FIRST AMENDED AND RESTATED CONVERSION AGREEMENT Between Holders of Series A Preferred Stock of RxElite Holdings Inc., on the One Hand, And RxElite Holdings Inc., on the Other Hand
FIRST
AMENDED AND RESTATED
Between
Holders of Series A Preferred Stock of
RxElite
Holdings Inc., on the One Hand,
And
RxElite
Holdings Inc., on the Other Hand
This
First Amended and Restated Conversion Agreement (“Agreement”) is dated as of
April 26, 2007 and amends and restates that certain Conversion Agreement dated
as of October 17, 2006 (the “Original Agreement”) between RxElite Holdings Inc.
(the “Company”) and each of the persons who were holders (“Holders”) of Series A
Preferred Stock of the Company, par value $0.01 per share (“Preferred Stock”) as
at October 17, 2006;
WHEREAS,
pursuant to the Second Amended and Restated Certificate of Incorporation of
the
Company (the “Certificate”), holders of Series A Preferred Stock are entitled to
certain rights and preferences that are superior to the rights and preferences
afforded to the holders of Common Stock of the Company (“Common
Stock”);
WHEREAS,
the Company anticipates entering into a number of transactions and has requested
the Holders to convert each of their shares of Preferred Stock into one share
of
Common Stock (the “Conversion”);
WHEREAS,
in order to induce the Holders to consent to the Conversion, the Company hereby
agrees to grant the Holders the rights set forth in this Agreement;
WHEREAS,
the Company and the Holders desire to amend and restate the Original Agreement
and desire to enter into this Agreement.
NOW,
THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Term.
This
Agreement shall become effective as of the date of the Original Agreement and
shall terminate upon the earlier of a consummation of a Qualified Merger or
the
initial public offering of the Company’s securities (other than Sections 5 and 6
hereof which shall survive indefinitely), it being acknowledged that obligations
incurred prior to such termination shall survive until such obligations are
satisfied.
2. Conversion.
Pursuant to Section 4(d)(i)(z) of the Certificate, as of the date of the
Original Agreement, each Holder elects to convert all of its shares of Preferred
Stock into shares of Common Stock, such that each share of Preferred Stock
will
be converted into one share of Common Stock. The Holders waive any rights of
notice that may be required by the Certificate to implement the foregoing
Conversion. The Conversion shall apply to all shares of Preferred Stock issued
and subscribed for as of the date of the Original Agreement and such subscribed
shares shall immediately upon issuance be so converted and the Holder shall
for
all purposes on or after the date of the Original Agreement be deemed a holder
of Common Stock.
3. The
Liquidation Preference.
The
Company agrees with each Holder as follows:
(a) The
Company agrees that it shall provide the Holders with no less than 30 calendar
days’ notice prior to effecting a liquidation or a deemed liquidation, which
notice shall include a description of the transaction and, if applicable, the
per share consideration to be paid with respect to each share of Common Stock
in
such liquidation or deemed liquidation (“Liquidation Notice”).
(b) At
any
time within the 20 calendar day period following the date of the Liquidation
Notice, each Holder shall be entitled to deliver a notice (“Special Notice”) to
the Company irrevocably electing to cause the Company to purchase from such
Holder such number of its shares of Common Stock (up to the aggregate number
of
shares received upon Conversion) as shall be identified in the Special Notice
(the “Subject Shares”). The per share purchase price of each Subject Share shall
be the Purchase Price.
(c) Within
30
calendar days after the date of the Liquidation Notice, the Company shall
consummate the purchase of and pay for in cash the Subject Shares, it being
acknowledged that the Company shall not consummate the liquidation or deemed
liquidation until such time as it shall have purchased and paid for all of
the
Subject Shares (all of which may, however, occur in a simultaneous
transaction).
4. Certain
Agreements.
The
Company further agrees with each Holder that for so long as this Agreement
shall
be in effect it shall not:
(a) declare
or pay any dividends or redeem or repurchase any of its capital stock (other
than from employees or as contemplated by this Agreement);
(b) enter
into any agreement with any other equityholder similar to this Agreement;
(c) issue
any
securities with any preferences or rights pari passu or superior to the ones
set
forth in this Agreement;
(d) amend
any
provision of the Company’s Certificate of Incorporation (other than the filing
of the Third Amended and Restated Certificate of Incorporation on November
9,
2006, which is approved); or
(e) issue
any
equity securities or securities convertible into equity securities for a
consideration less than $0.474 per share (as adjusted for stock splits, stock
combinations and the like).
5. Consent
Fees.
(a) The
Company agrees that upon consummation of a Qualified Merger, the Company shall
pay the Holders the amount of $600,000 in cash, which amount shall be allocated
among the Holders based on the aggregate number of shares of Preferred Stock
converted by each Holder into Common Stock (a “Holder’s Pro-Rata
Percentage”).
(b) If
the
Company shall consummate the Qualified Merger, the Company (on behalf of itself
and the Surviving Company) further agrees that on December 31, 2008, the Company
shall offer by written notice to each Holder (the “Redemption Notice”) to
purchase from each Holder such Holder’s Shares at $4 each (as adjusted for stock
splits, stock combinations and the like). A Holder electing to have the Company
purchase some or all of its Holder’s Shares shall notify the Company of its
irrevocable election within 10 calendar days after the date of the Redemption
Notice and the Company shall consummate the purchase of the tendered Holder’s
Shares in cash within 50 calendar days after the date of the Redemption
Notice.
