DNAPrint INVESTMENT AGREEMENT
DATED September 28, 2004
relating to
Biofrontera XX
XXXXX & XXXXX LLP
Frankfurt
10.47.Investment_Agreement.DOC
contents
Clause ge
1. Interpretation...................................................5
2. DNAPrint's Investment............................................6
3. Default of Payment...............................................9
4. The Use of Proceeds.............................................12
5. Silent Partnership..............................................12
6. Representations and Warranties of the Company...................12
7. Guarantee and Undertaking of DNAPrint...........................14
8. Management structure............................................14
9. Transaction Costs...............................................14
10. Bridge Loan Agreement.............................................
11. Additional Financing............................................15
12. SEC Filing......................................................16
13. Obligations of the Company and the parties......................16
14. Press/Media.....................................................17
15. Status of this Agreement........................................17
16. Right to Rescind................................................17
17. Closing.........................................................18
18. General.........................................................19
19. Governing Law and Jurisdiction..................................20
Annex
1. Share Sale and Transfer Agreement...............................22
2. Guarantees......................................................25
3. Due Diligence Index.............................................33
4. Contingent Capital..............................................34
5. Authorized Capital IV...........................................36
6. Authorised Capital III..........................................37
THIS AGREEMENT is made on 28 September, 2004 BETWEEN:
(1) Prof. Xx. Xxxxxxx Xxxxxxx, Xxxxxxxx. 00, 00000 Xxxxxxxxxx, Xxxxxxx;
(2) Dr. Montserrat Xxxxxx-Xxxxxxx, Xxxxxxxx. 00, 00000 Xxxxxxxxxx, Xxxxxxx;
(3) Xxxxxxx Xxxxxxx, 00 Xxxxxxxx Xxx., Xxxxxxxxxx, XX 00000, XXX;
(4) Xxxxxx Xxxxxxxxx, 00 Xxxxxxxx Xxx., Xxxxxxxxxx, XX 00000, XXX;
(5) LeVenture Kapitalbeteiligungsgesellschaft mbH & Co. KG,
Xxxxxxxxx-Xxxxx-Xxxx(xxxx)x 00, 00000 Xxxxxxxxxx, Xxxxxxx; hereinafter
also referred to as LeVenture;
(6) TechnoMedia Kapitalbeteiligungsgesellschaft Koln mbH, Xxxxxxxxxxxxxxxx 0,
00000 Xxxx, Xxxxxxx; hereinafter also referred to as TMK;
(7) 3i Group Investments Limited Partnership, 00 Xxxxxxxx Xxxx, XX0 Xxxxxx
0XX, XX; hereinafter also referred to as 3i;
(8) PRICAP Venture Partners AG, Xxxxxxxxxxxxxxxxx 00, 00000 Xxxxxxx, Xxxxxxx;
(9) TRE Holding AG, Xxxxx 00, 0000 Xxxxxxxxx, Xxxxxxxxxxx;
(10) tbg Technologie-Beteiligungs-Gesellschaft mbH, Xxxxxx-Xxxxxx-Xxxxx 0,
00000 Xxxx, Xxxxxxx; hereinafter also referred to as tbg;
(11) Xx. Xxxxx Xxxxxx, Xx Xxxxxxxxxx 00, 00000 Xxxxxxxx Gladbach;
(12) Xxxxx Xxxxx, Xxxxxxxxx Xxxx(xxxx)x 00, 00000 Xxxxxxxxxx;
(13) Xx. Xxxxxx Xxxxxxxx, Xxxxxxxxxx(xxxx)xxxx 00, 00000 Xxxxxxxxxx;
(14) Xxxx Xxxxxx-Xxxx, Rothbroicher Stra(beta)e 6, 51467 Bergisch Gladbach;
(15) Xx. Xxxxxxxxx Xxxxxxx-Xxxxxx, Ginsterweg 1B, 51427 Bergisch Gladbach;
(16) Xxxxxxxxx Xxxxxxx, Am Xxxxxxx 0, 00000 Xxxx;
(17) Xx. Xxxxxxx Xxxxxxx, Griesberger Xxxx(xxxx)x 00, 00000 Xxxx;
(18) Xx. Xxxxx Xxxxxxx, Xxxxxxxxxxxxx(xxxx)x 00, 00000 Xxxx;
(19) Xxxxxx Hiltawsky, Xxxxxxxxxxxxx(xxxx)x 0, 00000 Xxxx;
(20) Xxxxxx Xxxx, Xxxxxxxxx 000, 00000 Xxxxxxxxxx;
(21) Prof. Xx. Xxxxxx Xxxxxxx, Sonsbecker Stra(beta)e 17, 40547 Dusseldorf;
(22) Heidelberg Innovation BioScience Venture II GmbH & Co. KG, represented by
Heidelberg Innovation Fonds Management GmbH, Xx Xxxxxxxxxxx Xxxx 000,
00000 Xxxxxxxxxx, Xxxxxxx; hereinafter also referred to as BSV II;
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(23) Heidelberg Innovation Parallel-Beteiligungs GmbH & Co. KG a.A.,
represented by Heidelberg Innovation Fonds Management GmbH, Im Xxxxxxxxxxx
Xxxx 000, 00000 Xxxxxxxxxx; hereinafter also referred to as HIPB;
(24) Xxxxxx Xxxxx, Xx Xxxxxxxxxxxxxxxx 00, 00000 Xxxxxxxx-Xxxxxxxx;
(25) Xxxxxxxxxxx XX, Xxxxxxxxxxxx Xxx 000, 00000 Xxxxxxxxxx, Xxxxxxx;
hereinafter also referred to as the Company or Biofrontera AG;
(26) Biofrontera Pharmaceuticals GmbH, Hemmelrather Xxx 000, 00000 Xxxxxxxxxx,
Xxxxxxx; hereinafter also referred to as Biofrontera GmbH;
(27) Biofrontera Discovery GmbH, Xxxxxxxxx Xxx. 000, 00000 Xxxxxxxxxx;
hereinafter also referred to as Biofrontera Discovery GmbH;
(28) DNAPrint genomics, Inc., 000 Xxxxxxxx Xxx. Xxxxxxxxx, XX 00000, XXX;
hereinafter referred to as DNAPrint.
In this Agreement the parties named in (1) to (23) are collectively or
individually referred to as the Current Shareholders. The parties named in (1)
to (23) and (28) are collectively or individually referred to as the
Shareholders.
Unless otherwise specified, any listings in this Agreement include both the
first and the last items specified, e.g. "the parties named in (2) to (9) of the
Preamble" includes both the party named in (2) and the party named in (9), as
well as (3), (4), (5), (6), (7) and (8).
I.
(A) Biofrontera AG is a German stock corporation, registered in the commercial
register of the local court of Cologne under HRB 49717, located in
Leverkusen, with its principal office at Xxxxxxxxxxxx Xxx 000, 00000
Xxxxxxxxxx, Xxxxxxx. Biofrontera AG owns 100% of the shares in Biofrontera
GmbH and Biofrontera Discovery GmbH.
(B) Prior to the capital measures planned in this Agreement, the Current
Shareholders hold shares in the Company as set forth in the following
table:
--------------------------------------------------------------------- -----------------------------------
Shareholder Number of Shares
--------------------------------------------------------------------- -----------------------------------
Prof. Xx. Xxxxxxx Xxxxxxx 403,200 Common Shares
--------------------------------------------------------------------- -----------------------------------
Dr. Montserrat Xxxxxx-Xxxxxxx 25,200 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xxxxxxx Xxxxxxx 12,600 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xxxxxx Xxxxxxxxx 12,600 Common Shares
--------------------------------------------------------------------- -----------------------------------
LeVenture 99,120 Preferred A
63,766 Preferred B
--------------------------------------------------------------------- -----------------------------------
2
--------------------------------------------------------------------- -----------------------------------
Shareholder Number of Shares
--------------------------------------------------------------------- -----------------------------------
TMK 99,120 Preferred A
63,766 Preferred B
--------------------------------------------------------------------- -----------------------------------
3i 191,520 Preferred A
231,587 Preferred B
--------------------------------------------------------------------- -----------------------------------
PRICAP Venture Partners AG 39,480 Preferred A
--------------------------------------------------------------------- -----------------------------------
TRE Holding AG 39,480 Preferred A
--------------------------------------------------------------------- -----------------------------------
tbg Technologie-Beteiligungs-Gesellschaft mbH 89,880 Preferred A
--------------------------------------------------------------------- -----------------------------------
Xx. Xxxxx Xxxxxx 784 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xxxxx Xxxxx 420 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xx. Xxxxxx Xxxxxxxx 308 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xxxx Xxxxxx-Xxxx 196 Common Shares
--------------------------------------------------------------------- -----------------------------------
PD Xx. Xxxxxxxxx Xxxxxxx-Xxxxxx 140 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xxxxxxxxx Xxxxxxx 70 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xx. Xxxxxxx Xxxxxxx 70 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xx. Xxxxx Xxxxxxx 56 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xxxxxx Hiltawsky 14 Common Shares
--------------------------------------------------------------------- -----------------------------------
Xxxxxx Xxxx 14 Common Shares
--------------------------------------------------------------------- -----------------------------------
Prof. Xx. Xxxxxx Xxxxxxx 5,371 Preferred B
--------------------------------------------------------------------- -----------------------------------
BSV II 314,178 Preferred B
--------------------------------------------------------------------- -----------------------------------
HIPB 169,173 Preferred B
--------------------------------------------------------------------- -----------------------------------
Own Shares 756 Common Shares
--------------------------------------------------------------------- -----------------------------------
Share capital 1,862,869
--------------------------------------------------------------------- -----------------------------------
The parties acknowledge that under the current ESOP 4,217 convertible
bonds have been issued, which may require the issuance of another
59,038 Shares. Furthermore, there are further 13,734 convertible bonds
which have not been issued yet under the ESOP and which cannot be
issued anymore since the empowerment elapsed.
3
II.
The parties named in (1) and (2), (5) to (27) and Xxxxxxx Matthey
Pharmaceuticals Materials Inc. (hereinafter referred to as Xxxxxxx Xxxxxxx)
entered into (i) a "Shareholders' Agreement" dated 3 July 2003, (ii) in July
2003 into an "Amendment to Shareholders' Agreement dated 3 July 2003" and (iii)
and an "Investment Agreement" dated 3 July 2003. The parties named in (1), (2)
and (5) to (27) entered into (iv) an "Amendment to Investment Agreement dated 3
July 2003" dated 31 December 2003. In May 2004 the parties named in (3) and (4)
acquired the shares of Xxxxxxx Matthey and took over its rights and obligations
under the agreements named in (i), (ii) and (iii) and became party to the
agreement named in (iv). The agreements named in (i) and (ii) are collectively
referred to as the Shareholders' Agreement. The agreements named in (iii) and
(iv) are collectively referred to as the Investment Agreement.
On the day of the signing of this Agreement the parties named in (1) to (28)
will also enter into an agreement on the accession and second amendment to the
Shareholders' Agreement (hereinafter referred to as the Accession Agreement).
The parties to this Agreement acknowledge that Biofrontera, BSV II, HIPB, TMK,
3i and Prof. Xx. Xxxxxx Xxxxxxx entered into bridge loan agreement on the
granting of a loan amounting up to EUR 1,200,000 dated the same date as this
Agreement (hereinafter referred to as the Bridge Loan Agreement).
