Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Agreement entered into as of May 12, 1998 by and among Xxxx Xxxx
Technologies, Inc., a Nevada corporation ("Xxxx Wolf"), Xxxx Xxxx Acquisition
Corp., a Delaware corporation ("Xxxx Wolf Subsidiary"), and REAADS Medical
Products, Inc., a Delaware corporation (the "Company"). Xxxx Xxxx, the Xxxx Xxxx
Subsidiary, and the Company are sometimes referred to collectively herein as the
"Parties."
W I T N E S S E T H:
WHEREAS, the Xxxx Wolf Subsidiary is a wholly-owned subsidiary of Xxxx
Xxxx; and
WHEREAS, the Board of Directors of Xxxx Wolf, the Xxxx Xxxx Subsidiary and
the Company deem it advisable and in the best interest of the respective
corporations and their respective stockholders that the Xxxx Xxxx Subsidiary be
merged with and into the Company in a transaction whereby the Company will
become a wholly-owned subsidiary of Xxxx Wolf (the "Merger"), all in accordance
with the terms of this Agreement and applicable provisions of law.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants contained in this Agreement, the Parties do hereby agree as follows.
1. DEFINITIONS.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
reasonable amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys' fees
and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"CERTIFICATE OF MERGER" has the meaning set forth in
Section 2(c) below.
"CLOSING" has the meaning set forth in Section 2(b)
below.
"CLOSING DATE" has the meaning set forth in Section
2(b) below.
"CODE" means the Internal Revenue Code of 1986, as
amended.
"COMPANY COMMON SHARE" OR "COMPANY COMMON SHARES" means any share or
shares of the Common Stock, $.01 par value per share, of the Company.
"COMPANY DISCLOSURE SCHEDULE" means the disclosure schedule, dated
the date hereof, and attachments thereto delivered by the Company to Xxxx Xxxx
simultaneously with the execution of this Agreement.
"COMPANY FINANCIAL STATEMENTS" has the meaning set
forth in Section 4(e) below.
"COMPANY PREFERRED SHARE" OR "COMPANY PREFERRED SHARES" means any
share or shares of the Preferred Stock, $.01 par value of the Company.
"COMPANY SHARES" means shares of the Company Common Shares and the
Company Preferred Shares.
"COMPANY SHAREHOLDERS" means the holders of Company Shares as of the
Closing Date.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 6(g)
below.
"DELAWARE GCL" means the Delaware General Corporation Law, as
amended.
"EFFECTIVE TIME" has the meaning set forth in Section
2(d)(i) below.
"EMPLOYEE BENEFIT PLAN" OR "EMPLOYEE BENEFIT PLANS" means any
pension, profit sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plan as defined in Section 4001(a)(3) of
ERISA.
"EMPLOYEE PENSION BENEFIT PLAN" means any "employee pension benefit
plan" as defined under Section 3(2) of ERISA.
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set
forth in ERISA Section 3(1).
"ENVIRONMENTAL HEALTH AND SAFETY REQUIREMENTS" means all federal,
state and local environmental, health and safety laws, codes and ordinances, and
all rules and regulations promulgated thereunder relating to (i) air emissions;
(ii) discharges to surface water or groundwater; (iii) noise emissions; (iv)
solid or liquid waste disposal; (v) the use, generation, storage, transportation
or disposal of toxic or hazardous substances or wastes (which shall include any
and all such materials listed in any federal, state or local law, code or
ordinance and all rules and regulations promulgated thereunder as hazardous or
potentially hazardous); or (vi) other environmental, health or safety matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"XXXX WOLF" has the meaning set forth in the preamble
above.
"XXXX XXXX ANTI-DILUTION WARRANTS" has the meaning set
forth in Section 2(d)(vi) below.
"XXXX WOLF COMMON SHARE" OR "XXXX XXXX COMMON SHARES" means any share
or shares of the Common Stock, $.001 par value per share, of Xxxx Wolf.
"XXXX XXXX DISCLOSURE SCHEDULE" means the disclosure statements,
dated the date hereof, and attachments thereto delivered by Xxxx Wolf to the
Company simultaneously with the execution of this Agreement.
"XXXX XXXX FINANCIAL STATEMENTS" has the meaning set
forth in Section 5(e) below.
"XXXX WOLF PREFERRED SHARE" OR "XXXX XXXX PREFERRED
SHARES" means any share or shares of the Preferred Stock, $.001
par value per share, of Xxxx Wolf.
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"XXXX XXXX SHARES" means shares of the Xxxx Wolf Common
Shares and Xxxx Xxxx Preferred Shares.
"XXXX WOLF SUBSIDIARY" has the meaning set forth in
the preamble above.
"IRS" means the Internal Revenue Service.
"INTELLECTUAL PROPERTY" shall mean all patents, patent applications,
trademarks, trademark applications, trade secrets, services marks, trade names,
copyrights, inventions, drawings, designs, customer lists, proprietary know-how
or information, other rights with respect thereto, or any other intangible
property rights.
"KNOWLEDGE" means actual knowledge without independent
investigation.
"LOCK-UP AGREEMENT" has the meaning set forth in Section 2(d)(vi).
"MERGER" has the meaning set forth in Section 2(a) below.
"MERGER CONSIDERATION" has the meaning set forth in Section 2(d)(vi)
below.
"MERGER UNITS" has the meaning set forth in Section 2(d)(vi) below.
"MOST RECENT COMPANY FINANCIAL STATEMENTS" has the meaning set forth
in Section 4(e) below.
"MOST RECENT COMPANY FISCAL YEAR END" has the meaning set forth in
Section 4(e) below.
"MOST RECENT COMPANY FISCAL QUARTER END" has the meaning set forth in
Section 4(e) below.
"MOST RECENT XXXX XXXX FINANCIAL STATEMENTS" has the meaning set
forth in Section 5(e) below.
"MOST RECENT XXXX WOLF FISCAL QUARTER END" has the meaning set forth
in Section 5(e) below.
"MOST RECENT XXXX XXXX FISCAL YEAR END" has the meaning set forth in
Section 5(e) below.
"MULTI-EMPLOYER PLAN" means any "multi-employer plan" as defined
under Section 3(37)(A) of ERISA.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PARTIES" has the meaning set forth in the preamble above.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated
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organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, OTHER THAN (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SERIES A PREFERRED STOCK" shall mean the Xxxx Wolf Preferred Shares
designated Series A Convertible Preferred Stock pursuant to the Certificate of
Designations attached as Exhibit H to this Agreement and issuable by the Company
pursuant to Section 8 of this Agreement, which shares are convertible into Xxxx
Xxxx Common Shares.
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"SURVIVING CORPORATION" has the meaning set forth in Section 2(a)
below.
"TAX" OR "TAXES" means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Warrant" or "Warrants" means the Warrant or Warrants to purchase
Common Stock in the form annexed hereto as Exhibit I issuable by the Company
under Section 8 of this Agreement.
"UNDERLYING SHARES" means the Common Stock underlying and issuable
upon conversion of the Series A Preferred Stock or exercise of the Warrants
2. THE MERGER.
(a) THE MERGER. Subject to the terms and conditions of this
Agreement, the Xxxx Xxxx Subsidiary will merge with and into the Company (the
"Merger") at the Effective Time. The Company shall be the corporation surviving
the Merger (the "Surviving Corporation").
(b) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Company in
Westminster, Colorado, commencing at 10:00 a.m. local time on that business day
as of which all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby have been satisfied or waived (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Parties may mutually determine (the
"Closing Date"); provided, however, that the Closing Date shall be no later than
May 15, 1998.
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(c) ACTIONS AT THE CLOSING. At the Closing, (i) the Company will
deliver to Xxxx Wolf the various certificates, instruments, and documents
referred to in Sections 3(a)(i) and 7(a) below, (ii) Xxxx Xxxx will deliver the
certificates and instruments representing the Merger Consideration and the
various certificates, instruments, and documents referred to in Sections
2(d)(viii), 3(b)(i) and 7(b) below, and (iii) the Xxxx Wolf Subsidiary and the
Company will file with the Secretary of State of the State of Delaware, a
Certificate of Merger in the form attached hereto as Exhibit B (the "Certificate
of Merger").
(d) EFFECT OF MERGER.
(i) GENERAL. The Merger shall become effective at the time (the
"Effective Time") the Xxxx Xxxx Subsidiary and the Company file the Certificate
of Merger with the Secretary of State of the State of Delaware. The Merger shall
have the effect set forth in the Delaware GCL. Xxxx Wolf may, at any time after
the Effective Time, take any action (including executing and delivering any
document) in the name and on behalf of either the Xxxx Xxxx Subsidiary or the
Company in order to carry out and effectuate the transactions contemplated by
this Agreement.
(ii) NAME CHANGE TO CORGENIX, INC. Pursuant to the Certificate
of Merger, the Surviving Corporation shall change its name to CORGENIX, INC.
(iii) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Company in effect at and as of the Effective Time will
remain the Certificate of Incorporation of the Surviving Corporation without any
modification or amendment in the Merger, except that the Certificate of
Designations filed April 25, 1996 with the Secretary of State of the State of
Delaware relating to the Company Preferred Shares shall be terminated and shall
not be part of the Certificate of Incorporation of the Surviving Corporation.
(iv) BYLAWS. The Bylaws of the Company in effect at and as of
the Effective Time will remain the Bylaws of the Surviving Corporation without
any modification or amendment in the Merger.
(v) DIRECTORS AND OFFICERS. The directors of Xxxx Wolf in
office at and before the Effective Time ("Original Directors") will vote in
three (3) persons nominated by the Company. All except two (2) Original
Directors and all of the officers of Xxxx Xxxx will resign their positions at
the Effective Time.
(vi) CONVERSION OF COMPANY SHARES. At and as of the Effective
Time, provided that all options, warrants, preferred stock and other convertible
or derivative securities of the Company shall have been previously redeemed by
the Company, or exchanged or converted into Company Common Shares, all 204,000
of the Company Common Shares issued and outstanding immediately prior to the
Effective Time, shall be converted into an aggregate of 6,120,000 Merger Units,
each Merger Unit consisting of one (1) Xxxx Wolf Common Share and one (1) Common
Stock Purchase Warrant entitling the holder to purchase up to .3268 additional
Xxxx Xxxx Common Shares at an exercise price of $.001 per share in the form
attached as Exhibit C to this Agreement (the "Xxxx Wolf Anti-Dilution
Warrants"), at an exchange ratio of thirty (30) Xxxx Xxxx Merger Units for each
Company Common Share converted (the "Merger Consideration"). The Company Common
Shares and Anti-Dilution Warrants comprising the Merger Units, and the Company
Common Shares underlying the Anti-Dilution Warrants shall be subject to the
terms and provisions of a Lock-Up Agreement in the form attached as Exhibit D to
this Agreement ("Lock-Up Agreement"). After the Effective Time, no Company
Common Share
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shall be deemed to be outstanding or to have any rights other than those set
forth above in this Section 2(d)(vi).
