EXHIBIT 2.1
MERGER AGREEMENT AND PLAN OF REORGANIZATION
July 3, 2003
by and among
Pinoak, Inc., a Nevada corporation ("Pinoak"),
Nutri Pharmaceutical Research, Inc.
a Nevada corporation ("NPRI"),
MERGER AGREEMENT AND PLAN OF REORGANIZATION
MERGER AGREEMENT AND PLAN OF REORGANIZATION made as of July 3, 2003,
by and among Pinoak, Inc., a Nevada corporation ("Pinoak"), having its
principal place of business at 00000 X Xxxxx, Xxxx, XX 00000 and Nutri
Pharmaceutical Researh, Inc., a Nevada corporation ("NPRI"), having its
principal place of business at 0000 Xxxxxxx Xxxxxx, Xxxxx 0, Xxx Xxxxx, XX
00000.
WHEREAS, Pinoak is authorized to issue 20,000,000 shares of common
stock, par value $0.001 per share (the "Pinoak common Stock"), of which
2,000,000 shares are issued and outstanding on the date hereof (the
"Outstanding Pinoak Shares"), and 5,000,000 shares of preferred stock are
authorized, par value $0.001 per share (the "Pinoak Preferred Stock"), none of
which are issued and outstanding. Under Rule 419, 2,399,334 shares were
purchased by the investors, these shares are being held in on the date hereof;
WHEREAS, NPRI is authorized to issue 20,000,000 shares of its common
stock, par value $0.001 par value ("NPRI Common Stock"), and 5,000,000 shares
of preferred stock are authorized, par value $0.001 per share (the "NPRI
Preferred Stock"), none of which are issued and outstanding, on the date
hereof;
WHEREAS, the respective Boards of Directors of Pinoak and NPRI, deem
it advisable and generally to the advantage and welfare of Pinoak and NPRI and
their respective shareholders that NPRI be merged with and into Pinoak under
the terms and conditions hereinafter set forth (the "Merger"), the Merger to be
effected pursuant to the Nevada General Corporation Law (the "NGCL") and to be
a tax free reorganization under Section 368(a)(1)(A) of the Internal Revenue
Code of 1986, as amended (the "Code"),
NOW, THEREFORE, in consideration of the premises, the parties hereto
do mutually agree as follows:
1. VOTE ON MERGER.
--------------
(a) As soon as practicable after the date hereof, Pinoak
shall cause a special meeting of its shareholders to be held to consider and
vote upon the transactions contemplated by this agreement, including but not
limited to the Merger, the change of Pinoak's name to " Nutri Pharmaceutical
Research, Inc." the authorization of additional shares of Pinoak Common Stock,
amendments to Pinoak, Inc.'s certificate of incorporation and by-laws
(collectively, the "Shareholder Matters"). Pinoak shall promptly take such
actions as may be necessary to effect the foregoing, including filing and using
its commercially reasonable best efforts to cause to be declared effective a
Post-Effective Amendment to its Form SB-2 Registration Statement, File No. 333-
76242 (the "Post-Effective Amendment") pursuant to Rule 419 ("Rule 419") under
the Securities Act of 1933, as amended (the "Securities Act").
(b) As soon as practicable after the date hereof, but in no
event after October 24, 2003, Pinoak shall obtain the written consent of its
shareholders to approve the Merger.
B-1
(c) If the Merger and the other Shareholder Matters are
approved by the shareholders of Pinoak in accordance with the laws of the
State of Nevada and the requirements of Rule 419, subject to the further
conditions and provisions of this Agreement, a closing of the transactions
contemplated by this Agreement shall be held (the "Closing"), and a certificate
of merger and all other documents or instruments deemed necessary or
appropriate by the parties hereto to effect the Merger shall be executed and
filed with the Secretary of State of the State of Nevada as promptly as
possible thereafter. The certificate of merger (the "Certificate of Merger")
so filed shall be in the form as the Boards of Directors of Pinoak and NPRI
shall mutually approve. The date and time that such Certificate of Merger is
accepted for filing by the Secretary of State of Nevada shall be the "Effective
Time."
(e) EFFECT OF THE MERGER. At the Effective Time, the effect
of the Merger shall be as provided in this Agreement and the applicable
provisions of the NGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of Pinoak and NPRI shall vest in NPRI as the surviving
corporation in the Merger (referred to hereinafter sometimes as the "Surviving
Corporation"), and all debts, liabilities and duties of Pinoak and NPRI shall
become the debts, liabilities and duties of the Surviving Corporation.
(f) CERTIFICATE OF INCORPORATION; BYLAWS.
------------------------------------
(1) At the Effective Time, the Certificate of
Incorporation of Pinoak, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Certificate of Incorporation of
the Surviving Corporation.
(2) The Bylaws of Pinoak, as in effect immediately
prior to the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended.
(g) DIRECTORS AND OFFICERS. The initial directors of the
Surviving Corporation shall be the directors of NPRI immediately prior to
the Effective Time, until their respective successors are duly elected or
appointed and qualified. The initial officers of the Surviving Corporation
shall be the officers of NPRI immediately prior to the Effective Time, until
their respective successors are duly appointed.
