conversion Shares, Warrants and Warrant Shares upon which it is
stamped, if, unless otherwise required by state securities laws, (i)
the sale of the Common Stock, Conversion Shares, or Warrant Shares is
registered under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of the Common Stock, Conversion Shares,
Warrants, or Warrant Shares may be made without registration under the
1933 Act, or (iii) such holder provides the Company with reasonable
assurances that the Common Stock, Conversion Shares, Warrants, or
Warrant Shares can be sold pursuant to Rule 144 without any restriction
as to the number of securities acquired as of a particular date that
can then be immediately sold.
h. Authorization, Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer
and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization,
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<PAGE> 5
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights
and remedies.
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<PAGE> 6
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BSTI.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company, BSTI , and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each
of the Company, BSTI and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company, BSTI and its subsidiaries taken as a
whole.
b. Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company and BSTI each have the requisite corporate
power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and any related agreements, and to issue
the Common Stock, Conversion Shares, Warrants, and Warrant Shares in
accordance with the terms hereof and thereof, (ii) the execution and
delivery of this Agreement, the Registration Rights Agreements and any
related agreements by the Company and BSTI and the consummation by it
of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Common Stock and the reservation for
issuance and the issuance of the Conversion Shares issuable upon
conversion or exercise thereof as provided in Section 8 hereof, have
been duly authorized by each of the Company's and BSTI's Board of
Directors and no further consent or authorization is required by each
of the Company, BSTI, its respective Board of Directors, or its
respective stockholders, (iii) this Agreement and the Registration
Rights Agreements and any related agreements have been duly executed
and delivered by the Company and BSTI, and (iv) this Agreement, the
Registration Rights Agreements and any related agreements constitute
the valid and binding obligations of the Company and BSTI enforceable
against the Company and BSTI in accordance with their terms, except as
such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of Common
Stock, of which as of the date hereof 30,000,000 shares were issued and
outstanding, and no series of preferred stock or debentures or notes
were issued and outstanding. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), no shares of Common Stock or preferred
stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in Schedule 3(c), as of the effective date of this
Agreement, (i) there are no
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<PAGE> 7
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or
any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may
become bound to issue additional shares of capital stock of the Company
or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, (ii) there are no
outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except the Company Registration Rights Agreement). There are
no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Common Stock
or the Conversion Shares as described in this Agreement. The Company
has furnished to or made available to Buyer, via the SEC Edgar site,
true and correct copies of BSTI's filings with the U.S. Securities and
Exchange Commission (the "SEC DOCUMENTS"), the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), the Company's By-laws, as in effect on
the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Common Stock are duly
authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and nonassessable, are free
from all taxes, liens and charges with respect to the issue thereof and
are entitled to the rights and preferences set forth in the Common
Stock. The Conversion Shares issuable upon conversion of the Common
Stock have been duly authorized and reserved for issuance by BSTI. The
Warrants and Warrant Shares, and upon exchange of the Common Stock into
Conversion Shares as provided in Section 8 of this Agreement, the
Warrant Shares and the Conversion Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all
rights accorded to a holder of common stock of BSTI and the Company,
respectively.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company
and BSTI and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any certificate of designations,
preferences, and rights of any outstanding series of preferred stock of
the Company or BSTI or by-laws or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company, BSTI, or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to
the Company, BSTI, or any of its subsidiaries or by which any
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<PAGE> 8
property or asset of the Company, BSTI, or any of its subsidiaries is
bound or affected. Except as disclosed in Schedule 3(e), neither the
Company, BSTI nor its subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation or Bylaws or their
organizational charter or by-laws, respectively, or any material
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable
to the Company, BSTI, or its subsidiaries. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and
any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Company Registration Rights
Agreement in accordance with the terms hereof or thereof. Except as
disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company and BSTI is required to
obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company, BSTI, and its
subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing.
f. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company , BSTI, or any of its subsidiaries,
threatened against or affecting the Company, the Common Stock, BSTI, or
any of the Company's subsidiaries, wherein an unfavorable decision,
ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company or BSTI
to perform its obligations under, this Agreement or any of the
documents contemplated herein or (iii), except as expressly set forth
in Schedule 3(h), have a material adverse effect on the business,
operations, properties, financial condition or results of operation of
the Company, BSTI, and its subsidiaries taken as a whole.
g. Acknowledgment Regarding Buyer's Purchase of Common Stock.
The Company and BSTI acknowledge and agree that the Buyer is acting
solely in the capacity of an arm's length purchaser with respect to
this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Company or BSTI (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of their
respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Common Stock. The Company and BSTI further
represent to the Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the
Company, BSTI, and its representatives.
h. No General Solicitation. Neither the Company, BSTI, nor any
of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation
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<PAGE> 9
or general advertising (within the meaning of Regulation D under the
1933 Act) in connection with the offer or sale of the Common Stock,
Conversion Shares, Warrants, or Warrant Shares.
j. No Integrated Offering. Neither the Company, BSTI , nor any
of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of the Common Stock, the Conversion Shares,
the Warrants or Warrant Shares under the 1933 Act or cause this
offering of Common Stock or the Conversion Shares to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions.
k. Employee Relations. Neither the Company, BSTI, nor any of
its subsidiaries is involved in any labor dispute nor, to the knowledge
of the Company, BSTI, or any of its subsidiaries, is any such dispute
threatened. None of the Company's, BSTI's or its subsidiaries'
employees is a member of a union and the Company, BSTI, and its
subsidiaries believe that their relations with their employees are
good.
l. Intellectual Property Rights. The Company, BSTI, and its
subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 3(n), none of the Company's
or BSTI's trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade
secrets, or other intellectual property rights have expired or
terminated, or are expected to expire or terminate, in the near future.
The Company, BSTI and its subsidiaries do not have any knowledge of any
infringement by the Company, BSTI or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations,
trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical
information by others and, except as set forth on Schedule 3(n), there
is no claim, action or proceeding being made or brought against, or to
the Company's or BSTI's knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents,
patent rights, invention, copyright, license, service names, service
marks, service mark registrations, trade secret or other infringement;
and the Company, BSTI and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
m. Environmental Laws. The Company, BSTI, and its subsidiaries
are (i) in material compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
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<PAGE> 10
LAWS"), (ii) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in material
compliance with all terms and conditions of any such permit, license or
approval.
n. Title. The Company, BSTI and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company, BSTI, and its subsidiaries, in
each case free and clear of all liens, encumbrances and defects except
such as are described in Schedule 3(p) or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company, BSTI, and
its subsidiaries. Any real property and facilities held under lease by
the Company, BSTI, and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company, BSTI, and its
subsidiaries.
o. Insurance. The Company, BSTI, and each of its subsidiaries
are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company
and believes to be prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor BSTI
any such subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor BSTI or any such subsidiary has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or
operations of the Company, BSTI and its subsidiaries, taken as a whole.
p. No Materially Adverse Contracts, Etc. Neither the Company,
BSTI, nor any of its subsidiaries is subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's or BSTI's officers
has or is expected in the future to have a material adverse effect on
the business, properties, operations, financial condition, results of
operations or prospects of the Company, BSTI, or its subsidiaries.
Neither the Company nor BSTI or any of its subsidiaries is a party to
any contract or agreement which in the judgment of the Company's
officers has or is expected to have a material adverse effect on the
business, properties, operations, financial condition, results of
operations or prospects of the Company, BSTI, or its subsidiaries.
q. Tax Status. Except as set forth on Schedule 3(u), the
Company, BSTI, and each of its subsidiaries has made or filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company, BSTI, and each of its
subsidiaries has set aside on
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<PAGE> 11
its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company and BSTI know of no basis for any such claim.
r. Certain Transactions. Except as set forth on Schedule 3(v)
and in BSTI's SEC Documents and except for arm's length transactions
pursuant to which the Company and BSTI make payments in the ordinary
course of business upon terms no less favorable than the Company or
BSTI could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company or BSTI is presently a party to any
transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company or BSTI, any corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner.
s. Dilutive Effect. BSTI understands and acknowledges that the
number of Conversion Shares issuable upon exchange of the Common Stock
will increase in certain circumstances. BSTI further acknowledges that
its obligation to issue Conversion Shares upon exchange of the Common
Stock in accordance with this Agreement is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the
ownership interests of other stockholders of BSTI.
t. Fees and Rights of First Refusal. Neither the Company nor
BSTI is obligated to offer the securities offered hereunder on a right
of first refusal basis or otherwise to any third parties including, but
not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
u. Shareholder Approval. BSTI covenants to submit to its,
shareholders at its next shareholder meeting a proposal for
ratification of the issuance of the Conversion Shares, if and as
required by the rules of the National Association of Securities
Dealers, Inc. (the "NASD") applicable to the transaction.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
Sections 5 and 6 of this Agreement.
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b. Form D. The Company agrees to file a Form D with respect to
the Common Stock and the Conversion Shares as required under Regulation
D and to provide a copy thereof to each Buyer promptly after such
filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary to
qualify the Common Stock and the Conversion Shares for, or obtain
exemption for the Common Stock and the Conversion Shares for, sale to
the Buyers at the Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date as of
which the Investors (as that term is defined in the Company
Registration Rights Agreement) may sell all of the Common Stock without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Investors shall
have sold all the Conversion Shares and (B) none of the Common Stock is
outstanding (the "REGISTRATION PERIOD"), the Company, once it becomes a
reporting company pursuant to the Securities Exchange Act of 1934, as
amended, shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if
the 1934 Act or the rules and regulations thereunder would otherwise
permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the
sale of the Common Stock for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following to each Buyer once it becomes a reporting company pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, upon the
effective date of its filing on Form 10 or S-1, during the Registration
Period: (i) within five (5) days after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K, its Quarterly Reports on
Form 10-Q, any Current Reports on Form 8-K and any registration
statements or amendments filed pursuant to the 1933 Act; (ii) within
one (1) day after release thereof, copies of all press releases issued
by the Company or any of its subsidiaries and (ii) copies of the same
notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.
f. Reservation of Shares. BSTI shall take all action necessary
to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of common stock
needed to provide for the issuance of the Conversion Shares. The
Company shall take all action necessary to at all times have authorized
and reserved for the purpose of issuance no less than 100% of the
number of shares of Common Stock needed to provide for the issuance of
the Warrant Shares.
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g. Listings. Once the Company becomes a reporting company
pursuant to the 1934 Act, the Company shall use its best efforts
promptly secure the listing of the Conversion Shares upon each national
securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all Conversion Shares from
time to time issuable under the terms of this Agreement and the Company
Registration Rights Agreement. The Company shall maintain the Common
Stock's authorization for quotation in the over-the counter market. The
Company shall promptly provide to each Buyer copies of any notices it
receives regarding the continued eligibility of the Common Stock for
trading in the over-the-counter market.
h. Expenses. Each of the Company and the Buyer shall pay all
costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreements. The placement fees of
J.P. Carey Securities, Inc. and Greenfield Capital Partners, LLC shall
be paid for by the Company at Closing.
i. Corporate Existence. So long as any Common Stock remain
outstanding, the BSTI shall not directly or indirectly consummate any
merger, reorganization, restructuring, consolidation, sale of all or
substantially all of BSTI's assets or any similar transaction or
related transactions (each such transaction, a "SALE OF BSTI") except
if the surviving or successor entity in such transaction (i) expressly
assumes, in writing, BSTI's obligations hereunder and under the BSTI
Registration Rights Agreement, and any other agreements and instruments
entered into or delivered by the Company in connection herewith and
(ii) is a publicly traded corporation whose Common Stock is listed for
trading on the New York Stock Exchange, Inc., the American Stock
Exchange, or the NASDAQ Small Cap, National Market or Electronic
Bulletin Board.
(j) No Short Sales of the Common Stock. So long as a Buyer or
any of its affiliates beneficially owns any Common Stock, each Buyer
and its affiliates shall not directly or indirectly engage in any short
sales or third party short sales of the Common Shares or hold a "put
equivalent position" with respect to the Common Stock (as defined in
Rule 16a-1 under the 1934 Act).
(k) Limitation on Short Sales of Conversion Shares. Buyer and
its affiliates shall not engage in short sales of the Conversion
Shares; provided, however, that any holder may enter into any short
sale or other hedging or similar arrangement it deems appropriate with
respect to Conversion Shares to be issued pursuant to an Exchange
Notice after it delivers an Exchange Notice with respect to such
Conversion Shares to be issued pursuant to an Exchange Notice so long
as such sales or arrangements do not involve more than the number of
such Conversion Shares to be issued pursuant to an Exchange Notice
(determined as of the date of such Exchange Notice). Buyer and its
affiliates agree to provide to BSTI upon
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written request from time to time its securities trading records in
order to demonstrate that it has complied with this Section 4(k).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common
Stock to the Buyer at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and the
Registration Rights Agreements and delivered the same to the Company.
b. The Buyer shall have delivered to the Company the Purchase
Price for the Common Stock being purchased by the Buyer at the Closing
by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
c. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at
or prior to the Closing Date.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Common Stock at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion:
a. The Company and BSTI shall have executed this Agreement,
the Company shall have executed the Company Registration Rights
Agreement and BSTI shall have executed the BSTI Registration Rights
Agreement, and delivered the same to the Buyer.
b. The representations and warranties of the Company and BSTI
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing
Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company and BSTI
shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied
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<PAGE> 15
with by the Company at or prior to the Closing Date. The Buyer shall
have received a certificate, executed by the Chief Executive Officer of
each of the Company and BSTI, each dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by the Buyer including, without limitation an update as of
the Closing Date regarding the representation contained in Section 3(c)
above.
c. The Buyer shall have received the opinion of the Company's
and BSTI's counsel dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer and in substantially the
form of Exhibit "D" attached hereto.
d. The Company and BSTI shall have executed and delivered to
the Buyer the Certificates (in such denominations as the Buyer shall
request) for the Common Stock and Warrants being purchased by the Buyer
at the Closing.
e. The Board of Directors of the Company and BSTI shall have
adopted the resolutions in substantially the form of Exhibit "E"
attached hereto.
f. As of the Closing Date, BSTI shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of
effecting the exchange of the Common Stock for the Conversion Shares as
provided in Section 8 herein, such number of Conversion Shares equal to
or greater than 100% of the number of shares which are issuable upon
conversion of all of the Common Stock which could be issued under this
Agreement.
g. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered and
acknowledged in writing by the BSTI's transfer agent.
h. Timothy C. Moses and Jacques Elfersy shall have delivered
the voting proxies substantially in the form attached hereto as Exhibit
"F."
7. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Common Stock, the Conversion Shares, the Warrants
and the Warrant Shares hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company and BSTI jointly and severally
shall defend, protect, indemnify and hold harmless the Buyer and each other
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the
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<PAGE> 16
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company or BSTI in this Agreement, the Common Stock, the Conversion Shares, the
Warrants and the Warrant Shares or the Registration Rights Agreements or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any material breach of any covenant, agreement or obligation of the Company or
BSTI contained in this Agreement or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Indemnities, any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Common Stock and Warrants or the status of the Buyer or
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares, as an investor in the Company or BSTI. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company and
BSTI shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
8. EXCHANGE OF COMMON STOCK INTO CONVERSION SHARES
(a) Exchange Right. Subject to the provisions of Sections 9,
10, 12, and 13 herein, in the event that the Company has not
consummated an initial public offering of its Common Stock, at any time
or times after June 30, 2000, (the "EXCHANGE COMMENCEMENT DATE"), any
holder of Common Stock shall be entitled to exchange any Common Stock
into fully paid and nonassessable shares (rounded to the nearest whole
share in accordance with Section 8(f) below) of Conversion Shares (the
"EXCHANGE RIGHT"), at the Exchange Rate (as defined below); provided,
however, that in no event shall any holder be entitled to (i) exchange
Common Stock into Conversion Shares in excess of that number of Common
Stock which, upon giving effect to such conversion, would cause the
aggregate number of Conversion Shares beneficially owned by the holder
and its affiliates to exceed 4.9% of the outstanding shares of the
Common Stock following such conversion or (ii) exchange more than 10%
of the total number of Conversion Shares issued to such holder into
Conversion Shares (or any successor or assign) pursuant to this
transaction in any thirty (30) day period commencing on the Exchange
Commencement Date and any succeeding thirty (30) day period thereafter.
For purposes of the foregoing proviso, the aggregate number of shares
of Conversion Shares beneficially owned by the holder and its
affiliates shall include the number of shares of Conversion Shares
issuable upon exchange of the Common Stock with respect to which the
determination of such proviso is being made, but shall exclude the
number of shares of Conversion Shares which would be issuable upon (i)
exchange of the remaining, non-exchanged Common Stock beneficially
owned by the holder and its affiliates beneficially owned by the holder
and its affiliates. Except as set forth in the preceding sentence, for
purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934,
as amended.
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<PAGE> 17
(b) Exchange Rate. The number of shares of Conversion Shares
issuable after the Exchange Commencement Date upon exchange of each
share of the Common Stock pursuant to Section 8(a) shall be determined
according to the following formula (the "EXCHANGE RATE"):
(ISSUE PRICE PER SHARE)(1.25)
-----------------------------
EXCHANGE PRICE
Notwithstanding anything contained herein to the contrary,
unless this transaction has been approved by the shareholders of BSTI
in accordance with Georgia law, then as long as the Common Stock of
BSTI is listed on the NASDAQ National Market or the NASDAQ Small Cap
Market, BSTI shall not issue Conversion Shares upon exchange of Common
Stock which would equal or exceed twenty percent (20%) of the issued
and outstanding Common Stock of BSTI on the date of issuance of the
Common Stock or such lesser amount as determined on a pro-rata basis
based upon the number of Common Stock issued.
For purposes of this Section 8, the following terms shall have
the following meanings:
(i) "EXCHANGE DATE" shall mean the Trading
Day that an Exchange Notice is deemed delivered
pursuant to Section 8(e);
(ii) "EXCHANGE PRICE" means the Average
Market Price for the Conversion Shares for the twenty
(20) consecutive Trading Days immediately following
the Exchange Date;
(iii) "AVERAGE MARKET PRICE" means, with
respect to any security for any period, that price
which shall be computed as the arithmetic average of
the Closing Bid Prices (as defined below) for such
security for each trading day in such period;
(iv) "CLOSING" shall mean one of the closing
of an exchange of Common Stock for Conversion Shares
pursuant to Section 8.
(v) "CLOSING DATE" shall mean with respect
to a closing, the twentieth Trading Day following the
Exchange Date related to such closings or such
earlier date as BSTI and the holder shall agree.
(vi) "CLOSING BID PRICE" means, for any
security as of any date, the last closing bid price
on the Nasdaq National Market System (the
"NASDAQ-NM") as reported by Bloomberg Financial
Markets ("BLOOMBERG"), or, if the Nasdaq-NM is not
the principal trading market for such security, the
last closing bid price of such security on the
principal securities exchange or
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<PAGE> 18
trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price of such
security in the over-the-counter market on the pink
sheets or bulletin board for such security as
reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the last
closing trade price of such security as reported by
Bloomberg. If the Closing Bid Price cannot be
calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such
security on such date shall be the fair market value
as reasonably determined in good faith by the Board
of Directors of the Company (all as appropriately
adjusted for any stock dividend, stock split or other
similar transaction during such period); and
(vii) "CONVERSION SHARES" shall mean those
shares of common stock of BSTI, no par value,
issuable pursuant to an exchange of Common Stock
pursuant to Section 8 of this Agreement.
(viii) "ISSUANCE DATE" means the date of
issuance of the Common Stock as described herein.
(ix) "ISSUE PRICE PER SHARE" shall mean
$4.67 (as adjusted for stock splits and similar
events of the Company).
(x) "PRINCIPAL MARKET" shall mean the Nasdaq
National market, the NASDAQ SmallCap Market, the
American Stock Exchange or the New York Stock
Exchange, whichever at the time is the principal
trading exchange or market for the Conversion Shares.
(xi) "TRADING DAY" shall mean any day during
which the Principal Market shall be open for
business.
(c) Dispute Resolution. In the case of a dispute as to the
determination of the Average Market Price or the arithmetic calculation
of the Exchange Rate, BSTI shall promptly issue to the holder the
number of Conversion Shares that is not disputed and shall submit the
disputed determinations or arithmetic calculations to the holder via
facsimile within three (3) business days of the Closing Date. If such
holder and BSTI are unable to agree upon the determination of the
Average Market Price or arithmetic calculation of the Conversion Rate
within three (3) business days of such disputed determination or
arithmetic calculation being submitted to the holder, then BSTI shall
within one (1) business day submit via facsimile (A) the disputed
determination of the Average Market Price to an independent, reputable
investment bank or (B) the disputed arithmetic calculation of the
Exchange Rate to its independent, outside accountant. BSTI shall cause
the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify BSTI and the holder of
the results no later than forty-eight (48) hours from the time it
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<PAGE> 19
receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may
be, shall be binding upon all parties absent manifest error. The person
or persons entitled to receive Conversion Shares issuable upon a
conversion of Common Stock shall be treated for all purposes as the
record holder or holders of such Conversion Shares on the Conversion
Date.
(d) Adjustment to Exchange Price - Dilution and Other Events.
In order to prevent dilution of the rights granted herein, the Exchange
Price will be subject to adjustment from time to time as provided in
this Section 8(d).
(i) Reorganization, Reclassification, Consolidation,
Merger, or Sale. Any recapitalization, reorganization
reclassification, consolidation. merger, sale of all or
substantially all of BSTI's assets to another Person (as
defined below) or other similar transaction which is effected
in such a way that holders of Conversion Shares are entitled
to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for
Conversion Shares is referred to herein as an "Organic
Change." Prior to the consummation of any Organic Change, BSTI
will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) to insure that each of the holders of the Common
Stock issued in connection with this transaction will
thereafter have the right to acquire and receive in lieu of or
in addition to (as the case may be) the Conversion Shares
immediately theretofore acquirable and receivable upon the
conversion of such holder's Common Stock, such shares of
stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of
Conversion Shares immediately theretofore acquirable and
receivable upon the exchange of such holder's Common Stock had
such Organic Change not taken place. In any such case, BSTI
will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) with respect to such holders' rights and
interests to insure that the provisions of this Section 8(d)
and Section 8(e) below will thereafter be applicable to the
Common Stock. BSTI will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the
successor entity (if other than BSTI) resulting from
consolidation or merger or the entity purchasing such assets
assumes, by written instrument (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding), the obligation to deliver to each holder of
Common Stock issued in connection with this transaction such
shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to
acquire. For purposes of this Agreement, "PERSON" shall mean
an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof.
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<PAGE> 20
(ii) Notices.
(A) Immediately upon any adjustment of the
Exchange Price, BSTI will give written notice thereof
to each holder of Common Stock issued in connection
with this transaction, setting forth in reasonable
detail and certifying the calculation of such
adjustment.
(B) BSTI will give written notice to each
holder of Common Stock issued in connection with this
transaction at least twenty (20) days prior to the
date on which BSTI closes its books or takes a record
(I) with respect to any dividend or distribution upon
the Conversion Shares, (II) with respect to any pro
rata subscription offer to holders of Conversion
Shares, or (III) for determining rights to vote with
respect to any Organic Change, dissolution or
liquidation.
(C) BSTI will also give written notice to
each holder of Common Stock issued in connection with
this transaction at least twenty (20) days prior to
the date on which any Organic Change, dissolution, or
liquidation will take place.
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<PAGE> 21
(e) Mechanics of Exchange of Common Stock into Conversion
Shares.
(i) Holder's Delivery Requirements. Such
notice exchanging Common Stock into Conversion Shares
in accordance with this Section 8 by the holder (the
"EXCHANGE NOTICE") shall (A) be delivered by
facsimile to the Company and BSTI for receipt on or
prior to 12:00 noon Eastern Standard Time or (B) the
immediately succeeding Trading Day if it is received
by facsimile or otherwise after 12:00 noon Eastern
Standard Time on a Trading Day (the "EXCHANGE DATE")
and (B) the holder shall surrender to a common
carrier for delivery to BSTI as soon as practicable
following such date, but in no event later than four
(4) Trading Days prior to a Closing Date, the
original certificates representing the Common Stock
being exchanged (or an indemnification undertaking
with respect to such shares in the case of their
loss, theft, or destruction) and the originally
executed conversion notice.
(ii) The Company and BSTI Response. Upon
receipt by the Company and BSTI of a facsimile copy
of the Exchange Notice, the Company and BSTI shall
send via facsimile, a confirmation of receipt of such
Exchange Notice to such holder. Upon receipt by the
Company of the Common Stock Certificates to be
exchanged pursuant to an Exchange Notice, together
with the originally executed Exchange Notice, BSTI or
the transfer agent (as applicable) shall, within
three (3) business days of each Closing Date (A)
issue and surrender to a common carrier for overnight
delivery to the address as specified in the Exchange
Notice, a certificate, registered in the name of the
holder or its designee, for the number of Conversion
Shares to which the holder shall be entitled. In lieu
of delivering physical certificates representing the
Conversion Shares issuable in accordance with this
Section 8(e) and provided that the transfer agent
then is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of a holder, BSTI shall use its
commercially reasonable efforts to cause the transfer
agent to electronically transmit the applicable
number of Conversion Shares by crediting the account
of the holder's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system.
In addition, on or prior to such Closing Date, each
of BSTI, the Company, and the holder shall deliver to
the others all documents, instruments, and writings
required to be delivered or reasonably requested by
any of them pursuant to this Agreement in order to
implement and effect the transactions contemplated
herein.
(iii) Record Holder. The person or persons
entitled to receive the Conversion Shares issuable
upon an exchange of Common Stock shall be treated for
all purposes as the record holder or holders of such
shares of Conversion Shares on the Exchange Date.
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<PAGE> 22
(iv) BSTI's Failure to Timely Exchange. If
BSTI shall fail to issue to a holder on a Closing
Date, a certificate for the number of shares of
Conversion Shares to which such holder is entitled
upon such holder's exchange of Common Stock, in
addition to all other available remedies which such
holder may pursue hereunder (including
indemnification pursuant to Section 7 hereof), the
Company shall pay additional damages to such holder
on each day after the fifth (5th) Trading Day
following the applicable Closing Date for which such
exchange is not timely effected, an amount equal to
1.0% of the product of number of Conversion Shares
not issued to such holder to which such holder is
entitled by the Exchange Price for each calendar
month until such exchange is made unless Buyer elects
to enforce the terms of Section 11 herein.
(f) Fractional Shares. BSTI shall not issue any
fraction of a Conversion Share upon any exchange. All
Conversion Shares (including fractions thereof) issuable upon
conversion of more than one share of Common Stock by a holder
thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of a
fraction of a Conversion Share. If, after the aforementioned
aggregation, the issuance would result in the issuance of a
fraction of its Conversion Share, BSTI shall round such
fraction of a Conversion Share up or down to the nearest whole
share.
(9) CASH PAYMENT OPTION BY BSTI.
In lieu of issuing the Conversion Shares in accordance with an Exchange
Notice, BSTI shall have the right, in its sole discretion, to pay to the holder
of the Common Stock an amount equal to $5.825 for each share of Common Stock so
exchanged (as adjusted for stock splits and similar events of the Company)
("CASH OUT PRICE"). The Company shall pay the Cash Out Price to that Holder
within seven (7) Trading Days following the receipt by the Company and BSTI of
an Exchange Notice.
(10) COMPANY'S RIGHT TO REDEEM AT ITS ELECTION.
(a) At any time, the Company shall have the right, in its sole
discretion, to redeem ("REDEMPTION AT COMPANY'S ELECTION"), from time
to time, any or all of the Common Stock; provided (i) the Company shall
first provide no more than seven (7) Trading Days and no less than one
(1) Trading Day advance written notice as provided in subparagraph
10(a)(ii) below, and (ii) that the Company shall only be entitled to
redeem Common Stock having an aggregate Stated Value (as defined above)
of at least Five Hundred Thousand Dollars ($500,000). If the Company
elects to redeem some, but not all, of the Common Stock, the Company
shall redeem a pro-rata amount from each Holder of the Common Stock.
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<PAGE> 23
(i) Redemption Price At Company's Election.
The "REDEMPTION PRICE AT COMPANY'S ELECTION" shall be
calculated as $5.825 (as adjusted for stock splits
and similar events of the Company).
(ii) Mechanics of Redemption at Company's
Election. The Company shall effect each such
redemption by giving no more than seven (7) Trading
Days and no less than one (1) Trading Day prior
written notice ("NOTICE OF REDEMPTION AT COMPANY'S
ELECTION") to (A) the Holders of the Common Stock
selected for redemption at the address and facsimile
number of such Holder appearing in the Company's
Common Stock register and (B) the Transfer Agent,
which Notice of Redemption At Company's Election
shall be deemed to have been delivered three (3)
Trading Days after the Company's mailing (by
overnight or two (2) day courier, with a copy by
facsimile) of such Notice of Redemption at Company's
Election. Such Notice of Redemption At Company's
Election shall indicate (i) the number of shares of
Common Stock that have been selected for redemption,
(ii) the date which such redemption is to become
effective (the "DATE OF REDEMPTION AT COMPANY'S
ELECTION"), and (iii) the applicable Redemption Price
At Company's Election, as defined in subsection
(a)(i) above.
(b) Company Must Have Immediately Available Funds or
Credit Facilities. The Company shall not be entitled to send
any Redemption Notice and begin the redemption procedure under
Sections 10(a) unless it has:
(i) the full amount of the redemption price
in cash, available in a demand or other immediately
available account in a bank or similar financial
institution; or
(ii) immediately available credit
facilities, in the full amount of the redemption
price with a bank or similar financial institution,
or
(iii) an agreement with a standby
underwriter willing to purchase from the Company a
sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not
converted prior to redemptions; or
(iv) a combination of the items set forth in
(i), (ii), and (iii) above, aggregating the full
amount of the redemption price.
(c) Payment of Redemption Price. Each Holder
submitting Common Stock being redeemed under this Section 10
shall send their Common Stock Certificates to be redeemed to
the Company or its Transfer Agent, and the Company shall pay
the applicable redemption price to that Holder within five (5)
business days of the Date of Redemption at Company's Election.
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<PAGE> 24
(11) INABILITY TO FULLY EXCHANGE.
(a) Holder's Option if BSTI Cannot Fully Exchange. If at any
time after the Exchange Commencement Date, upon the Company's and
BSTI's receipt of an Exchange Notice, BSTI does not issue shares which
are registered for resale under the BSTI Registration Statement within
five (5) business days of the time required for any reason or for no
reason, including, without limitation, because BSTI (x) does not have a
sufficient number of Conversion Shares authorized and available, (y) is
otherwise prohibited by applicable law or by the rules or regulations
of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over BSTI or its
securities, including without limitation The Nasdaq Stock Market, Inc.
from issuing all of the Conversion Shares which is to be issued to a
holder of Common Stock pursuant to an Exchange Notice or (z) fails to
have a sufficient number of Conversion Shares registered and eligible
for resale under the BSTI Registration Statement, then BSTI shall issue
as many Conversion Shares as it is able to issue in accordance with
such holder's Exchange Notice and pursuant to Section 8(e) above and,
with respect to the unconverted Common Stock, the holder, solely at
such holder's option, can, in addition to any other remedies such
holder may have hereunder, under this Agreement (including
indemnification under Section 7 thereof), under the BSTI Registration
Rights Agreement, at law or in equity, elect to:
(i) require BSTI to redeem from such holder those
shares of Conversion Stock for which BSTI is unable to issue
Conversion Shares in accordance with such holder's Exchange
Notice ("MANDATORY REDEMPTION") at a price per share of Common
Stock (the "MANDATORY REDEMPTION PRICE") equal to $5.825 (as
adjusted for stock splits or similar events of the Company;
(ii) require BSTI to issue restricted shares of
Common Stock in accordance with such holder's Exchange Notice
and pursuant to Section 8(e) above, if BSTI's inability to
fully exchange Common Stock is pursuant to its inability to
deliver Conversion Shares registered pursuant to the 1933 Act;
or
(iii) void its Exchange Notice and retain or have
returned, as the case may be, the unexchanged Common Stock
that were to be exchanged pursuant to such holder's Exchange
Notice.
(b) Mechanics of Fulfilling Holder's Election. BSTI shall send
via facsimile to a holder of Common Stock, upon receipt of a facsimile
copy of an Exchange Notice from such holder which cannot be fully
satisfied as described in Section 11(a) above, a notice of BSTI's
inability to fully satisfy such holder's Exchange Notice (the
"INABILITY TO FULLY EXCHANGE NOTICE"). Such Inability to Fully Exchange
Notice shall indicate (i) the reason why BSTI is unable to fully
satisfy such holder's Exchange Notice, (ii) the number of shares of
Common Stock which cannot be exchanged, and (iii) the Mandatory
Redemption Price. Such holder must, within five (5) Trading Days of
receipt of such Inability to Fully Exchange
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<PAGE> 25
Notice, deliver written notice via facsimile to BSTI ("NOTICE IN
RESPONSE TO INABILITY TO EXCHANGE") of its election pursuant to Section
11(a) above.
(c) Payment of Redemption Price. If such holder shall elect to
have its shares redeemed pursuant to Section 11(a) above, BSTI shall
pay the Mandatory Redemption Price in cash to such holder within thirty
(30) days of BSTI's receipt of the holder's Notice in Response to
Inability to Exchange (the "MANDATORY REDEMPTION PRICE DEADLINE"). If
BSTI shall fail to pay the applicable Mandatory Redemption Price to
such holder on a timely basis as described in this Section 11(c) (other
than pursuant to a dispute as to the determination of the Closing Bid
Price or the arithmetic calculation of the Redemption Rate), such
unpaid amount shall bear interest at the rate of 1% for the first month
and a rate of 2.0% per month thereafter (prorated for partial months)
until paid in full. Following the Mandatory Redemption Price Deadline,
until the full Mandatory Redemption Price is paid in full to such
holder, such holder may void the Mandatory Redemption with respect to
those shares of Common Stock for which the full Mandatory Redemption
Price has not been paid and receive back such shares of Common Stock.
(d) Pro-rata Exchange and Redemption. In the event the Company
and BSTI each receives an Exchange Notice from more than one holder of
Common Stock on the same day and BSTI can exchange and redeem some, but
not all, of the Common Stock pursuant to this Section 11, BSTI shall
exchange and redeem from each holder of Common Stock electing to have
Common Stock exchanged and redeemed at such time an amount equal to
such holder's pro-rata amount (based on the number of shares of Common
Stock held by such holder relative to the number of shares of Common
Stock outstanding, pursuant to this Agreement) of all Common Stock
being exchanged and redeemed at such time.
12. ONE-TIME RIGHT TO SUSPEND EXCHANGE RIGHT OR EXCHANGE COMMON
STOCK INTO CONVERSION SHARES.
Notwithstanding anything contained herein to the contrary, BSTI shall
have the one-time right, without payment or penalty of any kind, for a period of
thirty (30) days from the date written notice is given to the holders of Common
Stock, to suspend the Exchange Right in the event that the Company has received
a letter of intent by the Exchange Commencement Date from a reputable investment
banking firm to underwrite the public offering of the Company's common stock or
other securities ("PUBLIC OFFERING"), and the Public Offering has not occurred
by the Exchange Commencement Date due to market conditions as determined by such
underwriter.
13. SUSPENSION OF EXCHANGE RIGHT UPON REGISTRATION OF COMMON STOCK
OF THE COMPANY UNDER THE 1934 ACT.
Notwithstanding anything contained herein to the contrary, so long as
(i) the Company becomes and remains a reporting company under the 1934 Act, (ii)
the Company has its Form 8A declared effective by the SEC, and (iii) the trading
price of the Common Stock as reported by
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<PAGE> 26
Bloomberg on its principal exchange or trading market remains equal to or
greater than $6.19 per share, the holders of the Common Stock shall have no
Exchange Right.
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<PAGE> 27
14. REISSUANCE OF CERTIFICATES.
In the event of an exchange or redemption pursuant to this Agreement of
less than all of the Common Stock represented by a particular Common Stock
certificate, the Company shall promptly cause to be issued and delivered, to the
holder of such Common Stock, a Common Stock certificate representing the
remaining shares of Common Stock which have not been so exchanged or redeemed.
15. TRANSFER AGENT INSTRUCTIONS.
BSTI shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Conversion Shares in such amounts as specified from time to
time by the Buyer to the Company upon conversion of the Common Stock (the
"Irrevocable Transfer Agent Instructions"), except as provided in Sections 9,
10, 11, 12, and 15 herein. Prior to registration of the Conversion Shares under
the 1933 Act, all such certificates shall bear the restrictive legend specified
in Section 2(g) of this Agreement. The Company and BSTI warrant that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 15, and stop transfer instructions to give effect to Section
2(f) hereof (in the case of the Conversion Shares, prior to registration of such
shares under the 1933 Act) will be given by the Company or BSTI to its transfer
agent and that the Common Stock and the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company and BSTI as and to
the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section 15 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Common Stock or Conversion Shares. If the Buyer provides the Company and BSTI
with an opinion of counsel, reasonably satisfactory in form, and substance to
the Company, that registration of a resale by the Buyer of any of the Common
Stock or Conversion Shares is not required under the 1933 Act, the Company shall
permit the transfer, and, in the case of the Conversion Shares, BSTI shall
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by the Buyer. The Company and BSTI
acknowledge that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company and BSTI acknowledge
that the remedy at law for a breach of its obligations under this Section 15
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company or BSTI of the provisions of this Section 15, that the Buyer shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
16. CONFIDENTIALITY.
a. Nondisclosure. As much of the information and other
material furnished under or in connection with this Agreement (whether
furnished before, on or after the date hereof) as constitutes or
contains confidential business, financial or other information of the
Company, BSTI or its subsidiaries, each Buyer covenants for itself,
and, as applicable, for
-27-
<PAGE> 28
its directors, officers, affiliates and partners, that it will use due
care to prevent its officers, directors, partners, employees, counsel,
accountants and other representatives from disclosing such information
to persons other than their respective authorized employees, counsel,
accountants, shareholders, partners, limited partners and other
authorized representatives. Notwithstanding the foregoing, if a Buyer
is advised by such counsel that such disclosure or delivery is required
by law, regulation or judicial or administrative order, then they may
disclose or deliver such information or other after giving written
notice to the Company and BSTI of such requirements. For purposes of
this Section 10a., "due care" means at least the same level of care
that a Buyer would use to protect the confidentiality of its own
sensitive or proprietary information, and this obligation shall survive
termination of this Agreement.
b. Possession of Material, Non-Public Information. To the
extent that any of the information furnished by the Company or BSTI to
the Buyers hereof would constitute material, nonpublic information for
purposes of the Exchange Act, Buyers agree not to engage in any
purchase or sale of securities while in possession of such information
and prior to the time that such information is made generally known to
the public and Buyers agree to use due care to prevent their officers,
directors, partners, employees, counsel and other representatives, who
have been given access to such material, nonpublic information, from
engaging in any such purchase or sale during such period.
17. GOVERNING LAW: MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Georgia without
regard to the principles of conflict of laws. Buyer may at any time and
at its option, whether or not an arbitration action is then pending,
initiate a civil action for temporary and permanent injunctive and
other equitable relief against Company and BSTI. Company and BSTI
acknowledges that upon any breach of Buyer's conversion rights
hereunder, Buyer's resulting injury may not be adequately compensated
by a remedy at law. Accordingly, upon such breach, Buyer, at its
election and without limitation of its other remedies, shall be
entitled to pursue a claim for specific performance of this Agreement,
and Company and BSTI hereby waive the right to assert any defense
thereto that Purchaser has an adequate remedy at law. The parties
further agree that any action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the
Superior Court of Fulton County, Georgia, and the United States
District Court for the Northern District of Georgia, Atlanta Division
for the adjudication of any civil action asserted pursuant to this
Paragraph.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause four (4) additional original
executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
-28-
<PAGE> 29
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement, Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyer, the Company,
their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived
or amended other than by an instrument in writing signed by the party
to be charged with enforcement.
f. Notices. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (I) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
4405 International Blvd.
Suite B-109
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (410) 921-1062
With a copy to:
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Telephone: (770) 481-7201
Facsimile: (770) 481-7210
If to the Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to the Buyer's counsel as set forth on the Schedule
of Buyers. Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
-29-
<PAGE> 30
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent
of the Buyer. The Buyer may assign its rights hereunder without the
consent of the Company, provided, however, that any such assignment
shall not release the Buyer from its obligations hereunder unless such
obligations are assumed by such assignee and the Company has consented
to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Buyer
contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4, 5 and 9, the indemnification provisions set forth in
Section 8, shall survive the Closing. The Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. Publicity. The Company, BSTI, and the Buyer shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the
prior approval of the Buyer, to make any press release or other public
disclosure with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted
by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a
copy thereof).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
1. Termination. In the event that the Closing shall not have
occurred with respect to the Buyer on or before five (5) business days
from the date hereof due to the Company's or the Buyer's failure to
satisfy the conditions set forth in Sections 5 and 6 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party-
provided.
m. Independent Counsel. The parties to this Agreement
acknowledge that Company and BSTI have received independent counsel
from the law firm of Sims Moss Kline & Davis LLP which is acting as
their counsel. Buyers have been advised by Sims Moss Kline & Davis LLP
to seek independent advice with respect to the terms and conditions of
this Agreement and any related agreements before signing them.
-30-
<PAGE> 31
n. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
"COMPANY"
ALLERGY SUPERSTORE.COM., INC.
By:
-----------------------------------
Name: Timothy C. Moses
Its: President
BIOSHIELD TECHNOLOGIES, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"BUYER"
JACKSON, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-31-
<PAGE> 32
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF
BUYER'S NAME ADDRESS AND FACSIMILE NUMBER OF BUYER COMMON STOCK WARRANTS
- ------------- -------------------------------------- ------------------- ---------
<S> <C> <C> <C>
c/o Citco Trustees (Cayman) Ltd. 1,072,961 100,000
Jackson LLC Corporate Centre, Windwood One
West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
facsimile: 345-945-7566
</TABLE>
<PAGE> 33
SCHEDULE 3(C)
CAPITALIZATION
1. Options to purchase a total of 2,250,000 shares of Common Stock to
each of Timothy Moses and Jacques Elfersy at $2.00 per share.
2. Options to purchase thirty thousand shares of common stock at $2.00
each have been issued to five of the Board Members and four of the Medical
Advisory Board Members of the Company, plus an option to purchase an additional
5,000 shares for each year of service thereafter.
<PAGE> 34
SCHEDULE 3(E)
CONFLICTS
None.
<PAGE> 35
SCHEDULE 3(H)
LITIGATION
None.
<PAGE> 36
SCHEDULE 3(I)
INTELLECTUAL PROPERTY
None.
<PAGE> 37
SCHEDULE 3(N)
LIENS
None.
<PAGE> 38
SCHEDULE 3(U)
TAX STATUS
None.
<PAGE> 39
SCHEDULE 4(D)
USE OF PROCEEDS
<TABLE>
<S> <C>
1. Intercompany Debt Repayment $ 250,000.00
2. Design, development of Allergy Superstore $ 2,250,000.00
3. Increase staffing & costs related to new building $ 1,150,000.00
4. General & Administrative Expenses $ 2,500,000.00
5. Marketing & Sales (advertising/promo) $ 2,500,000.00
6. Branding Campaign $ 1,500,000.00
7. Web Server & Web Serving Tech $ 550,000.00
8. State-of-the-art distribution center $ 2,500,000.00
9. State-of-the-art e-commerce platform $ 450,000.00
10. Lease & Commissions $ 1,350,000.00
TOTAL $15,000,000.00
</TABLE>
<PAGE> 40
EXHIBIT "A"
(BSTI REGISTRATION RIGHTS AGREEMENT)
(See tab 2 for executed document.)
<PAGE> 41
EXHIBIT "B"
(COMPANY REGISTRATION RIGHTS AGREEMENT)
(See tab 3 for executed document.)
<PAGE> 42
EXHIBIT "C"
(WARRANT AGREEMENT)
(See tab 4 for executed document.)
<PAGE> 43
EXHIBIT "D"
(BSTI AND COMPANY COUNSEL'S OPINION)
(See tab 5 for executed document.)
<PAGE> 44
EXHIBIT "E"
(BSTI'S AND COMPANY'S BOARD RESOLUTIONS)
(See tabs 6 and 7 for executed documents.)
<PAGE> 45
EXHIBIT "F"
(VOTING PROXIES)
(See tab 8 for executed documents.)
<PAGE> 1
EXHIBIT 10.059
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of June 30,
1999, by and among BioShield Technologies, Inc., a Georgia corporation, with
headquarters at 4405 International Blvd., Norcross, Georgia 30093 (the
"COMPANY"), and the undersigned buyers (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among
the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), Allergy
Superstore.com, Inc ("ASC"), a subsidiary of the Company, has agreed, upon the
terms and subject to the conditions of the Securities Purchase Agreement, (i) to
issue and sell to the Buyers shares of ASC's common stock, par value $0.001 per
share (the "COMMON STOCK"), which, subject to certain terms and conditions, will
be exchangeable after June 30, 2000 (the "EXCHANGE COMMENCEMENT DATE") into
shares of the Company's common stock, no par value per share (as converted, the
"CONVERSION SHARES") in accordance with the terms of the Securities Purchase
Agreement; and
B. To induce the Buyer to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "INVESTOR" means the Buyer and any transferee or assignee
thereof to whom the Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
b. "PERSON" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or
ordering of
<PAGE> 2
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the Conversion
Shares issued or issuable upon conversion of the Common Stock and any
shares of capital stock issued or issuable with respect to the
Conversion Shares or the Common Stock as a result of any stock split,
stock dividend, recapitalization, exchange or similar event.
e."REGISTRATION STATEMENT" means a registration statement of
the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for-the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. No later than December 31, 1999,
(the "FILING DEADLINE"), the Company shall prepare and file with the
SEC a Registration Statement or Registration Statements (as is
necessary) on Form S-3 (or, if such form is unavailable for such a
registration, on such other form as is available for such a
registration, subject to the consent of each Buyer and the provisions
of Section 2(e), which consent will not be unreasonably withheld),
covering the resale of all of the Registrable Securities and no other
Securities of any kind by any person or entity, which Registration
Statement(s) shall state that, in accordance with Rule 416 promulgated
under the 1933 Act, such Registration Statement(s) also covers such
indeterminate number of additional shares of Common Stock as may become
issuable to prevent dilution resulting from stock splits, stock
dividends or similar transactions. Such Registration Statement shall
initially register for resale 1,000,000 shares of Common Stock, subject
to adjustment as provided in Section 3(b), and such registered shares
of Common Stock shall be allocated among the Investors pro rata based
on the total number of Registrable Securities issued or issuable as of
each date that a Registration Statement, as amended, relating to the
resale of the Registrable Securities is declared effective by the SEC.
The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC within one hundred and twenty
(120) days after the Filing Deadline (the "REGISTRATION DEADLINE"). The
Company shall permit the registration statement to become effective
within five (5) business days after receipt of a "no review" notice
from the SEC. In the event that the Registration Statement is not
declared effective by the SEC by the Registration Deadline then the
Company shall pay a penalty to each Buyer equal to 2% of the purchase
price for Common Stock purchased by each Investor and still held by
each Buyer for each thirty (30) day period beyond the Registration
Deadline that the Registration Statement is not declared effective by
the SEC (the "REGISTRATION DEADLINE PENALTY"). The Registration
Deadline Penalty shall be immediately payable by the Company on demand
by the Investor in either cash or Common Stock of the Company at the
election of the Company upon delivery to the Company of a notice of
such default by the Investor.
-2-
<PAGE> 3
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) involves an
underwritten offering, the Buyers shall have the right to select one
legal counsel to represent their interests in the offering, the costs
of which shall be borne by the Investors.
c. Piggy-Back Registrations. If at any time after the Exchange
Commencement Date and prior to the expiration of the Registration
Period (as hereinafter defined) the Company proposes to file with the
SEC a Registration Statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its
securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to securities to be issued solely in connection
with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit
plans) the Company shall promptly send to each Investor who is entitled
to registration rights under this Section 2(c) written notice of the
Company's intention to file a Registration Statement and of such
Investor's rights under this Section 2(c) and, if within twenty (20)
days after receipt of such notice, such Investor shall so request in
writing, the Company shall include in such Registration Statement all
or any part of the Registrable Securities such Investor requests to be
registered, subject to the priorities set forth in Section 2(d) below.
No right to registration of Registrable Securities under this Section
2(c) shall be construed to limit any registration required under
Section 2(a). The obligations of the Company under this Section 2(c)
may be waived by Investors holding a majority of the Registrable
Securities. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included
in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering.
d. Priority in Piggy-Back Registration Rights in connection
with Registrations or Company Account. If the registration referred to
in Section 2(c) is to be an underwritten public offering for the
account of the Company and the managing underwriter(s) advise the
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such registration:
(1) first, all securities the Company proposes to sell for its own
account, (2) second, up to the full number of securities proposed to be
registered for the account of the holders of securities entitled to
inclusion of their securities in the Registration Statement by reason
of demand registration rights, and (3) third, the securities requested
to be registered by the Investors and other holders of securities
entitled to participate in the registration, drawn from them pro rata
based on the number each has requested to be included in such
registration.
-3-
<PAGE> 4
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on
or prior to the Filing Deadline) for the registration of Registrable
Securities pursuant to Section 2(a)) and use its best efforts to cause
such Registration Statement(s) relating to Registrable Securities to
become effective as soon as possible after such filing (by the one
hundred and twentieth (120th) day following the issuance of the
relevant for the registration of Registrable Securities pursuant to
Section 2(a), and keep the Registration Statement(s) effective pursuant
to Rule 415 at all times until the later of (i) the date as of which
the Investors may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto) or (ii) the date on which the Investors shall have
sold all the Registrable Securities (the "REGISTRATION PERIOD"), which
Registration Statement(s) (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement(s) and the prospectus(es) used in connection
with the Registration Statement(s), which prospectus(es) are to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep the Registration Statement(s) effective at all times
during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration
Statement(s) until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statement(s). In the event the number of shares available
under a Registration Statement filed pursuant to this Agreement is
insufficient to cover all of the Registrable Securities, the Company
shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case,
as soon as practicable, but in any event within thirty (30) days after
the necessity therefor arises (based on the market price of the Common
Stock and other relevant factors on which the Company reasonably elects
to rely). The Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon
as practicable following the filing thereof. For purposes of the
foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of
the Registrable Securities" if at any time the number of Registrable
Securities issued or issuable upon conversion of the Common Stock is
greater than the quotient determined by dividing (i) the number of
Conversion Shares available for resale under such Registration
Statement by (ii)
-4-
<PAGE> 5
1.0; provided that in the case of the initial registration of the
Registrable Securities pursuant to Section 2(a), the Company shall be
required to register for resale 1,000,000 shares of Common Stock.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration Statement(s)
(including each preliminary prospectus ) and, with regards to the
Registration Statement, any correspondence by or on behalf of the
Company to the SEC or the staff of the SEC and any correspondence from
the SEC or the staff of the SEC to the Company or its representatives,
(ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies
as such Investor may reasonably request) and (iii) such other
documents, including any preliminary prospectus, as such Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
d. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration
Statement(s) under the securities or "blue sky" laws of such
jurisdictions in the United States as any Investor reasonably requests,
(ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period,
and (iv) take all other actions reasonably necessary or advisable to
quality the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in
any such jurisdiction, or (c) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify
each Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for
sale under the securities or "blue sky" laws of any jurisdiction in the
United States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.
e. [LEFT INTENTIONALLY BLANK]
f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a result
of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue
statement or
-5-
<PAGE> 6
omission, and deliver ten (10) copies of such supplement or amendment
to each Investor (or such other number of copies as such Investor may
reasonably request). The Company shall also promptly notify each
Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Investor
by facsimile on the same day of such effectiveness and by overnight
mail) (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information,
(iii) of the Company's reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.
g. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if such
an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (and, in the event
of an underwritten offering, the managing underwriters) of the issuance
of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.
h. The Company shall permit each Investor at such Investors
expense a single firm of counsel or such other counsel as thereafter
designated as selling stockholders' counsel by the Investors who hold a
majority of the Registrable Securities being sold, to review and
comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
i. At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if
any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriters
and the Investors.
j. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to
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<PAGE> 7
an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required under
the 1933 Act, (b) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body
of competent jurisdiction, or (c) the information in such Records has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, the Records deemed confidential. All
fees, costs and expenses of the foregoing shall be borne by the
Investors.
k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow such
Investor, at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
l. The Company shall use reasonable efforts either to (i)
cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with
respect to such Registrable Securities. The Company shall pay all fees
and expenses in connection with satisfying its obligation under this
Section 3(l).
m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, any
managing underwriter or
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<PAGE> 8
underwriters, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or
amounts, as the case may be, as the managing underwriter or
underwriters, if any, or, if there is no managing underwriter or
underwriters, the Investors may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the
Investors may request. Not later than the date on which any
Registration Statement registering the resale of Registrable Securities
is declared effective, the Company shall deliver to its transfer agent
instructions, accompanied by any reasonably required opinion of
counsel, that permit sales of unlegended securities in a timely fashion
that complies with then mandated securities settlement procedures for
regular way market transactions.
n. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
o. The Company shall provide a transfer agent and registrar of
all such Registrable Securities not later than the effective date of
such Registration Statement.
p. If requested by the managing underwriters of an Investor,
the Company shall immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters
and the Investors agree should be included therein relating to the sale
and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being
paid therefor by such underwriters and with respect to any other terms
of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required
filings of such prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by a shareholder
or any underwriter of such Registrable Securities. The costs of
preparation and filing of any such post-effective amendments and
supplements shall be borne by the Investors.
q. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement
to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of
such Registrable Securities.
r. The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with
any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from
each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration
Statement. It shall be a
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<PAGE> 9
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to
the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to
effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the
Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence
of 3(f) and, if so directed by the Company, such Investor shall deliver
to the Company (at the expense of the Company) or destroy all copies in
such Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be borne by the Company
except as otherwise specifically provided herein.
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<PAGE> 10
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor who
holds such Registrable Securities, the directors, officers, partners,
employees, agents and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 ACT"), and any underwriter (as defined in
the 1933 Act) for the Investors, and the directors and officers of, and
each Person, if any, who controls, any such underwriter within the
meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "CLAIMS")
incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party
thereto ("INDEMNIFIED DAMAGES"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky"
laws of any jurisdiction in which Registrable Securities are offered
("BLUE SKY FILING"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which the
statements therein were made, not misleading, (ii) any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the
foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS").
Subject to the restrictions set forth in Section 6(d) with respect to
the number of legal counsel, the Company shall reimburse the Investors
and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained
in this Section 6(a): (i) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by any Indemnified
Person or underwriter for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was
timely made
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<PAGE> 11
available by the Company pursuant to Section 3(c); (ii) with respect to
any preliminary prospectus, shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit
of any person controlling such person) if the untrue statement or
mission of material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section
3(c), and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a
violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company; and (iv) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9 for a period of three
(3) years from the Filing Deadline.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and
not jointly indemnify, hold harmless and defend, to the same extent and
in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (collectively and together with
an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim or
Indemnified Damages to which any of them may become subject, under the
1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in
each case to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect
to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing expressly for inclusion in the Registration
Statement.
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<PAGE> 12
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of
any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual
or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in
such proceeding. The Company shall pay reasonable fees for only one
separate legal counsel for the Investors, and such legal counsel shall
be selected by the Investors holding a majority in interest of the
Registrable Securities included in the Registration Statement to which
the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying
party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person
which relates to such action or claim. The indemnifying party shall
keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations
with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its
written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the Indemnified Party
or Indemnified Person, consent to entry of any judgment or enter into
any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party or Indemnified Person of a release from all
liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall
be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent
that the indemnifying party is prejudiced in its ability to defend such
action.
e. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified
Party or Indemnified Person against the
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<PAGE> 13
indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees, to:
a. make and keep public information available, as those terms
are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements (it being
understood that nothing herein shall limit the Company's obligations
under Section 4(c) of the Securities Purchase Agreement) and the filing
of such reports and other documents is required for the applicable
provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as
may be reasonably requested to permit the investors to sell such
securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment,
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<PAGE> 14
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement; (vi) such transferee shall be an "ACCREDITED
INVESTOR" as that term is defined in Rule 501 of Regulation D promulgated under
the 1933 Act; and (vii) in the event the assignment occurs subsequent to the
date of effectiveness of the Registration Statement required to be filed
pursuant to Section 2(a), the transferee agrees to pay all reasonable expenses
of amending or supplementing such Registration Statement to reflect such
assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities
with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
BioShield Technologies, Inc.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (770) 921-1065
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<PAGE> 15
with a copy (which shall not constitute notice) to:
Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit and of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
i. 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.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
BIOSHIELD TECHNOLOGIES, INC. JACKSON, LLC
By: By:
------------------------------- --------------------------------
Name: Name:
----------------------------- ------------------------------
Its: Its:
----------------------------- -------------------------------
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<PAGE> 17
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF
BUYER'S NAME ADDRESS AND FACSIMILE NUMBER OF BUYER COMMON STOCK WARRANTS
- ------------ ------------------------------------- ------------------- ---------
<S> <C> <C> <C>
c/o Citco Trustees (Cayman) Ltd. 1,070,664
Jackson LLC Corporate Centre, Windwood One
West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
facsimile: 345-945-7566
</TABLE>
<PAGE> 1
EXHIBIT 10.060
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of June 30,
1999, by and among Allergy Superstore.com, Inc., a Delaware corporation, with
headquarters at Suite B109, 4405 International Boulevard, Norcross, Georgia
30083 (the "COMPANY"), and the undersigned buyer (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among BioShield Technologies, Inc. ("BSTI") and the parties hereto of even date
herewith (the "SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon
the terms and subject to the conditions of the Securities Purchase Agreement,
(i) to issue and sell to the Buyer's shares of its common stock, par value
$0.0001 per share (the "COMMON STOCK"), which, under certain terms and
conditions, will be convertible into shares of BSTI's common stock, no par
value per share (as converted, the "CONVERSION SHARES") in accordance with the
terms of the Securities Purchase Agreement; and
B. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws once the Company becomes a
reporting company under the Securities and Exchange Act of 1934, as amended
(the "1934 ACT"), by making the appropriate filings with the U.S. Securities
and Exchange Commission (the "SEC"):
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "INVESTOR" means the Buyer and any transferee or
assignee thereof to whom the Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.
b. "PERSON" means a corporation, a limited liability
company, an association, a partnership, an organization, a business,
an individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing one or more
Registration Statements in compliance with the 1933 Act and pursuant
to Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous basis ("RULE 415"), and the
declaration or ordering of
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effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the Common
Stock and any shares of capital stock issued or issuable as a result
of any stock split, stock dividend, recapitalization, exchange, or
similar event of the Company.
e. "REGISTRATION STATEMENT" means a registration
statement of the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Piggy-Back Registrations. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the
Company proposes to file with the SEC a Registration Statement
relating to an offering for its own account or the account of others
under the 1933 Act of any of its securities (other than pursuant to an
initial public offering of any securities of the Company or a filing
on Form S-4 or Form S-8 or their then equivalents relating to
securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection
with stock option or other employee benefit plans) the Company shall
promptly send to each Investor who is entitled to registration rights
under this Section 2(c) written notice of the Company's intention to
file a Registration Statement and of such Investor's rights under this
Section 2(c) and, if within twenty (20) days after receipt of such
notice, such Investor shall so request in writing, the Company shall
include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered,
subject to the priorities set forth in Section 2(d) below. No right to
registration of Registrable Securities under this Section 2(c) shall
be construed to limit any registration required under Section 2(a).
The obligations of the Company under this Section 2(c) may be waived
by Investors holding a majority of the Registrable Securities. If an
offering in connection with which an Investor is entitled to
registration under this Section 2(c) is an underwritten offering, then
each Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company,
offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as
other shares of Common Stock included in such underwritten offering.
As used herein, "REGISTRATION PERIOD" shall mean the earlier of (i)
the date as of which the Investors may sell all of the Registrable
Securities without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act (or successor thereto) or (ii) the date on which
(A) the Investors shall have sold all the Registrable Securities.
b. Priority in Piggy-Back Registration Rights in
connection with Registrations or Company Account. If the registration
referred to in Section 2(c) is to be an underwritten public offering
for the account of the Company and the managing underwriter(s) advise
the
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Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such
registration: (1) first, all securities the Company proposes to sell
for its own account, (2) second, up to the full number of securities
proposed to be registered for the account of the holders of securities
entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the
securities requested to be registered by the Investors and other
holders of securities entitled to participate in the registration,
drawn from them pro rata based on the number each has requested to be
included in such registration.
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration
Statement(s) (including each preliminary prospectus ) and, with
regards to the Registration Statement, any correspondence by or on
behalf of the Company to the SEC or the staff of the SEC and any
correspondence from the SEC or the staff of the SEC to the Company or
its representatives, (ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or
such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including any preliminary prospectus,
as such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
b. The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities covered by the
Registration Statement(s) under the securities or "blue sky" laws of
such jurisdictions in the United States as any Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to quality the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a)
qualify to do business in any jurisdiction where it would not
otherwise be
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required to qualify but for this Section 3(d), (b) subject itself to
general taxation in any such jurisdiction, or (c) file a general
consent to service of process in any such jurisdiction. The Company
shall promptly notify each Investor who holds Registrable Securities
of the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such
purpose.
c. In the event Investors who hold a majority of the
Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of
such offering. The cost of such underwriters shall be borne by the
Investors.
d. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly
prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or omission, and deliver ten (10) copies
of such supplement or amendment to each Investor (or such other number
of copies as such Investor may reasonably request). The Company shall
also promptly notify each Investor in writing (i) when a prospectus or
any prospectus supplement or post-effective amendment has been filed,
and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be
delivered to each Investor by facsimile on the same day of such
effectiveness and by overnight mail) (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or related
prospectus or related information, (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate.
e. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of
such order or suspension at the earliest possible moment and to notify
each Investor who holds Registrable Securities being sold (and, in the
event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.
f. The Company shall permit each Investor at such
Investors expense a single firm of counsel or such other counsel as
thereafter designated as selling stockholders' counsel by the
Investors who hold a majority of the Registrable Securities being
sold, to review and
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comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
g. At the request of the Investors who hold a majority
of the Registrable Securities being sold, the Company shall furnish,
on the date that Registrable Securities are delivered to an
underwriter, if any, for sale in connection with the Registration
Statement (i) if required by an underwriter, a letter, dated such
date, from the Company's independent certified public accountants in
form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters and the Investors.
h. The Company shall make available for inspection by
(i) any Investor, (ii) any underwriter participating in any
disposition pursuant to a Registration Statement, (iii) one firm of
attorneys and one firm of accountants or other agents retained by the
Investors, and (iv) one firm of attorneys retained by all such
underwriters (collectively, the "INSPECTORS") all pertinent financial
and other records, and pertinent corporate documents and properties of
the Company (collectively, the "RECORDS"), as shall be reasonably
deemed necessary by each Inspector to enable each Inspector to
exercise its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any
Inspector may reasonably request for purposes of such due diligence
provided, however, that each Inspector shall hold in strict confidence
and shall not make any disclosure (except to an Investor) or use of
any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors
are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act,
(b) the release of such Records is ordered pursuant to a final,
non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has
been made generally available to the public other than by disclosure
in violation of this or any other agreement. Each Investor agrees that
it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. All fees, costs and expenses of the foregoing shall be
borne by the Investors.
i. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is
sought in
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or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and
allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
j. The Company shall use reasonable efforts either to
(i) cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv)
if, despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with
the National Association of Securities Dealers, Inc. ("NASD") as such
with respect to such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under
this Section 3(j).
k. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and, to the extent
applicable, any managing underwriter or underwriters, to facilitate
the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or, if there
is no managing underwriter or underwriters, the Investors may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may request. Not
later than the date on which any Registration Statement registering
the resale of Registrable Securities is declared effective, the
Company shall deliver to its transfer agent instructions, accompanied
by any reasonably required opinion of counsel, that permit sales of
unlegended securities in a timely fashion that complies with then
mandated securities settlement procedures for regular way market
transactions.
l. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
m. The Company shall provide a transfer agent and
registrar of all such Registrable Securities not later than the
effective date of such Registration Statement.
n. If reasonably requested by the managing underwriters,
the Company shall immediately incorporate in a prospectus supplement
or post-effective amendment such information as the managing
underwriters and the Investors agree should be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation,
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information with respect to the number of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by
such underwriters and with respect to any other terms of the
underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required
filings of such prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by a shareholder
or any underwriter of such Registrable Securities. The costs of
preparation and filing of any such post-effective amendments and
supplements shall be borne by the Investors.
o. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
p. The Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first
anticipated filing date of the Registration Statement, the Company
shall notify each Investor in writing of the information the Company
requires from each such Investor if such Investor elects to have any
of such Investor's Registrable Securities included in the Registration
Statement. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that
such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
Each Investor agrees to enter into any contractual lock-up agreements
with respect to the Common Stock or other securities
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held by each Investor in connection with an underwritten public
offering of the Company's common stock or other securities.
d. Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described
in Section 3(h) or the first sentence of 3(d), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or the first sentence
of 3(d) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy all
copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
and fees and disbursements of counsel for the Company shall be borne by the
Company except as otherwise specifically proved herein.
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend each
Investor who holds such Registrable Securities, the directors,
officers, partners, employees, agents and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), and any
underwriter (as defined in the 1933 Act) for the Investors, and the
directors and officers of, and each Person, if any, who controls, any
such underwriter within the meaning of the 1933 Act or the 1934 Act
(each, an "INDEMNIFIED PERSON"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several,
(collectively, "CLAIMS") incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto
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("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering
under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("BLUE SKY FILING"), or the
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to
the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, or (iii) any
violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities pursuant to a Registration
Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, "VIOLATIONS"). Subject to the restrictions set
forth in Section 6(d) with respect to the number of legal counsel, the
Company shall reimburse the Investors and each such underwriter or
controlling person, promptly as such expenses are incurred and are due
and payable, for any legal fees or other reasonable expenses incurred
by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished
in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c); (ii) with respect
to any preliminary prospectus, shall not inure to the benefit of any
such person from whom the person asserting any such Claim purchased
the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement
or mission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company pursuant to
Section 3(c), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim
is based on a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company (i) and (iv)
shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 for a period of three (3) years from the Filing
Deadline.
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b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "INDEMNIFIED PARTY"), against
any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that
such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for
use in connection with such Registration Statement; and, subject to
Section 6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue statement
or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution,
to the same extent as provided above, with respect to information such
persons so furnished in writing expressly for inclusion in the
Registration Statement.
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement
of any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests
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<PAGE> 11
between such Indemnified Person or Indemnified Party and any other
party represented by such counsel in such proceeding. The Company
shall pay reasonable fees for only one separate legal counsel for the
Investors, and such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action
or claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
e. The indemnification required by this Section 6 shall
be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying party
or others, and (ii) any liabilities the indemnifying party may be
subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however,
that: (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set
forth in Section 6 and (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation.
-11-
<PAGE> 12
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees,
once the Company becomes a reporting company under the 1934 Act upon the
effective date of its Form 10 to be filed with the SEC, to:
a. make and keep public information available, as those
terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the
1934 Act so long as the Company remains subject to such requirements
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the
investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of Registrable Securities if: (i) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a)
the name and address of such transferee or assignee, and (b) the securities
with respect to which such registration rights are being transferred or
assigned; (iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted
under the 1933 Act and applicable state securities laws; (iv) at or before the
time the Company receives the written notice contemplated by clause (ii) of
this sentence the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein; (v) such transfer shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement; (vi) such transferee shall be an "ACCREDITED INVESTOR" as
that term is defined in Rule 501 of Regulation D promulgated under the 1933
Act; and (vii) in the event the assignment occurs subsequent to the date of
effectiveness of the Registration Statement required to be filed pursuant to
Section 2(a), the transferee agrees to pay all reasonable expenses of amending
or supplementing such Registration Statement to reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities.
-12-
<PAGE> 13
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
-13-
<PAGE> 14
If to the Company: Allergy Superstore.com, Inc.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Attention: President
Facsimile: (770) 921-1065
With a copy to: Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
Facsimile: (770) 481-7200
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Georgia without regard to
the principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this
Agreement shall inure to the benefit and of and be binding upon the
permitted successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more
identical counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
-14-
<PAGE> 15
i. 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.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
ALLERGY SUPERSTORE.COM, INC. JACKSON, LLC
By: By:
-------------------------------- -------------------------------
Name: Name:
Its: Its:
-15-
<PAGE> 16
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Address and Facsimile Number of Number of Shares Number of
BUYER'S NAME Buyer of Common Stock Warrants
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
c/o Citco Trustees (Cayman) Ltd. 1,070,664 100,000
Jackson LLC Corporate Centre, Windwood One
West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
facsimile: 345-945-7566
</TABLE>
<PAGE> 1
EXHIBIT 10.061
TRANSFER AGENT INSTRUCTIONS
BIOSHIELD TECHNOLOGIES, INC.
June 30, 1999
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
ATTENTION: GEORGE KARFUNKEL
Dear Mr. Karfunkel:
Reference is made to that certain Securities Purchase Agreement, of
even date herewith, by and among BioShield Technologies, Inc., a Georgia
corporation (the "COMPANY"), and each of the subscribers listed in Exhibit "A"
attached hereto (collectively, the "HOLDERS") pursuant to which the Company is
issuing to the Holders up to an aggregate of 3,218,884 shares of Common Stock,
$0.001 par value of Allergy Superstore.com, Inc. (the "COMMON SHARES"). This
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time) to issue
shares (the "CONVERSION SHARES") of Common Stock, no par value (the "COMMON
STOCK"), of the Company to or upon the order of a Holder from time to time upon
(i) surrender to you of a properly completed and duly executed Conversion
Notice, in the form attached hereto as Exhibit I, which has been properly agreed
to and acknowledged by the Company as indicated by the signature of a duly
authorized officer of the Company thereon and (ii) certificates representing
Preferred Shares being converted (or an indemnification undertaking with respect
to such shares in the case of their loss, theft or destruction). So long as you
have previously received: (i) written confirmation from counsel to the Company
that a registration statement covering resales of the Conversion Shares has been
declared effective by the U.S. Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 ACT"), and (ii) a copy
of such Registration Statement, Certificates representing the Conversion Shares
shall not bear any legend restricting transfer of the Conversion Shares thereby
and should not be subject to any stop-transfer restriction. However, if you have
not previously received (i) written confirmation from counsel to the Company
that a registration statement covering resales of the Conversion Shares has been
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and (ii) a copy of such registration
statement, then the certificates representing the Conversion Shares shall bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
<PAGE> 2
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL, IN FORM AND CONTENT ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
provided, however, that the Company may from time to time notify you to place
stop transfer restrictions on the certificates for the Conversion Shares in the
event a registration statement covering the Conversion Shares is subject to
amendment for events then current.
An opinion of counsel to the Company that the issuance of the
Conversion Shares to the Holders will be exempt from registration under the
1933 Act is attached hereto as Exhibit II.
Please be advised that the Holders are relying upon this letter as an
inducement to enter into the Securities Purchase Agreement and, accordingly,
each Holder is a third party beneficiary to these instructions.
Should you have any questions concerning this matter please contact me
at (770) 925-3432.
Very truly yours,
BIOSHIELD TECHNOLOGIES, INC.
By:
---------------------------------------
Name: Timothy C. Moses
Its: President and Chief Executive Officer
<PAGE> 3
ACKNOWLEDGED AND AGREED:
AMERICAN STOCK TRANSFER & TRUST CO.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date:
--------------------------------------
Enclosure
cc: Holders
<PAGE> 4
EXHIBIT "A"
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
ADDRESS AND FACSIMILE NUMBER NUMBER OF SHARES NUMBER OF
BUYER'S NAME OF BUYER OF COMMON STOCK WARRANTS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
c/o Citco Trustees (Cayman) Ltd. 1,072,961 100,000
Jackson LLC Corporate Centre, Windwood One
West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
facsimile: 345-945-7566
</TABLE>
<PAGE> 5
EXHIBIT I
BIOSHIELD TECHNOLOGIES, INC.
EXCHANGE NOTICE
Reference is made to the Securities Purchase Agreement, dated as of
June 30, 1999 (the "AGREEMENT"). In accordance with and pursuant to the
Agreement, the undersigned hereby elects to exchange the number of shares of
Common Stock of Allergy Superstore.com, Inc., $0.001 par value per share (the
"COMMON STOCK"), of BioShield Technologies, Inc., a Georgia corporation (the
"COMPANY"), indicated below into shares of Common Stock, no par value per share
(the "COMMON STOCK"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Common Stock specified below as of the date
specified below.
The undersigned acknowledges that any sales by the undersigned of the
securities issuable to the undersigned upon exchange of the Common Stock shall
be made only pursuant to (i) a registration statement effective under the
Securities Act of 1933, as amended (the "ACT"), or (ii) an opinion of its
counsel in form and content satisfactory to the Company that such sale is
exempt from registration required by Section 5 of the Act.
Date of Exchange:
---------------------------------------------
Number of Shares of Common
Stock to be exchanged:
---------------------------------------------
Stock certificate No(s). to be exchanged:
---------------------------------------------
Please confirm the following information:
Exchange Price:
---------------------------------------------
Number of shares of Conversion Shares
to be issued:
---------------------------------------------
<PAGE> 6
please issue the Common Stock into which the Common Stock are being exchanged
in the following name and to the following address:
Issue to:
--------------------------------------
--------------------------------------
Facsimile Number:
--------------------------------------
Authorization:
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
Dated:
--------------------------------------
ACKNOWLEDGED AND AGREED:
BIOSHIELD TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
-----------------------------------
<PAGE> 7
EXHIBIT II
BIOSHIELD TECHNOLOGIES, INC.
Attached hereto.
<PAGE> 1
EXHIBIT 10.062
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of June 30, 1999, between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and Jackson LLC,
a Cayman Island limited liability company (hereinafter referred to as
"INVESTOR").
W I T N E S S E T H:
WHEREAS, Investor has participated as an Investor in connection with
the Company's offering (the "OFFERING") of up to $15,000,000 in aggregate
amount of common stock, par value $0.001 per share (the "COMMON STOCK") for an
aggregate purchase price of $15,000,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Investor and/or its designees, in consideration for,
and as part of the investment by Investor in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant.
Investor and/or its designees are hereby granted the right to
purchase, at any time from the date of issuance of the aforementioned Preferred
Stock until 5:00 P.M., Eastern Standard Time, on June 29, 2004 (the "WARRANT
EXERCISE TERM"), 100,000 Shares at an exercise price (subject to adjustment as
provided in Article 7 hereof) of $5.126 per share (the "INITIAL EXERCISE
PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash
or by check to the order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly
executed, together with payment of the Exercise Price (as hereinafter defined)
for the Shares purchased, at the Company's executive offices currently located
at 4405 International Blvd., Norcross Georgia 30093, the registered holder of a
Warrant Certificate ("HOLDER" or "HOLDERS") shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder hereof, in
<PAGE> 2
whole or in part (but not as to fractional shares of the Common Stock). In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at its option, exchange this Warrant, in whole
or in part (a "WARRANT EXCHANGE"), into the number of Shares determined in
accordance with this Section 3.2, by surrendering this Warrant at the principal
office of the company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange or, if later, the
date the Notice of Exchange is received by the Company (the "EXCHANGE DATE").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the Shares
remaining subject to this Warrant, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) business days following the Exchange
Date. In connection with any Warrant Exchange, this Warrant shall represent the
right to subscribe for and acquire the number of Shares (rounded to the next
highest integer) equal to (i) the number of Shares specified by the Holder in
its Notice of Exchange (the "TOTAL NUMBER") less (ii) the number of Shares
equal to the quotient obtained by dividing (A) the product of the Total Number
and the then existing Exercise Price by (B) the current market value of a share
of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for
the Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange,
substitution or transfer.
-2-
<PAGE> 3
The Warrant Certificates and, upon exercise of the Warrants, in part
or in whole, certificates representing the Shares shall bear a legend
substantially similar to the following:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "ACT"),
and may not be offered or sold except (i) pursuant to an effective
registration statement under the Act, (ii) to the extent applicable,
pursuant to Rule 144 under the Act (or any similar rule under such Act
relating to the disposition of securities), or (iii) upon the delivery
by the holder to the Company of an opinion of counsel, satisfactory to
counsel to the issuer, stating that an exemption from registration
under such Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price
shall be the price which shall result from time to time from any and all
adjustments of the Initial Exercise Price in accordance with the provisions of
Article 7 hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein
shall mean the Initial Exercise Price or the adjusted Exercise Price, depending
upon the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of
the date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
6.3 Piggyback Registration. If, at any time during the
five years following the date of this Agreement, the Company proposes to
prepare and file any registration statement or post-effective amendments (other
than in connection with an underwritten initial public offering or initial
-3-
<PAGE> 4
registration of the Company or the Company's securities with the U.S.
Securities & Exchange Commission) thereto covering equity or debt securities of
the Company, or any such securities of the Company held by its shareholders (in
any such case, other than in connection with a merger, acquisition or pursuant
to Form S-8 or successor form), (for purposes of this Article 6, collectively,
a "REGISTRATION STATEMENT"), it will give written notice of its intention to do
so by registered mail ("NOTICE"), at ten (10) business days prior to the filing
of each such Registration Statement, to all holders of the Registrable
Securities. Upon the written request of such a holder (a "REQUESTING HOLDER"),
made within ten (10) business days after receipt of the Notice, that the
Company include any of the Requesting Holder's Registrable Securities in the
proposed Registration Statement, the Company shall, as to each such Requesting
Holder, use its best efforts to effect the registration under the Securities
Act of the Registrable Securities which it has been so requested to register
("PIGGYBACK REGISTRATION"), at the Company's sole cost and expense and at no
cost or expense to the Requesting Holders. Notwithstanding the provisions of
this Section 6.3, the Company shall have the right at any time after it shall
have given written notice pursuant to this Section 6.3 (irrespective of whether
any written request for inclusion of such securities shall have already been
made) to elect not to file any such proposed Registration Statement, or to
withdraw the same after the filing but prior to the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Article 7, the number
of Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Shares issuable
upon exercise of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case
of any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result
of a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of
the property of the Company as an entirety, the Holders shall thereafter have
the right to purchase the kind and number of shares of stock and other
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as if the Holders were the owners of
the shares of Common Stock underlying the Warrants immediately prior to any
such events at a price equal to the
-4-
<PAGE> 5
product of (x) the number of shares issuable upon exercise of the Warrants and
(y) the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if such
Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases.
