EX-99A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "AGREEMENT") is made this 17th
day of June, 2004, by and among Email Real Xxxxxx.xxx, Inc., a Colorado
corporation having its principal place of business at 00 Xxxxxx Xxxxxx, #X,
Xxxxxx Xxxx, XX 00000 ("EMLR"), EMLR Acquisition Corp., a Delaware corporation
having its principal place of business at 00 Xxxxxx Xxxxxx, #X, Xxxxxx Xxxx, XX
00000 ("EMLR ACQUISITION") and Xxxxxx Health Sciences, Inc., a Delaware
corporation having its principal place of business at 000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxx Xxx Xxxxxxxxx, XX 00000 ("XXXXXX").
WHEREAS, Xxxxxx is authorized to issue 15,000,000 shares of its common
stock, par value $.01 per share ("XXXXXX COMMON Stock"), of which 6,179,829
shares ("ISSUED XXXXXX SHARES") are issued and outstanding; and
WHEREAS, immediately upon execution of this Agreement, Xxxxxx intends
to offer in a private placement up to 3,700,000 shares of its newly designated
Series A Convertible Preferred Stock, par value $.01 per share (the "XXXXXX
SERIES A SHARES");
WHEREAS, the outstanding capitalization of Xxxxxx is as set forth on
SCHEDULE A annexed hereto; and
WHEREAS, EMLR is authorized to issue 100,000,000 shares of common
stock, par value $.001 per share (the "EMLR COMMON STOCK") of which 24,996,000
shares are issued and outstanding (the "ISSUED EMLR SHARES"); the outstanding
shares of EMLR Common Stock are referred to herein as the "EMLR SHARES"; and
WHEREAS, EMLR Acquisition Corp. is a wholly owned subsidiary of EMLR
and is authorized to issue 1,000 shares of common stock, par value $.001
(referred to as the "EMLR ACQUISITION SHARES"), all of which are issued and
outstanding and owned by EMLR; and
WHEREAS, the respective Boards of Directors of EMLR, EMLR Acquisition
and Xxxxxx (the "COMPANIES") deem it advisable and in the best interests of the
Companies, and their respective shareholders, that EMLR Acquisition be merged
with and into Xxxxxx under the terms and conditions hereinafter set forth (the
"MERGER"), the Merger to be effected pursuant to the Delaware General
Corporation Law and the Merger 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, covenants and
conditions hereof, the parties hereto do mutually agree as follows:
VOTES ON MERGER AND RELATED MATTERS. EMLR ACQUISITION AND XXXXXX (THE
"CONSTITUENT CORPORATIONS") SHALL EACH, AS SOON AS PRACTICABLE BUT PRIOR TO
CLOSING (AS DEFINED BELOW) (I) CAUSE A SPECIAL MEETING OF ITS STOCKHOLDERS TO BE
CALLED TO CONSIDER AND VOTE UPON THE MERGER ON THE TERMS AND CONDITIONS
HEREINAFTER SET FORTH, OR (II) OBTAIN WRITTEN CONSENT OF SUCH STOCKHOLDERS, AS
APPLICABLE, AS IS NECESSARY TO APPROVE THE MERGER. IF THE MERGER IS APPROVED IN
ACCORDANCE WITH APPLICABLE LAW, SUBJECT TO THE FURTHER CONDITIONS AND
PROVISIONS OF THIS AGREEMENT, A CLOSING OF THE MERGER SHALL BE HELD (THE
"CLOSING") AND A CERTIFICATE OF MERGER (THE "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 DELAWARE AS PROMPTLY AS POSSIBLE THEREAFTER. THE
CERTIFICATE OF MERGER SO FILED SHALL BE SUBSTANTIALLY IN THE FORM OF EXHIBIT A
ANNEXED HERETO, WITH SUCH CHANGES THEREIN AS THE BOARD OF DIRECTORS OF EACH OF
EMLR ACQUISITION AND XXXXXX SHALL MUTUALLY APPROVE. THE DATE OF THE FILING OF
THE CERTIFICATE OF MERGER WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE
SHALL BE REFERRED TO HEREIN AS THE "EFFECTIVE DATE," AND THE TIME OF SUCH FILING
SHALL BE REFERRED TO AS THE "EFFECTIVE TIME."
REPRESENTATIONS, WARRANTIES AND COVENANTS OF XXXXXX. XXXXXX REPRESENTS, WARRANTS
AND COVENANTS AS FOLLOWS, EXCEPT TO THE EXTENT SET FORTH ON THE CORRESPONDING
SECTIONS OF THE SCHEDULE OF EXCEPTIONS ATTACHED HERETO AS SCHEDULE B AND MADE A
PART HEREOF (THE "XXXXXX SCHEDULE OF EXCEPTIONS"):
ORGANIZATION; CAPITALIZATION. Xxxxxx is, and on the Effective Date will be, a
duly organized and a validly existing corporation in good standing under the
laws of its state of formation. There are issued and outstanding, and on the
Effective Date there will be issued and outstanding, only the Issued Xxxxxx
Shares, all of which are, and on the Effective Date will be, duly authorized and
validly issued. There are, and on the Effective Date there will be, no
outstanding rights, options or warrants to purchase any equity interest in
Xxxxxx, and there will be no other or any other issued or outstanding securities
of any nature convertible into or exercisable or exchangeable for equity of
Xxxxxx. No person has any right of first refusal, right of participation, or any
similar right with respect to disposition of the Issued Xxxxxx Shares.
AUTHORITY. Xxxxxx has, and on the Effective Date will have, full power and
authority to enter into this Agreement and, subject to any third party approval
in accordance with the laws of the State of Delaware, to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been duly approved by the Board of Directors of Xxxxxx
and, prior to the Closing, by all stockholders of Xxxxxx whose consent is
required under applicable law.
BINDING AGREEMENT. This Agreement has been duly executed and delivered by Xxxxxx
and constitutes the legal, valid and binding obligation of Xxxxxx, enforceable
against it in accordance with the terms hereof, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of rights hereunder or
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
NO CONFLICTS. The execution and delivery by Xxxxxx of this Agreement, the
consummation and performance of the transactions herein contemplated, and
compliance with the terms of this Agreement by Xxxxxx will not conflict with,
result in a breach of or constitute or give rise to a default under (i) any
indenture, mortgage, deed of trust or other agreement, instrument or contract to
which Xxxxxx is now a party or by which it or any of its assets or properties
are bound; (ii) Xxxxxx'x certificate of incorporation and bylaws, in each case
as amended; or (iii) any law, order, rule, regulation, writ, injunction,
judgment or decree of any government,
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governmental instrumentality or court, domestic or foreign, having jurisdiction
over Xxxxxx or any of its business or properties wherein such breach could have
a material adverse effect on Xxxxxx or any of its business or properties.
SUBSIDIARIES. Xxxxxx does not have, and on the Effective Date will not have, any
subsidiaries, nor does it own any direct or indirect interest in any other
business entity.
FOREIGN QUALIFICATIONS. Xxxxxx is, and on the Effective Date will be, qualified
or licensed as a foreign corporation in all jurisdictions where its business or
ownership of assets so requires, except where the failure to be qualified or
licensed would not be reasonably expected to have a material adverse effect on
the business of Xxxxxx. A list of all such jurisdictions where Xxxxxx is
qualified or licensed as a foreign corporation is attached hereto as Schedule
2.6. The business of Xxxxxx 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.
FINANCIAL STATEMENTS. Xxxxxx has furnished EMLR with a true and complete copy of
(i) the audited balance sheets of Xxxxxx as of December 31, 2002 and December
31, 2003, and the related audited statements of income and statements of cash
flow of Xxxxxx for the fiscal years ended December 31, 2002 and December 31,
2003 (the "FINANCIAL STATEMENTS"). The Financial Statements fairly present in
all material respects the financial position, results of operations and other
information purported to be shown thereon of Xxxxxx, at the dates and for the
respective periods to which they apply. All such Financial Statements have been
audited by X.X. Xxxx LLP and are accompanied by their audit report and were
prepared in conformity with United States generally accepted accounting
principles consistently applied throughout the periods involved ("GAAP"), and
have been adjusted for all normal and recurring accruals.
NO ADVERSE EVENTS. Since December 31, 2003:
(i) there has not been any material adverse change in the
financial position or condition of Xxxxxx, its liabilities, assets or any
damage, loss or other change in circumstances materially affecting Xxxxxx, its
business or assets or Xxxxxx' right to carry on its business, other than changes
in the ordinary course of business or due to general economic, industry or
political conditions;
(ii) Xxxxxx has not entered into any transaction other than
transactions in the ordinary course of business consistent with past practice;
(iii) there has been no sale, assignment, transfer, mortgage,
pledge, encumbrance or lease of any asset or property of Xxxxxx that was not in
the ordinary course of business consistent with past practice;
(iv) there has been (x) no declaration or payment of a
dividend, or any other declaration, payment or distribution of any type or
nature to any stockholder of Xxxxxx in respect of its stock, whether in cash or
property, and (y) no purchase or redemption of any share of the capital stock of
Xxxxxx;
(v) there has been no declaration, payment, or commitment for
the payment,
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by Xxxxxx, of a bonus or other additional salary, compensation, or benefit to
any employee of Xxxxxx;
(vi) there has been no release, compromise, waiver or
cancellation of any debt to or claim by Xxxxxx, or waiver of any right of
Xxxxxx;
(vii) there have been no capital expenditures by Xxxxxx in
excess of $50,000 for any single item, or $100,000 in the aggregate;
(viii) there has been no change in accounting methods or
practices or revaluation of any asset of Xxxxxx;
(ix) there has been no material damage or destruction to, or
loss of, physical property (whether or not covered by insurance) adversely
affecting the business or the operations of Xxxxxx;
(x) there has been no loan by Xxxxxx, or guaranty by Xxxxxx of
any loan, to any employee of Xxxxxx;
(xi) Xxxxxx has not ceased to transact business with any
customer, or received notice that any customer intends to cease transacting
business with Xxxxxx, that, as of the date of such cessation or notice,
represented more than 5% of the annual gross revenues of Xxxxxx for the fiscal
year ended December 31, 2003;
(xii) there has been no termination or resignation of any key
employee or officer of Xxxxxx, and to the knowledge of Xxxxxx, no such
termination or resignation is threatened;
(xiii) there has been no amendment or termination of any
material oral or written contract, agreement or license to which Xxxxxx is or
was a party or by which Xxxxxx is or was bound, except in the ordinary course of
business or as expressly contemplated hereby;
(xiv) Xxxxxx has not discharged or satisfied or paid any lien
or encumbrance or obligation or liability other than current liabilities in the
ordinary course of business;
(xv) there has been no agreement or commitment by Xxxxxx to do
any of the foregoing; and
(xvi) there has been no other event or condition of any
character that has had, or could reasonably be expected to have, a material
adverse effect on the properties, business, operations, financial condition,
assets or prospects of Xxxxxx.
ORDINARY COURSE OF BUSINESS. Except for transactions occurring in the ordinary
course of business, there has not been, and on the Effective Date there will not
have been, any transactions involving Xxxxxx since December 31, 2003 in an
amount in excess of $100,000.
LIABILITIES; CLAIMS. There are, and on the Effective Date will be, no
liabilities (including, but not limited to, tax liabilities) or claims against
Xxxxxx (whether such liabilities or claims are
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contingent or absolute, direct or indirect, matured or unmatured) not appearing
on the Financial Statements, other than (i) liabilities incurred in the ordinary
course of business since December 31, 2003, (ii) taxes accrued on earnings since
December 31, 2003 which are not yet due or payable or (iii) other liabilities
which do not exceed $100,000 in the aggregate.
TAX RETURNS. All federal, state, county and local income, excise, property and
other tax returns required to be filed by Xxxxxx are true and correct in all
material respects and have been timely filed, and all required taxes, fees or
assessments have been paid or an adequate reserve therefor has been established
in the Financial Statements. The federal income tax returns and state and
foreign income tax returns of Xxxxxx have not been audited by the Internal
Revenue Service ("IRS") or any other taxing authority within the past five (5)
years. Neither the IRS nor any state, local or other taxing authority has
proposed any additional taxes, interest or penalties with respect to Xxxxxx or
any of its operations or businesses. There are no pending, or to the knowledge
of Xxxxxx, threatened, tax claims or assessments, and there are no pending, or
to the knowledge of Xxxxxx, threatened, tax examinations by any taxing
authorities. Xxxxxx has not given any waivers of rights (which are currently in
effect) under applicable statutes of limitations with respect to the federal
income tax returns of Xxxxxx for any year.
TITLE TO ASSETS. Except as provided for in the Financial Statements, Xxxxxx,
has, and on the Effective Date will have, good and marketable title to all of
its furniture, fixtures, equipment, inventory and other assets owned by Xxxxxx,
and such assets are owned free and clear of all security interests, pledges,
liens, restrictions and encumbrances of every kind and nature. Xxxxxx was, on
the date of the most recent Financial Statement, the owner of its inventory as
set forth in such Financial Statement and has good and marketable title thereto.
ACCOUNTS RECEIVABLE. The accounts receivable as set forth in the Financial
Statements represent amounts due for goods sold or services rendered by Xxxxxx
in the ordinary course of business and, except as reserved for in the Financial
Statements, Xxxxxx believes are collectable in the ordinary course of business,
without any claims by the obligor for set-off, deductions or counterclaims.