(h) EFFECT ON CAPITAL STOCK. Subject to the terms and
conditions of this Agreement, at the Effective Time, by virtue of the Merger
and without any action on the part of Pinoak, NPRI or the holders of any of
the following securities, the following shall occur:
B-2
(1) CONVERSION OF NPRI COMMON STOCK. Each share
of NPRI Common Stock issued and outstanding immediately prior to the
Effective Time will be canceled and extinguished and automatically converted
into the right to receive one share (the "Common Stock Exchange Ratio"), which
represents 8,000,000 shares of Pinoak common Stock upon surrender of the
certificate representing such share of NPRI Common Stock in the manner provided
in Section 1(j) (or in the case of a lost, stolen or destroyed certificate,
upon delivery of an affidavit (and bond, if required) in the manner provided in
Section 1(l)). The Pinoak shares will be issued to the
NPRI shareholders on their pro-rata ownership basis of NPRI.
(2) FRACTIONAL SHARES. No fraction of an Pinoak
Share will be issued by virtue of the Merger, but in lieu thereof the number of
shares of Pinoak Shares shall be rounded up to the nearest whole number.
(j) SURRENDER OF CERTIFICATES.
-------------------------
(1) EXCHANGE AGENT. NPRI shall select a bank,
trust company or bonded/licensed escrow company to act as the exchange agent
(the "Exchange Agent") in the Merger.
(2) PINOAK TO PROVIDE PINOAK SHARES. As
promptly as practicable after the Effective Time, Pinoak shall make available
to the Exchange Agent for exchange in accordance with this Article I, that
number of Pinoak Shares as is issuable pursuant to Section 1(h) in exchange
for outstanding shares of NPRI Common Stock and NPRI Preferred Stock and
any dividends or distributions to which holders of shares of NPRI Common
Stock and NPRI Preferred Stock may be entitled pursuant to Section 1(j)(4).
(3) EXCHANGE PROCEDURES. As soon as practicable
after the Effective Time, Pinoak shall cause the Exchange Agent to mail to each
holder of record (as of the Effective Time) of a certificate or certificates
(the "Certificates"), which immediately prior to the Effective Time represented
outstanding NPRI Shares whose shares were converted into the right to receive
Pinoak Shares pursuant to this Agreement, and any dividends or other
distributions pursuant to Section 1(j)(4), (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall contain such other provisions as
Pinoak may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing Pinoak
Shares and any dividends or other distributions pursuant to Section 1(j)(4).
Upon surrender of Certificates for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Pinoak, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
Pinoak Shares into which their NPRI Shares were converted at the Effective Time
and any dividends or distributions payable pursuant to Section 1(j)(4), and the
Certificates so
B-3
surrendered shall forthwith be canceled. Until so surrendered, outstanding
Certificates will be deemed from and after the Effective Time, for all
corporate purposes, subject to Section 1(j)(4) as to the payment of dividends,
to evidence only the ownership of the number of full Pinoak Shares into which
such NPRI Shares shall have been so converted and any dividends or
distributions payable pursuant to Section 1(j)(4).
(4) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES
AND ADDITIONAL MERGER CONSIDERATION. No dividends or other distributions
declared or made after the date of this Agreement with respect to Pinoak Shares
with a record date after the Effective Time will be paid to the holders of any
unsurrendered Certificates with respect to the Pinoak Shares represented
thereby until the holders of record of such Certificates shall surrender such
Certificates. Subject to applicable law, following surrender of any such
Certificates, the Exchange Agent shall promptly deliver to the record holders
thereof, without interest, certificates representing whole Pinoak Shares issued
in exchange therefor along with the amount of any such dividends or other
distributions with a record date after the Effective Time payable with respect
to such whole Pinoak Shares.
(5) TRANSFERS OF OWNERSHIP. If Pinoak Shares are
to be issued in a name other than that in which the Certificates surrendered in
exchange therefor are registered, it will be a condition of the issuance
thereof that the Certificates so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the persons requesting such
exchange will have paid to Pinoak or any agent designated by it any transfer or
other taxes required by reason of the issuance of Pinoak Shares in any name
other than that of the registered holder of the Certificates surrendered, or
established to the satisfaction of Pinoak or any agent designated by it that
such tax has been paid or is not payable.
(6) REQUIRED WITHHOLDING. Each of the Exchange
Agent, Pinoak and the Surviving Corporation shall be entitled to deduct and
withhold from any consideration payable or otherwise deliverable pursuant to
this Agreement to any holder or former holder of NPRI Shares such amounts as
may be required to be deducted or withheld therefrom under the Code or under
any provision of state, local or foreign tax law. To the extent such amounts
are so deducted or withheld, such amounts shall be treated for all purposes
under this Agreement as having been paid to the person to whom such amounts
would otherwise have been paid.
(7) NO LIABILITY. Notwithstanding anything to the
contrary in this Section 1(j)(7), neither the Exchange Agent, Pinoak, the
Surviving Corporation nor any party hereto shall be liable to a holder of
Pinoak Shares or NPRI Shares for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(k) NO FURTHER OWNERSHIP RIGHTS IN NPRI SHARES. All Pinoak
Shares issued in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such NPRI
Shares, and there shall be no further registration of transfers on the records
of the Surviving Corporation of NPRI Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
B-4
(l) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that
any Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, certificates
representing the Pinoak Shares into which the NPRI Shares represented by such
Certificates were converted pursuant to Section 1(h) and any dividends or
distributions payable pursuant to Section 1(j)(4); provided,
however, that Pinoak may, in its discretion and as a condition precedent to
the issuance of such certificates representing the Pinoak Shares, cash and
other distributions, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Pinoak, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
(m) TAX CONSEQUENCES. The parties hereto intend that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Income Tax Regulations.
