SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
June 26, 1997
BIOSAFE INTERNATIONAL, INC.
(Exact name as specified in charter)
Nevada 95-4203626
(State or Other Jurisdiction of (I.R.S Employer
Incorporation or Organization) Identification No.)
0-25998
(Commission File Number)
10 Fawcett Street, Cambridge, Massachusetts 02138
(Address of principal executive offices, including zip code)
(617) 497-4500
Fax (617) 497-6355
(Registrant's telephone number, including area code)
This document contains a total of 4 pages.
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Item 5. Other Events.
-------------
On June 26, 1997 BioSafe International, Inc. announced the closing of a private
placement offering of Series "A" convertible preferred stock which raised gross
proceeds of approximately $9 million.
The preferred stock was sold at a price of $100 per share, bears an 8% annual
dividend, and is convertible into common stock at a conversion price of $0.28125
per share of common stock, which conversion price maybe reset to a lower
conversion price upon the occurrence of certain events. The dividend is payable
in cash or in additional shares of preferred stock at the Company's option and
is subject to adjustment after 3 years.
As a result of the sale of the preferred stock, Biosafe International, Inc. now
has approximately 49,662,571 shares of common stock outstanding or reserved for
issuance upon the conversion of the preferred stock. The Company is currently
considering the sale of additional shares of the preferred stock on the same
terms through June 30, 1997.
The following pro forma consolidated balance sheet as of March 31, 1997
gives effect to the offering as if it occurred on that date.
The Company believes that this information is relevant to update the Company's
current financial condition and is deemed to be of importance to security
holders.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
The March 31, 1997 pro-forma Balance Sheet of BioSafe
International, Inc. is included on pages 3 and 4.
(c) Exhibits
99.1. - Certificate of Designation of a Series of Preferred Stock
of Biosafe International, Inc.
1
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BIOSAFE INTERNATIONAL, INC.
Date: June 26, 1997 By: /s/ Philip Strauss
------------------
Chairman, Chief Executive Officer
and President
Date: June 26, 1997 By: /s/ Robert Rivkin
-----------------
Vice President, Chief Financial Officer,
Treasurer and Secretary
2
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<TABLE>
BIOSAFE INTERNATIONAL, INC.
(A Development Stage Company)
Pro-Forma Consolidated Balance Sheet
<CAPTION>
Pro-forma
March 31, March 31,
Assets 1997 Pro-forma Adjustments 1997
--------------- ---------------------------------- -------------
(unaudited)
Dr. Cr.
<C> <C> <C> <C>
Current assets:
Cash $ 466,646 a) $ 7,250,000 $ 7,716,646
Accounts and notes receivable, net 816,865 816,865
Assets held for resale 275,000 b) $ 275,000 -
Prepaid expenses and other current assets 568,595 568,595
--------------- -------------
Total current assets 2,127,106 9,102,106
Accounts and notes receivable 340,812 340,812
Restricted cash and securities 1,227,095 1,227,095
Due from former employee 500,000 500,000
Property and equipment, net 12,090,341 b) 98,115 12,188,456
Deferred financing costs, net 652,150 652,150
Other assets 133,523 133,523
--------------- -------------
Total assets $ 17,071,027 $ 24,144,142
=============== =============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt and notes payable $ 1,985,806 c) 570,000 $ 1,415,806
Accounts payable 1,437,493 1,437,493
Accrued expenses 943,486 943,486
Restructuring and current liabilities related to
discontinued operations 1,750,097 1,750,097
Income and franchise taxes payable -
--------------- -------------
Total current liabilities 6,116,882 5,546,882
Long-term debt and notes payable 10,629,194 10,629,194
Landfill closure and post-closure costs 1,537,000 1,537,000
--------------- -------------
Total liabilities 18,283,076 17,713,076
--------------- -------------
Commitments and Contingencies
Minority interest 1,026,885 b) 1,026,885 -
--------------- -------------
Stockholders' equity (deficit):
Common stock, $.001 par value. Authorized
100,000,000 shares; 17,662,571 shares c) 700,000
issued and outstanding at March 31, 1997 17,662 b) 850,000 17,662
Preferred Stock - Series A, $100 par value - a) $ 7,450,000 9,000,000
Additional paid-in capital 21,749,420 a) 200,000 21,549,420
Deficit accumulated during the development stage (24,006,016) c) $ 130,000 (24,136,016)
--------------- -------------
Total stockholders' equity (deficit) (2,238,934) 6,431,066
--------------- -------------
Total liabilities and stockholders' equity (deficit) $ 17,071,027 $ 24,144,142
=============== =============
</TABLE>
3
<PAGE>
BIOSAFE INTERNATIONAL, INC.