MATERIAL CONTRACTS. A copy (or summary, if oral) of all agreements, contracts,
letters of intent, arrangements, understandings and commitments, whether written
or oral, to which Xxxxxx is or on the Effective Date will be, a party, or from
which Xxxxxx will receive substantial benefits and which are material to Xxxxxx
(collectively, "XXXXXX CONTRACTS"), have been delivered to EMLR or its counsel
and are listed hereto on Schedule 2.14. Any Xxxxxx Contracts entered into
between the date hereof and the Effective Date will be delivered to EMLR or its
counsel prior to Closing. The validity and enforceability of, and rights of
Xxxxxx contained in, each such Xxxxxx Contract shall not be adversely effected
by the Merger or the transactions contemplated hereby or any actions taken in
furtherance hereof. Xxxxxx is not, and on the Effective Date will not be, in
material default under any Xxxxxx Contract.
LEGAL PROCEEDINGS. There are, and on the Effective Date there will be, no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature pending, or to Xxxxxx'x knowledge, threatened,
directly or indirectly involving Xxxxxx or its officer, directors, employees or
affiliates, individually or in the aggregate, in which an unfavorable
determination could result in suspension or termination of Xxxxxx'x business or
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authority to conduct such business in any jurisdiction or could result in the
payment by Xxxxxx of more than $25,000, or challenging the validity or propriety
of the transactions contemplated by this Agreement. Xxxxxx is not a party to any
order, judgment or decree which will, or might reasonably be expected to,
materially adversely affect the business, operations, properties, assets or
financial condition of Xxxxxx.
CERTAIN TRANSACTIONS. Since December 31, 2003 there have been, and through the
Effective Date there will be (i) no bonuses or extraordinary compensation to any
of the officers or directors of Xxxxxx, (ii) no loans made to or any other
transactions with any of the officers or directors of Xxxxxx or their families
or affiliates and (iii) no dividends or other distributions declared or paid by
Xxxxxx.
INSURANCE. Xxxxxx has, and on the Effective Date will have, maintained casualty
and liability policies and other insurance policies with respect to its business
which are appropriate and customary for businesses similar in size, industry and
risk profile. Copies of all of the policies of insurance and bonds presently in
force with respect to Xxxxxx, including without limitation those covering
properties, buildings, machinery, equipment, worker's compensation, product
liability, officers and directors and public liability, have been made available
to EMLR. All such insurance is outstanding and in full force and effect, with
all premiums thereon duly paid, and Xxxxxx has not received any notice of
cancellation of any such policies.
INTELLECTUAL PROPERTY.
Set forth on Schedule 2.18 is a true and complete list of all material
proprietary technology, patents, trademarks, trade names, service marks and
registered copyrights (and all pending applications or current registrations for
any of the foregoing), and all licenses granted to Xxxxxx by third parties of
patent rights, trademark rights, trade name rights and service xxxx rights, used
by Xxxxxx in the conduct of its business (together with trade secrets and know
how used in the conduct of their business, the "XXXXXX INTELLECTUAL PROPERTY
RIGHTS"). Xxxxxx owns, or has validly licensed or otherwise has the right to use
or exploit, as currently used or exploited, and as contemplated to be used and
exploited in the future, all of the Xxxxxx Intellectual Property Rights, free of
any lien or any obligation to make any payment (whether of a royalty, license
fee, compensation or otherwise). No claims are pending or threatened against
Xxxxxx that Xxxxxx is infringing or otherwise violating the rights of any
individual, partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, limited liability company, joint
venture, government entity or other entity (a "PERSON") with regard to any
Xxxxxx Intellectual Property Right or that any Xxxxxx Intellectual Property
Right is invalid or unenforceable. No Person is infringing the rights of Xxxxxx
with respect to any Xxxxxx Intellectual Property Right nor, to the knowledge of
Xxxxxx, has any Person threatened to do so. Neither Xxxxxx, nor any of its
employees, agents or independent contractors, in connection with the performance
of such Person's services with Xxxxxx, as the case may be, has used,
appropriated or disclosed, directly or indirectly, any trade secret or other
proprietary or confidential information of any other Person without the right to
do so, or otherwise violated any confidential relationship with any other
Person, other than such actions that were not, or would not reasonably be
expected to be, materially adverse to the business of Xxxxxx.
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Except as set forth on the Xxxxxx Schedule of Exceptions:
(i) All former and current consultants or contractors of
Xxxxxx have executed and delivered written instruments with Xxxxxx, that assign
to Xxxxxx all rights to any inventions, improvements, discoveries or information
developed by them for or on behalf of Xxxxxx. All employees of Xxxxxx who
participated in the creation or contributed to the development of the Xxxxxx
Intellectual Property Rights were employees of Xxxxxx at the time of rendering
such services, such services were within the scope of their employment and such
employees have validly assigned all rights to the Xxxxxx Intellectual Property
Rights to Xxxxxx; and
(ii) Xxxxxx has taken all such security measures as it has
determined are commercially reasonable and appropriate, including entering into
appropriate confidentiality and nondisclosure agreements with all of their
employees, consultants and contractors, and any other persons with access to the
Xxxxxx Intellectual Property Rights, trade secrets or know how of Xxxxxx, to
protect the secrecy, confidentiality and value of all such Xxxxxx Intellectual
Property Rights, trade secrets or know how and there has not been any breach by
Xxxxxx, nor, to the knowledge of Xxxxxx, any other party to any such related
agreements, other than such that could not reasonably be expected to cause a
material adverse effect to Xxxxxx.
COMPLIANCE WITH LAWS. Xxxxxx has, and on the Effective Date will have, 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 did not have and would not be expected to have a material adverse effect
on its business or property.
RELATED PARTY CONTRACTS. There are, and on the Effective Date there will be, no
loans, leases, agreements, arrangements understandings or Xxxxxx Contracts
outstanding between Xxxxxx and any of its officers, directors or affiliates or
any person related to or affiliated with any such officers or directors.
OFFICER AND DIRECTOR INFORMATION. During the past ten year period neither
Xxxxxx, nor, to its knowledge, any of its officers or directors, nor any person
intended upon consummation of the Merger to be nominated by Xxxxxx to become an
officer or director of EMLR or any successor entity or subsidiary, has been the
subject of:
a petition under the federal bankruptcy laws or any other insolvency or
moratorium law or has a receiver, fiscal agent or similar officer been appointed
by a court for the business or property of Xxxxxx or such person, or any
partnership in which Xxxxxx or any such person was a general partner at or
within two years before the time of such filing, or any corporation or business
association of which Xxxxxx or any such person was an executive officer at or
within two years before the time of such filing;
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 or driving under the influence);
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any order, judgment or decree, not subsequently reversed, suspended or vacated,
of any court of competent jurisdiction, permanently or temporarily enjoining
Xxxxxx or any such person from, or otherwise limiting, the following activities:
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 the Securities and Exchange Commission (the "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;
Engaging in any type of business practice; or
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;
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 Xxxxxx or any such person to engage
in any activity described in the preceding sub-paragraph, or to be associated
with persons engaged in any such activity;
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
a finding by a court of competent jurisdiction in a civil action or by the
United States Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not been
subsequently reversed, suspended or vacated. All items described in clauses (a)
through (f) above are collectively referred to herein as "ADVERSE EVENTS."
BENEFIT PLANS. Xxxxxx does not have any pension plan, profit sharing or similar
employee benefit plan.
CONSENTS AND APPROVALS. Except for the consent and approval of the stockholders
of Xxxxxx 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 (any of the foregoing, a "CONSENT") are necessary in connection with
the execution and delivery by Xxxxxx of this Agreement and the consummation by
Xxxxxx of the Merger and all other transactions contemplated hereby.
FINDER'S FEES. Xxxxxx knows of no person who rendered any service in connection
with the introduction of the Companies to any of the other Companies for a
"finder's fee" or similar type of fee in connection with the Merger and the
other transactions contemplated hereby.
EMPLOYEE MATTERS. No employees of Xxxxxx are on strike or, to the best of
Xxxxxx'x knowledge, threatening any strike or work stoppage. Xxxxxx does not
have any obligations
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under any collective bargaining or labor union agreements, nor is Xxxxxx
involved in any material controversy with any of its employees or any
organization representing any of its employees. Xxxxxx believes its
relationships with its employees are good.
DISCLOSURE. To the knowledge of Xxxxxx, none of the information supplied or to
be supplied by or about Xxxxxx herein or for inclusion or incorporation by
reference in any information to be supplied to holders of EMLR Shares concerning
the Merger contains any untrue statement of a material fact or omit 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.
2.27 ACTIONS PRIOR TO CLOSING. Except as otherwise
contemplated by this Agreement, from the date hereof through the Closing, Xxxxxx
shall not, other than in the ordinary course of business, consistent with past
practice, without the prior written consent of EMLR:
sell, lease, assign, transfer or otherwise dispose of any material assets;
agree to assume or assume, guarantee, endorse or otherwise in any way be, or
become responsible or, liable for, directly or indirectly, any material
contingent obligation;
participate or engage in any discussions or negotiations with any Person
regarding, or enter into any transaction concerning, a merger, stock exchange or
consolidation, other than with the other parties hereto, or liquidate or
dissolve itself (or suffer any liquidation or dissolution) or convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a series of
related transactions, all or a substantial part of its property, business,
assets or capital stock or securities convertible into equity, or make any
material change in its present method of conducting business;
(d) make any amendment to its certificate of
incorporation or bylaws;
(e) enter into or amend any employment agreements or
increase the salary or bonus of any existing employee or with any person to
become an officer of Xxxxxx;
(f) create, incur, assume or suffer to exist, any
mortgage, pledge, lien, charge, security interest or encumbrance of any kind
upon any of its property, assets, income or profits, whether now owned or
hereafter acquired;
(g) declare or authorize any dividends or
distributions on any shares of its capital stock; or
(h) make any commitment, agreement or understanding
with respect to any of the foregoing.
2.28 CHARTER DOCUMENTS. The charter documents of Xxxxxx have
not been altered since its incorporation, except as filed in the record books of
Xxxxxx or with the Secretary of State of the State of Delaware and, in either
case, have all been delivered to EMLR.
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2.29 CORPORATE MINUTE BOOKS. The corporate minute books of
Xxxxxx are complete and correct and the minutes and consents contained therein
accurately reflect actions taken at a duly called and held meeting or by
sufficient consent without a meeting. All actions by Xxxxxx which required
director or shareholder approval are reflected on the corporate minute books of
Xxxxxx. Xxxxxx is not in violation or breach of, or in default with respect to,
any term of its certificate of incorporation (or other charter documents) or
by-laws.
2.30 TRADING WITH THE ENEMY ACT; PATRIOT ACT. No sale of
Xxxxxx'x securities nor Xxxxxx'x use of the proceeds from such sale has violated
the Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto. Without limiting the foregoing, Xxxxxx (a) is not a Person whose
property or interests in property are blocked pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) and (b) does not engage in any dealings or transactions, or is
otherwise associated, with any such person. Xxxxxx is in compliance with the USA
Patriot Act of 2001 (signed into law October 26, 2001).
REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING EMLR ACQUISITION. EMLR AND
EMLR ACQUISITION EACH JOINTLY AND SEVERALLY REPRESENTS, WARRANTS AND COVENANTS
AS FOLLOWS WITH RESPECT TO EMLR ACQUISITION:
ORGANIZATION; CAPITALIZATION. EMLR Acquisition is, and on the Effective Date
will be, a duly organized and validly existing corporation in good standing
under the laws of the State of Delaware, authorized to issue only the EMLR
Acquisition Shares. On the Effective Date there will be issued and outstanding
all of the EMLR Acquisition Shares, which shall be fully paid and nonassessable
and all of which shall be owned solely by EMLR. There are no, and on the
Effective Date there will be no, issued or outstanding options or warrants to
purchase EMLR Acquisition Shares or any issued or outstanding securities of any
nature convertible into EMLR Acquisition Shares, or any agreements or
understandings to issue any EMLR Acquisition Shares, options or warrants.
AUTHORITY. EMLR Acquisition has, and on the Effective Date will have, 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 EMLR Acquisition.
3.3 BINDING AGREEMENT. This Agreement has been duly executed
and delivered by EMLR Acquisition and constitutes the legal, valid and binding
obligation of EMLR Acquisition, enforceable against it in accordance with the
terms hereof, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application relating to or
affecting the enforcement of rights hereunder or general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.4 NO BUSINESS ACTIVITY; FINANCIAL CONDITION. EMLR
Acquisition has been organized solely for the purpose of consummating the Merger
and, since its inception, has had no
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business activity of any nature other than those related to its organization or
as contemplated by this Agreement. EMLR Acquisition has, and on the Effective
Date will have, no contracts or commitments to which it is, or on the Effective
Date will be, a party, except for this Agreement and other documents and
instruments contemplated hereby in connection with the Merger. Except for (i)
the incurring of expenses of its organization, (ii) the issuance of the EMLR
Acquisition Shares to EMLR, (iii) the incurring of expenses relating to this
Agreement and the consummation of the transactions contemplated by this
Agreement and (iv) the consummation of the Merger, EMLR Acquisition has had, and
on the Effective Date will have had, no financial or other transactions of any
nature whatsoever.
