<PAGE>
AS FILED WITH THE COMMISSION ON REGISTRATION NO.
________________________________________________________________________________
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BIOLABS INC.
(Name of Registrant as specified in its charter)
PROVINCE OF BRITISH COLUMBIA
(State or jurisdiction of incorporation or organization)
1A-3033 KING GEORGE HIGHWAY
SURREY, BC, CANADA V4P 1B8
(604) 542-0820
(Address and telephone number of principal executive offices, and
address of principal place of business or intended principal place of
business)
ALBERT KLYCHAK WITH COPIES TO:
BIOLABS INC. D. DAVID COHEN, ESQ.
1A-3033 KING GEORGE HIGHWAY JERICHO ATRIUM - SUITE 133
SURREY, BC, CANADA V4P 1B8 500 NORTH BROADWAY
(604) 542-0820 JERICHO, NEW YORK 11753
(516) 933-1700
(Name, address and telephone number of agent
for service)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement becomes effective.
If the only securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box / /.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
REGISTERED SHARE (a) PRICE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, no 980,000 Shares $8.10 $7,938,000 $2,221.00
par value
=================================================================================================================================
</TABLE>
(a) Calculated in accordance with Rule 457(c). No resale of the Shares is
permitted as to executive officers, directors or affiliates of the Registrant.
<PAGE>
CROSS-REFERENCE SHEET
BETWEEN ITEMS IN FORM S-8 AND PROSPECTUS
PURSUANT TO ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM NO. FORM S-8 CAPTION HEADING IN PROSPECTUS
<S> <C> <C>
A. Information Required in the Section 10(a) Prospectus
1. Plan Information
(a) General Plan Information.......................................Plan Information
(b) Securities to be Offered.......................................The Stock Option Plan
(c) Employees who may Participate in Plan..........................The Stock Option Plan
(d) Purchase and Payment of Securities Pursuant to the Plan........The Stock Option Plan
(e) Resale Restrictions............................................Resale of the Shares; Selling Shareholders
(f) Tax Effects of Plan Participation..............................Tax Effects
(g) Investment of Funds............................................Not Applicable
(h) Withdrawal from Plan; Assignment of Interest...................Not Applicable
(i) Forfeitures and Penalties......................................Not Applicable
(j) Charges and Deductions of Liens therefor.......................Not Applicable
2. Registrant Information..............................................Summary; Business of E&C; Selected Historical
Financial Data; Recent Developments; Additional
Information
B. Information Required in the Registration Statement
3. Incorporation of Documents
By Reference........................................................Incorporation by Reference; Additional
Information
4. Description of Securities...........................................Summary
5. Interests of Named Experts and Counsel..............................Legal Opinions
6. Indemnification of Directors and Officers...........................Indemnification
7. Exemption from Registration Claimed.................................Not Applicable
8. Exhibits............................................................Exhibits
9. Undertakings........................................................Undertakings
</TABLE>
ii
<PAGE>
INCORPORATION BY REFERENCE
BioLabs Inc. ("BioLabs" or the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission")
relating to its business, financial position, results of operations and other
matters. Such reports and other information can be inspected and copied at
the Public Reference Section maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and its Regional Offices
located at The Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661, and 7 World Trade Center, 15th Floor, New York, New York 10048. Copies
of such material also can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Company has filed with the Commission a registration statement on Form
S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to BioLabs and the Common Stock offered hereby.
No person is authorized to give any information or to make any representation
not contained in this Prospectus and, if given or made, such information or
representation should not be relied upon as having been authorized by the
Company or any other person. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities in any jurisdiction
to any person to whom it is not lawful to make any such offer or solicitation
in such jurisdiction. Neither the delivery of this Prospectus nor any
distribution of the securities made under this Prospectus shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date of this Prospectus. However, if any
material change occurs during the period that this Prospectus is required to
be delivered, this Prospectus will be amended or supplemented accordingly.
All information regarding E&C in this Prospectus has been supplied by E&C.
All documents and reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act whether before or after the date of
this Prospectus shall be deemed to be
iii
<PAGE>
incorporated by reference in this Prospectus and to be a part hereof from the
dates of filing of such documents or reports. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. Such documents (other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference) are available without charge, to any person, including any
beneficial owner, to whom this Prospectus is delivered, on written or oral
request, in the case of documents relating to BioLabs Inc, 1A-3033 King
George Highway, Surrey, B.C. Canada V4P 1B8 (telephone number (604) 542-0820,
Attn: Albert Klychak, Vice President.
iv
<PAGE>
Prospectus dated April __, 2000
-------------
BIOLABS, INC.
PROSPECTUS
-------------
This Prospectus relates to certain Common Shares of BioLabs, Inc. ("BioLabs"
or the "Company") issuable by the Company pursuant to options held by certain
key employees of the Company, and consultants to the Company pursuant to the
Officers, Directors, and Amended and Restated Stock Option Plan (the "Plan"),
and to the re-offer or resale of such Shares by persons who are not officers,
directors, or affiliates of the Company, or who have provided financial
consulting or other financial services to the Company in connection with
capital raising activities for the Company, and to the sale, with prospective
resale of, certain Warrant Shares.
Pursuant to the Plan, options have been issued to selected employees and
consultants from time to time since September, 1998 and additional options
may be issued in the future to such persons. The options are exercisable at
various prices from U.S. $1.00 to U.S. $10.60 per Share. Substantially all of
the options are currently exercisable. In addition, the offering relates to
Fifty Thousand (50,000) Shares which may be exercised pursuant to a Warrant
terminating on March 31, 2004 and held by one individual.
--------------------
On April 20, 2000 the reported closing bid price of a share of the Company's
Common Stock on the on the Bulletin Board market was U.S. $8.00 per share.
Investors are urged to obtain current price information for BioLabs Common
Stock in connection with any consideration of the transactions contemplated
thereby.
--------------------
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROSPECTUS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is ________, 2000
<PAGE>
SUMMARY
GENERAL.
This Prospectus relates to the offer, and prospective re-offer of certain
securities of BioLabs, Inc., a New York corporation ("BioLabs" or the
"Company").
THE COMPANY.
BioLabs has its principal place of business in Surrey, British Columbia,
Canada. It is a development stage Company formed to manufacture and market
certain cancer therapy tests being developed by a separate entity in which
the Company currently also holds an Eleven Percent (11%) equity interest. A
more detailed description of the business and affairs of the Company appears
at Item 1 hereinafter.
THE OFFERING. This Prospectus relates to the issuance of up to Nine Hundred
Eighty Thousand (980,000) Shares of the Common Stock of the Company, no par
value (the "Common Shares"). Nine Hundred Thirty Thousand (930,000) of such
Shares are reserved pursuant to the Company's Stock Option Plan described
hereinafter. Fifty Thousand (50,000) Shares are reserved pursuant to a
warrant issued March 31, 2000 to Mr. John J. Horan, who has been invited to
serve as a consultant to, and prospective director of, the Company.
The Shares are voting securities of the Company. The Company has no other
class of securities outstanding. The Shares do not currently carry a
dividend, and management does not contemplate paying a dividend on Common
Shares at any time in the foreseeable future. See also "Description of
Securities" at p. 26, ET SEQ.
2
<PAGE>
PLAN INFORMATION
THE STOCK OPTION PLAN.
The Stock Option Plan was initially adopted on July 31, 1998 (the "Plan").
The Plan is intended to provide additional incentive to certain key employees
of and consultants to the Company by encouraging such employees to acquire
shares of the Company. A maximum of the Company's Common Stock were reserved
for issuance pursuant to the Plan. As of a current date, options relating to
850,000 shares are currently outstanding, and are exercisable at various
price ranging from U.S. $1.00 per Share to U.S. $10.00 per Share. All of the
Options are currently vested and exercisable.
All key employees of the Company are eligible for options pursuant to the
Plan. All Options have a fixed term, established by the Compensation
Committee of the Company (the "Committee") or the Board of Directors. Certain
of the options currently outstanding expire on November 20, 2000; others
expire on various dates in 2003.
Options may be granted by the Board of Directors in its discretion from time
to time. Options are neither assignable nor transferable and are exercisable
by the optionee only during his lifetime. However, if an optionee dies or
becomes permanently disabled while employed by the Company and holding an
option which is exercisable on the date of death or permanent disability, the
optionee's legal heirs or personal representatives may exercise such option
within one (1) year after the date of death or termination of employment due
to permanent disability.
All Options, when granted, are exercisable at the fair market value for such
shares at the date of grant. The shares are purchased and paid for in full
only when the Options are exercised. "Fair market value" as defined by the
Plan means the average of the highest and lowest quoted prices during the
five (5) days prior to the date of grant of any Option.
RESALE OF THE SHARES.
The Plan currently provides that all shares issued pursuant to the exercise
of options under the Plan shall bear a restrictive legend and shall not be
re-transferred except in the absence of an effective Registration Statement
under the Securities Act of 1933, as amended (the "Act") or an exemption from
registration. The registration provided for herein is intended to satisfy
said requirement, permitting resale by persons who are not officers,
directors or affiliates of the Company.
TAX EFFECTS.
3
<PAGE>
Under the provisions of the United States Internal Revenue Code, Optionees do
not realize income upon the grant of any Option priced at or above fair
market value, or upon the exercise of any such Options.
An optionee who sells the Option Shares will realize income to the extent
that the selling price exceeds the Option Exercise Price. Shares sales made
within one year of exercise of an Option will result in ordinary income to
the Optionee, and sales made after the shares are held more than one year
will result in capital gains.
In Canada, in general, when a Canadian based employee exercises an option to
acquire shares, the employee will be deemed to realize income equal to the
fair market value of the shares at the time of exercise less the option
exercise price and any amount paid to acquire the option. This income will be
taxed in the same (more favorable) basis as a capital gain, as long as
certain conditions are met. Essentially those conditions are that a) the
shares are normal common shares for which there is no reasonable expectation
they will be redeemed or canceled within two years and no dividend
entitlement is limited or guaranteed; b) the taxpayer was dealing at arms
length with the corporation (e.g. is not part of a control group); and c) the
option exercise price is not less than the fair market value of the shares at
the time the option was granted. [New Ruling - requires additional discussion.]
After the option is exercised, a subsequent sale of the shares by the
employee will be treated for tax purposes in the same manner as any sale of
shares. For most employees, this will be a taxable capital gain, although for
any employees who are traders in a sufficient volume of shares the gain or
loss would be on account of income.
All employees are cautioned to retain their own qualified tax advisors with
respect to any tax consequences impacting upon such persons individually.
SELLING SHAREHOLDERS.
An aggregate of up to Four Hundred Forty Thousand (440,000) Shares of Common
Stock may be offered for resale by Optionees (collectively, the "Selling
Shareholders") from time to time. The Shares offered for sale constitute
approximately 5.2% of all shares of the Company's outstanding Common Stock,
without giving effect to the possible exercise of outstanding options not
covered by, or otherwise referred to in this Prospectus.
The following table sets forth certain information with respect to persons
for whom the Company is registering Shares FOR RESALE to the public. The
table reflects the numbers of Shares acquirable by the
4
<PAGE>
Selling Shareholders under their respective Options. None of the Selling
Shareholders otherwise owns any Common Stock, except as noted. The Company
will not receive any proceeds from the resale of the Shares. Except as noted,
all Selling Shareholders are employees, or Advisory Board members but not
executive officers, directors or affiliates of the Company.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
SHARES ACQUIRABLE
UNDER MAXIMUM TO BE
SELLING OPTIONS/WARRANTS RESOLD TO THE
SHAREHOLDER SHARES OWNED AMOUNT PERCENT (1) PUBLIC
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Natalie Barwieck 10,000 * 10,000
- ---------------------------------------------------------------------------------------------
Paul Ervin 20,000 * 20,000
- ---------------------------------------------------------------------------------------------
Alex Livak 20,000 * 20,000
- ---------------------------------------------------------------------------------------------
Edward Gold 20,000 * 20,000
- ---------------------------------------------------------------------------------------------
Lorna Vandemaeghe 20,000 * 20,000
- ---------------------------------------------------------------------------------------------
Andrew Kunish 20,000 * 20,000
- ---------------------------------------------------------------------------------------------
De Jong & 140,000 1.7% 140,000
Associates (Consultant)
- ---------------------------------------------------------------------------------------------
Aspen Management (Consultant) 120,000 1.4% 120,000
- ---------------------------------------------------------------------------------------------
Canadian 45,000 * 45,000
Independent
Productions (Consultant)
- ---------------------------------------------------------------------------------------------
Richard Lane, 25,000 * 25,000
Esq. (Attorney/Consultant)
- ---------------------------------------------------------------------------------------------
Total 440,000 5.2% 440,000
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Percent of total Common Stock outstanding less than one (1%) percent.
[The rest of this page intentionally left blank.]
5
<PAGE>
BUSINESS OF BIOLABS
DESCRIPTION OF BUSINESS.
BioLabs, Inc. is a New York corporation, having its principal place of
business in Surrey, British Columbia, Canada. It is a development stage
company formed to manufacture and market certain cancer therapy tests
developed by others. The Company was previously known as Flexx Realm, Inc.
Flexx Realm had no continuing business immediately prior to its name change
to BioLabs, Inc.
In November of 1998, the Company entered into a joint venture agreement with
an unrelated entity, Biotherapies Incorporated ("Biotherapies") to develop
and commercialize a Mammastatin Serum Assay Test (the "MSA Test"). The joint
venture operates as a Michigan Limited Liability corporation. The name of the
joint venture entity is Biomedical Diagnostics, LLC, and is herein referred
to as the "Joint Venture" or "JV". The Company also owns an approximate
eleven percent (11%) minority interest in Biotherapies, a privately owned
Company.
* * * * *
The Company has no revenue from operations, is in a start-up phase with its
existing assets and has no significant assets, tangible or intangible, other
than the opportunities for the Joint Venture referred to herein.
The Company continues to have significant obligations with respect to the
Joint Venture and Biotherapies. In order to complete its obligations, the
Company will require additional financing, before the Company can generate
revenues from operations. None of the Company's current officers are employed
directly by the Company. Although such officers are engaged substantially
full-time for the Company, in accordance with Canadian practice, they are
employed by the Company through a personal services holding company. The
Company has three full-time persons engaged through the holding Company, and
one other administrative employee, employed directly. (See Item 6: "Executive
Compensation").
There is no assurance that the Company will ever earn revenue, operate
profitably or provide a return on investment to its security holders. The
Company's activities to date have consisted primarily of efforts to raise
funds; establish a joint venture relationship with Biotherapies for the
manufacture and sale of the MSA Test; and acquire an equity interest in
Biotherapies.
As currently structured, the Company proposes to derive substantially all its
revenue from its 50% partnership in the Joint Venture. A
6
<PAGE>
critical part of the Company's business plan requires the Company to fund 50%
of the cost to develop, manufacture, market and distribute the MSA Test.
There can be no assurance that the Company will be able to successfully raise
the capital required, when required, to meet its proportionate costs in the
future. See "Risk Factors."
* * * * *
At present, the MSA Test is based on two immune globulins referred to as IgM
antibodies. The Joint Venture is actively seeking to develop two smaller
immune globins referred to as IgG antibodies to replace the IgM antibodies.
If such efforts are successful, the IgG antibodies will significantly improve
the ability of the MSA Test to detect Mammastatin levels. The antibodies are
being developed for use in clinical trials. The results of these trials will
be submitted in an application to the United States Food and Drug
Administration ("FDA") for approval of the MSA Test as a medical device. It
is anticipated that this application will be submitted by the second quarter
of 2000 with FDA action with respect to the application expected during the
fourth quarter of 2000. Based on such timetable, the MSA Test is not expected
to be launched in North America until the first quarter of 2001. The Company
believes it has adequate current cash resources, if appropriately allocated,
to continue operations as is for approximately eighteen (18) months. The
potential insufficiency of funds is a significant risk factor.