(A Development Stage Company)
Pro-Forma Entries
Dr. Cr.
------------ ------------
a/ Additional Paid in Capital $ 200,000
Cash 7,250,000
Preferred Stock $ 7,450,000
(To record issuance of convertible
preferred stock net of offering expenses)
b/ Minority Interest $1,026,885
Property and Equipment 98,115
Assets held for Sale $ 275,000
Preferred Stock 850,000
(To record the sale of assets and conversion
of minority interest in Waste Professionals
of Vermont, Inc. into convertible preferred stock)
c/ Loss on Extinguishment of Debt $ 130,000
Current Portion Long-Term Debt 570,000
Preferred Stock $ 700,000
(To record conversion of bank debt
into convertible preferred stock)
4
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BIOSAFE INTERNATIONAL, INC.
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF A SERIES OF PREFERRED STOCK
By Resolution of the Board of Directors
We, Philip Strauss, President, and Robert Rivkin, Secretary, of BioSafe
International, Inc., a corporation organized and existing under the General
Corporation Law of the State of Nevada (the "Corporation"), in accordance with
Section 78.1955 of the Nevada Business Corporation Act, do hereby certify:
That, pursuant to authority conferred upon the Board of Directors of
the Corporation by the Articles of Incorporation of said Corporation, as
amended, and pursuant to the provisions of Section 78.1955 of the Nevada
Business Corporation Act, said Board of Directors, at a meeting duly held and
convened on June 24, 1997, adopted a resolution providing for the designations,
preferences and relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, including, without limiting
the generality of the foregoing, such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets, and
conversion or exchange, of a series of preferred stock, which resolution is as
follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Articles
of Incorporation of the Corporation, as amended, a series of preferred stock of
the Corporation known as Series A Convertible Preferred Stock (the "Preferred
Stock") be, and it hereby is, created, classified, and authorized, and the
issuance thereof is provided for, and that the designation and number of shares,
and relative rights, preferences and limitations thereof, shall be as set forth
in the form appended hereto as Exhibit A.
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<PAGE>
A. Designation. The shares of the series of Preferred
Stock shall be designated as "Series A Convertible Preferred Stock," and the
number of shares constituting such series shall be 200,000. The par value of
the Series A Convertible Preferred Stock shall be $.001 per share.
A. Dividends. The holders of outstanding shares of the
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of dividends,
dividends at the annual rate of $8.00 per share for each of the three years
following June 26, 1997, and at the annual rate of $14.00 per share thereafter.
All dividends shall be cumulative and shall be payable annually in arrears on
June 26, 1997 of each year, commencing on June 26, 1998, in preference to and
with priority over dividends on the common stock of the Corporation, par value
$.001 per share (the "Common Stock"). Such dividends shall be cumulative and
shall accrue (whether or not earned or declared, and whether or not there are
funds legally available therefor) without interest from the first day of the
annual period in which such dividend may be payable as herein provided or from
the date of first issuance of the Preferred Stock, if later. Any dividends that
accrue may be paid, at the option and in the sole discretion of the Board of
Directors, in cash or, in whole or in part, by issuing fully paid and
non-assessable shares of Preferred Stock, valued for such purpose at $100 per
share. All dividends paid with respect to shares of the Preferred Stock pursuant
to this Section 2 hereof shall be paid pro rata to the holders entitled thereto.
Declaration and payment of such dividends shall be made each year unless
otherwise determined by the Board of Directors with respect to a particular
year.
