AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of April 18,
2000 (the "Agreement"), among x-XxxXxxx.xxx, a corporation organized and
existing under the laws of the State of Nevada ("Parent"), Illumea Acquisition
Corporation, a corporation organized and existing under the laws of the State
of Delaware ("Merger Sub") and a direct wholly owned subsidiary of Parent, and
Illumea Corporation, a corporation organized and existing under the laws of
the State of Delaware (the "Company");
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent, Merger Sub and the Company
have each determined that it is consistent with and in furtherance of their
respective long-term business strategies and fair to and in the best interests
of their respective stockholders to combine the respective businesses of
Parent and the Company by means of a merger (the "Merger") of Merger Sub with
and into the Company upon the terms and subject to the conditions set forth
herein and in accordance with the Delaware Corporation Law (the "Delaware
Corporation Law"); and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger qualify as a reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (together with the rules
and regulations promulgated thereunder, the "Code");
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware Corporation Law,
at the Effective Time, Merger Sub shall be merged with and into the Company.
As a result of the Merger, the separate corporate existence of Merger Sub
shall cease and the Company shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
1.2 Closing. Unless this Agreement shall have been terminated and
the Merger shall have been abandoned pursuant to Section 7.1 and subject to
the satisfaction or waiver of the conditions set forth in Article VII, the
consummation of the Merger shall take place as promptly as practicable (and in
any event within three business days) after satisfaction or waiver of the
conditions set forth in Article VII, at a closing (the "Closing") to be held
at the offices of x-XxxXxxx.xxx, 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx
Xxxxx, Xxxxxxxxxx 00000, unless another date, time or place is agreed to by
the Company and Parent.
1.3 Effective Time. At the time of the Closing, the parties shall
cause the Merger to be consummated by filing articles of merger (the "Articles
of Merger") with the Secretary of State of the State of Delaware in such form
as required by, and executed in accordance with the relevant provisions of,
the Delaware Corporation Law (the date and time of such filing, or such later
time as may be agreed by the parties hereto and specified in the Articles of
Merger, being the "Effective Time").
1.4 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the Delaware
Corporation Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation, and the Parent shall own all of the
issued and outstanding stock of the Surviving Corporation and shall have full
legal control over the Surviving Corporation.
1.5 Certificate of Incorporation; Bylaws; Directors and Officers of
Surviving Corporation. Unless otherwise agreed by the Company and Parent
prior to the Effective Time, at the Effective Time:
(a) the certificate of incorporation and bylaws of the Company,
as in effect immediately prior to the Effective Time, shall be the certificate
of incorporation and bylaws of the Surviving Corporation until thereafter
amended as provided by Law and such certificate of incorporation or bylaws;
(b) the officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation
until their successors are elected or appointed and qualified or until their
resignation or removal; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the Company or
the holders of any of the following securities, and in addition to any
consideration that may become payable pursuant to Section 2.2:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any Dissenting Shares) and
all rights in respect thereof shall forthwith cease to exist and shall be
converted into and become exchangeable for the number of shares of Parent
Common Stock equal to the product of (x) one divided by the number of shares
of the Company's Common Stock issued and outstanding immediately prior to the
Effective Time and (y) the quotient of Eleven Million One Hundred Thirty-Three
Thousand Three Hundred Fifty Six Dollars ($11,133,356) divided by the average
closing price of the Parent's Common Stock on the American Stock Exchange
during the thirty (30) trading days ending two days before the Effective Time
(the "Common Exchange Ratio").
(b) Each share of Series A Preferred Stock of Company issued and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares) and all rights in respect thereof shall forthwith cease to exist and
shall be converted into and become exchangeable for the number of shares of
Parent Common Stock equal to the product of (x) one divided by the number of
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shares of the Company's Common Stock issued and outstanding immediately prior
to the Effective Time and (y) the quotient of Eight Hundred Twenty-Three
Thousand Six Hundred Forty-Four Dollars ($823,644) divided by the average
closing price of the Parent's Common Stock on the American Stock Exchange
during the thirty (30) trading days ending two days before the Effective Time
(the "Series A Exchange Ratio").
(c) Each share of Series B Preferred Stock of Company issued and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares) and all rights in respect thereof shall forthwith cease to exist and
shall be converted into and become exchangeable for the number of shares of
Parent Common Stock equal to the product of (x) one divided by the number of
shares of the Company's Common Stock issued and outstanding immediately prior
to the Effective Time and (y) the quotient of Three Million Forty-Three
Thousand Dollars ($3,043,000) divided by the average closing price of the
Parent's Common Stock on the American Stock Exchange during the thirty (30)
trading days ending two days before the Effective Time (the "Series B Exchange
Ratio").
(d) Subject to the other terms of this Section 2, each Option to
purchase shares of Common Stock of the Company held by an employee, director
or consultant of the Company (the "Company Options") outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of any holder thereof, be converted into the right to
acquire that number of shares of Parent Common Stock determined by multiplying
the number of shares of the Company's Common Stock for which such Company
Options are exercisable immediately prior to the Effective Time by the Common
Exchange Ratio, at an exercise price per share of Parent Common Stock equal to
the exercise price per share of such Company Options divided by the Common
Exchange Ratio, subject to the provisions of Section 2.4 regarding the
elimination of fractional shares. The number of shares of Parent Common Stock
subject to such option shall be subject to increase pursuant to Section 2.2,
with the number of additional shares being equal to the number of
Earn-Out-Shares that correspond to the full number of shares subject to such
option. Such Company Options shall be assumed by Parent under the terms of
Parent's 1999 Stock Option Plan.
(e) Each share of common stock, no par value, of Merger Sub
issued and outstanding immediately prior to the Effective Time and all rights
in respect thereof shall forthwith cease to exist and shall be converted into
and become exchangeable for one newly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
