EXHIBIT 1
Investment AGREEMENT
Between
Biovest INTERNATIONAL, INC.
and
ACCENTIA, INC.
4/9/03
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INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (the "Agreement") is made as of April ___, 2003,
by and among Biovest International, Inc., a Delaware corporation ("Biovest") and
Accentia, Inc., a Florida corporation ("Accentia")
RECITALS:
1. The Board of Directors of Biovest has approved and deemed it fair,
advisable and in the best interests of the Biovest stockholders (the "Biovest
Stockholders") to adopt and approve this Agreement and the transactions
contemplated hereby, including the issuance of capital stock contemplated by
Section 1.01 below (collectively, the "Transactions").
2. The Board of Directors of Accentia has approved and deemed it fair,
advisable and in the best interest of the Accentia shareholders (the "Accentia
Stockholders") to adopt and approve this Agreement and the Transactions
contemplated hereby.
3. The parties wish to enter into this Agreement as the definitive
agreement and understanding between the parties to set forth the terms and
conditions of Accentia's investment in Biovest.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, the parties hereto agree as
follows:
ARTICLE I.
The Transaction
1. 1.01 Purchase of Shares. Biovest hereby agrees to issue to Accentia at
Closing, as defined, approximately 40,380,304 (as adjusted to represent 81% of
the outstanding capital stock immediately following the Closing) shares of
common stock, $.01 par value, representing 81% of the shares of Biovest common
stock which will be outstanding immediately following such issuance for the
aggregate purchase price of $20,000,000 .(the "Purchase Price") consisting of
$5,000,000 in cash to be paid at the last to occur of Closing or sixty days
following the execution of this Agreement and a non-interest bearing note for
$15,000,000, attached as Schedule 1.01, with the following annual principal
payments: $2,500,000 on the first anniversary of Closing, $2,500,000 on the
second anniversary of Closing, $5,000,000 on the third anniversary of Closing
and $5,000,000 on the fourth anniversary of Closing. Within five business days
following execution of this Agreement, Accentia will advance $530,000 to Biovest
pursuant to the Promissory Note and Security Agreement attached as Exhibit
1.01(a) (the "Pre-closing Advance"). The Pre-closing Advance shall be used by
Biovest only to pay the NCI. At the closing of this Agreement, the Pre-closing
Advance shall be deemed part of the Purchase Price due in cash at closing.
Biovest shall make any required disclosure to NCI regarding the Pre-closing
Advance, its use of the Pre-closing Advance to pay NCI, and this Agreement. The
parties agree that the cash portion of the purchase price shall be paid (and
deemed received by Biovest) to the extent Accentia makes payments as set forth
on Schedule 1.01 directly to the payees as set forth on such Schedule, on the
Closing Date as defined below ("Purchase Price"). The Purchase Price due from
Accentia at Closing shall be automatically reduced by the amount of any
payables, liabilities or other obligations of Biovest, not fully disclosed on
schedules thereto. At the Closing, all working capital borrowed by Biovest after
December 1, 2002, to the extent listed
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on Schedule 1.01(c), shall be repaid with interest out of the Purchase Price. At
the Closing, all convertible notes shall remain outstanding under their current
terms and conditions. The convertible notes shall be accorded "secured" debt
status in accordance with the Security Agreement attached as Exhibit 1.01(b),
with such security status being subordinated to all outstanding "secured" debt,
if any, of the Company and by secured debt borrowed by Biovest after the Closing
up to a maximum amount of $5,000,000. Further, the holders of the convertible
notes shall be given the opportunity to extend the maturity of their notes to
the third anniversary of the Closing under the following terms:
(a) All principal and interest shall be due in one installment on the
third anniversary of the Closing;
(b) Interest shall be 7% per annum paid with principal; and
(c) All principal and accrued interest may be converted into equity of
either Accentia or Biovest as follows: (i) all principal and accrued interest
may be converted into that number of shares of common stock of Accentia equal to
the principal and interest being converted based upon the following Accentia
Common Stock value: (a) if Accentia's shares are publicly traded, the value of a
share of Accentia Common Stock shall be an amount equal to the IPO offering
price, before discount or commission, as stated in the final Prospectus for
Accentia Common Stock or in the alternative (b) if Accentia's Common Stock is
not publicly trading, the value of a share of Accentia Common Stock shall be
determined by appraisal by an independent nationally recognized valuation firm
selected by the Board of Directors of Accentia. Such appraisal determination
shall be set forth in reasonable detail in a written notice to Biovest and,
absent manifest error or fraud, shall be binding on the parties; provided,
however, that Biovest through its Board of Directors shall have the right to
object to such determination by providing written notice (the "Objection
Notice") to Accentia within five (5) business days of Biovest's receipt of such
written notice of such determination. Provided Biovest delivers the Objection
Notice within such five (5) business day period, then, within a further period
of ten (10) business days (the "Settlement Period"), the parties and, if
desired, their accountants will attempt to resolve in good faith any disputed
items and reach a written agreement with respect thereto. Failing such
resolution, the unresolved disputed items will be referred for final binding
resolution to an independent nationally recognized firm of certified public
accountants (the "Sole Arbiter") mutually acceptable to Accentia, on the one
hand, and Biovest through its Board of Directors, on the other hand. In the
event that Accentia and Biovest are unable to select the Sole Arbiter within
five (5) business days following the end of the Settlement Period, then each of
Accentia and Biovest shall have an additional five (5) business days to select
(and provide written notice of such selection to the other) an independent
nationally recognized firm of certified public accountants. Each such firm shall
be referred to, respectively, as the "First Arbiter" (selected by Accentia) and
the "Second Arbiter" (selected by Biovest). Within ten (10) business days
following the selection of the First Arbiter and the Second Arbiter, the First
Arbiter and the Second Arbiter shall select (and provide written notice to
Accentia and Biovest of such selection) a third independent nationally
recognized firm of certified public accountants (the "Third Arbiter"). For
purposes of this Agreement, the "Arbiter" shall mean (A) the Sole Arbiter or,
(B) in the case that the Company and Biovest cannot agree upon the Sole Arbiter,
the First Arbiter, Second Arbiter and Third Arbiter collectively; provided that
if either the Company or Biovest fails to select the First Arbiter or the Second
Arbiter, respectively, then the Sole Arbiter (and thus the "Arbiter") shall be
deemed to be the First Arbiter in the case where Biovest failed to make the
selection and the Second Arbiter in the case where the Company failed to make
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the selection. In the case where the Arbiter consists of a First Arbiter, Second
Arbiter and Third Arbiter, the decision of a majority of the First Arbiter,
Second Arbiter and Third Arbiter shall constitute the decision of the Arbiter
hereunder. The fees and expenses of the Arbiter shall be borne by the
non-prevailing party. In making such determination (the "Arbiter's
Determination"), the Arbiter shall determine only those items in dispute and may
not assign a value to any disputed item greater than the greatest value for such
sum claimed by either party or less than the lowest value for such item claimed
by either party. The Arbiter's Determination shall be (1) in writing, (2)
furnished to Accentia and Biovest as soon as practicable after the items in
dispute have been referred to the Arbiter (but in no event later than ten (10)
business days after such referral), (3) made in accordance with GAAP
consistently applied, and (4) non-appealable; or in the alternative; (ii) all
principal and accrued interest of the convertible note may be converted into
common stock of Biovest at $0.50 per share.
1.02 Common Stock. The shares of Biovest capital stock to be issued to
Accentia hereunder shall be common stock, par value $.01 per share ("Biovest
Common Stock").
1.03 Letter of Investment Intent. At closing, Accentia shall execute and
deliver to Biovest, a Letter of Investment Intent in form acceptable to Biovest
confirming Accentia's intent to hold the shares of Biovest Common Stock for
investment and not for resale and confirming Accentia's covenant set forth in
Section 5.02.
1.04 Limitation on Sale. Neither the CRADA nor the rights to the
Non-Hodgkin Lymphoma Therapeutic Cancer Vaccine shall be sold by Biovest except
in transactions, in which the after tax net proceeds of sale are distributed to
the Biovest shareholders with holders of Biovest shares outstanding immediately
before Closing receiving the same per share distribution as the common shares of
Biovest held by Accentia. Except as provided herein, this Agreement places no
limitation of the sale of Biovest assets other than the CRADA and the rights to
the Non-Hodgkin Lymphoma Therapeutic Cancer Vaccine owned by Biovest at Closing.
1.05 Commencement of Public Trading. Within twelve months following
Closing, Biovest shall file all necessary documents and take all necessary
actions required to permit the Free Trading Shares of Biovest common stock to
trade publicly (the "Commencement of Public Trading"). The Board of Directors of
Biovest shall have broad discretion in selecting how to comply with the
requirement of this Section. In the event that Biovest has not completed the
process required to permit the Free Trading Shares of Biovest common stock to
trade publicly, Biovest shall, following a ninety day written notice and right
to cure, make the following tender offers to purchase the shares of Biovest
outstanding immediately before Closing: (i) 980,000 shares at $2.00 per share at
the first anniversary of the Closing, (ii) 1,960,000 shares at $2.00 per share
at the second anniversary of the Closing, (iii) 2,940,000 shares at $2.00 per
share at the third anniversary of the Closing and (iv) 3,920,000shares at $2.00
per share at the fourth anniversary of the Closing. The Biovest Board of
Directors shall exercise good faith to make the tender offer(s) based on the
number of the Biovest shares held by each immediately before the Closing or his
assignee. To the extent that a registration statement is required under state or
federal securities laws before the tender offer(s) can be made or shares
purchased, Biovest will exercise good faith to file and effect all required
filings and obtain all required governmental approvals. Notwithstanding the
forgoing, no tender offer shall be required to be made by Biovest during any
annual period provided the process required to permit the free trading shares of
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Biovest common stock to trade publicly has been completed during that annual
period.
1.06 Outstanding Legal Fees. At the Closing, Accentia will, in the exercise
of its discretion, settle all accrued legal accounts payable..
ARTICLE II
Definitions
For all purposes of this Agreement, the following terms shall have the
following respective meanings:
2.01 Stock of Biovest. The term "Stock of Biovest" shall mean and refer to
the Capital Stock of Biovest regardless of class or series.
2.02 CRADA. The term "CRADA" shall mean the Cooperative Research and
Development Agreement for Non-Hodgkin Lymphoma Therapeutic Cancer Vaccine
between Biovest and the National Cancer Institute.
2.03 Equity Security. The term "Equity Security" shall mean and refer to
capital stock and other securities of a type generally regarded as Equity
Securities and options, warrants, rights or other securities convertible into,
exchangeable for or entitling the holder thereof, under any circumstances, to
purchase or subscribe for any Equity Security.
2.04 Debt. The term "Debt" shall mean and refer to all obligations
including, but not limited to, those under written and oral agreements, accounts
payable, accruals, notes, bonds, debentures, guarantees and all other types of
obligations to pay whether the amount of the obligation is fixed or undetermined
or absolute or contingent.
2.05 FDA. The term "FDA" shall mean the U.S. Food and Drug Administration.
2.06 FDA Approval. The term FDA Approval shall mean unconditional licensure
and approval of the Biovest non-Hodgkin lymphoma therapeutic cancer vaccine
officially granted by the FDA to Biovest.
2.07 Free Trading Shares. Shares of Biovest common stock which are not
subject to any restriction on sale or transfer under the Securities Act of 1933,
as amended, any applicable state securities law or any contract
2.08 Intellectual Property. The term "Intellectual Property" shall mean and
refer to all applications for patents, trademarks and trade names, all issued
patents, trademark registrations and trade name registrations, and all material
proprietary trade secrets relating to information, processes or other matters
that are not in the public domain.
2.09 Mortgage Indebtedness. The term "Mortgage Indebtedness" shall mean and
refer to all mortgages (real, personal and mixed), vendor's liens, deeds of
trust, conditional bills of sale, security interests, pledges and other types of
liens generally regarded as mortgages affecting, relating to, or pertaining to
real or personal property, whether or not personal liability for the payment or
discharge thereof exists.
2.10 Non-Hodgkin Lymphoma Therapeutic Cancer Vaccine. The term "Non-Hodgkin
Lymphoma Therapeutic Cancer Vaccine" shall mean the personalized vaccine as
described in the FDA trials being conducted by Biovest and in the CRADA.
2.11 Preferred Stock. The term "Preferred Stock" shall mean and refer to
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the 10,000,000 shares of Preferred Stock of Biovest authorized in the Articles
of Incorporation of Biovest.
2.12 Material Contracts. The term "Material Contracts" shall mean and refer
to every contract or arrangement to which the specified person or entity is a
party, or by which it is bound, which contract satisfies one of the following
requirements: (i) contract for employment which is not terminable at will; (ii)
labor union or other collective bargaining agreement; (iii) bonuses, deferred
compensation, pension, profit sharing, retirement, insurance or other fringe
benefit, plan or arrangement; (iv) franchise, distributorship or other similar
contract which will extend beyond the closing; (v) contracts or commitments of
any sort or nature relating to the financing or refinancing of Mortgage
Indebtedness; (vi) bonds, bills of sale, bank loans, construction loans, liens,
security interest of credit agreements not otherwise specified or excluded from
the above; and (vii) any contract or commitment involving more than $10,000 in
the aggregate or which can not be terminated upon thirty days or less notice.
2.13 Closing. The term "Closing" shall mean and refer to the closing of the
transaction contemplated by this Agreement.
2.14 Closing Date. The term "Closing Date" shall mean and refer to the date
upon which the closing of this transaction occurs as set forth in Section 6.01.
ARTICLE III
Representations and Warranties of Biovest
Biovest, intending for ACCENTIA and its officers and directors to rely
thereon, represents, warrants and agrees as follows:
3.01 Corporate Standing. Biovest is a duly organized, validly existing
corporation in good standing under the laws of the State of Delaware. Biovest
has full corporate power and authority to own its assets and operate its
business in the manner that such business is presently being conducted. Biovest
is qualified to transact business in every state where the activities of Biovest
require that it qualify to transact business. Except as set forth on Schedule
3.01 attached hereto, Biovest has all governmental permits, licenses and other
authorizations necessary to conduct its business as presently being conducted,
and none of the transactions contemplated by this Agreement will terminate or
violate any such permits, licenses or authorizations.
3.02 Outstanding Equity Securities. Schedule 3.02 attached hereto and
incorporated herein by reference lists: (i) each authorized class of Equity
Securities, the number of shares, and the holders of all outstanding shares of
Biovest and (ii) each option, warrant or right or other obligation of any nature
to issue shares of Biovest Capital Stock. There will be no shares of Biovest
Preferred Stock issued or outstanding at the Closing. There will be no option,
warrant, right or any other obligation of any nature to issue shares of Biovest
Capital Stock not fully disclosed on Schedule 3.02. All shares of outstanding
Capital Stock reflected as issued on Schedule 3.02 are duly and validly issued
and are fully paid and non-assessable. During the period that any options
warrants or convertible notes outstanding at the Closing remain outstanding (the
"First Right of Refusal Period"), Accentia shall have a first right of refusal
to maintain ownership of 81% of the then outstanding capital stock of Biovest
(the "Accentia First Right of Refusal"). During the First Right of Refusal
Period, should Biovest for any reason issue any shares of capital stock,
Accentia shall have the right to purchase that number of shares of
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Biovest common stock required to maintain Accentia's ownership at 81% of the
then outstanding Biovest capital stock. The aggregate purchase price to be paid
by Accentia for the issuance of Accentia First Right of Refusal shares shall be
an amount equal to the aggregate price paid by the third party for the Biovest
shares that triggered Accentia's First Right of Refusal (i.e. the Accentia First
Right of Refusal purchase price for all shares required to maintain Accentia's
ownership at 81% of the then outstanding capital stock will equal the aggregate
price paid by the third party for all of the shares which triggered the first
right of refusal as opposed to matching the per share price paid by the third
party. Accordingly, the Accentia First Right of Refusal per share purchase price
may be significantly lower that the per share price paid by the third party).
The Accentia First Right of Refusal purchase price may, in the discretion of
Accentia, be paid by a five year promissory note bearing the lowest rate of
interest permitted by applicable corporate law. The First Right of Refusal
applies to all shares issued by Biovest during the First Right of Refusal Period
including, but not limited to, shares issued in new financings, acquisitions,
option and warrant exercises and conversion of convertible notes.
3.03 Power to Agree. The execution and delivery of this Agreement, the
consummation of the Transactions and compliance with the terms of this Agreement
will not result in a breach of any of the terms or provisions of, or constitute
a default under the Certificate of Incorporation or Bylaws of Biovest, any
indenture or other agreement or instrument to which Biovest is a party or by
which it or its assets are bound; or any applicable regulation, judgment, order
or decree of any government instrumentality or court, domestic or foreign,
having jurisdiction over Biovest, its securities or its properties. The
execution of this Agreement, the transactions contemplated in this Agreement,
including, but not limited to, the issuance of Capital Stock hereunder and the
Closing of this Agreement have been fully authorized by Biovest and no further
or additional action, approval or consent by Biovest or its directors or
shareholders is required to make this Agreement a legal and enforceable
obligation of Biovest. Except as set forth on Schedule 3.03 attached hereto, no
consent, approval, exemption, audit, waiver, order or authorization of, or
registration, qualification, designation, declaration, notice or filing with,
any governmental authority or any other person is required for Biovest's
execution and delivery of this Agreement, the performance of its obligations
hereunder, or Biovest's execution or closing of this Agreement . Except as set
forth on Schedule 3.03, there are no existing agreements, options, commitments
or rights with, of or to Biovest to acquire any of Biovest's assets, properties
or rights or any interest therein, except for contracts for the sale of
inventory entered into by Biovest in the ordinary course of business and except
for the stock options held by directors and employees of Biovest reflected in
Schedule 3.02 which have been either approved by Accentia or terminated
immediately before the Closing.
3.04 Outstanding Debts of Biovest. Attached as Schedule 3.04 is a list of
each Debt in excess of $1,000, which is outstanding and due by Biovest as of the
date reflected on Schedule 3.04. Schedule 3.04 reflects the name of each debtor
and the principal amount due and payable. At the Closing, Biovest, with respect
to such Debts will have no outstanding unpaid debts, or obligations including
accruals except those described on Schedule 3.04. Except as otherwise agreed,
Schedule 3.04 shall reflect that the following debts and obligations shall be
fully paid or otherwise eliminated concurrently with or as soon as is
practicable after the Closing out of the cash provided by the Purchase Price:
(i) certain notes listed on Schedule 3.04 payable including but not limited to
convertible notes, (ii) all accrued liabilities, including but not limited to
accrued compensation and expenses to employees, and (iii) all payables which
arose in the
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ordinary course of business and which are due and have been due for sixty days
or more. Schedule 1.02 specifies the debts, accruals and obligations to be paid
at closing from the Purchase Price.
3.05 Outstanding Material Contracts. Biovest is subject to no Material
Contracts which shall survive the Closing, except those fully disclosed on
Schedule 3.05. No Material Contract listed on Schedule 3.05 is in default on the
part of Biovest or, to the knowledge of Biovest, on the part of any other party
thereto except as set forth in Schedule 3.05. Except as set forth in Schedule
3.05, Biovest is in full compliance with all material terms of each of such
Material Contract. Except as set forth in Schedule 3.05, Biovest has received no
notice of default, deficiency or termination under any Material Contract listed
on Schedule 3.05 and Biovest knows of no fact which, but for the passage of
time, is reasonably likely to constitute a breach or default under any such
contract.
3.06 Governmental Filings and Reports. Except as otherwise set forth on
Schedule 3.06, Biovest has timely filed all reports and other filings required
to be made by Biovest with any governmental department, commission, agency or
other governmental body including, but not limited to, the U.S. Securities and
Exchange Commission (the "SEC"), the National Institutes of Health (the "NIH")
and The Cooperative Research and Development Agency (the "CRADA") to which
Biovest is subject (the "Governmental Authorities"). Except as otherwise
provided in Schedule 3.06, all reports and filings previously made by Biovest
with any Governmental Authority are accurate and complete in all material
respects. Biovest is not in default (and but for the passage of time would not
be in default) with any requirement, condition or obligation of any Governmental
Authority.
3.07 Financial Condition.
3.07.1 Attached hereto as Schedule 3.07 are the audited Financial
Statements as of and for the years ended September 31, 2000, September 31, 2001
and September 31, 2002 (the "Biovest Financial Statements"). The Biovest
Financial Statements present fairly Biovest's financial position as of the
respective dates thereof and its results of operations for the respective fiscal
periods then ended, in each case in accordance with Biovest's past practice and
in conformity with GAAP consistently applied during the periods involved.
3.07.2 Biovest has made and kept books, records and accounts in
reasonable detail, which, to Biovest's knowledge, accurately and fairly reflect
in all material respects its activities and transactions and the purchase and
disposition of any of its assets. Except as otherwise disclosed in this
Agreement and in the schedule 3.07, Biovest has not engaged in any material
transaction that is not reflected in such books, records and accounts.
3.07.3 No unrecorded funds or assets of Biovest have been established
for any purpose; no accumulation or use of funds of Biovest has been made
without being properly accounted for in the books and records of Biovest; all
payments by or on behalf of Biovest have been duly and properly recorded and
accounted for in Biovest's books and records; no false or artificial entry has
been made in the books and records of Biovest for any reason; no payment has
been made by or on behalf of Biovest with the understanding that any part of
such payment is to be used for any purpose other than that described in the
documents supporting such payment; and Biovest has not made, directly or
indirectly, any illegal contributions to any political party or candidate,
either domestic or foreign, or any contribution, gift, bribe, rebate, payoff,
influence
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payment or kickback, whether in cash, property or services, to any individual,
corporation, partnership or other entity, to secure business or to pay for
business secured.
3.07.4 The Financial Statements attached as Schedule 3.07 have been
accepted by the Biovest Board of Directors and all recommended or advised
changes, additions or deletions of the Biovest independent accountants have been
made in the Financial Statements except as disclosed in Schedule 3.07.4.
3.07.5 The books, records and accounts of Biovest accurately and fairly
reflect in all material respects the transactions and the assets and liabilities
of Biovest. Biovest has not engaged in any transaction with respect to the
Biovest business, maintained any bank account for the Biovest business, or used
any of the funds of Biovest in the conduct of the Biovest business, except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of Biovest.
3.08 Accounts Receivable. Schedule 3.08 lists all Accounts Receivable.
Except as disclosed in Schedule 3.08 all accounts receivable of Biovest (the
"Accounts Receivable"): (a) arose from bona fide transactions in the ordinary
course of business and (b) are considered collectible, net of the reserves for
doubtful and uncollectible amounts and for returns and allowances shown in the
Biovest Financial Statements, within one hundred eighty (180) days after the
Closing Date in the ordinary course of business.