Final product development, manufacturing, marketing, sales and distribution
of the MSA Test is expected to require a significant amount of additional
capital. Under the terms of the Joint Venture Agreement, each member of the
Joint Venture is obligated to fund its 50% portion of additional capital
requirements. In addition, the Company is required to undertake certain
responsibilities and incur certain expenses for Biotherapies. The Company
will require additional capital to meet such obligations. The Company intends
to finance its portion of these expenses through the proceeds of the sales of
securities by future private placements of securities or registered public
offering transactions. In the event that the Company is unable to raise its
50% portion of Joint Venture expenses, the Company's interest in the Joint
Venture may be reduced to 30%.
The Company has thus far paid U.S. $1,500,000 directly to Biotherapies in
connection with the ongoing development of products using the Mammastatin
technology. All amounts set forth herein are in U.S. Dollars.
Full clinical trials for Mammastatin at the MD Anderson Cancer Center in
Houston, TX have commenced. In addition, the JV is making necessary
arrangements to provide a large data base required for the MSA Test. However,
revenues are not expected to be realized until clinical trials
7
<PAGE>
are completed, and FDA approval is granted, issues, and marketing or
licensing of the MSA test on a commercial basis is feasible. The Company is
obligated to pay $2,500,000 to Biotherapies for exclusive on-going product
development when the Biotherapies-Background Joint Venture completes clinical
trials and obtains necessary regulatory approvals for the manufacturing and
marketing of some form of the MSA test in the United States. $500,000 of such
amount was paid on August 9, 1999; $1,000,000 is due within 60 days of
completion of diagnostic clinical trials; and the final $1,000,000 of which
is due 30 days after the Joint Venture has achieved $100,000 or more in gross
revenue. Although the Company is exploring licensing opportunities which
would, if consummated, enable it to pay such sums to Biotherapies when due
without future capital raise-ups, there can be no assurance thereof. The
potential insufficiency of funds is a significant risk factor.
Within fourteen (14) days after the Joint Venture obtains the regulatory
approvals, the Company is required to issue Biotherapies 5% of the Company's
total outstanding shares of all classes on a fully diluted basis. This
amount, when incurred will constitute an additional investment cost in the
Company's participation in the Joint Venture. The Company also intends to
seek other commercial relationships relating to cancer therapy treatments and
other biotechnology projects. There is no assurance that any such
relationships will be established or, if established, that any such
transactions or relationships will be profitable or effective for the
Company. See BUSINESS - "Risk Factors".
Based on the current status, Management believes that it has adequate current
cash resources, if appropriately allocated, to continue current operations as
is, for approximately 18 months. The Company's viability after 18 months is
dependent on the achievement of commercialization goals and milestones by the
Joint Venture, and, even then, continued viability will be dependent at least
for the same undetermined period, on the Company's ability to attract
additional investment capital from qualified individuals and institutions.
BIOTHERAPIES-BACKGROUND.
The Company owns a limited stock interest in Biotherapies. This discussion of
Biotherapies is provided solely to educate the reader concerning the
background of the Company's technical partner in the Joint Venture. The
reader is cautioned not to confuse the activities or capacities of
Biotherapies with those of the Company. The Company does not possess the
technical expertise of Biotherapies.
Biotherapies was founded in 1994 by Dr. Paul Ervin Jr. Dr. Ervin has been a
director of the Company in the past. He currently serves as a member of the
Scientific Advisory Board for the Company.
Dr. Ervin had discovered the Mammastatin protein in 1987 at the
8
<PAGE>
University of Michigan Cancer Center (now known as the Karamasoff Cancer
Center in Detroit, Michigan). Dr. Ervin observed that under certain
laboratory conditions that Mammastatin decreased the growth rate of breast
cancer cells.
During his Ph.D. training from 1987 to 1994, Dr. Ervin continued his research
which resulted in the issuance of a patent to the University of Michigan in
1990, entitled Mammastatin Biochemical Characteristics. Dr. Ervin ultimately
discovered that Mammastatin is a naturally occurring human protein that has
been identified in laboratory media conditions by the growth of normal
mammary epithelial cells in culture. Further, that Mammastatin can be
identified in female blood serum and Mammastatin levels vary in the serum of
healthy women during menstrual cycles. Additionally, preliminary research
indicated that Mammastatin is a growth inhibitory protein that may be a
normal regulator of breast cell growth which does not affect the growth of
other cells. Mammastatin is not active and levels are low in over 90% of
breast cancer samples analyzed; while it is active in all of the normal
breast cells analyzed.
A gene for Mammastatin has since been isolated and identified. In 1997,
Biotherapies was given permission to administer natural Mammastatin to Stage
IV breast cancer patients on a compassionate basis. The Company has been
advised that the protein was approximately 70% effective in either stopping
or eradicating the cancer. There is no assurance that those results will be
replicated in future necessary tests.
Biotherapies developed a quantitative assay for measuring Mammastatin in
blood serum, known as the MSA test. The assay in all its forms is believed by
management to be a viable system for measuring the quantity of Mammastatin
protein in a liquid, and thereby provide a reliable indicator of the
potential presence or likely absence of breast cancer cells.
The Joint Venture has been formed to commercialize the MSA test, subject to
the FDA approval process. The Joint Venture envisions development of a "Kit"
which would allow antibody based detection of the Mammastatin protein.
Components of the Kit may include, in additional to antibodies and protein,
substrates to develop color from the serum assay, membrane to immobilize
serum proteins, an apparatus to perform the blot, a scanner to read the blot,
and a software program and computer to interpret the blot. Neither the MSA
Test nor its component parts or the exact procedure to be followed has been
finalized.
Through the Company's 50% ownership interest in the Joint Venture, the
Company is partially funding the development of the MSA Test for breast
cancer. Biotherapies provided certain intellectual property to the Joint Venture
and also granted to the Joint Venture, the exclusive world
9
<PAGE>
wide rights to manufacture, market and distribute the MSA Test.
Upon any successful completion of clinical trials, an application to the FDA
for approval of the MSA Test as a medical device, will be submitted. The
Joint Venture will also submit an application to Health Protection Branch and
HPB ("HPB") Canada, for approval to sell the MSA Test in Canada. FDA action
with respect to the application of the MSA Test is expected by the end of the
fourth quarter of 2000. If such approval is obtained, the MSA Test is
scheduled to be launched in the United States and Canada, during the first
quarter of 2001.
The manufacturing and sale of pharmaceuticals is a highly competitive
industry dominated by a handful of large firms. As such, it is expected that
the Joint Venture will not manufacture the MSA test kit in-house, but instead
will sub-license these rights to a major pharmaceutical company.
The expected cost to bring the MSA Test to market has yet to be determined,
and will be determined, in part, by the terms and conditions of potential
sub-licensing agreements. The cost to introduce the MSA Test into the larger
clinical diagnostic market is not pre-determinable and may far exceed the
Company's current resources.
Acceptance of the MSA test by clinicians, pathologists, oncologists,
physicians and their patients will depend on BioMedical Diagnostic's ability
to (i) increase the level of awareness of Mammastatin ("MSA") Blood Test
among women, as well as laboratories and physicians who are expected to order
the MSA test; (ii) educate both the general public and medical community
regarding the benefits of early diagnosis of breast cancer with the MSA test;
(iii) provide data demonstrating clinical correlations to disease diagnosis
and outcomes detected by MSA tests; (iv) obtain third-party payor approval of
and reimbursement for the MSA tests.
MAMMASTATIN REPLACEMENT THERAPY.
Biotherapies also holds the exclusive rights to certain inventions pertaining
to the use of Mammastatin as a therapeutic for breast cancer. The Company has
no direct interest in Mammastatin as a therapeutic remedy, and will only
participate in the commercialization thereof through its approximately eleven
percent (11%) minority ownership interest in Biotherapies.
Mammastatin Replacement Therapy is not expected to be launched as a
commercial product until mid-2002 or later.
The sale of pharmaceuticals is a highly competitive industry dominated by a
handful of large firms. As such, it is expected that Biotherapies will
sub-license the distribution, marketing and sales rights to its
10
<PAGE>
Mammastatin Replacement Therapy to a major pharmaceutical company. At
present, Biotherapies is conducting a preliminary search of major
pharmaceutical companies for potential sub-license agreements for the
distribution, marketing and sale of the Mammastatin Replacement Therapy.
INVOLVEMENT WITH UNIVERSITY OF MICHIGAN.
In cooperation with the University of Michigan, Biotherapies has the
following patents and licenses on the Mammastatin technology:
- - Exclusive license from the University of Michigan on all of the
University's existing Mammastatin technology patent applications, subject
to reimbursement of past patent costs ($15,000 per year) and royalties:
15% on any sub-license revenues, and 4% on any direct sales revenues.
- - Submittal of U.S. and international patent applications in October 1997,
on behalf of the University of Michigan for:
1. The DNA sequence that codes for Mammastatin.
2. The synthetic reproduction of the Mammastatin protein.
- - Submittal of U.S. and international patent applications in 1998 by
Biotherapies on behalf of the University of Michigan for:
1. The Mammastatin blood testing methodology.
2. Use of healthy human mammary tissues for Mammastatin production.
TABLE MAMMASTATIN PATENT APPLICATIONS AND LICENSE HOLDERS.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Patent Patent Holder Licensee Exclusive
Application User
- ------------------------------------------------------------------------
<S> <C> <C> <C>
1. Mammastatin University of Biotherapies To be
biochemical Michigan Determined
characteristics ("TBD")
(issued 1990)
- ------------------------------------------------------------------------
11
<PAGE>
- ------------------------------------------------------------------------
2. Mammastatin University of Biotherapies Joint Venture
blood test (MSA) Michigan
(submitted 1996;
pending)
- ------------------------------------------------------------------------
3. Mammastatin University of Biotherapies TBD
DNA sequence and Michigan
synthetic
reproduction
(submitted 1997;
pending)
- ------------------------------------------------------------------------
4. Mammastatin University of Biotherapies TBD
method to treat Michigan
breast cancer
(submitted 1996;
pending)
- ------------------------------------------------------------------------
5. Mammastatin University of Biotherapies TBD
analog in other Michigan
epithelial
tissues
(submitted 1999;
pending)
- ------------------------------------------------------------------------
6. Mammastatin University of Biotherapies TBD
analog in Michigan
prostate
(submitted 1999;
pending)
- ------------------------------------------------------------------------
</TABLE>
INTELLECTUAL PROPERTY.
The Mammastatin technology, including the MSA test is, in the opinion of
management, protected pursuant to Dr. Ervin's work to the University of
Michigan and two patent applications filed in 1997 and 1998. All patent
applications have been assigned to the University of Michigan according to
the terms of the licensing agreement for the Mammastatin technology between
Biotherapies and the University of Michigan. Biotherapies manages the patent
process. Both Biotherapies and the Joint Venture intend to patent any and all
novel extensions of the existing technology.
There can be no assurance that the patent applications will ultimately be
granted or that the patents, if granted, will fully protect Biotherapies, the
Company, or the Joint Venture from other competition. Both Biotherapies and
the Joint Venture will have to incur considerable costs in the future to
obtain patent protection in other countries, if
12
<PAGE>
any protection can be obtained at all. Patent protection is limited in
duration. The Mammastatin blood test ("MSA") patent pending licenced to the
Joint Venture will, if granted, last no more than 17 years.
BIOTHERAPIES - CONTRIBUTIONS TO THE JOINT VENTURE/GOVERNANCE.
Under the terms of the Operating Agreement, Biotherapies' contribution to the
Joint Venture is an exclusive, non-assignable, non-sub-licensable, royalty
free world-wide sub-license to use all of Biotherapies' rights under the
License Agreement with the University of Michigan, for the development,
manufacturing, marketing and sale of the MSA test. The Joint Venture owns all
improvements, including modifications and enhancements as well as any new
product or material which performs substantially the same function as the MSA
test, but does so through a different method or process.
So long as the Joint Venture remains in effect, the Company will be notified
of any opportunities for the development or commercialization of any other
diagnostic or screening test developed by Biotherapies.
The Joint Venture is managed by four committee members, two of whom were
appointed by the Company and two appointed by Biotherapies. Each member has
one vote. The committee has the power and authority to make all of the
ordinary and usual decisions concerning the business of the Joint Venture,
including the hiring of key officers. Tie votes are resolved by the President
of Biotherapies, currently, Mr. Tom Trimmer.
The Joint Venture Management Committee must refer the sale or hypothecation
of all or substantially all of the assets of the Joint Venture, capital
expenditures or major commitments in excess of $250,000, non-arms-length
transaction or issuance of any additional Joint Venture interests directly to
the Joint Venture partners. As currently constituted, any such transaction
requires the Company's consent.
The Joint Venture Agreement has no fixed term for expiry and both the Company
and Biotherapies can engage in competing technologies or business to the MSA
test. Either member of the Joint Venture may sell or encumber all or part of
its interest in the Joint Venture to another party by first granting the
non-selling member a 30 day right of first refusal.
ADDITIONAL CAPITAL REQUIREMENTS OF THE JOINT VENTURE.
In the event that additional capital is required by the Joint Venture, each
member of the Joint Venture is obligated to fund its 50% portion of
13
<PAGE>
the total requirements. The Company will require additional capital to fund
its portion of such expenses. The Company is not aware as whether
Biotherapies has the financial capacity to pay its portion of the Joint
Venture expenses. Should either member of the Joint Venture fail to fund the
shortfall within 60 days of the due date, the other member has the option to
fund the shortfall and correspondingly dilute the non-funding member's
ownership interest in the Joint Venture. The Company currently has no way of
raising its portion of the Joint Venture capital otherwise than through the
sale of securities by future private placements or registered public offering
transactions.
THE FDA APPROVAL PROCESS.
The FDA approval process is being managed by Biotherapies, which has retained
a team of expert regulatory and legal advisors. In 1997, the FDA accepted the
Mammastatin proof of concept studies and approved the therapeutic product
under the "Fast Track" program, under which new products of life threatening
diseases can be approved in less than two years. The proof of concept study
involved a sample of 1000 blood samples and correlated low Mammastatin levels
with the incidence of breast cancer.
In 1998, Biotherapies received approval from the FDA to commence Phase I and
II clinical trials at the University of Texas, MD Anderson Cancer Center in
Houston, Texas. If Phase I and II are successful, Biotherapies will still
have to complete one or more Phase III trials prior to obtaining FDA approval
to commercially launch the product. Phase III trials will involve the use of
recombinant or synthetic Mammastatin because of the limited production
capability of natural Mammastatin. Phase III testing will primarily focus on
long term safety and efficacy and may take several years.
In the United States, commercialization and sale of either therapeutic
products or diagnostic/screening tests are subject to review and
authorization procedures by the FDA. Generally, any proposed drug or medical
device must pass each phase of a multi-phase process, designed to prove
safety, efficacy and effectiveness over a sufficient sample. Regulatory
authorities have a broad discretion when granting or denying approvals. There
is no assurance that the MSA Test will be sanctioned for use. The FDA could
impose additional product testing on the therapeutic, and in the case of the
MSA test, may require additional testing.
The MSA screening test will likely be subject to a less stringent trial
process because it is not an in-vitro therapeutic, but rather a blood test.
The Company anticipates that the duration of the test period will be
approximately 6-9 months. The Joint Venture is currently in the process of
reviewing the requirements governing the test under a 510K application or a
PMA application with FDA. Under a 510K, the FDA would,
14
<PAGE>
if accepted, sanction the use of the test and approve limitations on the
wording and terms of use of the product. A PMA application, if required, may
necessitate more stringent testing in a controlled clinical environment.