No adjustment of the Exercise Price shall for example be made:
(a) Upon the issuance or sale of shares of
Common Stock upon the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to
the Company's employee stock option plans in effect or the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any such options, or (ii) the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any options or warrants; or
(c) Upon the issuance of shares of Common Stock
pursuant to contractual obligations; or
(d) If the amount of said adjustment shall be
less than 2 cents (2 cent) per Share, provided, however, that
in such case any adjustment that would otherwise be required
then to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall
amount to at least 2 cents (2 cent) per Share.
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior
to the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company
or by another person or entity, or any other thing of value, the Holder or
Holders of the unexercised Warrants shall thereafter be entitled, in addition
to the shares of Common Stock or other securities receivable upon the exercise
thereof, to receive, upon the exercise of such Warrants, the same monies,
property, assets, rights, evidences of indebtedness, securities or any other
thing of value that they would have been entitled to receive at the time of
such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of
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<PAGE> 6
like tenor and date representing in the aggregate the right to purchase the
same number of Shares in such denominations as shall be designated by the
Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up
to the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts, once it has become a public company, to cause all shares
of Common Stock issuable upon the exercise of the Warrants to be listed on or
quoted on the electronic bulletin board, by NASDAQ or listed on such national
securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
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<PAGE> 7
(b) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business
as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or
entitled to vote on such proposed dissolution, liquidation, winding up or sale.
Such notice shall specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend or distribution, or any proposed
dissolution, liquidation, winding up or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3 of this Agreement or to such other address as the Company
may designate by notice to the Holders.
13. Supplements and Amendments.
The Company may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to cure
any ambiguity, to correct or supplement any provision contained herein which
may be defective or inconsistent with any provisions herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company may deem necessary or desirable and which the Company deems not to
adversely affect the interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on June 29,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been
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<PAGE> 8
exercised and all the Shares issuable upon exercise of the Warrants have been
resold to the public; provided, however, that the provisions of Article 6 shall
survive such termination until the close of business on June 29, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be
governed by and interpreted in accordance with the laws of the State of Georgia
without regard to the principles of conflict of laws. The parties further agree
that any action between them shall be heard in Atlanta, Georgia, and expressly
consent to the jurisdiction and venue of the Superior Court of Fulton County,
Georgia, and the United States District Court for the Northern District of
Georgia, Atlanta Division for the adjudication of any civil action asserted
pursuant to this Paragraph.
-8-
<PAGE> 9
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Investor and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the Investor and
any other holder or holders of the Warrant Certificates, Warrants or the
Shares.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------
Name: Timothy C. Moses
Title: Chairman of the Board and
Chief Executive Officer
Attest:
-----------------------------
Name:
-------------------------------
Title:
-------------------------------
INVESTOR: JACKSON, LLC
By:
-----------------------------
Name:
Title:
Attest:
-----------------------------
Name:
-------------------------------
Title:
------------------------------
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<PAGE> 10
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE
EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE
DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, STATING THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, JUNE 29, 2004
No. ___________ 100,000 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that Jackson LLC ("INVESTOR") or
registered assigns, is the registered holder of Warrants to purchase, at any
time from June 30, 1999, until 5:00 P.M. Eastern Standard Time on June 29, 2004
("EXPIRATION DATE"), up to 100,000 shares ("SHARES") of fully-paid and
non-assessable common stock, no par value ("COMMON STOCK"), of Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), at the Initial
Exercise Price, subject to adjustment in certain events (the "EXERCISE PRICE"),
of $5.126 per Share upon surrender of this Warrant Certificate and payment of
the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the warrant agreement dated as of June 30,
1999, between the Company and Investor (the "WARRANT AGREEMENT"). Payment of
the Exercise Price may be made in cash, or by certified or official bank check
in New York Clearing House funds payable to the order of the Company, or any
combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and
<PAGE> 11
the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferees) in exchange for this
Warrant Certificate, subject to the limitations provided herein and in the
Warrant Agreement, without any charge except for any tax, or other governmental
charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: As of June 30, 1999 ALLERGY SUPERSTORE.COM, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Attest:
--------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE> 12
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official
bank check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares
be registered in the name of ___________________________________ whose address
is_____________________________, and that such Certificate be delivered to
___________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:
---------------------- ---------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
- ------------------------------------
- ------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 13
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto
______________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
_______________, Attorney, to transfer the within Warrant Certificate on the
books of the within-named Company, with full power of substitution.
Dated: Signature:
---------------------- ---------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
- ------------------------------------
- ------------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE> 1
EXHIBIT 10.063
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of August 25,
1999, by and among Allergy Superstore.com, Inc., a Delaware corporation, with
headquarters located at 4405 International Blvd., Norcross, Georgia (the
"COMPANY"), BioShield Technologies, Inc, a Georgia corporation located at 4405
International Blvd., Norcross, Georgia ("BSTI ")and the investors listed on the
Schedule of Buyers attached hereto (individually, a "BUYER" or collectively
"BUYERS").
WHEREAS:
A. The Company, BSTI, and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
pursuant to Section 4(2) and/or Regulation D ("REGULATION D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
B. The Buyer wishes to purchase, upon the terms and conditions
stated in this Agreement, an aggregate amount of up to 85,653 shares of common
stock of the Company, par value $0.001 per share (such shares referred to herein
as the "COMMON STOCK"), in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers;
C. Contemporaneously with the execution and delivery of this
Agreement, BSTI and the Buyers hereto are executing and delivering a
Registration Rights Agreement substantially in the form attached hereto as
Exhibit "A" (the "BSTI REGISTRATION RIGHTS AGREEMENT") pursuant to which BSTI
has agreed to provide certain registration rights under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws;
D. Contemporaneously with the execution and delivery of this
Agreement, the Company and Buyers hereto are executing and delivering a
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit "B" (the "COMPANY REGISTRATION RIGHTS AGREEMENT") pursuant to which the
Company has agreed to provide certain registration rights under the 1933 Act and
rules and regulations promulgated thereunder and applicable state securities
laws; and
E. The holders of the Common Stock will receive stock purchase
warrants (the "WARRANTS") to acquire the Common Stock substantially in the form
attached as Exhibit "C."
NOW THEREFORE, the Company, the Buyer, and BSTI hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON STOCK.
a. Purchase of Common Stock. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 5 and 6 below, the
Company shall issue and sell to the Buyers and the Buyers shall
purchase from the Company an aggregate principal amount of 85,653
shares of Common Stock and Warrants for an aggregate purchase price of
<PAGE> 2
$15,000,000 (the "PURCHASE PRICE"), in the respective amounts set forth
opposite each Buyer's name on the Schedule of Buyers (the "CLOSING").
b. Closing Date. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Eastern Standard Time, within five
(5) business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 5 and 6 below (or such later date as is mutually agreed to by
the Company and the Buyer). The Closing shall occur on the Closing Date
at the offices of Sims Moss Kline & Davis LLP, 400 Northpark Town
Center, Suite 310, 1000 Abernathy Road, N.E., Atlanta, Georgia 30328.
c. Form of Payment. On the Closing Date, (i) each Buyer
shall pay his portion of the Purchase Price to the Company for the
Common Stock to be issued and sold to such Buyer at the Closing, by
wire transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) the Company shall deliver
to each Buyer certificates representing such Common Stock and Warrants
that such Buyer is then purchasing (as indicated opposite such Buyer's
name on the Schedule of Buyers), duly executed on behalf of the Company
and registered in the name of such Buyer or its designee (the
"CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer is acquiring the
Common Stock and Warrants and any shares of Common Stock issuable upon
exercise thereof ("WARRANT SHARES"), for its own account for investment
only and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold
any Common Stock, Conversion Shares (as defined in Section 8 hereof),
Warrants, or Warrant Shares for any minimum or other specific term and
reserves the right to dispose of Common Stock or Warrant Shares at any
time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. Notwithstanding anything contained herein
to the contrary, each Buyer agrees to enter into any contractual
lock-up agreements with respect to the Common Stock, Warrants, Warrant
Shares, or Conversion Shares that may be required by the Company's
underwriters in connection with an underwritten public offering of the
Company's common stock or other securities or any public offering of
the Conversion Shares or other securities of BSTI.
b. Accredited Investor Status. Such Buyer is an
"accredited investor" as that term is defined in Rule 501(a)(3) of
Regulation D.
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<PAGE> 3
c. Reliance on Exemptions. Such Buyer understands that
the Common Stock, Conversion Shares, Warrants, and Warrant Shares are
being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such
Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire such
securities.
d. Information. Such Buyer and its advisors, if any,
have been furnished with all materials relating to the business,
finances and operations of the Company and BSTI and materials relating
to the offer and sale of the Common Stock which have been requested by
such Buyer. Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and BSTI. Neither such
inquiries nor any other due diligence investigations conducted by such
Buyer or its advisors, if any, or its representatives shall modify,
amend or affect such Buyer's right to rely on the Company's or BSTI's
representations and warranties contained in Section 3 below. Such Buyer
understands that its investment in the Common Stock, Conversion Shares,
Warrants, and Warrant Shares involve a high degree of risk. Such Buyer
has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Common Stock, Conversion Shares, Warrants, and
Warrant Shares.
e. No Governmental Review. Such Buyer understands that
no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Common Stock, Conversion Shares, Warrants, and
Warrant Shares, or the fairness or suitability of the investment in the
Common Stock, nor have such authorities passed upon or endorsed the
merits of the offering of the Common Stock and Warrants.
f. Transfer or Resale. Such Buyer understands that: (i)
the Common Stock and Warrants have not been and are not being
registered under the 1933 Act or any state securities laws, and may not
be offered for sale, sold, assigned or transferred unless (a)
subsequently registered thereunder, (b) such Buyer shall have delivered
to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from such
registration, or (c) such Buyer provides the Company with reasonable
assurance that such securities can be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) ("RULE 144"); (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of such
securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) other than the
-3-
<PAGE> 4
Company Registration Rights Agreement and the BSTI Registration Rights
Agreement (collectively, the "REGISTRATION RIGHTS AGREEMENTS"), neither
the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates
or other instruments representing the Common Stock, Conversion Shares,
Warrants, and Warrant Shares shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Common Stock,
Conversion Shares, Warrants and Warrant Shares upon which it is
stamped, if, unless otherwise required by state securities laws, (i)
the sale of the Common Stock, Conversion Shares, or Warrant Shares is
registered under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of the Common Stock, Conversion Shares,
Warrants, or Warrant Shares may be made without registration under the
1933 Act, or (iii) such holder provides the Company with reasonable
assurances that the Common Stock, Conversion Shares, Warrants, or
Warrant Shares can be sold pursuant to Rule 144 without any restriction
as to the number of securities acquired as of a particular date that
can then be immediately sold.
h. Authorization, Enforcement. This Agreement has been
duly and validly authorized, executed and delivered on behalf of such
Buyer and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization,
-4-
<PAGE> 5
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights
and remedies.
-5-
<PAGE> 6
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BSTI.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company, BSTI,
and its subsidiaries are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which
they are incorporated, and have the requisite corporate power to own
their properties and to carry on their business as now being conducted.
Each of the Company, BSTI and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company, BSTI and its subsidiaries taken as a
whole.
b. Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company and BSTI each have the requisite corporate
power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and any related agreements, and to issue
the Common Stock, Conversion Shares, Warrants, and Warrant Shares in
accordance with the terms hereof and thereof, (ii) the execution and
delivery of this Agreement, the Registration Rights Agreements and any
related agreements by the Company and BSTI and the consummation by it
of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Common Stock and the reservation for
issuance and the issuance of the Conversion Shares issuable upon
conversion or exercise thereof as provided in Section 8 hereof, have
been duly authorized by each of the Company's and BSTI's Board of
Directors and no further consent or authorization is required by each
of the Company, BSTI, its respective Board of Directors, or its
respective stockholders, (iii) this Agreement and the Registration
Rights Agreements and any related agreements have been duly executed
and delivered by the Company and BSTI, and (iv) this Agreement, the
Registration Rights Agreements and any related agreements constitute
the valid and binding obligations of the Company and BSTI enforceable
against the Company and BSTI in accordance with their terms, except as
such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization. As of June 30, 1999, the authorized
capital stock of the Company consists of 100,000,000 shares of Common
Stock, of which as of the date hereof 30,000,000 shares were issued and
outstanding, and no series of preferred stock or debentures or notes
were issued and outstanding. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), no shares of Common Stock or preferred
stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in Schedule 3(c), as of the effective date of this
Agreement, (i) there are no
-6-
<PAGE> 7
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or
any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may
become bound to issue additional shares of capital stock of the Company
or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, (ii) there are no
outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except the Company Registration Rights Agreement). There are
no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Common Stock
or the Conversion Shares as described in this Agreement. The Company
has furnished to or made available to Buyer, via the SEC Edgar site,
true and correct copies of BSTI's filings with the U.S. Securities and
Exchange Commission (the "SEC DOCUMENTS"), the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), the Company's By-laws, as in effect on
the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Common Stock are duly
authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and non assessable, are free
from all taxes, liens and charges with respect to the issue thereof and
are entitled to the rights and preferences set forth in the Common
Stock. The Conversion Shares issuable upon conversion of the Common
Stock have been duly authorized and reserved for issuance by BSTI. The
Warrants and Warrant Shares, and upon exchange of the Common Stock into
Conversion Shares as provided in Section 8 of this Agreement, the
Warrant Shares and the Conversion Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all
rights accorded to a holder of common stock of BSTI and the Company,
respectively.
e. No Conflicts. Except as disclosed in Schedule 3(e),
the execution, delivery and performance of this Agreement by the
Company and BSTI and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of
the Certificate of Incorporation, any certificate of designations,
preferences, and rights of any outstanding series of preferred stock of
the Company or BSTI or by-laws or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company, BSTI, or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to
the Company, BSTI, or any of its subsidiaries or by which any
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<PAGE> 8
property or asset of the Company, BSTI, or any of its subsidiaries is
bound or affected. Except as disclosed in Schedule 3(e), neither the
Company, BSTI nor its subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation or Bylaws or their
organizational charter or by-laws, respectively, or any material
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable
to the Company, BSTI, or its subsidiaries. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and
any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Company Registration Rights
Agreement in accordance with the terms hereof or thereof. Except as
disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company and BSTI is required to
obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company, BSTI, and its
subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing.
f. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company , BSTI, or any of its subsidiaries,
threatened against or affecting the Company, the Common Stock, BSTI, or
any of the Company's subsidiaries, wherein an unfavorable decision,
ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company or BSTI
to perform its obligations under, this Agreement or any of the
documents contemplated herein or (iii), except as expressly set forth
in Schedule 3(h), have a material adverse effect on the business,
operations, properties, financial condition or results of operation of
the Company, BSTI, and its subsidiaries taken as a whole.
g. Acknowledgment Regarding Buyer's Purchase of Common
Stock. The Company and BSTI acknowledge and agree that the Buyer is
acting solely in the capacity of an arm's length purchaser with respect
to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Company or BSTI (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of their
respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Common Stock. The Company and BSTI further
represent to the Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the
Company, BSTI, and its representatives.
h. No General Solicitation. Neither the Company, BSTI,
nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation
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<PAGE> 9
or general advertising (within the meaning of Regulation D under the
1933 Act) in connection with the offer or sale of the Common Stock,
Conversion Shares, Warrants, or Warrant Shares.
j. No Integrated Offering. Neither the Company, BSTI,
nor any of its affiliates, nor any person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any security
or solicited any offers to buy any security, under circumstances that
would require registration of the Common Stock, the Conversion Shares,
the Warrants or Warrant Shares under the 1933 Act or cause this
offering of Common Stock or the Conversion Shares to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions.
k. Employee Relations. Neither the Company, BSTI, nor
any of its subsidiaries is involved in any labor dispute nor, to the
knowledge of the Company, BSTI, or any of its subsidiaries, is any such
dispute threatened. None of the Company's, BSTI's or its subsidiaries'
employees is a member of a union and the Company, BSTI, and its
subsidiaries believe that their relations with their employees are
good.
l. Intellectual Property Rights. The Company, BSTI, and
its subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 3(n), none of the Company's
or BSTI's trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade
secrets, or other intellectual property rights have expired or
terminated, or are expected to expire or terminate, in the near future.
The Company, BSTI and its subsidiaries do not have any knowledge of any
infringement by the Company, BSTI or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations,
trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical
information by others and, except as set forth on Schedule 3(n), there
is no claim, action or proceeding being made or brought against, or to
the Company's or BSTI's knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents,
patent rights, invention, copyright, license, service names, service
marks, service mark registrations, trade secret or other infringement;
and the Company, BSTI and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
m. Environmental Laws. The Company, BSTI, and its
subsidiaries are (i) in material compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
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<PAGE> 10
LAWS"), (ii) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in material
compliance with all terms and conditions of any such permit, license or
approval.
n. Title. The Company, BSTI and its subsidiaries have
good and marketable title in fee simple to all real property and good
and marketable title to all personal property owned by them which is
material to the business of the Company, BSTI, and its subsidiaries, in
each case free and clear of all liens, encumbrances and defects except
such as are described in Schedule 3(p) or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company, BSTI, and
its subsidiaries. Any real property and facilities held under lease by
the Company, BSTI, and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company, BSTI, and its
subsidiaries.
o. Insurance. The Company, BSTI, and each of its
subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
management of the Company and believes to be prudent and customary in
the businesses in which the Company and its subsidiaries are engaged.
Neither the Company nor BSTI any such subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor
BSTI or any such subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not
materially and adversely affect the condition, financial or otherwise,
or the earnings, business or operations of the Company, BSTI and its
subsidiaries, taken as a whole.
p. No Materially Adverse Contracts, Etc. Neither the
Company, BSTI, nor any of its subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company's or BSTI's
officers has or is expected in the future to have a material adverse
effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company, BSTI, or its
subsidiaries. Neither the Company nor BSTI or any of its subsidiaries
is a party to any contract or agreement which in the judgment of the
Company's officers has or is expected to have a material adverse effect
on the business, properties, operations, financial condition, results
of operations or prospects of the Company, BSTI, or its subsidiaries.
q. Tax Status. Except as set forth on Schedule 3(u), the
Company, BSTI, and each of its subsidiaries has made or filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company, BSTI, and each of its
subsidiaries has set aside on
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<PAGE> 11
its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company and BSTI know of no basis for any such claim.
r. Certain Transactions. Except as set forth on Schedule
3(v) and in BSTI's SEC Documents and except for arm's length
transactions pursuant to which the Company and BSTI make payments in
the ordinary course of business upon terms no less favorable than the
Company or BSTI could obtain from third parties and other than the
grant of stock options disclosed on Schedule 3(c), none of the
officers, directors, or employees of the Company or BSTI is presently a
party to any transaction with the Company (other than for services as
employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company or BSTI, any corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner.
s. Dilutive Effect. BSTI understands and acknowledges
that the number of Conversion Shares issuable upon exchange of the
Common Stock will increase in certain circumstances. BSTI further
acknowledges that its obligation to issue Conversion Shares upon
exchange of the Common Stock in accordance with this Agreement is
absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of
BSTI.
t. Fees and Rights of First Refusal. Neither the Company
nor BSTI is obligated to offer the securities offered hereunder on a
right of first refusal basis or otherwise to any third parties
including, but not limited to, current or former shareholders of the
Company, underwriters, brokers, agents or other third parties.
u. Shareholder Approval. BSTI covenants to submit to
its, shareholders at its next shareholder meeting a proposal for
ratification of the issuance of the Conversion Shares, if and as
required by the rules of the National Association of Securities
Dealers, Inc. (the "NASD") applicable to the transaction.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 5 and 6 of this Agreement.
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<PAGE> 12
b. Form D. The Company agrees to file a Form D with
respect to the Common Stock and the Conversion Shares as required under
Regulation D and to provide a copy thereof to each Buyer promptly after
such filing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary to
qualify the Common Stock and the Conversion Shares for, or obtain
exemption for the Common Stock and the Conversion Shares for, sale to
the Buyers at the Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date
as of which the Investors (as that term is defined in the Company
Registration Rights Agreement) may sell all of the Common Stock without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Investors shall
have sold all the Conversion Shares and (B) none of the Common Stock is
outstanding (the "REGISTRATION PERIOD"), the Company, once it becomes a
reporting company pursuant to the Securities Exchange Act of 1934, as
amended, shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if
the 1934 Act or the rules and regulations thereunder would otherwise
permit such termination.
d. Use of Proceeds. The Company will use the proceeds
from the sale of the Common Stock for substantially the same purposes
and in substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following to each Buyer once it becomes a reporting company pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, upon the
effective date of its filing on Form 10 or S-1, during the Registration
Period: (i) within five (5) days after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K, its Quarterly Reports on
Form 10-Q, any Current Reports on Form 8-K and any registration
statements or amendments filed pursuant to the 1933 Act; (ii) within
one (1) day after release thereof, copies of all press releases issued
by the Company or any of its subsidiaries and (ii) copies of the same
notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.
f. Reservation of Shares. BSTI shall take all action
necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 100% of the number of shares of common stock
needed to provide for the issuance of the Conversion Shares. The
Company shall take all action necessary to at all times have authorized
and reserved for the purpose of issuance no less than 100% of the
number of shares of Common Stock needed to provide for the issuance of
the Warrant Shares.
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<PAGE> 13
g. Listings. Once the Company becomes a reporting
company pursuant to the 1934 Act, the Company shall use its best
efforts promptly secure the listing of the Conversion Shares upon each
national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Conversion Shares
from time to time issuable under the terms of this Agreement and the
Company Registration Rights Agreement. The Company shall maintain the
Common Stock's authorization for quotation in the over-the counter
market. The Company shall promptly provide to each Buyer copies of any
notices it receives regarding the continued eligibility of the Common
Stock for trading in the over-the-counter market.
h. Expenses. Each of the Company and the Buyer shall pay
all costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreements. The placement fees of
J.P. Carey Securities, Inc. and Greenfield Capital Partners, LLC shall
be paid for by the Company at Closing.
i. Corporate Existence. So long as any Common Stock
remain outstanding, the BSTI shall not directly or indirectly
consummate any merger, reorganization, restructuring, consolidation,
sale of all or substantially all of BSTI's assets or any similar
transaction or related transactions (each such transaction, a "SALE OF
BSTI") except if the surviving or successor entity in such transaction
(i) expressly assumes, in writing, BSTI's obligations hereunder and
under the BSTI Registration Rights Agreement, and any other agreements
and instruments entered into or delivered by the Company in connection
herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on the New York Stock Exchange, Inc., the
American Stock Exchange, or the NASDAQ Small Cap, National Market or
Electronic Bulletin Board.
(j) No Short Sales of the Common Stock. So long as a
Buyer or any of its affiliates beneficially owns any Common Stock, each
Buyer and its affiliates shall not directly or indirectly engage in any
short sales or third party short sales of the Common Shares or hold a
"put equivalent position" with respect to the Common Stock (as defined
in Rule 16a-1 under the 1934 Act).
(k) Limitation on Short Sales of Conversion Shares. Buyer
and its affiliates shall not engage in short sales of the Conversion
Shares; provided, however, that any holder may enter into any short
sale or other hedging or similar arrangement it deems appropriate with
respect to Conversion Shares to be issued pursuant to an Exchange
Notice after it delivers an Exchange Notice with respect to such
Conversion Shares to be issued pursuant to an Exchange Notice so long
as such sales or arrangements do not involve more than the number of
such Conversion Shares to be issued pursuant to an Exchange Notice
(determined as of the date of such Exchange Notice). Buyer and its
affiliates agree to provide to BSTI upon
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<PAGE> 14
written request from time to time its securities trading records in
order to demonstrate that it has complied with this Section 4(k).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common
Stock to the Buyer at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and the
Registration Rights Agreements and delivered the same to the Company.
b. The Buyer shall have delivered to the Company the
Purchase Price for the Common Stock being purchased by the Buyer at the
Closing by wire transfer of immediately available funds pursuant to the
wire instructions provided by the Company.
c. The representations and warranties of the Buyer shall
be true and correct in all material respects as of the date when made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at
or prior to the Closing Date.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Common Stock at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion:
a. The Company and BSTI shall have executed this
Agreement, the Company shall have executed the Company Registration
Rights Agreement and BSTI shall have executed the BSTI Registration
Rights Agreement, and delivered the same to the Buyer.
b. The representations and warranties of the Company and
BSTI shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing
Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company and BSTI
shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied
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<PAGE> 15
with by the Company at or prior to the Closing Date. The Buyer shall
have received a certificate, executed by the Chief Executive Officer of
each of the Company and BSTI, each dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by the Buyer including, without limitation an update as of
the Closing Date regarding the representation contained in Section 3(c)
above.
c. The Buyer shall have received the opinion of the
Company's and BSTI's counsel dated as of the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer and in
substantially the form of Exhibit "D" attached hereto.
d. The Company and BSTI shall have executed and
delivered to the Buyer the Certificates (in such denominations as the
Buyer shall request) for the Common Stock and Warrants being purchased
by the Buyer at the Closing.
e. The Board of Directors of the Company and BSTI shall
have adopted the resolutions in substantially the form of Exhibit "E"
attached hereto.
f. As of the Closing Date, BSTI shall have reserved out
of its authorized and unissued Common Stock, solely for the purpose of
effecting the exchange of the Common Stock for the Conversion Shares as
provided in Section 8 herein, such number of Conversion Shares equal to
or greater than 100% of the number of shares which are issuable upon
conversion of all of the Common Stock which could be issued under this
Agreement.
g. The Irrevocable Transfer Agent Instructions, in form
and substance satisfactory to the Buyer, shall have been delivered and
acknowledged in writing by the BSTI's transfer agent.
h. Timothy C. Moses and Jacques Elfersy shall have
delivered the voting proxies substantially in the form attached hereto
as Exhibit "F."
7. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Common Stock, the Conversion Shares, the Warrants
and the Warrant Shares hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company and BSTI jointly and severally
shall defend, protect, indemnify and hold harmless the Buyer and each other
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the
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<PAGE> 16
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company or BSTI in this Agreement, the Common Stock, the Conversion Shares, the
Warrants and the Warrant Shares or the Registration Rights Agreements or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any material breach of any covenant, agreement or obligation of the Company or
BSTI contained in this Agreement or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Indemnities, any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Common Stock and Warrants or the status of the Buyer or
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares, as an investor in the Company or BSTI. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company and
BSTI shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
8. EXCHANGE OF COMMON STOCK INTO CONVERSION SHARES
(a) Exchange Right. Subject to the provisions of Sections
9, 10, 12, and 13 herein, in the event that the Company has not
consummated an initial public offering of its Common Stock, at any time
or times after June 30, 2000, (the "EXCHANGE COMMENCEMENT DATE"), any
holder of Common Stock shall be entitled to exchange any Common Stock
into fully paid and nonassessable shares (rounded to the nearest whole
share in accordance with Section 8(f) below) of Conversion Shares (the
"EXCHANGE RIGHT"), at the Exchange Rate (as defined below); provided,
however, that in no event shall any holder be entitled to (i) exchange
Common Stock into Conversion Shares in excess of that number of Common
Stock which, upon giving effect to such conversion, would cause the
aggregate number of Conversion Shares beneficially owned by the holder
and its affiliates to exceed 4.9% of the outstanding shares of the
Common Stock following such conversion or (ii) exchange more than 10%
of the total number of Conversion Shares issued to such holder into
Conversion Shares (or any successor or assign) pursuant to this
transaction in any thirty (30) day period commencing on the Exchange
Commencement Date and any succeeding thirty (30) day period thereafter.
For purposes of the foregoing proviso, the aggregate number of shares
of Conversion Shares beneficially owned by the holder and its
affiliates shall include the number of shares of Conversion Shares
issuable upon exchange of the Common Stock with respect to which the
determination of such proviso is being made, but shall exclude the
number of shares of Conversion Shares which would be issuable upon (i)
exchange of the remaining, non-exchanged Common Stock beneficially
owned by the holder and its affiliates beneficially owned by the holder
and its affiliates. Except as set forth in the preceding sentence, for
purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934,
as amended.
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<PAGE> 17
(b) Exchange Rate. The number of shares of Conversion
Shares issuable after the Exchange Commencement Date upon exchange of
each share of the Common Stock pursuant to Section 8(a) shall be
determined according to the following formula (the "EXCHANGE RATE"):
(ISSUE PRICE PER SHARE)(1.25)
----------------------------
EXCHANGE PRICE
Notwithstanding anything contained herein to the contrary,
unless this transaction has been approved by the shareholders of BSTI
in accordance with Georgia law, then as long as the Common Stock of
BSTI is listed on the NASDAQ National Market or the NASDAQ Small Cap
Market, BSTI shall not issue Conversion Shares upon exchange of Common
Stock which would equal or exceed twenty percent (20%) of the issued
and outstanding Common Stock of BSTI on the date of issuance of the
Common Stock or such lesser amount as determined on a pro-rata basis
based upon the number of Common Stock issued.
For purposes of this Section 8, the following terms shall have
the following meanings:
(i) "EXCHANGE DATE" shall mean the Trading
Day that an Exchange Notice is deemed delivered
pursuant to Section 8(e);
(ii) "EXCHANGE PRICE" means the Average
Market Price for the Conversion Shares for the twenty
(20) consecutive Trading Days immediately following
the Exchange Date;
(iii) "AVERAGE MARKET PRICE" means, with
respect to any security for any period, that price
which shall be computed as the arithmetic average of
the Closing Bid Prices (as defined below) for such
security for each trading day in such period;
(iv) "CLOSING" shall mean one of the closing
of an exchange of Common Stock for Conversion Shares
pursuant to Section 8.
(v) "CLOSING DATE" shall mean with respect
to a closing, the twentieth Trading Day following the
Exchange Date related to such closings or such
earlier date as BSTI and the holder shall agree.
(vi) "CLOSING BID PRICE" means, for any
security as of any date, the last closing bid price
on the Nasdaq National Market System (the "NASDAQ-
NM") as reported by Bloomberg Financial Markets
("BLOOMBERG"), or, if the Nasdaq-NM is not the
principal trading market for such security, the last
closing bid price of such security on the principal
securities exchange or
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<PAGE> 18
trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price of such
security in the over-the-counter market on the pink
sheets or bulletin board for such security as
reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the last
closing trade price of such security as reported by
Bloomberg. If the Closing Bid Price cannot be
calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such
security on such date shall be the fair market value
as reasonably determined in good faith by the Board
of Directors of the Company (all as appropriately
adjusted for any stock dividend, stock split or other
similar transaction during such period); and
(vii) "CONVERSION SHARES" shall mean those
shares of common stock of BSTI, no par value,
issuable pursuant to an exchange of Common Stock
pursuant to Section 8 of this Agreement.
(viii) "ISSUANCE DATE" means the date of
issuance of the Common Stock as described herein.
(ix) "ISSUE PRICE PER SHARE" shall mean
$4.66 (as adjusted for stock splits and similar
events of the Company).
(x) "PRINCIPAL MARKET" shall mean the Nasdaq
National market, the NASDAQ SmallCap Market, the
American Stock Exchange or the New York Stock
Exchange, whichever at the time is the principal
trading exchange or market for the Conversion Shares.
(xi) "TRADING DAY" shall mean any day during
which the Principal Market shall be open for
business.
(c) Dispute Resolution. In the case of a dispute as to
the determination of the Average Market Price or the arithmetic
calculation of the Exchange Rate, BSTI shall promptly issue to the
holder the number of Conversion Shares that is not disputed and shall
submit the disputed determinations or arithmetic calculations to the
holder via facsimile within three (3) business days of the Closing
Date. If such holder and BSTI are unable to agree upon the
determination of the Average Market Price or arithmetic calculation of
the Conversion Rate within three (3) business days of such disputed
determination or arithmetic calculation being submitted to the holder,
then BSTI shall within one (1) business day submit via facsimile (A)
the disputed determination of the Average Market Price to an
independent, reputable investment bank or (B) the disputed arithmetic
calculation of the Exchange Rate to its independent, outside
accountant. BSTI shall cause the investment bank or the accountant, as
the case may be, to perform the determinations or calculations and
notify BSTI and the holder of the results no later than forty-eight
(48) hours from the time it
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receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may
be, shall be binding upon all parties absent manifest error. The person
or persons entitled to receive Conversion Shares issuable upon a
conversion of Common Stock shall be treated for all purposes as the
record holder or holders of such Conversion Shares on the Conversion
Date.
(d) Adjustment to Exchange Price - Dilution and Other
Events. In order to prevent dilution of the rights granted herein, the
Exchange Price will be subject to adjustment from time to time as
provided in this Section 8(d).
(i) Reorganization, Reclassification,
Consolidation, Merger, or Sale. Any recapitalization,
reorganization reclassification, consolidation. merger, sale
of all or substantially all of BSTI's assets to another Person
(as defined below) or other similar transaction which is
effected in such a way that holders of Conversion Shares are
entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in
exchange for Conversion Shares is referred to herein as an
"Organic Change." Prior to the consummation of any Organic
Change, BSTI will make appropriate provision (in form and
substance reasonably satisfactory to the holders of a majority
of the Common Stock issued in connection with this transaction
then outstanding) to insure that each of the holders of the
Common Stock issued in connection with this transaction will
thereafter have the right to acquire and receive in lieu of or
in addition to (as the case may be) the Conversion Shares
immediately theretofore acquirable and receivable upon the
conversion of such holder's Common Stock, such shares of
stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of
Conversion Shares immediately theretofore acquirable and
receivable upon the exchange of such holder's Common Stock had
such Organic Change not taken place. In any such case, BSTI
will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) with respect to such holders' rights and
interests to insure that the provisions of this Section 8(d)
and Section 8(e) below will thereafter be applicable to the
Common Stock. BSTI will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the
successor entity (if other than BSTI) resulting from
consolidation or merger or the entity purchasing such assets
assumes, by written instrument (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding), the obligation to deliver to each holder of
Common Stock issued in connection with this transaction such
shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to
acquire. For purposes of this Agreement, "PERSON" shall mean
an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof.
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<PAGE> 20
(ii) Notices.
(A) Immediately upon any adjustment of
the Exchange Price, BSTI will give written notice
thereof to each holder of Common Stock issued in
connection with this transaction, setting forth in
reasonable detail and certifying the calculation of
such adjustment.
(B) BSTI will give written notice to
each holder of Common Stock issued in connection with
this transaction at least twenty (20) days prior to
the date on which BSTI closes its books or takes a
record (I) with respect to any dividend or
distribution upon the Conversion Shares, (II) with
respect to any pro rata subscription offer to holders
of Conversion Shares, or (III) for determining rights
to vote with respect to any Organic Change,
dissolution or liquidation.
(C) BSTI will also give written notice
to each holder of Common Stock issued in connection
with this transaction at least twenty (20) days prior
to the date on which any Organic Change, dissolution,
or liquidation will take place.
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<PAGE> 21
(e) Mechanics of Exchange of Common Stock into Conversion
Shares.
(i) Holder's Delivery Requirements.
Such notice exchanging Common Stock into Conversion
Shares in accordance with this Section 8 by the
holder (the "EXCHANGE NOTICE") shall (A) be delivered
by facsimile to the Company and BSTI for receipt on
or prior to 12:00 noon Eastern Standard Time or (B)
the immediately succeeding Trading Day if it is
received by facsimile or otherwise after 12:00 noon
Eastern Standard Time on a Trading Day (the "EXCHANGE
DATE") and (B) the holder shall surrender to a common
carrier for delivery to BSTI as soon as practicable
following such date, but in no event later than four
(4) Trading Days prior to a Closing Date, the
original certificates representing the Common Stock
being exchanged (or an indemnification undertaking
with respect to such shares in the case of their
loss, theft, or destruction) and the originally
executed conversion notice.
(ii) The Company and BSTI Response. Upon
receipt by the Company and BSTI of a facsimile copy
of the Exchange Notice, the Company and BSTI shall
send via facsimile, a confirmation of receipt of such
Exchange Notice to such holder. Upon receipt by the
Company of the Common Stock Certificates to be
exchanged pursuant to an Exchange Notice, together
with the originally executed Exchange Notice, BSTI or
the transfer agent (as applicable) shall, within
three (3) business days of each Closing Date (A)
issue and surrender to a common carrier for overnight
delivery to the address as specified in the Exchange
Notice, a certificate, registered in the name of the
holder or its designee, for the number of Conversion
Shares to which the holder shall be entitled. In lieu
of delivering physical certificates representing the
Conversion Shares issuable in accordance with this
Section 8(e) and provided that the transfer agent
then is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of a holder, BSTI shall use its
commercially reasonable efforts to cause the transfer
agent to electronically transmit the applicable
number of Conversion Shares by crediting the account
of the holder's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system.
In addition, on or prior to such Closing Date, each
of BSTI, the Company, and the holder shall deliver to
the others all documents, instruments, and writings
required to be delivered or reasonably requested by
any of them pursuant to this Agreement in order to
implement and effect the transactions contemplated
herein.
(iii) Record Holder. The person or
persons entitled to receive the Conversion Shares
issuable upon an exchange of Common Stock shall be
treated for all purposes as the record holder or
holders of such shares of Conversion Shares on the
Exchange Date.
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<PAGE> 22
(iv) BSTI's Failure to Timely Exchange.
If BSTI shall fail to issue to a holder on a Closing
Date, a certificate for the number of shares of
Conversion Shares to which such holder is entitled
upon such holder's exchange of Common Stock, in
addition to all other available remedies which such
holder may pursue hereunder (including
indemnification pursuant to Section 7 hereof), the
Company shall pay additional damages to such holder
on each day after the fifth (5th) Trading Day
following the applicable Closing Date for which such
exchange is not timely effected, an amount equal to
1.0% of the product of number of Conversion Shares
not issued to such holder to which such holder is
entitled by the Exchange Price for each calendar
month until such exchange is made unless Buyer elects
to enforce the terms of Section 11 herein.
(f) Fractional Shares. BSTI shall not issue any
fraction of a Conversion Share upon any exchange. All
Conversion Shares (including fractions thereof) issuable upon
conversion of more than one share of Common Stock by a holder
thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of a
fraction of a Conversion Share. If, after the aforementioned
aggregation, the issuance would result in the issuance of a
fraction of its Conversion Share, BSTI shall round such
fraction of a Conversion Share up or down to the nearest whole
share.
(9) CASH PAYMENT OPTION BY BSTI.
In lieu of issuing the Conversion Shares in accordance with an Exchange
Notice, BSTI shall have the right, in its sole discretion, to pay to the holder
of the Common Stock an amount equal to $5.825 for each share of Common Stock so
exchanged (as adjusted for stock splits and similar events of the Company)
("CASH OUT PRICE"). The Company shall pay the Cash Out Price to that Holder
within seven (7) Trading Days following the receipt by the Company and BSTI of
an Exchange Notice.
(10) COMPANY'S RIGHT TO REDEEM AT ITS ELECTION.
(a) At any time, the Company shall have the right, in its
sole discretion, to redeem ("REDEMPTION AT COMPANY'S ELECTION"), from
time to time, any or all of the Common Stock; provided (i) the Company
shall first provide no more than seven (7) Trading Days and no less
than one (1) Trading Day advance written notice as provided in
subparagraph 10(a)(ii) below, and (ii) that the Company shall only be
entitled to redeem Common Stock having an aggregate Stated Value (as
defined above) of at least Five Hundred Thousand Dollars ($500,000). If
the Company elects to redeem some, but not all, of the Common Stock,
the Company shall redeem a pro-rata amount from each Holder of the
Common Stock.
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<PAGE> 23
(i) Redemption Price At Company's
Election. The "REDEMPTION PRICE AT COMPANY'S
ELECTION" shall be calculated as $5.825 (as adjusted
for stock splits and similar events of the Company).
(ii) Mechanics of Redemption at
Company's Election. The Company shall effect each
such redemption by giving no more than seven (7)
Trading Days and no less than one (1) Trading Day
prior written notice ("NOTICE OF REDEMPTION AT
COMPANY'S ELECTION") to (A) the Holders of the Common
Stock selected for redemption at the address and
facsimile number of such Holder appearing in the
Company's Common Stock register and (B) the Transfer
Agent, which Notice of Redemption At Company's
Election shall be deemed to have been delivered three
(3) Trading Days after the Company's mailing (by
overnight or two (2) day courier, with a copy by
facsimile) of such Notice of Redemption at Company's
Election. Such Notice of Redemption At Company's
Election shall indicate (i) the number of shares of
Common Stock that have been selected for redemption,
(ii) the date which such redemption is to become
effective (the "DATE OF REDEMPTION AT COMPANY'S
ELECTION"), and (iii) the applicable Redemption Price
At Company's Election, as defined in subsection
(a)(i) above.
(b) Company Must Have Immediately Available
Funds or Credit Facilities. The Company shall not be entitled
to send any Redemption Notice and begin the redemption
procedure under Sections 10(a) unless it has:
(i) the full amount of the redemption price
in cash, available in a demand or other immediately
available account in a bank or similar financial
institution; or
(ii) immediately available credit
facilities, in the full amount of the redemption
price with a bank or similar financial institution,
or
(iii) an agreement with a standby
underwriter willing to purchase from the Company a
sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not
converted prior to redemptions; or
(iv) a combination of the items set forth in
(i), (ii), and (iii) above, aggregating the full
amount of the redemption price.
(c) Payment of Redemption Price. Each Holder
submitting Common Stock being redeemed under this Section 10
shall send their Common Stock Certificates to be redeemed to
the Company or its Transfer Agent, and the Company shall pay
the applicable redemption price to that Holder within five (5)
business days of the Date of Redemption at Company's Election.
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<PAGE> 24
(11) INABILITY TO FULLY EXCHANGE.
(a) Holder's Option if BSTI Cannot Fully Exchange. If at
any time after the Exchange Commencement Date, upon the Company's and
BSTI's receipt of an Exchange Notice, BSTI does not issue shares which
are registered for resale under the BSTI Registration Statement within
five (5) business days of the time required for any reason or for no
reason, including, without limitation, because BSTI (x) does not have a
sufficient number of Conversion Shares authorized and available, (y) is
otherwise prohibited by applicable law or by the rules or regulations
of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over BSTI or its
securities, including without limitation The Nasdaq Stock Market, Inc.
from issuing all of the Conversion Shares which is to be issued to a
holder of Common Stock pursuant to an Exchange Notice or (z) fails to
have a sufficient number of Conversion Shares registered and eligible
for resale under the BSTI Registration Statement, then BSTI shall issue
as many Conversion Shares as it is able to issue in accordance with
such holder's Exchange Notice and pursuant to Section 8(e) above and,
with respect to the unconverted Common Stock, the holder, solely at
such holder's option, can, in addition to any other remedies such
holder may have hereunder, under this Agreement (including
indemnification under Section 7 thereof), under the BSTI Registration
Rights Agreement, at law or in equity, elect to:
(i) require BSTI to redeem from such holder
those shares of Conversion Stock for which BSTI is unable to
issue Conversion Shares in accordance with such holder's
Exchange Notice ("MANDATORY REDEMPTION") at a price per share
of Common Stock (the "MANDATORY REDEMPTION PRICE") equal to
$5.825 (as adjusted for stock splits or similar events of the
Company;
(ii) require BSTI to issue restricted shares of
Common Stock in accordance with such holder's Exchange Notice
and pursuant to Section 8(e) above, if BSTI's inability to
fully exchange Common Stock is pursuant to its inability to
deliver Conversion Shares registered pursuant to the 1933 Act;
or
(iii) void its Exchange Notice and retain or have
returned, as the case may be, the unexchanged Common Stock
that were to be exchanged pursuant to such holder's Exchange
Notice.
(b) Mechanics of Fulfilling Holder's Election. BSTI shall
send via facsimile to a holder of Common Stock, upon receipt of a
facsimile copy of an Exchange Notice from such holder which cannot be
fully satisfied as described in Section 11(a) above, a notice of BSTI's
inability to fully satisfy such holder's Exchange Notice (the
"INABILITY TO FULLY EXCHANGE NOTICE"). Such Inability to Fully Exchange
Notice shall indicate (i) the reason why BSTI is unable to fully
satisfy such holder's Exchange Notice, (ii) the number of shares of
Common Stock which cannot be exchanged, and (iii) the Mandatory
Redemption Price. Such holder must, within five (5) Trading Days of
receipt of such Inability to Fully Exchange
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<PAGE> 25
Notice, deliver written notice via facsimile to BSTI ("NOTICE IN
RESPONSE TO INABILITY TO EXCHANGE") of its election pursuant to Section
11(a) above.
(c) Payment of Redemption Price. If such holder shall
elect to have its shares redeemed pursuant to Section 11(a) above, BSTI
shall pay the Mandatory Redemption Price in cash to such holder within
thirty (30) days of BSTI's receipt of the holder's Notice in Response
to Inability to Exchange (the "MANDATORY REDEMPTION PRICE DEADLINE").
If BSTI shall fail to pay the applicable Mandatory Redemption Price to
such holder on a timely basis as described in this Section 11(c) (other
than pursuant to a dispute as to the determination of the Closing Bid
Price or the arithmetic calculation of the Redemption Rate), such
unpaid amount shall bear interest at the rate of 1% for the first month
and a rate of 2.0% per month thereafter (prorated for partial months)
until paid in full. Following the Mandatory Redemption Price Deadline,
until the full Mandatory Redemption Price is paid in full to such
holder, such holder may void the Mandatory Redemption with respect to
those shares of Common Stock for which the full Mandatory Redemption
Price has not been paid and receive back such shares of Common Stock.
(d) Pro-rata Exchange and Redemption. In the event the
Company and BSTI each receives an Exchange Notice from more than one
holder of Common Stock on the same day and BSTI can exchange and redeem
some, but not all, of the Common Stock pursuant to this Section 11,
BSTI shall exchange and redeem from each holder of Common Stock
electing to have Common Stock exchanged and redeemed at such time an
amount equal to such holder's pro-rata amount (based on the number of
shares of Common Stock held by such holder relative to the number of
shares of Common Stock outstanding, pursuant to this Agreement) of all
Common Stock being exchanged and redeemed at such time.
12. ONE-TIME RIGHT TO SUSPEND EXCHANGE RIGHT OR EXCHANGE
COMMON STOCK INTO CONVERSION SHARES.
Notwithstanding anything contained herein to the contrary, BSTI shall
have the one-time right, without payment or penalty of any kind, for a period of
thirty (30) days from the date written notice is given to the holders of Common
Stock, to suspend the Exchange Right in the event that the Company has received
a letter of intent by the Exchange Commencement Date from a reputable investment
banking firm to underwrite the public offering of the Company's common stock or
other securities ("PUBLIC OFFERING"), and the Public Offering has not occurred
by the Exchange Commencement Date due to market conditions as determined by such
underwriter.
13. SUSPENSION OF EXCHANGE RIGHT UPON REGISTRATION OF COMMON STOCK
OF THE COMPANY UNDER THE 1934 ACT.
Notwithstanding anything contained herein to the contrary, so long as
(i) the Company becomes and remains a reporting company under the 1934 Act, (ii)
the Company has its Form 8A declared effective by the SEC, and (iii) the trading
price of the Common Stock as reported by
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<PAGE> 26
Bloomberg on its principal exchange or trading market remains equal to or
greater than $6.19 per share, the holders of the Common Stock shall have no
Exchange Right.
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<PAGE> 27
14. REISSUANCE OF CERTIFICATES.
In the event of an exchange or redemption pursuant to this Agreement of
less than all of the Common Stock represented by a particular Common Stock
certificate, the Company shall promptly cause to be issued and delivered, to the
holder of such Common Stock, a Common Stock certificate representing the
remaining shares of Common Stock which have not been so exchanged or redeemed.
15. TRANSFER AGENT INSTRUCTIONS.
BSTI shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Conversion Shares in such amounts as specified from time to
time by the Buyer to the Company upon conversion of the Common Stock (the
"Irrevocable Transfer Agent Instructions"), except as provided in Sections 9,
10, 11, 12, and 15 herein. Prior to registration of the Conversion Shares under
the 1933 Act, all such certificates shall bear the restrictive legend specified
in Section 2(g) of this Agreement. The Company and BSTI warrant that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 15, and stop transfer instructions to give effect to Section
2(f) hereof (in the case of the Conversion Shares, prior to registration of such
shares under the 1933 Act) will be given by the Company or BSTI to its transfer
agent and that the Common Stock and the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company and BSTI as and to
the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section 15 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Common Stock or Conversion Shares. If the Buyer provides the Company and BSTI
with an opinion of counsel, reasonably satisfactory in form, and substance to
the Company, that registration of a resale by the Buyer of any of the Common
Stock or Conversion Shares is not required under the 1933 Act, the Company shall
permit the transfer, and, in the case of the Conversion Shares, BSTI shall
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by the Buyer. The Company and BSTI
acknowledge that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company and BSTI acknowledge
that the remedy at law for a breach of its obligations under this Section 15
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company or BSTI of the provisions of this Section 15, that the Buyer shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
16. CONFIDENTIALITY.
a. Nondisclosure. As much of the information and other
material furnished under or in connection with this Agreement (whether
furnished before, on or after the date hereof) as constitutes or
contains confidential business, financial or other information of the
Company, BSTI or its subsidiaries, each Buyer covenants for itself,
and, as applicable, for
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<PAGE> 28
its directors, officers, affiliates and partners, that it will use due
care to prevent its officers, directors, partners, employees, counsel,
accountants and other representatives from disclosing such information
to persons other than their respective authorized employees, counsel,
accountants, shareholders, partners, limited partners and other
authorized representatives. Notwithstanding the foregoing, if a Buyer
is advised by such counsel that such disclosure or delivery is required
by law, regulation or judicial or administrative order, then they may
disclose or deliver such information or other after giving written
notice to the Company and BSTI of such requirements. For purposes of
this Section 10a., "due care" means at least the same level of care
that a Buyer would use to protect the confidentiality of its own
sensitive or proprietary information, and this obligation shall survive
termination of this Agreement.
b. Possession of Material, Non-Public Information. To
the extent that any of the information furnished by the Company or BSTI
to the Buyers hereof would constitute material, nonpublic information
for purposes of the Exchange Act, Buyers agree not to engage in any
purchase or sale of securities while in possession of such information
and prior to the time that such information is made generally known to
the public and Buyers agree to use due care to prevent their officers,
directors, partners, employees, counsel and other representatives, who
have been given access to such material, nonpublic information, from
engaging in any such purchase or sale during such period.
17. GOVERNING LAW: MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Georgia
without regard to the principles of conflict of laws. Buyer may at any
time and at its option, whether or not an arbitration action is then
pending, initiate a civil action for temporary and permanent injunctive
and other equitable relief against Company and BSTI. Company and BSTI
acknowledges that upon any breach of Buyer's conversion rights
hereunder, Buyer's resulting injury may not be adequately compensated
by a remedy at law. Accordingly, upon such breach, Buyer, at its
election and without limitation of its other remedies, shall be
entitled to pursue a claim for specific performance of this Agreement,
and Company and BSTI hereby waive the right to assert any defense
thereto that Purchaser has an adequate remedy at law. The parties
further agree that any action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the
Superior Court of Fulton County, Georgia, and the United States
District Court for the Northern District of Georgia, Atlanta Division
for the adjudication of any civil action asserted pursuant to this
Paragraph.
b. Counterparts. This Agreement may be executed in two
or more identical counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party. In the
event any signature page is delivered by facsimile transmission, the
party using such means of delivery shall cause four (4) additional
original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery hereof
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
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<PAGE> 29
d. Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement, Amendments. This Agreement
supersedes all other prior oral or written agreements between the
Buyer, the Company, their affiliates and persons acting on their behalf
with respect to the matters discussed herein, and this Agreement and
the instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company
nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (I) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
4405 International Blvd.
Suite B-109
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (410) 921-1062
With a copy to:
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Telephone: (770) 481-7201
Facsimile: (770) 481-7210
If to the Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to the Buyer's counsel as set forth on the Schedule
of Buyers. Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
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<PAGE> 30
g. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and assigns. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior
written consent of the Buyer. The Buyer may assign its rights hereunder
without the consent of the Company, provided, however, that any such
assignment shall not release the Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company
has consented to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and the
Buyer contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4, 5 and 9, the indemnification provisions set forth
in Section 8, shall survive the Closing. The Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. Publicity. The Company, BSTI, and the Buyer shall
have the right to approve before issuance any press releases or any
other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without
the prior approval of the Buyer, to make any press release or other
public disclosure with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted
by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a
copy thereof).
k. Further Assurances. Each party shall do and perform,
or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
1. Termination. In the event that the Closing shall not
have occurred with respect to the Buyer on or before five (5) business
days from the date hereof due to the Company's or the Buyer's failure
to satisfy the conditions set forth in Sections 5 and 6 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party-
provided.
m. Independent Counsel. The parties to this Agreement
acknowledge that Company and BSTI have received independent counsel
from the law firm of Sims Moss Kline & Davis LLP which is acting as
their counsel. Buyers have been advised by Sims Moss Kline & Davis LLP
to seek independent advice with respect to the terms and conditions of
this Agreement and any related agreements before signing them.
-30-
<PAGE> 31
n. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will
be applied against any party.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
"COMPANY"
ALLERGY SUPERSTORE.COM., INC.
By:
-----------------------------------------
Name: Timothy C. Moses
Its: President
BIOSHIELD TECHNOLOGIES, INC.
By:
-----------------------------------------
Name:
Title:
CACHE CAPITAL (USA) L.P.
--------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
-31-
<PAGE> 32
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ADDRESS AND FACSIMILE NUMBER OF NUMBER OF
BUYER'S NAME NUMBER OF BUYER SHARES OF WARRANTS
COMMON STOCK
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate Centre, West Bay 85,653 8,000
Cache Capital (USA) Road
L.P. P.O. Box 31106 SMB
Grand Cayman, Cayman
Islands
Facsimile: 345-949-3877
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 33
SCHEDULE 3(C)
CAPITALIZATION
1. Options to purchase a total of 2,250,000 shares of Common Stock to
each of Timothy Moses and Jacques Elfersy at $2.00 per share.
2. Options to purchase thirty thousand shares of common stock at $2.00
each have been issued to five of the Board Members and four of the Medical
Advisory Board Members of the Company, plus an option to purchase an additional
5,000 shares for each year of service thereafter.
<PAGE> 34
SCHEDULE 3(E)
CONFLICTS
None.
<PAGE> 35
SCHEDULE 3(H)
LITIGATION
None.
<PAGE> 36
SCHEDULE 3(I)
INTELLECTUAL PROPERTY
None.
<PAGE> 37
SCHEDULE 3(N)
LIENS
None.
<PAGE> 38
SCHEDULE 3(U)
TAX STATUS
None.
<PAGE> 39
SCHEDULE 4(D)
USE OF PROCEEDS
<TABLE>
<S> <C> <C>
1 Intercompany Debt Repayment $ 250,000.00
2 Design, development of Allergy Superstore $ 2,250,000.00
3 Increase staffing & costs related to new building $ 1,150,000.00
4 General & Administrative Expenses $ 2,500,000.00
5 Marketing & Sales (advertising/promo) $ 2,500,000.00
6 Branding Campaign $ 1,500,000.00
7 Web Server & Web Serving Tech $ 550,000.00
8 State-of-the-art distribution center $ 2,500,000.00
9 State-of-the-art e-commerce platform $ 450,000.00
10 Lease & Commissions $ 1,350,000.00
TOTAL $15,000,000.00
</TABLE>
<PAGE> 1
Exhibit 10.064
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of August
25, 1999, by and among BioShield Technologies, Inc., a Georgia corporation, with
headquarters at 4405 International Blvd., Norcross, Georgia 30093 (the
"COMPANY"), and the undersigned buyers (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
Allergy Superstore.com, Inc ("ASC"), a subsidiary of the Company, has agreed,
upon the terms and subject to the conditions of the Securities Purchase
Agreement, (i) to issue and sell to the Buyers shares of ASC's common stock, par
value $0.001 per share (the "COMMON STOCK"), which, subject to certain terms and
conditions, will be exchangeable after August 25, 2000 (the "EXCHANGE
COMMENCEMENT DATE") into shares of the Company's common stock, no par value per
share (as converted, the "CONVERSION SHARES") in accordance with the terms of
the Securities Purchase Agreement; and
B. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "INVESTOR" means the Buyer and any transferee or
assignee thereof to whom the Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.
b. "PERSON" means a corporation, a limited liability
company, an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing one or more
Registration Statements in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous basis ("RULE 415"), and the
declaration or ordering of
<PAGE> 2
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the
Conversion Shares issued or issuable upon conversion of the Common
Stock and any shares of capital stock issued or issuable with respect
to the Conversion Shares or the Common Stock as a result of any stock
split, stock dividend, recapitalization, exchange or similar event.
e. "REGISTRATION STATEMENT" means a registration
statement of the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for-the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. No later than December 31,
1999, (the "FILING DEADLINE"), the Company shall prepare and file with
the SEC a Registration Statement or Registration Statements (as is
necessary) on Form S-3 (or, if such form is unavailable for such a
registration, on such other form as is available for such a
registration, subject to the consent of each Buyer and the provisions
of Section 2(e), which consent will not be unreasonably withheld),
covering the resale of all of the Registrable Securities and no other
Securities of any kind by any person or entity, which Registration
Statement(s) shall state that, in accordance with Rule 416 promulgated
under the 1933 Act, such Registration Statement(s) also covers such
indeterminate number of additional shares of Common Stock as may become
issuable to prevent dilution resulting from stock splits, stock
dividends or similar transactions. Such Registration Statement shall
initially register for resale 1,000,000 shares of Common Stock, subject
to adjustment as provided in Section 3(b), and such registered shares
of Common Stock shall be allocated among the Investors pro rata based
on the total number of Registrable Securities issued or issuable as of
each date that a Registration Statement, as amended, relating to the
resale of the Registrable Securities is declared effective by the SEC.
The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC within one hundred and twenty
(120) days after the Filing Deadline (the "REGISTRATION DEADLINE"). The
Company shall permit the registration statement to become effective
within five (5) business days after receipt of a "no review" notice
from the SEC. In the event that the Registration Statement is not
declared effective by the SEC by the Registration Deadline then the
Company shall pay a penalty to each Buyer equal to 2% of the purchase
price for Common Stock purchased by each Investor and still held by
each Buyer for each thirty (30) day period beyond the Registration
Deadline that the Registration Statement is not declared effective by
the SEC (the "REGISTRATION DEADLINE PENALTY"). The Registration
Deadline Penalty shall be immediately payable by the Company on demand
by the Investor in either cash or Common Stock of the Company at the
election of the Company upon delivery to the Company of a notice of
such default by the Investor.
-2-
<PAGE> 3
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) involves an
underwritten offering, the Buyers shall have the right to select one
legal counsel to represent their interests in the offering, the costs
of which shall be borne by the Investors.
c. Piggy-Back Registrations. If at any time after the
Exchange Commencement Date and prior to the expiration of the
Registration Period (as hereinafter defined) the Company proposes to
file with the SEC a Registration Statement relating to an offering for
its own account or the account of others under the 1933 Act of any of
its securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to securities to be issued solely in connection
with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit
plans) the Company shall promptly send to each Investor who is entitled
to registration rights under this Section 2(c) written notice of the
Company's intention to file a Registration Statement and of such
Investor's rights under this Section 2(c) and, if within twenty (20)
days after receipt of such notice, such Investor shall so request in
writing, the Company shall include in such Registration Statement all
or any part of the Registrable Securities such Investor requests to be
registered, subject to the priorities set forth in Section 2(d) below.
No right to registration of Registrable Securities under this Section
2(c) shall be construed to limit any registration required under
Section 2(a). The obligations of the Company under this Section 2(c)
may be waived by Investors holding a majority of the Registrable
Securities. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included
in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering.
d. Priority in Piggy-Back Registration Rights in
connection with Registrations or Company Account. If the registration
referred to in Section 2(c) is to be an underwritten public offering
for the account of the Company and the managing underwriter(s) advise
the Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such registration:
(1) first, all securities the Company proposes to sell for its own
account, (2) second, up to the full number of securities proposed to be
registered for the account of the holders of securities entitled to
inclusion of their securities in the Registration Statement by reason
of demand registration rights, and (3) third, the securities requested
to be registered by the Investors and other holders of securities
entitled to participate in the registration, drawn from them pro rata
based on the number each has requested to be included in such
registration.
-3-
<PAGE> 4
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the
SEC a Registration Statement with respect to the Registrable Securities
(on or prior to the Filing Deadline) for the registration of
Registrable Securities pursuant to Section 2(a)) and use its best
efforts to cause such Registration Statement(s) relating to Registrable
Securities to become effective as soon as possible after such filing
(by the one hundred and twentieth (120th) day following the issuance of
the relevant for the registration of Registrable Securities pursuant to
Section 2(a), and keep the Registration Statement(s) effective pursuant
to Rule 415 at all times until the later of (i) the date as of which
the Investors may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto) or (ii) the date on which the Investors shall have
sold all the Registrable Securities (the "REGISTRATION PERIOD"), which
Registration Statement(s) (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement(s) and the prospectus(es) used in connection
with the Registration Statement(s), which prospectus(es) are to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep the Registration Statement(s) effective at all times
during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration
Statement(s) until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statement(s). In the event the number of shares available
under a Registration Statement filed pursuant to this Agreement is
insufficient to cover all of the Registrable Securities, the Company
shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case,
as soon as practicable, but in any event within thirty (30) days after
the necessity therefor arises (based on the market price of the Common
Stock and other relevant factors on which the Company reasonably elects
to rely). The Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon
as practicable following the filing thereof. For purposes of the
foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of
the Registrable Securities" if at any time the number of Registrable
Securities issued or issuable upon conversion of the Common Stock is
greater than the quotient determined by dividing (i) the number of
Conversion Shares available for resale under such Registration
Statement by (ii)
-4-
<PAGE> 5
1.0; provided that in the case of the initial registration of the
Registrable Securities pursuant to Section 2(a), the Company shall be
required to register for resale 1,000,000 shares of Common Stock.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration Statement(s)
(including each preliminary prospectus ) and, with regards to the
Registration Statement, any correspondence by or on behalf of the
Company to the SEC or the staff of the SEC and any correspondence from
the SEC or the staff of the SEC to the Company or its representatives,
(ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies
as such Investor may reasonably request) and (iii) such other
documents, including any preliminary prospectus, as such Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
d. The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities covered by the
Registration Statement(s) under the securities or "blue sky" laws of
such jurisdictions in the United States as any Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period,
and (iv) take all other actions reasonably necessary or advisable to
quality the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in
any such jurisdiction, or (c) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify
each Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for
sale under the securities or "blue sky" laws of any jurisdiction in the
United States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.
e. [LEFT INTENTIONALLY BLANK]
f. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a result
of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue
statement or
-5-
<PAGE> 6
omission, and deliver ten (10) copies of such supplement or amendment
to each Investor (or such other number of copies as such Investor may
reasonably request). The Company shall also promptly notify each
Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Investor
by facsimile on the same day of such effectiveness and by overnight
mail) (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information,
(iii) of the Company's reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.
g. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if such
an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (and, in the event
of an underwritten offering, the managing underwriters) of the issuance
of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.
h. The Company shall permit each Investor at such
Investors expense a single firm of counsel or such other counsel as
thereafter designated as selling stockholders' counsel by the Investors
who hold a majority of the Registrable Securities being sold, to review
and comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
i. At the request of the Investors who hold a majority
of the Registrable Securities being sold, the Company shall furnish, on
the date that Registrable Securities are delivered to an underwriter,
if any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriters
and the Investors.
j. The Company shall make available for inspection by
(i) any Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to
-6-
<PAGE> 7
an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required under
the 1933 Act, (b) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body
of competent jurisdiction, or (c) the information in such Records has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, the Records deemed confidential. All
fees, costs and expenses of the foregoing shall be borne by the
Investors.
k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow such
Investor, at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
l. The Company shall use reasonable efforts either to
(i) cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with
respect to such Registrable Securities. The Company shall pay all fees
and expenses in connection with satisfying its obligation under this
Section 3(l).
m. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and, to the extent
applicable, any managing underwriter or
-7-
<PAGE> 8
underwriters, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or
amounts, as the case may be, as the managing underwriter or
underwriters, if any, or, if there is no managing underwriter or
underwriters, the Investors may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the
Investors may request. Not later than the date on which any
Registration Statement registering the resale of Registrable Securities
is declared effective, the Company shall deliver to its transfer agent
instructions, accompanied by any reasonably required opinion of
counsel, that permit sales of unlegended securities in a timely fashion
that complies with then mandated securities settlement procedures for
regular way market transactions.
n. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
o. The Company shall provide a transfer agent and
registrar of all such Registrable Securities not later than the
effective date of such Registration Statement.
p. If requested by the managing underwriters of an
Investor, the Company shall immediately incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters and the Investors agree should be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number
of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any
other terms of the underwritten (or best efforts underwritten) offering
of the Registrable Securities to be sold in such offering; make all
required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and supplement or
make amendments to any Registration Statement if requested by a
shareholder or any underwriter of such Registrable Securities. The
costs of preparation and filing of any such post-effective amendments
and supplements shall be borne by the Investors.
q. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement
to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of
such Registrable Securities.
r. The Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first
anticipated filing date of the Registration Statement, the Company
shall notify each Investor in writing of the information the Company
requires from each such Investor if such Investor elects to have any of
such Investor's Registrable Securities included in the Registration
Statement. It shall be a
-8-
<PAGE> 9
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to
the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to
effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the
Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence
of 3(f) and, if so directed by the Company, such Investor shall deliver
to the Company (at the expense of the Company) or destroy all copies in
such Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be borne by the Company
except as otherwise specifically provided herein.
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<PAGE> 10
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend each
Investor who holds such Registrable Securities, the directors,
officers, partners, employees, agents and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), and any
underwriter (as defined in the 1933 Act) for the Investors, and the
directors and officers of, and each Person, if any, who controls, any
such underwriter within the meaning of the 1933 Act or the 1934 Act
(each, an "INDEMNIFIED PERSON"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several,
(collectively, "CLAIMS") incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party
is or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of
them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any
post-effective amendment thereto or in any filing made in connection
with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("BLUE SKY FILING"), or the omission or alleged omission to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
the statements therein were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the
foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS").
Subject to the restrictions set forth in Section 6(d) with respect to
the number of legal counsel, the Company shall reimburse the Investors
and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained
in this Section 6(a): (i) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by any Indemnified
Person or underwriter for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was
timely made
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<PAGE> 11
available by the Company pursuant to Section 3(c); (ii) with respect to
any preliminary prospectus, shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit
of any person controlling such person) if the untrue statement or
mission of material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section
3(c), and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a
violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company; and (iv) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9 for a period of three
(3) years from the Filing Deadline.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the
Registration Statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "INDEMNIFIED PARTY"), against
any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that
such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect
to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution, to
the same extent as provided above, with respect to information such
persons so furnished in writing expressly for inclusion in the
Registration Statement.
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<PAGE> 12
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of
any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual
or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in
such proceeding. The Company shall pay reasonable fees for only one
separate legal counsel for the Investors, and such legal counsel shall
be selected by the Investors holding a majority in interest of the
Registrable Securities included in the Registration Statement to which
the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying
party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person
which relates to such action or claim. The indemnifying party shall
keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations
with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its
written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the Indemnified Party
or Indemnified Person, consent to entry of any judgment or enter into
any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party or Indemnified Person of a release from all
liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall
be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent
that the indemnifying party is prejudiced in its ability to defend such
action.
e. The indemnification required by this Section 6 shall
be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be
in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the
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<PAGE> 13
indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees, to:
a. make and keep public information available, as those
terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934
Act so long as the Company remains subject to such requirements (it
being understood that nothing herein shall limit the Company's
obligations under Section 4(c) of the Securities Purchase Agreement)
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the
investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment,
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<PAGE> 14
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement; (vi) such transferee shall be an "ACCREDITED
INVESTOR" as that term is defined in Rule 501 of Regulation D promulgated under
the 1933 Act; and (vii) in the event the assignment occurs subsequent to the
date of effectiveness of the Registration Statement required to be filed
pursuant to Section 2(a), the transferee agrees to pay all reasonable expenses
of amending or supplementing such Registration Statement to reflect such
assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities
with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
BioShield Technologies, Inc.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (770) 921-1065
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<PAGE> 15
with a copy (which shall not constitute notice) to:
Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Georgia without regard to
the principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this
Agreement shall inure to the benefit and of and be binding upon the
permitted successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more
identical counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. 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.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
BIOSHIELD TECHNOLOGIES, INC. CACHE CAPITAL (USA) L.P.
By: By:
------------------------------ -------------------------------
Name: Name:
---------------------------- -----------------------------
Its: Its:
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<PAGE> 17
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
ADDRESS AND FACSIMILE NUMBER OF NUMBER OF SHARES NUMBER OF
BUYER'S NAME BUYER OF COMMON STOCK WARRANTS
- ------------ ------------------------------- ---------------- ---------
<S> <C> <C> <C>
Corporate Centre, West Bay Road 85,653 8,000
Cache Capital P.O. Box 31106 SMB
(USA) L.P. Grand Cayman, Cayman Islands
Facsimile: 345-949-3877
</TABLE>
<PAGE> 1
EXHIBIT 10.065
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of August
25, 1999, by and among Allergy Superstore.com, Inc., a Delaware corporation,
with headquarters at Suite B109, 4405 International Boulevard, Norcross, Georgia
30083 (the "COMPANY"), and the undersigned buyer (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among BioShield Technologies, Inc. ("BSTI") and the parties hereto of even date
herewith (the "SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon the
terms and subject to the conditions of the Securities Purchase Agreement, (i) to
issue and sell to the Buyer's shares of its common stock, par value $0.0001 per
share (the "COMMON STOCK"), which, under certain terms and conditions, will be
convertible into shares of BSTI's common stock, no par value per share (as
converted, the "CONVERSION SHARES") in accordance with the terms of the
Securities Purchase Agreement; and
B. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws once the Company becomes a
reporting company under the Securities and Exchange Act of 1934, as amended (the
"1934 ACT"), by making the appropriate filings with the U.S. Securities and
Exchange Commission (the "SEC"):
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "INVESTOR" means the Buyer and any transferee or
assignee thereof to whom the Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.
b. "PERSON" means a corporation, a limited liability
company, an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing one or more
Registration Statements in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous basis ("RULE 415"), and the
declaration or ordering of
<PAGE> 2
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the Common
Stock and any shares of capital stock issued or issuable as a result of
any stock split, stock dividend, recapitalization, exchange, or similar
event of the Company.
e. "REGISTRATION STATEMENT" means a registration
statement of the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Piggy-Back Registrations. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the
Company proposes to file with the SEC a Registration Statement relating
to an offering for its own account or the account of others under the
1933 Act of any of its securities (other than pursuant to an initial
public offering of any securities of the Company or a filing on Form
S-4 or Form S-8 or their then equivalents relating to securities to be
issued solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock option
or other employee benefit plans) the Company shall promptly send to
each Investor who is entitled to registration rights under this Section
2(c) written notice of the Company's intention to file a Registration
Statement and of such Investor's rights under this Section 2(c) and, if
within twenty (20) days after receipt of such notice, such Investor
shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities
such Investor requests to be registered, subject to the priorities set
forth in Section 2(d) below. No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any
registration required under Section 2(a). The obligations of the
Company under this Section 2(c) may be waived by Investors holding a
majority of the Registrable Securities. If an offering in connection
with which an Investor is entitled to registration under this Section
2(c) is an underwritten offering, then each Investor whose Registrable
Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the
same terms and conditions as other shares of Common Stock included in
such underwritten offering. As used herein, "REGISTRATION PERIOD" shall
mean the earlier of (i) the date as of which the Investors may sell all
of the Registrable Securities without restriction pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto) or (ii)
the date on which (A) the Investors shall have sold all the Registrable
Securities.
b. Priority in Piggy-Back Registration Rights in
connection with Registrations or Company Account. If the registration
referred to in Section 2(c) is to be an underwritten public offering
for the account of the Company and the managing underwriter(s) advise
the
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<PAGE> 3
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such registration:
(1) first, all securities the Company proposes to sell for its own
account, (2) second, up to the full number of securities proposed to be
registered for the account of the holders of securities entitled to
inclusion of their securities in the Registration Statement by reason
of demand registration rights, and (3) third, the securities requested
to be registered by the Investors and other holders of securities
entitled to participate in the registration, drawn from them pro rata
based on the number each has requested to be included in such
registration.
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration Statement(s)
(including each preliminary prospectus ) and, with regards to the
Registration Statement, any correspondence by or on behalf of the
Company to the SEC or the staff of the SEC and any correspondence from
the SEC or the staff of the SEC to the Company or its representatives,
(ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies
as such Investor may reasonably request) and (iii) such other
documents, including any preliminary prospectus, as such Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
b. The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities covered by the
Registration Statement(s) under the securities or "blue sky" laws of
such jurisdictions in the United States as any Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period,
and (iv) take all other actions reasonably necessary or advisable to
quality the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in
any jurisdiction where it would not otherwise be
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<PAGE> 4
required to qualify but for this Section 3(d), (b) subject itself to
general taxation in any such jurisdiction, or (c) file a general
consent to service of process in any such jurisdiction. The Company
shall promptly notify each Investor who holds Registrable Securities of
the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky" laws
of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such
purpose.
c. In the event Investors who hold a majority of the
Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and perform
its obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering. The
cost of such underwriters shall be borne by the Investors.
d. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a result
of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement
or amendment to each Investor (or such other number of copies as such
Investor may reasonably request). The Company shall also promptly
notify each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to
each Investor by facsimile on the same day of such effectiveness and by
overnight mail) (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
e. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if such
an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (and, in the event
of an underwritten offering, the managing underwriters) of the issuance
of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.
f. The Company shall permit each Investor at such
Investors expense a single firm of counsel or such other counsel as
thereafter designated as selling stockholders' counsel by the Investors
who hold a majority of the Registrable Securities being sold, to review
and
-4-
<PAGE> 5
comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
g. At the request of the Investors who hold a majority
of the Registrable Securities being sold, the Company shall furnish, on
the date that Registrable Securities are delivered to an underwriter,
if any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriters
and the Investors.
h. The Company shall make available for inspection by
(i) any Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to an Investor) or use of any Record or
other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release
of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or
(c) the information in such Records has been made generally available
to the public other than by disclosure in violation of this or any
other agreement. Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. All fees, costs
and expenses of the foregoing shall be borne by the Investors.
i. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in
-5-
<PAGE> 6
or by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow such
Investor, at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
j. The Company shall use reasonable efforts either to
(i) cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with
respect to such Registrable Securities. The Company shall pay all fees
and expenses in connection with satisfying its obligation under this
Section 3(j).
k. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and, to the extent
applicable, any managing underwriter or underwriters, to facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or, if there
is no managing underwriter or underwriters, the Investors may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may request. Not
later than the date on which any Registration Statement registering the
resale of Registrable Securities is declared effective, the Company
shall deliver to its transfer agent instructions, accompanied by any
reasonably required opinion of counsel, that permit sales of unlegended
securities in a timely fashion that complies with then mandated
securities settlement procedures for regular way market transactions.
l. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
m. The Company shall provide a transfer agent and
registrar of all such Registrable Securities not later than the
effective date of such Registration Statement.
n. If reasonably requested by the managing underwriters,
the Company shall immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters
and the Investors agree should be included therein relating to the sale
and distribution of Registrable Securities, including, without
limitation,
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<PAGE> 7
information with respect to the number of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by
such underwriters and with respect to any other terms of the
underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; make all required filings of
such prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by a shareholder
or any underwriter of such Registrable Securities. The costs of
preparation and filing of any such post-effective amendments and
supplements shall be borne by the Investors.
o. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement
to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of
such Registrable Securities.
p. The Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first
anticipated filing date of the Registration Statement, the Company
shall notify each Investor in writing of the information the Company
requires from each such Investor if such Investor elects to have any of
such Investor's Registrable Securities included in the Registration
Statement. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that
such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
Each Investor agrees to enter into any contractual lock-up agreements
with respect to the Common Stock or other securities
-7-
<PAGE> 8
held by each Investor in connection with an underwritten public
offering of the Company's common stock or other securities.
d. Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 3(h) or the first sentence of 3(d), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or the first sentence
of 3(d) and, if so directed by the Company, such Investor shall deliver
to the Company (at the expense of the Company) or destroy all copies in
such Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be borne by the Company
except as otherwise specifically proved herein.
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend each
Investor who holds such Registrable Securities, the directors,
officers, partners, employees, agents and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), and any
underwriter (as defined in the 1933 Act) for the Investors, and the
directors and officers of, and each Person, if any, who controls, any
such underwriter within the meaning of the 1933 Act or the 1934 Act
(each, an "INDEMNIFIED PERSON"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several,
(collectively, "CLAIMS") incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party
is or may be a party thereto
-8-
<PAGE> 9
("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any
untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering
under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("BLUE SKY FILING"), or the
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to
the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, or (iii) any
violation or alleged violation by the Company of the 1933 Act, the 1934
Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale
of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"VIOLATIONS"). Subject to the restrictions set forth in Section 6(d)
with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and payable,
for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not
apply to a Claim arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in
writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof
or supplement thereto, if such prospectus was timely made available by
the Company pursuant to Section 3(c); (ii) with respect to any
preliminary prospectus, shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit
of any person controlling such person) if the untrue statement or
mission of material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section
3(c), and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a
violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company (i) and (iv) shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9 for a
period of three (3) years from the Filing Deadline.
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<PAGE> 10
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the
Registration Statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "INDEMNIFIED PARTY"), against
any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that
such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; provided, further, however,
that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the
transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution, to
the same extent as provided above, with respect to information such
persons so furnished in writing expressly for inclusion in the
Registration Statement.