3.09 Accounts Payable. Schedule 3.09 lists all accounts payable. Except as
listed in Schedule 3.09, at Closing Biovest shall have no accounts payable
except those which were incurred in the ordinary course of business and have not
been due for more than 30 days. Immediately before the Closing Date, Biovest
shall have no obligation to pay accrued compensation or other accrued
obligations to any employee, director or stockholder and all compensation
expenses including those relating to compensation, vacation, healthcare and
mandatory contributions, and retirement plans shall be paid current through the
Closing.
3.10 Undisclosed Liabilities. Biovest does not have any material
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
due or to become due, or direct or indirect, arising out of any action or
inaction, or with respect to or based upon transactions or events occurring, or
any state of facts or condition existing, in connection with Biovest's conduct
of its business, and, to Biovest's knowledge, there is no basis for any claim
against Biovest for any such material liability or obligation, except: (i) to
the extent specifically described in this Agreement or disclosed in the
schedules hereto, (ii) to the extent fully reflected or reserved against in the
Biovest Financial Statements, (iii) for liabilities and obligations arising or
incurred in the ordinary course of business under any Contract disclosed on
Schedule 3.10 or not required to be disclosed because of the term or amount
involved, and (iv) for liabilities and obligations arising or incurred in the
ordinary course of business which will be paid or discharged prior to the due
date thereof or at the Closing. At the Closing, to the knowledge of Biovest,
Biovest shall have no liabilities or obligations, whether accrued, absolute,
contingent or otherwise, due or to become due, or direct or indirect, arising
out of any action or inaction, or with respect to or based upon transactions or
events occurring, or any state of facts or condition existing, in connection
with Biovest's conduct of its business, and, to Biovest's knowledge, there is no
basis for any claim against Biovest for any such material liability or
obligation, except as disclosed on Schedule 3.10.
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3.11 Insurance. Schedule 3.11 lists all policies of general liability
insurance setting forth the insurer, limits of coverage and premium amounts. All
listed policies are in full force and effect in accordance with their respective
terms. Except as disclosed in Schedule 3.11, no notice of cancellation has been
received by Biovest or any other responsible party, and there is no existing
default or event, which, with the giving of notice or lapse of time or both,
would constitute a default thereunder. Such insurance policies are, to Biovest's
knowledge, adequate in coverage for the conduct of Biovest's business.
3.12 Employees.
(a) At Closing, except as set forth on Schedule 3.12, all Biovest's
employee and shareholder obligations, including those to pension, profit
sharing, employee withholding, medical benefits, retirement plans and other
employee benefit plans, shall be fully funded and in compliance in all material
respects with the requirements of said plans and the requirements of all laws,
rules, and regulations applicable to said plans;
(b) Biovest is not a party to any collective bargaining or similar
agreement covering any of its employees. No labor organization or group of
employees of Biovest has made a demand for recognition, has filed a petition
seeking a representation proceeding, or given Biovest notice of any intention to
hold an election of a collective bargaining representative. Biovest has not
suffered any strike, slowdown, picketing or work stoppage by any group of
employees affecting Biovest's business;
(c) Biovest is in compliance in all material respects with all rules
and requirements of a safe workplace including, but not limited to, those
imposed by OSHA and by applicable state regulatory agencies;
(d) Except as disclosed in Schedule 3.12, Biovest has complied in all
material respects with all applicable laws relating to employment, including,
without limitation, the provisions thereof relating to wages, hours, equal
opportunity, collective bargaining, age, pregnancy, disability, sex, race,
national origin and other forms of unlawful discrimination, the WARN Act, and
the payment or withholding of all salary and wages, employee benefits, deferred
compensation, incentive compensation, holiday, vacation, and sick pay,
unemployment compensation, workers' compensation, withholding of taxes, FICA,
FUTA or SUTA obligations, employee health or life insurance, hospitalization,
savings, severance pay, disability, relocation, and similar obligations;
(e) Except as set forth in Schedule 3.12 hereto, Biovest is not
indebted to any employee except for amounts due as normal salaries, wages, or
reimbursement of ordinary business expenses, and no employee is indebted to
Biovest; and
(f) Except as set forth on Schedule 3.12, Biovest does not, and do not
have any obligation to, maintain or contribute to any employee benefit plan. No
event has occurred, and to Biovest's knowledge, there exists no condition or
circumstances, in connection with which Biovest or Accentia could be subject to
any liability under the terms of any employee benefit plan of Biovest, ERISA, or
the Internal Revenue Code or any other applicable law with respect to any
employee benefit plan, which would have a material adverse effect on the Biovest
business. The execution, delivery and performance of this Agreement will not
result in any: (i) increase in the compensation or benefits otherwise payable
under any employee benefit plan of Biovest or pursuant to any agreement with
respect to any employee of Biovest; (ii) acceleration
11
of the time of payment or vesting of any such compensation or benefits due to
any employee of Biovest; or (iii) renew or extend the term of any agreement
regarding compensation of an employee of Biovest, which in the case of (i), (ii)
or (iii) above, would create any liability to Biovest or Accentia after the
Closing Date. No payment or benefit that may be made by Biovest with respect to
any employee of Biovest will be classified as an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code. Except for
benefits accrued or accruing in accordance with the terms of any employee
benefit plan, Biovest has no liability for any benefit which has been or could
be claimed as a result of any event occurring prior to the Closing under any
employee benefit plan or any workers' compensation or similar Law (i) which is
not fully covered by insurance, or (ii) if not so insured, for which Biovest has
not established an adequate reserve in the Biovest Financial Statements. Except
as set forth in Schedule 3.12, to Biovest's knowledge, no validity review or
program integrity review related to Biovest has been conducted by any
governmental authority in connection with the Programs and no such review, audit
or audit assessment is scheduled, pending or threatened against Biovest, its
business or assets.
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3.13 Intellectual Property.
(a) Schedule 3.13 is a summary including patent number, status and
brief description of invention and claims of all intellectual property owned or
licensed by Biovest. Except as disclosed on Schedule 3.13, Biovest owns all of
the intellectual property and proprietary rights currently used, or required to
be used, by Biovest in the operation of the Biovest business.
(b) To the knowledge of Biovest, except as set forth on Schedule 3.13,
the Intellectual Property described in Schedule 3.13 shall, at the Closing, be
owned or licensed exclusively and solely by Biovest subject to no debt, lien or
encumbrance of any third party, except as indicated therein. Schedule 3.13 lists
all licenses except licenses to off-the-shelf software, that have been granted
by with regard to the patents and patent applications listed on Schedule 3.13.
Except for the licenses identified on Schedule 3.13, no licenses have been
granted and no third party has any right to utilize the inventions covered by
the patent and patent applications listed in Schedule 3.13.
(c) Biovest does not know nor does it have reasonable grounds to know
of any basis for any action challenging the enforceability or validity of the
Biovest Intellectual Property listed in Schedule 3.13 or claiming infringement
by the Intellectual Property upon the rights of any third party. Biovest has
received no notice of contest or claim regarding any patent or patent
application listed and Biovest knows of no defect or defense with regard to any
listed patent or patent application.
(d) To the knowledge of Biovest, each of the patent applications that
have been submitted by Biovest was accurate and truthful and contained no
material misrepresentations of fact.
(e) Schedule 3.13 describes all royalty or other payment obligations to
which Biovest or its Intellectual Property is subject to with regard to its
Intellectual Property. Schedule 3.13 lists every person or entity, including,
but not limited to, current and past employees, that has a right to claim an
interest in or to the Intellectual Property of Biovest. No patent or patent
application listed on Schedule 3.13 requires the payment of any royalty or other
fee by Biovest except such payments as are listed on Schedule 3.13.
(f) Schedule 3.13 lists all tradenames and trade marks utilized by
Biovest.
(g) Biovest does not require any licenses from any third parties to
conduct its current or planned business or execute its business plan, except
those that are listed on Schedule 3.13.
3.14 Business Plan. Attached as Schedule 3.14 is the Offering Document
which has been delivered by Biovest to Accentia. Biovest represents that the
Offering Document, except for the associated financial projections, is
materially accurate in its description of the Intellectual Property of Biovest
and its plans to commercialize same, in each case as of the date of the Offering
Document. Biovest represents that the assumptions relied upon in making the
financial projections included as part of the Business Plan are believed by
Biovest to be reasonable and that the financial projections represent financial
goals of Biovest that are believed to be reasonable.
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3.15 Litigation and Government Compliance. There are no actions, suits,
proceedings or governmental investigations pending or, to the best of Biovest's
knowledge, threatened against or affecting either Biovest or the business of
Biovest except as set forth on Schedule 3.15, and Biovest is not in violation of
or in default under any order, rule or regulation of any governmental agency or
branch which, in any case, involves the possibility of materially and adversely
affecting the business or condition of Biovest except as set forth on Schedule
3.15.
3.16 Corporate Records. The Certificate of Incorporation of Biovest, as
amended through the date hereof, its Bylaws and Minutes contained in the Minute
Book of Biovest constitute the existing Certificate of Incorporation, as
amended, Bylaws and records of proceedings of Biovest. The Certificate of
Incorporation and Bylaws of Biovest are attached as Schedule 3.16.
3.17 Absence of Certain Developments. Since December 31, 2002, and except
as expressly required by this Agreement or otherwise disclosed in or reserved
for in the Biovest Financial Statements, this Agreement, or the schedules
hereto, including Schedule 3.17, Biovest has not:
3.17.1 Incurred any liabilities, other than liabilities incurred in the
ordinary course of business or related to the Transaction, or discharged or
satisfied any lien or encumbrance or paid any liabilities, other than in the
ordinary course of business, or failed to pay or discharge when due any
liabilities of which the failure to pay or discharge has caused or would
reasonably be expected to cause any material damage or risk of material loss;
3.17.2 Sold, assigned or transferred any assets or properties, or
closed any operations, except for the sale of inventory and for the disposition
of assets in the ordinary course of business which are worn-out, in need of
substantial repair, or are obsolete and which do not have a market value in
excess of $10,000 in the aggregate for all such assets and properties;
3.17.3 Created, incurred, assumed or guaranteed any indebtedness for
borrowed money, or mortgaged, pledged or subjected any of its assets or
properties to any mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever in an aggregate amount
exceeding $10,000, other than in the ordinary course of business;
3.17.4 Made or suffered any material amendment or termination of any
Contract to which it is a party or by which it is bound, or canceled, modified
or waived any material debts or claims held by it or waived any rights of
material value not in the ordinary course of business;
3.17.5 Suffered any damage, destruction or loss, whether or not covered
by insurance, of any item or items carried on its books of account individually
or in the aggregate at more than $5,000 or suffered any repeated, recurring or
prolonged shortage, cessation or interruption of supplies or utilities or other
services required to conduct its operations;
3.17.6 Suffered any material adverse effect not in the ordinary course
of its business;
3.17.7 Received notice or obtained knowledge of any actual or
threatened labor trouble, strike, union organizing efforts, or other occurrence,
event or condition of any similar character;
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3.17.8 Made any acquisition of substantial assets or any commitments or
agreements for capital expenditures or capital additions or betterments
exceeding $10,000 individually or in the aggregate, except such as may be
involved in ordinary repair, maintenance or replacement of assets in the
ordinary course of business;
3.17.9 Other than in the ordinary course of business consistent with
past practices, increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business expenses) or
loan to, any of its employees or made any increase in, or any addition to, other
benefits to which any of its employees may be entitled;
3.17.10 Entered into or amended any contract with any of its
affiliates;
3.17.11 Except in the ordinary course of business and consistent with
past practice, or as permitted herein, made any distributions to its
stockholders; or
3.17.12 Entered into any transaction other than in the ordinary course
of business.
3.19 Tax Matters. Other than as set forth on Schedule 3.19 hereto, (a) all
tax returns that Biovest was or is required to file on or prior to the Closing
have been duly filed on a timely basis (after giving effect to any applicable
extensions) and all taxes indicated thereon have been timely paid; (b) all tax
returns that Biovest is or will be required to file after the Closing Date, with
respect to periods prior to the Closing Date, will be timely filed and all taxes
reflected thereon will be timely paid; (c) none of Biovest's assets is subject
to any lien (other than a permitted lien) for payment of any unpaid taxes or
levy proceedings; (d) all taxes which Biovest is or was required by law to
withhold or collect have been duly withheld or collected, and have been timely
paid over to the proper taxing authorities to the extent due and payable; (e)
Biovest is not a party to any Contract that would require it to make any payment
that would constitute an "excess parachute payment" for purposes of Sections
280G and 4999 of the Code; (f) Biovest is not a "foreign person" as such term is
defined in the Code; (g) Biovest does not have any express or implied obligation
(including, but not limited to, an indemnification obligation) with respect to
the payment of taxes for any person other than Biovest; and (h) Biovest has not
received any notice of any additional assessments since the date of any tax
return nor has Biovest received any notice of any audit or review of such tax
returns.
3.20 Securities Matters. Attached as Schedule 3.20 is a list of all Press
Releases issued by Biovest since January 1, 2000. All Press Releases were
materially accurate when issued. Attached as Schedule 3.20(a) is a list of all
securities offered or sold by Biovest since January 1, 2000 identifying the name
of the purchaser, the exemption relied upon and providing a description of the
offering pursuant to which the securities were sold.
3.21 Real Property. Biovest owns no real property. With respect to the real
property leased by Biovest as of the date hereof (the "Leased Biovest
Property"), Schedule 3.21 sets forth the following: (i) the description of the
Leased Biovest Property, including estimated total square footage, (ii) the name
of the Lessor thereof, the lease rate and term and (iii) whether such Leased
Biovest Property is currently being used for the operation of Biovest. Except as
set forth on Schedule 3.21: (i) the lease for the Leased Biovest Property is in
full force and effect and is valid, binding and enforceable in accordance with
its terms, (ii) all accrued and currently payable rents and other payments
required by such lease have been paid, (iii) Biovest and each other party
thereto have complied with all covenants and provisions of such lease in all
material respects,
15
(iv) neither Biovest nor any other party is in default in any material respect
under such lease, (v) no party has asserted any defense, set off, or counter
claim thereunder, (vi) no waiver, indulgence or postponement of any obligations
thereunder has been granted by any party, and (vii) the validity or
enforceability of such lease will be in no way affected by the Transactions.
3.22 Title to and Condition of Assets; Necessary Property.
3.22.1 Set forth on Schedule 3.22.1 is a true, correct, and complete
list of all liens on the assets of Biovest as of the date hereof. No person
other than Biovest owns, leases or has any right, title or interest in and to
any Biovest assets.
3.22.2 Biovest's tangible property is in good working order and repair,
reasonable wear and tear accepted, has been maintained and repaired on a regular
basis so as to preserve its utility and value, is usable in the ordinary course
of business, and conforms in all material respects to all applicable laws
relating to its construction, use and operation.
3.22.3 Except as disclosed in Schedule 3.22.3, Biovest's assets
constitute all of the assets and properties, whether real or personal, tangible
or intangible, or owned, leased, or licensed, that are used or useful in the
conduct of Biovest's business in the manner and to the extent presently
conducted by Biovest. No other asset or property, whether real or personal,
tangible or intangible, or owned, leased, or licensed, is required for the
conduct of the Biovest business in the manner and to the extent presently
conducted by Biovest.
3.23 Licenses and Permits. Biovest possesses all licenses, permits,
consents, concessions and other authorizations of Governmental Authorities that
are required to own Biovest's assets, to sell and service any inventory of
Biovest, or to otherwise conduct the Biovest business as presently conducted.
Schedule 3.23 hereto sets forth a list of each such license, permit, consent,
concession or other authorization so possessed. To Biovest's knowledge, nothing
contemplated in the transaction described herein will cause any of the licenses,
permits, consents, concessions and other authorizations to be revoked by any
such Governmental Authority.
3.24 Environmental Matters.
3.24.1 At all times prior to the Closing, Biovest has complied and at
the Closing will be in compliance, in all material respects, with all
Environmental Laws, and Biovest has not received any notice, report, or
information (including information that any litigation, investigation or
administrative or other proceedings of any kind are pending or threatened)
regarding any liabilities (whether accrued, absolute, contingent, unliquidated,
or otherwise), or any corrective, investigatory, or remedial obligations,
arising under Environmental Laws. For the purposes of this Agreement, the term
"Environmental Laws" means all present governmental requirements relating to the
discharge or release of air pollutants, water pollutants, process waste water,
petroleum products or hazardous substances, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Occupational Safety and Health Act of 1970, as amended, the Federal
Resource Conservation and Recovery Act, as amended, the Federal Clean Water Act,
as amended, the Toxic Substances Control Act, as amended, the Federal Clean Air
Act, as amended, the Superfund Amendments and Reauthorization Act, as amended,
and any and all other comparable state or local Laws relating to public health
and safety or work health and safety.
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3.24.2 No Hazardous Substances have been, or are currently, located at,
in, or under or emanating from the Leased Biovest Property or other Biovest
assets in a manner which: (i) violates any applicable Environmental Laws, or
(ii) requires response, remedial, corrective action or cleanup of any kind under
any applicable Environmental Law. For purposes of this Agreement, the term
"Hazardous Substances" has the meaning set forth in Section 101(14) of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, in the Federal Resource Conservation and Recovery Act, as amended, and
applicable state Laws, and shall also expressly include petroleum, crude oil and
any fraction thereof.
3.25 Brokers' Fees. Except as otherwise disclosed on Schedule 3.25, neither
Biovest nor any person on Biovest's behalf has retained any broker, finder or
agent or agreed to pay any brokerage fee, finder's fee, commission or other
payment with respect to the transactions contemplated by this Agreement.
3.26 Subsidiaries. Biovest has no subsidiaries.
3.27 CRADA. Attached as Exhibit 3.27 is a copy of the CRADA. Except as set
forth in Exhibit 3.27: (i) the CRADA is in good standing, (ii) Biovest is in
full compliance with all material terms and requirements of the CRADA, (iii)
Biovest has not received any notice of default or non-compliance of or with the
CRADA, and (iv) Biovest has no reason to believe that it may be in default or
non-compliance, with the CRADA.
3.28 All Material Information. No representation or warranty made by
Biovest in this Agreement, including the attached schedules, and no statement
contained in any certificate or other instrument furnished to Accentia as
required herein contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make any statement therein not
misleading.
ARTICLE IV
Representations, Warranties and Agreements of Accentia
Accentia, intending Biovest and its officers and directors to rely thereon,
represents, warrants and agrees as follows:
4.01 Corporate Standing. Accentia is a duly organized, validly existing
corporation in good standing under the laws of the State of Florida. Accentia
has full corporate power and authority to own its assets and operate its
business in the manner that such business is presently being conducted. Accentia
is qualified to transact business in the State of Florida, and Accentia's
activities do not require that it qualify to transact business in any other
state. Accentia has all governmental permits, licenses and other authorizations
necessary to conduct its business as presently being conducted, and none of the
transactions contemplated by this Agreement will terminate or violate any such
permits, licenses or authorizations.
4.02 Power to Agree.
(a) The execution and delivery of this Agreement and the consummation
of the Transaction and compliance with the terms of this Agreement will not
result in a breach of any of the terms or provisions of, or constitute a default
under, the Articles of Incorporation or Bylaws of Accentia, any indenture or
other agreement or instrument to which Accentia is a party or by which it or its
assets are bound; or any applicable regulation, judgment, order or decree of any
government instrumentality or court, domestic or foreign, having jurisdiction
over Accentia, its securities or its properties.
17
(b) The execution, delivery and performance of this Agreement and the
Transaction do not require the consent, authority or approval of any other
person or entities except such as have been obtained.
(c) The entering into of this Agreement and the performance thereof has
been duly and validly authorized by all required corporate action and does not
require any consents other than such as have been unconditionally obtained.
4.03 Omitted
4.04 Brokers. Accentia has not engaged any broker in connection with this
transaction.
4.05 Accuracy of Deliveries. This Agreement, all Schedules to this
Agreement and all documents to be delivered by Accentia at the Closing in
connection with this transaction are true and correct. 4.06 Sophisticated
Investor. Accentia is a sophisticated investor and is experienced in evaluating
high risk investments such as the investment contemplated by this Agreement.
Accentia has knowledge and experience in financial and business matters and is
capable of evaluating the merits and risks of Accentia's prospective investment
in Biovest. Accentia has the ability to bear the economic risks of the
investment. Accentia has been furnished access to information and documents as
it has requested and has been afforded an opportunity to ask questions and
expect answers from representatives of Biovest concerning the terms and
conditions of this Agreement. Accentia has relied upon its own investigation,
together with this Agreement, and representations and warranties contained
herein, in determining to purchase shares of the Capital Stock of Biovest under
this Agreement.
4.07 Outstanding Equity Securities. Schedule 4.07 attached hereto and
incorporated herein by reference lists: (i) each authorized class of Equity
Securities and the number of shares outstanding shares and (ii) each option,
warrant or right or other obligation of any nature to issue shares of Accentia
Capital Stock. All shares of outstanding Capital Stock reflected as issued on
Schedule 4.07 are duly and validly issued and are fully paid and non-assessable.
4.08 Financial Condition. Attached hereto as Schedule 4.08 are the
unaudited Financial Statements as of and for the year ended August 31, 2002 (the
"Accentia Financial Statements"). The Accentia Financial Statements present
fairly Accentia's financial position as of the date thereof and its results of
operations for the fiscal period then ended in conformity with GAAP. It is noted
that subsequent to Xxxxxx 00, 0000, Xxxxxxxx entered into pending and/or
completed material transactions. In the exercise of its reasonable business
judgment, Accentia has access to sufficient cash to enable it to close this
Agreement.
4.09 Undisclosed Liabilities. Accentia does not have any material
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
due or to become due, or direct or indirect, arising out of any action or
inaction, or with respect to or based upon transactions or events occurring, or
any state of facts or condition existing, in connection with Accentia's conduct
of its business, and, to Accentia's knowledge, there is no basis for any claim
against Accentia for any such material liability or obligation, except: (i) to
the extent specifically described in this Agreement or disclosed in the
schedules hereto, (ii) to the extent fully reflected or reserved against in the
Accentia Financial Statements, (iii) for liabilities and obligations
18
arising or incurred in the ordinary course of business, and (iv) for liabilities
and obligations arising or incurred in connection with acquisitions or other
business relationships, whether existing or contemplated, in connection with the
conduct or expansion of the business of Accentia.
