SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Paracelsian, Inc.
(Name of Issuer)
CUSIP No. 698898103
Biomar International, Inc.
Nelson Campbell
100 Europa Drive
Suite 599
Chapel Hill, North Carolina 27514
Telephone No. 919-933-2021
(Name, address and telephone number of person authorized to
receive notices and communications)
Copy to:
Ronald D. Raxter
The Sanford Holshouser Law Firm PLLC
234 Fayetteville Street
Suite 100
Raleigh, North Carolina 27601
January 14, 1998
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this
schedule because of Rule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4),
check the following box [ ].
Check the following box if
a fee is being paid
with this statement [ ].
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CUSIP NO. 698898103 PAGE 2 OF 6
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(1) NAME OF REPORTING PERSONS.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Biomar International, Inc.
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS* BK
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
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(6) CITIZENSHIP OF PLACE OF ORGANIZATION
Delaware
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NUMBER OF (7) SOLE VOTING POWER
3,571,429
SHARES --------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
4,113,764
OWNED BY --------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER
3,571,429
REPORTING --------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER
4,113,764
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CUSIP NO. 698898103 PAGE 3 OF 6
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
4,113,764
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
[ ] CERTAIN SHARES*
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
--------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO
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(1) NAME OF REPORTING PERSONS.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
T. Nelson Campbell
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS* BK
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
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CUSIP NO. 698898103 PAGE 4 OF 6
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(6) CITIZENSHIP OF PLACE OF ORGANIZATION
United States
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NUMBER OF (7) SOLE VOTING POWER
284,750
SHARES --------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
3,571,429
OWNED BY --------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER
284,750
REPORTING --------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER
3,571,429
--------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,856,179
--------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
[ ] CERTAIN SHARES*
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
--------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
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<PAGE>
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CUSIP NO. 698898103 PAGE 5 OF 6
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(1) NAME OF REPORTING PERSONS.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
T. Colin Campbell
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS* BK
-----------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
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(6) CITIZENSHIP OF PLACE OF ORGANIZATION
United States
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NUMBER OF (7) SOLE VOTING POWER
111,667
SHARES --------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
3,717,347
OWNED BY --------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER
111,667
REPORTING --------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER
3,717,347
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<PAGE>
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CUSIP NO. 698898103 PAGE 6 OF 6
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,829,014
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
[ ] CERTAIN SHARES*
--------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
--------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
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<PAGE>
Item 1. Security and Issuer
The reporting persons acquired the Common Stock of Paracelsian, Inc.
("Paracelsian"), par value $0.01 per share. Principal address is: 222 Langmuir
Laboratories, Cornell Technology Park, Ithaca, New York 14850.
Item 2. Identity and Background
The reporting persons are Biomar International, Inc. ("Biomar"), 100
Europa Drive, Suite 599, Chapel Hill, North Carolina 27514 and its two principal
shareholders:
T. Colin Campbell - Professor of Nutritional Sciences, Cornell
University, Ithaca, NY
26 Beckett Way
Ithaca, New York 14850
T. Nelson Campbell - Chairman and Executive Vice President, Biomar
International, Inc.,
Chapel Hill, North Carolina
100 Europa Drive, Suite 599
Chapel Hill, North Carolina 27514
(d) None.
(e) None.
(f) United States.
Item 3. Source and Amount of Funds or Other Consideration
The source of the $500,000 consideration used by Biomar to acquire the
common stock of Paracelsian was a line of credit made in the ordinary course of
business by a financial institution.
Item 4. Purpose of Transaction
The purpose of the transaction is for Biomar to acquire control of
Paracelsian in an attempt to restore shareholder value. Under the Stock Purchase
Agreement, Biomar also received warrants to purchase up to an additional
$520,000 in common stock, in increments of at least $100,000, at a per share
price equal to $0.175. The Purchase Agreement also provided for the resignation
of the Board of Directors serving on January 14, 1998 and the appointment of
Biomar's nominees to the Board of Directors of the Corporation (the "Board").
Effective on January 14, 1998, all of the Board members other than the Chairman,
Mr. Theodore P. Nikolis, resigned immediately and T. Nelson Campbell, the
chairman of the board of directors of Biomar, was appointed to the Board. Upon
satisfaction of the requirements of the SEC rules for the appointment of
Biomar's nominees, Mr. Nikolis will also resign as a director of the
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Corporation.
Item 5. Interest in Securities of the Issuer
See responses (7) through (11) on the cover page.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer
Thomas D. Livingston, an officer of Biomar, will be granted 200,000
shares of the Common Stock and Thomas H. Evans, an employee of Biomar, will be
granted 50,000 shares of the Common Stock. Sylvestor Johnson IV will also be
granted 2,997 shares of the Common Stock.
Item 7. Material to be Filed as Exhibits
Stock Purchase Agreement dated January 14, 1998.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 26, 1998 /s/ T. NELSON CAMPBELL
----------------------
T. Nelson Campbell
/s/ T. COLIN CAMPBELL
----------------------
T. Colin Campbell
Biomar International, Inc
BY: /s/ T. NELSON CAMPBELL
---------------------------
T. Nelson Campbell
Chairman of the Board
<PAGE>
EXHIBIT INDEX
Exhibit 1 Stock Purchase Agreement dated January 14, 1998.
STOCK PURCHASE AGREEMENT
This Agreement ("Agreement") is entered into this 14th day of January,
1998, by and between Biomar International, Inc., a Delaware corporation with its
principal offices in Chapel Hill, North Carolina (the "Purchaser") and
Paracelsian, Inc., a Delaware corporation with its principal offices in New York
(the "Corporation").
WHEREAS, the Purchaser desires to purchase from the Corporation
3,571,429 newly issued shares of the common stock of the Corporation (the
"Shares") on the terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Corporation, due to the
financial condition of the Corporation, desires to sell to the Purchaser the
Shares on the terms and subject to the conditions set forth herein.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
SECTION 1. PURCHASE OF SHARES.
1.1 PURCHASE OF SHARES. Subject to the terms and conditions set forth
herein, on or before January 15, 1998 (the "Purchase Date"), the Purchaser will
purchase 3,571,429 Shares and the Corporation will issue the Shares purchased by
the Purchaser, said Shares constituting approximately thirty percent (30%) of
all of the then issued and outstanding capital stock of the Corporation as of
the Purchase Date. On the Closing Date (as hereinafter defined) the Purchaser
will also receive warrants to purchase up to an additional $520,000 in common
stock, in increments of at least $100,000, at a per share price equal to $0.175
(the "Warrants"). The Warrants are in the form attached as Exhibit 1.1A and will
be exercisable at any time prior to their expiration which will occur 90 days
from the date the Shares and Warrants are registered with the Securities and
Exchange Commission ("SEC") as provided under the Registration Rights Agreement
in the form attached as Exhibit 1.1B. To the extent that the exercise of the
Warrants will require an increase in the number of authorized shares, the
Corporation will use its best efforts to obtain shareholder approval of an
increase in the authorized shares sufficient to accommodate issuance of the
shares under the Warrant.
1.2 PURCHASE PRICE. The Purchaser will pay to the Corporation the sum
of five hundred thousand dollars ($500,000) for the Shares (referred herein to
as the "Purchase Price").
1.3 PAYMENT OF PURCHASE PRICE. The Purchase Price will be paid as
follows: (i) the Purchaser will pay to the Corporation the sum of fifty thousand
dollars ($50,000) on the Closing Date; and (ii) the Purchaser will deliver the
sum of four hundred and fifty thousand dollars ($450,000) on the Purchase Date.
<PAGE>
SECTION 2. REPRESENTATIONS AND WARRANTIES OF CORPORATION. As a material
inducement to the Purchaser to enter into this Agreement and purchase the
Shares, the Corporation represents and warrants that to the best of the
knowledge of the Corporation:
2.1 ORGANIZATION AND CORPORATE POWER. The Corporation is a corporation
duly incorporated and validly existing under the laws of the State of Delaware
and the Corporation is qualified to do business in every jurisdiction in which
its ownership of property or conduct of business requires it to qualify, except
where any failure does not have a material adverse effect on the Corporation.
The Corporation has all requisite corporate power and authority and all material
licenses, permits, and authorizations necessary to own and operate its
properties and to carry on its business as now conducted, except where any
failure does not have a material adverse effect on the Corporation. The copies
of the Corporation's articles of incorporation and bylaws have been furnished to
the Purchaser and such copies reflect all amendments made thereto at any time
prior to the date of this Agreement and such copies are correct and complete.
