-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CoecgiTZ1j43Ug00FUWNuIUn1BYypbG4Xvk+o1rl6Vs5uKHPFp7+5P5cTzC15Tmv QHvECtS+zP5JGSdDVNHx3w== /in/edgar/work/20000703/0000950144-00-008508/0000950144-00-008508.txt : 20000920 0000950144-00-008508.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950144-00-008508 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20000614 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOSHIELD TECHNOLOGIES INC CENTRAL INDEX KEY: 0001059623 STANDARD INDUSTRIAL CLASSIFICATION: [2842 ] IRS NUMBER: 582181628 STATE OF INCORPORATION: GA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-24913 FILM NUMBER: 667238 BUSINESS ADDRESS: STREET 1: 4405 INTERNATIONAL BOULEVARD STREET 2: SUITE B109 CITY: NORCROSS STATE: GA ZIP: 30083 BUSINESS PHONE: 7709253432 MAIL ADDRESS: STREET 1: 4405 INTERNATIONAL BLVD STREET 2: SUITE B-109 CITY: NORCROSS STATE: GA ZIP: 30093 8-K 1 e8-k.txt BIOSHIELD TECHNOLOGIES, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 14, 2000 BIOSHIELD TECHNOLOGIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) GEORGIA 0-24913 58-2181628 - -------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 4405 INTERNATIONAL BLVD. SUITE B-109, NORCROSS, GEORGIA 30093 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 925-3432 (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) 2 ITEM 5. OTHER EVENTS On June 14, 2000, the Company completed a financing with private investors in which the Company issued $10 million principal amount of Series B Convertible Preferred Stock (the "Series B Preferred"), and entered into a equity financing agreement (the "Equity Line Agreement") under which the Company may cause the investor to purchase up to $50 million of the Company's common stock. The Series B Preferred is convertible into common stock until June 14, 2003, at the option of the holder, at a conversion price equal to the "market conversion price," but the conversion price will not exceed $19.70. The market conversion price is defined to mean 90% of the average of the closing bid and ask prices of the Company's Common Stock during any three trading days during the ten consecutive trading days immediately prior to the conversion date. The Series B Preferred is redeemable at the Company's option beginning on the earlier to occur of ninety days following the issue date or the date that the Series B Registration Statement (as herein defined) becomes effective with the SEC at a price of 125% of its principal amount. In connection with the issuance of the Series B Preferred, we issued warrants (the "Series B Warrants") to the investor to purchase an aggregate of 79,281 shares of common stock at the option of the holder until June 14, 2005, at an exercise price of $18.92 per share, subject to adjustment under certain circumstances. Under the terms of the private placement agreements governing the issuance of the Series B Preferred, we are required to file a registration statement (the Series B Registration Statement") with the Securities and Exchange Commission (the "SEC") to register for resale up to 1,500,000 shares of common stock issuable upon conversion of the Series B Preferred Stock and the Series B Warrants. Pursuant to the Equity Line Agreement, we are required to file a registration statement with the SEC (the "Equity Line Registration Statement") covering 6,666,667 shares of common stock. The investor has agreed to purchase our common stock during the 24-month period commencing on the date of effectiveness of the Equity Line Registration Statement in accordance with the Equity Line Agreement. From time to time during the term of the Equity Line Agreement, but no more frequently than once every 15 trading days, we can require the investor to purchase our common stock in a minimum amount of $250,000 and a maximum of the lesser of $5,000,000 or 150% of the average daily trading volume for the prior twenty trading days, until all the purchases total $50,000,000. The purchase price for each share will equal 90% of the average of the closing bid and ask prices of the Company's Common Stock during any three trading days during the ten consecutive trading days immediately prior to the closing of such purchase. The investor's obligation to purchase shares of our common stock is subject to a number of conditions, including requirements relating to minimum volume and bid price of our common stock. In connection with the Equity Line Agreement, we issued warrants to the investor to purchase an aggregate of 250,000 shares of common stock at the option of the holder until June 14, 2005, at an exercise price of $18.92 per share, subject to adjustment under certain circumstances. The investors in the Series B Preferred and under the Equity Line Agreement are subject to certain volume restrictions regarding the resale of the Company's common stock. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibits 10.86 Securities Purchase Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Wilson LLC 10.87 Registration Rights Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Wilson LLC 10.88 Placement Agency Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and J.P. Carey Securities, Inc. 10.89 Warrant Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Wilson LLC 10.90 Letter Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., Wilson LLC and Jackson LLC 10.91 Officer's Certificate of BioShield Technologies, Inc. dated as of June 14, 2000
3 10.92 Transfer Agent Instructions 10.93 Articles of Amendment to the Articles of Incorporation of BioShield Technologies, Inc. 10.94 Private Equity Credit Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Jackson LLC 10.95 Registration Rights Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Jackson LLC 10.96 Second Amendment dated as of June 14, 2000 to Private Equity Credit Agreement by and among BioShield Technologies, Inc., and Jackson LLC 10.97 Transfer Agent Instructions 10.98 Warrant Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Jackson LLC
4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BIOSHIELD TECHNOLOGIES, INC. (Registrant) Date: June 28, 2000 /s/ Timothy C. Moses TIMOTHY C. MOSES President and Chief Executive Officer 5 Exhibit Index
Exhibit Description 10.86 Securities Purchase Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Wilson LLC 10.87 Registration Rights Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Wilson LLC 10.88 Placement Agency Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and J.P.Carey Securities, Inc. 10.89 Warrant Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Wilson LLC 10.90 Letter Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., Wilson LLC and Jackson LLC 10.91 Officer's Certificate of BioShield Technologies, Inc. dated as of June 14, 2000 10.92 Transfer Agent Instructions 10.93 Articles of Amendment to the Articles of Incorporation of BioShield Technologies, Inc. 10.94 Private Equity Credit Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Jackson LLC 10.95 Registration Rights Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Jackson LLC 10.96 Second Amendment dated as of June 14, 2000 to Private Equity Credit Agreement by and among BioShield Technologies, Inc., and Jackson LLC 10.97 Transfer Agent Instructions 10.98 Warrant Agreement dated as of June 14, 2000, by and among BioShield Technologies, Inc., and Jackson LLC
EX-10.86 2 ex10-86.txt SECURITIES PURCHASE AGREEMENT 1 Exhibit 10.86 SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 14, 2000, by and among BioShield Technologies, Inc., a Georgia corporation, with headquarters located at 5655 Peachtree Parkway, Georgia 30092 (the "COMPANY"), and the investor listed on the Schedule of Buyers (the "SCHEDULE OF BUYERS") attached hereto (individually, a "BUYER" or collectively "BUYERS"). WHEREAS: A. The Company and the Buyers are executing and delivering this Agreement in reliance upon the exemption from securities registration pursuant to Section 4(2) and/or Regulation D ("REGULATION D") at the sole election of Buyer in the event that a registration statement filed by the Company pursuant to Section 2(a) of the Registration Rights Agreement (described below) is not declared effective by the Registration Deadline (as defined therein) as promulgated by the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 ACT"); B. The Company has authorized the following new series of its Preferred Stock, no par value per share (the "PREFERRED STOCK"): the Company's Series B Convertible Preferred Stock (the "SERIES B PREFERRED Shares"), which shall be convertible into shares of the Company's Common Stock, no par value per share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in accordance with the terms of the Company's Amendments to its Articles of Incorporation, substantially in the form attached hereto as Exhibit "A" (the "AMENDMENT"); C. The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, an aggregate of 500 shares of Series B Preferred Shares in the respective amounts set forth opposite each Buyer's name on the Schedule of Buyers; D. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement substantially in the form attached hereto as Exhibit "B" (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws; and E. The holders of Series B Preferred Shares shall receive stock purchase warrants to acquire shares of Common Stock of the Company at an exercise price of $18.92 per share the form attached as Exhibit "C" (the "WARRANTS"). NOW THEREFORE, the Company and the Buyer hereby agree as follows: 1. PURCHASE AND SALE OF SERIES B PREFERRED STOCK. a. Purchase of Series B Preferred Stock. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to the 1 2 Buyers and the Buyers shall purchase from the Company an aggregate of 500 shares of Series B Preferred Stock, in the respective amounts set forth opposite each Buyer's name on the Schedule of Buyers (the "CLOSING"). b. Closing Date. The date and time of the Closing (the "CLOSING DATE") shall be at a time and place as is mutually agreed to by the Company and the Buyer. The Closing shall occur on the Closing Date at the offices of Sims Moss Kline & Davis LLP, 400 Northpark Town Center, Suite 310, 1000 Abernathy Road, N.E., Atlanta, Georgia 30328. c. Form of Payment. On the Closing Date, (i) each Buyer shall pay the purchase price to the Company for the Series B Preferred Shares to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Escrow Agreement between the parties, dated as of June 7, 2000, and (ii) the Company shall deliver to each Buyer, certificates representing such Series B Preferred Shares which such Buyer is then purchasing (as indicated opposite such Buyer's name on the Schedule of Buyers), duly executed on behalf of the Company and registered in the name of such Buyer or its designee (the "CERTIFICATES") and the Warrants. 2. BUYER'S REPRESENTATIONS AND WARRANTEES. Each Buyer represents and warrants with respect to only itself that: a. Investment Purpose. Such Buyer (i) is acquiring the Series B Preferred Shares, (ii) upon conversion of the Series B Preferred Shares, will acquire the Conversion Shares then issuable, (iii) will acquire any Warrants issuable, and (iv) upon exercise of the Warrants, will acquire the shares of Common Stock upon exercise thereof (the "WARRANT SHARES") for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations herein, such Buyer does not agree to hold any Series B Preferred Shares, Conversion Shares, Warrants, or Warrant Shares for any minimum or other specific term and reserves the right to dispose of Series B Preferred Shares, Conversion Shares, Warrants, or Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. b. Accredited Investor Status. Such Buyer is an "accredited investor" as that term is defined in Rule 501(a)(3) of Regulation D. c. Reliance on Exemptions. Such Buyer understands that the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order 2 3 to determine the availability of such exemptions and the eligibility of such Buyer to acquire such securities. d. Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares, which have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer's right to rely on the Company's representations and warranties contained in Section 3 below. Such Buyer understands that its investment in the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares. e. No Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares or the fairness or suitability of the investment in the Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares nor have such authorities passed upon or endorsed the merits of the offering of the Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares. f. Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement: (i) the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (a) subsequently registered thereunder, (b) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (c) such Buyer provides the Company with reasonable assurance that such securities can be sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act, (ii) any sale of such securities made in reliance on Rule 144 (or a successor rule thereto) ("RULE 144") may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of such securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. 3 4 g. Legends. Such Buyer understands that the certificates or other instruments representing the Series B Preferred Shares, the Warrants and, until such time as the sale of the Conversion Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stock certificates representing the Conversion Shares, and the Warrant Shares shall bear a restrictive legend in substantially the following form (and a stop transfer order may be placed against transfer of such stock certificates): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares upon which it is stamped, if, unless otherwise required by state securities laws, (i) the sale of the Conversion Shares or the Warrant Shares is registered under the 1933 Act, (ii) in connection with a sale transaction, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment or transfer of the Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares may be made without registration under the 1933 Act, or (iii) such holder provides the Company with reasonable assurances that the Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares can be sold pursuant to Rule 144 without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold. h. Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and is a valid and binding agreement of such Buyer enforceable in accordance with its terms, subject as enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies. i. Residency. Such Buyer is a resident of that country specified in its address on the Schedule of Buyers. 4 5 j. No Scheme to Evade Registration. Buyer represents and warrants to the Company that the acquisition of the Series B Preferred Shares and the Conversion Shares is not a transaction (or any element of a series of transactions) that is part of a plan or scheme by the Buyer to evade the registration provisions of the 1933 Act. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each of the Buyers that: a. Organization and Qualification. The Company is a corporation duly organized and validly existing in good standing under the laws of the jurisdiction in which they are incorporated, and have the requisite corporate power to own their properties and to carry on their business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company taken as a whole. b. Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Registration Rights Agreement and any related agreements, and to issue the Series B Preferred Shares, the Conversion Shares, and cause to be issued the Warrants, and the Warrant Shares in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Registration Rights Agreement and any related agreements by the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation the issuance of the Series B Preferred Shares and the Warrants and the reservation for issuance and the issuance of the Conversion Shares and the Warrant Shares issuable upon conversion or exercise thereof, have been duly authorized by the Company's Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders, (iii) this Agreement and the Registration Rights Agreement and any related agreements have been duly executed and delivered by the Company, (iv) this Agreement, the Registration Rights Agreement and any related agreements constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies, and (v) prior to the Closing Date, the Certificate of Designations has been filed with the Secretary of State of the State of Georgia and will be in full force and effect, enforceable against the Company in accordance with its terms. c. Capitalization. As of May 15, 2000, the authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, of which as of the date hereof 7,981,714 shares were issued and outstanding, and 10,000,000 shares of Preferred Stock of which 200 shares of Series A preferred stock were issued and outstanding. All of such outstanding shares have been validly issued and are fully paid and non-assessable. Except 5 6 as disclosed in Schedule 3(c), no shares of Common Stock or preferred stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. Except as disclosed in Schedule 3(c), as of the effective date of this Agreement (i) there are no outstanding debt securities and (ii) there are no agreements or arrangements under which the Company is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement). There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares as described in this Agreement. The Company has furnished to the Buyer true and correct copies of the Company's Articles of Incorporation, as amended and as in effect on the date hereof (the "ARTICLES OF INCORPORATION"), and the Company's By-laws, as in effect on the date hereof (the "BY-LAWS"), and the terms of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto. d. Issuance of Securities. The Series B Preferred Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be (i) validly issued, fully paid and non-assessable, are free from all taxes, liens and charges with respect to the issue thereof and are entitled to the rights and preferences set forth in the Series B Preferred Shares. The Conversion Shares issuable upon conversion of the Series B Preferred Shares have been duly authorized and reserved for issuance. Upon conversion or exercise in accordance with the Series B Preferred Shares or the Warrants, the Conversion Shares and the Warrant Shares will be validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. e. No Conflicts. Except as disclosed in Schedule 3(e), the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not (i) result in a material violation of the Articles of Incorporation, any preferences and rights of any outstanding series of preferred stock of the Company or By-laws or (ii) conflict with or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the principal market or exchange on which the Common Stock is traded or listed) applicable to the Company or by which any property or asset of the Company bound or affected. Except as disclosed in Schedule 3(e), the Company is in violation of any term of or in default under its Articles of Incorporation or Bylaws or their organizational charter or by-laws, respectively, or any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company. To the knowledge of the Company, the business of the Company are not being conducted, and shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state 6 7 securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the Registration Rights Agreement in accordance with the terms hereof or thereof except as disclosed in Schedule 3(e). All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. f. SEC Documents: Financial Statements. Since January 1, 1999, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 ACT") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to as the "SEC DOCUMENTS"). The Company has delivered to the Buyer or its representative true and complete copies of the SEC Documents. As of their respective dates, the financial statements of the Company attached as Schedule 3(f) hereto (the "FINANCIAL STATEMENTS") complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). g. Absence of Certain Changes. Except as disclosed in Schedule 3(g), since January 1, 1999, there has been no material adverse change and no material adverse development in the business, properties, operations, financial condition, results of operations or prospects of the Company. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings. h. Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company against or affecting the Company or the Common Stock , wherein an unfavorable decision, ruling or finding would (i) have a material adverse effect on the transactions contemplated hereby (ii) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement or any of the documents contemplated herein or (iii), except as expressly set forth in Schedule 3(h), have a material adverse effect on the business, operations, properties, financial condition or results of operation of the Company taken as a whole. 7 8 i. Acknowledgment Regarding Buyer's Purchase of Series B Preferred Shares. The Company acknowledges and agrees that the Buyer is acting solely in the capacity of an arm's length purchaser with respect to this Agreement and the transactions contemplated hereby. j. No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or exists, or is contemplated to occur, with respect to the Company's respective business, properties, prospects, operations or financial condition, which could be material but which has not been publicly announced or disclosed in writing to the Buyer. k. No General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares. 1. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares under the 1933 Act or cause this offering of Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions. m. Employee Relations. The Company is involved in any labor dispute nor, to the knowledge of the Company in any such dispute threatened. The Company is not a member of a union and the Company believe that their relations with their employees are good. n. Title. The Company has good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company, in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(n) or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company . Any real property and facilities held under lease by the Company are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company. o. Regulatory Permits. The Company possess all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Company nor 8 9 any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. p. Tax Status. Except as set forth on Schedule 3(p), the Company has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. q. Fees and Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third parties. r. Shareholder Approval. The Company covenants to submit to its shareholders at its next shareholder meeting a proposal for ratification of the issuance of the Series B Preferred Shares and the Conversion Shares, if and as required by the rules of the National Association of Securities Dealers, Inc. (the "NASD") applicable to the transaction. s. Dilution. The Company acknowledges that issuance of the Conversion Shares upon conversion of the Series B Preferred Shares will result in dilution of the outstanding shares of Common Stock , which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligation to issue the Conversion Shares upon conversion of the Series B Preferred Shares in accordance with the terms of the Amendment is unconditional and absolute, subject to the limitations set forth herein and in the Amendment, regardless of the effect of any such dilution. 4. COVENANTS. a. Best Efforts. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement. b. Form D. The Company agrees to file a Form D with respect to the Series B Preferred Shares and the Conversion Shares as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Series B Preferred Shares and the Conversion Shares for, or obtain exemption for the Series B Preferred Shares and the Conversion Shares for, sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the 9 10 states of the United States, and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date. c. Reporting Status. Until the earlier of (i) the date as of which the Investors (as that term is defined in the Registration Rights Agreement) may sell all of the Conversion Shares without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto), or (ii) the date on which (A) the Investors shall have sold all the Conversion Shares and (B) none of the Series B Preferred Shares is outstanding (the "REGISTRATION PERIOD"), the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such termination. d. Use of Proceeds. The Company will use the proceeds from the sale of the Series B Preferred Shares for substantially the same purposes and in substantially the same amounts as indicated in Schedule 4(d). e. Financial Information. The Company agrees to send the following to each Buyer during the Registration Period: (i) within five (5) days after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-KSB, its Quarterly Reports on Form 10-QSB, any Current Reports on Form 8-KSB and any registration statements or amendments filed pursuant to the 1933 Act; (ii) within one (1) day after release thereof, copies of all press releases issued by the Company or any of its subsidiaries and (ii) copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders. f. Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the number of shares of Common Stock needed to provide for the issuance of the Conversion Shares and Warrant Shares; provided that all shares of the Common Stock authorized and not otherwise reserved for other purposes as of the date hereof shall be reserved for the purpose of issuance of the Conversion Shares. g. Listings. The Company shall promptly secure the listing of all Registrable Securities (as defined in the Registration Rights Agreement) upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable under the terms of this Agreement and the Registration Rights Agreement. The Company shall maintain the Common Stock's authorization for quotation in the over-the counter market. The Company shall promptly provide to each Buyer copies of any notices it receives regarding the continued eligibility of the Common Stock for trading on the Nasdaq SmallCap Market. 10 11 h. Expenses. Each of the Company and the Buyer shall pay all costs and expenses incurred by such party in connection with the negotiation, investigation, preparation, execution and delivery of this Agreement and the Registration Rights Agreement. i. Warrant Issuances. [INTENTIONALLY LEFT BLANK] j. No Short Sales of the Common Stock. So long as (i) a Buyer or any of its affiliates beneficially owns any of Series B Preferred Shares, (ii) the Company has not issued any publicly traded convertible securities and (iii) the Issuer is not in material default under the terms of the Series B Preferred Shares, each Buyer and its affiliates shall not directly or indirectly engage in any short sales or third party short sales of the Company's Common Stock or hold a "put equivalent position" with respect to the Common Stock (as defined in Rule 16a-1 under the 1934 Act). A short sale "or put equivalent position" shall not be deemed to have occurred if there is an offsetting long position in the Common Stock by way of conversion of any convertible securities of the Company or any Put Notice pursuant to any private equity credit agreement with the Buyer. Notwithstanding the foregoing restrictions on short sales, the foregoing restrictions shall not apply in the event that there is a material adverse change with respect to the Company which is likely to lead to the liquidation or bankruptcy of the Company. k. Right of First Refusal. The Company agrees to provide the Buyer with a right of first refusal with respect to subsequent financings, as follows: The Company shall not, without the prior written consent of the Buyer (which consent shall not be unreasonably withheld) sell any of its equity securities in a transaction intended to be exempt or not subject to registration under the Securities Act (a "Subsequent Placement") until June ___, 2001 other than (v) the granting of options or warrants to employees, consultants, officers and directors, and the issuance of shares upon exercise of options granted, under any stock option plan heretofore or hereinafter duly adopted by the Company, (w) shares of Common Stock issuable upon exercise of currently outstanding options and warrants and upon conversion of any currently outstanding convertible securities of the Company, (x) shares of Common Stock issuable upon conversion of the Series A or B Preferred Shares or any warrants issued in connection therewith, (y) any transaction for the primary benefit of any person or entity other than the Company such as Electronic Medical Distribution, Inc. or any other subsidiary or affiliate of the Company and (z) shares of Common Stock and other securities issued (i) in connection with mergers and acquisitions and (ii) to strategic investors, unless (A) the Company delivers to the Buyer a written notice (the "Subsequent Placement Notice") of its intention to effect such Subsequent Placement, which Subsequent Placement Notice shall describe in reasonable detail the proposed terms of such Subsequent Placement, the amount of proceeds intended to be raised thereunder, the entity with which such Subsequent Placement shall be effected, and attached to which shall be a term sheet or similar document relating thereto and (B) the Buyer shall not have notified the Company by 5:30 p.m. (New York City time) on the third business day after the delivery of the Subsequent Placement Notice of its willingness to provide financing to the Company on the same terms set forth in the Subsequent Placement Notice. If the Buyer shall notify the Company of its 11 12 willingness to so provide financing on such terms, the Buyer shall provide such financing, but the Company shall not be required in any event to accept financing from the Buyer in an amount less than or in excess of the amount set forth in the Subsequent Placement Notice. If the Buyer shall fail to notify the Company of its intention to provide such financing, the Company may effect the Subsequent Placement substantially upon the terms and to the entity or entities (or affiliates thereof) set forth in the Subsequent Placement Notice; provided, that the Company shall provide the Buyer with a second Subsequent Placement Notice, and the Buyer shall again have the right of first refusal as herein set forth, if the Subsequent Placement subject to the initial Subsequent Placement Notice shall not have been consummated for any reason on the terms set forth in such Subsequent Placement Notice within sixty business days after the date of the initial Subsequent Placement Notice]. 5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its respective nominee(s), for the Conversion Shares and Warrant Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Series B Preferred Shares or exercise of the Warrants (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior to registration of the Conversion Shares and Warrant Shares under the 1933 Act, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(g) hereof (in the case of the Conversion Shares and Warrant Shares, prior to registration of such shares under the 1933 Act) will be given by the Company to its transfer agent and that the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement. Nothing in this Section 5 shall affect in any way the Buyer's obligations and agreement to comply with all applicable securities laws upon resale of the Series B Preferred Shares, the Conversion Shares, the Warrants, and the Warrant Shares. If the Buyer provides the Company with an opinion of counsel, satisfactory in form and substance to the Company, that registration of a resale by the Buyer of any of the Series B Preferred Shares, the Conversion Shares, the Warrants, or the Warrant Shares is not required under the 1933 Act, the Company shall permit the transfer, and, in the case of the Conversion Shares or the Warrant Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by the Buyer. 6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company hereunder to issue and sell the Series B Preferred Shares to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion: a. The Buyer shall have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company. 12 13 b. The Amendment shall have been filed with the Secretary of State of the State of Georgia. c. The Buyer shall have delivered to the Company the Purchase Price for the Series B Preferred Shares being purchased by the Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company. d. The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date. 7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The obligation of the Buyer hereunder to purchase the Series B Preferred Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Buyer's sole benefit and may be waived by the Buyer at any time in its sole discretion: a. The Company shall have executed this Agreement and the Registration Rights Agreement, and delivered the same to the Buyer. b. The Common Stock shall be authorized for quotation on the Nasdaq SmallCap Market and trading in the Common Stock shall not have been suspended for any reason and all of the Conversion Shares issuable upon conversion of the Series B Preferred Shares shall be approved for listing. c. The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in Section 3 above, in which case, such representations and warranties shall be true and correct without further qualification) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, without limitation an update as of the Closing Date regarding the representation contained in Section 3(c) above. 13 14 d. The Buyer shall have received the opinion of the Company's counsel dated as of the Closing Date, in form, scope and substance reasonably satisfactory to the Buyer and in substantially the form of Exhibit "D" attached hereto. e. The Company shall have executed and delivered to the Buyer the Certificates (in such denominations as the Buyer shall request) for the Series B Preferred Shares being purchased by the Buyer at the Closing. f. The Board of Directors of the Company shall have adopted the resolutions in substantially the form of Exhibit "E" attached hereto. g. As of the Closing Date, the Company shall as of the Closing Date have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Series B Preferred Shares, such number of shares of Common Stock equal to or greater than 100% of the number of shares of Common Stock for which are issuable upon conversion of all of the Series B Preferred Shares, and the Warrant Shares could be issued at any time under this Agreement. h. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and acknowledged in writing by the Company's transfer agent. 8. INDEMNIFICATION. In consideration of the Buyer's execution and delivery of this Agreement and acquiring the Series B Preferred Shares, the Conversion Shares, and the Warrants, and the Warrant Shares hereunder and in addition to all of the Company's other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Buyer and each other holder of the Series B Preferred Shares, the Conversion Shares, and the Warrants, and the Warrant Shares and all of their officers, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "INDEMNITEES") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement, the Series B Preferred Shares, the Warrants, or the Registration Rights Agreement or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement, the Certificate of Designations, the Warrants, or the Registration Rights Agreement or any other certificate, instrument or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or made against such Indemnitee and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement or any other instrument, document or agreement executed pursuant hereto by any of the Indemnities, any transaction financed or to be financed in whole or in part, 14 15 directly or indirectly, with the proceeds of the issuance of the Series B Preferred Shares or the status of the Buyer or holder of the Series B Preferred Shares, the Warrants, or the Conversion Shares or the Warrant Shares, as an investor in the Company, except for any Indemnified Liability which directly or primarily results from the particular Indemnitee's gross negligence or willful misconduct for which such holder shall indemnify the Company in the same manner as provided in this Section 8. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. 9. GOVERNING LAW: MISCELLANEOUS. a. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia without regard to the principles of conflict of laws. Any dispute or controversy between the parties arising in connection with this agreement or the subject matter contemplated by this agreement shall be resolved by arbitration before a three-member panel of the American Arbitration Association in accordance with the commercial arbitration rules of said forum and the Federal Arbitration Act, 9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said arbitrators shall be empowered to award all forms of relief and damages claimed, including, but not limited to, attorney's fees, expenses of litigation and arbitration, exemplary damages, and prejudgment interest. Notwithstanding the foregoing, Buyer may at any time and at its option, whether or not an arbitration action is then pending, initiate a civil action for temporary and permanent injunctive and other equitable relief against Company. Company acknowledges that upon any breach of Buyer's conversion rights hereunder, Buyer's resulting injury may not be adequately compensated by a remedy at law. Accordingly, upon such breach, Buyer, at its election and without limitation of its other remedies, shall be entitled to pursue a claim for specific performance of this Agreement, and Company hereby waives the right to assert any defense thereto that Purchaser has an adequate remedy at law. The parties further agree that any arbitration action between them shall be heard in Atlanta, Georgia, and expressly consent to the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and the United States District Court for the Northern District of Georgia, Atlanta Division for the adjudication of any civil action asserted pursuant to this Paragraph. b. Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event any signature page is delivered by facsimile transmission, the party using such means of delivery shall cause four (4) additional original executed signature pages to be physically delivered to the other party within five (5) days of the execution and delivery hereof. c. Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. 15 16 d. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. e. Entire Agreement, Amendments. This Agreement supersedes all other prior oral or written agreements between the Buyer, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. f. Notices. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days after being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: 5655 Peachtree Parkway Atlanta, Georgia 30092 Attn: Chief Financial Officer Telephone: (770) 246-2000 Facsimile: (770) 368-0784 With a copy to (which shall not constitute notice): Raymond L. Moss, Esq. Sims Moss Kline & Davis LLP 400 Northpark Town Center, Suite 310 1000 Abernathy Road, N.E. Atlanta, Georgia 30328 Telephone: (770) 481-7201 Facsimile: (770) 481-7210 If to the Transfer Agent: 16 17 American Stock Transfer 40 Wall Street New York, New York 10005 Attn: Wallace Chun Telephone: (718) 921-8206 Facsimile: (718) 921-8336 If to the Buyer, to its address and facsimile number on the Schedule of Buyers, with copies to the Buyer's counsel as set forth on the Schedule of Buyers. Each party shall provide five (5) days' prior written notice to the other party of any change in address or facsimile number. g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. The Buyer may assign its rights hereunder without the consent of the Company, provided, however, that the Company is given written notice by such holder at the time of such transfer, stating the name and address of such transferee and any such assignment shall not release the Buyer from its obligations hereunder unless such obligations are assumed by such assignee and the Company has consented to such assignment and assumption. h. No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. i. Survival. The representations and warranties of the Company and the Buyer contained in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8 shall survive for a period of one year following the Closing. The Buyer shall be responsible only for its own representations, warranties, agreements and covenants hereunder. j. Publicity. The Company and the Buyer shall have the right to approve before issuance any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or other public disclosure with respect to such transactions as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release and shall be provided with a copy thereof). k. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably 17 18 request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 1. Termination. In the event that the Closing shall not have occurred with respect to the Buyer on or before five (5) business days from the date hereof due to the Company's or the Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party. m. Placement Agent. The Company acknowledges that it has engaged J.P. Carey Securities, Inc. and Greenfield Capital Partners, LLC as agents in connection with the sale of the Series B Preferred Shares (the "Placement Agents"). The Company shall be responsible for the payment of any finder's fees (which includes cash and warrants to purchase Common Stock) relating to or arising out of the transactions contemplated hereby. n. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. o. Independent Counsel. The parties to this Agreement acknowledge that the Company has received independent counsel form the law firm of Sims Moss Kline & Davis LLP which is acting as its counsel. Buyers and the Placement Agents have been advised by Sims Moss Kline & Davis LLP to seek independent advice with respect to the terms and conditions of this Agreement and any related agreements before signing them. 10. PUBLICITY. The Company agrees that it will not issue any press release or other public announcement of the transactions contemplated by this Agreement without the prior consent of the Buyer, which shall not be unreasonably withheld nor delayed by more than two trading days from its receipt of such proposed release; provided, however, that if the Company is advised by its outside counsel that it is required by law or the applicable rules of any Principal Market to issue any such press release or public announcement, then, it may do so without the prior consent of the Buyer, although it shall be required to provide prior notice (which may be by telephone) to the Buyer that it intends to issue such press release or public announcement. No release shall name the Buyer without its express consent. REMAINDER OF PAGE INTENTIONALLY BLANK 18 19 IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities Purchase Agreement to be duly executed as of the date first written above. "COMPANY" BIOSHIELD TECHNOLOGIES, INC. By: ______________________________________ Name: Timothy C. Moses Its: Chairman of the Board and Chief Executive Officer "BUYER" WILSON LLC By: ______________________________________ Name: ____________________________________ Title:____________________________________ 19 20 SCHEDULE OF BUYERS
NUMBER OF SERIES B BUYER'S NAME ADDRESS/FACSIMILE NUMBER OF BUYER PREFERRED SHARES - ------------ --------------------------------- ------------------ WILSON LLC c/o Citco Trustees (Cayman) Ltd. 500 Attn: David Sims Corporate Centre, Windwood One West Bay Road P.O. Box 31106 SMB Grand Cayman, Cayman Islands 284-494-4771
21 SCHEDULE 3(c) Capitalization 22 SCHEDULE 3(e) Conflicts None. 23 SCHEDULE 3(f) Financial Statements Reference is made to all public filings made by the Company with the SEC available at http://www.sec.gov/. 24 SCHEDULE 3(h) Litigation None. 25 SCHEDULE 3(n) Intellectual Property None. 26 SCHEDULE 3(n) Liens None. 27 SCHEDULE 3(p) Tax Status None. 28 SCHEDULE 4(d) Use of Proceeds Working capital. 29 EXHIBIT A Amendment to Articles of Incorporation See Tab 2. 30 EXHIBIT B Registration Rights Agreement See Tab 3. 31 EXHIBIT C Warrant Agreement See Tab 4. 32 EXHIBIT D Legal Opinion See Tab 6. 33 EXHIBIT E Board Resolutions See attached. EX-10.87 3 ex10-87.txt REGISTRATION RIGHTS AGREEMENT 1 Exhibit 10.87 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of June 14, 2000, by and among BioShield Technologies, Inc., a Georgia corporation, with headquarters at 5655 Peachtree Parkway, Atlanta, Georgia 30092 (the "COMPANY"), and the undersigned buyer (the "BUYER" OR "BUYERS"). WHEREAS: A. In connection with the Securities Purchase Agreement by and among the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement, to issue and sell to the Buyer (i) 500 shares of the Company's Series B Convertible Preferred Stock (the "PREFERRED STOCK"), which will be convertible into shares of the Company's common stock, no par value per share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES") in accordance with the terms of (i) the Company's Amendments to its Articles of Incorporation (the "ARTICLES") and (ii) warrants (the "Warrants") to purchase 79,281 shares of Common Stock (as converted the "Warrant Shares"); and B. To induce the Buyers to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 ACT"), and applicable state securities laws: NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Buyers hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: a. "INVESTOR" means the Buyer and any transferee or assignee thereof to whom the Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9. b. "PERSON" means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency. c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis ("RULE 415"), and the declaration or ordering of 2 effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the "SEC"). d. REGISTRABLE SECURITIES" means the Conversion Shares and the Warrant Shares issued or issuable upon conversion of the Preferred Stock and exercise of the Warrants, respectively, and any shares of capital stock issued or issuable with respect to the Conversion Shares, the Preferred Stock or the Warrant Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event, excluding any dividend or distribution of the securities of Electronic Medical Distribution, Inc. or any other subsidiary or affiliate of the Company. e. "REGISTRATION STATEMENT" means a registration statement of the Company filed under the 1933 Act. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set for-the in the Securities Purchase Agreement. 2. REGISTRATION. a. Mandatory Registration. The Company shall prepare, and, on or prior to July 31, 2000 file (the "FILING DEADLINE") with the SEC a Registration Statement or Registration Statements (as is necessary) on Form S-3 (or, if such form is unavailable for such a registration, on such other form as is available for such a registration, subject to the consent of each Buyer and the provisions of Section 2(e), which consent will not be unreasonably withheld), covering the resale of all of the Registrable Securities, which Registration Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement(s) also covers such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the Preferred Stock to prevent dilution resulting from stock splits, stock dividends or similar transactions. Such Registration Statement shall initially register for resale at least 1,500,000 shares of Common Stock, subject to adjustment as provided in Section 3(b), and such registered shares of Common Stock shall be allocated among the Investors pro rata based on the total number of Registrable Securities issued or issuable as of each date that a Registration Statement, as amended, relating to the resale of the Registrable Securities is declared effective by the SEC. The Company shall use its best efforts to have the Registration Statement declared effective by the SEC within ninety (90) days after the issuance of the Preferred Stock (the "REGISTRATION DEADLINE"). The Company shall permit the registration statement to become effective within five (5) business days after receipt of a "no review" notice from the SEC. If the Registration Statement has not been filed by the Filing Deadline or the Registration Statement is not declared effective by the Registration Deadline, then the Company will be required to pay the Buyers upon demand in cash an amount equal to (i) 1.5% of the face amount of the unredeemed Preferred Stock for the first thirty (30) days and (ii) 3.0% of the face amount of the unredeemed Preferred Stock for every thirty days thereafter that the Filing Deadline or Registration Deadline is late. 2 3 b. Underwritten Offering. If any offering pursuant to a Registration Statement pursuant to Section 2(a) involves an underwritten offering, the Buyers shall have the right to select one legal counsel and an investment banker or bankers and manager or managers to administer their interest in the offering, which investment banker or bankers or manager or managers shall be reasonably satisfactory to the Company. c. Piggy-Back Registrations. If at any time prior to the expiration of the Registration Period (as hereinafter defined) the Company proposes to file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the 1933 Act of any of its securities (other than on Form S-4 or Form S-8 or their then equivalents relating to securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans) the Company shall promptly send to each Investor who is entitled to registration rights under this Section 2(c) written notice of the Company's intention to file a Registration Statement and of such Investor's rights under this Section 2(c) and, if within twenty (20) days after receipt of such notice, such Investor shall so request in writing, the Company shall include in such Registration Statement all or any part of the Registrable Securities such Investor requests to be registered, subject to the priorities set forth in Section 2(d) below. No right to registration of Registrable Securities under this Section 2(c) shall be construed to limit any registration required under Section 2(a). The obligations of the Company under this Section 2(c) may be waived by Investors holding a majority of the Registrable Securities. If an offering in connection with which an Investor is entitled to registration under this Section 2(c) is an underwritten offering, then each Investor whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering. d. Priority in Piggy-Back Registration Rights in connection with Registrations or Company Account. If the registration referred to in Section 2(c) is to be an underwritten public offering for the account of the Company and the managing underwriter(s) advise the Company in writing, that in their reasonable good faith opinion, marketing or other factors dictate that a limitation on the number of shares of Common Stock which may be included in the Registration Statement is necessary to facilitate and not adversely affect the proposed offering, then the Company shall include in such registration: (1) first, all securities the Company proposes to sell for its own account, (2) second, up to the full number of securities proposed to be registered for the account of the holders of securities entitled to inclusion of their securities in the Registration Statement by reason of demand registration rights, and (3) third, the securities requested to be registered by the Investors and other holders of securities entitled to participate in the registration, drawn from them pro rata based on the number each has requested to be included in such registration. 3. RELATED OBLIGATIONS. 3 4 Whenever an Investor has requested that any Registrable Securities be registered pursuant to Section 2(c) or at such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2(a), the Company will use its best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations: a. The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities (on or prior to July 31. 2000, for the registration of Registrable Securities pursuant to Section 2(a)) and use its best efforts to cause such Registration Statement(s) relating to Registrable Securities to become effective as soon as possible after such filing (by the ninetieth (90th) day following the issuance of the relevant Preferred Stock for the registration of Registrable Securities pursuant to Section 2(a), and keep the Registration Statement(s) effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which the Investors may sell all of the Registrable Securities without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto) or (ii) the date on which (A) the Investors shall have sold all the Registrable Securities and (B) none of the Preferred Stock is outstanding the period ending on such earlier date being referred to herein as (the "REGISTRATION PERIOD"), which Registration Statement(s) (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. b. The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement(s) and the prospectus(es) used in connection with the Registration Statement(s), which prospectus(es) are to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep the Registration Statement(s) effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement(s) until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement(s). In the event the number of shares available under a Registration Statement filed pursuant to this Agreement is insufficient to cover all of the Registrable Securities, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within fifteen (15) days after the necessity therefor arises (based on the market price of the Common Stock and other relevant factors on which the Company reasonably elects to rely). The Company shall use its best efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed "insufficient to cover all of the Registrable Securities" if at any time the number of Registrable Securities issued or issuable upon conversion of the Preferred Stock is greater than the quotient determined by dividing (i) the 4 5 number of shares of Common Stock available for resale under such Registration Statement by (ii) 1.0. For purposes of the calculation set forth in the foregoing sentence, any restrictions on the convertibility of the Preferred Stock shall be disregarded and such calculation shall assume that the Preferred Stock are then convertible into shares of Common Stock at the then prevailing Conversion Rate (as defined in the Preferred Stock). c. The Company shall furnish to each Investor whose Registrable Securities are included in the Registration Statement(s) and its legal counsel without charge (i) promptly after the same is prepared and filed with the SEC at least one copy of the Registration Statement and any amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, the prospectus(es) included in such Registration Statement(s) (including each preliminary prospectus ) and, with regards to the Registration Statement, any correspondence by or on behalf of the Company to the SEC or the staff of the SEC and any correspondence from the SEC or the staff of the SEC to the Company or its representatives, (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, including any preliminary prospectus, as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor. d. The Company shall use reasonable efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement(s) under such other securities or "blue sky" laws of such jurisdictions in the United States as any Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to quality the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (a) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (b) subject itself to general taxation in any such jurisdiction, or (c) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose. e. In the event Investors who hold a majority of the Registrable Securities being offered in the offering select underwriters for the offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriters of such offering. 5 6 f. As promptly as practicable after becoming aware of such event, the Company shall notify each Investor in writing of the happening of any event, of which the Company has knowledge, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to each Investor (or such other number of copies as such Investor may reasonably request). The Company shall also promptly notify each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to each Investor by facsimile on the same day of such effectiveness and by overnight mail) (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. g. The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify each Investor who holds Registrable Securities being sold (and, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose. h. The Company shall permit each Investor a single firm of counsel or such other counsel as thereafter designated as selling stockholders' counsel by the Investors who hold a majority of the Registrable Securities being sold, to review and comment upon the Registration Statement(s) and all amendments and supplements thereto at least five (5) days prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement(s) or any amendment or supplement thereto without the prior approval of such counsel, which consent shall not be unreasonably withheld. i. At the request of the Investors who hold a majority of the Registrable Securities being sold, the Company shall furnish, on the date that Registrable Securities are delivered to an underwriter, if any, for sale in connection with the Registration Statement (i) if required by an underwriter, a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is 6 7 customarily given in an underwritten public offering, addressed to the underwriters and the Investors. j. The Company shall make available for inspection by (i) any Investor, (ii) any underwriter participating in any disposition pursuant to a Registration Statement, (iii) one firm of attorneys and one firm of accountants or other agents retained by the Investors, and (iv) one firm of attorneys retained by all such underwriters (collectively, the "INSPECTORS") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "RECORDS"), as shall be reasonably deemed necessary by each Inspector to enable each Inspector to exercise its due diligence responsibility, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence provided, however, that each Inspector shall hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement. Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. k. The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. l. The Company shall use its best efforts either to (i) cause all the Registrable Securities covered by a Registration Statement to be listed on each national securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, (ii) to secure designation and quotation of all the Registrable Securities 7 8 covered by the Registration Statement on the Nasdaq Small Cap System, or, (iii) if, despite the Company's best efforts to satisfy the preceding clause (iii), the Company is unsuccessful in satisfying the preceding clause (iv), to secure the inclusion for quotation on the over-the-counter market for such Registrable Securities, and, without limiting the generality of the foregoing, in the case of clause (iii) or (iv), to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(l). m. The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, any managing underwriter or underwriters, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the managing underwriter or underwriters, if any, or, if there is no managing underwriter or underwriters, the Investors may reasonably request and registered in such names as the managing underwriter or underwriters, if any, or the Investors may request. Not later than the date on which any Registration Statement registering the resale of Registrable Securities is declared effective, the Company shall deliver to its transfer agent instructions, accompanied by any reasonably required opinion of counsel, that permit sales of unlegended securities in a timely fashion that complies with then mandated securities settlement procedures for regular way market transactions. n. The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investors of Registrable Securities pursuant to a Registration Statement. o. The Company shall provide a transfer agent and registrar of all such Registrable Securities not later than the effective date of such Registration Statement. p. If requested by the managing underwriters or an Investor, the Company shall immediately incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriters and the Investors agree should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; make all required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and supplement or make amendments to any Registration Statement if requested by a shareholder or any underwriter of such Registrable Securities. q. The Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such 8 9 other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities. r. The Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder. 4. OBLIGATIONS OF THE INVESTORS. a. At least five (5) days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such Investor's Registrable Securities included in the Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. b. Each Investor by such Investor's acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement(s) hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement. c. In the event Investors holding a majority of the Registrable Securities being registered determine to engage the services of an underwriter, each Investor agrees to enter into and perform such Investor's obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless such Investor notifies the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement(s). d. Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement(s) covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of 3(f) and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy all copies in such Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. 9 10 e. No Investor may participate in any underwritten registration hereunder unless such Investor (i) agrees to sell such Investor's Registrable Securities on the basis provided in any underwriting arrangements approved by the Investors entitled hereunder to approve such arrangements, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions. 5. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company shall be borne by the Company. The Investors shall bear the fees and disbursements of their counsel. 6. INDEMNIFICATION In the event any Registrable Securities are included in a Registration Statement under this Agreement: a. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor who holds such Registrable Securities, the directors, officers, partners, employees, agents and each Person, if any, who controls any Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 ACT"), and any underwriter (as defined in the 1933 Act) for the Investors, and the directors and officers of, and each Person, if any, who controls, any such underwriter within the meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, "CLAIMS") incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("BLUE SKY FILING"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as 10 11 amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject to the restrictions set forth in Section 6(d) with respect to the number of legal counsel, the Company shall reimburse the Investors and each such underwriter or controlling person, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by any Indemnified Person or underwriter for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c); (ii) with respect to any preliminary prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or mission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company pursuant to Section 3(c), and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company (i) and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. b. In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written 11 12 information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(d), such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. c. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in any distribution, to the same extent as provided above, with respect to information such persons so furnished in writing expressly for inclusion in the Registration Statement. d. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Company shall pay reasonable fees for only one separate legal counsel for the Investors, which counsel shall be acceptable to the Company and such legal counsel shall be selected by the Investors holding a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect 12 13 thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6. e. The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. 8. REPORTS UNDER THE 1934 ACT. With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the investors to sell securities of the Company to the public without registration ("RULE 144"), the Company agrees to: a. make and keep public information available, as those terms are understood and defined in Rule 144; b. file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains 13 14 subject to such requirements (it being understood that nothing herein shall limit the Company's obligations under Section 4(c) of the Securities Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and c. furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the investors to sell such securities pursuant to Rule 144 without registration. 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; (v) such transfer shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement; (vi) such transferee shall be an "ACCREDITED INVESTOR" as that term is defined in Rule 501 of Regulation D promulgated under the 1933 Act; and (vii) in the event the assignment occurs subsequent to the date of effectiveness of the Registration Statement required to be filed pursuant to Section 2(a), the transferee agrees to pay all reasonable expenses of amending or supplementing such Registration Statement to reflect such assignment. 10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors who hold a majority of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. 11. MISCELLANEOUS. a. A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities 14 15 with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. b. Any notices consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days after being sent by U.S. certified mail, return receipt requested, or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: BioShield Technologies, Inc. 5655 Peachtree Parkway Atlanta, Georgia 30092 Facsimile: (770) 246-2196 Attention: Chief Financial Officer With a copy to: Raymond L. Moss, Esq. Sims Moss Kline & Davis LLP 400 Northpark Town Center, Suite 310 1000 Abernathy Road, N.E. Atlanta, Georgia 30328 Facsimile: (770) 481-7210 If to a Buyer, to its address and facsimile number on the Schedule of Buyers, with copies to such Buyer's counsel as set forth on the Schedule of Buyers. Each party shall provide five (5) days' prior written notice to the other party of any change in address or facsimile number. c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. d. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia without regard to the principles of conflict of laws. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. e. This Agreement and the Securities Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement and the Securities Purchase Agreement 15 16 supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. f. Subject to the requirements of Section 9, this Agreement shall inure to the benefit and of and be binding upon the permitted successors and assigns of each of the parties hereto. g. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. h. This Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. i. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 16 17 IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written. COMPANY: BUYER: BIOSHIELD TECHNOLOGIES, INC. WILSON LLC By: _____________________________ By: _______________________________ Name: Timothy C. Moses Name: _____________________________ Its: Chairman of the Board and Its: ______________________________ Chief Executive Officer 17 18 SCHEDULE OF BUYERS
NUMBER OF SERIES B PREFERRED BUYER'S NAME ADDRESS/FACSIMILE NUMBER OF BUYER SHARES - --------------- ----------------------------------- ---------------------------- WILSON LLC c/o Citco Trustees (Cayman) Ltd. 500 Attn: David Sims Corporate Centre, Windwood One West Bay Road P.O. Box 31106 SMB Grand Cayman, Cayman Islands 284-494-4771