4.10 Insurance. Schedule 4.10 lists all policies of general liability
insurance setting forth the insurer, limits of coverage and premium amounts. All
listed policies are in full force and effect in accordance with their respective
terms. Except as disclosed in Schedule 4.10, no notice of cancellation has been
received by Biovest or any other responsible party, and there is no existing
default or event, which, with the giving of notice or lapse of time or both,
would constitute a default thereunder except as reflected on Schedule 4.10.
4.11 Litigation and Government Compliance. There are no actions, suits,
proceedings or governmental investigations pending or, to the best of Accentia's
knowledge, threatened against or affecting either Accentia or the business of
Accentia except as set forth on Schedule 4.11, and Accentia is not in violation
of or in default under any order, rule or regulation of any governmental agency
or branch which, in any case, involves the possibility of materially and
adversely affecting the business or condition of Accentia except as set forth on
Schedule 4.11;
4.12 Tax Matters. Other than as set forth on Schedule 4.12 hereto, (a) all
tax returns that Accentia was or is required to file on or prior to the Closing
have been duly filed on a timely basis (after giving effect to any applicable
extensions) and all taxes indicated thereon have been timely paid; (b) all tax
returns that Accentia is or will be required to file after the Closing Date,
with respect to periods prior to the Closing Date, will be timely filed and all
taxes reflected thereon will be timely paid; (c) none of Accentia's assets is
subject to any lien (other than a permitted lien) for payment of any unpaid
taxes or levy proceedings; (d) all taxes which Accentia is or was required by
law to withhold or collect have been duly withheld or collected, and have been
timely paid over to the proper taxing authorities to the extent due and payable;
(e) Accentia is not a party to any Contract that would require it to make any
payment that would constitute an "excess parachute payment" for purposes of
Sections 280G and 4999 of the Code; (f) Accentia is not a "foreign person" as
such term is defined in the Code; (g) Accentia does not have any express or
implied obligation (including, but not limited to, an indemnification
obligation) with respect to the payment of taxes for any person other than
Accentia; and (h) Accentia has not received any notice of any additional
assessments since the date of any tax return nor has Accentia received any
notice of any audit or review of such tax return
4.13 Material Information. No representation or warranty made by Accentia
in this Agreement, including the attached schedules, and no statement contained
in any certificate or other instrument furnished to Biovest as required herein
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make any statement therein not misleading.
4.14 Interpretation; Survival of Warranties. The foregoing representations,
warranties and agreements shall be true and correct as of the Closing Date. Each
representation, warranty and agreement shall survive the Closing. None of such
representations, warranties and agreements contain or shall contain, as of the
Closing Date, any false or misleading statement of a material fact or omit, as
of the Closing Date, to state any material fact necessary in order to make the
representations, warranties and agreements not misleading.
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ARTICLE V
Covenants
5.01 Covenants of Biovest. Biovest shall:
(a) Pending the Closing, carry on its business in substantially the
same manner as heretofore carried on;
(b) Pending the Closing, Biovest shall maintain, in all material
respects, compliance with all governmental rules and regulations applicable to
its business;
(c) Pending the Closing, not sell, mortgage, pledge, subject to lien or
otherwise encumber or dispose of any of its assets, except in the ordinary
course of business, and not engage in any transaction other than in the ordinary
course of business, without the written consent of Accentia, which will not be
unreasonably withheld or delayed;
(d) Pending the Closing, maintain its fixed assets and its operating
assets in a good and operating state of repair, order and condition, reasonable
wear and tear and damage by fire or other casualty excepted;
(e) Pending the Closing, maintain its books, accounts and records in
accordance with generally accepted accounting principles consistently applied;
(f) Pending the Closing, maintain in full force and effect insurance
comparable in amount and scope of coverage to that which is now maintained;
(g) Pending the Closing, perform, in all material respects, all of its
existing obligations relating to or affecting its assets, properties and
business in the same manner as heretofore performed;
(h) Pending the Closing, use its best efforts to maintain and preserve
its business organizations intact and retain its present employees so that they
will be available after the Closing Date;
(i) Pending the Closing, not increase any salary or other form of
compensation payable to, or to become payable to, any of the employees of
Biovest;
(j) Pending the Closing, not pay or accrue any bonuses;
(k) Pending the Closing, except as contemplated by this Agreement, not
issue any Equity Securities or debt securities without the prior written consent
of Accentia;
(l) Pending the Closing, Biovest shall stand still and conduct or
engage in, either directly or indirectly, no negotiations or discussions of any
nature with any potential investor by or financial source other than Accentia or
Xxxxxxx Capital Group until the Closing Date or any extension thereof as
provided in Section 6.01 (the "Standstill Period");
(m) Immediately before the Closing, Biovest shall have the following
officers and directors which shall be duly elected or appointed:
OFFICERS: Xxxxx X'Xxxxxxx, M.D., Chairman (Executive Officer)
Xxxxxxxxxxx Xxxxxxxxxx, M.D., Vice Chairman
Xxxxxxxx Xxxxxx M.D. President and CEO
Xxxxx XxXxxxx, CFO
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DIRECTORS Xxxxx X'Xxxxxxx, M.D.
Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx,PhD
Xxxxx Xxxxxxx, M.D.
Xxxxxx Xxxx
Xxxxx Xxxxxxx, M.D.
Xxxxxxxx Xxxxxx, M.D.
Xxxxxxxxxxx Xxxxxxxxxx, M.D.
(n) Following Closing, Biovest shall amend its Articles of
Incorporation to establish, and at all times thereafter shall maintain, a
sufficient number of shares of authorized but unissued common stock required to
enable Biovest to comply with this Agreement, including but not limited to, the
Accentia First Right of Refusal.
(o) Prior to the Closing, Biovest shall, in a fashion acceptable to
Accentia, cause all accrued executive compensation owed by Biovest through the
date of the Closing of this Agreement to be satisfied through the issuance of
convertible notes having the following terms and conditions: (i) the payment
date for all principal and accrued interest shall be in one installment on the
fourth anniversary of Closing; and (ii) the convertible note shall bear interest
at 7% per annum, accrued through payment of principal; and (iii) conversion
rights which allow the holder, at the payment date, or earlier with consent of
Accentia, to either: (a) convert all principal and accrued interest into common
stock of Accentia with the number of shares of Accentia Common Stock being
established at the Accentia Common Stock value as provided in Section 1.01 for
outstanding convertible notes, or in the alternative; (b) convert all principal
and accrued interest into shares of common stock of Biovest as provided in
Section 1.01 for outstanding convertible notes.
(p) Biovest shall give the holder of each outstanding convertible note
currently outstanding, the opportunity to modify the terms of their notes to be
consistent with the terms of the new convertible notes described in subparagraph
(o) above. This opportunity to modify the terms of outstanding convertible notes
shall terminate and be of no continuing effect following the Closing of this
Agreement.
5.02 (a) Covenants of Accentia. Shares of Biovest acquired by Accentia
hereunder shall not be sold into the public market until twelve months following
the Commencement of Public Trading of Biovest shares pursuant to Section 1.05.
ARTICLE VI
Closing
6.01 Time and Place of Closing. The Closing shall take place no later than
sixty (60) days from the execution of this Agreement (the "Closing"). The
Closing shall occur at such place as the parties may mutually agree.
6.02 Items to be Delivered at the Closing. At the Closing, and subject to
terms and conditions of this Agreement:
(a) Biovest shall deliver or cause to be delivered to Accentia the
following:
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(i) Certificates representing the common stock being purchased by
Accentia pursuant to Section 1.01 and 1.02 hereof, fully executed and in form
and substance reasonably acceptable to Accentia and its counsel;
(ii) Certified copy of the Meeting of the Board of Directors of
Biovest establishing the officers and directors required by Section 5.01(o).
(iii) Certified copy of the minutes of Minutes of the meeting of
the Board of Directors of Biovest, reflecting the consent to and approval of
this Agreement and of all actions required by this Agreement;
(iv) Certificate of Good Standing reflecting that Biovest is an
active corporation in its state of incorporation;
(v) Any and all other documents which may be reasonably requested
by Accentia to effectuate and perfect the transaction contemplated by this
Agreement;
(vi) Legal opinion of counsel for Biovest in the form attached
hereto as an Exhibit;
(vii) A list of all Biovest employees which shall continue, or
are contemplated to continue, as employees of Biovest immediately following the
Closing;
(viii) A list of all accruals due and payable to Biovest past or
current employees, directors or shareholders immediately following the Closing;
(ix) A list of all Biovest options, warrant and rights to acquire
Biovest stock which shall remain outstanding immediately following the Closing;
and
(b) Accentia shall deliver or cause to be delivered, the following
documents to Biovest at the Closing:
(i) Accentia certified check, wire or verification of direct
payment pursuant to Schedule 1.01 in the amount of the Purchase Price as
provided in Section 1.01 hereof;
(ii) Certified Resolution of the Board of Directors of Accentia
authorizing this Agreement and all actions required by this Agreement;
(iii) Any and all other documents which may be reasonably
requested by Biovest to effectuate and perfect the transaction contemplated in
this Agreement; and
(iv) Legal opinion of counsel for Accentia in the form attached
hereto as an Exhibit.
(v) Letter of Investment Intent required by Section 1.04.
ARTICLE VII
Conditions - Obligations of Parties
7.01 Conditions to Obligations of Accentia. The obligations of Accentia
hereunder are subject to the conditions (any of which may be waived in writing
by Accentia) that, on the Closing Date:
22
(a) The representations and warranties on the part of Biovest made
herein shall be true and correct, in all material respects, as of the date
hereof and as of the Closing Date with the same force and effect as if made on
the Closing Date, other than representations and warranties that speak of a
specific date or time (which need be true and correct as of such date or time)
and Biovest shall not have materially breached any of its obligations under this
Agreement;
(b) Biovest shall have substantially performed and complied with all
the material agreements, covenants and conditions required by this Agreement to
be performed and complied with by it; and
(c) Completion of due diligence examination of the Biovest Schedules
and information required therein to the satisfaction of Accentia.
7.02 Conditions and Obligations of Biovest. The obligations of Biovest
hereunder are subject to the conditions (any of which may be waived in writing)
on the Closing Date:
(a) All material representations and warranties on the part of Accentia
made herein shall be true and correct, in all material respects, as of the date
hereof and as of the Closing Date, with the same force and effect as if made on
the Closing Date, other than representations and warranties that speak of a
specific date or time (which need be true and correct as of such date or time)
and Accentia shall not have materially breached any of its obligations under
this Agreement; and
(b) Accentia shall have substantially performed and complied with all
the material agreements, covenants and conditions required by this Agreement to
be performed and complied with by them.
ARTICLE VIII
General
8.01 Assignability. This Agreement shall be binding upon and shall inure to
the benefit of the successors and assigns of the Parties hereto.
8.02 Applicable Law. This Agreement shall be construed in accordance with
the laws of the state of Delaware.
8.03 Survival of Representations, Warranties and Agreements. All
representations, warranties, covenants, undertakings and agreements made herein
shall survive the Closing, notwithstanding any custom or law to the contrary and
notwithstanding the delivery of the Biovest Common Stock and the acceptance
thereof. No oral representations or warranties shall survive Closing and all
such oral representations and warranties shall be merged into the Closing.
8.04 Headings. All paragraph headings herein are inserted for the
convenience of the parties only and are not a part of and shall not in any way
modify or affect the construction or interpretation of any of the provisions of
this Agreement.
8.05 Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed to be an original and which together
shall constitute one and the same instrument.
8.06 Construction. Except where the context otherwise requires, words in
the plural numbers include the singular thereof, and vice versa, and words of
the male gender shall include the female and neuter gender and vice versa.
23
This Agreement shall be deemed to have been prepared mutually by all
parties and shall not be construed against any particular party as the
draftsman.
8.07 Schedules. All Schedules required by this Agreement shall be exchanged
by the parties no later than 15 calendar days following the date of this
Agreement. Schedules are incorporated as material terms and provisions of the
Agreement. Disclosures made in an Schedule are deemed to have been made in and
for the purposes of all Schedules, and omissions from any particular Schedule
shall not be deemed a breach of warranty or representation to the extent the
relevant information is contained in one or more other Schedules attached
hereto.
8.08 Notices. Any notice, request or instruction to be given hereunder by
any party to any other shall be in writing delivered personally or sent by
certified mail to the address or telecopy number set forth below:
Accentia: Accentia, Inc.
--------
0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Copy To:
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Biovest:
Biovest International, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, XX 00000
Copy to:
Xxxxxx X. Xxxxx
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
(n) 8.09 Letters of Intent. All prior Letters of Intent, Deal Points or
Outlines and other communication or correspondence concerning the subject matter
of this Agreement are superseded by this Agreement and are merged into this
Agreement and shall not survive the Closing of this Agreement.
24
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the day and year first above written.
ACCENTIA, INC.
By:
----------------------------------
Its:
BIOVEST INTERNATIONAL, INC.
By:
----------------------------------
Its:
MCSW, LLP
INVESTMENT AGREEMENT ("AGREEMENT")
DATED APRIL 9, 2003
BETWEEN
BIOVEST INTERNATIONAL, INC.
AND
ACCENTIA, INC.
DISCLOSURE SCHEDULE
Except as expressly set forth in the Agreement, any information, item,
description document or event (each, a "Disclosure Item") set forth on this
Disclosure Schedule in one section or subsection hereof shall be deemed to
relate and be responsive to each represenatation, warranty and/or covenant
contained in the Agreement (or exception thereto) calling for the disclosure of
such Disclosure Item, whether or not expressly referred to therein, and shall be
deemed disclosed for all purposes therein; provided that such deemed
relationship to, responsiveness to and disclosure in such representation,
warranty and/or covenant shall only be effective to the extent that a subject
Disclosure Item is reasonably related to or responsive to the subject
representation, warranty and/or covenant. Capitalized terms used in this
Disclosure Schedule without definition have the respective meanings set forth in
the Agreement. Disclosure Items speak as of April 9, 2003, unless otherwise
noted.
Schedule Information Requirements
--------------------------------------------------------------------------------
1.01 Schedule of direct payments to be paid at Closing from initial Purchase
Price
1.02 Debts, accruals and obligations to be paid at Closing from initial
Purchase Price
3.01 Corporate Standing
3.02 Outstanding Equity Securities
3.03 Power to Agree
3.04 Outstanding Debts of Biovest
3.05 Material Contracts
3.06 Government Filings and Reports
3.07 Audited Financial Statements for years ending Dec 31, 2000-2001-2002
3.07.4 Undisclosedure of any recommended or advised changes, additions or
deletions of BioVest independent accountants not diclosed I the
Financial Statements
3.08 Accounts Receivable
3.09 Accounts Payable
3.10 Undisclosed Liabilities
3.11 Insurance
3.12 Employees
3.13 Intellectual Property
3.14 Business Plan
3.15 Litigation and Government Compliance
3.16 Corporate Records
3.17 Absence of Certain Developments
3.19 Tax Matters
3.20 Securities Matters
3.21 Real Property
3.22 Title to and Condition of Assets; Necessary Property
3.22.1 Liens
3.22.3 Necessary Property
3.23 Licenses and Permits
3.25 Brokers' Fees
3.27 CRADA
--------------------------------------------------------------------------------
Biovest International, Inc.
Schedule 1.01
1.01 To be paid at Closing directly to payees from initial Purchase Price
Biovest International, Inc. $ 1,970,000
($2,500,000 net of $530,000 pre-closing advance)
Xxxxxxxx Xxxxx - to be determined
(If paid directly, reduces above amount to Biovest)
Biovest International, Inc.
Schedule 1.02
Debts, accruals and obligations to be paid at Closing from initial Purchase
Price
Payee Amount
---------------------------------------------------------------------------
Morrision Xxxxx to be determined
Reference is made to Schedules 3.04 and 3.09; items to be paid to be
determined upon consultation between Accentia and Biovest, unless otherwise
disclosed in these scheduless.
Biovest International, Inc.
Schedule 3.01
Corporate Standing
no disclosure
Biovest International, Inc.
Schedule 3.02
Outstanding Equity Securities
-----------------------------
SHAREHOLDERS LISTING - April 24, 2003
Last First Total
A-Xxxxx S 44
Accountants on Call 5
Acro Associates 9
Aeneas Venture Corp 22,006
Air Care Go, Inc. 81
Airborne Express 3
Airline Freight Services Inc. 243
AIT Air Freight Systems 23
Alko Diagnostics 16
Alltemp Storage & Distribution 184
Xxxxxxxx Xxxxxxx 15,000
Xxxxxxxx Xxxxxx 4,000
American Financial Printing 338
American Stock Transfer 1,567
Ameripride Services 3
Amersham Pharmacia Biotech 67
Xxxx Xxxxxxx 47
Amsco 79
Xxxxxxx Xxxxxx 16,000
Applied Mailing Technology 2
Arden Fasteners 3
Xxxxxxxxx Xxxxxx 20,000
Xxxxxxxxx Xxxxxx P. 2,352
Xxxx Xxx 2,250
Arrow Laboratory Specialists 8
Xxxxxxxxxxxxxx Xxxx 2,500
Xxx Xxxxx 4,000
Aston Technologies 38
ATCC 71
Xxxxxxxxx Xxxxxx 1,600
Automatic Data Processing-MN 18
Automation, Inc. 1
B&H Fairway Lawn Maintenance 20
X. Xxxxx Medical 22
Xxxxxx Xxxx 69,648
Xxxxxxx Xxxxxx 3,000
Xxxxxxx Xxxxxxxx 6,000
Banque Nationale de Paris 22,902
Barnant Corporation 190
Basalaten Xxxxxx 3,000
Xxxxxx Fenwal Laboratories 32
Xxxxxx Healthcare 7
BDO Gendrot 382
BDO Xxxxxxx 3,659
Xxxxxx Xxxxxx 3,600
Xxxxxx Xxxxx 1,000
Bellco Glass, Inc. 139
Xxxxxxx Xxxxxx 50,000
Xxxxxxxxx Xxxx 80,000
Xxxxxxx Xxxxx 4,000
Xxxxxxxx Co 13
Best Irrigation 2
Bettendorf, Rohrer, Knoche, Wall 95
Xxxxxx Xxx 10,000
BioWhittaker 12
Blangifotti Xxxx 24,000
Blue Star Media LLP 192
Xxxxx Xxxxxxxxx 4,000
Xxxxxx Scientific 38
Bridge Partners 250,000
Xxxxxxx Xxxxxx L. 278
Xxxxxxxxx Xxxx 3,158
Xxxxxxxx Xxxxx P. 286
Xxxxxxxx Xxxxxx 4,000
CA Dept of Revenue 11
Calbiochem 8
Calibrate, Inc. 3
Canon Communications 49
Cartridge Care 2
Xxxxxxx Xxxx 8,000
CDS NEDCO 4
CEDE & Co. 362,527
Celtrix Pharmaceuticles 312
Center for Professional Adv 53
Xxxx Xxxxxx 30,000
Xxxxx Electronics 7
Xxxxx Hill PLC 386
Xxxxx Corp 17
CMI Refrigeration 4
Xxxxxxxx Xxxxx 69,000
Xxxxx Xxxx R. 782
Biovest International, Inc.
Schedule 3.02
Outstanding Equity Securities
-----------------------------
SHAREHOLDERS LISTING - April 24, 2003
Last First Total
Xxxxx Xxxx 191,515
Xxxx Xxxxxx Instrument Co. 54
Color Express 2
Community School, The 5,000
Compaq Direct Plus 57
Computer Chrome 26
Consolidated Plastics 6
Xxxxxxxxxxxx Xxxxxx 3,000
Xxxxxxxxxxxx Xxxx 25,000
Xxxxxxxxxxxx Xxxxx 10,000
Xxxxxxxxxxx Xxxxxxxx 1,053
Xxxxxxxxx Xxxxxx Xxxxxxxx 47
Xxxxxxx Xxxxxx A. 250
Xxxxxxx Xxxxxxx 10,000
Country Suites 12
Xxxxxxx Xxxxxxx 20,000
Crosstown Refrigeration 4
Custom Cover Services 19
Xxxxxx Xxxx 180,000
Dalmation Fire 23
Daytimer 1
XxXxxx Xxxxx O. 22,632
XxXxxx Xxxxxx 20,000
XxXxxx Xxxxxxxx W. 8,000
XxXxxx Xxxx 5,600
Deluxe Business Forms 5
Xxxxxx Xxxxx King & Xxxxxxx Xxxx 1,564
Xxxxxxxx Xxxxxxx 2,000
Xxxxxxxxx Xxxxxxxxxxx 20,000
Dinos Ioannis 20,000
XxXxxxx Xxxxxxx 66,000
Distribution Management 156
Diversified Data & Communications 17
Xxxxx Xxxxxx E. 208
Xxxxxx & Xxxxxxx LLP 1
Drain King, Inc. 2
Xxxxxxxx Manufacturing 68
Dynagraphics 92
Xxxxx Safety Supply 9
EM Lubricants 19
Xxxxx Worldwide 2
Xxxxxxxx Xxxxxxx 20,000
Essex Xxxxxxxx 2
Fai Electronics 2
Xxxxxxx Xxxxx 2,000
Xxxxx Xxxx 190
Federal Express 66
Xxxxxxx Xxxx 4,000
Xxxxxxx Xxxxx Blowing 22
Fluid Control Methods 12
Forever Floral 4
Forma Scientific 33
Xxxxxxxx Xxxxxxxx 4,000
Xxxxxxxxxx & Xxxxx 5,193
Fridley Snow Plow 29
Xxxxx Xxxxx Xxx X. 209
FutureMed 61
Xxxxxxxxx Xxxxxx 2,400
Xxxxxxxxxx Xxxx 67,347
Xxxxx Transportation System 24
Genetic Engineering News 172
Xxxxxx Xxxxx Associates 390
Xxxxxxxxxxxx Xxxxxx 4,000
Xxxxxxxxxxxx Xxxxxxxxxx 20,000
Xxxxxxxxxxxx Xxxxx 20,000
Xxxxx Xxxxx 4,211
Gibco Labs 236
Xxxxxx Xxxxxx M. 287
Xxxxxxx Xxxxxx J. 288
GNS Holdings 118,367
Xxxxxx Publications 4
Xxxx Xxxxx 261
Xxxxxxxxx Xxxxx J. 220
Xxxxxx Xxxxxxx 6,000
Xxxxxx Xxxxxxx J. 576
Grass so Green 11
Xxxxxxxxx Xxxx 2,000
Xxxxxxx Xxxxx 760
X. Xxxxxx Company 1,562
Halleland Xxxxx Xxxxx 1,047
Halperin, Esq Xxxx 364
Biovest International, Inc.