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of
any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual
or potential differing interests
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<PAGE> 11
between such Indemnified Person or Indemnified Party and any other
party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for only one separate legal counsel for the
Investors, and such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any
such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or
claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified
Party or Indemnified Person with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall
not relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent
that the indemnifying party is prejudiced in its ability to defend such
action.
e. The indemnification required by this Section 6 shall
be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified
Party or Indemnified Person against the indemnifying party or others,
and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6 and (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation.
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<PAGE> 12
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees,
once the Company becomes a reporting company under the 1934 Act upon the
effective date of its Form 10 to be filed with the SEC, to:
a. make and keep public information available, as those
terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934
Act so long as the Company remains subject to such requirements and the
filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the
investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933 Act
and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement; (vi) such transferee shall be an "ACCREDITED INVESTOR" as that term
is defined in Rule 501 of Regulation D promulgated under the 1933 Act; and (vii)
in the event the assignment occurs subsequent to the date of effectiveness of
the Registration Statement required to be filed pursuant to Section 2(a), the
transferee agrees to pay all reasonable expenses of amending or supplementing
such Registration Statement to reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities.
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<PAGE> 13
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities
with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
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<PAGE> 14
If to the Company: Allergy Superstore.com, Inc.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Attention: President
Facsimile: (770) 921-1065
With a copy to: Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
Facsimile: (770) 481-7200
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Georgia without regard to
the principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this
Agreement shall inure to the benefit and of and be binding upon the
permitted successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more
identical counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
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<PAGE> 15
i. 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.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
ALLERGY SUPERSTORE.COM, INC. CACHE CAPITAL (USA) L.P.
By: By:
------------------------- ---------------------------------
Name: Name:
Its: Its:
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<PAGE> 16
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
ADDRESS AND FACSIMILE NUMBER OF SHARES NUMBER OF
BUYER'S NAME NUMBER OF BUYER OF COMMON STOCK WARRANTS
- ------------ --------------------- ---------------- ---------
<S> <C> <C> <C>
Corporate Centre, West Bay 85,653 8,000
Cache Capital Road
(USA) L.P. P.O. Box 31106 SMB
Grand Cayman, Cayman
Islands
Facsimile: 345-949-3877
</TABLE>
<PAGE> 1
EXHIBIT 10.066
TRANSFER AGENT INSTRUCTIONS
BIOSHIELD TECHNOLOGIES, INC.
August 25, 1999
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
Attn: George Karfunkel
Dear Gentlemen:
Reference is made to that certain Securities Purchase Agreement, of
even date herewith, by and among BioShield Technologies, Inc., a Georgia
corporation (the "COMPANY"), and each of the subscribers listed in Exhibit "A"
attached hereto (collectively, the "HOLDERS") pursuant to which the Company is
issuing to the Holders an aggregate of 85,653 shares of Common Stock, $0.001
par value of Allergy Superstore.com, Inc. (the "COMMON SHARES"). This letter
shall serve as our irrevocable authorization and direction to you (provided
that you are the transfer agent of the Company at such time) to issue shares
(the "CONVERSION SHARES") of Common Stock, no par value (the "COMMON STOCK"),
of the Company to or upon the order of a Holder from time to time upon (i)
surrender to you of a properly completed and duly executed Conversion Notice,
in the form attached hereto as Exhibit I, which has been properly agreed to and
acknowledged by the Company as indicated by the signature of a duly authorized
officer of the Company thereon and (ii) certificates representing Preferred
Shares being converted (or an indemnification undertaking with respect to such
shares in the case of their loss, theft or destruction). So long as you have
previously received: (i) written confirmation from counsel to the Company that
a registration statement covering resales of the Conversion Shares has been
declared effective by the U.S. Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 ACT"), and (ii) a copy
of such Registration Statement, Certificates representing the Conversion Shares
shall not bear any legend restricting transfer of the Conversion Shares thereby
and should not be subject to any stop-transfer restriction. However, if you
have not previously received (i) written confirmation from counsel to the
Company that a registration statement covering resales of the Conversion Shares
has been declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and (ii) a copy of such registration
statement, then the certificates representing the Conversion Shares shall bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN FORM AND CONTENT
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER SAID ACT.
<PAGE> 2
provided, however, that the Company may from time to time notify you to place
stop transfer restrictions on the certificates for the Conversion Shares in the
event a registration statement covering the Conversion Shares is subject to
amendment for events then current.
An opinion of counsel to the Company that the issuance of the
Conversion Shares to the Holders will be exempt from registration under the
1933 Act is attached hereto as Exhibit II.
Please be advised that the Holders are relying upon this letter as an
inducement to enter into the Securities Purchase Agreement and, accordingly,
each Holder is a third party beneficiary to these instructions.
Should you have any questions concerning this matter please contact me
at (770) 925-3432.
Very truly yours,
BIOSHIELD TECHNOLOGIES, INC.
By:
--------------------------------------
Name: Timothy C. Moses
Its: President and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
AMERICAN STOCK TRANSFER & TRUST CO.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Date:
-------------------------------------
Enclosure
cc: Holders
<PAGE> 3
EXHIBIT "A"
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES OF
BUYER'S NAME ADDRESS AND FACSIMILE NUMBER OF BUYER COMMON STOCK NUMBER OF WARRANTS
- ------------------------- ---------------------------------------- ------------------------ --------------------
<S> <C> <C> <C>
Corporate Centre, West Bay Road 85,653 8,000
Cache Capital (USA) L.P. P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
Facsimile: 345-949-3877
- ------------------------- ---------------------------------------- ------------------------ --------------------
</TABLE>
<PAGE> 4
EXHIBIT I
BIOSHIELD TECHNOLOGIES, INC.
EXCHANGE NOTICE
Reference is made to the Securities Purchase Agreement, dated as of
June 30, 1999 (the "AGREEMENT"). In accordance with and pursuant to the
Agreement, the undersigned hereby elects to exchange the number of shares of
Common Stock of Allergy Superstore.com, Inc., $0.001 par value per share (the
"COMMON STOCK"), of BioShield Technologies, Inc., a Georgia corporation (the
"COMPANY"), indicated below into shares of Common Stock, no par value per share
(the "COMMON STOCK"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Common Stock specified below as of the date
specified below.
The undersigned acknowledges that any sales by the undersigned of the
securities issuable to the undersigned upon exchange of the Common Stock shall
be made only pursuant to (i) a registration statement effective under the
Securities Act of 1933, as amended (the "ACT"), or (ii) an opinion of its
counsel in form and content satisfactory to the Company that such sale is
exempt from registration required by Section 5 of the Act.
<TABLE>
<CAPTION>
<S> <C>
Date of Exchange:
---------------------------------------------
Number of Shares of Common
Stock to be exchanged:
---------------------------------------------
Stock certificate No(s). to be exchanged:
---------------------------------------------
Please confirm the following information:
Exchange Price:
---------------------------------------------
Number of shares of Conversion Shares
to be issued:
---------------------------------------------
</TABLE>
<PAGE> 5
please issue the Common Stock into which the Common Stock are being exchanged
in the following name and to the following address:
<TABLE>
<CAPTION>
<S> <C>
Issue to:
---------------------------------------------
---------------------------------------------
Facsimile Number:
---------------------------------------------
Authorization:
---------------------------------------------
By:
-----------------------------------------
Title:
--------------------------------------
Dated:
---------------------------------------------
ACKNOWLEDGED AND AGREED:
BIOSHIELD TECHNOLOGIES, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Date:
---------------------------
</TABLE>
<PAGE> 6
EXHIBIT II
BIOSHIELD TECHNOLOGIES, INC.
Attached hereto.
<PAGE> 1
EXHIBIT 10.067
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of August 25, 1999, between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and Cache Capital
(USA) L.P. (hereinafter referred to as "INVESTOR").
W I T N E S S E T H :
WHEREAS, Investor has participated as an Investor in connection with
the Company's offering (the "OFFERING") of up to $15,000,000 in aggregate
amount of common stock, par value $0.001 per share (the "COMMON STOCK") for an
aggregate purchase price of $15,000,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Investor and/or its designees, in consideration for,
and as part of the investment by Investor in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant.
Investor and/or its designees are hereby granted the right to
purchase, at any time from the date of issuance of the aforementioned Preferred
Stock until 5:00 P.M., Eastern Standard Time, on June 29, 2004 (the "WARRANT
EXERCISE TERM"), 8,000 Shares at an exercise price (subject to adjustment as
provided in Article 7 hereof) of $5.126 per share (the "INITIAL EXERCISE
PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in
cash or by check to the order of the Company, or any combination of cash or
check, subject to adjustment as provided in Article 7 hereof. Upon surrender of
the Warrant Certificate with the annexed Form of Election to Purchase duly
executed, together with payment of the Exercise Price (as hereinafter defined)
for the Shares purchased, at the Company's executive offices currently located
at 4405 International Blvd., Norcross Georgia 30093, the registered holder of a
Warrant Certificate ("HOLDER" or "HOLDERS") shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder hereof, in
<PAGE> 2
whole or in part (but not as to fractional shares of the Common Stock). In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at its option, exchange this Warrant, in whole
or in part (a "WARRANT EXCHANGE"), into the number of Shares determined in
accordance with this Section 3.2, by surrendering this Warrant at the principal
office of the company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange or, if later, the
date the Notice of Exchange is received by the Company (the "EXCHANGE DATE").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the Shares
remaining subject to this Warrant, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) business days following the Exchange
Date. In connection with any Warrant Exchange, this Warrant shall represent the
right to subscribe for and acquire the number of Shares (rounded to the next
highest integer) equal to (i) the number of Shares specified by the Holder in
its Notice of Exchange (the "TOTAL NUMBER") less (ii) the number of Shares
equal to the quotient obtained by dividing (A) the product of the Total Number
and the then existing Exercise Price by (B) the current market value of a share
of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for
the Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange,
substitution or transfer.
-2-
<PAGE> 3
The Warrant Certificates and, upon exercise of the Warrants, in part
or in whole, certificates representing the Shares shall bear a legend
substantially similar to the following:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "ACT"),
and may not be offered or sold except (i) pursuant to an effective
registration statement under the Act, (ii) to the extent applicable,
pursuant to Rule 144 under the Act (or any similar rule under such Act
relating to the disposition of securities), or (iii) upon the delivery
by the holder to the Company of an opinion of counsel, satisfactory to
counsel to the issuer, stating that an exemption from registration
under such Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price
shall be the price which shall result from time to time from any and all
adjustments of the Initial Exercise Price in accordance with the provisions of
Article 7 hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein
shall mean the Initial Exercise Price or the adjusted Exercise Price, depending
upon the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of
the date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
6.3 Piggyback Registration. If, at any time during the
five years following the date of this Agreement, the Company proposes to
prepare and file any registration statement or post-effective amendments (other
than in connection with an underwritten initial public offering or initial
-3-
<PAGE> 4
registration of the Company or the Company's securities with the U.S.
Securities & Exchange Commission) thereto covering equity or debt securities of
the Company, or any such securities of the Company held by its shareholders (in
any such case, other than in connection with a merger, acquisition or pursuant
to Form S-8 or successor form), (for purposes of this Article 6, collectively, a
"REGISTRATION STATEMENT"), it will give written notice of its intention to do so
by registered mail ("NOTICE"), at ten (10) business days prior to the filing of
each such Registration Statement, to all holders of the Registrable Securities.
Upon the written request of such a holder (a "REQUESTING HOLDER"), made within
ten (10) business days after receipt of the Notice, that the Company include any
of the Requesting Holder's Registrable Securities in the proposed Registration
Statement, the Company shall, as to each such Requesting Holder, use its best
efforts to effect the registration under the Securities Act of the Registrable
Securities which it has been so requested to register ("PIGGYBACK
REGISTRATION"), at the Company's sole cost and expense and at no cost or expense
to the Requesting Holders. Notwithstanding the provisions of this Section 6.3,
the Company shall have the right at any time after it shall have given written
notice pursuant to this Section 6.3 (irrespective of whether any written request
for inclusion of such securities shall have already been made) to elect not to
file any such proposed Registration Statement, or to withdraw the same after the
filing but prior to the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Article 7, the number
of Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Shares issuable
upon exercise of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In
case of any reclassification or change of the outstanding shares of Common
Stock (other than a change in par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination), or in the case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the Company
is the surviving corporation and which does not result in any reclassification
or change of the outstanding shares of Common Stock, except a change as a
result of a subdivision or combination of such shares or a change in par value,
as aforesaid), or in the case of a sale or conveyance to another corporation of
the property of the Company as an entirety, the Holders shall thereafter have
the right to purchase the kind and number of shares of stock and other
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as if the Holders were the owners of
the shares of Common Stock underlying the Warrants immediately prior to any
such events at a price equal to the
-4-
<PAGE> 5
product of (x) the number of shares issuable upon exercise of the Warrants and
(y) the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if such
Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall for example be made:
(a) Upon the issuance or sale of shares of
Common Stock upon the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant
to the Company's employee stock option plans in effect or the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any such options, or (ii) the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any options or warrants; or
(c) Upon the issuance of shares of Common Stock
pursuant to contractual obligations; or
(d) If the amount of said adjustment shall be
less than 2 cents (2(cent)) per Share, provided, however,
that in such case any adjustment that would otherwise be
required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried
forward, shall amount to at least 2 cents (2(cent)) per
Share.
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior
to the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company
or by another person or entity, or any other thing of value, the Holder or
Holders of the unexercised Warrants shall thereafter be entitled, in addition
to the shares of Common Stock or other securities receivable upon the exercise
thereof, to receive, upon the exercise of such Warrants, the same monies,
property, assets, rights, evidences of indebtedness, securities or any other
thing of value that they would have been entitled to receive at the time of
such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of
-5-
<PAGE> 6
like tenor and date representing in the aggregate the right to purchase the
same number of Shares in such denominations as shall be designated by the
Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up
to the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts, once it has become a public company, to cause all shares
of Common Stock issuable upon the exercise of the Warrants to be listed on or
quoted on the electronic bulletin board, by NASDAQ or listed on such national
securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise than in cash, or
a cash dividend or distribution payable otherwise than out of current
or retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
-6-
<PAGE> 7
(b) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business
as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or
entitled to vote on such proposed dissolution, liquidation, winding up or sale.
Such notice shall specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend or distribution, or any proposed
dissolution, liquidation, winding up or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3 of this Agreement or to such other address as the Company
may designate by notice to the Holders.
13. Supplements and Amendments.
The Company may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to cure
any ambiguity, to correct or supplement any provision contained herein which
may be defective or inconsistent with any provisions herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company may deem necessary or desirable and which the Company deems not to
adversely affect the interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on June 29,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been
-7-
<PAGE> 8
exercised and all the Shares issuable upon exercise of the Warrants have been
resold to the public; provided, however, that the provisions of Article 6 shall
survive such termination until the close of business on June 29, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be
governed by and interpreted in accordance with the laws of the State of Georgia
without regard to the principles of conflict of laws. The parties further agree
that any action between them shall be heard in Atlanta, Georgia, and expressly
consent to the jurisdiction and venue of the Superior Court of Fulton County,
Georgia, and the United States District Court for the Northern District of
Georgia, Atlanta Division for the adjudication of any civil action asserted
pursuant to this Paragraph.
-8-
<PAGE> 9
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Investor and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the Investor and
any other holder or holders of the Warrant Certificates, Warrants or the
Shares.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
<TABLE>
<S> <C>
ALLERGY SUPERSTORE.COM, INC.
By:
----------------------------------------------
Name: Timothy C. Moses
Title: Chairman of the Board and Chief Executive
Officer
Attest:
---------------------------
Name:
-----------------------------
Title:
----------------------------
INVESTOR:
CACHE CAPITAL (USA) L.P.
By:
----------------------------------------------
Name:
Title:
Attest:
---------------------------
Name:
-----------------------------
Title:
----------------------------
</TABLE>
-9-
<PAGE> 10
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE
EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE
DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, STATING THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, JUNE 30, 2004
No. ___________ 8,000 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that Cache Capital (USA) L.P.
("INVESTOR") or registered assigns, is the registered holder of Warrants to
purchase, at any time from June 30, 1999, until 5:00 P.M. Eastern Standard Time
on August 24, 2004 ("EXPIRATION DATE"), up to 8,000 shares ("SHARES") of
fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of
Allergy Superstore.com, Inc., a Delaware corporation (the "COMPANY"), at the
Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE
PRICE"), of $5.126 per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but
subject to the conditions set forth herein and in the warrant agreement dated
as of August 25, 1999, between the Company and Investor (the "WARRANT
AGREEMENT"). Payment of the Exercise Price may be made in cash, or by certified
or official bank check in New York Clearing House funds payable to the order of
the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and
<PAGE> 11
the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferees) in exchange for this
Warrant Certificate, subject to the limitations provided herein and in the
Warrant Agreement, without any charge except for any tax, or other governmental
charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: As of August 25, 1999 ALLERGY SUPERSTORE.COM, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Attest:
---------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 12
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official
bank check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares
be registered in the name of ___________________________________ whose address
is_____________________________, and that such Certificate be delivered to
___________________________________________, whose address is
_______________________________________________________________.
<TABLE>
<S> <C>
Dated: Signature:
--------------------- ---------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate.)
- ------------------------------------
- ------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
</TABLE>
<PAGE> 13
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such
holder desires to transfer the Warrant
Certificate.)
FOR VALUE RECEIVED hereby
-------------------------------------------
sells, assigns and transfers unto
- ------------------------------------------------------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
, Attorney, to transfer the within Warrant
- -----------------------------------
Certificate on the books of the within-named Company, with full power of
substitution.
<TABLE>
<S> <C>
Dated: Signature:
--------------------- ---------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate)
- -------------------------------------
- -------------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)
</TABLE>
<PAGE> 1
EXHIBIT 10.068
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of August 25,
1999, by and among Allergy Superstore.com, Inc., a Delaware corporation, with
headquarters located at 4405 International Blvd., Norcross, Georgia (the
"COMPANY"), BioShield Technologies, Inc, a Georgia corporation located at 4405
International Blvd., Norcross, Georgia ("BSTI")and the investors listed on the
Schedule of Buyers attached hereto (individually, a "BUYER" or collectively
"BUYERS").
WHEREAS:
A. The Company, BSTI, and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) and/or Regulation D ("REGULATION D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT");
B. The Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, an aggregate amount of up to 42,827 shares of common stock of
the Company, par value $0.001 per share (such shares referred to herein as the
"COMMON STOCK"), in the respective amounts set forth opposite each Buyer's name
on the Schedule of Buyers;
C. Contemporaneously with the execution and delivery of this Agreement,
BSTI and the Buyers hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit "A" (the "BSTI
REGISTRATION RIGHTS AGREEMENT") pursuant to which BSTI has agreed to provide
certain registration rights under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws;
D. Contemporaneously with the execution and delivery of this Agreement,
the Company and Buyers hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as Exhibit "B" (the
"COMPANY REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has
agreed to provide certain registration rights under the 1933 Act and rules and
regulations promulgated thereunder and applicable state securities laws; and
E. The holders of the Common Stock will receive stock purchase warrants
(the "WARRANTS") to acquire the Common Stock substantially in the form attached
as Exhibit "C."
NOW THEREFORE, the Company, the Buyer, and BSTI hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON STOCK.
a. Purchase of Common Stock. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 5 and 6 below, the
Company shall issue and sell to the Buyers and the Buyers shall
purchase from the Company an aggregate principal amount of 42,827
shares of Common Stock and Warrants for an aggregate purchase price of
<PAGE> 2
$15,000,000 (the "PURCHASE PRICE"), in the respective amounts set forth
opposite each Buyer's name on the Schedule of Buyers (the "CLOSING").
b. Closing Date. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Eastern Standard Time, within five
(5) business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 5 and 6 below (or such later date as is mutually agreed to by
the Company and the Buyer). The Closing shall occur on the Closing Date
at the offices of Sims Moss Kline & Davis LLP, 400 Northpark Town
Center, Suite 310, 1000 Abernathy Road, N.E., Atlanta, Georgia 30328.
c. Form of Payment. On the Closing Date, (i) each Buyer shall
pay his portion of the Purchase Price to the Company for the Common
Stock to be issued and sold to such Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) the Company shall deliver
to each Buyer certificates representing such Common Stock and Warrants
that such Buyer is then purchasing (as indicated opposite such Buyer's
name on the Schedule of Buyers), duly executed on behalf of the Company
and registered in the name of such Buyer or its designee (the
"CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer is acquiring the Common
Stock and Warrants and any shares of Common Stock issuable upon
exercise thereof ("WARRANT SHARES"), for its own account for investment
only and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold
any Common Stock, Conversion Shares (as defined in Section 8 hereof),
Warrants, or Warrant Shares for any minimum or other specific term and
reserves the right to dispose of Common Stock or Warrant Shares at any
time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. Notwithstanding anything contained herein
to the contrary, each Buyer agrees to enter into any contractual
lock-up agreements with respect to the Common Stock, Warrants, Warrant
Shares, or Conversion Shares that may be required by the Company's
underwriters in connection with an underwritten public offering of the
Company's common stock or other securities or any public offering of
the Conversion Shares or other securities of BSTI.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
-2-
<PAGE> 3
c. Reliance on Exemptions. Such Buyer understands that the
Common Stock, Conversion Shares, Warrants, and Warrant Shares are being
offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and
accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such
Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire such
securities.
d. Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and BSTI and materials relating to the offer
and sale of the Common Stock which have been requested by such Buyer.
Such Buyer and its advisors, if any, have been afforded the opportunity
to ask questions of the Company and BSTI. Neither such inquiries nor
any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect
such Buyer's right to rely on the Company's or BSTI's representations
and warranties contained in Section 3 below. Such Buyer understands
that its investment in the Common Stock, Conversion Shares, Warrants,
and Warrant Shares involve a high degree of risk. Such Buyer has sought
such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of
the Common Stock, Conversion Shares, Warrants, and Warrant Shares.
e. No Governmental Review. Such Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Common Stock, Conversion Shares, Warrants, and
Warrant Shares, or the fairness or suitability of the investment in the
Common Stock, nor have such authorities passed upon or endorsed the
merits of the offering of the Common Stock and Warrants.
f. Transfer or Resale. Such Buyer understands that: (i) the
Common Stock and Warrants have not been and are not being registered
under the 1933 Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, (b) such Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to the
effect that such securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such
registration, or (c) such Buyer provides the Company with reasonable
assurance that such securities can be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) ("RULE 144"); (ii) any sale of such securities made in
reliance on Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of such
securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) other than the
-3-
<PAGE> 4
Company Registration Rights Agreement and the BSTI Registration Rights
Agreement (collectively, the "REGISTRATION RIGHTS AGREEMENTS"), neither
the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Common Stock, Conversion Shares,
Warrants, and Warrant Shares shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Common Stock,
Conversion Shares, Warrants and Warrant Shares upon which it is
stamped, if, unless otherwise required by state securities laws, (i)
the sale of the Common Stock, Conversion Shares, or Warrant Shares is
registered under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of the Common Stock, Conversion Shares,
Warrants, or Warrant Shares may be made without registration under the
1933 Act, or (iii) such holder provides the Company with reasonable
assurances that the Common Stock, Conversion Shares, Warrants, or
Warrant Shares can be sold pursuant to Rule 144 without any restriction
as to the number of securities acquired as of a particular date that
can then be immediately sold.
h. Authorization, Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer
and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization,
-4-
<PAGE> 5
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights
and remedies.
-5-
<PAGE> 6
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BSTI.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company, BSTI, and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each
of the Company, BSTI and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company, BSTI and its subsidiaries taken as a
whole.
b. Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company and BSTI each have the requisite corporate
power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and any related agreements, and to issue
the Common Stock, Conversion Shares, Warrants, and Warrant Shares in
accordance with the terms hereof and thereof, (ii) the execution and
delivery of this Agreement, the Registration Rights Agreements and any
related agreements by the Company and BSTI and the consummation by it
of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Common Stock and the reservation for
issuance and the issuance of the Conversion Shares issuable upon
conversion or exercise thereof as provided in Section 8 hereof, have
been duly authorized by each of the Company's and BSTI's Board of
Directors and no further consent or authorization is required by each
of the Company, BSTI, its respective Board of Directors, or its
respective stockholders, (iii) this Agreement and the Registration
Rights Agreements and any related agreements have been duly executed
and delivered by the Company and BSTI, and (iv) this Agreement, the
Registration Rights Agreements and any related agreements constitute
the valid and binding obligations of the Company and BSTI enforceable
against the Company and BSTI in accordance with their terms, except as
such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
c. Capitalization. As of June 30, 1999, the authorized capital
stock of the Company consists of 100,000,000 shares of Common Stock, of
which as of the date hereof 30,000,000 shares were issued and
outstanding, and no series of preferred stock or debentures or notes
were issued and outstanding. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), no shares of Common Stock or preferred
stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in Schedule 3(c), as of the effective date of this
Agreement, (i) there are no
-6-
<PAGE> 7
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or
any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may
become bound to issue additional shares of capital stock of the Company
or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, (ii) there are no
outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except the Company Registration Rights Agreement). There are
no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Common Stock
or the Conversion Shares as described in this Agreement. The Company
has furnished to or made available to Buyer, via the SEC Edgar site,
true and correct copies of BSTI's filings with the U.S. Securities and
Exchange Commission (the "SEC DOCUMENTS"), the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), the Company's By-laws, as in effect on
the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Common Stock are duly
authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and nonassessable, are free
from all taxes, liens and charges with respect to the issue thereof and
are entitled to the rights and preferences set forth in the Common
Stock. The Conversion Shares issuable upon conversion of the Common
Stock have been duly authorized and reserved for issuance by BSTI. The
Warrants and Warrant Shares, and upon exchange of the Common Stock into
Conversion Shares as provided in Section 8 of this Agreement, the
Warrant Shares and the Conversion Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all
rights accorded to a holder of common stock of BSTI and the Company,
respectively.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company
and BSTI and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any certificate of designations,
preferences, and rights of any outstanding series of preferred stock of
the Company or BSTI or by-laws or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company, BSTI, or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the principal market or
exchange on which the Common Stock is traded or listed) applicable to
the Company, BSTI, or any of its subsidiaries or by which any
-7-
<PAGE> 8
property or asset of the Company, BSTI, or any of its subsidiaries is
bound or affected. Except as disclosed in Schedule 3(e), neither the
Company, BSTI nor its subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation or Bylaws or their
organizational charter or by-laws, respectively, or any material
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable
to the Company, BSTI, or its subsidiaries. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and
any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Company Registration Rights
Agreement in accordance with the terms hereof or thereof. Except as
disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company and BSTI is required to
obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company, BSTI, and its
subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing.
f. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company, BSTI, or any of its subsidiaries,
threatened against or affecting the Company, the Common Stock, BSTI, or
any of the Company's subsidiaries, wherein an unfavorable decision,
ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company or BSTI
to perform its obligations under, this Agreement or any of the
documents contemplated herein or (iii), except as expressly set forth
in Schedule 3(h), have a material adverse effect on the business,
operations, properties, financial condition or results of operation of
the Company, BSTI, and its subsidiaries taken as a whole.
g. Acknowledgment Regarding Buyer's Purchase of Common Stock.
The Company and BSTI acknowledge and agree that the Buyer is acting
solely in the capacity of an arm's length purchaser with respect to
this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Company or BSTI (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of their
respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Common Stock. The Company and BSTI further
represent to the Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the
Company, BSTI, and its representatives.
h. No General Solicitation. Neither the Company, BSTI, nor any
of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation
-8-
<PAGE> 9
or general advertising (within the meaning of Regulation D under the
1933 Act) in connection with the offer or sale of the Common Stock,
Conversion Shares, Warrants, or Warrant Shares.
j. No Integrated Offering. Neither the Company, BSTI , nor any
of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of the Common Stock, the Conversion Shares,
the Warrants or Warrant Shares under the 1933 Act or cause this
offering of Common Stock or the Conversion Shares to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions.
k. Employee Relations. Neither the Company, BSTI, nor any of
its subsidiaries is involved in any labor dispute nor, to the knowledge
of the Company, BSTI, or any of its subsidiaries, is any such dispute
threatened. None of the Company's, BSTI's or its subsidiaries'
employees is a member of a union and the Company, BSTI, and its
subsidiaries believe that their relations with their employees are
good.
l. Intellectual Property Rights. The Company, BSTI, and its
subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 3(n), none of the Company's
or BSTI's trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade
secrets, or other intellectual property rights have expired or
terminated, or are expected to expire or terminate, in the near future.
The Company, BSTI and its subsidiaries do not have any knowledge of any
infringement by the Company, BSTI or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations,
trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical
information by others and, except as set forth on Schedule 3(n), there
is no claim, action or proceeding being made or brought against, or to
the Company's or BSTI's knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents,
patent rights, invention, copyright, license, service names, service
marks, service mark registrations, trade secret or other infringement;
and the Company, BSTI and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
m. Environmental Laws. The Company, BSTI, and its subsidiaries
are (i) in material compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
-9-
<PAGE> 10
LAWS"), (ii) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in material
compliance with all terms and conditions of any such permit, license or
approval.
n. Title. The Company, BSTI and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company, BSTI, and its subsidiaries, in
each case free and clear of all liens, encumbrances and defects except
such as are described in Schedule 3(p) or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company, BSTI, and
its subsidiaries. Any real property and facilities held under lease by
the Company, BSTI, and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company, BSTI, and its
subsidiaries.
o. Insurance. The Company, BSTI, and each of its subsidiaries
are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company
and believes to be prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor BSTI
any such subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor BSTI or any such subsidiary has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or
operations of the Company, BSTI and its subsidiaries, taken as a whole.
p. No Materially Adverse Contracts, Etc. Neither the Company,
BSTI, nor any of its subsidiaries is subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's or BSTI's officers
has or is expected in the future to have a material adverse effect on
the business, properties, operations, financial condition, results of
operations or prospects of the Company, BSTI, or its subsidiaries.
Neither the Company nor BSTI or any of its subsidiaries is a party to
any contract or agreement which in the judgment of the Company's
officers has or is expected to have a material adverse effect on the
business, properties, operations, financial condition, results of
operations or prospects of the Company, BSTI, or its subsidiaries.
q. Tax Status. Except as set forth on Schedule 3(u), the
Company, BSTI, and each of its subsidiaries has made or filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company, BSTI, and each of its
subsidiaries has set aside on
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<PAGE> 11
its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company and BSTI know of no basis for any such claim.
r. Certain Transactions. Except as set forth on Schedule 3(v)
and in BSTI's SEC Documents and except for arm's length transactions
pursuant to which the Company and BSTI make payments in the ordinary
course of business upon terms no less favorable than the Company or
BSTI could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company or BSTI is presently a party to any
transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company or BSTI, any corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner.
s. Dilutive Effect. BSTI understands and acknowledges that the
number of Conversion Shares issuable upon exchange of the Common Stock
will increase in certain circumstances. BSTI further acknowledges that
its obligation to issue Conversion Shares upon exchange of the Common
Stock in accordance with this Agreement is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the
ownership interests of other stockholders of BSTI.
t. Fees and Rights of First Refusal. Neither the Company nor
BSTI is obligated to offer the securities offered hereunder on a right
of first refusal basis or otherwise to any third parties including, but
not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
u. Shareholder Approval. BSTI covenants to submit to its,
shareholders at its next shareholder meeting a proposal for
ratification of the issuance of the Conversion Shares, if and as
required by the rules of the National Association of Securities
Dealers, Inc. (the "NASD") applicable to the transaction.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
Sections 5 and 6 of this Agreement.
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<PAGE> 12
b. Form D. The Company agrees to file a Form D with respect to
the Common Stock and the Conversion Shares as required under Regulation
D and to provide a copy thereof to each Buyer promptly after such
filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary to
qualify the Common Stock and the Conversion Shares for, or obtain
exemption for the Common Stock and the Conversion Shares for, sale to
the Buyers at the Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date as of
which the Investors (as that term is defined in the Company
Registration Rights Agreement) may sell all of the Common Stock without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Investors shall
have sold all the Conversion Shares and (B) none of the Common Stock is
outstanding (the "REGISTRATION PERIOD"), the Company, once it becomes a
reporting company pursuant to the Securities Exchange Act of 1934, as
amended, shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if
the 1934 Act or the rules and regulations thereunder would otherwise
permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the
sale of the Common Stock for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following to each Buyer once it becomes a reporting company pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, upon the
effective date of its filing on Form 10 or S-1, during the Registration
Period: (i) within five (5) days after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K, its Quarterly Reports on
Form 10-Q, any Current Reports on Form 8-K and any registration
statements or amendments filed pursuant to the 1933 Act; (ii) within
one (1) day after release thereof, copies of all press releases issued
by the Company or any of its subsidiaries and (ii) copies of the same
notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.
f. Reservation of Shares. BSTI shall take all action necessary
to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of common stock
needed to provide for the issuance of the Conversion Shares. The
Company shall take all action necessary to at all times have authorized
and reserved for the purpose of issuance no less than 100% of the
number of shares of Common Stock needed to provide for the issuance of
the Warrant Shares.
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g. Listings. Once the Company becomes a reporting company
pursuant to the 1934 Act, the Company shall use its best efforts
promptly secure the listing of the Conversion Shares upon each national
securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all Conversion Shares from
time to time issuable under the terms of this Agreement and the Company
Registration Rights Agreement. The Company shall maintain the Common
Stock's authorization for quotation in the over-the counter market. The
Company shall promptly provide to each Buyer copies of any notices it
receives regarding the continued eligibility of the Common Stock for
trading in the over-the-counter market.
h. Expenses. Each of the Company and the Buyer shall pay all
costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreements. The placement fees of
J.P. Carey Securities, Inc. and Greenfield Capital Partners, LLC shall
be paid for by the Company at Closing.
i. Corporate Existence. So long as any Common Stock remain
outstanding, the BSTI shall not directly or indirectly consummate any
merger, reorganization, restructuring, consolidation, sale of all or
substantially all of BSTI's assets or any similar transaction or
related transactions (each such transaction, a "SALE OF BSTI") except
if the surviving or successor entity in such transaction (i) expressly
assumes, in writing, BSTI's obligations hereunder and under the BSTI
Registration Rights Agreement, and any other agreements and instruments
entered into or delivered by the Company in connection herewith and
(ii) is a publicly traded corporation whose Common Stock is listed for
trading on the New York Stock Exchange, Inc., the American Stock
Exchange, or the NASDAQ Small Cap, National Market or Electronic
Bulletin Board.
(j) No Short Sales of the Common Stock. So long as a Buyer or
any of its affiliates beneficially owns any Common Stock, each Buyer
and its affiliates shall not directly or indirectly engage in any short
sales or third party short sales of the Common Shares or hold a "put
equivalent position" with respect to the Common Stock (as defined in
Rule 16a-1 under the 1934 Act).
(k) Limitation on Short Sales of Conversion Shares. Buyer and
its affiliates shall not engage in short sales of the Conversion
Shares; provided, however, that any holder may enter into any short
sale or other hedging or similar arrangement it deems appropriate with
respect to Conversion Shares to be issued pursuant to an Exchange
Notice after it delivers an Exchange Notice with respect to such
Conversion Shares to be issued pursuant to an Exchange Notice so long
as such sales or arrangements do not involve more than the number of
such Conversion Shares to be issued pursuant to an Exchange Notice
(determined as of the date of such Exchange Notice). Buyer and its
affiliates agree to provide to BSTI upon
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<PAGE> 14
written request from time to time its securities trading records in
order to demonstrate that it has complied with this Section 4(k).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common
Stock to the Buyer at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and the
Registration Rights Agreements and delivered the same to the Company.
b. The Buyer shall have delivered to the Company the Purchase
Price for the Common Stock being purchased by the Buyer at the Closing
by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
c. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at
or prior to the Closing Date.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Common Stock at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion:
a. The Company and BSTI shall have executed this Agreement,
the Company shall have executed the Company Registration Rights
Agreement and BSTI shall have executed the BSTI Registration Rights
Agreement, and delivered the same to the Buyer.
b. The representations and warranties of the Company and BSTI
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing
Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company and BSTI
shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied
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<PAGE> 15
with by the Company at or prior to the Closing Date. The Buyer shall
have received a certificate, executed by the Chief Executive Officer of
each of the Company and BSTI, each dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by the Buyer including, without limitation an update as of
the Closing Date regarding the representation contained in Section 3(c)
above.
c. The Buyer shall have received the opinion of the Company's
and BSTI's counsel dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer and in substantially the
form of Exhibit "D" attached hereto.
d. The Company and BSTI shall have executed and delivered to
the Buyer the Certificates (in such denominations as the Buyer shall
request) for the Common Stock and Warrants being purchased by the Buyer
at the Closing.
e. The Board of Directors of the Company and BSTI shall have
adopted the resolutions in substantially the form of Exhibit "E"
attached hereto.
f. As of the Closing Date, BSTI shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of
effecting the exchange of the Common Stock for the Conversion Shares as
provided in Section 8 herein, such number of Conversion Shares equal to
or greater than 100% of the number of shares which are issuable upon
conversion of all of the Common Stock which could be issued under this
Agreement.
g. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered and
acknowledged in writing by the BSTI's transfer agent.
h. Timothy C. Moses and Jacques Elfersy shall have delivered
the voting proxies substantially in the form attached hereto as Exhibit
"F."
7. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Common Stock, the Conversion Shares, the Warrants
and the Warrant Shares hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company and BSTI jointly and severally
shall defend, protect, indemnify and hold harmless the Buyer and each other
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the
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<PAGE> 16
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company or BSTI in this Agreement, the Common Stock, the Conversion Shares, the
Warrants and the Warrant Shares or the Registration Rights Agreements or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any material breach of any covenant, agreement or obligation of the Company or
BSTI contained in this Agreement or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Indemnities, any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Common Stock and Warrants or the status of the Buyer or
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares, as an investor in the Company or BSTI. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company and
BSTI shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
8. EXCHANGE OF COMMON STOCK INTO CONVERSION SHARES
(a) Exchange Right. Subject to the provisions of Sections 9,
10, 12, and 13 herein, in the event that the Company has not
consummated an initial public offering of its Common Stock, at any time
or times after June 30, 2000, (the "EXCHANGE COMMENCEMENT DATE"), any
holder of Common Stock shall be entitled to exchange any Common Stock
into fully paid and nonassessable shares (rounded to the nearest whole
share in accordance with Section 8(f) below) of Conversion Shares (the
"EXCHANGE RIGHT"), at the Exchange Rate (as defined below); provided,
however, that in no event shall any holder be entitled to (i) exchange
Common Stock into Conversion Shares in excess of that number of Common
Stock which, upon giving effect to such conversion, would cause the
aggregate number of Conversion Shares beneficially owned by the holder
and its affiliates to exceed 4.9% of the outstanding shares of the
Common Stock following such conversion or (ii) exchange more than 10%
of the total number of Conversion Shares issued to such holder into
Conversion Shares (or any successor or assign) pursuant to this
transaction in any thirty (30) day period commencing on the Exchange
Commencement Date and any succeeding thirty (30) day period thereafter.
For purposes of the foregoing proviso, the aggregate number of shares
of Conversion Shares beneficially owned by the holder and its
affiliates shall include the number of shares of Conversion Shares
issuable upon exchange of the Common Stock with respect to which the
determination of such proviso is being made, but shall exclude the
number of shares of Conversion Shares which would be issuable upon (i)
exchange of the remaining, non-exchanged Common Stock beneficially
owned by the holder and its affiliates beneficially owned by the holder
and its affiliates. Except as set forth in the preceding sentence, for
purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934,
as amended.
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<PAGE> 17
(b) Exchange Rate. The number of shares of Conversion Shares
issuable after the Exchange Commencement Date upon exchange of each
share of the Common Stock pursuant to Section 8(a) shall be determined
according to the following formula (the "EXCHANGE RATE"):
(ISSUE PRICE PER SHARE)(1.25)
-----------------------------
EXCHANGE PRICE
Notwithstanding anything contained herein to the contrary,
unless this transaction has been approved by the shareholders of BSTI
in accordance with Georgia law, then as long as the Common Stock of
BSTI is listed on the NASDAQ National Market or the NASDAQ Small Cap
Market, BSTI shall not issue Conversion Shares upon exchange of Common
Stock which would equal or exceed twenty percent (20%) of the issued
and outstanding Common Stock of BSTI on the date of issuance of the
Common Stock or such lesser amount as determined on a pro-rata basis
based upon the number of Common Stock issued.
For purposes of this Section 8, the following terms shall have
the following meanings:
(i) "EXCHANGE DATE" shall mean the Trading
Day that an Exchange Notice is deemed delivered
pursuant to Section 8(e);
(ii) "EXCHANGE PRICE" means the Average
Market Price for the Conversion Shares for the twenty
(20) consecutive Trading Days immediately following
the Exchange Date;
(iii) "AVERAGE MARKET PRICE" means, with
respect to any security for any period, that price
which shall be computed as the arithmetic average of
the Closing Bid Prices (as defined below) for such
security for each trading day in such period;
(iv) "CLOSING" shall mean one of the closing
of an exchange of Common Stock for Conversion Shares
pursuant to Section 8.
(v) "CLOSING DATE" shall mean with respect
to a closing, the twentieth Trading Day following the
Exchange Date related to such closings or such
earlier date as BSTI and the holder shall agree.
(vi) "CLOSING BID PRICE" means, for any
security as of any date, the last closing bid price
on the Nasdaq National Market System (the
"NASDAQ-NM") as reported by Bloomberg Financial
Markets ("BLOOMBERG"), or, if the Nasdaq-NM is not
the principal trading market for such security, the
last closing bid price of such security on the
principal securities exchange or
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<PAGE> 18
trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price of such
security in the over-the-counter market on the pink
sheets or bulletin board for such security as
reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the last
closing trade price of such security as reported by
Bloomberg. If the Closing Bid Price cannot be
calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such
security on such date shall be the fair market value
as reasonably determined in good faith by the Board
of Directors of the Company (all as appropriately
adjusted for any stock dividend, stock split or other
similar transaction during such period); and
(vii) "CONVERSION SHARES" shall mean those
shares of common stock of BSTI, no par value,
issuable pursuant to an exchange of Common Stock
pursuant to Section 8 of this Agreement.
(viii) "ISSUANCE DATE" means the date of
issuance of the Common Stock as described herein.
(ix) "ISSUE PRICE PER SHARE" shall mean
$4.66 (as adjusted for stock splits and similar
events of the Company).
(x) "PRINCIPAL MARKET" shall mean the
Nasdaq National market, the NASDAQ SmallCap Market,
the American Stock Exchange or the New York Stock
Exchange, whichever at the time is the principal
trading exchange or market for the Conversion Shares.
(xi) "TRADING DAY" shall mean any day
during which the Principal Market shall be open for
business.
(c) Dispute Resolution. In the case of a dispute as to the
determination of the Average Market Price or the arithmetic calculation
of the Exchange Rate, BSTI shall promptly issue to the holder the
number of Conversion Shares that is not disputed and shall submit the
disputed determinations or arithmetic calculations to the holder via
facsimile within three (3) business days of the Closing Date. If such
holder and BSTI are unable to agree upon the determination of the
Average Market Price or arithmetic calculation of the Conversion Rate
within three (3) business days of such disputed determination or
arithmetic calculation being submitted to the holder, then BSTI shall
within one (1) business day submit via facsimile (A) the disputed
determination of the Average Market Price to an independent, reputable
investment bank or (B) the disputed arithmetic calculation of the
Exchange Rate to its independent, outside accountant. BSTI shall cause
the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify BSTI and the holder of
the results no later than forty-eight (48) hours from the time it
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<PAGE> 19
receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may
be, shall be binding upon all parties absent manifest error. The person
or persons entitled to receive Conversion Shares issuable upon a
conversion of Common Stock shall be treated for all purposes as the
record holder or holders of such Conversion Shares on the Conversion
Date.
(d) Adjustment to Exchange Price - Dilution and Other Events.
In order to prevent dilution of the rights granted herein, the Exchange
Price will be subject to adjustment from time to time as provided in
this Section 8(d).
(i) Reorganization, Reclassification, Consolidation,
Merger, or Sale. Any recapitalization, reorganization
reclassification, consolidation. merger, sale of all or
substantially all of BSTI's assets to another Person (as
defined below) or other similar transaction which is effected
in such a way that holders of Conversion Shares are entitled
to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange
for Conversion Shares is referred to herein as an "Organic
Change." Prior to the consummation of any Organic Change,
BSTI will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) to insure that each of the holders of the Common
Stock issued in connection with this transaction will
thereafter have the right to acquire and receive in lieu of
or in addition to (as the case may be) the Conversion Shares
immediately theretofore acquirable and receivable upon the
conversion of such holder's Common Stock, such shares of
stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of
Conversion Shares immediately theretofore acquirable and
receivable upon the exchange of such holder's Common Stock
had such Organic Change not taken place. In any such case,
BSTI will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) with respect to such holders' rights and
interests to insure that the provisions of this Section 8(d)
and Section 8(e) below will thereafter be applicable to the
Common Stock. BSTI will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the
successor entity (if other than BSTI) resulting from
consolidation or merger or the entity purchasing such assets
assumes, by written instrument (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding), the obligation to deliver to each holder of
Common Stock issued in connection with this transaction such
shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to
acquire. For purposes of this Agreement, "PERSON" shall mean
an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof.
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<PAGE> 20
(ii) Notices.
(A) Immediately upon any adjustment of the
Exchange Price, BSTI will give written notice thereof
to each holder of Common Stock issued in connection
with this transaction, setting forth in reasonable
detail and certifying the calculation of such
adjustment.
(B) BSTI will give written notice to each
holder of Common Stock issued in connection with this
transaction at least twenty (20) days prior to the
date on which BSTI closes its books or takes a record
(I) with respect to any dividend or distribution upon
the Conversion Shares, (II) with respect to any pro
rata subscription offer to holders of Conversion
Shares, or (III) for determining rights to vote with
respect to any Organic Change, dissolution or
liquidation.
(C) BSTI will also give written notice to
each holder of Common Stock issued in connection with
this transaction at least twenty (20) days prior to
the date on which any Organic Change, dissolution, or
liquidation will take place.
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<PAGE> 21
(e) Mechanics of Exchange of Common Stock into Conversion
Shares.
(i) Holder's Delivery Requirements. Such
notice exchanging Common Stock into Conversion Shares
in accordance with this Section 8 by the holder (the
"EXCHANGE NOTICE") shall (A) be delivered by
facsimile to the Company and BSTI for receipt on or
prior to 12:00 noon Eastern Standard Time or (B) the
immediately succeeding Trading Day if it is received
by facsimile or otherwise after 12:00 noon Eastern
Standard Time on a Trading Day (the "EXCHANGE DATE")
and (B) the holder shall surrender to a common
carrier for delivery to BSTI as soon as practicable
following such date, but in no event later than four
(4) Trading Days prior to a Closing Date, the
original certificates representing the Common Stock
being exchanged (or an indemnification undertaking
with respect to such shares in the case of their
loss, theft, or destruction) and the originally
executed conversion notice.
(ii) The Company and BSTI Response. Upon
receipt by the Company and BSTI of a facsimile copy
of the Exchange Notice, the Company and BSTI shall
send via facsimile, a confirmation of receipt of such
Exchange Notice to such holder. Upon receipt by the
Company of the Common Stock Certificates to be
exchanged pursuant to an Exchange Notice, together
with the originally executed Exchange Notice, BSTI or
the transfer agent (as applicable) shall, within
three (3) business days of each Closing Date (A)
issue and surrender to a common carrier for overnight
delivery to the address as specified in the Exchange
Notice, a certificate, registered in the name of the
holder or its designee, for the number of Conversion
Shares to which the holder shall be entitled. In lieu
of delivering physical certificates representing the
Conversion Shares issuable in accordance with this
Section 8(e) and provided that the transfer agent
then is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of a holder, BSTI shall use its
commercially reasonable efforts to cause the transfer
agent to electronically transmit the applicable
number of Conversion Shares by crediting the account
of the holder's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system.
In addition, on or prior to such Closing Date, each
of BSTI, the Company, and the holder shall deliver to
the others all documents, instruments, and writings
required to be delivered or reasonably requested by
any of them pursuant to this Agreement in order to
implement and effect the transactions contemplated
herein.
(iii) Record Holder. The person or persons
entitled to receive the Conversion Shares issuable
upon an exchange of Common Stock shall be treated for
all purposes as the record holder or holders of such
shares of Conversion Shares on the Exchange Date.
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<PAGE> 22
(iv) BSTI's Failure to Timely Exchange. If
BSTI shall fail to issue to a holder on a Closing
Date, a certificate for the number of shares of
Conversion Shares to which such holder is entitled
upon such holder's exchange of Common Stock, in
addition to all other available remedies which such
holder may pursue hereunder (including
indemnification pursuant to Section 7 hereof), the
Company shall pay additional damages to such holder
on each day after the fifth (5th) Trading Day
following the applicable Closing Date for which such
exchange is not timely effected, an amount equal to
1.0% of the product of number of Conversion Shares
not issued to such holder to which such holder is
entitled by the Exchange Price for each calendar
month until such exchange is made unless Buyer elects
to enforce the terms of Section 11 herein.
(f) Fractional Shares. BSTI shall not issue any
fraction of a Conversion Share upon any exchange. All
Conversion Shares (including fractions thereof) issuable upon
conversion of more than one share of Common Stock by a holder
thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of a
fraction of a Conversion Share. If, after the aforementioned
aggregation, the issuance would result in the issuance of a
fraction of its Conversion Share, BSTI shall round such
fraction of a Conversion Share up or down to the nearest whole
share.
(9) CASH PAYMENT OPTION BY BSTI.
In lieu of issuing the Conversion Shares in accordance with an Exchange
Notice, BSTI shall have the right, in its sole discretion, to pay to the holder
of the Common Stock an amount equal to $5.825 for each share of Common Stock so
exchanged (as adjusted for stock splits and similar events of the Company)
("CASH OUT PRICE"). The Company shall pay the Cash Out Price to that Holder
within seven (7) Trading Days following the receipt by the Company and BSTI of
an Exchange Notice.
(10) COMPANY'S RIGHT TO REDEEM AT ITS ELECTION.
(a) At any time, the Company shall have the right, in its sole
discretion, to redeem ("REDEMPTION AT COMPANY'S ELECTION"), from time
to time, any or all of the Common Stock; provided (i) the Company shall
first provide no more than seven (7) Trading Days and no less than one
(1) Trading Day advance written notice as provided in subparagraph
10(a)(ii) below, and (ii) that the Company shall only be entitled to
redeem Common Stock having an aggregate Stated Value (as defined above)
of at least Five Hundred Thousand Dollars ($500,000). If the Company
elects to redeem some, but not all, of the Common Stock, the Company
shall redeem a pro-rata amount from each Holder of the Common Stock.
-22-
<PAGE> 23
(i) Redemption Price At Company's Election. The
"REDEMPTION PRICE AT COMPANY'S ELECTION" shall be
calculated as $5.825 (as adjusted for stock splits
and similar events of the Company).
(ii) Mechanics of Redemption at Company's
Election. The Company shall effect each such
redemption by giving no more than seven (7) Trading
Days and no less than one (1) Trading Day prior
written notice ("NOTICE OF REDEMPTION AT COMPANY'S
ELECTION") to (A) the Holders of the Common Stock
selected for redemption at the address and facsimile
number of such Holder appearing in the Company's
Common Stock register and (B) the Transfer Agent,
which Notice of Redemption At Company's Election
shall be deemed to have been delivered three (3)
Trading Days after the Company's mailing (by
overnight or two (2) day courier, with a copy by
facsimile) of such Notice of Redemption at Company's
Election. Such Notice of Redemption At Company's
Election shall indicate (i) the number of shares of
Common Stock that have been selected for redemption,
(ii) the date which such redemption is to become
effective (the "DATE OF REDEMPTION AT COMPANY'S
ELECTION"), and (iii) the applicable Redemption Price
At Company's Election, as defined in subsection
(a)(i) above.
(b) Company Must Have Immediately Available Funds or
Credit Facilities. The Company shall not be entitled to send
any Redemption Notice and begin the redemption procedure under
Sections 10(a) unless it has:
(i) the full amount of the redemption price in
cash, available in a demand or other immediately
available account in a bank or similar financial
institution; or
(ii) immediately available credit facilities, in
the full amount of the redemption price with a bank
or similar financial institution, or
(iii) an agreement with a standby underwriter
willing to purchase from the Company a sufficient
number of shares of stock to provide proceeds
necessary to redeem any stock that is not converted
prior to redemptions; or
(iv) a combination of the items set forth in (i),
(ii), and (iii) above, aggregating the full amount of
the redemption price.
(c) Payment of Redemption Price. Each Holder
submitting Common Stock being redeemed under this Section 10
shall send their Common Stock Certificates to be redeemed to
the Company or its Transfer Agent, and the Company shall pay
the applicable redemption price to that Holder within five (5)
business days of the Date of Redemption at Company's Election.
-23-
<PAGE> 24
(11) INABILITY TO FULLY EXCHANGE.
(a) Holder's Option if BSTI Cannot Fully Exchange. If at any
time after the Exchange Commencement Date, upon the Company's and
BSTI's receipt of an Exchange Notice, BSTI does not issue shares which
are registered for resale under the BSTI Registration Statement within
five (5) business days of the time required for any reason or for no
reason, including, without limitation, because BSTI (x) does not have a
sufficient number of Conversion Shares authorized and available, (y) is
otherwise prohibited by applicable law or by the rules or regulations
of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over BSTI or its
securities, including without limitation The Nasdaq Stock Market, Inc.
from issuing all of the Conversion Shares which is to be issued to a
holder of Common Stock pursuant to an Exchange Notice or (z) fails to
have a sufficient number of Conversion Shares registered and eligible
for resale under the BSTI Registration Statement, then BSTI shall issue
as many Conversion Shares as it is able to issue in accordance with
such holder's Exchange Notice and pursuant to Section 8(e) above and,
with respect to the unconverted Common Stock, the holder, solely at
such holder's option, can, in addition to any other remedies such
holder may have hereunder, under this Agreement (including
indemnification under Section 7 thereof), under the BSTI Registration
Rights Agreement, at law or in equity, elect to:
(i) require BSTI to redeem from such holder those shares
of Conversion Stock for which BSTI is unable to issue
Conversion Shares in accordance with such holder's Exchange
Notice ("MANDATORY REDEMPTION") at a price per share of Common
Stock (the "MANDATORY REDEMPTION PRICE") equal to $5.825 (as
adjusted for stock splits or similar events of the Company;
(ii) require BSTI to issue restricted shares of Common
Stock in accordance with such holder's Exchange Notice and
pursuant to Section 8(e) above, if BSTI's inability to fully
exchange Common Stock is pursuant to its inability to deliver
Conversion Shares registered pursuant to the 1933 Act; or
(iii) void its Exchange Notice and retain or have
returned, as the case may be, the unexchanged Common Stock
that were to be exchanged pursuant to such holder's Exchange
Notice.
(b) Mechanics of Fulfilling Holder's Election. BSTI shall send
via facsimile to a holder of Common Stock, upon receipt of a facsimile
copy of an Exchange Notice from such holder which cannot be fully
satisfied as described in Section 11(a) above, a notice of BSTI's
inability to fully satisfy such holder's Exchange Notice (the
"INABILITY TO FULLY EXCHANGE NOTICE"). Such Inability to Fully Exchange
Notice shall indicate (i) the reason why BSTI is unable to fully
satisfy such holder's Exchange Notice, (ii) the number of shares of
Common Stock which cannot be exchanged, and (iii) the Mandatory
Redemption Price. Such holder must, within five (5) Trading Days of
receipt of such Inability to Fully Exchange
-24-
<PAGE> 25
Notice, deliver written notice via facsimile to BSTI ("NOTICE IN
RESPONSE TO INABILITY TO EXCHANGE") of its election pursuant to Section
11(a) above.
(c) Payment of Redemption Price. If such holder shall elect to
have its shares redeemed pursuant to Section 11(a) above, BSTI shall
pay the Mandatory Redemption Price in cash to such holder within thirty
(30) days of BSTI's receipt of the holder's Notice in Response to
Inability to Exchange (the "MANDATORY REDEMPTION PRICE DEADLINE"). If
BSTI shall fail to pay the applicable Mandatory Redemption Price to
such holder on a timely basis as described in this Section 11(c) (other
than pursuant to a dispute as to the determination of the Closing Bid
Price or the arithmetic calculation of the Redemption Rate), such
unpaid amount shall bear interest at the rate of 1% for the first month
and a rate of 2.0% per month thereafter (prorated for partial months)
until paid in full. Following the Mandatory Redemption Price Deadline,
until the full Mandatory Redemption Price is paid in full to such
holder, such holder may void the Mandatory Redemption with respect to
those shares of Common Stock for which the full Mandatory Redemption
Price has not been paid and receive back such shares of Common Stock.
(d) Pro-rata Exchange and Redemption. In the event the Company
and BSTI each receives an Exchange Notice from more than one holder of
Common Stock on the same day and BSTI can exchange and redeem some, but
not all, of the Common Stock pursuant to this Section 11, BSTI shall
exchange and redeem from each holder of Common Stock electing to have
Common Stock exchanged and redeemed at such time an amount equal to
such holder's pro-rata amount (based on the number of shares of Common
Stock held by such holder relative to the number of shares of Common
Stock outstanding, pursuant to this Agreement) of all Common Stock
being exchanged and redeemed at such time.
12. ONE-TIME RIGHT TO SUSPEND EXCHANGE RIGHT OR EXCHANGE COMMON
STOCK INTO CONVERSION SHARES.
Notwithstanding anything contained herein to the contrary, BSTI shall
have the one-time right, without payment or penalty of any kind, for a period of
thirty (30) days from the date written notice is given to the holders of Common
Stock, to suspend the Exchange Right in the event that the Company has received
a letter of intent by the Exchange Commencement Date from a reputable investment
banking firm to underwrite the public offering of the Company's common stock or
other securities ("PUBLIC OFFERING"), and the Public Offering has not occurred
by the Exchange Commencement Date due to market conditions as determined by such
underwriter.
13. SUSPENSION OF EXCHANGE RIGHT UPON REGISTRATION OF COMMON STOCK
OF THE COMPANY UNDER THE 1934 ACT.
Notwithstanding anything contained herein to the contrary, so long as
(i) the Company becomes and remains a reporting company under the 1934 Act, (ii)
the Company has its Form 8A declared effective by the SEC, and (iii) the trading
price of the Common Stock as reported by
-25-
<PAGE> 26
Bloomberg on its principal exchange or trading market remains equal to or
greater than $6.19 per share, the holders of the Common Stock shall have no
Exchange Right.
-26-
<PAGE> 27
14. REISSUANCE OF CERTIFICATES.
In the event of an exchange or redemption pursuant to this Agreement of
less than all of the Common Stock represented by a particular Common Stock
certificate, the Company shall promptly cause to be issued and delivered, to the
holder of such Common Stock, a Common Stock certificate representing the
remaining shares of Common Stock which have not been so exchanged or redeemed.
15. TRANSFER AGENT INSTRUCTIONS.
BSTI shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Conversion Shares in such amounts as specified from time to
time by the Buyer to the Company upon conversion of the Common Stock (the
"Irrevocable Transfer Agent Instructions"), except as provided in Sections 9,
10, 11, 12, and 15 herein. Prior to registration of the Conversion Shares under
the 1933 Act, all such certificates shall bear the restrictive legend specified
in Section 2(g) of this Agreement. The Company and BSTI warrant that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 15, and stop transfer instructions to give effect to Section
2(f) hereof (in the case of the Conversion Shares, prior to registration of such
shares under the 1933 Act) will be given by the Company or BSTI to its transfer
agent and that the Common Stock and the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company and BSTI as and to
the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section 15 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Common Stock or Conversion Shares. If the Buyer provides the Company and BSTI
with an opinion of counsel, reasonably satisfactory in form, and substance to
the Company, that registration of a resale by the Buyer of any of the Common
Stock or Conversion Shares is not required under the 1933 Act, the Company shall
permit the transfer, and, in the case of the Conversion Shares, BSTI shall
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by the Buyer. The Company and BSTI
acknowledge that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company and BSTI acknowledge
that the remedy at law for a breach of its obligations under this Section 15
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company or BSTI of the provisions of this Section 15, that the Buyer shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
16. CONFIDENTIALITY.
a. Nondisclosure. As much of the information and other
material furnished under or in connection with this Agreement (whether
furnished before, on or after the date hereof) as constitutes or
contains confidential business, financial or other information of the
Company, BSTI or its subsidiaries, each Buyer covenants for itself,
and, as applicable, for
-27-
<PAGE> 28
its directors, officers, affiliates and partners, that it will use due
care to prevent its officers, directors, partners, employees, counsel,
accountants and other representatives from disclosing such information
to persons other than their respective authorized employees, counsel,
accountants, shareholders, partners, limited partners and other
authorized representatives. Notwithstanding the foregoing, if a Buyer
is advised by such counsel that such disclosure or delivery is required
by law, regulation or judicial or administrative order, then they may
disclose or deliver such information or other after giving written
notice to the Company and BSTI of such requirements. For purposes of
this Section 10a., "due care" means at least the same level of care
that a Buyer would use to protect the confidentiality of its own
sensitive or proprietary information, and this obligation shall survive
termination of this Agreement.
b. Possession of Material, Non-Public Information. To the
extent that any of the information furnished by the Company or BSTI to
the Buyers hereof would constitute material, nonpublic information for
purposes of the Exchange Act, Buyers agree not to engage in any
purchase or sale of securities while in possession of such information
and prior to the time that such information is made generally known to
the public and Buyers agree to use due care to prevent their officers,
directors, partners, employees, counsel and other representatives, who
have been given access to such material, nonpublic information, from
engaging in any such purchase or sale during such period.
17. GOVERNING LAW: MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Georgia without
regard to the principles of conflict of laws. Buyer may at any time and
at its option, whether or not an arbitration action is then pending,
initiate a civil action for temporary and permanent injunctive and
other equitable relief against Company and BSTI. Company and BSTI
acknowledges that upon any breach of Buyer's conversion rights
hereunder, Buyer's resulting injury may not be adequately compensated
by a remedy at law. Accordingly, upon such breach, Buyer, at its
election and without limitation of its other remedies, shall be
entitled to pursue a claim for specific performance of this Agreement,
and Company and BSTI hereby waive the right to assert any defense
thereto that Purchaser has an adequate remedy at law. The parties
further agree that any action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the
Superior Court of Fulton County, Georgia, and the United States
District Court for the Northern District of Georgia, Atlanta Division
for the adjudication of any civil action asserted pursuant to this
Paragraph.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause four (4) additional original
executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
-28-
<PAGE> 29
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement, Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyer, the Company,
their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived
or amended other than by an instrument in writing signed by the party
to be charged with enforcement.
f. Notices. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (I) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
4405 International Blvd.
Suite B-109
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (410) 921-1062
With a copy to:
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Telephone: (770) 481-7201
Facsimile: (770) 481-7210
If to the Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to the Buyer's counsel as set forth on the Schedule
of Buyers. Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
-29-
<PAGE> 30
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent
of the Buyer. The Buyer may assign its rights hereunder without the
consent of the Company, provided, however, that any such assignment
shall not release the Buyer from its obligations hereunder unless such
obligations are assumed by such assignee and the Company has consented
to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Buyer
contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4, 5 and 9, the indemnification provisions set forth in
Section 8, shall survive the Closing. The Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. Publicity. The Company, BSTI, and the Buyer shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the
prior approval of the Buyer, to make any press release or other public
disclosure with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted
by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a
copy thereof).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
1. Termination. In the event that the Closing shall not have
occurred with respect to the Buyer on or before five (5) business days
from the date hereof due to the Company's or the Buyer's failure to
satisfy the conditions set forth in Sections 5 and 6 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party-
provided.
m. Independent Counsel. The parties to this Agreement
acknowledge that Company and BSTI have received independent counsel
from the law firm of Sims Moss Kline & Davis LLP which is acting as
their counsel. Buyers have been advised by Sims Moss Kline & Davis LLP
to seek independent advice with respect to the terms and conditions of
this Agreement and any related agreements before signing them.
-30-
<PAGE> 31
n. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
"COMPANY"
ALLERGY SUPERSTORE.COM., INC.
By:
---------------------------------------
Name: Timothy C. Moses
Its: President
BIOSHIELD TECHNOLOGIES, INC.
By:
----------------------------------------
Name:
Title:
GPS AMERICA FUND LTD.
------------------------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-31-
<PAGE> 32
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
ADDRESS AND FACSIMILE NUMBER OF SHARES OF
BUYER'S NAME NUMBER OF BUYER COMMON STOCK NUMBER OF WARRANTS
- ------------------------------ ---------------------------- ------------------- ------------------
<S> <C> <C> <C>
World Trade Center Amsterdam 42,827 4,000
GPS America Fund Ltd. Tower B, 17th Floor
Strawinksylaan 1725
P.O. Box 7241
1007 JE Amsterdam
The Netherlands
Facsimile: 3120-675-0881
</TABLE>
<PAGE> 33
SCHEDULE 3(C)
CAPITALIZATION
1. Options to purchase a total of 2,025,000 shares of Common Stock to
each of Timothy Moses and Jacques Elfersy at $2.00 per share.
2. Options to purchase thirty thousand shares of common stock at $2.00
each have been issued to five of the Board Members and four of the Medical
Advisory Board Members of the Company, plus an option to purchase an additional
5,000 shares for each year of service thereafter.
<PAGE> 34
SCHEDULE 3(E)
CONFLICTS
None.
<PAGE> 35
SCHEDULE 3(H)
LITIGATION
None.
<PAGE> 36
SCHEDULE 3(I)
INTELLECTUAL PROPERTY
None.
<PAGE> 37
SCHEDULE 3(N)
LIENS
None.
<PAGE> 38
SCHEDULE 3(U)
TAX STATUS
None.
<PAGE> 39
SCHEDULE 4(D)
USE OF PROCEEDS
<TABLE>
<S> <C>
1. Intercompany Debt Repayment $ 250,000.00
2. Design, development of Allergy Superstore $ 2,250,000.00
3. Increase staffing & costs related to new building $ 1,150,000.00
4. General & Administrative Expenses $ 2,500,000.00
5. Marketing & Sales (advertising/promo) $ 2,500,000.00
6. Branding Campaign $ 1,500,000.00
7. Web Server & Web Serving Tech $ 550,000.00
8. State-of-the-art distribution center $ 2,500,000.00
9. State-of-the-art e-commerce platform $ 450,000.00
10. Lease & Commissions $ 1,350,000.00
TOTAL $15,000,000.00
</TABLE>
<PAGE> 40
EXHIBIT "A"
(BSTI REGISTRATION RIGHTS AGREEMENT)
(See tab 3 for executed document.)
<PAGE> 41
EXHIBIT "B"
(COMPANY REGISTRATION RIGHTS AGREEMENT)
(See tab 4 for executed document.)
<PAGE> 42
EXHIBIT "C"
(WARRANT AGREEMENT)
(See tab 6 for executed document.)
<PAGE> 43
EXHIBIT "D"
(BSTI AND COMPANY COUNSEL'S OPINION)
(See tab 7 for executed document.)
<PAGE> 44
EXHIBIT "E"
(BSTI'S AND COMPANY'S BOARD RESOLUTIONS)
(See tabs 8 and 9 for executed documents.)
<PAGE> 45
EXHIBIT "F"
(VOTING PROXIES)
(See tab 10 for executed documents.)
<PAGE> 1
EXHIBIT 10.069
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of August
25, 1999, by and among BioShield Technologies, Inc., a Georgia corporation,
with headquarters at 4405 International Blvd., Norcross, Georgia 30093 (the
"COMPANY"), and the undersigned buyers (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
Allergy Superstore.com, Inc ("ASC"), a subsidiary of the Company, has agreed,
upon the terms and subject to the conditions of the Securities Purchase
Agreement, (i) to issue and sell to the Buyers shares of ASC's common stock, par
value $0.001 per share (the "COMMON STOCK"), which, subject to certain terms and
conditions, will be exchangeable after August 25, 2000 (the "EXCHANGE
COMMENCEMENT DATE") into shares of the Company's common stock, no par value per
share (as converted, the "CONVERSION SHARES") in accordance with the terms of
the Securities Purchase Agreement; and
B. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "INVESTOR" means the Buyer and any transferee or assignee
thereof to whom the Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
b. "PERSON" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or
ordering of
<PAGE> 2
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the Conversion
Shares issued or issuable upon conversion of the Common Stock and any
shares of capital stock issued or issuable with respect to the
Conversion Shares or the Common Stock as a result of any stock split,
stock dividend, recapitalization, exchange or similar event.
e."REGISTRATION STATEMENT" means a registration statement of
the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. No later than December 31, 1999,
(the "FILING DEADLINE"), the Company shall prepare and file with the
SEC a Registration Statement or Registration Statements (as is
necessary) on Form S-3 (or, if such form is unavailable for such a
registration, on such other form as is available for such a
registration, subject to the consent of each Buyer and the provisions
of Section 2(e), which consent will not be unreasonably withheld),
covering the resale of all of the Registrable Securities and no other
Securities of any kind by any person or entity, which Registration
Statement(s) shall state that, in accordance with Rule 416 promulgated
under the 1933 Act, such Registration Statement(s) also covers such
indeterminate number of additional shares of Common Stock as may
become issuable to prevent dilution resulting from stock splits, stock
dividends or similar transactions. Such Registration Statement shall
initially register for resale 1,000,000 shares of Common Stock,
subject to adjustment as provided in Section 3(b), and such registered
shares of Common Stock shall be allocated among the Investors pro rata
based on the total number of Registrable Securities issued or issuable
as of each date that a Registration Statement, as amended, relating to
the resale of the Registrable Securities is declared effective by the
SEC. The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC within one hundred and twenty
(120) days after the Filing Deadline (the "REGISTRATION DEADLINE").
The Company shall permit the registration statement to become
effective within five (5) business days after receipt of a "no review"
notice from the SEC. In the event that the Registration Statement is
not declared effective by the SEC by the Registration Deadline then
the Company shall pay a penalty to each Buyer equal to 2% of the
purchase price for Common Stock purchased by each Investor and still
held by each Buyer for each thirty (30) day period beyond the
Registration Deadline that the Registration Statement is not declared
effective by the SEC (the "REGISTRATION DEADLINE PENALTY"). The
Registration Deadline Penalty shall be immediately payable by the
Company on demand by the Investor in either cash or Common Stock of
the Company at the election of the Company upon delivery to the
Company of a notice of such default by the Investor.
<PAGE> 3
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) involves an
underwritten offering, the Buyers shall have the right to select one
legal counsel to represent their interests in the offering, the costs
of which shall be borne by the Investors.
c. Piggy-Back Registrations. If at any time after the
Exchange Commencement Date and prior to the expiration of the
Registration Period (as hereinafter defined) the Company proposes to
file with the SEC a Registration Statement relating to an offering for
its own account or the account of others under the 1933 Act of any of
its securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to securities to be issued solely in connection
with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit
plans) the Company shall promptly send to each Investor who is
entitled to registration rights under this Section 2(c) written notice
of the Company's intention to file a Registration Statement and of
such Investor's rights under this Section 2(c) and, if within twenty
(20) days after receipt of such notice, such Investor shall so request
in writing, the Company shall include in such Registration Statement
all or any part of the Registrable Securities such Investor requests
to be registered, subject to the priorities set forth in Section 2(d)
below. No right to registration of Registrable Securities under this
Section 2(c) shall be construed to limit any registration required
under Section 2(a). The obligations of the Company under this Section
2(c) may be waived by Investors holding a majority of the Registrable
Securities. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included
in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to
the provisions of this Agreement, on the same terms and conditions as
other shares of Common Stock included in such underwritten offering.
d. Priority in Piggy-Back Registration Rights in connection
with Registrations or Company Account. If the registration referred to
in Section 2(c) is to be an underwritten public offering for the
account of the Company and the managing underwriter(s) advise the
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such
registration: (1) first, all securities the Company proposes to sell
for its own account, (2) second, up to the full number of securities
proposed to be registered for the account of the holders of securities
entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the
securities requested to be registered by the Investors and other
holders of securities entitled to participate in the registration,
drawn from them pro rata based on the number each has requested to be
included in such registration.
3 . RELATED OBLIGATIONS.
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<PAGE> 4
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on
or prior to the Filing Deadline) for the registration of Registrable
Securities pursuant to Section 2(a)) and use its best efforts to cause
such Registration Statement(s) relating to Registrable Securities to
become effective as soon as possible after such filing (by the one
hundred and twentieth (120th) day following the issuance of the
relevant for the registration of Registrable Securities pursuant to
Section 2(a), and keep the Registration Statement(s) effective
pursuant to Rule 415 at all times until the later of (i) the date as
of which the Investors may sell all of the Registrable Securities
without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto) or (ii) the date on which the Investors
shall have sold all the Registrable Securities (the "REGISTRATION
PERIOD"), which Registration Statement(s) (including any amendments or
supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to
the Registration Statement(s) and the prospectus(es) used in
connection with the Registration Statement(s), which prospectus(es)
are to be filed pursuant to Rule 424 promulgated under the 1933 Act,
as may be necessary to keep the Registration Statement(s) effective at
all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by
the Registration Statement(s) until such time as all of such
Registrable Securities shall have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof
as set forth in the Registration Statement(s). In the event the number
of shares available under a Registration Statement filed pursuant to
this Agreement is insufficient to cover all of the Registrable
Securities, the Company shall amend the Registration Statement, or
file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in
any event within thirty (30) days after the necessity therefor arises
(based on the market price of the Common Stock and other relevant
factors on which the Company reasonably elects to rely). The Company
shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable
following the filing thereof. For purposes of the foregoing provision,
the number of shares available under a Registration Statement shall be
deemed "insufficient to cover all of the Registrable Securities" if at
any time the number of Registrable Securities issued or issuable upon
conversion of the Common Stock is greater than the quotient determined
by dividing (i) the number of Conversion Shares available for resale
under such Registration Statement by (ii)
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<PAGE> 5
1.0; provided that in the case of the initial registration of the
Registrable Securities pursuant to Section 2(a), the Company shall be
required to register for resale 1,000,000 shares of Common Stock.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration
Statement(s) (including each preliminary prospectus ) and, with
regards to the Registration Statement, any correspondence by or on
behalf of the Company to the SEC or the staff of the SEC and any
correspondence from the SEC or the staff of the SEC to the Company or
its representatives, (ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or
such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including any preliminary prospectus,
as such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
d. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration
Statement(s) under the securities or "blue sky" laws of such
jurisdictions in the United States as any Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to quality the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a)
qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b)
subject itself to general taxation in any such jurisdiction, or (c)
file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify each Investor who holds Registrable
Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any
of the Registrable Securities for sale under the securities or "blue
sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for
such purpose.
e. [LEFT INTENTIONALLY BLANK]
f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly
prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or
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<PAGE> 6
omission, and deliver ten (10) copies of such supplement or amendment
to each Investor (or such other number of copies as such Investor may
reasonably request). The Company shall also promptly notify each
Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each
Investor by facsimile on the same day of such effectiveness and by
overnight mail) (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
g. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of
such order or suspension at the earliest possible moment and to notify
each Investor who holds Registrable Securities being sold (and, in the
event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.
h. The Company shall permit each Investor at such Investors
expense a single firm of counsel or such other counsel as thereafter
designated as selling stockholders' counsel by the Investors who hold
a majority of the Registrable Securities being sold, to review and
comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
i. At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if
any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters and the Investors.
j. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to
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<PAGE> 7
an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is
ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other
agreement. Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. All fees, costs
and expenses of the foregoing shall be borne by the Investors.
k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt written notice to such Investor
and allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
l. The Company shall use reasonable efforts either to (i)
cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv)
if, despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with
the National Association of Securities Dealers, Inc. ("NASD") as such
with respect to such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under
this Section 3(l).
m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable,
any managing underwriter or
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<PAGE> 8
underwriters, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or
amounts, as the case may be, as the managing underwriter or
underwriters, if any, or, if there is no managing underwriter or
underwriters, the Investors may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the
Investors may request. Not later than the date on which any
Registration Statement registering the resale of Registrable
Securities is declared effective, the Company shall deliver to its
transfer agent instructions, accompanied by any reasonably required
opinion of counsel, that permit sales of unlegended securities in a
timely fashion that complies with then mandated securities settlement
procedures for regular way market transactions.
n. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
o. The Company shall provide a transfer agent and registrar
of all such Registrable Securities not later than the effective date
of such Registration Statement.
p. If requested by the managing underwriters of an Investor,
the Company shall immediately incorporate in a prospectus supplement
or post-effective amendment such information as the managing
underwriters and the Investors agree should be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number
of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in
such offering; make all required filings of such prospectus supplement
or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any Registration
Statement if requested by a shareholder or any underwriter of such
Registrable Securities. The costs of preparation and filing of any
such post-effective amendments and supplements shall be borne by the
Investors.
q. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
r. The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from
each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration
Statement. It shall be a
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<PAGE> 9
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence
of 3(f) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy all
copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
and fees and disbursements of counsel for the Company shall be borne by the
Company except as otherwise specifically provided herein.
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<PAGE> 10
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor who
holds such Registrable Securities, the directors, officers, partners,
employees, agents and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 ACT"), and any underwriter (as defined in
the 1933 Act) for the Investors, and the directors and officers of,
and each Person, if any, who controls, any such underwriter within the
meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "CLAIMS")
incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party
thereto ("INDEMNIFIED DAMAGES"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky"
laws of any jurisdiction in which Registrable Securities are offered
("BLUE SKY FILING"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which the
statements therein were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). Subject to the restrictions set forth in
Section 6(d) with respect to the number of legal counsel, the Company
shall reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished
in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made
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<PAGE> 11
available by the Company pursuant to Section 3(c); (ii) with respect
to any preliminary prospectus, shall not inure to the benefit of any
such person from whom the person asserting any such Claim purchased
the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement
or mission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company pursuant to
Section 3(c), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim
is based on a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company; and (iv) shall
not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 for a period of three (3) years from the Filing
Deadline.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and
not jointly indemnify, hold harmless and defend, to the same extent
and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (collectively and together
with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim
or Indemnified Damages to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in
each case to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made
by or on behalf of such Indemnified Party and shall survive the
transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit
of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on
a timely basis in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing expressly for inclusion in the Registration
Statement.
