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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
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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
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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")
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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.
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(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.
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(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.
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(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
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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
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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
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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.
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(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
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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.
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(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.
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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
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