2.2 CAPITAL STOCK AND RELATED MATTERS. (a) The authorized capital stock
of the Corporation consists of twenty million (20,000,000) Shares, twelve
million, four thousand, eight hundred and sixty seven (12,004,867) of which are
issued and outstanding and are owned, of record, as shown on the books of the
Corporation on December 31, 1997 and no other shares, common or otherwise, of
the Corporation are issued and outstanding. Except as listed on Schedule 2.2,
the Corporation does not have outstanding and has not agreed, orally or in
writing, to issue any shares or securities convertible or exchangeable for any
shares, nor does it have outstanding nor has it agreed, orally or in writing, to
issue any options or rights to purchase or otherwise acquire its shares. The
Corporation is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any of its shares. Except as listed on
Schedule 2.2, the Corporation has not violated any applicable securities laws or
regulations in connection with the offer or sale of its securities other than
violations that have been, or will before the Closing have been, corrected by
post-issuance filings. All of the outstanding shares of the Corporation's
capital stock are validly issued, fully paid, and nonassessable. Upon purchase
thereof pursuant to the terms of this Agreement, the Purchaser will have, good
and marketable title to the Shares, free and clear of all security interests,
liens, encumbrances, or other restrictions or claims, subject only to
restrictions as to marketability imposed by securities laws. Assuming that the
representations in Section 3.6 are true and correct, the Corporation has not
violated or will not violate any applicable securities laws in connection with
the offer or sale of the Shares to the Purchaser hereunder. (b) Except as noted
on Schedule 2.2 or where the failure to file would not have had or could not
have a material and adverse effect on the Corporation, the Corporation has filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that were required to be filed with the SEC or
any other governmental or regulatory authorities having jurisdiction over the
Corporation. All such reports, registrations and statements filed by the
Corporation with the SEC or other such regulatory authority are collectively
referred to herein as the "Reports." As of their respective dates, each Report
complied in all material respects with all the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which it was filed and
did not contain any untrue
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<PAGE>
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Corporation has
not been notified that any such Report was deficient in any material respect as
to form or content.
2.3 SUBSIDIARIES. The Corporation has no operating subsidiaries or
affiliated companies and does not otherwise own or control, directly or
indirectly, any equity interest in any operating corporation or entity.
2.4 CONDUCT OF BUSINESS; LIABILITIES. Except as set forth in Schedule
2.4, the Corporation is not in default under, and no condition exists that with
notice or lapse of time would constitute a default of the Corporation under (i)
any mortgage, loan agreement, evidence of indebtedness, or other instrument
evidencing borrowed money to which the Corporation is a party or by which the
Corporation or the properties of the Corporation are bound or (ii) any judgment,
order, or injunction of any court, arbitrator, or governmental agency that would
reasonably be expected to affect materially and adversely the business,
financial condition, or results of operations of the Corporation taken as a
whole.
2.5 FINANCIAL STATEMENTS. (a) The audited balance sheet and income
statement of the Corporation as of the 30th day of September, 1997, in the form
attached to this Agreement as Exhibit 2.5(A) and the income statement for the
period ending the 30th day of September, 1997, in the form attached to this
Agreement as Exhibit 2.5(B) (collectively the "Audited Financial Statements"),
fairly presents in all material respects the financial position of the
Corporation as of the 30th day of September, 1997 and has been prepared in
accordance with generally accepted accounting principles, consistently applied,
and in a manner substantially consistent with prior financial statements of the
Corporation. The latest unaudited, balance sheet and income statement of the
Corporation as of the 31st day of December, 1997 and for the month then ended,
in the form attached hereto as Exhibit 2.5(C) ("Latest Financial Statements"),
fairly presents in all material respects the financial position of the
Corporation as of the 31st day of December, 1997 and the results of operations
for the one month then ended and have been prepared in accordance with generally
accepted accounting principles consistently applied and in a manner
substantially consistent with the Audited Financial Statements, except for
differences resulting from normally occurring audit adjustments, including, but
not limited to, income tax and tax accrual adjustments, or as noted in the
Latest Financial Statements or the notes thereto. Except as contemplated by or
permitted under this Agreement, there are no adjustments that would be required
on review of the Latest Financial Statements that would, individually or in the
aggregate, have a material negative effect upon the Corporation's reported
financial condition. (b) The audited balance sheet of the Corporation as of the
30th day of September, 1997, reflects a tangible book value of not less than two
million two hundred thousand dollars ($2,200,000). The unaudited financial
statements of the Corporation as of November 30, 1997, reflect not less than
$500,000 in cash and cash equivalents and no more than $275,000 in payables
(excluding any contingent liabilities arising out of any lawsuits which have
been
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<PAGE>
disclosed in the filings made with the SEC), obligations and other liabilities.
Monthly, recurring operational expenses of the Corporation do not exceed
$75,000.
2.6 NO UNDISCLOSED LIABILITIES. Except for (i) liabilities and
obligations incurred in the ordinary course of business since the 31st day of
December, 1997 ("Statement Date"), and (ii) liabilities or obligations described
in Schedule 2.6, neither the Corporation nor any of the property of the
Corporation is subject to any material liability or obligation that was required
to be included or adequately reserved against in the Latest Financial Statements
or described in the notes thereto and was not so included, reserved against, or
described.
2.7 ABSENCE OF CERTAIN CHANGES. Except as contemplated or permitted by
this Agreement or as described in Schedule 2.7, since the Statement Date there
has not been:
2.7.1 Any material adverse change in the business, financial condition,
operations, or assets of the Corporation;
2.7.2 Any damage, destruction, or loss, whether covered by insurance or
not materially adversely affecting the properties or business of the
Corporation;
2.7.3 Any sale or transfer by the Corporation of any tangible or
intangible asset other than in the ordinary course of business, any mortgage or
pledge or the creation of any security interest, lien, or encumbrance on any
such asset, or any lease of property, including equipment, other than tax liens
with respect to taxes not yet due and contract rights of customers in inventory;
2.7.4 Any declaration, setting aside, or payment of a distribution in
respect of or the redemption or other repurchase by the Corporation of any stock
of the Corporation;
2.7.5 Any material transaction not in the ordinary course of business
of the Corporation;
2.7.6 The lapse of any material trademark, assumed name, trade name,
service mark, copyright, or license or any application with respect to the
foregoing;
2.7.7 The grant of any increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension,
profit-sharing, or other plan) other than customary increases on a periodic
basis or required by agreement or understanding in the ordinary course of
business and in accordance with past practice;
2.7.8 The discharge or satisfaction of any material lien or encumbrance
or the payment of any material liability other than current liabilities in the
ordinary course of business;
2.7.9 The making of any material loan, advance, or guaranty to or for
the benefit of any person except the creation of accounts receivable in the
ordinary course of business; or
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2.7.10 An agreement to do any of the foregoing.
2.8 TITLE AND RELATED MATTERS. Except as set forth in Schedule 2.8, the
Corporation has good and marketable title to all of its property, real and
personal, and other assets included in the Latest Financial Statements (except
properties and assets sold or otherwise disposed of subsequent to the Statement
Date in the ordinary course of business or as contemplated in this Agreement),
free and clear of all security interests, mortgages, liens, pledges, charges,
claims, or encumbrances of any kind or character, except (i) statutory liens for
property taxes not yet delinquent or payable subsequent to the date of this
Agreement and statutory or common law liens securing the payment or performance
of any obligation of the Corporation, the payment or performance of which is not
delinquent, or that is payable without interest or penalty subsequent to the
date on which this representation is given, or the validity of which is being
contested in good faith by the Corporation; (ii) the rights of customers of the
Corporation with respect to inventory under orders or contracts entered into by
the Corporation in the ordinary course of business; (iii) claims, easements,
liens, and other encumbrances of record pursuant to filings under real property
recording statutes; and (iv) as described in the Unaudited Statements or the
notes thereto.
2.9 LITIGATION. Except as set forth in Schedule 2.9, there are no
material actions, suits, proceedings, orders, investigations, or claims pending
or, to the best of the Corporation's knowledge, overtly threatened against the
Corporation or any of its property, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency, or instrumentality;
the Corporation is not subject to any arbitration proceedings under collective
bargaining agreements or otherwise or, to the best of the Corporation's
knowledge, any governmental investigations or inquiries; and the Corporation has
received in writing no threat of any of the foregoing.