(n) TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of Pinoak and NPRI, then Pinoak and NPRI will
cause their respective current officers to take all such lawful
and necessary action. Pinoak shall perform all of its obligations relating to
this Agreement and the transactions contemplated hereby.
2. REPRESENTATIONS AND WARRANTIES BY NPRI. NPRI represents and
warrants as follows:
(a) NPRI is a duly organized and validly existing
corporation in good standing under the laws of the State of Nevada, authorized
to issue the NPRI Common Stock and the NPRI Preferred Stock. The issued
and outstanding capital stock of NPRI consists only of the shares set forth
in Section 2(a) of the NPRI Schedule, and except as set forth thereon there
are no issued or outstanding rights, options or warrants to purchase NPRI
Common Stock or any issued or outstanding securities of any nature convertible
into NPRI Common Stock. The issued and outstanding shares of NPRI Common
Stock have all been issued pursuant to an appropriate exemption from the
registration requirements of the Securities Act and from any applicable
registration requirements of the various states.
(b) NPRI has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This
Agreement and the transactions contemplated hereby have been duly approved by
the Board of Directors of NPRI. This Agreement has been duly executed and
delivered by NPRI and constitutes a valid and binding obligation of NPRI,
enforceable against NPRI in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights.
B-5
(c) NPRI is qualified as a foreign corporation in all
jurisdictions where its business or ownership of assets or properties so
requires, except where the failure to be so qualified would not have a material
adverse effect on the business or financial condition of NPRI (an "NPRI
Material Adverse Effect"). The business of NPRI does not require it to be
registered as an investment company or investment adviser as such terms are
defined under the Investment Company Act of 1940 and the Investment Advisers
Act of 1940, each as amended.
(d) The consolidated financial statements of NPRI,
consisting of its balance sheet as at June 30, 2003, its statement of
operations for the year ended June 30, 2003, its statement of stockholders'
equity for the year ended June 30, 2003, and its statement of cash flows for
the year ended June 30, 2003, all together with accompanying notes, have
been prepared in accordance with GAAP, are true, complete, and accurate in all
material respects and fairly present the consolidated financial position,
results of operations and other information purported to be shown therein of
NPRI, at the date and for the respective periods to which they apply. The
financial statements of NPRI referred to above in this Section 2(e) are
hereinafter collectively referred to as the "NPRI Financial Statements." Since
the inception of NPRI on April 4, 2003, the business of NPRI has been operated
in all material respects only in the ordinary course and there has not been any
NPRI Material Adverse Effect except as set forth in the NPRI Financial
Statements.
(e) There are no material liabilities (including, but not
limited to material tax liabilities) or material claims against NPRI (whether
such liabilities or claims are contingent or absolute, direct or indirect,
matured or unmatured) not described in the NPRI Financial Statements, other
than liabilities incurred in the ordinary course of business since the date of
the NPRI Financial Statements.
(f) All federal, state, county and local income, excise,
property and other material tax returns required to be filed by NPRI has been
filed and all required taxes, fees assessments have been paid or an adequate
reserve therefor has been established as described in the NPRI Financial
Statements. All tax returns filed by NPRI are true, correct and complete. The
income tax returns of NPRI have never been audited by any authority empowered
to do so, where any such audit could reasonably be expected to have a NPRI
Material Adverse Effect. All taxes required by law to be withheld or collected
have been so withheld or collected and, to the extent required, paid to the
proper governmental body.
(g) Except as described in the NPRI Financial Statements,
NPRI has good and marketable title in all material respects to all its
furniture, fixtures, equipment and other owned assets as set forth in the NPRI
Financial Statements and such assets are owned free and clear of all material
security interests, pledges, liens, restrictions and encumbrances of every kind
and nature, except as set forth in the NPRI Financial Statements.
B-6
(h) The accounts receivable, net of reserves, set forth in
the NPRI Financial Statements represent amounts due for goods sold or services
rendered by NPRI in the ordinary course of business and, except as reserved for
in the NPRI Financial Statements, are, to the best knowledge of NPRI,
collectable in all material respects in the ordinary course of business.
(i) Copies of all written material agreements, contracts,
arrangements, understandings and commitments, including, without limitation,
real estate leases and loan agreements (collectively, "Contracts"), to which
NPRI is a party, by which NPRI is bound, or from which NPRI is entitled to
receive substantial benefits, and a summary of the provisions of each oral
material contract, have been delivered to Pinoak. There is no default by NPRI
under any such Contract that could reasonably be expected to have a NPRI
Material Adverse Effect. The validity and enforceability of and rights of NPRI
contained in each such Contract shall not be materially adversely affected by
the Merger or the transactions contemplated hereby.
(j) There are no legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against NPRI which could reasonably be expected to have a NPRI Material Adverse
Effect or which challenge the validity or propriety of the transactions
contemplated by this Agreement and, to NPRI's knowledge, there is no reasonable
basis for any such proceeding, claim, action or governmental investigation.