(vii) XXXX WOLF SUBSIDIARY SHARES. At and as of the Effective
Time, all of the Xxxx Xxxx Subsidiary Shares issued and outstanding immediately
prior to the Effective Time shall be converted into one (1) share of Common
Stock of the Surviving Corporation. After the Effective Time, no Xxxx Wolf
Subsidiary Share shall be deemed to be outstanding or to have any rights other
than those set forth above in this Section 2(d)(vii).
(viii) EXCHANGE OF COMPANY COMMON SHARE CERTIFICATES. At and as
of the Effective Time, each Company Shareholder shall receive in exchange for
the Company Shareholder's certificate or certificates representing the Company
Common Shares upon surrender of such certificate or certificates to Xxxx Xxxx,
certificates (each registered in the name of the exchanging Company Shareholder)
representing the number of Xxxx Wolf Merger Units into which the Company Common
Shares shall have been converted. After the Effective Time, until surrendered in
exchange, the outstanding certificates for the Company Common Shares shall be
deemed for all purposes, other than the payment of dividends or other
distributions to the stockholder, to represent the number of whole Xxxx Xxxx
Common Shares included in the Merger Units into which such Company Shares shall
have been converted.
(e) CLOSING OF TRANSFER RECORDS. After the close of business on the
Closing Date, transfers of Company Shares outstanding prior to the Effective
Time shall not be made on the stock transfer books of the Surviving Corporation.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF COMPANY. Except as set forth in
the Company Disclosure Schedule, the Company represents and warrants to Xxxx
Wolf that the statements contained in this Section 3(a) are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout each subsection of this
Section 3(a)).
(i) AUTHORIZATION OF TRANSACTION. The Company has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Company, enforceable in accordance with its terms and conditions, except
(A) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights
and (B) as limited by the application of general principles of equity. The
Company need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any third party, including any government
or governmental agency in order to consummate the transactions contemplated by
this Agreement, except as provided in Section 3(a)(i) of the Company Disclosure
Schedule.
(ii) NONCONTRAVENTION. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of its charter or bylaws or (B) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, Security Interest, license, instrument, or other
arrangement to which the Company is a party or by which it or any of its assets
is subject.
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(iii) BROKERS' FEES. The Company has no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which Xxxx Xxxx could become
liable or obligated.
(iv) INVESTMENT. Each of the Company Shareholders (A)
understands that Xxxx Wolf Common Shares and Xxxx Xxxx Anti-Dilution Warrants
have not been, and will not be, registered under the Securities Act, or under
any state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering,
(B) is acquiring Xxxx Wolf Common Shares and Xxxx Xxxx Anti-Dilution Warrants
solely for his own account for investment purposes, and not with a view to the
distribution thereof, (C) who is not an accredited investor, either alone or
with his purchaser representative(s), has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment, (D) has received certain information
concerning Xxxx Wolf and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding Xxxx Xxxx Common Shares and Xxxx Wolf Anti-Dilution Warrants, and (E) is
able to bear the economic risk and lack of liquidity inherent in holding Xxxx
Xxxx Common Shares and Xxxx Wolf Anti-Dilution Warrants.
(v) COMPANY SHARES. Each of the Company Shareholders holds of
record and owns beneficially the number of Company Common Shares, set forth on
Exhibit A attached to this Agreement, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. None of the Company Shareholders or
the Company is a party to any option, warrant, purchase right, or other contract
or commitment that could require the Company to sell, transfer, or otherwise
dispose of any capital stock of the Company (other than this Agreement). None of
the Company Shareholders is a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock of
the Company.
(b) REPRESENTATIONS AND WARRANTIES OF XXXX XXXX. Xxxx Xxxx represents
and warrants to the Company that the statements contained in this Section 3(b)
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout each
subsection of this Section 3(b)).
(i) AUTHORIZATION OF TRANSACTION. Xxxx Wolf has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Xxxx Xxxx, enforceable
in accordance with its terms and conditions, except (A) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights and (B) as limited by the
application of general principles of equity. Xxxx Wolf need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any third party, including any government or governmental agency in order to
consummate the transactions contemplated by this Agreement, except as provided
in Section 3(b)(i) of the Xxxx Xxxx Disclosure Schedule.
(ii) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Xxxx Wolf is subject or any provision of
the charter or bylaws of either, or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, Security
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Interest, license, instrument, or other arrangement to which Xxxx Xxxx is a
party or by which either is bound or to which any of their respective assets is
subject.
(iii) BROKERS' FEES. Xxxx Wolf has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any Company Shareholder or
the Company could become liable or obligated.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The Company
represents and warrants to Xxxx Xxxx that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Company Disclosure Schedule.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects of
the Company. The Company has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. Section 4(a) of the Company Disclosure Schedule lists the directors
and officers of the Company.
(b) CAPITALIZATION. The entire authorized capital stock of the
Company consists of 500,000 Company Common Shares, of which 164,215 Company
Common Shares are issued and outstanding and 2,000 shares of Class A Preferred
Stock, of which 113.2 shares are issued and outstanding. All of the issued and
outstanding Company Shares have been duly authorized, are validly issued, fully
paid, and nonassessable. Currently, the Company has outstanding options and
warrants to purchase 44,325 and 34,300 Company Common Shares, respectively.
Effective as of the Closing, there will be outstanding 204,000 Company Common
Shares, no Company Preferred Shares, and no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Company to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
Effective as of the Closing, there will be no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Company.
(c) TITLE TO ASSETS. The Company has good and marketable title to, or
a valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Company Balance Sheet or acquired
after the date thereof, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Company Balance Sheet.
(d) SUBSIDIARIES. The Company has the Subsidiaries set forth on
Section 4(d) of the Company Disclosure Schedule. The Company Disclosure Schedule
sets forth with respect to each Subsidiary (i) the number of shares of
authorized capital stock of each class of its capital stock, (ii) the number of
issued and outstanding shares of each class of its capital stock, and (iv) the
number of shares of its capital stock held in treasury. The Company is the
holder of record of all of the issued and outstanding shares of capital stock of
the Subsidiaries. All of the issued and outstanding shares of capital stock of
the Subsidiaries have been duly authorized and are validly issued, fully paid,
and nonassessable.
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(e) FINANCIAL STATEMENTS. Attached hereto as Exhibit E are the
following financial statements (collectively the "Company Financial
Statements"): (i) audited consolidated balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the fiscal years
ended June 30,1995, June 30,1996, and June 30,1997 (the "Most Recent Company
Fiscal Year End") for the Company; and (ii) unaudited consolidated balance
sheets and statements of income, changes in stockholders' equity, and cash flow
as of and for the six (6) months ended December 31, 1997 and as of and for the
eight (8) months ended February 28, 1998 for the Company (the "Most Recent
Company Financial Statements"). The Company's most recent fiscal quarter end
(the "Most Recent Company Fiscal Quarter End") and its most recent fiscal month
end (the "Most Recent Fiscal Month End") are March 31, 1998. The Company
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of the Company as of
such dates and the results of operations of the Company for such periods;
provided, however, that the Most Recent Company Financial Statements are subject
to normal year-end adjustments (which will not be material individually or in
the aggregate) and lack footnotes and other presentation items.
(f) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Company Fiscal Year End, there has not been any material adverse change
in the business, financial condition, operations, results of operations, or
future prospects of the Company taken as a whole. Without limiting the
generality of the foregoing, since that date:
(i) The Company has not sold, leased, transferred, or assigned
any material assets, tangible or intangible, outside the Ordinary Course of
Business;
(ii) The Company has not entered into any material agreement,
contract, lease, license or other arrangement outside the Ordinary Course of
Business;
(iii) no party (including the Company) has accelerated,
terminated, made material modifications to, or canceled any material agreement,
contract, lease, or license to which the Company is a party or by which it is
bound;
(iv) The Company has not imposed any Security Interest upon any
of its assets, tangible or intangible;
(v) The Company has not made any material capital expenditures
outside the Ordinary Course of Business;
(vi) The Company has not made any material capital investment
in, or any material loan to, any other Person outside the Ordinary Course of
Business;
(vii) The Company has not created, incurred, assumed, or
guaranteed more than $10,000 in aggregate indebtedness for borrowed money and
capitalized lease obligations;
(viii) The Company has not granted any license or sublicense of
any material rights under or with respect to any Intellectual Property;
(ix) there has been no change made or authorized to be made in
the Certificate of Incorporation or bylaws of the Company;
(x) The Company has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of its
capital stock;
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(xi) The Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(xii) The Company has not experienced any material
damage, destruction, or loss (whether or not covered by
insurance) to its property and assets;
(xiii) The Company has not made any loan to, or entered into any
other transaction with, any of its stockholders, directors, officers, employees
or Affiliates outside the Ordinary Course of Business;
(xiv) The Company has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(xv) The Company has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xvi) The Company has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(xvii) The Company has not made any other material change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business; and
(xviii) The Company has not committed to any of the foregoing.
(g) UNDISCLOSED LIABILITIES. The Company has no material liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for Taxes), except for
(i) liabilities set forth on the face of the balance sheet included in the Most
Recent Company Financial Statements (rather than in any notes thereto) and (ii)
liabilities which have arisen after the Most Recent Company Fiscal Month End in
the Ordinary Course of Business.
(h) LEGAL COMPLIANCE. The Company has complied with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply, except
where the failure to comply would not have a material adverse effect on the
business, financial condition, operations, results of operations, or future
prospects of the Company.
(i) TAX MATTERS.
(i) The Company has filed all income Tax Returns that it was
required to file, and has paid all income Taxes due and owing, except where the
failure to file income Tax Returns or to pay income Taxes would not have a
material adverse effect on the financial condition of the Company taken as a
whole.
10
(ii) Section 4(i) of the Company Disclosure Schedule lists all
income Tax Returns filed with respect to the Company for taxable periods ended
on or after June 30, 1991, indicates those income Tax Returns that have been
audited, and indicates those income Tax Returns that currently are the subject
of audit. The Company has delivered to Xxxx Xxxx correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company since June 30, 1995.
(iii) The Company has not waived any statute of limitations in
respect of income Taxes or agreed to any extension of time with respect to an
income tax assessment or deficiency.
(iv) The Company is not a party to any income Tax allocation or
sharing agreement.
(v) The Company has not filed a consent under Code Section
341(f). The Company has not made any material payments, nor is the Company
obligated to make any material payments, nor is the Company a party to any
agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible under Code Section 280G. The
Company has not been a United States real property holding corporation within
the meaning of Code Section 897(c)(2) during the applicable period specified in
Code Section 897(c)(1)(A)(ii). The Company is not a party to any tax allocation
or sharing agreement.