2.10 TAX MATTERS. Except as set forth on Schedule 2.10, (i) the
Corporation has prepared in a substantially correct manner and has filed all
federal, state, local, and foreign tax returns and reports heretofore required
to be filed by them and have paid all taxes shown as due thereon; and (ii) no
taxing authority has asserted any deficiency in the payment of any tax or
informed the Corporation that it intends to assert any such deficiency or to
make any audit or other investigation of the Corporation for the purpose of
determining whether such a deficiency should be asserted against the
Corporation.
2.11 COMPLIANCE WITH LAWS. Except as listed on Schedule 2.11, the
Corporation is, in the conduct of its business, in substantial compliance with
all laws, statutes, ordinances, regulations, orders, judgments, or decrees
applicable to them, the enforcement of which, if the Corporation was not in
compliance therewith, would have a materially adverse effect on the business of
the Corporation, taken as a whole. The Corporation has received no notice of any
asserted present or past failure by the Corporation to comply with such laws,
statutes, ordinances, regulations, orders, judgments, or decrees.
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<PAGE>
2.12 NO BROKERS OR FINDERS. There are no claims for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Corporation.
2.13 INSURANCE. Schedule 2.13 contains a list of each insurance policy
maintained by the Corporation with respect to its properties, assets, and
businesses, and each such policy is in full force and effect. The Corporation is
not in material default with respect to its obligations under any such policy
maintained by it. The Corporation has not been notified of the cancellation of
any of the insurance policies listed on Schedule 2.13 or of any material
increase in the premiums to be charged for such insurance policies.
2.14 EMPLOYEES AND LABOR RELATIONS MATTERS. Except as set forth in
Schedule 2.14 or as provided in this Agreement, no employee or former employee
of the Corporation is in violation of any material term of any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of such employee with the Corporation or any other
party because of the nature of the business conducted or to be conducted by the
Corporation. Each employee or former employee of the Corporation with access to
confidential or proprietary information has executed, or in the ordinary course
will execute, a proprietary information agreement obligating such employee to
hold confidential the Corporation's proprietary information. The Corporation has
in all material respects complied with all applicable state and federal laws
related to employment.
2.15 DISCLOSURE. Neither this Agreement nor any of the schedules,
attachments, written statements, documents, certificates, or other items
prepared or supplied to the Purchaser by or on behalf of the Corporation with
respect to this purchase contain any untrue statement of a material fact or omit
a material fact necessary to make each statement contained herein or therein not
misleading. The Corporation has not intentionally concealed any fact known to
have a material adverse effect upon the Corporation's existing or expected
financial condition, operating results, assets, customer relations, employee
relations, or business prospects taken as a whole.
2.16 POWER OF ATTORNEY. No material power of attorney or similar
authorization given by the Corporation is presently in effect.
2.17 ACCOUNTS RECEIVABLE. All accounts receivable of the Corporation
reflected in the Latest Financial Statements represent bona fide sales actually
made in the ordinary course of business.
2.18 AGREEMENTS AND COMMITMENTS. Schedule 2.18 contains a complete and
accurate list of each agreement, contract, instrument, and commitment (including
license agreements) to which the Corporation is a party that provides for
payments in excess of $10,000 per year or whose term is in excess of one year
and is not cancelable upon 30 or fewer days' notice without any liability,
penalty, or premium, other than a nominal cancellation fee or charge ("Third
Party Agreements"). Except as otherwise set forth in Schedule 2.18, the
Corporation is not in material default under any Third Party Agreements, nor, to
the Corporation's best knowledge, does there
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exist any event that, with notice or the passage of time or both, would
constitute a material default or event of default by the Corporation under any
Third Party Agreements.
2.19 PERSONAL PROPERTY. Without material exception, Schedule 2.19
contains lists of all tangible personal property and assets owned or held by the
Corporation and used or useful in the conduct of the business of the
Corporation. Except as set forth in Schedule 2.19, the Corporation owns and has
good title to such properties and none of such properties is subject to any
security interest, mortgage, pledge, conditional sales agreement, or other lien
or encumbrance (except for liens for current taxes, assessments, charges, or
other governmental levies not yet due and payable). The Corporation has
delivered to the Purchaser copies of all leases and other agreements relating to
property described in Schedule 2.19 (including any and all amendments and other
modifications to such leases and other agreements) all of which are valid and
binding, and the Corporation is not in material default under any such leases or
agreements. Except as set forth in Schedule 2.19 and to the best of the
Corporation's knowledge, all material properties listed therein are generally in
good operating condition and repair (ordinary wear and tear excepted), are
performing satisfactorily, and are available for immediate use in the conduct of
the business and operations of the Corporation. To the best of the Corporation's
knowledge, all such tangible personal property is in compliance in all material
respects with all applicable statutes, ordinances, rules, and regulations. The
properties listed in Schedule 2.19 include substantially all such properties
necessary to conduct the business and operations of the Corporation as now
conducted.
2.20 INTELLECTUAL PROPERTY. The Corporation (i) owns or has the right
to use, free and clear of all liens, charges, claims and restrictions, those
patents, trademarks, service marks, trade names, copyrights, licenses, and other
intellectual property rights necessary for the operation of its businesses now
conducted or presently proposed to be conducted, and (ii) to its knowledge, and
except for the payments required in connection with those patents, trademarks,
service marks, trade names, copyrights, licenses and other intellectual property
rights listed on Schedule 2.20, is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to any
owner or licensee of, or other claimant to, any patent, trademark, service mark,
trade name, copyright or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business or otherwise. To the knowledge
of the Corporation, the Corporation has not infringed upon nor is it infringing
upon any patent, trademark, service mark, trade name, copyright or other
intellectual property of any third party. The Corporation is not aware of any
violation by a third party of any of the Corporation's patents, licenses,
trademarks, service marks, trade names, copyrights, trade secrets or other
proprietary rights.
2.21 ERISA AND RELATED MATTERS Schedule 2.21 sets forth a description
of all "Employee Welfare Benefit Plans" and "Employee Pension Benefit Plans" (as
defined in ss.ss. 3(1) and 3(2), respectively, of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) existing on the date hereof that are
or have been maintained or contributed to by the Corporation. Except as listed
on Schedule 2.21, the Corporation does not maintain any retirement or deferred
compensation plan, savings, incentive, stock option or stock purchase
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plan, unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other fringe
benefit arrangement for any employee, consultant or agent of the Corporation,
whether pursuant to contract, arrangement, custom or informal understanding,
which does not constitute an "Employee Benefit Plan" (as defined in ss. 3(3) of
ERISA), for which the Corporation may have any ongoing material liability after
Closing. The Corporation does not maintain nor has it ever contributed to any
Multiemployer Plan as defined by ss. 3(37) of ERISA. The Corporation does not
currently maintain any Employee Pension Benefit Plan subject to Title IV of
ERISA. There have been no "prohibited transactions" (as described in ss. 406 of
ERISA or ss. 4975 of the Code) with respect to any Employee Pension Benefit Plan
or Employee Welfare Benefit Plan maintained by the Corporation as to which the
Corporation has been a party. As to any employee pension benefit plan listed on
Schedule 2.21 and subject to Title IV of ERISA, there have been no reportable
events (as such term is defined in ss. 4043 of ERISA).
2.22 OPERATING RIGHTS. The Corporation has all operating authority,
licenses, franchises, permits, certificates, consents, rights and privileges
(collectively "Licenses") as are necessary or appropriate to the operation of
its business as now conducted and which the failure to possess would have a
material adverse effect on the assets, operations or financial condition of the
Corporation. Except where any failure would not have a material adverse effect
on the Corporation, such Licenses are in full force and effect, no violations
have been or are expected to have been recorded in respect of any such licenses,
and no proceeding is pending or, to the knowledge of the Corporation, threatened
that could result in the revocation or limitation of any such licenses. The
Corporation has conducted its business so as to comply in all material respects
with all such Licenses.
2.23 TRANSACTIONS WITH AFFILIATES. Except for regular salary payments
and fringe benefits under an individual's compensation package with the
Corporation, none of the officers, employees, directors, or other affiliates of
the Corporation, or members of their families is a party to any agreements,
understandings, or proposed transactions with the Corporation. The Corporation
has not guaranteed or assumed any obligations of the Corporation's officers,
directors, or employees.
2.24 MINUTE BOOKS. Except as described on Schedule 2.24, the minute
books of the Corporation contain a materially complete summary of all meetings
of directors and shareholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.
2.25 KNOWLEDGE. Notwithstanding anything to the contrary herein, to the
extent that any of the representations and warranties contained in this Section
2 shall have been breached and the fact or facts constituting such breach were
at the date hereof known to T. Colin Campbell and T. Nelson Campbell, then and
in such event, no breach shall be deemed to have occurred.
