EXHIBIT 2.1
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Merger Agreement and Plan of Reorganization
MERGER AGREEMENT AND PLAN OF REORGANIZATION
This Merger Agreement and Plan of Reorganization (the "Agreement") is
made as of this 8th day of July, 2004, by and among Treasure Mountain Holdings,
Inc., a Nevada corporation having its principal place of business at 1390 South
0000 Xxxx Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000 ("Treasure Mountain"), TMH
Acquisition Corp., a Delaware corporation having its principal place of business
at 1390 South 0000 Xxxx Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000 ("Vyteris
Mergerco") and Vyteris, Inc., a Delaware corporation having its principal place
of business at 00-00 Xxxxxxx Xxxxx, Xxxx Xxxx, XX 00000 ("Vyteris").
WHEREAS, Vyteris is authorized to issue shares of its common stock, par
value $.0001 per share ("Vyteris Common Stock"), and shares of its preferred
stock, par value $.0001 per share ("Vyteris Preferred Stock"); and
WHEREAS, the outstanding capitalization of Vyteris is as set forth on
SCHEDULE A annexed hereto; and
WHEREAS, Treasure Mountain is authorized to issue 50,000,000 shares of
common stock, par value $.001 per share (the "Treasure Mountain Common Stock");
and
WHEREAS, Vyteris Mergerco is a wholly-owned subsidiary of Treasure
Mountain; and
WHEREAS, Vyteris Mergerco is authorized to issue 1,000 shares of common
stock, par value $.0001 (referred to as the "Vyteris Mergerco Shares"), all of
which such Vyteris Mergerco Shares are issued and outstanding and owned by
Treasure Mountain; and
WHEREAS, the respective Boards of Directors of Treasure Mountain,
Vyteris Mergerco and Vyteris (the "Companies") deem it advisable and generally
to the advantage and welfare of the Companies, and their respective
shareholders, that Vyteris Mergerco be merged with and into Vyteris under the
terms and conditions hereinafter set forth (the "Merger"), to be effected
pursuant to the Delaware General Corporation Law; and
WHEREAS, pursuant to the Merger, Vyteris Mergerco shall merge with and
into Vyteris, each outstanding share of Vyteris Common Stock and Vyteris
Preferred Stock shall be converted into the right to receive shares of Treasure
Mountain capital stock or equivalents thereto as hereinafter set forth; and
WHEREAS, the parties hereto expect that the Merger shall 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:
1. VOTES ON THE MERGERS AND RELATED MATTERS. Vyteris Mergerco and
Vyteris (the "Constituent Corporations") shall each, as soon as practicable, (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") at the offices of Xxxxxxxxxx Xxxxxxx PC, 1251 Avenue of the
Americas, New York, New York, commencing at 9:00 A.M. on a date designated by
Vyteris and reasonably acceptable to Treasure Mountain and not more than five
business days after all conditions to the consummation of the Merger shall have
been satisfied or waived in accordance with the provisions of this Agreement.
Upon consummation of the Closing, a certificate of merger (the "Certificate of
Merger") shall be executed and filed with the Secretary of State of the State of
Delaware. 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 Vyteris Mergerco and Vyteris shall mutually approve. The Merger shall
be effective as of the time of the filing of the Certificate of Merger (the
"Effective Time").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF VYTERIS. Vyteris
represents, warrants and covenants to Treasure Mountain and Vyteris Mergerco as
follows, except to the extent set forth in the corresponding section of the
schedule of exceptions delivered to Treasure Mountain contemporaneous with the
execution of this Agreement (the "Vyteris Schedule of Exceptions"):
2.1 ORGANIZATION; CAPITALIZATION. Vyteris is a duly
organized and validly existing corporation in good standing under the laws of
its state of formation. Schedule A annexed hereto sets forth the number of
shares of Common Stock, Series A Preferred Stock, Series C Preferred Stock and
Preferred Stock which Vyteris is authorized to issue and the number of shares of
Common Stock, Series A Preferred Stock and Series C Preferred Stock which are
outstanding as of the date hereof. Except as set forth on such Schedule A, as of
the date hereof there are no outstanding rights, options or warrants to purchase
any equity interest in Vyteris or any outstanding securities of any nature
convertible into or exercisable or exchangeable for any equity interest in
Vyteris. Except as set forth in the Private Placement Memorandum, Vyteris has
not granted to any person any right of first refusal, right of participation, or
any similar right with respect to the disposition of any shares of Vyteris'
capital stock. No shares of capital stock of Vyteris were issued in violation of
the preemptive rights of any person or entity.
2.2 AUTHORITY. Vyteris has full power and authority to enter
into this Agreement and, subject to any third party approval in accordance with
the laws of the States of Delaware and New Jersey, to consummate the
transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been duly approved by the Board of Directors of
Vyteris.
2.3 BINDING AGREEMENT. This Agreement has been duly executed
and delivered by Vyteris and constitutes the legal, valid and binding obligation
of Vyteris, 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).
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2.4 NO CONFLICTS. Assuming compliance with, or the
non-applicability of, the New Jersey Industrial Site Recovery Act ("ISRA"), the
execution and delivery by Vyteris of this Agreement, the consummation and
performance of the transactions herein contemplated, and compliance with the
terms of this Agreement by Vyteris do not conflict with, result in a breach of
or constitute or give rise to a default under (i) Vyteris' certificate of
incorporation or bylaws, in each case as amended; (ii) any indenture, mortgage,
deed of trust or other agreement, instrument or contract to which Vyteris is now
a party or by which it or any of its assets or properties are bound; (iii) any
law, order, rule, regulation, writ, injunction, judgment or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over Vyteris or any of its business or properties, except, with
respect to clauses (ii) and (iii), conflicts, breaches and defaults which,
individually and in the aggregate, do not have a "Material Adverse Effect" on
Vyteris. For purposes of this Agreement, the term "Material Adverse Effect" on a
party shall mean a material adverse effect on (A) the results of operations,
business, properties or financial condition of such party and its subsidiaries
(if any) taken as a whole, other than any such effect attributable to or
resulting primarily from (v) the announcement of the transactions contemplated
hereby, (w) any change in laws, rules or regulations of general applicability or
interpretations thereof by courts or governmental authorities (other than
changes having a disproportionate effect on such party), (x) any economic
condition impacting such party's industry generally (other than conditions
having a disproportionate effect on such party) or (y) any change in generally
accepted accounting principles ("GAAP") or (B) the ability of such party to
consummate the transactions contemplated hereby.
2.5 SUBSIDIARIES. Vyteris does not have any subsidiaries,
nor does it own any direct or indirect interest in any other business entity.
2.6 FOREIGN QUALIFICATIONS. Vyteris is 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 Vyteris. A list
of all such jurisdictions where Vyteris is qualified or licensed as a foreign
corporation is set forth as Schedule 2.6 of the Vyteris Schedule of Exceptions.
The business of Vyteris 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.
2.7 FINANCIAL STATEMENTS. Vyteris has furnished Treasure
Mountain with a true and complete copy of the audited balance sheets of Vyteris
as at December 31, 2002 and December 31, 2003, and the related audited
statements of operations and statements of cash flows of Vyteris for the fiscal
years ended December 31, 2002 and December 31, 2003 and, on an unaudited basis,
Vyteris' balance sheet as of March 31, 2004 and statements of operations and
cash flows for the quarters ended March 31, 2003 and March 31, 2004 (the
"Vyteris Financial Statements"). The Vyteris Financial Statements fairly present
in all material respects the financial position, results of operations and other
information purported to be shown thereon of Vyteris, at the dates and for the
respective periods to which they apply. The Vyteris Financial Statements for the
years ended December 31, 2002 and December 31, 2003 have been audited by Ernst &
Young LLP and are accompanied by such firm's audit report and were prepared in
conformity with generally accepted
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accounting principles consistently applied throughout the periods involved, and
have been adjusted for all normal and recurring accruals.
2.8 NO ADVERSE EVENTS. Since the date of the most recent
Vyteris Financial Statements, except for (a) matters referred to in the Vyteris
Financial Statements, (b) matters which do not, individually or in the
aggregate, have a Material Adverse Effect on Vyteris, (c) matters referred to in
Vyteris' Private Placement Memorandum, dated June 18, 2004, a copy of which has
been furnished to Treasure Mountain's counsel (the "Private Placement
Memorandum"), and (d) matters set forth in Schedule 2.8 of the Vyteris Schedule
of Exceptions:
(i) there has not been any material adverse change in the
financial position or condition of Vyteris, its liabilities or its
assets or any damage, loss or other change in circumstances materially
affecting Vyteris, its business or assets or Vyteris' 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) Vyteris 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 Vyteris that
was not in the ordinary course of business consistent with past
practice;
(iv) there has been (i) no declaration or payment of a
dividend, or any other declaration, payment or distribution of any type
or nature to any stockholder of Vyteris in respect of its stock, whether
in cash or property, and (ii) no purchase or redemption of any share of
the capital stock of Vyteris;
(v) there has been no declaration, payment, or commitment
for the payment, by Vyteris, of a bonus or other additional salary,
compensation, or benefit to any employee of Vyteris;
(vi) there has been no release, compromise, waiver or
cancellation of any material debt to or claim by Vyteris, or of any
material right of Vyteris;
(vii) there have been no capital expenditures by Vyteris in
excess of $200,000 for any single item or $500,000 in the aggregate,
other than capital expenditures reflected in a capital budget delivered
to Treasure Mountain prior to the date hereof;
(viii) there has been no change in accounting methods or
practices or revaluation of any asset of Vyteris;
(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 Vyteris;
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(x) there has been no loan by Vyteris, or guaranty by
Vyteris of any loan, to any employee of Vyteris, other than advances
made in the ordinary course of business consistent with past practice;
(xi) there has been no termination or resignation of any key
employee or executive officer of Vyteris, and to the knowledge of
Vyteris, no such termination or resignation is threatened;
(xii) there has been no amendment or termination of any
material oral or written contract, agreement or license to which Vyteris
is or was a party or by which Vyteris is or was bound, except in the
ordinary course of business or as expressly contemplated hereby;
(xiii) Vyteris has not discharged or satisfied or paid any lien
or encumbrance or obligation or liability other than in connection with
the payment of current liabilities or the conversion of outstanding
indebtedness in an amount not greater than $1,500,000;
(xiii) there has been no agreement or commitment by Vyteris to
do any of the foregoing; and
(xiv) 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 as to Vyteris.
2.9 ORDINARY COURSE OF BUSINESS. Except for (i) transactions
occurring in the ordinary course of business, (ii) transactions which are not
reasonably likely to have a Material Adverse Effect on Vyteris, (iii)
transactions set forth on the Vyteris Schedule of Exceptions, (iv) transactions
referred to in the Private Placement Memorandum and (v) the incurrence of
expenses permitted under Section 2.10, there has not been any transactions or
series of related transaction involving Vyteris since March 31, 2004 in an
amount in excess of $500,000.
2.10 LIABILITIES; CLAIMS. Except as set forth on the Vyteris
Schedule of Exceptions or in the private Placement Memorandum, there are no
liabilities (including, but not limited to, tax liabilities) or claims against
Vyteris (whether such liabilities or claims are contingent or absolute, direct
or indirect, matured or unmatured) not appearing on the Vyteris Financial
Statements, other than (i) liabilities incurred in the ordinary course of
business since Xxxxx 00, 0000, (xx) taxes accrued on earnings since March 31,
2004 which are not yet due or payable, (iii) expenses incurred in connection
with the Merger, (iv) expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement, (v) expenses incurred in
connection with obtaining financing, (vi) expenses incurred in seeking to
commercialize Vyteris' products, in establishing a manufacturing capability and
in expanding the applications of its technology in an amount not exceeding
$9,000,000 in the aggregate, (vii) liabilities not referred to in any of the
other clauses of this Section 2.10 which do not exceed $100,000 in the aggregate
and (viii) liabilities which are not
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required, under GAAP, to be disclosed on the face or in the notes to the Vyteris
Financial Statements.
2.11 TAX RETURNS. All federal, state, county and local
income, excise, property and other tax returns required to be filed by Vyteris
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 Vyteris Financial Statements. The federal
income tax returns and state and foreign income tax returns of Vyteris 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 Vyteris or any of its operations or businesses. There
are no pending, or to the knowledge of Vyteris, threatened, tax claims or
assessments, and there are no pending, or to the knowledge of Vyteris,
threatened, tax examinations by any taxing authorities. Vyteris 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 Vyteris for any
year.
2.12 TITLE TO ASSETS. Except as provided for in the Vyteris
Financial Statements or as described in Schedule 2.12 of the Vyteris Schedule of
Exceptions, Vyteris has good and marketable title to all of its furniture,
fixtures, equipment, inventory and other assets owned by Vyteris, and such
assets are owned free and clear of all security interests, pledges, liens,
restrictions and encumbrances of every kind and nature.
2.13 MATERIAL CONTRACTS. A copy (or summary if oral) of all
material agreements, contracts, letters of intent, arrangements, understandings
and commitments, whether written or oral, to which Vyteris is a party, or from
which Vyteris will receive substantial benefits and which are material to
Vyteris (collectively, "Vyteris Contracts"), have been delivered to Treasure
Mountain or its counsel and are listed on Schedule 2.13(a) of the Vyteris
Schedule of Exceptions. Any Vyteris Contracts entered into between the date
hereof and the Closing will be delivered to Treasure Mountain or its counsel
prior to Closing. Except as set forth in Schedule 2.13(b) of the Vyteris
Schedule of Exceptions, the validity and enforceability of, and rights of
Vyteris contained in, each such Vyteris Contract shall not be adversely effected
by the Merger or the transactions contemplated hereby or any actions taken in
furtherance hereof. Except as set forth in Schedule 2.13(c) of the Vyteris
Schedule of Exceptions, Vyteris is not in material default under any Vyteris
Contract.
2.14 LEGAL PROCEEDINGS. Except for legal proceedings
described in the Private Placement Memorandum, there are no legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature pending, or to Vyteris' knowledge, threatened,
directly or indirectly involving Vyteris or its officers, directors, employees
or affiliates, individually or in the aggregate, in which an unfavorable
determination could result in suspension or termination of Vyteris' business or
authority to conduct such business in any jurisdiction or could result in the
payment by Vyteris of more than $250,000, or challenging the validity or
propriety of the transactions contemplated by this Agreement. Vyteris 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 Vyteris.
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2.15 CERTAIN TRANSACTIONS. Except as set forth on Section 2.8
of the Vyteris Schedule of Exceptions, since March 31, 2004 there have been (i)
no bonuses or extraordinary compensation to any of the officers or directors of
Vyteris and (ii) no loans made to or any other transactions with any of the
officers or directors of Vyteris or their families.
2.16 INSURANCE. Vyteris maintains 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 to Vyteris. Copies of all of the policies of insurance and bonds
presently in force with respect to Vyteris, 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 Treasure Mountain. All such insurance is outstanding and in full
force and effect, with all premiums thereon duly paid, and Vyteris has not
received any notice of cancellation of any such policies.
2.17 INTELLECTUAL PROPERTY.
(a) Set forth on Schedule 2.17 of the Vyteris
Schedule of Exceptions is a true and complete list, as of the date hereof, of
all material 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 Vyteris by third parties of patent
rights, trademark rights, trade name rights and service xxxx rights (together
with trade secrets and know how used in the conduct of Vyteris' business, the
"VYTERIS INTELLECTUAL PROPERTY RIGHTS"). Except as set forth on Schedule 2.17 of
the Vyteris Schedule of Exceptions, to the knowledge of Vyteris, Vyteris owns,
or has validly licensed or otherwise has the right to use or exploit, as
currently used or exploited, all of the Vyteris Intellectual Property Rights,
free of any lien or any obligation to make any payment (whether of a royalty,
license fee, compensation or otherwise). To the knowledge of Vyteris after due
inquiry, no claims are pending or threatened against Vyteris to the effect that
Vyteris is infringing or otherwise violating the rights of any person with
regard to any Vyteris Intellectual Property Right or that any Vyteris
Intellectual Property Right is invalid or unenforceable. To the knowledge of
Vyteris, no person is infringing the rights of Vyteris with respect to any
Vyteris Intellectual Property Right nor, to the knowledge of Vyteris, has any
person threatened to do so. To the knowledge of Vyteris, neither Vyteris, nor
any of its employees, agents or independent contractors, in connection with the
performance of such person's services with Vyteris, 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 did not have, or could not reasonably
be expected to have, a Material Adverse Effect on Vyteris.