EX-10.88 4 ex10-88.txt PLACEMENT AGENCY AGREEMENT 1 Exhibit 10.88 PLACEMENT AGENCY AGREEMENT THIS AGREEMENT ("AGREEMENT"), made as of the 14 day of June, 2000, by and between BioShield Technologies, Inc., a Georgia corporation ("COMPANY"), and J.P. Carey Securities, Inc.,(the "AGENT"). WITNESSETH: WHEREAS, the Company proposes to issue and sell to certain investors (the "INVESTORS") shares of Series B Preferred Stock, par value $0.001 per share ("PREFERRED STOCK") and Warrants resulting in gross proceeds up to $10,000,000 (the Preferred Stock and Warrants to be sold, hereinafter referred to as the "SECURITIES") (the "OFFERING") not involving a public offering without registration under the Securities Act of 1933, as amended (the "'33 ACT"), pursuant to exemptions from the registration requirements of the Act under Regulation D promulgated under the Act ("REGULATION D"), as described below; and WHEREAS, the Agent has offered to assist the Company in placing the Securities on a "best efforts basis," and the Company desires to secure the services of the Agent on the terms and conditions hereinafter set forth; AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual promises, conditions and covenants herein contained, the parties hereto do hereby agree as follows: 1. Engagement of Agent. The Company hereby appoints the Agent, as its non-exclusive placement agent for the Offering, to sell up to $10,000,000 of securities (the "MAXIMUM SECURITIES") on a "best efforts basis," resulting in gross proceeds to the Company of up to $10,000,000. The Offering shall be made in one tranche (the "TRANCHE"). The Agent, subject to the terms and conditions herein set forth, accepts such appointment and agrees to use its best efforts to find purchasers for the Securities. 2. Representations and Warranties of the Company. In order to induce the Agent to enter into this Agreement, the Company hereby represents and warrants to and agrees with the Agent as follows: 2.1 Offering Documents. The Company and the Investors have prepared a Securities Purchase Agreements, Registration Rights Agreement and certain exhibits thereto in connection with the sale of the Securities, which documents have been or will be sent to the Investors. As used in this Agreement, the term "Offering Documents" refers to and means the Securities Purchase Agreement, Registration Rights Agreements, and certain exhibits thereto and all amendments, exhibits and supplements thereto, together with any other documents which are provided to the Agent by, or approved for Agent's use by, the Company for the purpose of this Offering. -1- 2 2.2 Provision of Offering Documents. The Company shall deliver to the Agent, without charge, as many copies of the Offering Documents as the Agent may reasonably require for the purposes contemplated by this Agreement. The Company authorizes the Agent, in connection with the Offering of the Securities, to use the Offering Documents as from time to time amended or supplemented in connection with the offering and sale of the Securities and in accordance with the applicable provisions of the '33 Act and Regulation D. The Company consents to the Agent's distribution of the Offering Documents to the Investor as a disclosure document about the Company, its business, prospects, financial condition and other matters. 2.3 Accuracy of Offering Documents. The Offering Documents, at the time of filing, conformed in all material respects with the requirements, to the extent applicable, of the '34 Act and the applicable Rules and Regulations and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. On each Closing Date (as hereinafter defined), the Offering Documents will contain all statements which are required to be stated therein in accordance with the '34 Act and the Rules and Regulations for the purposes of the proposed Offering, and all statements of material fact contained in the Offering Documents will be true and correct, and the Offering Documents will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Company does not make any representations or warranties as to the information contained in or omitted from the Offering Documents in reliance upon written information furnished on behalf of the Agent or the Investors specifically for use therein. 2.4 Duty to Amend. If during such period of time as in the opinion of the Agent or its counsel any Offering Documents relating to this offering are required to be delivered under the '34 Act, any event occurs or any event known to the Company relating to or affecting the Company shall occur as a result of which the Offering Documents as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time after the date hereof to amend or supplement the Offering Documents to comply with the '34 Act or the applicable Rules and Regulations, the Company shall forthwith notify the Agent thereof and shall prepare such further amendment or supplement to the Offering Documents as may be required and shall furnish and deliver to the Agent and to others, whose names and addresses are designated by the Agent, all at the cost of the Company, a reasonable number of copies of the amendment or supplement or of the amended or supplemented Offering Documents which, as so amended or supplemented, will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the Offering Documents not misleading in the light of the circumstances when it is delivered to the Investor and which will comply in all respects with the requirements (to the extent applicable) of the '34 Act and the applicable Rules and Regulations. -2- 3 2.5 Incorporation and Standing. The Company is, and at each Closing Date will be, duly formed and validly existing in good standing as a corporation under the laws of the State of Delaware and with full power and authority (corporate and other) to own its properties and conduct its business, present and proposed, as described in the Offering Documents; the Company, has full power and authority to enter into this Agreement; and the Company is duly qualified and in good standing as a foreign entity in each jurisdiction in which the failure to so qualify would have a material adverse effect on the Company or its properties. 2.6 Legality of Outstanding Securities. Prior to each Closing Date, the outstanding securities of the Company have been duly and validly authorized and issued, fully paid and nonassessable and conform in all material respects to the statements with regard thereto contained in the Offering Documents. 2.7 Legality of Securities. The Securities, when sold and delivered, will constitute legal, valid and binding obligations of the Company, enforceable in accordance with the terms thereof, and shall be duly and validly issued and outstanding, fully paid and nonassessable. The Securities, when issued, shall be duly and validly issued and outstanding, fully paid and non-assessable. 2.8 Litigation. Except as set forth in the Offering Documents, there is now, and at each Closing Date there will be, no action, suit or proceeding before any court or governmental agency, authority or body pending or, to the knowledge of the Company, threatened, which might result in judgements against the Company not adequately covered by insurance or which collectively might result in any material adverse change in the condition (financial or otherwise) or business of the Company or which would materially adversely affect the properties or assets of the Company. 2.9 Authority. The execution and delivery by the Company of this Agreement have been duly authorized by all necessary action, and this Agreement is the valid, binding and legally enforceable obligation of the Company subject to standard qualifications as to the availability of equitable remedies, the effect of bankruptcy and other laws relating to the protection of debtors and public policy opinions promulgated by the Commission with respect to indemnification against liabilities under the '33 Act. 3. Issue, Sale and Delivery of the Securities. 3.1 Deliveries of Securities. Certificates in such form that, subject to applicable transfer restrictions as described in the Securities Purchase Agreement, they can be negotiated by the Investor for the Securities, and warrants representing the Agent's warrant compensation described in Section 3.4 below ("WARRANTS"), shall be delivered by the Company to the Escrow Agent, with copies made available to the Agent for checking at least one (1) full business day prior to the first Closing Date. The certificates for the Securities and the Warrants shall be delivered at the Closing (as defined hereinafter). -3- 4 3.2 Escrow of Funds. Pursuant to the Escrow Agreement, a copy of which is attached hereto as Exhibit "B" (the "ESCROW AGREEMENT"), executed by the Company, the Agent and the escrow agent (the "ESCROW AGENT"), the Investor shall place all funds for purchase of Securities and the Company will place the Securities for each Closing in an escrow account set up by the Escrow Agent. Upon each Closing, Escrow Agent shall release the subscription funds to the Company and the certificates representing the Securities shall be released by the Company to the Investor (the "CLOSING"). 3.3 Closing Date. Each Closing shall take place at the offices of Sims Moss Kline & Davis LLP, 400 Northpark Town Center, Suite 310, 1000 Abernathy Road, NE, Atlanta, Georgia 30328 at such time and date ("CLOSING DATE") as mutually agreed by the Company and the Agent. The Closing Date may be changed by mutual agreement of the Investor and the Company. 3.4 Agent's Compensation. The Company shall pay the Agent: (a) A commission of six percent (6%) of the gross subscription proceeds (the "AGENT FEE") for the Tranche (the "GROSS PROCEEDS") to be paid upon Closing on the Closing Date; (b) In lieu of any other compensation, a commission of six percent (6%) of each draw down of funds by the Company pursuant to the Equity Line Credit Agreement, dated as of July, 1999 ("1999 Equity Line"), as amended and a commission of two and one half percent (2 -1/2%) of each draw down of funds by the Company pursuant to the Equity Line Credit Agreement, dated as of even date herewith (collectively, the "Equity Lines"). (c) In addition to the fees and reimbursement of costs set forth in Sections 3.4 and 3.5 of this Agreement, the Company shall issue to the Agent (as defined below) warrants to purchase shares of common stock of Electronic Medical Distribution, Inc. ("eMD") in an amount equal to warrants to purchase 10,000 shares of common stock of eMD for each $1,000,000 of Gross Proceeds resulting from the 1999 Equity Line, which shall be exercisable for the common stock of eMD on a one-for-one basis at a price per share of $4.67 per share, subject to adjustment for stock splits, recapitalizations and similar transactions. In addition, at the Closing Date, assuming the Maximum Securities is sold, the Agent shall be entitled to receive from the Company a warrant to purchase 100,000 shares of the Common Stock of the Company at a purchase price per share of $19.70. Each of the warrants shall have cashless exercise provisions. The term of the warrants shall be five years. The Agent and any sub-agent by way of transfer or assignment, agrees to enter into any contractual lock-up agreements which may be required by the Company's underwriters in connection with an underwritten public offering of the Company's Securities or other securities. The Agent shall be responsible for paying any other agent or sub-agent fee, including, but not limited to, Greenfield Capital Partners, LLC. -4- 5 3.5 Payment of Fees. The Escrow Agent shall be instructed to pay all fees and cost reimbursements and Warrants pursuant to section 3.4 of this Agreement, directly to the Agent from the Gross Proceeds of the Closing, simultaneously with the transfer of Gross Proceeds to the Company. -5- 6 4. Offering of the Securities on Behalf of the Company. 4.1 In offering the Securities for sale, the Agent shall offer them solely as an agent for the Company, and such offer shall be made upon the terms and subject to the conditions set forth in the Offering Documents. The Agent shall commence making such offer as an agent for the Company as soon as possible following delivery of the Offering Documents or in any manner inconsistent with federal or state securities laws. 4.2 The Agent will not make offers to sell the Securities to, or solicit offers to subscribe for any Securities from, persons or entities that are not "accredited investors" as defined in Regulation D. 5. Confidentiality/Protection of Clients. 5.1 The Company agrees to maintain the confidentiality of the Agent's clients, except as required by applicable law. Such clients shall be those entities which invest or have been offered an opportunity to invest by the Agent in the Offering (the "CLIENTS"). For a period of two years from the Closing, the Company will not solicit or enter into any financing transaction with the Clients without the written consent of Agent and payment to Agent compensation no less than the compensation to be paid to Agent hereunder for raising a like amount. The restrictions on the Company and Agent's right to compensation described in the preceding sentence shall not apply to any Clients included in a financing transaction as the result of the efforts of an agent or other intermediary other than Agent. 5.2 In the event that Company breaches Section 5.1 of this Agreement, Agent shall be entitled to receive compensation in the same proportion to the financing done without Agent's participation as the compensation to Agent under this Agreement bears to the financing raised in this Offering. 6. Covenants of the Company. The Company covenants and agrees with the Agent that: 6.1 After the date hereof, the Company will not at any time, prepare and distribute any amendment or supplement to the Offering Documents, of which amendment or supplement the Agent shall not previously have been advised and the Agent and its counsel furnished with a copy within a reasonable time period prior to the proposed adoption thereof, or to which the Agent shall have reasonably objected in writing on the ground that it is not in compliance with the '34 Act or the Rules and Regulations (if applicable). 6.2 The Company will pay, whether or not the transactions contemplated hereunder are consummated or this Agreement is prevented from becoming effective or is terminated, all costs and expenses incident to the performance of its obligations under this Agreement, including all expenses incident to the authorization of the Securities and their issue and delivery to the Agent, any original issue taxes in connection therewith, all transfer taxes, if any, incident to the initial sale of the -6- 7 Securities, the fees and expenses of the Company's counsel (except as provided below) and accountants, the cost of reproduction and furnishing to the Agent copies of the Offering Documents as herein provided; provided, however, that the Company shall not be responsible for the payment of fees and costs incurred by Agent, including attorney's fees of or any costs incurred by the Agent's counsel. 6.3 The Company shall be responsible for making any and all filings required by the Blue Sky authorities and filings required by the laws of the jurisdictions in which Investor is located, if any. 7. Indemnification. 7.1 The Company agrees to indemnify and hold harmless the Agent, each person who controls the Agent within the meaning of Section 15 of the '33 Act and the Agent's employees, accountants, attorneys and agents (the "AGENT'S INDEMNITEES") against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the '33Act or any other statute or at common law for any legal or other expenses (including the costs of any investigation and preparation) incurred by them in connection with any litigation, whether or not resulting in any liability, but only insofar as such losses, claims, damages, liabilities and litigation arise out of or are based upon any untrue statement of material fact contained in the Offering Documents or any amendment or supplement thereto or any application or other document filed in any state or jurisdiction in order to qualify the Securities under the Blue Sky or securities laws thereof, or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein, under the circumstances under which they were made, not misleading, all as of the date of the Offering Documents or of such amendment as the case may be; provided, however, that the indemnity agreement contained in this Section 7.1 shall not apply to amount paid in settlement of any such litigation, if such settlements are made without the consent of the Company, nor shall it apply to the Agent's Indemnitees in respect to any such losses, claims, damages or liabilities arising out of or based upon any such untrue statement or alleged untrue statement or any such omission or alleged omission, if such statement or omission was made in reliance upon information furnished in writing to the Company by the Agent specifically for use in connection with the preparation of the Offering Documents or any such amendment or supplement thereto or any application or other document filed in any state or jurisdiction in order to qualify the Securities under the Blue Sky or securities law thereof. This indemnity agreement is in addition to any other liability which the Company may otherwise have to the Agent's Indemnitees. The Agent's Indemnitees agree, within ten (10) days after the receipt by them of written notice of the commencement of any action against them in respect to which indemnity may be sought from the Company under this Section 7.1, to notify the Company in writing of the commencement of such action; provided, however, that the failure of the Agent's Indemnitees to notify the Company of any such action shall not relieve the Company from any liability which it may have to the Agent's Indemnitees on account of the indemnity agreement contained in this Section 7.1, and further shall not relieve the Company from any other liability which it may have to the Agent's Indemnitees, and if the Agent's Indemnitees shall notify the Company of the commencement thereof, the Company -7- 8 shall be entitled to participate in (and, to the extent that the Company shall wish, to direct) the defense thereof at its own expense, but such defense shall be conducted by counsel of recognized standing and reasonably satisfactory to the Agent's Indemnitees, defendant or defendants, in such litigation. The Company agrees to notify the Agent's Indemnitees promptly of the commencement of any litigation or proceedings against the Company or any of the Company's officers or directors of which the Company may be advised in connection with the issue and sale of any of the Securities and to furnish to the Agent's Indemnitees, at their request, to provide copies of all pleadings therein and to permit the Company's Indemnitees to be observers therein and apprise the Agent's Indemnitees of all developments therein, all at the Company's expense. 7.2 The Agent agrees, in the same manner and to the same extent as set forth in Section 7.1 above, to indemnify and hold harmless the Company, each person who controls the Company within the meaning of Section 15 of the '33 Act and the Company's and Company's employees, accountants, attorneys and agents (the "COMPANY'S INDEMNITEES") with respect to (i) any statement in or omission from the Offering Documents or any amendment or supplement thereto or any application or other document filed in any state or jurisdiction in order to qualify the Securities under the Blue Sky or securities laws thereof, or any information furnished pursuant to this Agreement, if such statement or omission was made in reliance upon information furnished in writing to the Company by the Agent on its behalf specifically for use in connection with the preparation thereof or supplement thereto, or (ii) any untrue statement of a material fact made by the Agent or its agents not based on statements in the Offering Documents or authorized in writing by the Company, or with respect to any misleading statement made by the Agent or its agents resulting from the omission of material facts which misleading statement is not based upon the Offering Documents, or information furnished in writing by the Company or, (iii) any breach of any representation, warranty or covenant made by the Agent in this Agreement. The Agent shall not be liable for amounts paid in settlement of any such litigation if such settlement was effected without its consent. In case of the commencement of any action in respect of which indemnity may be sought from the Agent, the Company's Indemnitees shall have the same obligation to give notice as set forth in Section 7.1 above, subject to the same loss of indemnity in the event such notice is not given, and the Agent shall have the same right to participate in (and, to the extent that it shall wish, to direct) the defense of such action at its own expense, but such defense shall be conducted by counsel of recognized standing reasonably satisfactory to the Company. The Agent agrees to notify the Company's Indemnitees and, at their request, to provide copies of all pleadings therein and to permit the Company's Indemnitees to be observers therein and apprise them of all the developments therein, all at the Agent's expense. 8. Effectiveness of Agreement. This Agreement shall become effective (i) at 9:00 a.m., New York City time, on the date hereof or (ii) upon release by the Escrow Agent of the Securities for offering after the date hereof, whichever shall last occur. 9. Termination. -8- 9 9.1 This Agreement may be terminated by the Agent by notice to the Company in the event that the Company shall have failed or been unable to comply with any of the terms, conditions or provisions of this Agreement on the part of the Company to be performed, complied with or fulfilled within the respective times, if any, herein provided for, unless compliance therewith or performance or satisfaction thereof shall have been expressly waived by the Agent in writing. 9.2 This Agreement may be terminated by the Company by notice to the Agent in the event that the Agent shall have failed or been unable to comply with any of the terms, conditions or provisions of this Agreement on the part of the Agent to be performed, complied with or fulfilled within the respective times, if any, herein provided for, unless compliance therewith or performance or satisfaction thereof shall have been expressly waived by the Company in writing. 9.3 Any termination of this Agreement pursuant to this Section shall be without liability of any character (including, but not limited to, loss of anticipated profits or consequential damages) on the part of any party thereto, except that the Company shall remain obligated to pay the costs and expenses provided to be paid by it specified in Sections 3, 5, and 6; and the Company and the Agent shall be obligated to pay, respectively, all losses, claims, damages or liabilities, joint or several, under Section 7.1 in the case of the Company and Section 7.2 in the case of the Agent. 10. Agent's Representations, Warranties, and Covenants. The Agent represents and warrants to and agrees with the Company that: 10.1 Agent is a corporation duly incorporated and existing under the laws of the state of Georgia Agent is registered with the Securities Exchange Commission and the NASD. 10.2 There is not now pending or threatened against the Agent any action or proceeding of which the Agent has been advised, either in any court of competent jurisdiction, before the Commission or before any state securities commission or the NASD, concerning the Agent's activities which would impair the ability of the Agent to conduct the Offering as contemplated by this Agreement. 10.3 All corporate actions by Agent required for the execution, delivery and performance of this Agreement have been taken. The execution and delivery of this Agreement by the Agent, the observance and performance thereof, and the consummation of the transactions contemplated herein or in the Offering Documents do not and will not constitute a material breach of, or a material default under, any instrument or agreement by which the Agent is bound, and does not and will not, to the best of the Agent's knowledge, contravene any existing law, decree or order applicable to it. This Agreement constitutes a valid and binding agreement of Agent, enforceable in accordance with its terms. 10.4 Agent understands and acknowledges that the Securities are not being registered under the 1933 Act, and that the Offering is to be conducted pursuant to Regulation D. Accordingly, -9- 10 in conducting its activities under this Agreement Agent shall offer Securities only to "accredited investors," as defined in Regulation D. 10.5 Agent's representations and warranties under this Section shall be true and correct as of the Closing, and shall survive the Closing for a period of one year. 11. Notices. Except as otherwise expressly provided in this Agreement: 11.1 Whenever notice is required by the provisions of this Agreement to be given to the Company, such notice shall be in writing, addressed to the Company, at: If to the Company: BioShield Technologies, Inc. 5655 Peachtree Parkway Norcross, Georgia 30092 Telephone: (770) 246-2000 Facsimile: (770) 368-0784 With a copy to: Sims Moss Kline & Davis LLP 400 Northpark Town Center, Suite 310 1000 Abernathy Road Atlanta, Georgia 30328 Attn: Raymond L. Moss, Esq. Telephone: (770) 481-7201 Facsimile: (770) 481-7210 11.2 Whenever notice is required by the provisions of this Agreement to be given to the Agent, such notice shall be given in writing, addressed to the Agent, at: If to the Agent: J.P. Carey Securities, Inc. Atlanta Financial Center, East Tower 3343 Peachtree Road, Suite 500 Atlanta, Georgia 30326 Attn: President 11.3 Any notice instructing the Escrow Agent to distribute monies or Securities held in Escrow must be signed by authorized agents of both the Company and the Agent in order to be valid. -10- 11 12. Miscellaneous. 12.1 Benefit. This Agreement is made solely for the benefit of the Agent and the Company, their respective officers and directors and any controlling person referred to in Section 15 of the '33 Act and their respective successors and assigns, and no other person may acquire or have any right under or by virtue of this Agreement, including, without limitation, the holders of any Securities. The term "successor" or the term "successors and assigns" as used in this Agreement shall not include any purchasers, as such, of any of the Securities. 12.2 Survival. The respective indemnities, agreements, representations, warranties, covenants and other statements of the Company and the Agent, or the officers, directors or controlling persons of the Company and the Agent as set forth in or made pursuant to this Agreement and the indemnity agreements of the Company and the Agent contained in Section 7 hereof shall survive and remain in full force and effect for a period of three (3) years from the date hereof, regardless of (i) any investigation made by or on behalf of the Company or the Agent or any such officer, director or controlling person of the Company or of the Agent; (ii) delivery of or payment for the Securities; or (iii) the Closing Date, and any successor of the Company or the Agent or any controlling person, officer or director thereof, as the case may be, shall be entitled to the benefits hereof. 12.3 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia without regard to the principles of conflict of laws. Any dispute or controversy between the parties arising in connection with this agreement or the subject matter contemplated by this agreement shall be resolved by arbitration before a three-member panel of the American Arbitration Association in accordance with the commercial arbitration rules of said forum and the Federal Arbitration Act, 9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said arbitrators shall be empowered to award all forms of relief and damages claimed, including, but not limited to, attorney's fees, expenses of litigation and arbitration, exemplary damages, and prejudgment interest. Notwithstanding the foregoing, Agent may at any time and at its option, whether or not an arbitration action is then pending, initiate a civil action for temporary and permanent injunctive and other equitable relief against Company. Company acknowledges that upon any breach of Agent's rights to Warrants or other compensation hereunder, Agent's resulting injury may not be adequately compensated by a remedy at law. Accordingly, upon such breach, Agent, at its election and without limitation of its other remedies, shall be entitled to pursue a claim for specific performance of this Agreement, and Company hereby waives the right to assert any defense thereto that Agent has an adequate remedy at law. The parties further agree that any arbitration action between them shall be heard in Fulton County, Georgia. 12.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which may be deemed an original and all of which together will constitute one and the same instrument. -11- 12 12.5 Confidential Information. All confidential financial or business information (except publicly available or freely usable material otherwise obtained from another source) respecting either party will be used solely by the other party in connection with the within transactions, be revealed only to employees or contractors of such other party who are necessary to the conduct of such transactions, and be otherwise held in strict confidence. 12.6 Public Announcements. Prior to the Closing Date, neither party hereto will issue any public announcement concerning the within transactions without the approval of the other party. 12.7 Recitals. The recitals to this Agreement are a material part hereof, and each recital is incorporated into this Agreement by reference and made a part of this Agreement. 12.8 Independent Counsel. The parties to this Agreement acknowledge that Company and BSTI have received independent counsel from the law firm of Sims Moss Kline & Davis LLP which is acting as their counsel. Agent has been advised by Sims Moss Kline & Davis LLP to seek independent advice with respect to the terms and conditions of this Agreement and any related agreements before signing them. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -12- 13 IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be executed as of the day and year first above written. "THE COMPANY" BIOSHIELD TECHNOLOGIES, INC. By:_____________________________________ Name: Timothy C. Moses Title: President "THE AGENT" J.P. CAREY SECURITIES, INC. By:__________________________________________ Name:________________________________________ Title: ______________________________________ EX-10.89 5 ex10-89.txt WARRANT AGREEMENT 1 EXHIBIT 10.89 WARRANT AGREEMENT WARRANT AGREEMENT dated as of June 15, 2000, between BioShield Technologies, Inc., a Delaware corporation (the "COMPANY"), and Wilson LLC, a Cayman Island limited liability company (hereinafter referred to as "INVESTOR"). W I T N E S S E T H: WHEREAS, Investor has participated as an Investor in connection with the Company's offering (the "OFFERING") of up to $10,000,000 of the Company's Series B Convertible Preferred Stock, no par value (the "PREFERRED STOCK"); and WHEREAS, the Warrants issued pursuant to this Agreement are being issued by the Company to Investor and/or its designees, in consideration for, and as part of the investment by Investor in connection with the Offering; NOW, THEREFORE, in consideration of the premises, the agreements herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows (capitalized terms used herein without definition shall have the meanings ascribed to then in the Offering): 1. Grant. Investor and/or its designees are hereby granted the right to purchase, at any time from the date of the closing of the first purchase by Investor of shares of common stock, no par value (the "COMMON STOCK") pursuant to the Offering (the "INITIAL CLOSING") until 5:00 P.M., Eastern Standard Time, on the fifth anniversary of the Initial Closing (the "WARRANT EXERCISE TERM"), 79,281 Shares of Common Stock (the "SHARES") at an exercise price (subject to adjustment as provided in Article 7 hereof) equal to $18.92 (the "INITIAL EXERCISE PRICE"). 2. Warrant Certificates. The warrant certificates (the "WARRANT CERTIFICATES") delivered and to be delivered pursuant to this Agreement shall be in the form set forth as Exhibit A, attached hereto and made a part hereof, with such appropriate insertions, omissions, substitutions and other variations as required or permitted by this Agreement. 3. Exercise of Warrants. 3.1 Cash Exercise. The Exercise Price may be paid in cash or by check to the order of the Company, or any combination of cash or check, subject to adjustment as provided in Article 7 hereof. Upon surrender of the Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment of the Exercise Price (as hereinafter defined) for the Shares purchased, at the Company's executive offices currently located at 5655 Peachtree Parkway Atlanta, Georgia 30092, the registered holder of a Warrant Certificate ("HOLDER" or 2 "HOLDERS") shall be entitled to receive a certificate or certificates for the Shares so purchased. The purchase rights represented by each Warrant Certificate are exercisable at the option of the Holder hereof, in whole or in part (but not as to fractional shares of the Common Stock). In the case of the purchase of less than all the Shares purchasable under any Warrant Certificate, the Company shall cancel said Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Shares purchasable thereunder. 3.2 Cashless Exercise. At any time during the Warrant Exercise Term, the Holder may, at its option, exchange this Warrant, in whole or in part (a "WARRANT EXCHANGE"), into the number of Shares determined in accordance with this Section 3.2, by surrendering this Warrant at the principal office of the company or at the office of its transfer agent, accompanied by a notice stating such Holder's intent to effect such exchange, the number of Shares to be exchanged and the date on which the Holder requests that such Warrant Exchange occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall take place on the date specified in the Notice of Exchange or, if later, the date the Notice of Exchange is received by the Company (the "EXCHANGE Date"). Certificates for the Shares issuable upon such Warrant Exchange and, if applicable, a new warrant of like tenor evidencing the balance of the Shares remaining subject to this Warrant, shall be issued as of the Exchange Date and delivered to the Holder within seven (7) business days following the Exchange Date. In connection with any Warrant Exchange, this Warrant shall represent the right to subscribe for and acquire the number of Shares (rounded to the next highest integer) equal to (i) the number of Shares specified by the Holder in its Notice of Exchange (the "TOTAL NUMBER") less (ii) the number of Shares equal to the quotient obtained by dividing (A) the product of the Total Number and the then existing Exercise Price by (B) the average of the Closing Prices for the five Trading Days immediately prior to the date specified in the Notice of Exchange. 3.3 Exercise Limitation. In no event shall any Investor be entitled to exercise any of the warrants if, upon the exercise of such warrant(s), it would cause the aggregate number of shares of Common Stock beneficially owned by the Investor and its affiliates to exceed 4.9% of the outstanding shares of the Common Stock following such exercise. 4. Issuance of Certificates. Upon the exercise of the Warrants, the issuance of certificates for the Shares shall be made forthwith (and in any event within five business days thereafter) without charge to the Holder thereof including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to satisfaction of the Company that such tax has been paid. 2 3 The Warrant Certificates and the certificates representing the Shares shall be executed on behalf of the Company by the manual or facsimile signature of the present or any future Chairman or Vice Chairman of the Board of Directors, Chief Executive officer or President or Vice President of the Company under its corporate seal reproduced thereon, attested to by the manual or facsimile signature of the present or any future Secretary or Assistant Secretary of the Company. Warrant Certificates shall be dated the date of execution by the Company upon initial issuance, division, exchange, substitution or transfer. The Warrant Certificates and, upon exercise of the Warrants, in part or in whole, certificates representing the Shares shall bear a legend substantially similar to the following: The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "ACT"), and may not be offered or sold except (i) pursuant to an effective registration statement under the Act, (ii) to the extent applicable, pursuant to Rule 144 under the Act (or any similar rule under such Act relating to the disposition of securities), or (iii) upon the delivery by the holder to the Company of an opinion of counsel, satisfactory to counsel to the issuer, stating that an exemption from registration under such Act is available. 5. Price. 5.1 Adjusted Exercise Price. The adjusted Exercise Price shall be the price which shall result from time to time from any and all adjustments of the Initial Exercise Price in accordance with the provisions of Article 7 hereof. 5.2 Exercise Price. The term "EXERCISE PRICE" herein shall mean the Initial Exercise Price or the adjusted Exercise Price, depending upon the context. 6. Registration Rights. 6.1 Registration Under the Securities Act of 1993. The Warrants and the Shares have not been registered for purposes of public distribution under the Securities Act of 1933, as amended ("THE ACT"). 6.2 Registrable Securities. As used herein the term "REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of Common Stock issued upon any stock split or stock dividend in respect of such Shares; provided, however, that with respect to any particular Registrable Security, such security shall cease to be a Registrable Security when, as of the date of determination, (i) it has been effectively registered under the Securities Act and disposed of pursuant thereto, (ii) registration under the Securities Act is no longer required for the immediate public distribution of such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE SECURITIES" means any and/or all of the securities falling within the foregoing definition of a "Registrable Security." In the event of any merger, reorganization, consolidation, recapitalization or other change in corporate structure affecting the Common Stock, such 3 4 adjustment shall be made in the definition of "Registrable Security" as is appropriate in order to prevent any dilution or enlargement of the rights granted pursuant to this Article 6. 6.3 Piggyback Registration. If, at any time during the five years following the date of the Initial Closing, the Company proposes to prepare and file any registration statement or post-effective amendments (other than in connection with an underwritten initial public offering or initial registration of the Company or the Company=s securities with the U.S. Securities & Exchange Commission) thereto covering equity or debt securities of the Company, or any such securities of the Company held by its shareholders (in any such case, other than in connection with a merger, acquisition or pursuant to Form S-8 or successor form), (for purposes of this Article 6, collectively, a "REGISTRATION STATEMENT"), it will give written notice of its intention to do so by registered mail ("NOTICE"), at ten (10) business days prior to the filing of each such Registration Statement, to all holders of the Registrable Securities. Upon the written request of such a holder (a "REQUESTING HOLDER"), made within ten (10) business days after receipt of the Notice, that the Company include any of the Requesting Holder's Registrable Securities in the proposed Registration Statement, the Company shall, as to each such Requesting Holder, use its best efforts to effect the registration under the Securities Act of the Registrable Securities which it has been so requested to register ("PIGGYBACK REGISTRATION"), at the Company's sole cost and expense and at no cost or expense to the Requesting Holders. Notwithstanding the provisions of this Section 6.3, the Company shall have the right at any time after it shall have given written notice pursuant to this Section 6.3 (irrespective of whether any written request for inclusion of such securities shall have already been made) to elect not to file any such proposed Registration Statement, or to withdraw the same after the filing but prior to the effective date thereof. 7. Adjustments of Exercise Price and Number of Shares. 7.1 Subdivision and Combination. In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination. 7.2 Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Article 7, the number of Shares issuable upon the exercise of each Warrant shall be adjusted to the nearest full Share by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. 7.3 Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or 4 5 combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of the property of the Company as an entirety, the Holders shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Holders were the owners of the shares of Common Stock underlying the Warrants immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of the Warrants and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Holders had exercised the Warrants. 7.4 No Adjustment of Exercise Price in Certain Cases. No adjustment of the Exercise Price shall be made: (a) Upon the issuance or sale of shares of Common Stock upon the exercise of the Warrants; or (b) Upon (i) the issuance of options pursuant to the Company's employee stock option plans in effect or the issuance or sale by the Company of any shares of Common Stock pursuant to the exercise of any such options, or (ii) the issuance or sale by the Company of any shares of Common Stock pursuant to the exercise of any options or warrants; or (c) Upon the issuance of shares of Common Stock pursuant to contractual obligations; or (d) If the amount of said adjustment shall be less than 2 cents (24) per Share, provided, however, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least 2 cents (24) per Share. 8. Exchange and Replacement of Warrant Certificates. Each Warrant Certificate is exchangeable without expense, upon the surrender hereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Shares in such denominations as shall be designated by the Holder thereof at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant Certificate of like tenor, in lieu thereof. 