2.2 Earn-Out Shares.
(a) In addition to the number of shares of Parent Common Stock
set forth in Section 2.1 above, but subject to certain conditions set forth
below, Parent shall issue to the holders of the Company's Common Stock, Series
A Preferred Stock and/or Series B Preferred Stock converted pursuant to
Section 2.1 (the "Company Stockholders"), as additional merger consideration,
an additional number of shares of Parent Common Stock (the "Earn-Out Shares")
based upon Company's gross sales (the "Milestones") for each of the fiscal
years ending on March 31, 2001 and March 31, 2002 (the "Earn-Out Period")
(calculated in accordance with generally accepted accounting principals on an
accrual basis). The Earn-Out Shares shall be cumulative with respect to each
separate Milestone listed below and the corresponding additional
consideration. For example, if the Company's gross sales for fiscal 2002 were
$30,000,000, the minimum number of Earn-Out Shares issuable would be
3,000,000. The Earn-Out Shares shall be calculated as follows:
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Cumulative
Gross Sales
Fiscal Year for Such
Ending Year Earn-Out
3/31/01 $ 3,000,000 The greater of (a) 150,000 shares of
Parent Common Stock or (b) that number
of shares of Parent Common Stock with a
value equal to $3,000,000
3/31/02 $10,000,000 The greater of (a) 500,000 shares of
Parent Common Stock or (b) that number
of shares of Parent Common Stock with a
value equal to $10,000,000
3/31/02 $20,000,000 The greater of (a) 1,000,000 shares of
Parent Common Stock or (b) that number of
shares of Parent Common Stock with a value
equal to $20,000,000
3/31/02 $30,000,000 The greater of (a) 1,500,000 shares of
Parent Common Stock or (b) that number of
shares of Parent Common Stock with a value
equal to $30,000,000
3/31/02 $40,000,000 The greater of (a) 500,000 shares of Parent
Common Stock or (b) that number of shares
of Parent Common Stock with a value equal
to $10,000,000
(b) Notwithstanding anything to the contrary contained in
Section 2.2(a) above, in no event shall the total number of shares of Parent
Common Stock to be issued pursuant to Section 2.2(a) above, together with the
total number of shares of Parent Common Stock to be issued pursuant to
Sections 2.1(a), (b) and (c) of this Agreement, exceed five percent of the
total number of shares of Parent Common Stock outstanding as of the date of
any such issuance. The share numbers set forth in Section 2.2(a) above shall
be subject to adjustment for stock splits, combinations and dividends with
respect to the Parent Common Stock. In case of any reorganization of Parent
during the Earn-out Period, or in case that, during such period, the Company
shall consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Company Stockholders, upon payment of the Earn-Out Shares as provided
in this Section 2 at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu of
the Earn-Out Shares receivable prior to such consummation, the stock or other
securities or property to which the Company Stockholder would have been
entitled upon such consummation if the Company Stockholder had received the
Earn-Out Shares immediately prior thereto; in each such case, the terms of
this Agreement, shall be applicable to the shares of stock or other securities
or property receivable upon receipt of the Earn-Out Shares after such
consummation. The value of the shares of Parent Common Stock to be issued
pursuant to the Earn-Out Shares shall be determined by dividing the relevant
dollar value by the average closing price of the Parent Common Stock on the
American Stock Exchange for the thirty (30) trading days ended two (2) trading
days prior to the date that Company satisfies the relevant Milestone and such
shares shall be deemed issued as of such date.
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(c) The Earn-Out Shares shall be delivered to the Company
Stockholders within thirty days following achievement of the relevant
milestone. Following the achievement of a milestone, the Company shall notify
Parent (the "Report"). Parent shall have fifteen days to review and approve
the Report. If Parent does not notify the Company Stockholders in writing
within such fifteen day period that they dispute any matter set forth in the
Report, the Report shall be deemed to have been accepted by the Company
Stockholders and Parent. If any disputes arise regarding the Report which the
Company Stockholders and Parent cannot resolve between themselves within
fifteen days, such questions shall be referred to the independent accountants
representing each of the parties, who shall have seven days thereafter to
attempt to resolve such questions, and any decisions mutually agreeable to
such accountants shall be binding upon the Company Stockholders and Parent.
If, after such seven days, the independent accountants of the Company
Stockholders and Parent are unable to arrive at a resolution of any issue
relating to the Report, such independent accountants will appoint a third
independent accounting firm satisfactory to each of them, which shall be
directed to resolve such questions within seven days thereafter, and whose
decisions shall be final and binding on all parties. The cost of the
accounting firm shall be borne equally by the Company Stockholders and Parent.
(d) After the Closing Date and at all times during the Earn-Out
Period, the Company shall operate pursuant to an annual budget that has been
mutually agreed upon by both Xxxxxx Xxxxxxxx and the board of directors of
Parent prior to the commencement of such fiscal year.
(e) The Earn-Out Shares shall be divided among the holders of
Company Common Stock, Company Series A Preferred Stock and Company Series B
Preferred Stock converted pursuant to Section 2.1 above (the "Company Stock")
(other than any Dissenting Shares), such that, each share of Company Stock
shall be entitled to receive that number of shares of Parent Common Stock
equal to the product of (i) the Earn-Out-Shares, multiplied by (ii) one
divided by the sum of (x) the number of shares of Company Stock and (y) the
number of shares subject to Company Options.
2.3 Exchange of Shares and Company Options; Delivery of Earn-Out
Shares.
(a) Subject to the terms and conditions hereof, at or prior to
the Effective Time, Parent shall appoint an exchange agent to effect the
exchange of shares of Company Common Stock (other than Dissenting Shares) for
Parent Common Stock in accordance with the provisions of this Article II (the
"Exchange Agent"). From time to time after the Effective Time, Parent shall
deposit, or cause to be deposited, certificates representing Parent Common
Stock for conversion of shares of Company Common Stock (other than Dissenting
Shares) in accordance with the provisions of Sections 2.1 and 2.2 (such
certificates being herein referred to as the "Exchange Fund"); provided,
however, that all certificates representing Parent Common Stock to be issued
pursuant to Section 2.1(a) and (b) shall be deposited within ten (10) business
days following the Effective Time. Commencing immediately after the Effective
Time and until the appointment of the Exchange Agent shall be terminated, each
holder of a certificate or certificates theretofore representing shares of
Company Common Stock (other than Dissenting Shares) may surrender the same to
the Exchange Agent and, after the appointment of the Exchange Agent shall be
terminated, any such holder may surrender any such certificate to Parent. Such
holder shall be entitled upon such surrender to receive in exchange therefor a
certificate or certificates representing the number of full shares of Parent
Common Stock into which the shares of Company Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
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converted in accordance with the provisions of Section 2.1, in accordance with
Section 2.4, and all such shares of Parent Common Stock shall be deemed to
have been issued at the Effective Time. Until so surrendered and exchanged,
each outstanding certificate which, prior to the Effective Time, represented
issued and outstanding shares of Company Common Stock shall be deemed for all
corporate purposes of Parent to evidence ownership of the number of fullshares
of Parent Common Stock into which the shares of Company Common Stock
theretofore represented thereby shall have been converted at the Effective
Time. Notwithstanding the foregoing provisions of this Section 2.3, risk of
loss and title to such certificates representing shares of Company Common
Stock shall pass only upon proper delivery of such certificates to the
Exchange Agent, and neither the Exchange Agent nor any party hereto shall be
liable to a holder of shares of Company Common Stock for any Parent Common
Stock or dividends or distributions thereon delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law or to a
transferee pursuant to Section 2.3. In the event that this Agreement shall
have been terminated pursuant to Section 7.1 hereof, the Company and Parent
shall cause the Exchange Agent to use its commercially reasonable efforts to
effect the prompt return of stock certificates representing shares of Company
Common Stock to the holders thereof. In the event Earn-Out Shares become
deliverable to the Company Stockholders pursuant to Section 2.3, such shares
shall be deposited with the Exchange Agent within five (5) business days
following final determination of the number of shares issuable for such year,
and the Exchange Agent shall distribute to each Company Stockholder the
Earn-Out Shares issuable to such Company Stockholder pursuant to Section
2.3(e).