(b) Except as set forth on Schedule 2.17 of the
Vyteris Schedule of Exceptions:
(i) All former and current consultants or
contractors of Vyteris have executed and delivered written instruments
with Vyteris, that assign to Vyteris all rights to any inventions,
improvements, discoveries or information developed by them. All
employees of Vyteris who participated in the creation or contributed to
the development of
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the Vyteris Intellectual Property Rights were employees of Vyteris at
the time of rendering such services, such services were within the scope
of their employment and such employees have validly assigned any rights
to the Vyteris Intellectual Property Rights to Vyteris; and
(ii) Vyteris 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 its employees, consultants and contractors, and any other
persons with access to the trade secrets or know how of Vyteris, to
protect the secrecy, confidentiality and value of all such trade secrets
or know how. There has not been any breach by Vyteris, nor, to the
knowledge of Vyteris, any other party to any such agreement, other than
such actions that could not reasonably be expected to have a Material
Adverse Effect on Vyteris.
2.18 COMPLIANCE WITH LAWS. Vyteris has in all material
respects operated its business and conducted its affairs in compliance with all
applicable laws, rules and regulations.
2.19 RELATED PARTY CONTRACTS. Except as set forth on Schedule
2.19 of the Vyteris Schedule of Exceptions and except for transactions between
Vyteris and Xxxxxxx Xxxxx Specialty Group, LLC or its affiliates, there are no
loans (other than advances made in the ordinary course of business consistent
with past practice), leases, agreements, arrangements understandings or Vyteris
Contracts outstanding between Vyteris and any of its officers, directors or any
person related to or affiliated with any such officers or directors.
2.20 OFFICER AND DIRECTOR INFORMATION. During the past five
years, neither Vyteris, nor any of its officers or directors, nor any person
intended upon consummation of the Merger to be nominated by Vyteris to become an
officer or director of Treasure Mountain or any successor entity or subsidiary,
has been the subject of:
(a) a petition under the Federal bankruptcy laws or
any other insolvency or moratorium law or a petition seeking to appoint a
receiver, fiscal agent or similar officer for the business or property of
Vyteris or such person, or any partnership in which Vyteris 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 any such person was an
executive officer at or within two years before the time of such filing;
(b) 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 of an
intoxicating substance);
(c) any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining Vyteris or any such person from, or
otherwise limiting, the following activities:
(i) Acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant,
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any other person regulated by the United States Commodity Futures Trading
Commission or an associated person of any of the foregoing, or as an investment
adviser, underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any conduct or
practice in connection with such activity;
(ii) Engaging in any type of business
practice; or
(iii) Engaging in any activity in connection
with the purchase or sale of any security or commodity or in connection with any
violation of Federal, state or other securities laws or commodities laws;
(d) 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
Vyteris 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;
(e) a finding by a court of competent jurisdiction
in a civil action or by the Securities and Exchange Commission (the
"Commission") to have violated any securities law, regulation or decree and the
judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended or vacated; or
(f) 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."
2.21 BENEFIT PLANS. Except as set forth on Schedule 2.21 of
the Vyteris Schedule of Exceptions, Vyteris does not have any pension plan,
profit sharing plan or similar employee benefit plan.
2.22 CONSENTS AND APPROVALS. Except for the consent and
approval of the stockholders of Vyteris, any consents required pursuant to any
Vyteris Contracts, any consents, filings or approvals that may be required by
ISRA, compliance with applicable federal and state securities laws 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 (i) the execution and
delivery by Vyteris of this Agreement and (ii) the consummation by Vyteris of
the Merger and of all other transactions contemplated hereby.
2.23 FINDER'S FEES. Vyteris 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.
2.24 EMPLOYEE MATTERS. No employees of Vyteris are on strike
or to Vyteris' knowledge threatening any strike or work stoppage. Vyteris does
not have any obligations under any
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collective bargaining or labor union agreements, nor is Vyteris involved in any
material controversy with any of its employees or any organization representing
any of its employees. Vyteris believes its relationships with its employees are
good.
2.25 DISCLOSURE. None of the information supplied or to be
supplied by or about Vyteris for inclusion or incorporation by reference in any
information to be supplied to holders of Treasure Mountain Common Stock or
Vyteris capital stock concerning the Merger contains or will contain any untrue
statement of a material fact or omits or will 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.
2.26 CHARTER DOCUMENTS. As of the date hereof, the charter
documents of Vyteris have not been altered since its incorporation, except as
filed in the record books of Vyteris and delivered to Treasure Mountain.
2.27 CORPORATE MINUTE BOOKS. Except with respect to the
proceedings of the compensation committee of Vyteris' Board of Directors, the
corporate minute books of Vyteris shall be complete in all material respects
prior to July 15, 2004 and the minutes and consents contained therein shall,
prior to July 15, 2004, accurately reflect the actions that were taken at a duly
called and held meeting or by consent without a meeting. All material actions by
Vyteris which required director or shareholder approval shall, prior to July 15,
2004, be reflected in the corporate minute books of Vyteris. Except for any
violation, breach or default arising from the fact that Treasure Mountain does
not have sufficient authorized shares of common stock or preferred stock to
cover all of the shares of Treasure Mountain capital stock issuable hereunder,
Vyteris is not in material violation or breach of, or in material default with
respect to, any term of its Certificate of Incorporation (or other charter
documents) or by-laws.
2.28 TRADING WITH THE ENEMY ACT; PATRIOT ACT. No sale of
Vyteris' securities nor Vyteris' 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, Vyteris (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, and is
not otherwise associated with any such person. Vyteris is in material compliance
with the USA Patriot Act of 2001 (signed into law October 26, 2001).
3. REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING VYTERIS
MERGERCO. Treasure Mountain and Vyteris Mergerco each jointly and severally
represents, warrants and covenants to Vyteris as follows with respect to Vyteris
Mergerco except to the extent set forth on the corresponding sections of a
schedule of exceptions delivered to Vyteris contemporaneous with the execution
of this Agreement ("Treasure Mountain Schedule of Exceptions"):
10
3.1 ORGANIZATION; CAPITALIZATION. Vyteris Mergerco is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware. Vyteris Mergerco is authorized to issue only the Vyteris
Mergerco Shares. The only shares of Vyteris Mergerco capital stock outstanding
are the Vyteris Mergerco Shares, which are fully paid and nonassessable. At the
Effective Time, all of such shares shall be owned solely by Treasure Mountain.
There are no issued or outstanding options or warrants to purchase Vyteris
Mergerco Shares or any issued or outstanding securities of any nature
convertible into Vyteris Mergerco Shares, or any agreements or understandings to
issue any Vyteris Mergerco Shares, options or warrants. Vyteris Mergerco has not
granted to any person any right of first refusal, right of participation, or any
similar right with respect to the disposition of any shares of its capital
stock.
3.2 AUTHORITY; BINDING AGREEMENT Vyteris Mergerco has full
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, including without limitation (to the extent
applicable) the Merger. This Agreement and the transactions contemplated hereby
have been duly approved by the Board of Directors of Vyteris Mergerco and by
Treasure Mountain as the sole shareholder of Vyteris Mergerco. This Agreement
has been duly executed and delivered by Vyteris Mergerco and constitutes the
legal, valid and binding obligation of Vyteris Mergerco, 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).
3.3 NO BUSINESS ACTIVITY. Vyteris Mergerco has been
organized solely for the purpose of consummating the Merger and, since its
inception, has had no business activity of any nature other than those related
to its organization or as contemplated by this Agreement.
3.4 ISSUANCE OF SECURITIES. Since its inception, Vyteris
Mergerco has not issued or committed itself to issue, and to the Effective Date
will not issue or commit to issue, any Vyteris Mergerco Shares or any options,
rights, warrants, or other securities convertible into Vyteris Mergerco Shares,
except for the issuance of the Vyteris Mergerco Shares to Treasure Mountain.
3.5 CONSENTS AND APPROVALS. Except for the compliance with
applicable securities laws 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 Vyteris Mergerco of this Agreement and (ii) the consummation by
Vyteris Mergerco of the Merger and the other transactions contemplated hereby.
3.6 NO CONFLICTS. The execution and delivery by Vyteris
Mergerco of this Agreement, the consummation and performance of the transactions
herein contemplated, and compliance with the terms of this Agreement by Vyteris
Mergerco 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 Vyteris Mergerco 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 Vyteris Mergerco, or any law, order, rule or
regulation, writ, injunction, judgment or decree of any
11
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over Vyteris Mergerco or any of its businesses or properties.
3.7 SUBSIDIARIES. Vyteris Mergerco has no subsidiaries, nor
does it own any direct or indirect interest in any other business entity.
3.8 FINANCIAL CONDITION. Except for (i) the incurring of
expenses of its organization, (ii) the issuance of the Vyteris Mergerco Shares
to Treasure Mountain, (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, Vyteris Mergerco has had, and at the
Effective Time will have had, no business and no financial or other transactions
of any nature whatsoever.
3.9 LIABILITIES. Vyteris Mergerco has no liabilities
(including, but not limited to, tax liabilities) nor are there any claims
against Vyteris Mergerco (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. Vyteris Mergerco has no fixtures, furniture,
equipment, inventory, accounts receivable or other assets other than its
interest in this Agreement.
3.11 CONTRACTS. Vyteris Mergerco has no contracts or
commitments to which it is a party, except for this Agreement and other
documents and instruments contemplated hereby in connection with the Merger.
3.12 LEGAL PROCEEDINGS. There are no legal, administrative,
arbitral or other proceedings, claims, actions or governmental investigations of
any nature against Vyteris Mergerco, or challenging the validity or propriety of
the transactions contemplated by this Agreement and, to Vyteris Mergerco's
knowledge, there is no reasonable basis for any other proceeding, claim, action
or governmental investigation against Vyteris Mergerco. Vyteris Mergerco is not
a party to any order, judgment or decree which will, or might reasonably be
expected to, have a Material Adverse Effect on Vyteris Mergerco.
3.13 EMPLOYEE MATTERS; RELATED PARTY TRANSACTIONS. Since the
inception of Vyteris Mergerco there have been, and to the Effective Time there
will be (i) no salaried or otherwise compensated employees and no bonuses paid
to any officer or director of Vyteris Mergerco; (ii) no loans made to or any
transactions with any officer or director of Vyteris Mergerco; (iii) no
dividends or other distributions declared or paid by Vyteris Mergerco; and (iv)
no purchase by Vyteris Mergerco of any Vyteris Mergerco Shares.
3.14 INTELLECTUAL PROPERTY. Vyteris Mergerco has no patents,
patent applications, trademarks, trademark registrations, tradenames,
copyrights, copyright registrations or applications therefor or any other
intellectual property. Vyteris Mergerco has no knowledge of any infringements by
such party of any third party's intellectual property. To the knowledge of
Vyteris Mergerco, neither Vyteris Mergerco nor any of its employees, agents or
independent contractors, in connection with the
12
performance of such person's services with Vyteris Mergerco, 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
3.15 COMPLIANCE WITH LAWS. Since its inception, Vyteris
Mergerco has in all material respects operated its business and conducted its
affairs in compliance with all applicable laws, rules and regulations.
3.16 OFFICER AND DIRECTOR INFORMATION. During the past five
years, no officer or director of Vyteris Mergerco has been the subject of any
Adverse Event.
3.17 BENEFIT PLANS. Vyteris Mergerco does not have any
pension plan, profit sharing plan or similar employee benefit plan.
3.18 FINDER'S FEES. Vyteris Mergerco knows of no person who
rendered any service in connection with the introduction of any of the parties
hereto to any of the other parties hereto, for a "finder's fee" or similar type
of fee in connection with the Merger or any of the other transactions
contemplated hereby.
3.19 CHARTER DOCUMENTS. The charter documents of Vyteris
Mergerco have been delivered to Vyteris and have not been altered since the
incorporation of such entities.
3.20 MINUTE BOOKS. The corporate minute books of Vyteris
Mergerco are complete in all material respects and the minutes and consents
contained therein accurately reflect the actions that were taken at each duly
called and held meeting or by consent without a meeting. All material actions by
Vyteris Mergerco which required director or shareholder approval are reflected
in the corporate minute books of Vyteris Mergerco. Vyteris Mergerco is not in
material violation or breach of, or in material default with respect to, any
term of its Certificate of Incorporation (or other charter documents) or
by-laws.
3.21 TRADING WITH THE ENEMY ACT; PATRIOT ACT. No sale of
securities by Vyteris Mergerco nor its 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, Vyteris Mergerco (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. Vyteris Mergerco
is in compliance in all material respects with the USA Patriot Act of 2001.
3.22 FOREIGN QUALIFICATIONS. Vyteris Mergerco is 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
13
Effect on Vyteris Mergerco. A list of all such jurisdictions where Vyteris
Mergerco is qualified or licensed as a foreign corporation is set forth as
Schedule 3.22 of the Treasure Mountain Schedule of Exceptions. The business of
Vyteris Mergerco 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 Advisors Act of 1940, each as amended.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF TREASURE MOUNTAIN.
Treasure Mountain hereby represents, warrants and covenants to Vyteris, except
to the extent set forth on the corresponding sections of the Treasure Mountain
Schedule of Exceptions, as follows:
4.1 ORGANIZATION; CAPITALIZATION; AUTHORITY. Treasure
Mountain is a duly organized and validly existing corporation in good standing
under the laws of the State of Nevada, authorized to issue an aggregate of
50,000,000 shares of Treasure Mountain Common Stock and no other shares of
capital stock. Immediately prior to the consummation of the Merger, there will
be issued and outstanding 3,412,117 shares of Treasure Mountain Common Stock,
all of which such issued and outstanding shares are validly issued, fully paid
and nonassessable. Except as described in the Current SEC Reports (as defined
below) or as contemplated by this Agreement (including as contemplated by
Section 10.12), immediately prior to the consummation of the Merger there will
be no issued or outstanding securities convertible or exercisable into or
exchangeable for, 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, Treasure Mountain Common Stock. Treasure Mountain
has not reserved any authorized but unissued shares of Treasure Mountain Common
Stock other than for securities issuable pursuant to this Agreement, including
securities issuable pursuant to Section 10.12. Treasure Mountain has not granted
to any person any right of first refusal, right of participation, or any similar
right with respect to disposition of any shares of its capital stock. No shares
of capital stock of Treasure Mountain (including shares of capital stock of
Treasure Mountain's Utah predecessor corporation) were issued in violation of
the preemptive rights of any person or entity. Treasure Mountain has full power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement and the transactions contemplated hereby
have been duly approved by the Board of Directors of Treasure Mountain.
4.2 BINDING AGREEMENT. This Agreement has been duly executed
and delivered by Treasure Mountain and constitutes the legal, valid and binding
obligation of Treasure Mountain 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 RECENT BUSINESS OPERATIONS. Except as set forth in its
most recent SEC Report (as defined below) filed prior to the date hereof,
Treasure Mountain has not been engaged in any business activity since at least
January 1, 1998 other than the search for an acquisition or merger partner.
4.4 FOREIGN QUALIFICATIONS. Treasure Mountain is qualified
or licensed as a foreign corporation in all jurisdictions where its business or
ownership of assets so requires, except
14
where the failure to be qualified or licensed would not be reasonably expected
to have a Material Adverse Effect on Treasure Mountain. A list of all such
jurisdictions where Treasure Mountain is qualified or licensed as a foreign
corporation is set forth as Schedule 3.22 of the Treasure Mountain Schedule of
Exceptions. The business of Treasure Mountain does not require it to be
registered as an investment company or investment advisor, as such terms are
defined under the Investment Company Act of 1940 and the Investment Advisors Act
of 1940, each as amended.
4.5 SUBSIDIARIES. Treasure Mountain has no subsidiaries,
except for Vyteris Mergerco, nor does it own any direct or indirect interest in
any other business entity.