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<PAGE> 12
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement
of any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The Company shall pay
reasonable fees for only one separate legal counsel for the Investors,
and such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The Indemnified
Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action
or claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
e. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the
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<PAGE> 13
indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however,
that: (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set
forth in Section 6; (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (iii)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees,
to:
a. make and keep public information available, as those terms
are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements (it being
understood that nothing herein shall limit the Company's obligations
under Section 4(c) of the Securities Purchase Agreement) and the
filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of Registrable Securities if: (i) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment,
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<PAGE> 14
furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which
such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the
provisions contained herein; (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement; (vi) such transferee shall be an "ACCREDITED INVESTOR" as
that term is defined in Rule 501 of Regulation D promulgated under the
1933 Act; and (vii) in the event the assignment occurs subsequent to
the date of effectiveness of the Registration Statement required to be
filed pursuant to Section 2(a), the transferee agrees to pay all
reasonable expenses of amending or supplementing such Registration
Statement to reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon
each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
BioShield Technologies, Inc.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (770) 921-1065
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<PAGE> 15
with a copy (which shall not constitute notice) to:
Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit and of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement,
once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
i. 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.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
BIOSHIELD TECHNOLOGIES, INC. GPS AMERICA FUND LTD.
By: By:
--------------------------------- -------------------------------
Name: Name:
-----------------------------
Its: Its:
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<PAGE> 17
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ADDRESS AND FACSIMILE NUMBER OF BUYER NUMBER OF SHARES OF NUMBER OF
BUYER'S NAME COMMON STOCK WARRANTS
- ---------------------- ----------------------------------------------- -------------------------- ------------------
<S> <C> <C> <C>
World Trade Center Amsterdam 42,827 4,000
GPS America Fund Ltd. Tower B, 17th Floor
Strawinksylaan 1725
P.O. Box 7241
1007 JE Amsterdam
The Netherlands
Facsimile: 3120-675-0881
- ---------------------- ----------------------------------------------- -------------------------- ------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.070
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of August
25, 1999, by and among Allergy Superstore.com, Inc., a Delaware corporation,
with headquarters at Suite B109, 4405 International Boulevard, Norcross,
Georgia 30083 (the "COMPANY"), and the undersigned buyer (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among
BioShield Technologies, Inc. ("BSTI") and the parties hereto of even date
herewith (the "SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon
the terms and subject to the conditions of the Securities Purchase Agreement,
(i) to issue and sell to the Buyer's shares of its common stock, par value
$0.0001 per share (the "COMMON STOCK"), which, under certain terms and
conditions, will be convertible into shares of BSTI's common stock, no par
value per share (as converted, the "CONVERSION SHARES") in accordance with the
terms of the Securities Purchase Agreement; and
B. To induce the Buyer to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"),
and applicable state securities laws once the Company becomes a reporting
company under the Securities and Exchange Act of 1934, as amended (the "1934
ACT"), by making the appropriate filings with the U.S. Securities and Exchange
Commission (the "SEC"):
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "INVESTOR" means the Buyer and any transferee or assignee
thereof to whom the Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
b. "PERSON" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or
ordering of
<PAGE> 2
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the Common Stock
and any shares of capital stock issued or issuable as a result of any
stock split, stock dividend, recapitalization, exchange, or similar
event of the Company.
e."REGISTRATION STATEMENT" means a registration statement of
the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Piggy-Back Registrations. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the
Company proposes to file with the SEC a Registration Statement
relating to an offering for its own account or the account of others
under the 1933 Act of any of its securities (other than pursuant to an
initial public offering of any securities of the Company or a filing
on Form S-4 or Form S-8 or their then equivalents relating to
securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection
with stock option or other employee benefit plans) the Company shall
promptly send to each Investor who is entitled to registration rights
under this Section 2(c) written notice of the Company's intention to
file a Registration Statement and of such Investor's rights under this
Section 2(c) and, if within twenty (20) days after receipt of such
notice, such Investor shall so request in writing, the Company shall
include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered,
subject to the priorities set forth in Section 2(d) below. No right to
registration of Registrable Securities under this Section 2(c) shall
be construed to limit any registration required under Section 2(a).
The obligations of the Company under this Section 2(c) may be waived
by Investors holding a majority of the Registrable Securities. If an
offering in connection with which an Investor is entitled to
registration under this Section 2(c) is an underwritten offering, then
each Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company,
offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as
other shares of Common Stock included in such underwritten offering.
As used herein, "REGISTRATION PERIOD" shall mean the earlier of (i)
the date as of which the Investors may sell all of the Registrable
Securities without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act (or successor thereto) or (ii) the date on which
(A) the Investors shall have sold all the Registrable Securities.
b. Priority in Piggy-Back Registration Rights in connection
with Registrations or Company Account. If the registration referred to
in Section 2(c) is to be an underwritten public offering for the
account of the Company and the managing underwriter(s) advise the
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<PAGE> 3
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such
registration: (1) first, all securities the Company proposes to sell
for its own account, (2) second, up to the full number of securities
proposed to be registered for the account of the holders of securities
entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the
securities requested to be registered by the Investors and other
holders of securities entitled to participate in the registration,
drawn from them pro rata based on the number each has requested to be
included in such registration.
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration
Statement(s) (including each preliminary prospectus ) and, with
regards to the Registration Statement, any correspondence by or on
behalf of the Company to the SEC or the staff of the SEC and any
correspondence from the SEC or the staff of the SEC to the Company or
its representatives, (ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or
such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including any preliminary prospectus,
as such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
b. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration
Statement(s) under the securities or "blue sky" laws of such
jurisdictions in the United States as any Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to quality the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a)
qualify to do business in any jurisdiction where it would not
otherwise be
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<PAGE> 4
required to qualify but for this Section 3(d), (b) subject itself to
general taxation in any such jurisdiction, or (c) file a general
consent to service of process in any such jurisdiction. The Company
shall promptly notify each Investor who holds Registrable Securities
of the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such
purpose.
c. In the event Investors who hold a majority of the
Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of
such offering. The cost of such underwriters shall be borne by the
Investors.
d. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly
prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or omission, and deliver ten (10) copies
of such supplement or amendment to each Investor (or such other number
of copies as such Investor may reasonably request). The Company shall
also promptly notify each Investor in writing (i) when a prospectus or
any prospectus supplement or post-effective amendment has been filed,
and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be
delivered to each Investor by facsimile on the same day of such
effectiveness and by overnight mail) (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or related
prospectus or related information, (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate.
e. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of
such order or suspension at the earliest possible moment and to notify
each Investor who holds Registrable Securities being sold (and, in the
event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.
f. The Company shall permit each Investor at such Investors
expense a single firm of counsel or such other counsel as thereafter
designated as selling stockholders' counsel by the Investors who hold
a majority of the Registrable Securities being sold, to review and
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<PAGE> 5
comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
g. At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if
any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters and the Investors.
h. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to an Investor) or use of any Record
or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release
of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in
violation of this or any other agreement. Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or
by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to the Company and allow the Company,
at its expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, the Records deemed
confidential. All fees, costs and expenses of the foregoing shall be
borne by the Investors.
i. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is
sought in
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<PAGE> 6
or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and
allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
j. The Company shall use reasonable efforts either to (i)
cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv)
if, despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with
the National Association of Securities Dealers, Inc. ("NASD") as such
with respect to such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under
this Section 3(j).
k. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable,
any managing underwriter or underwriters, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant
to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or, if there is no managing
underwriter or underwriters, the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters,
if any, or the Investors may request. Not later than the date on which
any Registration Statement registering the resale of Registrable
Securities is declared effective, the Company shall deliver to its
transfer agent instructions, accompanied by any reasonably required
opinion of counsel, that permit sales of unlegended securities in a
timely fashion that complies with then mandated securities settlement
procedures for regular way market transactions.
l. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
m. The Company shall provide a transfer agent and registrar
of all such Registrable Securities not later than the effective date
of such Registration Statement.
n. If reasonably requested by the managing underwriters, the
Company shall immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters
and the Investors agree should be included therein relating to the
sale and distribution of Registrable Securities, including, without
limitation,
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<PAGE> 7
information with respect to the number of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by
such underwriters and with respect to any other terms of the
underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required
filings of such prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by a shareholder
or any underwriter of such Registrable Securities. The costs of
preparation and filing of any such post-effective amendments and
supplements shall be borne by the Investors.
o. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
p. The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from
each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration
Statement. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that
such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
Each Investor agrees to enter into any contractual lock-up agreements
with respect to the Common Stock or other securities
-7-
<PAGE> 8
held by each Investor in connection with an underwritten public
offering of the Company's common stock or other securities.
d. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 3(h) or the first sentence of 3(d), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or the first sentence
of 3(d) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy all
copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
and fees and disbursements of counsel for the Company shall be borne by the
Company except as otherwise specifically proved herein.
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor who
holds such Registrable Securities, the directors, officers, partners,
employees, agents and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 ACT"), and any underwriter (as defined in
the 1933 Act) for the Investors, and the directors and officers of,
and each Person, if any, who controls, any such underwriter within the
meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "CLAIMS")
incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party
thereto
-8-
<PAGE> 9
("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering
under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("BLUE SKY FILING"), or the
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to
the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, or (iii) any
violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities pursuant to a Registration
Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, "VIOLATIONS"). Subject to the restrictions set
forth in Section 6(d) with respect to the number of legal counsel, the
Company shall reimburse the Investors and each such underwriter or
controlling person, promptly as such expenses are incurred and are due
and payable, for any legal fees or other reasonable expenses incurred
by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished
in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c); (ii) with respect
to any preliminary prospectus, shall not inure to the benefit of any
such person from whom the person asserting any such Claim purchased
the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement
or mission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company pursuant to
Section 3(c), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim
is based on a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company (i) and (iv)
shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 for a period of three (3) years from the Filing
Deadline.
-9-
<PAGE> 10
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and
not jointly indemnify, hold harmless and defend, to the same extent
and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (collectively and together
with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim
or Indemnified Damages to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in
each case to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue statement
or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing expressly for inclusion in the Registration
Statement.
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement
of any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests
-10-
<PAGE> 11
between such Indemnified Person or Indemnified Party and any other
party represented by such counsel in such proceeding. The Company
shall pay reasonable fees for only one separate legal counsel for the
Investors, and such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action
or claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
e. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying party
or others, and (ii) any liabilities the indemnifying party may be
subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however,
that: (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set
forth in Section 6 and (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation.
-11-
<PAGE> 12
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees,
once the Company becomes a reporting company under the 1934 Act upon the
effective date of its Form 10 to be filed with the SEC, to:
a. make and keep public information available, as those terms
are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements and the
filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of Registrable Securities if: (i) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a)
the name and address of such transferee or assignee, and (b) the securities
with respect to which such registration rights are being transferred or
assigned; (iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted
under the 1933 Act and applicable state securities laws; (iv) at or before the
time the Company receives the written notice contemplated by clause (ii) of
this sentence the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein; (v) such transfer shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement; (vi) such transferee shall be an "ACCREDITED INVESTOR" as
that term is defined in Rule 501 of Regulation D promulgated under the 1933
Act; and (vii) in the event the assignment occurs subsequent to the date of
effectiveness of the Registration Statement required to be filed pursuant to
Section 2(a), the transferee agrees to pay all reasonable expenses of amending
or supplementing such Registration Statement to reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities.
-12-
<PAGE> 13
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
-13-
<PAGE> 14
If to the Company: Allergy Superstore.com, Inc.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Attention: President
Facsimile: (770) 921-1065
With a copy to: Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
Facsimile: (770) 481-7200
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit and of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement,
once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
-14-
<PAGE> 15
i. 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.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
ALLERGY SUPERSTORE.COM, INC. GPS AMERICA FUND LTD.
By: By:
------------------------------ -----------------------------
Name: Name:
Its: Its:
-15-
<PAGE> 16
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ADDRESS AND FACSIMILE NUMBER OF NUMBER OF SHARES OF NUMBER OF WARRANTS
BUYER'S NAME BUYER COMMON STOCK
- ----------------------------- ------------------------------------- ---------------------------- -------------------
<S> <C> <C> <C>
World Trade Center Amsterdam 42,827 4,000
GPS America Fund Ltd. Tower B, 17th Floor
Strawinksylaan 1725
P.O. Box 7241
1007 JE Amsterdam
The Netherlands
Facsimile: 3120-675-0881
- ----------------------------- ------------------------------------- ---------------------------- -------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.071
TRANSFER AGENT INSTRUCTIONS
BIOSHIELD TECHNOLOGIES, INC.
August 25, 1999
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
Attn: George Karfunkel
Dear Gentlemen:
Reference is made to that certain Securities Purchase Agreement, of
even date herewith, by and among BioShield Technologies, Inc., a Georgia
corporation (the "COMPANY"), and each of the subscribers listed in Exhibit "A"
attached hereto (collectively, the "HOLDERS") pursuant to which the Company is
issuing to the Holders an aggregate of 42,827 shares of Common Stock, $0.001
par value of Allergy Superstore.com, Inc. (the "COMMON SHARES"). This letter
shall serve as our irrevocable authorization and direction to you (provided
that you are the transfer agent of the Company at such time) to issue shares
(the "CONVERSION SHARES") of Common Stock, no par value (the "COMMON STOCK"),
of the Company to or upon the order of a Holder from time to time upon (i)
surrender to you of a properly completed and duly executed Conversion Notice,
in the form attached hereto as Exhibit I, which has been properly agreed to and
acknowledged by the Company as indicated by the signature of a duly authorized
officer of the Company thereon and (ii) certificates representing Preferred
Shares being converted (or an indemnification undertaking with respect to such
shares in the case of their loss, theft or destruction). So long as you have
previously received: (i) written confirmation from counsel to the Company that
a registration statement covering resales of the Conversion Shares has been
declared effective by the U.S. Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 ACT"), and (ii) a copy
of such Registration Statement, Certificates representing the Conversion Shares
shall not bear any legend restricting transfer of the Conversion Shares thereby
and should not be subject to any stop-transfer restriction. However, if you
have not previously received (i) written confirmation from counsel to the
Company that a registration statement covering resales of the Conversion Shares
has been declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and (ii) a copy of such registration
statement, then the certificates representing the Conversion Shares shall bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
<PAGE> 2
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL, IN FORM AND CONTENT ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
provided, however, that the Company may from time to time notify you to place
stop transfer restrictions on the certificates for the Conversion Shares in the
event a registration statement covering the Conversion Shares is subject to
amendment for events then current.
An opinion of counsel to the Company that the issuance of the
Conversion Shares to the Holders will be exempt from registration under the
1933 Act is attached hereto as Exhibit II.
Please be advised that the Holders are relying upon this letter as an
inducement to enter into the Securities Purchase Agreement and, accordingly,
each Holder is a third party beneficiary to these instructions.
Should you have any questions concerning this matter please contact me
at (770) 925-3432.
Very truly yours,
BIOSHIELD TECHNOLOGIES, INC.
By:
---------------------------------------
Name: Timothy C. Moses
Its: President and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
AMERICAN STOCK TRANSFER & TRUST CO.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date:
-------------------------------------
Enclosure
cc: Holders
<PAGE> 3
EXHIBIT "A"
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES OF
ADDRESS AND FACSIMILE NUMBER OF BUYER COMMON STOCK NUMBER OF WARRANTS
BUYER'S NAME
- ------------------------- ---------------------------------------- ------------------------ ------------------------
<S> <C> <C> <C>
World Trade Center Amsterdam 42,827 4,000
GPS America Fund Ltd. Tower B, 17th Floor
Strawinksylaan 1725
P.O. Box 7241
1007 JE Amsterdam
The Netherlands
Facsimile: 3120-675-0881
- ------------------------- ---------------------------------------- ------------------------ ------------------------
</TABLE>
<PAGE> 4
EXHIBIT I
BIOSHIELD TECHNOLOGIES, INC.
EXCHANGE NOTICE
Reference is made to the Securities Purchase Agreement, dated as of
June 30, 1999 (the "AGREEMENT"). In accordance with and pursuant to the
Agreement, the undersigned hereby elects to exchange the number of shares of
Common Stock of Allergy Superstore.com, Inc., $0.001 par value per share (the
"COMMON STOCK"), of BioShield Technologies, Inc., a Georgia corporation (the
"COMPANY"), indicated below into shares of Common Stock, no par value per share
(the "COMMON STOCK"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Common Stock specified below as of the date
specified below.
The undersigned acknowledges that any sales by the undersigned of the
securities issuable to the undersigned upon exchange of the Common Stock shall
be made only pursuant to (i) a registration statement effective under the
Securities Act of 1933, as amended (the "ACT"), or (ii) an opinion of its
counsel in form and content satisfactory to the Company that such sale is
exempt from registration required by Section 5 of the Act.
Date of Exchange:
------------------------------------------
Number of Shares of Common
Stock to be exchanged:
------------------------------------------
Stock certificate No(s). to be exchanged:
------------------------------------------
Please confirm the following information:
Exchange Price:
------------------------------------------
Number of shares of
Conversion Shares to be
issued:
------------------------------------------
<PAGE> 5
please issue the Common Stock into which the Common Stock are being exchanged
in the following name and to the following address:
Issue to:
--------------------------------------------
--------------------------------------------
Facsimile Number:
--------------------------------------------
Authorization:
--------------------------------------------
--------------------------------------------
By:
-----------------------------------------
Title:
--------------------------------------
Dated:
--------------------------------------------
ACKNOWLEDGED AND AGREED:
BIOSHIELD TECHNOLOGIES, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Date:
------------------------------
<PAGE> 6
EXHIBIT II
BIOSHIELD TECHNOLOGIES, INC.
Attached hereto.
<PAGE> 1
EXHIBIT 10.072
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of August 25, 1999, between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and GPS America
Fund Limited, (hereinafter referred to as "INVESTOR").
W I T N E S S E T H:
WHEREAS, Investor has participated as an Investor in connection with
the Company's offering (the "OFFERING") of up to $15,000,000 in aggregate
amount of common stock, par value $0.001 per share (the "COMMON STOCK") for an
aggregate purchase price of $15,000,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Investor and/or its designees, in consideration for,
and as part of the investment by Investor in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant.
Investor and/or its designees are hereby granted the right to
purchase, at any time from the date of issuance of the aforementioned Preferred
Stock until 5:00 P.M., Eastern Standard Time, on June 29, 2004 (the "WARRANT
EXERCISE TERM"), 4,000 Shares at an exercise price (subject to adjustment as
provided in Article 7 hereof) of $5.126 per share (the "INITIAL EXERCISE
PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash or
by check to the order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly
executed, together with payment of the Exercise Price (as hereinafter defined)
for the Shares purchased, at the Company's executive offices currently located
at 4405 International Blvd., Norcross Georgia 30093, the registered holder of a
Warrant Certificate ("HOLDER" or "HOLDERS") shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder hereof, in
<PAGE> 2
whole or in part (but not as to fractional shares of the Common Stock). In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at its option, exchange this Warrant, in whole
or in part (a "WARRANT EXCHANGE"), into the number of Shares determined in
accordance with this Section 3.2, by surrendering this Warrant at the principal
office of the company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange or, if later, the
date the Notice of Exchange is received by the Company (the "EXCHANGE DATE").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the Shares
remaining subject to this Warrant, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) business days following the Exchange
Date. In connection with any Warrant Exchange, this Warrant shall represent the
right to subscribe for and acquire the number of Shares (rounded to the next
highest integer) equal to (i) the number of Shares specified by the Holder in
its Notice of Exchange (the "TOTAL NUMBER") less (ii) the number of Shares
equal to the quotient obtained by dividing (A) the product of the Total Number
and the then existing Exercise Price by (B) the current market value of a share
of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for
the Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange,
substitution or transfer.
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<PAGE> 3
The Warrant Certificates and, upon exercise of the Warrants, in part
or in whole, certificates representing the Shares shall bear a legend
substantially similar to the following:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "ACT"),
and may not be offered or sold except (i) pursuant to an effective
registration statement under the Act, (ii) to the extent applicable,
pursuant to Rule 144 under the Act (or any similar rule under such Act
relating to the disposition of securities), or (iii) upon the delivery
by the holder to the Company of an opinion of counsel, satisfactory to
counsel to the issuer, stating that an exemption from registration
under such Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price
shall be the price which shall result from time to time from any and all
adjustments of the Initial Exercise Price in accordance with the provisions of
Article 7 hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein shall
mean the Initial Exercise Price or the adjusted Exercise Price, depending upon
the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of
the date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
6.3 Piggyback Registration. If, at any time during the five
years following the date of this Agreement, the Company proposes to prepare and
file any registration statement or post-effective amendments (other than in
connection with an underwritten initial public offering or initial
-3-
<PAGE> 4
registration of the Company or the Company's securities with the U.S.
Securities & Exchange Commission) thereto covering equity or debt securities of
the Company, or any such securities of the Company held by its shareholders (in
any such case, other than in connection with a merger, acquisition or pursuant
to Form S-8 or successor form), (for purposes of this Article 6, collectively,
a "REGISTRATION STATEMENT"), it will give written notice of its intention to do
so by registered mail ("NOTICE"), at ten (10) business days prior to the filing
of each such Registration Statement, to all holders of the Registrable
Securities. Upon the written request of such a holder (a "REQUESTING HOLDER"),
made within ten (10) business days after receipt of the Notice, that the
Company include any of the Requesting Holder's Registrable Securities in the
proposed Registration Statement, the Company shall, as to each such Requesting
Holder, use its best efforts to effect the registration under the Securities
Act of the Registrable Securities which it has been so requested to register
("PIGGYBACK REGISTRATION"), at the Company's sole cost and expense and at no
cost or expense to the Requesting Holders. Notwithstanding the provisions of
this Section 6.3, the Company shall have the right at any time after it shall
have given written notice pursuant to this Section 6.3 (irrespective of whether
any written request for inclusion of such securities shall have already been
made) to elect not to file any such proposed Registration Statement, or to
withdraw the same after the filing but prior to the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Article 7, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Shares issuable
upon exercise of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case of
any reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result
of a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of
the property of the Company as an entirety, the Holders shall thereafter have
the right to purchase the kind and number of shares of stock and other
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as if the Holders were the owners of
the shares of Common Stock underlying the Warrants immediately prior to any
such events at a price equal to the
-4-
<PAGE> 5
product of (x) the number of shares issuable upon exercise of the Warrants and
(y) the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if such
Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall for example be made:
(a) Upon the issuance or sale of shares of Common
Stock upon the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to the
Company's employee stock option plans in effect or the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any such options, or (ii) the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any options or warrants; or
(c) Upon the issuance of shares of Common Stock
pursuant to contractual obligations; or
(d) If the amount of said adjustment shall be less
than 2 cents (2(cent)) per Share, provided, however, that in
such case any adjustment that would otherwise be required
then to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall
amount to at least 2 cents (2(cent)) per Share.
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior
to the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company
or by another person or entity, or any other thing of value, the Holder or
Holders of the unexercised Warrants shall thereafter be entitled, in addition
to the shares of Common Stock or other securities receivable upon the exercise
thereof, to receive, upon the exercise of such Warrants, the same monies,
property, assets, rights, evidences of indebtedness, securities or any other
thing of value that they would have been entitled to receive at the time of
such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of
-5-
<PAGE> 6
like tenor and date representing in the aggregate the right to purchase the
same number of Shares in such denominations as shall be designated by the
Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up
to the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts, once it has become a public company, to cause all shares
of Common Stock issuable upon the exercise of the Warrants to be listed on or
quoted on the electronic bulletin board, by NASDAQ or listed on such national
securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
-6-
<PAGE> 7
(b) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or
entitled to vote on such proposed dissolution, liquidation, winding up or sale.
Such notice shall specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend or distribution, or any proposed
dissolution, liquidation, winding up or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address
of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3
of this Agreement or to such other address as the Company may
designate by notice to the Holders.
13. Supplements and Amendments.
The Company may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to cure
any ambiguity, to correct or supplement any provision contained herein which
may be defective or inconsistent with any provisions herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company may deem necessary or desirable and which the Company deems not to
adversely affect the interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on June 29,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been
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<PAGE> 8
exercised and all the Shares issuable upon exercise of the Warrants have been
resold to the public; provided, however, that the provisions of Article 6 shall
survive such termination until the close of business on June 29, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be
governed by and interpreted in accordance with the laws of the State of Georgia
without regard to the principles of conflict of laws. The parties further agree
that any action between them shall be heard in Atlanta, Georgia, and expressly
consent to the jurisdiction and venue of the Superior Court of Fulton County,
Georgia, and the United States District Court for the Northern District of
Georgia, Atlanta Division for the adjudication of any civil action asserted
pursuant to this Paragraph.
-8-
<PAGE> 9
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Investor and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the Investor and
any other holder or holders of the Warrant Certificates, Warrants or the
Shares.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
ALLERGY SUPERSTORE.COM, INC.
By:
----------------------------------------
Name: Timothy C. Moses
Title: Chairman of the Board and Chief
Executive Officer
Attest:
--------------------------
Name:
----------------------------
Title:
---------------------------
INVESTOR:
GPS AMERICA FUND LTD.
By:
----------------------------------------
Name:
Title:
Attest:
--------------------------
Name:
----------------------------
Title:
---------------------------
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<PAGE> 10
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE
EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE
DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, STATING THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, JUNE 29, 2004
No. ___________ 4,000 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that GPS America Fund Ltd.
("INVESTOR") or registered assigns, is the registered holder of Warrants to
purchase, at any time from August 25, 1999, until 5:00 P.M. Eastern Standard
Time on June 29, 2004 ("EXPIRATION DATE"), up to 4,000 shares ("SHARES") of
fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of
Allergy Superstore.com, Inc., a Delaware corporation (the "COMPANY"), at the
Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE
PRICE"), of $5.126 per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but
subject to the conditions set forth herein and in the warrant agreement dated
as of August 25, 1999, between the Company and Investor (the "WARRANT
AGREEMENT"). Payment of the Exercise Price may be made in cash, or by certified
or official bank check in New York Clearing House funds payable to the order of
the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and
<PAGE> 11
the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferees) in exchange for this
Warrant Certificate, subject to the limitations provided herein and in the
Warrant Agreement, without any charge except for any tax, or other governmental
charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: As of August 25, 1999 ALLERGY SUPERSTORE.COM, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Attest:
-----------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 12
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official
bank check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares
be registered in the name of ___________________________________ whose address
is_____________________________, and that such Certificate be delivered to
___________________________________________, whose address
is________________________________.
Dated: Signature:
----------------------- -------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
- ------------------------------------
- ------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 13
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to
transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto
- -------------------------------------------------------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:
-------------------- ---------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate)
- -------------------------------------
- -------------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE> 1
Exhibit 10.073
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of September
2, 1999, by and among Allergy Superstore.com, Inc., a Delaware corporation,
with headquarters located at 4405 International Blvd., Norcross, Georgia (the
"COMPANY"), BioShield Technologies, Inc, a Georgia corporation located at 4405
International Blvd., Norcross, Georgia ("BSTI") and the investors listed on the
Schedule of Buyers attached hereto (individually, a "BUYER" or collectively
"BUYERS").
WHEREAS:
A. The Company, BSTI, and the Buyers are executing and
delivering this Agreement in reliance upon the exemption from securities
registration pursuant to Section 4(2) and/or Regulation D ("REGULATION D") as
promulgated by the U.S. Securities and Exchange Commission (the "SEC") under
the Securities Act of 1933, as amended (the "1933 ACT");
B. The Buyer wishes to purchase, upon the terms and conditions
stated in this Agreement, an aggregate amount of up to 85,653 shares of common
stock of the Company, par value $0.001 per share (such shares referred to
herein as the "COMMON STOCK"), in the respective amounts set forth opposite
each Buyer's name on the Schedule of Buyers;
C. Contemporaneously with the execution and delivery of this
Agreement, BSTI and the Buyers hereto are executing and delivering a
Registration Rights Agreement substantially in the form attached hereto as
Exhibit "A" (the "BSTI REGISTRATION RIGHTS AGREEMENT") pursuant to which BSTI
has agreed to provide certain registration rights under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws;
D. Contemporaneously with the execution and delivery of this
Agreement, the Company and Buyers hereto are executing and delivering a
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit "B" (the "COMPANY REGISTRATION RIGHTS AGREEMENT") pursuant to which the
Company has agreed to provide certain registration rights under the 1933 Act
and rules and regulations promulgated thereunder and applicable state
securities laws; and
E. The holders of the Common Stock will receive stock purchase
warrants (the "WARRANTS") to acquire the Common Stock substantially in the form
attached as Exhibit "C."
NOW THEREFORE, the Company, the Buyer, and BSTI hereby agree as
follows:
1 . PURCHASE AND SALE OF COMMON STOCK.
a. Purchase of Common Stock. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 5 and 6 below, the
Company shall issue and sell to the Buyers and the Buyers shall
purchase from the Company an aggregate principal amount of 85,653
shares of Common Stock and Warrants for an aggregate purchase price of
<PAGE> 2
$15,000,000 (the "PURCHASE PRICE"), in the respective amounts set
forth opposite each Buyer's name on the Schedule of Buyers (the
"CLOSING").
b. Closing Date. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Eastern Standard Time, within five
(5) business days following the date hereof, subject to notification
of satisfaction (or waiver) of the conditions to the Closing set forth
in Sections 5 and 6 below (or such later date as is mutually agreed to
by the Company and the Buyer). The Closing shall occur on the Closing
Date at the offices of Sims Moss Kline & Davis LLP, 400 Northpark Town
Center, Suite 310, 1000 Abernathy Road, N.E., Atlanta, Georgia 30328.
c. Form of Payment. On the Closing Date, (i) each Buyer shall
pay his portion of the Purchase Price to the Company for the Common
Stock to be issued and sold to such Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) the Company shall
deliver to each Buyer certificates representing such Common Stock and
Warrants that such Buyer is then purchasing (as indicated opposite
such Buyer's name on the Schedule of Buyers), duly executed on behalf
of the Company and registered in the name of such Buyer or its
designee (the "CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only
itself that:
a. Investment Purpose. Such Buyer is acquiring the Common
Stock and Warrants and any shares of Common Stock issuable upon
exercise thereof ("WARRANT SHARES"), for its own account for
investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided,
however, that by making the representations herein, such Buyer does
not agree to hold any Common Stock, Conversion Shares (as defined in
Section 8 hereof), Warrants, or Warrant Shares for any minimum or
other specific term and reserves the right to dispose of Common Stock
or Warrant Shares at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
Notwithstanding anything contained herein to the contrary, each Buyer
agrees to enter into any contractual lock-up agreements with respect
to the Common Stock, Warrants, Warrant Shares, or Conversion Shares
that may be required by the Company's underwriters in connection with
an underwritten public offering of the Company's common stock or other
securities or any public offering of the Conversion Shares or other
securities of BSTI.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
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<PAGE> 3
c. Reliance on Exemptions. Such Buyer understands that the
Common Stock, Conversion Shares, Warrants, and Warrant Shares are
being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.
d. Information. Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances
and operations of the Company and BSTI and materials relating to the
offer and sale of the Common Stock which have been requested by such
Buyer. Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and BSTI. Neither such
inquiries nor any other due diligence investigations conducted by such
Buyer or its advisors, if any, or its representatives shall modify,
amend or affect such Buyer's right to rely on the Company's or BSTI's
representations and warranties contained in Section 3 below. Such
Buyer understands that its investment in the Common Stock, Conversion
Shares, Warrants, and Warrant Shares involve a high degree of risk.
Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with
respect to its acquisition of the Common Stock, Conversion Shares,
Warrants, and Warrant Shares.
e. No Governmental Review. Such Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Common Stock, Conversion Shares, Warrants, and
Warrant Shares, or the fairness or suitability of the investment in
the Common Stock, nor have such authorities passed upon or endorsed
the merits of the offering of the Common Stock and Warrants.
f. Transfer or Resale. Such Buyer understands that: (i) the
Common Stock and Warrants have not been and are not being registered
under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (a)
subsequently registered thereunder, (b) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (c) such Buyer provides the
Company with reasonable assurance that such securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the
1933 Act (or a successor rule thereto) ("RULE 144"); (ii) any sale of
such securities made in reliance on Rule 144 promulgated under the
1933 Act (or a successor rule thereto) may be made only in accordance
with the terms of Rule 144 and further, if Rule 144 is not applicable,
any resale of such securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules
and regulations of the SEC thereunder; and (iii) other than the
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<PAGE> 4
Company Registration Rights Agreement and the BSTI Registration Rights
Agreement (collectively, the "REGISTRATION RIGHTS AGREEMENTS"),
neither the Company nor any other person is under any obligation to
register such securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption
thereunder.
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Common Stock, Conversion Shares,
Warrants, and Warrant Shares shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of the Common
Stock, Conversion Shares, Warrants and Warrant Shares upon which it is
stamped, if, unless otherwise required by state securities laws, (i)
the sale of the Common Stock, Conversion Shares, or Warrant Shares is
registered under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of the Common Stock, Conversion Shares,
Warrants, or Warrant Shares may be made without registration under the
1933 Act, or (iii) such holder provides the Company with reasonable
assurances that the Common Stock, Conversion Shares, Warrants, or
Warrant Shares can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a particular
date that can then be immediately sold.
h. Authorization, Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer
and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization,
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<PAGE> 5
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights
and remedies.
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<PAGE> 6
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BSTI.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company, BSTI , and
its subsidiaries are corporations duly organized and validly existing
in good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each
of the Company, BSTI and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company, BSTI and its subsidiaries taken as a
whole.
b. Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company and BSTI each have the requisite
corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement and any related
agreements, and to issue the Common Stock, Conversion Shares,
Warrants, and Warrant Shares in accordance with the terms hereof and
thereof, (ii) the execution and delivery of this Agreement, the
Registration Rights Agreements and any related agreements by the
Company and BSTI and the consummation by it of the transactions
contemplated hereby and thereby, including without limitation the
issuance of the Common Stock and the reservation for issuance and the
issuance of the Conversion Shares issuable upon conversion or exercise
thereof as provided in Section 8 hereof, have been duly authorized by
each of the Company's and BSTI's Board of Directors and no further
consent or authorization is required by each of the Company, BSTI, its
respective Board of Directors, or its respective stockholders, (iii)
this Agreement and the Registration Rights Agreements and any related
agreements have been duly executed and delivered by the Company and
BSTI, and (iv) this Agreement, the Registration Rights Agreements and
any related agreements constitute the valid and binding obligations of
the Company and BSTI enforceable against the Company and BSTI in
accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, or similar laws
relating to, or affecting generally, the enforcement of creditors'
rights and remedies.
c. Capitalization. As of June 30, 1999, the authorized
capital stock of the Company consists of 100,000,000 shares of Common
Stock, of which as of the date hereof 30,000,000 shares were issued
and outstanding, and no series of preferred stock or debentures or
notes were issued and outstanding. All of such outstanding shares have
been validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), no shares of Common Stock or preferred
stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in Schedule 3(c), as of the effective date of this
Agreement, (i) there are no
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<PAGE> 7
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or
any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may
become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities and (iii) there are no agreements
or arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except the Company Registration Rights Agreement). There are
no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Common Stock
or the Conversion Shares as described in this Agreement. The Company
has furnished to or made available to Buyer, via the SEC Edgar site,
true and correct copies of BSTI's filings with the U.S. Securities and
Exchange Commission (the "SEC DOCUMENTS"), the Company's Certificate
of Incorporation, as amended and as in effect on the date hereof (the
"CERTIFICATE OF INCORPORATION"), the Company's By-laws, as in effect
on the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Common Stock are duly
authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and nonassessable, are free
from all taxes, liens and charges with respect to the issue thereof
and are entitled to the rights and preferences set forth in the Common
Stock. The Conversion Shares issuable upon conversion of the Common
Stock have been duly authorized and reserved for issuance by BSTI. The
Warrants and Warrant Shares, and upon exchange of the Common Stock
into Conversion Shares as provided in Section 8 of this Agreement, the
Warrant Shares and the Conversion Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all
rights accorded to a holder of common stock of BSTI and the Company,
respectively.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company
and BSTI and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any certificate of designations,
preferences, and rights of any outstanding series of preferred stock
of the Company or BSTI or by-laws or (ii) conflict with or constitute
a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company, BSTI, or any
of its subsidiaries is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of
the principal market or exchange on which the Common Stock is traded
or listed) applicable to the Company, BSTI, or any of its subsidiaries
or by which any
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<PAGE> 8
property or asset of the Company, BSTI, or any of its subsidiaries is
bound or affected. Except as disclosed in Schedule 3(e), neither the
Company, BSTI nor its subsidiaries is in violation of any term of or
in default under its Certificate of Incorporation or Bylaws or their
organizational charter or by-laws, respectively, or any material
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation
applicable to the Company, BSTI, or its subsidiaries. Except as
specifically contemplated by this Agreement and as required under the
1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Company Registration Rights
Agreement in accordance with the terms hereof or thereof. Except as
disclosed in Schedule 3(e), all consents, authorizations, orders,
filings and registrations which the Company and BSTI is required to
obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company, BSTI, and its
subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing.
f. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company , BSTI, or any of its
subsidiaries, threatened against or affecting the Company, the Common
Stock, BSTI, or any of the Company's subsidiaries, wherein an
unfavorable decision, ruling or finding would (i) have a material
adverse effect on the transactions contemplated hereby (ii) adversely
affect the validity or enforceability of, or the authority or ability
of the Company or BSTI to perform its obligations under, this
Agreement or any of the documents contemplated herein or (iii), except
as expressly set forth in Schedule 3(h), have a material adverse
effect on the business, operations, properties, financial condition or
results of operation of the Company, BSTI, and its subsidiaries taken
as a whole.
g. Acknowledgment Regarding Buyer's Purchase of Common Stock.
The Company and BSTI acknowledge and agree that the Buyer is acting
solely in the capacity of an arm's length purchaser with respect to
this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Company or BSTI (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of their
respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such
Buyer's purchase of the Common Stock. The Company and BSTI further
represent to the Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the
Company, BSTI, and its representatives.
h. No General Solicitation. Neither the Company, BSTI, nor
any of its affiliates, nor any person acting on its or their behalf,
has engaged in any form of general solicitation
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<PAGE> 9
or general advertising (within the meaning of Regulation D under the
1933 Act) in connection with the offer or sale of the Common Stock,
Conversion Shares, Warrants, or Warrant Shares.
j. No Integrated Offering. Neither the Company, BSTI , nor
any of its affiliates, nor any person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any security
or solicited any offers to buy any security, under circumstances that
would require registration of the Common Stock, the Conversion Shares,
the Warrants or Warrant Shares under the 1933 Act or cause this
offering of Common Stock or the Conversion Shares to be integrated
with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions.
k. Employee Relations. Neither the Company, BSTI, nor any of
its subsidiaries is involved in any labor dispute nor, to the
knowledge of the Company, BSTI, or any of its subsidiaries, is any
such dispute threatened. None of the Company's, BSTI's or its
subsidiaries' employees is a member of a union and the Company, BSTI,
and its subsidiaries believe that their relations with their employees
are good.
l. Intellectual Property Rights. The Company, BSTI, and its
subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 3(n), none of the Company's
or BSTI's trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade
secrets, or other intellectual property rights have expired or
terminated, or are expected to expire or terminate, in the near
future. The Company, BSTI and its subsidiaries do not have any
knowledge of any infringement by the Company, BSTI or its subsidiaries
of trademark, trade name rights, patents, patent rights, copyrights,
inventions, licenses, service names, service marks, service mark
registrations, trade secret or other similar rights of others, or of
any such development of similar or identical trade secrets or
technical information by others and, except as set forth on Schedule
3(n), there is no claim, action or proceeding being made or brought
against, or to the Company's or BSTI's knowledge, being threatened
against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service
names, service marks, service mark registrations, trade secret or
other infringement; and the Company, BSTI and its subsidiaries are
unaware of any facts or circumstances which might give rise to any of
the foregoing.
m. Environmental Laws. The Company, BSTI, and its
subsidiaries are (i) in material compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL
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<PAGE> 10
LAWS"), (ii) have received all material permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in material
compliance with all terms and conditions of any such permit, license
or approval.
n. Title. The Company, BSTI and its subsidiaries have good
and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company, BSTI, and its subsidiaries,
in each case free and clear of all liens, encumbrances and defects
except such as are described in Schedule 3(p) or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company,
BSTI, and its subsidiaries. Any real property and facilities held
under lease by the Company, BSTI, and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company,
BSTI, and its subsidiaries.
o. Insurance. The Company, BSTI, and each of its subsidiaries
are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company
and believes to be prudent and customary in the businesses in which
the Company and its subsidiaries are engaged. Neither the Company nor
BSTI any such subsidiary has been refused any insurance coverage
sought or applied for and neither the Company nor BSTI or any such
subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the
earnings, business or operations of the Company, BSTI and its
subsidiaries, taken as a whole.
p. No Materially Adverse Contracts, Etc. Neither the Company,
BSTI, nor any of its subsidiaries is subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's or BSTI's officers
has or is expected in the future to have a material adverse effect on
the business, properties, operations, financial condition, results of
operations or prospects of the Company, BSTI, or its subsidiaries.
Neither the Company nor BSTI or any of its subsidiaries is a party to
any contract or agreement which in the judgment of the Company's
officers has or is expected to have a material adverse effect on the
business, properties, operations, financial condition, results of
operations or prospects of the Company, BSTI, or its subsidiaries.
q. Tax Status. Except as set forth on Schedule 3(u), the
Company, BSTI, and each of its subsidiaries has made or filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company, BSTI, and each of its
subsidiaries has set aside on
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<PAGE> 11
its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company and BSTI know of no basis for any such claim.
r. Certain Transactions. Except as set forth on Schedule 3(v)
and in BSTI's SEC Documents and except for arm's length transactions
pursuant to which the Company and BSTI make payments in the ordinary
course of business upon terms no less favorable than the Company or
BSTI could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers, directors,
or employees of the Company or BSTI is presently a party to any
transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company or BSTI, any corporation,
partnership, trust or other entity in which any officer, director, or
any such employee has a substantial interest or is an officer,
director, trustee or partner.
s. Dilutive Effect. BSTI understands and acknowledges that
the number of Conversion Shares issuable upon exchange of the Common
Stock will increase in certain circumstances. BSTI further
acknowledges that its obligation to issue Conversion Shares upon
exchange of the Common Stock in accordance with this Agreement is
absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of
BSTI.
t. Fees and Rights of First Refusal. Neither the Company nor
BSTI is obligated to offer the securities offered hereunder on a right
of first refusal basis or otherwise to any third parties including,
but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
u. Shareholder Approval. BSTI covenants to submit to its,
shareholders at its next shareholder meeting a proposal for
ratification of the issuance of the Conversion Shares, if and as
required by the rules of the National Association of Securities
Dealers, Inc. (the "NASD") applicable to the transaction.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
Sections 5 and 6 of this Agreement.
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<PAGE> 12
b. Form D. The Company agrees to file a Form D with respect
to the Common Stock and the Conversion Shares as required under
Regulation D and to provide a copy thereof to each Buyer promptly
after such filing. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is
necessary to qualify the Common Stock and the Conversion Shares for,
or obtain exemption for the Common Stock and the Conversion Shares
for, sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the
United States, and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date as of
which the Investors (as that term is defined in the Company
Registration Rights Agreement) may sell all of the Common Stock
without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto), or (ii) the date on which (A) the
Investors shall have sold all the Conversion Shares and (B) none of
the Common Stock is outstanding (the "REGISTRATION PERIOD"), the
Company, once it becomes a reporting company pursuant to the
Securities Exchange Act of 1934, as amended, shall file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the proceeds from
the sale of the Common Stock for substantially the same purposes and
in substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following to each Buyer once it becomes a reporting company pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended, upon
the effective date of its filing on Form 10 or S-1, during the
Registration Period: (i) within five (5) days after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly
Reports on Form 10-Q, any Current Reports on Form 8-K and any
registration statements or amendments filed pursuant to the 1933 Act;
(ii) within one (1) day after release thereof, copies of all press
releases issued by the Company or any of its subsidiaries and (ii)
copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the
giving thereof to the stockholders.
f. Reservation of Shares. BSTI shall take all action
necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than 100% of the number of shares of
common stock needed to provide for the issuance of the Conversion
Shares. The Company shall take all action necessary to at all times
have authorized and reserved for the purpose of issuance no less than
100% of the number of shares of Common Stock needed to provide for the
issuance of the Warrant Shares.
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g. Listings. Once the Company becomes a reporting company
pursuant to the 1934 Act, the Company shall use its best efforts
promptly secure the listing of the Conversion Shares upon each
national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Conversion Shares
from time to time issuable under the terms of this Agreement and the
Company Registration Rights Agreement. The Company shall maintain the
Common Stock's authorization for quotation in the over-the counter
market. The Company shall promptly provide to each Buyer copies of any
notices it receives regarding the continued eligibility of the Common
Stock for trading in the over-the-counter market.
h. Expenses. Each of the Company and the Buyer shall pay all
costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of
this Agreement and the Registration Rights Agreements. The placement
fees of J.P. Carey Securities, Inc. and Greenfield Capital Partners,
LLC shall be paid for by the Company at Closing.
i. Corporate Existence. So long as any Common Stock remain
outstanding, the BSTI shall not directly or indirectly consummate any
merger, reorganization, restructuring, consolidation, sale of all or
substantially all of BSTI's assets or any similar transaction or
related transactions (each such transaction, a "SALE OF BSTI") except
if the surviving or successor entity in such transaction (i) expressly
assumes, in writing, BSTI's obligations hereunder and under the BSTI
Registration Rights Agreement, and any other agreements and
instruments entered into or delivered by the Company in connection
herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on the New York Stock Exchange, Inc., the
American Stock Exchange, or the NASDAQ Small Cap, National Market or
Electronic Bulletin Board.
(j) No Short Sales of the Common Stock. So long as a Buyer or
any of its affiliates beneficially owns any Common Stock, each Buyer
and its affiliates shall not directly or indirectly engage in any
short sales or third party short sales of the Common Shares or hold a
"put equivalent position" with respect to the Common Stock (as defined
in Rule 16a-1 under the 1934 Act).
(k) Limitation on Short Sales of Conversion Shares. Buyer and
its affiliates shall not engage in short sales of the Conversion
Shares; provided, however, that any holder may enter into any short
sale or other hedging or similar arrangement it deems appropriate with
respect to Conversion Shares to be issued pursuant to an Exchange
Notice after it delivers an Exchange Notice with respect to such
Conversion Shares to be issued pursuant to an Exchange Notice so long
as such sales or arrangements do not involve more than the number of
such Conversion Shares to be issued pursuant to an Exchange Notice
(determined as of the date of such Exchange Notice). Buyer and its
affiliates agree to provide to BSTI upon
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<PAGE> 14
written request from time to time its securities trading records in
order to demonstrate that it has complied with this Section 4(k).
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Common
Stock to the Buyer at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and the
Registration Rights Agreements and delivered the same to the Company.
b. The Buyer shall have delivered to the Company the Purchase
Price for the Common Stock being purchased by the Buyer at the Closing
by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
c. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to the Closing Date.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Common Stock at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Buyer's sole benefit and may be waived by the Buyer at any time in its sole
discretion:
a. The Company and BSTI shall have executed this Agreement,
the Company shall have executed the Company Registration Rights
Agreement and BSTI shall have executed the BSTI Registration Rights
Agreement, and delivered the same to the Buyer.
b. The representations and warranties of the Company and BSTI
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing
Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company and BSTI
shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied
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<PAGE> 15
with by the Company at or prior to the Closing Date. The Buyer shall
have received a certificate, executed by the Chief Executive Officer
of each of the Company and BSTI, each dated as of the Closing Date, to
the foregoing effect and as to such other matters as may be reasonably
requested by the Buyer including, without limitation an update as of
the Closing Date regarding the representation contained in Section
3(c) above.
c. The Buyer shall have received the opinion of the Company's
and BSTI's counsel dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer and in substantially
the form of Exhibit "D" attached hereto.
d. The Company and BSTI shall have executed and delivered to
the Buyer the Certificates (in such denominations as the Buyer shall
request) for the Common Stock and Warrants being purchased by the
Buyer at the Closing.
e. The Board of Directors of the Company and BSTI shall have
adopted the resolutions in substantially the form of Exhibit "E"
attached hereto.
f. As of the Closing Date, BSTI shall have reserved out of
its authorized and unissued Common Stock, solely for the purpose of
effecting the exchange of the Common Stock for the Conversion Shares
as provided in Section 8 herein, such number of Conversion Shares
equal to or greater than 100% of the number of shares which are
issuable upon conversion of all of the Common Stock which could be
issued under this Agreement.
g. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered and
acknowledged in writing by the BSTI's transfer agent.
h. Timothy C. Moses and Jacques Elfersy shall have delivered
the voting proxies substantially in the form attached hereto as
Exhibit "F."
7. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Common Stock, the Conversion Shares, the Warrants
and the Warrant Shares hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company and BSTI jointly and severally
shall defend, protect, indemnify and hold harmless the Buyer and each other
holder of the Common Stock, the Conversion Shares, the Warrants and the Warrant
Shares and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the
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<PAGE> 16
Indemnitees or any of them as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company or BSTI in this Agreement, the Common
Stock, the Conversion Shares, the Warrants and the Warrant Shares or
the Registration Rights Agreements or any other certificate,
instrument or document contemplated hereby or thereby, (b) any
material breach of any covenant, agreement or obligation of the
Company or BSTI contained in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or
claim brought or made against such Indemnitee and arising out of or
resulting from the execution, delivery, performance or enforcement of
this Agreement or any other instrument, document or agreement executed
pursuant hereto by any of the Indemnities, any transaction financed or
to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Common Stock and Warrants or the
status of the Buyer or holder of the Common Stock, the Conversion
Shares, the Warrants and the Warrant Shares, as an investor in the
Company or BSTI. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company and BSTI
shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under
applicable law.
8. EXCHANGE OF COMMON STOCK INTO CONVERSION SHARES
(a) Exchange Right. Subject to the provisions of Sections 9,
10, 12, and 13 herein, in the event that the Company has not
consummated an initial public offering of its Common Stock, at any
time or times after June 30, 2000, (the "EXCHANGE COMMENCEMENT DATE"),
any holder of Common Stock shall be entitled to exchange any Common
Stock into fully paid and nonassessable shares (rounded to the nearest
whole share in accordance with Section 8(f) below) of Conversion
Shares (the "EXCHANGE RIGHT"), at the Exchange Rate (as defined
below); provided, however, that in no event shall any holder be
entitled to (i) exchange Common Stock into Conversion Shares in excess
of that number of Common Stock which, upon giving effect to such
conversion, would cause the aggregate number of Conversion Shares
beneficially owned by the holder and its affiliates to exceed 4.9% of
the outstanding shares of the Common Stock following such conversion
or (ii) exchange more than 10% of the total number of Conversion
Shares issued to such holder into Conversion Shares (or any successor
or assign) pursuant to this transaction in any thirty (30) day period
commencing on the Exchange Commencement Date and any succeeding thirty
(30) day period thereafter. For purposes of the foregoing proviso, the
aggregate number of shares of Conversion Shares beneficially owned by
the holder and its affiliates shall include the number of shares of
Conversion Shares issuable upon exchange of the Common Stock with
respect to which the determination of such proviso is being made, but
shall exclude the number of shares of Conversion Shares which would be
issuable upon (i) exchange of the remaining, non-exchanged Common
Stock beneficially owned by the holder and its affiliates beneficially
owned by the holder and its affiliates. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended.
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<PAGE> 17
(b) Exchange Rate. The number of shares of Conversion Shares
issuable after the Exchange Commencement Date upon exchange of each
share of the Common Stock pursuant to Section 8(a) shall be determined
according to the following formula (the "EXCHANGE RATE"):
(ISSUE PRICE PER SHARE)(1.25)
EXCHANGE PRICE
Notwithstanding anything contained herein to the contrary,
unless this transaction has been approved by the shareholders of BSTI
in accordance with Georgia law, then as long as the Common Stock of
BSTI is listed on the NASDAQ National Market or the NASDAQ Small Cap
Market, BSTI shall not issue Conversion Shares upon exchange of Common
Stock which would equal or exceed twenty percent (20%) of the issued
and outstanding Common Stock of BSTI on the date of issuance of the
Common Stock or such lesser amount as determined on a pro-rata basis
based upon the number of Common Stock issued.
For purposes of this Section 8, the following terms shall
have the following meanings:
(i) "EXCHANGE DATE" shall mean the Trading
Day that an Exchange Notice is deemed delivered
pursuant to Section 8(e);
(ii) "EXCHANGE PRICE" means the Average
Market Price for the Conversion Shares for the
twenty (20) consecutive Trading Days immediately
following the Exchange Date;
(iii) "AVERAGE MARKET PRICE" means, with
respect to any security for any period, that price
which shall be computed as the arithmetic average of
the Closing Bid Prices (as defined below) for such
security for each trading day in such period;
(iv) "CLOSING" shall mean one of the
closing of an exchange of Common Stock for
Conversion Shares pursuant to Section 8.
(v) "CLOSING DATE" shall mean with respect
to a closing, the twentieth Trading Day following
the Exchange Date related to such closings or such
earlier date as BSTI and the holder shall agree.
(vi) "CLOSING BID PRICE" means, for any
security as of any date, the last closing bid price
on the Nasdaq National Market System (the
"NASDAQ-NM") as reported by Bloomberg Financial
Markets ("BLOOMBERG"), or, if the Nasdaq-NM is not
the principal trading market for such security, the
last closing bid price of such security on the
principal securities exchange or
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<PAGE> 18
trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price of such
security in the over-the-counter market on the pink
sheets or bulletin board for such security as
reported by Bloomberg, or, if no closing bid price
is reported for such security by Bloomberg, the last
closing trade price of such security as reported by
Bloomberg. If the Closing Bid Price cannot be
calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such
security on such date shall be the fair market value
as reasonably determined in good faith by the Board
of Directors of the Company (all as appropriately
adjusted for any stock dividend, stock split or
other similar transaction during such period); and
(vii) "CONVERSION SHARES" shall mean those
shares of common stock of BSTI, no par value,
issuable pursuant to an exchange of Common Stock
pursuant to Section 8 of this Agreement.
(viii) "ISSUANCE DATE" means the date of
issuance of the Common Stock as described herein.
(ix) "ISSUE PRICE PER SHARE" shall mean
$4.66 (as adjusted for stock splits and similar
events of the Company).
(x) "PRINCIPAL MARKET" shall mean the
Nasdaq National market, the NASDAQ SmallCap Market,
the American Stock Exchange or the New York Stock
Exchange, whichever at the time is the principal
trading exchange or market for the Conversion
Shares.
(xi) "TRADING DAY" shall mean any day
during which the Principal Market shall be open for
business.
(c) Dispute Resolution. In the case of a dispute as to the
determination of the Average Market Price or the arithmetic
calculation of the Exchange Rate, BSTI shall promptly issue to the
holder the number of Conversion Shares that is not disputed and shall
submit the disputed determinations or arithmetic calculations to the
holder via facsimile within three (3) business days of the Closing
Date. If such holder and BSTI are unable to agree upon the
determination of the Average Market Price or arithmetic calculation of
the Conversion Rate within three (3) business days of such disputed
determination or arithmetic calculation being submitted to the holder,
then BSTI shall within one (1) business day submit via facsimile (A)
the disputed determination of the Average Market Price to an
independent, reputable investment bank or (B) the disputed arithmetic
calculation of the Exchange Rate to its independent, outside
accountant. BSTI shall cause the investment bank or the accountant, as
the case may be, to perform the determinations or calculations and
notify BSTI and the holder of the results no later than forty-eight
(48) hours from the time it
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<PAGE> 19
receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may
be, shall be binding upon all parties absent manifest error. The
person or persons entitled to receive Conversion Shares issuable upon
a conversion of Common Stock shall be treated for all purposes as the
record holder or holders of such Conversion Shares on the Conversion
Date.
(d) Adjustment to Exchange Price - Dilution and Other
Events. In order to prevent dilution of the rights granted herein, the
Exchange Price will be subject to adjustment from time to time as
provided in this Section 8(d).
(i) Reorganization, Reclassification, Consolidation,
Merger, or Sale. Any recapitalization, reorganization
reclassification, consolidation. merger, sale of all or
substantially all of BSTI's assets to another Person (as
defined below) or other similar transaction which is effected
in such a way that holders of Conversion Shares are entitled
to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange
for Conversion Shares is referred to herein as an "Organic
Change." Prior to the consummation of any Organic Change,
BSTI will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) to insure that each of the holders of the Common
Stock issued in connection with this transaction will
thereafter have the right to acquire and receive in lieu of
or in addition to (as the case may be) the Conversion Shares
immediately theretofore acquirable and receivable upon the
conversion of such holder's Common Stock, such shares of
stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of
Conversion Shares immediately theretofore acquirable and
receivable upon the exchange of such holder's Common Stock
had such Organic Change not taken place. In any such case,
BSTI will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding) with respect to such holders' rights and
interests to insure that the provisions of this Section 8(d)
and Section 8(e) below will thereafter be applicable to the
Common Stock. BSTI will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the
successor entity (if other than BSTI) resulting from
consolidation or merger or the entity purchasing such assets
assumes, by written instrument (in form and substance
reasonably satisfactory to the holders of a majority of the
Common Stock issued in connection with this transaction then
outstanding), the obligation to deliver to each holder of
Common Stock issued in connection with this transaction such
shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to
acquire. For purposes of this Agreement, "PERSON" shall mean
an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof.
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<PAGE> 20
(ii) Notices.
(A) Immediately upon any adjustment of the
Exchange Price, BSTI will give written notice
thereof to each holder of Common Stock issued in
connection with this transaction, setting forth in
reasonable detail and certifying the calculation of
such adjustment.
(B) BSTI will give written notice to each
holder of Common Stock issued in connection with
this transaction at least twenty (20) days prior to
the date on which BSTI closes its books or takes a
record (I) with respect to any dividend or
distribution upon the Conversion Shares, (II) with
respect to any pro rata subscription offer to
holders of Conversion Shares, or (III) for
determining rights to vote with respect to any
Organic Change, dissolution or liquidation.
(C) BSTI will also give written notice to
each holder of Common Stock issued in connection
with this transaction at least twenty (20) days
prior to the date on which any Organic Change,
dissolution, or liquidation will take place.
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<PAGE> 21
(e) Mechanics of Exchange of Common Stock into
Conversion Shares.
(i) Holder's Delivery Requirements. Such
notice exchanging Common Stock into Conversion
Shares in accordance with this Section 8 by the
holder (the "EXCHANGE NOTICE") shall (A) be
delivered by facsimile to the Company and BSTI for
receipt on or prior to 12:00 noon Eastern Standard
Time or (B) the immediately succeeding Trading Day
if it is received by facsimile or otherwise after
12:00 noon Eastern Standard Time on a Trading Day
(the "EXCHANGE DATE") and (B) the holder shall
surrender to a common carrier for delivery to BSTI
as soon as practicable following such date, but in
no event later than four (4) Trading Days prior to a
Closing Date, the original certificates representing
the Common Stock being exchanged (or an
indemnification undertaking with respect to such
shares in the case of their loss, theft, or
destruction) and the originally executed conversion
notice.
(ii) The Company and BSTI Response. Upon
receipt by the Company and BSTI of a facsimile copy
of the Exchange Notice, the Company and BSTI shall
send via facsimile, a confirmation of receipt of
such Exchange Notice to such holder. Upon receipt by
the Company of the Common Stock Certificates to be
exchanged pursuant to an Exchange Notice, together
with the originally executed Exchange Notice, BSTI
or the transfer agent (as applicable) shall, within
three (3) business days of each Closing Date (A)
issue and surrender to a common carrier for
overnight delivery to the address as specified in
the Exchange Notice, a certificate, registered in
the name of the holder or its designee, for the
number of Conversion Shares to which the holder
shall be entitled. In lieu of delivering physical
certificates representing the Conversion Shares
issuable in accordance with this Section 8(e) and
provided that the transfer agent then is
participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of a holder, BSTI shall use
its commercially reasonable efforts to cause the
transfer agent to electronically transmit the
applicable number of Conversion Shares by crediting
the account of the holder's prime broker with DTC
through its Deposit Withdrawal Agent Commission
("DWAC") system. In addition, on or prior to such
Closing Date, each of BSTI, the Company, and the
holder shall deliver to the others all documents,
instruments, and writings required to be delivered
or reasonably requested by any of them pursuant to
this Agreement in order to implement and effect the
transactions contemplated herein.
(iii) Record Holder. The person or persons
entitled to receive the Conversion Shares issuable
upon an exchange of Common Stock shall be treated
for all purposes as the record holder or holders of
such shares of Conversion Shares on the Exchange
Date.
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<PAGE> 22
(iv) BSTI's Failure to Timely Exchange. If
BSTI shall fail to issue to a holder on a Closing
Date, a certificate for the number of shares of
Conversion Shares to which such holder is entitled
upon such holder's exchange of Common Stock, in
addition to all other available remedies which such
holder may pursue hereunder (including
indemnification pursuant to Section 7 hereof), the
Company shall pay additional damages to such holder
on each day after the fifth (5th) Trading Day
following the applicable Closing Date for which such
exchange is not timely effected, an amount equal to
1.0% of the product of number of Conversion Shares
not issued to such holder to which such holder is
entitled by the Exchange Price for each calendar
month until such exchange is made unless Buyer
elects to enforce the terms of Section 11 herein.
(f) Fractional Shares. BSTI shall not issue any
fraction of a Conversion Share upon any exchange. All
Conversion Shares (including fractions thereof) issuable upon
conversion of more than one share of Common Stock by a holder
thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of a
fraction of a Conversion Share. If, after the aforementioned
aggregation, the issuance would result in the issuance of a
fraction of its Conversion Share, BSTI shall round such
fraction of a Conversion Share up or down to the nearest
whole share.
(9) CASH PAYMENT OPTION BY BSTI.
In lieu of issuing the Conversion Shares in accordance with an
Exchange Notice, BSTI shall have the right, in its sole discretion, to pay to
the holder of the Common Stock an amount equal to $5.825 for each share of
Common Stock so exchanged (as adjusted for stock splits and similar events of
the Company) ("CASH OUT Price"). The Company shall pay the Cash Out Price to
that Holder within seven (7) Trading Days following the receipt by the Company
and BSTI of an Exchange Notice.
(10) COMPANY'S RIGHT TO REDEEM AT ITS ELECTION.
(a) At any time, the Company shall have the right, in its
sole discretion, to redeem ("REDEMPTION AT COMPANY'S ELECTION"), from
time to time, any or all of the Common Stock; provided (i) the Company
shall first provide no more than seven (7) Trading Days and no less
than one (1) Trading Day advance written notice as provided in
subparagraph 10(a)(ii) below, and (ii) that the Company shall only be
entitled to redeem Common Stock having an aggregate Stated Value (as
defined above) of at least Five Hundred Thousand Dollars ($500,000).
If the Company elects to redeem some, but not all, of the Common
Stock, the Company shall redeem a pro-rata amount from each Holder of
the Common Stock.
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<PAGE> 23
(i) Redemption Price At Company's
Election. The "REDEMPTION PRICE AT COMPANY'S
ELECTION" shall be calculated as $5.825 (as adjusted
for stock splits and similar events of the Company).
(ii) Mechanics of Redemption at Company's
Election. The Company shall effect each such
redemption by giving no more than seven (7) Trading
Days and no less than one (1) Trading Day prior
written notice ("NOTICE OF REDEMPTION AT COMPANY'S
ELECTION") to (A) the Holders of the Common Stock
selected for redemption at the address and facsimile
number of such Holder appearing in the Company's
Common Stock register and (B) the Transfer Agent,
which Notice of Redemption At Company's Election
shall be deemed to have been delivered three (3)
Trading Days after the Company's mailing (by
overnight or two (2) day courier, with a copy by
facsimile) of such Notice of Redemption at Company's
Election. Such Notice of Redemption At Company's
Election shall indicate (i) the number of shares of
Common Stock that have been selected for redemption,
(ii) the date which such redemption is to become
effective (the "DATE OF REDEMPTION AT COMPANY'S
ELECTION"), and (iii) the applicable Redemption
Price At Company's Election, as defined in
subsection (a)(i) above.
(b) Company Must Have Immediately Available
Funds or Credit Facilities. The Company shall not be entitled
to send any Redemption Notice and begin the redemption
procedure under Sections 10(a) unless it has:
(i) the full amount of the redemption
price in cash, available in a demand or other
immediately available account in a bank or similar
financial institution; or
(ii) immediately available credit
facilities, in the full amount of the redemption
price with a bank or similar financial institution,
or
(iii) an agreement with a standby
underwriter willing to purchase from the Company a
sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not
converted prior to redemptions; or
(iv) a combination of the items set forth
in (i), (ii), and (iii) above, aggregating the full
amount of the redemption price.
(c) Payment of Redemption Price. Each Holder
submitting Common Stock being redeemed under this Section 10
shall send their Common Stock Certificates to be redeemed to
the Company or its Transfer Agent, and the Company shall pay
the applicable redemption price to that Holder within five
(5) business days of the Date of Redemption at Company's
Election.
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<PAGE> 24
(11) INABILITY TO FULLY EXCHANGE.
(a) Holder's Option if BSTI Cannot Fully Exchange. If at
any time after the Exchange Commencement Date, upon the Company's and
BSTI's receipt of an Exchange Notice, BSTI does not issue shares which
are registered for resale under the BSTI Registration Statement within
five (5) business days of the time required for any reason or for no
reason, including, without limitation, because BSTI (x) does not have
a sufficient number of Conversion Shares authorized and available, (y)
is otherwise prohibited by applicable law or by the rules or
regulations of any stock exchange, interdealer quotation system or
other self-regulatory organization with jurisdiction over BSTI or its
securities, including without limitation The Nasdaq Stock Market, Inc.
from issuing all of the Conversion Shares which is to be issued to a
holder of Common Stock pursuant to an Exchange Notice or (z) fails to
have a sufficient number of Conversion Shares registered and eligible
for resale under the BSTI Registration Statement, then BSTI shall
issue as many Conversion Shares as it is able to issue in accordance
with such holder's Exchange Notice and pursuant to Section 8(e) above
and, with respect to the unconverted Common Stock, the holder, solely
at such holder's option, can, in addition to any other remedies such
holder may have hereunder, under this Agreement (including
indemnification under Section 7 thereof), under the BSTI Registration
Rights Agreement, at law or in equity, elect to:
(i) require BSTI to redeem from such holder those
shares of Conversion Stock for which BSTI is unable to issue
Conversion Shares in accordance with such holder's Exchange
Notice ("MANDATORY REDEMPTION") at a price per share of
Common Stock (the "MANDATORY REDEMPTION PRICE") equal to
$5.825 (as adjusted for stock splits or similar events of the
Company;
(ii) require BSTI to issue restricted shares of
Common Stock in accordance with such holder's Exchange Notice
and pursuant to Section 8(e) above, if BSTI's inability to
fully exchange Common Stock is pursuant to its inability to
deliver Conversion Shares registered pursuant to the 1933
Act; or
(iii) void its Exchange Notice and retain or have
returned, as the case may be, the unexchanged Common Stock
that were to be exchanged pursuant to such holder's Exchange
Notice.
(b) Mechanics of Fulfilling Holder's Election. BSTI
shall send via facsimile to a holder of Common Stock, upon receipt of
a facsimile copy of an Exchange Notice from such holder which cannot
be fully satisfied as described in Section 11(a) above, a notice of
BSTI's inability to fully satisfy such holder's Exchange Notice (the
"INABILITY TO FULLY EXCHANGE NOTICE"). Such Inability to Fully
Exchange Notice shall indicate (i) the reason why BSTI is unable to
fully satisfy such holder's Exchange Notice, (ii) the number of shares
of Common Stock which cannot be exchanged, and (iii) the Mandatory
Redemption Price. Such holder must, within five (5) Trading Days of
receipt of such Inability to Fully Exchange
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<PAGE> 25
Notice, deliver written notice via facsimile to BSTI ("NOTICE IN
RESPONSE TO INABILITY TO EXCHANGE") of its election pursuant to
Section 11(a) above.
(c) Payment of Redemption Price. If such holder shall elect
to have its shares redeemed pursuant to Section 11(a) above, BSTI
shall pay the Mandatory Redemption Price in cash to such holder within
thirty (30) days of BSTI's receipt of the holder's Notice in Response
to Inability to Exchange (the "MANDATORY REDEMPTION PRICE DEADLINE").
If BSTI shall fail to pay the applicable Mandatory Redemption Price to
such holder on a timely basis as described in this Section 11(c)
(other than pursuant to a dispute as to the determination of the
Closing Bid Price or the arithmetic calculation of the Redemption
Rate), such unpaid amount shall bear interest at the rate of 1% for
the first month and a rate of 2.0% per month thereafter (prorated for
partial months) until paid in full. Following the Mandatory Redemption
Price Deadline, until the full Mandatory Redemption Price is paid in
full to such holder, such holder may void the Mandatory Redemption
with respect to those shares of Common Stock for which the full
Mandatory Redemption Price has not been paid and receive back such
shares of Common Stock.
(d) Pro-rata Exchange and Redemption. In the event the
Company and BSTI each receives an Exchange Notice from more than one
holder of Common Stock on the same day and BSTI can exchange and
redeem some, but not all, of the Common Stock pursuant to this Section
11, BSTI shall exchange and redeem from each holder of Common Stock
electing to have Common Stock exchanged and redeemed at such time an
amount equal to such holder's pro-rata amount (based on the number of
shares of Common Stock held by such holder relative to the number of
shares of Common Stock outstanding, pursuant to this Agreement) of all
Common Stock being exchanged and redeemed at such time.
12. ONE-TIME RIGHT TO SUSPEND EXCHANGE RIGHT OR EXCHANGE COMMON
STOCK INTO CONVERSION SHARES.
Notwithstanding anything contained herein to the contrary, BSTI shall
have the one-time right, without payment or penalty of any kind, for a period
of thirty (30) days from the date written notice is given to the holders of
Common Stock, to suspend the Exchange Right in the event that the Company has
received a letter of intent by the Exchange Commencement Date from a reputable
investment banking firm to underwrite the public offering of the Company's
common stock or other securities ("PUBLIC OFFERING"), and the Public Offering
has not occurred by the Exchange Commencement Date due to market conditions as
determined by such underwriter.
13. SUSPENSION OF EXCHANGE RIGHT UPON REGISTRATION OF COMMON
STOCK OF THE COMPANY UNDER THE 1934 ACT.
Notwithstanding anything contained herein to the contrary, so long as
(i) the Company becomes and remains a reporting company under the 1934 Act,
(ii) the Company has its Form 8A declared effective by the SEC, and (iii) the
trading price of the Common Stock as reported by
-25-
<PAGE> 26
Bloomberg on its principal exchange or trading market remains equal to or
greater than $6.19 per share, the holders of the Common Stock shall have no
Exchange Right.
-26-
<PAGE> 27
14. REISSUANCE OF CERTIFICATES.
In the event of an exchange or redemption pursuant to this Agreement
of less than all of the Common Stock represented by a particular Common Stock
certificate, the Company shall promptly cause to be issued and delivered, to
the holder of such Common Stock, a Common Stock certificate representing the
remaining shares of Common Stock which have not been so exchanged or redeemed.
15. TRANSFER AGENT INSTRUCTIONS.
BSTI shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Conversion Shares in such amounts as specified from time to
time by the Buyer to the Company upon conversion of the Common Stock (the
"Irrevocable Transfer Agent Instructions"), except as provided in Sections 9,
10, 11, 12, and 15 herein. Prior to registration of the Conversion Shares under
the 1933 Act, all such certificates shall bear the restrictive legend specified
in Section 2(g) of this Agreement. The Company and BSTI warrant that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 15, and stop transfer instructions to give effect to Section
2(f) hereof (in the case of the Conversion Shares, prior to registration of
such shares under the 1933 Act) will be given by the Company or BSTI to its
transfer agent and that the Common Stock and the Conversion Shares shall
otherwise be freely transferable on the books and records of the Company and
BSTI as and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section 15 shall affect in any way the
Buyer's obligations and agreement to comply with all applicable securities laws
upon resale of the Common Stock or Conversion Shares. If the Buyer provides the
Company and BSTI with an opinion of counsel, reasonably satisfactory in form,
and substance to the Company, that registration of a resale by the Buyer of any
of the Common Stock or Conversion Shares is not required under the 1933 Act,
the Company shall permit the transfer, and, in the case of the Conversion
Shares, BSTI shall promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by the Buyer.
The Company and BSTI acknowledge that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company and
BSTI acknowledge that the remedy at law for a breach of its obligations under
this Section 15 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company or BSTI of the provisions of this Section 15,
that the Buyer shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond
or other security being required.
16. CONFIDENTIALITY.
a. Nondisclosure. As much of the information and other
material furnished under or in connection with this Agreement (whether
furnished before, on or after the date hereof) as constitutes or
contains confidential business, financial or other information of the
Company, BSTI or its subsidiaries, each Buyer covenants for itself,
and, as applicable, for
-27-
<PAGE> 28
its directors, officers, affiliates and partners, that it will use due
care to prevent its officers, directors, partners, employees, counsel,
accountants and other representatives from disclosing such information
to persons other than their respective authorized employees, counsel,
accountants, shareholders, partners, limited partners and other
authorized representatives. Notwithstanding the foregoing, if a Buyer
is advised by such counsel that such disclosure or delivery is
required by law, regulation or judicial or administrative order, then
they may disclose or deliver such information or other after giving
written notice to the Company and BSTI of such requirements. For
purposes of this Section 10a., "due care" means at least the same
level of care that a Buyer would use to protect the confidentiality of
its own sensitive or proprietary information, and this obligation
shall survive termination of this Agreement.
b. Possession of Material, Non-Public Information. To the
extent that any of the information furnished by the Company or BSTI to
the Buyers hereof would constitute material, nonpublic information for
purposes of the Exchange Act, Buyers agree not to engage in any
purchase or sale of securities while in possession of such information
and prior to the time that such information is made generally known to
the public and Buyers agree to use due care to prevent their officers,
directors, partners, employees, counsel and other representatives, who
have been given access to such material, nonpublic information, from
engaging in any such purchase or sale during such period.
17. GOVERNING LAW: MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Georgia
without regard to the principles of conflict of laws. Buyer may at any
time and at its option, whether or not an arbitration action is then
pending, initiate a civil action for temporary and permanent
injunctive and other equitable relief against Company and BSTI.
Company and BSTI acknowledges that upon any breach of Buyer's
conversion rights hereunder, Buyer's resulting injury may not be
adequately compensated by a remedy at law. Accordingly, upon such
breach, Buyer, at its election and without limitation of its other
remedies, shall be entitled to pursue a claim for specific performance
of this Agreement, and Company and BSTI hereby waive the right to
assert any defense thereto that Purchaser has an adequate remedy at
law. The parties further agree that any action between them shall be
heard in Atlanta, Georgia, and expressly consent to the jurisdiction
and venue of the Superior Court of Fulton County, Georgia, and the
United States District Court for the Northern District of Georgia,
Atlanta Division for the adjudication of any civil action asserted
pursuant to this Paragraph.
b. Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. In the
event any signature page is delivered by facsimile transmission, the
party using such means of delivery shall cause four (4) additional
original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery hereof
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
-28-
<PAGE> 29
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement, Amendments. This Agreement supersedes
all other prior oral or written agreements between the Buyer, the
Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the
instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (I) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
4405 International Blvd.
Suite B-109
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (410) 921-1062
With a copy to:
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Telephone: (770) 481-7201
Facsimile: (770) 481-7210
If to the Buyer, to its address and facsimile number on the Schedule
of Buyers, with copies to the Buyer's counsel as set forth on the
Schedule of Buyers. Each party shall provide five (5) days' prior
written notice to the other party of any change in address or
facsimile number.
-29-
<PAGE> 30
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent
of the Buyer. The Buyer may assign its rights hereunder without the
consent of the Company, provided, however, that any such assignment
shall not release the Buyer from its obligations hereunder unless such
obligations are assumed by such assignee and the Company has consented
to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and
the Buyer contained in Sections 2 and 3, the agreements and covenants
set forth in Sections 4, 5 and 9, the indemnification provisions set
forth in Section 8, shall survive the Closing. The Buyer shall be
responsible only for its own representations, warranties, agreements
and covenants hereunder.
j. Publicity. The Company, BSTI, and the Buyer shall have the
right to approve before issuance any press releases or any other
public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without
the prior approval of the Buyer, to make any press release or other
public disclosure with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted
by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a
copy thereof).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
1. Termination. In the event that the Closing shall not have
occurred with respect to the Buyer on or before five (5) business days
from the date hereof due to the Company's or the Buyer's failure to
satisfy the conditions set forth in Sections 5 and 6 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other
party- provided.
m. Independent Counsel. The parties to this Agreement
acknowledge that Company and BSTI have received independent counsel
from the law firm of Sims Moss Kline & Davis LLP which is acting as
their counsel. Buyers have been advised by Sims Moss Kline & Davis LLP
to seek independent advice with respect to the terms and conditions of
this Agreement and any related agreements before signing them.
-30-
<PAGE> 31
n. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will
be applied against any party.
IN WITNESS WHEREOF, the Buyer and the Company have caused
this Securities Purchase Agreement to be duly executed as of the date
first written above.
"COMPANY"
ALLERGY SUPERSTORE.COM., INC.
By:
----------------------------------------
Name: Timothy C. Moses
Its: President
BIOSHIELD TECHNOLOGIES, INC.