(vi) The unpaid income Taxes of the Company (A) did not, as of
the Most Recent Company Fiscal Month End, exceed by any material amount the
reserve for income Tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and tax income) set forth
on the face of the Most Recent Company Balance Sheet (rather than in any notes
thereto) and (B) will not exceed by any material amount that reserve as adjusted
for operations and transactions through the Closing Date in accordance with the
past custom and practice of the Company in filing its income Tax Returns.
(j) REAL PROPERTY.
(i) The Company owns no real property.
(ii) Section 4(j)(ii) of the Company Disclosure Schedule lists
all real property leased or subleased to the Company. The Company has delivered
to Xxxx Wolf correct and complete copies of the leases and subleases listed in
Section 4(j)(ii) of the Company Disclosure Schedule (as amended to date). To the
Knowledge of the Company, each lease and sublease listed in Section 4(j)(ii) of
the Company Disclosure Schedule is legal, valid, binding, enforceable, and in
full force and effect, except where the illegality, invalidity, nonbinding
nature, unenforceability, or ineffectiveness would not have a material adverse
effect on the financial condition of the Company taken as a whole.
(k) INTELLECTUAL PROPERTY.
(i) The Company, to its knowledge, has not interfered with,
infringed upon, misappropriated, or violated any material Intellectual Property
rights of third parties, and, except as provided in Section 4(j) of the Company
Disclosure Schedule, the Company has never received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company must
license or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of the Company, no third party has interfered with,
infringed upon, misappropriated, or violated any material Intellectual Property
rights of the Company in any material respect.
11
(ii) Section 4(k)(ii) of the Company Disclosure Schedule
identifies each patent or registration which has been issued to the Company with
respect to any of its Intellectual Property, identifies each pending patent
application or application for registration which the Company has made with
respect to any of its Intellectual Property, and identifies each material
license, agreement, or other permission which the Company has granted to any
third party with respect to any of its Intellectual Property (together with any
exceptions). The Company has delivered to Xxxx Xxxx correct and complete copies
of all such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date). Section 4(k)(ii) of the Company Disclosure
Schedule also identifies each trademark, service xxxx and trade name, and each
unregistered trademark, service xxxx and trade name used by the Company in
connection with any of its businesses. With respect to each item of Intellectual
Property required to be identified in Section 4(k)(ii) of the Company Disclosure
Schedule, the Company possesses all right, title, and interest in and to the
item, free and clear of any Security Interest, license, claim or other
restriction: (A) granted by the Company and (B) to the Company's Knowledge,
asserted by any Person based on a claim of infringement, misappropriation or
similar claim.
(l) CONTRACTS. Section 4(l) of the Company Disclosure Schedule lists
all written contracts and other written agreements to which the Company is a
party the performance of which will involve consideration in excess of $10,000.
The Company has delivered to Xxxx Wolf a correct and complete copy of each
written contract or other written agreement listed in Section 4(l)of the Company
Disclosure Schedule (as amended to date) and a written summary setting forth the
material terms and conditions of each oral agreement referred to in Section 4(l)
of the Company Disclosure Schedule. With respect to each such agreement: (A) the
agreement is legal, valid, binding, enforceable, and in full force and effect in
all material respects; (B) no party is in material breach or default, and no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has repudiated any material
provision of the agreement.
(m) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of the Company are reflected properly on its books and records, are valid
receivables, and to the Knowledge of the Company, will be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of the Most Recent Company Balance
Sheet (rather than in any notes thereto) as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Company.
(n) INSURANCE. The Company has provided to Xxxx Xxxx a copy of each
material insurance policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety arrangements)
with respect to which the Company is a party, a named insured, or otherwise the
beneficiary of coverage.
(o) LITIGATION. Section 4(o) of the Company Disclosure Schedule sets
forth each instance in which the Company (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to
the Knowledge of the Company, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator; except where the injunction, judgment,
order, decree, ruling, action, suit, proceeding, hearing, or investigation would
not have a material adverse effect on the financial condition of the Company
taken as a whole.
(p) EMPLOYEES. The Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strike or material
grievance, claim of unfair
12
labor practices, or other collective bargaining dispute within the past three
years. The Company has no Knowledge of any organizational effort presently being
made or threatened by or on behalf of any labor union with respect to employees
of the Company.
(q) EMPLOYEE BENEFITS.
(i) Section 4(q) of the Company Disclosure Schedule lists each
Employee Benefit Plan that the Company maintains or to which the Company
contributes.
A. To the Knowledge of the Company, each
such Employee Benefit Plan (and each related trust, insurance contract, or fund)
complies in form and in operation in all respects with the applicable
requirements of ERISA and the Code, except where the failure to comply would not
have a material adverse effect on the financial condition of the Company taken
as a whole.
B. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
C. Each such Employee Benefit Plan which is
an Employee Pension Benefit Plan has received a determination letter from the
Internal Revenue Service to the effect that it meets the requirements of Code
Section 401(a).
D. As of the last day of the most recent
prior plan year, the market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any Multi-employer
Plan) equaled or exceeded the present value of liabilities thereunder
(determined in accordance with then current funding assumptions).
E. The Company has delivered to Xxxx Wolf
correct and complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the IRS, the most recent Form
5500 Annual Report, and all related trust agreements, insurance contracts, and
other funding agreements which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Company
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
A. No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multi-employer Plan) has been
completely or partially terminated or been the subject of a reportable event as
to which notices would be required to be filed with the PBGC. No proceeding by
the PBGC to terminate any such Employee Pension Benefit Plan (other than any
Multi-employer Plan) has been instituted.
B. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims for benefits) is
pending, except where the action, suit, proceeding, hearing, or investigation
would not have a material adverse effect on the financial condition of the
Company taken as a whole.
C. The Company has not incurred any
liability to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal liability) with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit Plan.
13
(iii) The Company does not contribute to, never has contributed
to, and never has been required to contribute to any Multi-employer Plan or has
any material liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any withdrawal liability, under any Multi-employer Plan.
(r) GUARANTIES. The Company is not a guarantor or otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
(s) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) To the Knowledge of the Company, the Company is in
compliance with Environmental, Health, and Safety Requirements, except for such
noncompliance as would not have a material adverse effect on the financial
condition of the Company taken as a whole.
(ii) To the Knowledge of the Company, the Company has not
received any written notice, report or other information regarding any actual or
alleged material violation of Environmental, Health, and Safety Requirements, or
any material liabilities or potential material liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any investigator,
remedial or corrective obligations, relating to the Company or its facilities
arising under Environmental, Health, and Safety Requirements, the subject of
which would have a material adverse effect on the financial condition of the
Company taken as a whole.
(iii) This Section 4(s) contains the sole and exclusive
representations and warranties of the Company with respect to any environmental,
health or safety matters, including without limitation, any arising under any
Environmental Health and Safety Requirements.
(t) CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY. None of the
Company Shareholders has been involved in any material business arrangement or
relationship with the Company within the past 12 months, and no Company
Shareholder owns any material asset, tangible or intangible, which is used in
the business of the Company.
(u) DISCLOSURE. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading. Except for general
economic conditions, there is no information known to the Company, but not
disclosed in this Agreement or the Company Disclosure Schedule or Exhibit hereto
that materially adversely affects or with the passage of time could materially
adversely affect the business, properties, assets, prospects, condition,
financial or other, of the Company.
5. REPRESENTATIONS AND WARRANTIES CONCERNING XXXX XXXX. Xxxx Xxxx
represents and warrants to the Company and the Company Shareholders that the
statements contained in this Section 5 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout the subsections of this Section 5), except as set
forth in the Xxxx Wolf Disclosure Schedule.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Xxxx Xxxx is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Xxxx Wolf is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the financial
condition
14
of Xxxx Xxxx. Xxxx Xxxx has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. Section 5(a) of the Xxxx Wolf Disclosure Schedule lists the
directors and officers of Xxxx Xxxx.
(b) CAPITALIZATION. The entire authorized capital stock of Xxxx Wolf
consists of 20,000,000 Xxxx Xxxx Common Shares, of which 1,957,259 Xxxx Wolf
Common Shares are issued and outstanding, and 5,000,000 Xxxx Xxxx Preferred
Shares, none of which are issued or outstanding. All of the issued and
outstanding Xxxx Wolf Common Shares have been duly authorized, are validly
issued, fully paid, and nonassessable. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Xxxx Xxxx
to issue, sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to Xxxx Wolf. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of Xxxx Xxxx. Effective as of the Closing, but
prior to the issuance of the Merger Units, there will be 5,907,259 Xxxx Wolf
Common Shares and no Xxxx Xxxx Preferred Shares issued and outstanding.
(c) SUBSIDIARIES. Xxxx Wolf has no Subsidiaries, other than the Xxxx
Xxxx Subsidiary.
(d) TITLE TO ASSETS. Xxxx Wolf has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by them, located on
their premises, or shown on the Most Recent Xxxx Xxxx Balance Sheet or acquired
after the date thereof, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Xxxx Wolf Financial Statement.
(e) FINANCIAL STATEMENTS. Attached hereto as Exhibit F is the
following financial statement (the "Xxxx Xxxx Financial Statement" and the "Most
Recent Xxxx Wolf Financial Statement"): an unaudited balance sheet of the
Company as at December 31, 1997 (the "Most Recent Xxxx Xxxx Fiscal Year End").
The Xxxx Wolf Financial Statement (including the notes thereto) has been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and presents fairly the financial condition of Xxxx Xxxx
as of such date; provided, however, that the Most Recent Xxxx Wolf Financial
Statement lacks certain footnotes and other presentation items. Xxxx Xxxx'x most
recent fiscal quarter end (the "Most Recent Xxxx Wolf Fiscal Quarter End") and
its most recent fiscal month end (the "Most Recent Xxxx Xxxx Fiscal Month End")
are March 31, 1998.
(f) EVENTS SUBSEQUENT TO MOST RECENT XXXX WOLF FISCAL YEAR END. Since
the Most Recent Xxxx Xxxx Fiscal Year End, there has not been any material
adverse change in the financial condition of Xxxx Wolf taken as a whole. Without
limiting the generality of the foregoing, since that date Xxxx Xxxx has not
engaged in any practice, taken any action, or entered into any transaction
outside the Ordinary Course of Business.
(g) UNDISCLOSED LIABILITIES. Xxxx Wolf has no material liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for Taxes), except for
(i) liabilities set forth on the face of the Most Recent Xxxx Xxxx Financial
Statement (rather than in any notes thereto) and (ii) liabilities which have
arisen after the Most Recent Xxxx Wolf Fiscal Month End in the Ordinary Course
of Business.