4.6 FINANCIAL STATEMENTS. The financial statements of
Treasure Mountain, consisting of its Balance Sheets, Statements of Operations,
Statements of Stockholders' Equity and Statements of Cash Flows, all as at or
for the years ended December 31, 2002 and December 31, 2003 or as at or for the
three months ended March 31, 2003 and March 31, 2004, as set forth in the SEC
Reports, and all together with accompanying notes, if any, are complete and
correct in all material respects, present fairly the financial position of
Treasure Mountain as of the dates thereof and the results of operations, cash
flows and changes in financial position of Treasure Mountain for the periods
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 Treasure Mountain are collectively referred to as
the "Treasure Mountain Financial Statements", all of which have been delivered
to Vyteris and are true, correct and complete in all material respects. All of
the Treasure Mountain Financial Statements for the years ended December 31, 2002
and 2003 have been audited by Xxxxxx & Associates, CPA's Inc., whose audit
report has been provided to Vyteris.
4.7 NO ADVERSE EVENTS. Since March 31, 2004, except for (i)
matters referred to in the Treasure Mountain Financial Statements, Treasure
Mountain's Annual Report on Form 10-KSB for the year ended December 31, 2003
(the "10-K") or Treasure Mountain's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 2004 (collectively with the 10-K, the "Current SEC
Reports"), (ii) matters described in Section 4.7 of the Treasure Mountain
Schedule of Exceptions, (iii) the transactions contemplated hereunder and (iv)
matters which do not, individually or in the aggregate, have a Material Adverse
Effect on Treasure Mountain:
(i) there has not been any material adverse change in the
financial position or condition of Treasure Mountain, or in its
liabilities or its assets or any damage, loss or other change in
circumstances materially affecting Treasure Mountain, its business or
its assets or its 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) Treasure Mountain 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 Treasure
Mountain that was not in the ordinary course of business consistent with
past practice;
15
(iv) there has been (i) no declaration or payment of a
dividend, or any other declaration, payment or distribution of any type
or nature to any stockholder of Treasure Mountain in respect of its
stock, whether in cash or property, (ii) no purchase or redemption of
any share of the capital stock of Treasure Mountain, (iii) no issuance
of any shares of the capital stock of Treasure Mountain, (iv) no grant
of any option, warrant or right to purchase any capital stock of
Treasure Mountain and (v) no issuance of any security or instrument
exchangeable for or convertible into any capital stock of Treasure
Mountain;
(v) there has been no declaration, payment, or commitment
for the payment, by Treasure Mountain, of a bonus or other additional
salary, compensation, or benefit to any employee of Treasure Mountain;
(vi) there has been no release, compromise, waiver or
cancellation of any debt to or claim by Treasure Mountain, or of any
material right of Treasure Mountain;
(vii) there have been no capital expenditures by Treasure
Mountain;
(viii) there have been no changes in accounting methods or
practices or revaluation of any asset of Treasure Mountain;
(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 Treasure Mountain;
(x) there has been no loan by Treasure Mountain, or guaranty
by Treasure Mountain of any loan, to any employee of Treasure Mountain,
other than advances made in the ordinary course of business;
(xi) there has been no amendment or termination of any
material oral or written contract, agreement or license to which
Treasure Mountain is or was a party or by which Treasure Mountain is or
was bound, except in the ordinary course of business or as expressly
contemplated hereby;
(xii) Treasure Mountain has not discharged or satisfied or
paid any lien or encumbrance or obligation or liability other than in
connection with the payment of current liabilities or the conversion of
outstanding indebtedness;
(xiii) there has been no agreement or commitment by Treasure
Mountain to do any of the foregoing; and
(xiv) 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 as to Treasure Mountain.
16
4.8 LIABILITIES. Except as contemplated by the Current SEC
Reports, there are no liabilities (including, but not
limited to, tax liabilities) or claims against Treasure Mountain (whether such
liabilities or claims are contingent or absolute, direct or indirect, accrued or
unaccrued and matured or unmatured) not appearing on the Treasure Mountain
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
Treasure Mountain's business or taxes incurred on earnings since March 31, 2004.
4.9 TAX RETURNS. All Federal, state, county and local
income, excise, property and other tax returns required to be filed by Treasure
Mountain 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 Treasure Mountain Financial
Statements. The federal income tax returns and state and foreign income tax
returns of Treasure Mountain 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 Treasure Mountain or any of its operations or
businesses. There are no pending, or to the knowledge of Treasure Mountain,
threatened, tax claims or assessments, and there are no pending, or to the
knowledge of Treasure Mountain, threatened, tax examinations by any taxing
authorities. Treasure Mountain 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 Treasure Mountain for any year.
4.10 ASSETS. Treasure Mountain has, and at the Effective
Time, will have, no fixtures, furniture, equipment, inventory, accounts
receivable or other assets except for approximately $100 in cash.
4.11 CONTRACTS. Except as set forth in the Current SEC
Reports, Treasure Mountain has no material contracts to which it is a party.
4.12 NO CONFLICTS. The execution and delivery by Treasure
Mountain of this Agreement, the consummation and performance of the transactions
herein contemplated, and compliance with the terms of this Agreement by Treasure
Mountain 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 Treasure Mountain 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 Treasure Mountain, 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 Treasure
Mountain or any of its businesses or properties.
4.13 LEGAL PROCEEDINGS. There are no legal, administrative,
arbitral or other proceedings, claims, actions or governmental investigations of
any nature pending or to Treasure Mountain's knowledge threatened, against
Treasure Mountain, including, but not limited to any shareholder claims or
derivative actions, or challenges to the validity or propriety of the
transactions contemplated by this Agreement, and, to Treasure Mountain's best
knowledge, there is no reasonable
17
basis for any proceeding, claim, action or governmental investigation against
Treasure Mountain. Treasure Mountain is not a party to any order, judgment or
decree.
4.14 TRADING WITH THE ENEMY ACT; PATRIOT ACT. No sale of
securities by Treasure Mountain nor Treasure Mountain's 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, Treasure Mountain (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. Treasure Mountain
is in compliance in all material respects with the USA Patriot Act of 2001.
4.15 ISSUANCES OF SECURITIES. Except as set forth in the
Current SEC Reports, since December 31, 2003, Treasure Mountain has not issued
or committed itself to issue, and prior to the consummation of the Merger will
not issue or commit itself to issue, any Treasure Mountain Common Stock or any
other security or any options, warrants, or other right to purchase any Treasure
Mountain Common Stock or any other security, except as contemplated by this
Agreement (including as contemplated by Section 10.12) and as set forth on
Schedule 4.15 of the Treasure Mountain Schedule of Exceptions.
4.16 INTELLECTUAL PROPERTY. Treasure Mountain has no patents,
patent applications, trademarks, trademark registrations, trade names,
copyrights, copyright registrations or applications therefor. Treasure Mountain
has no knowledge of any infringements by Treasure Mountain of any third party's
intellectual property. To the knowledge of Treasure Mountain, neither Treasure
Mountain, nor any of its employees, agents or independent contractors, in
connection with the performance of such person's services with Treasure
Mountain, 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.
4.17 COMPLIANCE WITH LAWS. Treasure Mountain has in all
material respects operated its business and conducted its affairs in compliance
with all applicable laws, rules and regulations. To the best of its knowledge,
Treasure Mountain is not in violation of any Federal, state or local
environmental law or regulation.
4.18 RELATED PARTY TRANSACTIONS. Except as contemplated
hereby or set forth in the Current SEC Reports, immediately prior to the
consummation of the Merger, there will be no loans, leases, commitments,
arrangements or other contracts of any kind or nature outstanding between (i)
Treasure Mountain and (ii) any officer or director of Treasure Mountain or any
person related to or affiliated with any officer or director of Treasure
Mountain.
18
4.19 OFFICERS AND DIRECTORS. During the past five years, no
officer or director of Treasure Mountain has been the subject of any Adverse
Event.
4.20 EMPLOYEE BENEFIT PLANS. Treasure Mountain has no pension
plan, profit sharing plan or similar employee benefit plan.
4.21 CONSENTS. Except for 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 Treasure Mountain of this Agreement and (ii) the
consummation by Treasure Mountain of the transactions contemplated hereby
4.22 FINDER'S FEES. Treasure Mountain knows of no person who
rendered any service in connection with the introduction of any of the parties
hereto to any of the other parties hereto, for a "finder's fee" or similar type
of fee in connection with the Merger or any of the other transactions
contemplated hereby.
4.23 EMPLOYEES; OTHER MATTERS. Except as set forth in the
Current SEC Reports, Treasure Mountain has no employees.
4.24 DISCLOSURE. None of the information supplied or to be
supplied by or about Treasure Mountain for inclusion or incorporation by
reference in any information to be supplied to holders of Treasure Mountain
Common Stock or Vyteris capital stock concerning the Merger contains or will
contain any untrue statement of a material fact or omits or will 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.
4.25 SEC REPORTS; FINANCIAL STATEMENTS. Treasure Mountain 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 January 1, 2002 (the foregoing materials filed through June 25,
2004 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 Treasure Mountain
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved, 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 Treasure Mountain as of 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.
19
4.26 CHARTER DOCUMENTS. Treasure Mountain has delivered to
Vyteris a true copy of the charter documents of Treasure Mountain from the
incorporation of Treasure Mountain. No modification of such documents shall be
made without Vyteris' consent.
4.27 MINUTE BOOKS. The corporate minute books of Treasure
Mountain are complete in all material respects and the minutes and consents
contained therein accurately reflect the actions that were taken at each duly
called and held meeting or by consent without a meeting. All material actions by
Treasure Mountain which required director or shareholder approval are reflected
in the corporate minute books of Treasure Mountain. Treasure Mountain is not in
material violation or breach of, or in material default with respect to, any
term of its Certificate of Incorporation (or other charter documents) or
by-laws.
4.28 NEVADA STATUTE. Since May 11, 2001, to the best of its
knowledge, Treasure Mountain has not taken any action which violates Sections
78.411 through 78.444 of the Nevada Revised Statutes (the "Interested
Stockholder Statutes"). Treasure Mountain was not subject to the Interested
Stockholder Statutes prior to May 11, 2001. Treasure Mountain has taken all
steps necessary to assure that neither the Merger, nor the Reincorporation
Merger nor the adoption of the Charter Amendment will violate the Interested
Stockholder Statutes. Since May 11, 2001, to the best of Treasure Mountain's
knowledge, no person or entity has become an "interested stockholder" (within
the meaning of Section 78.423) of Treasure Mountain unless the Board of
Directors of Treasure Mountain approved the transaction by which such person
became an "interested stockholder" prior to the consummation of such
transaction.
5. REPRESENTATIONS TO SURVIVE CLOSING. The representations,
covenants and warranties contained in this Agreement (including any statements
contained in any certificate or other instrument delivered by or on behalf of
Treasure Mountain, Vyteris Mergerco or Vyteris pursuant hereto or in connection
with the transactions contemplated hereby) shall survive the Closing for a
period of 6 months from the Effective Time.
6. THE MERGER. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law, at the
Effective Time, Vyteris Mergerco shall merge with and into Vyteris. Vyteris
shall be the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger, and shall continue its corporate existence under
the laws of the State of Delaware. The name of the Surviving Corporation shall
continue to be Vyteris, Inc. Upon consummation of the Merger, the separate
corporate existence of Vyteris Mergerco shall terminate. At the Effective Time,
the Surviving Corporation shall be considered the same business and corporate
entity as each of Vyteris Mergerco and Vyteris and, thereupon and thereafter,
all the property, rights, privileges, powers and franchises of each of Vyteris
Mergerco and Vyteris shall vest in the Surviving Corporation and the Surviving
Corporation shall be subject to and be deemed to have assumed all of the debts,
liabilities, obligations and duties of each of Vyteris Mergerco and Vyteris and
shall have succeeded to each of their relationships, as fully and to the same
extent as if such property, rights, privileges, powers, franchises, debts,
liabilities, obligations, duties and relationships had been originally acquired,
incurred or entered into by the Surviving Corporation. In addition, any
reference to either of Vyteris Mergerco or Vyteris in any contract or document,
20
whether executed or taking effect before or after the Effective Time, shall be
considered a reference to the Surviving Corporation if not inconsistent with the
other provisions of the contract or document; and any pending action or other
judicial proceeding to which either of Vyteris Mergerco or Vyteris is a party
shall not be deemed to have abated or to have discontinued by reason of the
Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of Vyteris Mergerco or Vyteris if the Merger had not occurred.
7. TREATMENT OF SECURITIES OF CONSTITUENT CORPORATIONS IN THE
MERGERS. 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 in the Merger is as follows:
7.1. TREATMENT OF THE VYTERIS COMMON STOCK. At the Effective
Time, each share of Vyteris Common Stock issued and outstanding immediately
prior to the Effective Time shall, by virtue of this Agreement, cease to be
outstanding and shall be converted into and become the right to receive a number
of shares of Treasure Mountain Common Stock equal to the "Vyteris Common
Conversion Number" upon surrender of such certificates evidencing such shares.
For purposes of this Agreement, the "Vyteris Common Conversion Number" shall be
4.19. It is acknowledged that there will not be a sufficient number of
authorized but unissued shares of Treasure Mountain Common Stock to issue to
those individuals and entities that, immediately prior to the Effective Time,
are owners of Vyteris Common Stock (the "Former Common Stockholders") and to
reserve for issuance pursuant to Sections 7.2, 7.3 and 7.4. Accordingly, the
conversion of shares of Vyteris Common Stock into shares of Treasure Mountain
Common Stock shall be effected in accordance with the following provisions:
(a) For purposes of this Agreement, the following terms
shall have the following meanings:
(I) "Available Treasure Mountain Common Share
Number" shall mean the number of authorized but unissued shares of Treasure
Mountain Common Stock immediately after the Effective Time, excluding from this
calculation any shares of Treasure Mountain Common Stock issuable pursuant to
the Merger, less a reserve of (x) 25,000 shares and (y) 1,500,000 shares to be
reserved for issuance upon exercise of the warrants issuable pursuant to Section
10.12 hereof.
(II) "Common Share Fraction" shall mean, for
each of the Former Common Stockholders, a fraction, the numerator of which is
the number of shares of Vyteris Common Stock which such Former Common
Stockholder owned immediately prior to the Effective Time and the denominator of
which is the number of shares of Vyteris Common Stock outstanding immediately
prior to the Effective Time.
(III) "Common Stock Merger Consideration Number"
shall mean, for each Former Common Stockholder, the number of shares of Vyteris
Common Stock owned by such stockholder immediately prior to the Effective Time
multiplied by the Vyteris Common Stock Conversion Number.
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(b) Upon consummation of the Merger, each Former Common
Stockholder shall be entitled to receive stock certificates representing a
number of shares of Treasure Mountain Common Stock (for such stockholder, such
stockholder's "Base Number") equal to such Former Common Stockholder's Common
Share Fraction multiplied by the Available Treasure Mountain Common Share
Number.
(c) Upon consummation of the Merger, each Former Common
Stockholder shall also be entitled to receive a rights certificate (a "Common
Stock Rights Certificate"), in form and substance reasonably approved by Vyteris
prior to the consummation of the Merger, entitling such stockholder to receive a
number of shares of Treasure Mountain Common Stock equal to such stockholder's
Common Stock Merger Consideration Number minus such stockholder's Base Number.