By:
---------------------------------------
Name:
Title:
ATLANTIS CAPITAL FUND LIMITED
------------------------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-31-
<PAGE> 32
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ADDRESS AND FACSIMILE NUMBER OF NUMBER OF SHARES OF NUMBER OF WARRANTS
BUYER'S NAME BUYER COMMON STOCK
- ------------------------------ ------------------------------------ ------------------------- ----------------------
<S> <C> <C> <C>
c/o Citco Fund Services, Ltd. 85,653 8,000
Atlantis Capital Fund Limited Bahamas Financial Center
Shirley & Charlotte Streets
P.O. Box CB13136
Nassau, Bahamas
facsimile: 242-356-0223
- ------------------------------ ------------------------------------ ------------------------- ----------------------
</TABLE>
<PAGE> 33
SCHEDULE 3(C)
CAPITALIZATION
--------------
1. Options to purchase a total of 2,250,000 shares of Common Stock to
each of Timothy Moses and Jacques Elfersy at $2.00 per share.
2. Options to purchase thirty thousand shares of common stock at $2.00
each have been issued to five of the Board Members and four of the Medical
Advisory Board Members of the Company, plus an option to purchase an additional
5,000 shares for each year of service thereafter.
<PAGE> 34
SCHEDULE 3(E)
CONFLICTS
---------
None.
<PAGE> 35
SCHEDULE 3(H)
LITIGATION
----------
None.
<PAGE> 36
SCHEDULE 3(I)
INTELLECTUAL PROPERTY
---------------------
None.
<PAGE> 37
SCHEDULE 3(N)
LIENS
-----
None.
<PAGE> 38
SCHEDULE 3(U)
TAX STATUS
----------
None.
<PAGE> 39
SCHEDULE 4(D)
USE OF PROCEEDS
---------------
<TABLE>
<CAPTION>
<S> <C> <C>
1. Intercompany Debt Repayment $ 250,000.00
2. Design, development of Allergy Superstore $ 2,250,000.00
3. Increase staffing & costs related to new building $ 1,150,000.00
4. General & Administrative Expenses $ 2,500,000.00
5. Marketing & Sales (advertising/promo) $ 2,500,000.00
6. Branding Campaign $ 1,500,000.00
7. Web Server & Web Serving Tech $ 550,000.00
8. State-of-the-art distribution center $ 2,500,000.00
9. State-of-the-art e-commerce platform $ 450,000.00
10. Lease & Commissions $ 1,350,000.00
TOTAL $15,000,000.00
</TABLE>
<PAGE> 40
EXHIBIT "A"
(BSTI REGISTRATION RIGHTS AGREEMENT)
(See tab 3 for executed document.)
<PAGE> 41
EXHIBIT "B"
(COMPANY REGISTRATION RIGHTS AGREEMENT)
(See tab 4 for executed document.)
<PAGE> 42
EXHIBIT "C"
(WARRANT AGREEMENT)
(See tab 6 for executed document.)
<PAGE> 43
EXHIBIT "D"
(BSTI AND COMPANY COUNSEL'S OPINION)
(See tab 7 for executed document.)
<PAGE> 44
EXHIBIT "E"
(BSTI'S AND COMPANY'S BOARD RESOLUTIONS)
(See tabs 8 and 9 for executed documents.)
<PAGE> 45
EXHIBIT "F"
(VOTING PROXIES)
(See tab 10 for executed documents.)
<PAGE> 1
EXHIBIT 10.074
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
September 2, 1999, by and among BioShield Technologies, Inc., a Georgia
corporation, with headquarters at 4405 International Blvd., Norcross, Georgia
30093 (the "COMPANY"), and the undersigned buyers (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
Allergy Superstore.com, Inc ("ASC"), a subsidiary of the Company, has agreed,
upon the terms and subject to the conditions of the Securities Purchase
Agreement, (i) to issue and sell to the Buyers shares of ASC's common stock,
par value $0.001 per share (the "COMMON STOCK"), which, subject to certain
terms and conditions, will be exchangeable after September 2, 2000 (the
"EXCHANGE COMMENCEMENT DATE") into shares of the Company's common stock, no par
value per share (as converted, the "CONVERSION SHARES") in accordance with the
terms of the Securities Purchase Agreement; and
B. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "INVESTOR" means the Buyer and any transferee or assignee
thereof to whom the Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
b. "PERSON" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or
ordering of
<PAGE> 2
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the Conversion
Shares issued or issuable upon conversion of the Common Stock and any
shares of capital stock issued or issuable with respect to the
Conversion Shares or the Common Stock as a result of any stock split,
stock dividend, recapitalization, exchange or similar event.
e."REGISTRATION STATEMENT" means a registration statement of
the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. No later than December 31, 1999,
(the "FILING DEADLINE"), the Company shall prepare and file with the
SEC a Registration Statement or Registration Statements (as is
necessary) on Form S-3 (or, if such form is unavailable for such a
registration, on such other form as is available for such a
registration, subject to the consent of each Buyer and the provisions
of Section 2(e), which consent will not be unreasonably withheld),
covering the resale of all of the Registrable Securities and no other
Securities of any kind by any person or entity, which Registration
Statement(s) shall state that, in accordance with Rule 416 promulgated
under the 1933 Act, such Registration Statement(s) also covers such
indeterminate number of additional shares of Common Stock as may
become issuable to prevent dilution resulting from stock splits, stock
dividends or similar transactions. Such Registration Statement shall
initially register for resale 1,000,000 shares of Common Stock,
subject to adjustment as provided in Section 3(b), and such registered
shares of Common Stock shall be allocated among the Investors pro rata
based on the total number of Registrable Securities issued or issuable
as of each date that a Registration Statement, as amended, relating to
the resale of the Registrable Securities is declared effective by the
SEC. The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC within one hundred and twenty
(120) days after the Filing Deadline (the "REGISTRATION DEADLINE").
The Company shall permit the registration statement to become
effective within five (5) business days after receipt of a "no review"
notice from the SEC. In the event that the Registration Statement is
not declared effective by the SEC by the Registration Deadline then
the Company shall pay a penalty to each Buyer equal to 2% of the
purchase price for Common Stock purchased by each Investor and still
held by each Buyer for each thirty (30) day period beyond the
Registration Deadline that the Registration Statement is not declared
effective by the SEC (the "REGISTRATION DEADLINE PENALTY"). The
Registration Deadline Penalty shall be immediately payable by the
Company on demand by the Investor in either cash or Common Stock of
the Company at the election of the Company upon delivery to the
Company of a notice of such default by the Investor.
-2-
<PAGE> 3
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) involves an
underwritten offering, the Buyers shall have the right to select one
legal counsel to represent their interests in the offering, the costs
of which shall be borne by the Investors.
c. Piggy-Back Registrations. If at any time after the
Exchange Commencement Date and prior to the expiration of the
Registration Period (as hereinafter defined) the Company proposes to
file with the SEC a Registration Statement relating to an offering for
its own account or the account of others under the 1933 Act of any of
its securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to securities to be issued solely in connection
with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit
plans) the Company shall promptly send to each Investor who is
entitled to registration rights under this Section 2(c) written notice
of the Company's intention to file a Registration Statement and of
such Investor's rights under this Section 2(c) and, if within twenty
(20) days after receipt of such notice, such Investor shall so request
in writing, the Company shall include in such Registration Statement
all or any part of the Registrable Securities such Investor requests
to be registered, subject to the priorities set forth in Section 2(d)
below. No right to registration of Registrable Securities under this
Section 2(c) shall be construed to limit any registration required
under Section 2(a). The obligations of the Company under this Section
2(c) may be waived by Investors holding a majority of the Registrable
Securities. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included
in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to
the provisions of this Agreement, on the same terms and conditions as
other shares of Common Stock included in such underwritten offering.
d. Priority in Piggy-Back Registration Rights in connection
with Registrations or Company Account. If the registration referred to
in Section 2(c) is to be an underwritten public offering for the
account of the Company and the managing underwriter(s) advise the
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such
registration: (1) first, all securities the Company proposes to sell
for its own account, (2) second, up to the full number of securities
proposed to be registered for the account of the holders of securities
entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the
securities requested to be registered by the Investors and other
holders of securities entitled to participate in the registration,
drawn from them pro rata based on the number each has requested to be
included in such registration.
-3-
<PAGE> 4
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on
or prior to the Filing Deadline) for the registration of Registrable
Securities pursuant to Section 2(a)) and use its best efforts to cause
such Registration Statement(s) relating to Registrable Securities to
become effective as soon as possible after such filing (by the one
hundred and twentieth (120th) day following the issuance of the
relevant for the registration of Registrable Securities pursuant to
Section 2(a), and keep the Registration Statement(s) effective
pursuant to Rule 415 at all times until the later of (i) the date as
of which the Investors may sell all of the Registrable Securities
without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto) or (ii) the date on which the Investors
shall have sold all the Registrable Securities (the "REGISTRATION
PERIOD"), which Registration Statement(s) (including any amendments or
supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to
the Registration Statement(s) and the prospectus(es) used in
connection with the Registration Statement(s), which prospectus(es)
are to be filed pursuant to Rule 424 promulgated under the 1933 Act,
as may be necessary to keep the Registration Statement(s) effective at
all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by
the Registration Statement(s) until such time as all of such
Registrable Securities shall have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof
as set forth in the Registration Statement(s). In the event the number
of shares available under a Registration Statement filed pursuant to
this Agreement is insufficient to cover all of the Registrable
Securities, the Company shall amend the Registration Statement, or
file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in
any event within thirty (30) days after the necessity therefor arises
(based on the market price of the Common Stock and other relevant
factors on which the Company reasonably elects to rely). The Company
shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable
following the filing thereof. For purposes of the foregoing provision,
the number of shares available under a Registration Statement shall be
deemed "insufficient to cover all of the Registrable Securities" if at
any time the number of Registrable Securities issued or issuable upon
conversion of the Common Stock is greater than the quotient determined
by dividing (i) the number of Conversion Shares available for resale
under such Registration Statement by (ii)
-4-
<PAGE> 5
1.0; provided that in the case of the initial registration of the
Registrable Securities pursuant to Section 2(a), the Company shall be
required to register for resale 1,000,000 shares of Common Stock.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration
Statement(s) (including each preliminary prospectus ) and, with
regards to the Registration Statement, any correspondence by or on
behalf of the Company to the SEC or the staff of the SEC and any
correspondence from the SEC or the staff of the SEC to the Company or
its representatives, (ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or
such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including any preliminary prospectus,
as such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
d. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration
Statement(s) under the securities or "blue sky" laws of such
jurisdictions in the United States as any Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to quality the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a)
qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b)
subject itself to general taxation in any such jurisdiction, or (c)
file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify each Investor who holds Registrable
Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any
of the Registrable Securities for sale under the securities or "blue
sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for
such purpose.
e. [LEFT INTENTIONALLY BLANK]
f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly
prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or
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<PAGE> 6
omission, and deliver ten (10) copies of such supplement or amendment
to each Investor (or such other number of copies as such Investor may
reasonably request). The Company shall also promptly notify each
Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each
Investor by facsimile on the same day of such effectiveness and by
overnight mail) (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
g. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of
such order or suspension at the earliest possible moment and to notify
each Investor who holds Registrable Securities being sold (and, in the
event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.
h. The Company shall permit each Investor at such Investors
expense a single firm of counsel or such other counsel as thereafter
designated as selling stockholders' counsel by the Investors who hold
a majority of the Registrable Securities being sold, to review and
comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
i. At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if
any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters and the Investors.
j. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to
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<PAGE> 7
an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is
ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other
agreement. Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. All fees, costs
and expenses of the foregoing shall be borne by the Investors.
k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt written notice to such Investor
and allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
l. The Company shall use reasonable efforts either to (i)
cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv)
if, despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with
the National Association of Securities Dealers, Inc. ("NASD") as such
with respect to such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under
this Section 3(l).
m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable,
any managing underwriter or
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<PAGE> 8
underwriters, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or
amounts, as the case may be, as the managing underwriter or
underwriters, if any, or, if there is no managing underwriter or
underwriters, the Investors may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the
Investors may request. Not later than the date on which any
Registration Statement registering the resale of Registrable Securities
is declared effective, the Company shall deliver to its transfer agent
instructions, accompanied by any reasonably required opinion of
counsel, that permit sales of unlegended securities in a timely fashion
that complies with then mandated securities settlement procedures for
regular way market transactions.
n. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
o. The Company shall provide a transfer agent and registrar
of all such Registrable Securities not later than the effective date
of such Registration Statement.
p. If requested by the managing underwriters of an Investor,
the Company shall immediately incorporate in a prospectus supplement
or post-effective amendment such information as the managing
underwriters and the Investors agree should be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number
of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in
such offering; make all required filings of such prospectus supplement
or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any Registration
Statement if requested by a shareholder or any underwriter of such
Registrable Securities. The costs of preparation and filing of any
such post-effective amendments and supplements shall be borne by the
Investors.
q. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
r. The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from
each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration
Statement. It shall be a
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<PAGE> 9
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence
of 3(f) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy all
copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
and fees and disbursements of counsel for the Company shall be borne by the
Company except as otherwise specifically provided herein.
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<PAGE> 10
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor who
holds such Registrable Securities, the directors, officers, partners,
employees, agents and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 ACT"), and any underwriter (as defined in
the 1933 Act) for the Investors, and the directors and officers of,
and each Person, if any, who controls, any such underwriter within the
meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "CLAIMS")
incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party
thereto ("INDEMNIFIED DAMAGES"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky"
laws of any jurisdiction in which Registrable Securities are offered
("BLUE SKY FILING"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which the
statements therein were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). Subject to the restrictions set forth in
Section 6(d) with respect to the number of legal counsel, the Company
shall reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished
in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made
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<PAGE> 11
available by the Company pursuant to Section 3(c); (ii) with respect
to any preliminary prospectus, shall not inure to the benefit of any
such person from whom the person asserting any such Claim purchased
the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement
or mission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company pursuant to
Section 3(c), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim
is based on a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company; and (iv) shall
not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 for a period of three (3) years from the Filing
Deadline.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and
not jointly indemnify, hold harmless and defend, to the same extent
and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (collectively and together
with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim
or Indemnified Damages to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in
each case to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made
by or on behalf of such Indemnified Party and shall survive the
transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit
of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on
a timely basis in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing expressly for inclusion in the Registration
Statement.
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<PAGE> 12
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement
of any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The Company shall pay
reasonable fees for only one separate legal counsel for the Investors,
and such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The Indemnified
Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action
or claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
e. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the
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<PAGE> 13
indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however,
that: (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set
forth in Section 6; (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (iii)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees,
to:
a. make and keep public information available, as those terms
are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements (it being
understood that nothing herein shall limit the Company's obligations
under Section 4(c) of the Securities Purchase Agreement) and the
filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of Registrable Securities if: (i) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment,
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<PAGE> 14
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; (v)
such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement; (vi) such transferee shall
be an "ACCREDITED INVESTOR" as that term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act; and (vii) in the event the assignment occurs
subsequent to the date of effectiveness of the Registration Statement required
to be filed pursuant to Section 2(a), the transferee agrees to pay all
reasonable expenses of amending or supplementing such Registration Statement to
reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon
each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
BioShield Technologies, Inc.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (770) 921-1065
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<PAGE> 15
with a copy (which shall not constitute notice) to:
Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit and of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement,
once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
i. 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.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
BIOSHIELD TECHNOLOGIES, INC. ATLANTIS CAPITAL FUND LTD.
By: By:
------------------------------- --------------------------------
Name: Name:
Its: Its:
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<PAGE> 17
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ADDRESS AND FACSIMILE NUMBER OF NUMBER OF SHARES OF NUMBER OF
BUYER'S NAME BUYER COMMON STOCK WARRANTS
- ---------------------- ----------------------------------------------- -------------------------- ------------------
<S> <C> <C> <C>
c/o Citco Fund Services, Ltd. 85,653 8,000
Atlantis Capital Bahamas Financial Center
Fund Limited Shirley & Charlotte Streets
P.O. Box CB13136
Nassau, Bahamas
facsimile: 242-356-0223
- ---------------------- ----------------------------------------------- -------------------------- ------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.075
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of September
2, 1999, by and among Allergy Superstore.com, Inc., a Delaware corporation, with
headquarters at Suite B109, 4405 International Boulevard, Norcross, Georgia
30083 (the "COMPANY"), and the undersigned buyer (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among BioShield Technologies, Inc. ("BSTI") and the parties hereto of even date
herewith (the "SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon the
terms and subject to the conditions of the Securities Purchase Agreement, (i) to
issue and sell to the Buyer's shares of its common stock, par value $0.0001 per
share (the "COMMON STOCK"), which, under certain terms and conditions, will be
convertible into shares of BSTI's common stock, no par value per share (as
converted, the "CONVERSION SHARES") in accordance with the terms of the
Securities Purchase Agreement; and
B. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws once the Company becomes a
reporting company under the Securities and Exchange Act of 1934, as amended (the
"1934 ACT"), by making the appropriate filings with the U.S. Securities and
Exchange Commission (the "SEC"):
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "INVESTOR" means the Buyer and any transferee or
assignee thereof to whom the Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.
b. "PERSON" means a corporation, a limited liability
company, an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing one or more
Registration Statements in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous basis ("RULE 415"), and the
declaration or ordering of
<PAGE> 2
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the Common
Stock and any shares of capital stock issued or issuable as a result of
any stock split, stock dividend, recapitalization, exchange, or similar
event of the Company.
e. "REGISTRATION STATEMENT" means a registration
statement of the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Piggy-Back Registrations. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the
Company proposes to file with the SEC a Registration Statement relating
to an offering for its own account or the account of others under the
1933 Act of any of its securities (other than pursuant to an initial
public offering of any securities of the Company or a filing on Form
S-4 or Form S-8 or their then equivalents relating to securities to be
issued solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock option
or other employee benefit plans) the Company shall promptly send to
each Investor who is entitled to registration rights under this Section
2(c) written notice of the Company's intention to file a Registration
Statement and of such Investor's rights under this Section 2(c) and, if
within twenty (20) days after receipt of such notice, such Investor
shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities
such Investor requests to be registered, subject to the priorities set
forth in Section 2(d) below. No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any
registration required under Section 2(a). The obligations of the
Company under this Section 2(c) may be waived by Investors holding a
majority of the Registrable Securities. If an offering in connection
with which an Investor is entitled to registration under this Section
2(c) is an underwritten offering, then each Investor whose Registrable
Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the
same terms and conditions as other shares of Common Stock included in
such underwritten offering. As used herein, "REGISTRATION PERIOD" shall
mean the earlier of (i) the date as of which the Investors may sell all
of the Registrable Securities without restriction pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto) or (ii)
the date on which (A) the Investors shall have sold all the Registrable
Securities.
b. Priority in Piggy-Back Registration Rights in
connection with Registrations or Company Account. If the registration
referred to in Section 2(c) is to be an underwritten public offering
for the account of the Company and the managing underwriter(s) advise
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<PAGE> 3
the Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such registration:
(1) first, all securities the Company proposes to sell for its own
account, (2) second, up to the full number of securities proposed to be
registered for the account of the holders of securities entitled to
inclusion of their securities in the Registration Statement by reason
of demand registration rights, and (3) third, the securities requested
to be registered by the Investors and other holders of securities
entitled to participate in the registration, drawn from them pro rata
based on the number each has requested to be included in such
registration.
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration Statement(s)
(including each preliminary prospectus ) and, with regards to the
Registration Statement, any correspondence by or on behalf of the
Company to the SEC or the staff of the SEC and any correspondence from
the SEC or the staff of the SEC to the Company or its representatives,
(ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies
as such Investor may reasonably request) and (iii) such other
documents, including any preliminary prospectus, as such Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
b. The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities covered by the
Registration Statement(s) under the securities or "blue sky" laws of
such jurisdictions in the United States as any Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period,
and (iv) take all other actions reasonably necessary or advisable to
quality the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in
any jurisdiction where it would not otherwise be
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<PAGE> 4
required to qualify but for this Section 3(d), (b) subject itself to
general taxation in any such jurisdiction, or (c) file a general
consent to service of process in any such jurisdiction. The Company
shall promptly notify each Investor who holds Registrable Securities of
the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky" laws
of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such
purpose.
c. In the event Investors who hold a majority of the
Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and perform
its obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering. The
cost of such underwriters shall be borne by the Investors.
d. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a result
of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement
or amendment to each Investor (or such other number of copies as such
Investor may reasonably request). The Company shall also promptly
notify each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to
each Investor by facsimile on the same day of such effectiveness and by
overnight mail) (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
e. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if such
an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (and, in the event
of an underwritten offering, the managing underwriters) of the issuance
of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.
f. The Company shall permit each Investor at such
Investors expense a single firm of counsel or such other counsel as
thereafter designated as selling stockholders' counsel by the Investors
who hold a majority of the Registrable Securities being sold, to review
and
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<PAGE> 5
comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
g. At the request of the Investors who hold a majority
of the Registrable Securities being sold, the Company shall furnish, on
the date that Registrable Securities are delivered to an underwriter,
if any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriters
and the Investors.
h. The Company shall make available for inspection by
(i) any Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to an Investor) or use of any Record or
other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release
of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or
(c) the information in such Records has been made generally available
to the public other than by disclosure in violation of this or any
other agreement. Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. All fees, costs
and expenses of the foregoing shall be borne by the Investors.
i. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in
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<PAGE> 6
or by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow such
Investor, at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
j. The Company shall use reasonable efforts either to
(i) cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with
respect to such Registrable Securities. The Company shall pay all fees
and expenses in connection with satisfying its obligation under this
Section 3(j).
k. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and, to the extent
applicable, any managing underwriter or underwriters, to facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or, if there
is no managing underwriter or underwriters, the Investors may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may request. Not
later than the date on which any Registration Statement registering the
resale of Registrable Securities is declared effective, the Company
shall deliver to its transfer agent instructions, accompanied by any
reasonably required opinion of counsel, that permit sales of unlegended
securities in a timely fashion that complies with then mandated
securities settlement procedures for regular way market transactions.
l. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
m. The Company shall provide a transfer agent and
registrar of all such Registrable Securities not later than the
effective date of such Registration Statement.
n. If reasonably requested by the managing underwriters,
the Company shall immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters
and the Investors agree should be included therein relating to the sale
and distribution of Registrable Securities, including, without
limitation,
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<PAGE> 7
information with respect to the number of Registrable Securities being
sold to such underwriters, the purchase price being paid therefor by
such underwriters and with respect to any other terms of the
underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; make all required filings of
such prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by a shareholder
or any underwriter of such Registrable Securities. The costs of
preparation and filing of any such post-effective amendments and
supplements shall be borne by the Investors.
o. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement
to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of
such Registrable Securities.
p. The Company shall otherwise use its best efforts to
comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first
anticipated filing date of the Registration Statement, the Company
shall notify each Investor in writing of the information the Company
requires from each such Investor if such Investor elects to have any of
such Investor's Registrable Securities included in the Registration
Statement. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that
such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
Each Investor agrees to enter into any contractual lock-up agreements
with respect to the Common Stock or other securities
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<PAGE> 8
held by each Investor in connection with an underwritten public
offering of the Company's common stock or other securities.
d. Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 3(h) or the first sentence of 3(d), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or the first sentence
of 3(d) and, if so directed by the Company, such Investor shall deliver
to the Company (at the expense of the Company) or destroy all copies in
such Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be borne by the Company
except as otherwise specifically proved herein.
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company
will, and hereby does, indemnify, hold harmless and defend each
Investor who holds such Registrable Securities, the directors,
officers, partners, employees, agents and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), and any
underwriter (as defined in the 1933 Act) for the Investors, and the
directors and officers of, and each Person, if any, who controls, any
such underwriter within the meaning of the 1933 Act or the 1934 Act
(each, an "INDEMNIFIED PERSON"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several,
(collectively, "CLAIMS") incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party
is or may be a party thereto
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<PAGE> 9
("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any
untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering
under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("BLUE SKY FILING"), or the
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to
the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, or (iii) any
violation or alleged violation by the Company of the 1933 Act, the 1934
Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale
of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"VIOLATIONS"). Subject to the restrictions set forth in Section 6(d)
with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and payable,
for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not
apply to a Claim arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in
writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof
or supplement thereto, if such prospectus was timely made available by
the Company pursuant to Section 3(c); (ii) with respect to any
preliminary prospectus, shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit
of any person controlling such person) if the untrue statement or
mission of material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section
3(c), and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a
violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company (i) and (iv) shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9 for a
period of three (3) years from the Filing Deadline.
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<PAGE> 10
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the
Registration Statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "INDEMNIFIED PARTY"), against
any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that
such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; provided, further, however,
that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the
transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution, to
the same extent as provided above, with respect to information such
persons so furnished in writing expressly for inclusion in the
Registration Statement.
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of
any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual
or potential differing interests
-10-
<PAGE> 11
between such Indemnified Person or Indemnified Party and any other
party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for only one separate legal counsel for the
Investors, and such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any
such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or
claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified
Party or Indemnified Person with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall
not relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent
that the indemnifying party is prejudiced in its ability to defend such
action.
e. The indemnification required by this Section 6 shall
be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified
Party or Indemnified Person against the indemnifying party or others,
and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6 and (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation.
-11-
<PAGE> 12
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees,
once the Company becomes a reporting company under the 1934 Act upon the
effective date of its Form 10 to be filed with the SEC, to:
a. make and keep public information available, as those
terms are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934
Act so long as the Company remains subject to such requirements and the
filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the
investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933 Act
and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement; (vi) such transferee shall be an "ACCREDITED INVESTOR" as that term
is defined in Rule 501 of Regulation D promulgated under the 1933 Act; and (vii)
in the event the assignment occurs subsequent to the date of effectiveness of
the Registration Statement required to be filed pursuant to Section 2(a), the
transferee agrees to pay all reasonable expenses of amending or supplementing
such Registration Statement to reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities.
-12-
<PAGE> 13
Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities
with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
-13-
<PAGE> 14
If to the Company: Allergy Superstore.com, Inc.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Attention: President
Facsimile: (770) 921-1065
With a copy to: Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
Facsimile: (770) 481-7200
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Georgia without regard to
the principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this
Agreement shall inure to the benefit and of and be binding upon the
permitted successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more
identical counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
-14-
<PAGE> 15
i. 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.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
ALLERGY SUPERSTORE.COM, INC. ATLANTIS CAPITAL FUND LIMITED
By: By:
------------------------------ --------------------------------
Name: Name:
Its: Its:
-15-
<PAGE> 16
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
ADDRESS AND FACSIMILE NUMBER OF SHARES NUMBER OF
BUYER'S NAME NUMBER OF BUYER OF COMMON STOCK WARRANTS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
c/o Citco Fund Services, Ltd. 85,653 8,000
Atlantis Capital Fund Bahamas Financial Center
Limited Shirley & Charlotte Streets
P.O. Box CB13136
Nassau, Bahamas
facsimile: 242-356-0223
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.076
TRANSFER AGENT INSTRUCTIONS
BIOSHIELD TECHNOLOGIES, INC.
September 2, 1999
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
Attn: George Karfunkel
Dear Gentlemen:
Reference is made to that certain Securities Purchase Agreement, of
even date herewith, by and among BioShield Technologies, Inc., a Georgia
corporation (the "COMPANY"), and each of the subscribers listed in Exhibit "A"
attached hereto (collectively, the "HOLDERS") pursuant to which the Company is
issuing to the Holders an aggregate of 85,653 shares of Common Stock, $0.001 par
value of Allergy Superstore.com, Inc. (the "COMMON SHARES"). This letter shall
serve as our irrevocable authorization and direction to you (provided that you
are the transfer agent of the Company at such time) to issue shares (the
"CONVERSION SHARES") of Common Stock, no par value (the "COMMON STOCK"), of the
Company to or upon the order of a Holder from time to time upon (i) surrender to
you of a properly completed and duly executed Conversion Notice, in the form
attached hereto as Exhibit I, which has been properly agreed to and acknowledged
by the Company as indicated by the signature of a duly authorized officer of the
Company thereon and (ii) certificates representing Preferred Shares being
converted (or an indemnification undertaking with respect to such shares in the
case of their loss, theft or destruction). So long as you have previously
received: (i) written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares has been
declared effective by the U.S. Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 ACT"), and (ii) a copy
of such Registration Statement, Certificates representing the Conversion Shares
shall not bear any legend restricting transfer of the Conversion Shares thereby
and should not be subject to any stop-transfer restriction. However, if you have
not previously received (i) written confirmation from counsel to the Company
that a registration statement covering resales of the Conversion Shares has been
declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and (ii) a copy of such registration
statement, then the certificates representing the Conversion Shares shall bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE
<PAGE> 2
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL, IN FORM AND CONTENT ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
provided, however, that the Company may from time to time notify you to place
stop transfer restrictions on the certificates for the Conversion Shares in the
event a registration statement covering the Conversion Shares is subject to
amendment for events then current.
An opinion of counsel to the Company that the issuance of the
Conversion Shares to the Holders will be exempt from registration under the 1933
Act is attached hereto as Exhibit II.
Please be advised that the Holders are relying upon this letter as an
inducement to enter into the Securities Purchase Agreement and, accordingly,
each Holder is a third party beneficiary to these instructions.
Should you have any questions concerning this matter please contact me
at (770) 925-3432.
Very truly yours,
BIOSHIELD TECHNOLOGIES, INC.
By:
----------------------------------------
Name: Timothy C. Moses
Its: President and Chief Executive Officer
ACKNOWLEDGED AND AGREED:
AMERICAN STOCK TRANSFER & TRUST CO.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
---------------------------------
Enclosure
cc: Holders
<PAGE> 3
EXHIBIT "A"
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
NUMBER OF
ADDRESS AND FACSIMILE SHARES OF NUMBER OF
BUYER'S NAME NUMBER OF BUYER COMMON STOCK WARRANTS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
c/o Citco Fund Services, Ltd. 85,653 8,000
Atlantis Capital Fund Bahamas Financial Center
Limited Shirley & Charlotte Streets
P.O. Box CB13136
Nassau, Bahamas
facsimile: 242-356-0223
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
EXHIBIT I
BIOSHIELD TECHNOLOGIES, INC.
EXCHANGE NOTICE
Reference is made to the Securities Purchase Agreement, dated as of
September 2, 1999 (the "Agreement"). In accordance with and pursuant to the
Agreement, the undersigned hereby elects to exchange the number of shares of
Common Stock of Allergy Superstore.com, Inc., $0.001 par value per share (the
"COMMON Stock"), of BioShield Technologies, Inc., a Georgia corporation (the
"COMPANY"), indicated below into shares of Common Stock, no par value per share
(the "COMMON STOCK"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Common Stock specified below as of the date
specified below.
The undersigned acknowledges that any sales by the undersigned of the
securities issuable to the undersigned upon exchange of the Common Stock shall
be made only pursuant to (i) a registration statement effective under the
Securities Act of 1933, as amended (the "ACT"), or (ii) an opinion of its
counsel in form and content satisfactory to the Company that such sale is exempt
from registration required by Section 5 of the Act.
<TABLE>
<S> <C>
Date of Exchange:
---------------------------------------------
Number of Shares of Common Stock
to be exchanged:
---------------------------------------------
Stock certificate No(s). to be exchanged:
---------------------------------------------
Please confirm the following information:
Exchange Price:
---------------------------------------------
Number of shares of Conversion Shares
to be issued:
---------------------------------------------
</TABLE>
<PAGE> 5
please issue the Common Stock into which the Common Stock are being exchanged in
the following name and to the following address:
Issue to:
--------------------------------------------
--------------------------------------------
Facsimile Number:
--------------------------------------------
Authorization:
--------------------------------------------
By:
-----------------------------------------
Title:
--------------------------------------
Dated:
--------------------------------------
ACKNOWLEDGED AND AGREED:
BIOSHIELD TECHNOLOGIES, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Date:
------------------------------
<PAGE> 6
EXHIBIT II
BIOSHIELD TECHNOLOGIES, INC.
Attached hereto.
<PAGE> 1
EXHIBIT 10.077
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of September 2, 1999, between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and Atlantis
Capital Fund Limited, a Cayman Islands corporation (hereinafter referred to as
"INVESTOR").
W I T N E S S E T H:
WHEREAS, Investor has participated as an Investor in connection with
the Company's offering (the "OFFERING") of up to $15,000,000 in aggregate amount
of common stock, par value $0.001 per share (the "COMMON STOCK") for an
aggregate purchase price of $15,000,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Investor and/or its designees, in consideration for,
and as part of the investment by Investor in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Investor and/or its designees are hereby granted the right to purchase,
at any time from the date of issuance of the aforementioned Preferred Stock
until 5:00 P.M., Eastern Standard Time, on June 29, 2004 (the "WARRANT EXERCISE
TERM"), 8,000 Shares at an exercise price (subject to adjustment as provided in
Article 7 hereof) of $5.126 per share (the "INITIAL EXERCISE PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in
cash or by check to the order of the Company, or any combination of cash or
check, subject to adjustment as provided in Article 7 hereof. Upon surrender of
the Warrant Certificate with the annexed Form of Election to Purchase duly
executed, together with payment of the Exercise Price (as hereinafter defined)
for the Shares purchased, at the Company's executive offices currently located
at 4405 International Blvd., Norcross Georgia 30093, the registered holder of a
Warrant Certificate ("HOLDER" or "HOLDERS") shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder hereof, in
<PAGE> 2
whole or in part (but not as to fractional shares of the Common Stock). In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at its option, exchange this Warrant, in whole or
in part (a "WARRANT EXCHANGE"), into the number of Shares determined in
accordance with this Section 3.2, by surrendering this Warrant at the principal
office of the company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange or, if later, the
date the Notice of Exchange is received by the Company (the "EXCHANGE DATE").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the Shares
remaining subject to this Warrant, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) business days following the Exchange
Date. In connection with any Warrant Exchange, this Warrant shall represent the
right to subscribe for and acquire the number of Shares (rounded to the next
highest integer) equal to (i) the number of Shares specified by the Holder in
its Notice of Exchange (the "TOTAL NUMBER") less (ii) the number of Shares equal
to the quotient obtained by dividing (A) the product of the Total Number and the
then existing Exercise Price by (B) the current market value of a share of
Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
-2-
<PAGE> 3
The Warrant Certificates and, upon exercise of the Warrants, in part or
in whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "ACT"), and may not
be offered or sold except (i) pursuant to an effective registration
statement under the Act, (ii) to the extent applicable, pursuant to
Rule 144 under the Act (or any similar rule under such Act relating to
the disposition of securities), or (iii) upon the delivery by the
holder to the Company of an opinion of counsel, satisfactory to counsel
to the issuer, stating that an exemption from registration under such
Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price
shall be the price which shall result from time to time from any and all
adjustments of the Initial Exercise Price in accordance with the provisions of
Article 7 hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein
shall mean the Initial Exercise Price or the adjusted Exercise Price, depending
upon the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
6.3 Piggyback Registration. If, at any time during the
five years following the date of this Agreement, the Company proposes to prepare
and file any registration statement or post-effective amendments (other than in
connection with an underwritten initial public offering or initial
-3-
<PAGE> 4
registration of the Company or the Company's securities with the U.S. Securities
& Exchange Commission) thereto covering equity or debt securities of the
Company, or any such securities of the Company held by its shareholders (in any
such case, other than in connection with a merger, acquisition or pursuant to
Form S-8 or successor form), (for purposes of this Article 6, collectively, a
"REGISTRATION STATEMENT"), it will give written notice of its intention to do so
by registered mail ("NOTICE"), at ten (10) business days prior to the filing of
each such Registration Statement, to all holders of the Registrable Securities.
Upon the written request of such a holder (a "REQUESTING HOLDER"), made within
ten (10) business days after receipt of the Notice, that the Company include any
of the Requesting Holder's Registrable Securities in the proposed Registration
Statement, the Company shall, as to each such Requesting Holder, use its best
efforts to effect the registration under the Securities Act of the Registrable
Securities which it has been so requested to register ("PIGGYBACK
REGISTRATION"), at the Company's sole cost and expense and at no cost or expense
to the Requesting Holders. Notwithstanding the provisions of this Section 6.3,
the Company shall have the right at any time after it shall have given written
notice pursuant to this Section 6.3 (irrespective of whether any written request
for inclusion of such securities shall have already been made) to elect not to
file any such proposed Registration Statement, or to withdraw the same after the
filing but prior to the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Article 7, the number
of Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case
of any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the
-4-
<PAGE> 5
product of (x) the number of shares issuable upon exercise of the Warrants and
(y) the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if such
Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall for example be made:
(a) Upon the issuance or sale of shares of
Common Stock upon the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant
to the Company's employee stock option plans in effect or the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any such options, or (ii) the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any options or warrants; or
(c) Upon the issuance of shares of Common Stock
pursuant to contractual obligations; or
(d) If the amount of said adjustment shall be
less than 2 cents (2 cent) per Share, provided, however, that
in such case any adjustment that would otherwise be required
then to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall
amount to at least 2 cents (2 cent) per Share.
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Holder or Holders
of the unexercised Warrants shall thereafter be entitled, in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of
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<PAGE> 6
like tenor and date representing in the aggregate the right to purchase the same
number of Shares in such denominations as shall be designated by the Holder
thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts, once it has become a public company, to cause all shares of
Common Stock issuable upon the exercise of the Warrants to be listed on or
quoted on the electronic bulletin board, by NASDAQ or listed on such national
securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
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<PAGE> 7
(b) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business
as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or any proposed dissolution,
liquidation, winding up or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3 of this Agreement or to such other address as the Company may
designate by notice to the Holders.
13. Supplements and Amendments.
The Company may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
may deem necessary or desirable and which the Company deems not to adversely
affect the interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on June 29,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been
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<PAGE> 8
exercised and all the Shares issuable upon exercise of the Warrants have been
resold to the public; provided, however, that the provisions of Article 6 shall
survive such termination until the close of business on June 29, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be governed
by and interpreted in accordance with the laws of the State of Georgia without
regard to the principles of conflict of laws. The parties further agree that any
action between them shall be heard in Atlanta, Georgia, and expressly consent to
the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and
the United States District Court for the Northern District of Georgia, Atlanta
Division for the adjudication of any civil action asserted pursuant to this
Paragraph.
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<PAGE> 9
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Investor and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the Investor and
any other holder or holders of the Warrant Certificates, Warrants or the Shares.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
<TABLE>
<S> <C>
ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------------------------
Name: Timothy C. Moses
Title: Chairman of the Board and Chief Executive
Officer
Attest:
----------------------------------
Name:
------------------------------------
Title:
-----------------------------------
INVESTOR:
ATLANTIS CAPITAL FUND LIMITED
By:
-----------------------------------------------
Name:
Title:
Attest:
----------------------------------
Name:
------------------------------------
Title:
-----------------------------------
</TABLE>
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<PAGE> 10
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, JUNE 29, 2004
No. ___________ 8,000 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that Atlantis Capital Fund Limited
("INVESTOR") or registered assigns, is the registered holder of Warrants to
purchase, at any time from June 29, 1999, until 5:00 P.M. Eastern Standard Time
on August 24, 2004 ("EXPIRATION DATE"), up to 8,000 shares ("SHARES") of
fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of
Allergy Superstore.com, Inc., a Delaware corporation (the "COMPANY"), at the
Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE
PRICE"), of $5.126 per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
September 2, 1999, between the Company and Investor (the "WARRANT AGREEMENT").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and
<PAGE> 11
the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: As of September 2, 1999 ALLERGY SUPERSTORE.COM, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Attest:
---------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 12
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of ___________________________________ whose address
is_____________________________, and that such Certificate be delivered to
___________________________________________, whose address is
_______________________________________________________________.
Dated:____________________ Signature:__________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 13
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto
______________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________,
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ____________________ Signature: ________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
_________________________________
_________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 1
EXHIBIT 10.078
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of September 2, 1999, between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and J.P. Carey
Securities, Inc. (hereinafter referred to as "AGENT").
W I T N E S S E T H:
WHEREAS, Agent has acted as a placement agent in connection with the
Company's offering (the "OFFERING") of up to $15,000,000 in aggregate amount of
common stock, par value $0.001 per share (the "COMMON STOCK") for an aggregate
purchase price of $15,000,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Agent and/or its designees, in consideration for, and
as part of its role in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Agent and/or its designees are hereby granted the right to purchase, at
any time from the date of issuance of the aforementioned Preferred Stock until
5:00 P.M., Eastern Standard Time, on June 29, 2004 (the "WARRANT EXERCISE
TERM"), 20,000 Shares at an exercise price (subject to adjustment as provided in
Article 7 hereof) of $5.126 per share (the "INITIAL EXERCISE PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash
or by check to the order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased, at the Company's executive offices currently located at 4405
International Blvd., Norcross Georgia 30093, the registered holder of a Warrant
Certificate ("HOLDER" or "HOLDERS") shall be entitled to receive a certificate
or certificates for the Shares so purchased. The purchase rights represented by
each Warrant Certificate are exercisable at the option of the Holder hereof, in
<PAGE> 2
whole or in part (but not as to fractional shares of the Common Stock). In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at its option, exchange this Warrant, in whole or
in part (a "WARRANT EXCHANGE"), into the number of Shares determined in
accordance with this Section 3.2, by surrendering this Warrant at the principal
office of the company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange or, if later, the
date the Notice of Exchange is received by the Company (the "EXCHANGE DATE").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the Shares
remaining subject to this Warrant, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) business days following the Exchange
Date. In connection with any Warrant Exchange, this Warrant shall represent the
right to subscribe for and acquire the number of Shares (rounded to the next
highest integer) equal to (i) the number of Shares specified by the Holder in
its Notice of Exchange (the "TOTAL NUMBER") less (ii) the number of Shares equal
to the quotient obtained by dividing (A) the product of the Total Number and the
then existing Exercise Price by (B) the current market value of a share of
Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
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<PAGE> 3
The Warrant Certificates and, upon exercise of the Warrants, in part or
in whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "ACT"), and may not
be offered or sold except (i) pursuant to an effective registration
statement under the Act, (ii) to the extent applicable, pursuant to
Rule 144 under the Act (or any similar rule under such Act relating to
the disposition of securities), or (iii) upon the delivery by the
holder to the Company of an opinion of counsel, satisfactory to counsel
to the issuer, stating that an exemption from registration under such
Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price
shall be the price which shall result from time to time from any and all
adjustments of the Initial Exercise Price in accordance with the provisions of
Article 7 hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein
shall mean the Initial Exercise Price or the adjusted Exercise Price, depending
upon the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
6.3 Piggyback Registration. If, at any time during the
five years following the date of this Agreement, the Company proposes to prepare
and file any registration statement or post-effective amendments (other than in
connection with an underwritten initial public offering or initial
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<PAGE> 4
registration of the Company or the Company's securities with the U.S. Securities
& Exchange Commission) thereto covering equity or debt securities of the
Company, or any such securities of the Company held by its shareholders (in any
such case, other than in connection with a merger, acquisition or pursuant to
Form S-8 or successor form), (for purposes of this Article 6, collectively, a
"REGISTRATION STATEMENT"), it will give written notice of its intention to do so
by registered mail ("NOTICE"), at ten (10) business days prior to the filing of
each such Registration Statement, to all holders of the Registrable Securities.
Upon the written request of such a holder (a "REQUESTING HOLDER"), made within
ten (10) business days after receipt of the Notice, that the Company include any
of the Requesting Holder's Registrable Securities in the proposed Registration
Statement, the Company shall, as to each such Requesting Holder, use its best
efforts to effect the registration under the Securities Act of the Registrable
Securities which it has been so requested to register ("PIGGYBACK
REGISTRATION"), at the Company's sole cost and expense and at no cost or expense
to the Requesting Holders. Notwithstanding the provisions of this Section 6.3,
the Company shall have the right at any time after it shall have given written
notice pursuant to this Section 6.3 (irrespective of whether any written request
for inclusion of such securities shall have already been made) to elect not to
file any such proposed Registration Statement, or to withdraw the same after the
filing but prior to the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Article 7, the number
of Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case
of any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the
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<PAGE> 5
product of (x) the number of shares issuable upon exercise of the Warrants and
(y) the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if such
Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall for example be made:
(a) Upon the issuance or sale of shares of
Common Stock upon the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to
the Company's employee stock option plans in effect or the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any such options, or (ii) the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any options or warrants; or
(c) Upon the issuance of shares of Common Stock
pursuant to contractual obligations; or
(d) If the amount of said adjustment shall be
less than 2 cents (2 cent) per Share, provided, however, that
in such case any adjustment that would otherwise be required
then to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall
amount to at least 2 cents (2 cent) per Share.
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Holder or Holders
of the unexercised Warrants shall thereafter be entitled, in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of
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<PAGE> 6
like tenor and date representing in the aggregate the right to purchase the same
number of Shares in such denominations as shall be designated by the Holder
thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts, once it has become a public company, to cause all shares of
Common Stock issuable upon the exercise of the Warrants to be listed on or
quoted on the electronic bulletin board, by NASDAQ or listed on such national
securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
-6-
<PAGE> 7
(b) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business
as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or any proposed dissolution,
liquidation, winding up or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3 of this Agreement or to such other address as the Company may
designate by notice to the Holders.
13. Supplements and Amendments.
The Company may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
may deem necessary or desirable and which the Company deems not to adversely
affect the interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on June 29,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been
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<PAGE> 8
exercised and all the Shares issuable upon exercise of the Warrants have been
resold to the public; provided, however, that the provisions of Article 6 shall
survive such termination until the close of business on June 29, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be governed
by and interpreted in accordance with the laws of the State of Georgia without
regard to the principles of conflict of laws. The parties further agree that any
action between them shall be heard in Atlanta, Georgia, and expressly consent to
the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and
the United States District Court for the Northern District of Georgia, Atlanta
Division for the adjudication of any civil action asserted pursuant to this
Paragraph.
-8-
<PAGE> 9
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Agent and any other registered holder
or holders of the Warrant Certificates, Warrants or the Shares any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and the Agent and any other
holder or holders of the Warrant Certificates, Warrants or the Shares.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
<TABLE>
<S> <C>
ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------------------------
Name: Timothy C. Moses
Title: Chairman of the Board and Chief Executive
Officer
Attest:
-------------------------------
Name:
---------------------------------
Title:
--------------------------------
AGENT: J.P. CAREY SECURITIES, INC.
By:
-----------------------------------------------
Name:
Title:
Attest:
-------------------------------
Name:
---------------------------------
Title:
--------------------------------
</TABLE>
-9-
<PAGE> 10
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, JUNE 29, 2004
No. ___________ 20,000 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that J.P. Carey Securities, Inc.
("AGENT") or registered assigns, is the registered holder of Warrants to
purchase, at any time from June 30, 1999, until 5:00 P.M. Eastern Standard Time
on June 29, 2004 ("EXPIRATION DATE"), up to 20,000 shares ("SHARES") of
fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of
Allergy Superstore.com, Inc., a Delaware corporation (the "COMPANY"), at the
Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE
PRICE"), of $5.126 per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
September 2, 1999, between the Company and Agent (the "WARRANT AGREEMENT").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and
<PAGE> 11
the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: As of September 2, 1999 ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Attest:
-----------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 12
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of ___________________________________ whose address
is_____________________________, and that such Certificate be delivered to
___________________________________________, whose address is
_______________________________________________________________.
Dated:______________________ Signature:________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 13
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto
______________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:
___________________ _________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 1
EXHIBIT 10.079
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of September 2, 1999, between Allergy
Superstore.com, Inc., a Delaware corporation (the "COMPANY"), and Greenfield
Capital Partners, LLC (hereinafter referred to as "AGENT").
W I T N E S S E T H:
WHEREAS, Agent has acted as a placement agent in connection with the
Company's offering (the "OFFERING") of up to $15,000,000 in aggregate amount of
common stock, par value $0.001 per share (the "COMMON STOCK") for an aggregate
purchase price of $15,000,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Agent and/or its designees, in consideration for, and
as part of its role in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Agent and/or its designees are hereby granted the right to purchase, at
any time from the date of issuance of the aforementioned Preferred Stock until
5:00 P.M., Eastern Standard Time, on June 29, 2004 (the "WARRANT EXERCISE
TERM"), 20,000 Shares at an exercise price (subject to adjustment as provided in
Article 7 hereof) of $5.126 per share (the "INITIAL EXERCISE PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash
or by check to the order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased, at the Company's executive offices currently located at 4405
International Blvd., Norcross Georgia 30093, the registered holder of a Warrant
Certificate ("HOLDER" or "HOLDERS") shall be entitled to receive a certificate
or certificates for the Shares so purchased. The purchase rights represented by
each Warrant Certificate are exercisable at the option of the Holder hereof, in
<PAGE> 2
whole or in part (but not as to fractional shares of the Common Stock). In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at its option, exchange this Warrant, in whole or
in part (a "WARRANT EXCHANGE"), into the number of Shares determined in
accordance with this Section 3.2, by surrendering this Warrant at the principal
office of the company or at the office of its transfer agent, accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange or, if later, the
date the Notice of Exchange is received by the Company (the "EXCHANGE DATE").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant of like tenor evidencing the balance of the Shares
remaining subject to this Warrant, shall be issued as of the Exchange Date and
delivered to the Holder within seven (7) business days following the Exchange
Date. In connection with any Warrant Exchange, this Warrant shall represent the
right to subscribe for and acquire the number of Shares (rounded to the next
highest integer) equal to (i) the number of Shares specified by the Holder in
its Notice of Exchange (the "TOTAL NUMBER") less (ii) the number of Shares equal
to the quotient obtained by dividing (A) the product of the Total Number and the
then existing Exercise Price by (B) the current market value of a share of
Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
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<PAGE> 3
The Warrant Certificates and, upon exercise of the Warrants, in part or
in whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "ACT"), and may not
be offered or sold except (i) pursuant to an effective registration
statement under the Act, (ii) to the extent applicable, pursuant to
Rule 144 under the Act (or any similar rule under such Act relating to
the disposition of securities), or (iii) upon the delivery by the
holder to the Company of an opinion of counsel, satisfactory to counsel
to the issuer, stating that an exemption from registration under such
Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price
shall be the price which shall result from time to time from any and all
adjustments of the Initial Exercise Price in accordance with the provisions of
Article 7 hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein
shall mean the Initial Exercise Price or the adjusted Exercise Price, depending
upon the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
6.3 Piggyback Registration. If, at any time during the
five years following the date of this Agreement, the Company proposes to prepare
and file any registration statement or post-effective amendments (other than in
connection with an underwritten initial public offering or initial
-3-
<PAGE> 4
registration of the Company or the Company's securities with the U.S. Securities
& Exchange Commission) thereto covering equity or debt securities of the
Company, or any such securities of the Company held by its shareholders (in any
such case, other than in connection with a merger, acquisition or pursuant to
Form S-8 or successor form), (for purposes of this Article 6, collectively, a
"REGISTRATION STATEMENT"), it will give written notice of its intention to do so
by registered mail ("NOTICE"), at ten (10) business days prior to the filing of
each such Registration Statement, to all holders of the Registrable Securities.
Upon the written request of such a holder (a "REQUESTING HOLDER"), made within
ten (10) business days after receipt of the Notice, that the Company include any
of the Requesting Holder's Registrable Securities in the proposed Registration
Statement, the Company shall, as to each such Requesting Holder, use its best
efforts to effect the registration under the Securities Act of the Registrable
Securities which it has been so requested to register ("PIGGYBACK
REGISTRATION"), at the Company's sole cost and expense and at no cost or expense
to the Requesting Holders. Notwithstanding the provisions of this Section 6.3,
the Company shall have the right at any time after it shall have given written
notice pursuant to this Section 6.3 (irrespective of whether any written request
for inclusion of such securities shall have already been made) to elect not to
file any such proposed Registration Statement, or to withdraw the same after the
filing but prior to the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Article 7, the number
of Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case
of any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the
-4-
<PAGE> 5
product of (x) the number of shares issuable upon exercise of the Warrants and
(y) the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if such
Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall for example be made:
(a) Upon the issuance or sale of shares of
Common Stock upon the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to
the Company's employee stock option plans in effect or the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any such options, or (ii) the
issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any options or warrants; or
(c) Upon the issuance of shares of Common Stock
pursuant to contractual obligations; or
(d) If the amount of said adjustment shall be
less than 2 cents (2 cent) per Share, provided, however, that
in such case any adjustment that would otherwise be required
then to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall
amount to at least 2 cents (2 cent) per Share.
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Holder or Holders
of the unexercised Warrants shall thereafter be entitled, in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of
-5-
<PAGE> 6
like tenor and date representing in the aggregate the right to purchase the same
number of Shares in such denominations as shall be designated by the Holder
thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts, once it has become a public company, to cause all shares of
Common Stock issuable upon the exercise of the Warrants to be listed on or
quoted on the electronic bulletin board, by NASDAQ or listed on such national
securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
-6-
<PAGE> 7
(b) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business
as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or any proposed dissolution,
liquidation, winding up or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3 of this Agreement or to such other address as the Company may
designate by notice to the Holders.
13. Supplements and Amendments.
The Company may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
may deem necessary or desirable and which the Company deems not to adversely
affect the interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on June 29,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been
-7-
<PAGE> 8
exercised and all the Shares issuable upon exercise of the Warrants have been
resold to the public; provided, however, that the provisions of Article 6 shall
survive such termination until the close of business on June 29, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be governed
by and interpreted in accordance with the laws of the State of Georgia without
regard to the principles of conflict of laws. The parties further agree that any
action between them shall be heard in Atlanta, Georgia, and expressly consent to
the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and
the United States District Court for the Northern District of Georgia, Atlanta
Division for the adjudication of any civil action asserted pursuant to this
Paragraph.
-8-
<PAGE> 9
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Agent and any other registered holder
or holders of the Warrant Certificates, Warrants or the Shares any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and the Agent and any other
holder or holders of the Warrant Certificates, Warrants or the Shares.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
<TABLE>
<S> <C>
ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------------------------
Name: Timothy C. Moses
Title: Chairman of the Board and Chief Executive
Officer
Attest:
-------------------------------
Name:
---------------------------------
Title:
--------------------------------
AGENT: GREENFIELD CAPITAL PARTNERS,
LLC
By:
-----------------------------------------------
Name:
Title:
Attest:
-------------------------------
Name:
---------------------------------
Title:
--------------------------------
</TABLE>
-9-
<PAGE> 10
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, JUNE 29, 2004
No. ___________ 20,000 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that Greenfield Capital Partners,
LLC ("AGENT") or registered assigns, is the registered holder of Warrants to
purchase, at any time from June 30, 1999, until 5:00 P.M. Eastern Standard Time
on June 29, 2004 ("EXPIRATION DATE"), up to 20,000 shares ("SHARES") of
fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of
Allergy Superstore.com, Inc., a Delaware corporation (the "COMPANY"), at the
Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE
PRICE"), of $5.126 per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
September 2, 1999, between the Company and Agent (the "WARRANT AGREEMENT").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and
<PAGE> 11
the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: As of September 2, 1999 ALLERGY SUPERSTORE.COM, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Attest:
-------------------------------
Name:
---------------------------------
Title:
--------------------------------
<PAGE> 12
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of ___________________________________ whose address
is_____________________________, and that such Certificate be delivered to
___________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:
___________________________ __________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 13
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto
______________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:
___________________________ __________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 1
EXHIBIT 10.080
RAYMOND L. MOSS
Direct Dial: (770) 481-7201
E-mail: [email protected]
June 30, 1999
To: The Buyers of the Common Stock
J.P. Carey Securities, Inc.
RE: ALLERGY SUPERSTORE.COM, INC., INC.
Ladies and Gentlemen:
We have acted as counsel to BioShield Technologies, Inc., a Georgia
corporation (the "BSTI") and Allergy Superstore.com, Inc., a Delaware
Corporation (the "COMPANY"), in connection with the Securities Purchase
Agreement, dated as of June 30, 1999, by and among you, the Company, and BSTI
(the "PURCHASE AGREEMENT") and the transactions contemplated thereby. This
opinion is furnished to you pursuant to Section 6(c) of the Purchase Agreement.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings assigned to such terms in the Purchase Agreement.
In connection with the opinion expressed below, we have examined the
following documents:
(i) The Certificate of Incorporation and Bylaws of each of the
Company and BSTI, each as currently in effect;
(ii) Certain resolutions of the Board of Directors of the Company
and BSTI;
(iii) The Purchase Agreement;
(iv) The Registration Rights Agreement of each of BSTI and the
Company;
(v) The form of Warrant;
(vi) The Irrevocable Transfer Agent Instructions;
(vii) The Placement Agent Agreement;
<PAGE> 2
The Buyers of the Common Stock
J.P. Carey Securities, Inc.
June 30, 1999
Page 2
(viii) The Certificate of Existence (Good Standing) dated June 24,
1999, with respect to BSTI as issued by the Secretary of
State of the State of Georgia (the "GEORGIA CERTIFICATE OF
GOOD STANDING");
(ix) The Minute Books of the Company (the "COMPANY MINUTE BOOKS");
and
(x) The disbursement instructions issued to you by the Company
with respect to the consideration to be paid for the Common
Stock and the other documents delivered at closing, including
the Escrow Agreement.
The Purchase Agreement, the Registration Rights Agreements, the form
of Warrant, the Placement Agent Agreement, the Escrow Agreement, and the
Irrevocable Transfer Agent Instructions are herein referred to collectively as
the "TRANSACTION AGREEMENTS." We have also examined and considered such
corporate records, certificates, other statements of corporate officers of the
Company and BSTI, and matters of law as we have deemed appropriate as a basis
for our opinions set forth below.
The opinions expressed herein are subject to the following
assumptions, limitations, qualifications, and exceptions:
(a) We have assumed the genuineness of all signatures, the
authenticity of all Transaction Agreements submitted to us as originals, the
conformity with originals of all Transaction Agreements submitted to us as
copies, the authenticity of certificates of public officials and the due
authorization, execution and delivery of all Transaction Agreements (except the
due authorization, execution and delivery by the Company and BSTI of the
Transaction Agreements).
(b) In examining agreements (including the Transaction Agreements)
executed by parties other than the Company (the "OTHER PARTIES"), we have
assumed that each Other Party has the legal right, capacity and power to enter
into, enforce and perform all of its obligations under such agreements.
Furthermore, we have assumed the due authorization by each of the Other Parties
of all requisite action and the due execution and delivery of such agreements
by each of the Other Parties, and that such agreements are valid and binding
upon each of the Other Parties and are enforceable against each Other Party in
accordance with their terms.
(c) We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
federal or state laws affecting the rights of creditors generally.
<PAGE> 3
The Buyers of the Common Stock
J.P. Carey Securities, Inc.
June 30, 1999
Page 3
(d) We express no opinion as to the effect or availability of rules of
law governing specific performance, injunctive relief or other equitable
remedies (regardless of whether any such remedies are considered in a
proceeding at law or in equity) or as to the effect of general equitable
principles.
Furthermore, the following opinions are qualified to the extent that
the validity or enforceability of any provision of any of the Transaction
Agreements is subject to or affected by:
(i) limitations based on statutes and public policy regarding the
enforceability of express or implied waivers including, without limitation,
waivers of rights, claims or defenses;
(ii) limitations on the enforceability of a requirement that
provisions of the Transaction Agreements may only be amended or waived in
writing, to the extent that an oral agreement modifying provisions of the
Transaction Agreements has been performed;
(iii) limitations on the effectiveness of "severability" provisions
depending on the materiality of the unenforceable provision to the Transaction
Agreements as a whole and to the undertakings of the parties thereunder; and
(iv) limitations imposed by state blue sky laws.
For purposes of factual matters relevant to the opinions expressed
herein, we have relied on (a) the representations and warranties of the Company
and BSTI contained in the Transaction Agreements and (b) certificates of public
officials and the Company's transfer agent and statements and certificates of
the officers of the Company. Wherever any statement herein with respect to the
existence or absence of facts is qualified by the phrase "to our knowledge" or
similar phrase, it is intended to indicate that after a review of (i) the
representations and warranties of the Company and BSTI contained in the
Transaction Agreements and (ii) certificates of public officials and the
Company's and BSTI's transfer agent and statements and certificates of the
officers of the Company and BSTI, and (iii) the Company's and BSTI's Minute
Books, and during the course of our representation of the Company through the
date hereof, no information that would give us current actual knowledge of the
inaccuracy of such statement has come to the attention of those attorneys in
this firm who have represented the Company in connection with the Transaction
Agreements and the transaction contemplated thereby.
Based upon the foregoing and subject to the assumptions, limitations,
qualifications and exceptions stated herein, we are of the opinion that as of
the date hereof:
1. The Company and BSTI are corporations validly existing and in
good standing under the laws of their respective jurisdictions.
<PAGE> 4
The Buyers of the Common Stock
J.P. Carey Securities, Inc.
June 30, 1999
Page 4
2. Each of the Company and BSTI has the requisite corporate power and
authority to execute, deliver, and perform the Transaction Agreements; the
Transaction Agreements have been duly executed and delivered by the Company and
BSTI in accordance with the requirements of the Delaware and Georgia General
Corporate Laws (the "CORPORATE LAW") and have become effective under the
Corporate Law; and the Transaction Agreements constitute valid and binding
obligations of the Company and BSTI enforceable against the Company and BSTI in
accordance with their terms.
3. The issuance and sale of Common Stock to be purchased by you has
been duly authorized, and are validly issued, fully paid and non-assessable,
and not subject to preemptive rights or rights of first refusal. The issuance
of the Warrants to be issued to you and the Placement Agent have been duly
authorized and, upon issuance in accordance with the terms of the Transaction
Agreements, will be validly issued, fully paid and non-assessable and not
subject to preemptive rights or rights of first refusal.
4. Assuming your representations, warranties and covenants set forth
in the Transaction Agreements are true and correct, the Common Stock, the
Warrants, the Conversion Shares and the Warrant Shares may be issued to you
without registration under the 1933 Act, the securities laws of any state or
the Trust Indenture Act.
5. No authorization approval or consent of or filing with any court,
governmental body, regulatory agency, self-regulatory organization or stock
exchange or market, or the stockholders of the Company or BSTI, or, to our
knowledge, any third party is required to be obtained by the Company or BSTI to
enter into and perform its obligations under the Transaction Agreements or for
the issuance and sale of the Debentures, the Common Stock, the Conversion
Shares and the Warrant Shares as contemplated by the Transaction Agreements.
6. The execution, delivery and performance by each of the Company and
BSTI of the Transaction Agreements, the consummation by the Company and BSTI of
the transactions contemplated thereby and compliance by the Company and BSTI
with the terms thereof does not (a) violate, conflict with or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under the Certificate of Incorporation or Bylaws of either the Company
or BSTI or (b) result in any violation of any material law, applicable to the
Company that in our experience normally is applicable to transactions of the
type contemplated by the Transaction Agreements or any judgments, orders and
decrees of which we are aware.
7. To our knowledge, there is no material action, suit, proceeding,
inquiry or investigation before or by any court, public board or body or any
governmental agency or self-regulatory organization pending or threatened
against or affecting the Company or BSTI.
<PAGE> 5
The Buyers of the Common Stock
J.P. Carey Securities, Inc.
June 30, 1999
Page 5
We are members of the Bar of Georgia, and we do not express any
opinion concerning any law other than the laws of the state of Georgia, the
General Corporation Law of the state of Delaware, and the federal laws of the
United States. To the extent that the governing law with respect to any matters
covered by this opinion is the law of a jurisdiction other than Georgia or
federal law, we have assumed that that law of such other jurisdiction is
identical to Georgia law.
This opinion is furnished as of the date hereof, and we assume no
obligation to update this Opinion or to advise you of any events,
circumstances, or developments that occur or are otherwise brought to our
attention subsequent to the date hereof. This opinion is furnished to you
solely for your benefit in connection with the transactions contemplated by the
Transaction Agreements and may not be used, circulated, quoted, or otherwise
referred to or relied upon by any other person (other than the Affiliates (as
defined below) of the addressee of this opinion, who shall, upon a transfer of
the Common Stock to such affiliate, be entitled to rely on this opinion as if
they were the addressee hereof) or for any other purpose without our express
prior written consent. This opinion is expressly limited to the matters set
forth above, and we render no opinion, whether by implication or otherwise, as
to any other matters. As used in this opinion, the term "AFFILIATE" means with
respect to any person or any entity which controls, is controlled by, or is
under common control with such person, and the term "CONTROL" means the power,
directly or indirectly, including through contract, to direct investment
decisions, including the acquisition, disposition, and voting of securities.
Very truly yours,
SIMS MOSS KLINE & DAVIS LLP
<PAGE> 1
EXHIBIT 10.081
PLACEMENT AGENCY AGREEMENT
THIS AGREEMENT ("AGREEMENT"), made as of the 30 day of June, 1999, by
and between Allergy Superstore,com, Inc., a Delaware corporation ("COMPANY"),
and J.P. Carey Securities, Inc., a Georgia corporation (the "AGENT").
WITNESSETH:
WHEREAS, the Company proposes to issue and sell to certain investors
(the "INVESTORS") shares of Common Stock, par value $0.001 per share ("COMMON
STOCK") and Warrants resulting in gross proceeds up to $15,000,000 (the Common
Stock and Warrants to be sold, hereinafter referred to as the "SECURITIES")
(the "OFFERING") not involving a public offering without registration under the
Securities Act of 1933, as amended (the "'33ACT"), pursuant to exemptions from
the registration requirements of the Act under Regulation D promulgated under
the Act ("REGULATION D"), as described below; and
WHEREAS, the Agent has offered to assist the Company in placing the
Securities on a "best efforts basis", and the Company desires to secure the
services of the Agent on the terms and conditions hereinafter set forth;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties hereto do
hereby agree as follows:
1. Engagement of Agent. The Company hereby appoints the Agent, as its
non-exclusive placement agent for the Offering, to sell up to $15,000,000 of
securities (the "MAXIMUM SECURITIES") on a "best efforts basis," resulting in
gross proceeds to the Company of up to $15,000,000. The Offering shall be made
in one or more tranches (the "Tranches"). The Agent, subject to the terms and
conditions herein set forth, accepts such appointment and agrees to use its
best efforts to find purchasers for the Securities.
2. Representations and Warranties of the Company. In order to induce
the Agent to enter into this Agreement, the Company hereby represents and
warrants to and agrees with the Agent as follows:
2.1 Offering Documents. The Company, BioShield Technologies, Inc.
("BSTI"), and the Investors have prepared a Securities Purchase Agreements,
Registration Rights Agreement and certain exhibits thereto in connection with
the sale of the Securities, which documents have been or will be sent to the
Investors. As used in this Agreement, the term "Offering Documents" refers to
and means the Securities Purchase Agreement, Registration Rights Agreements,
and certain exhibits thereto and all amendments, exhibits and supplements
thereto, together with any other documents which are provided to the Agent by,
or approved for Agent's use by, the Company for the purpose of this Offering.
<PAGE> 2
2.2 Provision of Offering Documents. The Company shall deliver to the
Agent, without charge, as many copies of the Offering Documents as the Agent
may reasonably require for the purposes contemplated by this Agreement. The
Company authorizes the Agent, in connection with the Offering of the
Securities, to use the Offering Documents as from time to time amended or
supplemented in connection with the offering and sale of the Securities and in
accordance with the applicable provisions of the `33 Act and Regulation D. The
Company consents to the Agent's distribution of the Offering Documents to the
Investor as a disclosure document about the Company, its business, prospects,
financial condition and other matters.
2.3 Accuracy of Offering Documents. The Offering Documents, at the
time of filing, conformed in all material respects with the requirements, to
the extent applicable, of the `34 Act and the applicable Rules and Regulations
and did not include 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 light of the circumstances under which they were made,
not misleading. On each Closing Date (as hereinafter defined), the Offering
Documents will contain all statements which are required to be stated therein
in accordance with the `34 Act and the Rules and Regulations for the purposes
of the proposed Offering, and all statements of material fact contained in the
Offering Documents will be true and correct, and the Offering Documents will
not include 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 light of the circumstances under which they were made, not
misleading; provided, however, that the Company does not make any
representations or warranties as to the information contained in or omitted
from the Offering Documents in reliance upon written information furnished on
behalf of the Agent or the Investors specifically for use therein.
2.4 Duty to Amend. If during such period of time as in the opinion of
the Agent or its counsel any Offering Documents relating to this offering are
required to be delivered under the `34 Act, any event occurs or any event known
to the Company relating to or affecting the Company shall occur as a result of
which the Offering Documents as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time after
the date hereof to amend or supplement the Offering Documents to comply with
the `34 Act or the applicable Rules and Regulations, the Company shall
forthwith notify the Agent thereof and shall prepare such further amendment or
supplement to the Offering Documents as may be required and shall furnish and
deliver to the Agent and to others, whose names and addresses are designated by
the Agent, all at the cost of the Company, a reasonable number of copies of the
amendment or supplement or of the amended or supplemented Offering Documents
which, as so amended or supplemented, will not contain an untrue statement of a
material fact or omit to state any material fact necessary in order to make the
Offering Documents not misleading in the light of the circumstances when it is
delivered to the Investor and which will comply in all respects with the
requirements (to the extent applicable) of the `34 Act and the applicable Rules
and Regulations.
-2-
<PAGE> 3
2.5 Incorporation and Standing. The Company is, and at each Closing
Date will be, duly formed and validly existing in good standing as a
corporation under the laws of the State of Delaware and with full power and
authority (corporate and other) to own its properties and conduct its business,
present and proposed, as described in the Offering Documents; the Company, has
full power and authority to enter into this Agreement; and the Company is duly
qualified and in good standing as a foreign entity in each jurisdiction in
which the failure to so qualify would have a material adverse effect on the
Company or its properties.
2.6 Legality of Outstanding Securities. Prior to each Closing Date,
the outstanding securities of the Company have been duly and validly authorized
and issued, fully paid and nonassessable and conform in all material respects
to the statements with regard thereto contained in the Offering Documents.
2.7 Legality of Securities. The Securities, when sold and delivered,
will constitute legal, valid and binding obligations of the Company,
enforceable in accordance with the terms thereof, and shall be duly and validly
issued and outstanding, fully paid and nonassessable. The Securities, when
issued, shall be duly and validly issued and outstanding, fully paid and
non-assessable.
2.8 Litigation. Except as set forth in the Offering Documents, there
is now, and at each Closing Date there will be, no action, suit or proceeding
before any court or governmental agency, authority or body pending or, to the
knowledge of the Company, threatened, which might result in judgements against
the Company not adequately covered by insurance or which collectively might
result in any material adverse change in the condition (financial or otherwise)
or business of the Company or which would materially adversely affect the
properties or assets of the Company.
2.9 Finders. The Company does not know of any outstanding claims for
services in the nature of a finder's fee or origination fees with respect to
the sale of the Securities hereunder for which the Agent may be responsible,
and the Company will indemnify the Agent from any liability for such fees by
any party who has a claim for such compensation from the Company and for which
person the Agent is not legally responsible.
2.10 Authority. The execution and delivery by the Company of this
Agreement have been duly authorized by all necessary action, and this Agreement
is the valid, binding and legally enforceable obligation of the Company subject
to standard qualifications as to the availability of equitable remedies, the
effect of bankruptcy and other laws relating to the protection of debtors and
public policy opinions promulgated by the Commission with respect to
indemnification against liabilities under the `33 Act.
3. Issue, Sale and Delivery of the Securities.
3.1 Deliveries of Securities. Certificates in such form that, subject
to applicable transfer restrictions as described in the Securities Purchase
Agreement, they can be negotiated by the Investor for the Securities, and
warrants representing the Agent's warrant compensation described in Section
-3-
<PAGE> 4
3.4 below ("WARRANTS"), shall be delivered by the Company to the Escrow Agent,
with copies made available to the Agent for checking at least one (1) full
business day prior to the first Closing Date. The certificates for the
Securities and the Warrants shall be delivered at the Closing (as defined
hereinafter).
3.2 Escrow of Funds. Pursuant to the Escrow Agreement, a copy of which
is attached hereto as Exhibit "B" (the "ESCROW AGREEMENT"), executed by the
Company, the Agent and the escrow agent (the "ESCROW AGENT"), the Investor
shall place all funds for purchase of Securities and the Company will place the
Securities for each Closing in an escrow account set up by the Escrow Agent.
Upon each Closing, Escrow Agent shall release the subscription funds to the
Company and the certificates representing the Securities shall be released by
the Company to the Investor (the "CLOSING").
3.3 Closing Date. Each Closing shall take place at the offices of Sims
Moss Kline & Davis LLP, 400 Northpark Town Center, Suite 310, 1000 Abernathy
Road, NE, Atlanta, Georgia 30328 at such time and date ("CLOSING DATE") as
mutually agreed by the Company and the Agent. The Closing Date may be changed
by mutual agreement of the Investor and the Company.
3.4 Agent's Compensation. The Company shall pay the Agent:
(a) A commission of four percent (4%) of the gross
subscription proceeds (the "AGENT FEE") of each Tranche (the "GROSS
PROCEEDS") to be paid upon each Closing on each Closing Date; and
(b) In addition to the fees and reimbursement of costs set
forth in Sections 3.4 and 3.5 of this Agreement, the Company shall
issue to the Agent warrants ("WARRANTS") to purchase shares of the
Company's Common Stock, in an amount equal to Warrants to purchase
6,666 shares of Common Stock for each $1,000,000 of Gross Proceeds of
each, which shall be exercisable for the Company's Common Stock on a
one-for-one basis at a price per share equal to the fair value of a
share of the Company's Common Stock on the day immediately prior to
each closing. The Warrants shall have cashless exercise provisions.
The term of the Warrants shall be five years. The Agent agrees to
enter into any contractual lock-up agreements which may be required by
the Company's underwriters in connection with an underwritten public
offering of the Company's Securities or other securities. Fifty
percent (50%) of the Agent Fee shall be paid to Agent and fifty
percent (50%) shall be paid to Greenfield Capital Partners, LLC as
sub-agent ("SUB-AGENT"). Sub-Agent shall receive a portion of the
Warrants as determined by Agent and Sub-Agent.
3.5 Payment of Fees. The Escrow Agent shall be instructed to pay all
fees and cost reimbursements and Warrants pursuant to section 3.4 of this
Agreement, directly to the Agent from the Gross Proceeds of the Closing,
simultaneously with the transfer of Gross Proceeds to the Company.
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<PAGE> 5
4. Offering of the Securities on Behalf of the Company.
4.1 In offering the Securities for sale, the Agent shall offer them
solely as an agent for the Company, and such offer shall be made upon the terms
and subject to the conditions set forth in the Offering Documents. The Agent
shall commence making such offer as an agent for the Company as soon as
possible following delivery of the Offering Documents or in any manner
inconsistent with federal or state securities laws.
4.2 The Agent will not make offers to sell the Securities to, or
solicit offers to subscribe for any Securities from, persons or entities that
are not "accredited investors" as defined in Regulation D.
5. Confidentiality/Protection of Clients.
5.1 The Company agrees to maintain the confidentiality of the Agent's
clients, except as required by applicable law. Such clients shall be those
entities which invest or have been offered an opportunity to invest by the
Agent in the Offering (the "CLIENTS"). For a period of two years from the
Closing, the Company will not solicit or enter into any financing transaction
with the Clients without the written consent of Agent and payment to Agent
compensation no less than the compensation to be paid to Agent hereunder for
raising a like amount. The restrictions on the Company and Agent's right to
compensation described in the preceding sentence shall not apply to any Clients
included in a financing transaction as the result of the efforts of an agent or
other intermediary other than Agent.
5.2 In the event that Company breaches Section 5.1 of this Agreement,
Agent shall be entitled to receive compensation in the same proportion to the
financing done without Agent's participation as the compensation to Agent under
this Agreement bears to the financing raised in this Offering.
6. Covenants of the Company. The Company covenants and agrees with the
Agent that:
6.1 After the date hereof, the Company will not at any time, prepare
and distribute any amendment or supplement to the Offering Documents, of which
amendment or supplement the Agent shall not previously have been advised and
the Agent and its counsel furnished with a copy within a reasonable time period
prior to the proposed adoption thereof, or to which the Agent shall have
reasonably objected in writing on the ground that it is not in compliance with
the `34 Act or the Rules and Regulations (if applicable).
6.2 The Company will pay, whether or not the transactions contemplated
hereunder are consummated or this Agreement is prevented from becoming
effective or is terminated, all costs and expenses incident to the performance
of its obligations under this Agreement, including all expenses incident to the
authorization of the Securities and their issue and delivery to the Agent, any
original issue taxes in connection therewith, all transfer taxes, if any,
incident to the initial sale of the
-5-
<PAGE> 6
Securities, the fees and expenses of the Company's counsel (except as provided
below) and accountants, the cost of reproduction and furnishing to the Agent
copies of the Offering Documents as herein provided; provided, however, that
the Company shall not be responsible for the payment of fees and costs incurred
by Agent, including attorney's fees of or any costs incurred by the Agent's
counsel.
6.3 The Company shall be responsible for making any and all filings
required by the Blue Sky authorities and filings required by the laws of the
jurisdictions in which Investor is located, if any.
7. Indemnification.
7.1 The Company agrees to indemnify and hold harmless the Agent, each
person who controls the Agent within the meaning of Section 15 of the `33 Act
and the Agent's employees, accountants, attorneys and agents (the "AGENT'S
INDEMNITEES") against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the '33Act or
any other statute or at common law for any legal or other expenses (including
the costs of any investigation and preparation) incurred by them in connection
with any litigation, whether or not resulting in any liability, but only
insofar as such losses, claims, damages, liabilities and litigation arise out
of or are based upon any untrue statement of material fact contained in the
Offering Documents or any amendment or supplement thereto or any application or
other document filed in any state or jurisdiction in order to qualify the
Securities under the Blue Sky or securities laws thereof, or the omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, under the circumstances under which they were
made, not misleading, all as of the date of the Offering Documents or of such
amendment as the case may be; provided, however, that the indemnity agreement
contained in this Section 7.1 shall not apply to amount paid in settlement of
any such litigation, if such settlements are made without the consent of the
Company, nor shall it apply to the Agent's Indemnitees in respect to any such
losses, claims, damages or liabilities arising out of or based upon any such
untrue statement or alleged untrue statement or any such omission or alleged
omission, if such statement or omission was made in reliance upon information
furnished in writing to the Company by the Agent specifically for use in
connection with the preparation of the Offering Documents or any such amendment
or supplement thereto or any application or other document filed in any state
or jurisdiction in order to qualify the Securities under the Blue Sky or
securities law thereof. This indemnity agreement is in addition to any other
liability which the Company may otherwise have to the Agent's Indemnitees. The
Agent's Indemnitees agree, within ten (10) days after the receipt by them of
written notice of the commencement of any action against them in respect to
which indemnity may be sought from the Company under this Section 7.1, to
notify the Company in writing of the commencement of such action; provided,
however, that the failure of the Agent's Indemnitees to notify the Company of
any such action shall not relieve the Company from any liability which it may
have to the Agent's Indemnitees on account of the indemnity agreement contained
in this Section 7.1, and further shall not relieve the Company from any other
liability which it may have to the Agent's Indemnitees, and if the Agent's
Indemnitees shall notify the Company of the commencement thereof, the Company
-6-
<PAGE> 7
shall be entitled to participate in (and, to the extent that the Company shall
wish, to direct) the defense thereof at its own expense, but such defense shall
be conducted by counsel of recognized standing and reasonably satisfactory to
the Agent's Indemnitees, defendant or defendants, in such litigation. The
Company agrees to notify the Agent's Indemnitees promptly of the commencement
of any litigation or proceedings against the Company or any of the Company's
officers or directors of which the Company may be advised in connection with
the issue and sale of any of the Securities and to furnish to the Agent's
Indemnitees, at their request, to provide copies of all pleadings therein and
to permit the Company's Indemnitees to be observers therein and apprise the
Agent's Indemnitees of all developments therein, all at the Company's expense.