(b) Following the Effective Time, Parent shall exchange, or
cause to be exchanged, agreements in respect of all Company Options exchanged
pursuant to Section 2.1(d) above for the existing agreements covering such
Company Options, which new agreements shall be covered by the terms of
Parent's 1999 Stock Option Plan.
2.4 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company with respect to shares of Company Common Stock shall be
closed, and there shall be no further registration of transfers of shares of
Company Common Stock thereafter on the records of any such stock transfer
books. In the event of a transfer of ownership of shares of Company Common
Stock that is not registered in the stock transfer records of the Company, at
the Effective Time, a certificate or certificates representing the number of
full shares of Parent Common Stock into which such shares of Company Common
Stock shall have been converted shall be issued to the transferee in
accordance with Section 2.3, if the certificate or certificates representing
such shares of Company Common Stock is or are surrendered as provided in
Section 2.3, accompanied by all documents required to evidence and effect such
transfer and by evidence of payment of any applicable stock transfer tax.
2.5 No Fractional Share Certificates. Unless Parent otherwise
determines, no scrip or fractional share certificates for Parent Common Stock
shall be issued upon the surrender for exchange of certificates evidencing
shares of Company Common Stock. In lieu of fractional shares, each holder of
shares of Company Common Stock who would be entitled to receive a fractional
share of Parent Common Stock shall, upon surrender of the certificate or
certificates representing shares of Company Common Stock, be entitled to
receive one full share of Parent Common Stock for any fractional share
interest.
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2.6 Dissenting Shares. Notwithstanding any provision of Section 2.1
hereof to the contrary, shares of Company Common Stock which are held by
holders of such shares who have not voted in favor of the Merger, who are
entitled to dissent and who have delivered a written notice of intent to
demand payment for such shares in the manner provided in Section 262 of the
Delaware Corporation Law ("Dissenting Shares"), shall not be converted into or
exchanged for or represent the right to receive any shares of Parent Common
Stock, unless such holder fails to perfect or effectively withdraws or loses
such rights to payment. If, after the Effective Time, such holder fails to
perfect or effectively withdraws or loses such right to payment, then such
Dissenting Shares shall thereupon be deemed to have been converted into and
exchanged pursuant to Section 2.1 hereof, as of the Effective Time, for the
right to receive shares of Parent Common Stock issued in the Merger to which
the holder of such shares of Company Common Stock is entitled, without any
interest thereon. The Company shall give Parent prompt notice of any notices
and demands received by the Company for payment for shares of Company Common
Stock, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such notices and demands. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands. Prior to the Effective
Time, the Company shall establish an escrow account with a financial
institution and the Company shall fund such escrow account with cash or cash
equivalents in an amount sufficient to make all payments to holders of
Dissenting Shares. Such escrow account shall survive the Merger. All payments
to holders of Dissenting Shares shall be made out of such escrow account, and
no such payments shall be made or otherwise funded by Parent.
2.7 Protection Against Dilution as to Conversion Rate. In the event
that Parent subdivides or consolidates the Parent Common Stock or declares a
Common Stock dividend with respect to the Parent Common Stock or recapitalizes
or reclassifies its shares of Common Stock subsequent to the execution of this
Agreement and effective prior to the Closing Date, the conversion rate and
type of security (and the exercise price, with respect to Company Options)
shall be proportionately adjusted.
2.8 Further Assurances. Parent agrees that if, at any time after the
Effective Time, Company considers or is advised that any further deeds,
assignments or assurances are reasonably necessary or desirable to be obtained
from Parent or its officers or directors, to consummate the Merger or to carry
out the purposes of this Agreement at or after the Effective Time, then
Company, Parent and their respect officers and directors may execute and
deliver all such proper deeds, assignments and assurances and do all other
things necessary or desirable to consummate the Merger and to carry out the
purposes of this Agreement, in the name of Parent or otherwise.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in Schedule 2 which is attached hereto and
incorporated herein by reference, the Company hereby represents and warrants
to Parent and Merger Sub that:
3.1 Organization. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of Delaware, has all
necessary corporate powers to own its properties and to carry on its business
as now owned and operated by it, and is duly qualified to do business and is
in good standing in each of the jurisdictions where its business requires
qualification.
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3.2 Capital. The authorized Common Stock of the Company consists of
25,000,000 shares of Common Stock, $.001 par value, of which 1,932,800 are
currently issued and outstanding, and 5,000,000 shares of Preferred Stock,
$.001 par value, of which 50,575 shares of Preferred A stock and 179,000
shares of Preferred B stock are currently issued and outstanding. All of the
issued and outstanding shares of the Company are duly authorized, validly
issued, fully paid, and nonassessable, and are owned by the persons listed on
Schedule 1 hereto. Other than the Preferred A and B stock, there are no
outstanding subscriptions, options, rights, warrants, debentures, instruments,
convertible securities, or other agreements or commitments obligating the
Company to issue or to transfer from treasury any additional shares of its
Common Stock of any class.
3.3 Subsidiaries. The Company does not have any subsidiaries or own
any interest in any other enterprise (whether or not such enterprise is a
corporation) except as disclosed in Schedule 2.
3.4 Directors and Officers. Schedule 2 contains the names and titles
of all directors and officers of the Company as of the date of this Agreement.
3.5 Financial Statements. The Company has delivered to Parent
unaudited balance sheets and statements of operations for the year ended
December 31, 1999 (the "Financial Statements"). The Financial Statements
fairly present the financial condition of the Company, subject to normal
year-end adjustments. The Financial Statements fairly accurately set out and
describe the financial condition of the Company as of December 31, 1999.
3.6 Absence of Changes. Since December 31, 1999, except for changes
in the ordinary course of business which have not in the aggregate been
materially adverse, to the best of the Company's knowledge, the Company has
conducted its business only in the ordinary course and has not experienced or
suffered any material adverse change in the condition (financial or
otherwise), results of operations, properties, business or prospects of the
Company or waived or surrendered any claim or right of material value.
3.7 Absence of Undisclosed Liabilities. Neither the Company nor any
of its properties or assets are subject to any material liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due or to become due, that are required to be recorded in
accordance with generally accepted accounting principles and are not reflected
in the financial statements presented to Parent or have otherwise been
disclosed to Parent.
3.8 Tax Returns. Within the times and in the manner prescribed by
law, the Company has filed all federal, state and local tax returns required
by law, or has filed extensions which have not yet expired, and has paid all
taxes, assessments and penalties due and payable.
3.9 Patents, Trade Names and Rights. Schedule 2 sets forth a
complete and accurate schedule of (i) all patents pending or issued; (ii) all
registered trademarks and service marks and all trademark and service xxxx
applications, including country of filing, filing number, date of issue and
expiration date used in the business of the Company; and (iii) all registered
copyrights owned by the Company. Except as set forth in such schedule, to the
Company's knowledge, no third party has asserted, or threatened to assert
against the Company or any of its officers or directors, any conflicting
rights to any such intellectual property and the Company has no knowledge of
facts that the Company believes could reasonably be expected to give rise to
such a claim.