(d) Promptly after the Effective Time, Treasure Mountain
shall use its best efforts to effect either (but not both) of the following
actions described below in (I) and (II) (the Reincorporation Merger (as defined
below)) and (III) (the Charter Amendment (as defined below)) (collectively, the
"Subsequent Actions"):
(I) Treasure Mountain shall form a subsidiary
incorporated in Delaware ("Newco"). Newco shall be authorized to issue
100,000,000 shares of common stock, par value $.0001 per share ("Newco Common
Stock"), 333,333 shares of Series A Convertible Preferred Stock, par value
$.0001 per share ("Newco Series A Preferred Stock"), 7,500,000 shares of Series
B Convertible Preferred Stock, par value $.0001 per share ("Newco Series B
Preferred Stock"), and 42,166,667 additional shares of preferred stock, par
value $.0001 per share, undesignated as to series. The terms of the Newco Series
A Preferred Stock shall be identical to the terms of Vyteris Series A Preferred
Stock, except that each share of Newco Series A Preferred Stock shall be
convertible into a number of shares of Newco Common Stock equal to ten percent
of the number of shares of Vyteris Common Stock into which one share of Vyteris
Series A Preferred Stock is convertible immediately prior to the Effective Time
multiplied by the Vyteris Common Conversion Number. The terms of the Newco
Series B Preferred Stock shall be identical to the terms of Vyteris Series C
Preferred Stock, except that each share of Newco Series B Preferred Stock shall
be convertible into a number of shares of Newco Common Stock equal to ten
percent of the number of shares of Vyteris Common Stock into which one share of
Vyteris Series C Preferred Stock is convertible immediately prior to the
Effective Time multiplied by the Vyteris Common Conversion Number. In all other
respects, the certificate of incorporation of Newco shall be substantially the
same as the certificate of incorporation of Vyteris immediately prior to the
Effective Time.
(II) Treasure Mountain shall enter into a merger
agreement providing for Treasure Mountain to merge into Newco (the
"Reincorporation Merger"). Such agreement shall provide that upon consummation
of the Reincorporation Merger, each share of Treasure Mountain Common Stock
outstanding immediately prior to the effective time of that merger shall convert
into one tenth of a share of Newco Common Stock, consistent with the provisions
of Section 7.12 hereunder.
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(III) If, for any reason, the Board of Directors
of Treasure Mountain determines after the Effective Time not to pursue the
Reincorporation Merger, then Treasure Mountain shall seek to adopt an amendment
to its certification of incorporation (the "Charter Amendment") such that (i) a
one for 10 reverse stock split is effected with respect to the outstanding
Treasure Mountain Common Stock, (ii) Treasure Mountain has 100,000,000 shares of
Treasure Mountain Common Stock authorized for issuance, (iii) Treasure Mountain
is authorized to issue 333,333 shares of Series A Convertible Preferred Stock,
par value $.0001 per share ("Treasure Mountain Series A Preferred Stock"), (iv)
Treasure Mountain is authorized to issue 7,500,000 shares of Series B
Convertible Preferred Stock, par value $.0001 per share ("Treasure Mountain
Series B Preferred Stock"), (v) Treasure Mountain is authorized to issue
42,166,667 additional shares of preferred stock, par value $.0001 per share,
undesignated as to series and (vi) such other changes are made such that the
certificate of incorporation of Treasure Mountain, as amended, is substantially
the same as the certificate of incorporation of Vyteris immediately prior to the
Effective Time. The terms of the Treasure Mountain Series A Preferred Stock
shall be identical to the terms of Vyteris Series A Preferred Stock, except that
each share of Treasure Mountain Series A Preferred Stock shall be convertible
into a number of shares of Treasure Mountain Common Stock equal to ten percent
of the number of shares of Vyteris Common Stock into which one share of Vyteris
Series A Preferred Stock is convertible immediately prior to the Effective Time
multiplied by the Vyteris Common Conversion Number, consistent with the
provisions of Section 7.12 hereunder. The terms of the Treasure Mountain Series
B Preferred Stock shall be identical to the terms of Vyteris Series C Preferred
Stock, except that each share of Treasure Mountain Series B Preferred Stock
shall be convertible into a number of shares of Treasure Mountain Common Stock
equal to ten percent of the number of shares of Vyteris Common Stock into which
one share of Vyteris Series C Preferred Stock is convertible immediately prior
to the Effective Time multiplied by the Vyteris Common Conversion Number,
consistent with the provisions of Section 7.12 hereunder.
(IV) If the Reincorporation Merger occurs in
lieu of the Charter Amendment, Newco shall have a stock option plan covering
shares of Newco Common Stock in an amount at least equal to the number of shares
of Vyteris Common Stock reserved under Vyteris' current incentive stock option
plan multiplied by the Vyteris Common Conversion Number divided by ten. If the
Charter Amendment occurs in lieu of the Reincorporation Merger, Treasure
Mountain shall have a stock option plan covering shares of Newco Common Stock in
an amount at least equal to the number of shares of Vyteris Common Stock
reserved under Vyteris' current incentive stock option plan multiplied by the
Vyteris Common Conversion Number divided by ten.
7.2 TREATMENT OF THE VYTERIS PREFERRED STOCK.
(a) Upon consummation of the Merger, each person or
entity which, immediately prior to the Effective Time, owned shares of Vyteris
Series A Preferred Stock shall be entitled to receive a rights certificate (a
"Series A Rights Certificate"), in form and substance reasonably approved by
Vyteris prior to the consummation of the Merger, entitling such stockholder to
receive:
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(i) if the Reincorporation Merger is effected,
one share of Newco Series A Preferred Stock for each share of Vyteris Series A
Preferred Stock owned by such stockholder immediately prior to the Effective
Time; or
(ii) if the Charter Amendment is effected, one
share of Treasure Mountain Series A Preferred Stock for each share of Vyteris
Series A Preferred Stock owned by such stockholder immediately prior to the
Effective Time.
(b) Upon consummation of the Merger, each person or
entity which, immediately prior to the Effective Time, owned shares of Vyteris
Series C Preferred Stock shall be entitled to receive a rights certificate (a
"Series B Rights Certificate"), in form and substance approved by Vyteris prior
to the consummation of the Merger, entitling such stockholder to receive:
(i) if the Reincorporation Merger is effected,
one share of Newco Series B Preferred Stock for each share of Vyteris Series C
Preferred Stock owned by such stockholder immediately prior to the Effective
Time; or
(ii) if the Charter Amendment is effected, one
share of Treasure Mountain Series B Preferred Stock for each share of Vyteris
Series C Preferred Stock owned by such stockholder immediately prior to the
Effective Time.
7.3 TREATMENT OF VYTERIS WARRANTS. At the Effective Time,
each warrant theretofore granted by Vyteris entitling its holder to purchase
shares of Vyteris Common Stock (an "Existing Warrant") shall by virtue of this
Agreement be converted into and become the right to receive a warrant to
purchase shares of Treasure Mountain Common Stock (a "New Warrant") upon
surrender of such certificates evidencing such Existing Warrants. The terms of
the New Warrant shall be identical to the terms of the corresponding Existing
Warrant, except that:
(a) the number of shares of Treasure Mountain Common
Stock covered by the New Warrant shall equal the number of shares of Vyteris
Common Stock covered by the Existing Warrant multiplied by the Vyteris Common
Conversion Number, subject to adjustment for forward or reverse stock splits,
stock dividends, recapitalizations and the like occurring following the Closing;
(b) the exercise price of the New Warrant shall equal
the exercise price set forth in the corresponding Existing Warrant divided by
the Vyteris Common Conversion Number, subject to adjustment for forward or
reverse stock splits, stock dividends, recapitalizations and the like occurring
following the Closing;
(c) upon exercise of the New Warrants, holders thereof
shall receive rights certificates in form and substance approved by Vyteris
prior to the consummation of the Merger until the effectiveness of either of the
Subsequent Actions; and
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(d) to the extent that the Existing Warrant was, prior
to the Effective Time, governed by contractual provisions other than as set
forth in the terms of the Existing Warrant, Treasure Mountain shall enter into
an agreement (in form and substance reasonably satisfactory to Vyteris) at the
Closing pursuant to which Treasure Mountain shall agree to perform all such
contractual provisions.
Upon the effectiveness of either of the Subsequent Actions, Treasure Mountain
shall cause to be reserved the number of shares of Treasure Mountain Common
Stock (or Newco Common Stock) initially issuable upon exercise of all of the New
Warrants divided by ten.
7.4 TREATMENT OF VYTERIS OPTIONS. At the Effective Time,
each option theretofore granted by Vyteris entitling its holder to purchase
shares of Vyteris Common Stock (an "Existing Option") shall be converted into
and become the right to receive an option to purchase shares of Treasure
Mountain Common Stock (a "New Option"). The terms of the New Option shall be
identical to the terms of the corresponding Existing Option, except that:
(a) the number of shares of Treasure Mountain Common
Stock covered by the New Option shall equal the number of shares of Vyteris
Common Stock covered by the Existing Option multiplied by the Vyteris Common
Conversion Number, subject to adjustment for forward or reverse stock splits,
stock dividends, recapitalizations and the like occurring following the Closing;
(b) the exercise price of the New Option shall equal the
exercise price set forth in the corresponding Existing Option divided by the
Vyteris Common Conversion Number, subject to adjustment for forward or reverse
stock splits, stock dividends, recapitalizations and the like occurring
following the Closing; and
(c) upon exercise of a New Option, holders thereof shall
receive rights certificates in form and substance approved by Vyteris prior to
the consummation of the Merger until the effectiveness of either of the
Subsequent Actions.
Upon the effectiveness of either of the Subsequent Actions, Treasure Mountain
shall cause to be reserved the number of shares of Treasure Mountain Common
Stock initially issuable upon exercise of all of the New Options divided by ten.
7.5 TREATMENT OF CONVERTIBLE NOTES. As set forth in Sections
10.1 and 11.11, it is a condition of the Closing that all promissory notes
convertible into the capital stock of Vyteris shall either have been paid or
converted at or prior to the Closing.
7.6 TREATMENT OF TREASURY SHARES. At the Effective Time, all
(i) shares of Vyteris capital stock held in Vyteris' treasury and (ii) shares of
Vyteris capital stock held directly or indirectly by Vyteris shall be canceled
and shall cease to exist and no other consideration shall be delivered in
exchange therefor.
7.7 EXISTENCE OF VYTERIS MERGERCO. Each share of Vyteris
Mergerco common stock issued and outstanding immediately prior to the Effective
Time shall be converted into one share of
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common stock, par value $0.0001 per share, of the Surviving Corporation. Such
newly issued shares shall thereafter constitute all of the issued and
outstanding capital stock of the Surviving Corporation, and shall be owned by
Treasure Mountain.
7.8 CERTIFICATE OF INCORPORATION. At the Effective Time, the
Certificate of Incorporation of Vyteris, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended in accordance with applicable law.
7.9 BY-LAWS. At the Effective Time, the By-Laws of Vyteris,
as in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation until thereafter amended in accordance with applicable
law.
7.10 OFFICERS AND DIRECTORS.
(a) The officers and directors of Vyteris immediately
prior to the Effective Time shall be the officers and directors of the Surviving
Corporation immediately after the Effective Time, subject to re-election in
accordance with law and the governing documents of Vyteris. Promptly after the
date hereof, Treasure Mountain shall send a notice to its stockholders providing
information regarding the composition of the Board of Directors of Treasure
Mountain upon consummation of the Merger (the "14(f) Notice"), such notice to be
in the form and substance of the notice heretofore approved by Vyteris.
(b) It is a condition to Vyteris' obligations to
consummate the Closing that at the Closing, each member of the Board of
Directors of Treasure Mountain other than Xxxxxx Xxxxxx (the "Continuing
Director") shall resign and that the Continuing Director shall elect to the
Treasure Mountain board of directors each of the members of Vyteris' board of
directors, effective as of the Effective Time, subject to the mailing of the
14(f) Notice.
(c) It is a condition to Vyteris' obligations to
consummate the Closing that at the Closing, each officer of Treasure Mountain
shall resign and that the Continuing Director shall elect as the sole officers
of Treasure Mountain each of the officers of Vyteris, effective as of the
Effective Time.
(d) It is a condition to Vyteris' obligations to
consummate the Closing that at the Closing, the Continuing Director shall submit
his resignation, effective as of the Effective Time.
7.11 TAX CONSEQUENCES. It is intended that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. Neither Vyteris nor Treasure Mountain shall act,
or fail to act, in a manner that may reasonably be expected to preclude the
Merger from being treated as a reorganization within the meaning of Section
368(a) of the Code.
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7.12 SHARE RIGHT CERTIFICATES. The Common Stock Rights
Certificates, the Series A Rights Certificates and Series B Rights Certificates
(the Common Stock Rights Certificate, the Series A Rights Certificate and the
Series B Rights Certificate, collectively, the "Rights Certificates") shall not
entitle the holders thereof to any voting or other rights as a stockholder of
Treasure Mountain until the effectiveness of either of the Subsequent Actions.
As soon as practicable following the effectiveness of either of the Subsequent
Actions, Treasure Mountain shall mail (or cause its transfer agent to mail) to
each holder of a Rights Certificate a letter of transmittal and instructions for
use in effecting the surrender of the Rights Certificate in exchange for shares
of Treasure Mountain (or Newco) capital stock. Upon the effectiveness of either
of the Subsequent Actions: (i) the Common Stock Rights Certificate holders shall
be entitled to receive a number of shares of Treasure Mountain (or Newco) Common
Stock equal to the number of shares represented by such certificates divided by
ten; (ii) the Series A Rights Certificate holders shall be entitled to receive
one share of Treasure Mountain (or Newco) Series A Preferred Stock initially
convertible into a number of shares of Treasure Mountain (or Newco) Common Stock
equal to ten percent of the number of shares of Vyteris Common Stock into which
one share of Vyteris Series A Preferred Stock is convertible immediately prior
to the Effective Time multiplied by the Vyteris Common Conversion Number; and
(iii) the Series B Rights Certificate holders shall be entitled to receive one
share of Treasure Mountain (or Newco) Series B Preferred Stock initially
convertible into a number of shares of Treasure Mountain (or Newco) Common Stock
equal to ten percent of the number of shares of Vyteris Common Stock into which
one share of Vyteris Series C Preferred Stock is convertible immediately prior
to the Effective Time multiplied by the Vyteris Common Conversion Number.
8. EXCHANGE OF SHARES. The following provisions shall govern the
exchange of shares pursuant to the Merger:
8.1 EXCHANGE AGENT. Vyteris, Vyteris Mergerco and Treasure
Mountain hereby appoint Western States Transfer & Registrar (or such other
transfer agent as shall be acceptable to Vyteris) (the "Exchange Agent") as the
exchange agent for purposes of effecting the conversion hereunder of Treasure
Mountain's securities pursuant to the Merger.
8.2. NO FRACTIONAL SHARES. Notwithstanding anything to the
contrary contained herein, no certificates or scrip representing fractional
shares of Treasure Mountain capital stock shall be issued upon the surrender for
exchange of certificates evidencing securities of Vyteris, no dividend or
distribution with respect to Treasure Mountain capital stock shall be payable on
or with respect to any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any other rights of a
shareholder of Treasure Mountain. In lieu of the issuance of any such fractional
share, Treasure Mountain shall pay to each former stockholder of Vyteris who
otherwise would be entitled to receive a fractional share of Treasure Mountain
capital stock pursuant to the Merger an amount in cash representing the fair
value for such share.
8.3 AFFIDAVIT IN LIEU OF SHARES. In the event that any
certificate evidencing securities to be surrendered hereunder shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such certificate to be lost, stolen or destroyed and, if
required by Treasure Mountain, the posting by such person of a bond in such
amount as Treasure
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Mountain may direct as indemnity against any claim that may be made against it
with respect to such certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed certificate the shares of Treasure Mountain
capital stock, rights certificates and cash in lieu of fractional shares
deliverable in respect thereof pursuant to this Agreement.
8.4 LETTER OF TRANSMITTAL. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which theretofore represented shares of capital
stock of Vyteris (collectively, the "Certificates" and individually, a
"Certificate") a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent) and instructions for
use in effecting the surrender of the Certificates in exchange for shares of
Treasure Mountain capital stock or rights certificates into which the shares of
Vyteris capital stock represented by such Certificates shall have been converted
pursuant to this Agreement. Vyteris shall have the right to approve both the
letter of transmittal and the instructions prior to the Effective Time. After
the Effective Time, upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the shares of Treasure Mountain capital stock or rights
certificate to which such holder of Vyteris capital stock shall have become
entitled pursuant to the provisions of this Agreement, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
any cash to be paid in lieu of fractional shares or on any unpaid dividends or
distributions, if any, payable to holders of Certificates.