The sample range test will consist of 500 healthy women and 500 breast cancer
patients to determine normal Mammastatin ranges. Histories will be available
for each patient. Measurement of Mammastatin levels will be made, and a
determination as to whether the levels correspond with the patient history.
The correlation test will consist of 1000 blood samples absent of patient
history. The purpose of the correlation test is to seek to identify from
blood samples only those patients who have tumors or breast cancer. The
sample range and correlation tests are designed to prove the efficacy of the
MSA screening test as a measurement and diagnostic tool.
The international jurisdictions in which the Joint Venture intends to market
the MSA test have similar legislation and regulations governing the sale of
the therapeutic products and cancer screening tests. Any failure to comply
with these provisions could result in immediate cessation of sales and
distribution activities.
Laws and regulations of the United States and other jurisdictions are subject
to change. There can be no assurance that any such change would not adversely
affect the Joint Venture, and the Joint Venture's proposed business. The
failure of the Company to comply with such laws and regulations could have an
adverse impact on the operations of the Company.
INDUSTRY OVERVIEW.
Despite a multiplicity of new drugs and advanced technologies, cancer remains
one of the major causes of death in developed countries. For 1998, the
American Cancer Society estimated new breast cancer incidence alone at
180,300 with 43,900 related deaths in the USA. Breast cancer is a leading
cause of cancer mortality among women in the USA and the developed world.
While the rate of incidence increase is greatest in women under age 50, most
cases occur after age 50.
Breast cancer, like other cancers, is a disease of abnormal cell growth.
Typically, the cells which line the milk producing ducts in the breast are
the cells that become cancerous. These cells undergo a controlled cycle of
growth and death during each menstrual cycle. The growth of these cells is
thought to be stimulated by the action of steroid hormones such as estrogen
and progesterone. Abnormal growth causes a dense accumulation of cells in a
small area, which is the early formation of a tumor and quite possibly breast
cancer. This abnormal growth or mutation, that ultimately leads to breast
cancer, can be
15
<PAGE>
passed in a hereditary manner (believed to be approximately 10% of all cases)
or may be caused by mutating environmental agents. Environmental agents that
are thought to cause mutation include radiation, synthetic chemicals,
pesticides and diets which generate a large amount of activated chemicals.
Cancer incidence rates also increase dramatically with age. The aging
population is associated with increasing health care expenditure for cancer
diagnosis and management in the USA and worldwide.
In most cancer cases, the disease is first diagnosed via patient complaint,
or discomfort, or the detection of lumps in abnormal tumor development.
In the past, cancer was primarily diagnosed via tissue biopsy, sample culture
or x-ray, or mammography. Recent advances permit cancer detection through the
identification of specific markers or screens in the body fluids of patients.
Tumor markers or screening tests are defined as either substances or
antibodies that can be measured quantitatively to detect the presence of a
cancer. Such tests can also establish the extent of tumor growth before
treatment, to predict prognosis, and to monitor therapeutic response.
The tumor marker and screening test industry has grown significantly over the
past several years due to increased awareness of the benefits of early
detection, and the FDA's reclassification of tumor marker tests as Class II
devices, in September, 1996. The reclassification allows manufacturers to
submit pre-market notification 510(K) to the FDA. The US market for
immunoassay tumor marker and screening tests is believed to have been in
excess of $200 million in 1998 for existing products, and is expected to
continue to grow significantly. Current penetration rates in other developed
countries are lower but are also expected to grow at similar, if not better,
rates with increased awareness.
The Company believes that the MSA screening test will be functionally similar
to the existing PSA test for prostrate cancer, in that it is an immunoassay
test, utilizing blood serum, that screens for levels of a key growth
inhibiting protein.
COMPETITION.
Competition to the Biotherapies proposed therapeutic product consists of more
conventional treatments such as surgery, chemotherapy and radiation. In
addition, several other non-invasive therapeutics also exist, which are
manufactured and marketed by large multinational pharmaceutical companies.
The industry is dominated by four large competitors with Abbot Laboratories
having the major share (approximately 53%). The large companies are able to
offer a wide variety of tests for different cancers, and offer
instrumentation
16
<PAGE>
giveaways and other commercial incentives in exchange for test sales which
the Company, as presently structured, would be unable to provide. Such
industry leaders also have substantially greater resources, including capital
and manpower, than the Company.
Additional competition through better or improved products may arise while
Biotherapies completes its clinical trials. While the Company believes that
Biotherapies' Mammastatin therapeutic has the potential to prove to be
superior to other treatments currently in existence, there is no assurance
thereof, or that the product will not face severe competition from existing
products and procedures or other products and procedures developed in the
future, which could significantly impact the Company's performance. The
reclassification of tests by the FDA has resulted in a significant expansion
in the number of new products submitted to the FDA for clearance.
Competition in the tumor marker and screening test immunoassay market is
dependent primarily upon efficacy including, sensitivity of the test to a
particular cancer type (i.e. the number of false readings).
Currently, management is not aware of any direct competition to the proposed
MSA immunoassay screening test, but there can be no assurance that such
competition will not develop in the near future.
HISTORY AND ORGANIZATION.
The Company is a New York corporation which was incorporated on September 19,
1994, under the name Flexx Realm Inc. The name was changed to Company, Inc.
on August 14, 1998. The Company began focusing on the biotechnology industry
in 1998. In November, 1998, the Company entered into the Joint Venture with
Biotherapies.
EMPLOYEES.
The Company is in the start-up phase of its operations, none of the Company's
principal officers are employed directly by the Company. As of August, 1999,
the Company had four full time employees, one employed in administration, and
the three officers employed indirectly through the arrangement with Tynehead
Capital.
RISK FACTORS.
LACK OF PRIOR OPERATIONS AND EXPERIENCE. The Company has no revenue
17
<PAGE>
from operations, is in a start-up phase with its existing assets and has no
significant assets, tangible or intangible, other than the opportunities for
the Joint Venture disclosed herein. There can be no assurance that the
Company will generate revenues in the future. There is no assurance that the
Company will be able to operate profitably in the future, if at all.
NEED FOR ADDITIONAL FINANCING. The Company continues to have significant
obligations with respect to the Joint Venture and Biotherapies. In order to
complete its obligations, the Company will require additional financing by
the year 2000. Further, the Joint Venture may require additional operating
capital by the year 2000, for which the Company and Biotherapies are required
to contribute equally. The Company believes it has sufficient funds to carry
its own expenses for approximately eighteen months or until the Joint Venture
has reached the point of commercialization of the MSA test. There can be no
assurance that the Company will obtain additional financing for and the Joint
Venture's current and future operations or capital needs on favorable terms,
if at all. If the Company defaults with respect to capital calls for the
Joint Venture, its interest therein may be substantially diluted.
UNCERTAIN MARKET/GOVERNMENT REGULATIONS. Biotherapies' therapeutic product
requires FDA approval in the USA and will likely undergo a series of long
term clinical trials. The product will have to likely go through similar
testing in foreign jurisdictions. The MSA test is also subject to successful
completion of limited trials in the USA and requires standardization with
respect to methods of use and packaging, subject to FDA approval. There can
be no assurance that the tests and trials will ultimately be successful or
that the product can be commercialized in its current form, or approved for
use, in either the USA or any other foreign jurisdiction.
DEPENDENCE ON ONE PRODUCT. The size of the Company makes it unlikely that the
Company will be able to commit its funds to the acquisition of any other
business opportunities, until and unless it has first succeeded in some way
with the MSA test, to which there is no assurance.
RELIANCE IN BIOTHERAPIES. As currently structured, the Company's potential
for future success is completely dependent upon the Joint Venture,
Biotherapies and Dr. Paul Ervin. No officer or director has any long term
employment agreement. There can be no assurance that Dr. Ervin or the
Company's other directors will remain associated with the Company.
COMPETITION. Even if the MSA test can be successfully developed, and approved
by the FDA, and marketed, the Company is likely to face intense
18
<PAGE>
competition from very large, well established firms in the medical and
biotechnology industries. These entities typically have significantly more
resources and well established track records. Many of these competitors are
in a better position to attract clientele. The Company, Biotherapies and the
Joint Venture will likely have to form alliances or further joint ventures in
order to successfully penetrate the marketplace. There can be no assurance
that a competitor will not develop similar or superior products nor that the
Company will be successful in competing in the marketplace.
OTHER INTERESTS OF MANAGEMENT. The officers and directors, including Dr.
Ervin, have other interests to which they may devote time and each may
continue to do so, notwithstanding the fact that additional management time
may be necessary to conduct the business of the Company.
HISTORY OF LOSSES. The Company has incurred net losses of $1,007,958 and
$191,118 for the fiscal years ended December 31, 1998 and 1997 respectively.
There can be no assurance that the Company will operate profitably in the
near future or at all.
NEGATIVE NET WORTH. The Company had a negative net worth of $415,622 and
$393,896 as at December 31, 1998 and 1997 respectively. There is no assurance
that the Company will be able to attract the capital it needs for its current
business opportunities given that negative Net Worth.
NEGATIVE CASH FLOW. The Company has no current income or likely source of
current income in the immediate future. Management and consulting fees,
including legal and accounting fees, are currently costing the Company
between Seventy Thousand ($70,000) Dollars and One Hundred Thousand
($100,000) Dollars monthly. The Company will be required to place additional
securities in new financings to make up for such negative cash flow. Such
transactions may have a negative or depressing effect on the trading policies
for the Company's publicly-traded securities.
NO LIKELIHOOD OF DIVIDENDS. The Company has never paid any cash or other
dividend on either its Common or Preferred Stock. At present, the Company
does not anticipate paying dividends in the foreseeable future and intends to
devote any earnings to the development of the Company's businesses. Investors
who anticipate the need for income from their investment should refrain from
purchasing the Company's Stock.
LACK OF LISTING. The Company's securities are traded on the NASD Bulletin
Board. Continuation of such trading will be dependent, in part, on the
Company's ability to timely file required reports under the Securities
Exchange Act of 1934 in the future. The Bulletin Board is not a national
securities exchange. The Bulletin Board does not provide holders of the
Company's securities with the liquidity which would or
19
<PAGE>
could be available, if the Company's common stock were listed on a national
securities exchange, or the NASDAQ electronic market.
INDEMNIFICATION AND EXCLUSION OF LIABILITY OF DIRECTORS AND OFFICERS.
So far as permitted by law, the Company's Certificate of Incorporation and
By-Laws provide that the Company will indemnify its directors and officers
against expenses and liabilities they incur to defend, settle or satisfy any
civil or criminal action brought against them on account of their being or
having been Company directors or officers unless, in any such action, they
are adjudged to have acted with gross negligence or to have engaged in
willful misconduct. As a result of such provisions, stockholders may be
unable to recover damages against the directors and officers of the Company
for actions taken by them which constitute negligence or a violation of their
fiduciary duties, which may reduce the likelihood of stockholders instituting
derivative litigation against directors and officers and may discourage or
deter stockholders from suing directors, officers, employees and agents of
the Company for breaches of their duty of care, even though such action, if
successful, might otherwise benefit the Company and its stockholders.
20
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information known to the Company, as of March
20, 2000, regarding the beneficial ownership of the Company's voting
securities by (i) each of the Company's directors and executive officers, and
(ii) all directors and executive officers of the Company as a group.
Except as indicated below, management is not aware of any individual or
entity that owns 5% or more of the voting stock of the Company, unless
otherwise indicated, each of the stockholders listed in the table below has
sole voting and dispositive power with respect to shares beneficially owned
by such stockholder.
<TABLE>
<CAPTION>
NAME OF COMMON PERCENT PERCENT OF VOTING
BENEFICIAL OWNER(1) SHARES OF CLASS OWNERSHIP(2)
- -------------------------------------------------------------------
<S> <C> <C> <C>
E. Greg McCartney 350,000 4.2% 3.4%
Lawrence J. Pasemko 350,000 4.2% 3.4%
Albert Klychak 210,000 2.5% 2.0%
Dr. Ian B. Woods 300,000 3.6% 2.9%
All Directors and
Officers as a Group 1,210,000(3) 14.5% 11.7%
Lutz Family Trust 100,000(4) 1.2% 10.9%
</TABLE>
- ----------
(1) The address for each of Messrs. McCartney, Pasemko, Klychak, and Woods is
c/o Company, Inc., Suite #1A, 3033 King George Highway, Surrey, BC, Canada,
V4P 1B8.
(2) The percentage shown in this column reflects voting ownership after
taking into account the existing Class A Preferred Stock. None of the
officers or directors owns any of the Class A Preferred Stock.
(3) Excludes 410,000 vested options to purchase Common Shares held by such
officers and directors.
(4) The Trust also owns 1,024,612 shares of the Company's Convertible
Preferred Stock, Class A.
21
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
E. Greg McCartney 48 President, Chief Executive Officer and
Chairman of the Board of Directors
Lawrence J. Pasemko 62 Chief Financial Officer, Secretary and
Director
Albert Klychak 41 Vice President, Corporate Relations and
Director
Dr. Ian B. Woods 55 Vice President, Operations and Director
Carol Patterson Neves 66 Director
</TABLE>
E. GREG MCCARTNEY. Mr. McCartney has been the Company's President and Chief
Executive Officer since 1995. In addition, he serves as Chairman of the Board
for White Diamond Spirits Inc., an American distilled spirits importing
company. From 1992 to 1995, Mr. McCartney was Vice President of Corporate
Development at Advanced Gaming Technology Corp., a public company
distributing and manufacturing electronic gaming equipment. Prior to 1992,
Mr. McCartney was a founding partner in a number of private enterprises
involved in the electronics industry, real estate and the automotive
distribution business.
LAWRENCE J. PASEMKO. Mr. Pasemko has been the Company's Chief Financial
Officer and Secretary Treasurer since 1995. From 1992 to 1995, Mr. Pasemko
was the CFO for Advanced Gaming Technology Corp., a public company which
manufactured and distributed electronic gaming equipment. Prior to his
employment with Advanced Gaming, Mr. Pasemko was president of Supercart
Pacific Wholesale (Canada) Inc., a private distribution business with
operations throughout the Pacific Northwest and was President and General
Manager of two Chrysler automobile dealerships located in British Columbia.
DR. IAN B. WOODS. Dr. Woods has been the Company's Vice President, Operations
since February 1998. Dr. Woods is the senior founding partner of the Burke
Mountain Medical Centre in Port Coquitlam, British Columbia, where he has
conducted a general medical practice since 1977. He received his Ph.D. in
Physics and his M.D. from the University of British Columbia. He completed
his internship at the Royal Columbian Hospital. He has served on numerous
medical advisory committees, is a director of ETC Industries Ltd.
22
<PAGE>
ALBERT KLYCHAK. Mr. Klychak has been the Company's Vice President, Corporate
Relations since 1995 and is primarily responsible for investor relations.
From 1993 to 1996, Mr. Klychak was the President and Director of Quinchak
Enterprises Limited, a private company providing financing and investor
relations services and management services for a private equity fund. From
1986 to 1993, he managed a private equity portfolio as an independent
consultant. Mr. Klychak is also a Director of Lexus Capital, Inc.
CAROL PATTERSON NEVES. Ms. Neves was employed with Merrill Lynch, Pierce,
Fenner & Smith for approximately 40 years prior to her retirement in 1996.
From 1986 to 1996, Ms. Neves was the First Vice President/Senior Research
Analyst: Diversified Companies. Ms. Neves received her B.A. in Economics from
Trinity College, her graduate certificate from Harvard Business School and
her MBA from New York University. Ms. Neves was first elected to the Board on
March 1, 1999, by the Board of Directors.
Each director holds office until the Company's annual meeting of stockholders
and until his successor is duly elected and qualified. Officers are elected
by the Board of Directors and hold office at the discretion of the Board of
Directors. There are no family relationships between any of the directors or
executive officers of the Company. All of the directors, other than were
re-elected at a meeting of the stockholders held on September 28, 1999.