Schedule 3.02
Outstanding Equity Securities
-----------------------------
SHAREHOLDERS LISTING - April 24, 2003
Last First Total
Xxxxxxxxx & Xxxxx 67,000
Xxxxxx Xxxxx 16,000
Xxxxxx Xxxxx 80,000
Xxxxxx, M.D. Xxxxxx X. & Xxxxxxxxx 181,999
Xxxxxx, M.D. Xxxxxxx & Xxxxxx 20,000
Xxxxxx, M.D. Xxxxxxx & Xxxx 20,000
Xxxx Xxxxx 120,000
Xxxxxx Xxxxxx 1,000
Xxxxxxxx Xxxx V. 224
Hartford Insurance 852
Xxxxxxxxxx Xxxxxxx X. 113,961
Xxxxxxxxxx Xxxxx 21,648
Xxxxxxx Chemical 6
Head Hashmoon 4,000
Xxxxxxxxx Xxxx D. 504
Xxxxxxxx Xxxx 50,000
Xxxxxxxx Xxxx D. 663
Xxxxx Landscape 11
Xxxxx Xxxxx K. 261
Xxxxxxx Xxxxxxx E. 6,008
Hospal Ind 196
HTS Properties 7,134
Xxxxx Xxxxxx 237
Hyclone Laboratories, Inc. 4,083
In House Productions 124
Independent Packing 16
Inmac 2
Integra Holdings AG 27,733
Inter City Oil 1
Xxxxxxxx Xxxxxx 80,000
Xxxxxxxx Xxxxx 80,000
Irvine Scientific 28
J Exe Advertising 2
Jamak, Inc 19
Xxxx-xxxx of MN 19
Jasons Dry Ice 107
Jonas Xxxxxxx X. 782
Xxxxxxxxx Xxxxxx 16,000
Xxxxxx Xxxxx 60,000
Xxxxxx Xxxxxxx 281,871
Xxxxxx Xxxxxxx A. 3,100
Xxxxxx Xxxxxxx 20,000
Xxxxxxxxx Xxxx 12,000
Xxxxxxxxxx Xxxxx 4,000
Xxxxxxxxxx Xxxxx 4,000
Xxxxxxx Xxxxxx 20,000
Xxxxx Services, Inc. 298
Xxxxxxx Scales 10
Xxxx Xxxxxx 192
Kenznoff Xxxxx X. 413
KGB Associates 166
Xxxxxxx Electric 53
Xxxxxx Xxxxxx 331
Kinkos, Inc. 8
Xxx Xxxx Tat 782
Xxxxx Xxxxx M. 3,600
Xxxxx Xxxxxxx 3,600
Xxxxxxx Xxxxx 250
Xxxxx Xxxxxxxx 35,000
Xxxxxxx Xxxxx 17,140
Xxxxxxxxxxxxxx Xxxxxxx 20,800
Xxxxxxxxx Xxxxxxx 552,513
Xxxxxxxx Xxxxxx 28,000
Xxxxxxxx Xxxxx 56,000
XxxxxxX, Xxxxx & Xxxxx LLP 24
KS Legal Consultant 775
Xxxxx Xxxxxxxxxxxx 100,198
Xxxxxxxxxx Xxxxxxxxx 2,500
Xxxxxxxxxx Xxxx 100,000
Xxxxxxxxxx Xxxxx 370,883
Xxxxxxxxxx Xxxxx III 2,500
Xxxxxxxxxx Xxxxx 2,500
Xxxxxxxxxx Xxxxx 219,477
Xxxxxxxxxx Xxxxx II 2,500
Kyriakides Polixeny 84,896
Lab Support 569
Lama Michel 3,000
Xxxxxxxxxxx Xxx 80,000
Langonikos Xxxxxxxxx 20,000
Xxxxxx & Xxxxxxx 60,000
Xxxxx Xxxxxx 66,000
Xxxxx Xxxxx 160,000
Xxxxxxxx Xxxxxx 86,641
Xxxxx Xxxxx L. 150
Xxxxx Xxxxxxxxx 100,000
Xxxxxxxx Xxxxx 1,000
Liberty Carton Co 81
Xxxxxxxxx & Xxxxxx 46
Linen Polo 21,800
Xxxxxx Xxxxxxx 10,000
Lore Xxxx X. 8,000
Xxxxxxx Xxxxxxx 1,000
Loukeris Marinos 13,300
Xxxxxx Xxxx 5,000
Lurie, Besikof, Xxxxxxx 135
Xxxxx Xxxx 10,000
Xxxxx-XxXxxxxx Xxxxxxxx 2,000
Macmillan Magazines 223
Xxxx Xxxxx 281,762
Manna Freight Systems 23
Xxxxxx Xxxxx 500
Marangos Iraklis 1,000
Xxxxxxxxx Xxxxx 9,600
Xxxxx Xxxxx 2,382
Xxxxxxx Xxxxxx R. 200
Xxxxxxxxx Xxxxx 800
Mc Xxxxx Xxxxx 544
XxXxxxxx Xxxx 3,500
MCI Local Service 7
Medo USA 28
Xxxxxx Xxxxx 60,000
Xxxxxx Xxxxxx 20,000
Xxxxxx & Hole 2,389
Micro Parts 18
Mid-Com Comm 43
Midwest Mailing Systems 1
Minnegasco 13
Minnesota Chemical 8
Xxxxx Xxxxxx 10,000
MN Biotechnologt Assn 27
MN Dept of Revenue 764
MN MED Inc. 11
Xxxxxxxx Xxxxxx 400
Xxxxxx Xxxxxx 2,000
Xxxxxxxxxx & Xxxxxxxxxx 51
Xxxxx Xxxxxxx & Xxxxxxx 10,000
Xxxxx Xxxxxx 4,000
Xxxxxxxxxxx Xxxxxxxxx 40,000
Xxxxxxxxx Xxxxxxx 10,000
Xxxxxxxxx Xxxxx 119,999
Xxxxxxxxx Xxxxx 205,554
Xxxxxxxxx Xxxxx 56,000
Xxxxxxxxx Xxxxxxxxx 61,784
Xxxxxxxxx Xxxxxxxx 50,000
Xxxxxxxxxx Xxxxx 5,267
Mway LLC 350,000
Xxxx Xxx 2,579
Namsa 8
NASDAQ 466
National Calibration Lab 15
National Seminars Group 6
Xxxxxx-Xxxxxx Xxxxx 9,000
Nefesh Zion 700
Xxxxxxxxx Xxxxx 10,000
Xxxxxxxxx Xxxxxxxx 51,296
Xxxxxxxx Xxxxxxx 2,000
Xxxxxxxxx Xxxx 4,000
Xxxxxx Xxxxxxx 1,312
Northern States Power 742
Xxxx Xxxxx 30,000
Xxxxx Xxxxx 46
Xxxxxxx Xxxxx 400
Olsten Staffing Services 188
Onvoy Inc. 8
Orkin Exterminating 4
Xxxxxxx Noreyma 5,600
Oxygen Service Co 98
Page Xxxxxxx 2,000
Page Xxxxxxx 000
Xxxxxxxxxxxx Xxxxxxxxxx 2,000
Xxxxxxxxxx Xxxxxxxx 3,000
Paper Direct 4
Biovest International, Inc.
Schedule 3.02
Outstanding Equity Securities
-----------------------------
SHAREHOLDERS LISTING - April 24, 2003
Last First Total
Xxxxxx Xxxxx Xxxxxx 3,333
Xxxxxx Xxxxx & Xxxxxxxxx 336,667
Xxxxxx Xxxxx 473,333
Xxxxxxxxxxx Xxxxx 40,000
Xxxxxxxxxxx Xxxxx & Xxxxxx 20,000
Xxxxxxx Xxxxxx 40,000
Xxxxxxx Xxxxxxx 280
Xxxxx Xxxxx 80,000
Xxxxxxx Xxxxxxxxx 15,000
Xxxxxxx Xxx 4,000
Xxxxxx Maitland 44,000
Xxxxxxx Xxxxxx 168,836
Pharmacia & Upjohn Diagnostics 16
Xxxxxx Xxxxx 17
Xxxxxx Refrigeration 26
Piezo Kinetics, Inc. 1
Xxxxxxxxx Xxxxxxx 20,000
Pioneer Standard 19
PM Services 80
Polar Tech 30
Xxxxxxxx Xxxxxxx 20,000
Xxxxxx Xxxxxxx 8,000
Xxxxxx Xxxxxxx 4,000
Xxxxxxx-Xxxx Dickon 3,129
Pownall-Grey Dickon 80,000
PR Newswire 94
Xxxxxxx Xxxxx 90,000
Xxxxxxx Xxxxx 3,107
Prakash Pension Xxxxx 1,550
Professional Consultants 21
Progressive Business Pub. 8
Prostaff 10
Purimetrics, Inc. 64
Xxxxxx Xxxxxxx 4,211
Quality Biotech 96
Quality Business Forms 16
Xxxxx Transfer 9
Xxxxxxx Xxxxxx 779
Xxxxxxx Xxxx 779
Xxxxxxx Xxxxxx 1,557
Rapid Service 22
Xxxxxxxxx Xxxxx 200
Remel 1
Xxxxx Xxxxxx 153
Xxxxxxxx Xxxxxxx 10,000
Xxxxxxx Xxxxx 1,500
Xxxxxx Electronics 3
Road Runner Parcel 5
Rockefeller University Press 42
Xxxxxx Xxxxx 94
Xxxxxx Xxxxxxx 4,000
Xxxxxx Xxxxxx 100,000
Xxxxxx Xxxxx 270,000
Xxxxxxxxx Xxxx 4,000
Rouikate Monika 4,000
Sage Group The 201
Xxxxx Xxxxxx 650
Xxxxxxx Xxxxxxxxx 999
Xxxxxxxx Xxxxxxx 9,000
Xxxxxx Xxxxxx Yoset 7,000
Sandpiper Multimedia 5
Xxxxxxxxx Xxxxxxx Pension 6,214
Scantibodies Laboratory 3,999
Schiff & Company 88
Xxxxxxxx Xxxxxxx & Xxxxxxx 782
Science 210
Scientific Xxxxxxx Xxxxx 7
Scientific Research Consortium 11
Scientific Staffing 1,124
Scientist 200
Xxxxxx Plastics 4
Xxxxx Xxxxxx 10,000
Xxxxx Xxxxxxxx G. 65,191
Select Technologies 3
Selectform 2
Xxxxxxxxx Xxxxxxx 20,000
Xxxxxx Xxxxxxx 4,211
Xxxxxxxx Xxxxx 250,000
Shi Yuan 6,000
Xxxxxx Xxxx 2,105
Sigma-Xxxxxxx 1,327
Biovest International, Inc.
Schedule 3.02
Outstanding Equity Securities
-----------------------------
SHAREHOLDERS LISTING - April 24, 2003
Last First Total
Xxxxxxxxx Xxxxx 10,000
Xxxxxxxxx Xxxxx 2,335
Silent Knight Security 12
Xxxxxxxxx Xxxxx Xxxxxxxxxx 216
Xxxxxxx Xxx 40,000
Simplex Time Recorder 17
Xxxxxxxxx Xxxxxx 8,000
Xxxxxxxxx Xxxx 24,000
Xxxxxxxxx Xxxxx 8,000
Xxxxxx 0
Xxxxx Xxxxxx 4,000
Xxxxx Engineering 9
Society for HR MGT 4
Sonic Courier 2
Soras Xxxxxxxxxxx 30,000
Xxxxxxxxx Xxxx 1,000
Spectrum Laboratories 24
Xxxxxxxxx Xxxx 175,289
Sports Medicine & Orthopaedic Rehab. P.C. 20,000
St Xxxx Book 2
Xxxxxxx Xxxxxxx 30,367
Steris Corp 7
Sterling Bank 87
Stewarts Forest Prod 2
Xxxx Xxxxxx 240
Sunsource Xxxxxx 21
Suspa, Inc. 35
Suspa, Inc. 00
Xxxxxx Xxxxx 35,000
Xxxxx Xxxxxxx 779
Xxxxxx Machine 1
Tecknit,Inc 10
Temporary Assets 21
Xxxxx A. Xxxxxx 1,565
Xxxxxxxx Xxxxxx 63
Toll company 110
Top Five Data Services 15
Xxxxxxxx Xxx 10,000
Xxxxxxxxxxx Xxxxx 46,061
Travel Tax Mgt 9
Tsakinis Haris 1,000
Xxxxxx Xxxx 12,000
Xxxxxxxxxx Xxxxxxxx 2,105
Xxxxxxx Xxxxxxx 40,000
Twin City Filter Service 2
Xxxxxxx Xxxxx 3,000
Xxx Co. 2
Xxx Xxxxx 400
Unisyn Technologies 70,000
United Parcel Service 376
Univ. of Minnesota 18
Univ. of Minnesota 3
Unter Xx. Xxxx 779
UPS Customhouse Brokerage 555
Xxxxxxx Xxxxxx 1,557
Xxxxxxxxx Xxxxxxxxx 11,000
Van Virginia 20,000
Van Soneren Transfer 1
Xxxxxxxxx Chechamna 252
Viro Med 20
Xxxxxx Xxxx 4,000
Xxxxxxx Xxxxxx 2,000
Xxxxxx Xxxxx 9,000
Xxxxxxx Xxxxx 10,000
VWR Scientific 52
Xxxxxxx Xxxxx 1,424
Warburton LLC 225,000
Xxxxxxxx Xxxxxxx 4,800
Xxxxxxx Xxxxx 2,000
Xxxxx Xxxxxx 21,053
Williamsburg Bioprocessing 32
Xxxxxx Lines 8
Wilson, Elser, Xxxxxxxxx, Xxxxxxx 26
World Courier 50
World Spirit, Inc. 6,265
Xxxxx Xxxxxxxx 20,000
Yun Hyungkoo 40,000
Xxxxxx Xxxxxx 283
Xxxxxx Xxxxxx 40,000
Xxxxxxxx Xxxxxxxx 4,000
Xxxxx Xxxx 2,000
--------------
Biovest International, Inc.
Schedule 3.02
Outstanding Equity Securities
-----------------------------
SHAREHOLDERS LISTING - April 24, 2003
Last First Total
10,269,696
* Xxxxxxxxxx Xxxxxx 36,000
10,305,696
* Shares authorized but not yet issued--to be issued within 30 days of April
22, 2003, pursuant to termination agreement
Biovest International, Inc.
Stock Options and Warrants
Term in Grant Exercise
Years Date Individual Outstanding Price Proceeds
OPTIONS
FY 2000
5 07/19/00 Xxxxx Xxxxxxxxxx 1,000,000 1.50 1,500,000
5 07/19/00 Xxxxx Xxxxxxxxx 1,000,000 1.50 1,500,000
5 07/19/00 Xxxxx XxXxxx 200,000 1.50 300,000
FY 2000 Activity 2,200,000 3,300,000
FY 2001
5 03/15/01 JSA options (Sitildes) 140,000 1.25 175,000
10 06/06/01 Xxxx XxXxxx 75,000 1.25 93,750
10 06/06/01 Xxxxxx X. Xxxxxxx 100,000 1.25 125,000
10 06/06/01 Xxxxx X. Xxxxx 20,000 1.25 25,000
10 06/06/01 Xxxx X. Xxxxxxxx 100,000 1.25 125,000
10 06/06/01 Xxxx X. Xxxxxx 30,000 1.25 37,500
10 06/06/01 Xxxxxxx X. Xxxxxx 50,000 1.25 62,500
10 06/06/01 Xxxxxxx X. Page 25,000 1.25 31,250
10 06/06/01 Xxxxxx Xxxxxxxxxxxxx 15,000 1.25 18,750
10 06/06/01 Xxxx X. Xxxxxxx 4,000 1.25 5,000
10 06/06/01 Xxxx X. Xxxxx 2,000 1.25 2,500
10 06/06/01 Xxxxx X. Xxxxx 500 1.25 625
10 06/06/01 Xxxxx X. Waigner 15,000 1.25 18,750
10 06/06/01 Xxxxxxx X. Xxxxxx 15,000 1.25 18,750
10 06/06/01 Xxxxxx X. Xxxxx 5,000 1.25 6,250
10 06/06/01 Xxxxxx X. Xxxxxx 100 1.25 125
10 06/06/01 Xxxxx X. Xxxxxxxxx 4,000 1.25 5,000
10 06/06/01 Xxxxx Xxxxxx 250 1.25 313
10 06/06/01 Xxxxxx X. Xxxxxxx 1,000 1.25 1,250
10 06/06/01 Xxxxxx X. Xxxxxx 2,000 1.25 2,500
10 06/06/01 Xxxxx X. Xxxxx 500 1.25 625
10 06/06/01 Xxxxx X. Xxxxx 1,000 1.25 1,250
10 06/06/01 Xxxxxx X. Xxxxx 500 1.25 625
10 06/06/01 Xxxxx X. Xxxxxx-Xxxxxxx 1,000 1.25 1,250
10 06/06/01 Xxxxx X. Xxxxxxxxx 1,000 1.25 1,250
10 06/06/01 Xxxxxx X. Xxxxxxx 1,500 1.25 1,875
10 06/06/01 Xxxxx X. Xxxx 1,500 1.25 1,875
10 06/06/01 Xxxx X. Xxxxxxxx 750 1.25 938
10 06/06/01 Xxxxxx X. Xxxxxxx 1,000 1.25 1,250
10 06/06/01 Xxxxxx X. Xxxxxxx 750 1.25 938
10 06/06/01 Xxxxx X Xxxxxxxxx, Xx. 750 1.25 938
10 06/06/01 Xxxx X Xxxxxxx 750 1.25 938
10 06/06/01 Xxxxx X. Xxxxxxx 500 1.25 625
10 06/06/01 Xxxxxxx X. Xxxxxx 500 1.25 625
10 06/06/01 Xxxxxx X. Xxxxx 500 1.25 625
10 06/06/01 Xxxxxxx X. Xxxxxx 1,000 1.25 1,250
10 06/06/01 Xxxxx X. Xxxxxx 250 1.25 313
10 06/06/01 Xxxxx X. Xxxxxxx 1,000 1.25 1,250
10 06/06/01 Xxxxxx X. Xxxxx 3,500 1.25 4,375
10 06/06/01 Xxxxxx X. Xxxx 2,000 1.25 2,500
10 06/06/01 Xxxxxx X. Leclerk 1.25
10 06/06/01 Xxxxx X. Xxxxxxxx 750 1.25 938
10 06/06/01 Xxxx X. Xxxx 1.25
10 06/06/01 Xxxxx Xxxxx 750 1.25 938
10 06/06/01 Xxxxxxxx X. Xxxxxxx 500 1.25 625
10 08/18/01 Xxxxxxx X. Xxxxxx 4,000 1.25 5,000
08/18/01 Xxxxx Xxxxx 500 1.25 625
08/18/01 Xxxx X. Xxxx 1.25 -
10 06/06/01 Xxxxx Xxxxxxxxxx - 6/1/01 600,000 1.38 825,000
10 06/06/01 Xxxxx Xxxxxxxxx - 6/1/01 600,000 1.38 825,000
10 06/06/01 Xx. Xxxxxxx 500,000 1.25 625,000
06/06/01 Xxxxxx X. Xxxxx(non-employee) 100,000 1.25 125,000
10 06/06/01 Xxxxx XxXxxxx 2,500 1.25 3,125
10 07/25/01 Crystal Cortesella 10,000 3.00 30,000
10 9/01/01 Xxxx Xxxxxx 10,000 3.00 30,000
FY 2001 Activity 2,453,100 3,251,375
FY 2002
5 10/01/01 Xxxxx Xxxxxxxxxx 1,000,000 1.50 1,500,000
5 10/01/01 Xxxxx Xxxxxxxxx 1,000,000 1.50 1,500,000
5 10/1/01 Xxxxx XxXxxx 50,000 1.50 75,000
5 10/1/01 Xxxxx XxXxxx 50,000 1.50 75,000
10 02/18/02 Xxxxx X. Xxxxxx 2,000 2.25 4,500
10 02/18/02 Xxxxxxx Xxxxxxxxxxx 2,000 2.25 4,500
10 02/18/02 Xxxx Xxxxxx 1,000 2.25 2,250
10 02/18/02 Xxxxx X. Xxxxxxx 4,000 2.25 9,000
10 02/18/02 Xxxxxx X. Xxxxx 7,000 2.25 15,750
10 02/18/02 Xxxxxx X. Xxxx 10,000 2.25 22,500
10 02/18/02 Xxxxxx X. Leclerk 2.25
10 02/18/02 Xxxxx X. Xxxxxxxx 3,000 2.25 6,750
10 02/18/02 Xxxx X. Xxxx 2.25
10 02/18/02 Xxxxx Xxxxx 5,000 2.25 11,250
10 02/18/02 Xxxxxxxx X. Xxxxxxx 1,000 2.25 2,250
10 02/18/02 Xxxxxx Xxxxxx 1,000 2.25 2,250
10 12/18/01 Xxxx Xxxxxxxx 50,000 1.50 75,000
10 12/18/01 Xxxx Xxxxxx 10,000 1.50 15,000
10 12/18/01 Xxxxx Xxxxx 2,500 1.50 3,750
Biovest International, Inc.