8.5 DIVIDENDS. No dividends or other distributions declared
after the Effective Time with respect to Treasure Mountain capital stock and
payable to the holders of record thereof shall be paid to the holder of any
unsurrendered Vyteris Certificate until the holder thereof shall surrender such
Certificate in accordance with this Section 8. After the surrender of a
Certificate in accordance with this Section 8, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Treasure Mountain capital stock, if any, represented by such Certificate.
8.6 TRANSFER BOOKs. After the Effective Time, there shall be
no transfers on the stock transfer books of Vyteris of the shares of Vyteris
capital stock which were issued and outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates representing such
shares are presented for transfer to the Exchange Agent, they shall be canceled
and exchanged for shares of Treasure Mountain capital stock or rights
certificates in accordance with the terms of this Agreement.
8.7 OTHER MATTERS. Any portion of the consideration
distributable to the holders of Certificates that remains unclaimed by the
shareholders of Vyteris for twelve months after the Effective Time shall be paid
to Treasure Mountain (or its successor). Any shareholders of Vyteris who have
not theretofore complied with this Section 8 shall thereafter look only to
Treasure Mountain (or its successor) for payment of the shares of capital stock,
rights certificates, cash in lieu of fractional shares and unpaid dividends and
distributions deliverable in respect of each share of Vyteris capital stock such
shareholder holds as determined pursuant to this Agreement, in each case,
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without any interest thereon. If outstanding Certificates are not surrendered or
the payment for them is not claimed prior to the date on which such payments
would otherwise escheat to or become the property of any governmental unit or
agency, the unclaimed items shall, to the extent permitted by abandoned property
laws, escheat laws and any other applicable law, become the property of Treasure
Mountain or its successor (and to the extent not in its possession shall be paid
over to it), free and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, none of Vyteris,
Treasure Mountain (or its successor) or the Exchange Agent or any other person
shall be liable to any former holder of shares of Vyteris capital stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
9. FURTHER ASSURANCES OF TITLE. As and when requested by Vyteris,
or by any of its successors or assigns, Vyteris Mergerco 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 Vyteris may deem
necessary or desirable in order to vest in and confirm to Vyteris title to and
possession of the property acquired by Vyteris by reason or as a result of the
Merger, and otherwise to carry out the intent and purposes hereof, and the
officers and directors of Vyteris and Treasure Mountain, as applicable, are
fully authorized in the name of Vyteris or Treasure Mountain or otherwise to
take any and all such action.
10. CONDITIONS OF OBLIGATIONS OF VYTERIS MERGERCO TO CONSUMMATE THE
MERGER. The obligation of Vyteris Mergerco and Treasure Mountain to consummate
the Merger and the other transactions related thereto is subject to satisfaction
or waiver of the following conditions prior to the Effective Time:
10.1 COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES;
COVENANTS. Each of the representations and warranties of Vyteris in this
Agreement shall be true and correct on and as of the Effective Time as if made
on and as of such time, except to the extent that any representations and
warranties expressly relate to an earlier date in which case such
representations and warranties shall be true and correct as of such earlier
date, in either case such that the aggregate effect of any inaccuracies in such
representations and warranties do not comprise or would not be reasonably likely
to comprise a Material Adverse Effect on Vyteris, in each case without regard
(for purposes of this Section 10.1) to any materiality or Material Adverse
Effect qualifications contained in such representations and warranties, and
Treasure Mountain shall have received a certificate, executed on behalf of
Vyteris by Vyteris' president or chief financial officer, to such effect.
Vyteris shall have performed or complied in all material respects with all
covenants required by this Agreement to be performed or complied with by it on
or prior to the Effective Time, and Treasure Mountain shall have received
certificates executed on behalf of Vyteris by Vyteris' president or chief
financial officer, to such effect.
10.2 LOSSES. Vyteris 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
affect adversely its condition, financial or otherwise, regardless of whether or
not such loss shall have been insured.
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10.3 NO MATERIAL ADVERSE CHANGE. Except as disclosed in this
Agreement, the Private Placement Memorandum or in any document delivered in
connection with this Agreement, no Material Adverse Effect on Vyteris shall have
occurred since March 31, 2004.
10.4 DISPOSITION OF ASSETS. Since March 31, 2004, none of the
properties or assets of Vyteris shall have been sold or otherwise disposed of
other than in the ordinary course of business in accordance with past practice,
except with the prior written consent of Treasure Mountain.
10.5 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 Vyteris and resolutions to that
effect shall have been delivered to Treasure Mountain and its counsel. Vyteris
shall have obtained all Consents, if any, listed on Schedule 10.5 of the Vyteris
Schedule of Exceptions.
10.6 COMPLIANCE WITH SECURITIES LAWS. There shall have been
substantial compliance with the applicable securities or "blue sky" laws and
regulations of any state or other governmental body having jurisdiction over the
Merger.
10.7 OPINIONS OF COUNSEL. Treasure Mountain shall have
received an opinion from counsel to Vyteris in form and substance reasonably
satisfactory to Treasure Mountain.
10.8 FAIRNESS OPINION. Treasure Mountain shall have received
a fairness opinion from an independent firm to the effect that the terms of the
Merger are fair to the stockholders of Treasure Mountain, other than
stockholders affiliated with Xxxxxxx Xxxxx & Co., Inc., from a financial point
of view.
10.9 FINANCING. Vyteris will have raised gross cash proceeds
from equity financings during the period from December 31, 2003 until
immediately prior to the Effective Time in an amount equal to at least
$25,000,000.
10.10 INVESTMENT REPRESENTATION. At the Closing (i) each
holder of Vyteris capital stock as of the date hereof (a "Current Vyteris
Stockholder") shall have delivered to Treasure Mountain certificates
representing all equity securities of Vyteris owned by such Current Vyteris
Stockholder as of the date hereof, duly endorsed for transfer pursuant to the
Merger and (ii) each holder of Vyteris capital stock shall have delivered to
Treasure Mountain an investment letter (and consent and waiver letter, as
applicable), in the form annexed hereto as EXHIBIT B, including (a) a
representation that the securities of Treasure Mountain being acquired as a
result of the transactions contemplated by this Agreement are being acquired for
investment purposes only and not with a view to, or sale in connection with, any
distribution within the meaning of the Securities Act, and (b) with respect to
holders of Existing Warrants and Existing Options, a consent and waiver with
respect to the terms of the New Warrants and New Options issuable to such
holders.
10.11 CONVERTIBLE NOTES. All promissory notes convertible into
the capital stock of Vyteris shall either have been paid in full or converted at
or prior to the Closing.
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10.12 ISSUANCE OF WARRANTS. Immediately prior to the
consummation of the transactions contemplated hereby, Treasure Mountain shall
have issued, to each of Xxxxxx Xxxxxx and Xxxx Xxxxxxxx a warrant, in the form
attached hereto as Exhibit C, to purchase 750,000 shares of Treasure Mountain
Common Stock, at an exercise price equal to $.10 per share. Such warrants shall
have a term of exercise of two years, piggy-back registration rights and a
cashless exercise provision.
10.13 VOTING AGREEMENTS. Treasure Mountain and Vyteris shall
have received irrevocable agreements in substantially the form attached as
Exhibit D from Xxxxxxx Xxxxx Specialty Group LLC and the current officers and
directors of Vyteris to vote all shares of Treasure Mountain capital stock
issuable to them hereunder in favor of the Subsequent Actions.
Compliance with the provisions of Sections 10.2, 10.3 and 10.9 shall be
certified to at the Closing of the Merger by Vyteris by its President and
Secretary.
11. CONDITIONS OF OBLIGATIONS OF VYTERIS. The obligations of Vyteris
to consummate the Merger and the other transactions contemplated hereby is
subject to satisfaction or waiver of the following conditions prior to the
Effective Time:
11.1 COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES;
COVENANTS. Each of the representations and warranties of Vyteris Mergerco and
Treasure Mountain (collectively, the "Treasure Mountain Parties") in this
Agreement shall be true and correct on and as of the Effective Time as if made
on and as of such time, except to the extent that any representations and
warranties expressly relate to an earlier date in which case such
representations and warranties shall be true and correct as of such earlier
date, in either case such that the aggregate effect of any inaccuracies in such
representations and warranties do not comprise or would not be reasonably likely
to comprise a Material Adverse Effect on the Treasure Mountain Parties, in each
case without regard (for purposes of this Section 11.1) to any materiality or
Material Adverse Effect qualifications contained in such representations and
warranties, and Vyteris shall have received a certificate, executed on behalf of
the Treasure Mountain Parties by Treasure Mountain's president or chief
financial officer, to such effect. The Treasure Mountain Parties shall have
performed or complied in all material respects with all covenants required by
this Agreement to be performed or complied with by them on or prior to the
Effective Time, and Vyteris shall have received certificates executed on behalf
of the Treasure Mountain Parties by Treasure Mountain's president or chief
financial officer, to such effect.
11.2 LOSSES. Vyteris Mergerco and Treasure Mountain 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.
11.3 NO MATERIAL TRANSACTIONS. Except as set forth in the
Current SEC Reports, no material transactions shall have been entered into by
Vyteris Mergerco or Treasure Mountain since March 31, 2004, other than (a)
transactions in the ordinary course of business or (b) transactions
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referred to in this Agreement or in connection herewith, except with the prior
written consent of Vyteris.
11.4 NO MATERIAL ADVERSE CHANGE. Except as disclosed in this
Agreement, the Current SEC Reports or in any document delivered in connection
with this Agreement, no Material Adverse Effect on Vyteris Mergerco or Treasure
Mountain shall have occurred since March 31, 2004.
11.5 DISPOSAL OF ASSETS. Except as disclosed in the Current
SEC Reports, none of the properties or assets of Vyteris Mergerco or Treasure
Mountain shall have been sold or otherwise disposed of, other than in the
ordinary course of business, since March 31, 2004, except with the written
consent of Vyteris.
11.6 FILINGS AND APPROVALS. All applicable filings required
to be made and regulatory approvals, as well as any other third party approvals,
obtained by Treasure Mountain shall have been made or obtained, including the
filing of required information pursuant to Section 14(f) of the Exchange Act
with the Commission. At least ten days shall have elapsed since the 14(f) Notice
shall have been mailed to Treasure Mountain's stockholders.
11.7 BOARD AND OFFICER RESIGNATIONS. All of Treasure
Mountain's directors except the Continuing Director shall have resigned and each
of the members of Vyteris' board of directors shall have been appointed by the
Continuing Director as directors of Treasure Mountain, to fill the vacancies
created thereby, all subject to the consummation of the Merger. The Continuing
Director shall have delivered a resignation, effective as of the Effective Time.
All of Treasure Mountain's officers shall have resigned, subject to consummation
of the Merger. The Continuing Director shall have elected as officers each of
Vyteris' officers, all subject to the consummation of the Merger. All of the
resignations described in this Section 11.7 shall be in form and substance
reasonably satisfactory to Vyteris.
11.8 OPINIONS. Vyteris shall have received opinions from
counsel to Treasure Mountain and Vyteris Mergerco in form and substance
reasonably satisfactory to Vyteris.
11.9 FAIRNESS OPINION. Vyteris shall have received fairness
opinions from an independent firm to the effect that the terms of the Merger are
fair to the stockholders of Vyteris (including, but not limited to, the
stockholders not affiliated with Xxxxxxx Xxxxx Specialty Group, LLC and its
affiliates) from a financial point of view.
11.10 CONVERTIBLE NOTES. All promissory notes convertible into
the capital stock of Vyteris shall either have been paid in full or converted at
or prior to the Closing.
11.12 DISSENTERS' SHARES. As of the Closing, no stockholder of
Vyteris, other than any holder of Vyteris' Series A Preferred Stock, shall have
exercised appraisal rights under Delaware law.
11.13 VOTING AGREEMENTS. Vyteris shall have received
irrevocable agreements in substantially the form attached as Exhibit D from
Scimitar Holdings LLC, Xxxxxxx Xxxxx Specialty
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Group, LLC, Xxxxxxx Xxxxx Ventures, Inc. Xxxxxx Xxxxxx and Xxxx Xxxxxxxx
agreeing to vote all shares of Treasure Mountain capital stock owned by them or
to be acquired by them hereunder in favor of the Subsequent Actions.
11.14 EXPENSES. The aggregate amount of expenses incurred by
Treasure Mountain and Vyteris Mergerco in connection with the transactions
contemplated hereby, including, without limitation, fees, expenses and
disbursements of their respective financial advisors, accountants and counsel
and all other expenses of Treasure Mountain and Vyteris Mergerco incurred from
February 26, 2004 through the Closing, shall not have exceeded $250,000 without
the prior consent of Vyteris.
11.15 TREASURE MOUNTAIN'S AUDITORS; PRO FORMA FINANCIAL
STATEMENTS. Treasure Mountain's auditors, as identified in the 10-K, shall have
provided to Vyteris such consents and acknowledgments as Vyteris shall
reasonably request with respect to the filing of Treasure Mountain's financial
statements with the SEC subsequent to the Effective Time. Treasure Mountain
shall have delivered to Vyteris such information as Vyteris shall reasonably
request in order to enable Vyteris to prepare pro forma financial statements
reflecting the Merger.
11.16 STOCKHOLDER APPROVALS AND WAIVERS. Vyteris shall have
received such stockholder approvals of the Merger as Vyteris shall determine to
be required as a matter of law. Vyteris shall have received such waivers from
the holders of its preferred stock as it shall elect to obtain in connection
with the transactions contemplated hereby. At least twenty-one days shall have
elapsed from (x) the date on which Vyteris provides notice to its stockholders
of a special meeting of stockholders to vote on the Merger to (y) the date of
such meeting.
11.17 TAX TREATMENT. Vyteris shall have no reason to believe
that the Merger will not be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
11.18 ISRA. Vyteris' shall have obtained either (i) a written
determination (based upon an affidavit of Vyteris) from the New Jersey
Department of Environmental Protection ("NJDEP") that the transactions
contemplated by this Agreement are not subject to the requirements of ISRA, or
(ii) a Remediation Agreement (in form and substance satisfactory to Vyteris)
issued by the NJDEP pursuant to ISRA authorizing the consummation of the
transactions contemplated hereby prior to the issuance of any "Negative
Declaration," "No Further Action Letter" or approval of any "Remedial Action
Workplan," as such terms are defined under ISRA, or (iii) a "Negative
Declaration" or approvals of any "Remedial Action Workplan" (in either case in
form and substance satisfactory to Vyteris) with respect to each property in New
Jersey which Vyteris owns or operates, in each case to the extent that such
property renders the provisions of ISRA applicable to the transactions
contemplated by this Agreement.
Compliance with the provisions of Sections 11.2, 11.3 and 11.4, shall be
certified to at the Closing of the Merger on behalf of Treasure Mountain and
Vyteris Mergerco by the President and Secretary of Treasure Mountain.
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12. OTHER COVENANTS.
12.1 CERTIFICATES TO THE PLACEMENT AGENTS. At the Closing,
Treasure Mountain and Vyteris shall deliver to each Placement Agent (as
identified in the Private Placement Memorandum) a certificate, signed by the
President of Treasure Mountain and the President of Vyteris, confirming, on
behalf of Treasure Mountain and Vyteris, respectively, that except for the
consummation of the financing described in Section 10.9 above, the filing of the
Certificate of Merger and the release of their respective executed closing
documents required to be delivered hereunder (which such documents shall be held
in escrow pending the consummation of the closing of such financing), all
conditions to the Closing of Treasure Mountain and Vyteris, respectively, have
been satisfied or waived. At the Closing, Treasure Mountain shall deliver to
each Placement Agent a certificate, signed by the President of Treasure
Mountain, confirming, on behalf of Treasure Mountain, that all representations
and warranties of Treasure Mountain set forth in this Agreement shall be deemed
to be made directly to the Placement Agents, which representations and
warranties shall survive the closing of the offering described in the Private
Placement Memorandum. At the Closing, Vyteris shall deliver to each Placement
Agent a certificate, signed by the President of Vyteris, confirming, on behalf
of Vyteris, that all representations and warranties of Vyteris set forth in this
Agreement shall be deemed to be made directly to the Placement Agents, which
representations and warranties shall survive the closing of the offering
described in the Private Placement Memorandum.