NPRI is not a party to or bound by any order, judgment or decree which could
reasonably be expected to have a NPRI Material Adverse Effect.
(k) Since June 30, 2003, there have been (i) no bonuses or
extraordinary compensation paid to any of the officers or directors of NPRI,
(ii) no loans made to or any other transactions with any of
the officers or directors of NPRI or their families, (iii) no dividends or
other distributions declared or paid by NPRI, and (iv) no purchase by NPRI of
any of its capital shares.
(l) Since June 30, 2003, NPRI has not issued or committed
itself to issue, and until after the Effective Time will not issue or
commit itself to issue any NPRI Common Stock or any options, rights,
warrants, or other securities convertible into NPRI Common Stock except
pursuant to options, rights, warrants or other convertible securities issued
and outstanding as of the date hereof except as contemplated by this Agreement.
(m) NPRI has maintained casualty and liability policies and
other insurance policies with respect to its business which are appropriate and
customary for businesses similar to NPRI in size, industry and risk profile.
Copies of all of the policies of insurance and bonds presently in force with
respect to NPRI, including without limitation those covering properties,
buildings, machinery, equipment, worker's compensation, officers and directors
and public liability, shall be delivered to Pinoak upon written request. All
such insurance is outstanding and in full force and effect, with all premiums
thereon duly paid and NPRI has not received any notice
of cancellation of any such policies.
(n) NPRI has patent applications pending, trademark
registrations pending, copyright registrations or applications pending which,
it considers its other registered intellectual property.
B-7
(o) Since inception, NPRI has in all material respects
operated its business and conducted its affairs in compliance with all
applicable laws, rules and regulations, except where the failure to so comply
could not reasonably be expected to have a NPRI Material Adverse Effect. NPRI
has all licenses, permits, orders, and approvals from all governmental bodies
required for the conduct of its businesses and is not in violation of any such
license, permit, order, or approval, where the lack of such license, permit,
etc. would have an NPRI Material Adverse Effect. All such licenses, permits,
orders and approvals are in full force and effect, and no suspension or
cancellation thereof has been threatened.
(p) Except as described in the NPRI Financial Statements,
since June 30, 2003 there have been no loans, leases or other Contracts
outstanding between NPRI and any officer or director of NPRI or any person or
entity related to any officer or director of NPRI.
(q) Since June 30, 2003, neither NPRI, any promoter,
officer or director of NPRI, nor any person intended to become an officer or
director of NPRI has been the subject of:
(1) a petition under the Federal bankruptcy laws or
any other insolvency law nor has a receiver, fiscal agent or similar officer
been appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within five years before
the time of such filing, or any corporation or business association of which he
was an executive officer at or within five years before the time of such
filing;
(2) a conviction in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic violations which do
not relate to driving while intoxicated);
(3) any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from, or otherwise limiting, the
following activities:
(i) Acting as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant, any other person
regulated by the United States Commodity Futures Trading Commission or an
associated person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any conduct or
practice in connection with such activity;
(ii) Engaging in any type of business
practice; or
(iii) Engaging in any activity in
connection with the purchase or sale of any security or commodity or in
connection with any violation of Federal, state or other
securities laws or commodities laws;
B-8
(4) any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any Federal, state or local authority
barring, suspending or otherwise limiting for more than 60 days the right of
such person to engage in any activity described in the preceding sub-paragraph,
or to be associated with persons engaged in any such activity;
(5) a finding by a court of competent jurisdiction
in a civil action or by the Securities and Exchange Commission (the
"Commission") to have violated any securities law, regulation or decree and the
judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended or vacated; or
(6) a finding by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to have
violated any federal commodities law, and the judgment in such civil action or
finding by the Commodity Futures Trading Commission has not been subsequently
reversed, suspended or vacated.
(r) NPRI has no pension plan, profit sharing or similar
employee benefit plan.
(s) Except for the consent and approval of the shareholders
of Pinoak and NPRI and the filing of the Certificate of Merger, no consents or
approvals of, or filings or registrations with, any third party or any public
body or authority are necessary in connection with (i) the execution and
delivery by NPRI of this Agreement and (ii) the consummation by NPRI of the
Merger and the other transactions contemplated hereby.
(t) No employees of NPRI are on strike or threatening any
strike or work stoppage. NPRI has no obligations under any collective
bargaining or labor union agreements. NPRI is not involved in any material
controversy with any of its employees or any organization representing any of
its employees.
(u) None of the information supplied or to be supplied by or
about NPRI for inclusion in the Post-Effective Amendment to be furnished to the
Pinoak shareholders concerning the Merger contains or will contain any untrue
statement of a material fact or omit or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading.
(v) The execution and delivery by NPRI of this Agreement,
the consummation and performance the transactions herein contemplated, and
compliance with the terms of this Agreement by NPRI will not conflict with,
result in a breach of or constitute a default under any indenture, mortgage,
deed of trust or other material agreement, instrument or Contract to which
NPRI is now a party or by which it or any of its assets or properties is bound
or the Articles of Incorporation, as amended, or the bylaws of NPRI, as
amended, or any law, order, rule or regulation, writ, injunction, judgment, or
decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over NPRI or any of its business or properties,
which conflict, breach or default could reasonably be expected to have a NPRI
Material Adverse Effect.