3.5 ISSUANCE OF SECURITIES. Since its inception, EMLR
Acquisition has not issued or committed itself to issue, and to the Effective
Date will not issue or commit to issue, any EMLR Acquisition Shares or any
options, rights, warrants, or other securities convertible into EMLR Acquisition
Shares, except for the issuance of the EMLR Acquisition Shares to EMLR.
3.6 CONSENTS AND APPROVALS. Except for the consent and
approval of the Board of Directors and the sole shareholder of EMLR Acquisition,
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 EMLR
Acquisition of this Agreement and (ii) the consummation by EMLR Acquisition of
the Merger and the other transactions contemplated hereby.
3.7 NO CONFLICTS. The execution and delivery by EMLR
Acquisition of this Agreement, the consummation and performance by it of the
transactions herein contemplated, and compliance with the terms of this
Agreement by EMLR Acquisition, will not conflict with, result in a breach of or
constitute or give rise to a default under, any indenture, mortgage, deed of
trust or other agreement, instrument or contract to which EMLR Acquisition is
now a party or by which it or any of its assets or properties are bound or its
certificate of incorporation or the bylaws of EMLR Acquisition, 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 EMLR Acquisition or any of its businesses or properties.
3.8 SUBSIDIARIES. EMLR Acquisition has, and on the Effective
Date will have, no subsidiaries, nor does it own any direct or indirect interest
in any other business entity.
3.9 LIABILITIES. EMLR Acquisition has, and on the Effective
Date will have, no liabilities (including, but not limited to, tax liabilities)
nor are there, or on the Effective Date will there be, any claims against EMLR
Acquisition (whether such liabilities or claims are contingent or absolute,
direct or indirect, and matured or unmatured) except for liabilities for its
organization expenses or expenses incurred in connection with the Merger and the
consummation of the transactions contemplated by this Agreement.
3.10 ASSETS. EMLR Acquisition has, and on the Effective Date
will have, no fixtures, furniture, equipment, inventory, accounts receivable or
other assets other than its interest in this Agreement.
16
3.11 LEGAL PROCEEDINGS. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature against EMLR Acquisition,
or challenging the validity or propriety of the transactions contemplated by
this Agreement and, to EMLR Acquisition's best knowledge, there is no reasonable
basis for any other proceeding, claim, action or governmental investigation
against EMLR Acquisition. EMLR Acquisition is not a party to any order, judgment
or decree which will, or might reasonably be expected to, materially adversely
affect the business, operations, properties, assets or financial condition of
EMLR Acquisition.
3.12 EMPLOYEE MATTERS; RELATED PARTY TRANSACTIONS. Since the
inception of EMLR Acquisition there have been, and to the Effective Date there
will be (i) no salaried or otherwise compensated employees and no bonuses paid
to any officer or director of EMLR Acquisition; (ii) no loans made to or any
transactions with, any officer or director of EMLR Acquisition; (iii) no
dividends or other distributions declared or paid by EMLR Acquisition; and (iv)
no purchase by EMLR Acquisition of any EMLR Acquisition Shares.
3.13 INTELLECTUAL PROPERTY. EMLR Acquisition has no patents,
patent applications, trademarks, trademark registrations, tradenames,
copyrights, copyright registrations or applications therefor or any other
intellectual property.
3.14 COMPLIANCE WITH LAWS. Since its inception, EMLR
Acquisition has, and on the Effective Date will have, in all material respects
conducted its affairs in compliance with all applicable laws, rules and
regulations.
3.15 OFFICER AND DIRECTOR INFORMATION. During the past ten
year period, no officer or director of EMLR Acquisition has been the subject of
any Adverse Event.
3.16 BENEFIT PLANS. EMLR Acquisition has no pension plan,
profit sharing or similar employee benefit plan.
3.17 FINDER'S FEES. EMLR Acquisition knows of no person who
rendered any service in connection with the introduction of the Companies to any
of the other Companies for a "finder's fee" or similar type of fee in connection
with the Merger and the other transactions contemplated hereby.
3.18 CHARTER DOCUMENTS. The charter documents of EMLR
Acquisition have not been altered since its incorporation.
3.19 CORPORATE MINUTE BOOKS. The corporate minute books of
EMLR Acquisition are complete and correct and the minutes and consents contained
therein accurately reflect the actions that were taken at a duly called and held
meeting or by appropriate consent without a meeting. All actions by EMLR
Acquisition which require director or stockholder approval, including, but not
limited to those required in connection with the Merger and the other
transactions contemplated by this Agreement, are reflected on the corporate
minute books of EMLR Acquisition. EMLR Acquisition is not in violation or breach
of, or in default with respect to, any term of its certificate of incorporation
(or other charter documents) or by-laws.
17
REPRESENTATIONS, WARRANTIES AND COVENANTS OF EMLR. EMLR HEREBY REPRESENTS,
WARRANTS AND COVENANTS AS FOLLOWS, EXCEPT TO THE EXTENT SET FORTH ON THE
CORRESPONDING SECTIONS OF THE SCHEDULE OF EXCEPTIONS ATTACHED HERETO AS SCHEDULE
C AND MADE A PART HEREOF ("EMLR SCHEDULE OF EXCEPTIONS"):
ORGANIZATION; CAPITALIZATION. EMLR is a duly organized and validly existing
corporation in good standing under the laws of the State of Colorado, authorized
to issue an aggregate of 100,000,000 shares of EMLR Common Stock and 10,000,000
shares of preferred stock, par value $.01 per share, none of which are issued or
outstanding. On the Effective Date, there will be issued and outstanding
24,996,000 shares of EMLR Common Stock, all of which will be validly issued,
fully paid and nonassessable. Except as contemplated by this Agreement, on the
Effective Date there will be no issued or outstanding securities and no issued
or outstanding options, warrants or other rights, or commitments or agreements
of any kind, contingent or otherwise, to purchase or otherwise acquire EMLR
Shares or any issued or outstanding securities of any nature convertible into
EMLR Shares. There is no proxy or any other agreement, arrangement or
understanding of any kind authorized, effective or outstanding which restricts,
limits or otherwise affects the right to vote any EMLR Shares.
BINDING AGREEMENT. This Agreement and the transactions contemplated hereby have
been duly approved by the Board of Directors of EMLR. This Agreement has been
duly executed and delivered by EMLR and constitutes the legal, valid and binding
obligation of EMLR enforceable against it in accordance with the terms hereof,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws of general application relating to or affecting the enforcement
of rights hereunder or general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.3 AUTHORITY. EMLR has, and on the Effective Date will have,
full power and authority to enter into this Agreement and, subject to any third
party approval in accordance with the laws of the State of Colorado, to
consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated hereby have been duly approved by the Board of
Directors of EMLR.
4.4 NO CONFLICTS. The execution and delivery by EMLR of this
Agreement, the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by EMLR will not
conflict with, result in a breach of or constitute or give rise to a default
under (i) any indenture, mortgage, deed of trust or other agreement, instrument
or contract to which EMLR is now a party or by which it or any of its assets or
properties are bound; (ii) EMLR's certificate of incorporation and bylaws, in
each case as amended; or (iii) any law, order, rule, regulation, writ,
injunction, judgment or decree of any government, governmental instrumentality
or court, domestic or foreign, having jurisdiction over EMLR or any of its
business or properties wherein such breach could have a material adverse effect
on EMLR or any of its business or properties.
4.5 RECENT BUSINESS OPERATIONS. Except as set forth in its
filings with the Commission, EMLR has not been engaged in any other business
activity since at least February 28, 2003, other than the search for an
acquisition or merger partner.
18
4.6 FOREIGN QUALIFICATIONS. EMLR is, and on the Effective Date
will be, duly authorized, qualified and licensed under any and all applicable
laws, regulations, ordinances or orders of public authorities to carry on its
business in the places and in the manner as presently conducted. The business of
EMLR does not require it to be registered as an investment company or investment
advisor, as such terms are defined under the Investment Company Act and the
Investment Advisors Act of 1940.
4.7 SUBSIDIARIES. EMLR has, and on the Effective Date will
have, no subsidiaries, except for EMLR Acquisition, nor does it own any direct
or indirect interest in any other business entity.
4.8 FINANCIAL STATEMENTS. The financial statements of EMLR,
consisting of its Balance Sheets, Statement of Operations, Statement of
Stockholders' Equity and Statement of Cash Flows, all as at or for years ending
February 29, 2004 and February 28, 2003, and all together with accompanying
notes, if any, are complete and correct in all material respects, present fairly
the financial position of EMLR, the results of operations and changes in
financial position for the period covered thereby, and were prepared in
accordance with GAAP, and have been adjusted for all normal and recurring
accruals. All the financial statements referenced herein regarding EMLR are
collectively referred to as the "EMLR FINANCIAL STATEMENTS", all of which have
been delivered to Xxxxxx and are true, correct and complete in all material
respects.
4.9 NO ADVERSE CHANGES. There has not been, and on the
Effective Date there will not have been, any material change in the financial
condition of EMLR from that set forth in the EMLR Financial Statements except
for (i) transactions in the ordinary course of business and (ii) transactions,
including but not limited to the incurring of expenses and liabilities, relating
to this Agreement.
4.10 LIABILITIES. There are, and on the Effective Date will
be, no liabilities (including, but not limited to, tax liabilities) or claims
against EMLR (whether such liabilities or claims are contingent or absolute,
direct or indirect, accrued or unaccrued and matured or unmatured) not appearing
on the EMLR Financial Statements, except for (i) liabilities for expenses
incurred relating to this Agreement and the consummation of the transactions
contemplated hereby and (ii) liabilities and commitments incurred or made in the
ordinary course of EMLR's business or taxes incurred on earnings since February
29, 2004.
4.11 TAX RETURNS. All federal, state, county and local income,
excise, property or other tax returns required to be filed by EMLR have been
timely filed and all required taxes, fees and assessments have been paid or an
adequate reserve therefor has been provided for in the EMLR Financial
Statements. The federal income tax returns and state and foreign income tax
returns of EMLR have not been audited by the IRS or any other taxing authority
within the past five (5) years. Neither the IRS nor any state, local or other
taxing authority has proposed any additional taxes, interest or penalties with
respect to EMLR or any of its operations or businesses. There are no pending, or
to the knowledge of EMLR threatened, tax claims or assessments, and there are no
pending, or to the knowledge of EMLR threatened, tax examinations by any taxing
authorities. EMLR has not given any waivers of rights (which are currently in
effect) under applicable statutes of limitations with respect to the federal
income tax returns of EMLR for any year.
19
4.12 ASSETS. Except as set forth in the SEC Reports (as
hereinafter defined), EMLR has, and on the Effective Date will have, no
fixtures, furniture, equipment, inventory, accounts receivable or other assets
except for no more than $100.00 in cash.
4.13 MATERIAL CONTRACTS. Except as set forth in the SEC
Reports, EMLR has, and on the Effective Date will have, no material contracts to
which it is, or on the Effective Date will be, a party.
4.14 NO CONFLICTS. The execution and delivery by EMLR of this
Agreement, the consummation and performance of the transactions herein
contemplated and compliance with the terms of this Agreement by EMLR will not
conflict with, result in a breach of or constitute a default under (i) any
indenture, mortgage, deed of trust or other agreement, instrument or contract to
which EMLR is now a party or by which it or any of its assets or properties is
bound; (ii) the certificate of incorporation or the bylaws of EMLR, in each case
as amended; or (iii) any law, order, rule, regulation, writ, injunction,
judgment or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over EMLR or any of its business or
properties.
4.15 LEGAL PROCEEDINGS. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature pending, or to EMLR's
knowledge threatened, against EMLR, including, but not limited to any
shareholder claims or derivative actions, or challenging the validity or
propriety of the transactions contemplated by this Agreement, and, to EMLR's
best knowledge, there is no reasonable basis for any proceeding, claim, action
or governmental investigation against EMLR. EMLR is not a party to any order,
judgment or decree.
4.16 CERTAIN TRANSACTIONS. There have been, and to the
Effective Date there will be (i) no loans made to, or transactions with, any
officer or director of EMLR and (ii) no dividends or other distributions
declared or paid by EMLR.
4.17 INSURANCE. EMLR has not, and on the Effective Date will
not have, maintained casualty and liability policies and other insurance
policies with respect to its business.
4.18 ISSUANCES OF SECURITIES. Except as set forth in the SEC
Reports, EMLR has not, except for the Issued EMLR Shares, issued or committed
itself to issue, and prior to the Effective Date will not issue or commit itself
to issue, any EMLR Shares or any options, rights, warrants or other securities
convertible into EMLR Shares, except as contemplated by this Agreement.
4.19 INTELLECTUAL PROPERTY. EMLR has no patents, patent
applications, trademarks, trademark registrations, trade names, copyrights,
copyright registrations or applications therefor. EMLR has no knowledge of any
infringements by EMLR of any third party's intellectual property.