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<PAGE>
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. As a material
inducement to the Corporation to enter into this Agreement and sell the Shares,
the Purchaser hereby represents and warrants to the Corporation that to the best
of the knowledge of the Purchaser:
3.1 ORGANIZATION; POWER. The Purchaser is a corporation duly
incorporated and validly existing under the laws of the State of Delaware and
has all requisite corporate power and authority to enter into this Agreement and
perform its obligations hereunder.
3.2 AUTHORIZATION. The execution, delivery, and performance by the
Purchaser of this Agreement and all other agreements contemplated hereby to
which the Purchaser is a party have been duly and validly authorized by all
necessary corporate action of the Purchaser, and this Agreement and each such
other agreement, when executed and delivered by the parties thereto, will
constitute the legal, valid, and binding obligation of the Purchaser enforceable
against it in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, and similar statutes affecting creditors'
rights generally and judicial limits on equitable remedies.
3.3 NO CONFLICT WITH OTHER INSTRUMENTS OR AGREEMENTS. The execution,
delivery, and performance by the Purchaser of this Agreement and all other
agreements contemplated hereby to which the Purchaser is a party will not result
in a breach or violation of, or constitute a default under, its Articles of
Incorporation or Bylaws or any material agreement to which the Purchaser is a
party or by which the Purchaser is bound.
3.4 GOVERNMENTAL AUTHORITIES. Except as set forth in Schedule 3.4, (i)
the Purchaser is not required to submit any notice, report, or other filing with
any governmental or regulatory authority in connection with the execution and
delivery by the Purchaser of this Agreement and the consummation of the purchase
and (ii) no consent, approval, or authorization of any governmental or
regulatory authority is required to be obtained by the Purchaser or any
affiliate in connection with the Purchaser's execution, delivery, and
performance of this Agreement and the consummation of this purchase.
3.5 LITIGATION. There are no actions, suits, proceedings, or
governmental investigations or inquiries pending or, to the knowledge of the
Purchaser, threatened against the Purchaser or its properties, assets,
operations, or businesses that might delay, prevent, or hinder the consummation
of this purchase.
3.6 INVESTMENT REPRESENTATIONS
3.6.1 The Purchaser is a corporation in good standing and a
sophisticated investor that has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Corporation so that the Purchaser is capable of evaluating the merits and
risks of the Purchaser's investment in the Corporation and has the capacity to
protect the Purchaser's own interests.
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<PAGE>
3.6.2 The Purchaser is acquiring the Shares for investment for the
Purchaser's own account, not as a nominee or agent, and not with the view to, or
for resale in connection with, any distribution thereof. The Purchaser
understands that the Shares to be purchased have not been registered under the
Securities Act of 1933 ("Securities Act") or the securities laws of any state by
reason of a specific exemption from the registration provisions of the
Securities Act and the applicable state securities laws, the availability of
which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of the Purchaser's representations as expressed herein.
The Purchaser is acquiring the Shares without expectation, desire, or need for
resale and not with the view toward distribution, resale, subdivision, or
fractionalization of the Shares except as provided under the Registration Rights
Agreement.
3.6.3 The Purchaser understands that the Shares to be purchased have
not been registered under Securities Act, or under any state securities law and
will contain a legend to that effect.
3.6.4 The Purchaser understands that the Shares cannot be resold in a
transaction to which the Securities Act and state securities laws apply unless
(i) subsequently registered under the Securities Act and applicable state
securities laws or (ii) exemptions from such registrations are available. The
Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of shares purchased in a private
transaction subject to the satisfaction of certain conditions.
3.7 TAX LIABILITY. To the extent the Purchaser deems necessary, the
Purchaser has reviewed with the Purchaser's own tax advisors the federal, state,
local and foreign tax consequences of this investment and the transactions
contemplated by this Agreement. The Purchaser relies solely on such advisors and
not on any statements or representations of the Corporation or any of its
agents. The Purchaser understands that the Purchaser (and not the Corporation)
shall be responsible for the Purchaser's own tax liability that may arise as a
result of this investment or the transactions contemplated by this Agreement.
3.8 DISCLOSURE. To the Purchaser's knowledge, this Agreement, with the
Exhibits hereto, when taken as a whole, does not contain any untrue statement of
a material fact concerning the Purchaser or omit to state a material fact
necessary in order to make the statements concerning the Purchaser contained
herein not misleading in light of the circumstances under which they were made.
3.9 LITIGATION. There are no actions, suits, proceedings or
investigations pending against the Purchaser or the Purchaser's properties
before any court or governmental agency (nor, to the Purchaser's knowledge, is
there any threat thereof) which would impair in any way the Purchaser's ability
to enter into and fully perform the Purchaser's commitments and obligations
under this Agreement or the transactions contemplated hereby.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of and compliance with this Agreement, and the issuance of shares
will not result in any material
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<PAGE>
violation of, or conflict with, or constitute a material default under, any
Purchaser's articles of incorporation or bylaws or any of the Purchaser's
material agreements nor result in the creation of any mortgage, pledge, lien,
encumbrance or charge against any of the assets or properties of the Corporation
or the Shares.
SECTION 4. COVENANTS OF CORPORATION. The Corporation covenants and
agrees with the Purchaser that upon the reasonable request of the Purchaser
hereto after the Closing, the Corporation will take all action and will execute
all documents and instruments necessary or desirable to consummate and give
effect to this purchase. These include, by way of illustration and not by way of
limitation, the following:
4.1 Various conditions relating to filing, payment, and collecting of
refunds relating to taxes;
4.2 Prompt delivery of Corporate books and records;
4.3 Provisions relating to treatment of confidential proprietary
information obtained in the acquisition process; and
4.4 Dr. Thomas Tachovsky agrees to continue his employment with the
Corporation at not less than his present compensation for at least 30 days after
the Closing Date.
SECTION 5. AGREEMENTS. 5.1 As a material inducement to the Purchaser to
enter into this Agreement and purchase the Shares, the Corporation agrees to:
5.1.1 provide for the resignation of the current Board of Directors and
the appointment of the Purchaser's nominees to the Board of Directors of the
Corporation;
5.1.2 take such actions as are necessary to qualify and facilitate the
issuance of the Shares without a shareholder vote under any applicable law and
the rules and regulations of the applicable Nasdaq market system; and
5.1.3 provide prompt reimbursement by the Corporation to the Purchaser
for all reasonable legal and other out-of-pocket expenses incurred in connection
with the completion of this transaction.
5.1.4 indemnify the Purchaser from and against all losses, claims,
expenses and liabilities arising out of any breach of any representations,
warranties, covenants and agreements made by the Corporation in this Agreement.
Purchaser understands and agrees that the foregoing indemnification is the
Purchaser's sole and exclusive remedy with respect to any breach of any
representations, warranties, covenants and agreements made by the Corporation in
this Agreement, except to the extent such breach could be expected to have a
material adverse effect on the future operations or financial condition of the
Corporation.
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<PAGE>
5.2 As a material inducement to the Corporation to enter into this
Agreement and issue the Shares, the Purchaser agrees to use its best efforts to
cause the Corporation to maintain director and officer liability coverage in
substantially the same amounts and with substantially the same coverages as that
maintained by the Corporation on the Closing Date for at least three years.
SECTION 6. RELEASE. Dr. T. Colin Campbell, a principal in the
Purchaser, agrees not to pursue his claims in C.A. No. 15072 BB in the Court of
Chancery in New Castle County, State of Delaware (the "Lawsuit"). Dr. Campbell
understands that this Agreement is a full and final release of all claims stated
in the Lawsuit, including any claims which he may have or may contend that he
may have, and Dr. Campbell further understands that he is releasing all claims
arising out of or related to the Lawsuit that are known, unknown, suspected and
unsuspected.
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER. Each
and every obligation of the Purchaser under this Agreement is subject to the
condition, at or before the Closing, that the Corporation will have furnished to
the Purchaser a certificate of an officer of the Corporation that its present
legal counsel has been instructed to deliver all files of the Corporation in its
possession to the Purchaser and, to the best of the knowledge of the officer,
all documents of the Corporation have been provided to the Purchaser.
SECTION 8. CLOSING.