4
IT IS AGREED as follows:
1. Interpretation
1.1 In this Agreement the capitalised terms have the following meaning unless
the context requires otherwise:
Additional Payments means additional payments in the sense of Sec. 272
Sub.-sec. 2 No. 4 of the German Commercial Code (HGB);
A Investors means the parties listed in (5) to (10) of the Preamble of
this Agreement or any of their legal successors if the relevant legal
successor becomes A Shareholder, i.e. a holder of Preferred A in the
Company, jointly or individually or both;
Agreement means this DNAPrint Investment Agreement, including any Annexes;
B Investors means the parties listed in (5) to (7), (21) to (23) and (28)
of the Preamble of this Agreement or any of their legal successors if the
relevant legal successor becomes B Shareholder, i.e. a holder of Preferred
B in the Company, jointly or individually or both;
B Shareholders means any or all holders of Preferred B in respect of the
Preferred B held by it or them, jointly or individually or both;
Common Shares means any or all non-par value registered shares with a
proportionate amount of the Company's share capital of 1.00 allotted to
each share in the Company except for Preferred A, Preferred B;
Company or Biofrontera AG means Biofrontera AG, with its principal place
of business at Hemmelrather Xxx 000, 00000 Xxxxxxxxxx, Xxxxxxx and
registered in the commercial register of the local court Cologne under HRB
49717;
Current Shareholders means the parties named in (1) to (23) of the
Preamble of this Agreement or any of their legal successors if the
relevant legal successor becomes shareholder in the Company, jointly or
individually or both;
ESOP means the current employee stock option plan of the Company as
defined in Clause 6 of the Shareholders' Agreement;
Investors means all A Investors and B Investors jointly or individually or
both;
Management Board means the management board of the Company;
Preferred A means any or all non-par value registered shares with a
proportionate amount of the Company's share capital of 1.00
allotted to each share issued by the Company as voting preference shares
class A;
Preferred B means any or all non-par value registered shares with a
proportionate amount of the Company's share capital of 1.00 allotted to
each share issued or to be issued by the Company as voting preference
shares class B;
5
Preferred Shareholders means any or all holders of Preferred A and
Preferred B, jointly or individually or both;
SEC Approval means the approval as defined in Clause 12;
Shares means any or all non-par value registered shares in the Company
with a proportionate amount of the Company's share capital of 1.00
allotted to each share issued or to be issued, including Common Shares,
Preferred A and Preferred B;
Shareholders means the parties named in (1) to (23) and (28) of the
Preamble of this Agreement or any of their legal successors if the
relevant legal successor becomes Shareholder in the Company, jointly or
individually or both;
Silent Partnership I means the participation agreement entered into
between the Company and tbg concerning the formation of a silent
partnership about DM 2 mill. dated 2nd October, 1998 and 10th October,
1998;
Silent Partnership II means the participation agreement entered into
between the Company and tbg concerning the formation of a silent
partnership about DM 3 mill. dated 2nd October, 1998 and 10th October,
1998;
Silent Partnership III means the participation agreement entered into
between the Company and tbg concerning the formation of a silent
partnership about 2,954,800 dated 8th January, 2001;
Subscription Rights means all subscription rights related to Shares;
Subsidiary (or Subsidiaries) means a company (or all companies) in which
the Company has a controlling interest;
Supervisory Board means the supervisory board of the Company;
1.2 Unless otherwise specified, any references to Clauses, Subclauses,
Paragraphs and Annexes are references to clauses, Subclauses, paragraphs
and annexes of this Agreement, e.g. "subject to Subclause 2.7" means
"subject to Subclause 2.7 of this Agreement".
1.3 Where a defined term refers to a word in plural the same term in singular
beginning with a capital letter in this Agreement shall have the same
meaning as the defined term, e.g. "If any Shareholder wishes to dispose"
shall refer to all Shareholders in the sense of this Clause.
2. DNAPrint's Investment
2.1 In a shareholders' meeting to be held immediately after signing of this
Agreement the Current Shareholders shall resolve to increase the share
capital of the Company from 1,862,869 by 2,157,497 to 4,020,366 in return
for cash contributions through the issuance of 2,157,497 non-par value
registered shares as voting preference shares class B with a portion of
the Company's share capital of 1.00 each. The new Preferred B shall be
issued as follows:
(a) The issue price (Issue Price) shall be 1.00 per Preferred B.
(b) Each new Preferred B shall grant one vote.
(c) Each new Preferred B shall grant the right to participate in profits
from 1st January, 2004.
6
2.2 The shareholders' resolution for the capital increase shall provide that
the Current Shareholders waive their subscription rights and that DNAPrint
is eligible to subscribe for all 2,157,497 new Preferred B, indicating the
Issue Price as a pro rata amount of the Company share capital without a
premium, i.e., as 1.00 per share so that the total amount of the Issue
Price is 2,157,497. DNAPrint shall only be obliged and entitled to
subscribe for the new Preferred B if the SEC Approval has been granted.
DNAPrint shall be obliged to subscribe for the new Preferred B without
undue delay, but not later than fifteen (15) days after the SEC Approval.
The corresponding subscription form shall provide that the subscription
shall not be binding if the consummation of the share capital increase is
not registered in the commercial register of the Company within six (6)
months after the capital increase was resolved.
2.3 The total Issue Price shall be paid in three instalments amounting to
833,333, 833,333 and 490,831 respectively. The first instalment is due
five (5) days after subscription and the two subsequent instalments are
due on the same day of the following two months (e.g., if the first
instalment is due on 3 August, the following two instalments are due on 3
September and 3 October). DNAPrint shall pay the total amount of the Issue
Price into the Company's special account for the increase of capital at
Deutsche Bank Leverkusen, account number 704 545 301, bank sorting code
375 700 64.
2.4 The Shareholders agree that in addition to the Issue Price DNAPrint shall
pay an extra amount of 8.27 per share, which shall be recorded as other
Additional Payments (referred to collectively with the Issue Price as the
DNA Purchase Price). The total amount of the Additional Payments is
17,842,500.19. DNAPrint's obligation shall exist exclusively vis-a-vis the
Current Shareholders, but for the sole benefit of the Company. A
corresponding claim of the Company shall not be created.
2.5 The total amount of the Additional Payments shall be paid by DNAPrint in
22 monthly instalments into the Company's account at Sparkasse Leverkusen,
account number 100 119 510, bank sorting code 375 514 40. The first
instalment is due on the same date as the last instalment of the Issue
Price and amounts to 342,502. The other 21 instalments are due on the same
day of the following months and amount to 833,333 each.
2.6 The payment obligations under Subclauses 2.3 to 2.5 shall be discharged
only on the day on which the amount is booked on the respective Company's
account. Payments pursuant to Subclauses 2.3 to 2.5 shall be made by wire
transfer to the Company's respective account free of any fees, costs and
charges and in Euro. DNAPrint shall be entitled to pay any or all
instalments before their respective due dates.
2.7 Each of the Shareholders undertakes individually vis-a-vis every other
Shareholder to do everything necessary or appropriate to carry out the
measures agreed to in Clause 2. In particular the Current Shareholders
undertake to co-operate in the increase of the share capital as described
by exercising their voting rights in the shareholders' meeting of the
Company accordingly and by waiving all their Subscription Rights in
connection with the share capital increase. The Current Shareholders
undertake vis-a-vis each other and the Company not to institute an action
to set aside or to nullify the resolution on the share capital increase
described in Clause 2, and the Current Shareholders hereby waive all
rights they have or might have for whatever reason to challenge or to
apply for the judicial determination regarding the resolution's nullity,
in particular but not exclusively due to or in connection with the
exclusion of their Subscription Rights or the issue price of the new
Preferred B. The Shareholders undertake vis-a-vis each other and the
Company not to institute an action for damages against the Company, its
Management Board, its Supervisory Board, any members of these boards or
each other based on the increase of share capital by issuing new shares in
consideration for cash as foreseen in Clause 2.
7
2.8 After the subscription and the receipt of the first instalment of the
Issue Price the Company shall without undue delay apply for registration
in the commercial register of the resolution on the increase of the share
capital and of the consummation of the increase of share capital in
accordance with Section 188 German Stock Corporation Act. The Company, the
Managers and the Shareholders shall take all measures and make all
declarations necessary or appropriate for the increase of share capital to
become effective.
2.9 Each of the Shareholders undertakes individually vis-a-vis every other
Shareholder to carry out a new shareholders' resolution, should the
resolution under Subclause 2.1 be ineffective for whatever reason.
2.10 Once the increase of share capital described in Subclause 2.1 has become
effective, the Shareholders shall hold shares, each with the portion of
the Company's share capital of 1.00 as set forth in the following table:
------------------------------------------------------------------- -----------------------------------
Shareholder Number of Shares
------------------------------------------------------------------- -----------------------------------
Prof. Xx. Xxxxxxx Xxxxxxx 403,200 Common Shares
------------------------------------------------------------------- -----------------------------------
Dr. Montserrat Xxxxxx-Xxxxxxx 25,200 Common Shares
------------------------------------------------------------------- -----------------------------------
Xxxxxxx Xxxxxxx 12,600 Common Shares
------------------------------------------------------------------- -----------------------------------
Xxxxxx Tomborini 12,600 Common Shares
------------------------------------------------------------------- -----------------------------------
LeVenture 99,120 Preferred A
63,766 Preferred B
------------------------------------------------------------------- -----------------------------------
TMK 99,120 Preferred A
63,766 Preferred B
------------------------------------------------------------------- -----------------------------------
3i 191,520 Preferred A
231,587Preferred B
------------------------------------------------------------------- -----------------------------------
PRICAP Venture Partners AG 39,480 Preferred A
------------------------------------------------------------------- -----------------------------------
TRE Holding AG 39,480 Preferred A
------------------------------------------------------------------- -----------------------------------
tbg Technologie-Beteiligungs-Gesellschaft mbH 89,880 Preferred A
------------------------------------------------------------------- -----------------------------------
Xx. Xxxxx Xxxxxx 784 Common Shares
------------------------------------------------------------------- -----------------------------------
Xxxxx Xxxxx 420 Common Shares
------------------------------------------------------------------- -----------------------------------
Xx. Xxxxxx Xxxxxxxx 308 Common Shares
------------------------------------------------------------------- -----------------------------------
8
------------------------------------------------------------------- -----------------------------------
Shareholder Number of Shares
------------------------------------------------------------------- -----------------------------------
Xxxx Xxxxxx-Xxxx 196 Common Shares
------------------------------------------------------------------- -----------------------------------
PD Xx. Xxxxxxxxx Xxxxxxx-Xxxxxx 140 Common Shares
------------------------------------------------------------------- -----------------------------------
Xxxxxxxxx Xxxxxxx 70 Common Shares
------------------------------------------------------------------- -----------------------------------
Xx. Xxxxxxx Xxxxxxx 70 Common Shares
------------------------------------------------------------------- -----------------------------------
Xx. Xxxxx Xxxxxxx 56 Common Shares
------------------------------------------------------------------- -----------------------------------
Xxxxxx Hiltawsky 14 Common Shares
------------------------------------------------------------------- -----------------------------------
Xxxxxx Xxxx 14 Common Shares
------------------------------------------------------------------- -----------------------------------
BSV II 314,178 Preferred B
------------------------------------------------------------------- -----------------------------------
HIPB 169,173 Preferred B
------------------------------------------------------------------- -----------------------------------
Prof. Xx. Xxxxxx Xxxxxxx 5,371 Preferred B
------------------------------------------------------------------- -----------------------------------
DNAPrint 2,157,497 Preferred B
------------------------------------------------------------------- -----------------------------------
Own Shares 756 Common Shares
------------------------------------------------------------------- -----------------------------------
Share capital 4,020,366
------------------------------------------------------------------- -----------------------------------
The parties acknowledge that under the current ESOP 4,217 convertible
bonds have been issued, which may require the issuance of another 59,038
Shares.
3. Default of Payment
3.1 DNAPrint declares herewith the following:
(a)
(i) DNAPrint consents herewith that the Company may redeem DNAPrint's
Preferred B pursuant to ss. 30 (1) of the Articles of Association
for which DNAPrint did not pay the aggregate DNA Purchase Price in
accordance with this Agreement. The number of Preferred B to be kept
by DNAPrint shall be calculated as follows: the sum of the aggregate
DNA Purchase Price already paid is to be divided by EUR 9.27.
Accordingly, the number of Preferred B to be redeemed is the
difference between the aggregate number of DNAPrint's Preferred B
and DNAPrint's Preferred B to be kept.
(ii) DNAPrint waives any claims for compensation it may have pursuant to
the Company's articles of association.