4.20 COMPLIANCE WITH LAWS. EMLR has, and on the Effective Date
will have, in all material respects operated its business and conducted its
affairs in compliance with all
20
applicable laws, rules and regulations, except where the failure to so comply
did not have and would not be expected to have, a material adverse effect on its
business or property. To the best of its knowledge, EMLR is not in violation of
any federal, state or local environmental law or regulation.
4.21 RELATED PARTY TRANSACTIONS. On the Effective Date there
will be no loans, leases, commitments, arrangements or other contracts of any
kind or nature outstanding between (i) EMLR or (ii) any officer or director of
EMLR, or any person related to or affiliated with any officer or director of
EMLR.
4.22 OFFICERS AND DIRECTORS. During the past ten year period,
no current officer or director of EMLR has been the subject of any Adverse
Event.
4.23 BENEFIT PLANS. EMLR has no pension plan, profit sharing
or similar employee benefit plan.
4.24 CONSENTS. Except for the filing of the Certificate of
Merger and the filing of Commission Form 8-K, 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 EMLR of this
Agreement or (ii) the consummation by EMLR of the transactions contemplated
hereby. EMLR has, and on the Effective Date will have, full power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby.
4.25 FINDER'S FEES. EMLR knows of no person who rendered any
service in connection with the introduction of the Companies to any of the other
Companies, for a "finder's fee" or similar type of fee in connection with the
Merger and the other transactions contemplated hereby.
4.26 EMPLOYEES. Except as set forth in the SEC Reports, EMLR
has no employees.
4.27 DISCLOSURE. To the knowledge of EMLR, none of the
information supplied or to be supplied by or about EMLR to Xxxxxx concerning the
Merger contains any untrue statement of a material fact 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.
4.28 SEC REPORTS; FINANCIAL STATEMENTS. EMLR has filed all
reports required to be filed by it under the Securities Act of 1933, as amended
(the "SECURITIES ACT") and the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), including pursuant to Section 13(a) or 15(d) thereof, since May
16, 2001 (the foregoing materials being collectively referred to herein as the
"SEC REPORTS"). As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a 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. The financial
statements of EMLR included in the SEC Reports complied in all material respects
with applicable accounting
21
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements were
prepared in accordance with GAAP, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the EMLR as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.
4.29 CHARTER DOCUMENTS. The charter documents of EMLR have not
been altered since incorporation, except as filed in the record books of EMLR.
4.30 CORPORATE MINUTE BOOKS. The corporate minute books of
EMLR are complete and correct and the minutes and consents contained therein
accurately reflect actions taken at a duly called and held meeting or by
sufficient consent without a meeting. All actions by EMLR which required
director or shareholder approval are reflected on the corporate minute books of
EMLR. EMLR is not in violation or breach of, or in default with respect to, any
term of its certificate of incorporation (or other charter documents) or
by-laws.
REPRESENTATIONS TO SURVIVE CLOSING. ALL OF THE REPRESENTATIONS, COVENANTS AND
WARRANTIES CONTAINED IN THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, ALL
STATEMENTS CONTAINED IN ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY OR ON
BEHALF OF EMLR, EMLR ACQUISITION OR XXXXXX PURSUANT HERETO OR IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED HEREBY) SHALL SURVIVE THE CLOSING FOR A PERIOD OF
ONE (1) YEAR FROM THE EFFECTIVE DATE.
SURVIVING CORPORATIONS. THE SURVIVING ENTITY IN THE MERGER SHALL BE XXXXXX.
XXXXXX' NAME, IDENTITIES, CERTIFICATE OF INCORPORATION, BYLAWS, EXISTENCE,
PURPOSES, POWERS, OBJECTS, FRANCHISES, RIGHTS AND IMMUNITIES SHALL BE UNAFFECTED
AND UNIMPAIRED BY THE MERGER, EXCEPT AS DESCRIBED IN THE CERTIFICATE OF MERGER.
TREATMENT OF SECURITIES OF CONSTITUENT CORPORATIONS IN THE MERGER. THE TERMS AND
CONDITIONS OF THE MERGER, THE MODE OF CARRYING THE SAME INTO EFFECT, AND THE
MANNER AND BASIS OF CONVERTING THE SECURITIES OF EACH OF THE CONSTITUENT
CORPORATIONS ARE AS FOLLOWS:
TREATMENT OF THE ISSUED XXXXXX SHARES. At the Effective Time, each Issued Xxxxxx
Share shall be converted into and exchangeable for one share of fully paid and
non-assessable shares of EMLR's newly-designated Series B Convertible Preferred
Stock, par value $.01 per share (the "EMLR SERIES B SHARES"). The EMLR Series B
Shares shall have the terms, rights and preferences substantially as set forth
on the Certificate of Designation for the EMLR Series B Shares attached hereto
as Exhibit C. Each EMLR Series B Share shall be initially convertible into a
number of shares of EMLR Common Stock equal to the quotient resulting from
dividing (a) the product resulting from multiplying (i) the total number of
shares of EMLR Common Stock outstanding on a fully-diluted basis immediately
prior to the Effective Time by (ii) 6.692308, by (b) the total number of Issued
Xxxxxx Shares outstanding on a fully-diluted basis immediately prior to the
Effective Time (the "EXCHANGE RATIO"), subject to adjustment for stock splits,
combinations, recapitalizations and similar events.
TREATMENT OF THE XXXXXX SERIES A SHARES. At the Effective Time, each Xxxxxx
Series A Share issued and outstanding shall be converted into and exchangeable
for one (1) share of fully paid
22
and non-assessable share of EMLR's newly-designated Series A Convertible
Preferred Stock, par value $.01 per share (the "EMLR SERIES A SHARES"). The EMLR
Series A Shares shall have the terms, rights and preferences substantially as
set forth on the Certificate of Designation for the EMLR Series A Shares
attached hereto as Exhibit B. Each EMLR Series A Share shall be initially
convertible into a number of shares of EMLR Common Stock equal to the Exchange
Ratio, subject to adjustment for stock splits, combinations, recapitalizations
and similar events.
TREATMENT OF XXXXXX WARRANTS. All outstanding warrants and other rights to
purchase or acquire shares of Xxxxxx Common Stock outstanding immediately prior
to the Closing shall convert to the right to purchase the same number of shares
of EMLR Common Stock on the same basis of conversion set forth in Section 7.1
above; provided that the exercise price per share of EMLR Common Stock under
each such converted warrant or right will be equal to the quotient obtained by
dividing the exercise price per share of Xxxxxx Common Stock under each
outstanding Xxxxxx warrant or right by the applicable Exchange Ratio.
TREATMENT OF XXXXXX OPTIONS. All outstanding options to purchase shares of
Xxxxxx Common Stock outstanding immediately prior to the Closing shall convert
to the right to purchase the same number of shares of EMLR Common Stock on the
same basis of conversion set forth in Section 7.1 above; provided that the
exercise price per share of EMLR Common Stock under each such converted option
will be equal to the quotient obtained by dividing the exercise price per share
of Xxxxxx Common Stock under each outstanding Xxxxxx option or right by the
applicable Exchange Ratio.
TREATMENT OF EMLR ACQUISITION SHARES. Each issued and outstanding share of
common stock of EMLR Acquisition held by EMLR immediately prior to the Effective
Time will be converted into and become one validly issued, fully paid and
non-assessable share of common stock of Xxxxxx.
EXISTENCE OF EMLR ACQUISITION. The separate existence and corporate organization
of EMLR Acquisition, except insofar as it may be continued by statute, shall
cease on Effective Date and Xxxxxx shall become a wholly owned subsidiary of
EMLR.
RIGHTS OF HOLDERS OF XXXXXX SHARES. (a) On and after the Effective Time and
until surrendered for exchange, each outstanding certificate that immediately
prior to the Effective Time represented Issued Xxxxxx Shares (except Dissenting
Shares) shall be deemed for all purposes, to evidence ownership of and represent
the number of whole EMLR Series B Shares into which such Issued Xxxxxx Shares
are convertible pursuant to Section 7.1 above. The record holder of each such
outstanding certificate representing Issued Xxxxxx Shares shall, after the
Effective Date, be entitled to vote the EMLR Series B Shares into which such
Issued Xxxxxx Shares shall have been converted or are convertible on any matters
on which the holders of record of the EMLR Series B Shares, as of any date
subsequent to the Effective Date, shall be entitled to vote. In any matters
related to such certificates of Issued Xxxxxx Shares, EMLR may conclusively rely
upon the record of stockholders maintained by EMLR containing the names and
addresses of the holders of record of Issued Xxxxxx Shares on the Effective
Date.
(b) On and after the Effective Time and until surrendered for
exchange, each outstanding certificate that immediately prior to the Effective
Time represented Xxxxxx Series A
23
Shares shall be deemed for all purposes, to evidence ownership of and represent
the number of whole EMLR Series A Shares into which such Xxxxxx Series A Shares
are convertible pursuant to Section 7.2 above. The record holder of each such
outstanding certificate representing Xxxxxx Series A Shares shall, after the
Effective Date, be entitled to vote the EMLR Series A Shares into which such
Xxxxxx Series A Shares shall have been converted or are convertible on any
matters on which the holders of record of the EMLR Series A Shares, as of any
date subsequent to the Effective Date, shall be entitled to vote. In any matters
related to such certificates of Xxxxxx Series A Shares, EMLR may conclusively
rely upon the record of stockholders maintained by EMLR containing the names and
addresses of the holders of record of Xxxxxx Series A Shares on the Effective
Date.
DISSENTING SHARES. Issued Xxxxxx Shares held by stockholders of Xxxxxx who have
properly exercised and preserved appraisal rights with respect to those shares
("DISSENTING SHARES") in accordance with Section 262 of the Delaware General
Corporation Law ("DGCL") shall not be converted into or represent a right to
receive EMLR Series B Shares pursuant to Section 7.1 above, but the holders
thereof shall be entitled only to such rights as are granted by Section 262 of
the DGCL. Each holder of Dissenting Shares who becomes entitled to payment for
such shares pursuant to Section 262 of the DGCL shall receive payment therefor
from Xxxxxx, as the surviving corporation, in accordance with such laws;
PROVIDED, HOWEVER, that if any such holder of Dissenting Shares shall have
effectively withdrawn such holder's demand for appraisal of such shares or lost
such holder's right to appraisal and payment of such shares under Section 262 of
the DGCL, such holder or holders (as the case may be) shall forfeit the right to
appraisal of such shares and each such share shall thereupon be deemed to have
been canceled, extinguished and converted, as of the Effective Time, into and
represent the right to receive payment from EMLR of EMLR Series B Shares as
provided in Section 7.1 above.
RIGHTS AND LIABILITIES OF SURVIVING CORPORATION IN MERGER. ON AND AFTER THE
EFFECTIVE DATE, XXXXXX, AS THE SURVIVING CORPORATION OF THE MERGER, 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 EMLR ACQUISITION; ALL DEBTS DUE TO EMLR
ACQUISITION ON WHATEVER ACCOUNT SHALL BE VESTED IN XXXXXX; ALL CLAIMS, DEMANDS,
PROPERTY, RIGHTS, PRIVILEGES, POWERS, FRANCHISES AND EVERY OTHER INTEREST OF
EMLR ACQUISITION SHALL BE AS EFFECTIVELY THE PROPERTY OF XXXXXX AS THEY WERE OF
EMLR ACQUISITION; THE TITLE TO ANY REAL ESTATE BY DEED OR OTHERWISE IN EMLR
ACQUISITION SHALL NOT REVERT OR BE IN ANY WAY IMPAIRED BY REASON OF THE MERGER,
BUT SHALL BE VESTED IN XXXXXX; ALL RIGHTS OF CREDITORS AND ALL LIENS UPON ANY
PROPERTY OF EMLR ACQUISITION SHALL BE PRESERVED UNIMPAIRED, LIMITED IN LIEN TO
THE PROPERTY AFFECTED BY SUCH LIEN AT THE EFFECTIVE DATE; AND ALL DEBTS,
LIABILITIES AND DUTIES OF EMLR ACQUISITION SHALL THENCEFORTH ATTACH TO XXXXXX
AND MAY BE ENFORCED AGAINST IT TO THE SAME EXTENT AS IF SUCH DEBTS, LIABILITIES
AND DUTIES HAD BEEN INCURRED OR CONTRACTED BY IT.
FURTHER ASSURANCES OF TITLE. AS AND WHEN REQUESTED BY XXXXXX, OR BY ANY OF ITS
SUCCESSORS OR ASSIGNS, EMLR ACQUISITION 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 XXXXXX MAY XXXX NECESSARY OR DESIRABLE IN
ORDER TO VEST IN AND CONFIRM TO XXXXXX TITLE TO AND POSSESSION OF THE PROPERTY
ACQUIRED BY XXXXXX BY REASON OR AS A RESULT OF THE MERGER, AND OTHERWISE TO
CARRY OUT THE INTENT AND PURPOSES HEREOF, AND THE OFFICERS,
24
DIRECTORS OF XXXXXX AND EMLR, AS APPLICABLE, ARE FULLY AUTHORIZED IN THE NAME OF
XXXXXX OR EMLR OR OTHERWISE TO TAKE ANY AND ALL SUCH ACTION.