A. Liquidation, Dissolution or Winding Up.
1. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, holders of
each share of Preferred Stock outstanding shall be entitled to be paid out
of the assets of the Corporation available for distribution to
stockholders, whether such assets are capital, surplus, or earnings, an
amount equal to $100 per share of Preferred Stock held plus any accrued and
unpaid dividends with respect thereto to which holders of the Preferred
Stock have become entitled (the "Liquidation Preference"), before any
payment shall be made to the holders of any class of Common Stock or of any
stock ranking on liquidation junior to the Preferred Stock. If upon any
liquidation, dissolution, or winding up of the Corporation, the assets to be
distributed to the holders of the Preferred Stock under the foregoing sentence
shall be insufficient to permit payment to such shareholders of the full
preferential amounts aforesaid, then all of the assets of the Corporation
available for distribution to such holders under such sentence shall be
distributed to such holders pro rata, so that each holder receives that portion
of the assets available for distribution as the number of shares of Preferred
Stock held by such holder bears to the total number of shares of Preferred Stock
then outstanding. After the payment of all preferential amounts required to be
paid to the holders of the Series A Preferred Stock upon the dissolution,
liquidation or winding up of the Corporation, the holders of shares of Preferred
Stock and shares of Common Stock then outstanding shall share ratably in the
distribution of the remaining assets and funds of the Corporation in proportion
to the number of shares of Common Stock held by them or issuable upon conversion
of shares of Preferred Stock held by them.
1. The amount per share set forth in Section 3(a)
shall be appropriately adjusted for any stock split, stock combinations, stock
dividends or similar recapitalizations with respect to the Preferred Stock.
A. Voting Power.
1. Except as otherwise expressly provided herein or
as required by law, the holder of each share of Preferred Stock shall be
entitled to vote on all matters. Each share of Preferred Stock shall
entitle the holder thereof to such number of votes per share as shall equal
the number of shares of Common Stock into which each share of Preferred Stock
is then convertible. Except as otherwise expressly provided herein in Section
4(b) below, or as required by law, the holders of shares of the Preferred
Stock and the Common Stock shall vote together as a single class on all matters.
1. The holders of the Preferred Stock shall have
the right to vote together as a single class to elect four (4) directors to the
Board of Directors of the Corporation, two of which shall be designated by
B III Capital Partners, L.P. ("B III"), so long as B III holds 30,000 or more
shares of the Preferred Stock; provided that in the event that B III shall own
fewer than 30,000 shares (subject to adjustment as provided herein) of
Preferred Stock, B III shall be entitled to designate one director; and
provided further that in the event that B III shall own fewer than 15,000 shares
(subject to adjustment as provided herein) of the Preferred Stock, B III shall
not be entitled to designate a director. Such directors shall be elected
annually for one-year terms by the holders of the Preferred Stock at the
Corporation's annual meeting of stockholders, notwithstanding any contrary
provision in the Corporation's charter or bylaws, or, if necessary, to replace
one of such directors at a special meeting of the Preferred Stockholders.
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<PAGE>
A. Conversion. The holders of the Preferred Stock shall
have the following conversion rights:
1. Subject to and in compliance with the provisions
of this Section 5, any shares of the PreferredStock may, at the option of the
holder, be converted at any time or from time totime into fully-paid and
non-assessable shares of Common Stock. The number of shares of Common Stock
to which a holder of the Preferred Stock shall be entitled upon
conversion shall be the product obtained by multiplying the Applicable
Conversion Rate (determined as provided in Section 5(c)) by the number of
shares of Preferred Stock being converted. For purposes of this
Section 5, the number of shares of Preferred Stock being converted shall include
shares of Preferred Stock that would be issuable in payment of any accrued and
unpaid dividends at the time of conversion.
