Effective September 28, 2004, the Registrant entered into an Investment Agreement (the "Biofrontera Agreement") with Biofrontera AG, a German corporation ("Biofrontera") and the shareholders of Biofrontera. Prior to entering into the investment agreement, Richard Gabriel, the Registrant's chief executive officer and a director, and Monica Tamborini, the Registrant's chief financial officer, each owned less than 1% of the outstanding equity securities of Biofrontera.
Pursuant to the Biofrontera Agreement, the Registrant has agreed to purchase certain Series B preferred shares of Biofrontera. The purchase of the shares would give the Registrant an equity interest of approximately 51% in Biofrontera. The purchase price of the shares is 20 million Euro, payable in monthly installments of 833,333 Euro over a period of 24 months. The transaction will not close, and the Registrant's payment obligation does not begin, until after the effectiveness of a registration statement to be filed under the Securities Act of 1933 by the Registrant with respect to the Dutchess Agreement, described in this Current Report under the caption "Dutchess Agreement."
In the event that such registration statement does not become effective on or before February 7, 2005, the Biofrontera Agreement will terminate without liability to either party. Once the registration statement has become effective, the Registrant is obliged to consummate the acquisition of the shares, and Biofrontera will issue all of the shares to the Registrant. In the event the Registrant defaults in payment of the purchase price installments, Biofrontera has the right to redeem from the Registrant those shares as to which the purchase price has not been paid in full. In no event does Biofrontera have the right to recover the unpaid purchase price from the Registrant in cash.
The Registrant has the right to nominate two members of the six-person Biofrontera board. In addition, a representative of Biofrontera, Professor Doctor Herman Luebbert will join the Registrant's board of directors after the closing of the transaction. If the Registrant fails to pay the full purchase price for the Biofrontera shares, the Registrant forfeits its right to appoint such board members.
It time for DNAP to pull a rabbit ( MONEY ) out of the hat .