CONDITIONS OF OBLIGATIONS OF EMLR ACQUISITION AND EMLR. THE OBLIGATION OF EMLR
ACQUISITION AND EMLR TO CONSUMMATE THE MERGER AND OTHER TRANSACTIONS
CONTEMPLATED HEREBY IS SUBJECT TO THE FOLLOWING CONDITIONS PRIOR TO THE
EFFECTIVE DATE:
COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. Xxxxxx shall be in compliance
with its representations, warranties and covenants contained herein in all
material respects, and EMLR Acquisition and EMLR each shall receive from Xxxxxx
certificates to such effect from the President of Xxxxxx as of the Effective
Date.
LOSSES. Xxxxxx shall not have suffered a loss on account of fire, flood,
accident or other calamity of such a character as to interfere materially with
the continuous operation of its business or materially adversely affect its
condition, financial or otherwise, regardless of whether or not such loss shall
have been insured.
NO MATERIAL ADVERSE CHANGE. Except as disclosed in this Agreement or in the
schedules annexed hereto, no material adverse change in the aggregate shall have
occurred in the financial condition, business, properties, assets, liabilities,
results of operations or prospects of Xxxxxx since December 31, 2003.
DISPOSITION OF ASSETS. None of the properties or assets of Xxxxxx shall have
been sold or otherwise disposed of other than in the ordinary course of business
in accordance with past practice during such period, except with the prior
written consent of EMLR.
CONDITIONS. Xxxxxx shall have performed and complied with the provisions and
conditions of this Agreement on its part to be performed and complied with.
FILINGS AND APPROVALS. All applicable filings and regulatory approvals required
to be made or obtained by Xxxxxx shall have been made or obtained.
OTHER APPROVALS. This Agreement and the transactions contemplated hereby shall
have been approved by appropriate action of the Board of Directors and
stockholders, as required, of Xxxxxx and resolutions to that effect shall have
been delivered to EMLR. Xxxxxx shall have obtained all consents required to be
obtained.
COMPLIANCE WITH SECURITIES LAWS. There shall have been full compliance with the
applicable securities or "blue sky" laws and regulations of any state or other
governmental body having jurisdiction over the Merger.
OPINION OF COUNSEL. EMLR shall have received an opinion from counsel to Xxxxxx
in form and substance reasonably satisfactory to EMLR.
PRIVATE PLACEMENT. That certain private placement of Xxxxxx Series A Shares
providing minimum aggregate gross proceeds to Xxxxxx of $7,014,000 shall have
been consummated (the "PRIVATE PLACEMENT").
25
VOTING AGREEMENT. R&R Biotech Partners, LLC shall have executed and delivered a
voting agreement, agreeing to vote all Issued EMLR Shares beneficially owned by
it in favor of the transactions contemplated hereby.
Compliance with the provisions of this Section 10 shall be certified to
at the Closing of the Merger by the President and Secretary of Xxxxxx.
CONDITIONS OF OBLIGATIONS OF XXXXXX. THE OBLIGATIONS OF XXXXXX TO CONSUMMATE THE
MERGER ARE SUBJECT TO THE FOLLOWING CONDITIONS PRIOR TO THE EFFECTIVE DATE:
COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. EMLR Acquisition and EMLR shall
be in compliance with their respective representations, warranties and covenants
contained herein, and Xxxxxx shall have received from each of EMLR Acquisition
and EMLR a certificate to such effect from their respective Presidents as of the
Effective Date.
LOSSES. EMLR Acquisition and EMLR shall not have suffered any loss on account of
fire, flood, accident or other calamity of such a character as to interfere
materially with the continuous operation of their respective businesses or
materially adversely affect their respective condition, financial or otherwise,
regardless of whether or not such loss shall have been insured.
NO MATERIAL TRANSACTIONS. No material transactions shall have been entered into
by EMLR Acquisition or EMLR, other than transactions in the ordinary course of
business, since February 29, 2004, other than as referred to in this Agreement
or in connection herewith, except with the prior written consent of Xxxxxx.
NO MATERIAL ADVERSE CHANGE. No material adverse change shall have occurred in
the financial condition, business, properties, assets, liabilities, results of
operations or prospects of EMLR Acquisition or EMLR since February 29, 2004,
other than as referred to in this Agreement.
DISPOSAL OF ASSETS; LIABILITIES. None of the properties or assets of EMLR
Acquisition or EMLR shall have been sold or otherwise disposed of, other than in
the ordinary course of business since February 29, 2004, except with the written
consent of Xxxxxx. Neither EMLR nor EMLR Acquisition shall have any liabilities
or claims, whether such liabilities or claims are contingent or absolute, direct
or indirect, accrued or unaccrued and matured or unmatured, including without
limitation, amounts owed to their respective financial advisors, accountants and
counsel.
COMPLIANCE WITH CONDITIONS. EMLR Acquisition and EMLR shall each have performed
and complied with the provisions and conditions of this Agreement on its part to
be performed and complied with.
11.7 FILINGS AND APPROVALS. All applicable filings required to
be made and regulatory approvals, as well as any other third party approvals,
required to be obtained by EMLR have been made or obtained, including the filing
with the Commission and mailing to its shareholders a statement containing the
information required by Rule 14f-1 under the Exchange Act. Without limiting the
generality of the foregoing, EMLR shall have also filed with the Commission its
quarterly report on Form 10-QSB for its quarter ended May 31, 2004, which report
shall comply in all material respects with the requirements of the Exchange Act
and the rules and regulations promulgated thereunder.
26
11.8 BOARD RESIGNATIONS. EMLR shall have held a meeting of its
Board of Directors at which meeting all of its directors except one (the "EMLR
BOARD MEMBER") shall have resigned and the persons designated by Xxxxxx shall
have been appointed as directors of EMLR, to fill the vacancies created thereby,
all subject to the consummation of the Merger. Upon such appointment, the
remaining EMLR Board Member shall resign.
11.9 OPINION. Xxxxxx shall have received an opinion from
counsel to EMLR Acquisition and EMLR in form and substance reasonably
satisfactory to Xxxxxx.
11.10 PRIVATE PLACEMENT. The Private Placement shall have
been consummated.
Compliance with the provisions of this Section 11, as well as such
other reasonable certifications as Xxxxxx shall require, including but not
limited to certification of the shareholder list, bylaws and charter documents
of EMLR, shall be certified to at the Closing of the Merger by the President and
Secretary of EMLR.
OTHER COVENANTS.
PREPARATION OF INFORMATION STATEMENT. As promptly as practicable after the
execution of this Agreement, EMLR will prepare and file with the Commission and
mail to its shareholders a notice that complies with Rule 14f-1 under the
Exchange Act and will prepare and use commercially reasonable efforts to file
any other filings required to be filed by it under the Exchange Act, the
Securities Act or any other federal, state or foreign laws relating to the
Merger and the transactions contemplated by this Agreement. EMLR and Xxxxxx
shall promptly supply the other with any information which may be required in
order to effectuate any filings pursuant to this Section 12.1.
EXPENSES. Except as otherwise provided in this Agreement, all fees and expenses
incident to the negotiation, preparation and performance of this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses, including, without limitation, fees, expenses and
disbursements of their respective financial advisors, accountants and counsel.
TAX TREATMENT. None of EMLR, EMLR Acquisition or Xxxxxx shall knowingly take any
action that could reasonably be expected to disqualify the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code.
REVERSE SPLIT. The parties acknowledge and agree that, following the Closing,
EMLR intends to effect a reverse split of the EMLR Common Shares in order to
allow for the conversion of the EMLR Series A and Series B Preferred Shares (the
"REVERSE SPLIT"). The Reverse Split shall be effected at a ratio not to exceed
1-for-12. The Reverse Split may also be effected through a merger with a
wholly-owned subsidiary of EMLR for purposes of completing a reincorporation
under Delaware law in which each share of outstanding EMLR Common Stock is
exchanged for no less than one-twelfth (1/12) of a common share of the surviving
corporation in such merger.
27
ABANDONMENT. THIS AGREEMENT AND THE MERGER MAY BE ABANDONED BY ANY OF THE
COMPANIES, ACTING BY ITS BOARD OF DIRECTORS, BY WRITTEN NOTICE TO THE OTHER
PARTIES HERETO, AT ANY TIME IN THE EVENT OF THE FAILURE OF ANY CONDITION IN
FAVOR OF SUCH ENTITY AS TO WHICH THE CONSUMMATION OF THE MERGER IS SUBJECT. IN
THE EVENT OF ABANDONMENT OF THIS AGREEMENT, THE SAME SHALL BECOME WHOLLY VOID
AND OF NO EFFECT, AND THERE SHALL BE NO FURTHER LIABILITY OR OBLIGATION
HEREUNDER ON THE PART OF ANY OF THE COMPANIES, THEIR RESPECTIVE BOARDS OF
DIRECTORS OR ANY OTHER PARTY TO ANY OTHER PARTY TO THIS AGREEMENT.
CLOSING OR TERMINATION. IN THE EVENT THE CLOSING SHALL NOT TAKE PLACE DUE TO
FAILURE OF ANY CONDITION REQUIRED HEREIN, 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.
DELIVERY OF CORPORATE PROCEEDINGS OF EMLR AND EMLR ACQUISITION. AT THE CLOSING,
EMLR AND EMLR ACQUISITION SHALL DELIVER TO COUNSEL FOR XXXXXX THE ORIGINALS OF
ALL OF THE CORPORATE PROCEEDINGS OF EMLR AND EMLR ACQUISITION, RELATING TO THIS
AGREEMENT AND XXXXXX SHALL DELIVER TO COUNSEL FOR EMLR THE ORIGINALS OF ALL OF
THE CORPORATE PROCEEDINGS OF XXXXXX, DULY CERTIFIED BY THEIR RESPECTIVE
SECRETARIES, RELATING TO THIS AGREEMENT.
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.
17. FURTHER INSTRUMENTS AND ACTIONS. Each party shall deliver such
further instruments and take such further action as may be reasonably requested
by any other party hereto in order to carry out the intent and purposes of this
Agreement.
18. GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED AND IS INTENDED TO
BE PERFORMED IN THE STATE OF NEW YORK, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO CONFLICTS OF LAWS
THEREOF. EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS CONCERNING THE
INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT AND ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH (WHETHER
BROUGHT AGAINST A PARTY HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS,
OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE COMMENCED EXCLUSIVELY IN
THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK. EACH PARTY HERETO
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, NEW YORK FOR THE ADJUDICATION OF
ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF ANY OF THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH), AND HEREBY
IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HERETO
(INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES) HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
28
HEREBY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS
AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
DELIVERING A COPY THEREOF VIA OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO
SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND
AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS
AND NOTICE THEREOF. IF ANY PARTY SHALL COMMENCE AN ACTION OR PROCEEDING TO
ENFORCE ANY PROVISIONS HEREOF, THEN THE PREVAILING PARTY IN SUCH ACTION OR
PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR ITS ATTORNEYS FEES AND
OTHER COSTS AND EXPENSES INCURRED WITH THE INVESTIGATION, PREPARATION AND
PROSECUTION OF SUCH ACTION OR PROCEEDING
19. NOTICES. ALL NOTICES OR OTHER COMMUNICATIONS TO BE SENT BY ANY
PARTY TO THIS AGREEMENT TO ANY OTHER PARTY TO THIS AGREEMENT SHALL BE SENT BY
CERTIFIED MAIL, PERSONAL DELIVERY OR NATIONWIDE OVERNIGHT COURIER TO THE
ADDRESSES HEREINBEFORE DESIGNATED, OR SUCH OTHER ADDRESSES AS MAY HEREAFTER BE
DESIGNATED IN WRITING BY A PARTY. NOTICE SHALL BE DEEMED GIVEN AND RECEIVED ON
THE DATE OF ACTUAL DELIVERY TO THE ADDRESS SPECIFIED THEREON.
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 A WRITING EXECUTED BY ALL OF THE PARTIES HERETO.
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.
23. JOINT DRAFTING. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN DRAFTED
JOINTLY BY THE PARTIES HERETO, AND NO INFERENCE OR INTERPRETATION AGAINST ANY
PARTY SHALL BE MADE SOLELY BY VIRTUE OF SUCH PARTY ALLEGEDLY HAVING BEEN THE
DRAFTSPERSON OF THIS AGREEMENT.
24. RELIANCE ON CERTIFICATES. IN RENDERING ANY OPINION REFERRED TO
HEREIN, COUNSEL FOR THE PARTIES HERETO MAY RELY, AS TO ANY FACTUAL MATTERS
INVOLVED IN THEIR RESPECTIVE OPINIONS, ON CERTIFICATES OF PUBLIC OFFICIALS AND
OF CORPORATE AND COMPANY OFFICERS, AND ON SUCH OTHER EVIDENCE AS SUCH COUNSEL
MAY REASONABLY DEEM APPROPRIATE AND, AS TO THE MATTERS GOVERNED BY THE LAWS OF
JURISDICTIONS OTHER THAN THE UNITED STATES OR THE STATES OF DELAWARE OR
COLORADO, AN OPINION OF LOCAL COUNSEL IN SUCH OTHER JURISDICTION(S), WHICH
COUNSEL SHALL BE SATISFACTORY TO THE OTHER PARTIES IN THE EXERCISE OF THEIR
REASONABLE DISCRETION.