(iii) DNAPrint consents that the Shareholders' Agreement as amended by the
Accession Agreement shall be amended to reflect the lower number of
Preferred B held by DNAPrint after redemption. The amendments will
be mutually agreed between the parties concerned, taking into
account the number of Preferred B kept by DNAPrint and Subclauses
2.6 and 2.7 of the Shareholders' Agreement as amended by the
Accession Agreement.
9
(b)
(i) DNAPrint authorizes herewith the Company to sell to a third party
determined by the Company the number of DNAPrint's Preferred B for
which DNAPrint did not pay the aggregate DNA Purchase Price in
accordance with this Agreement. The number of Preferred B to be kept
by DNAPrint shall be calculated as follows: the sum of the DNA
Purchase Price already paid is to be divided by EUR 9.27.
Accordingly, the number of Preferred B to be sold by the Company is
the difference between the aggregate number of DNAPrint's Preferred
B and DNAPrint 's Preferred B to be kept. The sale agreement shall
have substantially the form of Annex 1. The total sale price agreed
upon with ------- the third party (the Third Party Sale Price) may
be determined by the Company. The agreement of sale with the third
party shall stipulate that the Third Party Sale Price is paid
directly to the Company. DNAPrint shall not be liable for the
remaining amount if the Third Party Sale Price is lower than the
aggregate DNA Purchase Price that DNAPrint has failed to pay.
(ii) DNAPrint herewith assigns its claim of the Third Party Sale Price to
the Company without any compensation.
(iii) DNAPrint consents that the Shareholders' Agreement as amended by the
Accession Agreement shall be amended to reflect the lower number of
Preferred B held by DNAPrint after the sale. The amendments will be
mutually agreed between the parties concerned, taking into account
the number of Preferred B kept by DNAPrint and Subclauses 2.6 and
2.7 of the Shareholders' Agreement as amended by the Accession
Agreement.
3.2 A statement of the account into which the payment is to be made pursuant
to Clause 2 dated as of the day after expiration of the curing period set
forth in the written demand pursuant to Subclause 3.3 shall suffice as
proof of the non-fulfilment of the DNAPrint payment obligation.
3.3 If DNAPrint is in default with its payment obligations pursuant to Clause
2 in accordance with Section 286 of the German Civil Code (BGB) and the
Company issued a written demand to DNAPrint providing for a ten (10) days
curing period and DNAPrint did not pay the due and demanded payment during
the curing period, the Company is entitled to decide at its sole
discretion whether it will
(a) accept DNAPrint's offer pursuant to Paragraph 3.1(a) and redeem
DNAPrint's Preferred B in accordance with Paragraph 3.1(a); or
(b) accept DNAPrint's offer to sell the shares to a third party as agent
pursuant to Paragraph 3.1(b).
3.4 With respect to half of the amount of each monthly instalment pursuant to
Clause 2 objections against DNAPrint's payment obligations, i.e. against
the corresponding Company's claims cannot be raised unless explicitly
allowed under this Agreement. If DNAPrint does not pay the other half of
the amount of each monthly instalment pursuant to Clause 2 and invokes an
objection the Company shall not be entitled to redeem or sell DNAPrint's
shares pursuant to Clause 3.3 without DNAPrint confirming its consent. The
rights of the Company and DNAPrint to pursue their respective rights
against DNAPrint or the Company, as the case may be, shall remain
unaffected.
10
3.5 DNAPrint undertakes vis-a-vis each of the Current Shareholders to do
everything necessary or appropriate to carry out the measures to which it
obliged itself in Subclause 3.1, in particular to exercise its voting
rights to effect the redemption of its Preferred B, or to the transfer of
its Preferred B or to re-confirm any of its declarations made under
Subclause 3.1, DNAPrint hereby irrevocably authorises 3i, TMK, HIPB and
BSVII, each to act alone, to represent DNAPrint in the relevant
shareholders' meeting; a separate power of attorney to be signed by
DNAPrint is attached as Annex 7. The Current Shareholders waive herewith
any rights they may have based on the principle of non-discrimination
pursuant to sec. 53a AktG in connection with the sale.
3.6 If DNAPrint does not fulfil its payment obligations under Clause 2
pursuant to Subclauses 3.3 and 3.4 DNAPrint undertakes herewith vis-a-vis
the Company and each of its Current Shareholders to exercise its rights as
shareholder of the Company, including its voting rights with regard to
those shares which can be redeemed or sold pursuant to Subclause 3.1 as
follows:
(a) DNAPrint shall lose its voting rights regarding Internal Votes as defined
in the Accession Agreement; and
(b)
(i) DNAPrint shall exercise its voting rights in shareholders' meeting
including the exercise of its voting rights regarding special
resolutions in the meaning of the AktG and the Company's articles of
associations in compliance with the result of the relevant Internal
Vote passed by the B Shareholders other than DNAPrint; or
(ii) If the Shareholders' Agreement as amended by the Accession Agreement
does not provide for an Internal Vote of the B Shareholders with
respect to the specific shareholders' resolution or special
resolution DNAPrint shall exercise its voting rights pursuant to an
internal vote passed by the B Shareholders other than DNAPrint to
which the stipulation regarding the Internal Vote shall apply
mutatis mutandis.
(c) DNAPrint herewith authorises irrevocably 3i, TMK, HIPB and BSVII each to
act alone to represent DNAPrint in shareholders' meeting and to exercise
DNAPrint's voting right in accordance with Paragraphs 3.6(a)-(c) if
DNAPrint does not fulfil its payment obligations pursuant to Subclause
3.3; a separate power of attorney to be signed by DNAPrint is attached as
Annex 8.
3.7 The parties to this Agreement agree that the Company's and the Current
Shareholders' remedies for DNAPrint's failure to pay the DNA Purchase
Price are restricted to those set out in Clause 3 and that other remedies
for DNAPrint's failure to pay the DNA Purchase Price, including but not
limited to, claims for damages (e.g. Sections 280 ff. of the BGB) shall be
excluded. The Company's or the Shareholders' right to set off any
outstanding payment of the DNA Purchase Price with any of DNAPrint's Claim
for Damages in accordance with Clause 6 or the right to withhold
performance of obligations shall remain unaffected..
11
4. The Use of Proceeds
4.1 The proceeds from the share capital increase pursuant to Clause 2, i.e.,
the aggregate Additional Payments pursuant to Subclause 2.4, shall be used
for purposes of funding growth, e.g., for working capital needs, capital
expenditures and the general corporate purposes of the Company, in
accordance with the business plan (Business Plan) to be set up by the
Company without undue delay. The Business Plan shall be agreed upon by the
Company and the B Investors based on an Internal Vote of the B Investors.
4.2 The Shareholders agree to aim for an IPO on a stock exchange in particular
Nasdaq, NYSE or an European stock exchange, whichever may be preferable to
optimise the shareholders' value.
5. Silent Partnership
Tbg's consent to the measures stipulated in this Agreement and in the
Accession Agreement required under the Silent Partnerships I - III, in
particular for the participation of DNAPrint and the increase of the share
capital pursuant to Clause 2.1 has been granted and is herewith confirmed
by tbg.
6. Representations and Warranties of the Company
6.1 Subject to the provisions of this Clause, the Company and its Subsidiaries
jointly and severally guarantee vis-a-vis DNAPrint by way of independent
guarantees within the meaning of Section 311 German Civil Code (BGB) that
the statements set forth in Annex 2 of this Agreement are true and correct
as of the date of the signing of this Agreement.
6.2 Where one or more of the statements set forth in Annex 2 proves to be
untrue or incorrect (for the purposes of this Clause, Breach of
Guarantee), DNAPrint shall have the right to demand the Company or its
Subsidiaries or both to take such measures as required to remedy the
Breach of Guarantee and the Company or its Subsidiaries or both shall be
obliged to remedy this Breach of Guarantee in accordance with the demand,
within an appropriate time period as specified in the demand, and in no
case later than one month after issuance of the demand (the Specified
Period). If the Breach of Guarantee is not remedied by the Company or its
Subsidiaries within the Specified Period, or if such remedy is not
possible, the Company and its subsidiaries shall be jointly and severally
liable to DNAPrint for damages in accordance with the subsequent
Subclauses. The liability is not conditional on any fault or other
responsibility on the part of Company or its Subsidiaries. DNAPrint is
deemed to know the facts that were disclosed in the limited financial,
legal and technical due diligence. The parties agree that Section 442 of
the BGB shall apply with the provision that only the documents marked in
Annex 3 were submitted to DNAPrint and its advisors respectively in the
course of limited financial and legal due diligence and are therefore
deemed to be known by DNAPrint. With regard to technical due diligence,
all documents with regard to which the Company can prove that they were
submitted to DNAPrint or their advisers are deemed to be known by DNAPrint
as well.
6.3 Without prejudice to the obligation of the Company and its Subsidiaries to
remedy a Breach of Guarantee as requested by DNAPrint, DNAPrint shall only
have the right to claim damages (including but not limited to
consequential damages and loss of profits) under Subclause 6.2 if the
aggregate amount of an admissible claim exceeds 100,000 (Claim for
Damages). In the event of an excess of 100,000 they shall have the right
to claim the full amount (and not only the amount exceeding 100,000); the
liability of the Company or its Subsidiaries pursuant to Subclause 6.2
shall in total not exceed the DNA Purchase Price. This limitation does not
apply with respect to liability for legal defects in relation to the
Preferred B. If the aggregate DNA Purchase Price is actually reduced due
to an effective redemption or an effective sale of DNAPrint's Preferred B
pursuant to Clause 3 the liability of the Company or its Subsidiaries
shall be limited to the aggregate DNA Purchase Price actually paid by
DNAPrint.
12
6.4 Should DNAPrint be entitled to a Claim for Damages according to Subclauses
6.1 to 6.3 and 6.6 and 6.7 DNAPrint shall only be entitled to demand
payment of this Claim for Damages up to the amount of the DNA Purchase
Price actually paid on the date on which the Company settles the Claim for
Damages by payment to DNAPrint. Additionally, DNAPrint shall be entitled
to set off its remaining Claim for Damages with outstanding Additional
Payments when due however only with the portion of each monthly instalment
set out in Subclause 3.4 Sentence 2. The Current Shareholders explicitly
agree to such set-off. The right to set-off outstanding Additional Payment
with a Claim for Damages shall also apply for the Company and the Current
Shareholders. The Current Shareholders explicitly agree to such set-off.
6.5 Pursuant to Sub-clauses 6.5 (a) and (b) Professor Xx. Xxxxxxx guarantees
personally by way of independent guarantee that the statements set forth
in Annex 2 (except for the statement under F (4) 3. Sentence) are true and
accurate to the best of his knowledge as of the date of the signing of
this Agreement.
(a) Where one or more of the statements set forth in Annex 2 proves to
be false or inaccurate DNAPrint shall have the right to demand that
Professor Xx. Xxxxxxx bears the costs of remedying the Breach of
Guarantee incurred by the Company, its Subsidiaries or DNAPrint
(Indemnification Claim) if these costs account for a damage of
DNAPrint. Alternatively, if the Breach of Guarantee has not been
remedied within the Specified Period or if this remedy is
impossible, DNAPrint shall have the right to demand that Professor
Xx. Xxxxxxx pays compensation either to the Company and its
Subsidiaries or DNAPrint for the expenditures incurred and damages
suffered due to the Breach of Guarantee (Claim for Damages I).
(b) The liability of Professor Xx. Xxxxxxx shall be limited to
1,000,000. If the aggregate DNA Purchase Price is actually reduced
due to an effective redemption or sale of DNAPrint's Preferred B
pursuant to Clause 3, the liability of the Professor Xx. Xxxxxxx
shall be limited to (euro) 1,000,000 or to the aggregate DNA
Purchase Price actually paid by DNAPrint which ever is lesser.
Professor Xx. Xxxxxxx shall be entitled to compensate DNAPrint by
delivering Shares in Biofrontera at the DNA Purchase Price up to the
amount of 950,000.