(h) LEGAL COMPLIANCE. Xxxx Xxxx has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof),
15
except where the failure to comply would not have a material adverse effect upon
the financial condition, operations, or future prospects of Xxxx Wolf taken as a
whole.
(i) TAX MATTERS.
(i) Xxxx Xxxx has filed all income Tax Returns that it was
required to file, and has paid all income Taxes shown thereon as owing, except
where the failure to file income Tax Returns or to pay income Taxes would not
have a material adverse effect on the financial condition of Xxxx Wolf taken as
a whole.
(ii) Section 5(i) of the Xxxx Xxxx Disclosure Schedule lists
all income Tax Returns filed with respect to Xxxx Wolf for taxable periods ended
on or after December 31, 1993 indicates those income Tax Returns that have been
audited, and indicates those income Tax Returns that currently are the subject
of audit. Xxxx Xxxx has delivered to the Company correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by Xxxx Wolf since December 31, 1995.
(iii) Xxxx Xxxx has not waived any statute of limitations in
respect of Income Taxes or agreed to any extension of time with respect to an
income Tax assessment or deficiency.
(iv) Xxxx Wolf is not a party to any income Tax allocation or
sharing agreement.
(j) REAL PROPERTY.
(i) Xxxx Xxxx owns no real property.
(ii) Section 5(j)(ii) of the Xxxx Wolf Disclosure Schedule lists
all real property leased or subleased to Xxxx Xxxx. Xxxx Xxxx has delivered to
the Company correct and complete copies of the leases and subleases listed in
Section 5(j)(ii) of the Xxxx Wolf Disclosure Schedule (as amended to date). To
the Knowledge of Xxxx Xxxx, each lease and sublease listed in Section 5(j)(ii)
of the Xxxx Wolf Disclosure Schedule is legal, valid, binding, enforceable, and
in full force and effect, except where the illegality, invalidity, nonbinding
nature, unenforceability, or ineffectiveness would not have a material adverse
effect on the financial condition of Xxxx Xxxx taken as a whole.
(k) INTELLECTUAL PROPERTY. Except as set forth at Section 5(k) of the
Xxxx Wolf Disclosure Schedule, Xxxx Xxxx owns no rights to any item of
Intellectual Property.
(l) CONTRACTS. Section 5(l) of the Xxxx Wolf Disclosure Schedule
lists all written contracts and other written agreements to which Xxxx Xxxx is a
party the performance of which will involve consideration in excess of $10,000.
Xxxx Wolf has delivered to the Company a correct and complete copy of each
contract or other agreement listed in Section 5(l) of the Xxxx Xxxx Disclosure
Schedule (as amended to date). With respect to each such agreement: (A) the
agreement is legal, valid, binding, enforceable, and in full force and effect in
all material respects, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (ii) as limited by the
application of general principles of equity; (B) no party is in material breach
or default,
16
and no event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the agreement; and (C) no party has repudiated any material
provision of the agreement.
(m) POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of Xxxx Xxxx.
(n) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of Xxxx Wolf are reflected properly on its books and records, are valid
receivables, and to the Knowledge of Xxxx Xxxx will be collected in accordance
with their terms at their recorded amounts, subject only to the reserve for bad
debts set forth on the face of the Most Recent Xxxx Wolf Balance Sheet (rather
than in any notes thereto) as adjusted for operations and transactions through
the Closing Date in accordance with Xxxx Xxxx'x past custom and practice.
(o) INSURANCE. Xxxx Wolf has provided to the Company a copy of each
material insurance policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety arrangements)
with respect to which any of Xxxx Xxxx is a party, a named insured, or otherwise
the beneficiary of coverage.
(p) LITIGATION. Section 5(p) of the Xxxx Wolf Disclosure Schedule
sets forth each instance in which Xxxx Xxxx (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction, except where the injunction, judgment, order, decree,
ruling, action, suit, proceeding, hearing, or investigation would not have a
material adverse effect on the financial condition of Xxxx Wolf taken as a
whole.
(q) EMPLOYEES. Xxxx Xxxx is not a party to or bound by any collective
bargaining agreement, nor has it experienced any strike or material grievance,
claim of unfair labor practices, or other collective bargaining dispute within
the past three years. Xxxx Wolf currently has no employees.
(r) EMPLOYEE BENEFITS.
(i) Xxxx Xxxx maintains no, has never maintained any, and has
never been required by law to maintain any Employee Benefit Plan.
(ii) Xxxx Wolf does not contribute to, never has contributed to,
and never has been required to contribute to any Multi-employer Plan or has any
material liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due), including any withdrawal
liability, under any Multi-employer Plan.
(s) GUARANTIES. Xxxx Xxxx is not a guarantor or otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
(t) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) To the Knowledge of Xxxx Wolf, Gray Wolf is in compliance
with Environmental, Health, and Safety Requirements, except for such
noncompliance as would not have a material adverse effect on the financial
condition of Xxxx Xxxx taken as a whole.
(ii) To the Knowledge of Xxxx Wolf, Gray Wolf has not received
any written notice, report or other information regarding any actual or alleged
material violation of
17
Environmental, Health, and Safety Requirements, or any material liabilities or
potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigator, remedial or corrective
obligations, relating to Xxxx Xxxx or its facilities arising under
Environmental, Health, and Safety Requirements, the subject of which would have
a material adverse effect on the financial condition of Xxxx Wolf.
(iii) This Section 5(t) contains the sole and exclusive
representations and warranties of Xxxx Xxxx with respect to any environmental,
health, or safety matters, including without limitation any arising under any
Environmental, Health, and Safety Requirements.
(u) CERTAIN BUSINESS RELATIONSHIPS WITH XXXX WOLF. Except as
provided in the Xxxx Xxxx Disclosure Schedule, no Affiliate of Xxxx Wolf other
than TransGlobal Financial Corporation and Xxxx X. Mustafoglu has been involved
in any material business arrangement or relationship with Xxxx Wolf within the
past 12 months and none of Xxxx Xxxx or its Affiliates owns any material asset,
tangible or intangible, which is used in the business of Xxxx Wolf.
(v) DISCLOSURE. The representations and warranties contained in this
Section 5 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 5 not misleading. Except for general
economic conditions, there is no information known to Xxxx Xxxx, but not
disclosed in this Agreement or the Xxxx Wolf Disclosure Schedule or Exhibit
hereto that materially adversely affects or with the passage of time could
materially adversely affect the business, properties, assets, prospects,
condition, financial or other, of the Company.
6. COVENANTS. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) GENERAL. Each of the Parties will use its reasonable business
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 7 below).
(b) NOTICES AND CONSENTS. The Company, on the one hand, and Xxxx
Xxxx, on the other hand, will give any notices to third parties, and will use
its best efforts to obtain any third party consents, and any authorizations,
consents, and approvals of governments and governmental agencies, that the other
may reasonably request in connection with the matters referred to in Section
3(a)(i) and Section 3(b)(i) above.
(c) OPERATION OF BUSINESS. Except as set forth on Schedule 6(c)
attached, neither the Company nor Xxxx Wolf will engage in any practice, take
any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing:
(i) neither the Company nor Xxxx Xxxx will authorize or effect
any change in its Certificate of Incorporation or bylaws other than the changes
effected by: (A) Xxxx Xxxx'x Certificate of Amendment filing, (B) Xxxx Xxxx'x
Certificate of Designations filing and (C) REAADS filing of the
Certificate of Merger;
(ii) neither the Company nor Xxxx Wolf will grant any options,
warrants, or other rights to purchase or obtain any of its capital stock or
issue, sell, or otherwise dispose of any of its capital stock (except (A) the
issuance by Xxxx Xxxx of up to nine hundred fifty thousand (950,000) Company
Common Shares, and (B) upon the conversion or exercise of
18
REAADS options, warrants, and other rights currently outstanding and disclosed
in Section 4(b) of this Agreement);
(iii) neither the Company nor Xxxx Wolf will declare, set aside,
or pay any dividend or distribution with respect to its capital stock (whether
in cash or in kind), or redeem, repurchase, or otherwise acquire any of its
capital stock.
(iv) neither the Company nor Xxxx Xxxx will issue any note,
bond, or other debt security or create, incur, assume, or guarantee any
indebtedness for borrowed money or capitalized lease obligation outside the
Ordinary Course of Business;
(v) neither the Company nor Xxxx Wolf will impose any Security
Interest upon any of its assets;
(vi) neither the Company nor Xxxx Xxxx will make any capital
investment in, make any loan to, or acquire the securities or assets of any
other Person outside the Ordinary Course of Business;
(vii) neither the Company nor Xxxx Wolf will make any change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business; and
(viii) neither the Company nor Xxxx Xxxx will commit to any of
the foregoing.
(d) FULL ACCESS. The Company, on the one hand, and Xxxx Wolf on the
other hand, will each permit representatives of the other to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the other, to all premises, properties, personnel, books,
records (including tax records), contracts, and documents of or pertaining to
the other. Each Party will treat and hold as such any Confidential Information
it receives from the other in the course of the reviews contemplated by this
Section 6(d), will not use any of the Confidential Information except in
connection with this Agreement, and, if this Agreement is terminated for any
reason whatsoever, agrees to return to the source all tangible embodiments (and
all copies) thereof which are in its possession.
(e) NOTICE OF DEVELOPMENTS. Each Party will give prompt written
notice to the other of any material adverse development causing a breach of any
of its own representations and warranties in Section 3, Section 4 or Section 5
above. Following the Closing, no disclosure by any Party pursuant to this
Section 6(e) shall be deemed to amend or supplement its respective Disclosure
Schedule or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
(f) EXCLUSIVITY. The Company will not solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of all or substantially all of the capital stock or assets of the
Company (including any acquisition structured as a merger, consolidation, or
share exchange) prior to May 15, 1998. The Company shall notify Xxxx Xxxx
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
(g) CONFIDENTIAL INFORMATION. All copies of financial information,
marketing and sales information, pricing, marketing plans, business plans,
financial and business projections, manufacturing processes and procedures,
formulae, methodologies, inventions, product designs, product specifications and
drawings, and other confidential and/or proprietary information of the Company
or of Xxxx Wolf disclosed to the other in the course of negotiating
19
this Agreement or under or pursuant to this Agreement (the "Confidential
Information") will be held in confidence and not used or disclosed by the
receiving party or any of its employees, affiliates or agents. It is agreed that
the Confidential Information will NOT include information that: (a) is proven to
have been known to receiving party prior to receipt of such information from the
disclosing party, as evidenced by documentation in the files of the receiving
party; (b) is disclosed by a third party having the legal right to disclose such
information and who owes no obligation of confidence to the disclosing party;
(c) is now, or later becomes part of the general public knowledge or literature
in the art, other than as a result of a breach of this Agreement by the
receiving party. This provision shall survive the termination of this Agreement
for any reason.