5 6 9. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of shares of Common Stock and shall not be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Common Stock. 10. Reservation and Listing of Securities. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Warrants and payment of the Exercise Price therefor, all shares of Common Stock issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any shareholder. As long as the Warrants shall be outstanding, the Company shall use its best efforts, once it has become a public company, to cause all shares of Common Stock issuable upon the exercise of the Warrants to be listed on or quoted on the electronic bulletin board, by NASDAQ or listed on such national securities exchanges. 11. Notices to Warrant Holders. Nothing contained in this Agreement shall be construed as conferring upon the Holder or Holders the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the following events shall occur: (a) the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or (b) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed; then, in any one or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, options or warrants, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify 6 7 such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or any proposed dissolution, liquidation, winding up or sale. 12. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, or mailed by registered or certified mail, return receipt requested: (a) If to a registered Holder of the Warrants, to the address of such Holder as shown on the books of the Company; or (b) If to the Company, to the address set forth in Section 3 of this Agreement or to such other address as the Company may designate by notice to the Holders. 13. Supplements and Amendments. The Company may from time to time supplement or amend this Agreement without the approval of any Holders of Warrant Certificates in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any provisions herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company may deem necessary or desirable and which the Company deems not to adversely affect the interests of the Holders of Warrant Certificates. 14. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company and the Holders inure to the benefit of their respective successors and assigns hereunder. 15. Termination. This Agreement shall terminate at the close of business on the fifth anniversary of the Initial Closing. Notwithstanding the foregoing, this Agreement will terminate on any earlier date when all Warrants have been exercised and all the Shares issuable upon exercise of the Warrants have been resold to the public; provided, however, that the provisions of Article 6 shall survive such termination until the close of business on fifth anniversary of the Initial Closing. 16. Governing Law. This Agreement and each Warrant Certificate hereunder shall be governed by and interpreted in accordance with the laws of the State of Georgia without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Atlanta, Georgia, and expressly consent to the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and the United States District Court for the Northern District of 7 8 Georgia, Atlanta Division for the adjudication of any civil action asserted pursuant to this Paragraph. 17. Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company and the Investor and any other registered holder or holders of the Warrant Certificates, Warrants or the Shares any legal or equitable right, remedy or claim under this Agreement; and this Agreement shall be for the sole and exclusive benefit of the Company and the Investor and any other holder or holders of the Warrant Certificates, Warrants or the Shares. 18. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 8 9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. BIOSHIELD TECHNOLOGIES, INC. By: ------------------------------------- Name: Timothy C. Moses Title: Co-Chairman of the Board and Chief Executive Officer Attest: ------------------------------ Name: ------------------------------ Title: ------------------------------ INVESTOR: WILSON LLC By: ------------------------------------- Name: Title: Attest: ------------------------------ Name: ------------------------------ Title: ------------------------------ 9 10 EXHIBIT A THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE. THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN. EXERCISABLE ON OR BEFORE 5:00 P.M., EASTERN STANDARD TIME, JUNE 14, 2005 No. ___________ 79,281 Shares WARRANT CERTIFICATE This Warrant Certificate certifies that Wilson, LLC ("INVESTOR") or registered assigns, is the registered holder of 79,281 Warrants to purchase, at any time from June 15, 2000, until 5:00 P.M. Eastern Standard Time on June 14, 2005 ("EXPIRATION DATE"), up to 79,281 shares ("SHARES") of fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of BioShield Technologies, Inc., a Delaware corporation (the "COMPANY"), at the Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE PRICE"), of $18.92 per Share upon surrender of this Warrant Certificate and payment of the Exercise Price at an office or agency of the Company, but subject to the conditions set forth herein and in the warrant agreement dated as of June 15, 2000, between the Company and Investor (the "WARRANT AGREEMENT"). Payment of the Exercise Price may be made in cash, or by certified or official bank check in New York Clearing House funds payable to the order of the Company, or any combination of cash or check. No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on the Expiration Date, at which time all Warrants evidenced hereby, unless exercised prior thereto, shall thereafter be void. The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to in a 11 description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or registered holder) of the Warrants. The Warrant Agreement provides that upon the occurrence of certain events, the Exercise Price and/or number of the Company's securities issuable thereupon may, subject to certain conditions, be adjusted. In such event, the Company will, at the, request of the holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants; provided, however, that the failure of the Company to issue such new Warrant Certificates shall not in any way change, alter, or otherwise impair, the rights of the holder as set forth in the Warrant Agreement. Upon due presentment for registration of transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferees) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax, or other governmental charge imposed in connection therewith. Upon the exercise of less than all of the Warrants evidenced by this Certificate, the Company shall forthwith issue to the holder hereof a new Warrant Certificate representing such number of unexercised Warrants. The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary. All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. 12 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal. Dated: As of June ________, 2000 BIOSHIELD TECHNOLOGIES, INC. By: -------------------------------- Name: ------------------------------ Title: ----------------------------- Attest: ------------------------------ Name: ------------------------------ Title: ------------------------------ 13 [FORM OF ELECTION TO PURCHASE] The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ____________ Shares and herewith tenders in payment for such Shares cash or a certified or official bank check payable in New York Clearing House Funds to the order of _____________________ in the amount of $_______________, all in accordance with the terms hereof. The undersigned requests that a certificate for such Shares be registered in the name of ___________________________________ whose address is_____________________________, and that such Certificate be delivered to ___________________________________________, whose address is _________________. Dated: Signature: ------------------------------ ------------------------- (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) - ------------------------------------ - ------------------------------------ (Insert Social Security or Other Identifying Number of Holder) 14 [FORM OF ASSIGNMENT] (To be executed by the registered holder if such holder desires to transfer the Warrant Certificate.) FOR VALUE RECEIVED ___________________________________________ hereby sells, assigns and transfers unto ----------------------------------------------------------------------- (Please print name and address of transferee) this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________________________________, Attorney, to transfer the within Warrant Certificate on the books of the within-named Company, with full power of substitution. Dated: _____________________ Signature:_____________________________ (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate) - ------------------------------------- - ------------------------------------- (Insert Social Security or Other Identifying Number of Assignee) EX-10.90 6 ex10-90.txt LETTER AGREEMENT 1 Exhibit 10.90 BIOSHIELD (TM) BIOSHIELD TECHNOLOGIES, INC. June 27, 2000 Jackson, LLC Wilson, LLC c/o Citco Trustees (Cayman) Ltd. Attn: David Sims Corporate Center, Windwood One West Bay Road P.O. Box 31106 SMB Grand Cayman, Cayman Islands RE: BIOSHIELD TECHNOLOGIES, INC. (THE "COMPANY") Dear Mr. Sims: In consideration of and as a condition to the closing of the private placement by the parties of the Company's $10,000,000 Series B Convertible Preferred Stock and $50,000,000 Private Equity Credit Agreement (the "2000 Equity Line") of even date herewith, the parties hereto as holders of (i) Series A Convertible Preferred Stock; (ii) Series B Convertible Preferred Stock; (iii) common stock, no par value, of the Company ("Common Stock") issuable pursuant to that certain Private Equity Credit Agreement, dated as of June 1999 and the 2000 Equity Line; (iv) Electronic Medical Distribution, Inc. common stock, par value $0.0001 per share, which is exchangeable into Common Stock; and (v) Common Stock issued as a result of (i)-(iv) above ((i)-(v) shall be collectively referred to as Common Stock Holders") hereby agree as follows: 1. Limitation on Sales of Common Stock. The Common Stock Holders and their affiliates agree not to directly or indirectly at any time sell more than 20,000 shares of Common Stock on any Trading Day; provided, however, (i) that if the daily volume of the Common Stock, as reported by Bloomberg on any Trading Day is greater than 100,000 per day and less than 250,000 (excluding any Common Stock sold by the Common Stock Holders), then the Common Stock Holders may be permitted to sell a total of 40,000 shares of Common Stock on any such Trading Day; (ii) that if the daily volume of the Common Stock, as reported by Bloomberg on any Trading Day is greater than 250,000 and less than 500,000 shares of Common Stock (excluding any Common Stock sold by the 5655 Peachtree Parkway, Norcross, Georgia 30092; Tel: (770) 246-2000; Fax: (770) 368-0784 2 Common Stock Holders) then the Common Stock Holders may be permitted to sell a total of 70,000 shares of Common Stock on any such Trading Day; (iii) no sales may be made within the last hour of each Trading Day. Notwithstanding the foregoing limitation on such sales, the holder shall be permitted to sell on any Trading Day without any limitation on such sales in the event that the daily trading volume (excluding any Common Stock sold by the Common Stock Holders) is in excess of 500,000 shares on any Trading Day (preceding any Common Stock held by the Common Stock Holder). 2. Binding Nature of Agreement. The terms of this letter are intended to be binding on any transferee or assignee of the Common Stock Holders and no such transfer or assignment shall be effective until such transferee or assignee agrees in writing to be bond by the terms of this letter. 3. Definitions. Terms not otherwise defined herein shall have the meaning set forth in the Articles of Amendment of the Company dated as of June 14, 2000. 4. Counterparts. This agreement may be executed in counterparts, which together shall constitute a single instrument. BIOSHIELD TECHNOLOGIES, INC. By: _____________________________ Name: Title: Accepted and agreed to this 15 day of June, 2000. JACKSON, LLC HOLDER OF ELECTRONIC MEDICAL DISTRIBUTION, INC. COMMON STOCK By: _______________________________________ Name: Title: 5655 Peachtree Parkway, Norcross, Georgia 30092; Tel: (770) 246-2000; Fax: (770) 368-0784 3 JACKSON LLC BUYER OF COMMON STOCK OF BIOSHIELD TECHNOLOGIES, INC. JUNE 1999 PRIVATE EQUITY LINE AND HOLDER OF COMMON STOCK By: _______________________________________ Name: Title: WILSON LLC HOLDER OF BIOSHIELD TECHNOLOGIES, INC. SERIES A PREFERRED STOCK By: _______________________________________ Name: Title: 5655 PEACHTREE PARKWAY, NORCROSS, GEORGIA 30092; TEL: (770) 246-2000; Fax: (770) 368-0784 EX-10.91 7 ex10-91.txt OFFICER'S CERTIFICATE 1 Exhibit 10.91 OFFICER'S CERTIFICATE The undersigned, Timothy C. Moses, hereby certifies that he is the President and Chief Executive Officer of BioShield Technologies, Inc., a Georgia corporation (the "COMPANY") and that, as such, he is authorized to execute, this Officer's Certificate on behalf of the Company and with reference to that certain Securities Purchase Agreement dated as of June 14, 2000, (the "AGREEMENT") 1. The representations and warranties made by the Company in Section 3 of the Agreement are true and correct as of the date of this Certificate. The capitalization of the Company disclosed on Schedule 3(c) of the Agreement has not changed. 2. All of the Company's obligations specified in the Agreement to be satisfied at or prior to a Closing thereunder have been satisfied or performed. 3. There have been no adverse change in the business, affairs, prospects, operations, properties, assets or condition of a Company since June 30, 1999, the date of the Company's most recent audited financial statements. IN WITNESS WHEREOF, the undersigned has executed this certificate on June 14, 2000. BIOSHIELD TECHNOLOGIES, INC. By:______________________________________ Name: Timothy C. Moses Title: President and Chief Executive Officer EX-10.92 8 ex10-92.txt TRANSFER AGENT INSTRUCTIONS 1 Exhibit 10.92 TRANSFER AGENT INSTRUCTIONS BIOSHIELD TECHNOLOGIES, INC. June 14, 2000 American Stock Transfer 40 Wall Street New York, New York 10005 ATTN: WILBERT MYLES Dear Mr. Myles: Reference is made to that certain Securities Purchase Agreement, of even date herewith, by and among BioShield Technologies, Inc., a Georgia corporation (the "COMPANY"), and each of the subscribers listed in Exhibit "A" attached hereto (collectively, the "HOLDERS") pursuant to which the Company is issuing to the Holders an aggregate of 200 shares of Series B Preferred Stock, no par value, of the Company (the "PREFERRED SHARES"). This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time) to issue shares (the "CONVERSION SHARES") of Common Stock, no par value (the "COMMON STOCK"), of the Company to or upon the order of a Holder from time to time upon (i) surrender to you of a properly completed and duly executed Conversion Notice, in the form attached hereto as Exhibit I, which has been properly agreed and acknowledged by the Company as indicated by the signature of a duly authorized officer of the Company thereon and (ii) certificates representing Preferred Shares being converted (or an indemnification undertaking with respect to such shares in the case of their loss, theft or destruction). So long as you have previously received: (i) written confirmation from counsel to the Company that a registration statement covering resales of the Conversion Shares has been declared effective by the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 ACT"), and (ii) a copy of such Registration Statement, Certificates representing the Conversion Shares shall not bear any legend restricting transfer of the Conversion Shares thereby and should not be subject to any stop-transfer restriction. However, if you have not previously received (i) written confirmation from counsel to the Company that a registration statement covering resales of the Conversion Shares has been declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, and (ii) a copy of such registration statement, then the certificates representing the Conversion Shares shall bear the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE 2 SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT." provided, however, that the Company may from time to time notify you to place stop transfer restrictions on the certificates for the Conversion Shares in the event a registration statement covering the Conversion Shares is subject to amendment for events then current. An opinion of counsel to the Company that the issuance of the Conversion Shares to the Holders will be exempt from registration under the 1933 Act is attached hereto as Exhibit II. Please be advised that the Holders are relying upon this letter as an inducement to enter into the Securities Purchase Agreement and, accordingly, each Holder is a third party beneficiary to these instructions. Should you have any questions concerning this matter please contact me at (770) 326-9890. Very truly yours, BIOSHIELD TECHNOLOGIES, INC. By:_____________________________________ Name: Its: ACKNOWLEDGED AND AGREED: TRANSFER AGENT By:______________________________________ Name: ___________________________________ Title: ____________________________________ Date: ____________________________________ Enclosure cc: Holders 3 EXHIBIT "A" SCHEDULE OF BUYERS - -------------------------------------------------------------------------------- NUMBER OF SERIES B PREFERRED BUYER'S NAME ADDRESS/FACSIMILE NUMBER OF BUYER SHARES - -------------------------------------------------------------------------------- WILSON LLC c/o Citco Trustees (Cayman) Ltd. 500 Attn: David Sims Corporate Centre, Windwood One West Bay Road P.O. Box 31106 SMB Grand Cayman, Cayman Islands 284-494-4771 - -------------------------------------------------------------------------------- 4 EXHIBIT I BIOSHIELD TECHNOLOGIES, INC. CONVERSION NOTICE Reference is made to the Amendments to the Articles of Incorporation of BioShield Technologies, Inc.. (the "AMENDMENT"). In accordance with and pursuant to the Amendment, the undersigned hereby elects to convert the number of shares of Series B Convertible Preferred Stock, no par value per share (the "SERIES B PREFERRED SHARES"), of BioShield Technologies, Inc., a Georgia corporation (the "COMPANY"), indicated below into shares of Common Stock, no par value per share (the "COMMON STOCK"), of the Company, by tendering the stock certificate(s) representing the share(s) of Series B Preferred Shares specified below as of the date specified below. The undersigned acknowledges that any sales by the undersigned of the securities issuable to the undersigned upon conversion of the Series B Preferred Shares shall be made only pursuant to (i) a registration statement effective under the Securities Act of 1933, as amended (the "ACT"), or (ii) advice of counsel that such sale is exempt from registration required by Section 5 of the Act. Date of Conversion: ----------------------------------- Number of Series B Preferred Shares to be converted ----------------------------------- Stock certificate no(s). of Series B Preferred Shares to be converted: ----------------------------------- Please confirm the following information: Conversion Price: ----------------------------------- Ten Days Comprising Pricing Period and Three Lowest Prices: ----------------------------------- Number of shares of Common Stock to be issued: ----------------------------------- 5 please issue the Common Stock into which the Series B Preferred Shares are being converted in the following name and to the following address: Issue to:(1) --------------------------------------------- --------------------------------------------- Facsimile Number: --------------------------------------------- Authorization: --------------------------------------------- By: ------------------------------------------ Title: --------------------------------------- Dated: --------------------------------------- ACKNOWLEDGED AND AGREED: BIOSHIELD TECHNOLOGIES, INC. By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- Date: ------------------------------- - --------------- (1)If other than to the record holder of the Series B Preferred Shares, any applicable transfer tax must be paid by the undersigned. 6 EXHIBIT II BIOSHIELD TECHNOLOGIES, INC. Attached hereto. EX-10.93 9 ex10-93.txt ARTICLES OF AMENDMENT 1 Exhibit 10.93 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF BIOSHIELD TECHNOLOGIES, INC. I. The name of the corporation is BioShield Technologies, Inc. (the "CORPORATION"). II. Effective as of the date hereof, Article[ II] of the Articles of Incorporation, as amended is amended to read in full as follows: The Corporation hereby designates that the total number of shares of capital stock which the Corporation has authority to issue is 50,000,000, divided into 40,000,000 shares of "Common Stock," no par value, and 10,000,000 shares of capital stock, no par value, to be designated as "Preferred Stock." III. The Corporation hereby designates 500 of the 10,000,000 authorized shares of its Preferred Stock as "Series B Convertible Preferred Stock," no par value (the "PREFERRED STOCK") and shall possess the rights and privileges set forth below: (1) Dividends. The Series B Preferred Shares shall not bear any dividends. (2) Holder's Conversion of Series B Preferred Shares. A holder of Series B Preferred Shares shall have the right, at such holder's option, to convert the Series B Preferred Shares into shares of the Company's common stock, no par value per share (the "COMMON STOCK"), on the following terms and conditions: (a) Conversion Right. Subject to the provisions of Sections 2(j) and 3(a) below, at any time or times on or after the earlier to occur of (i) 90 days after the Issuance Date (as defined herein) or (ii) the date that Registration Statement filed by the Company registering the Common Stock to be issued upon conversion of the Preferred Stock is declared effective (the "EFFECTIVE DATE") by the U.S. Securities and Exchange Commission (the "SEC"), any holder of Series B Preferred Shares shall be entitled to convert any Series B Preferred Shares into fully paid and non-assessable shares (rounded to the nearest whole share in accordance with Section 2(h) below) of Common Stock, at the Conversion Rate (as defined below); provided, however, that in no event other than upon a Mandatory Conversion pursuant to Section 2(f) hereof, shall any holder be entitled to convert Series B Preferred Shares in excess of that number of Series B Preferred Shares which, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.9% of the outstanding 2 shares of the Common Stock following such conversion. For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of the Series B Preferred Shares with respect to which the determination of such proviso is being made, but shall exclude the number of shares of Common Stock which would be issuable upon conversion of the remaining, nonconverted Series B Preferred Shares beneficially owned by the holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. (b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of each of the Series B Preferred Shares pursuant to Section (2)(a) shall be determined according to the following formula (the "CONVERSION RATE"); (.05)(N/365)(20,000) + 20,000 ----------------------------- CONVERSION PRICE For purposes of this Amendment, the following terms shall have the following meanings: (i) "CONVERSION PRICE" means as, of any Conversion Date (as defined below), the lesser of (i) the Fixed Conversion Price or (ii) the Floating Conversion Price, as in effect as of such date and subject to adjustment as provided herein. (ii) "FIXED CONVERSION PRICE" means $19.70 per share, subject to adjustment as provided herein. (iii) "FLOATING CONVERSION PRICE" means, as of any date of determination, the amount obtained by multiplying the Conversion Percentage in effect as of such date by the lowest Average Market Prices for the Common Stock for any three (3) Trading Days in any ten (10) consecutive Trading Days immediately preceding such date; (iv) "CONVERSION PERCENTAGE" means 90%; (v) "AVERAGE MARKET PRICE" means, with respect to any security for any period, that price which shall be computed as the arithmetic average of the Closing Bid Prices and Closing Ask Prices (as defined below) for such security for each Trading Day in such period; (vi) "CLOSING ASK PRICE" means, for any security as of any date, the last closing ask price on the Nasdaq SmallCap Market (the "NASDAQ-SM") 2 3 as reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if the Nasdaq-SM is not the principal trading market for such security, the last closing ask price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg (the "Trading Market"), or if the foregoing do not apply, the last closing ask price of such security in the over-the-counter market on the pink sheets or bulletin board for such security as reported by Bloomberg, or, if no closing ask price is reported for such security by Bloomberg, the last closing ask price of such security as reported by Bloomberg. If the Closing Ask Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Ask Price of such security on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company all as appropriately adjusted for any stock dividend, stock split or other similar transaction during such period; and (vii) "CLOSING BID PRICE" means, for any security as of any date, the last closing bid price on the Nasdaq SmallCap Market (the "NASDAQ-SM") as reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if the Nasdaq-SM is not the principal trading market for such security, the last closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg (the "Trading Market"), or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the pink sheets or bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg. If the Closing Bid Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company (all as appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). (viii) "COUPON" means 5% per annum to be paid by the Company on the principal amount of the Preferred Stock. The Coupon shall be due and payable upon conversion or redemption of the Preferred Stock, as the case may be, in cash or Common Stock which has been registered with the SEC at the election of the Company. In the event that the Company elects to pay the Coupon in cash, the formula used to calculate the Conversion Rate shall be adjusted to exclude the calculation of the Coupon. (ix) "N" means the number of days from, but excluding, the Issuance Date through and including the Conversion Date for the Series B Preferred Shares for which conversion is being elected. 3 4 (x) "ISSUANCE DATE" means the date of issuance of the Series B Preferred Shares. (xi) "TRADING DAY" means any day on which the Company's Common Stock is traded on the Principal Trading Market. (c) Adjustment to Conversion Price - Dilution and Other Events. In order to prevent dilution of the rights granted under this Amendment, the Conversion Price will be subject to adjustment from time to time as provided in this Section 2(d). (i) Reorganization, Reclassification, Consolidation, Merger, or Sale. Any recapitalization, reorganization reclassification, consolidation. merger, sale of a or substantially all of the Company's assets to another Person (as defined below) or other similar transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as in "Organic Change." Prior to the consummation of any Organic Change, the Company will make appropriate provision to insure that each of the holders of the Series B Preferred Shares will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of such holder's Series B Preferred Shares, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of such holder's Series B Preferred Shares had such Organic Change not taken place. In any such case, the Company will make appropriate provision (in form and substance satisfactory to the holders of a majority of the Series B Preferred Shares then outstanding) with respect to such holders' rights and interests to insure that the provisions of this Section 2(c) will thereafter be applicable to the Series B Preferred Shares. The Company will not effect any such consolidation, merger or sale, unless prior to the consummation thereof the successor entity (if other than the Company) resulting from consolidation or merger or the entity purchasing such assets assumes, by written instrument (in form and substance satisfactory to the holders of a majority of the Series B Preferred Shares then outstanding), the obligation to deliver to each holder of Series B Preferred Shares such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. For purposes of this Agreement, "PERSON" shall mean an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. 4 5 (ii) Notices. (A) Immediately upon any adjustment of the Conversion Price, the Company will give written notice thereof to each holder of Series B Preferred Shares, setting forth in reasonable detail and certifying the calculation of such adjustment. (B) The Company will also give written notice to each holder of Series B Preferred Shares at least twenty (20) days prior to the date on which any Organic Change (as defined below), dissolution or liquidation will take place. (d) Mechanics of Conversion. Subject to the Company's inability to fully satisfy its obligations under a Conversion Notice (as defined below) as provided for in Section 5 below: (i) Holder's Delivery Requirements. To convert Series B Preferred Shares into full shares of Common Stock on any date (the "CONVERSION DATE"), the holder thereof shall (A) deliver or transmit by facsimile, for receipt on or prior to 11:59 p.m., Eastern Standard Time, on such date, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit I (the "CONVERSION NOTICE") to the Company or its designated transfer agent (the "TRANSFER AGENT"), and (B) surrender to a common carrier for delivery to the Company or the Transfer Agent as soon as practicable following such date, the original certificates representing the Series B Preferred Shares being converted (or an indemnification undertaking with respect to such shares in the case of their loss, theft or destruction) (the "PREFERRED STOCK CERTIFICATES") and the originally executed Conversion Notice. (ii) Company's Response. Upon receipt by the Company of a facsimile copy of a Conversion Notice, the Company shall immediately send, via Facsimile, a confirmation of receipt of such Conversion Notice to such holder. Upon receipt by the Company or the Transfer Agent of the Preferred Stock Certificates to be converted pursuant to a Conversion Notice, together with the originally executed Conversion Notice, the Company or the Transfer Agent (as applicable) shall, within five (5) business days following the date of receipt, (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of the holder or its designee, for the number of shares of Common Stock to which the holder shall be entitled or (B) credit the aggregate number of shares of Common Stock to which the holder shall be entitled to the holder's or its designee's balance account at The Depository Trust Company. 5 6 (iii) Dispute Resolution. In the case of a dispute as to the determination of the Average Market Price or the arithmetic calculation of the Conversion Rate, the Company shall promptly issue to the holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within three (3) business days of receipt of such holder's Conversion Notice. If such holder and the Company are unable to agree upon the determination of the Average Market Price or arithmetic calculation of the Conversion Rate within three (3) business days of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall within one (1) business day submit via facsimile (A) the disputed determination of the Average Market Price to an independent, reputable investment bank or (B) the disputed arithmetic calculation of the Conversion Rate to its independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the holder of the results no later than forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. (iv) Record Holder. The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of Series B Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. (e) NASDAQ Listing. So long as the Common Stock is listed for trading on Nasdaq-SM or an exchange or quotation system with a rule substantially similar to Rule 4460(i) then, notwithstanding anything to the contrary contained herein if, at any time, the aggregate number of shares of Common Stock then issued upon conversion of the Series B Preferred Shares (including any shares of capital stock or rights to acquire shares of capital stock issued by the Corporation which are aggregated or integrated with the Common Stock issued or issuable upon conversion of the Series B Preferred Shares for purposes of such rule) equals 19.99% of the "OUTSTANDING COMMON AMOUNT" (as hereinafter defined), the Series B Preferred Shares shall, from that time forward, cease to be convertible into Common Stock in accordance with the terms hereof, unless the Corporation (i) has obtained approval of the issuance of the Common Stock upon conversion of the Series B Preferred Shares by a majority of the total votes cast on such proposal, in person or by proxy, by the holders of the then-outstanding Common Stock (not including any shares of Common Stock held by present or former holders of Series B Preferred Shares that were issued upon conversion of Series B Preferred Shares (the "STOCKHOLDER Approval"), or (ii) shall have otherwise obtained permission to allow such issuances 6 7 from Nasdaq in accordance with Nasdaq Rule 4460(i). If the Corporation's Common Stock is not then listed on Nasdaq or an exchange or quotation system that has a rule substantially similar to Rule 4460(i) then the limitations set forth herein shall be inapplicable and of no force and effect. For purposes of this paragraph, "OUTSTANDING COMMON AMOUNT" means (i) the number of shares of the Common Stock outstanding on the date of issuance of the Series B Preferred Shares pursuant to the Purchase Agreement plus (ii) any additional shares of Common Stock issued thereafter in respect of such shares pursuant to a stock dividend, stock split or similar event. The maximum number of shares of Common Stock issuable as a result of the 19.99% limitation set forth herein is hereinafter referred to as the "MAXIMUM SHARE AMOUNT." With respect to each holder of Series B Preferred Shares, the Maximum Share Amount shall refer to such holder's pro rata share thereof. In the event that Corporation obtains Stockholder Approval or the approval of Nasdaq, or by reason of the inapplicability of the rules of Nasdaq or otherwise, the Corporation concludes that it is able to increase the number of shares to be issued above the Maximum Share Amount (such increased number being the "NEW MAXIMUM SHARE AMOUNT"), the references to Maximum Share Amount, above, shall be deemed to be, instead, references to the greater New Maximum Share Amount. In the event that Stockholder Approval is obtained and there are insufficient reserved or authorized shares, or a registration statement covering the additional shares of Common Stock which constitute the New Maximum Share Amount is not effective prior to the Maximum Share Amount being issued (if such registration statement is necessary to allow for the public resale of such securities), the Maximum Share Amount shall remain unchanged; provided, however, that the holders of Series B Preferred Shares may grant an extension to obtain a sufficient reserved or authorized amount of shares or of the effective date of such registration statement. In the event that (a) the aggregate number of shares of Common Stock actually issued upon conversion of the outstanding Series B Preferred Shares represents at least twenty percent (20%) of the Maximum Share Amount and (b) the sum of (x) the aggregate number of shares of Common Stock issued upon conversion of Series B Preferred Shares plus (y) the aggregate number of shares of Common Stock that remain issuable upon conversion of Series B Preferred Shares and based on the Conversion Price then in effect), represents at least one hundred percent (100%) of the Maximum Share Amount, the Corporation will use its best reasonable efforts to seek and obtain Stockholder Approval (or obtain such other relief as will allow conversions hereunder in excess of the Maximum Share Amount) as soon as practicable following the Triggering Event and before the Mandatory Redemption Date. (f) Mandatory Conversion. If any Series B Preferred Shares remain outstanding on June 14, 2003, then all such Series B Preferred Shares shall be converted as of such date in accordance with this Section 2 as if the holders of such Series B Preferred Shares had given the Conversion Notice on June 14, 2003, and the Conversion Date had been fixed as of June 14, 2003, (the "MANDATORY CONVERSION DATE") for all purposes of this Section 2, and all holders of Series B Preferred Shares 7 8 shall thereupon and within two (2) business days thereafter surrender all Preferred Stock Certificates, duly endorsed for cancellation, to the Company or the Transfer Agent. No person shall thereafter have any rights in respect of Series B Preferred Shares, except the right to receive shares of Common Stock on conversion thereof as provided in this Section 2. (g) Fractional Shares. The Company shall not issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of the Series B Preferred Shares by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after the aforementioned aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up or down to the nearest whole share. (h) Taxes. The Company shall pay any and all taxes which may be imposed upon it with respect to the issuance and delivery of Common Stock upon the conversion of the Series B Preferred Shares. (i) Lock-Up. [INTENTIONALLY LEFT BLANK] (3) Company's Right to Redeem at its Election. (a) At any time after the Effective Date, the Company shall have the right, in its sole discretion, to redeem ("REDEMPTION AT COMPANY'S ELECTION"), from time to time, any or all of the Series B Preferred Shares; provided (i) Company shall first provide twenty-five (25) Trading Days advance written notice as provided in subparagraph 3(a)(ii) below, and (ii) that the Company shall only be entitled to redeem Series B Preferred Shares having an aggregate Stated Value (as defined below) of at least Five Hundred Thousand Dollars ($500,000). If the Company elects to redeem some, but not all, of the Series B Preferred Shares, the Company shall redeem a pro-rata amount from each holder of the Series B Preferred Shares. (i) Redemption Price At Company's Election. The "REDEMPTION PRICE AT COMPANY'S ELECTION" shall be calculated as 125% of the Stated Value. For purposes hereof, "STATED VALUE" shall mean the original purchase price of Preferred Stock being redeemed plus any accrued and unpaid coupon due thereunder. (ii) Mechanics of Redemption at Company's Election. The Company shall effect each such redemption by giving at least twenty five (25) Trading Days prior written notice ("NOTICE OF REDEMPTION AT COMPANY'S ELECTION") to (A) the holders of the Series B Preferred Shares 8 9 selected for redemption at the address and facsimile number of such holder appearing in the Company's Series B Preferred Shares register and (B) the Transfer Agent, which Notice of Redemption At Company's Election shall be deemed to have been delivered three (3) business days after the Company's mailing (by overnight or two (2) day courier, with a copy by facsimile) of such Notice of Redemption at Company's Election. Such Notice of Redemption At Company's Election shall indicate (i) the number of shares of Series B Preferred Shares that have been selected for redemption, (ii) the date which such redemption is to become effective (the "DATE OF REDEMPTION AT COMPANY'S ELECTION") and (iii) the applicable Redemption Price At Company's Election, as defined in subsection (a)(i) above. Notwithstanding the above, the holder may convert into Common Stock, prior to the close of business on the Date of Redemption at Company's Election, any Series B Preferred Shares which it is otherwise entitled to convert, including Series B Preferred Shares that has been selected for redemption at Company's election pursuant to this subsection 3(a). (b) Company Must Have Immediately Available Funds or Credit Facilities. The Company shall not be entitled to send any Redemption Notice and begin the redemption procedure under Section 3(a) unless it has: (i) the full amount of the redemption price to cash, available in a demand or other immediately available account in a bank or similar financial institution; or (ii) immediately available credit facilities, in the full amount of the redemption price with a bank or similar financial institution, or (iii) an agreement with a standby underwriter willing to purchase from the Company a sufficient number of shares of stock to provide proceeds necessary to redeem any stock that is not converted prior to redemptions; or (iv) a combination of the items set forth in (i), (ii), and (iii) above, aggregating the full amount of the redemption price. (c) Payment of Redemption Price. Each holder submitting Series B Preferred Shares being redeemed under this Section 3 shall send their Preferred Stock Certificates to redeemed to the Company or its Transfer Agent, and the Company shall pay the applicable redemption price to that Holder within five (5) business days of the Date of Redemption at Company's Election. If the Company fails to pay the Redemption Price, the redemption right provided in this section shall be declared null and void. However, this redemption right shall not be null and void if a bona fide dispute exists with respect to the calculation of the Redemption Price. 