8.1 TIME, PLACE, AND MANNER OF CLOSING. The closing ("Closing") will be
held at such time and place as the parties may agree, on January 12, 1998. At
the time of the Closing, the parties to this Agreement will exchange such
instruments and documents in order to determine whether the terms and conditions
of this Agreement have been satisfied. Upon the determination of each party that
its conditions to consummate this purchase have been satisfied or waived, the
Corporation shall deliver to the Purchaser the certificate(s) evidencing the
Shares, and the Purchaser shall deliver to the Corporation the monies referred
to in Section 1.3, in a manner to be agreed upon by the parties. After the
Closing, the Corporation will execute, deliver, and acknowledge all such further
instruments of transfer and conveyance and will perform all such other acts as
the Purchaser may reasonably request to effectively transfer the Shares.
8.2 CONSUMMATION OF CLOSING. All acts, deliveries, and confirmations
comprising the Closing regardless of chronological sequence shall be deemed to
occur contemporaneously and simultaneously upon the occurrence of the last act,
delivery, or confirmation of the Closing and none of such acts, deliveries, or
confirmations shall be effective unless and until the last of the same shall
have occurred. The time of the Closing has been scheduled to correspond with the
close of business at the principal office of the Corporation and, regardless of
when the last act, delivery, or confirmation of the Closing shall take place,
the transfer of the Shares shall be deemed to occur as of the close of business
at the principal office of the Corporation on the date of the Closing.
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<PAGE>
SECTION 10. MISCELLANEOUS PROVISIONS.
10.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified, or supplemented only by a written agreement
signed by the parties.
10.2 WAIVER OF COMPLIANCE; CONSENTS
10.2.1 Any failure of any party to comply with any obligation,
covenant, agreement, or condition herein may be waived by the party entitled to
the performance of such obligation, covenant, or agreement or who has the
benefit of such condition, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement, or condition will not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
10.2.2 Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent will be given in a manner consistent
with the requirements for a waiver of compliance as set forth above.
SECTION 11. WAIVER. Failure of either party at any time to require
performance of any provision of this Agreement shall not limit the party's right
to enforce the provision, nor shall any waiver of any breach of any provision be
a waiver of any succeeding breach of any provision or a waiver of the provision
itself for any other provision.
SECTION 12. LAW GOVERNING. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina.
SECTION 13. ATTORNEY FEES. In the event any suit or action is brought
by any party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the trial court, and/or appellate
court.
SECTION 14. PRESUMPTION. This Agreement or any section thereof shall
not be construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party.
SECTION 15. COMPUTATION OF TIME. In computing any period of time
pursuant to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall be included, unless it is a
Saturday, Sunday, or a legal holiday, in which event the period shall begin to
run on the next day which is not a Saturday, Sunday or a legal holiday, in which
event the period shall run until the end of the next day thereafter which is not
a Saturday, Sunday or legal holiday.
SECTION 15. TITLES AND CAPTIONS. All article, section and paragraph
titles or captions contained in this Agreement are for convenience only and
shall not be deemed part of the context or affect the interpretation of this
Agreement.
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<PAGE>
SECTION 16. PRONOUNS AND PLURALS. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the Person or Persons may require.
SECTION 17. ENTIRE AGREEMENT. This Agreement contains the entire
understanding between and among the parties and supersedes any prior
understandings and agreements among them respecting the subject matter of this
Agreement.
SECTION 18. AGREEMENT BINDING. This Agreement shall not be binding upon
the successors and assigns of the parties hereto.
SECTION 19. FURTHER ACTION. The parties hereto shall execute and
deliver all documents, provide all information and take or forbear from all such
action as may be necessary or appropriate to achieve the purposes of this
Agreement.
SECTION 20. GOOD FAITH, COOPERATION, AND DUE DILIGENCE. The parties
hereto covenant, warrant and represent to each other good faith, complete
cooperation, due diligence and honesty in fact in the performance of all
obligations of the parties pursuant to this Agreement. All promises and
covenants are mutual and dependent.
SECTION 21. COUNTERPARTS. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
SECTION 22. PARTIES IN INTEREST. Nothing herein shall be construed to
be the benefit of any third party, nor is it intended that any provision shall
be for the benefit of any third party.
SECTION 23. SAVINGS CLAUSE. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
[The remainder of this page left blank intentionally.]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
Biomar International, Inc.
By: ______________________
T. Nelson Campbell
Chairman of the Board
Paracelsian, Inc.
By: _________________________________________
Dr. Thomas Tachovsky
President and Chief Executive Officer
Agreed and consented to by:
- - ----------------------------
Dr. T. Colin Campbell
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<PAGE>
PARACELSIAN, INC.
WARRANT CERTIFICATE
JANUARY 14, 1998 2,971,429 WARRANTS
COMMON STOCK PURCHASE WARRANTS
SECTION 1. PURCHASE PRICE AND EXERCISE.
This Certificate certifies that, for value received, Biomar
International, Inc. (the "Purchaser"), is the owner of 2,971,429 Warrants, each
of which Warrants entitles the owner thereof to purchase in increments of at
least one hundred thousand dollars ($100,000)
ONE (1)
fully paid and nonassessable share subject to adjustment as provided in Section
5 of the Common Stock (the "Common Stock"), of Paracelsian, Inc., a Delaware
corporation with its principal office in New York (the "Corporation"), upon
surrender of this Warrant Certificate and payment of the Purchase Price
specified herein, at the principal office of the Corporation.
The purchase price per share (the "Purchase Price") shall initially be
$0.175 per share (the "Initial Purchase Price"), and the number of shares of
Common Stock initially issuable per Warrant shall be one (1) such share, all
subject to adjustment as provided in Section 5.
Warrants may be exercised within 90 days from the date the Common Stock
and these Warrants are registered with the Securities and Exchange Commission
("SEC") as provided under the Registration Rights Agreement between the
Corporation and the Purchaser of even date and are separately transferable, upon
issuance, from shares of Common Stock.
Upon surrender of this Warrant Certificate, and payment of the Purchase
Price, the Corporation shall issue and cause to be delivered to the holder of
this Warrant Certificate a certificate for the number of shares of Common Stock
issuable for the Warrants then being exercised.
Upon any exercise of Warrants evidenced hereby, the form of election to
purchase set forth as Exhibit A shall be properly completed and executed. In the
event that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof a new Warrant Certificate, evidencing
the number of Warrants not exercised.
SECTION 2. TRANSFER.
Upon surrender of this Warrant Certificate and similar Warrant
Certificates at the
<PAGE>
principal office of the transfer agent of the Corporation, by the holder hereof
in person or by an attorney duly authorized in writing, such Warrant
Certificates may be transferred or exchanged in minimum quantities of fifty (50)
Warrants, in the manner provided in this Warrant Certificate and without payment
of any service charge, for another Warrant Certificate or Warrant Certificates
of like tenor, evidencing in the aggregate the number of Warrants evidenced by
the Warrant Certificates so surrendered and registered in the name or names as
requested by the then registered owner thereof or by an attorney duly authorized
in writing. The form of election to transfer set forth as Exhibit B, properly
completed and executed, may be used for this purpose.
Warrants are, upon issuance, separately transferable from any shares of
Common Stock issued by the Corporation.
SECTION 3. DURATION.
Warrants may be exercised within 90 days from the date the Common Stock
and these Warrants are registered with the SEC, subject to the terms and
conditions hereof, at which time all rights evidenced by this Warrant
Certificate shall cease and the Warrants shall become void, subject to earlier
termination as described in Section 8.
SECTION 4. MUTILATED OR MISSING WARRANT CERTIFICATE.
In the event that this Warrant Certificate shall be mutilated, lost,
stolen, or destroyed, the Corporation may, in its discretion, issue and deliver
in exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and in substitution for the lost, stolen, or
destroyed Warrant Certificate, a new Warrant Certificate of like tenor and
evidencing the number of Warrants evidenced by the Warrant Certificate so
mutilated, lost, stolen, or destroyed, but only upon receipt of evidence
satisfactory to the Corporation. The applicant for such substitute Warrant
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Corporation may, from time to time,
prescribe.
SECTION 5. ADJUSTMENTS TO PURCHASE PRICE AND NUMBER OF SHARES ISSUABLE UNDER
WARRANTS.
The Purchase Price and the resulting number of shares of Common Stock
issuable under each Warrant shall be subject to adjustment as follows:
(a) If the Corporation after the date of this Warrant Certificate but
before its exercise:
(1) pays a dividend or any other distribution payable in
shares of its Common Stock otherwise than out of earnings or
earned surplus;
(2) subdivides its outstanding shares of Common Stocks into a
greater number
<PAGE>
of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) issues by reclassification of its shares of Common Stock
any shares of capital stock of the Corporation (other than a
change in par value or from par value to no par value or from
no par value to par value); or
(5) issues rights, options or warrants entitling holders of
shares of Common Stock to subscribe for shares of Common Stock
at less than the current market price, if any;
the Purchase Price in effect immediately prior to such action shall be adjusted
so that the holder of each Warrant may receive the number of shares of Common
Stock of the Corporation to which it would have been entitled upon such action
if such holder had so exercised the Warrant immediately prior thereto. An
adjustment made pursuant to this Section 5 shall become effective immediately
after the record date for the determination of owners of Common Stock entitled
thereto in the case of a dividend or distribution, and shall become effective
immediately after the effective date in the case of a subdivision, combination,
reclassification, or issuance of rights, options or warrants.