(h) COMPLIANCE WITH CONSULTING AGREEMENT. During the term of the
Consulting Agreement between the Xxxx Xxxx and TransGlobal Financial Corporation
described in Section 7(a)(xi) of this Agreement, the Company and Xxxx Wolf will
at all time comply with and perform in all respects the covenants, obligations,
agreements and commitments that Xxxx Xxxx is required to perform or comply with
under the Consulting Agreement.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF XXXX WOLF. The obligation of Xxxx
Xxxx to consummate the transactions to be performed by it in connection with
this Agreement is subject to satisfaction of the following conditions:
(i) The Company shall have procured all of the third party
consents specified in Section 3(a)(i) above;
(ii) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date;
(iii) The Company shall have performed and complied
with all of its covenants hereunder in all material respects
through the Closing;
(iv) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(v) Xxxx Wolf shall have completed its due diligence of the
Company to its satisfaction;
(vi) The Company shall have delivered to Xxxx Xxxx a
certificate to the effect that each of the conditions specified above in this
Section 7(a) is satisfied in all respects;
(vii) on the Closing Date, no proceeding shall be pending or
threatened before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might eventuate in any such suit, action or proceeding
shall be pending or threatened;
(viii) on the Closing Date, no material adverse change shall
have occurred in the Company's business, assets, including without limitation
any of the Intellectual Property, or in the Company's financial condition, or
prospects, whether such materially adverse change shall have occurred as a
result of litigation, competition, legislation or other change in law, or fire,
explosion, earthquake, disaster, accident, labor dispute, any action by any
20
governmental authority, flood, drought, embargo, riot, civil disturbance,
uprising, activity of armed forces or act of God or public enemy;
(ix) all issued and outstanding warrants, options and Company
Preferred Shares shall have been canceled, redeemed, exchanged and/or converted
such that as of the Closing Date there shall not be any outstanding warrants,
options or Company Preferred Shares, or any other purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require the Company to issue, sell or otherwise cause to issue its
capital stock;
(x) 204,000 Company Common Shares shall be outstanding
effective as of the Closing;
(xi) Xxxx Wolf shall have executed and delivered to
TransGlobal Financial Corporation, the Consulting Agreement substantially in the
form attached as Exhibit G to this Agreement;
(xii) Xxxx Xxxx shall have negotiated employment
agreements satisfactory to it with each of Xxxx X. Xxxxx, MD,
Xxxxxxxx X. Xxxxxxx, Xxx X Xxxxxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxx
X. Xxxxxxxx, and Xxxxxxxxx X. Xxxx;
(xiii) Xxxx Wolf shall have (A) entered into and consummated the
transactions contemplated by certain Subscription Agreements, each among Xxxx
Xxxx and the Purchaser(s) thereto, and (B) obtained aggregate proceeds from sale
of securities pursuant to such agreements of $1,000,000;
(xiv) The Company Shareholders (other than Chugai
Pharmaceutical Corporation) each shall have executed and delivered the Lock-Up
Agreement;
(xv) on the Closing Date, no proceeding shall be pending or
threatened before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might eventuate in any such suit, action or proceeding
shall be pending or threatened;
(xvi) all actions to be taken by the Company in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Xxxx Wolf. Without limiting the generality of the foregoing, the Company shall
have delivered the following:
A. A certificate of the corporate secretary
of the Company attaching the Certificate of Incorporation, bylaws, board of
director and shareholder resolutions authorizing the transactions contemplated
hereby, and a statement as to the incumbency of the persons executing this
agreement or any document, certificate or instrument contemplated thereby.
Xxxx Xxxx may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the transactions to be performed by it in connection with
this Agreement is subject to satisfaction of the following conditions:
21
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) Xxxx Wolf shall have performed and complied with all of
its respective covenants hereunder in all material respects through the Closing;
(iii) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) Xxxx Xxxx shall have amended its Certificate of
Incorporation to provide for a series of the Xxxx Wolf Preferred Shares having
the rights, preferences and designations as described on Exhibit H hereto;
(v) The Company shall have completed its due diligence of
Xxxx Xxxx to its satisfaction;
(vi) Xxxx Wolf shall have delivered to the Company a
certificate to the effect that each of the conditions specified above in this
Section 7(b) is satisfied in all respects;
(vii) Xxxx Xxxx shall have changed its name to
CORGENIX MEDICAL CORPORATION;
(viii) Xxxx Wolf shall have (A) entered into and consummated the
transactions contemplated by certain Subscription Agreements, each among Xxxx
Xxxx and the Purchaser(s) thereto; (B) obtained aggregate proceeds from sale of
securities pursuant to such agreements of $1,000,000; and (C) deposited the net
proceeds thereof at Eagle National Bank, N.A., in account #0121-898;
(ix) all actions to be taken by Xxxx Wolf in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Company. Without limiting the generality of the foregoing, Xxxx Xxxx shall have
delivered the following:
A. A certificate of the corporate secretary
of Xxxx Wolf and of the Xxxx Xxxx Subsidiary attaching with respect to each the
Certificate of Incorporation, bylaws, board of director and shareholder
resolutions authorizing the transactions contemplated hereby, and a statement as
to the incumbency of the persons executing this agreement or any document,
certificate or instrument contemplated thereby.
The Company may waive any condition specified in this Section 7(b) if it
executes a writing so stating at or prior to the Closing.
8. AUTHORIZATION, REGISTRATION AND SALE OF SERIES A PREFERRED STOCK AND
WARRANTS.
(a) ISSUANCE AND SALE. Xxxx Wolf agrees to authorize and sell an
aggregate of one million (1,000,000) Xxxx Xxxx Preferred Shares, designated as
shares of Series A Preferred Stock, and Warrants to purchase an aggregate of one
million (1,000,000) shares of Common Stock at an exercise price therefore of Two
and No/100 United States ($2.00) Dollars per share. The aggregate purchase price
at which Xxxx Wolf shall sell the Preferred Stock and Warrants is One Million
and No/100 United States Dollars ($1,000,000), or One and No/100 Dollars ($1.00)
per unit, each unit consisting of one (1) share of Series A Preferred Stock and
one (1) Warrant.
22
(b) THE SERIES A PREFERRED STOCK. Subject to the terms and conditions
of this Agreement, Xxxx Xxxx has authorized the execution and delivery of one or
more certificates for the Series A Preferred Stock and Warrants as contemplated
by this Section 8. The designations, rights, restrictions and limitations of the
Series A Preferred Stock shall be as set forth in the Certificate of
Designations attached as Exhibit H to this Agreement, which shall be filed by
Xxxx Wolf with the Nevada Secretary of State prior to or simultaneously with the
consummation of the Merger. The Warrants shall be in the form and shall contain
the terms and conditions set forth in Exhibit I attached to this Agreement.
(c) SECURITIES ACT REGISTRATION. Within thirty (30) days after the
Closing Date, Xxxx Xxxx will file a Registration Statement to register the
Common Stock underlying and issuable upon conversion of the Series A Preferred
Stock or exercise of the Warrants ("Underlying Shares") under the Securities Act
on Form X-0, XX-0 or on another form appropriate for such registration, and use
its best efforts to cause such registration to be declared effective as
expeditiously as possible, and in any event within a period of sixty (60) days
thereafter.
(d) EXCHANGE ACT REGISTRATION. Within thirty (30) days after the
Closing Date, Xxxx Wolf will file a Registration Statement to register Xxxx Xxxx
under Section 12(g) of the Exchange Act on Form 10 or another form appropriate
for such registration.
(e) NASDAQ SMALL CAP MARKET LISTING. Upon the earlier of sixty (60)
days after the Closing Date, or the date of the first exercise of the Warrants,
Xxxx Wolf will file an application to list its Common Stock for trading on the
NASDAQ Small Cap Market, and diligently endeavor to perfect such listing as
expeditiously as possible, and in any event within a period of thirty (30) days
thereafter.
(f) RULE 504 OFFERING. In the event the registration of the
Underlying Shares shall not have been declared effective by the United States
Securities and Exchange Commission within a period of six (6) months from the
Closing Date, then Xxxx Xxxx covenants and agrees that it will issue the
Underlying Shares to the purchasers of the Preferred Stock and Warrants, upon
conversion of the Preferred Stock or exercise of the Warrants, without
restrictive legend, stop transfer order or other restriction on transfer,
pursuant to the transactional exemption afforded by Rule 504 of Regulation D
promulgated under the Securities Act.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Company contained in Sections 3(a) and 4
shall survive the Closing hereunder for a period of three (3) years from the
Closing Date, unless the breaching Party had Knowledge of any misrepresentation
or breach of warranty at the time of the Closing, in which event such
representations, warranties and covenants shall continue in full force and
effect (subject only to any applicable statutes of limitations).
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF XXXX Wolf. In the event
the Company, breaches any of the representations, warranties and covenants
contained in Sections 3(a) and 4 of this Merger Agreement, provided that
TransGlobal Financial Corporation makes a written claim for indemnification
against the Company in the manner provided in Section 11(g) below within any
applicable survival period, then the Company agrees to indemnify TransGlobal
Financial Corporation from and against any such Adverse Consequences Xxxx Xxxx
or TransGlobal Financial Corporation shall suffer through and after the date of
the claim for indemnification (but excluding any Adverse Consequences Xxxx Wolf
or TransGlobal Financial Corporation shall suffer after the end of any
applicable survival period) caused proximately by the breach in the manner
provided in paragraphs (i) - (iii) of this Section 9(b).
23
(i) LIMITATIONS ON INDEMNITY. The indemnification obligations
of the Company under this Section 9(b) shall be subject to the following
limitations:
(A) DEDUCTIBLE. The Company shall be
obligated to pay indemnity for any Adverse Consequences only to the extent that
such Adverse Consequences exceed $100,000 in the aggregate.
(B) CEILING. The Company shall not be
obligated to pay indemnity for any Adverse Consequences in excess
of $2,000,000.
(ii) PAYMENT OF INDEMNITY. The indemnity by the Company under
this Section 9(b) shall be payable hereunder, at the option of the indemnifying
party, in cash or in Xxxx Xxxx Common Shares in an amount determined in
accordance with paragraph 9(b)(iii) below.
(iii) DETERMINATION OF ADVERSE CONSEQUENCES AND NUMBER OF XXXX
WOLF COMMON SHARES DELIVERABLE. The Parties shall make appropriate adjustments
for tax benefits and insurance coverage in determining Adverse Consequences for
purposes of this Section 9(b). All indemnification payments under this Section
9(b) shall be deemed adjustments to the Merger Consideration. If Xxxx Xxxx
Common Shares are to be delivered as indemnity under this Section 9(b), the
number of Xxxx Wolf Common Shares to be delivered shall be determined by
dividing the amount of the Adverse Consequences by .3268.