Stock Options and Warrants
Term in Grant Exercise
Years Date Individual Outstanding Price Proceeds
OPTIONS
10 5/24/02 Xxx Xxxxxxxx 20,000 2.25 45,000
10 5/24/02 Xxxx Xxxxxxxx 25,000 1.50 37,500
10 5/24/02 Xxxx Xxxxxxxx 30,000 2.25 67,500
10 5/24/02 Xxxx Xxxxxxxx 20,000 2.75 55,000
10 03/06/03 Xxxxx Xxxxxx 1,000,000 * 0.50 500,000
*Requires stockholder approval
FY 2002 Activity 3,293,500 4,029,750
Status to date 2003 7,946,600 10,581,125
WARRANTS
FY 2000
5 08/15/00 GNS Holdings (formerly Bridge Partners) 230,000 1.25 287,500
5 08/15/00 Bridge Partners 320,000 1.25 400,000
5 08/15/00 Bridge Partners 250,000 2.00 500,000
FY 2000 Activity 800,000 1,187,500
FY 2001
5 06/21/01 Xxxxx Xxxxxx 510,000 5.00 2,550,000
5 02/15/01 Xxxxx XxXxxx 25,000 2.50 62,500
5 02/15/01 Xxxxx XxXxxx 25,000 5.00 125,000
5 12/29/00 Xxxx Xxxxxxxxx 25,000 2.50 62,500
5 12/29/00 Xxxx Xxxxxxxxx 25,000 5.00 125,000
5 04/04/01 Xxxx Xxxxxxxx 25,000 2.50 62,500
5 04/04/01 Xxxx Xxxxxxxx 25,000 5.00 125,000
5 04/03/01 Xx. Xxxxxx Xxxxxxx 25,000 2.50 62,500
5 04/03/01 Xx. Xxxxxx Xxxxxxx 25,000 5.00 125,000
5 03/08/01 Xxxxxxx Xxxxxxx 25,000 2.50 62,500
5 03/08/01 Xxxxxxx Xxxxxxx 25,000 5.00 125,000
5 02/14/01 Xxxxxxxxx Xxxxx 25,000 2.50 62,500
5 02/14/01 Xxxxxxxxx Xxxxx 25,000 5.00 125,000
5 03/15/01 Xxxxx Xxxxx 25,000 2.50 62,500
5 03/15/01 Xxxxx Xxxxx 25,000 5.00 125,000
5 08/01/01 Xxxxx Xxxxxx 100,000 2.50 250,000
5 08/01/01 Xxxxx Xxxxxx 100,000 2.50 250,000
5 09/01/01 Xxxxxxx Xxxxxxxxx (loan renewal) 25,000 5.00 125,000
5 09/01/01 Xxxxx XxXxxx (loan renewal) 25,000 5.00 125,000
5 09/01/01 Xxxx Xxxxxxxx (loan renewal) 25,000 5.00 125,000
5 09/01/01 Xx. Xxxxxx Xxxxxxx (loan renewal) 25,000 5.00 125,000
FY 2001 Activity 1,160,000 4,862,500
FY 2002
5 10/11/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 5,000 1.25 6,250
5 10/11/01 Xxxxxx Xxxxxxxxx Wise & Co. 7,500 1.25 9,375
5 10/11/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 5,000 1.50 7,500
5 10/11/01 Xxxxxx Xxxxxxxxx Wise & Co. 7,500 1.50 11,250
5 10/13/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 2,500 1.25 3,125
5 10/13/01 Xxxxxx Xxxxxxxxx Wise & Co. 2,500 1.50 3,750
5 10/16/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 5,000 1.25 6,250
5 10/16/01 Xxxxxx Xxxxxxxxx Wise & Co. 5,000 1.50 7,500
5 10/25/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 2,500 1.25 3,125
5 10/25/01 Xxxxxx Xxxxxxxxx Wise & Co. 2,500 1.50 3,750
5 11/06/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 2,500 1.25 3,125
5 11/06/01 Xxxxxx Xxxxxxxxx Wise & Co. 2,500 1.50 3,750
5 11/07/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 2,500 1.25 3,125
5 11/07/01 Xxxxxx Xxxxxxxxx Wise & Co. 2,500 1.50 3,750
5 12/03/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 15,000 1.25 18,750
5 12/03/01 Xxxxxx Xxxxxxxxx Wise & Co. 15,000 1.50 22,500
5 12/12/01 Xxxxxx Xxxxxxxxx Xxxx & Co. 10,000 1.25 12,500
5 12/12/01 Xxxxxx Xxxxxxxxx Wise & Co. 10,000 1.50 15,000
5 12/19/01 Xxxxxx Xxxxxxxxx 50,000 5.00 250,000
5 12/20/01 Xxxxxxxxxxx Soras 50,000 2.50 125,000
5 01/10/02 Xxxxxx Xxxxxxxxx Xxxx & Co. 5,000 1.25 6,250
5 01/10/02 Xxxxxx Xxxxxxxxx Wise & Co. 5,000 1.50 7,500
5 01/22/02 Xxxxxx Xxxxxxxxx Xxxx & Co. 10,000 1.25 12,500
5 01/22/02 Xxxxxx Xxxxxxxxx Wise & Co. 10,000 1.50 15,000
5 01/30/02 Xxxxxx Xxxxxxxxx Xxxx & Co. 32,500 1.25 40,625
5 01/30/02 Xxxxxx Xxxxxxxxx Wise & Co. 32,500 1.50 48,750
5 05/24/02 Xxxxx Xxxxxx 166,667 3.00 500,000
5 05/24/02 Xxxxx Xxxxxx 250,000 1.50 375,000
5 06/15/02 Xxxxx Xxxxxxx 10,000 3.00 30,000
5 06/15/02 Xxxxx Xxxxxxx 6,000 4.00 24,000
5 06/15/02 Xxxxx Xxxxxxx 4,000 5.00 20,000
Total warrants issued in 2002 736,667 1,599,000
5 10/24/02 Xxxxx XxXxxx 25,000 1.25 31,250
5 10/24/02 Xxxx Xxxxxxxxx 25,000 1.25 31,250
5 10/24/02 Xxx Xxxxx 25,000 1.25 31,250
5 10/24/02 Xxxx & Xxxx Xxxxxx 12,500 1.25 15,625
5 10/24/02 Xxx Xxxxx 12,500 1.25 15,625
5 10/24/02 Xxxxxx Xxxxxx 87,500 1.25 109,375
Biovest International, Inc.
Stock Options and Warrants
Term in Grant Exercise
Years Date Individual Outstanding Price Proceeds
OPTIONS
5 10/24/02 Kit Xxxxx Xxxx 12,500 1.25 15,625
5 10/24/02 Xxxxx Xxxxx 81,250 1.25 101,563
5 10/24/02 Anaka Prakash 18,750 1.25 23,438
5 10/24/02 Xxxxx Xxxxxx 250,000 1.25 312,500
5 01/13/03 Xxxxx Xxxxxx 200,000 0.50 100,000
5 02/26/03 Xxxxx Xxxxxx 160,000 0.50 80,000
5 03/07/03 Xxxxxx Xxxxxxxxxxx 250,000 0.50 125,000
Total warrants issued in 2003 1,160,000 992,500
Total for Warrants Issued through 2003 3,856,667 8,641,500
Totals for all categories through 2003 11,803,267 19,222,625
Biovest International, Inc.
Schedule 3.03
Power to Agree
Consents or notices to the parties under the material contracts listed on
Schedule 3.05 (which have been furnished and/or made available to Accentia)
may be required in connection with the execution, delivery and/or
performance of the investment agreement.
Biovest International, Inc.
Schedule 3.04
Outstanding Debts of Biovest
Accr Int to
Notes Payable @ 6/09/03 Principal 6/9/03 Total Subtotals
Kordistos 100,000 12,767 112,767
DeFouw, D 100,000 20,247 120,247
Xxxxxxx 100,000 19,288 119,288
Xxxxxx 1,000,000 132,945 1,132,945
Xxxxx 100,000 12,432 112,432
Soras, C/M 50,000 6,226 56,226
Prakash 75,000 3,113 78,113
Korahais 25,000 9,308 34,308
Soras, Ch 50,000 6,175 56,175
Konstandtinitis 25,000 3,041 28,041
Lignos 50,000 3,862 53,862
Xxxxx 50,000 3,861 53,861
Xxxxxx 350,000 38,281 388,281
Agopianis 150,000 16,551 166,551
Xxxx 50,000 5,240 55,240
Pensa 325,000 32,990 357,990
Xxxxxx 160,000 3,161 163,161
Tsakopoulos 250,000 4,507 254,507
Xxxxxxxxx Xxxxx 72,047 3,166 75,213
Rider Bennett 74,990 - 74,990
Long Term Debt-regulatory agencies @ 5/31/03
State of Minnesota 52,288 - 52,288
State of Minnesota 27,415 - 27,415
MN SUTA 26,911 - 26,911
State of Pennsylvania 20,571 - 20,571
State of New Jersey 7,703 - 7,703
State of Wisconsin 4,838 - 4,838
Short Term Borrowings @ 6/9/03
---------------
Xxxxxx 300,000 1,148 301,148 3,935,071
--------------------------
Accrued Executive Compensation through June, 2003
C Kyriakides 855,000
O Mourkakos 855,000
X XxXxxx 40,000 1,750,000
Accrued Payroll/Taxes - employees @ 6/6/03
Accrued Xx. Xxxxxxx 200,000
Accrued payroll/taxes - regular payroll 16,067
Accrued payroll - deferrals 105,241
Accrued commissions 16,977
Accrued/unused vacation 147,240
Employee withholding - 401K 5,401
Employee withholding - cafeteria plans 4,427 495,353
Customer deposits - hardware @ 6/6/03 (see attached list) 588,899 588,899
Customer deposits - MA contract services @ 5/31/03
Immunogen 250,000
Providence 33,414
Biosite 36,740
UCSF 76,071 396,225
Accrued liabilities 5/31/03
Morrision Xxxxx (xxxxxxxx) 831,980
Morrision Xxxxx (accrual) 25,000
Xxxxxx Beach legal 41,254
NCI-CTEP fees - accrual 50,000
Consortium site fees - accrual 117,500
Xxxxx Xxxxxx Xxxxx LLP 38,828
Xxxxxxx Xxxxx judgment entered 2/28/01 10,530
Xxxxx Xxxxxxxxxx judgment entered 2/28/01 2,781
P Xxxxxx consulting fee 30,000
Accrued expense - Hopkinton facility close 30,000
Accrued commission - SJ Promotions Inc. 6,750
Xxxxxx Xxxxxxxxxx (April-June) 39,000
DeFouw Board of Directors meeting fees 12,500 1,236,123
Accounts Payable @ 6/6/03 - see 3.09 738,583 738,583
------------------------------
9,140,254 9,140,254
==============================
Contingent liabilities (reference made to Notice of Default- Hopkinton facility lease):
Hopkinton facility rent premium 18,243
Hopkinton facility repair/HVAC removal 20,000
In addition, such other liabilities, debt, and payables arising in the ordinary course of business from
April 9, 2003 (or other date as referenced in Schedule) to Closing.
Schedule 3.04 detail
Biovest International, Inc.
Customer Deposits - hardware
000-2260
06/06/03
----------------
Misc adj (140.62)
Xxxxxx Lab 25% Down Pmt 352,875.00
Agricultre Canada 50% Down Pmt 375.00
Xxxxxxx Xxxxxxx Prepayment 21,900.86
Becton Xxxxxxxxx 50% Down Pmt 437.50
Biocult 50% Down Pmt 766.00
Biomart 50% Down Pmt 2,020.00
Biomerieux 50% Down Pmt 6,597.50
Canbreal Prepayment 1,873.00
City of Hope 50% Down Pmt 15.00
Dade Behring 50% Down Pmt 5,000.00
Diagnostic Product Corp 50% Down Pmt 27,500.00
Digitana 50% Down Pmt 36.15
Dominion Biologicals 50% Down Pmt 24,250.00
Duke 50% Down Pmt 2,860.00
Xxxxxx Diag/Abbott 10% Deposit 3,672.50
GTF 50% Down Pmt 2,140.00
Xxxxxx Xxxxxxxx 50% Down Pmt 1,500.00
Immucor 50% Down Pmt 950.00
Innogenetics 50% Down Pmt 5.00
Instrumentation Lab 50% Down Pmt 2,100.00
IVSS 50% Down Pmt 67.50
KS Biomedix Duplicate pmt 3,083.00
Leinco 50% Down Pmt 2,400.00
Microgenics 50% Down Pmt 3,750.00
Miltenyi 50% Down Pmt 2,880.00
PARIS 50% Down Pmt 2,400.00
Pure Protein 50% Down Pmt 3,600.00
Radim 50% Down Pmt 440.50
Raven Biotechnologies 50% Down Pmt 28,965.50
R-Biopharm 50% Down Pmt 20,595.00
SciMedia 50% Down Pmt 26,800.00
Southmead Prepayment 2,185.00
Vicam 50% Down Pmt 33,750.00
VWR 50% Down Pmt 1,250.00
-----------------------
588,899.39
=======================
Biovest International, Inc.
Schedule 3.05
Material Contracts
National Institutes of Health/NCRR Cooperative Agreement, Grant # 5 U42 RR05991
National Cancer Institute Cooperative Research & Development Agreement #01030
Clinical Study and Research Agreements (6 sites)
NYU
Duke University
University of Pennsylvania
Xxxxxxx Cancer Center (Florida)
Northwestern University
University of Minnesota Duluth
Excorp Medical Settlement Agreement/Promissory Note
Xxxxx Xxxxxx Investment Agreement
Xxxxx Xxxxxx Consulting Agreement
SJ Promotions, Inc. Consultant/Commission Agreement
GTF Termometerfabrik Distributor Agreement
Sci-Media Distributor Agreement
TWC Biosearch International Distributor
Digitana Distributor Agreement
Bio-Mart Distributor Agreement
Xxxxx-Xxxxxx Life Sciences Ltd. Distributor Agreement
Xxxxxx Xxxxxxxxx Wise Investment Banking Advisory Agreement
Consulting agreements (NCI/CRADA related) - (no executed copies on file)
Xx. Xxxxxx Muggia
Xx. Xxxxxx Xxxxxxxx
Xx. Xxxxxx Xxxxxxxxx
Xx. Xxxxxxx X Xxxxxxxx
All notes payables
Real property leases - Minnesota, Massachusetts*
Employee Related
Xxxxx Xxxxx Employment Agreement
Xxxxxx Xxxxxxxxxx/Employment Termination Agreement
Xxxx Xxxxxx Severance Agreement
Biovest International, Inc. Retirement Savings Plan
Flexible Compensation Plan
United Healthcare Insurance Company (medical)
Fortis Benefits Insurance Company (dental/life/std/ltd)
Open customer orders - contract services (as of 6/06/03)
Immunogen 915,000
Biosite 231,737
UCSF 63,972
Geron 54,600
All others (<$10,000 individually) 34,734
Open customer orders - hardware (as of 6/06/03)
See attached list by customer 2,512,670
Office equipment leases
IOS Capital Lease #7N 762
IOS Capital Lease #3B659
* Reference is made to notice of default from X0/XXX Xxxx Xxxxxx; Xxxxxxxxx,
XX lease
Schedule 3.05 detail
Open Sales Order Report
Sales Part Description Com Sold to Sold to
Order Number Code Customer Name Cust ID
--------------------------------------------------------------------------------------------------------------------------------
204891 U22010663 AY*FLOWPATH PKG., 10K CP CW AGRICULTURE & AGRI-FOOD CANADA AGR020
204891 X00000000 KIT*SEPTA PORTS SPARE AGRICULTURE & AGRI-FOOD CANADA AGR020
204721 600058-221 AY*PKG,C/W10K,2.1M2CELL CW AMCELL CORP/CO MILTENYI BIOTEC AMC010
204889 600058-221 AY*PKG.,C/W 10K,2.1M2 CELL CW AMCELL CORP/CO MILTENYI BIOTEC AMC010
204840 UBR110 BIOREACTOR*10KD,1.1M2 CW AVENTIS PHARMA SA AVE010
204943 3908-000 ELECTRODE-PROBE OXYGEN 4 SPARE XXXXXXX XXXXXXX BEC030
204943 4113-000 AY.CABLE,OXYGEN INCUBATOR SPARE XXXXXXX XXXXXXX BEC030
204943 1554-000 ELECTRODE PH COMB.S/D/L/G SPARE XXXXXXX XXXXXXX BEC030
204951 CALIB MAXIMIZER 1000 SERV XXXXXXX XXXXXXX BEC030
204951 CALIB MAXIMIZER 1000 SERV XXXXXXX XXXXXXX BEC030
204775 600058-221 AY*PKG,C/W10K,2.1M2CELL XX XXXXXXX-XXXXXXX BEC030
204777 600068-221 AY*PKG.,C/W10K,2.1M2,CELL XX XXXXXXX-XXXXXXX NEW BRX BEC030
204776 600068-221 AY*PKG.,C/W10K.2.1M2CELL XX XXXXXXX-XXXXXXX OLD BRX BEC030
204903 600099-221 AY*PKG.,C/W10K,2.1M2,CELL CW BIO PRODUCTS LABORATORY BIO020
204920 600022-000 ASSY*PKG.,CAP,MEDIA,10.0 SPARE BIO PRODUCTS LABORATORY BIO020
204902 SERV 400012-000 A-R BD ASSY SPARE BIOCULT AB PROD MRA 2855 BIO050
204902 1554-000 ELECTRODE-PH COMB.S/D/L/G SPARE BIOCULT AB PRODUCTION CENT BIO050
204885 600058-221 AY*PKG.,C/W 10K, 2.1M2, CELL CW BIO-MART BIO230
204885 600068-215 AY*PKG.,C/W 10K, 1.5 M2, CW BIO-MART BIO230
204819 400137-240 ASSY*CABLE,INCUBATOR TEMP SPARE BIOMERIEUX BIO060
204897 600058-221 AY*PKG.,C/W 10K,2.1M2 CELL CW BIOMERIEUX BIO060
204897 600068-221 AY*PKG.,C/W10K, 2.1M2, CELL CW BIOMERIEUX BIO060
204936 600068-215 AY*PKG., C/W 10K, 1.5 M2 CW BIOSYNERGY (EUROPE) LTD. QBS010
204940 SERV LABOR FOR SERVICE SERV CANBREAL THERODIAGNOSTICS INTL CAN030
204921 UHGW00026 BAG-WASTE, 20L, SIX PACK SPARE CHEMICON INTERNATIONAL CHE020
204947 600058-215 AY*PKG.,C/W 10K, 1.5M2 CW CURETECH LTD PARTIAL OK CUR010
204947 600020-000 ASSY*PKG., CAP, MEDIA 2. SPARE CURETECH LTD PARTIAL OK CUR010
204937 SERV 400012-000 A-R BD SPARE CYMBUS BIOSCIENCES MRA 2856 CYM010
204937 SERV 400012-000 A-R BD SPARE CYMBUS BIOSCIENCES MRA 2856 CYM010
204868 0000-000 XX*XXX XXX.XXXXX,XXXXX,X SPARE CYTOBIOLOGIC CYT030
204360 SPECIAL BLK ORDER FOR C/W & SPARES BLK DADE BEHRING INC/SYVA DAD040
204360 600099-221 AY*PKG.,C/W10K,2.1M2,CELL XX XXXX XXXXXXX INC/SYVA DAD040
204945 1554-000 ELECTRODE-PH COMB.S/D/L/G SPARE DADE/SYVA PARTIAL OK DAD040
204876 600159-221 AY*PKG.,C/W 10kD XXXX, 0. CW DIAGNOSTIC PRODUCTS CORP DIA010
204876 600159-221 AY*PKG.,C/W 10kD XXXX, 0. CW DIAGNOSTIC PRODUCTS CORP DIA010
204923 600099-221 AY*PKG.,C/W 10K,2.1M2 CELL CW DIAGNOSTIC PRODUCTS CORP DIA010
204944 U22011767 AY*FLOWPATH, 10KD, 35 CW DIGITANA AG DIG010
204944 U22010529 PROBE*PH FERMPROBE SPARE DIGITANA AG DIG010
204944 U22010686 PROBE*DO, 12MM X 90MM SPARE DIGITANA AG DIG010
204944 U22010663 AY*FLOWPATH PKG., 10K CP CW DIGITANA AG PARTIALS OK DIG010
204807 600099-221 AY*PKG.,C/W10K,2.1M2,CELL CW DOMINION BIOLOGICALS LTD DOM010
204910 600058-215 AY*PKG.,C/W10K, 1.5M2 CW DOMINION BIOLOGICALS LTD DOM010
204910 600068-215 AY*PKG.,C/W 10K, 1.5 M2, CW DOMINION BIOLOGICALS LTD DOM010
204913 600099-221 AY*PKG.,C/W 10K, 2.1M2, CELL CW DOMINION BIOLOGICALS LTD DOM010
204860 4762-000 XX.XXX.XX PROBE CASE SPARE DUKE MED CENTER DUK010
204860 600058-221 AY*PKG.,C/W,2.1M2, CELL XX XXXX MED CENTER DUK010
204764 1554-000 ELECTRODE-PH COMB.S/D/L/G SPARE EXCELL BIOTECH LTD EXC010
204764 0000-000 XX.,XXXXX,XX(XXXXXXXXX) SPARE EXCELL BIOTECH LTD EXC010
204764 4113-000 AY.CABLE,OXYGEN INCUBATOR SPARE EXCELL BIOTECH LTD EXC010
204799 UUNI-047 MEDIA JAR COVER ASSY SPARE GAMMA BIOLOGICAL GAM010
204847 UUNI-047 MEDIA JAR COVER ASSY SPARE GAMMA BIOLOGICAL GAM010
204688 U12340637 FLOWPATH ASSEMBLY, AUTOHA CW GLAXO WELLCOME RES. & DEV. GLA020
204688 UBR1910 BIOREACTOR* 10kD, 19 ft2 CW GLAXO WELLCOME RES. & DEV. GLA020
204688 UOXY10 OXYGENATOR*10ft2 (1.1m2) CW GLAXO WELLCOME RES. & DEV. GLA020
204688 UOXY25 OXYGENATOR*25ft2 (2.8 m2) CW GLAXO WELLCOME RES. & DEV. GLA020
204888 600068-221 AY*PKG., C/W 10K,2.1M2, CELL CW GOTEBORGS TERMOMETERFABR GOT010
204928 600160-221 AY*PKG.,STERILE BIO.2.1M CW GOTEBORGS TERMOMETERFABR GOT010
204928 600239-211 AY*PKG,FINAL,BIOREACTOR CW GOTEBORGS TERMOMETERFABR GOT010
204928 600159-221 AY*PKG,C/W 10KD MWCO 2. CW GOTEBORGS TERMOMETERFABR GOT010
204928 1554-000 ELECTRODE-PH COMB.S/D/L/G SPARE GOTEBORGS TERMOMETERFABR GOT010
204928 U12340637 FLOWPATH ASSEMBLY, AUTOH CW GOTEBORGS TERMOMETERFABR GOT010
204928 U22010663 AY*FLOWPATH PKG., 10K CP CW GOTEBORGS TERMOMETERFABR GOT010
204928 5145-420 ASSY-TEMPERATURE PROBE,3X SPARE GOTEBORGS TERMOMETERFABR GOT010
204928 600099-221 AY*PKG,C/W,2.1M2,CELL CW GOTEBORGS TERMOMETERFABR GOT010
204928 600238-211 AY*PKG,FINAL,FLOWPATH CW GOTEBORGS TERMOMETERFABR GOT010
204581 U22011767 AY* FLOW PATH, 10kD, 35 CW XXXXXX XXXXXXXX CHE010
204581 UOXY25A OXYGENATOR* 25 SQ FT CW XXXXXX XXXXXXXX CHE010
204617 UBR1910 BIOREACTOR* 10kD, 19 ft2 CW INSTRUMENTATION LABORATORY INS040
204918 XXXXXX 60099-221 XCELL CW LAUREATE PHARMA L.P.MRA 2863 CYT010
204696 U22011767 AY*FLOW PATH, 10KD, 35 CW LEINCO TECHNOLOGIES LEI020
204696 U22011767 AY*FLOW PATH, 10KD, 35 CW LEINCO TECHNOLOGIES LEI020
204696 U22011767 AY* FLOW PATH, 10kD, 35 CW LEINCO TECHNOLOGIES BLK ORDER LEI020