6.6 Without prejudice to Subclause 6.5, DNAPrint shall be entitled to claim
the amount payable due to the same Breach of Guarantee (Claim of Damages
and Claim of Damages I) either by the Company, its Subsidiaries or
Professor Xx. Xxxxxxx once only. However, should DNAPrint request
Professor Xx. Xxxxxxx compensate the damages he shall not be entitled to
have recourse to the Company or its Subsidiaries.
6.7 Except as set forth below all rights of DNAPrint in relation to a Breach
of Guarantee are subject to a limitation period of one (1) year beginning
with the signing of this Agreement. In the event of a wilful concealment
of any facts or circumstances of a Breach of Guarantee, a limitation
period of ten (10) years shall apply. With respect to tax guarantees given
under F of Annex 2 the limitation period shall be six months and shall
begin with the issuance of legally valid notification relating to the time
period until signing of this Agreement, which shall not be subject to
verification. The limitation period for tax guarantees shall in no case
exceed 30 years from the signing of this Agreement. The limitation period
shall be interrupted on demand as described in Subclauses 6.2 and 6.5.
13
6.8 The provisions of this Clause relating to the consequences of a Breach of
Guarantee form an integral part of the guarantees and the guarantees are
only given subject to these provisions and limitations. Any other
recourse, including statutory recourse, is excluded.
7. Guarantee and Undertaking of DNAPrint
7.1 DNAPrint warrants that the standby equity distribution agreement mentioned
in Clause 12 is signed until the date of the signing of this Agreement, is
legally binding (subject to the SEC Approval) and enables DNAPrint to
fulfil this Agreement, in particular that there are no side agreements
preventing DNAPrint from fulfilling this Agreement.
7.2 DNAPrint shall use commercially reasonable efforts to have authorized, and
reserved for the purpose of issuance, such number of shares of common
stock as shall be necessary to raise the capital necessary to pay the DNA
Purchase Price in accordance with this Agreement. If at any time DNAPrint
does not have available such shares of common stock, DNAPrint shall call
and hold a special meeting of the shareholders for the purpose of
increasing the number of shares authorized. DNAPrint shall recommend that
the shareholders vote in favour of increasing the number of shares of
common stock authorized.
8. Management structure
8.1 DNAPrint wishes that the current members of the Management Board shall not
be dismissed and that their current competencies shall not be altered. The
Shareholders consent to this. Hence, the Shareholders agree that the terms
of the current service agreements of the members of the Management Board
shall be extended for another five (5) year term at financial conditions
reflecting at least the conditions of the current service agreements and
taking into consideration the position of both within Biofrontera and the
relative position within the Management Board.
8.2 DNAPrint will grant Prof. Xx. Xxxxxxx Xxxxxxx one seat in its board of
directors within one (1) month after the signing of this Agreement.
8.3 To the extent legally permissible each of the Shareholders undertakes
individually vis-a-vis every other Shareholder to do everything necessary
or appropriate to bring into effect Subclauses 8.1 and 8.2.
9. Transaction Costs
Except for the court fees and notary's costs in connection with capital
measures pursuant to this Agreement and amendments to the Articles of
Associations provided for in the Accession Agreement as well as DNAPrint's
costs for legal counsel up to Euro 100,000 which shall be borne by the
Company, the parties shall each bear their own legal and other expenses
concerning the measures foreseen in this Agreement and in the Accession
Agreement of the same date. DNAPrint's costs to be borne by the Company
pursuant the foregoing sentence shall be paid in twelve instalments
(without any interest being owed) and be deducted from the first twelve
(12) instalments of the Additional Payments.
14
10. Bridge Loan Agreement
10.1 The Current Shareholders undertake vis-a-vis each other to pass a
resolution on a contingent capital substantially in the form of Annex 4 in
the Shareholders' meeting in which the share capital increase pursuant to
Clause 2 is resolved.
10.2 The Shareholders agree that the lenders of the Bridge Loan Agreement shall
be entitled to convert any or all outstanding issued instalments and/or
accrued interests pursuant to ss. 8 of the Bridge Loan Agreement by
receiving newly issued Preferred B generated by the use of the authorised
capital created pursuant to Clause 11 for which the lenders shall pay the
lowest possible issue price of (euro) 1.00 for each Preferred B in cash.
The lenders undertake to enter into an agreement between the lenders of
the Bridge Loan Agreement and the remaining Shareholders on the
contribution of lenders' repayment claim of any or all outstanding issued
instalments and/or the accrued interest thereon to the Company pursuant to
the Bridge Loan Agreement, as additional payments in the sense of Sec. 272
Sub.-Sec. 2 No. 4 of the HGB.
10.3 Each of the Shareholders undertakes individually vis-a-vis every other
Shareholder to do everything necessary or appropriate to carry out the
measures agreed to in Clause 10. In particular the Current Shareholders
undertake to co-operate in the passing of the shareholders' resolution as
described in Subclause 10.1 by exercising their voting rights in the
shareholders' meeting of the Company accordingly and by waiving all their
Subscription Rights in connection with the creation or use of the
contingent capital. The Current Shareholders undertake vis-a-vis each
other and the Company not to institute an action to set aside or to
nullify the resolution on the contingent capital described in Clause 10.1,
and the Current Shareholders hereby waive all rights they have or might
have for whatever reason to challenge or to apply for the judicial
determination regarding the resolution's nullity, in particular but not
exclusively due to or in connection with the exclusion of their
Subscription Rights. The Shareholders undertake vis-a-vis each other and
the Company not to institute an action for damages against the Company,
its Management Board, its Supervisory Board, any members of these boards
or each other based on the issuance of convertible bonds or shares as
foreseen in Clause 10.1.
11. Additional Financing
11.1 The Current Shareholders undertake vis-a-vis each other to pass a
resolution on an authorised capital substantially in the form of Annex 5
in the shareholders' meeting in which the share capital increase pursuant
to Clause 2 is resolved .
11.2 The Shareholders agree that the Investors or other investors may invest
into the Company on terms and conditions equivalent to those of this
Agreement (including but not limited to the payment of an Additional
Payment to the Company reflecting the difference between the issuance
price and the pre-money valuation of (euro) 17.6 million) up to the amount
of 5 million in aggregate, based on a pre-money valuation of the Company
of 17.6 million and by receiving newly issued Preferred B during a period
of twelve (12) months after signing of this Agreement. The parties to this
Agreement confirm that 5 million shall be inclusive of any funds
contributed by a conversion of the lenders' repayment claim of the
outstanding issued instalments and/or accrued interest thereon pursuant to
the Bridge Loan Agreement and Clause 10. The Company is only entitled to
use the authorised capital created pursuant to Subclause 11.1 and Annex 4
upon prior approval of the Supervisory Board members nominated by DNAPrint
which shall not be withheld unreasonably. A consent with respect to the
conversion of the lenders' repayment claim of the outstanding issued
instalments and/or accrued interest thereon pursuant to the Bridge Loan
Agreement and Clause 10 is however not required. The Company and the
lenders undertake not to amend the Bridge Loan Agreement without the
consent of the Supervisory Board members nominated by DNAPrint, which
shall not unreasonably be withheld.
15
11.3 Each of the Shareholders undertakes individually vis-a-vis every other
Shareholder to do everything necessary or appropriate to carry out the
measures agreed to in Clause 11. In particular the Current Shareholders
undertake to co-operate in passing of the shareholders' resolution as
described by exercising their voting rights in the shareholders' meeting
of the Company accordingly and by waiving all their Subscription Rights in
connection with the creation and use of the authorised capital. The
Current Shareholders undertake vis-a-vis each other and the Company not to
institute an action to set aside or to nullify the resolution on the
authorised capital described in Clause 11.1, and the Current Shareholders
hereby waive all rights they have or might have for whatever reason to
challenge or to apply for the judicial determination regarding the
resolution's nullity, in particular but not exclusively due to or in
connection with the exclusion of their Subscription Rights or the issue
price of the new shares to be issued by using the authorised capital. The
Shareholders undertake vis-a-vis each other and the Company not to
institute an action for damages against the Company, its Management Board,
its Supervisory Board, any members of these boards or each other based on
the issuance of new shares by using the authorised capital as foreseen in
Clause 11.1.
12. SEC Filing
12.1 The parties to this Agreement acknowledge that DNAPrint has to file with
the US Securities and Exchange Commission a registration statement
registering certain common stock to be issued in connection with a standby
equity distribution agreement to be entered into by DNAPrint and Dutchess
Advisors LLP. The US Securities and Exchange Commission's declaration of
effectiveness of such registration statement is hereinafter referred to as
the SEC Approval.
12.2 DNAPrint undertakes vis-a-vis the Company that it will undertake
everything necessary or appropriate to obtain the SEC Approval including
to file the registration statement pursuant to Subclause 12.1 within ten
(10) business days after the signing of this Agreement. Biofrontera shall
support DNAPrint with regard to obtaining the SEC Approval to the extent
reasonably necessary.
13. Obligations of the Company and the parties
13.1 The parties to this Agreement acknowledge that there might exist an
uncertainty whether the share capital increase of the Company resolved by
its shareholders' meeting on 28 May 2001 amounting to EUR 202 was
consummated by validly registering the consummation with the commercial
register. The Company and the parties to this Agreement therefore
undertake vis-a-vis DNAPrint and vis-a-vis each other to do everything
necessary or appropriate to clear any uncertainties without undue delay
after the signing of this Agreement so that the number of shareholders and
their stockholding in the Company comply to the table of shareholdings
under Section I (B) before subscription by DNAPrint. The Management Board
undertakes to report to the Supervisory Board about the status of the
Company's undertaking regularly to each meeting of the Supervisory Board.
The Company undertakes to indemnify DNAPrint from any liabilities
vis-a-vis and claims from the Company, its Current or previous
Shareholders arising in connection with the capital increase by EUR 202,
any subsequent capital increase or the fulfilment of the Company's
undertaking pursuant to Subclause 13.1 Sentence 2.
16
13.2 The parties to this Agreement acknowledge that the appointment of Xx.
Xxxxx und Professor Xx. Xxxxxxx as managing directors of Biofrontera GmbH
and Biofrontera Discovery GmbH respectively may not have been correct. The
Company undertakes to do everything necessary or appropriate to pursue
that Xx. Xxxxx and Professor Xx. Xxxxxxx are appointed as managing
directors of Biofrontera GmbH and Biofrontera Discovery GmbH appropriately
by Biofrontera AG represented in the respective shareholders meetings of
Biofrontera GmbH and Biofrontera Discovery GmbH by the Supervisory Board
of Biofrontera AG. The Management Board undertakes to report to the
Supervisory Board about the status of the Company's undertaking regularly
to each meeting of the Supervisory Board.
13.3 The parties to this Agreement undertake to perform all such measures which
are necessary and appropriate to ensure the registration of the Silent
Partnership I and the Silent Partnership II which have not yet been
registered with the commercial register.
14. Press/Media
With regard to the fundraising of DNAPrint the Company and DNAPrint shall
without undue delay after signing of this Agreement and in good faith
agree to the content of an initial press release pertaining to the
investment as contained in this Agreement, as well as to the time at which
this press release shall be made. DNAPrint is entitled to publish all
statements which are required under applicable US securities laws and
regulations and stock exchange rules. The Company shall cooperate fully
with DNAPrint in its filing with the US Securities and Exchange Commission
of a current report on Form 8-K disclosing the transaction contemplated by
this Agreement, and any financial statements and other financial
information required to be filed with such report, all in a timely
fashion. The Company shall cooperate, and shall cause its accountants to
cooperate, in the preparation of such financial statements and other
financial information. The parties acknowledge that such filing and the
relationship between the Company and DNAPrint created by this Agreement
will require DNAPrint to file and to make publicly available the text of
this Agreement and any other Agreements executed by DNAPrint in connection
with the transaction contemplated by this Agreement.
15. Status of this Agreement
15.1 The Shareholders will regulate their legal relationship as shareholders of
the Company by entering into the separate Accession Agreement on the same
date as this Agreement.