(c) LIQUIDATED DAMAGES FOR BREACH OF CERTAIN PROVISIONS. If
Xxxx Xxxx shall fail to perform its obligations under Sections 8(b)-8(f),
inclusive, of this Agreement, the Company and Xxxx Wolf, jointly and severally,
shall pay to TransGlobal Financial Corporation, as liquidated damages, and not
as a penalty, $1,000.00 for each day that Xxxx Xxxx has not complied with such
obligations, provided that if the Company shall have failed to comply with more
than one of Sections 8(b) - 8(f), inclusive, of this Agreement, the liquidated
damages shall be multiplied by the number of such Sections with respect to which
Xxxx Wolf is in default of its obligations.
(d) SPECIFIC ENFORCEMENT. The Parties specifically acknowledge
and agree that TransGlobal Financial Corporation will be entitled to specific
performance and/or injunctive relief because without such remedies the damage to
TransGlobal Financial Corporation will be irreparable and money damages
inadequate in the event that Xxxx Xxxx and/or the Company breaches the
Consulting Agreement between Xxxx Wolf and the TransGlobal Financial
Corporation.
10. TERMINATION.
(a) TERMINATION OF AGREEMENT. Either of the Company or Xxxx Xxxx may
terminate this Agreement with the prior authorization of its board of directors
(whether before or after stockholder approval) as provided below:
(i) Either of Xxxx Wolf or the Company may terminate this
Agreement by mutual written consent at any time prior to the Effective Time;
(ii) Xxxx Xxxx may terminate this Agreement by giving written
notice to the Company at any time prior to the Effective Time (A) in the event
the Company has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Xxxx Wolf has notified the
Company of the breach, and the breach has continued without cure for a period of
30 days after the notice of breach has been delivered
24
in accordance with Section 11(g) below or (B) if the Closing shall not have
occurred on or before May 15, 1998, (unless the failure to close results
primarily from Xxxx Xxxx breaching any representation, warranty, or covenant
contained in this Agreement);
(iii) the Company may terminate this Agreement by giving written
notice to Xxxx Wolf at any time prior to the Effective Time (A) in the event
that Xxxx Xxxx has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Company has notified
Xxxx Wolf of the breach, and the breach has continued without cure for a period
of 30 days after the notice of breach has been delivered in accordance with
Section 11(g) or (B) if the Closing shall not have occurred on or before May 15,
1998, (unless the failure to close results primarily from the Company breaching
any representation, warranty, or covenant contained in this Agreement);
(b) EFFECT OF TERMINATION. If Xxxx Xxxx or the Company terminates
this Agreement pursuant to Section 10(a) above, all rights and obligations of
the Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in Section 6(g) shall
survive any such termination for a period of three (3) years.
11. GENERAL.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Neither Xxxx Wolf nor
the Company shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the other Party; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Party prior to making the disclosure).
(b) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than (i) the Parties, (ii) the Company
Shareholders; (iii) TransGlobal Financial Corporation; and (iv) their respective
successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement, and the other documents
referenced herein, constitute the entire understanding of the parties hereto
with respect to the subject matter hereof, and supersedes any prior
understandings or agreements, oral or written, and no amendment, modification or
alteration of the terms hereof shall be binding unless the same be in writing,
dated subsequent to the date hereof and duly approved and executed by each of
the parties hereto.
(d) BINDING AGREEMENT; NON-ASSIGNABILITY. Each of the provisions and
agreements contained in this Agreement shall be binding upon and inure to the
benefit of the personal representatives, heirs, devisees, successors and assigns
of the respective parties hereto; but none of the rights or obligations
attaching to any party shall be assignable.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
25
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Company:
REAADS Medical Products, Inc.
00000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: President
Copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxxx, Black and Xxxx, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
If to Xxxx Wolf or TransGlobal Financial Corporation:
00000 X.X. Xxxxxxx 0
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Copy to:
Xxxx X. Xxxxx, Esq.
Xxxxx & Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
(i) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Delaware GCL. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by both of the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall
26
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) SEVERABILITY. If any term, provision, covenant, or condition of
this Agreement, or its application to any person or circumstance, shall be held
by a court of competent jurisdiction to be invalid, unenforceable, or void, the
remainder of this Agreement and such term, provision, covenant or condition as
applied to other persons or circumstances shall remain in full force and effect.
(k) EXPENSES. All expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the Company.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(m) GENDER, NUMBER AND TENSE. Throughout this Agreement, as the
context may require, the masculine gender includes the feminine and neuter, and
the neuter gender includes the masculine and feminine.
(n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
Xxxx Xxxx Technologies, Inc.
By: /s/ Xxxx X. Mustafogler
--------------------------
Title: President
-----------------------
REAADS Medical Products, Inc.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------
Title: President
-----------------------
27
EXHIBIT A
EXHIBIT B
CERTIFICATE OF MERGER
OF
CORGENIX, INC.
(a Delaware corporation)
INTO
REAADS MEDICAL PRODUCTS, INC.
(a Delaware corporation)
Pursuant to Section 252 of
the General Corporation Law
OF THE STATE OF DELAWARE
REAADS Medical Products, Inc., a Delaware corporation, DOES HEREBY
CERTIFY:
1. CORGENIX, INC., the constituent corporation being merged into REAADS
Medical Products, Inc., the surviving corporation, was incorporated under the
laws of the State of Delaware. REAADS Medical Products, Inc., the surviving
corporation, was incorporated under the laws of the State of Delaware.
2. An Agreement and Plan of Merger has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations, in accordance
with Section 252(c) of the General Corporation Law of the State of Delaware.
3. The name of the surviving corporation shall be CORGENIX, INC.
4. The certificate of incorporation of REAADS Medical Products, Inc. shall
be the certificate of incorporation of the surviving corporation, except that
the certificate of designations filed April 25, 1996 by the Secretary of State
of the State of Delaware relating to the Company Preferred Shares shall be
terminated and shall not be part of the certificate of incorporation of the
surviving corporation.
5. The By-laws of REAADS Medical Products, Inc. shall be the By-laws of
the surviving corporation.
6. The officers of the surviving corporation shall be:
President
Vice President
Secretary
Treasurer
7. The directors of the surviving corporation shall be:
Xxxx Mustafoglu
8. The original, executed Agreement and Plan of Merger is on file at the
principal place of business of REAADS Medical Products, Inc., 00000 Xxxxx
Xxxxxx, Xxxxxxxxxxx, XX, 00000, a copy of which will be furnished by the
surviving corporation, on request and without any cost to any stockholder of any
constituent corporation.
IN WITNESS WHEREOF, this Certificate of Merger of CORGENIX,
INC. into REAADS Medical Products, Inc. has been executed by the
President of REAADS Medical Products, Inc. thereunto duly
authorized, and the seal of said corporation has been duly
affixed hereto this day of May, 1998.
----
REAADS MEDICAL PRODUCTS, INC.
By:
---------------------------------
, President
ATTEST:
By:
SEAL:
EXHIBIT C
THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF
AN OFFER TO BUY THE WARRANT IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE SOLD,
PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS,
OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF
THE SECURITIES ACT AND UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS; AND
IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS RECEIVED AN OPINION FROM
THEIR COUNSEL THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION OF THE
SECURITIES.
STOCK PURCHASE WARRANT
No.
--
To Purchase Shares of Common Stock of
CORGENIX MEDICAL CORPORATION
THIS CERTIFIES that, for value received, (the
-----------------------------
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after May , 1998 and on or prior to May ,
--- ---
2003 (the "Termination Date") but not thereafter, to subscribe for and purchase
from CORGENIX MEDICAL CORPORATION, a corporation incorporated under the laws of
the State of Nevada (the "Company" or "Corgenix"), the number of shares (the
"Warrant Shares") of Common Stock, $.001 par value per share of the Company (the
"Common Stock") provided in Section 3 below. The purchase price of one share of
Common Stock (the "Exercise Price") under this Warrant shall be equal to $.001.
The Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. This Warrant is being issued
in connection with an Agreement and Plan of Merger dated May , 1998 (the
---
"Agreement") among the Company, Xxxx Xxxx Acquisition Corp. (a wholly-owned
subsidiary of the Company), and REAADS Medical Products, Inc. Unless otherwise
defined herein, capitalized terms used in this Warrant have the meanings
ascribed to them in the Agreement. This Warrant is one of the Xxxx Wolf
Anti-Dilution Warrants referenced in the Agreement.
1. TRANSFER OF WARRANT. This Warrant and all rights hereunder are
transferable by gift, will and by operation of the laws of distribution and
descent. Any other transfer shall require the prior written consent of the
Company and its financial adviser TransGlobal Financial Corporation.
2. AUTHORIZATION OF SHARES. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon such exercise and full payment of the Exercise Price for the
shares so exercised, 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).
3. EXERCISE OF WARRANT.
(a) ACCRUAL EVENTS. The right to exercise and purchase the Warrant
Shares represented by this Warrant shall accrue upon the following events:
(i) The exercise of one or more Corgenix $2.00
Warrants; or
(ii) The conversion of one or more shares of Corgenix Series A
Convertible Preferred Stock to Corgenix Common Stock; or
(iii)On or after November , 1998.
--
(b) ACCRUAL FORMULA. The number of Warrant Shares which shall be
exercisable from time to time under this Warrant (hereafter, the "Accrued
Warrant Shares") shall be determined as follows:
(i) NUMBER OF ACCRUED WARRANT SHARES PRIOR TO NOVEMBER , 1998.
--
The number of Accrued Warrant Shares exercisable at any time prior to November
, 1998 shall be determined according to the following mathematical formula:
--
(a + b) (n)
------------
- d = Number of Accrued Warrant Shares
2,000,000
where:
a = the number of Corgenix $2.00 Warrants exercised to the date of the
current Accrual Event;
b = the number of shares of Corgenix Common Stock received upon conversion
of Corgenix Series A Convertible Preferred Stock to the date of the current
Accrual Event;
n = (the total number of Warrant Shares represented by this Warrant
----
prior to November , 1998);
--
d = the number of Warrant Shares previously exercised by Holder.
(ii) NUMBER OF ACCRUED WARRANT SHARES ON OR AFTER NOVEMBER ,
--
1998. The number of Accrued Warrant Shares exercisable at any time on or after
November , 1998 shall be determined according to the following mathematical
--
formula:
m
----------
l - n' - d = Number of Accrued Warrant Shares
$1,000,000
where:
m = the dollar amount of Corgenix Series A Convertible Preferred Stock
sold through November , 1998;
--
n' = (the total number of Warrant Shares represented by this Warrant
---
on or after November , 1998);
--
d = the number of Warrant Shares previously exercised by Holder.