a) In the event that after June 26, 1998
the average closing price of the Corporation's Common Stock on the Nasdaq Stock
Market (or, in the event that such security is not traded on the Nasdaq
Stock Market, such other national or regional securities exchange or
automated quotation system upon which such security is listed and principally
traded or, if no such price is available, the per share market value of the
Common Stock as determined by a nationally recognized investment banking
firm or other nationally recognized financial adviser retained by the
Corporation for such purpose) is equal to or greater than 200% of the
Applicable Conversion Value over a period of any twenty (20) successive
trading days, the Corporation may, at its option, effect the automatic
conversion of shares of Preferred Stock, in whole or in part, at the Applicable
Conversion Rate; provided that the Company's option to effect the automatic
conversion under this Section 5(b) shall be available only if the Corporation
Common Stock does in fact trade on each day in the twenty days prior to the
election to effect the automatic conversion. With respect to any automatic
conversion of fewer than all the outstanding shares of preferred stock, the
number of shares to be converted shall be determined by the Board of Directors
and the shares to be converted shall be selected pro rata. If the foregoing
condition has been satisfied and the Corporation has elected to effect the
automatic conversion of shares of Preferred Stock, it shall deliver a notice to
that effect by overnight delivery service to each holder of shares of Preferred
Stock. The conversion will be effective five (5) days after the delivery of such
notice in accordance with the provisions of Section 5(b)(ii) below.
a) Upon the occurrence of the events
specified in Section (5)(b)(i), the outstanding shares of Preferred Stock shall
be converted automatically without any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent, provided, however, that
the Corporation shall not be obligated to issue certificates evidencing
the shares of Common Stock issuable upon such conversion unless
certificates evidencing such shares of the Preferred Stock being converted are
either delivered to the Corporation or any transfer agent, as hereinafter
provided, or the holder notifies the Corporation or any transfer agent as
hereinafter provided, that such certificates have been lost, stolen or destroyed
and executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection therewith.
Upon the occurrence of the automatic conversion of all of the
outstanding Preferred Stock, the holders of the Preferred Stock shall surrender
the certificates representing such shares at the office of the Corporation or of
any transfer agent for the Common Stock. Thereupon, there shall be issued and
delivered to each such holder, promptly at such office and in his name as shown
on such surrendered certificate or certificates, a certificate or certificates
for the number of shares of Common Stock into which the shares of the Preferred
Stock surrendered were convertible on the date on which such automatic
conversion occurred.
1. The conversion rate in effect at any time
(the "Applicable Conversion Rate") shall equal the quotient obtained by
dividing $100 by the Applicable Conversion Value, calculated as
hereinafter provided.
2. The Applicable Conversion Value in effect
initially, and until first adjusted in accordance with Section 4(e) shall
be $.28125.
7
<PAGE>
1. Upon the happening of an Extraordinary Common
Stock Event (as hereinafter defined), the Applicable Conversion Value shall,
simultaneously with the happening of such Extraordinary Common Stock Event,
be adjusted by dividing the then effective Applicable Conversion Value by a
fraction, the numerator of which shall be the number of shares of Common Stock
of all classes outstanding immediately after such Extraordinary Common Stock
Event and the denominator of which shall be the number of shares of Common Stock
of all classes outstanding immediately prior to such Extraordinary Common
Stock Event, and the quotient so obtained shallthereafter be the Applicable
Conversion Value. The Applicable Conversion Value, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive
Extraordinary Common Stock Event or Events. "Extraordinary Common Stock
Event" shall mean (i) the issue of additional shares of the Common Stock
of any class as a dividend or other distribution on outstanding Common Stock,
(ii) subdivision of outstanding shares of Common Stock of any class into a
greater number of shares of the Common Stock, or (iii) combination of
outstanding shares of the Common Stock of any class into a smaller number of
shares of the Common Stock.
(f) If the average closing price of the Corporation's Common
Stock on the NASDAQ Stock Market (or, in the event that such security is not
traded on the NASDAQ Stock Market, such other national or regional securities
exchange or automated quotation system upon which such security is listed and
principally traded or, if no such price is available, the per share market value
of the Common Stock as determined by a nationally recognized investment banking
firm or other nationally recognized financial advisor retained by the
Corporation for such purpose) over the final twenty trading days of the 120 day
period commencing on the effective date of the proposed reverse stock split is
less than $.28125 (subject to adjustment as provided herein) then the Applicable
Conversion Value shall be such average closing price.