7.2 The Agent agrees, in the same manner and to the same extent as set
forth in Section 7.1 above, to indemnify and hold harmless the Company, each
person who controls the Company within the meaning of Section 15 of the `33 Act
and the Company's and Company's employees, accountants, attorneys and agents
(the "COMPANY'S INDEMNITEES") with respect to (i) any statement in or omission
from the Offering Documents or any amendment or supplement thereto or any
application or other document filed in any state or jurisdiction in order to
qualify the Securities under the Blue Sky or securities laws thereof, or any
information furnished pursuant to this Agreement, if such statement or omission
was made in reliance upon information furnished in writing to the Company by
the Agent on its behalf specifically for use in connection with the preparation
thereof or supplement thereto, or (ii) any untrue statement of a material fact
made by the Agent or its agents not based on statements in the Offering
Documents or authorized in writing by the Company, or with respect to any
misleading statement made by the Agent or its agents resulting from the
omission of material facts which misleading statement is not based upon the
Offering Documents, or information furnished in writing by the Company or,
(iii) any breach of any representation, warranty or covenant made by the Agent
in this Agreement. The Agent shall not be liable for amounts paid in settlement
of any such litigation if such settlement was effected without its consent. In
case of the commencement of any action in respect of which indemnity may be
sought from the Agent, the Company's Indemnitees shall have the same obligation
to give notice as set forth in Section 7.1 above, subject to the same loss of
indemnity in the event such notice is not given, and the Agent shall have the
same right to participate in (and, to the extent that it shall wish, to direct)
the defense of such action at its own expense, but such defense shall be
conducted by counsel of recognized standing reasonably satisfactory to the
Company. The Agent agrees to notify the Company's Indemnitees and, at their
request, to provide copies of all pleadings therein and to permit the Company's
Indemnitees to be observers therein and apprise them of all the developments
therein, all at the Agent's expense.
8. Effectiveness of Agreement. This Agreement shall become effective
(i) at 9:00 a.m., New York City time, on the date hereof or (ii) upon release
by the Escrow Agent of the Securities for offering after the date hereof,
whichever shall last occur.
-7-
<PAGE> 8
9. Termination.
9.1 This Agreement may be terminated by the Agent by notice to the
Company in the event that the Company shall have failed or been unable to
comply with any of the terms, conditions or provisions of this Agreement on the
part of the Company to be performed, complied with or fulfilled within the
respective times, if any, herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been expressly waived by the
Agent in writing.
9.2 This Agreement may be terminated by the Company by notice to the
Agent in the event that the Agent shall have failed or been unable to comply
with any of the terms, conditions or provisions of this Agreement on the part
of the Agent to be performed, complied with or fulfilled within the respective
times, if any, herein provided for, unless compliance therewith or performance
or satisfaction thereof shall have been expressly waived by the Company in
writing.
9.3 Any termination of this Agreement pursuant to this Section shall
be without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party thereto,
except that the Company shall remain obligated to pay the costs and expenses
provided to be paid by it specified in Sections 3, 5, and 6; and the Company
and the Agent shall be obligated to pay, respectively, all losses, claims,
damages or liabilities, joint or several, under Section 7.1 in the case of the
Company and Section 7.2 in the case of the Agent.
10. Agent's Representations, Warranties, and Covenants. The Agent
represents and warrants to and agrees with the Company that:
10.1 Agent is a corporation duly incorporated and existing under the
laws of the state of Georgia Agent is registered with the Securities Exchange
Commission and the NASD.
10.2 There is not now pending or threatened against the Agent any
action or proceeding of which the Agent has been advised, either in any court
of competent jurisdiction, before the Commission or before any state securities
commission or the NASD, concerning the Agent's activities which would impair
the ability of the Agent to conduct the Offering as contemplated by this
Agreement.
10.3 All corporate actions by Agent required for the execution,
delivery and performance of this Agreement have been taken. The execution and
delivery of this Agreement by the Agent, the observance and performance
thereof, and the consummation of the transactions contemplated herein or in the
Offering Documents do not and will not constitute a material breach of, or a
material default under, any instrument or agreement by which the Agent is
bound, and does not and will not, to the best of the Agent's knowledge,
contravene any existing law, decree or order applicable to it. This Agreement
constitutes a valid and binding agreement of Agent, enforceable in accordance
with its terms.
10.4 Agent understands and acknowledges that the Securities are not
being registered under the '33 Act, and that the Offering is to be conducted
pursuant to Regulation D. Accordingly,
-8-
<PAGE> 9
in conducting its activities under this Agreement Agent shall offer Securities
only to "accredited investors," as defined in Regulation D.
10.5 Agent's representations and warranties under this Section shall
be true and correct as of the Closing, and shall survive the Closing for a
period of one year.
11. Notices. Except as otherwise expressly provided in this Agreement:
11.1 Whenever notice is required by the provisions of this Agreement
to be given to the Company, such notice shall be in writing, addressed to the
Company, at:
-9-
<PAGE> 10
If to the Company:
Allergy Superstore.com, Inc.
4405 International Blvd.
Suite B-109
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (410) 921-1062
With a copy to:
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Telephone: (770) 481-7201
Facsimile: (770) 481-7210
11.2 Whenever notice is required by the provisions of this Agreement
to be given to the Agent, such notice shall be given in writing, addressed to
the Agent, at:
If to the Agent: J.P. Carey Securities, Inc
Atlanta Financial Center, East Tower
3343 Peachtree Road, Suite 500
Atlanta, Georgia 30326
Attn: Joseph Canouse
11.3 Any notice instructing the Escrow Agent to distribute monies or
Securities held in Escrow must be signed by authorized agents of both the
Company and the Agent in order to be valid.
12. Miscellaneous.
12.1 Benefit. This Agreement is made solely for the benefit of the
Agent and the Company, their respective officers and directors and any
controlling person referred to in Section 15 of the `33 Act and their
respective successors and assigns, and no other person may acquire or have any
right under or by virtue of this Agreement, including, without limitation, the
holders of any Securities. The term "successor" or the term"successors and
assigns" as used in this Agreement shall not include any purchasers, as such,
of any of the Securities.
-10-
<PAGE> 11
12.2 Survival. The respective indemnities, agreements,
representations, warranties, covenants and other statements of the Company and
the Agent, or the officers, directors or controlling persons of the Company and
the Agent as set forth in or made pursuant to this Agreement and the indemnity
agreements of the Company and the Agent contained in Section 7 hereof shall
survive and remain in full force and effect for a period of three (3) years
from the date hereof, regardless of (i) any investigation made by or on behalf
of the Company or the Agent or any such officer, director or controlling person
of the Company or of the Agent; (ii) delivery of or payment for the Securities;
or (iii) the Closing Date, and any successor of the Company or the Agent or any
controlling person, officer or director thereof, as the case may be, shall be
entitled to the benefits hereof.
12.3 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Georgia without regard
to the principles of conflict of laws. Any dispute or controversy between the
parties arising in connection with this agreement or the subject matter
contemplated by this agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages
claimed, including, but not limited to, attorney's fees, expenses of litigation
and arbitration, exemplary damages, and prejudgment interest. Notwithstanding
the foregoing, Agent may at any time and at its option, whether or not an
arbitration action is then pending, initiate a civil action for temporary and
permanent injunctive and other equitable relief against Company. Company
acknowledges that upon any breach of Agent's rights to Warrants or other
compensation hereunder, Agent's resulting injury may not be adequately
compensated by a remedy at law. Accordingly, upon such breach, Agent, at its
election and without limitation of its other remedies, shall be entitled to
pursue a claim for specific performance of this Agreement, and Company hereby
waives the right to assert any defense thereto that Agent has an adequate
remedy at law. The parties further agree that any arbitration action between
them shall be heard in Wilmington, Delaware.
12.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
12.5 Confidential Information. All confidential financial or business
information (except publicly available or freely usable material otherwise
obtained from another source) respecting either party will be used solely by
the other party in connection with the within transactions, be revealed only to
employees or contractors of such other party who are necessary to the conduct
of such transactions, and be otherwise held in strict confidence.
12.6 Public Announcements. Prior to the Closing Date, neither party
hereto will issue any public announcement concerning the within transactions
without the approval of the other party.
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<PAGE> 12
12.7 Finders. The parties acknowledge that no person has acted as a
finder in connection with the transactions contemplated herein and each will
agree to indemnify the other with respect to any other claim for a finder's fee
in connection with the offering.
12.8 Recitals. The recitals to this Agreement are a material part
hereof, and each recital is incorporated into this Agreement by reference and
made a part of this Agreement.
12.9 Independent Counsel. The parties to this Agreement acknowledge
that Company and BSTI have received independent counsel from the law firm of
Sims Moss Kline & Davis LLP which is acting as their counsel. Agent has been
advised by Sims Moss Kline & Davis LLP to seek independent advice with respect
to the terms and conditions of this Agreement and any related agreements before
signing them.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed as of the day and year first above written.
"THE COMPANY"
ALLERGY SUPERSTORE.COM, INC.
By:
---------------------------------------
Name: Timothy C. Moses
Title: President
"THE AGENT"
J.P. CAREY SECURITIES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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<PAGE> 1
EXHIBIT 10.082
PRIVATE EQUITY CREDIT AGREEMENT
BY AND BETWEEN
JACKSON LLC
AND
BIOSHIELD TECHNOLOGIES, INC.
Dated as of June 30, 1999
<PAGE> 2
<TABLE>
<CAPTION>
<S> <C> <C>
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
Section 4.16 Material Non-Public Information.............................................. 17
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
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 and Blackout Shares................................... 19
Section 6.12 Legal Opinion on Subscription Date........................................... 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
Section 9.3 Method of Asserting Indemnification Claims.................................... 27
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
iii
<PAGE> 5
PRIVATE EQUITY CREDIT AGREEMENT is entered into as of the 30th day of
June, 1999 (this "Agreement"), by and between JACKSON, 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 six million
two hundred and fifty thousand dollars ($6,250,000) 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.
"Bid Price" shall mean the closing bid price of the Common
Stock on the Principal Market.
"Blackout Notice" shall have the meaning specified in the
Registration Rights Agreement.
"Blackout Shares" shall have the meaning specified in Section
2.6.
"By-Laws" shall have the meaning specified in Section 4.8.
"Certificate" shall have the meaning specified in Section
4.8.
<PAGE> 6
"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
twentieth (20th) Trading Day following the Put Date related to such Closing, or
such earlier date as the Company and Investor shall agree, provided all
conditions to such Closing have been satisfied on or before such Trading Day.
"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).
"Discount" shall mean twenty percent (20%).
"Dispute Period" shall have the meaning specified in Section
9.3(a).
"DTC" shall the meaning specified in Section 2.3.
2
<PAGE> 7
"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" on any given date shall mean the average of
the Bid Prices for the twenty (20) Trading Days immediately following the Put
Date.
"Maximum Commitment Amount" shall mean six million two
hundred and fifty thousand dollars ($6,250,000), subject to increase as agreed
to by the Company and Investor.
"Minimum Commitment Amount" shall mean two hundred fifty
thousand dollars ($250,000).
"Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects or financial condition of the
Company that is material and
3
<PAGE> 8
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 Put Amount" shall mean, with respect to any Put, one
million five hundred thousand dollars ($1,500,000), 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.
"Purchase Price" shall mean, with respect to a Put, the
Market Price on the applicable Put 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.
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"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, (b)
the Blackout Shares and (c) 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 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.
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"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 file 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 twenty (20) 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).
"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:
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(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.
"Valuation Period" shall mean the period of twenty (20)
Trading Days immediately following the date on which the applicable Put Notice
is deemed to be delivered 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
twentieth 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) Minimum Amount of Puts. The Company shall, in
accordance with Section 2.2(a), deliver to Investor during the Commitment
Period, Put Notices with an aggregate Investment Amount at least equal to the
Minimum Commitment Amount. If the Company for any reason fails to issue and
deliver such Put Shares during the Commitment Period, on the first Trading Day
after the expiration of the Commitment Period, the Company shall wire to
Investor a sum in immediately available funds equal to the product of (i) the
Minimum Commitment Amount minus the aggregate Investment Amounts of the Put
Notices delivered to Investor hereunder and (ii) the Discount.
(c) 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 1,263,831 shares of Common Stock (representing approximately 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
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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 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 Special Circumstances; Adjustment Period.
(a) Adjustment Period Notice. In the event that the Company
shall in good faith anticipate executing an agreement of acquisition, merger or
consolidation within ninety (90) days after giving Investor Adjustment Period
Notice (as defined below), the Company may, in its sole discretion, give
Investor at least twenty-one (21) days irrevocable advance notice, in the form
of Exhibit B hereto ("Adjustment Period Notice"), that the Company shall
initiate an Adjustment Period (as defined below). The Company shall not give
such Adjustment Period Notice if it constitutes the disclosure of material
non-public information to Investor.
(b) Actions During the Adjustment Period. During the
Adjustment Period:
(i) the Discount shall be increased to {twenty-one
percent (21%)};
(ii) the duration of the Trading Cushion shall be
shortened to ten (10) Trading Days until the expiration of five (5) consecutive
weeks after the date on which the Adjustment Period Notice was given (the
"Adjustment Period"); and
(iii) the Company may not deliver a Put Notice such that
the number of Put Shares to be purchased by Investor upon the applicable
Closing, when aggregated with all other shares of Common Stock then owned by
Investor beneficially or deemed beneficially owned by Investor, would result in
Investor owning more than 4.9% of all of such Common Stock as would be
outstanding on such Closing Date, as determined in accordance with Section
13(d) of the Exchange Act and the regulations promulgated thereunder. For
purposes of this Section 2.4(b)(iii), in the event that the amount of Common
Stock outstanding as determined in accordance with Section 13(d) of the
Exchange Act is greater on a Closing Date than on the date upon which the Put
Notice associated with such Closing Date is given, the amount of Common Stock
outstanding on
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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 4.9% of the Common Stock following such Closing Date.
Section 2.5 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, for any reason other than deferrals
or suspension during a Blackout Period in accordance with the Registration
Rights Agreement, 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 2.6 Blackout Shares. In the event that, (a) within five
Trading Days following any Closing Date, the Company gives a Blackout Notice to
Investor of a Blackout Period in accordance with the Registration Rights
Agreement, and (b) the Bid Price on the Trading Day immediately preceding such
Blackout Period ("Old Bid Price") is greater than the Bid Price on the first
Trading Day following such Blackout Period that Investor may sell its
Registrable Securities pursuant to an effective Registration Statement ("New
Bid Price"), then the Company shall issue to Investor the number of additional
shares of Registrable Securities (the "Blackout Shares") equal to the
difference between (i) the product of the number of Put Shares held by Investor
immediately prior to the Blackout Period that were issued on the most recent
Closing Date (the "Remaining Put Shares") multiplied by the Old Bid Price,
divided by the New Bid Price, and (ii) the Remaining Put Shares.
Section 2.7 Liquidated Damages. Each of the Company and Investor
acknowledge and agree that the sum payable under Section 2.1(b) and the
requirement to issue Blackout Shares under Section 2.6 shall give rise to
liquidated damages and not penalties. Each of the Company and Investor further
acknowledge that (a) the amount of loss or damages likely to be incurred is
incapable or is difficult to precisely estimate, (b) the amounts specified in
such Sections bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by Investor in
connection with the failure by the Company to make Puts with aggregate Purchase
Prices totaling at least the Minimum Commitment Amount or in connection with a
Blackout Period under the Registration Rights Agreement, and (c) each of the
Company and Investor are sophisticated business parties and have been
represented by sophisticated and able legal and financial counsel and
negotiated this Agreement at arm's length.
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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.
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 Delaware 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.
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Section 3.6 Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, and
compliance with the requirements hereof and thereof, will not (a) violate any
law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on Investor, (b) violate any provision of any indenture, instrument or
agreement to which Investor is a party or is subject, or by which Investor or
any of its assets is bound, or conflict with or constitute a material default
thereunder, (c) result in the creation or imposition of any lien pursuant to
the terms of any such indenture, instrument or agreement, or constitute a
breach of any fiduciary duty owed by Investor to any third party, or (d)
require the approval of any third-party (that has not been obtained) pursuant
to any material contract, instrument, agreement, relationship or legal
obligation to which Investor is subject or to which any of its assets,
operations or management may be subject.
Section 3.7 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 3.8 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 3.9 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.
Section 3.10 No SEC or NASD Proceedings. To the knowledge of
Investor, there are no disciplinary proceedings involving Investor or any of
its employees pending before the NASD, the SEC or any other regulatory
authority to which Investor is subject.
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 Allergy
Superstore.Com, Inc. ("ASC"). The Company is duly qualified as a foreign
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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 and
the Blackout Shares, if any; (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 March 31, 1999, the authorized
capital stock of the Company consisted of 50,000,000 shares of Common Stock, of
which 6,144,125 shares were issued and outstanding, and no shares of preferred
stock 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 4.3 Capitalization. As of March 31, 1999, the authorized
capital stock of the Company consisted of 50,000,000 shares of Common Stock, of
which 6,144,125 shares were issued and outstanding, and no shares of preferred
stock 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.
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
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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 and the Blackout Shares, if any in accordance with
the terms and on the bases 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, and the Blackout
Shares, if any, shall be duly and validly issued, fully paid, and
nonassessable. Neither the sales of the Put Shares or the Blackout Shares,
if any, 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 the Blackout Shares, if any, 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 and the Blackout Shares, if any, 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 the Blackout Shares, if
any, 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.
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 and the Blackout Shares, if any, 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
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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 January 1, 1999, no
event has occurred that would have a Material Adverse Effect on the Company,
except as disclosed in the SEC Documents.
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 1, 1998 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 January 1,
1999, 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
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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 or the Blackout
Shares, if any, 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
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.
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Section 5.2 Limitation on Short Sales. Investor and its Affiliates
shall not engage in short sales of the Common Stock; provided, however, that
Investor may enter into any short sale or other hedging or similar arrangement
it deems appropriate with respect to Put Shares after it receives a Put Notice
with respect to such Put Shares so long as such sales or arrangements do not
involve more than the number of such Put Shares (determined as of the date of
such Put Notice). Investor and its Affiliates agree to provide to the Company
upon written request from time to time its securities trading records in order
to demonstrate that it has complied with this Section 5.2.
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 any obligation to issue the Put Shares and the
Blackout Shares, if any. The number of shares so reserved from time to time, as
theretofore increased or reduced as hereinafter provided, may be reduced by the
number of shares actually delivered 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 and the Blackout Shares, if any, 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 the Blackout Shares, if any, 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.
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.
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Section 6.5 Legends. The certificates evidencing the Put Shares and
the Blackout Shares, if any, 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 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
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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.
Section 6.11 Issuance of Put Shares and Blackout Shares. The sale of
the Put Shares, the issuance of the Blackout Shares, if any, 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.
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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 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, and
in any event no later than ninety (90) days after filing of the Initial
Registration Statement. 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
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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 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.
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(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 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 and Blackout Shares, if any, would own more than 9.9% of the
Common Stock following such Closing Date.
(k) Minimum Bid Price. The average of the Bid Prices for
the twenty (20) Trading Days immediately preceding the Put Notice shall have
equaled or exceeded $1.00 (as adjusted for stock splits, stock dividends,
reverse stock splits, and similar events).
(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.
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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 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
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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
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
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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.
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.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Attention: Timothy C. Moses
Telephone: (770) 925-3432
Facsimile: (770) 921-1065
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with a copy (which shall not constitute notice) to:
Sims Moss Kline & Davis LLP
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
Telephone: (770) 481-7201
Facsimile: (770) 481-7210
if to Investor:
Jackson, LLC
Executive Pavilion
90 Grove Street
Ridgefield, Connecticut 06877
Attn: Steve Hicks
Telephone: (203) 431-8300
Facsimile: (203) 431-8301
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.
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(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.
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
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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 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
28
<PAGE> 33
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 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.
29
<PAGE> 34
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 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 twelve (12)
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 J.P. Carey Securities, Inc. and Greenfield Capital Partners,
LLC (for which the Company shall be responsible for the fees of such entities)
it has had no dealings in connection with this transaction with any finder or
broker who will demand payment of any
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<PAGE> 35
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 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.
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.
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<PAGE> 36
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 INTENTIONALLY LEFT BLANK]
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<PAGE> 37
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:
JACKSON, LLC
BY: SOUTHRIDGE CAPITAL MANAGEMENT LLC,
GENERAL PARTNER
By:
------------------------------------
Name:
Title:
33
<PAGE> 38
EXHIBIT A
[FORM OF REGISTRATION RIGHTS AGREEMENT]
<PAGE> 39
EXHIBIT B
ADJUSTMENT PERIOD NOTICE
Notice is hereby granted that the Board of Directors of BioShield
Technologies, Inc. (the "Company") anticipates executing a merger or
acquisition agreement within ninety (90) days of the date hereof.
The following five-week period is hereby designated as an Adjustment
Period pursuant to Section 2.4 of the Private Equity Credit Agreement, dated
June__, 1999, by and between the Company and Jackson, LLC.
Beginning: ________________________________
(no sooner that twenty-one (21) days from the date
this notice is deemed to be delivered)
Expiring: _________________________________
The undersigned has executed this Certificate this ____ day of
________, 19__.
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 40
EXHIBIT C
FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL
<PAGE> 41
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 Jackson, LLC, ("Investor") pursuant
to Article II of the Private Equity Credit Agreement (the "Agreement"), dated
June__, 1999, 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
___________, 199___.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 42
EXHIBIT E
INSTRUCTIONS TO TRANSFER AGENT
<PAGE> 1
EXHIBIT 10.083
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 30,
1999, is made and entered into by and between BIOSHIELD TECHNOLOGIES, INC., a
Georgia corporation (the "Company"), and JACKSON, LLC, a Cayman Island limited
liability company (the "Investor").
WHEREAS, the Company and the Investor have entered into that certain
Private Equity Credit Agreement dated as of the date hereof (the "Investment
Agreement"), pursuant to which the Company may issue and sell, from time to
time, to the Investor up to $6,250,000 worth of shares of its common stock, no
par value per share (the "Common Stock"); and
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Investment Agreement, the Company has
agreed to provide the Investor with certain registration rights with respect to
the Registrable Securities;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein and in the Investment
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound
hereby, the parties hereto agree as follows (capitalized terms used herein and
not defined herein shall have the respective meanings ascribed to them in the
Investment Agreement):
ARTICLE I
REGISTRATION RIGHTS
1.1 Form SB-2 Registration Statements.
(a) Filing of Form SB-2 Registration Statement. Subject to the
terms and conditions of this Agreement, the Company shall (i) prepare and,
within one hundred forty (140) days following the Subscription Date, deliver to
the Investor a draft of a registration statement on Form SB-2 under the
Securities Act (the "Initial Registration Statement") for the registration for
the resale by the Investor of at least one million (1,000,000) Registrable
Securities (the "Initial Registrable Securities") and accompanied or preceded by
a questionnaire (a "Selling Shareholder Questionnaire") and of the type commonly
used for offerings of this kind and (ii) within ten (10) days after the Company
has received comments, if any, and a properly completed Selling Shareholder
Questionnaire from the Investor, file the Initial Registration Statement with
the SEC. Thereafter, if the Company desires to issue and sell to the Investor
any Registrable Securities in addition to the Initial Registrable Securities,
the Company shall first file with the SEC a registration
<PAGE> 2
statement on Form SB-2 under the Securities Act (the Initial Registration
Statement and any subsequent registration statement, each a "Registration
Statement").
(b) Effectiveness of the Initial Registration Statement. The
Company shall use its commercially reasonable efforts (i) to have the Initial
Registration Statement declared effective by the SEC by no later than one
hundred and twenty (120) days after the filing of the Initial Registration
Statement, and (ii) to ensure that the Initial Registration Statement and any
subsequent Registration Statement remains in effect throughout the term of this
Agreement as set forth in Section 4.2, subject to the terms and conditions of
this Agreement.
[(c) Failure to Maintain Effectiveness of a Registration
Statement. In the event the Company fails to maintain the effectiveness of any
Registration Statement (or the underlying prospectus) throughout the term of
this Agreement, other than temporary suspensions permitted by Section 1.1(e),
and the Investor holds any Registrable Securities at any time during the period
of such ineffectiveness (an "Ineffective Period"), the Company shall pay to the
Investor in immediately available funds into an account designated by the
Investor an amount equal to one percent (1%) of the aggregate Purchase Price of
all of the Registrable Securities then held by the Investor for each thirty (30)
calendar day period (prorated for partial periods) of such Ineffective Period;
provided, that the Company shall be entitled to credit against any such payment
the value of the Blackout Shares (based on the applicable New Bid Price) issued
to the Investor pursuant to Section 2.6 of the Investment Agreement. The
payments required by this Section 1.1(d) shall be made on the first Trading Day
after the earliest to occur of (i) the expiration of the Commitment Period, and
(ii) the expiration of an Ineffective Period (or if an Ineffective Period shall
last more than thirty (30) calendar days, the expiration of each thirty (30)
calendar days of an Ineffective Period).]
(d) Deferral or Suspension During a Blackout Period.
Notwithstanding the provisions of Section 1.1 (c), if the Company shall furnish
to the Investor notice (a "Blackout Notice") signed by the Chief Executive
Officer or Chief Financial Officer of the Company stating that he has determined
in good faith that it would be seriously detrimental to the Company and its
shareholders for the Initial Registration Statement to be filed (or for any
Registration Statement to remain in effect) and it is therefore desirable to
defer the filing of such Initial Registration Statement (or temporarily suspend
the effectiveness of any Registration Statement or use of the related
prospectus), the Company shall have the right (i) immediately to defer such
filing for a period of not more than thirty (30) days beyond the date by which
such Initial Registration Statement was otherwise required hereunder to be filed
or (ii) suspend the effectiveness of any Registration Statement for a period of
not more than thirty (30) days (any such deferral or suspension period of up to
thirty days, a "Blackout Period"). The Investor acknowledges that it would be
seriously detrimental to the Company and its shareholders for such initial
Registration Statement to be filed (or for any Registration Statement to remain
in effect) during a Blackout Period and therefore essential to defer such filing
(or suspend such effectiveness) during such Blackout Period, and
2
<PAGE> 3
agrees to cease any disposition of Registrable Securities during such Blackout
Period. The Company may not utilize any of its rights under this Section 1.1(d)
to defer the filing of a Registration Statement (or suspend its effectiveness)
more than twice in any twelve (12) month period. Following such deferral or
suspension, the Investor shall be entitled to such additional number of shares
of Common Stock as set forth in Section 2.7 of the Investment Agreement.
(e) Liquidated Damages. The Company and the Investor hereto
acknowledge and agree that the sums payable under subsection 1(c) above shall
constitute liquidated damages and not penalties. The parties further acknowledge
that (i) the amount of loss or damages likely to be incurred is incapable or is
difficult to precisely estimate, (ii) the amounts specified in such subsections
bear a reasonable relationship to, and are not plainly or grossly
disproportionate to, the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of a
Registration Statement, (iii) one of the reasons for the Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are sophisticated business parties and have been represented by
sophisticated and able legal counsel and negotiated this Agreement at arm's
length.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1 Filings; Information. The Company will effect the
registration and sale of the Registrable Securities in accordance with the
intended methods of disposition thereof. Without limiting the foregoing, the
Company in each such case will do the following as expeditiously as possible,
but in no event later than the deadline, if any, prescribed therefor in this
Agreement:
(a) The Company shall (i) prepare and file with the SEC 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, that counsel for
the Company shall deem appropriate and which form shall be available for the
sale of the Registrable Securities to be registered thereunder in accordance
with the provisions of this Agreement and in accordance with the intended method
of distribution of such Registrable Securities); (ii) use commercially
reasonable efforts to cause such filed Registration Statement to become and
remain effective (pursuant to Rule 415 under the Securities Act or otherwise);
(iii) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for the time period
prescribed by Section 1.1(b); and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
3
<PAGE> 4
by such Registration Statement during such period in accordance with the
intended methods of disposition by the Investor set forth in such Registration
Statement.
(b) The Company shall file all necessary amendments to any
Registration Statement in order to effectuate the purpose of this Agreement and
the Investment Agreement.
(c) No later than five (5) days prior to filing any amendment
or supplement to the Initial Registration Statement or any subsequent
Registration Statement or prospectus, or any amendment or supplement thereto
(excluding, in each case, amendments deemed to result from the filing of
documents incorporated by reference therein), or such shorter period as is
reasonable under the circumstances, the Company shall deliver to the Investor
and one firm of counsel representing the Investor, in accordance with the notice
provisions of Section 4.8, copies of such Registration Statement as proposed to
be filed, together with exhibits thereto, which documents will be subject to
review by the Investor and such counsel, and thereafter deliver to the Investor
and such counsel, in accordance with the notice provisions of Section 4.8, such
number of copies of the Registration Statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus included
in such Registration Statement (including each preliminary prospectus) and such
other documents or information as the Investor or counsel may reasonably request
in order to facilitate the disposition of the Registrable Securities.
(d) The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each seller of Registrable Securities covered by a
Registration Statement, such number of conformed copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in any Registration Statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
seller's Registrable Securities, and such other documents, as such seller may
reasonably request to facilitate the disposition of its Registrable Securities.
(e) After the filing of a Registration Statement, the Company
shall promptly notify the Investor of any stop order issued or threatened by the
SEC in connection therewith and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
(f) The Company shall use its commercially reasonable efforts
to (i) register or qualify the Registrable Securities under such other
securities or blue sky laws of such jurisdictions in the United States as the
Investor may reasonably request in light of its intended plan of distribution
and (ii) cause the Registrable Securities to be registered with or approved by
such other governmental agencies or authorities in the United States
4
<PAGE> 5
as may be necessary by virtue of the business and operations of the Company, and
do any and all other acts and things that may be reasonably necessary or
advisable to enable the Investor to consummate the disposition of the
Registrable Securities in light of its intended plan of distribution; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (f), subject itself to taxation in any such jurisdiction,
or consent or subject itself to general service of process in any such
jurisdiction.
(g) The Company shall immediately notify the 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: (i)
receipt of any request by the SEC or any other federal or state governmental
authority for additional information, amendments or supplements to such
Registration Statement or related prospectus; (ii) the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of such Registration Statement or notification of the
initiation of any proceedings for that purpose; (iii) 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; (iv) 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 such Registration Statement, related
prospectus or documents so that, in the case of such 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, in the light of the circumstances under which they were
made, 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 (v) the
Company's reasonable determination that a post-effective amendment to such
Registration Statement would be appropriate, and the Company will promptly make
available to the Investor any such supplement or amendment to the related
prospectus.
(h) The Company shall enter into customary agreements and take
such other customary actions as are reasonably required in order to expedite or
facilitate the disposition by the Investor of such Registrable Securities
(whereupon the Investor may, at its option, require that any or all of the
representations, warranties and covenants of the Company also be made to and for
the benefit of the Investor).
(i) The Company shall make available to the Investor (and will
deliver to Investor's counsel), subject to restrictions imposed by the United
States federal government or any agency or instrumentality thereof, copies of
all correspondence between the SEC and the Company, its counsel or its auditors
and will also make available for inspection by the Investor and any attorney,
accountant or other professional retained
5
<PAGE> 6
by the Investor (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers
and employees to supply all information reasonably requested by any Inspectors
in connection with a Registration Statement. Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in any Registration Statement or (ii) the disclosure or release of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other legal process; provided,
however, that prior to any disclosure or release pursuant to clause (ii), the
Inspectors shall provide the Company with prompt notice of any such request or
requirement so that the Company may seek an appropriate protective order or
waive such Inspectors' obligation not to disclose such Records; and, provided,
further, that if failing the entry of a protective order or the waiver by the
Company permitting the disclosure or release of such Records, the Inspectors,
upon advice of counsel, are compelled to disclose such Records, the Inspectors
may disclose that portion of the Records that counsel has advised the Inspectors
that the Inspectors are compelled to disclose. The Investor agrees that
information obtained by it as a result of such inspections (not including any
information obtained from a third party who, insofar as is known to the Investor
after reasonable inquiry, is not prohibited from providing such information by a
contractual, legal or fiduciary obligation to the Company) shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such information
has been made generally available to the public. The Investor further agrees
that it will, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction, give notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential.
(j) The Company shall otherwise comply with all applicable
rules and regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act.
(k) The Company may require the Investor to promptly furnish
in writing to the Company such information as may be legally required in
connection with such registration including, without limitation, all such
information as may be requested by the SEC or the NASD. The Investor agrees to
provide such information requested in connection with such registration within
five (5) calendar days after receiving such written request, or such shorter
period as is reasonable under the circumstances, and the Company shall not be
responsible for any delays in obtaining or maintaining the effectiveness of any
Registration Statement caused by the Investor's failure to timely provide such
information.
6
<PAGE> 7
Section 2.2 Registration Expenses. In connection with each Registration
Statement, the Company shall pay all registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"),
including, without limitation: (a) all registration, filing, securities exchange
listing and fees required by the NASD, (b) all registration, filing,
qualification and other fees and expenses of compliance with securities or blue
sky laws (including reasonable fees and disbursements of counsel for the
Company), (c) all word-processing, duplicating, printing, messenger and delivery
expenses, (d) the Company's internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), and (e) reasonable fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified public
accountants retained by the Company.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1 Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Investor, its partners, Affiliates, officers,
directors, employees and duly authorized agents, and each Person or entity, if
any, who controls the Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with the partners,
Affiliates, officers, directors, employees and duly authorized agents of such
controlling Person or entity (collectively, the " Controlling Persons"), from
and against any loss, claim, damage, liability, costs and expenses (including,
without limitation, reasonable attorneys' fees and disbursements and costs and
expenses of investigating and defending any such claim) (collectively,
"Damages"), joint or several, and any action or proceeding in respect thereof to
which the Investor, its partners, Affiliates, officers, directors, employees and
duly authorized agents, and any Controlling Person, may become subject under the
Securities Act or otherwise, as incurred, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or prospectus relating to the
Registrable Securities or arises out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made, except insofar as any such untrue
statement, alleged untrue statement, omission or alleged omission is made in
reliance upon and in conformity with written information furnished to the
Company by the Investor which is specifically intended by the Investor for use
in the preparation of any such Registration Statement, preliminary prospectus or
prospectus, and shall reimburse the Investor, its partners, Affiliates,
officers, directors, employees and duly authorized agents, and each such
Controlling Person, for any legal and other expenses reasonably incurred by the
Investor, its partners, Affiliates, officers, directors, employees and duly
authorized agents, or any such Controlling Person, as incurred, in investigating
7
<PAGE> 8
or defending or preparing to defend against any such Damages or actions or
proceedings; provided, however, that the Company shall not be liable to the
Investor to the extent that any such Damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Investor failed to send or deliver a copy of the final prospectus delivered by
the Company to the Investor with or prior to the delivery of written
confirmation of the sale by the Investor to the Person asserting the claim from
which such Damages arise, and (ii) the final prospectus would have corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission.
(b) Indemnification by the Investor. The Investor agrees to
indemnify and hold harmless the Company, its Affiliates, officers, directors,
employees and duly authorized agents, and each Controlling Persons of the
Company, from and against any and all Damages, joint or several, and any action
or proceeding in respect thereof to which the Investor, its partners,
Affiliates, officers, directors, employees and duly authorized agents, and any
such Controlling Person, may become subject under the Securities Act or
otherwise, as incurred, insofar as such Damages (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or prospectus relating to the Registrable
Securities or arises out of, or are based upon, any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made, but only to the extent that any such untrue statement,
alleged untrue statement, omission or alleged omission is made in reliance upon
and in conformity with written information furnished to the Company by the
Investor which is specifically intended for by the Investor for use in the
preparation of any such Registration Statement, preliminary prospectus or
prospectus, and shall reimburse the Company, its partners, Affiliates, officers,
directors, employees and duly authorized agents, and each such Controlling
Person, for any legal and other expenses reasonably incurred by the Investor,
its partners, Affiliates, officers, directors, employees and duly authorized
agents, or any such Controlling Person, as incurred, in investigating or
defending or preparing to defend against any such Damages or actions or
proceedings.
Section 3.2 Conduct of Indemnification Proceedings. Promptly after
receipt by any person or entity in respect of which indemnity may be sought
pursuant to Section 3.1 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the person or entity against whom such indemnity
may be sought (the "Indemnifying Party"), notify the Indemnifying Party in
writing of the claim or the commencement of such action. In the event an
Indemnified Party shall fail to give such notice as provided in this Section 3.2
and the Indemnifying Party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, the indemnification provided for in Section 3.1
shall be reduced to the extent of any actual prejudice resulting from such
failure to so notify the Indemnifying Party; provided, however, that the failure
to notify the Indemnifying Party shall not relieve the Indemnifying Party from
8
<PAGE> 9
any liability that it may have to an Indemnified Party otherwise than under
Section 3.1. If any such claim or action shall be brought against an Indemnified
Party, and it shall notify the Indemnifying Party thereof, the Indemnifying
Party shall be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified Indemnifying Party, to assume
the defense thereof with counsel reasonably satisfactory to the Indemnified
Party. After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such claim or action, the Indemnifying Party
shall not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party and its Controlling Persons who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party,
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the reasonable judgment of
the Indemnifying Party and the Indemnified Party, representation of both parties
by the same counsel would be inappropriate due to actual or potential conflicts
of interest between them, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity is sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such claim or
proceeding. Whether or not the defense of any claim or action is assumed by the
Indemnifying Party, such Indemnifying Party will not be subject to any liability
for any settlement made without its consent, which consent will not be
unreasonably withheld.
Section 3.3 Other Indemnification. Indemnification similar to that
specified in the preceding paragraphs of this Article III (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
Section 3.4 Contribution. If the indemnification and reimbursement
obligations provided for in any section of this Article III is unavailable or
insufficient to hold harmless the Indemnified Parties in respect of any Damages
referred to herein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the
9
<PAGE> 10
amount paid or payable by such Indemnified Party as a result of such Damages as
between the Company on the one hand and the Investor on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
the Investor in connection with such statements or omissions, as well as other
equitable considerations. The relative fault of the Company on the one hand and
of the Investor on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 3.4 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
ARTICLE IV
MISCELLANEOUS
Section 4.1 No Outstanding Registration Rights. The Company represents
and warrants to the Investor that there is not in effect on the date hereof any
agreement by the Company pursuant to which any holders of securities of the
Company have a right to cause the Company to register or qualify such securities
under the Securities Act or any securities or blue sky laws of any jurisdiction,
except for those warrants issued to investors in February and March 1998 to
purchase shares of Common Stock and warrants to purchase shares of Common Stock
issued to the Company's underwriters in connection with the Company's initial
public offering in September of 1998.
Section 4.2 Term. The obligations of the Company and the rights
provided to the holders of Registrable Securities hereunder shall terminate at
such time as all the Commitment Period has expired and any Registrable
Securities theretofore issued have ceased to be Registrable Securities in
accordance with the definition thereof contained in the Investment Agreement.
Notwithstanding the foregoing, Section 1.1(c) and (d), Article III, Section 4.8,
and Section 4.9, shall survive the termination of this Agreement.
Section 4.3 Rule 144. The Company will use its commercially reasonable
efforts to file in a timely manner information, documents and reports in
compliance with the
10
<PAGE> 11
Securities Act and the Exchange Act and will, at its expense, promptly take such
further action as holders of Registrable Securities may reasonably request to
enable such holders of Registrable Securities to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act ("Rule 144"), as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. If at any time the Company is not
required to file such reports, it will, at its expense, forthwith upon the
written request of any holder of Registrable Securities, make available adequate
current public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 or such other information as necessary to permit
sales pursuant to Rule 144. Upon the request of the Investor, the Company will
deliver to the Investor a written statement, signed by the Company's principal
executive or financial officer, as to whether it has complied with such
requirements.
Section 4.4 Certificate. The Company will, at its expense, forthwith
upon the request of any holder of Registrable Securities, deliver to such holder
a certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's SEC
file number, (d) the number of shares of each class of Stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least ninety (90) days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder.
Section 4.5 Amendment and Modification. No provision of this Agreement
may be waived, unless such waiver is set forth in a writing executed by both
parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
Section 4.6 Successors and Assigns; Entire Agreement. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto
11
<PAGE> 12
and their respective successors and permitted assigns. The Investor may assign
its rights under this Agreement to any subsequent holder of the Registrable
Securities, provided that the Company shall have the right to require any holder
of Registrable Securities to execute a counterpart of this Agreement as a
condition to such holder's claim to any rights hereunder. This Agreement,
together with the Investment Agreement, sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
Section 4.7 Severability. 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 4.8 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.
Suite B109
4405 International Blvd.
Norcross, Georgia 30093
Telephone: (770) 925-3432
Facsimile: (770) 921-1065
with a copy (which shall not constitute notice) to:
12
<PAGE> 13
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
Telephone: (770) 481-7201
Facsimile: (770) 481-7210
if to Investor: Jackson, LLC
Executive Pavilion
90 Grove Street
Ridgefield, Connecticut 06877
Attn: Steve Hicks
Telephone: (203) 431-8300
Facsimile: (203) 431-8301
Either party hereto may from time to time change its address
or facsimile number for notices under this Section 4.8 by giving at least ten
(10) days' prior written notice of such changed address or facsimile number to
the other party hereto.
Section 4.9 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. The parties hereto 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 4.10 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 4.11 Counterparts. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties 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
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 4.12 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.
13
<PAGE> 14
Section 4.13 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
BIOSHIELD TECHNOLOGIES, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
JACKSON, LLC
BY: SOUTHRIDGE CAPITAL MANAGEMENT LLC,
GENERAL PARTNER
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
15
<PAGE> 1
EXHIBIT 10.084
BIOSHIELD TECHNOLOGIES, INC.
4405 INTERNATIONAL BLVD.
NORCROSS, GEORGIA 30093
June 30, 1999
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
ATTENTION: COMPLIANCE DEPARTMENT
Dear Sir or Madam:
Reference is made to the Private Equity Credit Agreement (the
"Agreement"), dated as of June 30, 1999, between Jackson LLC (the "Investor")
and BioShield Technologies, Inc. (the "Company"). Pursuant to the Agreement,
subject to the terms and conditions set forth in the Agreement the Investor has
agreed to purchase from the Company and the Company has agreed to sell to the
Investor from time to time during the term of the Agreement shares of common
stock of the Company, no par value per share (the "Common Stock"). As a
condition to the effectiveness of the Agreement, the Company has agreed to issue
to you, as the transfer agent for the Common Stock (the "Transfer Agent"), these
instructions relating to the Common Stock to be issued to the Investor (or a
permitted assignee) pursuant to the Agreement. All terms used herein and not
otherwise defined shall have the meaning set forth in the Agreement.
1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND.
Pursuant to the Agreement, the Company is required to prepare and file
with the Commission, and maintain the effectiveness of, a registration statement
or registration statements registering the resale of the Common Stock to be
acquired by the Investor under the Agreement. The Company will advise the
Transfer Agent in writing of the effectiveness of any such registration
statement promptly upon its being declared effective. The Transfer Agent shall
be entitled to rely on such advice and shall assume that the effectiveness of
such registration statement remains in effect unless the Transfer Agent is
otherwise advised in writing by the Company and shall not be required to
independently confirm the continued effectiveness of such registration
statement. In the circumstances set forth in the following two paragraphs, the
Transfer Agent shall deliver to the delivering broker certificates representing
Common Stock not bearing the Legend without requiring further advice or
instruction or additional documentation from the Company or its counsel or the
Investor or its counsel or any other party (other than as described in such
paragraphs).
At any time after the effective date of the applicable registration
statement (provided that the Company has not informed the Transfer Agent in
writing that such registration statement is not then effective), upon any
surrender of one or more certificates evidencing Common Stock which bear the
Legend, to the extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered, the Transfer Agent
shall deliver to the delivering broker the
<PAGE> 2
American Stock Transfer & Trust Co.
June 30, 1999
Page 2
certificates representing the Common Stock not bearing the Legend, in such names
and denominations as such broker shall request, provided that, in connection
with such event, the delivering broker (or its permitted assignee) shall confirm
in writing to the Transfer Agent and the Company that (i) the Investor has sold,
pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer
such Common Stock in a bona fide transaction to a designated transferee that is
not an affiliate of the Company; and (ii) the delivering broker has complied
with the prospectus delivery requirements under the Securities Act of 1933, as
amended.
Any advice, notice or instructions to the Transfer Agent required or
permitted to be given hereunder may be transmitted via facsimile to the Transfer
Agent's facsimile number of (303) 234- 5340.
2. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON
STOCK.
In connection with any Closing pursuant to which the Investor acquires
Common Stock under the Agreement, the Transfer Agent shall deliver certificates
representing Common Stock (with or without the Legend, as appropriate) as
promptly as practicable, but in no event later than three business days, after
such Closing.
3. FEES OF TRANSFER AGENT; INDEMNIFICATION.
The Company agrees to pay the Transfer Agent for all fees incurred in
connection with these Irrevocable Instructions. The Company agrees to indemnify
the Transfer Agent and its officers, employees and agents, against any losses,
claims, damages or liabilities, joint or several, to which it or they become
subject based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions.
4. THIRD PARTY BENEFICIARY.
The Company and the Transfer Agent acknowledge and agree that the
Investor is an express third party beneficiary of these Irrevocable Instructions
and shall be entitled to rely upon, and enforce, the provisions hereof.
BIOSHIELD TECHNOLOGIES, INC.
By:
-----------------------------------------
Name: Timothy C. Moses
Title: President and Chief Executive Officer
2
<PAGE> 3
American Stock Transfer & Trust Co.
June 30, 1999
Page 3
AGREED AND ACCEPTED:
AMERICAN STOCK TRANSFER & TRUST CO.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
3
<PAGE> 1
EXHIBIT 10.085
STATE OF GEORGIA
COUNTY OF GWINNETT
LEASE
5655 Peachtree Parkway
THIS LEASE, made this ___________ day of _______________, ______, between
COLOGNE INVESTORS, LIMITED and ERWIN WALTER GRAEBNER (herein collectively
called "Lessor"), and BIOSHIELD TECHNOLOGIES, INCORPORATED (herein called
"Lessee");
W I T N E S S E T H: THAT
WHEREAS, Lessor is the owner of that certain building situated at 5655
Peachtree Parkway, Norcross, Gwinnett County, Georgia (herein called the
"Building") and located on the land (herein called the "Land") described on
EXHIBIT "A", attached hereto and by this reference incorporated herein and made
a part hereof; and
WHEREAS, Lessee wishes to lease from Lessor: (i) all of the Building,
including the whole approximate 55,324 rentable square feet therein, and the
Building layout is shown on EXHIBIT "B" attached hereto and by this reference
incorporated herein and made a part hereof, and (ii) the exclusive right to use
the "Common Areas" (as defined herein) located on the Land (the Building and
the Land including all Common Areas are herein called the "Premises");
NOW, THEREFORE, in consideration of the payment of the rent and the
keeping and performance of the covenants and agreements by Lessee as
hereinafter set forth, Lessor does hereby lease to Lessee, and Lessee does
hereby lease from Lessor, the Premises. Lessee accepts the Premises in "as is"
condition, provided that Lessor represents and warrants that as of the
Commencement Date, all HVAC and mechanical building systems will be in good
operating condition consistent with such systems' age and prior use, but Lessor
makes no continuing warranty. LESSEE HEREBY ACKNOWLEDGES THAT LESSOR HAS NOT
MADE ANY REPRESENTATION OR WARRANTY AS TO THE SUITABILITY OF THE PREMISES FOR
THE CONDUCT OF LESSEE'S BUSINESS. No easement for light or air is included in
the Premises.
FOR AND IN CONSIDERATION of the leasing of the Premises as aforesaid, the
parties hereby covenant and agree as follows:
1. TERM; OCCUPANCY; RENT COMMENCEMENT. The term (herein called the "Lease
Term") of this Lease shall commence on , 1999 (herein called the "Commencement
Date") and, unless sooner terminated under the provisions hereof, shall expire
at 11:59 p.m. on the day before the date which is the last day of the one
hundred twentieth (120th) full calendar month after the Commencement Date.
Lessee shall be obligated to occupy the Premises as of the Commencement Date,
and whether or not Lessee does so occupy the Premises, the obligations of
Lessee to pay all rents and other amounts under this Lease shall commence ten
(10) days after the execution of this Lease by all parties.
2. RENT.
2.1 The annual base rental (herein called "Annual Base Rental"
or "Base Rent") for the Premises shall be as follows:
<TABLE>
<CAPTION>
- ------------------------------ ---------------------------- --------------------------- ----------------------------
MONTHS ANNUAL P.R.S.F. MONTHLY RENTAL ANNUAL RENTAL
- ------------------------------ ---------------------------- --------------------------- ----------------------------
<S> <C> <C> <C>
1-12 $6.50 $29,967.17 $359,606.00
- ------------------------------ ---------------------------- --------------------------- ----------------------------
13-24 $13.26 $61,133.02 $733,596.24
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
25-36 $13.53 $62,377.81 $748,533.72
- ------------------------------ ---------------------------- --------------------------- ----------------------------
37-48 $13.80 $63,622.60 $763,471.20
- ------------------------------ ---------------------------- --------------------------- ----------------------------
49-60 $14.08 $64,913.49 $778,961.92
- ------------------------------ ---------------------------- --------------------------- ----------------------------
61-72 $14.36 $66,204.39 $794,452.64
- ------------------------------ ---------------------------- --------------------------- ----------------------------
MONTHS ANNUAL P.R.S.F. MONTHLY RENTAL ANNUAL RENTAL
- ----------------------------- ---------------------------- --------------------------- ----------------------------
73-84 $14.65 $67,541.38 $810,496.60
- ------------------------------ ---------------------------- --------------------------- ----------------------------
85-96 $14.94 $68,878.38 $826,540.56
- ------------------------------ ---------------------------- --------------------------- ----------------------------
97-108 $15.24 $70,261.48 $843,137.75
- ------------------------------ ---------------------------- --------------------------- ----------------------------
109-120 $15.54 $71,644.58 $859,734.96
- ------------------------------ ---------------------------- --------------------------- ----------------------------
</TABLE>
2.2 Lessee shall pay the rent and all other sums, amounts,
liabilities, and obligations which Lessee herein assumes or agrees to pay,
whether designated Annual Base Rental, additional rent, costs, expenses,
damages, losses, or otherwise, (all of which are herein collectively called
"Amount Due") as herein provided promptly at the times and in the manner herein
specified without deduction, setoff, abatement, counterclaim, or defense. If
any Amount Due is not received by Lessor within ten (10) days after the date on
which it is due, Lessee shall pay Lessor a late charge equal to five percent
(5%) of the amount of such past due payment, notwithstanding the date on which
such payment is actually paid to Lessor. If such Amount Due is not paid within
thirty (30) days of the date on which it was originally due, then, in addition
to such late charge, Lessee shall pay Lessor interest on such Amount Due from
the date on which it was originally due until the date it is actually paid at
the rate of twelve (12%) percent per annum. Any such late charge and interest
shall be due and payable at the time of actual payment of the Amount Due. Any
Amount Due payable to Lessor by Lessee shall be paid in cash or by check at the
following location, c/o Technology Park/Atlanta, Inc., Suite 150, 11555 Medlock
Bridge Road, Duluth, Georgia 30097, or at such other place or places as Lessor
may from time to time designate in writing.
2.3 Contemporaneously with the execution of this Lease, Lessee
shall pay Lessor a security deposit in the amount of FIFTY NINE THOUSAND NINE
HUNDRED THIRTY FOUR AND 33/100 DOLLARS ($59,934.33) (herein called the
"Security Deposit") to be held by Lessor for the performance by Lessee of
Lessee's covenants and obligations under this Lease. If Lessee shall at any
time fail to pay any Amount Due, Lessor may, but shall not be obligated to,
from time to time and without prejudice to any other remedy, apply all or any
portion of the Security Deposit to the extent necessary toward the payment of
any such Amount Due. In the event Lessor applies the Security Deposit or a
portion thereof as provided in this Section 2.3, Lessee shall immediately upon
notice from Lessor of such application pay the amount so applied to Lessor, it
being the intent of the parties that the Security Deposit held by Lessor always
be in the amount stated above. It is expressly understood and agreed, however,
that the Security Deposit shall not be considered an advance payment of rent or
a measure of Lessor's damages in the event of any default by Lessee. If, at the
expiration or termination of this Lease, Lessee is not in default hereunder,
the Security Deposit shall be returned by Lessor to Lessee without interest.
Lessor agrees to keep the Security Deposit in a separate escrow account in the
name of Lessor, but not commingled with any other funds of the Lessor, with a
financial institution whose deposits are insured by the federal government, for
purposes of ensuring availability of such Security Deposit for purposes of the
same under this Lease.
2.4 Base Rent shall be paid monthly in advance on the first day
of each calendar month in the Lease Term. The Base Rent for the first month
shall be prorated and due when Lessee's payment obligations commence under
Section 1.
3. NET LEASE. This lease is a "net" lease. It is the intention
and purpose of the parties that Lessor shall receive the Base Rent, additional
rent, and other amounts constituting the Amount Due as income or expense
2
<PAGE> 3
reimbursements from the Premises totally net of expenses. Lessee shall bear,
pay for, and discharge not only such items as Lessee has specifically agreed by
the provisions of this Lease to pay, but also all other costs, charges, and
expenses of every reasonable kind and nature with respect to the ownership,
occupancy, and operation of the Premises, including but not limited to costs,
charges, and expenses associated with maintenance and repair, taxes and
assessments, insurance, management, and utilities, for or of the Premises,
except only any such cost, charge, or expense which Lessor expressly agrees in
this Lease to pay or not to charge to Lessee; provided that Lessee shall not be
required to pay any additional amount for (a) income tax imposed on Lessor on
account of income from the Premises or (2) amounts owed by Lessor under any
mortgage, security deed, or security agreement on the Premises or any part
thereof. All amounts payable by Lessee hereunder in addition to the Base Rent
shall be deemed to be additional rent.
4. SHARED EXPENSES.
4.1 During the Lease Term, Lessee shall pay to Lessor as
additional rent Lessee's Proportionate Share (as hereinafter defined) of Shared
Expenses (as hereinafter defined). Lessee shall also pay as additional rent all
other charges, costs and expenses which are not included within Shared Expenses
and which are reasonably incurred by Lessor as a result of any use of the
Premises by Lessee. Such amounts shall be paid to Lessor in equal monthly
installments in advance on the first day of each month of the Lease Term, at
the same time and in the same manner as Base Rent. The dollar amount of
Lessee's Proportionate Share of Shared Expenses shall be prorated as necessary
for any year during which this Lease is in effect for less than the full twelve
month calendar year. Shared Expenses shall be calculated on an accrual basis
and estimated in accordance with Section 4.6 below.
4.2 "TOTAL RENTABLE AREA" shall mean all space within the
Building designed and designated for individual tenant occupancy whether such
space is currently subject to a lease by an individual tenant or not,
including, if any, publicly used areas and areas used in common with other
tenants of the Building, if any. The parties hereby acknowledge that the Total
Rentable Area within the Building is 55,324 square feet.
4.3 "LESSEE'S PROPORTIONATE SHARE" shall mean that proportion
which the area in the Building hereby leased to Lessee bears to the Total
Rentable Area of the Building. Specifically, the parties acknowledge that the
area of the Building occupied by Lessee is 55,324 square feet out of a Total
Rentable Area of 55,324 square feet; therefore, for any applicable period, the
Lessee's Proportionate Share of Shared Expenses, to be paid by Lessee to
Lessor, is 100%. During the Lease Term (and any renewals thereof), should the
Lessor construct additional buildings upon the Land or lease a portion of the
Building to any other tenant who then shares occupancy of the Building with
Lessee, the Lessee's Proportionate Share shall be recalculated to adjust for
the Building square footage then occupied by the Lessee and the Total Rentable
Area of the Building and such additional buildings, and, in the case of such
shared occupancy of the Building, the respective areas of the Building occupied
by Lessee and such other tenant(s) shall be considered in fixing the respective
Proportionate Shares of Lessee and such other tenant(s), provided that the
Common Area shall not be reduced, and the aggregate Proportionate Shares shall
equal 100%.
4.4 For purposes of this Lease, the term "SHARED EXPENSES" shall
mean the operating and maintenance expenses reasonably incurred by Lessor
pertaining to all areas of the Premises (herein called the "COMMON AREA")
including, but not limited to, publicly used areas, if any, and areas such as,
lawns, gardens, sidewalks, driveways and parking lots. Shared Expenses shall
include, but not be limited to:
4.4.1 The wages, salaries and attributable overhead
expenses of all employees engaged in the operation and maintenance of the
Common Area, including employers' Social Security taxes, unemployment, and any
other taxes which may be levied on or with respect to such wages, salaries, and
attributable overhead expenses but excluding interest and penalty charges
arising from late payment, thereof.
4.4.2 The cost of all janitorial and other cleaning
expenses if provided, all office supplies, tools, equipment and materials used
in the operation and maintenance of the Common Area by Lessor.
4.4.3 The cost of water, sewer, heating, lighting,
ventilation, electricity, air conditioning and
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any other utilities supplied or paid for by Lessor and the cost of maintaining
the systems supplying the same.
4.4.4 The cost of all maintenance and service of the
Common Area, including, but not limited to, pest control and the cleaning and
maintenance of equipment, janitorial service, and landscaping maintenance.
4.4.5 The costs of acquiring and installing all sprinkler
systems, fire extinguishers, fire hoses, security services and protective
services or devices rendered to or in connection with the Land and the Building
or any part thereof.
4.4.6 Insurance premiums for insurance for the Premises
or any part thereof required to be maintained by Lessor hereunder or which
Lessor deems reasonably appropriate, including, but not limited to, premiums
for insurance maintained by Lessor under Section 9, business interruption,
rental abatement, or liability insurance.
4.4.7 The cost of repairs and general maintenance of the
Common Area, including, but not limited to: maintenance and cleaning of common
areas and facilities; lawn mowing, gardening, landscaping, and irrigation of
landscaped areas; line painting, pavement maintenance, sweeping, and sanitary
control; removal of snow, trash, rubbish, garbage, and other refuse; the cost
of personnel to implement such services, to direct parking, and to police the
common facilities; the cost of exterior and interior painting; all maintenance
and repair costs incurred under Section 6.1 or Section 10.14; and the cost of
maintenance of sewers and utility lines.
4.4.8 The amortization, together with financing charges,
of the costs of acquiring and installing capital investment items which are
reasonably installed for the purpose of reducing operating expenses, promoting
safety, complying with governmental requirements (other than "Prior ADA and
Code Requirements" as hereinafter defined) or maintaining the quality and
nature of the Premises consistent with the quality and nature of Technology
Park/Atlanta and the Premises prior to and up to the Commencement Date.
4.4.9 All Impositions (as hereinafter defined), taxes,
assessments and governmental or other charges, general or special, ordinary or
extraordinary, foreseen or unforeseen, which are levied, assessed or otherwise
imposed against the Premises, street lights, personal property, or rents, or on
the right or privilege of leasing the Premises or collecting rents therefrom or
from parking vehicles thereon by any federal, state, county or municipal
government or by any special sanitation district or by any other governmental
or quasi-governmental entity that has taxing or assessment authority, and any
other taxes and assessments attributable to the Premises or their operation,
including but not limited to any Impositions payable by Lessor under Section 16
hereof; but exclusive of federal, state or local income taxes of Lessor,
inheritance taxes, estate taxes, gift taxes, transfer taxes, excess profit
taxes and any taxes imposed in lieu of such excluded taxes.
4.4.10 All management expenses attributable to the
Premises, including, but not limited to: administrative expenses associated
with collecting rent, arranging for and assuring continuity of Common Area
services, supervising maintenance or repair, enforcing rules and regulations;
salaries or wages of persons employed or contracted to manage the Premises; the
cost of supplies and materials, equipment and furnishings necessary for such
management functions; the cost of telephone service, attributable overhead
expenses and any other expenses and management fees directly relating to the
management of the Premises.
4.4.11 All assessments, if any, assessed against the
Premises during the Lease Term under any protective covenants now or hereafter
of record against the Premises, including, without limitation, any assessments
imposed for the maintenance and repair of the common areas of Technology Park
under the Protective Covenants described in Section 26.
4.4.12 Those items specified in Section 7.1 hereof which
are Lessor's responsibility to maintain.
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4.5 Nothing contained in this Section 4, including, but not
limited to the definition of "Shared Expenses" contained in Section 4.4 hereof,
shall imply any duty on the part of Lessor to pay any expense or provide any
service. The foregoing sentence is not intended to waive any affirmative
obligations of the Lessor expressly stated elsewhere in this Lease.
4.6 Prior to the Commencement Date and prior to each December 31
thereafter during the Lease Term, Lessor shall estimate the amount of Shared
Expenses and Lessee's Proportionate Share of Shared Expenses for the ensuing
calendar year or, if applicable, remaining portion thereof and notify Lessee in
writing of such estimate. Such estimate shall be made by Lessor in the exercise
of its sole reasonable discretion and in good faith, but shall not be subject
to dispute by Lessee or arbitration. Lessor agrees to provide such estimate in
sufficient detail that Lessee and Lessor can reasonably discuss proposed
expenses, and Lessor agrees to reasonable discussion with Lessee about such
expenses. The amount of additional rent specified in each such notification
shall be paid by Lessee to Lessor in equal monthly installments in advance on
the Commencement Date and on the first day of each calendar month thereafter
during the Lease Term, at the same time and in the same manner as Base Rent.
Attached hereto and expressly incorporated herein as Exhibit "F" is a true
schedule of Lessor's Shared Expenses for calendar years 1996 through 1998
inclusive. Attachment of such Exhibit "F" shall not be construed as a
limitation on any type or amount of expenses to be included in the Shared
Expenses.
4.7 On or before each April 30 during the Lease Term, Lessor
shall advise Lessee of the amount of actual Shared Expenses for such prior
calendar year. If Lessee's Proportionate Share of Shared Expenses for such
calendar year proves to be greater than the estimated amount, Lessor shall
invoice Lessee for the deficiency as soon as practicable after the amount of
underpayment has been determined, and Lessee shall pay such deficiency to
Lessor within fifteen (15) days following its receipt of such invoice. If,
however, Lessee's Proportionate Share of Shared Expenses for such calendar year
is lower than the estimated amount, Lessee shall receive a credit toward the
next ensuing monthly payment or payments of the estimated amount of Lessee's
Proportionate Share of Shared Expenses in an amount of such overpayment until
depleted, provided however that (i) in no event shall Lessee's Proportionate
Share of Shared Expenses be deemed to be less than zero, and (ii) that in the
event of the expiration or other termination of this Lease, Lessee shall be
refunded such overpayment as soon as practicable thereafter after the amount of
overpayment has been determined.
4.8 Lessee may, only one (1) time during each calendar year and
upon ten (10) days' prior written notice to Lessor, at Lessee's expense and at
any reasonable time, audit the books and supporting documentation of Lessor
pertaining exclusively to the types and amounts of Shared Expenses incurred for
either or both of the two immediately previous calendar years (provided,
however, that Lessee shall only have the right to audit records one time for
any calendar year). If Lessee disputes the amount of additional rent due under
Section 4.7 hereof, and Lessor and Lessee are unable to resolve the dispute by
good faith efforts, then Lessee may institute arbitration proceedings and such
dispute shall be settled by arbitration in the Gwinnett County, Georgia, by a
panel of three members in accordance with the rules then in effect of the
American Arbitration Association; provided, however, that Lessee shall
immediately pay any disputed amount to Lessor, and if the arbitrators find that
Lessee has paid more than the Lessee's Proportionate Share of Shared Expenses
for the previous calendar year, Lessor shall immediately refund such
overpayment to Lessee. The decision of the arbitrators acting hereunder shall
be binding and conclusive upon the parties. Lessor and Lessee shall each pay
one-half of the cost of such arbitration; provided, however, that if the
arbitrators determine that the arbitration proceedings were not instituted in
good faith by Lessee, Lessee shall pay the full cost thereof or in the event
the arbitrators determine that the Shared Expenses were not determined in good
faith by Lessor, Lessor shall pay the full cost thereof. Said arbitrators shall
also be empowered to award reasonable attorney's fees and expert witness fees
to the prevailing party in such arbitration.
4.9 Notwithstanding the foregoing, Shared Expenses shall not
include the following:
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(i) Maintenance, repairs and other expenses arising
from gross negligence or willful wrong-doing of Lessor or
its employees;
(ii) Expenses and improvements arising from Lessor's (or
its predecessor's) failure (if any) to construct,
modify, or maintain the Premises so as to comply with
"Prior ADA and Code Requirements" as hereinafter
defined;
(iii) Attorney's fees and collection costs which Lessor
incurs in connection with legal controversies arising
from the actions or dealings of any other actual or
alleged lessee which may use and occupy the Premises;
and
(iv) Lessor's cost of maintaining the exterior
structure, walls and roof of the Building.
4.10 Lessee agrees to consult with Lessor as to any expenses
which Lessee wishes to pay directly for the Premises, which might otherwise be
included in Shared Expenses, and which Lessee's payment will fully discharge
such that inclusion of such expenses in the Shared Expenses would result in
double payment of such expenses, and Lessor agrees to such consultation;
provided that Lessor shall have the option at Lessor's sole discretion of
including such expenses in the Shared Expenses in lieu of Lessee's direct
payment, as reasonably necessary for proper or efficient administration and
management of the Premises.
4.11 The term "Prior ADA and Code Requirements" shall mean
requirements imposed on Lessor or its predecessor as owner of the Premises
before the Commencement Date (a) requiring compliance before the Commencement
Date with the Americans with Disabilities Act ("ADA") or (b) as to any
structure or improvement, if any, whose condition or use before the
Commencement Date and continuing thereafter violates any applicable statute or
code, unless in case of clause (a) or (b), the Lessee's Improvements will
effect such ADA compliance or will correct such statutory or code violation, or
will otherwise make such compliance or correction moot. If the Lessee's
Improvements will effect such compliance or correction, or make such compliance
or correction moot, without additional cost or expense not otherwise required
for Lessee's Improvements, Lessee shall effect or moot such compliance or
correction as part of Lessee's Improvements without any cost or expense to
Lessor other than Lessor's provision of the Allowance. If additional cost or
expense over and above the cost and expense of Lessee's Improvements would be
required to effect such compliance or correction or to make such compliance or
correction moot, Lessee shall nevertheless cooperate with Lessor to provide an
opportunity for Lessor to make or to moot such compliance or correction at
savings in cost and time, if any, in connection with making Lessee's
Improvements. Nothing contained in this section shall impose any obligation
upon Lessee to investigate or otherwise discover any condition falling within
the scope of a Prior ADA and Code Requirement in order to correct, remediate or
eliminate said condition.
4.13 "Amortization" to be included in the Shared Expenses
pursuant to this Section 4 shall be based on straight-line amortization of the
included cost and the standard useful life of such item in the accounting
industry, whether such useful life is longer or shorter than the Lease Term.
Only the portion of such amortization for years included in the Lease Term
shall be included in Shared Expenses.
5. USE.
5.1 Lessee and its permitted assignees and subtenants shall use
the Premises for general office and other uses associated with Lessee's
operations, not in violation of the Protective Covenants (as hereinafter
defined), and for no other purpose without the prior written consent of Lessor.
Lessor acknowledges and approves the use of the Building for research,
laboratory facilities, testing, development, marketing, production, packaging
and shipping operations by Lessee and its affiliated entities in connection
with organic volatile compounds, microbial agents, antimicrobial products
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and prescription drugs, provided such use does not violate any applicable law
or requirement having the force of law, or any of the Protective Covenants, and
does not injure any person or damage any property. Lessee shall operate its
business in the Premises during the entire Lease Term and in a reputable manner
in compliance with all applicable laws, ordinances, regulations, covenants,
restrictions, and other matters shown on the public records, now in force or
hereafter enacted. Lessee will not permit, create, or maintain any disorderly
conduct, trespass, noise, or nuisance whatsoever about the Premises which has a
tendency to annoy or disturb any persons occupying adjacent premises either
within or without the Building.
5.2 Lessee shall not place or maintain machines, equipment, or
other apparatus which causes vibrations or noise that may be transmitted to the
Building structure or to any space to such a degree as to be objectionable to
Lessor or to any other tenant in the Building or to persons having rights to
occupy property adjacent to the Premises. Neither Lessee nor any of Lessee's
employees, agents or invitees shall place or maintain within the Premises any
stoves, ovens or space heaters (other than properly-installed professional
equipment necessary for Lessee's laboratory operations), except with the prior
written consent of Lessor in each instance. Lessee shall not make or permit to
emanate from the premises any smoke or odor that is objectionable to other
occupants of the Building, or to persons having rights to occupy property
adjacent to the Premises, and shall not create, permit, or maintain a public or
private nuisance thereon, or do any act which damages the Premises or would
cause disinterested, impartial persons having expertise as to quality of
buildings in the commercial office market in the vicinity of Technology
Park/Atlanta to characterize the Building as declining in quality on account of
such act below the quality of the Building during its existence prior to the
Commencement Date.
5.3 Lessee shall cause all loading and unloading of any goods or
materials delivered to or sent from the Premises to be done only in the areas
as Lessor may designate. Under no circumstances shall Lessee allow any goods or
materials delivered to or sent from the Premises to be stored on, accumulate on
or obstruct such area, dumpster pad, sidewalks, driveways, parking areas,
entrances or other public areas or spaces of the Building or other parts of the
Premises. Lessee acknowledges that violations of this Section 5.3 shall
constitute a material breach of this Lease.
5.4 Lessee shall not perform or permit any work, including, but
not limited to, assembly, construction, mechanical work, painting, drying,
layout, cleaning, or repair of goods or materials, to be done on the sidewalks,
driveways, parking areas, landscaped areas of the Building or other parts of
the Premises.
5.5 Lessee shall not use, handle, store, deal in, discharge, or
fabricate any environmentally hazardous wastes, substances or materials as the
same are now or hereafter may be defined or classified by any local, state, or
federal environmental protection legislation or regulation issued pursuant
thereto. Notwithstanding the foregoing, Lessee shall be authorized to use,
store, handle and test various organic volatile compounds and microbial agents,
including but not limited to E-coli and Salmonella, in connection with its
usual operations provided that Lessee complies with all laws, requirements
having the force of law, and the Protective Covenants, applicable to the use of
said substances in Lessee's operations, and in such use, storage, handling, and
testing.
5.6 Lessee shall defend, indemnify, and hold harmless Lessor and
Lessor's partners, managers, and employees ("Indemnified Parties") from and
against all claims, actions, demands, losses, liabilities, damages, awards,
fines, penalties, costs, and expenses, including reasonable attorneys' fees,
which are made against or incurred by the Indemnified Parties on account of
Lessee's use of the Premises.
5.7 Technology Park/Atlanta, Inc., as a signatory to this Lease
and as the original Declarant of that certain Declaration of Covenants,
Conditions and Restrictions dated July 2, 1971 [being recorded at Deed Book
389, Pages 636-649, Gwinnett County, Georgia Records] (said instrument and any
amendments thereto being collectively referred to as the "Declaration"),
represents that (i) it is the owner of twenty (20%) percent or more of the
acreage subject to the Declaration; (ii) it holds the controlling vote of the
members of the TP/A Design Control Committee referenced in said
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Declaration; and (iii) the Lessee's use of the Premises, as described in this
Lease, is hereby approved by the Committee and will not violate or breach the
Declaration.
6. UTILITIES AND SERVICE.
6.1 Lessee shall pay during the Lease Term the costs of all
utilities furnished to the Premises, including, without limitation, water, gas,
if any, electricity, sewer and refuse disposal. To the extent water, sewer and
refuse disposal for the Premises are not separately billed to Lessee, the costs
for such services shall be paid by Lessee to Lessor as a Shared Expense. Lessee
shall be solely responsible for the payment of all telephone and cable charges,
including, without limitation, the cost of installation at the Premises of all
telephone and cable equipment which shall be installed at the request of
Lessee. The furnishing of and cost of janitorial services for the Premises
shall be the sole responsibility of Lessee.
6.2 Unless caused by the gross negligence or willful wrongdoing
of the Lessor or its employees, Lessor shall not be held liable for any damage
or injury suffered by Lessee or by any of Lessee's licensees, agents, invitees,
servants, employees, contractors, or subcontractors or any other person or
entity engaged, invited, or allowed to come onto the Premises by Lessee (herein
collectively called "Lessee Parties"), resulting directly, indirectly,
proximately, or remotely from the installation, use, or interruption of any
service to the Premises or Building, including, but not limited to, temporary
failure to supply any heating, air conditioning, electrical, water, or sewer
services, or any of them. No temporary failure to provide services shall
relieve Lessee from fulfillment of any covenant of this Lease, including,
without limitation, the covenant to pay any Amount Due in the manner and
amounts, and promptly at the times set forth herein. The provisions of this
Section 6.2 shall not be construed to impose such gross negligence or willful
wrongdoing standard upon any claim by Lessee against any person other than
Lessor or its employees, nor to permit any lesser standard for any liability by
Lessor or its employees.
7. MAINTENANCE.
7.1 Lessor shall not be obligated to maintain or make any
repairs or replacements to the Premises during the Lease Term other than the
roof, foundation and exterior walls of the Building (excluding, however, glass
doors), and Lessee covenants and agrees to assume all responsibility of other
repair and maintenance of the Premises. Notwithstanding the foregoing, Lessee
shall be responsible for the cost of any and all damage arising from the
negligence or wilful misconduct of Lessee or any of the Lessee Parties.
7.2 Upon commencement of the Lease Term, Lessee shall accept and
occupy the Premises for its intended use. Lessee shall, at its sole cost, risk,
expense and liability, keep and maintain the Premises in good order and repair,
and in compliance with all applicable governmental codes, ordinances and
regulations. Lessee shall also keep all sewer and utility lines including,
without limitation, all sewer connections, plumbing, heating, ventilating and
air conditioning equipment and appliances, wiring and glass, in good order and
repair; (ii) provide janitorial services for the Premises; and (iii) keep the
Premises free from all litter, dirt, debris and obstructions and in a clean and
sanitary condition. At all times the Premises shall be kept in accordance with
the standards then prevailing in Gwinnett County, Georgia submarket for similar
office buildings and common areas, and all such maintenance, repair,
replacement and work performed under this section shall be performed in
accordance with such standards. Actions to be taken by Lessee under the second,
third, and fourth sentences of this Section 7.2 may be taken by a third party
provider of services pursuant to any service contract which Lessor has in
effect for the Premises; provided such actions are fully paid for by Lessee as
Shared Expenses and fully discharge the obligations of Lessee under this
paragraph; and provided, further, that making or keeping any such service
contract in effect, and the terms and conditions thereof, including the extent
to which any such actions may be covered thereby, shall be at Lessor's sole
discretion, and nothing herein shall be construed to impose on Lessor any
obligation to perform any such actions for Lessee or any liability for
non-performance of such actions.
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7.3 At the expiration or other termination of this Lease, Lessee
shall surrender the Premises, and the keys thereto, in as good condition as
when received, loss by fire or other casualty not the result of any act or
omission of Lessee, or ordinary wear and tear only excepted.
7.4 Nothing in this Section 7 shall be deemed to relieve Lessee
from any liability which Lessee may have to Lessor under the terms of this
Lease or otherwise, on account of any damage as may be caused to the Premises
by the negligence or misconduct of Lessee or any of the Lessee Parties.
7.5 As used in this Section 7, "repair and maintenance" shall
include repairs and replacements, and the standard shall be the good, clean and
safe condition of similar office buildings and common areas in Gwinnett County,
Georgia submarket.
8. FORCE MAJEURE. In the event that either party hereto shall be
delayed or hindered in or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, labor troubles, inability to procure
materials, failure of power, restrictive government laws or regulations, riots,
insurrection, war, or (in the case of performance of any construction) severely
inclement weather which prevents construction, or other reason of a like nature
(other than finance) not the fault of the party delayed in performing work or
doing acts required under the terms of this Lease, then performance of such act
shall be excused for the period of the delay and the period for the performance
of any such act shall be extended for a period equivalent to the period of the
delay. The provisions of this Section 8 shall not cancel, postpone, or delay
the due date of any payment to be made by Lessee hereunder, nor operate to
excuse Lessee from prompt payment of any Amount Due required by the terms of
this Lease.
9. PROPERTY AND LIABILITY INSURANCE.
9.1 Throughout the Lease Term, Lessor will insure the Building,
including foundations and excavations, the Building standard leasehold
improvements, and the machinery, boilers, and equipment contained therein owned
by Lessor, excluding any property Lessee is obliged to insure under Section 9.3
below, against damage by fire and the perils insured in the standard extended
coverage endorsement. Lessor shall also, throughout the Lease Term, carry
public liability insurance with respect to the ownership and operation of the
Premises.