B-9
3. REPRESENTATIONS AND WARRANTIES RELATING TO PINOAK. Pinoak
represents and warrants as follows:
(a) Pinoak is a duly organized and validly existing
corporation in good standing under the laws of the State of Nevada, authorized
to issue only 20,000,000 shares of Pinoak common Stock and 5,000,000 shares of
preferred stock, $0.001 par value, the rights, powers and designations of which
have not been established by the Board of Directors of Pinoak. Immediately
prior to the Effective Time, there will be issued and outstanding, 2,000,000
shares of Pinoak Common Stock, all of which will be fully paid and
nonassessable (the "Outstanding Pinoak Shares"). Under Rule 419, 2,399,334
shares purchased by the investors were placed in escrow pending:
o distribution of a reconfirmation prospectus to the investors
describing the acquisition of NPRI; and
o the subsequent reconfirmation by at least 80% of the investors that
they have elected to remain investors.
There are no issued or outstanding options, warrants or other rights,
contingent or otherwise, to purchase or acquire shares of Pinoak common Stock
or any issued or outstanding securities of any nature convertible into shares
of Pinoak Common Stock. The issued and outstanding shares of Pinoak common
Stock have all been issued pursuant to an effective registration statement or
an appropriate exemption from the registration requirements of the Securities
Act and from any applicable registration requirements of the various states.
(b) Since its inception, the business of Pinoak has been
limited to the search for an acquisition or merger partner and, except for
transactions related thereto or related to its status as a publicly held
company, it has not engaged in any other business or activity.
(c) Pinoak has full power and authority to enter into this
Agreement and, subject to obtaining the approval of its shareholders, to
consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated hereby have been duly approved by the Board of
Directors of Pinoak. This Agreement has been duly executed and delivered by
Pinoak and constitutes a valid and binding obligation of Pinoak
enforceable against Pinoak in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights.
(d) Pinoak is qualified as a foreign corporation in all
jurisdictions where its business or ownership of assets or properties so
requires, except where the failure to be so qualified would not have a material
adverse effect on the business or financial condition of Pinoak (an "Pinoak
Material Adverse Effect"). The business of Pinoak does not require it
to be registered as an investment company or investment adviser as such terms
are defined under the Investment Company Act of 1940 and the Investment
Advisers Act of 1940, each as amended.
(e) Pinoak has no subsidiaries.
B-10
(f) The financial statements of Pinoak, consisting of its
balance sheets as at December 31, 2002, and its statement of operations, its
statement of stockholders' equity and its statement of cash flows for the year
ended December 31, 2002, all together with accompanying notes, as set forth in
Pinoak's Registration Statement on Form SB-2, have been audited by
independent public accountants and fairly present the consolidated financial
position, results of operations and other information purported to be shown
therein of Pinoak, at the date and for the respective periods to which they
apply. The unaudited financial statements of Pinoak, consisting of its
balance sheet as at June 30, 2002 and 2001, its statement of income,
statement of stockholders' equity and statement of cash flows for the six
months ended June 30, 2002, as set forth in Pinoak's Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2002 (the "Form 10-QSB," and
collectively with the Registration Statement, the "SEC Reports"), have been
prepared in accordance with generally accepted accounting principles, have been
adjusted for all normal and recurring accruals, and fairly present the
consolidated financial position, results of operations and other information
purported to be shown therein of Pinoak, at the date and for the respective
periods to which they apply. The audited financial statements and the
unaudited financial statements of Pinoak are hereinafter referred to as the
"Pinoak Financial Statements." The Pinoak Financial Statements have been
delivered to NPRI.
(g) The business of Pinoak, as described in the SEC Reports,
has only been operated in the ordinary course. There has not been any material
change in the financial condition of Pinoak from that set forth in the Form 10-
QSB except for (i) transactions in the ordinary course of business, (ii)
transactions relating to this Agreement, and (iii) the incurring of expenses or
liabilities relating to this Agreement.
(h) There are, and at the Effective Time will be, no
liabilities (including, but not limited to, tax liabilities) or claims against
Pinoak(whether such liabilities or claims are contingent or absolute, direct
or indirect, and matured or unmatured) not appearing on the PinoakFinancial
Statements, except for (i) liabilities for expenses incurred relating to this
Agreement and the consummation of the transactions contemplated by this
Agreement and (ii) liabilities and commitments incurred or made in the ordinary
course of Pinoak's business or taxes incurred on earnings since June 30, 2003,
each as listed on the Pinoak Disclosure Schedule attached hereto.
(i) All federal, state, county and local income, excise,
property or other tax returns required to be filed by Pinoak have been filed
and all required taxes, fees or assessments have been paid or an adequate
reserve therefor has been set up in the Pinoak Financial Statements. Pinoak's
income tax returns have never been audited by any authority empowered to do so.
(j) Pinoak has no fixtures, furniture, equipment, inventory
or accounts receivable.
(k) Pinoak has no material Contracts to which it is a
party, except those between the parties hereto, and as described in the SEC
Reports and except filing and other requirements associated with Pinoak's
initial public offering of securities and its status as a publicly held
company.