(g) In the event the Corporation shall make or issue, or fix a
record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the
Corporation other than shares of Common Stock, then and in each such event
lawful and adequate provision shall be made so that the holders of Preferred
Stock shall receive upon conversion thereof in addition to the number of shares
of Common Stock receivable thereupon, the number of securities of the
Corporation which they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had they thereafter,
during the period from the date of such event to and including the Conversion
Date (as hereinafter defined), retained such securities receivable by them as
aforesaid during such period, giving application to all adjustments called for
during such period under this Section 5 with respect to the rights of the
holders of the Preferred Stock.
(h) If the Common Stock issuable upon the conversion of the
Preferred Stock shall be changed into the same or different number of shares of
any class or classes of stock, whether by reclassification or otherwise, then
and in each such event the holder of each share of Preferred Stock shall have
the right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification or other change, by holders of the number of shares of Common
Stock into which such shares of Preferred Stock might have been converted
immediately prior to such reorganization, reclassification or change, all
subject to further adjustment as provided herein.
(i) If at any time or from time to time there shall be a
capital reorganization of the Common Stock or a merger or consolidation of the
Corporation with or into another Corporation or the sale of all or substantially
all of the Corporation's properties and assets to any other person, then, as a
part of and as a condition to the effectiveness of such reorganization, merger,
consolidation or sale, lawful and adequate provision shall be made so that the
holders of the Preferred Stock shall thereafter be entitled to receive upon
conversion of the Preferred Stock the number of shares of stock or other
securities or property of the Corporation or of the successor Corporation
resulting from such merger or consolidation or sale, to which a holder of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization, merger, consolidation, or sale. In any such case, appropriate
provisions shall be made with respect to the rights of the holders of the
Preferred Stock after the reorganization, merger, consolidation or sale to the
end that the provisions of this Section 5 (including without limitation
provisions for adjustment of the Applicable Conversion Value and the number of
shares purchasable upon conversion of the Preferred Stock) shall thereafter be
applicable, as nearly as may be, with respect to any shares of stock, securities
or assets to be deliverable thereafter upon the conversion of the Preferred
Stock.
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Each holder of Preferred Stock upon the occurrence of a capital
reorganization, merger or consolidation of the Corporation or the sale of all or
substantially all its assets and properties as such events are more fully set
forth in the first paragraph of this Section 5(h), shall have the option of (i)
receiving the Liquidation Preference or (ii) electing treatment of its shares of
Preferred Stock under the preceding paragraph of this Section 5(h), notice of
which election shall be submitted in writing to the Corporation at its principal
offices no later than ten (10) days before the effective date of such event,
provided that any such notice shall be effective if given not later than fifteen
(15) days after the date of the Corporation's notice, pursuant to Section 8,
with respect to such event.
(j) In each case of an adjustment or readjustment of the
Applicable Conversion Rate, the Corporation will furnish each holder of
Preferred Stock with a certificate, prepared by the chief financial officer of
the Corporation, showing such adjustment or readjustment, and stating in detail
the facts upon which such adjustment or readjustment is based.
(k) To exercise its conversion privilege as provided in
Section 5(a) above, a holder of Preferred Stock shall surrender the certificate
or certificates representing the shares being converted to the Corporation at
its principal office, and shall give written notice to the Corporation at that
office that such holder elects to convert such shares. Such notice shall also
state the name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock issuable upon such conversion shall be
issued. The certificate or certificates for shares of Preferred Stock
surrendered for conversion shall be accompanied by proper assignment thereof to
the Corporation or in blank. The date when such written notice is received by
the Corporation together with the certificate or certificates representing the
shares of Preferred Stock being converted, shall be the "Conversion Date." As
promptly as practicable after the Conversion Date, the Corporation shall issue
and shall deliver to the holder of the shares of Preferred Stock being
converted, or on its written order, a certificate or certificates as it may
request for the number of full shares of Common Stock issuable upon the
conversion of such shares of Preferred Stock in accordance with the provisions
of this Section 5 and cash as provided in Section 5(k), in respect of any
fraction of a share of Common Stock issuable upon such conversion. Such
conversion shall be deemed to have been effected immediately prior to the close
of business on the Conversion Date, and at such time the rights of the holder as
holder of the converted shares of Preferred Stock shall cease and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of shares of Common Stock represented
thereby.