“Holder’s
Shares” shall mean a Holder’s portion of 350,000 Surviving Company Shares (as
adjusted for stock splits, stock combinations and the like), which 350,000
shares shall be allocated among the Holders based on the number of shares of
Preferred Stock owned by them on December 31, 2004.
6. Certain
Consent Warrants.
The
Company is presently in negotiations relating to a Qualified Merger as a result
of which a surviving company shall be created (the “Surviving Company”),
pursuant to which the Company may be entitled to receive, inter alia, warrants
to purchase shares of common stock of the Surviving Company (“Surviving Company
Shares”) at $0.60 per share (as adjusted for stock splits, stock combinations
and the like). The Company agrees that if such Qualified Merger is consummated,
that the Company shall allocate 1,000,000 (as adjusted for stock splits, stock
combinations and the like) of such warrants to the Holders, which warrants
shall
be allocated among the Holders based on the Holder’s Pro-Rata
Percentage.
7. Certain
Defined Terms.
The
following defined terms shall have the meanings set forth below:
(a) A
“deemed
liquidation” shall mean a merger or consolidation (unless the Company is the
surviving entity), or sale or lease of all or substantially all of the assets
or
stock of the Company, provided, however, that a Qualified Merger or the initial
public offering of the Company’s securities shall not constitute a liquidation
or deemed liquidation.
(b) “Purchase
Price” shall mean the sum of
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(i)
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an
amount equal to $0.948 (as adjusted for stock splits, stock combinations
and the like); and
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(ii)
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an
amount determined by multiplying the aggregate amount that would
be
available for distribution to equityholders of the Company if the
Company
were liquidated as a result of the liquidation or deemed liquidation
and
all assets of the Company were distributed to equityholders (after
deducting from such amount the amount set forth in item (i) of this
definition with respect to all Subject Shares) by a fraction, the
numerator of which is one and the denominator of which is the aggregate
number of shares of Common Stock issued and outstanding (on a fully
diluted basis) at the time of determination (with all non-cash amounts
being valued by the Board of Directors and approved by a
majority-in-interest of the
Holders).
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(c) A
“Qualified Merger” shall mean the merger or consolidation (whether forward to
reverse) of the Company with a company publicly traded on any securities
exchange.
8. Miscellaneous.
This
Agreement shall be governed by and construed in accordance with Idaho law.
No
provision of this Agreement may be amended or waived without the written consent
of the Company and the Holders holding a majority of the aggregate Holder’s
Pro-Rata Percentages. This Agreement may be signed in two or more counterparts.
Upon consummation of the Qualified Merger, the obligations of the Company set
forth herein shall automatically become the obligations of the Surviving
Company.
9. Stock
Split.
The
parties take cognizance that on November 9, 2006, the Company filed its Third
Amended and Restated Certificate of Incorporation pursuant to which each share
of Common Stock was split into 4.2194 shares of Common Stock. All references
in
this Agreement to share numbers and to dollar values relating to a share are
after giving effect to the foregoing stock split but not to any stock split,
stock combination and the like after November 9, 2006.
IN
WITNESS WHEREOF, the Parties hereto have set their hand as of the date first
above written.
| RXELITE HOLDINGS INC. | ||
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| By: | /s/ Xxxxxx Xxxx | |
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Name: Xxxxxx
Xxxx
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| Title: Chairman of the Board | ||
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Best
Sky Investments Limited
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| /s/ Xxxxxx Xxxx | By: | /s/ X. Xxxx Sing |
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Xxxxxx
Xxxx
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Name: X. Xxxx Sing |
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Title:
Director
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| Rich Basin Investments Limited | Xxxxx Xxxxxxx and Xxxxx Xxxxxxx, joint tenants | |||
| By: | /s/ Xxx Xxxxxx Sit | By: | /s/ Xxxxx Xxxxxxx | |
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Name: Xxx Xxxxxx Sit |
Xxxxx Xxxxxxx |
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Title:
Manager
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| /s/ Xxxxx Xxxxxxx | ||||
| By: |
Xxxxx
Xxxxxxx
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| The Xxxxxx Company, a Washington Corporation | Xxxxx Xxxxxxxx and Xxx Xxxxxxxx, joint tenants | |||
| By: | /s/ Xxxxx X. Xxxxxx | By: | /s/ Xxxxx Xxxxxxxx | |
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Name: Xxxxx X. Xxxxxx |
Xxxxx Xxxxxxxx |
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Title:
President
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| /s/ Xxx Xxxxxxxx | ||||
| By: |
Xxx
Xxxxxxxx
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| /s/ Xxxx Xxxxxxx | /s/ Xxxxxxxx X. Xxxx | ||
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Xxxx
Xxxxxxx
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Xxxxxxxx
X. Xxxx
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| /s/ Xxxxx Xxxx | /s/ Xxxx Xxxxx | ||
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Xxxxx
Xxxx
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Xxxx
Xxxxx
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