25. PUBLIC ANNOUNCEMENTS. ALL PARTIES HERETO AGREE THAT ANY PUBLIC
ANNOUNCEMENT, PRESS RELEASE OR OTHER PUBLIC DISCLOSURE OF THE SIGNING OF THIS
AGREEMENT SHALL BE MADE JOINTLY AND ONLY AFTER ALL PARTIES HERETO HAVE REVIEWED
AND APPROVED THE LANGUAGE AND TIMING OF SUCH DISCLOSURE.
29
26. CONSENT. Whenever consent is required to be given by any party to
any other party
hereunder in connection with any matter contemplated hereby, such consent shall
not be unreasonably withheld, delayed or conditioned.
SIGNATURE PAGE FOLLOWS.
30
IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
EMAIL REAL XXXXXX.XXX, INC.,
a Colorado corporation
By:
------------------------------------------
Name: Xxx X'Xxxxx
Title: Chief Executive Officer
EMLR ACQUISITION CORP.,
a Delaware corporation
By:
------------------------------------------
Name: Xxx X'Xxxxx
Title: Chief Executive Officer
XXXXXX HEALTH SCIENCES, INC.,
a Delaware corporation
By:
------------------------------------------
Name: Xxxx X. Xxx
Title: President and Chief Executive Officer
31
INDEX TO SCHEDULES AND EXHIBITS
Exhibit A: Certificate of Merger
Exhibit B: Form of Certificate of Designation of EMLR Series A Shares
Exhibit C: Form of Certificate of Designation of EMLR Series B Shares
Schedule A: Xxxxxx Capitalization Schedule
Schedule B: Xxxxxx Schedule of Exceptions
Schedule C: EMLR Schedule of Exceptions
Schedule 2.6: Xxxxxx Foreign Qualifications
Schedule 2.14: Xxxxxx Contracts
Schedule 2.18: Xxxxxx Intellectual Property Rights
31
EXHIBIT A
CERTIFICATE OF MERGER
OF
EMLR ACQUISITION CORP.
INTO
XXXXXX HEALTH SCIENCES, INC.
Pursuant to Title 8, Section 251 of the General Corporation Law of the
State of Delaware, Xxxxxx Health Sciences, Inc. certifies:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
---- ----------------------
EMLR Acquisition Corp. Delaware
Xxxxxx Health Sciences, Inc. Delaware
SECOND: That an Agreement and Plan of Merger has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with the requirements of Section 251 of the General
Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation of the merger is Xxxxxx
Health Sciences, Inc., the name of which is hereby changed to Hana Biosciences,
Inc.
FOURTH: The certificate of incorporation and Bylaws of Xxxxxx Health
Sciences, Inc. will be the certificate of incorporation and Bylaws of the
surviving corporation.
FIFTH: The executed Agreement and Plan of Merger is on file at an
office of the surviving corporation, the address of which is 000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
SIXTH: That a copy of the Agreement and Plan of Merger will be
furnished by the surviving corporation, on request and without cost, to any
stockholder of any constituent corporation.
SEVENTH: This merger shall be effective at the time of filing of this
Certificate of Merger with the Secretary of State of Delaware.
The undersigned corporation has caused this certificate of merger to be
signed on ________, 2004.
XXXXXX HEALTH SCIENCES, INC.
By:
---------------------------------------
Xxxx X. Xxx
President and Chief Executive Officer
EXHIBIT B
EMAIL REAL XXXXXX.XXX, INC.
CERTIFICATE OF DESIGNATION OF
SERIES A CONVERTIBLE PREFERRED STOCK
--------------------------------------------
EMAIL REAL XXXXXX.XXX, INC., a corporation organized and existing
under the laws of the State of Colorado (the "Corporation"), does hereby certify
that, pursuant to the authority conferred on the Board of Directors of the
Corporation by the Articles of Incorporation, as amended and restated to date
(the "ARTICLES OF INCORPORATION"), of the Corporation and in accordance with
Section 0-000-000 of the Colorado Business Corporation Act, the Board of
Directors of the Corporation adopted the following resolution establishing a
series of [__________________ ( )] shares of Preferred Stock of the Corporation
designated as "Series A Convertible Preferred Stock":
RESOLVED, that pursuant to the authority conferred on the Board of
Directors of this Corporation by the Articles of Incorporation, a
series of Preferred Stock, par value $0.01 per share, of the
Corporation is hereby established and created, and that the
designation and number of shares thereof and the voting and other
powers, preferences and relative, participating, optional or other
rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:
1. DESIGNATION. The series of preferred stock established hereby shall
be designated the "Series A Convertible Preferred Stock" (and shall be referred
to herein as the "PREFERRED SHARES") and the authorized number of Preferred
Shares shall be [ ].
2. RANK. With respect to any Liquidation Event (as defined herein),
the Preferred Shares shall rank prior to the Corporation's common stock, par
value $.001 per share (the "COMMON STOCK"), and the Corporation's Series B
Convertible Preferred Stock, par value $.01 per share (the "SERIES B SHARES,"
and together with the Common Stock, the "JUNIOR SECURITIES").
3. VOTING RIGHTS. Along with the holders of the Common Stock, each
holder of Preferred Shares shall have one vote on all matters submitted to the
holders of Common Stock for each share of Common Stock into which such Preferred
Shares would be converted if converted as of the date of such vote based on the
Conversion Ratio (as herein defined) then in effect, but regardless as to
whether the Preferred Shares are then convertible. In addition, without the
affirmative vote of the holders (acting together as a class) of at least a
majority of Preferred Shares at the time outstanding given in person or by proxy
at any annual or special meeting, or, if permitted by law, in writing without a
meeting, the Corporation shall not alter, change or amend the preferences or
rights of the Preferred Shares.
4. DIVIDENDS. The Preferred Shares shall not be entitled to receive a
dividend and, as long as any Preferred Shares remain outstanding, no dividends
shall be declared on any Junior Security without the consent in writing of
holders of at least a majority of the Preferred Shares
then outstanding. Subject to the foregoing sentence, in the event that the
Corporation declares or pays any dividends upon the Common Stock (whether
payable in cash, securities or other property), other than dividends payable
solely in shares of Common Stock, the Corporation shall also declare and pay to
the holders of the Preferred Shares at the same time that it declares and pays
such dividends to the holders of the Common Stock, the dividends which would
have been declared and paid with respect to the Common Stock issuable upon
conversion of the Preferred Shares had all of the outstanding Preferred Shares
been converted immediately prior to the record date for such dividend or, if no
record date is fixed, the date as of which the record holders of Common Stock
entitled to such dividends are to be determined; provided that for purposes of
determining the number of shares of Common Stock into which the Preferred Shares
are converted, it shall be assumed that a Recapitalization Event has been
effected.
5. LIQUIDATION RIGHT AND PREFERENCE. In the event of the liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary
(a "LIQUIDATION EVENT"), the holders of Preferred Shares shall be entitled to
receive in cash, out of the assets of the Corporation, an amount per share for
each outstanding Preferred Share equal to $[3.34] (herein, "LIQUIDATION VALUE"),
before any payments shall be made or any assets distributed to the holders of
any Junior Securities. If, upon any Liquidation Event, the assets of the
Corporation are insufficient to pay the Liquidation Value, the holders of such
Preferred Shares shall share pro rata in any such distribution in proportion to
the full amounts to which they would otherwise be respectively entitled. After
payment of the full Liquidation Value to which each holder of Preferred Shares
is entitled, the holders of the Preferred Shares will not be entitled to any
further participation as such in any distribution of assets of the Corporation.
6. CONVERSION RIGHTS.
(a) CONVERSION RATIO. The Preferred Shares shall be initially
convertible into Common Stock at the rate of [MERGER EXCHANGE RATIO] shares of
Common Stock per Preferred Share converted (the "CONVERSION RATIO"). The shares
of Common Stock issuable upon conversion of the Preferred Shares shall be
referred to herein as the "CONVERSION SHARES." The Conversion Ratio shall be
subject to adjustment pursuant to SECTIONS 8(A) AND (B). For the avoidance of
doubt, a Recapitalization Event shall trigger an appropriate adjustment to the
Conversion Ratio under SECTION 8(A) AND (B).
(b) OPTIONAL CONVERSION. Following the time upon which a
Recapitalization Event becomes effective under all applicable provisions of the
Colorado Business Corporation Act and the Corporation's Articles of
Incorporation and Bylaws, the Preferred Shares may be convertible into such
number of shares of Common Stock based on the Conversion Ratio then in effect.
As used herein, the term "RECAPITALIZATION EVENT" means a combination of the
Corporation's Common Stock on the basis of at least 1-for-[12], or a merger with
a wholly-owned subsidiary of the Corporation pursuant to which each outstanding
share of Common Stock is to be exchanged for no more than 1/[12] of a share of
common stock of the surviving corporation in such merger.
(c) AUTOMATIC CONVERSION. The Preferred Shares shall,
automatically and without any action on the part of the holders thereof, convert
into a number of fully paid and nonassessable shares of Common Stock based on
the then applicable Conversion Ratio
B-2
upon the earlier of (i) such time as the United States Securities and Exchange
Commission has declared effective a registration statement under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), covering the resale of
Conversion Shares, or (ii) the date on which the Conversion Shares relating to
such Preferred Shares are eligible for resale pursuant to Rule 144(k)
promulgated under the Securities Act (or any successor rule thereto), but
regardless of whether the holder of any such Preferred Shares is then deemed an
affiliate of the Corporation; PROVIDED, HOWEVER, in either case, that a
Recapitalization Event has occurred. The Conversion Ratio shall be subject to
adjustment pursuant to Sections 8(a) and (b).
(d) OPTIONAL CONVERSION MECHANICS. In order to exercise the
conversion privilege described in paragraph (b) of this Section, a holder of
Preferred Shares shall (1) notify the Corporation in writing of such holder's
intent to convert a specified portion of such shares (the "CONVERSION NOTICE"
and the date of such notice which shall be the same or later than the date
notice is given, the "CONVERSION NOTICE DATE") and (2) provide, on or prior to
the Conversion Notice Date, to the Corporation at its principal office the
certificate evidencing the Preferred Shares being converted, duly endorsed to
the Corporation and accompanied by written notice to the Corporation that the
holder elects to convert a specified portion or all of such Preferred Shares.
Preferred Shares converted in accordance with paragraph (b) of this Section
shall be deemed to have been converted on the day of receipt by the Corporation
of the certificate representing such shares for conversion in accordance with
the foregoing provisions (the "CONVERSION DATE"), and at such time the rights of
the holder of such Preferred Shares other than the right to receive shares of
Common Stock upon conversion of the Preferred Shares pursuant to the terms
hereof, as such holder, shall cease and such holder shall be treated for all
purposes as the record holder of Common Stock issuable upon conversion. As
promptly as practicable on or after the Conversion Date, the Corporation shall
issue and mail or deliver to such holder a certificate or certificates for the
number of shares of Common Stock issuable upon conversion, computed to the
nearest full share, and a certificate or certificates for the balance of
Preferred Shares surrendered, if any, not so converted into Common Stock.
(e) AUTOMATIC CONVERSION MECHANICS. The Corporation shall not be
obligated to issue the shares of Common Stock issuable upon the automatic
conversion of the Preferred Shares, as described in paragraph (c) of this
Section, unless certificates evidencing such Preferred Shares are either
delivered to the Corporation or the holder notifies the Corporation that such
certificates have been lost, stolen or destroyed, and executes agreements
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection therewith. Upon the occurrence of any automatic
conversion of the Preferred Shares pursuant to paragraph (c) of this Section,
the holders of the Preferred Shares shall surrender the certificates
representing the Preferred Shares for which such automatic conversion has
occurred to the Corporation and the Corporation shall cause its transfer agent
to deliver the shares of Common Stock issuable upon such conversion to the
holder within three business days of the holder's delivery of the applicable
Preferred Share certificate(s).
7. PREEMPTIVE RIGHTS. Holders of Preferred Shares shall have no
preemptive rights with respect to any future issuances of securities by the
Corporation.
B-3
8. OTHER TERMS OF PREFERRED SHARES.
(f) STOCK SPLIT, STOCK DIVIDEND, RECAPITALIZATION, ETC. If the
Corporation, at any time while any Preferred Shares are
outstanding, (a) shall pay a stock dividend or otherwise make a
distribution or distributions payable in shares of its capital
stock (whether payable in shares of its Common Stock or of
capital stock of any class), (b) subdivide outstanding shares of
Common Stock into a larger number of shares, (c) combine
outstanding shares of Common Stock into a smaller number of
shares, or (d) issue by reclassification of shares of Common
Stock any shares of capital stock of the Corporation, the
Conversion Ratio in effect immediately prior thereto shall be
adjusted so that the holder of any Preferred Shares thereafter
surrendered for conversion shall be entitled to receive the
number of shares of Common Stock which such holder would have
owned or have been entitled to receive after the happening of any
of the events described above had such Preferred Shares been
converted immediately prior to the happening of such event or the
record date therefore, whichever is earlier. Any adjustment made
pursuant to this Section shall become effective immediately after
the record date for the determination of shareholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a
subdivision, combination or reclassification.