(b) No payment or adjustment shall be made by or on behalf of the
Corporation on account of any cash dividends on the Common Stock issued upon any
exercise of a Warrant which was declared for payment to the holders of Common
Stock of record as of a date prior to the date on which such Warrant is
exercised.
(c) Upon each adjustment of the Purchase Price made pursuant to this
Section 5, each Warrant shall thereafter (until another such adjustment)
evidence the right to purchase that number of shares of Common Stock (calculated
to the nearest hundredth) obtained by dividing the Initial Purchase Price by the
Purchase Price in effect after such adjustment.
(d) Whenever there is an adjustment in the Purchase Price as provided
in this Section 5, the Corporation shall promptly cause a notice to be sent by
registered or certified mail, postage prepaid, to each holder of a Warrant
Certificate, such notice stating that such adjustment has been effected and
stating the Purchase Price then in effect and the number of shares of Common
Stock issuable per Warrant as a result of such adjustment.
(e) The Corporation shall reserve and keep available out of its
authorized Common Stock and/or shares of its Common Stock then owned or held by
or for the account of the Corporation, solely for the purpose of delivery upon
exercise of the Warrants as provided herein, such number of shares of Common
Stock equal to the number of shares of Common Stock issuable upon exercise of
all Warrants then outstanding. All shares of Common Stock which shall be so
delivered upon such exercise shall be duly and validly issued and fully paid
<PAGE>
and nonassessable.
(f) To the extent that there are not sufficient shares of the Common
Stock available to satisfy the requirements under Paragraph (e) above, the
Corporation shall use its best efforts to obtain shareholder approval of an
increase in the authorized number of shares in an amount sufficient to satisfy
the deficiency in the number of shares. The Purchaser agrees and understands
that these Warrants may be exercised only for the number of authorized shares
available.
SECTION 6. FRACTIONAL SHARES.
As provided in Section 1 above, each Warrant shall initially entitle
the holder thereof to purchase one (1) share of Common Stock upon the exercise
thereof, but the number of shares of Common Stock purchasable upon exercise of
each Warrant shall be subject to adjustment, as provided in Section 5 hereof,
and accordingly the number of shares of Common Stock issuable upon exercise of
each Warrant may be expressed to include fractional shares. Upon exercise of a
Warrant, the Corporation will not be obligated to issue fractional shares, but
the number of Warrants being exercised at any one time by the holder will be
aggregated and multiplied by the number of shares of Common Stock issuable under
each Warrant (subject to the terms and conditions hereof). The total number of
full shares of Common Stock issuable under the total number of Warrants being
exercised at any one time by the holder (subject to the terms and conditions
hereof) will forthwith be issued to such holder, and the Corporation shall
thereupon pay the cash value of any fractional share of Common Stock at a price
equal to the product of (a) such fraction of a share of Common Stock, and (b)
the Purchase Price as last adjusted.
SECTION 7. NOTICES TO WARRANT HOLDER.
Nothing contained in this Warrant Certificate shall be construed as
conferring upon the holder hereof the right to vote or to consent or to receive
notice as a stockholder in respect of the meetings of stockholders or the
election of directors of the Corporation or any other matter, or any rights
whatsoever to which a stockholder of the Corporation may be entitled.
In case the Corporation shall enter into any agreement or understanding
or the Board of Directors shall adopt any resolution authorizing or proposing
any transaction of the type described in Section 8 hereof, or with respect to a
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then in any such event the Corporation promptly shall cause to be
mailed, by registered or certified mail, postage prepaid, to the holder of this
Warrant certificate at such holder's last address appearing on the records of
the Corporation at least thirty (30) days prior to such event, a notice stating
the expected record date for determining holders of Common Stock entitled to
exchange their shares with respect to a transaction described in Section 8
hereof, or the date on which such dissolution, liquidation or winding up of the
Corporation is expected to occur; provided, however, that the Corporation shall
not be liable or responsible if the actual dates of any such events shall be
different from the expected dates set forth in such notice.
<PAGE>
SECTION 8. TERMINATION OF RIGHT OF CONVERSION ON FUNDAMENTAL CORPORATE
CHANGES.
Notwithstanding anything herein to the contrary, and subject to the
notice requirements of Section 7 hereof, if the Corporation shall be a party to
any transaction which involves any consolidation or merger of the Corporation
with, or any sale of all or substantially all of the assets of the Corporation
to, another corporation, which corporation does not control, is not controlled
by, and is not under common control with the Corporation, and which transaction
is effected in such a way that the holder of Common Stock shall be entitled to
receive stock, securities or other assets with respect to or in exchange for
Common Stock, then the right to exercise the Warrants and thereby to purchase
shares of Common Stock shall terminate at the close of business on the date as
of which the holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other assets deliverable upon
such consolidation, merger or sale.
SECTION 9. NOTICES.
Any notice to be given by the holder of this Warrant Certificate to the
Corporation shall be considered sufficiently given if sent by first-class mail,
postage prepaid, addressed as follows:
Paracelsian, Inc.
95 Brown Road
Ithaca, New York 14850
Attn: Chief Financial Officer
or such other address as the Corporation might designate in writing to the
holder.
Any notice to be given to a holder of this Warrant Certificate by the
Corporation shall be considered sufficiently given if sent by registered or
certified mail, postage prepaid, return receipt requested, addressed to the
address of such holder as it appears on the records of the Corporation. Such
records of the Corporation will be revised by the Corporation upon receipt of a
written notice from such holder specifying a new address.
SECTION 10. SUPPLEMENTS AND AMENDMENTS.
The Corporation may, from time to time, supplement or amend this
Warrant Certificate without the approval of the holder hereof in order to cure
any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein, or to make
changes in any other provisions in regard to matters or questions arising
hereunder which the Corporation may deem necessary and desirable, provided that
no supplement or amendment shall adversely affect the interests of the holder.
<PAGE>
SECTION 11. SUCCESSORS.
All of the provisions of this Warrant Certificate by or for the benefit
of the Corporation shall bind and inure to the benefit of its successors and
assigns.
SECTION 12. GOVERNING LAW.
This Warrant Certificate shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be construed in
accordance with such laws.
IN WITNESS WHEREOF, Paracelsian, Inc., has caused this Warrant
Certificate to be signed by its President and its corporate seal to be impressed
hereon attested to by the signature of its Secretary.
Dated: January 12, 1998
PARACELSIAN, INC.
By:______________________________________
Dr. Thomas Tachovsky
President and Chief Executive Officer
[Corporate Seal]
Attest:
_____________ Secretary
<PAGE>
Exhibit A
ELECTION TO PURCHASE
TO: PARACELSIAN, INC.
222 Langmuir Laboratories
Ithaca, New York 14850
Attn: Chief Financial Officer
The undersigned hereby irrevocably elects to exercise ________________
Warrants represented by the attached Warrant Certificate, and to purchase the
shares of Common Stock issuable upon the exercise of said Warrants, and requests
that certificates for such shares be issued in the name of
- - --------------------------------------------------------------------------------
(name)
- - --------------------------------------------------------------------------------
(address)
- - --------------------------------------------------------------------------------
(Taxpayer number)
and be delivered to
................................................................................
(name)
................................................................................
(address)
and, if said number of Warrants shall not be all the Warrants evidenced by the
attached Warrant Certificate, that a new Warrant Certificate for the balance
remaining of such Warrants be issued in the name of, and delivered to, the
undersigned at the address stated below.
Payment is to be made as follows:
Cash.......................................................$___________
Name of holder of Warrant Certificate:
____________________________________
(Please print)
Address: __________________________
__________________________
Signature:__________________________
NOTE: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular, without alteration or
enlargement or any change.
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EXHIBIT B
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s)
to______________________________________________________________________________
________________________________________________________________________________
(Please print or type name and address, including zip code, of assignee)
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE:____________________________
________________________ Common Stock purchase Warrants represented by the
attached Certificate, and do hereby irrevocably constitute and
appoint:____________________, Attorney, to transfer said Warrants on the books
of the within named corporation with full power of substitution in the premises.