EXECUTIVE COMPENSATION.
The Company is in the start-up phase of its business and operations and
currently generates no revenues. None of the Company's principal officers are
employed directly by the Company. However, Messrs. McCartney, Pasemko and
Klychak, through their respective holding companies, are parties to an
employment agreement dated September 1, 1998, between Tynehead Capital Corp.
and the Company.
During the year ended December 31, 1998, fees aggregating $173,200 was paid
or was payable to Tynehead Capital Corp. in connection with management and
administrative services provided by such executive officers and their
respective holding corporations. The amount was divided equally among the
three officers excepting automobile expenses, which were based on actual
expenses incurred. Dr. Woods was not paid for his services in 1998. During
the year ended December 31, 1999 Dr. Woods was paid $14,230.
The monthly management fee is subject to an annual review by the Board of
Directors of the Company. The Company may also pay to Tynehead Capital Corp.
an annual incentive management fee, to be determined by the Board of
Directors, taking into account the financial performance of
23
<PAGE>
the Company and other such factors deemed relevant.
The agreement provides that Messrs. McCartney, Pasemko and Klychak will
non-compete with the Company for a period of one year subsequent to
termination. The enforcement of such non-compete clauses may be subject to
challenge as against public policy.
DIRECTOR COMPENSATION. Directors not otherwise employed by the Company did
not receive cash compensation for serving on the Board of Directors during
the fiscal year ended December 31, 1999, except that Dr. Woods received
$14,230. In addition, Dr. Woods and other directors did received stock
options. See below.
OPTION AND AWARD PLAN. On July 31, 1998, the stockholders approved the 1998
Stock Option Plan adopted by the Board of Directors of the Company. The plan
provides for the grant of incentive stock options for up to 650,000 shares of
Common Stock to those employees, officers, directors or consultants eligible
under the Plan to receive stock options, and was amended on September 28,
1999 to increase the number of Shares reserved to Nine Hundred Thirty
Thousand (930,000).
The Plan is administered by the Board of Directors or a committee thereof,
which determines, among other things, those individuals who receive options,
the time period during which the options may be partially or fully exercised,
the terms of any restrictions, the number of shares of Common Stock issuable
upon the exercise of each option, the exercise price and the expiration date,
which date will not exceed ten years from the date of grant of the Option.
The exercise price per share of Common Stock subject to an incentive option
may not be less than the fair market value per share of Common Stock on the
date the option is granted, as determined by a formula contained in a
standard stock option agreement. The maximum grant to any individual cannot
exceed 5% of the total issued and outstanding Common Stock of the Company as
of the date of the grant of the option.
No stock option may be transferred by a plan participant other than by will,
or the laws of descent and distribution, and during the lifetime of the plan
participant, the option can be only exercised by the plan participant. In the
event of termination by death, retirement or the date a consultant ceases to
be a consultant by termination of the contract in accordance with its terms,
or ceases to be a director, the plan participant shall be entitled to
exercise the option within ninety days of the termination date. Options
expire immediately in all other instances. The plan administrator may amend
the rules with respect to termination in special circumstances.
Options issued under the Plan must be exercised within ten years from the
date the option is granted. All options granted under the Plan
24
<PAGE>
provide for expiring dates ranging from one year to five years, and for the
payment of the exercise price in cash or bank draft provided the plan
participant delivers notice of intent to exercise speaking the number of
options to be exercised.
In the event of a merger, amalgamation or other corporate arrangement,
including but not limited to takeover, the Board of Directors may, in a fair
and equitable manner, determine the manner in which all unexercised option
rights granted under this plan will be treated, including the acceleration of
time for the exercise of such rights.
Any unexercised options that expire or that terminate upon a participant
ceasing to be employed by the Company become available again for issuance
under the Plan.
As of March 20, 2000, the following options to purchase Common Stock have
been granted to officers and directors of the Company:
<TABLE>
<CAPTION>
NAME OPTIONS HELD EXERCISE PRICE
---- ------------ --------------
<S> <C> <C>
E. Greg McCartney 90,000 $1.00
Lawrence J. Pasemko 90,000 $1.00
Albert Klychak 90,000 $1.00
Dr. Ian B. Woods 90,000 $1.00
Carol Neves 50,000 $1.00
</TABLE>
[See also Selling Shareholder list at page 5 hereof for list of grantees who
are not officers and directors.]
[The rest of this page intentionally left blank.]
25
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On May 4, 1997, shares of Common Stock of the Company were issued to officers
and directors noted below as a settlement of outstanding debts and accounts
payable of $17,400.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
----------------------
<S> <C>
E. Greg McCartney 150,000
Lawrence J. Pasemko 135,000
Albert Klychak 150,000
Dr. Ian B. Woods 200,000
</TABLE>
In addition to the foregoing:
On January 2, 1998, 200,000 shares of Common Stock of the Company were issued
to Aspenwood Holdings Ltd., a company controlled by E. Greg McCartney, as
settlement of outstanding debts and accounts payable of $23,160.
On January 2, 1998, 215,000 shares of Common Stock of the Company were issued
to Supercart Pacific Wholesale (Canada) Inc., a company controlled by
Lawrence J. Pasemko, as settlement of outstanding debts and accounts payable
of $22,497.
On January 2, 1998, 100,000 shares of Common Stock of the Company were issued
to Dr. Ian B. Woods, an officer and director of the Company, as settlement of
outstanding debts and accounts payable of $8,635.
On January 2, 1998, 60,000 shares of Common Stock of the Company were issued
to Albert Klychak, an officer and director of the Company, as settlement of
outstanding debts and accounts payable of $6,948.
All of such stock issuances were related party transactions. No independent
opinion as to the fairness of the issuances was obtained.
In addition all of the above persons rendered services in connection with the
formation of the Company for which they received no cash compensation or
other payment.
DESCRIPTION OF SECURITIES.
The Company is authorized to issue One Hundred Million (100,000,000) shares
of its Common Stock, $.0001 par value, of which 8,397,747 shares are
outstanding as of February 24, 2000 The Company is also authorized to issue
One Hundred Million (100,000,000) shares of its Preferred Stock, $.0001 par
value, of which 1,902,400 shares are outstanding as of January 31, 2000.
26
<PAGE>
Each outstanding share of Common Stock is entitled to one vote, either in
person or by proxy, on all matters that may be voted upon by the holders
thereof at meetings of the stockholders. The holders of the Company's Common
Stock have equal ratable rights to dividends from funds legally available,
therefore, when, and if declared by the Board of Directors of the Company,
and are entitled to a pro rata share, subject to preferences given to
Preferred Stock holders, of all the assets of the Company available for
distribution to holders of the Common Stock, upon liquidation, dissolution or
winding up of the affairs of the Company. The holders of Common Stock do not
have preemptive, subscription or conversion rights, redemption or any
redemption or sinking fund provisions. All shares of Common Stock outstanding
are fully paid and non-assessable.
Each holder of the Series A Convertible Preferred Stock, par value $0.0001,
(the "Class A Stock") is entitled to receive, out of any funds legally
available, noncumulative dividends at a rate of six percent (6%) per annum
prior and in preference to any payment of any dividend on the Common Stock in
each calendar year, and to participate pro rata with the Common Stock in any
additional dividends. Dividends are paid when, as and if declared by the
board. The dividend rights and preferences of the Class A Stock are senior to
those of the Common Stock. The Company has never paid any dividends, and
there is no likelihood that it will do so in the foreseeable future.
All of the Class A Stock is restricted as to retransfer. There is no liquid
market for the securities. None is expected to develop. In certain events
relating to liquidation, dissolution, consolidation or winding up of the
Company holders of the Class A Stock are entitled to receive an amount equal
to the original purchase price per share for the Class A Stock plus an amount
equal to all declared but unpaid dividends thereon (the "Preference Amount").
After the full liquidation preference on all outstanding shares of the Class
A Stock has been paid, any remaining funds and assets of the Company legally
available for distribution to shareholders are distributed pro rata among the
holders of the Class A Stock and the Common Stock on an "as-if-converted"
basis. If the Company has insufficient assets to permit payment of the
Preference Amount in full to all the Class A Stock shareholders, then the
holders of the Class A Stock will receive lesser payments in proportion to
the Preference Amount each such holder would otherwise be entitled to
receive, without any distribution to the holders of the Common Stock.
The Company has rights to redeem all of the outstanding Class A Stock at any
time. The redemption price is 110% of the initial purchase price of the Class
A Stock plus all declared but unpaid dividends. Redemption is
27
<PAGE>
highly unlikely under current circumstances.
The holders of the Class A Stock have the right to convert its Class A Stock
into shares of Common Stock at any time commencing one year after purchase.
The Conversion Rate is one share of Class A Stock for one share of Common
Stock. All rights incident to a share of Class A Stock will terminate
automatically upon any conversion of such share into Common Stock. The
Conversion Rate of the Class A Stock into Common Stock is subject to
adjustment from time-to-time.
[The rest of this page intentionally left blank.]
28
<PAGE>
COMPANY, INC.
FORM 10 S-B
REGISTRATION STATEMENT
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY.
PRICE RANGE OF COMMON STOCK.
The Common Stock of the Company commenced trading on the OTC Bulletin Board on
February 16, 1999, under the symbol "BILB". The following table sets forth, for
the fiscal periods indicated, the high and low trading prices of a share of
Common Stock as reported by the OTC Bulletin Board for periods subsequent to
February 16, 1999. Such quotations reflect inter-dealer prices, without dealer
mark-up, markdown or commission and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year 1999 to Date
1st Quarter $ 7.00 $3.50
2nd Quarter $ 4.625 $2.00
3rd Quarter $ 3.75 $2.875
4th Quarter $ 5.75 $3.25
Fiscal Year 2000
1st Quarter to date $18.125 $5.10
</TABLE>
As of March 28, 2000 there are approximately 1,425 holders of record of
shares of such Common Stock. There is no market for the Registrant's Class A
Convertible Preferred Stock. As of March 28, 2000 there are approximately 20
holders of record of shares of the Class A Convertible Preferred Stock. None
of Class A Convertible Preferred Stockholders have converted.
The Company has not paid dividends on the Common Stock or the Class A
Preferred Stock since inception and does not intend to pay and dividends to
its stock holders in the foreseeable future. The declaration of dividends in
the future will be at the election of the Board of Directors and will depend
upon the earnings, capital requirements, financial position of the Company,
general economic conditions, and other factors the Board of Directors deems
relevant.
Item 2. LEGAL PROCEEDINGS.
29
<PAGE>
None. Not Applicable.
Item 3. CHANGES IN AND DISAGREEMENTS WITH EXTERNAL AUDITORS.
None. Not Applicable.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES.
In the past three years, the Company has made the following sales of
unregistered securities, all of which sales were exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), pursuant
to Section 3(b) hereof or as otherwise indicated herein.
In August, 1998, the Company sold 960,000 shares of Common Stock at $1.00 per
share (an aggregate of $960,000) to 181 non-accredited investors. The Company
believes that each issuance and sale of such securities was exempt from
registration pursuant to Section 3 (b) of the Act and/or Rule 504 promulgated
thereunder. The Company filed a Form D relating to such transaction on August
1, 1998.
From November of 1998 to August of 1999, the Company sold 1,285,838 shares of
Convertible Preferred Stock to 19 persons. The Company believes that such
offerings are exempt from registration pursuant to Regulation D and Sections
3(b) or 4(2) of the Act as well as relevant exemptions in accordance with the
Canadian Securities Laws and provincial authorities, including Section
74(2)(4) of the Securities Act (British Columbia) and 107(1)(d) of the
Securities Act (Alberta).
All proceeds of the Company's private placement offerings, minus sales
commissions not exceeding (10%) percent of the amount thereof, have been
applied by the Company solely to capital contributions to the Joint Venture,
other required capital commitments to Biotherapies and payment of general
operating expenses. Except to the extent disclosed herein Item 6, "Executive
Compensation", none of the proceeds were paid, directly or indirectly, to
directors, officers, general partners of the Company, 10% shareholders or any
of their affiliates (other than payments made to Biotherapies, which is an
affiliate of Dr. Paul Ervin, a director of the Company).
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
New York Law enables a corporation in its original certificate of
incorporation, or an amendment thereto validly approved by the Board of
Directors, to eliminate or limit personal liability of members of its Board
of Directors for violations of a director's fiduciary duty of
30
<PAGE>
care. However, the elimination or limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith,
intentional misconduct or a knowing violation of a law, or where an improper
personal benefit is obtained. New York law permits a corporation to indemnify
directors and officers with respect to any matter in which a director or
officer acted in good faith and in a manner reasonably believed to be not
opposed to the best interests of the corporation, and, with respect to any
criminal action, had reasonable cause to believe the conduct was lawful.
The Company's Certificate of Incorporation includes the following language:
The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is
hereby eliminated except that such personal liability shall not be
eliminated if a judgement or other final adjudication adverse to
such director established that his acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation of
law or that he personally gained in fact a financial profit or
other advantage to which he was not legally entitled or that his
acts violated Section 719 of the Business Corporation Law.
The Company's By-Laws include the following language:
Each director and officer of the corporation shall be indemnified
by the corporation to the fullest extent permitted by law against
all costs and expenses actually and necessarily incurred by him or
her in connection with the defense of any action, suit or
proceeding in which he or she may be involved or to which he or she
may be made a party by reason of his or her being or having been
such director or officer, except in relation to matter as to which
he or she shall be finally adjudged in such action, suit or
proceeding to be liable for negligence or misconduct in the
performance of duty.
31
<PAGE>
FINANCIAL STATEMENTS
The Financial Statements and Notes thereto can be found beginning on page FS-1
"Index to Financial Statements" following the signature page hereof.
[The rest of this page intentionally left blank.]
32
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF
BIOLABS, INC.
The following selected financial information of BioLabs, Inc. for each of the
years ended December 31, 1999, 1998 and 1997 and total from inception
(September 19, 1994) to December 31, 1999 has been derived from BioLabs,
Inc.'s audited financial statements contained in its Annual Reports on Form
10-KSB for the year ended December 31, 1999 and is qualified in its entirety
by such documents. This information should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements.
<TABLE>
<CAPTION>
Total from Inception
1999 1998 1997 to December 31, 1999
----------- ----------- --------- --------------------
<S> <C> <C> <C> <C>
Revenues $ $ $ $
Expenses $ 1,074,574 $ 1,080,811 $ 191,118 $ 2,678,098
Loss Before
Other Items: (1,074,574) (1,080,811) (191,118) (2,678,098)
Net Loss: (1,259,862) (1,077,958) (191,181) (2,860,533)
Loss Per
Common Share: $ 0.15 $ 0.17 $ 0.09 N/A
Total Assets: $ 5,474,529 $ 1,022,779 $ 4,218 N/A
Stockholders
Equity: $ 5,062,927 $ (415,622) $(393,896) N/A
</TABLE>
33
<PAGE>
LEGAL OPINIONS
The validity of the securities offered hereby will be passed upon for the
Company by D. David Cohen, Esq., 500 No. Broadway, Suite 133, Jericho, NY
11753 who has acted as special counsel to the Company in connection with this
Offering.
EXPERTS
The financial statements and schedules of the Company, incorporated by
reference in the Registration Statement of which this Prospectus is a part
have been audited by Lemieux Deck Millard Bond, chartered accountants, for the
periods indicated in their report thereon. Such financial statements and
schedules have been incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
For additional information concerning the Company, financial statements, its
operations, properties, facilities, employees, competitors, management,
executive compensation, legal proceedings, market for the Company's Common
Stock, security ownership of directors executive officers and certain
beneficial holders, this prospectus will be accompanied by the Company's Form
10-KSB for the fiscal year ended December 31, 1999, and latest Form 10-Q and
the Company's proxy statement in connection with the election of directors at
its most recent Annual Meeting of Shareholders.