204946 0000-000 XX.,XXX,XXXX,XXXXXXXX SIXP SPARE METABOLIX MET030
204915 600068-215 AY*PKG., C/W 10K, 1.5 M2 CW MICROGENICS MIC010
204862 600052-002 ASSY*FNL.,PKG.,ASM, 230V INST MUREX BIOTECH LIMITED ABB020
204862 600277-002 AY*PKG,A-XCELL,230V,SGL S INST MUREX BIOTECH LIMITED ABB020
204862 600277-002 AY*PKG,A-XCELL,230V,SGL S INST MUREX BIOTECH LIMITED ABB020
204862 600277-002 AY*PKG,A-XCELL,230V,SGL S INST MUREX BIOTECH LIMITED ABB020
204935 600020-000 ASSY*PKG., CAP, MEDIA,2. SPARE MUREX BIOTECH LIMITED MUR010
204938 600281-221 AY*PKG.,CULUTUREWARE, XCE CW MUREX BIOTECH LIMITED MUR010
204938 600068-215 AY*PKG.,C/W 10K, 1.5 M2, CW MUREX BIOTECH LIMITED MUR010
204938 600281-221 AY*PKG.,CULUTUREWARE, XCE CW MUREX BIOTECH LIMITED MUR010
204938 600068-215 AY*PKG., C/W 10K,1.5 M2, CW MUREX BIOTECH LIMITED MUR010
204938 600281-221 AY*PKG.,CULUTUREWARE, XCE CW MUREX BIOTECH LIMITED MUR010
204938 600068-215 AY*PKG.,C/W 10K, 1.5 M2, CW MUREX BIOTECH LIMITED MUR010
204938 SERV IQ/OQ ON XCELL INSTRUMENTS SERV MUREX BIOTECH LIMITED MUR010
204938 SERV TRAVEL EXPENSE SERV MUREX BIOTECH LIMITED MUR010
204938 SERV ENGINEERING EXPENSES SERV MUREX BIOTECH LIMITED MUR010
204938 SERV IQ/OQ ON ASM INSTRUMENTS SERV MUREX BIOTECH LIMITED MUR010
204900 600099-221 AY*PKG.,C/W10K, 2.1M2, CELL CW MUREX BIOTECH MRA 2848 MUR010
204539 SPECIAL BLK ORDER FOR C/W & SPARES BLK NCI-XXXXXXXXX NAT020
204941 600159-211 AY*PKG., C/W 10KD MWCO 1. CW P.A.R.I.S. PAR030
204941 600058-211 AY*PKG., C/W 10K, 1.1M2, CELL CW P.A.R.I.S. PAR030
204926 U22011767 AY*FLOWPATH 10KD,35 CW PURE PROTEIN, LLC PUR020
204927 1554-000 ELECTRODE-PH COMB.S/D/L/G SPARE RADIM SRL RAD010
204927 2131-000 KIT-SERVICE,MEMBRANE OXY SPARE RADIM SRL RAD010
204906 102064-000 WASHER*THRUST,M'FLEX,PMP. SPARE RAVENbiotechnologies, inc. RAV010
204906 1554-000 ELECTRODE-PH COMB.S/D/L/G SPARE RAVENbiotechnologies, inc. RAV010
204906 1825-000 AY.,FILTER,0.2UM NON-STIL. SPARE RAVENbiotechnologies, inc. RAV010
204906 0000-000 XX.XXX.XXXXXXX XXX. ASM/ SPARE RAVENbiotechnologies, inc. RAV010
204906 600011-000 ASSY*PKG.,LUER FITTINGS K SPARE RAVENbiotechnologies, inc. RAV010
204906 600018-000 ASSY*PKG.,CAP,MEDIA 1. SPARE RAVENbiotechnologies, inc. RAV010
204906 600019-000 ASSY*PKG.,CAP,MEDIA 2. SPARE RAVENbiotechnologies, inc. RAV010
204906 600020-000 ASSY*PKG.,CAP,MEDIA 2. SPARE RAVENbiotechnologies, inc. RAV010
204906 600021-000 ASSY*PKG.,CAP,MEDIA 5. SPARE RAVENbiotechnologies, inc. RAV010
204906 600022-000 ASSY*PKG.,CAP,MEDIA 10.0 SPARE RAVENbiotechnologies, inc. RAV010
204906 600023-000 ASSY*PKG.,CAP, HARVEST SPARE RAVENbiotechnologies, inc. RAV010
204906 600052-000 ASSY*PKG., FNL. ASM-1000 INST RAVENbiotechnologies, inc. RAV010
204906 600058-215 AY*PKG., C/W 10K, 1.5 M2 CW RAVENbiotechnologies, inc. RAV010
204906 600068-215 AY*PKG.,C/W 10K, 1.5 M2, CW RAVENbiotechnologies, inc. RAV010
204906 600082-000 AY*PKG, PH PROBE O-RING RE SPARE RAVENbiotechnologies, inc. RAV010
204906 600096-000 AY*PKG, FNL, ACULINK, 100/12 SPARE RAVENbiotechnologies, inc. RAV010
204905 600022-000 ASSY*PKG., CAP, MEDIA, 10.0 SPARE R-BIOPHARM RHONE R-B010
204905 600058-215 AY*PKG., C/W 10K, 1.5 M2 CW R-BIOPHARM RHONE R-B010
204905 600263-002 AY*FINAL PKG, miniMAX INST R-BIOPHARM RHONE R-B010
204865 600099-221 AY*PKG.,C/W10K,2.1M2,CELL CW SciMedia LTD OSAKA OFFICE SCI010
204912 600068-211 AY*PKG.,C/W 10K, 1.1M2, CELL CW SciMedia LTD OSAKA OFFICE SCI010
204952 600068-211 AY*PKG.,C/W 10K, 1.1M2, CELL CW SciMedia LTD OSAKA OFFICE SCI010
204952 600052-001 ASSY*FNL.,PKG.,ASM, 100V INST SciMedia LTD OSAKA OFFICE SCI010
204831 600263-001 AY*FINAL PKG, miniMAX INST SCIMedia YOKOHAMA OFFICE SCI010
204784 UBR110 BIOREACTOR*10kD, 1.1M2 PARTIALS OK CW SOUTHMEAD HOSPITAL SOU020 PM
204904 UUNI-049 RESERVOIR JAR SPARE SPECTRAL DIAGNOSTICS SPE010
204361 SERV INSTALLATION SERV UN DEVELOP PROG IN THAILAND /CG INT080
204837 U22011767 AY*FLOW PATH, 10KD, 00 XX XXXXXXXXXX XX XXXXXXXX UNI280
204942 UHGW00026 BAG-WASTE, 20L, SIX PACK SPARE UNIVERSITY OF BUFFALO UNI340
204853 600068-221 AY*PKG.,C/W10K, 2.1M2, CELL CW VICAM VIC010
204853 600159-221 AY*PKG.,C/W 10kD XXXX, 0. CW VICAM VIC010
204929 600052-000 ASSY*PKG.,FNL.ASM-1000 INST VICAM VIC010
204950 100362-000 CARTON*SHIPPING, INSTRUME SPARE VICAM VIC010
204950 100402-000 PKG.,*SHIPPING, TOP SPARE VICAM VIC010
204950 100401-000 PKG.*SHIPPING, ROLL-UP FIL SPARE VICAM VIC010
204950 3495-000 FOAM*SHIPPING, BOTTOM SPARE VICAM VIC010
204572 SERV INSTALLATION SERV VWR INTERNATIONAL, LTD / CG VWR030
204752 2876-000 PUMP HEAD, W/SS ROTORS SIZ SPARE XTL BIOPHARMACEUTICALS LTD XTL010
204752 4195-000 AY.PKG.TEMP.PROBE ACUSYST SPARE XTL BIOPHARMACEUTICALS LTD XTL010
Qty Date Due Net Price
Terr Rem Entered Date Extended
----------------------------------------------------------------------
20489 I 1.004/16/2003 4/16/2003 680.00
204891 I 2.004/16/2003 4/16/2003 70.00
204721 PM 4.001/14/2003 1/14/2003 11,520.00
204889 PM 2.004/15/2003 4/15/2003 5,760.00
204840 PM 50.003/14/2003 3/14/2003 10,350.00
204943 D 1.006/4/2003 6/18/2003 2,200.00
204943 D 2.006/4/2003 6/18/2003 800.00
204943 D 2.006/4/2003 6/18/2003 780.00
204951 D 1.006/9/2003 6/9/2003 2,000.00
204951 D 1.006/9/2003 6/9/2003 2,000.00
204775 D 2.005/15/2003 5/15/2003 5,000.00
204777 D 2.002/11/2003 7/23/2003 6,000.00
204776 D 4.002/11/2003 8/20/2003 12,000.00
204903 PM 2.004/25/2003 6/18/2003 12,000.00
204920 PM 5.005/12/2003 5/12/2003 975.00
204902 PM 1.005/22/2003 5/22/2003 640.00
204902 PM 2.004/25/2003 4/25/2003 892.00
204885 I 1.004/29/2003 4/29/2003 2,020.00
204885 I 1.004/11/2003 4/11/2003 2,020.00
204819 PM 1.003/5/2003 3/5/2003 535.00
204897 PM 2.004/24/2003 4/24/2003 5,760.00
204897 PM 2.004/24/2003 4/24/2003 6,900.00
204936 PM 1.005/29/2003 5/29/2003 2,880.00
204940 I 1.006/3/2003 6/3/2003 1,400.00
204921 D 2.005/13/2003 5/13/2003 190.00
204947 PM 2.006/5/2003 6/5/2003 4,800.00
204947 PM 1.006/5/2003 6/5/2003 195.00
204937 PM 1.005/29/2003 5/29/2003 470.00
204937 PM 1.005/29/2003 5/29/2003 1,080.00
204868 D 1.004/3/2003 4/3/2003 152.00
204360 D 1.006/12/02 5/30/03 1,909.12
204360 D 2.005/14/2003 5/14/2003 10,000.00
204945 D 10.006/5/2003 6/5/2003 3,900.00
204876 D 10.004/8/2003 6/27/2003 22,500.00
204876 D 10.004/8/2003 5/14/2004 22,500.00
204923 D 2.005/14/2003 8/8/2003 10,000.00
204944 PM 5.006/4/2003 6/4/2003 11,000.00
204944 PM 2.006/4/2003 6/4/2003 800.00
204944 PM 2.006/4/2003 6/4/2003 820.00
204944 PM 8.006/4/2003 6/4/2003 3,840.00
204807 I 3.002/25/2003 2/25/2003 15,000.00
204910 I 3.005/2/2003 6/30/2003 6,000.00
204910 I 3.005/2/2003 6/30/2003 7,500.00
204913 I 4.005/5/2003 6/30/2003 20,000.00
204860 D 1.003/31/2003 4/10/2003 720.00
204860 D 2.003/31/2003 4/10/2003 5,000.00
204764 PM 2.002/4/2003 2/4/2003 892.00
204764 PM 1.002/4/2003 2/4/2003 150.00
204764 PM 1.002/4/2003 2/4/2003 420.00
204799 D 1.002/19/2003 3/14/2003 950.00
204847 D 1.003/24/2003 3/24/2003 950.00
204688 PM 20.0012/10/02 12/10/02 5,800.00
204688 PM 10.0012/10/02 12/10/02 4,000.00
204688 PM 10.0012/10/02 12/10/02 4,000.00
204688 PM 3.0012/10/02 12/10/02 2,070.00
204888 PM 2.004/15/2003 4/15/2003 4,840.00
204928 PM 2.005/16/2003 5/16/2003 500.00
204928 PM 2.005/16/2003 5/16/2003 680.00
204928 PM 4.005/16/2003 5/16/2003 8,080.00
204928 PM 4.005/16/2003 5/16/2003 1,340.00
204928 PM 2.005/16/2003 5/16/2003 400.00
204928 PM 2.005/16/2003 5/16/2003 960.00
204928 PM 2.005/16/2003 5/16/2003 788.00
204928 PM 1.005/16/2003 5/16/2003 4,500.00
204928 PM 3.005/16/2003 5/16/2003 2,160.00
204581 D 1.0010/15/02 6/30/03 2,400.00
204581 D 1.0010/15/02 6/30/03 600.00
204617 D 12.0010/31/02 7/21/03 4,200.00
204918 D 2.005/7/2003 5/7/2003 500.00
204696 D 1.002/13/2003 2/13/2003 2,400.00
204696 D 1.004/11/2003 5/30/2003 2,400.00
204696 D 1.0012/17/02 12/17/02 2,400.00
204946 D 2.006/5/2003 6/5/2003 374.00
204915 D 3.005/5/2003 6/30/2003 7,500.00
204862 PM 3.003/31/2003 6/20/2003 138,000.00
204862 PM 3.003/31/2003 6/13/2003 424,500.00
204862 PM 3.003/31/2003 6/27/2003 424,500.00
204862 PM 3.003/31/2003 7/11/2003 424,500.00
204935 PM 12.005/29/2003 5/29/2003 2,340.00
204938 PM 10.005/30/2003 7/31/2003 48,000.00
204938 PM 5.005/30/2003 7/31/2003 12,240.00
204938 PM 6.005/30/2003 8/29/2003 28,800.00
204938 PM 6.005/30/2003 10/31/2003 14,688.00
204938 PM 14.005/30/2003 1/30/2004 67,200.00
204938 PM 7.005/30/2003 1/30/2004 17,136.00
204938 PM 13.005/30/2003 7/31/2003 67,600.00
204938 PM 8.005/30/2003 7/31/2003 400.00
204938 PM 1.005/30/2003 7/31/2003 7,800.00
204938 PM 3.005/30/2003 7/31/2003 10,200.00
204900 PM 1.004/25/2003 4/25/2003 0.00
204539 D 1.009/27/02 9/26/03 200,000.00
204941 PM 1.006/3/2003 6/3/2003 2,400.00
204941 PM 1.006/3/2003 6/3/2003 2,400.00
204926 D 3.005/16/2003 5/16/2003 7,200.00
204927 PM 1.005/16/2003 5/16/2003 445.00
204927 PM 1.005/16/2003 5/16/2003 436.00
204906 D 2.004/29/2003 4/29/2003 16.00
204906 D 1.004/29/2003 4/29/2003 390.00
204906 D 1.004/29/2003 4/29/2003 230.00
204906 D 1.004/29/2003 4/29/2003 740.00
204906 D 1.004/29/2003 4/29/2003 160.00
204906 D 1.004/29/2003 4/29/2003 150.00
204906 D 1.004/29/2003 4/29/2003 150.00
204906 D 1.004/29/2003 4/29/2003 150.00
204906 D 1.004/29/2003 4/29/2003 150.00
204906 D 1.004/29/2003 4/29/2003 150.00
204906 D 1.004/29/2003 4/29/2003 150.00
204906 D 1.004/29/2003 4/29/2003 50,000.00
204906 D 1.004/29/2003 4/29/2003 2,000.00
204906 D 1.004/29/2003 4/29/2003 2,500.00
204906 D 1.004/29/2003 4/29/2003 45.00
204906 D 1.004/29/2003 4/29/2003 950.00
204905 PM 2.004/29/2003 4/29/2003 390.00
204905 PM 2.004/29/2003 4/29/2003 4,800.00
204905 PM 1.004/29/2003 4/29/2003 36,000.00
204865 I 3.004/2/2003 5/30/2003 13,500.00
204912 I 5.005/5/2003 5/5/2003 10,100.00
204952 I 5.006/9/2003 6/9/2003 10,100.00
204952 1 1.006/9/2003 6/9/2003 45,000.00
204831 I 1.003/11/2003 3/11/2003 30,000.00
204784 10.002/14/2003 2/14/2003 2,185.00
204904 I 1.004/29/2003 4/29/2003 700.00
204361 PM 1.006/13/02 6/13/02 6,000.00
204837 D 6.003/13/2003 3/13/2003 13,680.00
204942 D 1.006/4/2003 6/4/2003 95.00
204853 D 5.003/27/2003 3/27/2003 15,000.00
204853 D 1.003/27/2003 3/27/2003 2,500.00
204929 D 1.005/20/2003 5/20/2003 50,000.00
204950 D 1.006/9/2003 6/9/2003 81.00
204950 D 1.006/9/2003 6/9/2003 38.00
204950 D 1.006/9/2003 6/9/2003 3.00
204950 D 1.006/9/2003 6/9/2003 28.00
204572 I 1.0010/10/02 12/31/02 2,500.00
204752 PM 4.001/28/2003 1/28/2003 1,152.00
204752 PM 1.001/28/2003 1/28/2003 290.00
------------
2,512,670.12
------------
Biovest International, Inc.
Schedule 3.06
Government Filings and Contracts
NIH yellow book annual audit reports prior to 2000 not filed
NIH yellow book annual audit report for 2002 pending (extension filed)
Biovest International, Inc.
Schedule 3.07
Financial Statements
Form 10K Reports for years ending:
September 30, 2000
September 30, 2001
September 30, 2002
Schedule 3.07.4
Disclosure of any recommended or advised changes, additions or
deletions of Biovest independent accountants not disclosed in the
Financial Statements:
none
Biovest International, Inc.
Schedule 3.08
Accounts Receivable
Accounts Receivable - Trade @ 6/6/03 (see aging) 764,706
NIH Grant Receivable, net of allowance @ 6/6/03* 524,178
-------------
1,288,885
=============
* Actual amount collectible subject to completion of indirect rate
negotiation for 2002 and 2003, and approval by NIH for reimbursement of
overhead from past grant years.
Biovest International, Inc.
Schedule 3.09
Accounts Payable
Accounts Payable Trial Balance 6/6/03 1,424,943
less Morrison Cohen, included in Schedule 3.04 (767,598)
-------------
657,345
-------------
Purchased Receipts (goods received/not yet invoiced @ 6/6/03) 53,651
Other Accounts Payable
SKD Konferens (ESACT 2001) 3,060
Konsult AB 161
Sports Medicine COBRA 2,522
Int'l Biotech I-010310 2,785
Stericycle 2,157
Winstar 900
UPS 1,326
Federal Express 225
G Wright 5,269
P McGrady 8,933
Oxygen Service 250
-------------
738,583
=============
In addition, such other payables arising in the ordinary course of business from
April 9, 2003, or such other dates as referenced in Schedule, through Closing.
Biovest International, Inc.
Schedule 3.10
Undisclosed liabilities
none
Biovest International, Inc.
Schedule 3.11
Insurance
The Hartford Insurance Group $73,892 annual premium
11/30/02 - 11/30/03 (binder copy attached)
Package - Policy # 42UUVUB6800 $ 39,441
Workers Comp - Policy # 42WEVKJ3133 $ 29,234
Umbrella - Policy # 42RHVUB6422 $ 5,217
Medmarc Casualty Insurance Company $65,850 annual premium
11/30/02 - 11/30/03 (binder copy attached)
Product Liability
Policy # 02MA380050
Gulf Insurance Company $86,250 annual premium
05/31/02 - 05/31/03
Directors & Officers Professional Liability Coverage
Policy # GA00716654
extension 5/31/03 - 6/30/03 $ 8,133 one-month extension
Biovest International, Inc.
Schedule 3.12
Employees:
Deferred wages - management and certain employees - January 1, 2003 forward
(also see Schedule 3.04 - liabilities)
Reference is made to termination agreement with George Constantin (also see
Schedule 3.02 and 3.04)
Biovest International, Inc.
Schedule 3.13
Intellectual Property
------------------------------------------------------------------------------------------------------------------------------------
Docket # Title Assignee Patent No. Grant Date Reference No. Inventor Description
------------------------------------------------------------------------------------------------------------------------------------
BIOV001 Method of Activating Hydroxyl BIOV 4,582,875 4/15/1986 85101.0003 That T. Ngo This patent covers a
Groups of a Polymeric Carrier using purification support
2-Fluoro-1- technology. We do not
Methylpyridinium Toluene-4- practice this patent.
Solufonate The last maintenance fee
has been paid, so this
patent does not cost
anything to maintian.
------------------------------------------------------------------------------------------------------------------------------------
BIOV003 Bioreactor Appratus BIOV 4,889,812 12/26/1989 85101.0005 Perry W. Guinn This patent specifically
covers techniques such as
EC circulation used in
the CP2500 and reverse IC
flow used in the AcuSyst-
R, along with other
techniques not currently
being practiced (novel
pumping method). This
patent is useful to
maintain at a minimum to
keep competitors from
practicing these
techniques.
------------------------------------------------------------------------------------------------------------------------------------
BIOV005 Bioreactor System BIOV 4,894,342 1/16/1990 85101.0007 Perry W. Guinn Covers items useful for
perfusion instrumentation
including an in-line
heater and gas
humidiication as being
used in the CP2500. Also
covers the use of a
reversible pump.
------------------------------------------------------------------------------------------------------------------------------------
BIOV008 Multi-Bioreactor Hollow Fiber BIOV 5,656,421 8/12/1997 85101.0010 Timothy C. Covers a unique harvest
Cell Propagation System and Gebhard method for the EC of
Method bioreactors to make sure
that bioreacotrs in
parallel receive the same
feed and harvest amount.
Also covers a novel
oxygen calibration
method. We are not
practicing this patent,
but this patent is useful
to maintain at a minimum
to keep competitors from
practicing these
techniques.
------------------------------------------------------------------------------------------------------------------------------------
BIOV009 Basket-Type Bioreactor BIOV 5,998,184 12/7/1999 85101.0011 Yuan Shi This patent describes a
method to allow easier
scale up of hollow fiber
systems. This patent is
not being practiced, but
is being maintained as a
potential next-generation
system.
------------------------------------------------------------------------------------------------------------------------------------
BIOV010 Cell Culture Apparatus BIOV 5,416,022 5/16/1995 85101.0012 Bruce P. Amiot This patent describes a
small hollow fiber
bioreactor with an
integral oxygenation
membrane.
------------------------------------------------------------------------------------------------------------------------------------
BIOV011 Pressure Control System for a BIOV 5,330,915 7/19/1994 85101.0013 John R. Wilson This bioreactor describes
Bioreactor a pressure control valve
to keep the bioreactor in
BIOV10 from draining by
siphon.