(l) No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of Preferred Stock. Instead of
any fractional shares of Common Stock which would otherwise be issuable upon
conversion of Preferred Stock, the Corporation shall pay to the holder of the
shares of Preferred Stock which were converted a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the market price per
share of the Common Stock (as determined in a manner prescribed by the Board of
Directors) at the close of business on the Conversion Date.
(m) In the event some but not all of the shares of Preferred
Stock represented by a certificate or certificates surrendered by a holder are
converted, the Corporation shall execute and deliver to or on the order of the
holder, at the expense of the Corporation, a new certificate representing the
number of shares of Preferred Stock which were not converted.
(n) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of the Preferred Stock,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Preferred
Stock, and if at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares of the Preferred Stock, the Corporation shall take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
9
<PAGE>
A. Redemption.
1. Call Redemption. If any shares of
Preferred Stock shall be outstanding on June 26, 2002, the Corporation may
redeem, at the option of the Corporation in its sole discretion,to the extent it
has funds legally available therefor, at any time or from timeto time, in whole
or in part, shares of Preferred Stock (a "Call Redemption") at a price per share
equal to the Liquidation Preference plus any accrued and unpaid dividends
with respect to such shares to which the holders of the Preferred Stock
have become entitled (the "Redemption Price"). With respect to any Call
Redemption of fewer than all of the outstanding shares of Preferred Stock,
the number of shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be selected pro rata.
1. Notice of Call Redemption. Notice of any Call
Redemption of shares of Preferred Stock, specifying the time and place of
redemption and the Redemption Price (a "Redemption Notice"), shall be sent
by overnight delivery service to each holder of Preferred Stock to be redeemed,
at the address for such holder shown on the Corporation's record not more than
sixty (60) nor less than thirty (30) days prior to the Redemption Date
(as hereinafter defined). If less than all the shares of Preferred Stock
owned by such holder are then to be redeemed, the Redemption Notice shall
also specify the number of shares which are to be redeemed; provided,
however, that no failure to given such Redemption Notice nor any defect therein
shall affect the validity of the procedure for the redemption of any shares of
Preferred Stock to be redeemed except as to the holder to whom the Corporation
has failed to give said Redemption Notice or except as to the holder whose
Redemption Notice was defective. Each such Redemption Notice shall state:
(i) the Redemption Date (as hereinafter defined); (ii) the Redemption
Price (as hereinafter defined); (iii) the number of shares of Preferred Stock to
be redeemed and, if fewer than all the shares of Preferred Stock held by a
holder are to be redeemed, the number of shares thereof to be redeemed from such
holder; (iv) the manner and place or places at which payment for the shares of
Preferred Stock offered for redemption will be made, presentation and surrender
to the Corporation of the certificates evidencing the shares being redeemed; (v)
that dividends on the shares of Preferred Stock being redeemed shall cease to
accrue on the Redemption Date unless the Corporation defaults in the payment of
the Redemption Price; and (vi) that the rights of holders of Preferred Stock as
stockholder of the Corporation with respect to shares being redeemed shall
terminate as of the Redemption Date unless the Corporation defaults in the
payment of the Redemption Price. Upon mailing any such Redemption Notice, the
Corporation shall become obligated to redeem at the Redemption Price on the
applicable Redemption Date all shares of Preferred Stock therein specified.
1. Redemption Date. The Corporation shall fix the
date for a Call Redemption (the "Redemption Date") no earlier than thirty
(30) but not more than sixty (60) days after the Redemption Notice is sent as
set forth in Section 6(b) hereof.