34
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 21.1 of the Company's Articles of Association provides, with respect
to the indemnification of directors and officers, that the Company shall
indemnify, subject to the [Company Act], any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or proceeding, whether or not brought by the Company or by a
corporation or other legal entity or enterprise and whether civil, criminal
or administrative, by reason of the fact that such person is or was a
director, manager, or officer of the Company, against all costs, charges and
expenses, including legal fees and any amount paid to settle the action or
proceeding or satisfy a judgment, if such person acted honestly and in good
faith with a view to the best interests of the Company, if such person
exercised the care, diligence and skill of a reasonably prudent person, and,
with respect to any criminal or administrative action or proceeding, such
person had reasonable grounds for believing that his or her conduct was
lawful. The provisions of Article 21.1 are deemed to be a term of every
contract of employment or office of every director, manager, and officer of
the Company.
Article 21.2 of the Company's Articles of Association provides that, subject
to the Company Act, the Company may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or proceeding, whether or not brought by the Company or by a
corporation or other legal entity or enterprise and whether civil, criminal
or administrative, by reason of the fact that he is or was an employee or
agent of the Company or is or was serving in any other capacity on behalf of
the Company at its request including, but without limiting the generality of
the foregoing, serving at the request of the Company as a director, manager,
officer, employee or agent of another corporation, a partnership, joint
venture, trust or other enterprise, against all costs, charges and expenses,
including legal fees and any amount paid to settle the action or proceeding
or satisfy a judgment, if he acted honestly and in good faith with a view to
the best interests of the Company or other corporation or other legal entity
or enterprise as aforesaid, and, with respect to any criminal or
administrative action or proceeding, if he had reasonable grounds for
believing that his conduct was lawful. The provisions of Article 21.2 shall
not be part of any contract or agreement between any aforesaid person and the
Company unless expressly made so by the terms of the contract or agreement
with the Company.
Article 21.4 provides that the Company may indemnify any person, other than a
director, in respect of any losses, damages, costs or expenses whatsoever
incurred by him while acting as an officer, employee or agent for the
Company, unless such losses, damages, costs or expenses shall arise out of
failure to comply with instructions, willful act or default or fraud by such
person, and in any of such events the Company shall only indemnify such
person if the directors, in their absolute discretion, so decide. The
provisions of this Article 21.4 shall not be part of any contract or
agreement between any aforesaid person and the Company unless expressly made
so by the terms of the contract or agreement with the Company.
Article 21.6 provides that the Company may give indemnities, on such terms
and conditions as it deems appropriate, to any director, officer, employee,
agent or other person who has undertaken or is
II-1
<PAGE>
about to undertake any liability on behalf of the Company or any corporation
controlled by it. The provisions of Article 21.6 shall not be part of any
contract or agreement between any aforesaid person and the Company unless
expressly made so by the terms of the contract or agreement with the Company.
Article 21.7 provides that, subject to the Company Act and other applicable
laws and statutes, no director, officer, employee or agent for the time being
of the Company shall be liable for the acts, receipts, neglects or defaults
of any other director, officer, employee or agent or for joining in any
receipt or act for conformity, or for any loss, damage or expense happening
to the Company through the insufficiency or deficiency of title to any
property acquired by order of the Board, or for the insufficiency or
deficiency of any security in or upon which any of the moneys of or belonging
to the Company shall be invested or for any loss or damages arising from the
bankruptcy, insolvency, or tortious act of any person, firm or corporation
with whom or with which any moneys, securities or effects shall be lodged or
deposited or for any loss occasioned by any error of judgment or oversight on
his part or for any other loss, damage or misfortune whatever which may
happen in the execution of the duties of his respective office or trust or in
relation thereto unless the same shall happen by or through his own willful
act or omission, default, negligence, breach of trust or breach of duty.
Item 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
II-2
<PAGE>
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
3.1 Restated Certificate of Incorporation of Company, Inc. 2/9/99*
3.2 Class A Convertible Preferred Stock definition*
5.1 Opinion regarding legality of Shares*
10.1 Abstract of Limited Liability Company Operating Agreement of
BioMedical Diagnostics, LLC (Joint Venture Agreement)
10.3 Management Services Agreement BioLabs, Inc. with Tynehead Capital
Corp.*
10.4 Letter Agreement with Dynamed, Inc. dated September 2, 1999*
10.5 Form of Stock Option Agreement (1)
10.6 Amended and Restated Stock Option Plan (1)
10.7 Form of Warrant Agreement (Horan Warrant) dated March 31, 2000 (1)
21.1 Subsidiaries of Registrant: None.
</TABLE>
* Filed with Form 10-SB
(1) Filed herewith
(b) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or not applicable, and therefore have been omitted.
(c) Item 4(b) Information
Not applicable.
Item 22. UNDERTAKINGS.
(a)(1) The Company undertakes that prior to any public offering of the
securities registered hereunder through use of a prospectus which is a
part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect
to reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form; and
(2) The Company undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Securities Act, and
is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and
that, for purposes of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment of the Company of expenses
incurred or paid by a director, officer or controlling person of the
Company 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 Company will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the questions
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The undersigned Company hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day
of receipt of such request, and to send the incorporated documents by first
and to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned Company hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement on Form S-8 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Province of
British Columbia, Canada, on the 24th day of April, 2000.
BIOLABS,INC.
By: /s/ E. GREG MCCARTNEY
----------------------------
E. GREG McCARTNEY, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jeffrey M. Barnett and Daniel DeBou, and each
of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated:
II-5
<PAGE>
SIGNATURE PAGE
In accordance with Section 12 of the Securities Act of 1934, the registrant
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
BioLabs Inc.
BY /s/ E. GREG MCCARTNEY PRESIDENT,CEO & CHAIRMAN
--------------------- ------------------------
E. GREG McCARTNEY
DATE APRIL 24, 2000
--
BY /s/ E. GREG MCCARTNEY PRESIDENT,CEO & CHAIRMAN
--------------------- ------------------------
E. GREG McCARTNEY
DATE APRIL 24, 2000
--
BY /s/ LAWRENCE J. PASEMKO CHIEF FINANCIAL OFFICER, SEC. & DIRECTOR
----------------------- ----------------------------------------
LAWRENCE J. PASEMKO
DATE APRIL 24, 2000
--
BY /s/ ALBERT KLYCHAK VICE PRESIDENT, DIRECTOR
------------------ ------------------------
ALBERT KLYCHAK
DATE APRIL 24, 2000
--
BY /s/ DR. IAN B. WOODS VICE PRESIDENT, DIRECTOR
-------------------- ------------------------
DR. IAN B. WOODS
DATE APRIL 24, 2000
--
BY DIRECTOR
--------------------- ------------------------
CAROL PATTERSON NEVES
DATE ________________________________________________________
II-6
<PAGE>
II-7
<PAGE>
EXHIBIT 10.5
STOCK OPTION AGREEMENT
FOR SHARES ISSUED UNDER THE
BIOLABS, INC. AMENDED AND RESTATED STOCK OPTION PLAN
THIS AGREEMENT dated and made effective the ____ day of ____
BETWEEN:
BIOLABS, INC., a company incorporated pursuant to the laws of the
State of New York, having an office at #1A - 3033 King George Highway,
Surrey, British Columbia, V4P 1B8
(the "Company")
OF THE FIRST PART
AND
_______, of (insert address)
(the "Optionee")
OF THE SECOND PART
WHEREAS:
A. The Company has established an amended and restated stock option plan
(the "Plan") to grant incentive options to purchase its common shares
(the "Shares") to directors, officers, employees and consultants of the
Company, and has received approval to do so from its shareholders
respecting same;
B. The Optionee is a consultant of the Company or its subsidiaries and is
eligible to receive options to purchase Shares pursuant to the Plan; and
C. The Company has determined it is in its best interests to grant an option
to the Optionee to purchase Shares, on the terms and conditions set forth
below.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of these
premises and of the sum of $1.00 paid by the Optionee to the Company and for
other good and valuable consideration (the receipt and sufficiency of which is
hereby acknowledged), it is hereby agreed by and between the parties hereto as
follows:
<PAGE>
PART 1
GRANT OF OPTION
1.1 PLAN.
This Agreement is entered into pursuant to the provisions of the Plan,
as amended from time to time, the terms of which are incorporated herein and
made a part hereof. The Optionee hereby confirms that he has received a copy
of the Plan.
1.2 GRANT OF OPTION.
The Company hereby grants to the Optionee, on the terms and conditions
hereinafter set forth, an option (the "Option") to purchase at any time or
from time to time during the period hereinafter referred to, all or any part
of Shares (such Shares as from time to time are available for purchase under
this section 1.2 being hereinafter called the "Optioned Shares"), for a
purchase price of $____ per Optioned Share (the "Exercise Price").
1.3 REGULATORY AND OTHER APPROVALS.
The Option hereby granted is subject to acceptance for filing of
notice of the grant of the Option by all stock exchanges or trading
facilities on which the Shares are listed or traded at the time of grant and
any required approvals of the shareholders of the Company and relevant
securities commissions or other regulatory bodies in the United States or
Canada.
PART 2
EXERCISE OF OPTION
2.1 RIGHT TO EXERCISE.
Unless otherwise provided for in this Agreement or in the Plan, the
Optionee, upon becoming entitled to exercise the Option, will thereafter be
entitled to exercise the Option at any time with respect to all or any part
of the Optioned Shares, prior to the expiration or other termination of the
Option, as provided in Part 3 herein.
2.2 EXERCISE AND PAYMENT.
Subject to the provisions of Part 1 and Section 2.1, the Option may be
exercised by the Optionee or, if applicable, the legal representatives of the
Optionee giving two days' advance written notice to the Company (Attention: the
Secretary) marked "Confidential", signed by the Optionee, specifying the number
of Optioned Shares in respect of which the Option is being exercised,
2
<PAGE>
accompanied by payment (by certified cheque or bank draft payable to the
Company) of the entire exercise price for the number of the Optioned Shares
specified in the notice.
2.3 SHARE CERTIFICATES.
Upon any such exercise of the Option by the Optionee the Company will
as soon as is reasonably practicable, cause the transfer agent and registrar
of the Shares to deliver to the Optionee or the legal representative of the
Optionee, as the case may be, a share certificate or certificates registered
in the name of the Optionee or the legal representative of the Optionee, as
the case may be, representing the number of Shares purchased pursuant to such
exercise of the Option.
2.4 NO OBLIGATION TO EXERCISE OPTION.
Nothing herein contained or done pursuant hereto will obligate the
Optionee to purchase and/or pay for, or the Company to issue, any Optioned
Shares except Optioned Shares in respect of which the Optionee will have
exercised his Option to purchase in the manner provided under this Agreement.
PART 3
TERMINATION PRIOR TO EXPIRY DATE
3.1 TERMINATION OF OPTION.
The Option and this Agreement will terminate on the earlier of __(the
"Expiry Date") or, if the Optionee ceases to be a ______ of the company or
one of its subsidiaries prior to the Expiry Date, on the date that is _____
days after the Optionee has ceased to be a consultant, subject only to
Sections 3.2 and 3.3.
3.2 TERMINATION FOR CAUSE OR RESIGNATION.
Notwithstanding Section 3.1, the Option will immediately become
terminated and will lapse notwithstanding the original term of the Option
granted under this Agreement if the Optionee's consulting contract, if any,
is terminated for cause by the Company or one of its subsidiaries or if the
Optionee ceases to be a _____ of the Company or any of its subsidiaries for
any reason other than normal termination of the consulting contract, if any,
in accordance with its terms, retirement, in the absence of any consulting
contract, or death.
3.3. DEATH OF OPTIONEE.
3
<PAGE>
Notwithstanding Section 3.1, in the event of the death of the
Optionee, all or any part of the Optioned Shares not yet purchased by the
Optionee may be purchased by the legal representatives of the deceased
Optionee or by the person or persons to whom the rights of the Optionee have
passed by will or by operation of the laws of devolution, distribution or
descent for a period of 45 days (or until the Expiry Date if earlier) from
the date of death of the deceased Optionee to exercise the Option. Upon the
expiration of such period, the Option and this Agreement will immediately
become terminated and will lapse notwithstanding the original term of the
Option.
3.4 CHANGE IN POSITION.
A change in the office, position or duties of the Optionee from the
office, position or duties held by the Optionee on the date on which the
Option was granted will not result in the termination of the Option pursuant
to Section 3.1, provided that the Optionee remains a director, officer,
employee or consultant of the Company or any of its subsidiaries after such
change.
3.5 FULL EXERCISE.
Unless otherwise provided for in this Agreement or in the Plan, the
Option and this Agreement will terminate on the date that the Optionee will
have validly exercised the Option with respect to all of the Optioned Shares.
PART 4
CHANGE IN CONTROL
4.1 DEFINITIONS.
For the purposes of this Part 4, a "Change in Control" of the Company
will be deemed to occur where:
(a) any person becomes the beneficial owner, directly or indirectly,
of securities of the Company respecting 20% or more of the
combined voting power of the Company's then outstanding
securities or who publicly announces an intention to do so;
(b) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors
of the Company and any new director, whose appointment by the
Board of Directors
4
<PAGE>
or nomination for election by the Shareholders of the Company was
approved by vote of at least two-thirds of the directors then
still in office and who were directors at the beginning of the
period or whose election or nomination for election was
previously approved, cease for any reason to constitute a
majority thereof;
(c) the business of the Company for which the Optionee's services are
principally performed is disposed of by the Company, pursuant to a
partial or complete liquidation of the Company, a sale of assets
(including stock of a subsidiary) of the Company, or otherwise; or
(d) the Board of Directors of the Company adopt a resolution to the
effect that, for the purposes of this Agreement, a Change in
Control of the Company has occurred.
4.2 DEEMED VESTING.
In the event of a Change in Control occurring:
(a) all of the Optionee's Optioned Shares which, at the time of the
Change in Control, are unvested, if any, will be deemed to become
immediately vested and available for execution; and
(b) the Company may, upon giving the Optionee written notice to that
effect, require the acceleration of the time for the exercise of
the Options and of the time for the fulfillment of any conditions
or restrictions on such exercise.
PART 5
GENERAL
5.1 ADJUSTMENTS.
In the event of a stock dividend, subdivision, redivision,
consolidation, recapitalization, share reclassification (other than pursuant
to the Plan), or other relevant changes in the capital stock of the Company,
the Board of Directors of the Company may make such adjustment, if any, of
the number of Optioned Shares, or of the Exercise Price, or both, as it will
deem appropriate to give proper effect to such event. If because of a
proposed merger, amalgamation or other corporate arrangement or
reorganization, the exchange or replacement of the Shares for those in
another company is imminent, the Board of Directors of the Company may, in a
fair
5
<PAGE>
and equitable manner, determine the manner in which the Option will be
treated including, for example, requiring the acceleration of the time for
the exercise of the Option by the Optionee and of the time for the fulfilment
of any conditions or restrictions on such exercise. All determinations of the
Board of Directors under this Section 5.1 will be final, binding and
conclusive for all purposes.
5.2 AMENDMENT.
This Agreement may not be amended except with the written consent of
the Company, the Optionee, and if required, any stock exchanges or trading
facilities on which the Shares are listed, and the shareholders of the
Company.
5.3 CONFIDENTIALITY.
The Optionee will not, either during the term he acts as consultant
for the Company or its subsidiaries, or at any time thereafter, disclose to
any person, firm or corporation any information concerning the business
affairs of the Company which the Optionee may have acquired in the course of
or incidental to his role with the Company or otherwise, whether for his own
benefit, or to the detriment, or intended or probable detriment, of the
Company.