9.2 Lessee shall comply with all applicable insurance
regulations so the lowest fire, extended coverage, and liability insurance
rates available for use of the Premises as described in Section 5.1 may be
obtained by Lessor and will not use or keep any substance or material in or
about the Premises which may vitiate or endanger the validity of insurance on
the Premises, increase the hazard or the risk beyond that for such use, or
result in an increase in premium on such insurance above the premium from time
to time that reasonably accounts for the use of the Premises permitted by this
Lease. If any insurance policy upon the Premises or any part thereof shall be
canceled or shall be threatened by the insurer to be canceled, the coverage
thereunder reduced or threatened to be reduced, or the premium therefor
increased or threatened to be increased in any way by the insurer above the
premium from time to time that reasonably accounts for the use of the Premises
permitted by this Lease, by reason of the use and occupation of the Premises by
Lessee or by any assignee or subtenant of Lessee for a use other than the use
as set forth in Section 5.1 herein, and if Lessee fails to remedy the condition
giving rise to the cancellation, reduction, or premium increase or threat
thereof within forty-eight (48) hours after notice thereof by Lessor, Lessor
may, at its option, do any one of the following:
9.2.1 Declare a default by Lessee, and thereupon the
provisions of Section 12 shall apply; or
9.2.2 Enter upon the Premises and remedy the condition
giving rise to the cancellation, reduction, or premium increase or threat
thereof, and in such event, Lessee shall forthwith pay the cost thereof to
Lessor as additional rent; and if Lessee fails to pay such cost, Lessor may
declare a default by Lessee and thereupon the
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provisions of Section 12 shall apply, and Lessor shall not be liable for any
damage or injury caused to any property of Lessee or of others located on the
Premises as a result of the re-entry; or
9.2.3 If the sole action taken by the insurer is to raise the
premium or other monetary cost of the insurance, demand payment from Lessee of
the premium or other cost as additional rent hereunder, and if Lessee fails to
pay the increase to Lessor within ten (10) days of demand by Lessor, Lessor may
declare a default by Lessee and thereupon the provisions of Section 12 shall
apply. Lessee acknowledges that it has no right to receive any proceeds from any
insurance policies carried by Lessor and that such insurance will be for the
sole benefit of Lessor with no coverage for Lessee for any risk insured against.
9.3 Lessee shall, during its occupancy of the Premises and
during the entire Lease Term, at its sole cost and expense, obtain, maintain,
and keep in full force and effect, the following types and kinds of insurance:
9.3.1 Upon property of every description and kind owned
by Lessee and located on the Premises or for which Lessee is legally liable or
which was installed by or on behalf of Lessee, including, without limitation,
furniture, fittings, installations, alterations, additions, partitions, and
fixtures (excluding, however, those improvements, if any, to be insured by
Lessor in accordance with Section 9 hereof), against all risk of loss in an
amount not less than one hundred percent (100%) of the full replacement cost
thereof;
9.3.2 Commercial general liability insurance in an amount
not less than $1,000,000.00 for any one occurrence or at such higher limits as
Lessor may reasonably require from time to time, with Lessor and Lessor's
mortgagees named as additional insureds therein as their respective interests
may appear; the insurance shall include coverage against liability for bodily
injuries or property damage arising out of the use by or on behalf of Lessee of
owned, non-owned, or hired automobiles and other vehicles for a limit not less
than that specified above; and shall also include coverage for "Fire Legal"
liability with respect to the Premises in an amount not less than $1,000,000.00
or such higher limits as Lessor may reasonably require from time to time; and
9.3.3 Workers' compensation insurance in the amount
required by law to protect Lessee's employees.
9.4 All insurance policies shall be taken out with nationally
recognized companies reasonably acceptable to Lessor and licensed and
registered to operate in the State of Georgia and in form reasonably
satisfactory to Lessor. The insurance may be by blanket insurance policy or
policies. Lessee shall deliver certificates evidencing the insurance policies
and any endorsement, rider, or renewal thereof, to Lessor. Certificates
evidencing renewals shall be delivered to Lessor no later than fifteen (15)
days after each renewal, as often as renewal occurs, and in no event less than
fifteen (15) days prior to the date on which the policy would otherwise expire.
All insurance policies shall require the insurer to notify Lessor and Lessor's
mortgagees in writing thirty (30) days prior to any material change,
cancellation, or termination thereof.
9.5 Lessor and Lessee hereby release the other from any and all
liability or responsibility to the other or to anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any other perils insured or insurable, whether or not such
insurance is obtained, in policies of fire and extended coverage insurance
covering such property even if such loss or damage shall have been caused by
the fault or negligence of the other party, or any one for whom such party may
be responsible, other than acts, such as intentional wrongdoing or criminal
conduct, that are not waived in the standard waiver of subrogation provision in
commercial property insurance at the time of the loss or damage.
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10. ALTERATIONS AND IMPROVEMENTS.
10.1 Subject to the provisions of this Section 10, Lessor agrees
that Lessee may do phased renovations to the Building as described herein
("Lessee's Improvements") after the Commencement Date and after Lessee occupies
the Premises and commences paying Base Rent and additional rent. The Lessee's
Improvements shall be constructed in accordance with final plans,
specifications and construction drawings (collectively the "Lessee's Plans and
Specifications") provided by Lessee and agreed upon by Lessor and Lessee in
accordance with the terms hereof.
10.2 After Lessee shall have commenced paying Base Rent and
additional rent for the Premises, Lessee shall cause plans and specifications
to be prepared by a licensed, professional engineer or architect, and submitted
to Lessor, at Lessee's sole cost and expense, covering all work to be performed
in constructing the Lessee's Improvements. The Lessee's Plans and
Specifications shall be in reasonable detail. Lessee shall ensure that the
Lessee's Plans and Specifications comply with all applicable statutes, codes,
ordinances and regulations ("Codes"). The submitted Lessee's Plans and
Specifications shall be subject to review, comment and approval by Lessor.
Lessor shall advise Lessee of its approval of the Lessee's Plans and
Specifications, or raise any objections thereto, in writing within fifteen (15)
business days after Lessor receives all of the Lessee's Plans and
Specifications. Lessee will have Lessee's Plans and Specifications modified as
reasonably required by Lessor and will resubmit the modified plans to Lessor
within fifteen (15) business days after Lessee receives all of the modification
requirements. Lessor will expeditiously review such modifications and return
Lessor's final approvals or any further comments or objections within an
additional fifteen (15) business days after Lessee's resubmission. Lessee shall
then have an additional ten (10) business days to address such further comments
or objections, if any. If Lessee and Lessor cannot agree on such changes, the
disagreement shall be resolved by submission to an independent architect
(selected mutually by Lessor and Lessee) having at least ten (10) years
experience in the construction or renovation of property comparable to the
Building. If the parties are not able to agree on such an independent architect
within ten (10) days of notice from either party of such a disagreement, either
party may request the selection of such an architect by the president of the
local chapter of the American Institute of Architects.
10.3 Lessee shall obtain all building permits covering Lessee's
Improvements pursuant to the Lessee's Plans and Specifications, and, if
required, other permits, licenses, and approvals for Lessee's Improvements from
any governmental agency or private third party. Lessee shall provide Lessor
copies of all the same. Lessor will cooperate reasonably with Lessee's efforts
to obtain such permits, licenses, and approvals. The contractor for Lessee's
Improvements may be chosen by Lessee, subject to Lessor's reasonable prior
approval. Such contractor shall be a reputable, licensed contractor with proven
experience in the kind of work involved in doing Lessee's Improvements, capable
of providing performance and payment bonds for the total cost of the Lessee's
Improvements, creditworthy, and in good standing with applicable licensing
agencies. Lessor may require Lessee to have the contractor obtain such bonds
from an established, reputable surety and to name Lessor as a beneficiary of
such bonds by dual obligee rider or other appropriate means. Lessee shall
provide Lessor a copy of any construction contract or similar agreement which
Lessee proposes to make for installation of the Lessee's Improvements for
verification that such contract will contain terms and conditions consistent
with Lessee's obligations under this Lease concerning construction of the
Lessee's Improvements. Lessor and Lessee will cooperate reasonably, diligently,
and in good faith in Lessee's finalization of such contract. Lessee represents
to Lessor that Lessee intends to use for the basic form of such construction
contract the American Institute of Architects (AIA) form of construction
contract in substantial part (either cost plus or stipulated sum, at Lessee's
discretion) with AIA general conditions thereto and other contract documents,
subject to such modifications (not contravening any obligation of Lessee under
this Lease) as may be negotiated between Lessee and Lessee's general
contractor, including but not limited to a ten percent (10%) retention from
payments thereunder. Lessor shall have the right to have a representative of
Lessor (who may be a professional architect or engineer) observe and inspect
the installation of the Lessee's Improvements, and to participate reasonably in
management of the same.
10.4 Lessee will prosecute construction of the Lessee's
Improvements diligently to Substantial Completion after commencement of such
construction; provided, however, that if Lessee shall be unable to accomplish
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such Substantial Completion on or before the intended completion date due to
force majeure as defined herein, such inability of Lessee shall not give Lessee
a right to cancel this Lease, and, so long as Lessee continues diligently in
making Lessee's Improvements and is not otherwise in default under this Lease,
shall not give Lessor the right to cancel this Lease; provided, further, that
Lessee shall in any event Substantially Complete the Lessee's Improvements by
July 31, 2006 and failure to complete the Lessee's Improvements by such final
date, or failure by Lessee to prosecute construction of Lessee's Improvements
as required by this Lease, shall be a breach of this Lease and Lessor shall
have all available remedies provided under this Lease for such breach including
the right to terminate this Lease in connection with such breach.
Upon Substantial Completion of Lessee's Improvements, a
representative of Lessor and a representative of Lessee together shall inspect
the Premises and prepare a "punchlist" of defective or uncompleted items
relating to the construction of the Lessee's Improvements. Lessee shall, within
a reasonable time but in no event more then thirty (30) days after such
punchlist is prepared and agreed upon by Lessor and Lessee, complete such
incomplete work and remedy any defective work as set forth on the punchlist.
10.5 No material amendments to the final approved Lessee's Plans
and Specifications will be implemented without the written approval of Lessor.
Any proposed material amendment to such final approved plans shall be submitted
by the Lessee to the Lessor in writing and shall be approved or rejected in
writing within ten (10) business days after receipt thereof by the Lessor.
Lessee shall advise Lessor of the additional costs of the Lessee's proposed
changes. Lessor and Lessee shall act reasonably, diligently and in good faith
to agree upon any such proposed amendment to final approved plans.
10.6 Lessee shall have all work in constructing the Lessee's
Improvements or any other construction on the Premises performed promptly,
diligently and in a good and workmanlike manner, free of defects, and in
accordance with the applicable plans and specifications.
10.7 Lessor shall provide Lessee with an allowance (herein
called the "Allowance") of TWO HUNDRED TWENTY ONE THOUSAND TWO HUNDRED NINETY
SIX AND NO/100 DOLLARS ($221,296.00) for the design, supervision and
construction of the Lessee's Improvements to the Premises, including, without
limitation, all costs of design, all costs of materials and labor to install
such improvements, and an overhead and supervisory fee to Lessor of five
percent (5%) of all such costs, and Lessor will pay all such costs to the
extent of the Allowance. If such costs should exceed the Allowance, then Lessee
shall pay for all such costs in excess of the Allowance. Lessor makes no
representation or warranty that the Allowance will be sufficient to pay for
Lessee's Improvements.
10.8 The Allowance shall be paid out as follows:
Lessor will disburse funds from the Allowance to Lessee to pay
the costs of constructing Lessee's Improvements according to customary and
reasonable methods of payment for construction, including but not limited to
progress payments not more frequently than monthly, lien releases from Lessee's
general contractor and retention from such funds in connection with progress
payments to the contractor, and appropriate evidence of such general
contractor's payment of subcontractors and material suppliers.
If the actual expenditures by Lessee for costs of construction
of the Lessee's Improvements shall total less than the Allowance, the Allowance
shall automatically be deemed reduced to the actual costs. The Allowance shall
be applied to reimburse only costs of improving real property in the Premises,
and not to costs of any furniture, furnishings, fixtures, equipment, or other
personal property of any kind.
Lessee may submit to Lessor monthly requests for disbursement,
less retention of ten percent (10%), which Lessor may withhold from progress
payments to Lessee's contractor. Lessee's request shall be in writing and
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shall be accompanied by the following items:
(i) Signed lien release or releases by Lessee's general
contractor and major subcontractors, which release(s) may include a conditional
lien release (conditional upon the contractor's receipt of payment in a
specified amount), for the work covered by the progress payment applied for.
"Major subcontractors" means any supplier of services or materials costing more
than $5,000.00;
(ii) A certificate for payment (AIA form) provided by a
disinterested and impartial professional, licensed architect or engineer who
has inspected such construction, and evidencing that the work and stored
materials to be paid for by the progress payment applied for, and the work in
the aggregate up to the date of that progress payment and covered by the
aggregate of previous progress payments and the current progress payment, has
been completed free of defects, and in accordance with the approved plans and
specifications;
(iii) Lessee's contractor's acknowledgment in writing that
the retention of ten percent (10%) will be payable to such contractor only upon
expiration of any mechanic's lien period applicable to such construction,
following full completion of the Lessee's Improvements, without filing of
mechanic's liens claims on account of such construction or after discharge by
bonding or otherwise of any such mechanic's lien that is filed, to the
reasonable satisfaction of Lessor;
(iv) Evidence reasonably satisfactory to Lessor that no
mechanic's lien has then been filed on account of the Lessee's Improvements and
remains undischarged by bonding or otherwise;
(v) A customary general contractor's affidavit for
partial payment in form reasonably satisfactory to Lessor;
(vi) Evidence reasonably satisfactory to Lessor that the
remaining balance of the Allowance, together with any additional funds (if any)
already paid out or to be paid out by Lessee (and available for such use) and
not to be covered by the Allowance, will be sufficient to pay for all remaining
costs of constructing the Lessee's Improvements; and
(vii) Evidence reasonably satisfactory to Lessor that
any professional, licensed architect or engineer who has inspected the
installation of Lessee's Improvements on behalf of Lessor would not reasonably
refuse to certify such progress payments.
Subject to Lessor's receipt of the required submissions for such
progress payments as described above, Lessor will disburse the monthly progress
payment amount to Lessee within ten (10) business days after receipt of
Lessee's written request therefor; provided that Lessor may disburse all or a
portion of such progress payment directly to any contractor or material
supplier at Lessor's discretion after prior notice to Lessee and without
waiving any of Lessee's rights as to said contractor or supplier.
When Lessee's Improvements have been Substantially Completed,
Lessee may make written request to Lessor for payment of the remaining amount
of the Allowance, less and except one hundred fifty percent (150%) of the
estimated cost to complete applicable punchlist items (the "Holdback"). The
Holdback amount shall be available to Lessee immediately upon completion of
such punchlist corrections. Lessee's request for such remaining balance (less
the Holdback) shall be accompanied by the following:
(i) A written certificate (AIA form) of substantial
completion without defects and in accordance with the approved plans and
specifications, reasonably satisfactory to Lessor, from a licensed,
professional architect or engineer; and
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(ii) Final lien releases of the contractors and
subcontractors whose lien releases were previously required and pursuant to
which disbursements of progress payments were made; and
(iii) A customary general contractor's affidavit for
full payment in form reasonably
satisfactory to Lessor; and
(iv) The other items described herein as necessary to
evidence Substantial Completion as defined herein.
Subject to Lessor's receipt of the required submissions
for payment of such remaining amount as described above, Lessor will disburse
the remaining balance of the Allowance (less Holdback) within ten (10) business
days after receipt of Lessee's written request therefor.
10.9 Substantial Completion of the Lessee's Improvements shall
mean that: (1) the construction to be done by Lessee according to the Lessee's
Plans and Specifications is complete except for minor punchlist items which
shall be promptly completed thereafter, and is in accordance with all
applicable laws, regulations, codes, and ordinances, and all systems that are
affected by the Lessee's Improvements and are necessary to service the Premises
are operational to the extent required for such service; (2) there is no
remaining construction or installation to be done by Lessee that would prevent
occupancy of any portion of the Premises; (3) Lessee has obtained a valid
Certificate of Substantial Completion from a licensed architect or engineer for
such work; and (4) Lessee has delivered to Lessor evidence reasonably
satisfactory to Lessor that the Lessee's Improvements have been completed lien
free and that there are no disputes or other matters which could lead to a
claim of any mechanic's or materialmen's lien against the Premises or if such a
dispute or claim shall have arisen, Lessee shall have delivered to Lessor
satisfactory evidence that such claim has been properly bonded or finally
resolved and any such lien bonded or released and that no such further claim
can be made. Without limiting what might be such reasonably satisfactory
evidence, Lessor agrees that the following will be satisfactory: (A) Original
executed lien waivers from Lessee's general contractors and subcontractors for
construction of the Lessee's Improvements together with (B) an original
affidavit signed by an officer of the general contractor with personal
knowledge, stating that (1) the persons or entities from which such lien
waivers have been obtained are all the contractors and subcontractors for the
construction of the Lessee's Improvements and stating (2) that all contractors,
subcontractors and material suppliers who have provided labor or materials for
such construction, for which a mechanic's or materialman's lien could be filed,
have been paid, less only standard retention amounts under construction
contracts with Lessee.
Lessor may reasonably require Lessee to file a Notice of
Commencement under applicable Georgia law on mechanic's and materialmen's liens
in connection with any work of installing Lessee's Improvements for which such
a lien could be filed.
10.10 Lessee shall deliver to Lessor copies of all warranties
and all tests conducted in connection with construction by Lessee of the
Lessee's Improvements as the same may relate to the Premises, and Lessee's
written confirmation that Lessee will enforce such warranties for the benefit
of Lessor and Lessee as their interests may appear during the term of this
Lease, and if and to the extent requested by Lessor and assignable, such
warranties shall be assigned to Lessor.
10.11 Unless specifically approved by Lessor as part of the
Lessee's Improvements, Lessee shall not make (a) any exterior or structural
alterations, additions, or improvements in or to the Premises, or attach or
install exterior fixtures or other fixtures which affect the structure of the
Building, without the prior written consent of Lessor, which shall not be
unreasonably withheld, conditioned or delayed, or (b) except as provided in
this Section 10.11, any nonstructural interior alterations, additions, or
improvements to the Premises. Lessee may make nonstructural interior
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alterations, additions or improvements to the Premises not part of Lessee's
Improvements, and may install or attach, in or to the interior of the Building,
fixtures other than Lessee's Improvements and which do not affect the structure
of the Building, without Lessor's consent, provided such nonstructural changes,
installations, and attachments shall not total more than $25,000.00 in value
during any 12-month period. All alterations, additions, or improvements made,
installed in, or attached to the Premises by Lessee shall be made at Lessee's
expense in a good and workmanlike manner, in accordance with the plans and
specifications approved by Lessor (if applicable), all applicable laws,
ordinances, regulations, and other requirements of any appropriate governmental
authority, and with the Protective Covenants.
10.12 Prior to the commencement of any such work of making the
Lessee's Improvements as defined herein, or any other changes to the Premises
described in foregoing Section 10.11, Lessee shall deliver to Lessor
certificates issued by insurance companies licensed and registered to operate
in the State of Georgia evidencing that workers' compensation insurance and
public liability insurance, all in amounts satisfactory to Lessor, are in force
and effect and maintained by all contractors and subcontractors engaged by
Lessee to perform the work.
10.13 Lessee shall keep the Premises free from all liens,
preliminary notices of liens, right to liens, or claims of liens of
contractors, subcontractors, mechanics, or materialmen for work done or
materials furnished to the Premises at the request of Lessee. Whenever and so
often as any such lien shall attach or claims or notices thereof shall be filed
against the Premises or any part thereof as a result of work done or materials
furnished to the Premises at the request of Lessee, Lessee shall, within ten
(10) days after Lessee has actual notice of the claim or notice of lien, cause
it to be discharged of record, which discharge may be accomplished by deposit
or bonding proceedings. If Lessee shall fail to cause the lien, or such claim
or notice thereof, to be discharged or bonded off within the ten-day period,
then, in addition to any other right or remedy, Lessor may, but shall not be
obligated to, discharge it either by paying the amount claimed to be due or by
procuring the discharge of the lien, or claim or notice thereof, by deposit or
bonding proceedings. Any amount so paid by Lessor and all costs and expenses,
including, without limitation, attorneys' fees, incurred by Lessor in
connection therewith shall constitute additional rent payable by Lessee under
this Lease and shall be paid by Lessee in full on demand of Lessor together
with interest thereon at the rate set forth in Section 2.2 hereof from the date
it was paid by Lessor. LESSEE SHALL NOT HAVE THE AUTHORITY TO SUBJECT THE
INTEREST OR ESTATE OF LESSOR TO ANY LIENS, RIGHTS TO LIENS, OR CLAIMS OF LIENS
FOR SERVICES, MATERIALS, SUPPLIES, OR EQUIPMENT FURNISHED TO LESSEE, AND ALL
PERSONS CONTRACTING WITH LESSEE ARE HEREBY CHARGED WITH NOTICE THAT THEY MUST
LOOK TO LESSEE AND TO LESSEE'S INTEREST ONLY TO SECURE PAYMENT.
10.14 All alterations, additions, or improvements, including,
but not limited to, fixtures, partitions, counters, and window and floor
coverings, which may be made or installed by either of the parties hereto upon
the Premises, irrespective of the manner of annexation, and irrespective of
which party may have paid the cost thereof (excepting only movable office
furniture and shop, laboratory, or other equipment installed by Lessee during
the term of this Lease and not paid for by the Allowance), shall be the
property of Lessor, and shall remain upon and be surrendered with the Premises
as a part thereof at the expiration or other termination of this Lease, without
disturbance, molestation, or injury. Lessee shall remove all such excepted
furniture and equipment at Lessee's expense. Notwithstanding that any
alterations, additions, or improvements may belong to Lessor as stated herein,
Lessor may elect that any or all installations made or installed by or on
behalf of Lessee, and not to be removed by Lessee otherwise, must be removed by
Lessee at the end of the Lease Term. It shall be Lessee's obligation to restore
the portion of the Premises from which any such removal is required by this
Lease or by Lessor pursuant to this Lease, to the condition of the Premises
prior to the installation of any such equipment, alterations, additions, or
improvements made by Lessee, on or before the expiration or other termination
of this Lease. Such removal and restoration shall be at the sole expense of
Lessee. Furthermore, notwithstanding anything contained herein to the contrary
except as otherwise provided in Section 9.1 hereof, Lessor shall be under no
obligation to insure the alterations, additions, or improvements or anything in
the nature of a leasehold improvement made or installed by or on behalf of
Lessee, the Lessee Parties, or any other person, and such improvements shall be
on the Premises at the risk of Lessee only.
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10.15 In the event Lessor makes any capital investment, major
structural repairs or improvements in or to the Premises which are required due
to any act or omission of Lessee or any of the Lessee Parties, any and all cost
and expenses incurred by Lessor in making the capital investment, major
structural repairs, or improvements shall constitute additional rent payable by
Lessee under this Lease and shall be paid by Lessee in full on demand of
Lessor, together with interest thereon from the date of the demand at the rate
set forth in Section 2.2 hereof.
11. ASSIGNMENT OR SUBLETTING.
11.1 Lessee shall not assign this Lease, or any interest herein,
or sublet or allow any other person, firm, or corporation to use or occupy the
Premises, or any part thereof, without the prior written consent of Lessor,
which consent will not be unreasonably withheld, conditioned or delayed, except
Lessee may assign this Lease to a corporation, partnership, limited liability
company, other entity or individual which controls, is controlled by, or is
under common control with, Lessee ("Affiliate"), without Lessor's consent;
provided, however, that Lessee shall ensure that Lessor receives at the time of
such assignment Lessee's written notice thereof, a true and correct copy of the
assignment instrument, the written undertaking by such assignee to observe and
perform all of the terms and conditions of this Lease, and a reasonable fee
(including reasonable attorneys' fees but not more than $1,000.00) for Lessor's
processing thereof. "Control" means the right to exercise at least twenty
percent (20%) of the voting power of an entity to which such "control"
criterion is applied. Lessor shall have the right to make such investigations
as it deems reasonable and necessary in determining the acceptability of the
proposed assignee or subtenant. Such investigations may include inquiries into
the financial background, business history, capability of the proposed assignee
or subtenant in its line of business, and the quality of its operations. Under
no circumstances shall Lessor be obligated to consent to the assignment of this
Lease or the subletting of the Premises to any entity whose operations violate
the Protective Covenants. Lessee shall provide to Lessor such information as
Lessor may reasonably require to enable it to determine the acceptability of
the proposed assignee or subtenant, including information concerning all of the
foregoing matters, and Lessor shall have no obligation to consent to any
assignment or subletting unless it has received from Lessee, at no cost or
expense to Lessor, the most recent audited financial statements of the proposed
assignee or subtenant a copy of the proposed sublease or assignment agreement,
to be followed by a copy of the fully executed document, and such other
information as Lessor reasonably requires. For purposes of this Section 11, an
assignment of stock or other ownership interest in Lessee shall be deemed an
assignment within the meaning of and be governed by this Section. No assignment
or subletting, be it with or without the consent of Lessor, shall release
Lessee from its obligations under this Lease. Unless consented to by Lessor,
Lessee shall not permit this Lease or any interest herein or in the tenancy
hereby created to become vested in or owned by any other person, firm, or
corporation by operation of law or otherwise. The power of Lessor to give or
withhold its consent to any assignment or subletting shall not be exhausted by
the exercise thereof on one or more occasions, but shall be a continuing right
and power with respect to any type of transfer, assignment or subletting.
Lessor consents to Allergy Superstore.com, Inc.'s joint occupancy of the
Premises in whole or in part with Lessee.
11.2 If Lessee shall assign this Lease or sublet the Premises in
any way not authorized by the terms hereof, the acceptance by Lessor of any
Amount Due from any person claiming as assignee, sublessee, or otherwise shall
not be construed as a recognition of or consent to the assignment or subletting
or as a waiver of the right of Lessor thereafter to collect any rent from
Lessee, it being agreed that Lessor may at any time accept any Amount Due under
this Lease from any person offering to pay it without thereby acknowledging the
person so paying as a lessee in place of Lessee herein named, and without
releasing Lessee from the obligations of this Lease, and without recognizing
the claims under which such person offers to pay any Amount Due, but it shall
be taken to be a payment on account by Lessee.
11.3 In the event Lessee shall become entitled to receive any
premium in connection with an assignment or other transfer of this Lease or any
interest herein or from a sublease of the Premises or any part thereof
("Premium"), Lessor shall have the right to receive one-half (1/2) of such
Premium, free and clear of any claim, right, or interest of Lessee or any third
person. The term "Premium" shall include (1) any amount of money paid or
property provided, to or for the benefit of the Lessee, directly or indirectly,
for Lessee's making such an assignment or sublease, by any third
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person other than an Affiliate, (2) any excess of rent (whether paid by money
or property) to which Lessee is entitled under any such sublease with such a
third person, over and above the Base Rent under this Lease, and (3) any excess
of additional rent and other components of the Amount Due other than Base Rent
(whether paid by money or property) which Lessee is entitled to receive under
any such sublease with such a third person over and above the Amount Due
(excluding Base Rent) owed under this Lease. Lessee shall ensure that half of
any such Premium is paid to Lessor no later than the time Lessee becomes
entitled to such Premium. The foregoing definition of "Premium" shall not
preclude Lessee from reasonably including in the calculation of such Premium
(before determining Lessor's half thereof) payment of a normal and customary,
arm's length, real estate brokerage commission to a Georgia-licensed real
estate broker who is entitled to such commission from Lessee in connection with
such an assignment or other transfer or sublease. Notwithstanding the
foregoing, a Premium shall not include any barter transaction, exchange of
services or product, systems sharing arrangement or other arrangement between
Lessee and such third person which advances Lessee's usual and customary
business activities. Nothing in this section shall permit any assignment or
sublease that would not otherwise be permitted under this Lease, require Lessor
to give consent to any assignment or sublease that Lessor would otherwise not
be required to give, or waive any right of Lessor in connection with any
assignment or sublease. In no case shall any right of Lessor to such a Premium
obligate Lessor to any person with whom Lessee makes any assignment or
sublease. Lessee shall provide Lessor full and complete details and
documentation about any transaction to which such a Premium may apply, so that
Lessor may evaluate the Premium to which Lessor is entitled.
12. DEFAULTS.
12.1 In the event that (i) Lessee shall fail to pay the Base
Rent or any other Amount Due for more than five (5) days following receipt of
written notice by Lessee that the same is due, or (ii) Lessee shall fail to
comply with any of the terms, covenants, conditions, or agreements herein
contained or any of the rules and regulations now or hereafter established for
the government of the Premises or any part thereof and such failure to comply
continues for thirty (30) days after Lessor's written notice to Lessee thereof,
then Lessor shall have the option, but not the obligation, to do any one or
more of the following in addition to, and not in limitation of, any other
remedy permitted by law, in equity or by this Lease:
12.1.1 Terminate this Lease, in which event Lessee shall
surrender the Premises to Lessor immediately upon expiration of ten (10) days
from the date of the service upon Lessee of written notice to that effect,
without any further notice or demand. In the event Lessor shall become entitled
to the possession of the Premises by any termination of this Lease herein
provided, and Lessee shall refuse to surrender or deliver up possession of the
Premises after the service of such notice, then Lessor may, without further
notice or demand, enter into and upon the Premises, or any part thereof, and
take possession of and repossess the Premises as Lessor's former estate, and
expel, remove, and put out of possession Lessee and its effects, using such
help, assistance, and force in so doing as may be needful and proper, without
being liable for prosecution or damages therefor, and without prejudice to any
remedy allowed by law available in such cases. Lessee shall indemnify Lessor
for all loss, cost, expense, and damage which Lessor may suffer by reason of
the termination, whether through inability to relet the Premises, or through
decrease in rent or otherwise. In the event of such termination, Lessor may, at
its option, recover forthwith as liquidated damages, and not as a forfeiture or
penalty, a sum of money equal to the total of (a) the cost of recovering the
Premises, including, without limitation, attorneys' fees and cost of suit, (b)
the unpaid rent earned at the time of termination, plus late charges and
interest thereon at the rate specified in Section 2.2 hereof, (c) the present
value (discounted at the rate of 8% per annum) of the balance of the rent for
the remainder of the Lease Term, including any amounts treated as additional
rent hereunder, less the present value (discounted at the same rate) of the
fair market rental value of the Premises for said period, taking into account
the cost, time, expenses and other factors necessary to obtain a replacement
tenant or tenants, including expenses relating to the recovery of the Premises,
preparation for reletting and reletting itself, and (d) any other sum of money
and damages owed by Lessee to Lessor.
12.1.2 Without terminating this Lease, retake possession
of the Premises and rent the Premises,
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or any part thereof, for such term or terms and for such rent and upon such
conditions as Lessor may, in its sole discretion, think best, making such
changes, improvements, alterations, and repairs to the Premises as may be
required. All rent received by Lessor from any reletting shall be applied first
to the payment of any indebtedness other than rent due hereunder from Lessee;
second, to the payment of any costs and expenses of the reletting, including but
not limited to brokerage fees, attorneys' fees and costs of such changes,
improvements, alterations, and repairs; third, to the payment of rent due and
unpaid hereunder; and the residue, if any, shall be held by Lessor and applied
in payment of future rent or damage as they may become due and payable
hereunder. If the rent received from the reletting during the Lease Term is at
any time insufficient to cover the costs, expenses, and payments enumerated
above, Lessee shall pay any deficiency to Lessor, as often as it shall arise, on
demand.
12.1.3 Correct or cure the default and recover any amount
expended in so doing, together with interest thereon until paid.
12.1.4 Recover any and all costs incurred by Lessor
resulting directly, indirectly, proximately, or remotely from the default,
including but not limited to reasonable attorneys' fees actually incurred.
12.2 In addition to any other rights which Lessor may have,
Lessor, in person or by agent, may enter upon the Premises and take possession
of all or any part of Lessee's property in the Premises, and may sell all or
any part of such property at a public or private sale, in one or successive
sales, with or without notice, to the highest bidder for cash, and, on behalf
of Lessee, sell and convey all or part of such property to the highest bidder,
delivering to the highest bidder all of Lessee's title and interest in the
property sold to him. The proceeds of the sale of such property shall be
applied by Lessor toward the reasonable costs and expenses of the sale,
including, without limitation, attorneys' fees actually incurred, and then
toward the payment of all sums then due by Lessee to Lessor under the terms of
this Lease. Any excess remaining shall be paid to Lessee or any other person
entitled thereto by law. Such sale shall bar Lessee's right of redemption.
12.3 In the event of a default under this Lease by Lessee or
threat of a default which could result in death or personal injury to any
individual, or physical damage or destruction of, or loss of value to, the
Premises or any personal property of Lessor or any third person thereon, Lessor
shall be entitled to all equitable remedies, including, without limitation,
injunction and specific performance.
12.4 Pursuit of any of the remedies herein provided shall not
preclude the pursuit of any other remedies herein provided or any other
remedies provided at law or in equity. Failure by Lessor to enforce one or more
of the remedies herein provided shall not be deemed or construed to constitute
a waiver of any default, or any violation or breach of any of the terms,
provisions, or covenants herein contained.
13. BANKRUPTCY. The filing or preparation for filing by or against
Lessee of any petition in bankruptcy, insolvency, or for reorganization under
the Federal Bankruptcy Code, any other federal or state law now or hereafter
relating to insolvency, bankruptcy, or debtor relief, or an adjudication that
Lessee is insolvent, bankrupt, or an issuance of an order for relief with
respect to Lessee under the Federal Bankruptcy Code, any other federal or state
law now or hereafter relating to insolvency, bankruptcy, or debtor relief, or
the execution by Lessee of a voluntary assignment for the benefit of, or a
transfer in fraud of, its general creditors, or the failure of Lessee to pay
its debts as they mature, or the levying on under execution of the interest of
Lessee under this Lease, or the filing or preparation for filing by Lessee of
any petition for a reorganization under the Federal Bankruptcy Code, or for the
appointment of a receiver or trustee for a substantial part of Lessee's assets
or to take charge of Lessee's business, or of any other petition or application
seeking relief under any other federal or state laws now or hereafter relating
to insolvency, bankruptcy, or debtor relief, or the appointment of a receiver
or trustee for a substantial part of Lessee's assets or to take charge of
Lessee's business, shall automatically constitute a default in this Lease by
Lessee for which Lessor may, at any time or times thereafter, at its option,
exercise any of the remedies and options provided to Lessor in Section 12
hereof; provided, however, that
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if such petition be filed by a third party against Lessee, and Lessee desires
in good faith to defend against the petition and is not in any way in default
of any obligation hereunder at the time of filing the petition, and Lessee
within ninety (90) days thereafter procures a final adjudication that it is
solvent and a judgment dismissing the petition, then this Lease shall be fully
reinstated as though the petition had never been filed.
14. DAMAGE AND CONDEMNATION.
14.1 In the event during the Lease Term the Premises are damaged
by fire or other casualty, but to such an extent that repairs and rebuilding
can reasonably be completed within one hundred eighty (180) days of the date of
the event causing the damage, Lessor may, at Lessor's option within sixty (60)
days of such event, elect to repair and rebuild the Premises. If Lessor elects
to repair and rebuild the Premises, this Lease shall remain in full force and
effect, but Lessor may require Lessee temporarily to vacate the Premises while
they are being repaired and, subject to the provisions of this Section 14.1,
rent shall abate during this period to the extent that the Premises are
untenantable; provided, however, that Lessor shall not be liable to Lessee for
any damage or expense which temporarily vacating the Premises may cause Lessee.
If Lessor elects to repair and rebuild, but the Premises are not repaired,
rebuilt, or otherwise made suitable for occupancy by Lessee within the
aforesaid one hundred eighty (180) day period, Lessee shall have the right, by
written notice to Lessor within ten (10) days of the end of such period, to
terminate this Lease, in which event rent shall be abated for the unexpired
Lease Term, effective as of the date of the written termination, in addition to
any abatement for untenantability under the foregoing provisions of this
Section 14.1, but the other terms and conditions of this Lease shall continue
and remain in full force and effect until Lessee shall have vacated the
Premises, removed all Lessee's personal property therefrom and delivered
peaceable possession thereof to Lessor.
If (a) within the aforesaid sixty (60) day period Lessor elects
not to repair and rebuild the Premises or (b) the Premises or any part thereof
be so damaged that the Premises are untenantable and in Lessor's reasonable
opinion, which shall be given to Lessee by notice in writing ("non-completion
notice") within sixty (60) days of such casualty, the repairs and rebuilding
cannot be completed within one hundred eighty (180) days of the date of the
event causing the damage, then within fourteen (14) days of Lessee's receipt of
Lessor's notice of such election not to rebuild or such non-completion notice,
Lessor or Lessee may by seven (7) days' written notice to the other terminate
this Lease in which event rent shall be abated for the unexpired Lease Term,
effective as of the date of the Lessor's election not to repair and rebuilt or
such non-completion notice, as applicable, but the other terms and conditions
of this Lease shall continue and remain in full force and effect until Lessee
shall have vacated the Premises, removed all Lessee's personal property
therefrom and delivered peaceable possession thereof to Lessor. Failure by
Lessee to comply with any provision of this Section 14.1 shall subject Lessee
to such costs, expenses, damages, and losses as Lessor may incur by reason of
Lessee's breach hereof. Notwithstanding any provision of this Lease to the
contrary, if the Premises or any part thereof are damaged by fire or other
casualty caused by or materially contributed to by the negligence or misconduct
of Lessee or any of the Lessee Parties, Lessee shall be fully responsible, to
the extent not covered by insurance, for repairing, restoring, or paying for
the damage as Lessor shall direct and this Lease shall remain in full force and
effect without reduction or abatement of rent.
14.2 In the event the Premises shall be taken, in whole or in
part, by condemnation or the exercise of the right of eminent domain, or if in
lieu of any formal condemnation proceedings or actions, if any, Lessor shall
sell and convey the Premises, or any portion thereof, to the governmental or
other public authority, agency, body, or public utility, seeking to take the
Premises or any substantial portion thereof which would materially adversely
affect Lessee's use and occupancy of the Premises, then Lessor at its option
may terminate this Lease upon ten (10) days' prior written notice to the Lessee
and prepaid rent shall be proportionately refunded from the date of possession
by the condemning authority. Lessor shall notify Lessee of the commencement of
any such condemnation proceeding within fourteen (14) days of Lessor's becoming
aware of the same. All damages awarded for the taking, or paid as the purchase
price for the sale and conveyance in lieu of formal condemnation proceedings,
whether for the fee or the leasehold interest, shall belong to and be the
property of Lessor; provided, however, Lessee shall have the sole right to
reclaim and recover from
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the condemning authority, but not from Lessor, such compensation as may be
separately awarded or recoverable by Lessee in Lessee's own right on account of
any and all costs or loss, including loss of business, to which Lessee might be
put in removing Lessee's merchandise, furniture, fixtures, leasehold
improvements, and equipment to a new location. Lessee shall execute and deliver
any instruments, at the expense of Lessor, that Lessor may deem necessary to
expedite any condemnation proceedings, to effectuate a proper transfer of title
to such governmental or other public authority, agency, body or public utility
seeking to take or acquire the Premises or any portion thereof. Lessee shall
vacate the Premises, remove all Lessee's personal property therefrom and
deliver up peaceable possession thereof to Lessor or to such other party
designated by Lessor in the aforementioned notice. Failure by Lessee to comply
with any provisions of this Section 14.2 shall subject Lessee to such costs,
expenses, damages, and losses as Lessor may incur by reason of Lessee's breach
hereof. If Lessor chooses not to terminate this Lease, then to the extent and
availability of condemnation proceeds received by Lessor and subject to the
rights of any mortgagee thereto, Lessor shall, at the sole cost and expense of
Lessor and with due diligence and in a good and workmanlike manner, restore and
reconstruct the Premises within one hundred eighty (180) days after the date of
the physical taking, and such restoration and reconstruction shall make the
Premises tenantable and suitable as reasonably practicable for the permitted
use being made by Lessee prior to the taking; provided, however, that Lessor
shall have no obligation to restore and reconstruct Lessee's leasehold
improvements unless and to the extent that Lessor receives an award of
condemnation proceeds specifically designated as compensation for such
improvements. Notwithstanding the foregoing, if Lessor has not completed the
restoration and reconstruction within one hundred eighty (180) days after the
date of physical taking, Lessee, in addition to any other rights and remedies
Lessee may have, shall have the right to cancel this Lease. If this Lease
continues in effect after the physical taking, the rent payable hereunder shall
be equitably adjusted both during the period of restoration and reconstruction
and during the unexpired portion of the Lease Term.
14.3 In the event Lessor, during the Lease Term, shall be
required by any governmental authority or the order or decree of any court, to
repair, alter, remove, reconstruct, or improve (herein collectively called
"Repairs") any part of the Premises, then the Repairs shall be made by and at
the expense of Lessor, unless resulting from alterations made by Lessee, and
shall not in any way affect the obligations or covenants of Lessee herein
contained, and Lessee hereby waives all claims for damages or abatement of rent
because of the Repairs. If the Repairs shall render the Premises untenantable
and if the Repairs are not completed within one hundred eighty (180) days after
the date of the notice, requirement, order, or decree, either party hereto upon
written notice to the other party given not later than one hundred ninety (190)
days after the date of the notice, requirement, order, or decree, may terminate
this Lease, in which case rent shall be apportioned and paid to the date the
Premises were rendered untenantable; provided however that where the
requirement by a governmental authority having jurisdiction to repair, alter,
remove, reconstruct, or improve any part of the Premises arises out of any act
or omission by Lessee, then the Repairs shall be effected promptly at the sole
cost and expense of Lessee and there shall not, in any event, be any abatement
of rent nor any right in Lessee to terminate this Lease whether or not the
completion of the Repairs takes more than one hundred eighty (180) days.
14.4 Nothing in this Section 14 shall preclude extension of such
180-day periods by reason of force majeure as described in Section 8.
15. TAXES.
15.1 Subject to Lessee's obligation to pay its Proportionate
Share thereof as a Shared Expense, Lessor shall pay all taxes, assessments and
other governmental charges, general or special, ordinary or extraordinary,
foreseen or unforeseen, including any installments thereof (herein called
"Impositions"), levied, assessed or otherwise imposed by any lawful authority
or payable with respect to the Premises.
15.2 If at any time during the Lease Term the methods of
taxation prevailing at the Commencement Date shall be altered so that in lieu
of, or as a substitute for, the whole or any part of the taxes, assessments,
levies, impositions or charges now levied, assessed or imposed on real estate
and the improvements thereon, there shall be
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levied, assessed or imposed a tax, assessment, levy, fee or other charge: (i)
on or measured by the rents received therefrom; (ii) measured by or based in
whole or in part upon the Premises and imposed upon Lessor; or (iii) measured
by the rent payable by Lessee under this Lease, then all such taxes,
assessments, levies, impositions, charges or fees or the part thereof so
measured or based, shall be deemed to be included within the definition of
"Impositions". The tax, levy, or other imposition to which reference is made
hereinabove shall include sales, excise or similar taxes, but shall not include
any net income, franchise, estate or inheritance taxes imposed on Lessor.
15.3 In the event that a tax or assessment attributable to
environmental protection legislation, as distinguished from a tax or assessment
in the nature of a real estate property tax, is imposed upon Lessor by a
governmental authority having jurisdiction over the Land, which tax or
assessment is attributable to a portion of the Common Area being parking
facilities available to the Lessee, its servants, agents, employees, invitees,
licensees, contractors or subcontractors, such tax or assessment shall be
included within the definition of "Impositions".
16. LIABILITY OF LESSOR.
16.1 Subject to Section 9.5 hereof, Lessee shall indemnify,
defend, and hold harmless Lessor, at Lessee's expense, against (a) any default
by Lessee or permitted assignee or subtenant hereunder; (b) any act of
negligence of Lessee or any of the Lessee Parties; and (c) all claims for
damages to persons or property by reason of the use or occupancy of the
Premises not caused by Lessor. Lessee shall not be liable to Lessor, or
Lessor's agents, servants, employees, contractors, customers or invitees for
any damage to person or property caused by any act, omission or neglect of
Lessor, its agents, servants or employees. Lessor shall not be liable to
Lessee, or Lessee's agent, servants, employees, contractors, customers or
invitees for any damage to person or property caused by any act, omission or
neglect of Lessee, its agents, servants, or employees. Moreover, Lessor shall
not be liable for any damage, injury, destruction, or theft to, of, or at the
Premises, the personal property of Lessee or any of the Lessee Parties, Lessee,
or any of the Lessee Parties arising from any use or condition of the Premises,
or any sidewalks, entrance ways, or parking areas serving the Premises, or the
act or neglect of co-tenants or any other person, or the malfunction of any
equipment or apparatus serving the Premises, or any loss thereof by mysterious
disappearance or otherwise. Any and all claims against Lessor for any damage
referred to in this Section 16, except to the extent such damage is caused by,
or arises from, the gross negligence or wilful wrongdoing of Lessor or its
employees, are hereby waived and released by Lessee.
16.2 Notwithstanding anything to the contrary in this Lease,
Lessor's liability is limited to, and Lessee expressly agrees to look solely
to, Lessor's interest in the Premises and the present revenues generated
therefrom. Excluding any criminal negligence by the following parties, none of
Lessor, or Lessor's partners, shareholders, officers, directors, principals,
members, attorneys, employees, shall ever be personally liable with respect to
this Lease. The provision contained in the foregoing sentence is not intended
to, and shall not, limit any right that Lessee might otherwise have to obtain
injunctive relief against Lessor or Lessor's successors-in-interest.
17. RIGHT OF ENTRY.
17.1 Lessor reserves the right, for itself, its mortgagees, or
their respective agents and duly authorized representatives, to enter and be
upon the Premises, after having given prior reasonable notice to Lessee, from
time to time during business hours, and in the company of a representative of
Lessee, to inspect the Premises and to repair, maintain, alter, improve, and
remodel the Premises or any part thereof; provided, however, that no such
notice or accompaniment by a representative of Lessee shall be required in case
of any emergency threatening loss, injury, or damage to person or property in
Lessor's reasonable discretion, and the foregoing shall not be construed to
require any such notice or accompaniment for Lessor's employees, agents, or
representatives to enter the Premises for routine services, maintenance, or
other activities connected with management of the Premises; provided, further,
that Lessor shall not materially interfere with Lessee's normal operation
except in case of an emergency. Lessee shall not be entitled to any
compensation, damages, or abatement or reduction in rent on account of any such
repairs, maintenance,
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alterations, improvements or remodeling. Nothing contained in this Section 17.1
shall imply any duty on the part of Lessor to repair, maintain, alter, improve,
or remodel the Premises or any part thereof.
17.2 After reasonable notice to Lessee, Lessee shall permit
Lessor or Lessor's agents at any reasonable hour of the day to enter into or
upon and, subject to reasonable restrictions to protect Lessee's laboratory
operations and proprietary materials and for the safety of the entrants, to go
through and view the Premises and to exhibit the Premises to prospective
purchasers or (during the last twelve (12) months of this Lease) to prospective
tenants. Provided however, that with respect to such entry for exhibition to
prospective tenants, during the twelfth through sixth months before expiration
of this Lease, the laboratory area shall only be exhibited after Lessee's
normal business hours.
18. BUILDING RULES AND REGULATIONS. Lessor reserves the right to
establish reasonable rules and regulations pertaining to the use and occupancy
of the Premises, which rules and regulations may be changed by Lessor from time
to time and shall be provided to Lessee in writing. Lessee shall comply with
any rules and regulations established by Lessor under this Section 18.
19. PROPERTY LEFT ON THE PREMISES. Upon the expiration of this Lease,
or if the Premises should be abandoned by Lessee, or if this Lease should
terminate for any cause, or if Lessee should be dispossessed after default, if
at the time of any such expiration, abandonment, termination or dispossession,
Lessee or its assignees, subtenants, agents, servants, employees, contractors,
or any other person controlled by Lessee or claiming under Lessee should leave
any property of any kind or character in or upon the Premises, such property
shall be the property of Lessor and the fact of such leaving of property in or
upon the Premises shall be conclusive evidence of the intent by Lessee or such
person to abandon such property so left in or upon the Premises, and such
leaving shall constitute abandonment of the property. It is understood and
acknowledged by the parties hereto that none of Lessor's servants, agents or
employees, have or shall have the actual or apparent authority to waive any
portion of this Section 19, and neither Lessee nor any other person designated
above shall have any right to leave any such property upon the Premises beyond
the time set forth herein without the written consent of Lessor. Lessor, its
agents or attorneys, shall have the right and authority without notice to
Lessee or anyone else, to remove and destroy, store, sell or otherwise dispose
of, such property, or any part thereof, without being in any way liable to
Lessee or anyone else therefor. Lessee shall be liable to Lessor for all
reasonable and necessary expenses incurred in such removal and destruction,
storage, sale or other disposition of such property. The said property removed
or the proceeds from the sale or other disposition thereof shall belong to the
Lessor as compensation for the removal and disposition of said property.
20. OTHER INTERESTS.
20.1 This Lease and Lessee's interest hereunder shall at all
times be subject and subordinate to the lien and security title of any deeds to
secure debt, deeds of trust, mortgages, or other interests heretofore or
hereafter granted by Lessor or which otherwise encumber or affect the Premises
and to any and all advances to be made thereunder and to all renewals,
modifications, consolidations, replacements, substitutions, and extensions
thereof (each of which is herein called the "Mortgage"), so long as any such
lien or security title holder agrees in writing that Lessee shall not be
disturbed in its possession of the Premises in the absence of a Lessee default
hereunder. This clause shall be self-operative and no further instrument of
subordination need be required by any holder of any Mortgage. In acknowledgment
of such subordination, Lessee shall, at Lessor's request, promptly execute,
acknowledge, and deliver any instrument which may be required to evidence
subordination to any Mortgage and, to the holder thereof, only (if Lessee shall
not be in default hereunder) in connection with Lessee's contemporaneous
receipt of such nondisturbance agreement. In the event of a failure of Lessee
to execute, acknowledge, and deliver any such instrument as promised by Lessee
in the foregoing sentence, Lessor may in addition to any other remedies for
breach of covenant hereunder, execute, acknowledge, and deliver the instrument
as the agent or attorney in fact of Lessee, and Lessee hereby irrevocably
constitutes Lessor its attorney in fact under limited power of attorney for
such purposes of execution, acknowledgment, and delivery of such instrument,
Lessee acknowledging that the appointment is coupled with an
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interest and is irrevocable. Lessee hereby waives and releases any claim it
might have against Lessor or any other party for any actions lawfully taken by
the holder of any such Mortgage.
20.2 In the event of a sale or conveyance by Lessor of Lessor's
interest in the Premises other than a transfer for security purposes only,
Lessor shall be relieved, from and after the date of transfer, of all
obligations and liabilities accruing thereafter on the part of Lessor solely to
the extent any such obligations and liabilities accrued following the effective
date of such transfer , provided that any funds in the hands of Lessor at the
time of transfer in which Lessee has an interest shall be delivered to the
successor of Lessor. This Lease shall not be affected by any such sale and
Lessee shall attorn to the purchaser or assignee in exchange for a
nondisturbance agreement from any such purchaser or assignee.
20.3 In the event of the enforcement by the holder of any
Mortgage, Lessee will, upon request of any person or party succeeding to the
interest of said holder, as a result of such enforcement, automatically become
the Lessee of such successor in interest without change in the terms or
provisions of this Lease; provided, however, that such successor in interest
shall not be (a) bound by any prepayment by Lessee to Lessor of Base Rental or
additional rent or advance rent for a period of more than one month in advance,
and all such rent shall remain due and owing notwithstanding such advance
payment, (b) bound by any security deposit which Lessee may have paid to any
prior lessor, including Lessor, unless such deposit is available to the party
who was the holder of such mortgage, deed of trust, or deed to secure debt at
the time of enforcement; (c) liable for any act or omission of any prior
lessor, including Lessor, or be subject to any offsets, defenses, or
termination rights of Lessee; (d) bound by any amendment or modification of
this Lease made without the written consent of such holder; or (e) personally
liable for monetary damages arising from a breach under the Lease after such
enforcement, the sole recourse of Lessee against such successor in interest on
account of such breach being limited, to the extent of any judgment obtained
for monetary damages, to such successor in interest's interest in the. Upon
request by such successor in interest, and upon such successor's submission to
Lessee of a nondisturbance agreement, Lessee shall execute and deliver an
instrument or instruments confirming the attornment herein provided for in a
form reasonably acceptable to such successor in interest. Notwithstanding
anything contained in this Lease to the contrary, in the event of any default
by Lessor in performing its covenants or obligations hereunder which would give
Lessee the right to terminate this Lease, Lessee shall not exercise such right
unless and until (aa) Lessee gives written notice of such default, which notice
shall specify the exact nature of said default and how the same may be cured,
to any holder(s) of any such mortgage, deed of trust or deed to secure debt who
has theretofore notified Lessee in writing of its interest and the address to
which notices are to be sent, and (bb) said holder(s) fail to undertake action
to cure said default within forty-five (45) days from the giving of such notice
by Lessee. The provisions of Section 20 shall govern the manner and effective
date of any notice to be given by Lessee to any such parties.
21. INTENTIONALLY DELETED
22. INTENTIONALLY DELETED.
23. HOLDING OVER. There shall be no renewal, extension, or
reinstatement of this Lease by operation of law. In the event of holding over
by Lessee after the expiration or sooner termination of this Lease, with
Lessor's acquiescence and without any express agreement of the parties, Lessee
shall be a tenant at sufferance and all of the terms, covenants, and conditions
of this Lease shall be applicable during that period, except that Lessee shall
pay Lessor as Base Rent for the period of the hold over an amount equal to 125%
of the Base Rent which would have been payable by Lessee under Section 2.1
hereof, had the hold-over period been part of the original Lease Term, together
with all additional rent due hereunder and together with any other Amount Due
under this Lease. The rent payable by Lessee during the hold-over period shall
be payable to Lessor on demand. If Lessee holds over as a tenant at sufferance,
Lessee shall vacate and deliver the Premises to Lessor upon demand. In the
event Lessee fails to surrender the Premises to Lessor upon expiration or other
termination of this Lease or of such tenancy at sufferance, then Lessee shall
indemnify Lessor against any and all loss or liability resulting from any delay
of Lessee in surrendering the Premises, including,
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but not limited to, any amounts required to be paid to third parties who were
to have occupied the Premises and any reasonable and actual attorneys' fees
related thereto.
24. NO WAIVER. Lessor and Lessee understand and acknowledge that no
assent, express or implied, by the other party to each of any one or more of
the terms, covenants or conditions hereof shall be deemed or taken to be a
waiver of any succeeding or other breach, whether of the same or any other
term, covenant or condition hereof.
25. BINDING EFFECT. All terms and provisions of this Lease shall be
binding upon and apply to the successors, permitted assigns, and legal
representatives of Lessor and Lessee or any person claiming by, through, or
under either of them or their agents or attorneys, subject always, as to
Lessee, to the restrictions contained in Section 11 hereof.
26. COMPLIANCE WITH PROTECTIVE COVENANTS. In addition to and without
in any way limiting any of the other provisions of this Lease, Lessee shall
comply with any protective covenants now or hereafter of record against the
Building or the Premises and with any changes to the covenants duly adopted
(herein called the "Protective Covenants"). It is expressly acknowledged that
all uses of the Building and Premises are subject to the covenants, conditions
and restrictions of Technology Park/Atlanta filed at Deed Book 389, Page 636,
Gwinnett County, Georgia, records, as may be amended and extended from time to
time. Lessor represents that Lessor has previously provided to Lessee the most
current version of the Protective Covenants, and Lessor further represents to
promptly provide Lessee with any changes or amendments thereto during the Lease
Term.
27. SIGNS. Lessee shall not install, paint, display, inscribe, place,
or affix any sign, picture, advertisement, notice, lettering, or direction
(herein collectively called "Signs") on any portion of the Premises exterior to
the Building, or the interior surface of glass and any other location which
could be visible from outside of the Building, without first securing written
consent from Lessor therefor. Any Sign permitted by Lessor shall at all times
conform with all municipal ordinances or other laws, regulations, deed
restrictions, and Protective Covenants. Lessee shall remove all Signs at the
expiration or other termination of this Lease, at Lessee's sole risk and
expense, and shall in a good and workmanlike manner properly repair any damage
caused by the installation, existence, or removal of Lessee's Signs.
28. INTENTIONALLY DELETED
29. ESTOPPEL CERTIFICATE. Lessee shall, at any time and from time to
time, upon not less than ten (10) days' prior written notice from Lessor,
execute, acknowledge, and deliver to Lessor a statement in writing certifying
that this Lease is unmodified and in full force and effect, or if modified,
stating the nature of the modification and certifying that this Lease, as so
modified, is in full force and effect, and the dates to which the rent and
other charges are paid, and acknowledging that Lessee is paying rent on a
current basis with no offsets or claims, and that there are not, to Lessee's
knowledge, any uncured defaults on the part of Lessor hereunder, or specifying
the offsets, claims, or defaults, if any are claimed, and such other
information, including, but not limited to, the most recent, financial
statements, reasonably required by Lessor. It is expressly understood and
acknowledged that any such statement may be relied upon by any prospective
purchaser or encumbrancer of all or any portion of the Premises or by any other
person to whom it is delivered.
30. SEVERABILITY. The terms, conditions, covenants, and provisions of
this Lease shall be deemed to be severable. If any clause or provision herein
contained shall be adjudged to be invalid or unenforceable by a court of
competent jurisdiction or by operation of any applicable law, it shall not
affect the validity of any other clause or provision herein, but the other
clauses or provisions shall remain in full force and effect.
31. ENTIRE AGREEMENT. Lessee acknowledges that there are no
covenants, representations, warranties, or conditions, express or implied,
collateral or otherwise, forming part of or in any way affecting or relating to
this Lease
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save as expressly set out in this Lease and that this Lease together with the
Exhibits attached hereto constitutes the entire agreement between the parties
hereto and may not be modified except as herein explicitly provided or except
by subsequent agreement in writing of equal formality hereto executed by Lessor
and Lessee.
32. CUMULATIVE REMEDIES. In the event of any default, breach, or
threat (as described in Section 12.3) of a breach by Lessee of any of the
covenants or provisions hereto, Lessor shall, in addition to all other remedies
as provided by this Lease, have the right of injunction and/or damages and the
right to invoke any remedy allowed at law or in equity, and may have any one or
more of the remedies contemporaneously. The various rights, remedies, powers,
options, and elections of Lessor reserved, expressed, or contained in this
Lease are cumulative and no one of them shall be deemed to be exclusive of the
others, or of such other rights, remedies, powers, options, or elections as are
now, or may hereafter, be conferred upon Lessor by law.
33. PARKING AREAS AND COMMON AREA CONTROL. Lessor warrants and
represents that Lessee's rights as described herein include the exclusive use,
at no additional cost to Lessee, of 132 parking spaces located on the Land.
Lessee covenants and agrees to fully cooperate with Lessor in the enforcement
of any program of rules and regulations designed for the orderly control and
operation of parking areas located on the Land; provided, however, that Lessor
shall have the right to change the area, level, location, and arrangement of
portions of the Common Area so long as in so doing Lessor does not materially
and adversely affect ingress to and egress from the Building or the Premises.
Nothing in this Section shall be construed to limit the Lessor's agreement
regarding addition of parking places as described in Exhibit E (Special
Stipulations).
34. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given when delivered in person or
when sent by overnight courier service or deposited in the United States mail,
return receipt requested, addressed to the parties at the respective addresses
set out below:
If to Lessee: Prior to the Commencement Date:
BioShield Technologies, Inc.
Attention: Timothy C. Moses
4405 International Boulevard
Suite B109
Norcross, Georgia 30093
After the Commencement Date:
BioShield Technologies, Inc.
Attention: Timothy C. Moses
5655 Peachtree Parkway
Norcross, Georgia 30092
With a copy to:
Gerald B. Kline, Esq.
Sims Moss Kline & Davis LLP
1000 Abernathy Road
Suite 310
Atlanta, Georgia 30328
-25-
<PAGE> 26
If to Lessor: Cologne Investors, Ltd.
c/o Jamestown Management Corporation
Two Paces West, Suite 1600
2727 Paces Ferry Road
Atlanta, GA 30339
with copy to: Technology Park/Atlanta, Inc.
Attention: President
11555 Medlock Bridge Road
Suite 150
Duluth, Georgia 30097
or to such other addresses as the parties may direct from time to time by
thirty (30) days' written notice. However, the time period in which a response
to any notice, demand, or request must be given, if any, shall commence to run
from the date of receipt of the notice, demand, or request by the addressee
thereof. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given shall be deemed to be
receipt of the notice, demand, or request sent.
35. RECORDING. Neither this Lease nor any portion hereof shall be
recorded unless both parties hereto agree to the recording.
36. ATTORNEYS' FEES. The non-prevailing party agrees to pay the
prevailing party's reasonable attorneys' fees, collection costs, and other
costs and expenses which the prevailing party incurs in enforcing any of the
obligations of the defaulting party under this Lease; provided that if Lessee
shall be in default for failure to pay any sum of money validly owed under this
Lease by Lessee, and Lessor shall bring an action to collect such sum, Lessor
shall be presumed to be the prevailing party.
37. HOMESTEAD. Lessee waives all homestead rights and exemptions
which it may have under any law as against any obligations owing under this
Lease. Lessee hereby assigns to Lessor its homestead right and exemption.
38. TIME OF ESSENCE. Time is of the essence of this Lease.
39. LESSOR-LESSEE RELATIONSHIP. This Lease shall create the
relationship of landlord and tenant between Lessor and Lessee, and nothing
contained herein shall be deemed or construed by the parties hereto, or by any
third party, as creating the relationship of principal and agent, or of
partnership, or of joint venture, or of any relationship other than landlord
and tenant between the parties hereto.
40. ACCORD AND SATISFACTION. No payment by Lessee or receipt by
Lessor of a lesser amount than the Base Rent, additional rent, or any other
Amount Due herein stipulated shall be deemed to be other than on account of the
earliest of such amount then due, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Lessor may accept the check or payment without
prejudice to Lessor's right to recover the balance of the rent or pursue any
other remedy provided in this Lease.
41. BROKERS' FEES. With the exception of Technology Park/Atlanta,
Inc., broker representing Lessor; Lessor and Lessee warrant and represent, each
to the other, that it has had no dealings with any broker or agent in
connection with this Lease, and Lessor and Lessee hereby indemnify each other
against, and agree to hold each other harmless from, any liability or claim,
and all expenses, including attorneys' fees, incurred in defending any such
claim or in enforcing this indemnity, for a real estate brokerage commission or
similar fee or compensation arising out of or
-26-
<PAGE> 27
in any way connected with any claimed dealings with the indemnitor and relating
to this Lease or the negotiation thereof. Lessor shall compensate Technology
Park/Atlanta, Inc. per a separate Commission Agreement.
42. MISCELLANEOUS.
42.1 Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall
be held to include the plural unless the context otherwise requires.
42.2 The captions are inserted in this Lease for convenience
only, and in no way define, limit, or describe the scope or intent of this
Lease, or of any provision hereof, nor in any way affect the interpretation of
this Lease.
42.3 This Lease is made and delivered in the State of Georgia
and shall be governed by and construed in accordance with the laws of the State
of Georgia.
For additional terms and stipulations of this Lease, if any, see
EXHIBIT "E", attached hereto and by this reference incorporated herein and made
a part hereof.
-27-
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals the day and year first above written.
LESSOR:
-------
COLOGNE INVESTORS, LIMITED
By:
---------------------------------
Attest:
-----------------------------
Name:
-----------------------
Title:
----------------------
[CORPORATE SEAL]
------------------------------------
ERWIN WALTER GRAEBNER
LESSEE:
-------
BIOSHIELD TECHNOLOGIES, INC.
By:
---------------------------------
Attest:
-----------------------------
Name:
-----------------------
Title:
----------------------
[CORPORATE SEAL]
-28-
<PAGE> 29
AND TECHNOLOGY PARK/ATLANTA, INC. executes this Lease for purposes of Section
5.7 hereof and as Broker.
BROKER:
TECHNOLOGY PARK/ATLANTA, INC.
By:
---------------------------
Richard R. O'Brien
President
-29-
<PAGE> 30
SCHEDULE OF EXHIBITS
EXHIBIT "A" Legal Description
EXHIBIT "B" Outline of Premises
EXHIBIT "C" General Plans
EXHIBIT "D" Rules and Regulations
EXHIBIT "E" Special Stipulations
EXHIBIT "F" Shared Expenses
-1-
<PAGE> 31
EXHIBIT "A"
LEGAL DESCRIPTION
Exhibit "A" - Legal Description ~ Page- 1 -
<PAGE> 32
EXHIBIT "B"
OUTLINE OF PREMISES
Exhibit "B" -Outline of Premises~ Page- 1 -
<PAGE> 33
EXHIBIT "C"
GENERAL PLANS
To Be Attached.
EXHIBIT "D"
RULES AND REGULATIONS
1. As part of the initial improvements to the Premises, Lessor agrees to
furnish Lessee two keys for each keyed door located within the Premises
without charge. Any pass keys or key cards required by Lessee must be
obtained from Lessor at a reasonable cost to be established by Lessor.
Lessee shall not alter any lock or install any new or additional locks or
bolts on any doors or windows of the Premises without obtaining Lessor's
prior written consent. All keys and key cards to Premises shall be
surrendered to Lessor upon termination of this Lease.
2. All contractors and installation technicians shall comply with Lessor's
rules and regulations pertaining to construction and installation. This
provision shall apply to all work performed on or about the Premises,
including installation of telephones, computer wiring, electrical devices
and attachments, and installations of any nature affecting floors, walls,
woodwork, trim, windows, ceilings, and equipment, or any other physical
portion of the Premises.
3. No signaling or telephonic devices, including antennae and satellite
dishes, or other wires, cabling and instruments or devices shall be
installed in connection with the Premises without the prior written
consent of Lessor. No advertising banners or balloons or any other items
which require fastening to the Premises are permitted without prior
written consent from Lessor. Mechanical equipment, utility meters, and/or
storage tanks will not be placed in or on the Premises without Lessor's
prior written approval.
4. Lessee shall not overload the floor of the Building; safes and other
heavy articles shall be placed by Lessee only in such manner as may be
specified in writing by Lessor, and any damage done to the Building or
other parts of the Premises from overloading a floor, or injury to
persons in moving safes or other heavy articles in or out of the Building
or Premises, shall be paid for by the Lessee.
5. All moving activity into or out of the Building must be scheduled with
the Lessor, and shall be under supervision of Lessor and carried out in a
manner that shall comply with Lessor's Rules and Regulations. Lessee
assumes, and shall indemnify Lessor against all loss, liability, cost,
expense, risk or claim of damage or injury to persons and properties
arising in connection with any said movement.
6. Lessee shall not place or use in or about the Premises any product
causing objectionable odors such as but not limited to furniture refinish
material, strong cleaners, gasoline, kerosene, oil, acids, caustics, or
any flammable explosive, or hazardous material without the prior written
consent of Lessor, which shall not be unreasonably withheld and which
shall be considered in light of the use for which Lessee is permitted
under this Lease to use the Premises.
7. Lessee shall not use any method of heating or air-conditioning, other
than that supplied by Lessor, without Lessor's prior written consent.
Space heaters are an electrical fire hazard, and are not to be used in
Lessee's Premises.
8. No cooking shall be done or permitted on the Premises, except that
Underwriters' Laboratory (UL)-approved equipment and microwave ovens may
be used in the Premises for heating food and brewing coffee, tea, hot
chocolate, and similar beverages for employees and visitors. This use
must be in accordance with all applicable federal, state, and city laws,
ordinances, rules, and regulations. Lessee shall not use outdoor grills
or cooking equipment, nor place picnic tables, tents, sports equipment,
etc. in or about the Premises, without prior written approval from
Landlord.
Exhibit "C" - General Plans ~ Page- 1 -
<PAGE> 34
9. Lessee shall not, at any time, occupy any part of the Premises as sleeping
or lodging quarters.
10. No dogs, cats, fowl or other animals shall be brought into, or kept in or
about the Premises except for those animals utilized to assist any
persons with disabilities. Lessor should be notified in advance, and in
writing, if any such animals will be utilized on a regular basis.
11. No Lessee, or their employees or invitees, shall disturb occupants of the
Premises by the use of any radios, tape or cd players, or other musical
instruments, or the making of objectionable noises by any unreasonable
use. Office parties and functions should be limited to an appropriate
portion of the Building occupied by Lessee. Catering services shall use
service entrance for deliveries.
12. All canvassing, soliciting, and peddling in or about the Premises is
prohibited. Lessee, Lessee's employees, and Lessee's agents shall not
loiter in or on the entrances, corridors, sidewalks, lobbies, halls or
common areas, or disturb, solicit, or canvas any occupant of the
Premises. Lessor reserves the right to exclude or expel from the Premises
any person who, in Lessor's reasonable judgment, is under the influence
of alcohol or drugs, or commits any act in violation of any of these
Rules and Regulations.
13. The restrooms, urinals, wash bowls, and other apparatus shall not be used
for any purpose other than that for which they were constructed, and no
foreign substance of any kind shall be thrown or poured into them. The
expense of any breakage, stoppage, or damage resulting from violation of
this rule shall be borne by the Lessee who caused, or whose employees,
agents, contractors, invitees, or licensees caused the breakage,
stoppage, or damage.
14. None of the parking, plaza, recreation, or lawn areas, entries, passages,
doors or hallways shall be blocked or obstructed; nor shall any rubbish,
litter, trash or material of any nature be placed, emptied or thrown into
these areas; nor shall these areas be used by Lessee's agents, employees,
and/or invitee's at any time for purposes which are inconsistent with
their designation by Lessor.
15. No signs of any type or description shall be erected, placed, or painted
in or about the doors and windows, the Building, the Common Area, or
other parts of the Premises except those signs submitted to Lessor in
writing and approved by Lessor in writing and which signs are in
conformance with the technology park's protective covenants. No covers or
awnings over or outside of the windows nor draperies or coverings hung
inside the windows will be permitted without Lessor's prior written
approval.
16. Lessee and its employees, agents, and invitees shall park their vehicles
only in those parking areas designated by Lessor and entirely within the
lines. All directional signs, arrows, and posted speed limits must be
observed. Bicycles, motorcycles or other mobile devices shall not be
allowed or placed anywhere on the Premises, except for in those areas so
designated. Parking is prohibited in areas not striped for parking, in
aisles where "No Parking" signs are posted, on ramps, in crosshatched
areas, and in other areas as may be designated by Lessor.
17. Lessee and its employees, agents, and invitees shall not leave any
vehicle in a state of disrepair, including, without limitation, flat
tires, oil or damaging fluid leaks, out-of-date inspection stickers or
license plates, on the Premises. If Lessee or its employees, agents or
invitees park their vehicles in areas other than the designated parking
areas or leave any vehicle in a state of disrepair, Lessor, after
ticketing vehicle in violation, shall have the right to remove such
vehicle at its owner's expense. No vehicle maintenance will be done on
the Premises without prior written consent of Lessor.
18. Lessee and its employees, agents, and invitees shall park their vehicles
in compliance with all parking rules and regulations, including any
sticker or other identification system established by Lessor. Parking
stickers or other forms of identification supplied by Lessor shall remain
the property of Lessor and are not transferrable. Vehicles should be kept
locked; any damage to vehicles or persons is assumed by the vehicle's
owner or its driver.
Exhibit "C" - General Plans ~ Page- 2 -
-30-
<PAGE> 35
19. Employees of Lessor shall not be responsible to carry messages from or to
Lessee. Nor shall employees of Lessor contract with, or render free or
paid service to any Lessee or to any of Lessee's agents, employees, or
invitee's which service is not covered in this Lease, without prior
written notice to Lessor.
20. Lessee shall comply with all safety, fire protection, and evacuation
procedures and regulations established by Lessor or by any government
agency. All Christmas trees placed in or on the Premises must be
fire-resistant artificial trees. Any lighting attached to trees or
decorations must be UL approved and designated for the purpose being
used. Installation of any decorations that could be deemed potential fire
hazards requires prior written approval of Lessor. Decorations outside of
the Building shall also require prior Lessor approval.
21. Lessor reserves the right at any time to change or rescind any one or
more of these Rules and Regulations or to make any additional reasonable
Rules and Regulations that, in Lessor's judgment, may be necessary for:
a. The management, safety, care, and cleanliness of the Premises.
b. The preservation of good; and
c. The convenience of other occupants and tenants in the Premises.
Lessor may waive any one or more of these Rules and Regulations for the benefit
of any particular tenants. No waiver by Lessor shall be construed as a waiver
of those Rules and Regulations in favor of any other tenant, and no waiver
shall prevent Lessor from enforcing those rules and Regulations against any
other tenant of the Premises. Lessee shall be considered to have read these
Rules and Regulations and to have agreed to abide by them as a condition of
Lessee's occupancy of the Premises.
Exhibit "C" - General Plans ~ Page- 3 -
<PAGE> 36
EXHIBIT "E"
SPECIAL STIPULATIONS
1. OPTION TO TERMINATE: Provided that Lessee provides Lessor with written
notice of termination on or before February 1, 2007, and provided that Lessee
pays over to Lessor an amount equal to two months' rental ($140,522.96), Lessee
may terminate this Lease so that the Lease Term will expire on November 1,
2007.
2. GUARANTY: Lessee's obligation under this Lease shall be guaranteed by Allergy
Superstore.Com, Inc. pursuant to a form of Guaranty to be executed at the time
this Lease is executed.
3. ADDITIONAL PARKING: Lessor shall after the third year of the Lease Term
(provided that Lessee's employee head count requires) add additional parking as
may be required by Lessee up to an additional 68 parking spaces. The cost of
such additional parking shall be shared one-half (1/2) by Lessee and one-half
(1/2) by Lessor up to a maximum of $80,000.00 total to be paid by Lessor. The
parking expansion is expressly subject to Gwinnett County's planned abandonment
of the driveway area (the "Abandonment"), which is intended to allow for the
parking expansion. Lessor at Lessor's sole cost shall use reasonable efforts to
see that the Abandonment is complete within sixty (60) days from the
Commencement Date of this Lease.
4. SIGNAGE: Subject to Lessor's architectural control review and approval, and
Gwinnett County ordinances, Lessee shall have the right but not the obligation
to refinish at Lessee's sole cost and expense, the current signage existing at
the entrance to the Building fronting Peachtree Parkway.
5. BUILDING SYSTEMS: Exclusive of the work contemplated in Section 10 hereof,
Lessor shall deliver the Building systems therein in good working order, and
any work associated with putting the Building systems in such good working
order shall be done so at Lessor's cost. Without limiting the foregoing, Lessor
shall perform the following maintenance and repair items: (i) clean condenser
coils on all three HVAC units located upon the Building; (ii) repair broken
condensate drain tap on HVAC unit RTU #2; (iii) repair damaged lap seams on
roof; (iv) complete HVAC ground floor compressor replacement; and (v) render
irrigation system operational. Lessor agrees that it will not replenish,
replace, upgrade or render operational, the Halon 1303 fire suppression system
situated upon the Premises unless so requested by the Lessee and at Lessee's
expense.
6. BUILDING SECURITY: Lessor shall insure that all keycard accesses to and
within the Building shall be in operating order upon delivery of the Premises.
7. CABLING/SATELLITE COMMUNICATION: Lessor consents to Lessee's rooftop
installation of a DVD-type system (or technological enhancement thereof) on the
Building's roof along with associated interior cabling; provided that Lessee
shall not cause any penetration of the roof without Lessor's explicit advance
consent to details of the same, and an opportunity of Lessor to confirm that
such installation will not adversely affect any warranty on the roof.
Exhibit "E" - Special Stipulations ~ Page-1
<PAGE> 37
EXHIBIT "F"
SHARED EXPENSES
Exhibit "F" - Shared Expenses - Page-1
<PAGE> 1
EXHIBIT 10.086
GUARANTY
THIS GUARANTY, made as of the ____ day of ____________, 1999, by and
between Allergy Superstore.com, Inc. (herein called "Guarantor"), and Erwin
Walter Graebner and COLOGNE INVESTORS, LIMITED (herein called "GCIL");
W I T N E S S E T H: That
WHEREAS, GCIL, as Lessor, and BIOSHIELD TECHNOLOGIES, INC., as Lessee
("Lessee"), entered that certain Lease herewith with respect to the lease of
certain premises located at 5655 Peachtree Parkway, Norcross, Gwinnett County,
Georgia , Georgia (herein called the "Lease"); and
WHEREAS, to induce GCIL to enter into the Lease with Lessee, Guarantor
agreed to guarantee payment by Lessee of its obligations to GCIL under the
Lease; and
WHEREAS, the Lease will be of direct benefit and advantage to
Guarantor;
NOW, THEREFORE, in consideration of the foregoing, and to induce GCIL
to enter into the Lease with Lessee, Guarantor does hereby covenant and agree
to, with and for the benefit of GCIL as follows:
1. Warranties. Guarantor represents and warrants that this
Guaranty has been duly authorized, executed and delivered by Guarantor and is a
legal, valid and binding instrument enforceable against Guarantor in accordance
with its terms.
2. Guaranty. Guarantor hereby unconditionally guarantees to GCIL
the full and punctual payment and performance by Lessee of all amounts of the
Lease and The First Amendment to Lease on Lessee's part to be paid therein.
3. Lease. The obligations of Guarantor hereunder shall in no way
be released or otherwise affected by any of the following, each of which may be
effected without notice to Guarantor:
3.1 any waiver by GCIL of any of the terms, covenants or
conditions of the Lease;
3.2 the giving by GCIL or by Lessee of consent to any matter
or thing under or relating to the Lease;
3.3 the granting by GCIL of any indulgences or extensions of
time to Lessee;
3.4 the receipt, application or release by GCIL of, or failure
by GCIL to apply, any security given for the performance or observance of the
terms, covenants and conditions on Lessee's part to be performed or observed
under the Lease;
3.5 any modification or amendment of the Lease (upon the
occurrence of which this Guaranty shall apply to the Lease, as thus modified or
amended); and
3.6 any permitted assignment of the interest of Lessee in the
lease.
PROVIDED, HOWEVER, notwithstanding anything to the contrary contained
in paragraphs 2 and 3 hereof, if any of the terms, covenants and conditions of
the Lease to be performed or observed by Lessee are amended, modified or changed
by an amendment to the Lease, and such modification increases the Lessee's
obligations, any increase in the obligation of the Guarantors on account of the
modification of the Lease will be subject to re-execution of the Guaranty.
However, Guarantor shall remain obligated under this Guaranty for Lessee's
payment obligations that existed as of the date of execution of this Guaranty.