1. Payment and Surrender. On any Redemption Date,
the full Redemption Price shall become payable in cash for the shares of
Preferred Stock being redeemed on such Redemption Date. As a condition of
payment of the Redemption Price, each holder of Preferred Stock must
surrender the certificate or certificates representing the shares of Preferred
Stock being redeemed to the Corporation in the manner and at the place
designated in the Redemption Notice or in the event such certificate or
certificates have been lost, stolen or destroyed, must execute an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection therewith. Each surrendered certificate shall be
canceled and retired. All redemption payments will be made to the holders of the
shares being redeemed.
1. Termination. On any Redemption Date, unless
the Corporation defaults in the payment in full of the Redemption Price,
dividends on the Preferred Stock redeemed shall cease to accumulate, and all
rights of holders of such redeemed shares shall terminate, except for the right
to receive the Redemption Price.
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<PAGE>
7. Restrictions and Limitations.
(a) Corporate Action. Except as expressly provided herein or
as required by law, so long as any shares of Preferred Stock remain outstanding,
the Corporation shall not without the approval by vote or written consent (which
written consent need not be unanimous) by the holders of at least fifty-one
percent (51%) of the then outstanding shares of Preferred Stock, voting as a
separate class:
(i) authorize or issue, or obligate itself to
authorize or issue, any equity security senior to or on parity with the
Preferred Stock as to liquidation preferences, dividend rights, redemption
rights or voting rights (except for common stock as to voting rights);
(ii) merge or consolidate with any other
corporation, or sell, assign, lease or otherwise dispose of or voluntarily part
with the control of (whether in one transaction or in a series of transactions)
all, or substantially all, of its assets (whether now owned or hereinafter
acquired), or consent to any liquidation, dissolution, winding up,
reorganization or recapitalization of the Corporation, or permit any subsidiary
to do any of the foregoing, except for (1) any wholly-owned subsidiary may merge
into or consolidate with or transfer assets to any other wholly-owned
subsidiary, and (2) any wholly-owned subsidiary may merge into or transfer
assets to the Corporation; or
(iii) amend, restate, modify or alter the by-laws of
the Corporation in any way which adversely affects the rights of the holders of
the Preferred Stock;
(b) Amendments to Charter. The Corporation shall not amend its
Articles of Incorporation without the approval, by vote or written consent
(which written consent need not be unanimous), by the holders of at least sixty
percent (60%) of the then outstanding shares of Preferred Stock, if such
amendment would adversely affect any of the rights, preferences, privileges of
or limitations provided for herein for the benefit of any shares of Preferred
Stock. Without limiting the generality of the preceding sentence, the
Corporation will not amend its Articles of Incorporation without the approval by
the holders of at least sixty percent (60%) of the then outstanding shares of
Preferred Stock if such amendment would:
(i) change the relative seniority rights of the
holders of Preferred Stock as to the payment of dividends in relation to the
holders of any other capital stock of the Corporation, or create any other
class or series of capital stock entitled to seniority as to the payment of
dividends in relation to the holders of Preferred Stock;
(ii) reduce the amount payable to the holders of
Preferred Stock upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, or change the relative seniority of the
liquidation preferences of the holders of Preferred Stock to the rights upon
liquidation of the holders of other capital stock of the Corporation, or
change the dividend rights of the holders of Preferred Stock;
(iii) cancel or modify the rights of the holders of the
Preferred Stock provided for in this Section 7.
8. Preemptive Rights
8.1 Right of Purchase. The Company grants to each holder of Preferred
Stock, so long as such holder shall own, of record or beneficially, or have the
right to acquire from the Corporation, any Preferred Stock, the right to
purchase all or part of his or its Pro Rata Share of New Securities offered by
the Corporation, which right shall expire before and shall not apply in
connection with any registered underwritten public offering by the Corporation
of the Corporation's securities. For purposes of this preemptive right, the term
"Pro Rata Share" shall mean the ratio of the number of shares of the
Corporation's Common Stock into which such holder's Preferred Stock is
convertible to the total number of shares of Common Stock then outstanding
(including Common Stock issuable upon the conversion of all the outstanding
Preferred Stock).