5.4 COUNTERPARTS.
This Agreement may be executed in any number of counterparts with the
same effect as if all parties had signed the same document. All counterparts
will constitute one and the same agreement. This Agreement may be executed
and transmitted by facsimile transmission and if so executed and transmitted
this Agreement will be for all purposes as effective as if the parties had
delivered an executed original Agreement.
5.5 CURRENCY.
All recurrences to currency are deemed to mean lawful money of the
United States (unless expressed to be in some other currency) and all amounts
to be calculated or paid pursuant to this Agreement are to be calculated in
lawful money of the United States.
5.6 ENUREMENT.
This Agreement will enure to the benefit of and be binding upon the
Company, its successors and assigns, and the Optionee, his heirs, executors
and other legal personal representatives.
5.7 GENDER.
6
<PAGE>
Words imparting the masculine gender include the feminine or neuter
gender and words in the singular include the plural and vice versa.
5.8 GOVERNING LAW.
This Agreement will be governed by and construed in accordance with
the laws of the State of New York and the laws of the United States
applicable thereto.
5.9 INTERPRETATION OF THIS AGREEMENT AND THE PLAN.
The Option granted hereby is subject to the terms and conditions set
out in this Agreement and in the Plan. If any question or dispute arises as
to the interpretation of this Agreement or the Plan, such question or dispute
will be determined by the Board of Directors of the Company and such
determination will be final, conclusive and binding on both the Company and
the Optionee. Unless there is something in the subject or context
inconsistent therewith, or unless otherwise herein provided, the expressions
used in this Agreement will have the same meaning as are ascribed to
corresponding expressions defined in the Plan. If there is any conflict
between the terms of this Agreement and the Plan, the terms of the Plan will
govern, despite any term of this Agreement.
5.10 NO FURTHER RIGHTS.
Nothing contained in this Agreement will give the Optionee or any
other person, any interest or title in or to any of the Shares or any rights
as a shareholder of the Company or any other legal or equitable right against
the Company whatsoever other than as set forth in this Agreement and pursuant
to the exercise of the Option, nor will it confer upon the Optionee any right
to continue as a director, officer, employee or consultant of the Company or
of its subsidiaries.
5.11 NO INDUCEMENT.
By execution of this Agreement and acceptance of the Options hereby
granted, the Optionee hereby certifies to the Company that the Optionee was
not induced to participate in the Plan by expectation of employment or
continued employment with the Company or its subsidiaries.
5.12 NON-ASSIGNABILITY OF OPTIONS.
The Option will not be transferable or assignable (whether absolutely
or by way of mortgage, pledge or other charge) by the
7
<PAGE>
Optionee other than by will or other testamentary instrument or the laws of
succession except, with the consent of the Company, to a corporation, the
shares of which are wholly-owned by the Optionee, and may be exercisable
during the lifetime of the Optionee only by the Optionee.
5.13 NOTICE.
Any notice or other communication required or contemplated under this
Agreement to be given by one party to the other will be delivered or mailed
by prepaid registered post to the party to receive same at the address
indicated on page one hereof, or at such other address as a party may provide
notice of from time to time. Any notice delivered will be deemed to have
been given and received on the business day next following the date of
delivery. Any notice mailed as aforesaid will be deemed to have been given
and received on the fifth business day following the date it is posted,
provided that if between the time of mailing and actual receipt of the notice
there will be a mail strike, slow-down or other labor dispute which might
affect delivery of the notice by mail, then the notice will be effective only
if actually delivered.
5.14 OBLIGATIONS OF COMPANY.
The Company will use reasonable commercial efforts to comply with,
satisfy and fulfil promptly all conditions and requirements imposed by or
arising out of legal, regulatory, stock exchange and administrative
requirements applicable to the grant of the Option hereunder, the issue of
Optioned Shares on the exercise of the Option and the listing and posting for
trading or quotation of the Optioned Shares issued on the exercise of the
Option on such stock exchanges or trading facilities on which the Shares are
listed and posted for trading or quoted from time to time.
5.15 REPRESENTATIONS OF OPTIONEE.
The Optionee represents and warrants to the Company, as a continuing
representation and warranty that will be true and correct on the date hereof
and on each date that the Optionee exercises the Option, as if made and given
on and as of each such date, that the Optionee is acquiring the Option and
will acquire the Optioned Shares purchased by him upon any exercise of the
Option as principal.
5.16 RESERVATIONS OF OPTIONED SHARES.
The Company covenants that it has reserved, set aside and allotted the
Optioned Shares to and in favour of the Optionee, his heirs, executors and
other legal personal representatives, and that
8
<PAGE>
upon each exercise of the Option in accordance with the terms hereof and
payment of the said price as aforesaid, the Optioned Shares which the
Optionee will have duly taken up and paid for hereunder will be duly issued
and outstanding as fully paid and non-assessable.
5.17 RESTRICTIONS ON RESALE; LEGEND.
The Optionee agrees that any Optioned shares must be sold in
compliance with all registration requirements under the Securities Act of
1934, as amended, or any other relevant legislation, or an exemption
therefrom. Each certificate evidencing any of the Optioned Shares may, at
the sole discretion of the Company, bear a legend substantially as follows:
"The Shares represented by this Certificate are subject to restrictions
on transfer and may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with and
subject to all the terms and conditions of a certain Stock Option
Agreement, a copy of which the Company will furnish to the holder of this
Certificate upon request and without charge."
5.18 TAXES.
The Optionee will be solely responsible for, and will pay, all income
and all other taxes, charges and contributions levied or required by
competent governmental authorities in respect of the Options and the Optioned
shares.
5.19 TIME OF THE ESSENCE.
Time will be of the essence of this Agreement.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on
the date first above written.
BIOLABS, INC.
by its duly authorized signatories:
Per: ____________________
Authorized Signatory
Per: ____________________
Authorized Signatory
SIGNED, SEALED AND DELIVERED BY )
in the presence of: )
9
<PAGE>
)
)
)
_______________________________ )
Name
______________________________ )
Address )
)
______________________________ ) ______________________
)
)
______________________________ )
Occupation
10
<PAGE>
EXHIBIT 10.6
BIOLABS, INC.
AMENDED AND RESTATED STOCK OPTION PLAN
1 PURPOSE OF PLAN
1.1 PURPOSE OF PLAN. The purpose of this Plan is to assist directors,
officers, employees and consultants of the Company and its
Subsidiaries to participate in the growth and development of the
Company and its Subsidiaries by providing such persons with the
opportunity, through stock options, to acquire an increased
proprietary interest in the Company thereby providing an additional
incentive to the persons contemplated above to promote the best
interest of the Company and to provide the means to the Company to
attract qualified persons.
2 DEFINED TERMS
2.1 DEFINED TERMS. Where used herein, the following terms will have the
meanings indicated below:
(a) "BOARD" means the Board of Directors of the Company or, if
established and duly authorized to act, the Executive Committee of
the Board of Directors of the Company;
(b) "BUSINESS DAY" means any day on which the Exchange is open for
trading;
(c) "COMMITTEE" will mean the Compensation Committee or such other
committee established or designated by the Board as responsible
for the purposes of this Plan or, in the event no committee is so
established or designated, will mean the Board;
(d) "COMPANY" means BioLabs, Inc., and includes any successor
corporation thereto;
(e) "CONSULTANT" means any individual, corporation or other person
engaged to provide ongoing services to the Company or any
Subsidiary;
(f) "ELIGIBLE PERSON" means any director, officer, employee or
consultant of the Company or any Subsidiary;
(g) "EXCHANGE" means any recognized exchange or market in Canada or
the United States on which the shares are listed and posted or
quoted from time to time;
<PAGE>
(h) "EXERCISE DATE" means the Business Day on which the Company
through the Secretary receives notice of an exercise of the Option
pursuant to Section 7.1 of this Plan; provided that if the notice
of exercise is received on a day which is not a Business Day, the
Exercise Date will be the next Business Day following the receipt
of the notice;
(i) "FULLY DILUTED COMMON EQUIVALENTS" means all outstanding Shares,
including all Shares which would result from the conversion of any
of the Company's other securities into Shares pursuant to the
Certificate of Incorporation of the Company or otherwise;
(j) "GRANT DATE" means the date on which any Option is approved by the
Board for grant hereunder;
(k) "KEY PERSON" means the person which may be designated by the
Committee as the key person providing ongoing services under a
consulting contract with the Company or any Subsidiary;
(l) "MARKET PRICE" in respect of a Share means:
(i) if the Shares are listed and posted or quoted on an
Exchange at the time of calculation, the price per Share
equal to the average of the daily high and low board lot
trading prices at which the Shares traded on the Exchange
for the 5 trading days preceding the Grant Date unless
otherwise required by any regulatory authority having
jurisdiction; or
(ii) if the Shares are not listed and posted or quoted on an
Exchange at the time of calculation:
(A) if there has been one or more arm's length sales
from treasury of Shares (or other securities of the
Company capable of conversion into Shares) in the 12
month period prior to the date for determination of
the Market Price, then the Market Price will equal
the last price per share paid for all Shares sold in
such period, and
(B) if there have been no arm's length sales form
treasury of Shares as contemplated in Section
2.1(1)(ii)(A) above, then the Market Price will be
reasonably determined by the Board and, in any
event, will be not less than:
<PAGE>
1.5X TRAILING TWELVE MONTHS REVENUES
------------------------------------------
Number of Fully Diluted Common Equivalents
(m) "OPTION" means an option to purchase Shares granted under this
Plan;
(n) "OPTION AGREEMENT" means an agreement evidencing an Option entered
into between the Company and an Eligible Person;
(o) "OPTION PRICE" means the price per share at which Shares may be
purchased under the Option as determined under this Plan and as
the same may be adjusted from time to time in accordance with Part
8 hereof;
(p) "OPTIONEE" means a person to whom an Option has been granted;
(q) "PLAN" means the Company's Amended and Restated Stock Option Plan,
as embodied herein, as the same may be amended or varied from time
to time;
(r) "QUARTERLY COMMENCEMENT PERIOD" means in any fiscal year, January
1 through and including March 31; April 1 through and including
June 30; July 1 through and including September 30; or October 1
through and including December 31;
(s) "SHARES" mean the common shares of the Company, or, in the event
of an adjustment contemplated by Part 8 hereof, such other shares
or securities to which an Optionee may be entitled upon the
exercise of an Option as a result of such adjustment;
(t) "SUBSIDIARY" means any corporation that is a subsidiary of the
Company (as such term is defined in the Business Corporation Law
of the State of New York as may be from time to time amended,
varied or re-enacted); and
(u) "TRAILING TWELVE MONTHS REVENUES" means the Company's revenues
(calculated in accordance with generally accepted accounting
principles in a manner consistent with the previous year) as
reported in the financial statements for the twelve month period
ending immediately prior to the Quarterly Commencement Period in
which such revenues are being calculated; provided, however, the
determination of Trailing Twelve Months Revenues will exclude any
one time adjustments which may result for any
<PAGE>
changes in the Company's accounting practices and policies.
3 ADMINISTRATION OF PLAN
3.1 ADMINISTRATION OF PLAN. This Plan will be administered by the
Committee; provided however that the Board may establish any other committee of
the Board consisting of not less than three members of the Board to replace the
Committee for the purposes of the administration of this Plan. The members of
the Committee will serve at the pleasure of the Board and vacancies occurring in
the Committee will be filled by the Board.
3.2 COMMITTEE GOVERNANCE. The Committee will select one of its members as
its Chairman and will hold its meetings at such time and place as it will
deem advisable. A majority of the members of the Committee will constitute a
quorum and all actions of the Committee will be taken by a majority of the
members present at any meeting. Any action of the Committee may be taken by
an instrument or instruments in writing signed by all the members of the
Committee, and any action so taken will be as effective as if it had been
passed by a majority of the votes cast by the members of the Committee
present at a meeting of such members duly called and held.
3.3 POWERS OF COMMITTEE. The Committee will have the power, where consistent
with the general purpose and intent of this Plan and subject to the specific
provisions of this Plan:
(a) to establish policies and to adopt rules and regulations for
carrying out the purposes, provisions and administration of this
Plan;
(b) to interpret and construe this Plan and to determine all questions
arising out of this Plan and any Option granted pursuant to this
Plan, and any such interpretation, construction or termination
made by the Committee will be final, binding and conclusive for
all purposes;
(c) to determine to which Eligible Persons Options are granted and to
grant Options;
(d) to determine the number of Shares covered by each Option;
(e) to determine the Option Price for each Option;
(f) to determine the time or times when Options will be granted, vest
and be exercisable;
<PAGE>
(g) to determine if the Shares that are subject to an Option will be
subject to any restrictions upon the exercise of such Option;
(h) to determine the expiration date for each Option;
(i) to prescribe the form of the instruments relating to the grant,
exercise and other terms of Options;
(j) to determine, where necessary, the Key Person pursuant to a
consulting contract as the person providing the services
thereunder; and
(k) to determine such other matters as provided for herein.
4 SHARES SUBJECT TO PLAN
4.1 SHARES SUBJECT TO PLAN. Options may be granted in respect of authorized
and unissued Shares, provided that the aggregate number of Shares to be issued
under this Plan, subject to adjustment or increase of such number pursuant to
the provisions of Part 8 hereof, will be 930,000. The number of Shares issued
hereunder may be increased or changed by the Board, as approved by the Exchange
and any other relevant regulatory authority having authority with respect
hereto.
4.2 REGRANTING OF SHARES. Shares with respect to which Options are not
exercised prior to the termination under any Option, will be available for grant
under subsequent Options under this Plan.
4.3 NO FRACTIONAL SHARES. No fractional Shares may be purchased or issued
under this plan.
5 ELIGIBILITY, GRANT AND TERMS OF OPTIONS
5.1 ELIGIBILITY. Options may be granted to Eligible Persons whose
participation in this Plan will, in the opinion of the Committee, accomplish the
purposes of this Plan.
5.2 GRANTING OF OPTIONS. Options may be granted by the Company pursuant
to recommendations of the Committee provided and to the extent that such
recommendations are approved by the Board.
5.3 OPTION AGREEMENT. Each Option granted pursuant to this Plan will be
evidenced by an Option Agreement executed on behalf of the Company by any two
directors or officers of the Company, and each Option Agreement will incorporate
such terms and conditions as the Committee in its discretion deems consistent
with the terms of this Plan. The Committee may, with the written consent of the
Optionee and the approval of the Exchange, if necessary, amend any Option
Agreement to the extent that the Committee, acting in its discretion, deems
consistent with the terms of this Plan.
<PAGE>
5.4 OPTION PRICE. For greater certainty, the Option Price on Shares that are
the subject of an Option will be as determined by the Committee, but will in no
event be less than the Market Price.
5.5 OPTION TERM. Each Option granted pursuant to this Plan will, subject to
early termination in accordance with Part 6 hereof and subject to the provisions
of Part 7 hereof, expire automatically on the earlier of:
(a) the date on which such Option is exercised in respect of all of
the Shares that may be purchased thereunder; and
(b) the date fixed by the Committee as to expiry date of such
Option,
which date will not exceed ten years from the Grant Date of the Option.
5.6 MAXIMUM GRANT. The total number of Shares to be optioned to any
Optionee under this Plan together with any Shares for issuance under any
other option plans for employees of the Company or any Subsidiary or any
other plans to such Optionee for Shares of the Company will not exceed 5% of
the issued and outstanding Shares at the Grant Date of the Option.
5.7 NON-ASSIGNABLE. An option is personal to the Optionee and is
non-assignable other than by will or other testamentary instrument or the
laws of succession and may be exercisable during the lifetime of the Optionee
only by the Optionee.