12.2 REGISTRATION RIGHTS AGREEMENT. Immediately following the
Effective Time, Treasure Mountain, by the signature of the new President of
Treasure Mountain (as appointed pursuant to Section 11.7) (the "New President")
shall execute a registration rights agreement in the form and substance of the
registration rights agreement set forth in the Private Placement Memorandum,
subject to such modifications as Vyteris shall approve prior to the Effective
Time (the "Registration Rights Agreement") and shall deliver to each Placement
Agent a certificate, signed by the New President, confirming, on behalf of
Treasure Mountain, that Treasure Mountain has executed the Registration Rights
Agreement.
12.3 EXPENSES. Vyteris shall promptly pay all fees and
expenses incident to the negotiation, preparation and performance of this
Agreement and the transactions contemplated hereby and all other expenses of
Treasure Mountain and Vyteris Mergerco incurred from February 26, 2004 through
the Closing, including, without limitation, fees, expenses and disbursements of
their respective financial advisors, accountants, counsel and providers of
fairness opinions; provided, however, that Vyteris shall not be required to pay
more than $250,000 of such fees and expenses of Treasure Mountain and Vyteris
Mergerco.
12.4 ACTIONS BY VYTERIS PRIOR TO CLOSING. From the date
hereof through the Closing, other than in the ordinary course of business, or in
a manner that would not have a Material Adverse Effect on Vyteris, or pursuant
to any financing or lease arrangement approved by Vyteris' Board of Directors,
or as expressly contemplated herein or in the Private Placement Memorandum,
Vyteris shall not, without the prior written consent of Treasure Mountain:
(a) sell, lease, assign, transfer or otherwise
dispose of any material assets other than inventory;
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(b) 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;
(c) subject to Section 12.5, enter into any
transaction concerning a merger, stock exchange or consolidation, other than
with the other parties hereto, 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 or assets or make any material change
in its present method of conducting business;
(d) make any amendment to its certificate of
incorporation or bylaws other than such amendments as shall be necessary in
order for Vyteris to raise additional capital;
(e) enter into or amend any employment agreements or
increase the salary or bonus of any existing employee;
(f) declare or authorize any dividends or
distributions on any shares of capital stock of Vyteris; or
(g) make any commitment, agreement or understanding
with respect to any of the foregoing.
12.5 ACTIONS BY VYTERIS MERGERCO AND TREASURE MOUNTAIN PRIOR
TO CLOSING. From the date hereof through the Closing, other than in the ordinary
course of business, consistent with past practice, or in a manner that would not
have a Material Adverse Effect on Vyteris, or as expressly contemplated herein,
Vyteris Mergerco and Treasure Mountain shall not, without the prior written
consent of Vyteris:
(a) sell, lease, assign, transfer or otherwise
dispose of any material assets;
(b) 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;
(c) 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 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 or assets 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;
35
(f) declare or authorize any dividends or
distributions on any shares of capital stock;
(g) take any action or omit to take any action
outside the ordinary course of business;
(h) issue any capital stock or any options, warrants
or other rights to purchase any capital stock;
(i) 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; or
(j) make any commitment, agreement or understanding
with respect to any of the foregoing.
12.6 ACQUISITION PROPOSAL. Nothing contained in this
Agreement shall prevent Vyteris or Treasure Mountain or their respective Board
of Directors from (A) providing information in response to a request therefor by
a person or entity which makes an unsolicited Acquisition Proposal if such
entities' Board of Directors receives from the person or entity so requesting
such information a suitable confidentiality agreement or (B) engaging in any
negotiations or discussions with any person or entity which makes an unsolicited
Acquisition Proposal, if and only to the extent that, in each such case referred
to in clause (A) or (B) above, (i) the Board of Directors of the applicable
entity, after consultation with outside legal counsel, determines in good faith
that such action is legally necessary for the proper discharge of its fiduciary
duties under applicable law and (ii) the Board of Directors of the applicable
entity, after consultation with its financial advisor, determines in good faith
that such Acquisition Proposal, if consummated, would result in a transaction
more favorable to their respective shareholders as a group than the transaction
contemplated by this Agreement. For purposes of this Agreement, the term
"Acquisition Proposal" shall mean a proposal to effect a merger, consolidation
or similar transaction involving Vyteris or Treasure Mountain, whether Vyteris
or Treasure Mountain is the acquiror or is to be acquired in such transaction.
12.7 PRESS RELEASE AND CURRENT REPORT ON FORM 8-K. As soon as
practicable following the execution of this Agreement, and in no event later
than 9:30 a.m. New York City time, on the first business day after the date
hereof, Treasure Mountain shall issue a press release, in the form and substance
of the draft press release furnished to Vyteris immediately prior to the
execution of this Agreement, disclosing the execution of this Agreement and
briefly describing Vyteris. On or prior to 9:30 a.m., New York City Time, on the
third business days after the date hereof, Treasure Mountain shall file with the
SEC a Current Report on Form 8-K which shall disclose the same information as
appears in the press release, shall attach a copy of this Agreement as an
exhibit and shall contain such other information that is reasonably satisfactory
to both of the parties hereto.
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12.8 OTHER SPLITS. Vyteris hereby acknowledges and agrees
that following the consummation of the Merger, with the exception of the
Subsequent Actions, no other reverse stock split or similar recapitalization
transaction involving Treasure Mountain or Newco's capital stock is presently
contemplated.
12.9 AMOUNTS. Notwithstanding anything in this Agreement to
the contrary, no party hereto shall be entitled to recover any loss incurred,
accrued or sustained by such party (an "Indemnified Party") as a result of any
misrepresentation made hereunder or breach of any provision hereof by any other
party hereto (the "Indemnifying Party") until such Indemnified Party has
delivered to such Indemnifying Party one or more claim certificates identifying
claims or losses relating to misrepresentations or breaches hereunder in excess
of the Basket Amount (defined below), in which case the Indemnified Party, shall
be entitled to recover all losses so identified in excess of the Basket Amount;
provided, however, that the maximum liability of any Indemnifying Party to all
Indemnified Parties under this Agreement, except in the case of actual fraud,
shall not exceed $600,000. "Basket Amount" shall mean $60,000 in the aggregate.
13A. TERMINATION AND ABANDONMENT. This Agreement may be terminated
and the Merger may be terminated at any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the shareholders of Vyteris:
(a) by mutual consent of the parties hereto;
(b) by any of the parties hereto if the Merger shall not
have been consummated on or before September 12, 2004 (the "Cut-off Date"),
unless the failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein;
(c) by any of the parties hereto if any approval of the
shareholders of Vyteris or Treasure Mountain required for the consummation of
the Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of such shareholders or at any adjournment
or postponement thereof;
(d) by any of the parties hereto (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), if there shall have
been a breach of any of the representations or warranties made to such party in
this Agreement (determined as of the date hereof or, in the case of
representations and warranties made as of a particular date, as of the date as
of which such representation or warranty is made), which breach is not cured
within thirty days following written notice to the party committing such breach,
or which breach, by its nature, cannot be cured prior to the Closing; provided,
however, that no party shall have the right to terminate this Agreement pursuant
to this Section 13A(d) unless the breach of representation or warranty, together
with all other such breaches, would entitle the party receiving such
representation not to consummate the transactions contemplated hereby under
Sections 10.1 or, 11.1;
37
(e) by any of the parties hereto (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), if there shall have
been a material breach of any of the covenants or agreements set forth in this
Agreement made for the benefit of such party, which breach shall not have been
cured within thirty days following receipt by the breaching party of written
notice of such breach from the other party hereto, or which breach, by its
nature, cannot be cured prior to the Closing;
(f) by any party hereto if Vyteris' or Treasure Mountain's
Board of Directors shall have approved a definitive agreement reflecting an
Acquisition Proposal prior to the Cut-Off Date;
(g) by any party hereto if any of the conditions to its
obligations to effect a closing hereunder set forth in Sections 10 and 11 are
not satisfied and are not capable of being satisfied by the Cut-off Date;
(h) by Treasure Mountain on or before July 15, 2004 if, as a
result of its due diligence review, it shall have identified any factors which,
in the opinion of Treasure Mountain's Board of Directors, render it inadvisable
to proceed with the Merger;
(i) by Vyteris on or before July 15, 2004 if, as a result of
its due diligence review, it shall have identified any factors which, in the
opinion of Vyteris' Board of Directors, render it inadvisable to proceed with
the Merger; or
(j) by any party hereto, acting pursuant to Section 28.
13. EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 13A, this Agreement shall forthwith become void
and have no effect except that this Section 13 and Sections 17-27 shall survive
any termination of this Agreement.
14. DELIVERY OF CORPORATE PROCEEDINGS OF TREASURE MOUNTAIN AND
VYTERIS MERGERCO. At the Closing, Treasure Mountain and Vyteris Mergerco shall
deliver to counsel for Vyteris the originals of all of the corporate proceedings
of Treasure Mountain and Vyteris Mergerco, duly certified by their respective
Secretaries, relating to this Agreement and Vyteris shall deliver to counsel for
Treasure Mountain the originals of all of the corporate proceedings of Vyteris,
duly certified by their respective Secretaries, relating to this Agreement.
15. 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.
16. 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 in order to carry out the intent and purposes of this
Agreement.
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17. 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 hereto 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 state or federal court 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. 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
18. 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.
19. BINDING AGREEMENT. This Agreement represents the entire
agreement among the parties hereto with respect to the matters described herein
and is binding upon and shall inure to the benefit of the parties hereto and
their legal representatives, successors and permitted assigns. This Agreement
may not be assigned and, except as stated herein, may not be altered or amended
except in writing executed by all of the parties hereto.
20. COUNTERPARTS. This Agreement may be executed in counterparts,
all of which, when taken together, shall constitute the entire Agreement.
21. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction will not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by law, the parties hereto waive any provision of law which renders
any such provision prohibited or unenforceable in any respect.
22. 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's allegedly
having been the draftsperson of this Agreement.
23. 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
39
jurisdictions other than the United States or the State of Delaware, 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, or by the assumption that New Jersey law is identical to New York
law.
24. 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, except as such
disclosure may be required pursuant to any legal obligation or order of any
court having proper jurisdiction over any of the parties hereto. Prior to the
Effective Time or the termination of this Agreement, Treasure Mountain and
Vyteris Mergerco shall not make any public comments regarding Vyteris' business
without the prior approval of Vyteris' chairman of the board, chief executive
officer or chief financial officer, except as such disclosure may be required
pursuant to any legal obligation or order of any court having proper
jurisdiction over any of the parties hereto.
25. CONSENT. Whenever consent is required to be given by any of the
parties hereto to any of the other parties hereto in connection with any matter
contemplated hereby, such consent shall not be unreasonably withheld, delayed or
conditioned.
26. WAIVER OF JURY TRIAL. Each party hereto (each, a "party") hereby
waives to the fullest extent permitted by applicable law, any right it may have
to a trial by jury in respect to any suit, action or other proceeding directly
or indirectly arising out of, under or in connection with this Agreement or any
transaction contemplated hereby. Each Party (a) certifies that no representative
of any other Party has represented, expressly or otherwise, that such other
Party would not, in the event of any suit, action or other proceeding, seek to
enforce that foregoing waiver and (b) acknowledges that it and the other Parties
have been induced to enter into this Agreement, by, among other things, the
mutual waivers and certifications in this Section 26.
27. CAPTIONS. The titles, captions and table of contents contained
in this Agreement are inserted in this Agreement only as a matter of convenience
and for reference and in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision of this Agreement. Unless
otherwise specified to the contrary, all references to Sections are references
to Sections of this Agreement.
28. SCHEDULES. The parties acknowledge that the Treasure Mountain
Schedule of Exceptions and the Vyteris Schedule of Exceptions have not been
prepared or are incomplete as of the date hereof (such unprepared or incomplete
schedules being the "INCOMPLETE SCHEDULES"). Each of Treasure Mountain and
Vyteris shall deliver to the other and its counsel for their review a complete
and accurate version of such party's Incomplete Schedules, expressly noted as
such in the transmittal correspondence with respect thereto (as so revised, the
"FINAL PROPOSED SCHEDULES") not later than 7 days after the date of this
Agreement. Each such party shall also provide the other with copies of any
supporting documents as may be reasonably requested by the other in connection
with their review of such Final Proposed Schedules. Notwithstanding anything
herein to the contrary, Treasure Mountain and Vyteris shall each have the right
to terminate this Agreement by written notice to the other in the event that it
is not satisfied with the other party's Final Proposed Schedules, provided that
notice is given in the manner described in the next succeeding sentence. Not
later than 5 business days after
40
its receipt of any Final Proposed Schedules, the receiving party shall either
(i) advise the other party that such Final Proposed Schedules are acceptable,
whereupon the Final Proposed Schedules shall become the schedules hereto and
shall be deemed to have been delivered as of the date hereof, or (ii) advise the
other party that it is terminating this Agreement, provided, however, that if
either Treasure Mountain or Vyteris does not respond within the aforementioned 5
business day period, then such party shall be deemed to have accepted the
other's Final Proposed Schedules.
29. ACCESS. Treasure Mountain shall permit Vyteris and its
representatives, and Vyteris shall permit Treasure Mountain and its
representatives, reasonable access to their respective properties, and shall
disclose and make available to Vyteris and its representatives, or Treasure
Mountain and its representatives, as the case may be, any and all books, papers
and records relating to its assets, stock ownership, properties, operations,
obligations and liabilities, material contracts and agreements, filings with any
regulatory authority, accountants' work papers, litigation files, plans
affecting employees, and any other business activities or prospects in which
Vyteris and its representatives or Treasure Mountain and its representatives may
have a reasonable interest, all to the extent reasonably requested by the party
seeking such access. Neither party shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of any patient, subject or customer, would contravene any law, rule,
regulation, order or judgment or would waive any privilege.
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IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
TREASURE MOUNTAIN HOLDINGS, INC.,
a Nevada corporation
By: /s/ Xxxxxx X. Xxxxxx, III
---------------------------
Name: Xxxxxx X. Xxxxxx, III
Title: President
TMH ACQUISITION CORP.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx, III
---------------------------
Name: Xxxxxx X. Xxxxxx, III
Title: President
VYTERIS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xx Xxxxxx
---------------------------
Name: Xxxxxxx Xx Xxxxxx
Title: President
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Index to Schedules and Exhibits
Exhibit A: Certificate of Merger
Exhibit B: Form of Investment Letter
Exhibit C: Form of Warrants
Exhibit D: Form of Voting Agreement
Schedule A: Vyteris Capitalization Schedule
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EXHIBIT A
CERTIFICATE OF MERGER
OF
TMH ACQUISITION CORP.
A Delaware Corporation
INTO
VYTERIS, INC.
A Delaware Corporation
The undersigned corporations, organized and existing under and by virtue
of the General Corporation Law of the State of Delaware,
DO HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
Name State of Incorporation
---- ----------------------
TMH Acquisition Corp. Delaware
Vyteris, Inc. Delaware
SECOND: That a merger agreement and plan of reorganization between
the parties to the merger (the "Agreement of Merger") has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with the requirements of subsection (c) of Section
251 of the General Corporation Law of the State of Delaware and with at least a
majority of the stockholders of each constituent corporation approving the
Agreement of Merger, (i) by written consent in accordance with subsection (d) of
Section 228 of the General Corporation Law of the State of Delaware in the case
of TMH Acquisition Corp. and (ii) by vote of the stockholders at a special
meeting conducted in accordance with subsection (c) of Section 251 of the
General Corporation Law of the State of Delaware in the case of Vyteris, Inc..
THIRD: That Vyteris, Inc. shall be the surviving corporation in the
merger.
FOURTH: That the Certificate of Incorporation of Vyteris, Inc. shall
be the Certificate of Incorporation of the surviving corporation.
FIFTH: That the executed Agreement of Merger is on file at the
principal place of business of the surviving corporation. The address of the
principal place of business of the surviving corporation is 00-00 Xxxxxxx Xxxxx,
Xxxx Xxxx, XX 00000.