<PAGE> 2
4. No Release. The obligations of Guarantor hereunder shall not
in any way be released or affected by:
4.1 the release or discharge of Lessee in any creditor's,
receivership, bankruptcy or other proceedings relating to Lessee;
4.2 the impairment, limitation or modification of the
liability of Lessee or the successors of Lessee in bankruptcy, or any remedy for
the enforcement of Lessee's liability under the Lease, resulting from the
operation of any present or future provision of federal or state law or other
statute, or from the decision of any court;
4.3 the rejection or disaffirmance of the Lease in any
proceedings relating to Lessee and which are referred to in paragraphs 4.1 and
4.2 hereof;
4.4 any disability or other defense of Lessee, other than
actual payment of the amount with respect to which a default is claimed by GCIL;
4.5 the cessation from any cause whatsoever of the liability
of Lessee under the Lease, except cessation of liability resulting form (i) the
expiration or earlier termination of the Lease for reasons other than (A)
default by Lessee or (B) arising out of the events described in paragraphs 4.1,
4.2, 4.3 and 4.4 hereof or (ii) a release or discharge of Lessee in accordance
with the express terms of the Lease; or
4.6 the cessation of the existence of Lessee in any manner or
for any cause, including, without limitation, dissolution, merger or
consolidation.
5. No Subrogation. Until all of the covenants and conditions of
the Lease on Lessee's part to be performed or observed are fully performed or
observed, Guarantor:
5.1 shall have no right to subrogation against Lessee by
reason of any payments by Guarantor, in compliance with the obligations of
Guarantor hereunder;
5.2 subordinates any liability or indebtedness of Lessee now
or hereafter held by Guarantor to the obligations of Lessee to GCIL under the
Lease.
6. Waiver. Guarantor hereby expressly waives notice of acceptance
of this Guaranty and notice of non-performance or non-observance of the terms,
covenants and conditions of the Lease on Lessee's part to be performed or
observed. Further, Guarantor hereby expressly waives all rights it may have now
or in the future under any statute, or at common law, or at law or in equity, or
otherwise, including, without limitation, any rights Guarantor may have under
Section 10-7-24 Official Code of Georgia Annotated, to compel GCIL to proceed
with respect to the guaranteed obligations against Lessee before proceeding
against, or as a condition to proceeding against, Guarantor. Guarantor agrees
that any notice or direction given at any time to GCIL which is inconsistent
with the waiver contained herein shall be void and may be ignored by GCIL, and,
in addition, may not be pleaded or introduced as evidence in any litigation
relating to this Guaranty for the reason that such pleading or introduction
would be at variance with the written terms of the Guaranty, unless GCIL has
specifically agreed otherwise in writing, signed by a duly authorized officer.
7. Liability. This is a guaranty of payment and not collection.
GCIL may proceed directly against Guarantor under this Guaranty without being
required to proceed against Lessee under the Lease, or to exhaust any rights or
remedies which GCIL may have against Lessee including, without limitation, any
other remedies contained in the Lease. GCIL may pursue its remedies under this
Guaranty concurrently with or independently of any action or proceeding relating
to the Lease which GCIL may institute against Lessee.
8. Applicable Modifications. This Guaranty shall apply to any
modification or amendment of the Lease with the same effect as if said
modification or amendment had been entered into by Lessee on the
<PAGE> 3
date hereof and had been hereinabove described as the Lease covered by this
Guaranty.
9. Binding Effect. This Guaranty shall be binding upon Guarantor,
its successors and assigns, and shall inure to the benefit of GCIL, its
successors and assigns.
10. No Amendment. This Guaranty may not be modified, discharged or
terminated orally or in any manner other than by agreement in writing signed by
GCIL and Guarantor.
11. Choice of Law. This Guaranty shall be governed and construed
in accordance with the laws of the State of Georgia.
12. Severability. Whenever possible, each provision of this
Guaranty shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Guaranty shall be prohibited
by or invalid under any such law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provision of this Guaranty.
12. Benefit. All obligations of Guarantor under this Guaranty are
imposed solely and exclusively for the benefit of GCIL, its successors and
assigns, and no other person shall have standing to require compliance with such
obligations in accordance with their terms, and no other person shall, under any
circumstances, be deemed to be the beneficiary of such obligations.
13. Notice. GCIL agrees to provide copies of all Notices under the
Lease to Guarantor at the address stated below.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal the
day and year first above written.
GUARANTOR:
Allergy Superstore.com, Inc.
By:
---------------------------------------
Title:
------------------------------------
Address:
Allergy Superstore.com, Inc.
Attention: Timothy C. Moses
5655 Peachtree Parkway
Norcross, Georgia 30092
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 4
GCIL:
COLOGNE INVESTORS, LIMITED
By:
---------------------------------------
Title:
------------------------------------
[Corporate Seal]
------------------------------------------
Erwin Walter Graebner
<PAGE> 1
EXHIBIT 10.087
FINANCIAL ADVISORY AND CONSULTING AGREEMENT
This agreement ("Agreement") is made and entered into this 1st day of
August 1999, between BioShield Technologies, Inc., a Georgia corporation ("the
Company") and White Capital Group, Ltd. (the "Consultant").
In consideration of and for the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Purpose. The Company hereby retains the Consultant on a non-exclusive
basis during the term specified to render consulting advice to the Company as
the Company may reasonably request relating to financial and similar matters,
upon the terms and conditions as set forth herein.
2. Term and Compensation. This Agreement shall be effective commencing on
the date first written above (the "Engagement Period"). The Company agrees to
award to Consultant as compensation, a warrant to purchase up to 110,000 shares
in the aggregate of common stock of the Company (the "Warrant"). The Warrant
issued shall be exercisable for a period of five years at an exercise price as
follows: 30,000 shares @ $15/share, 30,000 shares @ $20/share, and 50,000
shares @ $25/share subject to proportional adjustment in the event of a stock
split and shall be paid in equal monthly installments of 13,750 warrants over
an 8 month period at the end of each month. Such warrants shall be granted
piggyback registration rights, excluding acquisitions, mergers and alliances.
3. Duties of Consultant. During the term of this Agreement, the Consultant
will provide the Company with such regular and customary non-exclusive
consulting advice as is reasonable requested by the Company, provided that the
Consultant shall not be required to undertake duties not reasonable within the
scope of the consulting advisory services contemplated by this Agreement. In
performance of these duties, the Consultant shall provide the Company with the
benefits of its best judgment and efforts. It is understood and acknowledged by
the parties that the value of the Consultant's advice is not measurable in any
quantitative manner, and that the Consultant shall not be obligated to spend
any specific amount of time doing so. The Consultant's duties may at the
direction of the Company include, but not necessarily be limited to on a
non-exclusive basis:
A. Providing sponsorship and exposure in connection with the dissemination
of corporate information regarding the Company to the investment community at
large.
B. Assisting in the Company's financial public relations, including
discussions between the Company and the financial community.
C. Advice regarding the financial structure of the Company and its
divisions or subsidiaries or any programs and projects, as such issues relate
to the public market for the Company's equity securities.
Page 1 of 5
<PAGE> 2
D. Rendering advice with respect to any acquisition program of the
Company, as such program relates to the public market for the Company's equity
securities.
E. Rendering advice regarding the public market for the Company's
securities and the timing and structure of any future public offering of the
Company's equity securities.
It is expressly understood that no actual or express authority on behalf
of the Company is granted by the Company hereunder to Consultant.
4. Relationships with others. The Company acknowledges that the
Consultant or its affiliates is in the business of providing, among other
things, financial service and consulting advice (of all types contemplated by
this Agreement) to others. Nothing herein contained shall be construed to limit
or restrict the Consultant in conducting such business with respect to others,
or in rendering such advise to others. In connection with the rendering of
services hereunder, Consultant has been or will be furnished with confidential
information concerning the Company including, but not limited to, financial
statements and information, cost and expense date, production data, trade
secrets, marketing and customer data, and such other information not generally
obtained from public or published information or trade sources. Such
information shall be deemed "Confidential Material" and, except as specifically
provided herein, shall not be disclosed by Consultant or its employees or
agents without prior written consent of the Company. In the event Consultant
is required by applicable law or legal process to disclose any of the
Confidential Material, it is agreed that Consultant will deliver to the Company
immediate notice of such requirement prior to disclosure of same to permit the
Company to seek an appropriate protective order and/or waive compliance of this
provision. If, in the absence of a protective order or receipt of written
waiver, Consultant is nonetheless, in the reasonable written opinion of
Consultant's counsel, compelled to disclose any Confidential Material,
Consultant may do so without liability hereunder provided that notice of such
prospective disclosure is delivered to the Company at least five (5) days prior
to actual disclosure. Following the termination of this Agreement, Consultant
shall deliver to the Company all Confidential Material. Neither party hereto
will issue any public announcement concerning this Agreement without the
approval of the other party, provided however that nothing shall prevent the
Company from fulfilling its obligations to disclose the contents of this
Agreement with the U.S. Securities & Exchange Commission (the "SEC").
5. Consultant's Liability. The Consultant agrees to defend, indemnify,
and hold the Company, its officers, directors, employees, advisors, attorneys
and agents harmless from and shall indemnify the foregoing persons and entities
against any and all costs, expenses and liability (including reasonable
attorney's fees paid in connection with the investigations and/or the defense
of the such entities and persons) which may in any way result from a breach of
any representation, warranty or covenant made by Consultant or from any
services rendered by the Consultant pursuant to or in any connection with this
Agreement.
6. Expenses. The Company, upon receipt of appropriate supporting
documentation, shall reimburse the Consultant for any and all reasonable and
actual out-of-pocket expenses
Page 2 of 5
<PAGE> 3
incurred in connection with services provided to the Company, subject in each
case to prior written approval of the Company.
7. Limitation Upon the Use of Advice and Services.
(a) No person or entity, other than the Company or any of its
subsidiaries or directors or officers of each of the foregoing, shall be
entitled to make use of or rely upon the advice of the Consultant to be given
hereunder.
(b) It is clearly understood that the Consultant, for services rendered
under this Agreement, makes no commitment whatsoever as to recommend or advise
its clients to purchase the securities of the Company. Research reports or
corporate finance reports that may be prepared by the Consultant will, when and
if prepared, be done solely on the merits or judgment of analysts of the
Consultant or any senior finance personnel of the Consultant.
(c) Use of the Consultant's name in annual reports or any other report of
the Company or releases by the Company must have the prior approval of the
Consultant unless the Company is required by law to include Consultant's name
in such annual reports, other report or release of the Company, in which event
Consultant will be furnished with copies of such annual reports or other
reports or releases using Consultant's name in advance of publication by the
Company.
8. Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is deemed unlawful or invalid for
any reason whatsoever, such unlawfulness or invalidity shall not affect the
validity of this Agreement. At the sole discretion of the Company, this
agreement may be terminated with a thirty (30) day notice.
9. Miscellaneous.
(a) Any notice or other communication between parties hereto shall be
sufficiently given if sent by certified or registered mail, postage prepaid, or
faxed and confirmed if to the Company, addressed to it at BioShield
Technologies, Inc., Attention: Timothy C. Moses, 5655 Peachtree Parkway,
Norcross, Georgia 30092 or if to the Consultant, addressed to it at White
Capital Group, Ltd., 249-14 34th Avenue, Little Neck, New York 11363, Attention:
Mrs. Susan Mirman. Such notice or other communication shall be deemed to be
given on the date of receipt.
(b) If the Consultant shall cease to do business, the provisions hereof
relating to duties of the Consultant and all compensation to be paid by the
Company as it applies to the Consultant shall thereupon terminate and cease to
be in effect.
(c) This Agreement embodies the entire agreement and understanding between
the Company and the Consultant and supersedes any and all negotiations, prior
discussions and preliminary and prior agreements and understandings related to
the central subject matter hereof.
(d) This Agreement has been duly authorized, executed and delivered by
and on behalf of the Company and the Consultant.
Page 3 of 5
<PAGE> 4
(e) The validity, interpretation, and construction of this
Agreement will be governed by the laws of the State of Georgia applicable to
contract entered into and performed entirely with said state without regard to
the principles of conflict of laws. Any dispute or controversy between the
parties arising in connection with this Agreement or the subject matter
contemplated by this Agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act.
9 U.S.C. I et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. The parties further
agree that any arbitration action between them shall be heard in Atlanta,
Georgia. Notwithstanding anything contained herein to the contrary, nothing
contained herein shall prevent either party from initiating a civil action for
temporary or permanent injunctive and other equitable relief against the other
for breach of this Agreement. The parties expressly consent to the jurisdiction
and venue of the Superior Court of Fulton County, Georgia and the United States
District Court for the Northern District of Georgia, Atlanta Division for the
adjudication of any civil action asserted pursuant to this Paragraph.
(f) There is no relationship or partnership, agency, employment,
franchise, or joint venture between the parties. Neither party has the authority
to bind the other or incur any obligation on its behalf.
(g) This Agreement and the rights hereunder may not be assigned by
either party (except by operation of law or merger) and shall be binding upon
and inure to the benefit of the parties and their respective successors, assigns
and legal representatives.
(h) Consultant is not a party to any proceeding or action which
would prevent it from performing services pursuant to this Agreement.
(i) Sections 4 and 5 shall survive the expiration or termination of
this Agreement.
Page 4 of 5
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date hereof.
BIOSHIELD TECHNOLOGIES, INC.
By: Timothy C. Moses
----------------------------------------------
Name: Timothy C. Moses
--------------------------------------------
Title: CEO
-------------------------------------------
WHITE CAPITAL GROUP, LTD.
249-14 24th Ave., Little Neck, New York 11363
By: Susan Mirman
----------------------------------------------
Name: Susan Mirman
--------------------------------------------
Title: President
-------------------------------------------
Page 5 of 5
<PAGE> 1
EXHIBIT 10.088
[HARWOOD HOUSE LETTERHEAD]
Interior Design
459 Atlanta Country Club Dr.
Marietta, Georgia 30067
Telephone (770) 952-5655
Fax (770) 952-4987 Date: August 18, 1999
Contract of Services: Harwood House, Renie Harwood - Designer.
This agreement is made on August 18, 1999 between Harwood House and Mr. Tim
Moses, chief executive officer E.M.D.com, Inc.
1. Fee:
a. It is understood and agreed that a fee of $55,000 is to be paid to
Renie Hardwood for design and consulting services.
b. The sum of one half ($27,500) will be made as a deposit upon the
signing of this contract.
c. The balance due will be paid upon the completion of the designer's
services stated in this contract.
2. Purchasing:
a. Harwood House will provide the design scene and will purchase all
furniture, rugs, art, etc. for the officers of the two top executives,
Mr. Tim Moses and Mr. Jacques Effersy.
b. The above items will be sold to the client at the designer's
wholesale cost plus 30% handling fee. Freight and delivery charge will
be additional.
c. The estimated budget for each executive office will be approximately
$40,000.
It is my pleasure to be involved in the design of your new office complex. I
will do my best and thank you for the opportunity.
/s/ Renie Harwood /s/ Tim Moses
- --------------------------- ------------------------------
Renie Harwood Tim Moses
<PAGE> 1
EXHIBIT 10.089
[LOGO]
SUMMIT MARKETING GROUP, INC.
Collateral Marketing Material Proposal
Project: EMD.com
August 19, 1999
Client: Tim Moses
CEO BioShield
5655 Peachtree PARKWAY
Norcross, GA 30092
Job Name: EMDCOL 99 Customer #: 62706
The following information represents deliverable for estimated quantities of
the following collateral materials. Your signature on the line below authorizes
us to begin work on graphic design and production.
- - Initial comps, design, layout and final layout, copy writing, editing for
the following items:
<TABLE>
<CAPTION>
ITEM ESTIMATED QUANTITY
<S> <C>
EMD pocket folders/envelopes 5,000
Letterhead and envelopes 5,000
Business Card Shell Design
MD brochure self-mailer 20,000
with pocket to house CD (video
and demo) and the physician
contract
Patient information card 150,000 or 200,000
Promotional product to affix
to the card 150,000 or 200,000
Point-of-Sale poster/information holder 2,000 or 5,000
</TABLE>
- - Copy writing and production of the Physician Letter
- - Acquisition and creation of the data base based on EMD Medical Advisory
Board mailing list
2120 Powers Ferry Road - Suite 300 - Atlanta, Georgia 30339 - 770-956-9500
<PAGE> 2
Additional projects to be quoted as needed:
- - Dinner favor for physicians attending dinner presentations
- - Thank-you gift for ambassadors (those physicians initially signing-up for
EMD)
- - Dinner invitations and follow-up thank-you notes
- - Dinner event costs
TERMS:
1. Contract begins August 19, 1999 and extends through the printing phase of
the project.
2. Authorization in the form of a P.O. # for a total price of $150,000 which
will be used to bill against once each deliverable is approved and
produced.
3. Deposit of $20,000 to begin the project.
4. All out-of-pocket expenses included but not limited to shipping, long
distance, courier, travel, postage etc., will be billed separately with
30-day payment terms.
The signatures below represent acceptance of this proposal and serve as a legal
and binding document between parties.
P.O. #
-------------------------------
/s/ Thomas D. Major /s/ Tim Moses
- ----------------------------------------- -----------------------------------
Approved: Date: Approved: Date:
Thomas D. Major Tim Moses
President CEO
Summit Strategic Communications BioShield, Inc.
Please fill in the assigned P.O. # and fax this contract to 770-955-9664 -
Attention Barbara Obrentz.
<PAGE> 1
EXHIBIT 10.090
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is dated as of August 30,
1999, between E*MD.COM, a Georgia corporation (the "Company"), and SHARON KAY
ALLRED (the "Executive").
1. Employment. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to be employed by the Company, on the terms and
conditions set forth herein.
2. Term.
(a) The "Initial Term" of the employment of the Executive
by the Company as provided in Section 1 will commence on September 14,
1999 (the "Effective Date") and will terminate at 11:59 p.m. on
September 14, 2003 (the "Expiration Date") unless extended or sooner
terminated as hereinafter provided (such period, the "Employment
Period").
(b) The "Employment Period" may be extended beyond the
Initial Term by the mutual agreement of the parties in writing (the
"Extended Term").
(c) The "Business" of the Company shall be medical
internet, online pharmacy and information services.
3. Position, Duties and Responsibilities.
(a) Position. The Executive hereby agrees to serve as
Executive Vice President of Provider Sales and Development.
(b) Place of Employment. During the term of this
Agreement, the Company's headquarters shall be located in the Atlanta,
Georgia area.
(c) Other Activities. Except with the prior written
approval of the Board of Directors of the Company (the "Board") (which
the Board may grant or withhold in its sole and absolute discretion),
the Executive, during the Employment Period, will not (i) accept any
other employment, or (ii) engage, directly or indirectly, in any other
business activity (whether or not pursued for pecuniary advantage) that
is or may be competitive with or that might place him in a competing
position to, that of the Company or any of its affiliates.
Notwithstanding the foregoing, the Company agrees that the Executive
(or affiliates of the Executive) shall be permitted: (i) to make any
passive personal investments that are not in a business activity that
is directly or indirectly competitive with the Company (ii) to
participate in industry organizations, (iii) with the consent of the
Board of Directors of the
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<PAGE> 2
Company, to be a member of Boards of Directors of other entities which
do not directly compete with the Company, and (iv) to participate in
charitable or educational activities.
4. Compensation and Related Matters.
(a) Salary and Bonus. During the Employment Period, the
Company shall pay the Executive a salary of ONE HUNDRED TWENTY-FIVE
THOUSAND AND NO/100TH DOLLARS ($125,000.00) annually (the "Salary").
The Executive shall also be eligible for bonuses, such bonuses to be
awarded up to 100% of the Executive's salary in the event the Executive
exceeds her goals and objectives defined by the Board of Directors
and/or President/Chief Executive Officer. All Salary and bonuses to be
paid consistent with the standard payroll practices of the Company
(e.g., timing of payments and standard employee deductions, such as
income tax withholdings, social security, etc.).
(b) Stock Options. In addition to the Salary, the
Executive shall be entitled to stock options in accordance with the
terms and conditions set forth in a stock option agreement, a copy of
which is attached hereto as Exhibit A.
(c) Vacation. During the Employment Period Executive
shall be entitled to four weeks (20 days) of vacation during each
calendar year (non-cumulative).
(d) Business Expenses. The Company will reimburse the
Executive for reasonable bona fide business expenses incurred on behalf
of the Company in the ordinary course of business, provided, however,
that the expense is otherwise deductible by the Company as an ordinary
and necessary business expense for federal income tax purposes.
(e) Other Benefits. The Executive shall generally be
entitled to participate in or receive health, long-term disability
insurance, and similar benefits as the Company provides from time to
time to its executives. The Executive shall cooperate with the issuance
of a key man term life insurance policy for the benefit of the Company,
if so requested by the Company.
5. Termination or Resignation.
(a) Termination. The Executive's employment hereunder
shall be, or may be, as the case may be, terminated and shall
constitute a "Termination" under the following circumstances:
(i) Death. The Executive's employment hereunder
shall terminate upon his death.
(ii) Disability. The Executive's employment
hereunder shall terminate on the Executive's physical or
mental disability or infirmity which, in the opinion of a
competent physician selected by the Board, renders the
Executive unable to perform his duties under this Agreement
for more than 30 days during any 120-day period.
- 2 -
<PAGE> 3
(iii) With Cause. The Company may terminate the
Executive's employment hereunder for Cause. "Cause" shall mean
(i) Employee's material breach of any of the terms of this
Agreement, (ii) his conviction of a crime involving moral
turpitude or constituting a felony under the laws of any
state, the District of Columbia or of the United States, (iii)
his gross negligence, willful misconduct or fraud in the
performance of his duties hereunder; (iv) his repeated failure
or refusal to follow the directives of the Board; or (v)
inappropriate business conduct that is directly related to
Executive's activities on behalf of the Company that may cause
harm to the business interests of the Company.
(iv) Without Cause. The Company may terminate the
Executive's employment hereunder at any time without cause.
(b) Termination by Company. Any termination of the
Executive's employment by the Company shall be communicated by written
Notice of Termination to the Executive. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall
set forth, if applicable, in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. "Date of
Termination" shall mean (i) if the Executive's employment is terminated
by his death, the date of his death, (ii) if the Executive's employment
is terminated by reason of his disability, the date of the opinion of
the physician referred to in Section 5(a)(ii), above, (iii) if the
Executive's employment is terminated by the Company for Cause pursuant
to subsection 5(a)(iii) above or without Cause pursuant to subsection
5(a)(iv) above, the date specified in the Notice of Termination and
(iv) if the Executive voluntarily resigns pursuant to subsection 5(c)
above, the date of the Notice of Resignation.
(c) Termination by Executive for Any Reason. In addition
to the provisions of Section 2(c) hereof, notwithstanding the Term of
this Agreement and the Salary to be paid to the Executive during the
Employment Period, the Executive may voluntarily resign his position
and terminate his employment and Salary with the Company at any time,
with or without cause, by delivery of a written notice of resignation
to the Company (the "Notice of Resignation"). The Notice of Resignation
shall set forth the date such resignation shall become effective (the
"Date of Resignation"), which date shall, in any event, be at least
thirty (30) days and no more than sixty (60) days from the date the
Notice of Resignation is delivered to the Company. At its option, the
Company may reduce such notice period to any length, upon written
notice to the Executive.
(d) Termination by Company/Employment-At-Will.
Notwithstanding the Term of this Agreement and the annual salary to be
paid to the Executive during his employment with the Company, nothing
in this Agreement should be construed as to confer any right of the
Executive to be employed by the Company for a fixed or definite term.
Subject to Section 6 hereof, the Executive hereby agrees that the
Company may dismiss him under subsection 5(a)(iv) hereof without regard
(i) to any general or specific policies (whether written or oral) of
the Company relating to the employment or
- 3 -
<PAGE> 4
termination of its employees, or (ii) to any statements made to the
Executive, whether made orally or contained in any document, pertaining
to the Executive's relationship with the Company. The Executive's
employment with the Company is at will and may be terminated by the
Company at any time by delivery of a Notice of Termination to the
Executive, for any reason, with or without cause, without liability
except with respect to the payments provided for by Section 6(d).
(e) Termination Obligations. In exchange for the Company
entering into the Agreement and payment of the Severance Payments
provided for in Sections 6(b) and 6(d) herein, the Executive agrees
that, at the time of his resignation or termination from the Company:
(i) The Executive will promptly return to the
Company all personal property, both tangible and intangible,
furnished to or prepared by the Executive in the course of or
incident to his employment, the Executive hereby acknowledging
and agreeing that such property belongs to the Company, such
that following termination the Executive will not retain any
written or other tangible material containing any proprietary
information of the Company. "Personal property" includes,
without limitation, all computers, cellular phones, company
credit cards, access keys, books, manuals, records, reports,
notes, contracts, lists and other documents or materials, or
copies thereof (including computer files), and all other
proprietary information relating to the business of the
Company.
(ii) The Executive will tender his resignation
from all offices and directorships then held with the Company.
(iii) The Executive will execute a release
acceptable to the Company of all liability of the Company, and
its directors, officers, shareholders, employees, agents and
attorneys, to the Executive in connection with or arising out
of his employment with the Company, except with respect to any
Severance Payments under Sections 6(b) or 6(d) which may be
payable to him under the terms of the Agreement.
(iv) The representations and warranties contained
herein and the Executive's obligations under Sections 5(e), 7,
8, 9 and 15 through 18 shall survive termination of the
Employment Period and the expiration of this Agreement.
6. Compensation Upon Termination. Upon the occurrence of any of
the events described Section 5(a) through 5(d) of this Agreement, the Executive
shall be entitled, unless otherwise provided herein, to the following
remuneration in respect of such Termination (the "Severance Payments") for the
period of time specified therein (the "Severance Period"):
(a) Death. If the Executive's employment shall be
terminated pursuant to Section 5(a)(i), the Company shall pay the
Executive's personal representative his Salary payable pursuant to
Section 4(a) through the Date of Termination. At the Executive's own
- 4 -
<PAGE> 5
expense, the Executive's dependents shall also be entitled to any
continuation of health insurance coverage rights under any applicable
law.
(b) Disability. If the Executive's employment shall be
terminated by reason of disability pursuant to Section 5(a)(ii), the
Executive shall receive his Salary payable pursuant to Section 4(a) up
to the Date of Termination and for 30 days thereafter; provided that
payments so made to the Executive during the disability shall be
reduced by the sum of the amounts, if any, payable to the Executive at
or prior to the time of any such payment under any disability benefit
plan of the Company. At the Executive's own expense, the Executive and
his dependents shall also be entitled to any continuation of health
insurance coverage rights under any applicable law.
(c) Cause. If the Executive's employment shall be
terminated for Cause pursuant to Section 5(a)(iii) hereof, the Company
shall pay the Executive his Salary the payable pursuant to Section 4(a)
through the Date of Termination. At the Executive's own expense, the
Executive and his dependents shall also be entitled to any continuation
of health insurance coverage rights under any applicable law.
(d) Voluntary Resignation. If the Executive terminates
his employment with the Company pursuant to Section 5(c) hereof, the
Company shall have no obligation to compensate the Executive following
the Date of Resignation, except for the payment of accrued and unpaid
salary pursuant to Section 4(a) through the Date of Resignation. In any
event, at the Executive's own expense, the Executive and his dependents
shall be entitled to any continuation of health insurance coverage
rights under any applicable law.
(e) Termination Without Cause by Company. If the Company
terminates Executive's employment with the Company pursuant to Sections
5(a)(iv) and 5(d) hereof, the Company shall pay to Executive all salary
payable pursuant to Section 4(a), as Severance Payments through a
period ending on the earlier of (i) three (3) months following the Date
of Termination, or (ii) the expiration of the Employment Period. The
Company shall have no other obligation to compensate the Executive
following the Date of Termination. In any event, at the Executive's own
expense, the Executive and his dependents shall be entitled to any
continuation of health insurance coverage rights under any applicable
law.
(f) Any Severance Payments made pursuant to this Section
6 shall be payable following the Date of Termination in accordance with
the Company's regular payroll practices. The obligation of the Company
to make the Severance Payments to the Executive is expressly
conditioned upon the Executive complying and continuing to comply with
his obligations and covenants under Sections 5(e), 7 and 8 of this
Agreement following termination of his employment with the Company.
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<PAGE> 6
7. Confidentiality and Non-Solicitation Covenants.
(a) Confidentiality. In addition to the agreements set
forth in Section 5(e), the Executive hereby agrees that the Executive
will not, during the Employment Period or at any time thereafter
directly or indirectly disclose or make available to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever, any Confidential Information (as defined below). The
Executive agrees that, upon Termination of his employment with the
Company, all Confidential Information in his possession that is in
written or other tangible form (together with all copies or duplicates
thereof, including computer files) shall be returned to the Company and
shall not be retained by the Executive or furnished to any third party,
in any form except as provided herein; provided, however, that the
Executive shall not be obligated to treat as confidential, or return to
the Company copies of any Confidential Information that (i) was
publicly known at the time of disclosure to the Executive, (ii) becomes
publicly known or available thereafter, but prior to the Date of
Termination, other than by any means in violation of this Agreement or
any other duty owed to the Company by any person or entity or (iii) is
lawfully disclosed to the Executive by a third party. As used in this
Agreement the term "Confidential Information" means: information
disclosed to the Executive or known by the Executive as a consequence
of or through his relationship with the Company, about the directors,
officers, shareholders, customers, employees, investors, business
methods, public relations methods, organization, procedures or
finances, including, without limitation, information of or relating to
shareholder, customer or investor lists of the Company and any
affiliate.
(b) Non-Solicitation. In addition, the Executive hereby
agrees that during the Employment Period, and for a period of one (1)
year thereafter, regardless of the reason or circumstances of
Termination of employment with the Company, the Executive will not,
either on his own account or jointly with or as a manager, agent,
officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or
corporation, (i) carry on or be engaged or interested directly or
indirectly in, or solicit, the sale or provision of services or the
development or marketing of service modifying antimicrobials and
biostatic products as offered by the Company to its customers at the
Date of Termination, (ii) endeavor directly or indirectly to canvas or
solicit in competition with Company or to interfere with the supply of
orders for goods or services from or by any person, firm or corporation
which during the Employment Period has been or is a supplier of goods
or services to Company or become an investor in the Company or (iii)
directly or indirectly solicit or attempt to solicit away from Company
any of its officers or employees or offer employment to any person who,
at any time during the six (6) months immediately preceding the Date of
Termination, is or was an officer or employee of Company.
8. Covenant Not to Compete. The Executive agrees that during the
Employment Period he will devote full-time to the business of the Company and
not engage in any type of business which engages in the medical internet, online
pharmacy and information services or any other related businesses, including but
not limited to all aspects of the Business. Subject to such full-time
requirement and the restrictions set forth below in this Section 8 and Section
3(c) above, the Executive shall be permitted to continue his existing business
investments and activities and
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<PAGE> 7
may pursue additional business investments; provided that the Executive not
serve as a director or officer of any public company resulting from such
business investments. The Executive agrees that, from the end of the Employment
Period through a one (1) year period thereafter, he shall not, within the
Protected Territory (as defined hereinafter), (i) invest in, manage, consult or
participate in any way in any other business in competition with the Business
(in either an active or passive manner), (ii) participate in or advise any
business wherein any business activities similar to the Business are a relevant
business segment, or (iii) act for or on behalf of any business that intends to
enter or participate in the antimicrobial or biostatic products development
business, in each case unless the independent members of the Company's Board
determines that such action is in the best interests of the Company.
Notwithstanding the foregoing, the Executive may purchase stock as a stockholder
in any publicly traded company, including any company which is involved in the
development or operation of a medical internet site in the Protected Territory;
provided that the Executive does not own (together or separately or through his
affiliates) more than five percent (5%) of any company (other than the Company)
engaged in a business which is competitive with the Business of the Company
within the Protected Territory. In addition, the Executive shall not invest
(directly or indirectly) in any competitive business operating within the
Protected Territory unless the independent members of the Company's Board
determines that such an investment is in the best interests of the Company. For
purposes of this Agreement, the "Protected Territory" shall mean that area
within a one hundred (100) mile radius of the principal offices of the Company
at the Date of Termination and within a one hundred (100) mile radius of the
principal offices of any customer of the Company as of the Date of Termination.
9. Injunctive Relief and Enforcement. In the event of breach by
the Executive of the terms of Sections 5(e), 7 or 8, if the Company believes it
is suffering irreparable injury, then the Company shall, notwithstanding the
requirement of final and binding arbitration contemplated in Section 16 below,
be entitled to institute legal proceedings to enforce the specific performance
of this Agreement by the Executive and to enjoin the Executive from any further
violation of Sections 5(e), 7 or 8 and to exercise such remedies cumulatively or
in conjunction with all other rights and remedies provided by law and not
otherwise limited by this Agreement. The Executive acknowledges, however, that
the remedies at law for any breach by him of the provisions of Sections 5(e), 7
or 8 may be inadequate. In addition, in the event the covenants set forth in
Sections 5(e), 7 or 8 shall be determined by any court of competent jurisdiction
to be unenforceable by reason of extending for too great a period of time or
over too great a geographical area, by reason of being too restrictive or
expansive, or by constituting an unlawful restraint of trade in any other
respect, each such covenant shall be interpreted to extend over the maximum
period of time and over a maximum geographical area for which it may be
enforceable, and to the maximum extent in all other respects as to which it may
be enforceable, and enforced as so interpreted, all as determined by such court
in such action.
10. Notice. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered when
transmitted by telecopy with written confirmation of transmission and receipt,
three (3) days after deposit in the U.S. mail, first class, with adequate
postage thereon, or one (1) day after delivery to an overnight air courier
guaranteeing next day delivery, addressed as follows:
- 7 -
<PAGE> 8
If to the Executive: Mr. Sharon Kay Allred
If to the Company: e*MD.COM
4405 International Boulevard
Suite B-109
Norcross, Georgia 30093
Attention: President
With a copy to: Schreeder, Wheeler & Flint, LLP
1600 Candler Building
127 Peachtree Street, N.E.
Atlanta, Georgia 30303-1845
Attention: Edward H. Brown, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt as provided above.
11. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect; provided, however, that if any one or more of the terms
contained in Sections 5(e), 7 or 8 hereto shall for any reason be held by any
court of competent jurisdiction to be unenforceable by reason of extending for
too great a period of time or over too great a geographical area, by reason of
being too restrictive or expansive, or by constituting an unlawful restraint of
trade in any other respect, then such covenant shall not be deleted but shall be
reformed and constructed in a manner to enable it to be enforced to the extent
compatible with applicable law.
12. Assignment. This Agreement may not be assigned by the
Executive, but may be assigned by the Company to any successor to its business
and will inure to the benefit and be binding upon any such successor.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
15. Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of Georgia (without reference to the choice of law provisions of Georgia),
except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement,
and as
- 8 -
<PAGE> 9
to those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
16. Arbitration. Absent any irreparable injury being suffered by
the Company entitling the Company to seek injunctive relief against the
Executive pursuant to Section 9 hereof, in the event there shall be a dispute
among the parties arising out of or relating to this Agreement, or the breach
thereof, the parties agree that such dispute shall be resolved by final and
binding arbitration in Atlanta, Georgia under the rules of the American
Arbitration Association. Any award issued as a result of such arbitration shall
be final and binding between the parties thereto, and shall be enforceable by
any court having jurisdiction over the party against whom enforcement is sought.
The fees and expenses relating to such arbitration (with the exception of the
Executive's attorneys' fees, if any) or any action to enforce an arbitration
award shall be shared equally by the Company and the Executive.
15. Entire Agreement. This Agreement contains the entire agreement
and understanding between the Company and the Executive with respect to the
employment of the Executive by the Company as contemplated hereby, and no
representations, promises, agreements or understandings, written or oral, not
herein contained shall be of any force or effect. This Agreement shall not be
changed unless in writing and signed by both the Executive and the Board of the
Company.
18. Board Approval. In any case in which this Agreement provides
for the approval, review or determination of the Board in connection with the
Executive's compensation, benefits, termination or compliance with restrictive
covenants herein expressed, then such approval, review or determination shall be
deemed a "Director's conflicting interest transaction", subject to the
procedures required by O.C.G.A. ss. 14-2-860 et seq.
19. The Executive's Acknowledgment. The Executive acknowledges he
has had the opportunity to consult with independent counsel of his own choice
concerning this Agreement, and he has read and understands the Agreement, is
fully aware of its legal effect, and has entered into it freely based on his own
judgment.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the date and year first above written.
"COMPANY" "EXECUTIVE"
e*MD.COM
By:
-------------------------- -----------------------------------
Sharon Kay Allred
Title:
--------------------------
- 9 -
<PAGE> 1
EXHIBIT A
--------------------------------------------------------
NDC MANAGED CARE MAIL ORDER PHARMACY SYSTEM
FOR
EMD.COM
5655 PEACHTREE PARKWAY
NORCROSS, GA 30092
SEPTEMBER 7, 1999
PREPARED BY:
NDC HEALTH INFORMATION SERVICES
1300 PICCARD DRIVE, SUITE 101
ROCKVILLE, MD 20850
<PAGE> 2
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
PREFACE
NDC is proposing the NDC Managed Care Mail Order Pharmacy System for eMD.com.
The system proposed in this document is configured based on NDC's understanding
of your pharmacy's needs as described by your representatives.
The following statistics were used to calculate disk storage requirements for
the proposed system:
Mail Order
----------
Number of new prescriptions/day: 700
Number of refill prescriptions/day: 300
Number of patients in population: 500,000
Number of days for data retention: 730
INITIAL PRICE PROTECTION POLICY: Thirty days from the date of this proposal.
If this proposal is accepted, the prices
quoted herein are subject to change in
accordance with the Sale and License
Agreement.
i
<PAGE> 3
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
ASSUMPTIONS
Based on information provided in discussions with Eric Adams and Jeff Ard,
eMD.com and Rick Schnatz, Holly Knauert, Sheldon Feuer, and Marc Eldridge, NDC,
the following assumptions have been made:
1. The NDC Managed Care Mail Order Pharmacy System will be installed on a
Compaq/DEC Alpha 1000A platform located in Norcross, GA.
2. The NDC Managed Care Mail Order Pharmacy System is configured to support
the following locations:
Location Terminals Printers
-------- --------- --------
Call Center 5 DELL PCs
Pharmacy 3 DELL PCs 7 Lexmark Optra S
Data Processing Center 1 DELL PC
3. The PC workstation to be used as the system console with the Compaq/DEC
Core system is included in this agreement.
4. The network topology is ethernet. eMD.com will provide and maintain the
network, including all connectivity to workstations and printers.
5. Blue Emulation BluVista will be used as the PC emulation software.
6. Cambridge VX Connect will be used to monitor the system utility functions.
7. An NDC technician will instruct one technical staff person at eMD.com on
loading the emulation software.
8. eMD.com will provide six (6) voice grade telephone lines to be accessible
near the CPU for required modem connectivity. One modem will be used for
Central Support purposes, two modems are to be used for third party claims
processing, two modems for credit card processing and one modem for
technical support.
ii
<PAGE> 4
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
BILLING ADDRESS: INSTALLATION ADDRESS:
- --------------- --------------------
eMD.com eMD.com
5655 Peachtree Parkway 5655 Peachtree Parkway
Norcross, GA 30092 Norcross, GA 30092
Attn: Eric Adams Attn: Eric Adams
Phone Number: 770-246-2001 Phone Number: 770-246-2001
iii
<PAGE> 5
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
PART ONE: PRICING
<TABLE>
<S> <C> <C>
A. HARDWARE
Shipping and Insurance are pre-pay and additional
1. Core System
As specified at Attachment A, JJWild, Inc. Master Purchase Agreement $31,500.32
2. NDC Supplied Hardware
As specified at Part Three, Section B., NDC Supplied Hardware $27,643.00
----------
HARDWARE TOTAL: $59,143.32
B. SOFTWARE
Per the Terms and Conditions of the Sale and License Agreement(s)
1. NDC Managed Care Mail Order Pharmacy System $45,000.00
Includes ASCII File/Graph
2. NDC Managed Care Outpatient Pharmacy Management System $9,750.00
3. Operating System $10,000.00
4. Other Optional Software
> All-In-One Laser Label and one SIMM card $1,000.00
Six additional SIMM Cards $1,740.00
> Credit Card (via dial-up modems) $750.00
Note: Includes Default Payment by Credit Card
> Spanish Patient Education $1,000.00
> AIM $1,800.00
> Drug Imprint $2,000.00
5. Network/Communications Software
> Blue Emulation BluVista - 32 user license $1,255.00
> VX-Connect - 3 copies $570.00
----------
SOFTWARE TOTAL: $74,865.00
C. SERVICES*
- ------------------------
* NDC travel and related expenses are additional for all NDC Services.
</TABLE>
1-1
<PAGE> 6
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
As further discussed in Part Four, Section I, NDC Services.
1. Pre-implementation Planning Meeting $1,500.00*
(Three people, one day on-site)
2. Operating System Utilities Training/
Software Installation $3,000.00*
(One technician, three 8-hour days on-site)
3. Training/Support
a. System Manager Training Included in
(NDC office, Rockville, MD, five 8 hour days) System Price
The client is responsible for travel and per diem expenses.
b. User Training - one course $3,000.00*
(One trainer, one course, four 8 hour days on-site)
Additional courses will be provided at the same rate
c. System Live Support $1,500.00*
(One trainer, two 8-hour days on-site)
4. Post Implementation Follow-on Support
a. Sixth week $1,500.00*
(One trainer, two 8-hour days on-site)
b. Six Months $1,500.00*
(One trainer, two 8-hour days on-site)
c. Twelve Months $1,500.00*
(One trainer, two 8-hour days on-site)
5. Documentation Included in
(One copy of User Manual will be provided System Price
as specified in Part Four, Section I. B)
6. Initial Label Set Included in
(One set of labels as specified System Price
in Part Four, Section I. C)
------------
NDC SERVICES TOTAL: $13,500.00
------------
(A+B+C) SYSTEM TOTAL: $147,508.32
</TABLE>
1-2
<PAGE> 7
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
D. RECURRING MAINTENANCE
1. SOFTWARE MONTHLY MAINTENANCE
Per the Terms and Conditions of the Maintenance Service Agreements
a. NDC Mail Order MCPS and
Operating System $1,100.00
b. NDC Outpatient MCPS $50.00
- Other
> Credit Card $50.00
> Spanish Patient Education $10.00
> AIM $25.00
> Drug Imprint $54.00
---------
SOFTWARE MONTHLY MAINTENANCE TOTAL: $1,289.00
2. HARDWARE MAINTENANCE
Hardware Maintenance for the Core system is contracted
directly by the client with the hardware vendor. Warranty
options and costs are provided in the JJWild Master Purchase
Agreement, Addendum C.
</TABLE>
1-3
<PAGE> 8
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
PART TWO: STANDARD PAYMENT TERMS
A. GENERAL
1. All invoices are payable net 30 days.
2. FOB Shipping Point
3. Equipment will not be ordered until specified deposits/
payments are received.
4. The cost of freight and insurance is the responsibility of
the client and will be billed after the equipment is
delivered.
B. HARDWARE
1. Core System supplied by JJ Wild
Refer to the JJ Wild Master Purchase Agreement, Attachment A,
for terms and conditions.
Extended Warranty and Support options may be selected, as
detailed in the JJ Wild Master Purchase Agreement, Addendum
C. Payment for the selected option is due and payable with
the signed contract.
2. Hardware supplied by NDC
a. Fifty percent ($13,821.50) of the hardware purchased
through NDC is due and payable with the signed contract.
b. The balance ($13,821.50) of the hardware purchased
through NDC is invoiced upon delivery and is due and
payable net thirty (30) days.
C. SOFTWARE
1. Fifty percent ($37,432.50) of the software costs is due and
payable with the signed contract.
2. The balance of the software costs ($37,432.50) will be
invoiced upon installation is due and payable net
30 days.
3. Software Maintenance charges will be billed the month
following System Manager Training.
D. SERVICES
Services will be billed the month following delivery or performance.
2-1
<PAGE> 9
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
PART THREE: HARDWARE CONFIGURATION
A. CORE COMPUTER CONFIGURATION
The Compaq/Digital Alpha 1000A Core System configuration from
JJWild, Inc. is included as Attachment A
The configuration does not include ethernet network
components, network design, fiber, or RS232 cabling.
B. HARDWARE SUPPLIED BY NDC
1. Workstations
QUANTITY DESCRIPTION
-------- -----------
9 DELL
- 32 MB RAM
- 1.44 MB Floppy Drive
- 9.1 GB Fixed Disk Drive
- Celeron Processor, 400 MHz
- 15" Color Monitor
- 40X Max, CD-ROM
- Windows98
- NIC
- 1 year, next business day
2. Printers
QUANTITY DESCRIPTION
-------- -----------
7 Lexmark Optra S (18 ppm) Laser Printers
7 Lexmark 500 Sheet 2nd Drawer
7 Lexmark NIC 10 Base-T/10 Base-2
3. Modems
QUANTITY DESCRIPTION
-------- -----------
6 Hayes 33.6 kbps
NOTE: NDC reserves the right to substitute alternate hardware.
3-1
<PAGE> 10
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
PART FOUR: DETAILED INFORMATION
I. NDC SERVICES*
A. Training/Software Installation
1. Pre-implementation Planning Meeting*
This is a planning meeting that is held between NDC
and client personnel responsible for system
implementation and operation. The purpose of the
meeting is to discuss the implementation plan,
required activities, schedule, and organizational
responsibilities.
This proposal provides for three NDC persons, the
Director of Customer Support, the Implementation
Coordinator, and the Manager of Technical Services,
to be on-site one day.
2. Operating System Utilities Training and Software
Installation*
NDC technical support will be on-site to provide the
following support: load and test the application
software and operating system; conduct Operating
System Utilities Training; assist in hardware and
communications set-up and installation; assist in
the configuration of terminal servers or hubs; and
assist in the test of client provided communications
links.
The number of days and personnel required is based
on client specific requirements. If the client
requires additional days of support, beyond those
contracted, they will be provided at NDC's
prevailing rate.
Extended Support (hours outside basic Support
period, including Saturdays, Sundays, and/or
holidays) are billed at $1,500.00/day.
This proposal provides for one trainer, and three
8-hour days of support.
- -----------------
* NDC travel and related expenses are additional for all NDC Services.
4-1
<PAGE> 11
NATIONAL DATA CORPORATION
EXHIBIT A
- -------------------------------------------------------------------------------
3. Training*
- System Manager Training
A System Manager course is conducted at the NDC
Rockville, MD office training center. Class size
is limited to three students.
This proposal provides for five days of System
Manager training.
Travel and per diem costs are the responsibility
of the client.
This training can be provided at the client's
location for an additional charge of $750/day .
and per diem. Extended Support (hours outside
basic Support period, including Saturdays,
Sundays, and/or holidays) are billed at
$1,000.00/day.
- Implementation Support*
An NDC trainer provides on-site implementation
support at least one week prior to User
Training. The trainer assists client personnel
in table build and set-up of system parameters.
The number of days of support is determined and
priced based on client specific requirements. If
the client requires additional days of support
beyond those contracted, they will be provided
at NDC's prevailing rate.
Extended Support (hours outside basic Support
period, including Saturdays, Sundays, and/or
holidays) are billed at $1,000.00/day.
This proposal provides for no days of
Implementation Support.
- User Training*
IT IS THE CLIENT'S RESPONSIBILITY TO INSURE THAT
ALL EQUIPMENT IS INSTALLED AND OPERATIONAL PRIOR
TO USER TRAINING. FAILURE TO INSTALL AND CONNECT
THE EQUIPMENT MAY RESULT IN ADDITIONAL SERVICE
CHARGES.
An NDC trainer will provide User Training at the
client's facility. Class size is limited to
eight students per course with two students per
terminal. Training materials are provided at no
additional cost.
- -------------------------
* NDC travel and related expenses are additional for all NDC Services.
4-2
<PAGE> 12
NATIONAL DATA CORPORATION
EXHIBIT A
- --------------------------------------------------------------------------------
This proposal provides one course - four 8-hour days.
The number of courses required will be based on the
number of trainees and client specific requirements.
If the client requires additional days of training,
beyond those contracted, they will be provided at the
prevailing rate. Extended Support (hours outside
basic Support period, including Saturdays, Sundays,
and/or holidays) are billed at $1,000.00/day.
- System Live Support*
The NDC trainer following User Training provides
on-site system and user support.
The number of days is determined and priced based on
client specific requirements. If the client requires
additional days of support, beyond those contracted,
they will be provided at NDC's prevailing rate.
Extended Support (hours outside basic Support period,
including Saturdays, Sundays, and/or holidays) are
billed at $1,000.00/day.
This proposal provides for two days of "Live"
Support.
4. Post-Implementation Follow-on Support*
On-site system and user support is generally provided six
weeks following the system live date, at six months, and at
the first year anniversary following the system "Live" date.
The number of days required is determined and priced based on
client specific requirements. Extended Support (hours outside
basic Support period, including Saturdays, Sundays, and/or
holidays) are billed at $1,000.00/day.
This proposal provides for six days of Follow-on Support.
- ----------------
* NDC travel and related expenses are additional for all NDC Services.
4-3
<PAGE> 13
NATIONAL DATA CORPORATION
EXHIBIT A
- --------------------------------------------------------------------------------
B. Documentation
One copy of the System User Handbook, including the Mail
Order supplement, are included in the system price. If
additional copies are required, they may be locally
reproduced without violating copyright restrictions. NDC can
provide additional copies at NDC's prevailing rate.
NDC has incorporated on-line system documentation with each
software release. The result is a User Handbook within the
system, available for printing by the user. This capability
also allows users to append client specific on-line
documentation to the system. For example, users may include
facility specific policies and procedures as part of the user
documentation.
C. Labels
1. Standard Labels
The Training/Implementation staff is available for
assistance in the development of "roll your own"
labels. To ensure timely delivery of label software,
specifications must be provided to NDC thirty days
prior to user training. Subsequent modifications to
the initial set of labels will be priced based on
NDC's prevailing software development rates. The
following labels are included in the initial label
set:
<TABLE>
<CAPTION>
System Label Set
------ ---------
<S> <C>
Mail Order: one outpatient label
</TABLE>
2. All-In-One Laser Label Included
(Set-up fee and one font/SIMM cartridge)
Each additional font/SIMM cartridge $290.00
In support of OBRA 1990, NDC has developed a
standard single prescription label that includes the
patient education monograph, refill card, warning
labels, and address label. This capability requires
specific laser printers and an Rx font cartridge for
each laser printer. A list of currently supported
laser printers is available upon request.
NDC offers a selection of standard laser label
formats. To ensure timely delivery of label
software, client must select one format and notify
NDC thirty days prior to user training. There may be
additional charges required if these standard labels
are modified. If changes are required to the
standard format, NDC will quote a cost to the client
based on time and materials.
4-4
<PAGE> 14
NATIONAL DATA CORPORATION
EXHIBIT A
Subsequent modifications to the initial label will
be priced based on NDC's prevailing software
development rates.
D. Conversion Support Services
NDC supports data conversion as defined in the following
table:
Data Conversion
<TABLE>
<S> <C>
Files Converted Files Not Converted
Patient Inpatient Census
Doctor Inpatient Medication Orders
Product Pricing Formulas
Outpatient Prescription OP SIG Files
Inpatient Frequency Files
Accounts Receivable
</TABLE>
- Client must provide files (patient, product,
provider, and prescription) according to NDC
standard specifications and in a flat ASCII format
on tape or FTP file.
- NDC Rockville will convert the files and load into
the MCPS standard environment.
The following requirements pertain:
1. If the patient exists on multiple of the source
pharmacy systems, there must be a unique member ID
number. If not, each occurrence of the patient will
be duplicated. The MCPS does have an option to merge
patient profiles manually once identified by the
user.
2. If the same doctor exists on multiple of the source
pharmacy systems, there must be a unique doctor ID
number. If not, each occurrence of the doctor will
be duplicated. The MCPS does have an option to merge
doctor files manually once identified by the user.
3. The prescription number for the pharmacy must be
unique. It may be necessary to add a single alpha
prefix to each prescription number as it is
converted.
4-5
<PAGE> 15
NATIONAL DATA CORPORATION
EXHIBIT A
- --------------------------------------------------------------------------------
II. RECURRING MAINTENANCE CHARGES
A. Software Maintenance
Software maintenance is subject to the Terms and Conditions
of the Maintenance Service Agreement and includes customer
service, software support, and database maintenance.
- Specific services include:
< General software enhancements, as part of
product releases,
< Weekly updates on approximately 85,000
individual products of AWP, Direct, MAC
prices, AAWP, GEAP, and wholesaler ACQ.
< Monthly clinical updates of drug-drug,
drug-class, food-drug interactions, and
drug allergies,
< Monthly updates of patient education
monographs and IV incompatibilities, and
< Remote emergency diagnostics and
maintenance, 24 hours per day, 7 days per
week.
< Routine support is provided via the NDC
Customer Support Center which operates
between 8:30 AM and 8:00 PM (EST/EDT),
Monday through Friday, excluding NDC
holidays.
NOTE: Payment of all telecommunications costs associated
with system updates is the responsibility of the
client.
- Price Updates. NDC agrees to provide information
relating to the current cost of pharmaceutical items
commonly utilized within the United States. Access to
this cost information shall be via a dial-up
telephone arrangement at the Customer's expense. The
Customer shall be responsible for all communications
costs in communicating between its location(s) and
the nearest NDC telecommunication node. The Customer
acknowledges that NDC, in providing this cost data,
is acting as an agent and has obtained cost data from
sources that NDC believes to be reliable. NDC's only
responsibility in this regard shall be the timely
updating of its central cost databases at intervals
which generally not be more often than weekly.
B. Hardware Maintenance
1. Hardware Maintenance for the Core system is
contracted directly by the client with the hardware
vendor. Warranty options and costs are provided in
the JJWild Master Purchase Agreement, Addendum C.
4-6
<PAGE> 16
ATTACHMENT A
JJ WILD MASTER PURCHASE AGREEMENT
<PAGE> 17
ATTACHMENT B
MEDICAL INFORMATION TECHNOLOGY, INC.
MIIS/MAGIC OPERATING SYSTEM SOFTWARE JOINT LICENSE AGREEMENT
<PAGE> 1
EXHIBIT 10.092
[BIOSHIELD(TM) LOGO]
BIOSHIELD TECHNOLOGIES, INC.
July 12, 1999
Mr. Eric B. Adams
OFFER OF EMPLOYMENT
Dear Eric:
I am pleased to extend the following offer of full-time employment at ALLERGY
SUPERSTORE.COM
POSITION: MANAGER OF PHARMACY SYSTEMS
REPORT TO: MAGGIE PERRITT
SALARY: $95,000 ANNUALLY
START DATE: ON OR BEFORE JULY 29, 1999
Should you accept this offer of employment, you will be required to sign an
Insider Trading Policy Compliance Statement. You will also be eligible for the
standard Company Benefits. We will also work with you on the specific issues
discussed in the interview regarding previous commitments, and the exception to
your vacation benefit.
Eric, I look forward to receiving your written response and sincerely hope that
you will decide to join our team. Please do not hesitate to contact me if you
have any questions.
Sincerely,
Maggie M. Perritt
Director of Pharmacy
/abh
I accept the position of MANAGER OF PHARMACY SYSTEMS at Allergy Superstore.com
================================================================================
Eric B. Adams Date
<PAGE> 1
EXHIBIT 10.093
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is dated as of September
10, 1999, between E*MD.COM, a Georgia corporation (the "Company"), and WAYNE A.
ROBERTS (the "Executive").
1. Employment. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to be employed by the Company, on the terms and
conditions set forth herein.
2. Term.
(a) The "Initial Term" of the employment of the Executive
by the Company as provided in Section 1 will commence on September 13,
1999 (the "Effective Date") and will terminate at 11:59 p.m. on
September 13, 2002 (the "Expiration Date") unless extended or sooner
terminated as hereinafter provided (such period, the "Employment
Period").
(b) The "Employment Period" may be extended beyond the
Initial Term by the mutual agreement of the parties in writing (the
"Extended Term").
(c) The "Business" of the Company shall be medical
internet, online pharmacy and information services.
3. Position, Duties and Responsibilities.
(a) Position. The Executive hereby agrees to serve as
Vice President, Corporate Communications and Public Relations, and
assist on projects as directed from time to time by the Board of
Directors and President/Chief Executive Officer including work as
directed for BioShield Technologies, Inc.
(b) Place of Employment. During the term of this
Agreement, the Company's headquarters shall be located in the Atlanta,
Georgia area.
(c) Other Activities. Except with the prior written
approval of the Board of Directors of the Company (the "Board") (which
the Board may grant or withhold in its sole and absolute discretion),
the Executive, during the Employment Period, will not (i) accept any
other employment, or (ii) engage, directly or indirectly, in any other
business activity (whether or not pursued for pecuniary advantage) that
is or may be competitive with or that might place him in a competing
position to, that of the Company or any of its affiliates.
Notwithstanding the foregoing, the Company agrees that the Executive
(or affiliates of the Executive) shall be permitted: (i) to make any
passive personal investments that are not in a business activity that
is directly or indirectly competitive with the Company (ii) to
- 1 -
<PAGE> 2
participate in industry organizations, (iii) with the consent of the
Board of Directors of the Company, to be a member of Boards of
Directors of other entities which do not directly compete with the
Company, and (iv) to participate in charitable or educational
activities.
4. Compensation and Related Matters.
(a) Salary and Bonus. During the Employment Period, the
Company shall pay the Executive a salary of ONE HUNDRED FIFTY THOUSAND
AND NO/100th DOLLARS ($150,000.00) annually (the "Salary"). The
Executive shall also be eligible for a bonus up to $25,000 based on
performance review. All Salary and bonuses to be paid consistent with
the standard payroll practices of the Company (e.g., timing of payments
and standard employee deductions, such as income tax withholdings,
social security, etc.).
(b) Stock Options. In addition to the Salary, the
Executive shall be entitled to stock options in accordance with the
terms and conditions set forth in a stock option agreement, a copy of
which is attached hereto as Exhibit A.
(c) Vacation. During the Employment Period Executive
shall be entitled to four weeks (20 days) of vacation during each
calendar year (non-cumulative).
(d) Business Expenses. The Company will reimburse the
Executive for reasonable bona fide business expenses incurred on behalf
of the Company in the ordinary course of business, provided, however,
that the expense is otherwise deductible by the Company as an ordinary
and necessary business expense for federal income tax purposes.
(e) Other Benefits. The Executive shall generally be
entitled to participate in or receive health, long-term disability
insurance, and similar benefits as the Company provides from time to
time to its executives. The Executive shall cooperate with the issuance
of a key man term life insurance policy for the benefit of the Company,
if so requested by the Company.
5. Termination or Resignation.
(a) Termination. The Executive's employment hereunder
shall be, or may be, as the case may be, terminated and shall
constitute a "Termination" under the following circumstances:
(i) Death. The Executive's employment hereunder
shall terminate upon his death.
(ii) Disability. The Executive's employment
hereunder shall terminate on the Executive's physical or
mental disability or infirmity which, in the opinion of a
competent physician selected by the Board, renders the
Executive unable to perform his duties under this Agreement
for more than 30 days during any 120-day period.
- 2 -
<PAGE> 3
(iii) With Cause. The Company may terminate the
Executive's employment hereunder for Cause. "Cause" shall mean
(i) Employee's material breach of any of the terms of this
Agreement, (ii) his conviction of a crime involving moral
turpitude or constituting a felony under the laws of any
state, the District of Columbia or of the United States, (iii)
his gross negligence, willful misconduct or fraud in the
performance of his duties hereunder; (iv) his repeated failure
or refusal to follow the directives of the Board; or (v)
inappropriate business conduct that is directly related to
Executive's activities on behalf of the Company that may cause
harm to the business interests of the Company.
(iv) Without Cause. The Company may terminate the
Executive's employment hereunder at any time without cause.
(b) Termination by Company. Any termination of the
Executive's employment by the Company shall be communicated by written
Notice of Termination to the Executive. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall
set forth, if applicable, in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. "Date of
Termination" shall mean (i) if the Executive's employment is terminated
by his death, the date of his death, (ii) if the Executive's employment
is terminated by reason of his disability, the date of the opinion of
the physician referred to in Section 5(a)(ii), above, (iii) if the
Executive's employment is terminated by the Company for Cause pursuant
to subsection 5(a)(iii) above or without Cause pursuant to subsection
5(a)(iv) above, the date specified in the Notice of Termination and
(iv) if the Executive voluntarily resigns pursuant to subsection 5(c)
above, the date of the Notice of Resignation.
(c) Termination by Executive for Any Reason. In addition
to the provisions of Section 2(c) hereof, notwithstanding the Term of
this Agreement and the Salary to be paid to the Executive during the
Employment Period, the Executive may voluntarily resign his position
and terminate his employment and Salary with the Company at any time,
with or without cause, by delivery of a written notice of resignation
to the Company (the "Notice of Resignation"). The Notice of Resignation
shall set forth the date such resignation shall become effective (the
"Date of Resignation"), which date shall, in any event, be at least
thirty (30) days and no more than sixty (60) days from the date the
Notice of Resignation is delivered to the Company. At its option, the
Company may reduce such notice period to any length, upon written
notice to the Executive.
(d) Termination by Company/Employment-At-Will.
Notwithstanding the Term of this Agreement and the annual salary to be
paid to the Executive during his employment with the Company, nothing
in this Agreement should be construed as to confer any right of the
Executive to be employed by the Company for a fixed or definite term.
Subject to Section 6 hereof, the Executive hereby agrees that the
Company may dismiss him under subsection 5(a)(iv) hereof without regard
(i) to any general or specific
- 3 -
<PAGE> 4
policies (whether written or oral) of the Company relating to the
employment or termination of its employees, or (ii) to any statements
made to the Executive, whether made orally or contained in any
document, pertaining to the Executive's relationship with the Company.
The Executive's employment with the Company is at will and may be
terminated by the Company at any time by delivery of a Notice of
Termination to the Executive, for any reason, with or without cause,
without liability except with respect to the payments provided for by
Section 6(d).
(e) Termination Obligations. In exchange for the Company
entering into the Agreement and payment of the Severance Payments
provided for in Sections 6(b) and 6(d) herein, the Executive agrees
that, at the time of his resignation or termination from the Company:
(i) The Executive will promptly return to the
Company all personal property, both tangible and intangible,
furnished to or prepared by the Executive in the course of or
incident to his employment, the Executive hereby acknowledging
and agreeing that such property belongs to the Company, such
that following termination the Executive will not retain any
written or other tangible material containing any proprietary
information of the Company. "Personal property" includes,
without limitation, all computers, cellular phones, company
credit cards, access keys, books, manuals, records, reports,
notes, contracts, lists and other documents or materials, or
copies thereof (including computer files), and all other
proprietary information relating to the business of the
Company.
(ii) The Executive will tender his resignation
from all offices and directorships then held with the Company.
(iii) The Executive will execute a release
acceptable to the Company of all liability of the Company, and
its directors, officers, shareholders, employees, agents and
attorneys, to the Executive in connection with or arising out
of his employment with the Company, except with respect to any
Severance Payments under Sections 6(b) or 6(d) which may be
payable to him under the terms of the Agreement.
(iv) The representations and warranties contained
herein and the Executive's obligations under Sections 5(e), 7,
8, 9 and 15 through 18 shall survive termination of the
Employment Period and the expiration of this Agreement.
6. Compensation Upon Termination. Upon the occurrence of any of
the events described Section 5(a) through 5(d) of this Agreement, the Executive
shall be entitled, unless otherwise provided herein, to the following
remuneration in respect of such Termination (the "Severance Payments") for the
period of time specified therein (the "Severance Period"):
(a) Death. If the Executive's employment shall be
terminated pursuant to Section 5(a)(i), the Company shall pay the
Executive's personal representative his Salary payable pursuant to
Section 4(a) through the Date of Termination. At the Executive's own
- 4 -
<PAGE> 5
expense, the Executive's dependents shall also be entitled to any
continuation of health insurance coverage rights under any applicable
law.
(b) Disability. If the Executive's employment shall be
terminated by reason of disability pursuant to Section 5(a)(ii), the
Executive shall receive his Salary payable pursuant to Section 4(a) up
to the Date of Termination and for 30 days thereafter; provided that
payments so made to the Executive during the disability shall be
reduced by the sum of the amounts, if any, payable to the Executive at
or prior to the time of any such payment under any disability benefit
plan of the Company. At the Executive's own expense, the Executive and
his dependents shall also be entitled to any continuation of health
insurance coverage rights under any applicable law.
(c) Cause. If the Executive's employment shall be
terminated for Cause pursuant to Section 5(a)(iii) hereof, the Company
shall pay the Executive his Salary then payable pursuant to Section
4(a) through the Date of Termination. At the Executive's own expense,
the Executive and his dependents shall also be entitled to any
continuation of health insurance coverage rights under any applicable
law.
(d) Voluntary Resignation. If the Executive terminates
his employment with the Company pursuant to Section 5(c) hereof, the
Company shall have no obligation to compensate the Executive following
the Date of Resignation, except for the payment of accrued and unpaid
salary pursuant to Section 4(a) through the Date of Resignation. In any
event, at the Executive's own expense, the Executive and his dependents
shall be entitled to any continuation of health insurance coverage
rights under any applicable law.
(e) Termination Without Cause by Company. If the Company
terminates Executive's employment with the Company pursuant to Sections
5(a)(iv) and 5(d) hereof, the Company shall pay to Executive all salary
payable pursuant to Section 4(a), as Severance Payments through a
period ending on the earlier of (i) three (3) months following the Date
of Termination, or (ii) the expiration of the Employment Period. The
Company shall have no other obligation to compensate the Executive
following the Date of Termination. In any event, at the Executive's own
expense, the Executive and his dependents shall be entitled to any
continuation of health insurance coverage rights under any applicable
law.
(f) Any Severance Payments made pursuant to this Section
6 shall be payable following the Date of Termination in accordance with
the Company's regular payroll practices. The obligation of the Company
to make the Severance Payments to the Executive is expressly
conditioned upon the Executive complying and continuing to comply with
his obligations and covenants under Sections 5(e), 7 and 8 of this
Agreement following termination of his employment with the Company.
- 5 -
<PAGE> 6
7. Confidentiality and Non-Solicitation Covenants.
(a) Confidentiality. In addition to the agreements set
forth in Section 5(e), the Executive hereby agrees that the Executive
will not, during the Employment Period or at any time thereafter
directly or indirectly disclose or make available to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever, any Confidential Information (as defined below). The
Executive agrees that, upon Termination of his employment with the
Company, all Confidential Information in his possession that is in
written or other tangible form (together with all copies or duplicates
thereof, including computer files) shall be returned to the Company and
shall not be retained by the Executive or furnished to any third party,
in any form except as provided herein; provided, however, that the
Executive shall not be obligated to treat as confidential, or return to
the Company copies of any Confidential Information that (i) was
publicly known at the time of disclosure to the Executive, (ii) becomes
publicly known or available thereafter, but prior to the Date of
Termination, other than by any means in violation of this Agreement or
any other duty owed to the Company by any person or entity or (iii) is
lawfully disclosed to the Executive by a third party. As used in this
Agreement the term "Confidential Information" means: information
disclosed to the Executive or known by the Executive as a consequence
of or through his relationship with the Company, about the directors,
officers, shareholders, customers, employees, investors, business
methods, public relations methods, organization, procedures or
finances, including, without limitation, information of or relating to
shareholder, customer or investor lists of the Company and any
affiliate.
(b) Non-Solicitation. In addition, the Executive hereby
agrees that during the Employment Period, and for a period of one (1)
year thereafter, regardless of the reason or circumstances of
Termination of employment with the Company, the Executive will not,
either on his own account or jointly with or as a manager, agent,
officer, employee, consultant, partner, joint venturer, owner or
shareholder or otherwise on behalf of any other person, firm or
corporation, (i) carry on or be engaged or interested directly or
indirectly in, or solicit, the sale or provision of services or the
development or marketing of service modifying antimicrobials and
biostatic products as offered by the Company to its customers at the
Date of Termination, (ii) endeavor directly or indirectly to canvas or
solicit in competition with Company or to interfere with the supply of
orders for goods or services from or by any person, firm or corporation
which during the Employment Period has been or is a supplier of goods
or services to Company or become an investor in the Company or (iii)
directly or indirectly solicit or attempt to solicit away from Company
any of its officers or employees or offer employment to any person who,
at any time during the six (6) months immediately preceding the Date of
Termination, is or was an officer or employee of Company.
8. Covenant Not to Company. The Executive agrees that during the
Employment Period he will devote full-time to the business of the Company and
not engage in any type of business which engages in the medical internet, online
pharmacy and information services or any other related businesses, including but
not limited to all aspects of the Business. Subject to such full-time
requirement and the restrictions set forth below in this Section 8 and Section
3(c) above, the Executive shall be permitted to continue his existing business
investments and activities and
- 6 -
<PAGE> 7
may pursue additional business investments; provided that the Executive not
serve as a director or officer of any public company resulting from such
business investments. The Executive agrees that, from the end of the Employment
Period through a one (1) year period thereafter, he shall not, within the
Protected Territory (as defined hereinafter), (i) invest in, manage, consult or
participate in any way in any other business in competition with the Business
(in either an active or passive manner), (ii) participate in or advise any
business wherein any business activities similar to the Business are a relevant
business segment, or (iii) act for or on behalf of any business that intends to
enter or participate in the antimicrobial or biostatic products development
business, in each case unless the independent members of the Company's Board
determines that such action is in the best interests of the Company.
Notwithstanding the foregoing, the Executive may purchase stock as a stockholder
in any publicly traded company, including any company which is involved in the
development or operation of a medical internet site in the Protected Territory;
provided that the Executive does not own (together or separately or through his
affiliates) more than five percent (5%) of any company (other than the Company)
engaged in a business which is competitive with the Business of the Company
within the Protected Territory. In addition, the Executive shall not invest
(directly or indirectly) in any competitive business operating within the
Protected Territory unless the independent members of the Company's Board
determines that such an investment is in the best interests of the Company. For
purposes of this Agreement, the "Protected Territory" shall mean that area
within a one hundred (100) mile radius of the principal offices of the Company
at the Date of Termination and within a one hundred (100) mile radius of the
principal offices of any customer of the Company as of the Date of Termination.
9. Injunctive Relief and Enforcement. In the event of breach by
the Executive of the terms of Sections 5(e), 7 or 8, if the Company believes it
is suffering irreparable injury, then the Company shall, notwithstanding the
requirement of final and binding arbitration contemplated in Section 16 below,
be entitled to institute legal proceedings to enforce the specific performance
of this Agreement by the Executive and to enjoin the Executive from any further
violation of Sections 5(e), 7 or 8 and to exercise such remedies cumulatively or
in conjunction with all other rights and remedies provided by law and not
otherwise limited by this Agreement. The Executive acknowledges, however, that
the remedies at law for any breach by him of the provisions of Sections 5(e), 7
or 8 may be inadequate. In addition, in the event the covenants set forth in
Sections 5(e), 7 or 8 shall be determined by any court of competent jurisdiction
to be unenforceable by reason of extending for too great a period of time or
over too great a geographical area, by reason of being too restrictive or
expansive, or by constituting an unlawful restraint of trade in any other
respect, each such covenant shall be interpreted to extend over the maximum
period of time and over a maximum geographical area for which it may be
enforceable, and to the maximum extent in all other respects as to which it may
be enforceable, and enforced as so interpreted, all as determined by such court
in such action.
10. Notice. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered when
transmitted by telecopy with written confirmation of transmission and receipt,
three (3) days after deposit in the U.S. mail, first class, with adequate
postage thereon, or one (1) day after delivery to an overnight air courier
guaranteeing next day delivery, addressed as follows:
- 7 -
<PAGE> 8
If to the Executive: Mr. Wayne A. Roberts
If to the Company: e*MD.COM
4405 International Boulevard
Suite B-109
Norcross, Georgia 30093
Attention: President
With a copy to: Schreeder, Wheeler & Flint, LLP
1600 Candler Building
127 Peachtree Street, N.E.
Atlanta, Georgia 30303-1845
Attention: Edward H. Brown, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt as provided above.
11. Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect; provided, however, that if any one or more of the terms
contained in Sections 5(e), 7 or 8 hereto shall for any reason be held by any
court of competent jurisdiction to be unenforceable by reason of extending for
too great a period of time or over too great a geographical area, by reason of
being too restrictive or expansive, or by constituting an unlawful restraint of
trade in any other respect, then such covenant shall not be deleted but shall be
reformed and constructed in a manner to enable it to be enforced to the extent
compatible with applicable law.
12. Assignment. This Agreement may not be assigned by the
Executive, but may be assigned by the Company to any successor to its business
and will inure to the benefit and be binding upon any such successor.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
15. Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of Georgia (without reference to the choice of law provisions of Georgia),
except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement,
and as
- 8 -
<PAGE> 9
to those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
16. Arbitration. Absent any irreparable injury being suffered by
the Company entitling the Company to seek injunctive relief against the
Executive pursuant to Section 9 hereof, in the event there shall be a dispute
among the parties arising out of or relating to this Agreement, or the breach
thereof, the parties agree that such dispute shall be resolved by final and
binding arbitration in Atlanta, Georgia under the rules of the American
Arbitration Association. Any award issued as a result of such arbitration shall
be final and binding between the parties thereto, and shall be enforceable by
any court having jurisdiction over the party against whom enforcement is sought.
The fees and expenses relating to such arbitration (with the exception of the
Executive's attorneys' fees, if any) or any action to enforce an arbitration
award shall be shared equally by the Company and the Executive.
15. Entire Agreement. This Agreement contains the entire agreement
and understanding between the Company and the Executive with respect to the
employment of the Executive by the Company as contemplated hereby, and no
representations, promises, agreements or understandings, written or oral, not
herein contained shall be of any force or effect. This Agreement shall not be
changed unless in writing and signed by both the Executive and the Board of the
Company.
18. Board Approval. In any case in which this Agreement provides
for the approval, review or determination of the Board in connection with the
Executive's compensation, benefits, termination or compliance with restrictive
covenants herein expressed, then such approval, review or determination shall be
deemed a "Director's conflicting interest transaction", subject to the
procedures required by O.C.G.A. ss. 14-2-860 et seq.
19. The Executive's Acknowledgment. The Executive acknowledges he
has had the opportunity to consult with independent counsel of his own choice
concerning this Agreement, and he has read and understands the Agreement, is
fully aware of its legal effect, and has entered into it freely based on his own
judgment.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the date and year first above written.
"EXECUTIVE"
e*MD.COM
By:
----------------------------- --------------------------------
WAYNE A. ROBERTS
Title:
----------------------------
- 9 -
<PAGE> 1
EXHIBIT 10.094
- -------------------------------------------------------------------------------
AIA Document A111
STANDARD FORM OF AGREEMENT
BETWEEN OWNER AND CONTRACTOR
where the basis of payment is the
COST OF THE WORK PLUS A FEE
with or without a Guaranteed Maximum Price
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTATION WITH
AND ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION
The 1987 Edition of AIA Document A201. General Conditions of the Contract for
Construction, is adopted in this document by reference. Do no use with other
general conditions unless this document is modified.
This document has been approved and endorsed by The Associated General
Contractors of America.
- -------------------------------------------------------------------------------
AGREEMENT
made as of the 13th day of September in the year of Nineteen Hundred and
Ninety-Nine.
BETWEEN the Owner: BIOSHIELD Tech.
(Name and address) 5655 Peachtree Parkway
Norcross, GA 30092
and the Contractor: Beers Construction Company
(Name and address) 233 Peachtree Street, NE, Suite 2400
Atlanta, GA 30303
the Project is: E-MD.COM
(Name and address) 5655 Peachtree Parkway
Norcross, GA 30092
the Architect is:
(Name and address)
The Owner and Contractor agree as set forth below.
- -------------------------------------------------------------------------------
Copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978 (C)1987
by the American Institute of Architects. 1735 New York Avenue, N.W.,
Washington, D.C. 20006. Reproduction of the material herein of
substantial quotation of its provisions without written permission of
the AIA violates the copyright laws of the United States and will be
subject to legal prosecution.
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER/CONTRACTOR AGREEMENT - TENTH EDITION - ALA - (C)1987-
THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE,NW.,
WASHINGTON D.C. 20006 A111-1987 1
WARNING: Unlicensed photocopying violates U.S. copyright laws and is subject to
legal prosecution.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated August 19, 1999, accompanying the
financial statements and schedules included in the Annual Report of BioShield
Technologies, Inc. and Subsidiary on Form 10-KSB for the year ended June 30,
1999. We hereby consent to the incorporation by reference of said reports in the
Registration Statements of BioShield Technologies, Inc. and Subsidiary on Forms
SB-2 (File No. 333-57767, effective September 30, 1998 and Post-Effective
Amendment No. 1 to Form SB-2 File No. 333-57767), effective May, 1999) and on
Forms S-8 (File No. 333-79149, effective May 24, 1999).
Atlanta, Georgia
September 21, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BIOSHIELD TECHNOLOGIES, INC. FOR THE YEAR ENDED JUNE 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 2,500,561
<SECURITIES> 103,250
<RECEIVABLES> 122,013
<ALLOWANCES> 20,000
<INVENTORY> 151,403
<CURRENT-ASSETS> 7,827,050
<PP&E> 247,976
<DEPRECIATION> 45,576
<TOTAL-ASSETS> 8,223,743
<CURRENT-LIABILITIES> 851,845
<BONDS> 0
0
0
<COMMON> 7,336,318
<OTHER-SE> (4,763,170)
<TOTAL-LIABILITY-AND-EQUITY> 8,223,743
<SALES> 305,336
<TOTAL-REVENUES> 305,336
<CGS> 188,913
<TOTAL-COSTS> 780,566
<OTHER-EXPENSES> 2,785,647
<LOSS-PROVISION> 18,095
<INTEREST-EXPENSE> 16,960
<INCOME-PRETAX> (3,289,616)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,289,616)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,289,616)
<EPS-BASIC> (0.57)<F1>
<EPS-DILUTED> 0
<FN>
<F1>Diluted loss per common share is not disclosed because the effect of the
exchange or exercise of common stock equivalents would be antidilutive.
</FN>
</TABLE>