15.2 The JV Framework Agreement to be entered each by Biofrontera
Pharmaceuticals GmbH and DNAPrint on the same date as this Agreement, this
Agreement and the Accession Agreement shall supersede and replace the
Letter of Intent between DNAPrint and the Company dated 23 June 2004. The
Shareholders' Agreement shall remain effective as amended by this
Agreement and the Accession Agreement. The Investment Agreement is
unaltered by this Agreement and remains effective. The parties to this
Agreement acknowledge that there are no side-agreements to this Agreement.
16. Right to Rescind
16.1 Biofrontera shall have the right to rescind this Agreement in writing if
(a) the SEC Approval is not granted within 130 days after the signing of
this Agreement; or
(b) DNAPrint does not sign the subscription certificate in accordance
with Subclause 2.2; or
(c) DNAPrint does not pay the first installment of the Issue Price
pursuant to Subclauses 2.3 and 2.6.
17
16.2 If Biofrontera rescinds this Agreement the obligations of the Current
Shareholders and the Company pursuant to Clauses 10 and 11 shall survive
mutatis mutandis subject to that the Current Shareholders undertake to
pass the shareholders' resolution substantially in the form of Annex 6
instead of a shareholders' resolution substantially in the form of Annex
5. The preceding sentence shall apply until all obligations pursuant to
this sentence are complied with.
16.3 If the right to rescind is exercised, there shall be no liability or
obligation under or due to this Agreement on the part of either party due
to the rescission.
17. Closing
17.1 The consummation of this Agreement, save for the consummation of the
additional financing set forth in Subclause 17.4, shall take place
20 days after SEC Approval has been granted or such other date as
the parties hereto may agree upon from time to time, however no
later than 31 January 2005 (the Initial Closing). The following
measures and actions shall be taken on or before the Initial
Closing:
(a) The Current Shareholders shall resolve on the following issues:
(i) Appointment of the members of the Supervisory Board nominated
by DNAPrint in accordance with Subclause 2.4 of the
Shareholders' Agreement as amended by the Accession Agreement.
(ii) Amendment of the Articles of Association in accordance with
Subclause 3.1 of the Shareholders' Agreement as amended by the
Accession Agreement.
(b) Subject to the conditions set forth in Subclause 17.2 DNAPrint shall
have signed and delivered a subscription certificate for 2,157,497
Preferred B, provided that such subscription certificate stipulate
that the obligation to subscribe for new shares shall expire 6
months after the capital increase was resolved;
(c) Subject to the conditions set forth in Subclause 17.2 DNAPrint shall
make payment of the first instalment as set forth in Subclause 2.3;
(d) Subject to the fulfilment of the actions set forth under Paragraphs
17.1 (a) through and including 17.1 (c) and subject to the
conditions in Subclause 17.2 below the Company shall apply for
registration of the passed resolutions with the commercial register
as soon as reasonably practicable.
17.2 The actions set forth in Subclause 17.1 are subject to the following
cumulative conditions precedent:
(a) Signing and delivery of the Accession Agreement; and
(b) Signing and delivery of this Agreement by all parties concerned; and
(c) SEC Approval.
Each party to this Agreement shall be entitled to individually rescind
this Agreement by giving notice to the Company, which shall then inform
all other parties to this Agreement, if the Initial Closing has not
occurred until 31 January 2005. Subclauses 16.2 and 16.3 shall apply.
18
17.3 The consummation of the additional financing in accordance with Clause 11,
if any, shall take place on or before 18 September 2005 (the Subsequent
Closing). In particular the following measures and actions shall be taken
on or before the Subsequent Closing:
(a) The subscribers of the newly issued shares ("New Investors") become
a party to this Agreement, and to the Shareholders' Agreement as
amended by the Accession Agreement.
(b) The New Investors sign and deliver subscription certificates for the
shares to the Company.
(c) The New Investors make the payment of the subscription price for the
shares they subscribe for.
(d) Subject to the fulfilment of the actions set forth under Paragraphs
17.3 (a) to 17.3 (d), the Company shall apply for registration of
the passed resolutions with the commercial register as soon as
reasonably practicable.
The consummation of the additional financing shall be deemed to have
failed, and all actions already taken with respect to such consummation
shall be deemed null and void, if the Subsequent Closing has not occurred
until 18 September 2005.
18. General
18.1 The Preferred Shareholders are entitled to transfer their rights deriving
from this Agreement in whole or in part to the entities determined in
Clause 13 of the Shareholders' Agreement. Preferred Shareholders' rights
arising from this Agreement which depend directly or indirectly on the
circumstance that the Preferred Shareholder is a Shareholder may be
transferred to the extent that the right may reasonably be separated from
the holding of the Shares; e.g. claims due to Preference in Proceeds may
be transferred. The Preferred Shareholders shall give notice in writing
about any such transfer to the Company.
18.2 If this Agreements provides that an obligation is undertaken vis-a-vis a
group, e.g. as in Paragraph 2.4 each single person/entity of the group
vis-a-vis whom the obligation was undertaken shall be entitled to enforce
the obligation.
18.3 BSV II and HIPB shall always act through BSV II who is herewith authorized
by HIPB to act in the name and on behalf of HIPB and to act as receiving
agent.
18.4 This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. This Agreement fulfils any written
form requirements or other form requirements requisite for amendments and
additions to the Shareholders' Agreement (such as Clause 24.6 of the
Shareholders' Agreement) and the Investment Agreement (such as Clause 12.5
of the Investment Agreement).
18.5 Each party to this Agreement authorises Biofrontera AG to receive the
respective declaration of will consenting to this Agreement of the other
parties. The parties to this Agreement agree that Biofrontera AG shall
collect and keep the signed copies of this Agreement. Biofrontera AG shall
notify the parties to this Agreement if all parties to this Agreement
consented.
18.6 Amendments and additions to this Agreement are only effective if made in
writing, to the extent that notarisation is not required. The written form
requirement also applies to any waivers, including a waiver of the written
form requirement.
19
18.7 Should individual terms of this Agreement be or become invalid or
unenforceable or should this Agreement contain gaps, the validity of the
remaining terms of the Agreement shall remain unaffected. In place of the
invalid, unenforceable or missing term, a valid term upon which the
parties would have reasonably agreed, had they been aware at the signing
of this Agreement that the relevant term was invalid, unenforceable or
missing, shall be deemed to have been agreed upon. Should a term of this
Agreement be or become invalid because of the scope of performance for
which it provides, then the agreed scope of performance shall be amended
to correspond with the extent legally permitted.
19. Governing Law and Jurisdiction
19.1 This Investment Agreement is governed by and shall be construed in
accordance with the laws of the Federal Republic of Germany.
19.2 To the extent legally permissible, each party submits to the exclusive
jurisdiction of the courts of Frankfurt am Main, Germany for all purposes
relating to this Agreement. The parties waive any objection to the German
courts on grounds that they are an inconvenient or inappropriate forum to
settle any such dispute. DNAPrint shall at any time have appointed an
agent for service of process domiciled in Germany and undertakes to inform
the Company of any change within a period of ten (10) days after the
change has been effected. ss. 170 of the BGB shall remain unaffected.
DNAPrint herewith appoints Mayer, Brown, Xxxx & Maw LLP, Bockenheimer
Xxxxxxxx(beta)e 98-100, 60323 Frankfurt am Main as its agent in Germany
for service of process.
20
Prof. Xx. Xxxxxxx Xxxxxxx Xx. Xxxxxxxxx Xxxxxxx-Xxxxxx
--------------------------------------------------------- ------------------------------------------------------
Dr. Montserrat Xxxxxx-Xxxxxxx Xxxxxxxxx Xxxxxxx
--------------------------------------------------------- ------------------------------------------------------
Xxxxxxx Xxxxxxx Xx. Xxxxxxx Xxxxxxx
--------------------------------------------------------- ------------------------------------------------------
Xxxxxx Xxxxxxxxx Xx. Xxxxx Xxxxxxx
--------------------------------------------------------- ------------------------------------------------------
LeVenture Kapitalbeteiligungsgesellschaft mbH & Co. KG, Xxxxxx Hiltawsky
--------------------------------------------------------- ------------------------------------------------------
TechnoMedia Kapitalbeteiligungsgesellschaft Koln mbH Xxxxxx Xxxx
--------------------------------------------------------- ------------------------------------------------------
3i Group Investments Limited Partnership Prof. Xx. Xxxxxx Xxxxxxx
--------------------------------------------------------- ------------------------------------------------------
PRICAP Venture Partners AG, Heidelberg Innovation BioScience Venture II GmbH &
Co. KG
--------------------------------------------------------- ------------------------------------------------------
TRE Holding AG Heidelberg Innovation Parallel-Beteiligungs GmbH &
Co. KG a.A.
--------------------------------------------------------- ------------------------------------------------------
tbg Technologie-Beteiligungs-Gesellschaft mbH Xxxxxx Xxxxx
--------------------------------------------------------- ------------------------------------------------------
Xx. Xxxxx Xxxxxx Biofrontera AG represented by the Managing Board
--------------------------------------------------------- ------------------------------------------------------
Xxxxx Xxxxx, Biofrontera Pharmaceuticals GmbH
--------------------------------------------------------- ------------------------------------------------------
Xx. Xxxxxx Xxxxxxxx Biofrontera Discovery GmbH
--------------------------------------------------------- ------------------------------------------------------
Xxxx Xxxxxx-Xxxx DNAPrint
--------------------------------------------------------- ------------------------------------------------------
----------
Biofrontera AG represented by the Supervisory Board to the extent rights and
obligations between the Managing Board and the Company are established by this
Agreement.
-
21
Annex 1
Share Sale and Transfer Agreement
between
(1) DNAPrint,
hereafter referred to as DNAPrint or Seller
and
(2) [ ]
hereafter referred to as the Purchaser
Preamble:
The Seller holds o in Biofrontera AG, a German stock corporation registered with
the commercial register of the local court Cologne under HRB 49717, with its
principle office at Hemmelrather Xxx 000, 00000 Xxxxxxxxxx, Xxxxxxx (hereafter
referred to as Biofrontera AG). The share capital of Biofrontera AG amounts to
EUR o and is divided into onon-par value shares with a proportional amount of
the share capital of EUR 1,- each. The shares are in registered form and not
certified; no single or multiple share certificates have been issued. The o held
by the Seller are hereafter referred to as the Shares.
The parties to this Agreement therefore stipulate the following:
1. Sale and Assignment of the Shares
1. Seller herewith sells o Shares to Purchaser including and together with
all ancillary rights and associate rights of the Shares. The Purchaser
accepts herewith the sale of the Shares.
2. Subject to the payment of the Purchase Price the Seller herewith
assigns o Shares to the Purchaser including and together with all
ancillary rights and associates rights of the Shares. The Purchaser
accepts herewith the assignment of the Shares.
3. The right to all results of Biofrontera AG of the current fiscal year
and all possible profits of Biofrontera AG incurred in previous fiscal
years which have not yet been distributed to the shareholders of
Biofrontera AG shall be sold and assigned as well.
2. Purchase Price
1. The total purchase price for the Shares is EUR o (Euro o) (hereafter
referred to as the Purchase Price). The Purchase Price is owed to
Biofrontera AG (Sec. 328 BGB); Biofrontera AG shall have an own right
to demand payment.
2. The Purchase Price becomes due two weeks after the consent requirements
pursuant to Clause 4 have been fulfilled and the Purchaser has been
notified thereof by the Seller. The Purchase Price is to be paid to the
bank Biofrontera AG's account, account number o at o, bank code o.
22
3. Should any relevant tax authority or court rule that the sale and
assignment of the Shares set out in Clause 1 is taxable for VAT, the
Purchaser agrees to pay the VAT to Seller in accordance with such
decision and applicable law.
3. Warranty
The Parties have decided to leave the statutory system of agreements on
qualities and guarantees for the quality of the Shares as well as
section 444 alternative 2 BGB, the applicability of which is in dispute
but which in their view is not applicable, and in their place to
provide for a separate provision of liability as follows:
Seller guarantees the correctness and completeness of the following
statements by means of an independent guarantee promise within the
meaning of section 311 para 1 BGB, which according to the Parties'
express intention does not constitute a guarantee for the quality of
the Shares within the meaning of sections 443 para 1 alternative 1, 444
alternative 2 BGB but a promise which is made from the start only with
the content restricted to the following:
(a) Seller is the holder of the Shares. The Shares are not
encumbered with third parties' rights (except for obligations
under the agreements referred to in Annex 1).