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8.2 Definition of New Securities. "New Securities" shall mean any equity
securities of the Corporation, whether now authorized or not, and rights,
options, or warrants to purchase said equity securities, and securities of any
type whatsoever that are, or may become, convertible into said equity
securities; provided, however, that "New Securities" does not include (i)
securities offered to the public pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended ("Securities Act"); (ii)
securities issued pursuant to the acquisition of another corporation by the
Corporation by merger, purchase of substantially all of the assets, or other
reorganization whereby the Corporation acquires not less than 51% of the voting
power of such corporation; (iii) securities issued or issuable upon conversion
of any convertible securities or warrants issued by the Corporation and
outstanding as of June 26, 1997; (iv) any stock options issued to officers,
directors, employees or consultants of the Corporation and securities issuable
upon exercise thereof, provided that the aggregate amount of stock reserved for
issuance of such stock options shall not exceed fifteen percent (15%) of the
issued and outstanding Common Stock of the Corporation; or (v) Preferred Stock
issued after the date hereof and on or before June 30, 1997, provided that the
aggregate amount of such Preferred Stock does not exceed $5,000,000.
8.3 Notice from the Corporation. In the event the Corporation proposes
to undertake an issuance of New Securities, it shall give each holder of
Preferred Stock written notice of its intention, describing the type of New
Securities and the price and the terms upon which the Corporation proposes to
issue the same. Each holder of Preferred Stock shall have ten (10) business days
from the date of receipt of any such notice to agree to purchase up to their Pro
Rata Share of such New Securities for the price and upon the terms specified in
the notice by giving written notice to the Corporation and stating therein the
quantity of New Securities to be purchased.
8.4 Sale by the Corporation. In the event any holder of Preferred Stock
fails to exercise in full his or its preemptive right, the Corporation shall
have 60 days thereafter to sell the New Securities with respect to which such
holder's option was not exercised, at a price and upon terms no more favorable
to the purchasers thereof than specified in the Corporation's notice. To the
extent the Corporation does not sell all the New Securities offered within said
60 day period, the Corporation shall not thereafter issue or sell such New
Securities without first again offering such securities to the holders of
Preferred Stock in the manner provided above.
9. No Reissuance of Preferred Stock. No share or shares of the Preferred
Stock acquired by the Corporation by reason of redemption, purchase, conversion
or otherwise shall be reissued, and all such shares shall be canceled, retired,
and eliminated from the shares which the Corporation shall be authorized to
issue. The Corporation may from time to time take such appropriate corporate
action as may be necessary to reduce the authorized number of shares of the
Preferred Stock accordingly.
10. Notices of Record Date. In the event (i) the Corporation establishes
a record date to determine the holders of any class of securities who are
entitled to receive any dividend or other distribution, or (ii) there occurs any
capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any merger or
consolidation of the Corporation, and any transfer of all or substantially all
of the assets of the Corporation to any other Corporation, or any other entity
or person, or any voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, the Corporation shall mail to each holder of Preferred
Stock at least twenty (20) days prior to the record date specified therein, a
notice specifying (a) the date of such record date for the purpose of such
dividend or distribution and a description of such dividend or distribution, (b)
the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, and (c) the time, if any, that is to be fixed, as to when the
holders of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other securities) for securities or
other property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up.
11. Other Rights. Except as otherwise provided in this resolution or as
otherwise may be required by law, each share of Preferred Stock and each share
of Common Stock shall be identical in all respects, shall have the same powers,
preferences and rights, without preference of any such class or share over any
other such class or share, and shall be treated as a single class of stock for
all purposes.
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IN WITNESS WHEREOF, BioSafe International, Inc. has caused this
certificate to be executed under seal by Philip Strauss, its President, and
Robert Rivkin, its Secretary, this 25th day of June, 1997.
By:
Philip Strauss
President
By:
Robert Rivkin
Secretary
State of )
) ss:
County of )
)
On ___________________ personally appeared before me, a Notary Public,
Philip Strauss and Robert Rivkin, who acknowledges that they executed the above
instrument.
Notary Public
My commission expires:
(SEAL)
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