------------------------------------------------------------------------------------------------------------------------------------
BIOV012 Method of Culturing Leukocytes BIOV 5,541,105 7/30/1996 85101.0014 Georgiann B. This patent described a
Melink method of expanding LAK
cells in a hollow fiber
system using IL-2. We
are not practicing this
patent, but the approach
is still being considered
by others, so this patent
is being maintained.
------------------------------------------------------------------------------------------------------------------------------------
BIOV013 Immunotherapy Protocol of BIOV 5,631,006 5/20/1997 85101.0015 Georgiann B. This patent covers the
Culturing Leukcytes in the Melink method of treating a
Presence of Interleukiin-2 in a patient using cell
Hollow Fiber Cartridge generated from BIOV012.
------------------------------------------------------------------------------------------------------------------------------------
BIOV014 Hollow Fiber Cell Culture Device BIOV 4,804,628 2/14/1989 85101.0016 Ray F. This is a key patent of
and Method of Operation Cracauer AcuSyst technology that
covers cycling for
enhanced productivity in
hollow fiber systems.
This patent is also being
maintained in Canada,
Japan, Belgium, France,
Germany, Italy, The
Netherlands, Sweden,
Switzerland, and United
Kingdom.
------------------------------------------------------------------------------------------------------------------------------------
BIOV015 Apparatus for Delivering a BIOV 4,629,686 12/16/1986 85101.0017 Michael L. This patent covers the
Controlled Dosage of a Gruenberg automated pumping system
Chemical Substance of the LifeSigns
(AcuSyst-S) product.
------------------------------------------------------------------------------------------------------------------------------------
BIOV016 Culturing Apparatus BIOV 4,650,766 3/17/1987 85101.0018 William H. This patent covers the
Harm LifeSigns (AcuSyst-S)
instrument.
------------------------------------------------------------------------------------------------------------------------------------
BIOV018 Method of Culturing Cells Using BIOV 4,973,558 11/27/1990 85101.0019 John R. Wilson This patent covers the
Highly Gas Saturated Media use of a jet pump for
inexpensive oxygenation,
and also reverse IC flow,
both being practiced in
the AcuSyst-R.
------------------------------------------------------------------------------------------------------------------------------------
BIOV019 Process for Improving Mass BIOV 5,202,254 4/13/1993 85101.0020 Bruce P. Amiot The patent covers EC
Transfer in a Membrane circulation to enhance
Bioreactor and Providing a More growth and production
Homogenneous Culture being practiced in the
Environment CP2500.
------------------------------------------------------------------------------------------------------------------------------------
BIOV020 Micro Hollow Fiber Bioreactor BIOV 6,001,585 12/14/1999 85101.0021 Michael J. This patent covers a
Gramer scale-down model system
useful for screening
optimal conditions in a
hollow fiber bioreactor
instrument.
------------------------------------------------------------------------------------------------------------------------------------
Mark Country Reg # Next Action
---------------------------------------------------------------------------------------
Trademarks - Active
ACUSOFT USA 1,432,743 3/17/2007
ACUSYST-JR USA 1,440,510 5/26/2007
ACUSYST-MAXIMIZER USA 2,379,677 8/22/2006
ACUSYST-P USA 1,391,480 4/29/2006
ACUSYST-S USA 1,439,844 5/19/2007
ACUSYST-XCELL USA 2,379,695 8/22/2006
CELL-PHARM USA 1,429,937 2/24/2007
Benelux 414,937 2/8/2006
Canada 340,677 5/20/2003
France 1,341,913 2/6/2006
Germany 1,098,046 2/6/2006
Italy 473,985 2/19/2006
Japan 2,084,926 10/26/2008
MICRO MOUSE USA 1,779,529 6/29/2003
Trademarks - Inactive
UNISYN USA 2,096,778 9/16/2003
UK 390,963 1/1/2006
UNISYN EPO 390,063 1/1/2006
UNISYN USA 2,122,822 12/23/2003
AVIDCHROM USA 1,865,152 Abandoned?
Japan 3,241,722 12/25/2006
Germany 2,083,739 9/30/2003
UK 1,549,032 9/30/2003
UK 1,549,033 9/30/2003
Sweden 5/20/2004
BIO-CONCENTRATOR USA 1,463,384 2/24/2007
Canada 352,018 5/20/2003
BIOMEM USA 1,429,936 2/24/2007
Belgium 414,936
Italy 473,986 2/19/2006
Hybrid Grow USA 2,092,754 9/2/2003
IgPure USA 2,081,132 7/22/2003
Biovest International, Inc.
Schedule 3.14
Business Plan
(Attachment Omitted)
Biovest International, Inc.
Schedule 3.15
Litigation and Government Compliance
Late filing of NCCC yellow book audits - 2000 and 2001 (no filings prior to
2000)
Late filing of franchise tax returns
Notice of Default from W9/TIB Real Estate Limited - lease of demised
premises at 25 South Street, Hopkinton, MA
Reference is made to the letter dated April 8, 2003, from Michael
Hartofelis addressed to Robert H Cohen attached to this schedule
Biovest International, Inc.
Schedule 3.16
Corporate Records
Biovest International, Inc.
Schedule 3.17
Absence of Certain Developments
San Diego facility shutdown
Hopkinton facility shutdown
Biovest International, Inc.
Schedule 3.19
Tax Matters
Delaware franchise tax issues - 2001 and 2002
Biovest International, Inc.
Schedule 3.20
Securities Matters
December 11, 2000 NCI/Biovest CRADA
January 26, 2001 NYU presentation
April 15, 2003 Accentia, Inc. to Acquire 81% Interest in
Biovest International, Inc.
Schedule 3.20.a
List of all securities offered or sold by Biovest since Jan 1 2000,
identifying name of purchaser, exemption relied upon and description
of offering pursuant to which securities were sold.
Shares $$
Jan-00 Beginning Balance 9,100,415
Fiscal 2000 Compensation- Consultant 30,000 $ 37,500
Fiscal 2001 Compensation to Employees 133,000 $ 167,000
Fiscal 2001 Common for Expenses 196,281 $ 245,000
Jun-01 Private offering Peter Pappas 170,000 $ 510,000
Jun-02 Private offering Peter Pappas 166,667 $ 500,000
--------
2/14/2003 Ending Balance 9,796,363
Biovest International, Inc.
Schedule 3.21
Real Property
Biotech Bldg #4, 377 Plantation Street
Worcester, MA
Used for Contract Services
Area 13,788 sq ft
Term 10 years
Dated 10/26/95
Begin Date 03/01/96
Expires 02/28/06
Mo Lease Pmt (base) 24,667 plus RE taxes, CAM, mgmt fees
Lessor: ARE-377 Plantation Street LLC
8500 Evergreen Boulevard,
Coon Rapids, MN
Used for Hardware Mfg, NCCC, Contract Services
Area 32,800 sq ft
Term 20 years
Dated 12/1/1983 (amendment dated 12/31/91)
Begin Date 1/1/1984
Expires 11/30/2003
Mo Lease Pmt 18,059 plus RE taxes
Lessor: James Stanton
Biovest International, Inc.
Schedule 3.22
Title to and Condition of Assets; Necessary Property
Certain equipment in Minnesota lab owned by NIH - funded thru NCCC.
(This equipment is not included in Fixed Assets)
Schedule 3.22.1
Liens
IOS Capital - office equipment lease
AAW/Lignos, John & Maria 25,000 12/7/2002 secured debt/assets
AAW/Logan, Fay W 25,000 12/6/2002 secured debt/assets
Peter Pappas 300,000 Jan-03 secured by NIH receivable
Schedule 3.22.3
Necessary Property
no disclosure
Biovest International, Inc.
Schedule 3.23
Licenses and Permits
Minnesota facility:
Hazardous Waste Generator License #HW6059
State of MN Certificate of Exemption - Boilers and Pressure
Vessels Permit ID 012383
FDA Annual Registration of Device Establishment #2183664
State of MN, Dept of Public Safety Permit - Ethyl
Alcohol/Distilled Spirits/Wine
State of Minnesota Sales & Use Tax Cert #4270817
Massachusetts facility:
permits and licenses through Biotech Park/landlord
State of Massachusetts Sales & Use Tax Cert #38359
Worcester City Business Certificate (in process)
Both facilities are out of compliance with Microsoft/number of registered
users per licensed software
Biovest International, Inc.
Schedule 3.25
Brokers' Fees
none
Biovest International, Inc.
Exhibit 3.27
Copy of CRADA
Schedule 4.11
Litigation and Government Compliance
The Company is in litigation with its former CEO and its former CFO, who were
terminated for cause in May 2003. The former employees filed suit for breach of
contract, and are seeking the balance payable to them as stated in their
respective employment contracts. The company is in discussions with the former
CFO, and expects to settle the litigation, and will then commence settlement
discussion with the former CEO.
Accentia, Inc and Subsidiaries
Capitalization Summary
June 6, 2003
------------------------------------------------------------------------------------------------------------------------------------
Fully Diluted
Ownership Shares Conversion Terms
--------- ------ ----------------
Series D Convertible Preferred Stock TEAMM shareholders 9,710,244 Holder has the right to convert
outstanding shares of Series D
Convertible Preferred Stock into that
number of fully paid and non-assessable
shares of Common Stock
Series D Convertible Preferred Stock TEAMM shareholders 2,080,242 This represents warrants to purchase
11,790,486 TEAMM common stock which converted to
----------- Accentia Series D Convertible preferred
stock on April 10, 2003
Series C Convertible Preferred Stock
$1 Par Value Hopkins Capital Group, LLC 3,750,000 Holder has the right to convert
MOAB Investment, LP 3,750,000 outstanding shares of Series C
---------- Convertible Preferred Stock into that
number of fully paid and non-assessable
7,500,000 Common Stock determined by dividing the
aggregate face value of the Series C
Convertible Preferred being converted by
the Per Share Value of Common Stock.
This per share value shall, in turn, be
discounted by 20%.
Series B Convertible Preferred Stock John Doyle 2,349,610 Holder has the right to convert
$1 Par Value Steve Arikian, MD 3,916,017 outstanding shares of Series B
Julian Casciano 1,566,407 Convertible Preferred Stockinto that
Roman Casciano 242,229 number of fully paid and non-assessable
----------- Common Stock determinedby dividing the
8,074,263 aggregate face value of the Series B
Convertible Preferred being converted
by the Per Share Value of Common Stock.
This per share value shall, in turn, be
discounted by 25%.
Series A Convertible Preferred Stock Hopkins Capital Group, LLC 866,500 Holder has the right to convert
$1 Par Value MOAB Investment, LP 866,500 outstanding shares of Series A
Dart Investors LP No 2 200,000 Convertible Preferred Stockinto an
Ram Holdings, LLC 500,000 equal number of fully paid and non-
Robert Qualls 50,000 assessable Common Stock (on a 1:1
Alan McInnis 200,000 basis)
Edward Yavitz 50,000
-----------
2,733,000
Common Stock Hopkins Capital Group, LLC 4,701,000
$0.01 Par Value David Vorhoff 400,000
John Brucker 48,692
Laurence May 36,190
Bruce Frankel 71,722
Rita Angel 106,596
Steven Stogel 200,000
MOAB Investment, LP 4,700,000
-----------
10,264,200
Common Stock Options
R. Scott Jones 1,000,000 There are 2,000,000 shares of Common
David L. Redmond 500,000 Stock reserved for options under the
Stock Option Plan. Options aggregating
1,500,000 shares have been granted to
the former CEO and former CFO of
Accentia.
Analytica 280,000 Need details
Series D shareholders (TEAMM employees
& consultants) 1,259,429 Series D shareholders collectively have
----------- options to acquire this number of
shares @ $0.50 per share.
3,039,429
Series D Convertible Preferred Options TEAMM employees 762,571 Former TEAMM employee option-holders
have the right to acquire 1 million
shares of Series D Preferred @ $.50 per
share
-----------
Total Capitalization 44,163,949
-----------
Combining audit report
The Analytica Group, Inc.,
Accent Rx and Accentia, Inc.
August 31, 2002
CONTENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS
Combined Balance Sheet 2
Combined Statement of Operations 3
Combined Statement of Stockholders' Equity (Deficit) 4
Combined Statement of Cash Flows 5
Notes to Combined Financial Statements 7
Report of Independent Certified Public Accountants
--------------------------------------------------
To the Board of Directors
The Analytica Group, Inc.,
Accent Rx and Accentia, Inc.
Tampa, Florida
We have audited the accompanying combined balance sheet of The Analytica Group,
Inc., Accent Rx and Accentia, Inc. as of August 31, 2002 and the related
combined statement of operations, stockholders' equity (deficit), and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of The Analytica Group,
Inc., Accent Rx and Accentia, Inc. as of August 31, 2002, and the results of
their operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
at August 31, 2002 the Companies' working capital deficit was $3,308,565. This
factor, among others as discussed in Note B to the financial statements, raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note B.
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Tampa, Florida
October 28, 2002
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
COMBINED BALANCE SHEET
August 31, 2002
ASSETS
Current Assets
Cash and cash equivalents $ 442,104
Accounts receivable, net of allowance for doubtful accounts of
$1,184,677 at August 31, 2002 4,090,045
Inventories 365,553
Unbilled revenue 451,180
Prepaid expenses and other current assets 135,347
------------
Total current assets 5,484,229
Goodwill 11,545,715
Furniture, equipment and leasehold improvements 546,933
Due from affiliate 400,000
Other assets 86,979
------------
Total assets $ 18,063,856
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Deferred revenue $ 1,080,700
Convertible notes 1,217,391
Accounts payable and accrued expenses 4,540,558
Current maturities of long-term debt 1,800,000
Other payables 154,145
------------
Total current liabilities 8,792,794
Long-term debt, less current maturities 4,368,928
------------
Total liabilities 13,161,722
------------
Commitments and Contingencies --
Stockholders' Equity (Deficit)
Preferred stock 16,254,348
Common stock 10,570
Additional paid-in capital 5,489,737
Accumulated (deficit) (16,852,520)
------------
Total stockholders' equity 4,902,134
------------
Total liabilities and stockholders' equity $ 18,063,856
============
The accompany notes are an integral part of these
combined financial statements.
2
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
COMBINED STATEMENT OF OPERATIONS
For the Year Ended August 31, 2002
Sales revenue $ 21,415,435
Less: allowance for sales discounts and returns (591,808)
------------
Net sales revenue 20,823,627
Cost of goods and services sold 16,987,319
------------
Gross profit 3,836,308
Selling, general and administrative expenses
Administrative 3,775,160
Bad debt 1,362,227
Occupancy 477,475
Sales 582,328
Depreciation 247,057
------------
Total selling, general and administrative expenses 6,444,247
------------
Operating loss (2,607,939)
Interest expense, net 411,104
------------
(Loss) before income taxes 3,019,043
Provision for income taxes 377,000
------------
Net loss $ 3,396,043
============
The accompany notes are an integral part of these
combined financial statements.
3
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
For the Year Ended August 31, 2002
Preferred Stock Common Stock Additional
-------------------- --------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
------ ------------ ------------ ------------ ------------ ------------ ------------
Balance, August 31, 2000 -- $ -- 5,263,200 $ 5,263 $ 4,994,737 $ (7,769,115) $ (2,769,115)
Net loss -- -- -- (5,687,362) (5,687,362)
------ ------------ ------------ ------------ ------------ ------------ ------------
Balance, August 31, 2001 -- -- 5,263,200 5,263 4,994,737 (13,456,477) (8,456,477)
Issuance of common stock -- -- -- 307 -- -- 307
Conversion of warrants to
common stock -- -- 5,000,000 5,000 495,000 -- 500,000
Issuance of preferred stock -- 16,254,348 -- -- -- -- 16,254,348
Net loss -- -- -- (3,396,043) (3,396,043)
---- ------------ ------------ ------------ ------------ ------------ ------------
Balance, August 31, 2002 -- $ 16,254,348 10,263,200 $ 10,570 $ 5,489,737 $(16,852,520) $ (4,902,135)
==== ============ ============ ============ ============ ============ ============
The accompany notes are an integral part of this
combined financial statement.
4
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
COMBINED STATEMENT OF CASH FLOWS
For the Year Ended August 31, 2002
Cash Flows From Operating Activities
Net (loss) from operations $(3,396,043)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization 247,057
Changes in assets and liabilities:
Deferred revenue 232,400
Accounts receivable (929,525)
Inventories (29,844)
Prepaid and other assets (3,700)
Accounts payable and accrued expenses 1,696,970
-----------
Net cash (used in) operations (2,182,685)
-----------
Cash Flows From Investing Activities
Purchase of furniture, equipment and leasehold improvements (504,773)
-----------
Net cash (used in) investing activities (504,773)
-----------
Cash Flows From Financing Activities
Issuance of common stock 307
Exercise of warrants 500,000
Proceeds from convertible notes 1,217,391
Proceeds from long-term debt 2,796,437
Repayments of long-term debt (905,292)
Advances to affiliates (1,565,678)
-----------
Net cash provided by financing activities 2,043,165
-----------
Net (decrease) increase in cash and cash equivalents (644,293)
Cash at beginning of period 1,086,397
-----------
Cash at end of period $ 442,104
===========
Supplemental Disclosure of Cash Flow Information - Continuing
Operations
Cash paid for:
Interest $ 382,765
===========
Income taxes $ 16,000
===========
The accompany notes are an integral part of these
combined financial statements.
5
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE A - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
------------------
The financial statements represent the combination of The Analytica Group, Inc.,
Accent Rx and Accentia, Inc. ("the Company"), three companies under common
ownership. The Companies' mission is to provide a comprehensive specialty
pharmaceutical services company, supporting the product life cycle from
pre-market planning and launch, through distribution and formulary management,
to the point of patient care.
On April 3, 2002, the Analytica Group, Ltd. and subsidiaries ("Analytica Ltd.")
were acquired by Accentia, Inc. ("Accentia"), pursuant to a plan of merger
between Analytica Ltd. and The Analytica Group, Inc. ("Analytica Inc." or the
"Company"), a Florida corporation formed in March 2002 to effect the acquisition
and become the surviving entity. Accentia owns all of the outstanding common
stock of Analytica, Inc.
Pursuant to the acquisition, aggregate consideration paid to Analytica Ltd.
shareholders consisted of $12,173,914 in cash, $_____ of Accentia convertible
promissory notes and $_____ of Accentia convertible preferred stock. Further,
the aggregate face value of the preferred stock shall be adjusted upward or
downward by an amount equal to a true-up adjustment, which will adjust the
overall purchase price, calculated in accordance with a negotiated formula based
on earnings. In connection with the acquisition, all common shares of Analytica
Ltd. outstanding at the effective date of the acquisition were cancelled and
replaced with common shares of Analytica Inc. Accentia has pledged the
outstanding stock of Analytica Inc. as collateral for the Accentia convertible
promissory notes.
The Company also assumed liabilities and insured direct costs associated with
the acquisition totaling $______. The excess of the total acquisition cost over
the fair value of the net assets acquired, in the amount of approximately $11.5
million, has been allocated to goodwill.
The Company provides a range of pharmaceutical research services that include
global health, economic and market research, technology valuation, brand
strategy and decision-support software development. The Company delivers its
consulting services essentially to drug and biotechnology manufacturers to
measure health outcomes and operated primarily within the United States.
Accentia, Inc. was formed as a holding company and was created, in part, to
facilitate the acquisition of the Analytica Group, Inc. and to hold the
operations of the Analytica Group, Ltd. and Accent Rx. The operations of
Accentia, Inc. were immaterial to the combined statement of operations for the
period ended August 31, 2002.
6
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE A - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - Continued
Accent Rx ("the Company", formerly known as American Prescription Providers,
Inc.) is a leading national provider of specialty pharmaceuticals and pharmacy
case management services related to the treatment of patients with high-risk,
high-cost chronic diseases. The Company provides products and services to
HIV/AIDS patients, transplant and dialysis patients, specialized physicians,
centers for excellence, and health plans. Historically, approximately 35% of the
Company's revenue was through mail order and approximately 65% was derived
through retail sales. In February 2001, the Company sold all of the assets of
the retail sales segment. As a result, the Company's revenues during 2002 were
derived through mail orders only.
A Summary of the Companies' significant accounting policies follows:
Combination
-----------
The combined financial statements present the combined accounts of the Companies
and their subsidiaries. All significant intercompany accounts and transactions
have been eliminated.
Cash and Cash Equivalents
-------------------------
For the purpose of reporting the statements of cash flows, the Companies
includes all cash accounts and short-term investments (money market accounts)
that are readily convertible to known amounts of cash with maturities of three
months or less.
Allowance for Doubtful Accounts
-------------------------------
The allowance for doubtful accounts is established through a provision for
losses charged against operations and is maintained at a level that management
considers adequate to absorb potential losses of current trade receivables.
Management's judgment in determining the adequacy of the allowance is based on
the evaluation of individual accounts, the known and inherent risk
characteristics and size of the account, past experience, industry averages and
other relevant factors. Trade receivables are charged against the allowance for
doubtful accounts when management believes that the collectibility is unlikely.
Any subsequent recoveries are credited to the allowance for doubtful accounts
when received.
Inventories
-----------
Inventories of Accent Rx consisting of pharmaceutical products and
over-the-counter consumer items are stated at the lower of cost, determined on
the first-in, first-out basis, or market.
Furniture, Equipment and Leasehold Improvements
-----------------------------------------------
Furniture, equipment and leasehold improvements of the Companies are stated at
cost less accumulated depreciation and amortization. Depreciation and
amortization are provided using the Modified Accelerated Cost Recovery System
("MACRS"), which approximates the straight-line method over the following
estimated useful lives:
7
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE A - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - Continued
Asset Category Years
-------------- -----
Furniture and fixtures 5-7
Machinery and equipment 5-7
Automobiles 3
Leasehold improvements 2-10
Software 3-5
Leasehold improvements are amortized over the shorter of the improvements
estimated economic lives or the related lease terms. Gains and losses are
recognized upon realization. Maintenance and repairs are expensed as incurred
and improvements are capitalized.
Impairment of Goodwill and Long-Lived Assets - On July 20, 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) 141, Business Combinations, and SFAS 142, Goodwill and
Intangible Assets. SFAS 141 is effective for all business combinations completed
after June 30, 2002. SFAS 142 is effective for the fiscal year beginning
September 1, 2002; however, certain provisions of that Statement apply to
goodwill and other intangible assets acquired between July 1, 2001 and the
effective date of SFAS 142.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of. The provisions of the statement are
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company's initial analysis of the affect of SFAS 144 is
that it will not have a material impact on its financial statements.
Income Taxes
------------
The Companies recognize income taxes under the asset and liability method. Under
this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to be applicable to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.