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3.10 Compliance with Laws. To the best of the Company's knowledge,
the Company has complied with, and is not in violation of, applicable federal,
state or local statutes, laws and regulations (including, without limitation,
any applicable building, zoning or other law, ordinance or regulation)
affecting its properties or the operation of its business, except for matters
which would not have a material affect on the Company or its properties.
3.11 Litigation. The Company is not a party to any suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation pending or, to the best knowledge of the Company, threatened
against or affecting the Company or its business, assets or financial
condition, except for matters which would not have a material affect on the
Company or its properties. The Company is not in default with respect to any
order, writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality applicable to it. The Company is
not engaged in any lawsuit to recover any material amount of monies due to it.
3.12 Authority. The Company has full corporate power and authority
to enter into this Agreement. The board of directors of the Company has taken
all action required to authorize the execution and delivery of this Agreement
by or on behalf of the Company and the performance of the obligations of the
Company under this Agreement, other than the approval of the Company's
stockholders in accordance with Delaware law. No other corporate proceedings
on the part of the Company are necessary to authorize the execution and
delivery of this Agreement by the Company in the performance of its
obligations under this Agreement. This Agreement is, when executed and
delivered by the Company, and will be a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
rights generally.
3.13 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by the Company of its obligations
under this Agreement, nor the consummation of the transactions contemplated
under this Agreement will to the best of the Company's knowledge: (a)
materially violate any provision of the Company's certificate of incorporation
or bylaws; (b) with or without the giving of notice or the passage of time, or
both, violate, or be in conflict with, or constitute a material default under,
or cause or permit the termination or the acceleration of the maturity of, any
debt, contract, agreement or obligation of the Company, or require the payment
of any prepayment or other penalties; (c) require notice to, or the consent
of, any party to any material agreement or commitment, lease or license, to
which the Company is bound; (d) result in the creation or imposition of any
security interest, lien, or other encumbrance upon any material property or
assets of the Company; or (e) violate any material statute or law or any
judgment, decree, order, regulation or rule of any court or governmental
authority to which the Company is bound or subject.
3.14 Full Disclosure. None the representations and warranties made
by the Company in this Agreement and the Schedules and Exhibits to this
Agreement prepared by the Company contained, contains, or will contain at the
time it was or is so furnished any untrue statement of a material fact or
omitted, omits or will omit at such time to state any material fact necessary
in order to make the statements made herein and therein, in light of the
circumstances under which they were made, not misleading. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings.
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3.15 Assets and Technology. The Company has good and marketable
title to all of its tangible properties and such tangible properties are not
subject to any material liens or encumbrances. There are no existing rights
granted to anyone to use or license the technology and there are no known
claims by anyone else to any rights to the technology.
3.16 Material Contracts and Obligations. Attached hereto on Schedule
2 is a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which the Company is a party or by which it is bound that are
material to the conduct and operations of its business and properties, which
provide for payments to or by the Company in excess of $25,000; or which
involve transactions or proposed transactions between the Company and its
officers, directors, affiliates or any affiliate thereof. Copies of such
agreements and contracts and documentation evidencing such liabilities and
other obligations have been made available for inspection by Parent and its
counsel. All of such agreements and contracts are valid, accurate, binding
and in full force and effect in all material respects, and there have been, to
the knowledge of the Company, no breaches or anticipatory repudiation of such
agreements and contracts.
3.17 Approval of Clients. The Company has contacted each of its
clients listed in Schedule 3.17 regarding the transaction and each client has
consented to the change in ownership of the Company and agreed that the
contracts would remain in full force and effect after the Closing. In
addition all of the clients and persons mentioned in the draft press release
attached hereto as Exhibit D have approved of the use of their names in the
drafts press release. The Company shall not be deemed to be in breach of this
provision in the event the Company obtains the requisite approvals from its
clients on or before the Effective Time.
3.18 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by the Company in
connection with: (a) the execution and delivery by the Company of this
Agreement; (b) the performance by the Company of its obligations under this
Agreement; or (c) the consummation by the Company of the transactions
contemplated under this Agreement.
3.19 No Debts. Except as set forth on Schedule 3.19, at the Closing
of this transaction, the Company shall have no outstanding debts or
liabilities, absolute or contingent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Except as disclosed in Schedule 3 which is attached hereto and
incorporated herein by reference, Parent and Merger Sub hereby jointly and
severally represent and warrant to the Company that:
4.1 Organization and Qualification; Subsidiaries.
(a) Each of Parent, Merger Sub and all other subsidiaries of
Parent (the "Parent Subsidiaries") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to be so
10
organized, existing or in good standing or to have such power, authority and
governmental approvals could not reasonably be expected to have, individually
or in the aggregate, a material adverse effect. Parent, Merger Sub and each
other Parent Subsidiary is duly qualified or licensed to do business, and is
in good standing (to the extent applicable), in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect.
(b) Section 4.1 of Schedule 3 sets forth, as of the date of
this Agreement, a true and complete list of each Parent Subsidiary. Except as
set forth in Section 4.1 of Schedule 4, neither Parent nor any Parent
Subsidiary owns an equity interest in any partnership or joint venture
arrangement or other business entity that is material to the financial
condition, results of operations, business or prospects of Parent and the
Parent Subsidiaries, taken as a whole.
4.2 Capitalization. The authorized Common Stock of Parent consists
of 100,000,000 shares of Common Stock of which 75,689,532 are currently issued
and outstanding, all of which are validly issued, fully paid and
nonassessable. Except as set forth in Schedule 3, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which Parent is a party or by which Parent is bound relating to
the issued or unissued Common Stock of Parent, Merger Sub or any other Parent
Subsidiary or obligating Parent, Merger Sub or any other Parent Subsidiary to
issue or sell any shares of Common Stock of, or other equity interests in,
Parent, Merger Sub or any other Parent Subsidiary. Each outstanding share of
Common Stock of each Parent Subsidiary is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by Parent or another
Parent Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on Parent's
or such other Parent Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever, except where the failure to own such
shares free and clear could not reasonably be expected to have, individually
or in the aggregate, a material adverse effect.
4.3 Directors and Officers. Schedule 3 contains the names and titles
of all directors and officers of Parent and Merger Sub as of the date of this
Agreement.
4.4 Financial Statements. Parent has delivered to the Company its
audited balance sheet and statements of operations and cash flows as of and
for the period ended March 31, 1999, and its unaudited balance sheet and
statements of operations and cash flows as of and for the period ended
December 31, 1999 (collectively the "Financial Statements"). The Financial
Statements are complete and correct in all material respects and have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods indicated. The Financial
Statements accurately set out and describe the financial condition and
operating results of the Company as of the dates, and for the periods,
indicated therein.
4.5 Absence of Changes. Since December 31, 1999, except for changes
in the ordinary course of business which have not in the aggregate been
materially adverse, to the best of Parent's knowledge, Parent has not
experienced or suffered any material adverse change in its condition
(financial or otherwise), results of operations, properties, business or
prospects or waived or surrendered any claim or right of material value.