B-11
(l) There are no legal, administrative, arbitral or other
proceedings, claims, actions or governmental investigations of any nature
against Pinoak, or challenging the validity or propriety of the transactions
contemplated by this Agreement and, to Pinoak's and Pinoak's best knowledge,
there is no reasonable basis for any such proceeding, claim, action or
governmental investigation. Pinoak is not a party to or bound by any order,
judgment or decree which will, or might reasonably be expected to have a Pinoak
Material Adverse Effect.
(m) There have been: (i) no salaried or otherwise compensated
employees and no bonuses paid to any officer or director of Pinoak; (ii) no
loans made to or transactions with any officer or director of Pinoak other than
loans by officers to provide working capital described in the SEC Reports,
which shall not exceed $10,000 at the Effective Time; (iii) no cash dividends
or other cash distributions declared or paid by Pinoak; and (iv) no purchase by
Pinoak of any Pinoak Shares.
(n) Since June 30, 2003, Pinoak has not issued or
committed itself to issue, and prior to the Effective Time will not issue or
commit itself to issue any additional common shares (other than the outstanding
Pinoak Shares) or any options, rights, warrants, or other securities
convertible into common shares, except as contemplated by this Agreement.
(o) Pinoak has furnished to NPRI true and complete
copies, including exhibits and, as applicable, amendments thereto, of (i)
Pinoak's Registration Statement, including all post-effective amendments
thereto, for its initial public offering; (ii) the Prospectus contained
therein; and (iii) each Quarterly Report on Form 10-QSB and each Annual Report
on Form 10-KSB issued by Pinoak since its inception. None of such filings
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading a the time of such filings.
(p) Pinoak has no patents, patent applications, trademarks,
trademark registrations, trade names, copyrights, copyright registrations or
applications therefor.
(q) Since its inception, Pinoak has in all material
respects operated its business and conducted its affairs in compliance with all
applicable laws, rules and regulations.
(r) Except as set forth in the SEC Reports or otherwise
disclosed pursuant hereto, there are no loans, leases or other contracts
outstanding between Pinoak and any officer or director of Pinoak or any
person related to any officer or director of Pinoak
(s) Since Pinoak's inception, no officer or director of
Pinoak has been the subject of:
B-12
(1) a petition under the Federal bankruptcy laws or
any other insolvency law nor has a receiver, fiscal agent or similar officer
been appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before the
time of such filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such filing;
(2) a conviction in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic violations which do
not relate to driving while intoxicated);
(3) any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from, or otherwise limiting, the
following activities:
(i) Acting as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant, any other person
regulated by the United States Commodity Futures Trading Commission or an
associated person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any conduct or
practice in connection with such activity;
(ii) Engaging in any type of business
practice; or
(iii) Engaging in any activity in
connection with the purchase or sale of any security or commodity or in
connection with any violation of Federal, state or other securities laws or
commodities laws;
(4) any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any Federal, state or local authority
barring, suspending or otherwise limiting for more than 60 days the right of
such person to engage in any activity described in the preceding sub-paragraph,
or to be associated with persons engaged in any such activity;
(5) a finding by a court of competent jurisdiction
in a civil action or by the Commission to have violated any securities law,
regulation or decree and the judgment in such civil action or finding by the
Commission has not been subsequently reversed, suspended or vacated; or
(6) a finding by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to have
violated any federal commodities law, and the judgment in such civil action or
finding by the Commodity Futures Trading Commission has not been subsequently
reversed suspended or vacated.
(t) Pinoak has no pension plan, profit sharing or similar
employee benefit plan.
B-13
(u) Except for the consent and approval of the shareholders
of Pinoak, Pinoak and NPRI and the filing of the Certificate of Merger,
and the effectiveness of the Registration Statement, no consents or approvals
of, or filings or registrations with, any third party or any public body or
authority are necessary in connection with (i) the execution and delivery by
Pinoak of this Agreement and (ii) the consummation of the Merger and the other
transactions contemplated hereby.
(v) None of the information supplied or to be supplied by or
about Pinoak for inclusion in the Post-Effective Amendment to be furnished to
Pinoak shareholders concerning the Merger contains or will contain any untrue
statement of a material fact or omit or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(w) The execution and delivery by Pinoak of this Agreement,
the consummation and performance of the transactions herein contemplated, and
compliance with the terms of this Agreement by Pinoak will not conflict with,
result in a breach of or constitute default under any indenture, mortgage, deed
of trust or other agreement, instrument or Contract to which Pinoakis now a
party or by which it or any of its assets or properties is bound or the
Certificate of Incorporation, as amended, or the bylaws of Pinoak, in each
case as amended, or any law, order, rule or regulation, writ, injunction,
judgment or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over Pinoak or any of its business
or properties.