SIXTH: That a copy of the Agreement of Merger will be furnished by
the surviving corporation, on request and without cost, to any stockholder of
any constituent corporation.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
__ day of ______, 2004.
TMH ACQUISITION CORP.,
a Delaware corporation
By:
-----------------------
Name:
Title:
VYTERIS, INC.,
a Delaware corporation
By:
-----------------------
Name:
Title:
-2-
EXHIBIT B
To: Treasure Mountain Holdings, Inc.
The undersigned is a stockholder of Vyteris, Inc. ("Vyteris") or expects to
become a stockholder of Vyteris prior to the consummation of the pending merger
(the "Merger") pursuant to which Vyteris will become a wholly-owned subsidiary
of Treasure Mountain Holdings, Inc. ("Treasure Mountain"). The undersigned has
been advised that as a result of the Merger Agreement and Plan of Reorganization
(the "Agreement"), dated as of July ___, 2004, by and among Treasure Mountain, a
subsidiary of Treasure Mountain and Vyteris, all of the common and preferred
stock of Vyteris will be converted into the right to receive the common and
preferred stock of Treasure Mountain, respectively.
The undersigned understands that under the securities laws, every person or
entity that is a stockholder of Vyteris immediately prior to the effective time
of the Merger will be deemed to be acquiring Treasure Mountain capital stock
pursuant to the Agreement upon the consummation of the Merger. Accordingly, the
undersigned hereby represents and warrants as follows:
(a) The undersigned is acquiring securities of Treasure Mountain
pursuant to the Agreement solely for the undersigned's own account for
investment purposes only and not with a view to or sale in connection with, any
distribution within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The undersigned has no pre-existing agreement or arrangement,
formal or informal, with any person to sell, distribute or transfer all or any
part of such securities, and the undersigned has no plans to enter into any such
agreement or arrangement.
(b) The undersigned understands that the securities of Treasure Mountain
to be issued to the undersigned pursuant to the Agreement have not been
registered under the Securities Act or any state securities law by reason of
their issuance in a transaction which is exempt from the registration
requirements of the Securities Act and state securities laws, and that such
securities must be held indefinitely unless they are subsequently registered
under the Securities Act and such laws or a subsequent disposition thereof is
exempt from registration under the applicable provisions of the Securities Act
and such laws. The undersigned acknowledges that the certificates evidencing
such securities will contain a legend to the foregoing effect and that stop
transfer instructions will be placed with the transfer agent of the securities.
(c) The undersigned has (or, if the undersigned is not an accredited
investor, the undersigned has been assisted by a representative who has)
sufficient knowledge and expertise in business and financial matters so as to
enable the undersigned to analyze and evaluate the merits and risks of acquiring
the securities of Treasure Mountain pursuant to the terms of the Agreement. The
undersigned is able to bear the economic risk of such
acquisition, including a complete loss of the undersigned's investment in the
securities of Treasure Mountain being acquired pursuant to the Agreement.
(d) The undersigned represents that the undersigned is either an
accredited investor as defined in Rule 501(a) of Regulation D under the
Securities Act or is an employee or former employee of Vyteris that acquired
Vyteris securities upon the exercise of stock options.
(e) If the undersigned is an employee or former employee of Vyteris who
acquired Vyteris securities upon the exercise of stock options and is not an
accredited investor as defined in Rule 501(a) of Regulation D under the
Securities Act, the undersigned has checked the following box [ ].
(f) If the undersigned currently owns options or warrants to purchase
Vyteris common stock (the "Existing Rights"), the undersigned:
(i) understands that upon consummation of the Merger, there will
not be a sufficient number of authorized but unissued shares of Treasure
Mountain Common Stock to cover the options or warrants to purchase Treasure
Mountain Common Stock to be issued to the undersigned pursuant to the Merger
Agreement;
(ii) understands that pursuant to the Merger Agreement, the lack
of sufficient authorized shares is expected to be cured either by arranging for
Treasure Mountain to reincorporate in Delaware into an entity that has
sufficient authorized shares or by arranging for Treasure Mountain to amend its
certificate of incorporation to provide for sufficient authorized shares (the
"Subsequent Actions");
(iii) understands that while the Subsequent Actions will require
the approval of Treasure Mountain's stockholders, parties which will own a
majority of Treasure Mountain's Common Stock upon consummation of the Merger
have agreed to vote in favor of the Subsequent Actions;
(iv) understands that upon the consummation of the Merger, the
Existing Rights will become options or warrants to purchase Treasure Mountain's
Common Stock (the "New Rights"); and
(v) agrees that the undersigned will not exercise the New
Rights until such time as the Subsequent Actions are effected.
Dated: ___________, 2004
By:________________
[name and title]
EXHIBIT C
FORM OF
COMMON STOCK PURCHASE WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT "), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT.
COMMON STOCK PURCHASE WARRANT
To Purchase 750,000 Shares of Common Stock of
TREASURE MOUNTAIN HOLDINGS, INC.
This COMMON STOCK PURCHASE WARRANT (this "Warrant") certifies that, for
value received, _____________, an individual with an address at ________________
(the "Holder"), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after
_______ __, 2004 (the date of issuance of this Warrant) (the "Initial Exercise
Date") and on or prior to the close of business on the two-year anniversary date
of the Initial Exercise Date (the "Termination Date") but not thereafter, to
subscribe for and purchase from Treasure Mountain Holdings, Inc., a corporation
incorporated in the State of Nevada with an address at 1390 South 0000 Xxxx
Xxxxx 000, Xxxx Xxxx Xxxx, XX, 00000 or its successors and assigns (the
"Company"), up to seven hundred and fifty thousand (750,000) shares (the
"Warrant Shares") of common stock, $0.001 par value per share of the Company
(the "Common Stock"). The purchase price for one share of Common Stock (the
"Exercise Price") upon exercise of this Warrant shall be $.10. The Exercise
Price and the number of Warrant Shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein.
1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed. The transferee shall sign and deliver to the Company an
investment letter in form and substance reasonably satisfactory to the Company.
2. Authorization and Reservation of Warrant Shares; Authority. The
Company covenants that (i) during the period this Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number
of shares of its Common Stock to provide for the issuance of the Warrant Shares
upon exercise of any purchase rights under this Warrant and (ii) all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue). The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of the trading market
upon which the Common Stock may be listed; provided, however, that
notwithstanding any provision herein to the contrary, the Company shall have no
obligation to issue Warrant Shares hereunder unless and until the Holder shall
sign and deliver to the Company an investment letter in form and substance
reasonably satisfactory to the Company.
3. Exercise of Warrant.
(a) The exercise of the purchase rights represented by this Warrant may
be made at any time or times on or after the Initial Exercise Date and on or
before the Termination Date by the surrender of this Warrant and the Notice of
Exercise Form annexed hereto duly executed, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on the
books of the Company) and upon payment of the Exercise Price of the shares
thereby purchased by wire transfer or cashier's check drawn on a United States
bank or by means of a cashless exercise pursuant to Section 3(c), the Holder
shall be entitled to receive a certificate for the number of Warrant Shares so
purchased. Certificates for shares purchased hereunder shall be delivered to the
Holder within five trading days after the date on which this Warrant shall have
been exercised as aforesaid. This Warrant shall be deemed to have been exercised
and such certificate or
certificates shall be deemed to have been issued, and the Holder or any other
person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price and all taxes, if any,
required to be paid by the Holder pursuant to Section 5 prior to the issuance of
such shares, have been paid upon the effective date of an exercise pursuant to
Section 5, including, but not limited to, a cashless exercise pursuant to
Section 3(c). If the Company fails to deliver to the Holder a certificate or
certificates representing the Warrant Shares pursuant to this Section 3(a) by
the close of business on the fifth trading day after the date of exercise, then
the Holder will have the right to rescind such exercise.
(b) If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
(c) This Warrant may also be exercised at and after such time by means
of a "cashless exercise" in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:
(A) = the VWAP (as hereinafter defined) on the trading day preceding the
date of such election;
(B) = the Exercise Price of these Warrants, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of the
Warrants in accordance with the terms of the Warrant by means of a cash exercise
rather than a cashless exercise.
As used herein, "VWAP" means, for any date, the price determined by the
first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on the American Stock Exchange, the Nasdaq National Market or
the Nasdaq SmallCap Market (each, a "Trading Market"), the daily volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as
reported by Bloomberg Financial L.P. (based on a trading day from 9:30 a.m.
Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then
listed or quoted on a Trading Market and if prices for the Common Stock are then
quoted on the OTC Bulletin Board, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin
Board and if prices for the Common Stock are then reported in the "Pink Sheets"
published by the National Quotation Bureau Incorporated (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported; or (d) in all
other cases, the fair
market value of a share of Common Stock as determined by the Board of Directors
of the Company in good faith.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
7. Transfer, Division and Combination.
(a) Subject to compliance with any applicable federal and state
securities laws and the conditions set forth in Sections 1 and 7(e) hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company, together with
an Assignment Form attached hereto duly executed by the Holder or its agent or
attorney and funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations specified in such
instrument of assignment and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be exercised by a
new holder for the purchase of Warrant Shares without having a new Warrant
issued.
(b) This Warrant may be divided or combined with other Warrants of like
tenor and terms upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 7(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books for
the registration and the registration of transfer of the Warrants.
(e) If, at the time of the surrender of this Warrant in connection with
any exercise or transfer of this Warrant, the exercise or transfer of this
Warrant shall not be registered pursuant to an effective registration statement
under the Securities Act and under applicable state securities or blue sky laws,
the Company may require, as a condition of allowing such exercise or transfer
(i) that the Holder or transferee of this Warrant, as the case may be, furnish
to the Company a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise or transfer may be made without
registration under the Securities Act and under applicable state securities or
blue sky laws and (ii) that the Holder or transferee of this Warrant, as the
case may be, execute and deliver to the Company an investment letter in form and
substance reasonably satisfactory to the Company.
8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise
pursuant to Section 3(c)), the Warrant Shares so purchased shall be and be
deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender or payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day or
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares; Stock
Splits, etc. The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time in case the Company
shall: (i) pay a dividend in shares of Common Stock or make a distribution in
shares of Common Stock to holders of its outstanding Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or (iv) issue any shares of its capital stock
in a reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the Holder shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which it would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. Upon each such adjustment of the kind and number of Warrant Shares or
other securities of the Company which are purchasable hereunder, the Holder
shall thereafter be entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price per Warrant Share
or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company resulting from such
adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
12. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of its property, assets or business to
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of the Company,
including, without limitation, any reincorporation merger representing a
Subsequent Action (as defined in that certain Merger Agreement and Plan of
Reorganization referred to in Section 16 below) (the "Merger"), then the Holder
shall have the right thereafter to receive upon exercise of this Warrant, the
number of shares of Common Stock of the successor or acquiring corporation or of
the Company, if it is the surviving corporation, and Other Property receivable
upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
event. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of Warrant Shares for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this Section
12, "common stock of the successor or acquiring corporation" shall include stock
of such corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
13. Voluntary Adjustment by the Company. The Company may at any time
during the term of the Warrants reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
14. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.
15. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or other distribution,
or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property, or to receive
any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation (it being understood that the transaction by
which the Company has acquired Vyteris, Inc. and any merger effected in order to
reincorporate the Company in a jurisdiction other than Nevada as contemplated by
the Merger Agreement and Plan of Reorganization referred to in Section 16 below
are excluded from the transactions described in this clause "b") or,
(c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company; then, in any one or more of such cases, the
Company shall give to Holder (i) at least 20 days' prior written notice of the
date on which a record date shall be selected for such dividend, distribution or
right or for determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, including, without
limitation, the Merger, at least 20 days' prior written notice of the date when
the same shall take place. Such notice in accordance with the foregoing clause
also shall specify (x) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, the date on which the holders
of Common Stock shall be entitled to any such dividend, distribution or right,
and the amount and character thereof, and (y) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is expected to take place
and the time, if any such time is to be fixed, as of which the holders of Common
Stock shall be entitled to exchange their Warrant Shares for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 17(d).
16. Registration Rights. The Company hereby agrees to include the
Warrant Shares in the registration statement it files in connection with the
Registration Rights Agreement (as defined in the Merger Agreement and Plan of
Reorganization, dated as of July __, 2004, by and among the Company, TMH
Acquisition Corp. and Vyteris, Inc.), provided that the Holder furnishes the
Company with all information reasonably requested by the Company for purposes of
filing that registration statement (such information shall be substantially the
same information required to be delivered by the holders of Registrable
Securities (as defined in the Registration Rights Agreement) pursuant to the
Registration Rights Agreement) and provided that the Holder shall be subject to
all obligations of the holders of Registrable Securities as set forth in the
Registration Rights Agreement. It is understood that the Holder shall not be
entitled to receive any of the liquidated damages provided for in the
Registration Rights Agreement. In addition, if at any time following the date
hereof, the Company shall determine to prepare and file with the Securities and
Exchange Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the stock option or other employee
benefit plans, then, to the extent permitted by the Registration Rights
Agreement, the Company shall send to the Holder a written notice of such
determination and, if within fifteen days after the date of such notice, the
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of the Warrant Shares issuable hereunder,
subject to customary underwriter cutbacks applicable to all holders of
registration rights, to the extent such Warrant Shares are not eligible for
resale pursuant to Rule 144 under the Securities Act or are not included in an
effective registration statement.
17. Miscellaneous.
(a) Governing Law. This Warrant shall constitute a contract under the
laws of New York, without regard to its conflict of law principles or rules.
(b) Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
(d) Notices. All notices, requests and other communications to any party
hereunder shall be in writing and either delivered personally, telecopied or
sent by certified or registered mail, postage prepaid, at the address set forth
on the signature page hereof in the case of the Company or _________________ in
the case of the Holders or such other address or fax number as such party may
hereafter specify for the purpose by notice to the other parties hereto. All
such notices, requests and other communications shall be deemed received on the
date delivered personally, telecopied or, if mailed, five business days after
the date of mailing if received prior to 5 p.m. in the place of receipt and such
day is a business day in the place of receipt. Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding business day in the place of receipt.
(e) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
(f) Remedies. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(g) Successors and Assigns. Subject to applicable federal and state
securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and
permitted assigns of Holder. The provisions of this Warrant are intended to be
for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
(h) Amendment. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.
(i) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(j) Headings. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.
Dated: ____________ __, 2004
TREASURE MOUNTAIN HOLDINGS, INC.
By:______________________________
Name:
Title:
Address:
NOTICE OF EXERCISE
To: Treasure Mountain Holdings, Inc.
(1) The undersigned hereby elects to purchase ___________Warrant Shares
of Treasure Mountain Holdings, Inc., or its successor or assigns, pursuant to
the terms of the attached Warrant (only if exercised in full), and tenders
herewith payment of the exercise price in full, together with all applicable
transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is
necessary pursuant to Section 3(b) in accordance with the formula set forth in
subsection 3(c), to exercise this Warrant with respect to the maximum number of
Warrant Shares purchasable pursuant to the cashless exercise procedure set forth
in subsection 3(c).
(3) Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
The Warrant Shares shall be delivered to the following:
[PURCHASER]
By: __________________
Name:
Title:
Dated:________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
__________________________________________________________________ whose address
is __________________________________________________________________________.
Dated: ___________, _____
Holder's Signature: ___________________
Holder's Address:_____________________
_____________________
Signature Guaranteed: _________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
EXHIBIT D
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement"), dated as of July ____, 2004, by and
among Vyteris, Inc., a Delaware corporation ("Vyteris"), Treasure Mountain
Holdings, Inc., a Nevada corporation ("Pubco" or "Treasure Mountain"), Xxxxxxx
Xxxxx Specialty Group, Inc. ("STSG"), Scimitar Holdings, LLC ("Scimitar") and
such other persons who shall agree to be bound by the terms of this Agreement by
executing a joinder agreement as described herein (such other persons, together
with STSG and Scimitar, the "Voters").