Dated:__________________________________
Sign Here:______________________________
Notice: The signature to this assignment must correspond with the name as
written upon the face of the certificate in every particular, without alteration
or enlargement or any change.
SIGNATURE GUARANTEED
_________________________________________
Notice: Signature(s) must be guaranteed.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common
TEN ENT--as tenants by the entireties
JT TEN--as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT--Uniform Gifts to Minors Act ___________
CUST--custodian (State)
Additional abbreviations may also be used although not listed above.
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of January 14, 1998 (the
"Agreement"), is by and between PARACELSIAN, INC., a Delaware corporation with
its principal offices in New York (the "Company"), and BIOMAR INTERNATIONAL,
INC., a Delaware corporation with its principal offices in North Carolina (the
"Investor").
WITNESSETH:
WHEREAS, pursuant to the terms of a Stock Purchase Agreement (the
"Purchase Agreement"), dated the date hereof, between the Company and the
Investor, the Investor is investing in newly issued shares of the common stock
of the Company;
WHEREAS, it is a condition to the obligations of the Investor under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof;
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to provide for continuity of ownership of
the Company to further the interests of the Company and its present and future
stockholders, the parties hereby agree with each other as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock of the Company, as
constituted as of the date of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Holder" shall mean an Investor owning or having the right to acquire
Restricted Stock or any transferee of rights under this Agreement under Section
13.
"Registration Expenses" shall mean all expenses incurred in connection
with a registration statement, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with
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state securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance, and fees and disbursements of one counsel for
the sellers of Restricted Stock, but excluding any Selling Expenses.
"Restricted Stock" shall mean the mean the "Shares," the "Warrants"
(both as defined in the Purchase Agreement) and the Common Stock to be issued
under the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Restricted Stock which are incurred in
connection with a registration statement, plus any portion of Registration
Expenses required by law to be paid by the selling shareholder.
2. RESTRICTIVE LEGEND. Each certificate representing Restricted Stock
shall be stamped or otherwise imprinted with a legend substantially in the
following form:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THE CORPORATION WILL NOT TRANSFER THIS
CERTIFICATE UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
COVERING THE SHARES REPRESENTED BY THIS CERTIFICATE UNDER THE
SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES
LAWS, (ii) IT FIRST RECEIVES A LETTER FROM AN ATTORNEY,
ACCEPTABLE TO THE BOARD OF DIRECTORS OR ITS AGENTS, STATING
THAT IN THE OPINION OF THE ATTORNEY THE PROPOSED TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND
UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR (iii) THE
TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT OF 1933.
3. NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer of any
Restricted Stock or other shares of capital stock of the Company (other than
under the circumstances described in Sections 4 or 5), the Holder thereof shall
give written notice to the Company of its intention to effect such transfer.
Each such notice shall describe the manner of the proposed transfer and, if
requested by the Company, shall be accompanied by an opinion of counsel
reasonably satisfactory to the Company to the effect that the proposed transfer
may be effected without registration under the Securities Act, whereupon the
Holder of such stock shall be entitled to transfer such stock in accordance with
the terms of its notice; PROVIDED, HOWEVER, that
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no such opinion of counsel shall be required for a transfer to one or more
partners of the transferor (in the case of a transferor that is a partnership)
or to a parent corporation, subsidiary corporation or to a corporation which is
under common control with a transferor (in the case of a transferor that is a
corporation, to a member of the transferor's immediate family or other
descendant of the transferor or to a trust or other entity for the benefit of
the transfer and/or such person provided that in such case the transferee(s)
remain bound hereby).
4. REQUIRED REGISTRATION. (a) At any time within six months following
the date of this Agreement, one or more Holders of Restricted Stock constituting
at least sixty percent (60%) of the total shares of Restricted Stock then
outstanding may request the Company to register under the Securities Act all or
any portion of the shares of Restricted Stock held by such requesting Holder or
Holders ("Initiating Holders").
(b) Notwithstanding anything to the contrary contained in this Section
4, no request may be made under this Section 4 within one hundred eighty (180)
days after the effective date of a registration statement filed by the Company
other than on Form S-4 or S-8 or their successor forms.
(c) If at the time of any request to register Restricted Stock pursuant
to this Section 4 (i) the Company is engaged or has fixed plans to engage within
sixty (60) days of the time of the request in a registered public offering of
its securities, (ii) the Company is in possession of material non-public
information the public disclosure of which, in the good faith determination of
the Company's Board of Directors, would materially and adversely affect the
Company, (iii) the Company shall have delivered to the Holders of Restricted
Stock that have requested a registration a certificate of an officer of the
Company to the effect that, on the advice of counsel, the Company believes such
delay is necessary to comply with Regulation M under the Exchange Act, or (iv)
the Company is engaged in any other activity which, in the good faith
determination of the Company's Board of Directors, would be adversely affected
by the requested registration to the material detriment of the Company, then the
Company may at its option direct that such request be delayed for a reasonable
period not in excess of one hundred twenty (120) days from the time of such
request to register Restricted Stock pursuant to this Section 4; provided,
however, that such right to delay a request may be exercised by the Company not
more than once in any twelve-month period. Such delay, however, shall not in any
way restrict the Holders from exercising piggyback registration rights under
Section 5 during such period.
(d) Following receipt of any notice under this Section 4, the Company
shall immediately notify all Holders of Restricted Stock from whom notice has
not been received, and such Holders shall be entitled within thirty (30) days
thereafter to request the Company to include in the requested registration all
or any portion of their shares of Restricted Stock. The Company shall use its
best efforts to register under the Securities Act, for public sale in accordance
with the method of disposition specified in the notice from requesting Holders,
the number of shares of Restricted Stock specified in such notice (and in all
notices received by the Company from other Holders within thirty (30) days after
the giving of such notice by the
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Company). If such method of disposition shall be an underwritten public
offering, the Holders of a majority of the shares of Restricted Stock to be sold
in such offering may designate the managing underwriter of such offering,
subject to the approval of the Company, which approval shall not be unreasonably
withheld or delayed. Notwithstanding any other provision of this Section 4, if
the underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Holders of Restricted Stock which would
otherwise be underwritten pursuant hereto, and the number of shares of
Restricted Stock that may be included in the underwriting shall be allocated
among all Holders thereof, including the Initiating Holders, in proportion (as
nearly as practicable) to the amount of Restricted Stock of the Company owned by
each Holder; PROVIDED, HOWEVER, that the number of shares of Restricted Stock to
be included in such underwriting shall not be reduced unless all other
securities are first entirely excluded from the underwriting.
(e) The Company shall be obligated to register Restricted Stock
pursuant to this Section 4, on only one (1) occasion; PROVIDED, HOWEVER, that
such obligation shall be deemed satisfied only when a registration statement
covering all shares of Restricted Stock specified in notices received as
aforesaid, for sale in accordance with the method of disposition specified by
the requesting Holders shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto, unless a failure was caused by a Holder.
(f) Except for registration statements on Form S-4, S-8 or any
successor forms thereto, and unless the Company (i) has previously given the
notice referred to in Section 5 or (ii) has exercised its rights to delay a
requested registration under Section 4(c)(i) and within the time period
prescribed in Section 4(c) files a registration statement with respect to a
registered public offering of it securities, the Company will not file with the
Commission any other registration statement with respect to a registered public
offering of its securities, the Company will not file with the Commission any
other registration statement under the Securities Act with respect to Common
Stock, whether for its own account or that of other stockholders, from the date
of receipt of a notice from requesting Holders pursuant to this Section 4 until
the completion of the period of distribution of the registration contemplated
thereby.
5. PIGGYBACK REGISTRATION. (a) If the Company at any time (other than
pursuant to Section 4 or Section 13) proposes to register any of its securities
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Forms S-4, S-8 or any successor forms thereto), each
such time it will give written notice to all Holders of outstanding Restricted
Stock of its intention so to do; PROVIDED HOWEVER that no such notice shall be
required after such time that the Company ceases to have registration
obligations under this Section 5. Upon the written request of any such Holder,
received by the Company within ten (10) days after the giving of any such notice
by the Company, to register any of its Restricted Stock (which request shall
state the intended method of disposition thereof), the Company will use its best
efforts to cause the Restricted Stock as to which registration shall have been
so requested to be included in the
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securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent required to permit the sale or other disposition
by the Holder (in accordance with its written request) of such Restricted Stock
so registered.