4. RIGHTS AND LIABILITIES OF SURVIVING CORPORATION. At and after the
Effective Time, NPRI, as the surviving corporation, shall succeed to and
possess, without further act or deed, all of the estate, rights, privileges,
powers, and franchises, both public and private, and all of the property, real,
personal, and mixed, of each of the constituent corporations; all debts due to
either of the constituent corporations on whatever account shall be vested in
NPRI; all claims, demands, property, rights, privileges, powers, and
franchises and every other interest of either of the constituent corporations
shall be as effectively the property of NPRI as they were of the respective
constituent corporations; the title to any real estate by deed or otherwise in
either of the constituent corporations shall not revert or be in any way
impaired by reason of the merger, but shall be vested in NPRI; all rights of
creditors and all liens upon any property of either of the constituent
corporations shall be preserved unimpaired, limited in lien to the property
affected by such lien at the Effective Time; all debts, liabilities, and duties
of the respective constituent corporations shall thenceforth attach to NPRI and
may be enforced against it to the same extent as if such debts, liabilities,
and duties had been incurred or contracted by it; and NPRI shall indemnify and
hold harmless Pinoak and the officers and directors of each of the constituent
corporations against all such debts, liabilities, and duties and against all
claims and demands arising out of the Merger. At and after the Effective Time,
Pinoak shall continue to indemnify all prior officers and
directors of Pinoak to the maximum extent permitted by the Certificate of
Incorporation and Bylaws of Pinoak. To the extent the Surviving Corporation
obtains insurance covering its officers and directors, then it will maintain
such coverage for the present officers and directors of Pinoak for a period
of five years from and after the Effective Time, if and to the extent that
maintaining such coverage does not in management's reasonable discretion result
in material additional expense to NPRI.
B-14
5. REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective the Merger and
the other transactions contemplated by this Agreement, including using
commercially reasonable efforts to accomplish the following: (i) the obtaining
of all necessary actions or nonactions, waivers, consents, approvals, orders
and authorizations from governmental entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with governmental entities, if any) and (ii) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
(b) Each of NPRI and Pinoak shall give prompt notice to
the other of any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any material respect, or any failure
of such party to comply with or satisfy in any respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement, in
each case, such that the conditions set forth in Section 8 or 9 could
reasonably be expected to not be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
6. FURTHER ASSURANCES OF TITLE. As and when requested by NPRI or by
its successors or assigns, Pinoak shall execute and deliver or cause to be
executed and delivered all such deeds and instruments and will take or cause to
be taken all such further action as NPRI may deem necessary or desirable in
order to invest in and confirm to NPRI title to and possession of its
property acquired by NPRI by reason or as a result of the Merger and
otherwise to carry out the intent and purposes hereof, and the officers and
directors of Pinoak and NPRI are fully authorized in the name of Pinoak,
NPRI or otherwise to take any and all such action.
7. CONDITIONS TO OBLIGATIONS TO PINOAK. The obligation of NPRI to
consummate the Merger is subject to satisfaction of the following conditions
prior to the Effective Time:
(a) That the shareholders of NPRI, at a meeting of its
shareholders duly called and held, shall have approved the Merger and all other
Shareholder Matters, all subject to the consummation of the Merger.
(b) NPRI shall have delivered to Pinoak audited financial
statements as at and for the period ended June 30, 2003 and such financial
statements shall evidence no NPRI Material Adverse Change from the date of NPRI
Financial Statements. Except as disclosed in or as contemplated by this
Agreement or in the NPRI Schedule, that no material adverse change in the
aggregate shall have occurred in the consolidated financial condition of
NPRI since June 30, 2003.
B-15
(c) That NPRI shall have performed and complied in all
material respects with the provisions and conditions of this Agreement to be
performed and complied with, and that the representations and warranties made
by NPRI in this Agreement are true and correct in all material respects, both
when made and as of the Effective Time subject to NPRI making such
modifications to the NPRI Disclosure Schedule as may be necessary provided
that no such modification shall constitute an NPRI Material Adverse Effect.
(d) That this Agreement and the transactions contemplated
hereby shall have been approved by appropriate corporate action of NPRI,
including by written consent of the shareholders of NPRI, and that corporate
votes and resolutions to that effect in form and substance reasonably
satisfactory to Pinoak and its counsel have been delivered to Pinoak.
Compliance with the provisions of subparagraphs (a) through (d) of
this paragraph shall be evidenced by the certificate of the President and
Secretary of NPRI and the certificate of the President and Secretary of NPRI to
be delivered at Closing.
8. CONDITIONS TO OBLIGATIONS TO NPRI. The obligations of Pinoak
to consummate the Merger are subject to satisfaction of the following
conditions prior to the Effective Time:
(a) That the shareholders of Pinoak, at a meeting of its
shareholders duly called and held, shall have approved the Merger and all other
Shareholder Matters, all subject to the consummation of the Merger.
(b) That the Merger and all other Shareholder Matters,
including without limitation the amendment to Pinoak certificate of
incorporation shall have been approved by the shareholders of Pinoak on
terms satisfactory to NPRI, all subject to the consummation of the Merger.
(c) That Pinoak's Board of Directors and officers shall
have resigned seriatim subject to the consummation of the Merger.
(d) That no material transactions shall have been entered
into by Pinoak other than transactions in the ordinary course of
business since June 30, 20032, other than as referred to in this Agreement,
except with the prior written consent of NPRI.
(e) That no material adverse change shall have occurred in
the financial condition of either Pinoak since June 30, 2003, other than as
referred to in this Agreement.
(f) That Pinoak shall each have performed and complied in all
material respects with the provisions and conditions of this Agreement to be
performed and complied with and that the representations and warranties made by
Pinoak are true and correct in all material respects, both when made and as of
the Effective Time.
(g) That Pinoak shall have complied with all applicable
provisions of Rule 419 under the Securities Act, including the effectiveness of
the Post-Effective Amendment with the Commission and the circulation of a
reconfirmation offer to each original investor in Pinoak.