11
4.6 Absence of Undisclosed Liabilities. Neither Parent nor any of
its properties or assets are subject to any liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise and whether due or
to become due, that are not reflected in the financial statements presented to
the Company.
4.7 Tax Returns. Within the times and in the manner prescribed by
law, Parent has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments and penalties due and payable.
4.8 Trade Names and Rights. Parent does not use any trademark,
service xxxx, trade name, or copyright in its business, or own any trademarks,
trademark registrations or applications, trade names, service marks,
copyrights, copyright registrations or applications.
4.9 Compliance with Laws. To the best of Parent's knowledge, Parent
has complied with, and is not in violation of, applicable federal, state or
local statutes, laws and regulations (including, without limitation, any
applicable building, zoning, or other law, ordinance, or regulation) affecting
its properties or the operation of its business or with which it is otherwise
required to comply.
4.10 Litigation. There is no legal action, suit, arbitration or
other legal, administrative or other governmental investigation, inquiry or
proceeding (whether federal, state, local or foreign) pending or threatened
against or affecting (i) Parent or any of its subsidiaries or any of their
respective properties, assets or business (existing or contemplated) or (ii)
any employee of Parent or any such subsidiary, before any court or
governmental department, commission, board, bureau, agency or instrumentality
or any arbitrator, except for suits, arbitrations, investigations, inquiries
and proceedings which, if decided adversely to Parent would not a have
material adverse effect on Parent, its operations, assets or prospects. After
reasonable investigation, neither Parent nor any employee or agent of nor
attorney for Parent is aware of any fact that might result in or form the
basis for any such action, suit, arbitration, investigation, inquiry or other
proceeding. Neither Parent nor any employee is in default with respect to any
order, writ, judgment, injunction, decree, determination or award of any court
or of any governmental agency or instrumentality (whether federal, state,
local or foreign).
4.11 No Pending Investigation. Parent is not aware of any pending
investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding Parent or any
officers or directors of Parent or any shareholders or controlling persons of
such shareholders.
4.12 Authority Relative to this Agreement. Parent and Merger Sub
have all necessary corporate power and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and Merger
Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize
this Agreement or to consummate such transactions (other than the filing and
recordation of the Articles of Merger as required by the Delaware Corporation
Law). This Agreement has been duly executed and delivered by Parent and Merger
Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes the legal, valid and binding obligation of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms.
12
4.13 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, (i)
conflict with or violate any provision of the certificate or articles of
incorporation, as the case may be, or bylaws of Parent or Merger Sub or any
equivalent organizational documents of any other Parent Subsidiary, (ii)
assuming that all consents, approvals, authorizations and permits described in
Section 4.14(b) have been obtained and all filings and notifications described
in Section 4.14(b) have been made, conflict with or violate any Law applicable
to Parent or any other Parent Subsidiary or by which any property or asset of
Parent, Merger Sub or any other Parent Subsidiary is bound or affected or
(iii) except as set forth in Section 4.14(a) of the Schedule 3, result in any
breach of or constitute a default (or an event which with the giving of notice
or lapse of time or both could reasonably be expected to become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of Parent, Merger Sub or any other Parent Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which could not reasonably be
expected, individually or in the aggregate, (A) to have a material adverse
effect or (B) to prevent or materially delay the performance by Parent or
Merger Sub of its obligations pursuant to this Agreement or the consummation
of the Merger.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance by Parent and Merger Sub of their
respective obligations hereunder and the consummation of the Merger will not,
require any consent, approval, authorization or permit of, or filing by Parent
or Merger Sub with or notification by Parent or Merger Sub to, any
Governmental Entity, except (i) pursuant to applicable requirements of the
Exchange Act, the Securities Act, Blue Sky Laws, the rules and regulations of
the American Stock Exchange, and the filing and recordation of the Articles of
Merger as required by the Delaware Corporation Law and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not reasonably be expected, individually or in
the aggregate, (A) to have a material adverse effect or (B) to prevent or
materially delay the performance by Parent or Merger Sub of its obligations
pursuant to this Agreement or the consummation of the Merger.
4.14 Validity of Parent Shares. The shares of Parent Common Stock to
be delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
4.15 Full Disclosure. None the representations and warranties made by
Parent in this Agreement, the Schedules and Exhibits to this Agreement
prepared by Parent, any filings made by Parent with the Securities and
Exchange Commission (the "Commission") (including all the exhibits and
appendixes thereto) (the "SEC Documents") contained, contains, or will contain
at the time it was or is so furnished any untrue statement of a material fact
or omitted, omits or will omit at such time to state any material fact
necessary in order to make the statements made herein and therein, in light of
the circumstances under which they were made, not misleading. Except as
disclosed in any SEC Document filed on XXXXX at least five (5) business days
13
prior to the date hereof, since January 1, 1999, there has been no material
adverse change and no material adverse development in the business,
properties, operations, condition (financial or otherwise), assets,
liabilities or results of operations or, insofar as can reasonably be
foreseen, prospects of Parent or any of its subsidiaries. Parent has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does Parent or any of its
subsidiaries have any knowledge or reason to believe that their respective
creditors intend to initiate involuntary bankruptcy proceedings. No event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Parent or its subsidiaries or their
respective businesses, properties, operations, condition (financial or
otherwise), assets, liabilities or results of operations or, insofar as can
reasonably be foreseen, prospects, that would be required to be disclosed by
Parent under applicable securities laws on a registration statement (including
by way of incorporation by reference) filed with the Commission, on the date
this representation is made or deemed to be made, relating to an issuance and
sale by Parent of the Common Stock and which has not been publicly disclosed.
4.16 Assets. Parent has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any liens
or encumbrances except as disclosed in Parent's Financial Statements.
ARTICLE V
COVENANTS
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public, without the prior written consent of the party to which the
confidential information pertains. Each party shall take such steps as are
necessary to prevent disclosure of such information to unauthorized third
parties.
5.2 Conduct of Business. Prior to the Closing, Parent and the
Company shall each conduct its business in the normal course, and shall not
sell, pledge, or assign any assets, without the prior written approval of the
other party, except in the regular course of business or as contemplated in
previously disclosed contractual obligations. Neither Parent nor the Company
shall amend its Certificate of Incorporation (other than to amend the
liquidation preferences of the Preferred Stock) or Bylaws, declare dividends,
redeem or sell stock or other securities, incur additional or newly-funded
liabilities, acquire or dispose of fixed assets, change employment terms,
enter into any material or long-term contract, guarantee obligations of any
third party, settle or discharge any balance sheet receivable for less than
its stated amount, pay more on any liability than its stated amount, or enter
into any other transaction other than in the regular course of business except
as otherwise contemplated herein.
