STANDSTILL AGREEMENT WITH RESPECT TO CONVERSION RIGHTS, AS AMENDED
Exhibit
10.2
STANDSTILL
AGREEMENT WITH RESPECT TO CONVERSION RIGHTS,
AS
AMENDED
BioChemics,
Inc., a Delaware corporation (“BioChemics”), is the holder of 4,500,000 shares
of Class B Common Stock, par value $0.0001 per share (the “Class B Common
Stock”), of Vaso Active Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), which amount constitutes all outstanding shares of Class B Common
Stock. As of the date of this agreement, BioChemics holds approximately a 45%
economic interest in the Company.
Pursuant
to Section B(6) of Article Fifth of the Company’s Amended and Restated
Certificate of Incorporation, as amended (the “Certificate of Incorporation”),
each share of Class B Common Stock is convertible, at the option of its holder,
at any time into one fully-paid and non-assessable share of the Company’s Class
A Common Stock, par value $0.0001 per share (the “Class A Common Stock”).
Consequently, as the holder of all outstanding shares of Class B Common Stock,
BioChemics has the right at any time to convert ( the “Conversion Rights”) any
or all of its shares of Class B Common Stock to an equivalent number of shares
of Class A Common Stock.
BioChemics
agrees that it will not exercise the Conversion Rights for a specified period
of
time.
The
desirability of this agreement results from the Company’s August 2005 private
financing with certain institutional investors. The Company is obligated to
reserve a certain number of shares of Class A Common Stock under that certain
Securities Purchase Agreement, dated as of August 12, 2005 (the “Purchase
Agreement”) for issuance in connection with convertible notes and warrants that
have been and may be issued to the investors under the Purchase Agreement.
The
agreement of BioChemics hereunder is for the purpose of inducing the investors
to acknowledge that the Company has satisfied the requirements of Section 4.5(a)
of the Purchase Agreement relating to the availability of sufficient authorized
shares of Class A Common Stock for issuance under the Purchase Agreement. This
acknowledgement, if given, would preclude the investors from taking certain
actions under Section 4.5(c) of the Purchase Agreement including, in the case
of
a breach of Section 4.5(a) of the Purchase Agreement, the imposition of a
substantial monetary penalty.
Because
it holds a substantial ownership interest in the Company, BioChemics
acknowledges that it would receive significant direct and indirect benefits
if
the investors were to acknowledge that the Company has satisfied the
requirements of Section 4.5(a) of the Purchase Agreement relating to the
availability of sufficient authorized shares of Class A Common Stock for
issuance under the Purchase Agreement.
1. Based
upon the foregoing, and other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, BioChemics hereby agrees, subject
to paragraph 2 below, not to exercise the Conversion Rights commencing on the
date of this agreement and terminating upon the effectiveness of an amendment
to
the Certificate of Incorporation increasing the authorized shares of Class
A
Common Stock by 20,000,000 shares to 60,000,000 shares.
2.
If the
described amendment to the Certificate of Incorporation does not become
effective by December 31, 2005, this agreement will automatically terminate
at
5:00 p.m. on December 31, 2005, without any further action by or obligation
of
BioChemics.
IN
WITNESS WHEREOF, the undersigned has executed this Standstill Agreement as
of
October 13, 2005.
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BIOCHEMICS,
INC.
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By:
/s/
Xxxx X. Masiz
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Xxxx
X. Masiz, President
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Accepted
and Acknowledged:
VASO
ACTIVE PHARMACEUTICALS, INC.
By:
/s/
Xxxxxx Xxxxxxxxxx
Xxxxxx
Xxxxxxxxxx, President