(b) No further warranties and guarantees are granted.
4. Consent Requirements/Assignment of Contract
1. The parties to this Agreement acknowledge that pursuant to Clause 8 (3)
of Biofrontera AG's Articles of Association the assignment of the
Shares requires the consent of Biofrontera AG. Pursuant to Clause 8 (3)
sentence 2 of Biofrontera AG's Articles of Association Biofrontera AG's
management board declares such consent on the basis of a shareholders'
resolution. Additionally, Clause 26 (1) letter f of Biofrontera AG's
Articles of Association provides that the holders of the preferred
shares class B have to consent to the shareholders' resolution as well.
2. This Agreement shall become effective with the receipt of consent of
Biofrontera AG to the Purchaser.
3. The parties of this Agreement agree to enter into an agreement
stipulating the assignment of contracts to which the Seller is party
substantially in the form of Annex 1.
5. Final Provision
1. Costs and expenses in connection with this Agreement, if any, including
the fees of Purchaser's advisers are to be borne by the Purchaser.
2. This Agreement is governed by and shall be construed in accordance with
German law. To the extent legally permissible, jurisdiction for all
disputes arising out of, or in connection with this Agreement shall be
with the competent courts in Frankfurt am Main, Germany.
3. The parties irrevocably waive their right to seek dissolution of this
Agreement after it has been completed.
4. Amendments and additions to this Agreement are only effective if made
in writing, to the extend that notarisation is not required. The
written form requirement also applies to any waivers, including a
waiver of the written form requirement.
23
5. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
6. Should individual terms of this Agreement be or become invalid or
unenforceable or should this Agreement contain gaps, the validity of
the remaining terms of the Agreement shall remain unaffected and in
place of the invalid, unenforceable or missing terms a valid term for
which the parties would have reasonably agreed, had they been aware at
the signing of this Agreement that the relevant term was invalid,
unenforceable or missing, shall be deemed to have been agreed upon.
Should a term of this Agreement be or become invalid because of the
scope of performance for which it provides then the agreed scope of
performance shall be amended to correspond with the extent legally
permitted.
-------------------------- ---------------------------------
place/date o
for and on behalf of
Seller
-------------------------- ---------------------------------
place/date Purchaser
24
Annex 2
Guarantees
For the purposes of this Annex 2 the Company shall mean both
Biofrontera AG and its Subsidiaries, unless expressly stated otherwise.
Reference to the best knowledge of the Company means the best
knowledge of the Company's Management Board and/or managing directors
of the Subsidiaries, as the case may be.
(A) Corporate Law Matters
(1) The Company is validly incorporated and existing. Except as described
in Clause 13 of this Investment Agreement, Annex 2 A.1 completely and
accurately reflects the Company's shareholder structure.
(2) All the issued and outstanding shares of the Company's capital stock
have been duly and validly authorised and issued except as described in
Clause 13 of this Investment Agreement, are fully paid in (including
any applicable share premiums or any payments to the capital reserves
as the case may be), and have not been repaid.
(3) Except as set forth in Annex 2 A.3, there exist no silent partnership
agreements, loans with profit participation, participation rights or
any other rights entitling to a share in the Company's profit, turnover
or liquidation proceeds.
(4) Except as expressly described in this Investment Agreement, the
Shareholders' Agreement as well as the Accession and Second Amendment
to the Shareholders' Agreement and in the articles of association of
the Company, and except as set forth in Annex 2 A.4, there exist,
whether issued or not, no options, warrants or other rights to
purchase, rights conferring an obligation to issue new shares or
granting voting rights or rights to convert any obligation into or
exchange any securities for shares of the Company.
(5) Except as described in Clause 13 of the Investment Agreement, the
entries in the commercial register completely and accurately reflect
the Company's corporate structure. Copies of up-to-date commercial
register extracts are attached as Annex 2 A.5.
(6) The Company's Articles of Association in their version dated
[14.11.2003] have not been modified or amended since. Except as set
forth in Annex 2 A.6, there exist no other agreements between any
shareholders or any third parties and the Company, relating to the
shareholding in the Company.
(7) Except for the silent partnerships mentioned in Annex 2 A.3 and the
shareholdings listed in Annex 2 A.7, the Company does not maintain any
relationships under corporate law with any third parties such as
shareholdings or sub-shareholdings in any other company.
(8) Except as described in Clause 13 of this Investment Agreement, the
statements contained in the Preamble and in the Preamble of the
Shareholders' Agreement dated 3 July 2003 under (A) to (N) are true and
accurate. The Company and Professor Xx. Xxxxxxx undertake to do or
cause to be done everything reasonably necessary that the non-repayable
subsidy of the state North-Rhine-Westphalia which has been granted in
an amount of 4,031,316 will be paid out in accordance with its
terms and will not become repayable.
25
(9) The Company has not been dissolved and has not been the subject of any
action taken to dissolve it.
(10) The Company has full corporate power and authority to own or lease and
to operate its properties and conduct its business as well as to enter
into the DNA Print Investment Agreement and Shareholders' Agreement as
well as the Accession and Second Amendment to the Shareholders'
Agreement and to take all actions set forth therein and such agreements
constitute valid and legally binding obligations of the Company.
(11) All issued and outstanding shares of share capital of subsidiaries of
the Company are owned by the Company free and clear of any security
interest, claim, lien, pledge, other encumbrance or third party rights,
except as provided in this Investment Agreement, the Shareholders'
Agreement as well as the Accession and Second Amendment to the
Shareholders' Agreement.
(12) Except as provided in this Investment Agreement, the Shareholders'
Agreement as well as the Accession and Second Amendment to the
Shareholders' Agreement, the Preferred B issued to DNA Print will be
duly authorised, validly issued, non-assessable and not subject to any
pre-emption rights or other restrictions on transferability,
subscription rights of Current Shareholders or similar rights; the
Preferred B will be issued free from all pledges, adverse claims, liens
and other third party rights of any nature whatsoever and DNA Print
will be entitled to participate in all dividends and other
distributions declared, paid or made after the signing of this
Agreement.
(13) Except for the transfer of the Intellectual Property Rights still
registered or applied for in the name of Biofrontera AG, Biofrontera
AG's operative business has been validly transferred to Biofrontera
Pharmaceuticals GmbH as agreed upon by Biofrontera AG and Biofrontera
Pharmaceuticals GmbH in the Subscription Agreement and Contribution
Agreement dated 19th March, 2002.
(B) Balance Sheet Warranties / Business Plan
(1) The Business Plan of the Company issued in March 2004 which is attached
as Annex 2 B.1 (the "Business Plan"), was prepared by applying the due
care of a diligent businessman, and no facts specifically relating to
the Company have been omitted which, if considered part of the Business
Plan, may have a material adverse impact on the achievability of this
plan and on the Company's financial situation and profits. The factual
information relating to the Company underlying the Business Plan was
true and correct as of its date of issue. The parties are aware of the
fact that there is no guarantee as to the actual development of any
projected figures or, in particular, the attainment of any desired
research results.
(2) The financial statements of the Company for the year ended 31st
December, 2003, prepared in accordance with German GAAP, which are
attached as Annex 2 B.2, for the purposes of this Annex 2 referred to
as the Financial Statements, have been confirmed by an audit . The
Financial Statements accurately reflect the information contained in
the Company's corporate records and documents and were accurately and
completely prepared in accordance with the applicable statutory balance
sheet provisions as well as German generally accepted accounting
principles, observing the principle of balance sheet consistency. The
balance sheet information as at the previous balance sheet date was and
will be used and continued, applying the same legally permissible
valuation principles. All existing valuation options have been applied
and exercised consistently.
26
(3) All reserves and deferrals required pursuant to the applicable
accounting principles under commercial law have been made. Insofar as
such reserves and deferrals are optional, these options have been
exercised in accordance with reasonable judgement of a prudent business
man.
(4) The Biofrontera AG's equity as of 31st December, 2003 amounts to
8,972,576.01.
(C) Financial Situation
(1) All assets which are material in connection with the operation of the
Company, with the exception of any retentions of title under commercial
law, are owned by the Company or used by virtue of contractually agreed
licence rights, and the Company may freely dispose of these assets in
connection with licence rights. Insofar as there exist any customary
security rights (such as under the Loan), these have been created
exclusively with respect to the Company's liabilities. In this respect,
the Company has a right of disposal in its ordinary course of business.
(2) To the Company's best knowledge, there are no obligations of the
Company in connection with any transactions which are likely to cause
any losses.
(3) No insolvency proceedings have been applied for or instituted in
respect of the Company's assets.
(4) The Company has not entered into any commitments under any pension,
old-age or survivors' pension schemes or similar commitments except as
set forth in the attached Annex 2 C.4.
(5) All material assets forming part of the Company's operating assets are
in operating condition subject to ordinary wear and tear.
(6) Between the closing date of the Financial Statements and the date of
the signing of this Agreement no changes have occurred in respect of
the Company's financial situation which, objectively, may be of
material importance with regard to the execution of this Agreement; in
particular, no obligations have been entered into which have not been
set off by reasonable consideration; no assets have been sold without
reasonable and valuable consideration; and no damage or loss has been
sustained which, individually or cumulatively, may have a material
impact on the Company or its financial situation. The Company's
business activities are accurately and truly reflected in the reporting
document, the income statement and cash-flow statement (together
referred to as Current Financial Statements) as set forth in the
attached Annex 2 C.6. These Current Financial Statements were
accurately and completely prepared in accordance with the applicable
statutory balance sheet provisions as well as German general accepted
accounting principles, observing the principle of balance sheet
consistency. As of the date of the Current Financial Statements, there
exist no liabilities other then those indicated in these Current
Financial Statements or reflected as below-the-line-items. All
liabilities have been entered into by the Company have been incurred in
the ordinary course of business.
(7) Between the balance sheet date of the Financial Statements and the date
of the signing of this Agreement, no withdrawals or distributions of
profit (whether in cash or in kind, open or concealed) in respect of
Biofrontera AG have been made or resolved upon.
(D) Contractual Relationships of the Company
(1) All (i) agency, dealer, licence or other agreements relating to
Intellectual Property as defined in E below, research, consultancy,
co-operation as well as (ii) all supply and lease agreements,
obligations to accept or terms and conditions constituting liabilities
in excess of 50,000.00 in an individual case as well as (iii)
any agreements with any shareholder, director, officer, or relatives
within the meaning of Section 15 of the German Tax Code or affiliated
companies within the meaning of Section 15 et seq. German Stock
Corporation Act are listed in Annex 2 D.1. To the best knowledge of the
Company no cases of defective performance have occurred in relation to
any of these agreements, and there exist no circumstances which may
impair or put at risk the unchanged continued existence of these
agreements. To the best knowledge of the Company there are no grounds
for termination for an important reason.
27
(2) Outside the ordinary course of business, no contractually agreed
liabilities have been entered into.
(3) The Company has not issued any guarantees or letters of comfort for the
benefit of any third parties and is not contractually bound to
guarantee the liabilities, or contingent liabilities, of any third
parties.
(4) Except as set forth in Annex 2 D.4, the Company has not drawn upon any
credit facilities.
(5) All employment and service agreements entered into by the Company
providing for an annual remuneration (wage/salary payments, payments in
kind and bonus) in excess of 50,000.00 to the relevant employee
are listed in Annex 2 D.5.
(6) Except as set forth in Annex 2 D.6, no wage and salary increases in
excess of 1,000.00 per employee and month have been promised by
the Company after the balance sheet date in respect of the Financial
Statements.
(7) The Company has applied for, received and used the public subsidies
listed in Annex 2 D.7, exclusively in accordance with the applicable
statutory provisions and in observation of any official orders,
restrictions and impositions. No public grants, in particular subsidies
and/or allowances, are due for repayment by virtue of the execution,
delivery and performance of this Agreement, the Shareholders' Agreement
and the consummation of the transactions contemplated herby and thereby
or on any other grounds.