WITNESSETH:
WHEREAS, it is contemplated that Vyteris and Pubco will enter into a
merger agreement and plan of reorganization (the "Merger Agreement") pursuant to
which (i) a subsidiary of Pubco will merge with and into Vyteris (the "Merger")
and Vyteris will become a wholly-owned subsidiary of Pubco and (ii) all of the
capital stock of Vyteris will automatically convert into the right to receive
the capital stock of Pubco and all options, warrants and rights to purchase the
capital stock of Vyteris will convert into options, warrants and rights to
purchase the capital stock of Pubco;
WHEREAS, Pubco does not have sufficient authorized capital stock to
issue the shares of common stock and preferred stock to be issued pursuant to
the Merger Agreement or to cover the shares of Pubco common stock underlying the
options, warrants and other rights to purchase its capital stock which it will
be required to issue pursuant to the Merger Agreement (the "Insufficient
Authorized Shares Issue");
WHEREAS, Pubco presently does not have a stock option plan comparable to
Vyteris' stock option plan (the "Option Plan Issue");
WHEREAS, it is contemplated that after the consummation of the Merger,
the Insufficient Authorized Shares Issue and the Option Plan Issue will be
remedied either by (i) causing Pubco to reincorporate in Delaware by merging
into a subsidiary corporation that will have sufficient authorized capital stock
to cover the shares and shares underlying the options, warrants and rights
issuable pursuant to the Merger Agreement or (ii) amending its certificate of
incorporation to provide for sufficient authorized capital stock to cover the
shares, options, warrants and rights issuable pursuant to the Merger Agreement
(any such action described in clauses (i) or (ii) a "Subsequent Action").
WHEREAS, Vyteris, Treasure Mountain and certain persons who may invest
in Vyteris subsequent to the date hereof will rely upon the promises made herein
in connection with Vyteris' entering into the Merger Agreement and such
investments and would not effect such actions in the absence of this Agreement;
WHEREAS, it is a condition of Vyteris' obligations under the Merger
Agreement that Xxxxxx Xxxxxx and Xxxx Xxxxxxxx agree to be bound by the terms of
this Agreement and it is a condition of Vyteris' and Treasure Mountain's
obligations under the Merger Agreement that Vyteris' three senior officers and
all of Vyteris' Board members be bound by the terms of this Agreement; and
WHEREAS, the Voters or their affiliates own, or will acquire by virtue
of the Merger, capital stock of Vyteris or Pubco or both such entities and
desire to provide the inducements contemplated herein because they will benefit
from the actions currently contemplated by Vyteris.
NOW, THEREFORE, for good and valuable consideration, including the
mutual covenants contained in the Merger Agreement, the parties agree as
follows:
1. (a) For a period commencing as of the date hereof and continuing
until the earlier of (i) one year after the effective time of the Merger or (ii)
the date on which one of the Subsequent Actions is consummated (the "Term"),
each Voter agrees that at any special or other meeting called for such purpose,
in any consent submitted to such Voter or otherwise such Voter will vote all of
the shares of the capital stock of Treasure Mountain now Beneficially Owned (as
hereinafter defined) and controlled or hereafter acquired and then Beneficially
Owned and controlled by such Voter (collectively, as to all Voters, the
"Treasure Mountain Shares") (i) in favor of any Subsequent Action approved by
Treasure Mountain's Board of Directors after the Merger is consummated, (ii) in
favor of any other matters presented for consideration at any meeting of
shareholders of Treasure Mountain solely to the extent to which they are
consistent with, and/or advanced for the purpose of accomplishing or furthering
the objectives of, the Merger Agreement and (iii) against any action or
agreement that would be inconsistent with the agreements set forth in clauses
(i) and (ii) of this Section 1(a).
(b) The Voters agree to be present during the Term in person or
represented by proxy, at all such special or other shareholder meetings of
Treasure Mountain called to address any Subsequent Action so that the Treasure
Mountain Shares may be counted in determining the presence of a quorum at such
meetings.
2. (a) During the Term of this Agreement, the Voters shall not sell,
dispose of (including by means of gift), pledge, assign the rights to, or
encumber any of the Treasure Mountain Shares, or enter into any contract, option
or other arrangement or understanding with respect to the Treasure Mountain
Shares or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of any of the Treasure Mountain
Shares or any interest therein in any manner which affects the Voters' right to
vote the Treasure Mountain Shares in the manner provided for herein (any or the
foregoing being referred to as a "Share Transaction"), without the prior written
consent of Vyteris prior to the consummation of the Merger or Treasure Mountain
after the consummation of the Merger, unless the other party to any such Share
Transaction agrees in writing to be bound by the terms of this Agreement with
copies of such agreement promptly sent to Treasure Mountain.
(b) During the Term of this Agreement, the Voters shall not enter into
any other voting or other agreement or grant any proxy or power of attorney
regarding the Treasure Mountain Shares which is inconsistent with the provisions
of this Agreement.
3. The commitments given by the Voters herein may be specifically
enforced by Vyteris prior to the consummation of the Merger and by Treasure
Mountain after the consummation of the Merger without the necessity of posting a
bond, and shall be binding upon and inure to the benefit of any and all
permitted assignees or transferees of the Treasure Mountain Shares well as the
executors, administrators, heirs, successors, assigns, representatives, in
whatever capacity, by operation of law or otherwise, of the parties hereto.
4. Any notice or other communication to be given under this Agreement
shall be in writing and delivered personally or by certified mail, return
receipt requested as follows:
If to Vyteris or Treasure Mountain: to such entity at its corporate
headquarters, marked Attn: President, with a copy to Xxxxx X. Xxxxxxxxx, Esq.,
Xxxxxxxxxx Xxxxxxx PC, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000.
If to a Voter: at such Voter's last known address, as set forth in
Vyteris' records.
5. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of law principles.
6. This Agreement constitutes the entire agreement among the parties
with regard to the subject matter described herein and can be waived, modified,
amended or terminated only by a writing signed by all parties hereto. This
Agreement may be executed in counterparts, all of which, when taken together,
shall constitute one and the same instrument. Any person agreeing to be bound to
this Agreement subsequent to the date hereof shall evidence such agreement by
executing a joinder agreement in form and substance reasonably satisfactory to
Vyteris.
7. Each Voter agrees that if any "Affiliate" (as hereinafter defined) of
such Voter Beneficially Owns and controls any Treasure Mountain Shares or
hereafter acquires and then Beneficially Owns and controls any Treasure Mountain
Shares, such Voter shall use its commercially practicable efforts to cause such
Affiliate to take all actions with respect to such Treasure Mountain Shares as
such Voter is required to take with respect to such Voter's Treasure Mountain
Shares pursuant to the terms of this Agreement.
8. The following terms shall have the following meanings
(a) "Affiliate" of a Voter shall mean each individual or entity which,
directly or indirectly, controls such Voter, is controlled by such Voter or is
under common control with such Voter.
(b) "Beneficially Owns" or "Beneficially Owned" with respect to any
securities means having "beneficial ownership" of such securities as determined
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Without duplicative counting of the same securities by the
same holder, securities Beneficially Owned by a person include
securities Beneficially Owned by all other persons with whom such person would
constitute a "group" within the meaning of Section 13(d) of the Exchange Act
with respect to the securities of the same issuer.
9. Each Voter hereby agrees to permit Vyteris and Treasure Mountain,
upon advance written notice to such Voter if reasonably practicable, to publish
and disclose the nature of such Voter's commitments, arrangements and
understandings under this Agreement to the extent required pursuant to
applicable law or regulation.
10. (a) Each Voter hereby irrevocably, during the Term of this
Agreement, grants to, and appoints, Xxxxxxx Xx Xxxxxx and Xxxxxxx XxXxxxxxxx, or
any of them in their respective capacities as officers of Vyteris (or, after the
Merger is consummated, Treasure Mountain), as the case may be, and any
individual who shall hereafter succeed to any such office of Treasure Mountain
and each of them individually, such Voter's (and such Voter's Affiliates') proxy
and attorney-in-fact (with full power of substitution), for and in the name,
place and stead of such Voter, to vote or cause to be voted the Treasure
Mountain Shares at any meeting of the stockholders of Treasure Mountain or at
any adjournment or postponement thereof solely in the manner described in
Section 1(a) above and expressly limited to the purposes stated therein.
(b) Each Voter represents that any proxies heretofore given in respect
of the Treasure Mountain Shares are not irrevocable, and that such proxies
either have been or are hereby revoked.
(c) Each Voter hereby affirms that the irrevocable proxy set forth in
this Section 10 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of such Voter under this Agreement. Each Voter hereby further affirms
that the irrevocable proxy is coupled with an interest and may not be revoked,
except by amendment, modification or termination consented to by Vyteris prior
to the consummation of the Merger or Treasure Mountain after consummation of the
Merger. Each Voter hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is
executed and intended to be irrevocable during the Term in accordance with the
provisions of Section 212(e) of the Delaware General Corporation Law or
otherwise [need to also reference Nevada law here]. The power and authority
hereby conferred shall not be terminated by any act of such Voter (subject to
the terms hereof) or by operation of law, by the dissolution of such Voter (if
such Voter is other than a natural person), by lack of appropriate power or
authority, or by the occurrence of any other event or events (subject to the
terms hereof) and shall be binding upon all his representatives, executors,
successors and/or assigns. If after the execution of this Agreement a Voter
shall dissolve (if such Voter is other than a natural person), cease to have
appropriate power or authority, or if any other such event or events shall occur
(subject to the terms hereof), the proxies named herein are nevertheless
authorized and directed to vote the Treasure Mountain Shares in accordance with
the terms of this Agreement as if such dissolution, if applicable, lack of
appropriate power or authority or other event or events had not occurred and
regardless of notice thereof.
11. If requested by Vyteris or Treasure Mountain, each Voter will
promptly after the date hereof surrender to Treasure Mountain all certificates
representing the Treasure Mountain Shares,
and Treasure Mountain will place the following legend on such certificates in
addition to any other legend required thereon:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, VOTING AND OTHER RESTRICTIONS PURSUANT
TO A VOTING AGREEMENT ENTERED INTO BY VYTERIS, INC., TREASURE
MOUNTAIN HOLDINGS, INC. AND THE STOCKHOLDERS PARTY THERETO. THE
COMPANY WILL FURNISH A COPY OF SUCH VOTING AGREEMENT TO THE
HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT
CHARGE."
Upon any the inclusion of the foregoing legend, such certificates shall
promptly be returned to the applicable Voter. Following the Term, upon the
request of any Voter, any such legend shall be promptly removed at the sole cost
of Treasure Mountain.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
VYTERIS, INC.
By: ____________________________
Name:
Title:
TREASURE MOUNTAIN HOLDINGS, INC.
By: ____________________________
Name:
Title:
XXXXXXX XXXXX SPECIALTY GROUP, INC.
By: _______________________________
Name:
Title:
SCIMITAR HOLDINGS LLC
By: _______________________________
Name:
Title:
SCHEDULE A
SECURITIES AUTHORIZED FOR ISSUANCE AS OF THE DATE OF THE EXECUTION OF
THE AGREEMENT TO WHICH THIS SCHEDULE ISATTACHED
Common Stock 75,000,000*
Series A Convertible Preferred Stock 333,333
Series C Convertible Preferred Stock 7,500,000
Preferred Stock 42,166,667**
* Vyteris' Board of Directors has approved an increase in the number of
authorized shares of Common Stock to 100,000,000 shares. Vyteris' controlling
stockholder has indicated that it will consent to such increase. ** Excludes
shares designated as Series A Convertible Preferred Stock and Series C
Convertible Preferred Stock.
SECURITIES OUTSTANDING AS OF THE DATE OF THE EXECUTION OF THE
AGREEMENT TO WHICH THIS SCHEDULE IS ATTACHED
Common Stock 24,849,980
Series A Convertible Preferred Stock 333,333
Series C Convertible Preferred Stock 7,500,000
OUTSTANDING RIGHTS OPTIONS OR WARRANTS TO PURCHASE ANY EQUITY INTEREST IN
VYTERIS AND OUTSTANDING SECURITIES CONVERTIBLE INTO OR EXERCISABLE FOR ANY
EQUITY INTEREST IN VYTERIS, AS OF THE DATE OF THE EXECUTION OF THE AGREEMENT TO
WHICH THIS SCHEDULE IS ATTACHED
1. In general, under Xxxxxxx Xx Xxxxxx'x amended and restated employment, Xx. Xx
Xxxxxx has the right to receive options from time to time to maintain his
ownership of 4% of Vyteris' capital stock, on a fully-diluted, as-converted
basis, after each financing transaction effected by Vyteris in which Vyteris
receives cash proceeds in exchange for the issuance of its Common Stock or a
security convertible into, exchangeable for or exercisable for shares of its
Common Stock (until Vyteris has raised at least $27,000,000 in such financing
transactions). Reference is made to that employment agreement for additional
detail regarding that arrangement.
2. Excluding options covered by Xx. Xx Xxxxxx'x employment agreement, there are
options outstanding to purchase 1,375,268 shares of Vyteris' Common Stock.
3. Vyteris has outstanding $8,497,500 aggregate principal amount of 8% Secured
Convertible Notes due December 31, 2004 (the "Bridge Notes"). If any time prior
to the maturity date of the Bridge Notes, Vyteris consummates a private equity
financing or series of related financings pursuant to which Vyteris receives
gross proceeds of at least $8 million (the "Financing"), the
Bridge Notes will automatically convert (at the direction of each holder of
Bridge Notes) into either: (i) shares of Vyteris Common Stock at a conversion
price equal to the lower of (a) $1.00 and (b) the price per share of any equity
security sold prior to conversion or (ii) shares of the same class or series of
the Vyteris capital stock sold in the Financing at a conversion price equal to
eighty five percent (85%) of the per share price of the Vyteris capital stock
sold in the Financing. Notwithstanding the foregoing, in the event that units of
securities are sold in the Financing and a holder of Bridge Notes elects to
convert its Bridge Note into the units sold in the Financing, the Bridge Note
will convert into securities comparable to the securities included in the units
at a conversion price equal to eighty five percent (85%) of the price per unit
of securities sold in the Financing.
4. In connection with the issuance of the Bridge Notes, Vyteris issued (a) to
the purchasers of the Bridge Notes warrants to purchase a total of 4,248,750
shares of Vyteris' Common Stock and (b) to the placement agent for such issuance
warrants to purchase a total of 2,549,250 shares of Vyteris Common Stock. These
warrants are more fully described in the "Private Placement Memorandum" (as
defined in the agreement to which this schedule is annexed).
5. Vyteris has granted to Becton Xxxxxxxxx warrants to purchase 50,000 shares of
its Common Stock. These warrants are more fully described in the Private
Placement Memorandum.
6. In connection with the License, Development and Distribution Agreement that
Vyteris entered into with X. Xxxxx Medical, Inc., X. Xxxxx Medical, Inc. has the
conditional right to purchase 92,593 shares of Vyteris Common Stock. These
rights are more fully described in the Private Placement Memorandum.
7. Vyteris may issue subsequent to the date hereof options to purchase
additional shares of its Common Stock pursuant to its 2001 Stock Option Plan.
Vyteris may issue additional shares of its Common Stock and warrants to purchase
its Common Stock in connection with the Financing, as described in the Private
Placement Memorandum.
8. Each share of Vyteris Series A Convertible Preferred Stock is automatically
convertible into one-fourth of a share of Vyteris Common Stock (adjusted for
stock splits, combinations, stock dividends, recapitalizations, and the like)
upon the occurrence of (i) the closing of a firm commitment underwritten initial
public offering which results in a per share price of at least $12 and aggregate
gross proceeds to Vyteris of not less than $10,000,000 or (ii) subject to
certain exceptions, an Extraordinary Transaction (as defined in the Vyteris
Certificate of Incorporation). Further, the holders of Series A Convertible
Preferred Stock may elect to convert their shares on a four-for-one basis
(adjusted for stock splits, combinations, stock dividends, recapitalizations,
and the like) into shares of Vyteris Common Stock.
9. Each share of Vyteris Series C Convertible Preferred Stock is convertible at
any time, upon option of the holder, into Vyteris Common Stock at a price per
share as follows: (i) if converted within 18 months from March 31, 2004, $4.00;
(ii) if converted within the next 18 months, $3.00; or if converted at any time
thereafter, $1.50.