14
5.3 Plan of Reorganization. This Agreement is intended to constitute
a "plan of reorganization" within the meaning of Section 1.368-2(g) of the
income tax regulations promulgated under the Code. From and after the date of
this Agreement, each party hereto shall use all reasonable efforts to cause
the Merger to qualify, and shall not, without the prior written consent of the
other parties hereto, knowingly take any actions or cause any actions to be
taken which could reasonably be expected to prevent the Merger from qualifying
as a reorganization under the provisions of Section 368 of the Code. In the
event that the Merger shall fail to qualify as a reorganization under the
provisions of Section 368 of the Code, then the parties hereto agree to
negotiate in good faith to restructure the Merger in order that it shall
qualify as tax-free transaction under the Code. Following the Effective Time,
and consistent with any such consent, neither the Surviving Corporation nor
Parent nor any of their respective affiliates knowingly and voluntarily shall
take any action or cause any action to be taken which could reasonably be
expected to cause the Merger to fail to qualify as a reorganization under
Section 368 of the Code.
5.4 Registration of Common Stock by Parent. As soon as reasonably
practicable, and in any event within 60 days following the Closing, Parent
shall prepare and file a registration statement on Form S-3 or, if Form S-3 is
not available, then on Form S-1, or such other available form, with respect to
150,000 of the shares of Parent Common Stock to be received pursuant to this
Agreement (the "Registrable Shares"), and shall use its best efforts to cause
such registration statement to be declared effective as soon as possible and
keep such registration continuously effective for a period extending until the
earlier of one (1) year following the effective date thereof, or the date on
which all of the Registrable Shares have been sold. Each Company Stockholder
registering shares pursuant to such registration statement shall agree not to
sell more than 500 shares under such registration statement on any trading
day, and all such sales shall be made through accounts at Sutro and Company,
Inc.
5.5 Fairness Opinion. The parties agree that they will attempt to
obtain a fairness opinion as quickly as possible in which the investment
banker rendering the opinion concludes that the terms of this transaction are
fair to the shareholders of the Parent. This opinion will not, however, be a
condition to closing.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to the Obligations of Each Party to Consummate the
Merger. The obligations of the parties hereto to consummate the Merger, or to
permit the consummation of the Merger, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following conditions:
(a) this Agreement and the Merger shall have been duly approved
by the requisite vote of stockholders of the Company in accordance with
the Delaware Corporation Law;
(b) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other governmental
entity shall have issued any order, which is then in effect and has the effect
of making the Merger illegal or otherwise prohibiting its consummation;
(c) all consents, approvals and authorizations legally required
to be obtained to consummate the Merger shall have been obtained from all
governmental entities, except where the failure to obtain any such consent,
approval or authorization could not reasonably be expected to result in a
15
change in or have an effect on the business of the Company or Parent that is
materially adverse to the business, assets, liabilities (contingent or
otherwise), condition (financial or otherwise) or results of operations of
Parent and its subsidiaries, taken as a whole; and
(d) the shares of Parent Common Stock into which the shares of
Company Common Stock will be converted pursuant to Article I shall have been
authorized for listing on the American Stock Exchange.
6.2 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger, or to permit the consummation of the
Merger, are subject to the satisfaction or, if permitted by applicable Law,
waiver of the following further conditions:
(a) each of the representations and warranties of Parent
contained in this Agreement shall be true, complete and correct in all
material respects on and as of the Effective Time as if made at and as of the
Effective Time and the Company shall have received a certificate of the
President and Chief Financial Officer of Parent to such effect;
(b) Parent shall have performed or complied in all material
respects with all material agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective Time and
the Company shall have received a certificate of the President and Chief
Financial Officer of Parent to that effect;
(c) Employment Agreements. Parent and each of Xxxxxx Xxxxxxxx,
Xxxx Xxxxxx, M.D., and Nathalie J.v.d. Doornmalen shall have entered into an
employment agreement substantially in the forms of Exhibit A, B and C hereto,
respectively.
6.3 Conditions to the Obligations of Parent. The obligations of
Parent to consummate the Merger, or to permit the consummation of the Merger,
are subject to the satisfaction or, if permitted by applicable Law, waiver of
the following further conditions:
(a) each of the representations and warranties of the Company
contained in this Agreement shall be true, complete and correct in all
material respects on and as of the Effective Time as if made at and as of the
Effective Time and Parent shall have received a certificate of the Chairman or
President and Chief Financial Officer of the Company to such effect;
(b) the Company shall have performed or complied in all material
respects with all material agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective Time and
Parent shall have received a certificate of the Chairman or President and
Chief Financial Officer of the Company to that effect;
(c) there shall not be pending or threatened any action,
proceeding, claim or counterclaim which seeks to or would, or any order,
decree or injunction (whether preliminary, final or appealable) which would,
require Parent to hold separate or dispose of any of the stock or assets of
the Company or the Company Subsidiaries or imposes material limitations on the
ability of Parent to control in any material respect the business, assets or
operations of either Parent or the Company;
(d) The Company shall provide a letter from its auditors stating
that its financial statements for the period from inception through December
31, 1999, can be audited in accordance with SEC rules and that the audit can
be completed within 75 days after the Closing.
16
(e) Parent shall have received evidence that all of the
Company's outstanding vested options and warrants have been cancelled or
exercised.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and the Company;
(b) by either Parent or the Company, if the Effective Time shall
not have occurred on or before May 15, 2000; provided, however, that the right
to terminate this Agreement under this Section 7.1(b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
shall have caused, or resulted in, the failure of the Effective Time to occur
on or before such date;
(c) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement,
or if any representation or warranty of the Company shall have become untrue,
incomplete or incorrect, in either case such that the conditions set forth in
Section 6.3 would not be satisfied (a "Terminating Company Breach"); provided,
however, that if such Terminating Company Breach is curable by the Company
through the exercise of its reasonable efforts within 30 days and for so long
as the Company continues to exercise such reasonable efforts, Parent may not
terminate this Agreement under this Section 7.1(c); and provided further that
the preceding proviso shall not in any event be deemed to extend any date set
forth in paragraph (b) of this Section 7.1.
7.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of any party
hereto or any of its affiliates or any of its or their officers or directors,
and all rights and obligations of each party hereto shall cease; provided,
however, that nothing herein shall relieve any party hereto from liability for
the willful or intentional breach of any of its representations and warranties
or the willful or intentional breach of any of its covenants or agreements set
forth in this Agreement.
7.3 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective boards of directors at any
time prior to the Effective Time. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
7.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for or waive compliance with the performance of
any obligation or other act of any other party hereto or (b) waive any
inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties
to be bound thereby.
7.5 Expenses. All Expenses incurred in connection with this
Agreement and the Merger shall be paid by the party incurring such Expenses,
whether or not the Merger is consummated.
17
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-survival of Representations and Warranties. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
7.1, as the case may be. Each party agrees that, except for the
representations and warranties contained in this Agreement and the Disclosure
Schedules, no party hereto has made any other representations and warranties,
and each party hereby disclaims any other representations and warranties made
by itself or any of its officers, directors, employees, agents, financial and
legal advisors or other representatives, with respect to the execution and
delivery of this Agreement or the Merger contemplated herein, notwithstanding
the delivery or disclosure to any other party or any party's representatives
of any documentation or other information with respect to any one or more of
the foregoing.