(g) NO IMPAIRMENT. Unless approved in accordance with Section 3
hereof the Corporation will not, by amendment of its Articles of
Incorporation or this Certificate of Designation or through any
reorganization, transfer of assets, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but will at
all times in good faith assist in the carrying out of all the
provisions of Section 8(a) and in the taking of all such action
as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Preferred Shares against
impairment.
(h) NOTICES OF RECORD DATE. In the event that this Corporation shall
propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other
securities, whether or not a regular cash dividend and
whether or not out of earnings or earned surplus (for
avoidance of doubt, the foregoing phrase does not include
any stock split or reverse stock split which results in an
automatic adjustment of the Conversion Ratio purchase to
Section 8(a) above);
(ii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common
Stock; or
(iii) to merge with or into any other corporation (other than a
merger in which the holders of the outstanding voting
equity securities of the Corporation immediately prior to
such merger hold more than fifty percent (50%) of
B-4
the voting power of the surviving entity immediately
following such merger), or sell, lease or convey all or
substantially all its property or business, or to
liquidate, dissolve or wind up;
then, in connection with each such event, this Corporation shall send to the
holders of the Preferred Stock:
(1) at least ten (10) days' prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (ii) and (iii) above; and
(2) in the case of the matters referred to in (ii) and (iii)
above, at least ten (10) days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event).
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the holders of Preferred Shares at the address for each
such holder as shown on the books of this Corporation and shall be deemed given
when so mailed.
(i) RESERVATION OF SHARES ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Shares, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding Preferred Shares; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding Preferred Shares, the Corporation will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(j) STATUS OF CONVERTED STOCK. In the event any Preferred
Shares shall be converted pursuant to Section 6 hereof, (i) the Preferred Shares
so converted shall be retired and cancelled and shall not be reissued and (ii)
the authorized number of Preferred Shares set forth in Section 1 hereof shall be
automatically reduced by the number of Preferred Shares so converted and the
number of shares of the Corporation's undesignated Preferred Stock shall be
deemed increased by such number.
(k) LOSS, THEFT, DESTRUCTION OF PREFERRED SHARES. Upon receipt
of evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of certificates representing Preferred Shares and, in the case of any
such loss, theft or destruction, upon receipt of indemnity or security
reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of the Preferred Shares, the
Corporation shall make, issue and deliver, in lieu of such lost, stolen,
destroyed or mutilated certificates representing Preferred Shares, new
certificates representing Preferred Shares of like tenor.
B-5
IN WITNESS WHEREOF, Email Real Xxxxxx.xxx, Inc. has caused this
Certificate to be signed on its behalf, as of this ___ day of __________, 2004.
EMAIL REAL XXXXXX.XXX, INC.
By:
-----------------------------------------
Xxx X'Xxxxx
Its: President and Chief Executive Officer
B-6
EXHIBIT C
EMAIL REAL XXXXXX.XXX, INC.
CERTIFICATE OF DESIGNATION OF
SERIES B CONVERTIBLE PREFERRED STOCK
--------------------------------------------
EMAIL REAL XXXXXX.XXX, INC., a corporation organized and existing
under the laws of the State of Colorado (the "Corporation"), does hereby certify
that, pursuant to the authority conferred on the Board of Directors of the
Corporation by the Articles of Incorporation, as amended and restated to date
(the "ARTICLES OF INCORPORATION"), of the Corporation and in accordance with
Section 0-000-000 of the Colorado Business Corporation Act, the Board of
Directors of the Corporation adopted the following resolution establishing a
series of [__________________ ( )] shares of Preferred Stock of the Corporation
designated as "Series B Convertible Preferred Stock":
RESOLVED, that pursuant to the authority conferred on the Board of
Directors of this Corporation by the Articles of Incorporation, a
series of Preferred Stock, par value $0.01 per share, of the
Corporation is hereby established and created, and that the
designation and number of shares thereof and the voting and other
powers, preferences and relative, participating, optional or other
rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:
1. DESIGNATION. The series of preferred stock established hereby shall
be designated the "Series B Convertible Preferred Stock" (and shall be referred
to herein as the "PREFERRED SHARES") and the authorized number of Preferred
Shares shall be [ ].
2. RANK. With respect to any Liquidation Event (as defined herein),
the Preferred Shares shall rank junior to the Corporation's Series A Convertible
Preferred Stock, par value $.01 per share ("SERIES A PREFERRED SHARES"), but
prior to the Corporation's common stock, par value $.001 per share (the "COMMON
STOCK," and collectively with any other security of the Corporation ranking
junior to the Preferred Shares, the "JUNIOR SECURITIES").
3. VOTING RIGHTS. Along with the holders of the Common Stock, each
holder of Preferred Shares shall have one vote on all matters submitted to the
holders of Common Stock for each share of Common Stock into which such Preferred
Shares would be converted if converted as of the date of such vote based on the
Conversion Ratio (as herein defined) then in effect, but regardless as to
whether the Preferred Shares are then convertible. In addition, without the
affirmative vote of the holders (acting together as a class) of at least a
majority of Preferred Shares at the time outstanding given in person or by proxy
at any annual or special meeting, or, if permitted by law, in writing without a
meeting, the Corporation shall not alter, change or amend the preferences or
rights of the Preferred Shares.
4. DIVIDENDS. The Preferred Shares shall not be entitled to receive a
dividend and, as long as any Preferred Shares remain outstanding, no dividends
shall be declared on any Junior Security without the consent in writing of
holders of at least a majority of the Preferred Shares then outstanding. Subject
to the foregoing sentence, in the event that the Corporation declares or
pays any dividends upon the Common Stock (whether payable in cash, securities or
other property), other than dividends payable solely in shares of Common Stock,
the Corporation shall also declare and pay to the holders of the Preferred
Shares at the same time that it declares and pays such dividends to the holders
of the Common Stock, the dividends which would have been declared and paid with
respect to the Common Stock issuable upon conversion of the Preferred Shares had
all of the outstanding Preferred Shares been converted immediately prior to the
record date for such dividend or, if no record date is fixed, the date as of
which the record holders of Common Stock entitled to such dividends are to be
determined; provided that for purposes of determining the number of shares of
Common Stock into which the Preferred Shares are converted, it shall be assumed
that a Recapitalization Event has been effected.
5. LIQUIDATION RIGHT AND PREFERENCE. In the event of the liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary
(a "LIQUIDATION EVENT"), the holders of Preferred Shares shall be entitled to
receive in cash, out of the assets of the Corporation, an amount per share for
each outstanding Preferred Share equal to $3.34 (herein, "LIQUIDATION VALUE"),
before any payments shall be made or any assets distributed to the holders of
any Junior Securities. If, upon any Liquidation Event, the assets of the
Corporation are insufficient to pay the Liquidation Value, the holders of such
Preferred Shares shall share pro rata in any such distribution in proportion to
the full amounts to which they would otherwise be respectively entitled. After
payment of the full Liquidation Value to which each holder of Preferred Shares
is entitled, the holders of the Preferred Shares will not be entitled to any
further participation as such in any distribution of assets of the Corporation.
6. CONVERSION.
(a) CONVERSION RATIO. The Preferred Shares shall be initially
convertible into Common Stock at the rate of [MERGER EXCHANGE RATIO] shares of
Common Stock per Preferred Share converted (the "CONVERSION RATIO"). The shares
of Common Stock issuable upon conversion of the Preferred Shares shall be
referred to herein as the "CONVERSION SHARES." The Conversion Ratio shall be
subject to adjustment pursuant to SECTIONS 8(A) AND (B). For the avoidance of
doubt, a Recapitalization Event shall trigger an appropriate adjustment to the
Conversion Ratio under SECTION 8(A) AND (B).
(b) AUTOMATIC CONVERSION. The Preferred Shares shall, automatically
and without further action of the holders thereof, convert into a number of
fully paid and nonassessable shares of Common Stock based on the Conversion
Ratio then in effect at such time that a Recapitalization Event becomes
effective under all applicable provisions of the Colorado Business Corporation
Act and the Corporation's Articles of Incorporation and Bylaws. As used herein,
the term "RECAPITALIZATION EVENT" means a combination of the Corporation's
Common Stock on the basis of at least 1-for-12, or a merger with a wholly-owned
subsidiary of the Corporation pursuant to which each outstanding share of Common
Stock is to be exchanged for no more than 1/12 of a share of common stock of the
surviving corporation in such merger.
(c) CONVERSION MECHANICS. At the effective time of the
Recapitalization Event, the rights of the holder of Preferred Shares (other than
the right to receive shares of Common Stock upon conversion of the Preferred
Shares pursuant to the terms hereof, as such holder) shall cease and such holder
shall be treated for all purposes as the record holder of the
C-2
Conversion Shares. As promptly as practicable on or after the Recapitalization
Event, the Corporation shall issue and cause to be mailed or delivered to such
holder a notice stating that a Recapitalization Event has occurred and that the
Preferred Shares have been deemed to have converted in accordance with paragraph
(b) of this Section. The Corporation shall not be obligated to issue the shares
of Common Stock issuable upon such conversion, however, unless certificates
evidencing such Preferred Shares are either delivered to the Corporation or the
holder notifies the Corporation that such certificates have been lost, stolen or
destroyed, and executes agreements satisfactory to the corporation to indemnify
the Corporation from any loss incurred by it in connection therewith. Upon the
occurrence of an automatic conversion of the Preferred Shares pursuant to
paragraph (b) of this Section, the holders of the Preferred Shares shall
surrender the certificates representing the Preferred Shares for which such
conversion has occurred to the Corporation and the Corporation shall cause its
transfer agent to deliver the shares of Common Stock issuable upon such
conversion to the holder within three business days of the holder's delivery of
the applicable Preferred Share certificate(s).
7. PREEMPTIVE RIGHTS. Holders of Preferred Shares shall have no
preemptive rights with respect to any future issuances of securities by the
Corporation.
8. OTHER TERMS OF PREFERRED SHARES.
(d) STOCK SPLIT, STOCK DIVIDEND, RECAPITALIZATION, ETC. If the
Corporation, at any time while any Preferred Shares are outstanding, (a) shall
pay a stock dividend or otherwise make a distribution or distributions payable
in shares of its capital stock (whether payable in shares of its Common Stock or
of capital stock of any class), (b) subdivide outstanding shares of Common Stock
into a larger number of shares, (c) combine outstanding shares of Common Stock
into a smaller number of shares, or (d) issue by reclassification of shares of
Common Stock any shares of capital stock of the Corporation, the Conversion
Ratio in effect immediately prior thereto shall be adjusted so that the holder
of any Preferred Shares thereafter surrendered for conversion shall be entitled
to receive the number of shares of Common Stock which such holder would have
owned or have been entitled to receive after the happening of any of the events
described above had such Preferred Shares been converted immediately prior to
the happening of such event or the record date therefor, whichever is earlier.
Any adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of shareholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(e) NO IMPAIRMENT. Unless approved in accordance with Section 3
hereof the Corporation will not, by amendment of its Articles of Incorporation
or this Certificate of Designation or through any reorganization, transfer of
assets, merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation but will at all times
in good faith assist in the carrying out of all the provisions of Section 8(a)
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of the Preferred Shares against
impairment.
C-3
(f) NOTICES OF RECORD DATE. In the event that this Corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of
earnings or earned surplus (for avoidance of doubt, the
foregoing phrase does not include any stock split or reverse
stock split which results in an automatic adjustment of the
Conversion Ratio purchase to Section 8(a) above);
(ii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common
Stock; or
(iii) to merge with or into any other corporation (other than a
merger in which the holders of the outstanding voting equity
securities of the Corporation immediately prior to such merger
hold more than fifty percent (50%) of the voting power of the
surviving entity immediately following such merger), or sell,
lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, this Corporation shall send to the
holders of the Preferred Stock:
(1) at least ten (10) days' prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (ii) and (iii) above; and
(2) in the case of the matters referred to in (ii) and (iii)
above, at least ten (10) days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event).
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the holders of Preferred Shares at the address for each
such holder as shown on the books of this Corporation and shall be deemed given
when so mailed.
(g) RESERVATION OF SHARES ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Shares, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding Preferred Shares; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding Preferred Shares, the Corporation will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(h) STATUS OF CONVERTED STOCK. In the event any Preferred
Shares shall be converted pursuant to Section 6 hereof, (i) the Preferred Shares
so converted shall be retired and
C-4
cancelled and shall not be reissued and (ii) the authorized number of Preferred
Shares set forth in Section 1 hereof shall be automatically reduced by the
number of Preferred Shares so converted and the number of shares of the
Corporation's undesignated Preferred Stock shall be deemed increased by such
number.
(i) LOSS, THEFT, DESTRUCTION OF PREFERRED SHARES. Upon receipt
of evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of certificates representing Preferred Shares and, in the case of any
such loss, theft or destruction, upon receipt of indemnity or security
reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of the Preferred Shares, the
Corporation shall make, issue and deliver, in lieu of such lost, stolen,
destroyed or mutilated certificates representing Preferred Shares, new
certificates representing Preferred Shares of like tenor.
IN WITNESS WHEREOF, Email Real Xxxxxx.xxx, Inc. has caused this
Certificate to be signed on its behalf, as of this ___ day of __________, 2004.