(b) If any registration pursuant to this Section 5 shall be, in whole
or in part, an underwritten public offering of Common Stock, the number of
shares of Restricted Stock to be included in such an underwriting may be reduced
pro rata among the requesting Holders based upon the number of shares of
Restricted Stock owned by such Holders if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by the Company therein; PROVIDED,
HOWEVER, that: (1) if the Company registers any of its securities for its own
account in such underwriting, such number of shares of Restricted Stock shall
not be reduced if any shares are to be included in such underwriting for the
account of any person other than the Company or requesting Holders of Restricted
Stock or (2) if the Company does not register any of its securities for its own
account in such underwriting, the number of shares of Restricted Stock to be
included in such underwriting shall not be reduced unless all other securities
are first entirely excluded from the underwriting unless the Holders of more
than 60% of the Restricted Securities consent to the inclusion of such other
securities.
(c) Notwithstanding the foregoing provisions of this Section 5, the
Company may withdraw any registration statement referred to in this Section 5
without thereby incurring any liability to the Holders of Restricted Stock.
6. OBLIGATIONS OF THE COMPANY. If and whenever the Company is required
by the provisions of Section 4 or 5 to use its best efforts to effect the
registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 4,
shall be on Form S-1 or other form of general applicability satisfactory to the
managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until completion of the period of distribution and comply with the provisions of
the Securities Act with respect to the disposition of all Restricted Stock
covered by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Restricted Stock and to each underwriter
such number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such person reasonably may
request in order to facilitate the public
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sale or other disposition of the Restricted Stock covered by such registration
statement;
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or "blue sky" laws
of such jurisdictions as the sellers of Restricted Stock or, in the case of an
underwritten public offering, the managing underwriter reasonably shall request;
PROVIDED, HOWEVER, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to list the Restricted Stock covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;
(f) immediately notify each seller of Restricted Stock and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(g) if the offering is underwritten and at the request of any seller of
Restricted Stock, use its best efforts to furnish on the date that Restricted
Stock is delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to such seller,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the registration statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements contained therein) and (C) to such other
effects as reasonably may be requested by counsel for the underwriters or by
such seller or its counsel, and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five (5) business days prior to the date of such
letter) with respect to such registration as such underwriters reasonably may
request; and
(h) make available for inspection by each seller of Restricted Stock,
any
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underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement, subject to each party's obligations not to disclose or misuse any
confidential information disclosed to it.
For purposes of Sections 4(f), 6(a) and 6(b), the period of
distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted Stock covered thereby and sixty (60)
days after the effective date thereof.
7. OBLIGATIONS OF SELLING STOCKHOLDERS. In connection with each
registration hereunder, the sellers of Restricted Stock will furnish to the
Company in writing such information with respect to themselves and the proposed
distribution by them as reasonably shall be necessary to assure compliance with
federal and applicable state securities laws.
8. CERTAIN UNDERWRITING MATTERS. In connection with each registration
pursuant hereto covering an underwritten public offering, the Company and each
seller agree to enter into a written agreement with the managing underwriter
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature.
9. EXPENSES. The Company will pay all Registration Expenses in
connection with each registration statement hereunder.
10. INDEMNIFICATION AND CONTRIBUTION. (a) In the event of a
registration of any of the Restricted Stock under the Securities Act pursuant
hereto, the Company will and hereby does indemnify and hold harmless each seller
of such Restricted Stock thereunder, each underwriter of such Restricted Stock
thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Stock was registered under the Securities Act
pursuant hereto, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each such seller, each such underwriter and each such
controlling person for any legal
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or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action, PROVIDED,
HOWEVER, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such seller,
any such underwriter or any such controlling person in writing specifically for
use in such registration statement or prospectus.
(b) In the event of a registration of any of the Restricted Stock under
the Securities Act pursuant hereto, each seller of such Restricted Stock
thereunder severally and not jointly, will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each other seller of Restricted Stock,
each underwriter and each person who controls any underwriter within the meaning
of the Securities Act, against all losses, claims, damages or liabilities, joint
or several, to which the Company or such officer, director, other seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Restricted Stock was registered under the Securities Act
pursuant hereto, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein no misleading,
and will reimburse the Company and each such officer, director, other seller,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, PROVIDED, HOWEVER, that such seller will be
liable hereunder in any such case if and only to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to the Company by such seller specifically for use in such
registration statement or prospectus, and PROVIDED FURTHER that the liability of
each seller hereunder shall not apply to amounts paid in settlement without such
seller's prior written consent.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 10 and shall only relive it
from any liability which it may have to such indemnified party under this
Section 10 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory
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to such indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 10 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, PROVIDED,
HOWEVER, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any Holder of
Restricted Stock exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 10 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 10 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
10; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such Holder
is responsible for the portion represented by the percentage that the public
offering price of its Restricted Stock offered by the registration statement
bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; PROVIDED, HOWEVER, that, in Section 11(f) of the Securities Act) will
be entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this Section 10
shall survive the completion of any offering of Restricted Stock in a
registration statement under Section 4, 5 or 13 of this Agreement, and
otherwise.
11. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as,
there is any change in the Common Stock of Common Stock by way of a stock split,
stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or
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recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
12. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the commission which may at any time permit the
sale of the Restricted Stock to the public without registration, at all times
after ninety (90) days after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and;
(c) furnish to each Holder of Restricted Stock forthwith upon request a
written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as such Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any Restricted Stock without
registration.
13. TRANSFERABILITY OF REGISTRATION RIGHTS. The rights conferred herein
on the Holders of Restricted Stock shall only inure to the benefit of a
transferee of Restricted Stock, (i) if the transfer was approved by the Board of
Directors of the Company (which approval shall not be unreasonably withheld) and
there is transferred to such transferee all of the Restricted Stock then held by
the transferor or (ii) if the transferee is a transferee permitted in the
provision to Section 3; PROVIDED HOWEVER that no transferee shall receive rights
pursuant to this Agreement unless it first agrees in writing to abide by all
restrictions on the Holders hereunder.
14. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Investor as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the certificate of incorporation or bylaws of the Company or any
provision of any indenture, agreement or other instrument to which it or any or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement as been duly executed and delivered by the Company
and
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constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms.
15. MISCELLANEOUS.
(a) BINDING EFFECT. All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Restricted Stock), whether so
expressed or not.
(b) NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be sent by nationally recognized
overnight courier which obtains a signed receipt upon delivery, mailed by
certified or registered mail, return receipt requested, postage prepaid, or
telexed, in the case of non-U.S. residents, addressed as follows: (i) if to the
Company or any other party hereto, at the address of such party set forth in the
Purchase Agreement; or (ii) if to any subsequent Holder of Common Stock, to it
at such address or addresses as shall have furnished in writing to the Company
(in the case of a Holder of Restricted Stock) or to the Holders of Restricted
Stock (in the case of the Company) in accordance with the provisions of this
paragraph.
(c) NO WAIVER: CUMULATIVE REMEDIES. No failure or delay on the part of
any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
(d) AMENDMENTS, WAIVERS AND CONSENTS. This Agreement may not be amended
or modified, and no provision hereof may be waived, without the written consent
of the Company and the Holders of at least sixty percent (60%) of the
outstanding shares of Restricted Stock.
(e) TERMINATION. The obligations of the Company to register shares of
Restricted Stock under Sections 4 and 5 shall terminate with respect to any
Holder at such time as Rule 144 or another similar exemption under the
Securities Act is available for the sale of all such Holder's shares during a
three (3) month period without registration.
(f) SEVERABILITY. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
(g) GOVERNING LAW. This Agreement shall be governed by and construed in
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accordance with the laws of the State of North Carolina, without giving effect
to the principles of the conflicts of laws thereof.
(h) INJUNCTIVE RELIEF. The Company recognizes that the rights of the
Investor under this Agreement are unique and, accordingly, the Investor shall,
in addition to such other remedies as may be available to them at law or in
equity, have the right to enforce their rights hereunder by actions for
injunctive relief and specific performance to the extent permitted by law. This
Agreement is not intended to limit or abridge any rights of the Investor which
may exist apart from this Agreement.
(i) MERGER PROVISION. This Agreement, along with the Purchase Agreement
of even date herewith, including all exhibits and schedules thereto, constitute
the entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior and contemporaneous agreements and
understandings, of any of the parties hereto concerning the subject matter
hereof.
(j) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
BIOMAR INTERNATIONAL, INC.
By: _____________________________________
T. Nelson Campbell
Chairman of the Board
PARACELSIAN, INC.
By: _____________________________________
Dr. Thomas Tachovsky
President and Chief Executive Officer
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