8.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
telecopy or facsimile, by registered or certified mail (postage prepaid,
return receipt requested) or by a nationally recognized courier service to the
respective parties at their addresses set forth on the signature pages to this
Agreement (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 8.2).
8.3 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner
to the fullest extent permitted by applicable Law in order that the Merger may
be consummated as originally contemplated to the fullest extent possible.
8.4 Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of Law or otherwise) without the
prior written consent of the other parties hereto. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective successors and permitted
assigns any rights or remedies under or by reason of this Agreement.
8.5 Incorporation of Exhibits. The Disclosure Schedules and all
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part of this Agreement for all purposes as if fully set forth
herein.
18
8.6 Choice of Law. This Agreement shall be construed and governed by
the laws of the State of California without regard to conflicts of interest
principles. The parties hereto consent to the jurisdiction of the federal and
state courts located in Los Angeles, California, for any action or suit
arising out of this Agreement, and waive any defense to such jurisdiction,
including, without limitation, any defense based on venue or inconvenient
forum.
8.7 Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.8 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
8.9 Entire Agreement. This Agreement (including the Exhibits, the
Disclosure Schedules) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any
party hereto unless made in writing and signed by all parties hereto.
8.10 Further Assurances. Each party shall do and perform or cause to
be done or performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other parties may reasonably request in order to carry out the intent and
accomplish the purpose of this Agreement and the consummation of the
transactions contemplated hereby; provided, however, that no party shall be
obligated in any way to do anything that would conflict with, contradict or
otherwise contravene any term or condition set forth prior to this Section
8.10.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
AGREED TO AND ACCEPTED as of the date first above written.
x-XxxXxxx.xxx Illumea Corporation
By:/s/ Xxxx X. Xxxxxxx By:/s/ Xxxxxx Xxxxxxxx
Xxxx X. Xxxxxxx, President Xxxxxx Xxxxxxxx, President
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000 000 Xxxxxxxx Xxx
Xxxxxxxxxxxx, Xxxxxxx 00000 Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Illumea Acquisition Corporation
By:/s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx, President
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
19
SCHEDULE 1
Current Common Stockholders # Held
Xxxxx X. Xxxxxx, MD, D.Phil. 200,000
University Pathology Associates, Inc 100,000
Xxxxxxx X. Xxxxxxxx, MD 80,000
Xxxx Xxxxxx 592,800
Xxxxxx Xxxxxxxx 390,000
Nathalie j.v.d. Doornmalen 180,000
Xxxxxxxxx Xxxxxx Trust 150,000
Global Strategic Holdings Limited 45,000
GEM Global Yield Fund 45,000
XX Xxxxxxxxx 50,000
Xxxxx Xxxxxx 33,334
Xxxxx Xxxx 33,333
Xxxxxxxxx Xxxxxx 33,333
Current Common 1,932,800
Common from Conversion of Bridge
Leeward Management 143,905
Pillar Management 67,720
Empire Ventures 67,720
Trinity Advisors 33,860
Xxx Family Interests 25,395
Xxxx Xxxxxxxx 16,930
Common from Bridge 355,530
Common from Exercise of Options
Xxxxxx.xxx 50,000
Xxxx Xxxxx 30,000
Xxxx Xxxxxxx 50,000
Xxxxxxx XxXxxxx 50,000
Xxxx Xxxxxxxxx 7,217
Xxxx X. Xxxxxxxxxx 5,155
Xxxxxx Xxxxxxx, M.D. 5,000
Xxxxx Xxxxxxx, M.D. 5,000
Xxx Xxxxx Xxxxxx, M.D. 5,000
Xxxx Xxxxxxxxx 5,000
Xxxxxx Xxxxxxxxxx 5,000
Xxxxxx Xxxxxxxxxx 5,000
Xxxxx Xxxxxxx 5,000
Xxxx X. Xxxxxxxxxx 3,627
Xxxxxx Xxxxxxxx 3,422
Xxxxxxx Xxxxx 3,333
Xxxxxxx Xxxxxxx 2,797
Xxxx Xxxxxx 2,774
Xxxxx Xxxxxxxxx 2,655
Xxxxxxx Xx 1,839
Xxxx Xxxxxxx 17,000
Xxxx Xxx 1,250
Xxxxx Xxxxxxxxx 1,200
Xxxxxxx XxXxxxx 17,000
Xxxxx Xxxxxx 924
Xxxxxx Xxxxxx 870
Xxxxxxx Xxxxxx 712
Xxxxx Xxxxxxxx 657
X.X.Xxxxxxx 488
Xxxxxxx Xxxxxxxxx 274
The Concord Group 262
Xxxxx Xxxxxxx 64
Xxx Xxxxxxxxx 33
Xxx Xxxxxxxxx 20
Common from Exercise of Options 287,764(1)
Total Common before Preferred 2,576,094
Common from Conversion of Preferred A
Xxxxxxxxx Xxxxxx Trust 10,438
Xxx Xxx Xxxx 10,438
Eltrinic Enterprise Ltd. 10,438
Xxxxx Xxxxx Xxxxx Xx 5,219
Xxxxxx X.X. Xxxx 5,219
Xxxxxx Xxxx Tsing Tao 5,219
Xxxxxxx X. Xxxxxxxx, MD 2,559
Xxxx Xxx 1,045
Common Stock from Preferred A 50,575
Common from Conversion of Preferred B
Xxxxxxxxx Xxxxxx Trust 55,000
Xxxxx Xxxxxx 15,000
Xxxxxxxxx Xxxxxx 15,000
Xxxxx Xxxx 15,000
Xxxxx Xxxxxxxxx 10,000
Xxxxxx Xxxxxxx 10,000
Xxxx Xxxxxxx 5,000
Xxxxx Xxxxxxxxxxx 5,000
Xxxxxxxx Xxxxxxxx 5,000
Kin Xxx Xx 5,000
Xxxxxx Xxx 4,000
Xxxxx Xxxxx-Xxxxx Xx 3,000
Xxxx Xxxxxxxx 2,500
Xxxxxxx Xxxxxxxx 2,500
Xxxxxxx Xxxxxxx 2,500
Xxxxxxx Xxxxxx 2,500
Xxxxxxx Xxxxxx 2,500
Xxxxx Xxxxxx 2,500
Xxxx Xxxxx 2,500
Xxxxxxx Xxxxxxx 2,500
Xxxxx Xxxx 2,000
Hunter Vest, Ltd. 2,000
True Will Investment Limited 2,000
Xxxxxxx Xxxxx 1,000
Xxxx Xxx 1,000
Microscopy Marketing & Education 1,000
Xxxxxxx Ma 834
Xxxx X. Xxxxx 833
Yonanda j.v.d. Doornmalen 833
Xxxx Xxxxx 500
Common Stock from Preferred B 179,000
Total Fully-Diluted Common Shares (2) 2,805,669
_______________________
(1) Total unvested options are 182,236
(2) In addition, Xxxxxxxxx Xxxxxxxxx holds warrants for 7,245 shares at
$10.00 a share.