9 10 (4) Reissuance of Certificates. In the event of a conversion or redemption pursuant to this Amendment of less than all of the Series B Preferred Shares represented by a particular Preferred Stock Certificate, the Company shall promptly cause to be issued and delivered to the holder of such Series B Preferred Shares a Preferred Stock Certificate representing the remaining Series B Preferred Shares which have not been so converted or redeemed. (5) Reservation of Shares. The Company shall, so long as any of the Series B Preferred Shares are outstanding reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Series B Preferred Shares, such number of shares of Common Stock as shall from time to time be sufficient to affect the conversion of all of the Series B Preferred Shares then outstanding; provided that the number of shares of Common Stock so reserved shall at no time be less than 100% of the number of shares of Common Stock for which the Series B Preferred Shares are at any time convertible, (6) Voting Rights. Holders of Series B Preferred Shares shall have no voting rights, except as required by law, including but not limited to the Corporation Law of the State of Georgia and as expressly provided in this Amendment. (7) Liquidation, Dissolution, Winding-Up. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of the Series B Preferred Shares shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders (the "PREFERRED FUNDS"), before any amount shall be paid to the holders of any of the capital stock of the Company of any class junior in rank to the Series B Preferred Shares in respect of the preferences as to the distributions and payments on the liquidation, dissolution and winding up of the Company, an amount per Series B Preferred Share equal to the sum of (i) $20,000 and (ii) an amount equal to the product of (.05) (N/365) ($20,000) (where "N" has the meaning specified in Section 2(b)(viii); (such sum being referred to as the "LIQUIDATION VALUE"); provided that, if the Preferred Funds are insufficient to pay the full amount due to the holders of Series B Preferred Shares and holders of shares of other classes or series of preferred stock of the Company that are of equal rank with the Series B Preferred Shares as to payments of Preferred Funds (the "PARI PASSU SHARES"), then each holder of Series B Preferred Shares and Pari Passu Shares shall receive a percentage of the Preferred Funds equal to the full amount of Preferred Funds payable to such holder as a liquidation preference, in accordance with their respective preferences and rights, as a percentage of the full amount of Preferred Funds payable to all holders of Series B Preferred Shares and Pari Passu Shares. The purchase or redemption by the Company of stock of any class in any manner permitted by law, shall not for the purposes hereof, be regarded as a liquidation, dissolution or winding up of the Company. Neither the consolidation or merger of the Company with or into any other Person, nor the sale or transfer by the Company of less than substantially all of its assets, shall, for the purposes hereof, be deemed to be a liquidation, dissolution or winding up of the Company. No holder of Series B Preferred Shares shall be 10 11 entitled to receive any amounts with respect thereto upon any liquidation, dissolution or winding up of the Company other than the amounts provided for herein. (8) Preferred Rate. All shares of Common Stock shall be of junior rank to all Series B Preferred Shares in respect to the preferences as to distributions and payments upon the liquidation, dissolution, and winding up of the Company. The Series B Preferred Shares shall be of greater than any Series of Common or Preferred Stock hereinafter issued by the Company. Without the prior express written consent of the holders of not less than a majority of the then outstanding Series B Preferred Shares, the Company shall not hereafter authorize or issue additional or other capital stock that is of senior or equal rank to the Series B Preferred Shares in respect of the preferences as to distributions and payments upon the liquidation, dissolution and winding up of the Company. Without the prior express written consent of the holders of not less than a majority of the then outstanding Series B Preferred Shares, the Company shall not hereafter authorize or make any amendment to the Company's Articles of Incorporation or bylaws, or make any resolution of the board of directors with the Georgia Secretary of State containing any provisions, which would materially and adversely affect or otherwise impair the rights or relative priority of the holders of the Series B Preferred Shares relative to the holders of the Common Stock or the holders of any other class of capital stock. In the event of the merger or consolidation of the Company with or into another corporation, the Series B Preferred Shares shall maintain their relative powers, designations, and preferences provided for herein and no merger shall result inconsistent therewith. (9) Restriction on Dividends. Other than the distribution of the securities of the Company to the Company's shareholders, if any Series B Preferred Shares are outstanding, without the prior express written consent of the holders of not less than a majority of the then outstanding Series B Preferred Shares, the Company shall not directly or indirectly declare, pay or make any dividends or other distributions upon any of the Common Stock so long as written notice thereof has been given to holders of the Series B Preferred Shares at least 30 days prior to the earlier of (a) the record date taken for or (b) the payment of any such dividend or other distribution. Notwithstanding the foregoing, this Section 9 shall not prohibit the Company from declaring and paying a dividend in cash with respect to the Common Stock so long as the Company: (i) pays simultaneously to each holder of Series B Preferred Shares an amount in cash equal to the amount such holder would have received had all of such holder's Series B Preferred Shares been converted to Common Stock pursuant to Section 2 hereof one business day prior to the record date for any such dividend, and (ii) after giving effect to the payment of any dividend and any other payments required in connection therewith including to the holders of the Series B Preferred Shares, the Company has in cash or cash equivalents an amount equal to the aggregate of: (A) all of its liabilities reflected on its most recently available balance sheet, (B) the amount of any indebtedness incurred by the Company or any of its subsidiaries since its most recent balance sheet and (C) 120% of the amount payable to all holders of any shares of any class of preferred stock of the Company assuming a liquidation of the Company as the date of its most recently available balance sheet. 11 12 (10) Vote to Change the Terms of Series B Preferred Shares. The affirmative vote at a meeting duly called for such purpose, or the written consent without a meeting of the holders of not less than a majority of the then outstanding Series B Preferred Shares, shall be required for any change to this Amendment or the Company's Articles of Incorporation which would amend, alter, change or repeal any of the powers, designations, preferences and rights of the Series B Preferred Shares. (11) Lost or Stolen Certificates. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any Preferred Stock Certificates representing the Series B Preferred Shares, and, in the case of loss, theft or destruction, of any indemnification undertaking by the holder to the Company and, in the case of mutilation, upon surrender and cancellation of the Preferred Stock Certificate(s), the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date; provided, however, the Company shall not be obligated to re-issue preferred stock certificates if the holder contemporaneously requests the Company to convert such Series B Preferred Shares into Common Stock. (12) Withholding Tax Obligations. Notwithstanding anything herein to the contrary, to the extent that the Company receives advice in writing from its counsel that there is a reasonable basis to believe that the Company is required by applicable federal laws or regulations and delivers a copy of such written advice to the holders of the Series B Preferred Shares so effected, the Company may reasonably condition the making of any distribution (as such term is defined under applicable federal tax law and regulations) in respect of any Series B Preferred Share on the holder of such Series B Preferred Shares depositing with the Company an amount of cash sufficient to enable the Company to satisfy its withholding tax obligations (the "WITHHOLDING TAX") with respect to such distribution. Notwithstanding the foregoing or anything to the contrary, if any holder of the Series B Preferred Shares so effected receives advice in writing from its counsel that there is a reasonable basis to believe that the Company is not so required by applicable federal laws or regulations and delivers a copy of such written advice to the Company, the Company shall not be permitted to condition the making of any such distribution in respect of any Series B Preferred Share on the holder of such Series B Preferred Shares depositing with the Company any Withholding Tax with respect to such distribution, provided, however, the Company may reasonably condition the making of any such distribution in respect of any Series B Preferred Share on the holder of such Series B Preferred Shares executing and delivering to the Company, at the election of the holder, either: (i) if applicable, a properly completed Internal Revenue Service Form 4224, or (a) an indemnification agreement in reasonably acceptable form, with respect to any federal tax liability, penalties and interest that may be imposed upon the Company by the Internal Revenue Service as a result of the Company's failure to withhold in connection with such distribution to such holder. IV. 12 13 All other provisions of the Articles of Incorporation, as amended shall remain in full force and effect. V. Each amendment set forth above was duly approved by the Board of Directors of the Corporation with shareholder approval in accordance with the provisions of Section 14-2-821 of the Georgia Business Corporation Code on June 14, 2000. IN WITNESS WHEREOF, the Company has caused this Amendment to the Articles of Incorporation to be signed by Timothy C. Moses, its Chief Executive Officer, as of this 14 day of June, 2000. BIOSHIELD TECHNOLOGIES, INC. By: ______________________________________ Timothy C. Moses Chief Executive Officer ATTEST: By: ____________________________ Secretary 13 14 EXHIBIT I BIOSHIELD TECHNOLOGIES, INC. CONVERSION NOTICE Reference is made to the Amendments to the Articles of Incorporation of BioShield Technologies, Inc.. (the "AMENDMENT"). In accordance with and pursuant to the Amendment, the undersigned hereby elects to convert the number of shares of Series B Convertible Preferred Stock, no par value per share (the "SERIES B PREFERRED SHARES"), of BioShield Technologies, Inc., a Georgia corporation (the "COMPANY"), indicated below into shares of Common Stock, no par value per share (the "COMMON STOCK"), of the Company, by tendering the stock certificate(s) representing the share(s) of Series B Preferred Shares specified below as of the date specified below. The undersigned acknowledges that any sales by the undersigned of the securities issuable to the undersigned upon conversion of the Series B Preferred Shares shall be made only pursuant to (i) a registration statement effective under the Securities Act of 1933, as amended (the "ACT"), or (ii) advice of counsel that such sale is exempt from registration required by Section 5 of the Act. Date of Conversion: ------------------------------------------ Number of Series B Preferred Shares to be converted ------------------------------------------- Stock certificate no(s). of Series B Preferred Shares to be converted: ------------------------------------------- Please confirm the following information: Conversion Price: ------------------------------------------- Ten Consecutive Days Comprising Pricing Period and Prices: ------------------------------------------- Number of shares of Common Stock to be issued: ------------------------------------------- 15 please issue the Common Stock into which the Series B Preferred Shares are being converted in the following name and to the following address: Issue to:(1) -------------------------------------------- -------------------------------------------- Facsimile Number: -------------------------------------------- Authorization: -------------------------------------------- By: ----------------------------------------- Title: -------------------------------------- Dated: -------------------------------------- ACKNOWLEDGED AND AGREED: BIOSHIELD TECHNOLOGIES, INC. By: ----------------------------- Name: ---------------------------- Title: ---------------------------- Date: ---------------------------- - -------- (1) If other than to the record holder of the Series B Preferred Shares, any applicable transfer tax must be paid by the undersigned. 16 EXHIBIT II BIOSHIELD TECHNOLOGIES, INC. LOCK-UP NOTICE Reference is made to the Amendments to the Articles of Incorporation (the "AMENDMENT") of BioShield Technologies, Inc. (the "COMPANY"). In accordance with and pursuant to Section (2)(i) of the Amendment, the Company hereby elects to exercise its Lock-Up rights (as set forth in the Amendment), effective as of the date hereof. Consequently, the Company shall not be required to convert any Series B Preferred Shares which have a Conversion Date (as defined in the Amendment) during the period beginning on the date hereof and ending on the earlier of (i) that date which is ninety (90) days from the date hereof and (ii) the 725th day following the Issuance Date (as defined in the Amendment). Authorization: _______________________________ By:______________________________ Title:_____________________________ Dated: ____________________________ 17 EXHIBIT III BIOSHIELD TECHNOLOGIES, INC. FORM OF LOCK-UP AGREEMENT Reference is made to the Amendments to the Articles of Incorporation (the "AMENDMENT") of BioShield Technologies, Inc. (the "COMPANY"). The undersigned has been advised that in accordance with and pursuant to Section (2)(i) of the Amendment, effective as of ____________________________ (the "LOCK-UP COMMENCEMENT DATE"), the Company has elected to exercise its Lock-Up rights (as set forth in the Amendment) with respect to shares of Series B Convertible Preferred Stock (the "SERIES B PREFERRED SHARES"), no par value per share. Consequently, the Company shall not be required to convert any Series B Preferred Shares which have a Conversion Date (as defined in the Amendment) during the period (the "LOCK-UP PERIOD") beginning on the Lock-Up Commencement Date and ending on the earlier of (i) that date which is ninety (90) days from the Lock-Up Commencement Date and (ii) the 725th day following the Issuance Date (as defined in the Amendment). In consideration of the agreement by the holders of the Series B Preferred Shares not to convert any Series B Preferred Share pursuant to the Lock-Up rights, and for other good and valuable consideration, the undersigned hereby irrevocably agrees that, until one day after each of the holders of the Series B Preferred Shares has received written notice form the Company that the Lock-Up Period has ended, the undersigned will not, directly or indirectly, without the prior written consent of the holders representing a majority of the outstanding Series B Preferred Shares, sell, contact to sell, pledge, grant any option for the sale of or otherwise dispose or cause the disposition of any shares of the Company's common stock, no par value per share (the "COMMON STOCK"), or an securities convertible into or exchangeable or exercisable for any shares of Common Stock owned by the undersigned. Notwithstanding the foregoing, the undersigned shall not need to obtain such written consent with respect to (1) a transfer (not involving a sale in the public market) of shares of Common Stock by the undersigned in a bona fide charitable or other donative transaction or in any estate planning transaction so long as in each case the transferee of such agreement to holders of the Series B Preferred Shares prior to effecting any such transfer and (2) a transfer (not involving a sale in the public market) of shares of Common Stock, if the undersigned is a natural person, due to the death or disability of the undersigned so long as the transferee of such shares agrees in writing to be bound by the terms of this agreement and furnishes a copy of such agreement to holders of the Series B Preferred Shares prior to effecting any such transfer. In furtherance of the foregoing, the Company and the Company's transfer agent and registrar are hereby authorized to decline to make any transfer or securities if such transfer would constitute a violation or breach of this agreement. Very truly yours, ---------------------------------- Signature ---------------------------------- Print Name EX-10.94 10 ex10-94.txt PRIVATE EQUITY CREDIT AGREEMENT 1 Exhibit 10.94 PRIVATE EQUITY CREDIT AGREEMENT BY AND BETWEEN JACKSON LLC AND BIOSHIELD TECHNOLOGIES, INC. Dated as of June 14, 2000 2 ARTICLE I CERTAIN DEFINITIONS....................................................................... 1 Section 1.1 Defined Terms.............................................................. 1 ARTICLE II PURCHASE AND SALE OF COMMON STOCK......................................................... 8 Section 2.1 Investments................................................................ 8 Section 2.2 Mechanics.................................................................. 8 Section 2.3 Closings................................................................... 9 Section 2.4 Special Circumstances; Adjustment Period................................... 9 Section 2.5 Termination of Investment Obligation............................. 10 Section 2.6 Blackout Shares............................................................ 10 Section 2.7 Liquidated Damages......................................................... 10 ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR................................................ 11 Section 3.1 Intent..................................................................... 11 Section 3.2 Sophisticated Investor..................................................... 11 Section 3.3 Authority........................................................ 11 Section 3.4 Not an Affiliate........................................................... 11 Section 3.5 Organization and Standing.......................................... 12 Section 3.6 Absence of Conflicts............................................... 12 Section 3.7 Disclosure; Access to Information.................................. 12 Section 3.8 Manner of Sale..................................................... 12 Section 3.9 Financial Capacity................................................. 12 Section 3.10 No SEC or NASD Proceedings................................................. 12 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................. 13 Section 4.1 Organization of the Company........................................ 13 Section 4.2 Authority.......................................................... 13 Section 4.3 Capitalization..................................................... 13 Section 4.4 Common Stock....................................................... 14 Section 4.5 SEC Documents...................................................... 14 Section 4.6 Exemption from Registration; Valid Issuances....................... 14 Section 4.7 No General Solicitation or Advertising in Regard to this Transaction........................................................ 15 Section 4.8 Corporate Documents................................................ 15 Section 4.9 No Conflicts....................................................... 15 Section 4.10 No Material Adverse Change................................................. 16 Section 4.11 No Undisclosed Liabilities................................................. 16 Section 4.12 No Undisclosed Events or Circumstances..................................... 16 Section 4.13 No Integrated Offering..................................................... 16 Section 4.14 Litigation and Other Proceedings........................................... 16 Section 4.15 No Misleading or Untrue Communication...................................... 17
i 3 Section 4.16 Material Non-Public Information............................................ 17 ARTICLE V COVENANTS OF INVESTOR..................................................................... 17 Section 5.1 Compliance with Law................................................ 17 Section 5.2 Limitation on Short Sales.......................................... 17 ARTICLE VI COVENANTS OF THE COMPANY.................................................................. 17 Section 6.1 Registration Rights................................................ 17 Section 6.2 Reservation of Common Stock........................................ 17 Section 6.3 Listing of Common Stock............................................ 18 Section 6.4 Exchange Act Registration.......................................... 18 Section 6.5 Legends............................................................ 18 Section 6.6 Corporate Existence................................................ 18 Section 6.7 Additional SEC Documents........................................... 18 Section 6.8 Notice of Certain Events Affecting Registration; Suspension of Right to Make a Put................................................ 18 Section 6.9 Expectations Regarding Put Notices................................. 19 Section 6.10 Consolidation; Merger...................................................... 19 Section 6.11 Issuance of Put Shares..................................................... 19 Section 6.12 Legal Opinion on Subscription Date......................................... 20 Section 6.13 Limitations on Other Offerings by the Company.............................. 20 ARTICLE VII CONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO CLOSING........................... 20 Section 7.1 Conditions Precedent to the Obligation of the Company to Issue and Sell Common Stock.............................................. 20 Section 7.2 Conditions Precedent to the Right of the Company to Deliver a Put Notice and the Obligation of Investor to Purchase Put Shares....... 20 Section 7.3 Due Diligence Review; Non-Disclosure of Non-Public Information..... 23 ARTICLE VIII LEGENDS................................................................................... 24 Section 8.1 Legends............................................................ 24 Section 8.2 No Other Legend or Stock Transfer Restrictions..................... 25 Section 8.3 Investor's Compliance.............................................. 25 ARTICLE IX NOTICES; INDEMNIFICATION.................................................................. 25 Section 9.1 Notices............................................................ 25 Section 9.2 Indemnification.................................................... 27
ii 4 Section 9.3 Method of Asserting Indemnification Claims......................... 27
iii 5 ARTICLE X MISCELLANEOUS............................................................................. 30 Section 10.1 Governing Law; Jurisdiction................................................ 30 Section 10.2 Assignment................................................................. 30 Section 10.3 Third Party Beneficiaries.................................................. 31 Section 10.4 Termination................................................................ 31 Section 10.5 Entire Agreement, Amendment; No Waiver..................................... 31 Section 10.6 Fees and Expenses.......................................................... 31 Section 10.7 No Brokers................................................................. 31 Section 10.8 Counterparts............................................................... 31 Section 10.9 Survival; Severability..................................................... 31 Section 10.10 Further Assurances......................................................... 32 Section 10.11 No Strict Construction..................................................... 32 Section 10.12 Equitable Relief........................................................... 32 Section 10.13 Title and Subtitles........................................................ 32 Section 10.14 Reporting Entity for the Common Stock...................................... 32
iv 6 PRIVATE EQUITY CREDIT AGREEMENT is entered into as of the 14th day of June, 2000 (this "Agreement"), by and between JACKSON, LLC, an entity organized and existing under the laws of the Cayman Islands ("Investor"), and BioShield Technologies, Inc., a corporation organized and existing under the laws of the State of Georgia (the "Company"). WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to Investor, from time to time as provided herein, and Investor shall purchase, up to fifty million dollars ($50,000,000) of the Common Stock (as defined below); and WHEREAS, such investments will be made in reliance upon the provisions of Section 4(2) ("Section 4(2)") of the Securities Act of 1933 and the rules and regulations promulgated thereunder (the "Securities Act"), and/or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the investments in Common Stock to be made hereunder. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings specified or indicated (such meanings to be equally applicable to both the singular and plural forms of the terms defined) "Adjustment Period" shall have the meaning specified in Section 2.4(b). "Adjustment Period Notice" shall have the meaning specified in Section 2.4(a). "Agreement" shall have the meaning specified in the preamble hereof. "Ask Price" shall mean the closing ask price of the Common Stock on the Principal Market. "Average Daily Price" for any date shall mean the average of the Bid Price and the Ask Price for that date. "Average Daily Trading Volume" for any date shall mean the daily trading volume for the Common Stock on the Principal Market multiplied by the Bid Price. "Bid Price" shall mean the closing bid price of the Common Stock on the Principal Market. 7 "By-Laws" shall have the meaning specified in Section 4.8. "Certificate" shall have the meaning specified in Section 4.8. "Claim Notice" shall have the meaning specified in Section 9.3(a). "Closing" shall mean one of the closings of a purchase and sale of shares of Common Stock pursuant to Section 2.1. "Closing Date" shall mean, with respect to a Closing, the eleventh (11th) Trading Day following the Put Date related to such Closing. "Commitment Period" shall mean the period commencing on the earlier to occur of (a) the Effective Date or (b) such earlier date as the Company and Investor shall agree, and expiring on the earlier to occur of (i) the date on which Investor shall have purchased Put Shares pursuant to this Agreement for an aggregate Purchase Price of the Maximum Commitment Amount, (ii) the date this Agreement is terminated pursuant to Section 2.5, or (iii) the date occurring twenty-four (24) months from the date of commencement of the Commitment Period. "Common Stock" shall mean the Company's common stock, no par value, and any shares of any other class of common stock whether now or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon liquidation of the Company). "Common Stock Equivalents" shall mean any securities that are convertible into or exchangeable for Common Stock or any warrants, options or other rights to subscribe for or purchase Common Stock or any such convertible or exchangeable securities. "Company" shall have the meaning specified in the preamble to this Agreement. "Condition Satisfaction Date" shall have the meaning specified in Section 7.2. "Damages" shall mean any loss, claim, damage, liability, costs and expenses (including, without limitation, reasonable attorneys' fees and disbursements and costs and expenses of expert witnesses and investigation). 2 8 "Discount" shall mean ten percent (10%). "Dispute Period" shall have the meaning specified in Section 9.3(a). "DTC" shall the meaning specified in Section 2.3. "DWAC" shall the meaning specified in Section 2.3. "Effective Date" shall mean the date on which the SEC first declares effective a Registration Statement registering resale of the Registrable Securities as set forth in Section 7.2(a). "Exchange Act" shall mean the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder. "FAST" shall the meaning specified in Section 2.3. "Indemnified Party" shall have the meaning specified in Section 9.3(a). "Indemnifying Party" shall have the meaning specified in Section 9.3(a). "Indemnity Notice" shall have the meaning specified in Section 9.3(b). "Initial Registrable Securities" shall have the meaning specified in the Registration Rights Agreement. "Initial Registration Statement" shall have the meaning specified in the Registration Rights Agreement. "Investment Amount" shall mean the dollar amount (within the range specified in Section 2.2) to be invested by Investor to purchase Put Shares with respect to any Put Date as notified by the Company to Investor in accordance with Section 2.2. "Investor" shall have the meaning specified in the preamble to this Agreement. "Legend" shall have the meaning specified in Section 8.1. "Market Price" as applicable to any Closing shall mean the average of the three lowest Average Daily Prices for each of the ten (10) Trading Days immediately preceding the date of such Closing. "Material Adverse Effect" shall mean any effect on the business, operations, properties, prospects or financial condition of the Company that is material and 3 9 adverse to the Company or to the Company and such other entities controlling or controlled by the Company, taken as a whole, and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to enter into and perform its obligations under any of (a) this Agreement and (b) the Registration Rights Agreement. "Maximum Commitment Amount" shall mean fifty million dollars ($50,000,000), subject to increase as agreed to by the Company and Investor. "Maximum Put Amount" shall mean, with respect to any Put, the lessor of five million dollars ($5,000,000) or 150% of the Average Daily Trading Volume for the twenty (20) Trading Days immediately preceding the Put Date, subject to increase as agreed to by the Company and Investor. "Minimum Put Amount" shall mean, with respect to any Put, two hundred fifty thousand dollars ($250,000), subject to decrease as agreed to by the Company and Investor. "NASD" shall mean the National Association of Securities Dealers, Inc. "Nasdaq" shall mean The Nasdaq Stock Market, Inc. "New Bid Price" shall have the meaning specified in Section 2.6. "Old Bid Price" shall have the meaning specified in Section 2.6. "Outstanding" shall mean, with respect to the Common Stock, at any date as of which the number of shares of Common Stock is to be determined, all issued and outstanding shares of Common Stock, including all shares of Common Stock issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock; provided, however, that Outstanding shall not include any shares of Common Stock then directly or indirectly owned or held by or for the account of the Company. "Person" shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Preferred Stock" shall mean the Company's preferred stock, no par value. "Principal Market" shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock. 4 10 "Purchase Price" shall mean, with respect to a Put, the Market Price on the applicable Closing Date (or such other date on which the Purchase Price is calculated in accordance with the terms and conditions of this Agreement) less the product of the Discount and the Market Price. "Put" shall mean each occasion that the Company elects to exercise its right to tender a Put Notice requiring Investor to purchase shares of Common Stock, subject to the terms and conditions of this Agreement. "Put Date" shall mean the Trading Day during the Commitment Period that a Put Notice is deemed delivered pursuant to Section 2.2(b). "Put Notice" shall mean a written notice to Investor setting forth the Investment Amount with respect to which the Company intends to require Investor to purchase shares of Common Stock pursuant to the terms of this Agreement. "Put Shares" shall mean all shares of Common Stock issued or issuable pursuant to a Put that has been exercised or may be exercised in accordance with the terms and conditions of this Agreement. "Registrable Securities" shall mean the (a) Put Shares, and (b) any securities issued or issuable with respect to any of the foregoing by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (i) a Registration Statement has been declared effective by the SEC and such Registrable Securities have been disposed of pursuant to a Registration Statement, (ii) such Registrable Securities have been sold under circumstances under which all of the applicable conditions of Rule 144 are met, (iii) such time as such Registrable Securities have been otherwise transferred to holders who may trade such shares without restriction under the Securities Act, and the Company has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend or (iv) in the opinion of counsel to the Company, which counsel shall be reasonably acceptable to Investor, such Registrable Securities may be sold without registration under the Securities Act or the need for an exemption from any such registration requirements and without any time, volume or manner limitations pursuant to Rule 144(k) (or any similar provision then in effect) under the Securities Act. "Registration Rights Agreement" shall mean the registration rights agreement in the form of Exhibit A hereto. "Registration Statement" shall mean a registration statement on Form SB-2 (if use of such form is then available to the Company pursuant to the rules of the SEC and, if not, on such other form promulgated by the SEC for which the Company then qualifies 5 11 and which counsel for the Company shall deem appropriate and which form shall be available for the resale of the Registrable Securities to be registered thereunder in accordance with the provisions of this Agreement and the Registration Rights Agreement and in accordance with the intended method of distribution of such securities), for the registration of the resale by Investor of the Registrable Securities under the Securities Act. "Regulation D" shall have the meaning specified in the recitals of this Agreement. "Remaining Put Shares" shall have the meaning specified in Section 2.6. "Rule 144" shall mean Rule 144 under the Securities Act or any similar provision then in force under the Securities Act. "SEC" shall mean the Securities and Exchange Commission. "Section 4(2)" shall have the meaning specified in the recitals of this Agreement. "Securities Act" shall have the meaning specified in the recitals of this Agreement. "SEC Documents" shall mean, as of a particular date, all reports and other documents filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since the beginning of the Company's then most recently completed fiscal year as of the time in question (provided that if the date in question is within ninety days of the beginning of the Company's fiscal year, the term shall include all documents filed since the beginning of the second preceding fiscal year). "Subscription Date" shall mean the date on which this Agreement is executed and delivered by the Company and Investor. "Third Party Claim" shall have the meaning specified in Section 9.3(a). "Trading Cushion" shall mean a minimum of fifteen (15) Trading Days between Put Dates, unless a shorter period is agreed to by the Company and Investor. "Trading Day" shall mean any day during which the Principal Market shall be open for business. "Transfer Agent" shall mean the transfer agent for the Common Stock (and to any substitute or replacement transfer agent for the Common Stock upon the Company's appointment of any such substitute or replacement transfer agent). 