8
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE A - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - Continued
Stock-Based Compensation
------------------------
The Companies account for stock-based awards to employees using the intrinsic
value method in accordance with APB No. 25, Accounting for Stock Issued to
Employees ("APB No. 25"). Under APB No. 25, the Company recognizes no
compensation expense related to employee stock options, unless options are
granted at a price below the market price on the date of grant. The Company has
determined that the pro forma effects on net loss using the provisions of FASB
Statement No. 123 would be negligible. As a result, the disclosures required by
this statement are not presented.
Revenue Recognition
-------------------
Accent Rx maintains mail-order facilities in Edgewood, New York and Tampa
Florida. From these locations, pharmaceuticals are shipped to patients located
in the states in which the Company is licensed to conduct business. Revenue
related to those sales is recognized at the time of shipment. Industry standards
require that once shipped, pharmaceuticals may not be returned. Revenues from
specialty pharmaceutical sales and pharmacy case management are reported at
estimated net realizable amounts from customers, third-party payors, and others
for services rendered.
Revenue for the retail locations was recognized when prescriptions ("Rx's") were
dispensed. In the retail environment, the vast majority of the Rx's were
dispensed and picked-up on the same day. Sales returns are estimated at the
point of sale based on the history of such returns, and have approximated 4.5%
of total sales for the periods ended August 31, 2002 and 2001, respectively.
The Analytica Group, Inc. recognizes revenue as professional services are
performed. Revenue is generated primarily by fixed price contracts and is
recognized over the contract term based on the percentage of services provided
during the period compared to the total estimated services to be provided over
the entire contract. Losses on contracts are recognized during the period in
which the loss first becomes probable and reasonably estimable. Revenue
recognized in excess of billings is recorded as unbilled revenue. Billings in
excess of revenue recognized are recorded as deferred revenue until the above
revenue recognition criteria are met. Reimbursements of project-related costs
are included in revenues. An equivalent amount of these reimbursable costs is
included in cost of services.
Cost of Services
----------------
Cost of services for Analytica Group, Inc. consists of professional compensation
and project-related costs. Professional compensation consists of payroll costs
associated with professional employees to the extent that they are chargeable to
projects. Non-chargeable labor is allocated to selling, general and
administrative expenses based upon utilization. Professional compensation
expense allocated to selling, general and administrative expenses totaled
$82,149 for the eleven months ended August 31, 2002. Project-related costs
consist of out-of-pocket expenses and third-party costs. An equivalent amount of
reimbursable project-related costs is included in revenue.
9
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE A - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - Continued
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Advertising Costs
-----------------
The Companies follow the policy of charging costs of advertising and promotion
to expense as incurred. For the period ended August 31, 2002, advertising was
immaterial to the combined statement of operations. The Companies do not conduct
any direct-response advertising.
NOTE B - OPERATIONAL MATTERS
The accompanying financial statements have been presented on the basis of the
Company continuing as a going concern. For the period ended August 31, 2002, the
Companies had a net loss of $3,396,043, and a working capital deficit of
$3,308,565 at August 31, 2002.
The Companies ability to continue as a going concern is contingent upon the
continued support of the Companies principal shareholders who have supported the
Companies in the past. However, there is no guarantee that the principal
shareholders will continue to fund the Companies' working capital needs over the
next twelve months.
Management's plans consist of various alternatives that include sales of assets
of the Companies, as well as an outright sale of the Companies. There can be no
assurance that management will be able to consummate the sale of any assets or
companies to fund the Companies over the next twelve months.
NOTE C - ACCOUNTS RECEIVABLE
During fiscal 2001, Accent Rx experienced operational difficulties in its
billing and collection departments and a significant amount of receivables were
written off due to these problems. Management believes it has addressed these
operational problems and believes that the valuation allowance provided for
uncollected receivables is adequate.
10
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE C - ACCOUNTS RECEIVABLE - Continued
A summary of the change in the allowance for doubtful accounts for the Companies
is as follows for the year ended August 31, 2002:
Balance, beginning $ (390,130)
Provision charged to income (1,362,227)
Amounts written-off 567,680
-----------
Balance, ending $(1,284,677)
===========
NOTE D - INVENTORIES
Inventories for the Companies consist of the following at August 31:
Pharmaceutical products $365,553
Over-the-counter and other products --
--------
$365,553
========
NOTE E - FURNITURE, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS
Furniture, equipment and leasehold improvements for the Companies consist of the
following at August 31, 2002:
Equipment $ 983,395
Computer software 462,501
Furniture and fixtures 196,707
Leasehold improvements 125,786
-----------
1,768,389
Less accumulated depreciation and amortization (1,221,456)
-----------
Total furniture, equipment and leasehold improvements $ 546,933
===========
NOTE F - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable to major supplier $3,418,432
Other accounts payable 324,427
Accrued expenses 797,699
----------
Accounts payable and accrued expenses $4,540,558
==========
11
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE G - LONG-TERM DEBT
Note (a) $ 3,900,000
Revolving credit facility (b) 2,268,928
Convertible promissory note (c) 1,217,391
-----------
Total 7,386,319
Less: current maturities (3,017,391)
-----------
Long-term maturities $ 4,368,928
===========
(a) On November 30, 1998, Accent Rx entered into a $10.0 million Term Note (the
"Note") with its primary supplier McKesson. The Note bears interest at a
rate of LIBOR plus 3.5%, which is payable in arrears on a monthly basis.
The principal is repaid in quarterly installments of $300,000, with the
balance due and payable on January 1, 2004. In conjunction with the sale of
the retail segment in 2001, Accent Rx paid an additional $2.5 million on
this note. The terms of the note, among other things, restrict additional
borrowings by Accent Rx and require Accent Rx to maintain certain minimum
current ratios and funded debt to earnings before interest, taxes,
depreciation and amortization ("EBITDA") and funded debt to capital levels,
as defined. The obligation under the Note is secured by a lien on
substantially all of Accent Rx's assets and is personally guaranteed by two
of the shareholders of Accent Rx. Interest on this obligation has been paid
through August 31, 2002. At August 31, 2002, Accent Rx was in arrears on
principal payments of $600,000, which is included as current maturities as
of August 31, 2002.
(b) On November 30, 1998, Accent Rx entered into a $10 million Revolving Credit
Facility (the "Revolver", together with the Note, the "Credit Facility")
with McKesson. The Revolver is for working capital loans and bears interest
at the rate of LIBOR plus 3.5% per annum, which is payable in arrears on a
monthly basis. Principal is due and payable on January 1, 2004. In
conjunction with the sale of the retail segment, the revolver was paid down
to reflect the decrease in the borrowing base. The terms of the Credit
Facility, among other things, restrict additional borrowings by Accent Rx
and require Accent Rx to maintain certain minimum current ratios and funded
debt to capital and funded debt to EBITDA levels, as defined. Availability
under this facility is determined by a formula, which considers "eligible"
inventory, accounts receivable, and prescriptions filled as defined. The
borrowing base is approximately $___ million at August 31, 2002. The
obligation under the Revolver is secured by a lien on substantially all of
Accent Rx's assets and is personally guaranteed by the principal
shareholders of Accent Rx. Interest on this obligation has been paid
through August 31, 2002.
Accent Rx was in default of several provisions of the Credit Facility at
August 31, 2002, as well as certain financial covenants. Accent Rx obtained
waivers from McKesson for Accent Rx's default on all financial covenants.
McKesson waived its right to demand payment of the Credit Facility.
12
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE G - LONG-TERM DEBT - Continued
(c) Related to the acquisition as discussed in Note A, on April 3, 2002,
Accentia, Inc. issued promissory notes totaling $1,217,391 to the former
shareholders of Analytica Group, Inc. The notes mature and are payable in
one installment on October 12, 2002, and pay interest at a fixed rate of
3.58%. On or prior to the maturity date, the lender has the option to
convert all or part of the outstanding amount on the note, plus accrued
interest, into Series B convertible stock of Accentia, Inc.
Maturities of long-term debt consist of the following at August 31, 2002:
August 3l,
2003 $3,017,391
2004 4,368,928
2005 -
2006 and thereafter -
-----------
$7,368,319
===========
NOTE H - INCOME TAXES
Net deferred tax assets and liabilities consist of the following components at
August 31, 2002:
Assets:
Allowance for doubtful accounts
Furniture, equipment, and leasehold improvements
Interest
Other
Loss carryforward
Liabilities:
Gain on sale of asset
Less: valuation allowance
During the year ended August 31, 2002, the Companies recorded a valuation
allowance of $_________ against the deferred tax asset to reduce the total to an
amount that management believes will be ultimately realized. Realization of
deferred tax assets is dependent upon sufficient future taxable income during
the period that deductible temporary differences and carryforwards are expected
to be available to reduce taxable income.
13
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE H - INCOME TAXES - Continued
At August 31, 2002, the Companies had net operating loss carryforwards of
approximately $16,431,810 for federal and state purposes, respectively, that
begin to expire in _________.
The income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate to pre-tax income for the years ended
August 31, 2002 due primarily to the increase in the valuation allowance against
the deferred tax asset.
NOTE I - STOCKHOLDERS' EQUITY
Common stock
------------
The Analytica Group, Ltd. has one class of common stock with an aggregate
authorization of 100 shares. Each share of common stock carries equal voting
rights, dividend preferences, and $1.00 par value. Accent Rx has one class of
common stock with an aggregate authorization of 20,000,000 shares. Each share of
common stock carries equal voting rights, dividend preferences, and a par value
of $.001 per share.
Common stock equivalents
------------------------
The Company has the following equity instruments, which are common stock
equivalents ("CSE's"):
Warrants for common shares
--------------------------
In 2002, the principal shareholders of Accent Rx exercised 5,000,000 in warrants
at the exercise price of $.10 per share. Additionally, Accent Rx's primary
supplier has 1.1 million seven-year warrants for the purchase of common shares
at an exercise price of $3.27 per share.
Stock units
-----------
The Board of Directors of Accent Rx may grant up to 526,320 units pursuant to
which an aggregate of approximately 1,052,640 shares of common stock may be
granted. Each unit consists of one common share with an exercise price of $1.00
per share and one warrant to purchase an additional share for $1.00 per share.
Any future grants will be made at the then prevailing valuation for Accent Rx or
current fair market value. These options have a ten-year life and the vesting
period is defined therein. These units may be designated as either: (i)
incentive stock options ("ISO's") under the Internal Revenue Code of 1986, as
amended (the "Code"), or (ii) non-qualified options. ISO's may be granted to
employees and officers of Accent Rx. Non-qualified options may be granted to
consultants, directors (whether or not they are employees), employees, or
officers of Accent Rx. The Board granted 513,172 units for 1,026,344 shares to
certain employees and directors during the nine months ended August 31, 1999,
all of which are cancelled as of August 31, 2001. There are no units outstanding
at August 31, 2002.
14
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE I - STOCKHOLDERS' EQUITY - Continued
Accent Rx adopted a 2001 Stock Option Plan for its management and employees with
a total of two million options. Accent Rx issued options from that plan to
purchase one million shares to its Chief Executive Officer at a price of $.95 in
connection with an executive employment agreement executed in October 2001.
Additionally, 500,000 options from this plan were issued to Accent Rx's chief
financial officer at a price of $.95 in connection with an executive employment
agreement executed in February 2002.
Presented below is a summary of the common stock equivalent transactions
activity for the periods shown:
Weighted
Average
Shares Price Range Price
---------- ----------- --------
CSE's outstanding - August 31, 2000 6,356,580 $.10-3.27 $0.69
Warrants granted 50,000 1.00 1.00
CSE's exercised - - -
CSE's cancelled (256,580) 1.00 1.00
---------- -------- ------
CSE's outstanding - August 31, 2001 6,150,000 .10-3.27 0.68
CSE's granted 1,500,000 .95 .95
CSE's cancelled (50,000) 1.00 1.00
Warrants exercised (5,000,000) .10 .10
---------- -------- ------
CSE's outstanding - August 31, 2002 2,600,000 $.95-3.27 $1.95
========= ======== ====
The following table summarizes information for common stock equivalents
outstanding and exercisable at August 31, 2002.
CSE's Outstanding CSE's Exercisable
------------------------- ------------------------
Weighted
Average Weighted Weighted
Range Remaining Average Average
of Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (Yrs) Price Exercisable Price
----------- ------------ ------------- -------- ----------- --------
$.95 1,500,000 4.00 $ .95 1,000,000 $ .95
$3.27 1,100,000 3.25 $3.27 1,100,000 $3.27
--------- ----------
2,600,000 2,100,000
========= ==========
15
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE I - STOCKHOLDERS' EQUITY - Continued
Preferred Stock
---------------
Accent Rx has one series of preferred stock with the following preferences:
Accentia, Inc. has three series of preferred stock; Series A, Series B and
Series C with the following preferences:
NOTE J - COMMITMENTS AND CONTINGENCIES
Minimum Operating Lease Commitments - The Companies have operating leases for
various facilities, automobiles and machinery and equipment, which expire at
various times through 2009. The annual aggregate rental commitments required
under these leases, except for those providing for month-to-month tenancy, are
as follows:
Fiscal Year Ending August 31, Amount
----------
2003 $ 847,399
2004 721,728
2005 637,445
2006 618,168
2007 608,464
Thereafter 866,180
----------
Total $4,299,384
==========
Rent expense was approximately $524,000 for the year ended August 31, 2002.
16
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE J - COMMITMENTS AND CONTINGENCIES - Continued
The Company executed a sublease for all of its space in November 2001, with
subtenant occupancy beginning in May 2002. The sublease expires in November
2005, with the subtenant having an option to renew until February 2009. In
connection with this sublease, the Company will be liable for the difference in
its lease commitment and the sublease, as follows:
Amount of
Fiscal Year Ending August 31, Sublease
----------------------------- -----------
2003 $ 457,388
2004 320,017
2005 223,682
2006 513,968
2007 608,464
Thereafter 866,180
----------
Total $2,989,699
==========
Litigation
----------
The Companies are, from time to time, involved in litigation relating to claims
arising out of its operations in the ordinary course of business. The Company is
not aware of any such claims at August 31, 2002.
Major Supplier
--------------
Accent Rx entered into a five-year supplier agreement (the "Agreement") with
McKesson. The agreement provides for, but is not limited to, minimum monthly
purchase levels, monthly minimum purchases by location, pricing, and payment
terms, as defined. For the year ended August 31, 2002, Accent Rx purchased
substantially all of its pharmaceuticals from McKesson.
The agreement contains a 2% late fee if Accent Rx is past due with their
obligations. The agreement also contains a service fee of one percent assessed
semi-monthly on all balances past due 15 days or more. The total amount of fees
paid to McKesson under this agreement was approximately $_______ for the year
ended August 31, 2002.
The Agreement also contains provisions that would allow McKesson or Accent Rx to
terminate the agreement at any time if certain conditions are met, unless either
party shall cure the default provision within a thirty-day period. Although
management of the Company believes that the likelihood of the loss of McKesson
as a supplier is not probable, if McKesson terminated the current distribution
relationship with Accent Rx, management believes that it could establish a
similar arrangement with another supplier, as there are several distributors of
pharmaceutical products in the industry.
17
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE J - COMMITMENTS AND CONTINGENCIES - Continued
Employment Agreements
---------------------
As of August 31, 2002, Accent Rx has employment agreements with two executives
of the Company. The employment agreement with Accent Rx's Chief Executive
Officer was effective in September 2001, and terminates in September 2004. The
agreement includes an annual salary of $300,000, adjusted in the future for
certain revenue run rates. The employment agreement with the Company's Chief
Financial Officer was effective in February 2002, and terminates in January
2004, and includes an annual salary of $200,000 subject to adjustment in the
future based on certain revenue run rates.
Analytica Group, Inc. entered into employment contracts with three of the
officers of the Company. Future minimum payments under the employment agreements
as of August 31, 2002 are:
2003 $578,125
2004 635,938
2005 391,738
In March 1999, Analytica Ltd. issued an irrevocable letter of credit, acting as
security, in the amount of $113,000 for the benefit of the lessor under the
terms of an operating lease of its office space. Annually, this letter of credit
is automatically renewed for a period of one year, with a final expiration date
of July 31, 2003. Analytica Ltd. maintained an amount of deposit in a cash
account with the issuing institution that was at least equal to the issuance
amount as collateral for this letter of credit arrangement. The amount deposited
was approximately $122,000 at August 31, 2002.
NOTE K - RELATED PARTY TRANSACTIONS
The Company has a management fee agreement with an affiliate company. This
agreement became effective during 2002, and the Company recognized $400,000 in
management fee income for the period ended August 31, 2002.
18
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
NOTES TO COMBINED FINANCIAL STATEMENTS
August 31, 2002
NOTE L - EMPLOYEE BENEFIT PLAN
The Company maintains a defined contribution plan qualified under Section 401(k)
of the Internal Revenue Code. Any employee who is at least twenty-one years of
age may enroll in the plan. Participants may contribute up to 12% of their
compensation up to a maximum of $11,000. Employer contributions are 50% of
employee contributions, not to exceed 6% of compensation, and are determined
annually. For the period ended August 31, 2002, the Company contributed $6,513.
Participants are always 100% vested in their contributions and earnings. The
employer contributions and earnings are subject to the following vesting
schedule:
Vested
Years of service Interest
---------------- --------
1 0 %
2 0 %
3 100 %
19
Report of Independent Certified Public Accountants
--------------------------------------------------
on Supplementary Information
----------------------------
Board of Directors
The Analytica Group, Inc.,
Accent Rx and Accentia, Inc.
Our audit was made for the purpose of forming an opinion on the basic combined
financial statements taken as a whole of The Analytica Group, Inc., Accent Rx
and Accentia, Inc. for the year ended August 31, 2002, which are presented in
the preceding section of this report and on which we expressed an unqualified
opinion. The supplementary information presented hereinafter is presented for
purposes of additional analysis and is not a required part of the basic combined
financial statements. Such information has been subjected to the audit
procedures applied in the audit of the basic combined financial statements and,
in our opinion is fairly stated, in all material respects, in relation to the
basic combined financial statements taken as a whole.
Tampa, Florida
20
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
COMBINING BALANCE SHEET
August 31, 2002
Analytica Eliminating
Accent Rx Accentia, Inc. Group, Inc. Entries Combined
------------ ------------ ------------ ------------ ------------
ASSETS
Cash and cash equivalents $ 9,482 $ 2,630 $ 429,992 $ -- $ 442,104
Accounts receivable, net 2,404,533 -- 1,685,512 -- 4,090,045
Due from Accentia -- -- 6,251 (6,251) --
Unbilled revenue -- -- 451,180 -- 451,180
Inventories 365,553 -- -- -- 365,553
Prepaid expenses and other
assets 117,884 -- 17,463 -- 135,347
------------ ------------ ------------ ------------ ------------
Current assets 2,897,452 2,630 2,590,398 (6,251) 5,484,229
------------ ------------ ------------ ------------ ------------
Investment in subsidiary -- 12,173,914 -- (12,173,914) --
Investment in affiliate -- 5,311,008 -- (5,311,008) --
Due from related entity -- 400,000 -- -- 400,000
Due from Accentia 400,000 -- -- (400,000) --
Other assets 86,979 -- -- -- 86,979
Capital assets 513,985 -- 32,948 -- 546,933
Goodwill 11,545,715 -- 11,545,715 -- --
------------ ------------ ------------ ------------ ------------
Total Assets $ 3,898,416 $ 17,887,552 $ 14,169,061 $(17,891,173) $ 18,063,856
============ ============ ============ ============ ============
LIABILITIES
Due to Accent Rx $ -- $ 400,000 $ -- $ (400,000) $ --
Other payables 154,145 -- -- -- 154,145
Accounts payable and
accrued expenses 3,970,498 61,907 508,153 -- 4,540,558
Deferred revenue -- -- 1,080,700 -- 1,080,700
Due to related entity -- -- -- -- --
Due from related entity 6,251 -- -- (6,251) --
Convertible notes -- 1,217,391 -- -- 1,217,391
Current maturities of long-term
debt 1,800,000 -- -- -- 1,800,000
------------ ------------ ------------ ------------ ------------
Current liabilities 5,930,894 1,679,298 1,588,853 (406,251) 8,792,794
------------ ------------ ------------ ------------ ------------
Loans payable - Long-term debt 4,368,928 -- -- -- 4,368,928
------------ ------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY
Common stock 10,263 307 100 (100) 10,570
Additional paid-in capital 5,489,737 -- 12,173,814 (12,173,814) 5,489,737
Preferred stock 5,311,008 16,254,348 -- (5,311,008) 16,254,348
Retained earnings (13,456,477) -- -- -- (13,456,477)
------------ ------------ ------------ ------------ ------------
Equity (2,645,469) 16,254,655 12,173,914 (17,484,922) 8,298,178
Net income (3,755,937) (46,401) 406,294 -- (3,396,044)
------------ ------------ ------------ ------------ ------------
Total Stockholders' Equity (6,401,406) 16,208,254 12,580,208 (17,484,922) 4,902,134
------------ ------------ ------------ ------------ ------------
Total Liabilities and
Stockholders' Equity $ 3,898,416 $ 17,887,552 $ 14,169,061 $(17,891,173) $ 18,063,856
============ ============ ============ ============ ============
21
The Analytica Group, Inc., Accent Rx and Accentia, Inc.
COMBINING STATEMENT OF OPERATIONS
August 31, 2002
Analytica Eliminating
Accent Rx Accentia, Inc. Group, Inc. Entries Combined
------------ ------------ ------------ ------------ ------------
Revenues $ 19,134,641 $ -- $ 2,280,794 $ -- $ 21,415,435
Allowance for sales returns and
discounts (591,808) -- -- -- (591,808)
------------ ------------ ------------ ------------ ------------
Net sales 18,542,833 -- 2,280,794 -- 20,823,627
Cost of Goods and Services Sold 16,167,668 -- 843,936 -- 17,011,604
------------ ------------ ------------ ------------ ------------
Gross profit 2,375,165 -- 1,436,858 -- 3,812,023
Administration 3,072,277 31,938 646,660 -- 3,750,876
Bad debt 1,353,304 8,923 -- -- 1,362,227
Occupancy 477,475 -- -- -- 477,475
Sales 576,788 5,540 -- -- 582,328
Depreciation 240,153 -- 6,904 -- 247,057
------------ ------------ ------------ ------------ ------------
Operating expenses 5,719,997 46,401 653,564 -- 6,419,963
Interest expense 411,104 -- -- -- 411,104
Income tax provision-current -- -- 377,000 -- 377,000
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (3,755,936) $ (46,401) $ 406,294 $ -- $ (3,396,043)
============ ============ ============ ============= ============
22