6 TERMINATION OF EMPLOYMENT, DEATH
6.1 TERMINATION OR DEATH. Subject to Section 6.2 hereof and to any
express resolution passed by the Committee with respect to any specific
Option, an Option, and all rights to purchase Shares pursuant thereto, will
expire and terminate immediately upon the Optionee ceasing to be a director,
officer, employee or a consultant of the Company or of any Subsidiary.
6.2 RULES UPON TERMINATION OR DEATH. If before the expiry of an Option in
accordance with the terms hereof, the employment, or the consulting
contract, of the Optionee by or with the Company or any Subsidiary terminates
or ceases, or the Optionee ceases to be a director of the Company or any
Subsidiary or if an Option was issued to a corporation controlled by a
director, officer, employee or individual consultant of the Company and such
person no longer controls that corporation, the following will apply:
(a) if the Optionee ceases to be an employee or officer of the
Company or a Subsidiary by reason of retirement or ceases to be
a consultant by normal termination of the consulting contract
in accordance with its terms, or ceases to be a director of the
Company or a Subsidiary (such date of retirement or cessation
herein being called the "retirement date") all Options which
are exercisable at the retirement date, or which become
exercisable within 90 days from the retirement date, will be
exercisable on and after the retirement date, subject to the
terms of this Plan during a period of the earlier of, 90 days
following the retirement date or the expiry of the Option,
unless otherwise determined by the Committee and approved by
the Exchange;
(b) if the Optionee or a Key Person dies, all Options which are
exercisable at the date of death, or which become exercisable
within 90 days from the date of death will be exercisable on and
after the date of death, by the legal personal representative(s)
of the estate of the Optionee or the Key Person, as the case may
be, subject to the terms of this Plan during a period of the
earlier of, 90 days following the date of death or the expiry of
the Option, unless otherwise determined by the Committee and
approved by the Exchange;
(c) if the Optionee ceases to be an employee or officer of the Company
or a Subsidiary for any reason other than retirement or death or
ceases to be a consultant with the Company or any Subsidiary other
than by way of normal termination of the consulting contract in
accordance with its terms, all as provided in Section 6.2(a) and
(b) above, or if an Option was issued to a corporation controlled
by a director, officer, employee or individual consultant of the
Company and such person no longer controls that corporation, all
Options will expire automatically on the date that such Optionee
ceases to be an employee or officer or consultant of the Company
or a Subsidiary or ceases to control such corporation, as the case
may be, unless otherwise determined by the Committee and approved
by the Exchange.
6.3 EXCEPTION. Options will not be affected by any change of employment
of the Optionee or by the Optionee ceasing to be a director where the
Optionee continues to be an employee or a director of the Company or any
Subsidiary, as the case may be.
7. EXERCISE OF OPTIONS
7.1 EXERCISE OF OPTIONS. Subject to the provisions of this Plan, an
Option to purchase Shares may be exercised from time to time within the
period in which they are exercisable by delivery to the
<PAGE>
Company at its head office of a written notice of exercise addressed to the
Secretary of the Company specifying the number of shares with respect to
which the Option is being exercised and accompanied by payment in full of the
option Price of the Shares to be purchased (by cash, bank draft or certified
cheque payable to the Company). Certificates for such Shares will be issued
and delivered to the Optionee within a reasonable time following the receipt
of such notice and payment.
7.2 CONDITIONS. Notwithstanding any of the provisions contained
in this Plan or in any Option, the Company's obligation to issue Shares to an
Optionee pursuant to the exercise of an Option will be subject to:
(a) completion of such registration or other qualification of such
Shares or obtaining approval of such governmental authority as the
Company will determine to be necessary or advisable in connection
with the authorization, issuance or sale thereof;
(b) the admission of such Shares to being listed and posted or quoted
on the Exchange; and
(c) the receipt from the Optionee of such representations, agreements
and undertakings, including as to future dealings in such Shares,
as the company or its counsel determines to be necessary or
advisable in order to safeguard against the violation of the
securities laws of any jurisdiction.
In this connection the Company will, to the extent necessary, take all
reasonable steps to obtain such approvals, registrations and qualifications as
many be necessary for the issuance of such Shares in compliance with applicable
securities laws and for the listing and posting or quotation of such Shares on
the Exchange.
8 CERTAIN ADJUSTMENTS
8.1 ADJUSTMENTS. Appropriate adjustments in the number of Shares subject
to this Plan, and as regards Options granted or to be granted, in the number
of Shares optioned and in the applicable Option Price, will be conclusively
determined by the Board to give effect to adjustments in the number of Shares
of the Company resulting from subdivisions, consolidations adjustments in the
number of Shares of the Company resulting from subdivisions, consolidations or
reclassifications of the shares of the Company, the payment of stock dividends
by the Company (other than dividends in the ordinary course) or other relevant
changes in the capital stock of the Company. If, because of a proposed
merger,
<PAGE>
amalgamation or other corporate arrangement or reorganization, the exchange or
replacement of Shares of the Company for those in another company is imminent,
the Board may, in a fair and equitable manner, determine the manner in which
all unexercised option rights granted under this Plan will be treated
including, for example, requiring the acceleration of the time for the
exercise of such rights by the Optionees and of the time for the fulfilment of
any conditions or restrictions on such exercise. All determinations of the
Board under this Section will be final, binding and conclusive for all
purposes subject to the approval of the Exchange.
9 AMENDMENT OR DISCONTINUANCE OF PLAN
9.1 AMENDMENT OR DISCONTINUANCE OF PLAN. The Board may amend or
discontinue this Plan at any time; provided, however, that no such amendment may
increase the maximum number of Shares that may be optioned under this Plan,
change the manner of determining the Option Price or, without the consent of the
Optionee, alter or impair any Option previously granted to an Optionee under
this Plan, and further provided that any amendment receives the approval of the
Exchange and all other applicable regulatory authorities, as required.
10 SHAREHOLDER AND REGULATORY APPROVAL
10.1 REQUIRED APPROVALS. Any further material amendment to this Plan will
be subject to the requisite approval of the shareholders of the Company to be
given by a resolution passed at a meeting of the shareholders of the Company
and to acceptance by the Exchange and any other regulatory authorities having
jurisdiction, as required. Any Options granted after such amendment but
prior to such amendment but prior to such approval and acceptance will be
conditional upon such approval and acceptance being given and no such Options
may be exercised unless and until such approval and acceptance is given.
11 GENERAL
11.1 RIGHTS OF OPTIONEES. The holder of an Option will not have any rights
as a shareholder of the Company with respect to any of the Shares covered by
such Option until such holder will have exercised such Option in accordance
with the terms of this Plan (including tendering payment in full of the
Option Price of the Shares in respect of which the Option is being exercised)
and the Company will issue such Shares to the Optionee in accordance with the
terms of this Plan in those circumstances.
11.2 NO EFFECT ON EMPLOYMENT. Nothing in this Plan or any Option will confer
upon any Optionee any right to continue in the employ
<PAGE>
of or under contract with the Company or any Subsidiary of the Company or
affect in any way the right of the Company or any such Subsidiary to terminate
his or her employment at any time or terminate his or her consulting contract;
nor will anything in this Plan or any Option be deemed or construed to
constitute an agreement, or an expression of intent, on the part of the
Company or any such Subsidiary to extend the employment of any Optionee beyond
the time that he or she would normally be retired pursuant to the provisions
of any present or future retirement plan of the Company or any Subsidiary or
any present or future retirement policy of the Company or any Subsidiary, or
beyond the time at which he or she would otherwise be retired pursuant to the
provisions of any contract of employment with the Company or any Subsidiary.
11.3 OTHER SHARES. Nothing contained in this Plan will restrict or limit
or be deemed to restrict or limit the right or power of the Board in
connection with any allotment and issuance of Shares which are not allotted
and issued under this Plan including, without limitation, with respect to
other compensation arrangements.
11.4 MISCELLANEOUS. References herein to any gender include all genders
and to the plural includes the singular and vice versa. The division of this
Plan into Sections and the insertion of headings are for convenience of
reference only and will not affect the construction or interpretation of this
Plan.
<PAGE>
EXHIBIT 10.7
BIOLABS, INC.
A NEW YORK CORPORATION
WARRANT TO PURCHASE SHARES OF THE
COMPANY'S COMMON STOCK, NO PAR VALUE
WARRANT NO. BIOLABS 00-001
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACT AND THE RULES AND
REGULATIONS THEREUNDER.
Void after March 31, 2004 (unless Warrant To Purchase 50,000
earlier exercised or extended under Shares of Common Stock
the circumstances described herein) Dated: March 31, 2000
WARRANT CERTIFICATE REPRESENTING
WARRANTS TO PURCHASE COMMON STOCK OF
BIOLABS, INC.
FOR VALUE RECEIVED, BioLabs, Inc., a corporation organized and
existing under the laws of New York (the "Company"), hereby certifies that
the holder identified on the final page (the "Holder") of this Warrant (the
"Warrants", and each right to purchase a share of Common Stock, a "Warrant")
is entitled, subject to the terms set forth below, at any time or from time
to time hereafter, but not later than March 31, 2004, unless earlier
exercised or extended, to purchase from the Company fully paid and
nonassessable shares of Common Stock in the amount set forth above. These
Warrants and all rights hereunder, to the extent such rights shall not have
been exercised, shall terminate and become null and void at 5:00 p.m., New
York time, on March 31, 2004, unless earlier exercised or redeemed under the
circumstances described herein.
DEFINITIONS
The terms defined below, whenever used in this Warrant, shall have the
respective meanings hereinafter specified. Whenever used in this Warrant,
any noun or pronoun shall be deemed to include both the singular and plural
and to cover all genders.
"Assignment" means the form of Assignment appearing at the end of this
Warrant.
"Common Stock" means the Company's authorized Common Stock, $.0001
par value.
<PAGE>
"Commission" means the United States Securities and Exchange
Commission, or any other Federal agency then administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor U.S. federal statute, and the rules and
regulations of the Commission (or its successor) thereunder, all as the same
shall be in effect at the time.
"Exercise Period" means the period commencing on the date hereof and
terminating at 5:00 p.m., New York time, on March 31, 2004, unless otherwise
extended or earlier terminated as herein permitted.
"Exercise Price" means the price per share of Common Stock set forth
in Section 1A hereof, as such price may be adjusted from time to time
pursuant to Section 1.
"Form of Subscription" means the Form of Subscription appearing at the
end of this Warrant.
"Holder" means the person in whose name this Warrant is registered on
the books of the Company maintained for such purpose.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar U.S. Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
SECTION 1. EXERCISE OF WARRANTS: TERM; EXERCISE PRICE;
ADJUSTMENTS OF EXERCISE PRICE
1.1. EXERCISE OF WARRANTS. Subject to the conditions of this
Section 1, the holder of any Warrant at the holder's option may exercise such
holder's rights under all or any part of the Warrants to purchase shares of
the Company's Common Stock (the "Warrant Shares") at a price (the "Exercise
Price") at any time on or after the date hereof equal to Five dollars and
Seventy-Five Cents ($5.75) per share, subject to adjustment as hereinafter
provided.
1.2. SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased. The holder shall be
entitled to twenty (20) days notice of any change in the Exercise Price
pursuant to this Section 1.2.
1.3. CHANGES IN COMMON STOCK. If any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with another corporation, or sale, transfer or other
disposition of all or substantially all of its properties to another
corporation,
<PAGE>
shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each holder of Warrants
shall thereafter have the right to purchase and receive upon the basis and
upon the terms and conditions herein specified and in lieu of the shares of
the Common Stock of the Company immediately theretofore issuable upon
exercise of the Warrants, such shares of stock, securities or properties, if
any, as may be issuable or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of
shares of such Common Stock immediately theretofore issuable upon exercise of
the Warrants had such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition not taken place, and in any such
case appropriate provisions shall be made with respect to the rights and
interests of each holder of Warrants to the end that the provisions hereof
(including without limitation provisions for adjustment of the Exercise
Price) shall thereafter be applicable, as nearly equivalent as may be
practicable in relation to any shares of stock, securities or properties
thereafter deliverable upon the exercise thereof. The Company shall not
effect any such consolidation, merger, sale, transfer or other disposition,
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing or otherwise acquiring such properties
shall assume, by written instrument executed and mailed or delivered to the
holders of Warrants at the last address of such holders appearing on the
books of the Company, the obligation to deliver to such holders such shares
of stock, securities or properties as, in accordance with the foregoing
provisions, such holders may be entitled to acquire. The above provisions of
this subparagraph shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers, or other
dispositions. The holder shall be entitled to twenty (20) days notice of any
change in the capital stock of the Company or any merger, acquisition or
similar transaction pursuant to this Section 1.3.
1.4. NOTICE OF ADJUSTMENT. Upon any adjustment of the Exercise
Price, then and in each such case the Company shall promptly obtain the
opinion of a firm of independent certified public accountants (which may be
the regular auditors of the Company) of recognized national standing selected
by the Company's Board of Directors, which opinion shall state the Exercise
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares of Common Stock issuable upon Exercise of the Warrant or
Warrants held by each holder of Warrants, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
The good faith determination of the Board of Directors shall be final and
binding with respect to any adjustment required hereunder.
1.5. CERTAIN EVENTS. If any event occurs as to which in the opinion
of the Board of Directors of the Company the other provisions of Section 1
hereof are not strictly applicable or if strictly applicable would not fairly
protect the conversion rights of the holders of the Warrants in accordance
with the essential intent and principles of such provisions, then such Board
of Directors shall appoint a firm of independent certified public accountants
(which may be the regular auditors of the Company) of recognized national
standing, which shall give their opinion upon the adjustment, if any, on a
basis consistent with such essential intent and principles, necessary to
preserve, without dilution, the rights of the holders of the Warrants. Upon
receipt of such opinion by the Board of Directors, the Company shall
forthwith make the adjustments
<PAGE>
described therein; PROVIDED, HOWEVER, that no such adjustment shall have the
effect of increasing the Exercise Price as otherwise determined pursuant to
Section 1 hereof except in the event of a combination of shares of the type
contemplated in Section 3 and then in no event to an amount larger than the
exercise price as adjusted pursuant to Section 3.
1.6. PROHIBITION OF CERTAIN ACTIONS. The Company will not (i)
authorize or issue, or agree to authorize or issue, any shares of its capital
stock of any class preferred as to dividends or as to the distribution of
assets upon voluntary or involuntary liquidation, dissolution or winding-up
of the Company otherwise than for full and fair consideration paid or
delivered to the Company concurrent with any such issuance; or (ii) take any
action which would result in any adjustment of the Exercise Price if the
total number of shares of Common Stock issuable after such action upon
exercise of all of the Warrants would exceed the total number of shares of
Common Stock then authorized by the Company's Certificate of Incorporation.
1.7. STOCK TO BE RESERVED. The Company will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose
of issue upon the exercise of Warrants as herein provided, such number of
shares of Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants, and the Company will maintain at all times all other
rights and privileges sufficient to enable it to fulfill all its obligations
hereunder. The Company covenants that all shares of Common Stock which shall
be so issuable shall, upon issuance, be duly authorized, validly issued,
fully paid and nonassessable, free from preemptive or similar rights on the
part of the holders of any shares of capital stock or securities of the
Company, and free from all Liens and charges with respect to the issue
thereof; and without limiting the generality of the foregoing, the Company
covenants that it will from time to time take all such action as may be
required to assure that the par value, if any, per share of the Common Stock
is at all times equal to or less than the then effective Exercise Price. The
Company will take all such action as may be necessary to assure that such
shares of Common Stock may be so issued without violation by the Company of
any applicable law or regulation, or of any requirements of any domestic
securities exchange upon which the Common Stock may be listed. Without
limiting the foregoing, the Company will take all such action as may be
necessary to assure that, upon exercise of any of the Warrants, an amount
equal to the lesser of (a) the par value of each share of Common Stock
outstanding immediately prior to such conversion, or (b) the Exercise Price,
shall be credited to the Company's stated capital account for each share of
Common Stock issued upon such exercise, and that the balance of the principal
amount of each Warrant exercised shall be credited to the Company's capital
surplus account.