6 12 "Underwriter" shall mean any underwriter participating in any disposition of the Registrable Securities on behalf of Investor pursuant to a Registration Statement. "Valuation Event" shall mean an event in which the Company at any time during a Valuation Period takes any of the following actions: (a) subdivides or combines the Common Stock; (b) pays a dividend in shares of Common Stock or makes any other distribution of shares of Common Stock, except for dividends paid with respect to the Preferred Stock; (c) issues any warrants, options or other rights to subscribe for or purchase shares of Common Stock and the price per share for which shares of Common Stock may at any time thereafter be issuable pursuant to such warrants, options or other rights shall be less than the Bid Price in effect immediately prior to such issuance; (d) issues any securities convertible into or exchangeable for shares of Common Stock and the consideration per share for which shares of Common Stock may at any time thereafter be issuable pursuant to the terms of such convertible or exchangeable securities shall be less than the Bid Price in effect immediately prior to such issuance; (e) issues shares of Common Stock otherwise than as provided in the foregoing subsections (a) through (d), at a price per share less, or for other consideration lower, than the Bid Price in effect immediately prior to such issuance, or without consideration; (f) makes a distribution of its assets or evidences of indebtedness to the holders of Common Stock as a dividend in liquidation or by way of return of capital or other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law or any distribution to such holders made in respect of the sale of all or substantially all of the Company's assets (other than under the circumstances provided for in the foregoing subsections (a) through (e); or (g) takes any action affecting the number of Outstanding Common Stock, other than an action described in any of the foregoing subsections (a) through (f) hereof, inclusive, which in the opinion of the Company's Board of Directors, determined in good faith, would have a materially adverse effect upon the rights of Investor at the time of a Put. 7 13 "Valuation Period" shall mean the period of ten (10) Trading Days immediately preceding the date on which the applicable Closing is held and during which the Purchase Price of the Common Stock is valued; provided, however, that if a Valuation Event occurs during any Valuation Period, a new Valuation Period shall begin on the Trading Day immediately after the occurrence of such Valuation Event and end on the tenth Trading Day thereafter. 8 14 ARTICLE II PURCHASE AND SALE OF COMMON STOCK Section 2.1 Investments. (a) Puts. Upon the terms and conditions set forth herein (including, without limitation, the provisions of Article VII), on any Put Date the Company may exercise a Put by the delivery of a Put Notice. The number of Put Shares that Investor shall receive pursuant to such Put shall be determined by dividing the Investment Amount specified in the Put Notice by the Purchase Price with respect to such Put Date. (b) Maximum Amount of Puts. Unless the Company obtains the requisite approval of its shareholders in accordance with the corporate laws of the State of Georgia and the applicable rules of the Principal Market, no more than 19.99% of the Outstanding Common Stock on the date hereof) may be issued and sold to Investor pursuant to this Agreement. Section 2.2 Mechanics. (a) Put Notice. At any time during the Commitment Period, the Company may deliver a Put Notice to Investor, subject to the conditions set forth in Section 7.2; provided, however, the Investment Amount for each Put as designated by the Company in the applicable Put Notice shall be neither less than the Minimum Put Amount nor more than the Maximum Put Amount. (b) Date of Delivery of Put Notice. A Put Notice shall be deemed delivered on (i) the Trading Day it is received by facsimile or otherwise by Investor if such notice is received on or prior to 12:00 noon New York time, or (ii) the immediately succeeding Trading Day if it is received by facsimile or otherwise after 12:00 noon New York time on a Trading Day or at any time on a day which is not a Trading Day. Section 2.3 Closings. On each Closing Date for a Put, (a) the Company shall deliver to Investor one or more certificates, at Investor's option, representing the Put Shares to be purchased by Investor pursuant to Section 2.1 herein, registered in the name of Investor and (b) Investor shall deliver to the Company the Investment Amount specified in the Put Notice by wire transfer of immediately available funds to an account designated by the Company on or before the Closing Date. In lieu of delivering physical certificates representing the Common Stock issuable in accordance with clause (a) of this Section 2.3, and provided that the Transfer Agent then is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of Investor, the Company shall use its commercially reasonable efforts to cause the Transfer Agent to electronically transmit the Put Shares by crediting the account of the holder's prime broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system. In 9 15 addition, on or prior to such Closing Date, each of the Company and Investor shall deliver to the other all documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein. Section 2.4 Termination of Investment Obligation. The obligation of Investor to purchase shares of Common Stock shall terminate permanently without penalty (including with respect to a Closing Date that has not yet occurred) in the event that (a) there shall occur any stop order or suspension of the effectiveness of any Registration Statement for an aggregate of thirty (30) Trading Days during the Commitment Period, as a result of corporate developments subsequent to the Subscription Date that would require such Registration Statement to be amended to reflect such event in order to maintain its compliance with the disclosure requirements of the Securities Act, (b) the Company shall at any time fail to comply with the requirements of Section 6.3, 6.4, 6.5 or 6.6 and such failure shall continue for more than thirty (30) days, or (c) the Company shall provide thirty (30) days notice of termination to Investor. Section 2.5 Blackout Shares. [INTENTIONALLY LEFT BLANK] ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR Investor represents and warrants to the Company that: Section 3.1 Intent. Investor is entering into this Agreement for its own account and Investor has no present arrangement (whether or not legally binding) at any time to sell the Common Stock to or through any person or entity; provided, however, that by making the representations herein, Investor does not agree to hold the Common Stock for any minimum or other specific term and reserves the right to dispose of the Common Stock at any time in accordance with federal and state securities laws applicable to such disposition. Section 3.2 Sophisticated Investor. Investor is a sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as defined in Rule 501 of Regulation D), and Investor has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in Common Stock. Investor acknowledges that an investment in the Common Stock is speculative and involves a high degree of risk. 10 16 Section 3.3 Authority. (a) Investor has the requisite power and authority to enter into and perform its obligations under this Agreement and the transactions contemplated hereby in accordance with its terms; (b) the execution and delivery of this Agreement and the Registration Rights Agreement, and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action and no further consent or authorization of Investor or its partners is required; and (c) this Agreement has been duly authorized and validly executed and delivered by Investor and is a valid and binding agreement of Investor enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application. Section 3.4 Not an Affiliate. Investor is not an officer, director or "affiliate" (as that term is defined in Rule 405 of the Securities Act) of the Company. Section 3.5 Organization and Standing. Investor is a limited partnership duly organized, validly existing and in good standing under the laws of the Cayman Islands and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Investor is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure so to qualify would not have a material adverse effect on Investor. Section 3.6 Disclosure; Access to Information. Investor has received all documents, records, books and other information pertaining to Investor's investment in the Company that have been requested by Investor. Investor has reviewed or received copies of the SEC Documents. Section 3.7 Manner of Sale. At no time was Investor presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising. Section 3.8 Financial Capability. Investor presently has the financial capacity and the necessary capital to perform its obligations hereunder and shall and has provided to the Company such financial and other information that the Company has requested to demonstrate such capacity. 11 17 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Investor that: Section 4.1 Organization of the Company. The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Georgia and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company does not own more than fifty percent (50%) of the outstanding capital stock of or control any other business entity other than Electronic Medical Distribution, Inc. and Lab America, Inc. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure so to qualify would not have a Material Adverse Effect. Section 4.2 Authority. (a) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Registration Rights Agreement and to issue the Put Shares ; (b) the execution and delivery of this Agreement and the Registration Rights Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required; and (c) each of this Agreement and the Registration Rights Agreement has been duly executed and delivered by the Company and constitute valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application. Section 4.3 Capitalization. As of May 15, 2000, the authorized capital stock of the Company consisted of 50,000,000 shares of Common Stock, of which 7,981,714 shares were issued and outstanding, and 10,000,000 shares of preferred stock, of which 100 shares were issued and outstanding. All of the outstanding shares of Common Stock of the Company have been duly and validly authorized and issued and are fully paid and nonassessable. Section 4.4 Common Stock. The Company has registered the Common Stock pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full compliance with all reporting requirements of the Exchange Act, and the Company has maintained all requirements for the continued listing or quotation of the Common Stock, and such Common Stock is currently listed or quoted on the Principal Market. As of the date of this Agreement, the Principal Market is the Nasdaq SmallCap Market. 12 18 Section 4.5 SEC Documents. The Company has delivered or made available to Investor true and complete copies of the SEC Documents (including, without limitation, proxy information and solicitation materials). The Company has not provided to Investor any information that, according to applicable law, rule or regulation, should have been disclosed publicly prior to the date hereof by the Company, but which has not been so disclosed. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and other federal, state and local laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply as to form and substance in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto or (b) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Section 4.6 Exemption from Registration; Valid Issuances. The sale and issuance of the Put Shares , in accordance with the terms and on the basis of the representations and warranties set forth in this Agreement, may and shall be properly issued by the Company to Investor pursuant to Section 4(2), Regulation D and/or any applicable state law. When issued and paid for as herein provided, the Put Shares, shall be duly and validly issued, fully paid, and nonassessable. Neither the sales of the Put Shares , pursuant to, nor the Company's performance of its obligations under, this Agreement or the Registration Rights Agreement shall (a) result in the creation or imposition of any liens, charges, claims or other encumbrances upon the Put Shares , or any of the assets of the Company, or (b) entitle the holders of Outstanding Common Stock to preemptive or other rights to subscribe to or acquire the Common Stock or other securities of the Company. The Put Shares shall not subject Investor to personal liability by reason of the ownership thereof. Section 4.7 No General Solicitation or Advertising in Regard to this Transaction. Neither the Company nor any of its affiliates nor any person acting on its or their behalf (a) has conducted or will conduct any general solicitation (as that term is used in Rule 502(c) of Regulation D) or general advertising with respect to any of the Put Shares , or (b) made any offers or sales of any security or solicited any offers to buy any security under any circumstances that would require registration of the Common Stock under the Securities Act. 13 19 Section 4.8 Corporate Documents. The Company has furnished or made available to Investor true and correct copies of the Company's Certificate of Incorporation, as amended and in effect on the date hereof (the "Certificate"), and the Company's By-Laws, as amended and in effect on the date hereof (the "By-Laws"). Section 4.9 No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, including without limitation the issuance of the Put Shares , do not and will not (a) result in a violation of the Certificate or By-Laws or (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture, instrument or any "lock-up" or similar provision of any underwriting or similar agreement to which the Company is a party, or (c) result in a violation of any federal, state, local or foreign law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect) nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing; provided, however, that for purposes of the Company's representations and warranties as to violations of foreign law, rule or regulation referenced in clause (c), such representations and warranties are made only to the best of the Company's knowledge insofar as the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby are or may be affected by the status of Investor under or pursuant to any such foreign law, rule or regulation. The business of the Company is not being conducted in violation of any law, ordinance or regulation of any governmental entity, except for possible violations that either singly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or issue and sell the Common Stock in accordance with the terms hereof (other than any SEC, NASD or state securities filings that may be required to be made by the Company subsequent to any Closing, any registration statement that may be filed pursuant hereto, and any shareholder approval required by the rules applicable to companies whose common stock trades on the Nasdaq National Market); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of Investor herein. Section 4.10 No Material Adverse Change. Since March 31, 2000, no event has occurred that would have a Material Adverse Effect on the Company, except as disclosed in the SEC Documents. 14 20 Section 4.11 No Undisclosed Liabilities. The Company has no liabilities or obligations that are material, individually or in the aggregate, and that are not disclosed in the SEC Documents or otherwise publicly announced, other than those incurred in the ordinary course of the Company's businesses since March 31, 2000 and which, individually or in the aggregate, do not or would not have a Material Adverse Effect on the Company. Section 4.12 No Undisclosed Events or Circumstances. Since March 31, 2000, no event or circumstance has occurred or exists with respect to the or its businesses, properties, prospects, operations or financial condition, that, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed in the SEC Documents. Section 4.13 No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, other than pursuant to this Agreement, under circumstances that would require registration of the Common Stock under the Securities Act. Section 4.14 Litigation and Other Proceedings. Except as may be set forth in the SEC Documents, there are no lawsuits or proceedings pending or to the best knowledge of the Company threatened, against the Company, nor has the Company received any written or oral notice of any such action, suit, proceeding or investigation, which would have a Material Adverse Effect. Except as set forth in the SEC Documents, no judgment, order, writ, injunction or decree or award has been issued by or, so far as is known by the Company, requested of any court, arbitrator or governmental agency which would have a Material Adverse Effect. Section 4.15 No Misleading or Untrue Communication. The Company, any Person representing the Company, and, to the knowledge of the Company, any other Person selling or offering to sell the Put Shares , in connection with the transactions contemplated by this Agreement, have not made, at any time, any oral communication in connection with the offer or sale of the same which contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. Section 4.16 Material Non-Public Information. The Company is not in possession of, nor has the Company or its agents disclosed to Investor, any material non-public information that (a) if disclosed, would reasonably be expected to have a materially adverse effect on the price of the Common Stock or (b) according to applicable law, rule or regulation, should have been disclosed publicly by the Company prior to the date hereof but which has not been so disclosed. ARTICLE V 15 21 COVENANTS OF INVESTOR Section 5.1 Compliance with Law. Investor's trading activities with respect to shares of the Common Stock will be in compliance with all applicable state and federal securities laws, rules and regulations and the rules and regulations of the NASD and the Principal Market on which the Common Stock is listed. Section 5.2 Prohibition on Short Sales. Investor and its Affiliates shall not directly or indirectly engage in any short sales or third party short sales of the Company's Common Stock or hold a "put equivalent position" with respect to the Common Stock (as defined in Rule 16a-1 under the 1934 Act). A short sale or put equivalent position shall not be deemed to have occurred if there is an offsetting long position in the Common Stock by way of conversion of any convertible securities of the Company or any Put Notice. Notwithstanding the foregoing restrictions on short sales, the foregoing restrictions shall not apply in the event that there is a material adverse change with respect to the Company which is likely to lead to the liquidation or bankruptcy of the Company. ARTICLE VI COVENANTS OF THE COMPANY Section 6.1 Registration Rights. The Company shall cause the Registration Rights Agreement to remain in full force and effect and the Company shall comply in all respects with the terms thereof. Section 6.2 Reservation of Common Stock. As of the date hereof, the Company has available and the Company shall reserve and keep available at all times, free of preemptive rights, shares of Common Stock for the purpose of enabling the Company to satisfy an obligation to issue Put Shares having an aggregate Purchase Price of up to the lesser of (a) $50,000,000 or (b) the Maximum Commitment Amount less the aggregate Purchase Price of all Put Shares purchased by Investor hereunder. Section 6.3 Listing of Common Stock. The Company shall maintain the listing of the Common Stock on a Principal Market, and will cause the Put Shares to be listed on the Principal Market. The Company further shall, if the Company applies to have the Common Stock traded on any other Principal Market, include in such application the Put Shares and shall take such other action as is necessary or desirable in the reasonable opinion of Investor to cause the Common Stock to be listed on such other Principal Market as promptly as possible. The Company shall use its commercially reasonable efforts to continue the listing and trading of the Common Stock on the Principal Market (including, without limitation, maintaining sufficient net tangible assets) and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the NASD and the Principal Market. 16 22 Section 6.4 Exchange Act Registration. The Company shall take all commercially reasonable steps to cause the Common Stock to continue to be registered under Section 12(g) or 12(b) of the Exchange Act, will use its commercially reasonable efforts to comply in all material respects with its reporting and filing obligations under said Act, and will not take any action or file any document (whether or not permitted by said Act or the rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under said Act. Section 6.5 Legends. The certificates evidencing the Put Shares shall be free of legends, except as provided for in Article VIII. Section 6.6 Corporate Existence. The Company shall take all commercially reasonable steps necessary to preserve and continue the corporate existence of the Company. Section 6.7 Additional SEC Documents. The Company shall deliver to Investor, promptly after the originals thereof are submitted to the SEC for filing, copies of all SEC Documents so furnished or submitted to the SEC. Section 6.8 Notice of Certain Events Affecting Registration; Suspension of Right to Make a Put. The Company shall promptly notify Investor upon the occurrence of any of the following events in respect of a registration statement or related prospectus in respect of an offering of Registrable Securities: (a) receipt of any request for additional information by the SEC or any other federal or state governmental authority during the period of effectiveness of the registration statement for amendments or supplements to the registration statement or related prospectus; (b) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (c) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (d) the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the registration statement, related prospectus or documents so that, in the case of a Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (e) the Company's reasonable determination that a post-effective amendment to the registration statement would be appropriate, and the Company shall promptly make available to Investor any such supplement or amendment to the related prospectus. The Company shall not deliver to Investor any Put Notice during the 17 23 continuation of any of the foregoing events. Section 6.9 Expectations Regarding Put Notices. Within ten (10) days after the commencement of each calendar quarter occurring subsequent to the commencement of the Commitment Period, the Company undertakes to notify Investor as to its reasonable expectations as to the dollar amount it intends to raise during such calendar quarter, if any, through the issuance of Put Notices. Such notification shall constitute only the Company's good faith estimate with respect to such calendar quarter and shall in no way obligate the Company to raise such amount during such calendar quarter or otherwise limit its ability to deliver Put Notices during such calendar quarter. The failure by the Company to comply with this provision can be cured by the Company's notifying Investor at any time as to its reasonable expectations with respect to the current calendar quarter. Section 6.10 Consolidation; Merger. The Company shall not, at any time after the date hereof, effect any merger or consolidation of the Company with or into, or a transfer of all or substantially all of the assets of the Company to, another entity unless the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligation to deliver to Investor such shares of stock and/or securities as Investor is entitled to receive pursuant to this Agreement. 18 24 Section 6.11 Issuance of Put Shares. The sale of the Put Shares shall be made in accordance with the provisions and requirements of Regulation D and any applicable state law. Section 6.12 Legal Opinion on Subscription Date. The Company's legal counsel shall deliver to Investor upon execution of this Agreement an opinion in the form of Exhibit C, except for paragraph 7 thereof. Section 6.13 Limitations on Other Offerings by the Company. Until the earlier of (i) the date twelve months from the date of the first Closing hereunder, (ii) the termination of this Agreement as provided herein or (iii) the termination of Investors' obligations under Section 2.5 hereof, neither the Company nor any of its subsidiaries shall issue, in any public or private offering, Common Stock or securities convertible into or exchangeable for Common Stock of the Company ("Common Stock Equivalents") in which the effective cost per share of the Common Stock to the purchaser or acquiror thereof would be less than the average of the Average Daily Prices for a share of Common Stock for the ten Trading Days immediately preceding the closing of such offering; provided that the Company may so issue Common Stock or Common Stock Equivalents: (a) in exchange for, or upon conversion of, any securities convertible into or exchangeable for Common Stock or Common Stock Equivalents outstanding on the date hereof; (b) pursuant to any stock option plan, stock purchase plan or similar employee benefit plan in effect on the date hereof or hereafter adopted by the Company; (c) in any transaction to which the Investor has given its prior consent (which consent shall in any case not be unreasonably withheld or delayed), (d) to any entity or the holders of beneficial interest in such entity in connection with the acquisition or merger of part or all of such entity or in connection with proposed joint business efforts between such person or entity and the Company; (e) in connection with the issuance of debt securities by the Company; (f) in exchange for bona fide services rendered to the Company; (g) in any offering for the primary benefit of any person or entity other than the Company such as Electronic Medical Distribution, Inc. or any other Affiliate of the Company; (h) any secondary underwritten public offering of Common Stock or other securities of the Company; or (i) any investment by a strategic investor. ARTICLE VII CONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO CLOSING Section 7.1 Conditions Precedent to the Obligation of the Company to Issue and Sell Common Stock. The obligation hereunder of the Company to issue and sell the Put Shares to Investor incident to each Closing is subject to the satisfaction, at or before each such Closing, of each of the conditions set forth below. (a Accuracy of Investor's Representation and Warranties. The 19 25 representations and warranties of Investor shall be true and correct in all material respects as of the date of this Agreement and as of the date of each such Closing as though made at each such time, except for changes which have not had a Material Adverse Effect. (b Performance by Investor. Investor shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Investor at or prior to such Closing. Section 7.2 Conditions Precedent to the Right of the Company to Deliver a Put Notice and the Obligation of Investor to Purchase Put Shares. The right of the Company to deliver a Put Notice and the obligation of Investor hereunder to acquire and pay for the Put Shares incident to a Closing is subject to the satisfaction, on (a) the date of delivery of such Put Notice and (b) the applicable Closing Date (each a "Condition Satisfaction Date"), of each of the following conditions: (a)Registration of Registrable Securities with the SEC. As set forth in the Registration Rights Agreement, the Company shall have filed with the SEC the Initial Registration Statement with respect to the resale of the Initial Registrable Securities by Investor and such Registration Statement shall have been declared effective by the SEC prior to the first Put Date. For the purposes of any Put Notice with respect to the Registrable Securities other than the Initial Registrable Securities, the Company shall have filed with the SEC a Registration Statement with respect to the resale of such Registrable Securities by Investor which shall have been declared effective by the SEC prior to the Put Date therefor. (b) Effective Registration Statement. As set forth in the Registration Rights Agreement, a Registration Statement shall have previously become effective for the resale by Investor of the Registrable Securities subject to such Put Notice and such Registration Statement shall remain effective on each Condition Satisfaction Date and (i) neither the Company nor Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC's concerns have been addressed and Investor is reasonably satisfied that the SEC no longer is considering or intends to take such action), and (ii) no other suspension of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus shall exist. (c) Accuracy of the Company's Representations and Warranties. The representations and warranties of the Company shall be true and correct in all material respects as of each Condition Satisfaction Date as though made at each such time (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including 20 26 each Condition Satisfaction Date, except for any conditions which have temporarily caused any representations or warranties herein to be incorrect and which have been corrected with no continuing impairment to the Company or Investor. (d) Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement and the Registration Rights Agreement to be performed, satisfied or complied with by the Company at or prior to each Condition Satisfaction Date. (e) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or adopted by any court or governmental authority of competent jurisdiction that prohibits or directly and materially adversely affects any of the transactions contemplated by this Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by this Agreement. (f) Adverse Changes. Since the date of filing of the Company's most recent SEC Document, no event that had or is reasonably likely to have a Material Adverse Effect has occurred. (g) No Suspension of Trading In or Delisting of Common Stock. The trading of the Common Stock shall not have been suspended by the SEC, the Principal Market or the NASD and the Common Stock shall have been approved for listing or quotation on and shall not have been delisted from the Principal Market. (h) Legal Opinion. The Company shall have caused to be delivered to Investor, within five (5) Trading Days of the effective date of the Initial Registration Statement and each subsequent Registration Statement, an opinion of the Company's legal counsel in the form of Exhibit C hereto, addressed to Investor. (i) Due Diligence. No dispute between the Company and Investor shall exist pursuant to Section 7.3 as to the adequacy of the disclosure contained in any Registration Statement. (j) Ten Percent Limitation. On each Closing Date, the number of Put Shares then to be purchased by Investor shall not exceed the number of such shares that, when aggregated with all other shares of Registrable Securities then owned by Investor beneficially or deemed beneficially owned by Investor, would result in Investor owning no more than 9.9% of all of such Common Stock as would be outstanding on such Closing Date, as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. For purposes of this Section 7.2(j), in the event that the amount of Common Stock outstanding as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder is greater on a Closing 21 27 Date than on the date upon which the Put Notice associated with such Closing Date is given, the amount of Common Stock outstanding on such Closing Date shall govern for purposes of determining whether Investor, when aggregating all purchases of Common Stock made pursuant to this Agreement would own more than 9.9% of the Common Stock following such Closing Date. (k) Minimum Volume and Bid Price. For the ten (10) Trading Days immediately preceding both the Put Date and the Closing Date, (a) the aggregate Average Daily Trading Volume for each such ten Trading Day period shall have equaled or exceeded $500,000 and (b) the average of the Bid Prices for such ten Trading Day period shall equal or exceed $7.50 (as adjusted for stock splits, stock dividends, reverse stock splits, and similar events from and after the date hereof). (l) No Knowledge. The Company shall have no knowledge of any event more likely than not to have the effect of causing such Registration Statement to be suspended or otherwise ineffective (which event is more likely than not to occur within the fifteen Trading Days following the Trading Day on which such Notice is deemed delivered). (m) Trading Cushion. The Trading Cushion shall have elapsed since the immediately preceding Put Date. (n) Shareholder Vote. The issuance of shares of Common Stock with respect to the applicable Closing, if any, shall not violate the shareholder approval requirements of the Principal Market. (o) Other. On each Condition Satisfaction Date, Investor shall have received and been reasonably satisfied with such other certificates and documents as shall have been reasonably requested by Investor in order for Investor to confirm the Company's satisfaction of the conditions