SCHEDULE 2
3.4 - Directors and Officers
Name Title
Xxxxxx Xxxxxxxx President, Chief Executive Officer and Director
Xxxx Xxxxxx, M.D. Chief Science Officer and Director
Xxxxx Xxxxxx Secretary/Treasurer
Xxxxx Xxxxxx M.D., Ph.D. Chairman
Xxxxxx X. Xxxxxxxxx Director
Xxxx Xxxxx Director
Xxxx Xxxxxx Director
3.9 Intellectual Property
Patent Information
Patent Name : COMPRESSION PACKAGED IMAGE TRANSMISSION FOR TELEMICROSCOPY
Patent Docket #: 34660/JWE/I214
Patent Application #: 09/323,371
Trademark Trademark # Current Status
I Logo 75/713169 Filing receipt received 8/30/99, still
pending
THE TELEPATHOLOGY
SOLUTION 75/762736 Filing receipt received 10/20/99. Still
pending
THE TELEMICROSCOPY
SOLUTION 75/762736 Filing receipt received 10/20/99. Still
pending
FASTPIX 75/631414 Scheduled in Official Gazette on 11/9/99
FIBERPIX, CLASS 9,10 75/631400 Pending
FIBERPIX, CLASS 9 75/711435 Pending
ILLUMEA 75/711434 Pending
ILLUMEA CORPORATION 75/521307 Pending
3.16 - Material Contracts
Receivables 04/15/00
Xxxxxx Cancer Institute $ 84,861
USC 50,000
Total Receivables 134,861
Liabilities
Accounts Payable
Scientific Instruments $ 64,910
Xxxxxx.xxx 23,750
Other 149,205
$237,865
Salaries & Wages Payable (1) $ 41,154
Promissory Notes to Employees
(2) 0
Capital Leases 59,904
Series C Bridge Loan (3) 1,017,500
Total Liabilities(4) $1,356,423
(1) In addition, certain employees have accrued vacations which would become
payable on departure from the company.
(2) The Company will issue a maximum of $25,000 of notes to employees to
assist with exercise of options prior to merger. Notes will be paid back out
of salary over 12 months and accelerate if employee leaves firm.
(3) To be converted to common stock on close of transaction.
(4) In addition, the Company has leases totalling $45,000 with monthly lease
payments of $1,100.
3.17 Clients
University Pathology Associates (University of Southern California)
Genetics and Lab Medicine
Ohio State University
Memorial Sloan Kettering Cancer Center
Beijing University
Empire Pathology
Quest Diagnostics
Chulangkon Hospital
University of Maryland
Los Angeles County Hospital
Stanford University
Aventis Pharmaceuticals
Dianon Systems
Harvard University
U.S. Labs
Dartmouth Xxxxxxxxx Medical Center
Veterans Hospital - Los Angeles
Hartford Hospital
3.19 - No Debts
As of April 15, 2000, the Company has no liabilities or obligations except as
outlined in Schedule 2, 3.16.
The Company may incur additional liabilties between April 15, 2000 and closing
during the ordinary course of business (not to exceed $25,000).
Purchase Price Including Earn Out Provisions
Illumea purchase price shall be paid with restricted shares of common stock
valued at $15,000,000 with the number of shares being calculated in accordance
with subparagraph 2.1(a) of the Agreement. 150,000 shares shares shall have
piggyback registration rights, subject to approval by the Board of Directors
of x-XxxXxxx.xxx and a schedule of "dribble-out" provisions.
Targets for Earn Out Portion of Purchase Price:
Bonus to Illumea shareholders are cumulative meaning that each milestone met
as referenced below yields the additional consideration referenced:
1. Illumea generates $3,000,000 in gross sales by end of MED
Fiscal Year (3/31/01) - Illumea receives 375,000 shares or shares valued at
$7,500,000, whichever is greater.*
2. Illumea generates $10,000,000 in gross sales by end of MED
Fiscal Year (3/31/02) - Illumea receives bonus of 500,000 shares or shares
valued at $10,000,000, whichever is greater.*
3. Illumea generates $20,000,000 in gross sales by end of MED
Fiscal Year (3/31/02) - Illumea receives an additional bonus of 1,000,000
shares or shares valued at $20,000,000, whichever is greater.*
4. Illumea generates $30,000,000 in gross sales by end of MED
Fiscal Year (3/31/02), Illumea receives an additional bonus of 1,500,000
shares or shares valued at $30,000,000, whichever is greater.*
5. Illumea generates $40,000,000 in gross sales by end of MED
Fiscal Year (3/31/02), Illumea receives an additional bonus of 500,000 shares
or shares valued at $10,000,000, whichever is greater.*
6. In no event shall the number of shares issued under the
provisions of paragraphs 1 through 5 above, together with the $15,000,000
worth of shares to be issued at the closing, exceed 5% of the shares
outstanding as the date of this Agreement.
* All shares of restricted stock and all shares are issued and valued as
of the date the performance hurdle has first been satisfied by Illumea.
SCHEDULE 3
x-XxxXxxx.xxx
("e-Med")
4.1 Subsidiaries.
E-Net Technologies LTD and its wholly-owned UK subsidiaries B2B, an
Australian subsidiary
4.2 Capitalization:
Schedule of Warrants and Options Outstanding as of February 10, 2000
Price
Number of Number Date of Per
Warrant Holder Warrants of Shares Issue Share Term
Magnum Financial 50,000 50,000 1/11/99 $0.25 5 Years
Xxxxxxx Investors 250,000 250,000 3/19/99 $3.85 5 Years
Xxx Xxxxx 250,000 250,000 3/19/99 $3.85 5 Years
Sutro & Co. 350,000 350,000 5/23/99 $5.00 5 Years
Sutro & Co. 1,300,000 1,300,000 5/23/99 $0.01 5 Years
Warrants in
December private
offering 3,568,000 3,568,000 12/31/99 $4.00 5 Years
Outstanding 5,768,000 5,768,000
Price
Number of Number of Date of Per
Option Holder Options Shares Issue Share
Xxx XxXxxxxxx 100,000 100,000 8/31/99 $1.00
UK employees 202,500 202,500 various $1.00
Stock Option Plan 632,000 632,000 various various
Outstanding 934,500 934,500
Total Options and
Warrants 6,702,500 6,702,500
4.4 Directors and Officers of e-Med:
Name Position
Xxxx X. Xxxxxxx Chairman, President and Chief Executive Officer
Xxxxxxxx X. Xxxxxx Chief Financial Officer
Xxx XxXxxxxxx Managing Director, e-Net Technology Limited
Xxxxxxxx Xxxxx Chief Technology Officer and Executive Vice
President
Xxxxxx Xxxxxx Director
Xxx X.X. Xxxxx Director
Xxxxxxxx X. Xxxxx Director