B-16
(h) That the SEC shall have declared the Post-Effective
Amendment effective, no stop order suspending the effectiveness of the
Post-Effective Amendment or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the
prospectus included therein, shall have been initiated or threatened in writing
by the SEC.
Compliance with the provisions of subparagraphs (a) through (h) of
this paragraph shall be evidenced by the certificate of the President and
Secretary of Pinoak and the certificate of the President and Secretary of
Pinoak to be delivered at Closing.
9. ABANDONMENT. This Agreement and the Merger may be abandoned (a) by
NPRI, on the one hand, or Pinoak, on the other hand, acting by their respective
Boards of Directors, in the event of the failure at the Closing of any
condition in favor of such party to which the consummation of the
Merger is subject, or (b) by the mutual consent of the parties, acting each by
its Board of Directors, at any time after such adoption by such shareholders
and prior to the Effective Time. In the event of abandonment of this
Agreement, the same shall become wholly void and of no effect hereof, there
shall be no further liability or obligation hereunder on the part of any of the
parties, their respective Boards of Directors or any other party to this
Agreement.
10. CLOSING OR TERMINATION.
----------------------
(a) In the event the Closing of this Agreement shall not take
place by October 24, 2003, then any party shall have the right to terminate
this Agreement in which event no party shall have any further right or
obligation as against any other, except as set forth in Section 11(b).
11. DELIVERY OF CORPORATE PROCEEDINGS OF PINOAK. At the Closing,
Pinoak shall deliver to NPRI's counsel the originals or certified copies of
all of the corporate proceedings of Pinoak, duly certified by its Secretary,
relating to this Agreement.
12. DELIVERY OF CORPORATE PROCEEDINGS OF NPRI. At the Closing,
NPRI shall deliver to Pinoak's counsel the originals of all of the
corporate proceedings of NPRI, duly certified by its Secretary, relating to
this Agreement.
13. FURTHER AGREEMENTS; 1934 ACT REPORTING. Within 15 days after the
Effective Time, NPRI, the surviving company, shall file an appropriate Form 8-K
Current Report with respect to the Merger pursuant to the Securities Exchange
Act of 1934, as amended. NPRI, the surviving company, shall thereafter file
such audited and other financial statements pursuant to the requirements of
Form 8-K, such financial statements to be filed within the time period set
forth in Form 8-K.
B-17
14. LIMITATION OF LIABILITY. The representations and warranties made
by any party to this Agreement are intended to be relied upon only by the other
parties to this Agreement, and by no other person. Nothing contained in this
Agreement shall be deemed to confer upon any person not a party to this
Agreement any third party beneficiary rights or any other rights of any nature
whatsoever, and only to the extent expressly referred to herein.
15. FURTHER INSTRUMENTS AND ACTIONS. Each party shall deliver such
further instruments and take such further action as may be reasonably requested
by any other in order to carry out the intents and purposes of this Agreement.
16. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada, without reference to its
conflicts of laws principles, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law thereof.
17. RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
18. ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Any purported
assignment in violation of this Section 20 shall be void.
19. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand, sent
via overnight courier, sent by facsimile, or mailed by first class certified or
registered mail, return receipt requested, postage prepaid:
If to NPRI: Nutri Pharmaceuticals Research, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 0
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx Yew
Telephone: (000) 000-0000
If to Pinoak: Pinoak, Inc.
00000 X. Xxxxx Xxxxxx
Xxxx, XX 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
or to such other person or entity or at such other address as any
party shall designate by notice to the other in accordance with this Section
19.
B-18
Notices provided in accordance with this Section 19 shall be deemed
delivered (i) upon personal delivery with signature required, (ii) one Business
Day after they have been sent to the recipient by reputable overnight courier
service (charges prepaid and signature required) (iii) upon confirmation,
answer back received, of successful transmission of a facsimile message
containing such notice if sent between 9 a.m. and 5 p.m., local time of the
recipient, on any Business Day, and as of 9 a.m. local time of the recipient on
the next Business Day if sent at any other time, or (iv) three Business Days
after deposit in the mail. The term "Business Day" as used in this Section 19
shall mean any day other than Saturday, Sunday or a day on which banking
institutions are not required to be open in Las Vegas, Nevada. Copies of any
notices hereunder may be sent by email, but transmission by such means alone
shall not constitute delivery of notice under this Section 19.
20. BINDING AGREEMENT. This Agreement, represents the entire agreement
among the parties hereto with respect to the matters described herein and is
binding upon and shall inure to the benefit of the parties hereto and their
legal representatives, successors and permitted assigns. This Agreement may
not be assigned and, except as stated herein, may not be altered or amended
except in writing executed by the party to be charged.
21. COUNTERPARTS. This Agreement may be executed in counterparts, all
of which, when taken together, shall constitute the entire Agreement.
22. SEVERABILITY. The provisions of this Agreement shall be severable,
so that the unenforceability, validity or legality of any one provision shall
not affect the enforceability, validity or legality of the remaining provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
Nutri Pharmaceuticals Research, Inc.
By: /s/ Xxxxxxx Yew
-------------------------------------
Xxxxxxx Yew
Chairman and Chief Executive Officer
PINOAK, INC.
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
Title: President and Secretary
B-19