EMAIL REAL XXXXXX.XXX, INC.
By:
---------------------------------------
Xxx X'Xxxxx
Its: President and Chief Executive Officer
C-5
SCHEDULE A
----------
XXXXXX OUTSTANDING CAPITALIZATION
Authorized Shares of Common Stock: 15,000,000
Authorized Shares of Preferred Stock: 5,000,000
Outstanding Shares of Common Stock: 6,179,829
Shares of Common Stock Issuable Upon
Exercise of Outstanding Options/Warrants: 1,311,065
----------
Fully-Diluted Common Shares Outstanding: 7,490,894
==========
SCHEDULE B
----------
DISCLOSURE SCHEDULES
OF
XXXXXX HEALTH SCIENCES, INC.
Attached hereto are the Disclosure Schedules of Xxxxxx Health Sciences,
Inc., a Delaware corporation ("XXXXXX"), referred to the Merger Agreement dated
as of June 17, 2004 (the "AGREEMENT") by and among Xxxxxx, Email Real
Xxxxxx.xxx, Inc. ("EMLR") and EMLR Acquisition Corp. ("EMLR ACQUISITION").
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Agreement.
Xxxxxx'x disclosure schedules are qualified in their entirety by
reference to specific sections of the Agreement, and are not intended to
constitute, and shall not be construed as constituting, representations or
warranties of Xxxxxx, except as and to the extent provided in the Agreement.
Matters reflected in Xxxxxx'x disclosure schedules are not necessarily
limited to the matters required by the Agreement to be disclosed in the
disclosure schedules. Such additional matters are set forth for informational
purposes and do not necessarily include other matters of a similar nature.
Dated as of June 17, 2004
SECTION 2.8
MATERIAL ADVERSE CHANGE
-----------------------
(1) Pursuant to certain promissory notes (the "Notes") issued to Horizon
Biomedical Ventures, LLC or Paramount Capital Investments, LLC
(collectively, the "Paramount Lenders"), both of which are wholly owned
by Xxxxxxx X. Xxxxxxxxx, M.D., the Paramount Lenders have loaned to us
the aggregate amount of approximately $774,000. The Notes accrue
interest at the rate of 5% per annum. Pursuant to a letter agreement
dated January 15, 2004, the Notes are payable upon the earlier to occur
of the earlier of (a) ten (10) business days following the date on
which Xxxxxx has received gross proceeds equal to $5,000,000, in the
aggregate, through the sale of debt or equity securities of Xxxxxx in
one or more public offerings or private placements, and (b) January 15,
2005. The Notes are summarized below:
--------------------------------------------- -------------------------- --------------------------------------
HOLDER OF NOTE DATE OF NOTE PRINCIPAL AMOUNT OWED UNDER NOTE
--------------------------------------------- -------------------------- --------------------------------------
1. Horizon Biomedical Ventures, LLC 10/24/2002 $8,393.68
--------------------------------------------- -------------------------- --------------------------------------
2. Horizon Biomedical Ventures, LLC 11/21/2002 $9,807.11
--------------------------------------------- -------------------------- --------------------------------------
3. Horizon Biomedical Ventures, LLC 12/27/2002 $12,756.01
--------------------------------------------- -------------------------- --------------------------------------
4. Paramount Capital Investments, LLC 1/27/2003 $959.27
--------------------------------------------- -------------------------- --------------------------------------
5. Paramount Capital Investments, LLC 1/30/2003 $111,054.20
--------------------------------------------- -------------------------- --------------------------------------
6. Paramount Capital Investments, LLC 2/28/2003 $3,926.81
--------------------------------------------- -------------------------- --------------------------------------
7. Paramount Capital Investments, LLC 3/13/2003 $600.00
--------------------------------------------- -------------------------- --------------------------------------
8. Paramount Capital Investments, LLC 3/25/2003 $3,817.35
--------------------------------------------- -------------------------- --------------------------------------
9. Paramount Capital Investments, LLC 4/14/2003 $50,000.00
--------------------------------------------- -------------------------- --------------------------------------
10. Paramount Capital Investments, LLC 4/23/2003 $305.00
--------------------------------------------- -------------------------- --------------------------------------
11. Paramount Capital Investments, LLC 5/16/2003 $50,000.00
--------------------------------------------- -------------------------- --------------------------------------
12. Paramount Capital Investments, LLC 8/14/2003 $50,000.00
--------------------------------------------- -------------------------- --------------------------------------
13. Paramount Capital Investments, LLC 10/30/2003 $50,000.00
--------------------------------------------- -------------------------- --------------------------------------
14. Paramount Capital Investments, LLC 12/3/2003 $200,000.00
--------------------------------------------- -------------------------- --------------------------------------
15. Paramount Capital Investments, LLC 12/19/2003 $125,000.00
--------------------------------------------- -------------------------- --------------------------------------
16. Paramount Capital Investments, LLC 1/29/2004 $125,000.00
--------------------------------------------- -------------------------- --------------------------------------
(2) On February 19, 2004, Xxxxxx completed a private placement of 1,987,846
shares of its common stock at a per share price of $2.375. Paramount
BioCapital, Inc. (f/k/a Paramount Capital, Inc.) acted as placement
agent in connection with the private placement, for which it received
aggregate commissions of $326,979.40 (not including a $10,000 expense
allowance), plus 5-year warrants to purchase an aggregate of 196,679
shares of Xxxxxx common stock at an exercise price of $2.61.
[continued next page]
(3) Xxxxxx has hired several employees since December 31, 2003. The
following table sets forth the name of each such new employee, and
their respective title(s), salary and other compensation, and option
awards:
BONUS & NO. OF OPTION
NAME TITLE SALARY ($) OTHER COMP ($) SHARES
Xxxxxxxx X. Xxxxxx CFO/VP of Admin. 175,000 25,000(1) 100,000
Xxxx Xxxxxx VP-Bus. Development 175,000 40,000(2) 100,000
Xxx Xxx Director of Research 125,000 10,000(3) 40,000
Xxxx Xxxxxxxxxxxx Controller 85,000 0 20,000
----------------------------------
(1) Represents signing bonus. Also eligible for periodic incentive bonuses upon
the achievement of milestones to be determined by CEO, not to exceed $50,000.
(2) Represents signing bonus. Also eligible for periodic incentive bonuses upon
the achievement of milestones to be determined by CEO not to exceed $50,000.
(3) Represents signing bonus.
SECTION 2.9
ORDINARY COURSE OF BUSINESS
---------------------------
See Section 2.8 of this Exhibit B.
SECTION 2.10
LIABILITIES AND CLAIMS
----------------------
See item (1) in Section 2.8 of this Exhibit B.
SECTION 2.16
CERTAIN TRANSACTIONS
See item (3) of Section 2.8 of this Exhibit B.
SECTION 2.20
RELATED PARTY CONTRACTS
-----------------------
See item (1) in Section 2.8 of this Exhibit B.
SECTION 2.22
BENEFIT PLANS
-------------
(1) Xxxxxx maintains a 401(k) Plan with Fidelity Investments, as trustee, for
its employees.
(2) Xxxxxx maintains a Stock Option Plan, adopted on October 10, 2003.
SCHEDULE 2.24
FINDER'S FEES
-------------
Xxxxxx is obligated to pay a fee of $50,000 to Xxxxxx Xxxxx (or his
affiliates or assigns) upon the Effective Date.
SCHEDULE C
----------
DISCLOSURE SCHEDULES
OF
EMAIL REAL XXXXXX.XXX., INC. AND EMAIL ACQUISITION CORP.
Attached hereto are the Disclosure Schedules of Email Real Xxxxxx.xxx,
Inc., a Colorado corporation and Email Acquisition Corp. a Delaware corporation
("Company" or "EMLR"), referred to in the Agreement and Plan of Merger dated as
of June 17, 2004 (the "Agreement") by and among Xxxxxx Health Sciences, Inc. a
Delaware corporation, Email Acquisition Corp. and Email Real Xxxxxx.xxx, Inc.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Agreement.
Matters reflected in these disclosure schedules are not necessarily
limited to the matters required by the Agreement to be disclosed in the
disclosure schedules. Such additional matters are set forth for informational
purposes and do not necessarily include other matters of a similar nature.
Dated as of June 17, 2004
EMAIL REAL XXXXXX.XXX, INC.
SECTION 4.1
ORGANIZATION; CAPITALIZATION
----------------------------
The number of outstanding shares of EMLR Common Stock is subject to adjustment
as provided in that certain Common Stock Purchase Agreement dated June 16, 2004
by and among EMLR, The Washington Trust, R&R Biotech Partners, LLC, Turquoise
Partners, LLC and Chase Financing, Inc. and the "Escrow Agreement" described
therein.
SECTION 4.8
FINANCIAL STATEMENTS
--------------------
The financial statements of EMLR are true and correct.
The Company is now a fully reporting company under Section 12(g) of the
Securities Exchange Act.
SECTION 4.12
ASSETS
------
The Company has no leases and no assets other than cash and the website which it
built for its business and which is no longer operative.
SECTION 4.21
RELATED PARTY TRANSACTIONS
--------------------------
None
SECTION 4.23
BENEFIT PLANS
-------------
None
EMAIL ACQUISITION CORP.
No exceptions
SCHEDULE 2.6
FOREIGN QUALIFICATIONS
Xxxxxx is qualified as a foreign corporation in the State of California.
SCHEDULE 2.14
MATERIAL CONTRACTS
1. See promissory notes described in Section 2.8 of Exhibit B.
2. See items listed in Section 2.22 of Exhibit B.
3. Employment Agreements between Xxxxxx and each of Xxxx X. Xxx, Xxxxxxxx
X. Xxxxxx and Xxxx Xxxxxx.
4. Subscription agreements, registration rights agreement and escrow
agreement to be entered into by Xxxxxx in connection with the Private
Placement.
5. Exclusive License Agreement among Xxxxxx, Yale University and SUNY
dated February 4, 2004.
6. PT 523 License Agreement among Xxxxxx, Xxxx Xxxxxx Cancer Institute,
Inc. and Ash Xxxxxxx, Inc. dated on or about December 19, 2002.
7. Office Lease dated December 1, 2003 between Xxxxxx and Kashiwa Fudosan
America, Inc.
SCHEDULE 2.18
INTELLECTUAL PROPERTY
1. Pursuant to that certain PT 523 License Agreement among Xxxxxx, Xxxx
Xxxxxx Cancer Institute, Inc. ("DFCI") and Ash Xxxxxxx, Inc. dated on
or about December 19, 2002, Xxxxxx has the exclusive worldwide license
(subject to a non-exclusive license to the United States of America) to
utilize certain technology and know-how related to the following patent
rights:
(a) U.S. Patent No. 4,767,761 entitled "Omithine Derivatives and
their Use as Methotrexate Resistant Cell Inhibitions," issued
as of August 30, 1988 to DFCI;
(b) U.S. Provisional Patent Application, Serial No. 60/376,615
entitled "Pharmaceutically Active Omithine Derivatives,
Ammonium Salts Thereof and Methods of Making Same" filed April
30, 2002 and applications derived therefrom, including
continuations, any claim(s) in any continuation-in-part to the
extent that the claims are directed to subject matter
specifically described in USSN 60/376,615 and entitled to
priority date of the application under 35 U.S.C. ss. 120,
divisionals, substitutions, and any patents issuing thereon;
any reissuances, reexaminations or extensions of the patents;
and any foreign counterparts of the patent application. Patent
application, Serial No. 60/376,615, is jointly owned by DFCI
and Ash Xxxxxxx.
2. Pursuant to that certain Exclusive License Agreement among Xxxxxx, Yale
University ("Yale") and The Research Foundation of the State University
of New York ("SUNY") dated February 4, 2004, Xxxxxx has an exclusive,
worldwide license to the following patents or patent applications:
CNTRY TITLE (ASSIGNEE) APPLNNO FILEDATE PATENTNO ISSUEDATE STATUS
United States 5-Ioso 2-Pyrimidinone Nucleoside (FOUNDATION) 4,895,937 1/23/90 Issued
Canada Determination of prodrugs metabolizable by the liver and 2,103,050 5/15/1992 Pending
therapeutic use thereof (YALE)
European Determination of prodrugs metabolizable by the liver and 92912221.6-1216 5/15/1992 Pending
therapeutic use thereof (YALE)
Ireland Determination of prodrugs metabolizable by the liver and IR 92/1581 5/15/1992 Pending
therapeutic use thereof (YALE)
Israel Determination of prodrugs metabolizable by the liver and 101,879 5/15/1992 101,879 5/15/1992 Issued
therapeutic use thereof (YALE)
Japan Determination of prodrugs metabolizable by the liver and 92/500240 5/15/1992 Pending
therapeutic use thereof (YALE)
South Korea Determination of prodrugs metabolizable by the liver and 245252 5/15/1992 245252 11/27/1999 Issued
(Republic of therapeutic use thereof (YALE)
Korea)
United States Determination of prodrugs metabolizable by the liver and 08/146,164 4/19/1994 5,728,684 3/17/1998 Issued
therapeutic use thereof (YALE)
Israel Determination of prodrugs metabolizable by the liver and 121,375 7/23/1997 121,375 8/13/1999 Issued
therapeutic use thereof (YALE)