Notwithstanding the foregoing, if as of November , 1998, Accrued Warrant
--
Shares determined under Section 3(b)(i) exist under this Warrant but are
unexercised, the number of Accrued Warrant Shares exercisable under this Section
3(b)(ii) shall not be less than the number of Accrued Warrant Shares determined
under Section 3(b)(i) above.
(c) GENERAL. Accrual Warrant Shares may be purchased at any time or
times, and from time to time, from and after the happening of an Accrual Event,
before the close of business on the Termination Date, or such earlier date on
which this Warrant may terminate as provided in this Warrant, 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 hereof 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; whereupon the holder of
this Warrant shall be entitled to receive a certificate for the number of shares
of Common Stock so purchased. Certificates for shares purchased hereunder shall
be delivered to the holder hereof within three (3) calendar days after the date
on which this Warrant shall have been exercised as aforesaid, or be subject to
the damages set forth in the Agreement. Payment of the Exercise Price may be by
certified check or cashier's check or by wire transfer to an account designated
by the Company in an amount equal to the Exercise Price multiplied by the number
of Warrant Shares. If this Warrant is exercised for less than the full number of
Warrant Shares represented hereby, the Company shall issue to Holder a
substitute Warrant representing the number of Warrant shares remaining
unexercised.
4. FRACTIONAL SHARES. Fractional shares shall be issued as necessary upon
exercise of this Warrant.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof 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 of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any certificates for shares of Common Stock, 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 shareholder books or
records in any manner which prevents the timely exercise of this Warrant for a
period of time in excess of five (5) trading days per year.
7. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not entitle
the holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise thereof. Upon the surrender of this Warrant and
the payment of the aggregate Exercise Price, 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.
8. ASSIGNMENT AND TRANSFER OF WARRANT. This Warrant may be assigned by the
surrender of this Warrant and the execution of an Assignment Form 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 hereof at the address of
such holder appearing on the books of the Company); provided, however, that the
Company may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any expenses of transfer incidental thereto and that this
Warrant may not be resold or otherwise transferred except (i) in a transaction
registered under the Securities Act of 1933 (the "Securities Act"), or (ii) in a
transaction pursuant to an exemption, if available, from such registration and
whereby, if requested by the Company, an opinion of counsel is obtained by the
holder of this Warrant to the effect that the transaction is so exempt.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
certificate 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, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, 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 for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday in the State of Nevada,
then such action may be taken or such right may be exercised on the next
succeeding day not a legal holiday.
11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. 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 upon the
happening of any of the following.
In case the Company shall (i) declare or 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,
(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 of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
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 of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per such 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. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and/or extend the Termination Date for any period of time deemed
appropriate by the Board of Directors of the Company.
13. 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
promptly mail by registered or certified mail, return receipt requested, to the
holder of this Warrant notice of such adjustment or adjustments setting forth
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. Such notice, in absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
14. AUTHORIZED SHARES. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. 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 NASDAQ Small Cap
Stock Market or any domestic securities exchange upon which the Common Stock may
be listed.
15. TRANSFER RESTRICTIONS REGARDING COMMON STOCK UNDERLYING THE WARRANT.
The certificate or certificates representing the shares of Common Stock to be
issued at any time upon exercise of any part or all of this Warrant, shall be
subject to the following legend restricting transfer under the Securities Act of
1933, such legend to be substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"). THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR ASSIGNED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR IN A
TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF
THE SECURITIES ACT AND UNDER PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY
HAS RECEIVED AN OPINION FROM THEIR COUNSEL THAT SUCH TRANSACTION DOES
NOT REQUIRE REGISTRATION OF THE SECURITIES."
16. GENERAL.
(a) ISSUE DATE; JURISDICTION. The provisions of this Warrant shall be
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of Nevada, without regard to its conflict
of law, principles or rules.
(b) RESTRICTIONS. The holder hereof 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) MODIFICATION AND WAIVER. Except as otherwise provided in this
Warrant, this Warrant and any provisions hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by each of the
Company and Investor.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof by the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
(e) CAPITALIZED TERMS. All capitalized terms not otherwise defined
herein shall have the meaning assigned to them in the Agreement.
(f) ENTIRE AGREEMENT. This Warrant, together with all documents
referenced herein, embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
oral or written agreements and understandings relating to the subject matter
hereof. No statement, representation, warranty, covenant or Warrant of in the
Agreement of any kind not expressly set forth in this Agreement shall affect, or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: May , 1998
---
CORGENIX MEDICAL CORPORATION
By:
-------------------------------------
, President
NOTICE OF EXERCISE
To: CORGENIX MEDICAL CORPORATION
(1) The undersigned hereby elects to exercise warrants to
--------
purchase shares of Common Stock, $.001 par value per share (the "Common Stock")
of CORGENIX MEDICAL CORPORATION pursuant to the terms of the attached Warrant,
and tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
-----------------------------
Signature
EXHIBIT D
STOCKHOLDER LOCK-UP AGREEMENT
THIS STOCKHOLDER LOCK-UP AGREEMENT ("Agreement") is made effective as of
April 27, 1998, among REAADS Medical Products, Inc., a Delaware corporation
("REAADS"), Xxxx Xxxx Technologies, Inc., a Nevada corporation ("Xxxx Wolf") and
the undersigned stockholder ("Stockholder").
Xxxx Xxxx and REAADS are party to an Agreement and Plan of Merger,
pursuant to which REAADS will merge with Xxxx Wolf Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Xxxx Xxxx (the "Merger"). Pursuant to
the Merger, holders of REAADS common stock will receive 25 shares of Xxxx Wolf
common stock plus a warrant (the "Protective Warrant") to purchase up to 9.8
shares of Xxxx Xxxx common stock (subject to the occurrence of certain
contingencies) in exchange for each one (1) share of REAADS common stock held at
the effective time of the Merger (the "Merger Consideration"). As a condition to
receipt of the Merger Consideration, each holder of REAADS common stock is
required under the Merger Agreement to execute this Agreement.
As used herein, the term "Restricted Stock" means (i) all Xxxx Wolf common
stock included in the Merger Consideration, (ii) all Xxxx Xxxx common stock
issued on exercise of the Protective Warrants prior to the one year anniversary
date of the Merger, and (iii) all Xxxx Wolf common stock issued as a dividend
on, or in exchange for or conversion of, the foregoing.
In consideration of the mutual promises, covenants and conditions set
forth below, the parties mutually agree as follows:
1. RESTRICTED STOCK BOUND. All shares of Restricted Stock acquired by
Stockholder in connection with the Merger, including any shares received upon
exercise of the Protective Warrants, shall be subject to the terms and
restrictions set forth in this Agreement. No shares of Restricted Stock may be
transferred by Stockholder in any manner except in strict accord with the terms
of this Agreement.
2. LOCK-UP. The Stockholder agrees not to effect any sale
or transfer of the Restricted Stock until the one-year
anniversary of the Merger.
3. STOCK HELD BY ESCROW AGENT. To ensure compliance with the terms of this
Agreement, the share certificates representing the Restricted Stock shall be
deposited with Xxxxx & Xxxxx, counsel to Xxxx Wolf, as escrow agent (or a
substitute escrow agent selected by Xxxx Xxxx), until the one-year anniversary
date of the Merger.
4. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by the parties hereto.
5. WAIVER. Any provision contained in this Agreement may
be waived, either generally or in any particular instance, by
TransGlobal Financial Corporation.
6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns.
7. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
REAADS MEDICAL PRODUCTS, INC., XXXX WOLF TECHNOLOGIES, INC.,
a Delaware corporation a Nevada corporation
By: By:
Title: Title:
EXHIBIT E
EXHIBIT F
EXHIBIT G
CONSULTING AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into this day of
-----
May, 1998 by and between TransGlobal Financial Corporation ("TGF"), a Florida
corporation having a place of business at 00000 X.X. Xxxxxxx 0, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000 and, CORGENIX MEDICAL CORPORATION ("the Company"), a Nevada
corporation having a place of business at 00000 Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Company desires to obtain general financial advisory and
investment banking services from TGF; and
WHEREAS, TGF desires to perform these services for the
Company on terms and conditions as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and TGF hereto agree
as follows:
1. ENGAGEMENT OF TGF. Subject to the terms of this Agreement, the Company
does hereby appoint and engage TGF as a consultant and TGF hereby accepts its
appointment and engagement by the Company as a consultant to the Company with
respect to the services specified in paragraph 2 of this Agreement for the
compensation set forth in paragraph 4 of this Agreement.
2. SERVICES.
(a) As mutually determined from time to time by TGF and the Company,
during the term specified in paragraph 3 of this Agreement, TGF shall undertake
to consult with and advise the Company, by telephone or in person, with respect
to financial and business matters, including but not limited to assistance with
fund raising to implement the Company's business plans, implementation of the
Company's efforts to review capitalization, raise funding, or pursue mergers,
acquisitions or divestitures and other transactions, on an exclusive basis.
(b) TGF agrees to spend a reasonable amount of time needed to
accomplish its services under this Agreement, and to be available for telephone
calls, meetings and other matters on as needed basis.
3. TERM.Except as otherwise specified in paragraph 4 hereof, this
Agreement shall be effective for three (3) years from its execution by TGF and
the Company.
4. COMPENSATION.
(a) As full consideration for the services to be provided pursuant to
paragraph 2 of this Agreement (and in addition to the expenses provided for in
paragraph 5 hereof), the Company shall pay TGF the following fees:
(i) RETAINER FEE. The Company hereby agrees to pay TGF or TGF's
designee(s), an aggregate of One Hundred Eighty Thousand Dollars ($180,000),
payable in thirty-six (36) monthly installments of $5,000 on or before the tenth
(10th) day of each month during the term of this Agreement.
(ii) TRANSACTION FEES.
1. For financing secured on behalf of the
Company by or through TGF on terms and conditions reasonably acceptable to the
Company, the Company will pay TGF cash fees at the closing of such financing in
an amount equal to: (a) five percent (5%) of any and all funds committed and
available to the Company in any equity financing, and (b) three percent (3%) of
any and all funds committed and available to the Company in any debt financing.
2. In the event that TGF represents the
Company with respect to a merger, acquisition, investment, exchange, or other
disposition of securities or assets of the Company and/or a merger or
acquisition candidate, then the Company shall pay TGF a Transaction Fee equal to
5% of the total market value on the day of the closing of stock, cash, assets
and all other property (real or personal) exchanged or received, directly or
indirectly by the Company or any of its security holders in connection with any
such transaction, which Transaction Fee shall be payable by the Company in the
same form in which consideration is payable to the Company or its security
holders pursuant to such merger, acquisition, investment, exchange or other
disposition of securities or assets.