set forth in this Section 7.2., including, without limitation, a certificate in substantially the form and substance of Exhibit D hereto, executed by an executive officer of the Company and to the effect that all the conditions to such Closing shall have been satisfied as at the date of each such certificate. Section 7.3 Due Diligence Review; Non-Disclosure of Non-Public Information. (a) The Company shall make available for inspection and review by Investor, advisors to and representatives of Investor (who may or may not be affiliated with Investor and who are reasonably acceptable to the Company), any Underwriter, any Registration Statement or amendment or supplement thereto or any blue sky, NASD or other filing, all financial and other records, all SEC Documents and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company's officers, directors and employees to supply all such information reasonably requested by Investor or any such representative, advisor or Underwriter in connection with such Registration 22 28 Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of such Registration Statement for the sole purpose of enabling Investor and such representatives, advisors and Underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement. (b) Each of the Company, its officers, directors, employees and agents shall in no event disclose non-public information to Investor, advisors to or representatives of Investor (including, without limitation, in connection with the giving of the Adjustment Period Notice pursuant to Section 2.4) unless prior to disclosure of such information the Company identifies such information as being non-public information and provides Investor, such advisors and representatives with the opportunity to accept or refuse to accept such non-public information for review. The Company may, as a condition to disclosing any non-public information hereunder, require Investor's advisors and representatives to enter into a confidentiality agreement in form and substance reasonably satisfactory to the Company and Investor. (c) Nothing herein shall require the Company to disclose non-public information to Investor or its advisors or representatives, and the Company represents that it does not disseminate non-public information to any investors who purchase stock in the Company in a public offering, to money managers or to securities analysts; provided, however, that notwithstanding anything herein to the contrary, the Company shall, as hereinabove provided, immediately notify the advisors and representatives of Investor and any Underwriters of any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which it becomes aware, constituting non-public information (whether or not requested of the Company specifically or generally during the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in a Registration Statement would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements therein, in light of the circumstances in which they were made, not misleading. Nothing contained in this Section 7.3 shall be construed to mean that such persons or entities other than Investor (without the written consent of Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting due diligence in accordance with the terms and conditions of this Agreement and nothing herein shall prevent any such persons or entities from notifying the Company of their opinion that based on such due diligence by such persons or entities, any Registration Statement contains an untrue statement of a material fact or omits a material fact required to be stated in such Registration Statement or necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading. ARTICLE VIII 23 29 LEGENDS Section 8.1 Legends. Unless otherwise provided below, each certificate representing Registrable Securities will bear the following legend (the "Legend"): The securities represented by this certificate have not been registered under the Securities Act of 1933 (the "Securities Act") or qualified under applicable state securities laws. These securities may not be offered, sold, pledged, hypothecated, transferred or otherwise disposed of except pursuant to (i) an effective registration statement and qualification in effect with respect thereto under the Securities Act and under any applicable state securities law, (ii) to the extent applicable, Rule 144 under the Securities Act, or (iii) an opinion of counsel reasonably acceptable to BioShield Technologies, Inc. that such registration and qualification is not required under applicable federal and state securities laws. As soon as practicable after the execution and delivery hereof, the Company shall issue to the Transfer Agent instructions in substantially the form of Exhibit E hereto. Such instructions shall be irrevocable by the Company from and after the date thereof or from and after the issuance thereof except as otherwise expressly provided in the Registration Rights Agreement. It is the intent and purpose of such instructions, as provided therein, to require the Transfer Agent to issue to Investor certificates evidencing shares of Common Stock incident to a Closing, free of the Legend, without consultation by the transfer agent with the Company or its counsel and without the need for any further advice or instruction or documentation to the Transfer Agent by or from the Company or its counsel or Investor; provided that (a) a Registration Statement shall then be effective, (b) Investor confirms to the Transfer Agent and the Company that it has or intends to sell such Common Stock to a third party which is not an affiliate of Investor or the Company and Investor agrees to redeliver the certificate representing such shares of Common Stock to the Transfer Agent to add the Legend in the event the Common Stock is not sold, and (c) if reasonably requested by the transfer agent or the Company, Investor confirms to the transfer agent and the Company that Investor has complied with the prospectus delivery requirement under the Securities Act. At any time after the Effective Date, upon surrender of one or more certificates evidencing Common Stock that bear the Legend, to the extent accompanied by a notice requesting the issuance of new certificates free of the Legend to replace those surrendered Section 8.2 No Other Legend or Stock Transfer Restrictions. No legend other than the one specified in Section 8.1 has been or shall be placed on the share certificates representing the Common Stock and no instructions or "stop transfers orders," so called, "stock transfer restrictions," or other restrictions have been or shall be given to the Company's transfer agent with respect thereto other than as expressly set forth in this Article VIII. 24 30 Section 8.3 Investor's Compliance. Nothing in this Article VIII shall affect in any way Investor's obligations under any agreement to comply with all applicable securities laws upon resale of the Common Stock. ARTICLE IX NOTICES; INDEMNIFICATION Section 9.1 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of mailing by express courier service or on the fifth business day after deposited in the mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: If to the Company: BioShield Technologies, Inc. 5655 Peachtree Parkway Norcross, Georgia 30092 Attention: Timothy C. Moses Telephone: (770) 246-2000 Facsimile: (770) 368-0784 with a copy (which shall not constitute notice) to: Sims Moss Kline & Davis LLP 1000 Abernathy Road Atlanta, Georgia 30328 Attention: Raymond L. Moss, Esq. Telephone: (770) 481-7201 Facsimile: (770) 481-7210 25 31 if to Investor: Jackson, LLC Executive Pavilion 90 Grove Street Ridgefield, Connecticut 06877 Attn: Steve Hicks Telephone: (203) 431-8300 Facsimile: (203) 431-8301 Either party hereto may from time to time change its address or facsimile number for notices under this Section 9.1 by giving at least ten (10) days' prior written notice of such changed address or facsimile number to the other party hereto. Section 9.2 Indemnification. (a) The Company agrees to indemnify and hold harmless Investor and its officers, directors, employees, and agents, and each Person or entity, if any, who controls Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the Controlling Persons (as defined in the Registration Rights Agreement) from and against any Damages, joint or several, and any action in respect thereof to which Investor, its partners, affiliates, officers, directors, employees, and duly authorized agents, and any such Controlling Person becomes subject to, resulting from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Company contained in this Agreement, as such Damages are incurred, except to the extent such Damages result primarily from Investor's failure to perform any covenant or agreement contained in this Agreement or Investor's or its officers, directors, employees, agents or Controlling Persons negligence, recklessness or bad faith in performing its obligations under this Agreement. (b) Investor agrees to indemnify and hold harmless the Company and its officers, directors, employees, and agents, and each Person or entity, if any, who controls Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the Controlling Persons from and against any Damages, joint or several, and any action in respect thereof to which Investor, its partners, affiliates, officers, directors, employees, and duly authorized agents, and any such Controlling Person becomes subject to, resulting from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Company contained in this Agreement, as such Damages are incurred, except to the extent such Damages result primarily from the Company's failure to perform any covenant or agreement contained in this Agreement or the Company's or its officers, directors, employees, agents or Controlling Persons negligence, recklessness or bad faith in performing its obligations under this Agreement. 26 32 Section 9.3 Method of Asserting Indemnification Claims. All claims for indemnification by any Indemnified Party (as defined below) under Section 9.2 shall be asserted and resolved as follows: (a) In the event any claim or demand in respect of which any person claiming indemnification under any provision of Section 9.2 (an "Indemnified Party") might seek indemnity under Section 9.2 is asserted against or sought to be collected from such Indemnified Party by a person other than a party hereto or an affiliate thereof (a "Third Party Claim"), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party's claim for indemnification that is being asserted under any provision of Section 9.2 against any person (the "Indemnifying Party"), together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party's ability to defend has been prejudiced by such failure of the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the "Dispute Period") whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party under Section 9.2 and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim. (i) If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 9.3(a), then the Indemnifying Party shall have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not be indemnified in full pursuant to Section 9.2). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party's delivery of the notice referred to in the first sentence of this clause (i), file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate to protect its interests; and provided further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole 27 33 cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this clause (i), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under Section 9.2 with respect to such Third Party Claim. (ii) If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party (with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this clause (ii), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in clause (iii) below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party's defense pursuant to this clause (ii) or of the Indemnifying Party's participation therein at the Indemnified Party's request, and the Indemnified Party shall reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this clause (ii), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation. (iii) If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to the Indemnified Party with respect to the Third Party Claim under Section 9.2 or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability of the 28 34 Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that it the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be enlisted to institute such legal action as it deems appropriate. (b) In the event any Indemnified Party should have a claim under Section 9.2 against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under Section 9.2 specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim (an "Indemnity Notice") with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party's rights hereunder except to the extent that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that it the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be enlisted to institute such legal action as it deems appropriate. ARTICLE X MISCELLANEOUS Section 10.1 Governing Law; Jurisdiction. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia without regard to the principles of conflicts of law. Each of the Company and Investor hereby submit to the exclusive jurisdiction of the United States Federal and state courts located in Atlanta, Georgia with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby. Section 10.2 Assignment. This Agreement shall be binding upon and inure to the benefit of the Company and Investor and their respective successors and 29 35 permitted assigns. Neither this Agreement nor any rights of Investor or the Company hereunder may be assigned by either party to any other person. Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure to the benefit of, and be enforceable by, any transferee of any of the Common Stock purchased or acquired by Investor hereunder with respect to the Common Stock held by such person, and (b) Investor's interest in this Agreement may be assigned at any time, in whole but not in part, to any affiliate of Investor. Section 10.3 Third Party Beneficiaries. This Agreement is intended for the benefit of the Company and Investor and their respective successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. Section 10.4 Termination. This Agreement shall terminate twenty-four (24) months after the commencement of the Commitment Period (unless extended by the agreement of the Company and Investor); provided, however, that the provisions of Article VI, VIII, and Sections 10.1, 10.2, and 10.4 shall survive the termination of this Agreement. Section 10.5 Entire Agreement, Amendment; No Waiver. This Agreement and the instruments referenced herein contain the entire understanding of the Company and Investor with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. Section 10.6 Fees and Expenses. Each of the Company and Investor agrees to pay its own expenses in connection with the preparation of this Agreement and performance of its obligations hereunder. Section 10.7 No Brokers. Each of the Company and Investor represents that other than J.P. Carey Securities, Inc. and Greenfield Capital Partners, LLC (the Company shall be responsible for the fees of such entity) it has had no dealings in connection with this transaction with any finder or broker who will demand payment of any fee or commission from the other party. The Company on the one hand, and Investor, on the other hand, agree to indemnify the other against and hold the other harmless from any and all liabilities to any persons claiming brokerage commissions or finder's fees on account of services purported to have been rendered on behalf of the indemnifying party in connection with this Agreement or the transactions contemplated hereby. Section 10.8 Counterparts. This Agreement may be executed in multiple counterparts, each of which may be executed by less than all of the Company and Investor and shall be deemed to be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which together shall 30 36 constitute one and the same instrument. This Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile transmission of a copy of this Agreement bearing the signature of the parties so delivering this Agreement. Section 10.9 Survival; Severability. The representations, warranties, covenants and agreements of the parties hereto shall survive each Closing hereunder for a period of one year. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective if it materially changes the economic benefit of this Agreement to any party. Section 10.10 Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. Section 10.11 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 31 37 Section 10.12 Equitable Relief. The Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to Investor. The Company therefore agrees that Investor shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. Section 10.13 Title and Subtitles. The titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement. Section 10.14 Reporting Entity for the Common Stock. The reporting entity relied upon for the determination of the trading price of the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg L.P. or any successor thereto. The written mutual consent of Investor and the Company shall be required to employ any other reporting entity. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] 32 38 IN WITNESS WHEREOF, the parties hereto have caused this Private Equity Credit Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above. BIOSHIELD TECHNOLOGIES, INC. By: --------------------------------------- Name: Title: JACKSON, LLC BY: SOUTHRIDGE CAPITAL MANAGEMENT LLC, MANAGER By: --------------------------------------- Name: Title: 33 39 EXHIBIT A [FORM OF REGISTRATION RIGHTS AGREEMENT] 40 EXHIBIT B LEFT INTENTIONALLY BLANK 41 EXHIBIT C FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL 42 EXHIBIT D COMPLIANCE CERTIFICATE In connection with the issuance of shares of common stock of BioShield Technologies, Inc. (the "Company") pursuant to the Put Notice, dated _____________ delivered by the Company to Jackson, LLC, ("Investor") pursuant to Article II of the Private Equity Credit Agreement (the "Agreement"), dated June __, 2000, by and between the Company and Investor (the "Agreement"), the undersigned hereby certifies as follows: 1. The undersigned is the duly elected Chief [Executive] [Financial] Officer of the Company. 2. The representations and warranties of the Company set forth in Article V of the Agreement are true and correct in all material respects as though made on and as of the date hereof (other than representations and warranties made as of a specific date), except for changes which have not had a Material Adverse Effect. 3. The Company has performed in all material respects all covenants and agreements to be performed by the Company on or prior to the Closing Date related to the Put Notice and has complied in all material respects with all obligations and conditions contained in Article VII of the Agreement. The terms used herein but not defined herein shall have the meanings specified in the Agreement. The undersigned has executed this Certificate this day of , 200___. By: -------------------------------------- Name: -------------------------------------- Title: -------------------------------------- 43 EXHIBIT E INSTRUCTIONS TO TRANSFER AGENT EX-10.95 11 ex10-95.txt REGISTRATION RIGHTS AGREEMENT 1 Exhibit 10.95 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 14, 2000, is made and entered into by and between BIOSHIELD TECHNOLOGIES, INC., a Georgia corporation (the "Company"), and JACKSON, LLC, a Cayman Island limited liability company (the "Investor"). WHEREAS, the Company and the Investor have entered into that certain Private Equity Credit Agreement dated as of the date hereof (the "Investment Agreement"), pursuant to which the Company may issue and sell, from time to time, to the Investor up to $50,000,000 worth of shares of its common stock, no par value per share (the "Common Stock"); and WHEREAS, pursuant to the terms of, and in partial consideration for, the Investor's agreement to enter into the Investment Agreement, the Company has agreed to provide the Investor with certain registration rights with respect to the Registrable Securities; NOW, THEREFORE, in consideration of the premises, the representations, warranties, covenants and agreements contained herein and in the Investment Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the parties hereto agree as follows (capitalized terms used herein and not defined herein shall have the respective meanings ascribed to them in the Investment Agreement): ARTICLE I REGISTRATION RIGHTS 2.1 Registration Statements. (a) Filing of Registration Statement. Subject to the terms and conditions of this Agreement, the Company shall (i) prepare and, within ninety (90) days following the Subscription Date, deliver to the Investor a draft of a registration statement on Form S-1 or SB-2 under the Securities Act (the "Initial Registration Statement") for the registration for the resale by the Investor of at least 6,666,667 Registrable Securities (the "Initial Registrable Securities") and accompanied or preceded by a questionnaire (a "Selling Shareholder Questionnaire") and of the type commonly used for offerings of this kind and (ii) within ten (10) days after the Company has received comments, if any, and a properly completed Selling Shareholder Questionnaire from the Investor, file the Initial Registration Statement with the SEC. Thereafter, if the Company desires to issue and sell to the Investor any Registrable Securities in addition to the Initial Registrable Securities, the Company shall first file with the SEC a registration statement on Form S-1 or Form SB-2 under the Securities Act (the Initial Registration Statement and any subsequent registration statement, each a "Registration Statement"). 2 (b) Effectiveness of the Initial Registration Statement. The Company shall use its commercially reasonable efforts (i) to have the Initial Registration Statement declared effective by the SEC by no later than ninety (90) days after the filing of the Initial Registration Statement, and (ii) to ensure that the Initial Registration Statement and any subsequent Registration Statement remains in effect throughout the term of this Agreement as set forth in Section 4.2, subject to the terms and conditions of this Agreement. (c) Failure to Maintain Effectiveness of a Registration Statement. In the event the Company fails to maintain the effectiveness of any Registration Statement (or the underlying prospectus) throughout the term of this Agreement for any period of more than ten (10) continuous calendar days, other than temporary suspensions permitted by Section 1.1(e), and the Investor holds any Registrable Securities at any time during the period of such ineffectiveness (such period of ineffectiveness exceeding such 10 calendar day period being herein referred to as an "Ineffective Period"), the Company shall pay to the Investor in immediately available funds into an account designated by the Investor an amount equal to three percent (3%) of the aggregate Purchase Price of all of the Registrable Securities then held by the Investor for each ten (10) calendar day period (prorated for partial periods) of such Ineffective Period. The payments required by this Section 1.1(d) shall be made on the first Trading Day after the earliest to occur of (i) the expiration of the Commitment Period, and (ii) the expiration of an Ineffective Period (or if an Ineffective Period shall last more than thirty (30) calendar days, the expiration of each thirty (30) calendar days of an Ineffective Period). (d) Liquidated Damages. The Company and the Investor hereto acknowledge and agree that the sums payable under subsection 1(c) above shall constitute liquidated damages and not penalties. The parties further acknowledge that (i) the amount of loss or damages likely to be incurred is incapable or is difficult to precisely estimate, (ii) the amounts specified in such subsections bear a reasonable relationship to, and are not plainly or grossly disproportionate to, the probable loss likely to be incurred in connection with any failure by the Company to obtain or maintain the effectiveness of a Registration Statement, (iii) one of the reasons for the Company and the Investor reaching an agreement as to such amounts was the uncertainty and cost of litigation regarding the question of actual damages, and (iv) the Company and the Investor are sophisticated business parties and have been represented by sophisticated and able legal counsel and negotiated this Agreement at arm's length. 3 ARTICLE II REGISTRATION PROCEDURES 3.1 Section Filings; Information. The Company will effect the registration and sale of the Registrable Securities in accordance with the intended methods of disposition thereof. Without limiting the foregoing, the Company in each such case will do the following as expeditiously as possible, but in no event later than the deadline, if any, prescribed therefor in this Agreement: (a) The Company shall (i) prepare and file with the SEC a Registration Statement on Form S-1 or SB-2 (if use of such form is then available to the Company pursuant to the rules of the SEC and, if not, on such other form promulgated by the SEC for which the Company then qualifies, that counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the provisions of this Agreement and in accordance with the intended method of distribution of such Registrable Securities); (ii) use commercially reasonable efforts to cause such filed Registration Statement to become and remain effective (pursuant to Rule 415 under the Securities Act or otherwise); (iii) prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the time period prescribed by Section 1.1(b); and (iv) comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the Investor set forth in such Registration Statement. (b) The Company shall file all necessary amendments to any Registration Statement in order to effectuate the purpose of this Agreement and the Investment Agreement. (c) No later than five (5) days prior to filing any amendment or supplement to the Initial Registration Statement or any subsequent Registration Statement or prospectus, or any amendment or supplement thereto (excluding, in each case, amendments deemed to result from the filing of documents incorporated by reference therein), or such shorter period as is reasonable under the circumstances, the Company shall deliver to the Investor and one firm of counsel representing the Investor, in accordance with the notice provisions of Section 4.8, copies of such Registration Statement as proposed to be filed, together with exhibits thereto, which documents will be subject to review by the Investor and such counsel, and thereafter deliver to the Investor and such counsel, in accordance with the notice provisions of Section 4.8, such number of copies of the Registration Statement, each amendment and supplement 4 thereto (in each case including all exhibits thereto), the prospectus included in such Registration Statement (including each preliminary prospectus) and such other documents or information as the Investor or counsel may reasonably request in order to facilitate the disposition of the Registrable Securities. (d) The Company shall deliver, in accordance with the notice provisions of Section 4.8, to each seller of Registrable Securities covered by a Registration Statement, such number of conformed copies of such Registration Statement and of each amendment and supplement thereto (in each case including all exhibits and documents incorporated by reference), such number of copies of the prospectus contained in any Registration Statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 promulgated under the Securities Act relating to such seller's Registrable Securities, and such other documents, as such seller may reasonably request to facilitate the disposition of its Registrable Securities. (e) After the filing of a Registration Statement, the Company shall promptly notify the Investor of any stop order issued or threatened by the SEC in connection therewith and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered. (f) The Company shall use its commercially reasonable efforts to (i) register or qualify the Registrable Securities under such other securities or blue sky laws of such jurisdictions in the United States as the Investor may reasonably request in light of its intended plan of distribution and (ii) cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities in the United States as may be necessary by virtue of the business and operations of the Company, and do any and all other acts and things that may be reasonably necessary or advisable to enable the Investor to consummate the disposition of the Registrable Securities in light of its intended plan of distribution; provided, however, that the Company will not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (f), subject itself to taxation in any such jurisdiction, or consent or subject itself to general service of process in any such jurisdiction. (g) The Company shall immediately notify the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an offering of Registrable Securities: (i) receipt of any request by the SEC or any other federal or state governmental authority for additional information, amendments or supplements to such Registration Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any 5 stop order suspending the effectiveness of such Registration Statement or notification of the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, related prospectus or documents so that, in the case of such Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made, and that in the case of the related prospectus it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company's reasonable determination that a post-effective amendment to such Registration Statement would be appropriate, and the Company will promptly make available to the Investor any such supplement or amendment to the related prospectus. (h) The Company shall enter into customary agreements and take such other customary actions as are reasonably required in order to expedite or facilitate the disposition by the Investor of such Registrable Securities (whereupon the Investor may, at its option, require that any or all of the representations, warranties and covenants of the Company also be made to and for the benefit of the Investor). (i) The Company shall make available to the Investor (and will deliver to Investor's counsel), subject to restrictions imposed by the United States federal government or any agency or instrumentality thereof, copies of all correspondence between the SEC and the Company, its counsel or its auditors and will also make available for inspection by the Investor and any attorney, accountant or other professional retained by the Investor (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records") as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers and employees to supply all information reasonably requested by any Inspectors in connection with a Registration Statement. Records that the Company determines, in good faith, to be confidential and that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or (ii) the disclosure or release of such Records is requested or required pursuant to oral 6 questions, interrogatories, requests for information or documents or a subpoena or other order from a court of competent jurisdiction or other legal process; provided, however, that prior to any disclosure or release pursuant to clause (ii), the Inspectors shall provide the Company with prompt notice of any such request or requirement so that the Company may seek an appropriate protective order or waive such Inspectors' obligation not to disclose such Records; and, provided, further, that if failing the entry of a protective order or the waiver by the Company permitting the disclosure or release of such Records, the Inspectors, upon advice of counsel, are compelled to disclose such Records, the Inspectors may disclose that portion of the Records that counsel has advised the Inspectors that the Inspectors are compelled to disclose. The Investor agrees that information obtained by it as a result of such inspections (not including any information obtained from a third party who, insofar as is known to the Investor after reasonable inquiry, is not prohibited from providing such information by a contractual, legal or fiduciary obligation to the Company) shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company unless and until such information has been made generally available to the public. The Investor further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential. (j) The Company shall otherwise comply with all applicable rules and regulations of the SEC, including, without limitation, compliance with applicable reporting requirements under the Exchange Act. (k) The Company may require the Investor to promptly furnish in writing to the Company such information as may be legally required in connection with such registration including, without limitation, all such information as may be requested by the SEC or the NASD. The Investor agrees to provide such information requested in connection with such registration within five (5) calendar days after receiving such written request, or such shorter period as is reasonable under the circumstances, and the Company shall not be responsible for any delays in obtaining or maintaining the effectiveness of any Registration Statement caused by the Investor's failure to timely provide such information. 3.2 Section Registration Expenses. In connection with each Registration Statement, the Company shall pay all registration expenses incurred in connection with the registration thereunder (the "Registration Expenses"), including, without limitation: (a) all registration, filing, securities exchange listing and fees required by the NASD, (b) all registration, filing, qualification and other fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for 7 the Company), (c) all word-processing, duplicating, printing, messenger and delivery expenses, (d) the Company's internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), and (e) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company. ARTICLE III INDEMNIFICATION AND CONTRIBUTION 4.1 Section Indemnification. a. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor who holds such Registrable Securities, the directors, officers, partners, employees, agents and each Person, if any, who controls any Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 ACT") (collectively, Controlling Person"), and any underwriter (as defined in the 1933 Act) for the Investors, and the directors and officers of, and each Person, if any, who controls, any such underwriter within the meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, "CLAIMS") incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("BLUE SKY FILING"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or 8 supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject to the restrictions set forth herein with respect to the number of legal counsel, the Company shall reimburse the Investors and each such underwriter or controlling person, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section : (i) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by any Indemnified Person or underwriter for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c); (ii) with respect to any preliminary prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or mission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company pursuant to Section 3(c), and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company (i) and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. b. In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set 9 forth herein, the Company, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(d), such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. c. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in any distribution, to the same extent as provided above, with respect to information such persons so furnished in writing expressly for inclusion in the Registration Statement. d. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified 10 Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Company shall pay reasonable fees for only one separate legal counsel for the Investors, which counsel shall be acceptable to the Company and such legal counsel shall be selected by the Investors holding a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6. e. The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. f. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum 11 contribution with respect to any amounts for which it would otherwise be liable under this Section to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in this Section; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. ARTICLE IV MISCELLANEOUS 5.1 Section No Outstanding Registration Rights. The Company represents and warrants to the Investor that there is not in effect on the date hereof any agreement by the Company pursuant to which any holders of securities of the Company have a right to cause the Company to register or qualify such securities under the Securities Act or any securities or blue sky laws of any jurisdiction, except for those disclosed in the Company's public filings. 