(8) The Company has not entered into any futures, options or margin
transactions.
(9) The Company has not entered into any agreements that would constitute a
post-formation within the meaning of Section 52 Stock of the AktG.
(E) Copyrights and Intellectual Property Rights
(1) The Company owns, or is licensed to use, all patents, patent
applications, design and utility models, trademarks, service marks,
trade names, copyright, internet domain names, trade secrets,
information, know-how, formulas, recipes, inventions, proprietary
rights and processes and other intellectual property rights, including,
without limitation, all applications therefore, whether registered,
unregistered or otherwise being capable of being protected (the
"Intellectual Property") necessary for the research, development,
commercialisation, marketing and similar activities as now conducted by
the Company and as proposed to be conducted in the Business Plan,
without any conflict with or infringement of the rights of others.
(2) Except as set forth in Annex 2 E.2, the Company is not obligated to
make any payments by way of royalties, profit or margin sharing, fees
or otherwise to any owner or licensor of any other Intellectual
Property, with respect to the use thereof or in connection with the
conduct of its business, or otherwise. Except as set forth in Annex 2
E.2, the Company has not granted any third party any option, license or
other right of any kind to the Intellectual Property.
28
(3) To the Company's best knowledge, there is no infringement by a third
party of any of the Company's rights in the Intellectual Property. The
Company has not received any communications alleging that the Company
has violated or, by conducting its business as proposed in the Business
Plan, would violate any Intellectual Property or other proprietary
rights of any other person or entity, nor is there, to the Company's
best knowledge, any basis for any such violation.
(4) Except for the engagement of Professor Xx. Xxxxxxx with the University
of Bochum and the engagement of Xxx. Xxxx-Xxxxxx regarding her
laboratory, to the Company's best knowledge, none of its key employees
and managing directors is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her
best efforts to promote the interests of the Company or that would
conflict with the Company's business as conducted or as proposed to be
conducted.
(5) Except as set forth in Annex 2 E.5, to the Company's best knowledge its
employees do not own or have rights to any Intellectual Property
(patents, licenses, other intellectual property rights) other than
employee service inventions of which any royalty payment could be
demanded from the Company or the Company's business could be impeded or
prohibited in any material respect. The Company has taken reasonable
measures to be informed by its employees of any free inventions.
(6) Except as set forth in Annex 2 E.6 all reported employee inventions
have been claimed and claims of employees relating to such inventions
have been paid in full at their due dates in accordance with the
agreements entered into between the Company and the respective
employees.
(7) Except as reflected in Annex 2 E.7 and except as provided in this
Investment Agreement and the transactions contemplated therein, the
consummation of the transactions contemplated in this Investment
Agreement does not lead to a loss or an impairment of any of the
Intellectual Property of the Company.
(8) Attached hereto as Annex 2 E.8 is a true and complete list of all
patents, copyrights, registered trademarks, design and utility models
as well as applications therefore owned by the Company.
(9) Attached hereto as Annex 2 E.9 is a true and complete list of all
license and other agreements the Company is a party to with respect to
the Intellectual Property of any third party that is used within the
business of the Company and that is not generally available.
(10) The Company has complied in all material respects with all formalities
and paid all fees due and carried out all necessary actions which a
prudent businessman would take, taking into consideration the economic
significance of the relevant Intellectual Property , to protect and
enforce the Intellectual Property, and has administered such rights in
the ordinary course of business.
(11) Except as disclosed in Annex 2 E.8 attached, no Intellectual Property
is subject to any outstanding judgment or injunction, judicial order or
decree, agreement or encumbrance restricting the use of this right by
the Company or restricting the licensing of this right by the Company
to any third party, and there are no known circumstances which can
reasonably be expected to lead to such proceedings.
29
(12) The Company ensured the use of all Intellectual Property of Biofrontera
AG by Biofrontera Pharmaceuticals GmbH.
(F) Permits, Taxes, Social Security Contributions
(1) The Company has, obtained all material official permits which are
required or material for carrying out and continuing the Company's
current business as well as for the distribution of its products. All
of the said permits and consents were duly applied for, are valid and
effective, and the Company's Management Board, managing directors and
proxies are not aware of anything which may cause these permits or
consents to be revoked or restricted or which may cause any
restrictions to be imposed as a consequence of this Agreement, and no
such measures have been threatened.
(2) All transactions entered into by the Company have been entered into on
an arm's length basis and the consideration (if any) charged or
received or paid the Company on all transactions entered into by it has
been equal to the consideration which might have been expected to be
charged, received or paid (as appropriate) between independent persons
dealing at arm's length and no notice or enquiry by any taxation
authority has been made in connection with any such transaction.
(3) The Company is, to its best knowledge, not liable to pay taxation in
respect of any constructive dividends in any relevant jurisdiction.
(4) Details of all losses available for tax purposes to the Company are set
out in Annex 2 F.4. To the Company' best knowledge and subject to tax
audit all reasonable action has been taken to secure such losses to be
allowed, except for the consummation of the transactions contemplated
by this Investment Agreement There will be no liability of the Company
vis-a-vis the German tax authorities resulting from the spin-off of the
Company's assets to Biofrontera Pharmaceuticals GmbH effected by 1
January, 2002. Notwithstanding this and in case the German tax
authorities will disregard the tax treatment of the spin-off by the
Company ("Reclassification"), any claims resulting from such
Reclassification (i) have been and will be offset against any current
and future loss carry-forwards and/or loss carry-backwards and (ii)
have been and will be offset against any current and future
amortization amounts resulting from the amortization of the goodwill
created by the spin-off. Due to the aforementioned measures the
additional tax burden resulting from a Reclassification will be nil.
(5) Except as set forth in Annex 2 F.5 attached, all taxes, social security
contributions and other public duties, whether owed directly or
indirectly, in particular any corporation tax, turnover tax,
unemployment and pension insurance contributions, wage and salary tax
and all amounts of interest or default interest and surcharges on
arrears in respect of these taxes and duties have been duly declared
and paid when due.
All required declarations towards the competent tax authorities and
social security institutions have been duly made in respect of the
period of time until the signing of this Agreement.
(6) Wage tax and social security audits in respect to the Company have not
resulted in any material objections. No audits by any tax authorities
or social security institutions have been carried out in respect of the
Company and no such audits are currently carried out or pending.
(G) Legal Compliance
(1) To its best knowledge the Company has complied with all material laws
and directives, judgments, orders writs, public agreements, permits and
other authorizations and ordinances issued on that basis, insofar as
they relate to the facilities and business establishments used by it.
The Company has not received any notices to the effect that it is in
breach of any laws or any other provisions enacted under these laws.
30
(2) Except as described in Clause 13 of this Investment Agreement the
offer, authorization and issuance of the Preferred B as contemplated by
this Agreement comply with (i) the Company's Articles of Incorporation,
as amended in accordance with the terms of this Agreement (ii) any
judgement or order statute, rule or regulation to which the Company is
subject or (iii) any material agreement. The execution and performance
of this Agreement and the Shareholders' Agreement and the consummation
of the transactions contemplated hereby and thereby will not affect the
validity of any material agreement to which the Company is subject or
result in a termination right of the other party to such agreement.
(3) The Company has avoided every condition, and has not performed any act,
the occurrence of which would result in the Company's loss of any
material right granted under any license, customer contract or other
agreement.
(H) Legal Disputes
No legal or administrative proceedings or investigations are pending or
have been threatened, and no such proceedings are, to the Company's
best knowledge, foreseen or are to be expected in the light of any
specific circumstances. The Company is not a party or subject to the
provision of any outstanding order, writ, injunction, judgment,
settlement or decree of any court or government agency resulting from a
legal dispute. There is no action, suit proceeding or investigation by
the Company currently pending or that the Company intents to initiate.
(I) General
The documents provided fully reflect the legal relationships and
aspects mentioned in the preceding Guarantees.
(J) Governmental Consents
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any German or
other governmental authority on the part of the Company is or will be
required in connection with the consummation of the transactions
contemplated by this Agreement or the Shareholders Agreement save for
registration of the capital increase and the amendment to the Articles
of Incorporation contemplated hereby and by the Accession and Second
Amendment to the Shareholders' Agreement date 3 July 2003 to be entered
into between the parties with the Commercial Register.
(K) Marketing Rights
Except as set forth in Annex 2 K, the Company has not granted any rights
or options to license, market, produce or sell its products and services
to any other person and is not bound by any agreement that affects the
Company's exclusive right to develop, distribute, market or sell its
products and services.
(L) Outstanding Debt
Except as set forth in Annex 2 L, the Company has no outstanding
indebtedness for borrowed money or pledges, and is not a guarantor or
otherwise contingently liable for any such indebtedness, except
additional indebtedness incurred, assumed or guaranteed since [o] for
immaterial amounts. There exists no default under the provisions of any
instrument evidencing any such indebtedness or of any agreement
relating thereto.
31
(M) Insurance Coverage
The Company maintains in full force and effect insurance coverage that
the Company reasonably believes to be adequate against all liabilities,
claims and risks against which it is customary for comparably situated
companies to insure.
(N) Disclosure
The Company has not knowingly withheld from DNAPrint any material facts
relating to the assets, business, operations, financial condition or
prospects of the Company. No statement in any certificate, annex,
schedule, statement or other document furnished or to be furnished to
DNAPrint pursuant hereto or in connection with the transactions
contemplated hereby knowingly contains any untrue statement of a
material fact or knowingly omits to state any material fact necessary
to make the statements herein or therein not misleading. The financial
and other projections provided to DNAPrint, if any, were prepared in
good faith and based on reasonable assumptions; however, the Company
does not warrant that it will achieve such projections.
32
Annex 3
Due Diligence Index
33
Annex 4
Contingent Capital
(1) The Management Board is authorized to issue, with approval of the
Supervisory Board, until December 31, 2005, in one or several
transactions convertible bonds with an aggregate nominal value of (euro)
60,000 and with a term of up to five years and to grant the holders of
these convertible bonds the right to convert the bonds into non-par value
registered shares as voting preference shares class B having an aggregate
nominal value of (euro) 60,000 (Contingent Capital II) in accordance with
the terms and conditions of the convertible bonds.
(2) The holders of the convertible bonds are granted the right to convert
each convertible bond into one non-par value registered share as voting
preference share class B in accordance with the terms and conditions of
the convertible bonds.
(3) The conversion price to be determined per share of the Company shall
amount to at least (euro) 8.67.
(4) The conversion price can, pursuant to an anti-dilution protection clause
and in accordance with the terms and conditions of the convertible bonds,
be adjusted by a cash payment or reduction of the conversion price upon
exercise of the conversion rights if the Company increases its share
capital or issues further convertible bonds or other bonds and grants
subscription rights to its shareholders but does not grant subscription
rights to the holders of the convertible bonds as they would be entitled
to had they already exercised the conversion rights before the capital
increase or the issuance of further bonds. Instead of a cash payment or a
reduction of the conversion price the conversion ratio may also be
adjusted, to the extend possible, by division by the reduced conversion
price. The terms and conditions for the convertible bonds can also
provide for anti-dilution protection in the case of a capital decrease.
(5) The Management Board is authorized to determine further details of the
issuance and conditions of the convertible bonds, such as interest rate,
issue price, division, exercise price, transferability or conversion
period.
(6) The statutory subscription rights of the shareholders are excluded.