1.8. REGISTRATION AND LISTING OF COMMON STOCK. If any shares of
Common Stock required to be reserved for purposes of exercise of Warrants
hereunder require registration with or approval of any governmental authority
under any Federal or state law (other than the Securities Act) before such
shares may be issued upon exercise, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be
duly registered or approved, as the case may be. Shares of Common Stock
issuable upon exercise of the Warrants shall be registered by the Company
under the Securities Act or similar statute then in effect. If and so long
as the Common Stock is listed on any national securities exchange or quoted
on the Nasdaq Stock Market, the Company will, at its expense, obtain promptly
and maintain the approval for listing or
<PAGE>
quotation thereon upon official notice of issuance, of shares of Common Stock
issuable upon exercise of the then outstanding Warrants and maintain the
listing or quotation of such shares after their issuance; and the Company
will also cause the listing on such national securities exchange or quotation
on Nasdaq, will register under the Exchange Act and will maintain such
listing or quotation of, any other securities that at any time are issuable
upon exercise of the Warrants, if and at the time that any securities of the
same class shall be listed on such national securities exchange or quoted on
Nasdaq by the Company or shall require registration under the Exchange Act.
The Company shall not be required to list the securities on any national
securities exchange. The Holder understands that the Shares are not
currently so listed.
1.9. NO CHARGE FOR ISSUANCE. The issuance of certificates for
shares of Common Stock upon exercise of Warrants shall be made without charge
to the holders of the Warrants, other then payment of the exercise price.
1.10. CLOSING OF BOOKS. The Company will at no time close its
transfer books against the transfer of any Warrant or of any shares of Common
Stock issued or issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of such Warrant.
1.11. NO RIGHTS OR LIABILITIES AS SHAREHOLDERS. No Warrant shall
entitle any holder thereof to any of the rights of a shareholder of the
Company. No provision of this Warrant, in the absence of the actual exercise
of such Warrant or any part thereof by the holder thereof into Common Stock
issuable upon such exercise, shall give rise to any liability on the part of
such holder as a shareholder of the Company, whether such liability shall be
asserted by the Company or by creditors of the Company.
1.12. FRACTIONAL SHARES. The Company shall not issue fractional
shares of Common Stock or scrip representing fractional shares of Common
Stock upon any exercise of this Warrant. As to any fractional share of
Common Stock which the Holder would otherwise be entitled to purchase from
the Company upon such exercise, the Company shall purchase from the Holder
such fractional share at a price equal to an amount calculated by multiplying
such fractional share (calculated to the nearest 1/100th of a share) by its
Market Price on the date the Form of Subscription is received by the Company.
Payment of such amount shall be made in cash or by check payable to the
order of the Holder at the time of delivery of any certificate or
certificates arising upon such exercise.
SECTION 2. METHOD OF EXERCISE OF WARRANTS
2.1. The Warrants may be exercised by the surrender of this
Certificate, with the Form of Subscription attached hereto duly executed by
the holder, to the Company at its principal office, accompanied by payment of
the Exercise Price for the number of shares of Common Stock specified. The
Warrants may be exercised for less than the full number of shares of Common
Stock called for hereby by surrender of this Certificate in the manner and at
the place provided above, accompanied by payment for the number of shares of
Common Stock being purchased. If the Warrants should be exercised in part
only, the Company shall, upon surrender of this Warrant Certificate for
cancellation, execute and deliver a new Warrant Certificate evidencing the
right of
<PAGE>
the holder to purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Warrant Certificate at the office of the
Company, in proper form for exercise, accompanied by the full Exercise Price
in cash or certified or bank cashier's check, the holder shall be deemed to
be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such Common Stock shall not
then be actually delivered to the holder.
2.2. As soon as practicable after the exercise of these Warrants in
whole or in part and, in any event, within ten (10) days thereafter, the
Company at its expense will cause to be issued in the name of and delivered
to the holder a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock (and any new Warrants) to which the
holder shall be entitled upon such exercise. Each certificate for shares of
Common Stock so delivered shall be in such denominations as may be requested
by the holder and shall be registered in the name of the holder or such other
name as the holder may designate.
SECTION 3. PAYMENT OF TAXES
The issuance of certificates for shares of Common Stock upon exercise
of the Warrants shall be made without charge to the holders of the Warrants
exercised for any issuance tax in respect thereto; 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
certificate in a name other than that of the holder of the Warrant or
Warrants exercised.
SECTION 4. MUTILATED OR MISSING WARRANT CERTIFICATES
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant Certificate,
and (in the case of loss, theft or destruction) of reasonably satisfactory
indemnification and upon surrender and cancellation of this Warrant
Certificate, if mutilated, the Company will execute and deliver a new Warrant
Certificate of like tenor and date.
SECTION 5. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
5.1. NOTICE OF PROPOSED TRANSFER; REGISTRATION NOT REQUIRED. The
Holder of this Warrant or the holder of any shares of Common Stock issuable
upon the exercise hereof (the "Warrant Shares") by acceptance hereof or
thereof, agrees to give written notice to the Company, prior to any transfer
of this Warrant, the Warrant Shares or any portion hereof or thereof, of its
intention to make such transfer which notice shall include a brief
description of such proposed transfer.
If in the opinion of counsel to the Company or counsel to the
transferor reasonably acceptable to the Company the proposed transfer may be
effected without registration or qualification under any Federal or state law
whereupon the Holder shall be entitled to transfer this Warrant or Warrant
shares in accordance with the terms of the notice delivered to the Company
and the
<PAGE>
opinion of counsel. The Company shall not be required to implement any
unregistered transfer of the Warrant or Warrant Shares without such opinion
of counsel.
5.2. REQUIRED REGISTRATION AND QUALIFICATION. So long as the
Warrant Shares are unsold, the Company shall include the Warrant Shares in
any registration under the Securities Act filed by the Company in which the
Shares may be lawfully included provided that on notice of such registration,
the Holder of the Warrant or Warrant Shares shall request inclusion therein
and specify the number of shares to be registered or qualified and the
jurisdictions in which such registration or qualification is desired.
Promptly upon receipt of any request pursuant to this Section 5.2 the Company
shall promptly (a) take such steps as are reasonably necessary or appropriate
to prepare for registration and qualification of shares of Common Stock and
(b) give written notice to the holders of the Warrants and shares of Common
Stock issuable upon the exercise thereof of a proposed registration or
qualification by the Company under the Securities Act and under the
securities or blue sky laws of the requested jurisdictions and shall as
expeditiously as possible, in good faith, use its best efforts to effect any
such registration or qualification of:
(i) the number of shares of Common Stock issuable upon the exercise
hereof designated in such request, and
(ii) the number of shares of Common Stock issuable upon the exercise of
any other Warrants the holders of which shall have requested the
Company, in writing within 30 days after the date of such notice
by the Company, to have such shares of Common Stock registered or
qualified;
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof) by the prospective sellers of the shares of Common
Stock to be registered or qualified, with notification to or approval of, any
governmental authority under any Federal or state law, or any listing with
any securities exchange or qualification on the Nasdaq Stock Market, which
may be required to permit the sale or disposition of any shares of Common
Stock issuable upon the exercise of such Warrants which the holders thereof
propose to make, and the Company will keep effective and current such
registration or qualification for such period as may be reasonably necessary
to effect such sale or disposition, not to exceed nine (9) months after the
effective date of such registration statement.
5.3. ALLOCATION OF EXPENSES. If the Company is required by the
provisions hereof to use its best efforts to effect the registration or
qualification under the Securities Act or any state securities or blue sky
laws of any of the shares of Common Stock issuable upon the exercise of the
Warrants, the Company will pay all expenses in connection therewith,
including, without limitation, (a) all expenses incident to filing with the
National Association of Securities Dealers, Inc., (b) registration fees, (c)
printing expenses, (d) accounting and legal fees and expenses, (e) expenses
of any special audits incident to or required by any such registration or
qualification, (f) premiums for insurance in such amount, if any, deemed
appropriate by the managing underwriter and (g) expenses of complying with
the securities or blue sky laws of any jurisdictions in connection with such
registration or qualification; provided, however, the Company shall not be
(i) liable for any discounts or commissions to any underwriter.
<PAGE>
5.4. CROSS-INDEMNIFICATION. In connection with any registration or
qualification of securities hereunder, the Company hereby indemnifies the
Holder and the holders of any shares of Common Stock issuable upon the
exercise hereof and each underwriter thereof, including each person, if any,
who controls the Holder or such stockholder or underwriter within the meaning
of Section 15 of the Securities Act, against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) caused
by any untrue, or alleged untrue, statement of a material fact contained in
any registration statement, preliminary prospectus, prospectus or
notification or offering circular (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or caused by 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,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any untrue statement or alleged untrue statement or omission or
alleged omission based upon information furnished in writing to the Company
by the Holder expressly for use therein. The Company and each officer,
director and controlling person of the Company or underwriter within the
meaning of Section 15 of the Securities Act are hereby indemnified by the
Holder and by the holders of any shares of Common Stock issuable upon the
exercise hereof against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) caused by any untrue, or
alleged untrue, statement of a material fact contained in any registration
statement, preliminary prospectus or notification or offering circular (as
amended or supplemented) or caused by any omission, or alleged omission, to
state therein a material fact necessary to make the statements therein not
misleading, but only to the extent that such alleged untrue statement or
alleged omission was based upon information furnished in writing to the
Company by the Holder or any such stockholder expressly for use therein.
Promptly upon receipt by a party indemnified under this Section 5C of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 5D, such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may have to any indemnified party otherwise than under
this Section 5D unless such failure shall materially adversely affect the
defense of such action. In case notice of commencement of any such action
shall be given to the indemnifying party as above provided, the indemnifying
party shall be entitled to participate in and, to the extent it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party
unless (a) the indemnifying party agrees to pay the same, (b) the
indemnifying party fails to assume the defense of such action with counsel
reasonably satisfactory to the indemnified party or (c) the named parties to
any such action (including any impleaded parties) have been advised by such
counsel that representation of such indemnified party and the indemnifying
party by the same counsel would be inappropriate under applicable standards
of professional conduct (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified
party). No indemnifying party shall be liable for any settlement entered
into without its consent.
<PAGE>
5.5. SUPPLYING INFORMATION. The Company, the Holder and each holder
of shares of Common Stock issuable upon the exercise hereof shall cooperate
with each other in supplying such information as may be necessary for any of
such parties to complete and file any information reporting forms presently
or hereafter required by the Commission or any commissioner or other
authority administering the blue sky or securities laws of any jurisdiction
where shares of Common Stock are proposed to be sold pursuant hereto.
5.6. COMPLIANCE WITH RULE 144. At the request of any Holder of this
Warrant or holder of shares of Common Stock issuable upon the exercise hereof
who proposes to sell shares of Common Stock issuable upon the exercise hereof
in compliance with Rule 144 of the Commission, or any similar Rule, assuming
that at such time the provisions of such Rule are applicable to such Holder
or holder and, in the event the Holder or holder is or could be deemed an
"affiliate" of the Company, and the Company is then required to file reports
under Section 13 or 15(d) of the Exchange Act, the Company shall (a)
forthwith furnish to such Holder or holder a written statement as to its
compliance with the filing requirements of the Commission as set forth in
such Rule and (b) make such additional filings of reports with the Commission
as will enable the Holder or holder to make sales of shares of Common Stock
issued upon exercise hereof pursuant to such Rule.
SECTION 6. REDEMPTION
[NOT APPLICABLE TO THIS WARRANT]
SECTION 7. REPORTS TO HOLDERS
The Company shall, during the Exercise Period, furnish directly to the
Holders, as soon as the same shall be sent to stockholders generally, copies
of all annual or interim stockholder reports of the Company, and shall, for
the same period, also furnish the Holders promptly with copies of any reports
and financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company
is listed.
SECTION 8. MISCELLANEOUS
8.1. NONWAIVER. No course of dealing or any delay or failure to
exercise any right hereunder on the part of the Holder shall operate as a
waiver of such right or otherwise prejudice the Holder's rights, powers or
remedies.
8.2. NOTICE GENERALLY. Any notice, demand or delivery to be made
pursuant to the provisions of this Warrant shall be sufficiently given or
made if sent by first class mail, postage prepaid, addressed to (a) the
Holder at its last known address appearing on the books of the Company
maintained for such purpose or (b) the Company at its principal office
referred to in the Purchase Agreement. The Holder and the Company may each
designate a different address by notice to the other pursuant to this Section
8B.
<PAGE>
8.3. SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors of
the Company and the Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant, and
shall be enforceable by any such Holder.
8.4. AMENDMENT. This Warrant may not be modified or amended except
by written agreement of the parties.
8.5. HEADINGS. The headings of the Sections of this Warrant are for
the convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
8.6. GOVERNING LAW. Except to the extent the corporation statute of
the Company's state of incorporation otherwise applies, this Agreement shall
be governed by and construed and enforced under the laws of New York without
reference to the principles of the conflicts of laws thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, as of the day and year first above written.
WARRANT NO. BIOLABS 00-001 WARRANTS TO
PURCHASE 50,000 SHARES OF COMMON
STOCK, NO PAR VALUE
Price Per Share: $5.75
ISSUED TO: John J. Horan (Subject to Adjustment)
_________________
_________________
_________________
BIOLABS, INC.
By: ________________________
Name:
Title:
Dated: Surrey, British Columbia, Canada
March 31, 2000
FORM OF SUBSCRIPTION
DATE: _______________, 20___
<PAGE>
WARRANT NO: BioLabs 00-001
TO: JOHN J. HORAN
The Undersigned, the holder of the within Warrants, hereby,
irrevocably elects to exercise all or part of the purchase right represented
by such Warrants for, and to purchase thereunder, shares of Common Stock of
BioLabs, Inc., a New York corporation (the "Company"), and herewith makes
payment of $__________ to the Company, evidenced by delivery of the Holder's
certified or bank check and requests that the certificate representing such
shares be issued in the name of, and be delivered to Holder, at the address
indicated below.
______________________________
(Name of Holder)
______________________________
(Authorized Signature)
______________________________
(Full Address for Delivery of
Certificates)
______________________________
(Telephone #)
<PAGE>
ASSIGNMENT FORM
WARRANT NO: BIOLABS 00-001
(To be executed only upon the assignment
of the within Warrant)
TO: BIOLABS, INC.
FOR VALUE RECEIVED the undersigned registered Holder of the within
Warrant hereby sells, assigns and transfers unto ____________________________
whose address is ____________________________________________________________
all of the rights of the undersigned under the within Warrant, with respect
to a certain Warrant to purchase shares of Common Stock of BioLabs, Inc., a
New York corporation (the "Company"), and if such shares of Common Stock
shall not include all the shares of Common Stock issuable as provided in the
within Warrant, then a new Warrant of like tenor for the number of shares of
Common Stock of BioLabs, Inc., not being transferred hereunder shall be
issued in the name of and delivered to the undersigned, and does hereby
irrevocably constitute and appoint __________________________________________
_____________________________________________________________________________
as attorney in fact to register such transfer on the books of The Company
maintained for the purpose, with full power of substitution in the premises.
Assignment of this Warrant can only be made to an assignee who takes the
Warrant for investment only and not with a view to distribution or
redistribution thereof.
Dated ________________ , ______
By: __________________________________
(Signature of Registered Holder)
Signature Guaranteed:
By: ___________________________
NOTICE: The signature to this Assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatever.
The signature to this Assignment must be guaranteed by a commercial bank or
trust companying of the United States or a member firm of the New York Stock
Exchange.