5.1 Section Term. The obligations of the Company and the rights provided to the holders of Registrable Securities hereunder shall terminate at such time as all the Commitment Period has expired and any Registrable Securities theretofore issued have ceased to be Registrable Securities in accordance with the definition thereof contained in the Investment Agreement. Notwithstanding the foregoing, Section 1.1(c) and (d), Article III, Section 4.8, and Section 4.9, shall survive the termination of this Agreement. 5.2 Section Rule 144. The Company will use its commercially reasonable efforts to file in a timely manner information, documents and reports in compliance with the Securities Act and the Exchange Act and will, at its expense, promptly take such further action as holders of Registrable Securities may reasonably request to enable such holders of Registrable Securities to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act ("Rule 144"), as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. If at any time the Company is not required to file such reports, it will, at its expense, forthwith upon the written request of any holder of Registrable Securities, make available adequate current public information with respect to the Company within the meaning of paragraph (c)(2) of Rule 144 or such other information as necessary to permit sales pursuant to 12 Rule 144. Upon the request of the Investor, the Company will deliver to the Investor a written statement, signed by the Company's principal executive or financial officer, as to whether it has complied with such requirements. 5.3 Section Certificate. The Company will, at its expense, forthwith upon the request of any holder of Registrable Securities, deliver to such holder a certificate, signed by the Company's principal financial officer or other executive officer, stating (a) the Company's name, address and telephone number (including area code), (b) the Company's Internal Revenue Service identification number, (c) the Company's SEC file number, (d) the number of shares of each class of Stock outstanding as shown by the most recent report or statement published by the Company, and (e) whether the Company has filed the reports required to be filed under the Exchange Act for a period of at least ninety (90) days prior to the date of such certificate and in addition has filed the most recent annual report required to be filed thereunder. 5.4 Section Amendment and Modification. No provision of this Agreement may be waived, unless such waiver is set forth in a writing executed by both parties to this Agreement. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the holders of a majority of the then outstanding Registrable Securities. Notwithstanding the foregoing, the waiver of any provision hereof with respect to a matter that relates exclusively to the rights of holders of Registrable Securities whose securities are being sold pursuant to a Registration Statement and does not directly or indirectly affect the rights of other holders of Registrable Securities may be given by holders of at least a majority of the Registrable Securities being sold by such holders; provided that the provisions of this sentence may not be amended, modified or supplemented except in accordance with the provisions of the immediately preceding sentence. No course of dealing between or among any Person having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement. 5.5 Section Successors and Assigns; Entire Agreement. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The Investor may assign its rights under this Agreement to any subsequent holder of the Registrable Securities, provided that the Company shall have the right to require any holder of Registrable Securities to execute a counterpart of this Agreement as a condition to such holder's claim to any rights hereunder. This Agreement, together with the Investment Agreement, sets forth the entire agreement and understanding between the parties as 13 to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. 5.6 Section Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective if it materially changes the economic benefit of this Agreement to any party. 5.7 Section Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of mailing by express courier service or on the fifth business day after deposited in the mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: 5.8 If to the Company: BioShield Technologies, Inc. 5655 Peachtree Parkway Norcross, Georgia 30092 Telephone: (770) 246-2000 Facsimile: (770) 368-0784 with a copy (which shall not constitute notice) to: Sims Moss Kline & Davis LLP 400 Northpark Town Center, Suite 310 1000 Abernathy Road Atlanta, Georgia 30328 14 Attention: Raymond L. Moss, Esq. Telephone: (770) 481-7201 Facsimile: (770) 481-7210 if to Investor: Jackson, LLC Executive Pavilion 90 Grove Street Ridgefield, Connecticut 06877 Attn: Steve Hicks Telephone: (203) 431-8300 Facsimile: (203) 431-8301 Either party hereto may from time to time change its address or facsimile number for notices under this Section 4.8 by giving at least ten (10) days' prior written notice of such changed address or facsimile number to the other party hereto. 5.1 Section Governing Law, Jurisdiction. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia without regard to the principles of conflicts of law. The parties hereto hereby submit to the exclusive jurisdiction of the United States Federal and state courts located in Atlanta, Georgia, with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby. 5.2 Section Title and Subtitles. The titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement. 5.3 Section Counterparts. This Agreement may be executed in multiple counterparts, each of which may be executed by less than all of the parties and shall be deemed to be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which together shall constitute one and the same instrument. This Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile transmission of a copy of this Agreement bearing the signature of the parties so delivering this Agreement. 5.4 Section Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 15 5.5 Section No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 16 5.6 IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above. BIOSHIELD TECHNOLOGIES, INC. By: ------------------------------------- Name: ------------------------------------- Title: ------------------------------------- JACKSON, LLC BY: SOUTHRIDGE CAPITAL MANAGEMENT LLC, GENERAL PARTNER By: ------------------------------------- Name: ------------------------------------- Title: ------------------------------------- EX-10.96 12 ex10-96.txt 2ND AMENDMENT TO PRIVATE CREDIT AGREEMENT 1 Exhibit 10.96 SECOND AMENDMENT TO PRIVATE EQUITY CREDIT AGREEMENT Second Amendment, dated as of June 14, 2000, to that certain Private Equity Credit Agreement dated as of the 30th day of June, 1999 (the "Agreement"), by and between JACKSON, LLC, an entity organized and existing under the laws of the Cayman Islands ("Investor"), and BioShield Technologies, Inc., a corporation organized and existing under the laws of the State of Georgia (the "Company"). WHEREAS, the parties desire that the Agreement be amended in certain respects: NOW, THEREFORE, the parties hereto agree as follows: 1. A new definition of "Average Daily Price" shall be added to Article I of the Agreement, to read as follows: ""Average Daily Price" for any date shall mean the average of the closing bid price and the closing ask price of the Common Stock on the Principal Market for such date." 2. The definition of "Closing Date" contained in Article I of the Agreement shall be amended to read in its entirety as follows: ""Closing Date" shall mean, with respect to a Closing, the eleventh (11th) Trading Day following the Put Date related to such Closing." 3. The definition of "Discount" contained in Article I of the Agreement shall be amended to read in its entirety as follows: ""Discount" shall mean ten percent (10%)". 4. The definition of "Market Price" contained in Article I of the Agreement shall be amended to read in its entirety as follows: ""Market Price"shall mean the average of the three lowest Average Daily Prices for each of the ten (10) Trading Days immediately preceding the date of such Closing." 5. The definition of "Purchase Price" contained in Article I of the Agreement shall be amended to read in its entirety as follows: "Purchase Price" shall mean, with respect to a Put, the Market Price on the applicable Closing Date (or such other date on which the Purchase Price is calculated in accordance with the terms and conditions of this Agreement) less the product of the Discount and the Market Price. 6. The definition of "Valuation Period" contained in Article I of the Agreement shall be amended to read in its entirety as follows: 2 "Valuation Period" shall mean the period of ten (10) Trading Days immediately preceding the date on which the applicable Closing is held and during which the Purchase Price of the Common Stock is valued; provided, however, that if a Valuation Event occurs during any Valuation Period, a new Valuation Period shall begin on the Trading Day immediately after the occurrence of such Valuation Event and end on the tenth Trading Day thereafter. 7. Except as expressly amended by this Amendment, the Agreement shall remain in full force and effect in all respects. 8. This Amendment shall be governed by and interpreted in accordance with the laws of the State of Georgia without regard to the principles of conflicts of law. Each of the Company and Investor hereby submit to the exclusive jurisdiction of the United States Federal and state courts located in Atlanta, Georgia with respect to any dispute arising under this Amendment. 9. This Amendment is intended for the benefit of the Company and Investor and their respective successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 10. This Amendment contains the entire understanding of the Company and Investor with respect to the matters covered herein. No provision of this Amendment may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. 11. This Amendment may be executed in multiple counterparts, each of which may be executed by less than all of the Company and Investor and shall be deemed to be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which together shall constitute one and the same instrument. This Amendment, once executed by a party, may be delivered to the other parties hereto by facsimile transmission of a copy hereof bearing the signature of the parties so delivering this Amendment. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above. BIOSHIELD TECHNOLOGIES, INC. By:_____________________________ Name: Title: JACKSON, LLC BY: SOUTHRIDGE CAPITAL MANAGEMENT LLC, GENERAL PARTNER By:______________________________ Name: Title: 3 EX-10.97 13 ex10-97.txt TRANSFER AGENT INSTRUCTIONS 1 Exhibit 10.97 BIOSHIELD TECHNOLOGIES, INC. 4405 INTERNATIONAL BLVD. NORCROSS, GEORGIA 30093 June 14, 2000 American Stock Transfer & Trust Co. 40 Wall Street New York, New York 10005 ATTENTION: COMPLIANCE DEPARTMENT Dear Sir or Madam: Reference is made to the Private Equity Credit Agreement (the "Agreement"), dated as of June 14, 2000, between Jackson LLC (the "Investor") and BioShield Technologies, Inc. (the "Company"). Pursuant to the Agreement, subject to the terms and conditions set forth in the Agreement the Investor has agreed to purchase from the Company and the Company has agreed to sell to the Investor from time to time during the term of the Agreement shares of common stock of the Company, no par value per share (the "Common Stock"). As a condition to the effectiveness of the Agreement, the Company has agreed to issue to you, as the transfer agent for the Common Stock (the "Transfer Agent"), these instructions relating to the Common Stock to be issued to the Investor (or a permitted assignee) pursuant to the Agreement. All terms used herein and not otherwise defined shall have the meaning set forth in the Agreement. 1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND. Pursuant to the Agreement, the Company is required to prepare and file with the Commission, and maintain the effectiveness of, a registration statement or registration statements registering the resale of the Common Stock to be acquired by the Investor under the Agreement. The Company will advise the Transfer Agent in writing of the effectiveness of any such registration statement promptly upon its being declared effective. The Transfer Agent shall be entitled to rely on such advice and shall assume that the effectiveness of such registration statement remains in effect unless the Transfer Agent is otherwise advised in writing by the Company and shall not be required to independently confirm the continued effectiveness of such registration statement. In the circumstances set forth in the following paragraph, the Transfer Agent shall deliver to the delivering broker certificates representing Common Stock not bearing the Legend without requiring further advice or instruction or additional documentation from the Company or its counsel or the Investor or its counsel or any other party (other than as described in such paragraph). At any time after the effective date of the applicable registration statement (provided that the Company has not informed the Transfer Agent in writing that such registration statement is not then effective), upon any surrender of one or more certificates evidencing Common Stock which bear the Legend, to the extent accompanied by a notice requesting the issuance of new certificates free of the Legend to replace those surrendered, the Transfer Agent shall deliver to the delivering broker the certificates representing the Common Stock not bearing the Legend, in 2 American Stock Transfer & Trust Co. June 14, 2000 Page 2 such names and denominations as such broker shall request, provided that, in connection with such event, the delivering broker (or its permitted assignee) shall confirm in writing to the Transfer Agent and the Company that (i) the Investor has sold, pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer such Common Stock in a bona fide transaction to a designated transferee that is not an affiliate of the Company; and (ii) the delivering broker has complied with the prospectus delivery requirements under the Securities Act of 1933, as amended. Any advice, notice or instructions to the Transfer Agent required or permitted to be given hereunder may be transmitted via facsimile to the Transfer Agent's facsimile number of (718) 921-8248. 2. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK. In connection with any Closing pursuant to which the Investor acquires Common Stock under the Agreement, the Transfer Agent shall deliver certificates representing Common Stock (with or without the Legend, as appropriate) as promptly as practicable, but in no event later than three business days, after such Closing. 3. FEES OF TRANSFER AGENT; INDEMNIFICATION. The Company agrees to pay the Transfer Agent for all fees incurred in connection with these Irrevocable Instructions. The Company agrees to indemnify the Transfer Agent and its officers, employees and agents, against any losses, claims, damages or liabilities, joint or several, to which it or they become subject based upon the performance by the Transfer Agent of its duties in accordance with the Irrevocable Instructions. 4. THIRD PARTY BENEFICIARY. The Company and the Transfer Agent acknowledge and agree that the Investor is an express third party beneficiary of these Irrevocable Instructions and shall be entitled to rely upon, and enforce, the provisions hereof. 2 3 American Stock Transfer & Trust Co. June 14, 2000 Page 3 BIOSHIELD TECHNOLOGIES, INC. By:_________________________________________ Name: Timothy C. Moses Title: President and Chief Executive Officer AGREED AND ACCEPTED: AMERICAN STOCK TRANSFER & TRUST CO. By:_____________________________ Name:___________________________ Title:__________________________ 3 EX-10.98 14 ex10-98.txt WARRANT AGREEMENT 1 EXHIBIT 10.98 WARRANT AGREEMENT WARRANT AGREEMENT dated as of June 14, 2000, between BioShield Technologies, Inc., a Delaware corporation (the "COMPANY"), and Jackson LLC, a Cayman Island limited liability company (hereinafter referred to as "INVESTOR"). W I T N E S S E T H: WHEREAS, Investor has entered into a Private Equity Agreement (the "INVESTMENT AGREEMENT') with the Company pursuant to which the Investor may purchase up to $50,000,000 of shares of common stock, no par value, of the Company (the "COMMON STOCK"); and WHEREAS, the Warrants issued pursuant to this Agreement are being issued by the Company to Investor and/or its designees, in consideration for, and as part of the investment by Investor in connection with the Investment Agreement; NOW, THEREFORE, in consideration of the premises, the agreements herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows (capitalized terms used herein without definition shall have the meanings ascribed to then in the Investment Agreement): 1. Grant. Investor and/or its designees are hereby granted the right to purchase, at any time from the date of the closing of the first purchase by Investor of shares of Common Stock pursuant to the Investment Agreement (the "INITIAL CLOSING") until 5:00 P.M., Eastern Standard Time, on the fifth anniversary of the Initial Closing (the "WARRANT EXERCISE TERM"), 250,000 Shares of Common Stock (the "SHARES") at an exercise price (subject to adjustment as provided in Article 7 hereof) equal to $18.92 (the "INITIAL EXERCISE PRICE"). 2. Warrant Certificates. The warrant certificates (the"WARRANT CERTIFICATES") delivered and to be delivered pursuant to this Agreement shall be in the form set forth as Exhibit A, attached hereto and made a part hereof, with such appropriate insertions, omissions, substitutions and other variations as required or permitted by this Agreement. 3. Exercise of Warrants. -1- 2 3.1 Cash Exercise. The Exercise Price may be paid in cash or by check to the order of the Company, or any combination of cash or check, subject to adjustment as provided in Article 7 hereof. Upon surrender of the Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment of the Exercise Price (as hereinafter defined) for the Shares purchased, at the Company's executive offices currently located at 5655 Peachtree Parkway Atlanta, Georgia 30092, the registered holder of a Warrant Certificate ("HOLDER" or "HOLDERS") shall be entitled to receive a certificate or certificates for the Shares so purchased. The purchase rights represented by each Warrant Certificate are exercisable at the option of the Holder hereof, in whole or in part (but not as to fractional shares of the Common Stock). In the case of the purchase of less than all the Shares purchasable under any Warrant Certificate, the Company shall cancel said Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Shares purchasable thereunder. 3.2 Cashless Exercise. At any time during the Warrant Exercise Term, the Holder may, at its option, exchange this Warrant, in whole or in part (a "WARRANT EXCHANGE"), into the number of Shares determined in accordance with this Section 3.2, by surrendering this Warrant at the principal office of the company or at the office of its transfer agent, accompanied by a notice stating such Holder's intent to effect such exchange, the number of Shares to be exchanged and the date on which the Holder requests that such Warrant Exchange occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall take place on the date specified in the Notice of Exchange or, if later, the date the Notice of Exchange is received by the Company (the "EXCHANGE Date"). Certificates for the Shares issuable upon such Warrant Exchange and, if applicable, a new warrant of like tenor evidencing the balance of the Shares remaining subject to this Warrant, shall be issued as of the Exchange Date and delivered to the Holder within seven (7) business days following the Exchange Date. In connection with any Warrant Exchange, this Warrant shall represent the right to subscribe for and acquire the number of Shares (rounded to the next highest integer) equal to (i) the number of Shares specified by the Holder in its Notice of Exchange (the "TOTAL NUMBER") less (ii) the number of Shares equal to the quotient obtained by dividing (A) the product of the Total Number and the then existing Exercise Price by (B) the average of the Closing Prices for the five Trading Days immediately prior to the date specified in the Notice of Exchange. 3.3 Exercise Limitation. In no event shall any Investor be entitled to exercise any of the warrants if, upon the exercise of such warrant(s), it would cause the aggregate number of shares of Common Stock beneficially owned by the Investor and its affiliates to exceed 4.9% of the outstanding shares of the Common Stock following such exercise. 4. Issuance of Certificates. Upon the exercise of the Warrants, the issuance of certificates for the Shares shall be made forthwith (and in any event within five business days thereafter) without charge to the -2- 3 Holder thereof including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to satisfaction of the Company that such tax has been paid. The Warrant Certificates and the certificates representing the Shares shall be executed on behalf of the Company by the manual or facsimile signature of the present or any future Chairman or Vice Chairman of the Board of Directors, Chief Executive officer or President or Vice President of the Company under its corporate seal reproduced thereon, attested to by the manual or facsimile signature of the present or any future Secretary or Assistant Secretary of the Company. Warrant Certificates shall be dated the date of execution by the Company upon initial issuance, division, exchange, substitution or transfer. The Warrant Certificates and, upon exercise of the Warrants, in part or in whole, certificates representing the Shares shall bear a legend substantially similar to the following: The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "ACT"), and may not be offered or sold except (i) pursuant to an effective registration statement under the Act, (ii) to the extent applicable, pursuant to Rule 144 under the Act (or any similar rule under such Act relating to the disposition of securities), or (iii) upon the delivery by the holder to the Company of an opinion of counsel, satisfactory to counsel to the issuer, stating that an exemption from registration under such Act is available. 5. Price. 5.1 Adjusted Exercise Price. The adjusted Exercise Price shall be the price which shall result from time to time from any and all adjustments of the Initial Exercise Price in accordance with the provisions of Article 7 hereof. 5.2 Exercise Price. The term "EXERCISE PRICE" herein shall mean the Initial Exercise Price or the adjusted Exercise Price, depending upon the context. 6. Registration Rights. 6.1 Registration Under the Securities Act of 1993. -3- 4 The Warrants and the Shares have not been registered for purposes of public distribution under the Securities Act of 1933, as amended ("THE ACT"). 6.2 Registrable Securities. As used herein the term "REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of Common Stock issued upon any stock split or stock dividend in respect of such Shares; provided, however, that with respect to any particular Registrable Security, such security shall cease to be a Registrable Security when, as of the date of determination, (i) it has been effectively registered under the Securities Act and disposed of pursuant thereto, (ii) registration under the Securities Act is no longer required for the immediate public distribution of such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE SECURITIES" means any and/or all of the securities falling within the foregoing definition of a "Registrable Security." In the event of any merger, reorganization, consolidation, recapitalization or other change in corporate structure affecting the Common Stock, such adjustment shall be made in the definition of "Registrable Security" as is appropriate in order to prevent any dilution or enlargement of the rights granted pursuant to this Article 6. 6.3 Piggyback Registration. If, at any time during the five years following the date of the Initial Closing, the Company proposes to prepare and file any registration statement or post-effective amendments (other than in connection with an underwritten initial public offering or initial registration of the Company or the Company=s securities with the U.S. Securities & Exchange Commission) thereto covering equity or debt securities of the Company, or any such securities of the Company held by its shareholders (in any such case, other than in connection with a merger, acquisition or pursuant to Form S-8 or successor form), (for purposes of this Article 6, collectively, a "REGISTRATION STATEMENT"), it will give written notice of its intention to do so by registered mail ("NOTICE"), at ten (10) business days prior to the filing of each such Registration Statement, to all holders of the Registrable Securities. Upon the written request of such a holder (a "REQUESTING HOLDER"), made within ten (10) business days after receipt of the Notice, that the Company include any of the Requesting Holder's Registrable Securities in the proposed Registration Statement, the Company shall, as to each such Requesting Holder, use its best efforts to effect the registration under the Securities Act of the Registrable Securities which it has been so requested to register ("PIGGYBACK REGISTRATION"), at the Company's sole cost and expense and at no cost or expense to the Requesting Holders. Notwithstanding the provisions of this Section 6.3, the Company shall have the right at any time after it shall have given written notice pursuant to this Section 6.3 (irrespective of whether any written request for inclusion of such securities shall have already been made) to elect not to file any such proposed Registration Statement, or to withdraw the same after the filing but prior to the effective date thereof. 7. Adjustments of Exercise Price and Number of Shares. 7.1 Subdivision and Combination. In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall -4- 5 forthwith be proportionately decreased in the case of subdivision or increased in the case of combination. 7.2 Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Article 7, the number of Shares issuable upon the exercise of each Warrant shall be adjusted to the nearest full Share by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. 7.3 Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of the property of the Company as an entirety, the Holders shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Holders were the owners of the shares of Common Stock underlying the Warrants immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of the Warrants and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Holders had exercised the Warrants. 7.4 No Adjustment of Exercise Price in Certain Cases. No adjustment of the Exercise Price shall be made: (a) Upon the issuance or sale of shares of Common Stock upon the exercise of the Warrants; or (b) Upon (i) the issuance of options pursuant to the Company's employee stock option plans in effect or the issuance or sale by the Company of any shares of Common Stock pursuant to the exercise of any such options, or (ii) the issuance or sale by the Company of any shares of Common Stock pursuant to the exercise of any options or warrants; or (c) Upon the issuance of shares of Common Stock pursuant to contractual obligations; or -5- 6 (d) If the amount of said adjustment shall be less than 2 cents (24) per Share, provided, however, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least 2 cents (24) per Share. 8. Exchange and Replacement of Warrant Certificates. Each Warrant Certificate is exchangeable without expense, upon the surrender hereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Shares in such denominations as shall be designated by the Holder thereof at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant Certificate of like tenor, in lieu thereof. 9. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of shares of Common Stock and shall not be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Common Stock. 10. Reservation and Listing of Securities. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Warrants and payment of the Exercise Price therefor, all shares of Common Stock issuable upon such exercise shall be duly and validly issued, fully paid, nonassessable and not subject to the preemptive rights of any shareholder. As long as the Warrants shall be outstanding, the Company shall use its best efforts, once it has become a public company, to cause all shares of Common Stock issuable upon the exercise of the Warrants to be listed on or quoted on the electronic bulletin board, by NASDAQ or listed on such national securities exchanges. 11. Notices to Warrant Holders. -6- 7 Nothing contained in this Agreement shall be construed as conferring upon the Holder or Holders the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the following events shall occur: (a) the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or (b) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed; then, in any one or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, options or warrants, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or any proposed dissolution, liquidation, winding up or sale . 12. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, or mailed by registered or certified mail, return receipt requested: (a) If to a registered Holder of the Warrants, to the address of such Holder as shown on the books of the Company; or (b) If to the Company, to the address set forth in Section 3 of this Agreement or to such other address as the Company may designate by notice to the Holders. 13. Supplements and Amendments. -7- 8 The Company may from time to time supplement or amend this Agreement without the approval of any Holders of Warrant Certificates in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any provisions herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company may deem necessary or desirable and which the Company deems not to adversely affect the interests of the Holders of Warrant Certificates. 14. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company and the Holders inure to the benefit of their respective successors and assigns hereunder. 15. Termination. This Agreement shall terminate at the close of business on the fifth anniversary of the Initial Closing. Notwithstanding the foregoing, this Agreement will terminate on any earlier date when all Warrants have been exercised and all the Shares issuable upon exercise of the Warrants have been resold to the public; provided, however, that the provisions of Article 6 shall survive such termination until the close of business on fifth anniversary of the Initial Closing. 16. Governing Law. This Agreement and each Warrant Certificate hereunder shall be governed by and interpreted in accordance with the laws of the State of Georgia without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Atlanta, Georgia, and expressly consent to the jurisdiction and venue of the Superior Court of Fulton County, Georgia, and the United States District Court for the Northern District of Georgia, Atlanta Division for the adjudication of any civil action asserted pursuant to this Paragraph. 17. Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company and the Investor and any other registered holder or holders of the Warrant Certificates, Warrants or the Shares any legal or equitable right, remedy or claim under this Agreement; and this Agreement shall be for the sole and exclusive benefit of the Company and the Investor and any other holder or holders of the Warrant Certificates, Warrants or the Shares. -8- 9 18. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. BIOSHIELD TECHNOLOGIES, INC. By: --------------------------------------- Name: Timothy C. Moses Title: Co-Chairman of the Board and Chief Executive Officer Attest: ------------------ Name: -------------------- Title: ------------------- INVESTOR: JACKSON, LLC By: --------------------------------------- Name: Title: Attest: ------------------------------ Name: ------------------------------ Title: ------------------------------ -9- 10 EXHIBIT A THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE. THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN. EXERCISABLE ON OR BEFORE 5:00 P.M., EASTERN STANDARD TIME, June 13, 2005 No. 250,000 Shares -------------- WARRANT CERTIFICATE This Warrant Certificate certifies that Jackson LLC ("INVESTOR") or registered assigns, is the registered holder of 250,000 Warrants to purchase, at any time from June 14, 2000, until 5:00 P.M. Eastern Standard Time on June 13, 2005 ("EXPIRATION DATE"), up to 250,000 shares ("SHARES") of fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of BioShield Technologies, Inc., a Delaware corporation (the "COMPANY"), at the Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE PRICE"), of $18.92 per Share upon surrender of this Warrant Certificate and payment of the Exercise Price at an office or agency of the Company, but subject to the conditions set forth herein and in the warrant agreement dated as of June 14, 2000, between the Company and Investor (the "WARRANT AGREEMENT"). Payment of the Exercise Price may be made in cash, or by certified or official bank check in New York Clearing House funds payable to the order of the Company, or any combination of cash or check. No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on the Expiration Date, at which time all Warrants evidenced hereby, unless exercised prior thereto, shall thereafter be void. The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to in a 11 description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or registered holder) of the Warrants. The Warrant Agreement provides that upon the occurrence of certain events, the Exercise Price and/or number of the Company's securities issuable thereupon may, subject to certain conditions, be adjusted. In such event, the Company will, at the, request of the holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants; provided, however, that the failure of the Company to issue such new Warrant Certificates shall not in any way change, alter, or otherwise impair, the rights of the holder as set forth in the Warrant Agreement. Upon due presentment for registration of transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferees) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax, or other governmental charge imposed in connection therewith. Upon the exercise of less than all of the Warrants evidenced by this Certificate, the Company shall forthwith issue to the holder hereof a new Warrant Certificate representing such number of unexercised Warrants. The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary. All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. 12 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal. Dated: As of June 14, 2000 BIOSHIELD TECHNOLOGIES, INC. By: ------------------------------ Name: ----------------------------- Title: ---------------------------- Attest: -------------------------- Name: -------------------------- Title: -------------------------- 13 [FORM OF ELECTION TO PURCHASE] The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ____________ Shares and herewith tenders in payment for such Shares cash or a certified or official bank check payable in New York Clearing House Funds to the order of _____________________ in the amount of $_______________, all in accordance with the terms hereof. The undersigned requests that a certificate for such Shares be registered in the name of ___________________________________ whose address is_____________________________, and that such Certificate be delivered to ___________________________________________, whose address is __________________________________________________________ Dated: Signature: ----------------------- ---------------------------- (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) - ------------------------------------ - ------------------------------------ (Insert Social Security or Other Identifying Number of Holder) 14 [FORM OF ASSIGNMENT] (To be executed by the registered holder if such holder desires to transfer the Warrant Certificate.) FOR VALUE RECEIVED ___________________________________________ hereby sells, assigns and transfers unto ------------------------------------------------------------------------ (Please print name and address of transferee) this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________________________________, Attorney, to transfer the within Warrant Certificate on the books of the within-named Company, with full power of substitution. Dated: Signature: ------------------------ ------------------------- (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate) - --------------------------------- - --------------------------------- (Insert Social Security or Other Identifying Number of Assignee) -----END PRIVACY-ENHANCED MESSAGE-----