(7) The convertible bonds may only be issued to the following persons and
companies:
o Heidelberg Innovation BioScience Venture II GmbH & Co. KG, Xx
Xxxxxxxxxxx Xxxx 000, 00000 Xxxxxxxxxx, Xxxxxxx.
o Heidelberg Innovation Parallel-Beteiligungs GmbH & Co. KGaA, Xx
Xxxxxxxxxxx Xxxx 000, 00000 Xxxxxxxxxx, Xxxxxxx
o 3i Group Investments Limited Partnership, 00 Xxxxxxxx Xxxx, XX0
Xxxxxx 0XX, XX
o TechnoMedia Kapitalbeteiligungsgesellschaft Koln mbH,
Xxxxxxxxxxxxxxxx 0, 00000 Xxxx, Xxxxxxx
o Prof. Xx. Xxxxxx Xxxxxxx, Sonsbecker Stra(beta)e 17, 40547
Dusseldorf
(8) The share capital of the Company is conditionally increased by up to
(euro) 60,000 by issuance of up to 60,000 non-par value registered shares
as voting preference shares class B (Conditional Capital II). The
conditional capital increase is only implemented to the extend that
holders of convertible bonds which the Management Board may issue in
accordance with the terms of the shareholders' resolution of the
September 18, 2004, exercise their conversion rights. The new shares
participate in profits from the beginning of the fiscal year which is
running when the conversion right is exercised. The Management Board is
authorized to determine further details of the implementation of the
contingent capital increase with approval of the Supervisory Board.
34
(9) ss. 7 of the articles of association is amended by the following
sub-paragraph 4:
"The share capital is conditionally increased by (euro) 60,000
(Conditional Capital II). The conditional capital increase is only
implemented to the extend that holders of convertible bonds which the
Management Board may issue in accordance with the terms of the
shareholders' resolution of September 18, 2004 exercise their conversion
rights. The new shares participate in profits from the beginning of the
fiscal year which is running when the conversion right is exercised. The
Management Board is authorized to determine further details of the
implementation of the contingent capital increase with the approval of
the Supervisory Board.
35
Annex 5
AUTHORIZED CAPITAL IV
(1) The Management Board is authorized to increase the share capital with
the approval of the Supervisory Board until September 17, 2009 in one
or several transactions by an aggregate amount of (euro) 1,078,799 by
issuing up to 1,078,799 new non-par value registered shares as voting
preference shares class A or B each having a calculated nominal value
of (euro) 1.00 against cash payment or contribution in kind (Authorized
Capital IV). The Management Board is expressly authorized to issue the
new shares also at the lowest issue price pursuant to ss. 9 (1) Stock
Corporation Act. The subscription rights of the shareholders are
excluded.
(2) The Management Board is authorized to determine further details of the
shares and the conditions of the share issuance with the approval of
the Supervisory Board.
(3) ss. 7 of articles of association is amended by a new sub-paragraph 8
which reads as follows:
"The Management Board is authorized by resolution of the shareholders'
meeting of September 18, 2004 to increase the share capital of the
Company with the approval of the Supervisory Board until September 17,
2009, in one or several transactions by an aggregate amount of up to
(euro) 1,078,799 by issuance of up to 1,078,799 new non-par value
registered shares as voting preference shares class A or B, each having a
calculated nominal value of (euro) 1.00 against cash payment or
contribution in kind (Authorized Capital IV). The Management Board is
expressly authorized to issue the new shares also at the lowest issue
price pursuant to ss. 9 (1) Stock Corporation Act. The subscription
rights of the shareholders are excluded. Further details of the shares
and the conditions of the share issuance are determined by the Management
Board with the approval of the Supervisory Board."
(4) The Supervisory Board is authorized to adjust the wording of ss. 7 of
the articles of association (share capital) after complete or partial
implementation of the capital increase or after expiration of the
authorization period.
36
Annex 6
Authorised Capital III
First Shareholders' Resolution
(1) The Authorized Capital II is revoked in an amount of EUR 162,000 to the
effect that the highest amount is reduced to EUR 189,722.00 and the
maximum number of shares that can be issued is reduced to 189,722. In all
other respects, the Authorized Capital II remains unaffected.
(2) ss. 7 (6) of the articles of association is newly worded as follows:
"The Management Board was authorized by resolutions of the shareholders'
meetings of July 3, 2003 and September 18, 2004 to increase the share
capital of the Company with the approval of the Supervisory Board until
July 3, 2008 in one or several transactions by up to EUR 189,722 by
issuing up to 189,722 new non-par value registered shares as voting
preference shares class B, each having a calculated nominal value of EUR
1.00 against cash payment (Authorised Capital II). The Management Board
is expressly authorised to issue the new shares also at the lowest issue
price pursuant to ss. 9 (1) Stock Corporation Act. The subscription
rights of the shareholders are excluded. Further details of the shares
and the terms of the share issuance are determined by the Management
Board with approval of the Supervisory Board."
Second Shareholders' Resolution
(1) The Management Board is authorized to increase the Company's share
capital with the approval of the Supervisory Board until September 17,
2009 in one or several transactions by up to EUR 162,000 by issuing up to
162,000 new non-par value registered shares as voting preference shares
class B, each having a calculated nominal value of EUR 1.00 against cash
payment or contribution in kind (Authorized Capital III). The Management
Board is expressly authorized to issue the new shares also at the lowest
issue price pursuant to ss. 9 (1) Stock Corporation Act. The subscription
rights of the shareholders are excluded.
(2) The Management Board is authorized to determine further details of the
shares and the terms of the share issuance with the approval of the
Supervisory Board.
(3) ss. 7 of the articles of association is amended by a new sub-paragraph 7
which reads as follows:
"The Management Board was authorized by shareholders' resolution of
September 18, 2004 to increase the Company's share capital with the
approval of the Supervisory Board until September 17, 2009 in one or
several transactions by up to EUR 162,000 by issuing up to 162,000 new
non-par value registered shares as voting preference shares class B, each
having a calculated nominal value of EUR 1.00 against cash payment or
contribution in kind (Authorized Capital III). The Management Board is
expressly authorised to issue the new shares also at the lowest issue
price pursuant to ss. 9 (1) Stock Corporation Act. The subscription
rights of the shareholders are excluded. Further details of the shares
and the terms of the share issuance are determined by the Management
Board with the approval of the Supervisory Board."
(4) The Supervisory Board is authorized to adjust the wording of ss. 7 of the
articles of association (share capital) after complete a partial
implementation of the capital increase or after expiration of the
authorization period.
37
Annex 7
Power of AttornEy
Power of attorney
We
DNAPrint genomics, Inc.,
000 Xxxxxxxx Xxx.
Xxxxxxxx, XX 00000, XXX
herewith authorize each of the following
3i Group Investments Limited Partnership,
00 Xxxxxxxx Xxxx,
XX0 Xxxxxx 0XX, XX,
TechnoMedia Kapitalbeteiligungsgesellschaft Koln mbH,
Xxxxxxxxxxxxxxxx 0,
00000 Xxxx, Xxxxxxx,
Heidelberg Innovation BioScience Venture II GmbH & Co. KG,
represented by Heidelberg Innovation Fonds Management GmbH,
Im Xxxxxxxxxxx Xxxx 000, 00000 Xxxxxxxxxx, Xxxxxxx, and
Heidelberg Innovation Parallel-Beteiligungs GmbH & Co. KG a.A.,
represented by Heidelberg Innovation Fonds Management GmbH,
Xx Xxxxxxxxxxx Xxxx 000, 00000 Xxxxxxxxxx, Xxxxxxx
- each of them as proxy entitled to represent us alone (each of them
hereinafter referred to as the "Proxy") -
to represent us as shareholder of
Biofrontera AG
with registered seat in Xxxxxxxxxx,
XXX 00000 of the local court Cologne,
51377 Leverkusen,
Hemmelrather Xxx 000,
Xxxxxxx
(hereinafter referred to as the "Company")
38
in and outside of shareholders' meeting of the Company and to
exercise all our rights as shareholder, in particular the voting
right to effect the redemption or sale of our shares pursuant to
Subclauses 3.1 to 3.4. of the DNAPrint Investment Agreement entered
into on 18.09.2004 between the Company, its subsidiaries, its
shareholders and us (DNAPrint Investment Agreement). The Proxy is in
particular authorized for the following:
a) to consent to resolutions concerning the redemption of our
shares,
b) to pass resolutions on share capital increases including
resolutions on the decrease of the share capital;
c) to pass resolutions on the consent of the transfer of our shares
c) to pass resolutions on changes to or on the new formulation of
the articles of association;
d) to waive all requirements as to formalities and notice relating
to the convocation of general meetings;
e) to waive the submission of reports and audits.
To effect the redemption or the sale of our shares the Proxy is
authorized to take all steps to implement all resolutions passed in
shareholders' meetings, execute all agreements and give all
declarations which may be necessary or appropriate in connection
with the redemption of our shares.
The foregoing power of attorney is restricted to the extent that the
Proxy may represent our company only if we are in default with our
payment obligations under the DNAPrint Investment Agreement pursuant
to Subclauses 3.3 and 3.4 of the DNAPrint Investment Agreement . The
Proxy is authorized to represent other shareholders in addition to
us as well.
The Proxy is exempt from the restrictions of self contracting
pursuant to sec. 181 of the German Civil Code. He is authorized to
delegate this power of attorney. The German version of this power of
attorney is authoritative.
The power of attorney is governed by German law.
----------------------- ----------------------
Place Date
on behalf of
39
Annex 8
Power of ATtornEy
Power of attorney
We
DNAPrint genomics, Inc.,
000 Xxxxxxxx Xxx.
Xxxxxxxx, XX 00000, XXX
herewith authorize each of the following
3i Group Investments Limited Partnership,
00 Xxxxxxxx Xxxx,
XX0 Xxxxxx 0XX, XX
TechnoMedia Kapitalbeteiligungsgesellschaft Koln mbH,
Xxxxxxxxxxxxxxxx 0,
00000 Xxxx, Xxxxxxx
Heidelberg Innovation BioScience Venture II GmbH & Co. KG,
represented by Heidelberg Innovation Fonds Management GmbH,
Xx Xxxxxxxxxxx Xxxx 000, 00000 Xxxxxxxxxx, Xxxxxxx
Heidelberg Innovation Parallel-Beteiligungs GmbH & Co. KG a.A.,
represented by Heidelberg Innovation Fonds Management GmbH,
Xx Xxxxxxxxxxx Xxxx 000, 00000 Xxxxxxxxxx, Xxxxxxx
- each of them as proxy entitled to represent me/us alone (each of
them hereinafter referred to as the "Proxy") -
to represent us as shareholder of
Biofrontera AG
with registered seat in Xxxxxxxxxx,
XXX 00000 of the local court Cologne,
51377 Leverkusen,
Hemmelrather Xxx 000,
Xxxxxxx
(hereinafter referred to as the "Company")
in and outside of shareholders' meeting of the Company and to
exercise all our rights as shareholder, in particular the voting
right and to pass resolutions of any kind. The Proxy is in
particular authorized for the following:
40
a) to consent to resolutions concerning the redemption of our
shares,
b) to consent to resolutions concerning the consent to the sale of
our shares
c) to pass resolutions on share capital increases including
resolutions on authorized capital;
d) to pass resolutions on changes to or on the new formulation of
the articles of association;
e) to waive all requirements as to formalities and notice relating
to the convocation of general meetings;
f) to waive the submission of reports and audits.
To implement all the resolutions passed in shareholders' meeting the
Proxy is authorized to take all steps, execute all agreements and
give all declarations which may be necessary or appropriate in
connection with our position as shareholder.
The foregoing power of attorney is restricted to the extent that the
Proxy may represent our company only if we are in default with our
payment obligations under the DNAPrint Investment Agreement entered
into on 18.09.2004 between the Company, its subsidiaries, its
shareholders and us (DNAPrint Investment Agreement) pursuant to
Subclauses 3.3 and 3.4 of the DNAPrint Investment Agreement . The
foregoing power of attorney is further restricted to the extent that
the Proxy may represent us only with respect to those shares and may
only exercise the voting rights of those shares which are subject to
a redemption or sale pursuant to Subclauses 3.1-3.4 of the DNAPrint
Investment Agreement. The Proxy is authorized to represent other
shareholders in addition to us as well.
The Proxy is exempt from the restrictions of self contracting
pursuant to sec. 181 of the German Civil Code.
He is authorized to delegate this power of attorney. The German
version of this power of attorney is authoritative.
The power of attorney is governed by German law.
Place, Date
41
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