3. In the event TGF introduces the Company
to a joint venture partner or customer and sales develop as a result of the
introduction, the Company hereby agrees to pay a fee of five percent (5%) of the
before tax income generated from this introduction during the life of the
venture following the date of the first sale. For the computation of the before
tax income, sales shall be cash receipts less any applicable refunds, returns,
allowances, credits and shipping charges and monies paid by the Company by way
of settlement or judgment arising out of claims made by or threatened against
the Company. Commission payments shall be paid on the 15th day of each month
following the receipt of customer's payment. In the event any adjustments are
made to the total sales after the commission has been paid, the Company shall be
entitled to an appropriate refund or credit against future payments under this
Agreement.
(b) All fees to be paid pursuant to this Agreement, except as
otherwise specified, are due and payable to TGF at the closing or closings of
any transaction specified in paragraph 4 hereof. In the event that this
Agreement shall not be renewed or if terminated for any reason, notwithstanding
any such non-renewal or termination, TGF shall be entitled to a full fee as
provided under paragraph 4 and expense reimbursement as provided in paragraph 5
hereof, for any transaction for which the discussions were initiated during the
term of this Agreement and which is consummated within a period of twelve months
after non-renewal or termination of this Agreement.
(c) The Company and TGF mutually agree that the status of TGF is that
of an independent contractor operating at its own risk. TGF agrees that it is
not and will not act, represent, describe or hold itself out in any way,
directly or by implication, as a partner, joint venturer or agent of the Company
and will not describe itself as a representative for the Company, except with
respect to the performance of the services contemplated by paragraph 2 of this
Agreement.
(d) The obligation of the Company to pay the fees described in
subparagraph 4 of this Agreement shall be absolute and unconditional as long TGF
performs its obligations under this Agreement, and shall be payable without
offset, deduction or claim of any kind or character.
(e) The Company hereby acknowledges and consents that TGF may receive
additional fees or other compensation from one or more of the lenders,
subscribers, customers, investors or parties to any transaction described in
paragraph 4(a)(ii), or any sources of funding identified by TGF, for various
services which may include, in part, services related to this Agreement.
5. EXPENSES. In addition to the fees payable hereunder, and regardless of
whether any transaction set forth in paragraph 4 hereof is proposed or
consummated, the Company shall reimburse TGF for all fees and disbursements of
TGF's counsel and TGF's travel and out-of-pocket expenses incurred in connection
with the services performed by TGF pursuant to this Agreement, including without
limitation, hotels, food and associated expenses and long distance calls, but
excluding any expenses incurred by TGF in connection with any action, suit or
proceeding between TGF and the Company relating to the services to be performed
by TGF pursuant to this Agreement.
6. LIABILITY OF TGF.
(a) The Company acknowledges that all opinions and advice (written or
oral) given by TGF to the Company in connection with TGF's engagement are
intended solely for the benefit and use of the Company in considering the
transaction to which they relate, and the Company agrees that no person or
entity other than the Company shall be entitled to make use of or rely upon the
advice of TGF to be given hereunder, and no such opinion or advice shall be used
for any other purpose or reproduced, disseminated, quoted or referred to at any
time, in any manner or for any purpose, nor may the Company make any public
references to TGF, or use TGF's name in any annual reports or any other
statements, reports or releases of the Company without TGF's prior written
consent.
(b) The Company acknowledges that TGF makes no commitment whatsoever
as to making or causing others to make a market in the Company's securities or
as to recommending or advising its clients to purchase the Company's securities.
Research reports or corporate finance reports that may be prepared by TGF will,
when and if prepared, be done solely on the merits, and will be based upon the
independent judgment and analysis of TGF or any senior corporate finance
personnel of TGF. TGF agrees to use its best efforts to secure the financing
necessary to implement the Company's reasonable business plans.
7. TGF'S SERVICES TO OTHERS. The Company acknowledges that TGF or its
affiliates are in the business of providing financial advisory and investment
banking consulting advice to others. Nothing contained in this Agreement shall
be construed to limit or restrict TGF in conducting such business with others,
or in rendering such advice to others, except to any competitors of the Company.
8. COMPANY INFORMATION.
(a) The Company recognizes and confirms that, in advising the Company
and in fulfilling its engagement hereunder, TGF will use and rely on data,
material and other information furnished to TGF by the Company. The Company
acknowledges and agrees that in performing its services under this Agreement,
TGF may rely upon the data, material and other information supplied by the
Company without independently verifying the accuracy, completeness or veracity
of such data, material or other information.
(b) Except as contemplated by the terms of this Agreement or as
required by applicable law, TGF shall keep confidential all material, non-public
information provided to it by the Company, and shall not disclose such
information to any third party, other than such of its employees and advisors as
TGF determines have a need to know.
9. INDEMNIFICATION.
(a) (i) The Company shall indemnify and hold TGF harmless against any
and all liabilities, claims, lawsuits, including any and all awards and/or
judgments to which it may become subject under the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any other federal or state statue, at common law or
otherwise, insofar as said liabilities, claims and lawsuits (including awards
and/or judgments) arise out of or are in connection with the services rendered
by TGF or any transactions in connection with this Agreement, except for any
liabilities, claims and lawsuits (including awards and/or judgments), arising
out of and proximately caused by the reckless acts or omissions of TGF, or with
respect to which TGF is obligated to indemnify the Company under paragraph
9(b)(i) of this Agreement. In addition, the Company shall also indemnify and
hold TGF harmless against any and all costs and expenses, including reasonable
counsel fees, incurred or relating to the foregoing.
(ii) TGF shall give the Company prompt notice of any such
liability, claim or lawsuit which TGF contends is subject to the Company's
indemnification obligations under this Agreement, and the Company thereupon
shall be granted the right to take any and all necessary and proper action, at
its sole cost and expense, with respect to such liability, claim and lawsuit,
including the right to settle, compromise and dispose of such liability, claim
or lawsuit, excepting therefrom any and all proceedings or hearings before any
regulatory bodies and/or authorities.
(b) (i) TGF shall indemnify and hold the Company harmless against any
and all liabilities, claims and lawsuits, including any and all awards and/or
judgments to which it may become subject under the Securities Act, the Exchange
Act or any other federal or state statue, at common law or otherwise, insofar as
said liabilities, claims and lawsuits (including awards and/or judgments) arise
out of or are based upon an untrue statement or alleged untrue statement of a
material fact required to be stated or necessary to make the statement therein,
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Company by TGF for inclusion in any
registration statement or prospectus or any amendment or supplement thereto in
connection with any transaction to which this Agreement applies, except for any
liabilities, claims and lawsuits (including awards and/or judgments) with
respect to which the Company is obligated to indemnify TGF under paragraph
9(a)(i) of this Agreement. In addition, TGF shall also indemnify and hold
harmless the Company against any and all costs and expenses, including
reasonable counsel fees, incurred or relating to the foregoing.
(ii) The Company shall give to TGF prompt notice of any such
liability, claim or lawsuit which the Company contends is the subject to TGF's
indemnification obligations under this Agreement, and TGF thereupon shall be
granted the right to take any and all necessary and proper action, at its sole
cost and expense, with respect to such liability, claim and lawsuit, including
the right to settle, compromise or dispose of such liability, claim or lawsuit,
excepting therefrom any and all proceedings or hearings before any regulatory
bodies and/or authorities.
(c) In order to provide for just and equitable contribution under
this Agreement in any case in which (i) any person entitled to indemnification
under this paragraph 9 makes claim for indemnification pursuant hereto but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this paragraph 9 provides for indemnification in
such case, or (ii) contribution under this Agreement may be required on the part
of any such person in circumstances for which indemnification is provided under
this paragraph 9, then, and in each such case, the Company and TGF shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after any contribution from others) in such proportion taking
into consideration the relative benefits received by each party from the
transactions in connection with this Agreement, the parties' relative knowledge
and access to information concerning the matter with respect to which the claim
was assessed, the opportunity to correct and prevent any statement or omission
and other equitable considerations appropriate under the circumstances;
provided, however, that notwithstanding the above, in no event shall TGF shall
be required to contribute any amount in excess of 5% of the public offering
price of any equity securities, and 3% of the public offering price of any debt
securities offered in connection with this Agreement; and provided, that, in any
such case, no person guilty of a fraudulent misrepresentation (within the
meaning of section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Within fifteen (15) days after receipt by any party to this Agreement
(or its representative) of notice of the commencement of any action, suit or
proceeding, such party will, if a claim for contribution in respect thereof is
to be made against another party (the "Contributing Party"), notify the
Contributing Party of the commencement thereof, but the omission so to notify
the Contributing Party will not relieve it from any liability which it may have
to any other party other than for contribution hereunder. In case any such
action, suit or proceeding is brought against any party, and such party notifies
a Contributing Party or his or its representative of the commencement thereof
within the aforesaid fifteen (15) days, the Contributing Party will be entitled
to participate therein with the notifying party and any other Contributing Party
similarly notified. Any such Contributing Party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of the Contributing Party. The indemnification and contribution rights
contained in this paragraph 9 are in addition to any other rights and remedies
which either party hereto may have at law, in equity or otherwise.
10. COVENANTS OF THE COMPANY. The Company covenants and agrees that it
will:
(a) For the duration of this Agreement, furnish to TGF copies of such
financial statements and other periodic and special reports as the Company from
time to time furnish generally to holders of any class of its securities or to
its directors and officers, and promptly furnish TGF (i) a copy of each periodic
report the Company shall be required to file with the Securities and Exchange
Commission ("Commission"), (ii) a copy of every press release and every news
item and article with respect to the Company or its affairs which was released
by the Company, and (iii) such additional documents and information with respect
to the Company or its affairs or any future subsidiaries of the Company, as TGF
may from time to time reasonably request.
(b) Apply the net proceeds from any funding arranged by TGF according
to the "Use of Proceeds" that the Company shall be obligated to prepare prior to
any such funding; and provide to TGF any periodic reports requested by TGF
showing the actual disbursements of funds to monitor whether the "Use of
Proceeds" shall have been complied with. The Company will not apply funds in any
manner inconsistent with such "Use of Proceeds" except with TGF's prior written
consent.
(c) Provide TGF, upon its request, at the Company's sole expense,
with access to daily consolidated financial transfer sheets relating to the
Company's securities.
(d) Cause two (2) designees selected by TGF to be elected to the
Company's Board of Directors (the "Board") during each year of the term of this
Agreement and notify TGF of each meeting of the Board ("Representatives"). The
Representatives shall be entitled to receive reimbursement for all reasonable
costs incurred in attending such meetings. The Company further agrees that,
during the term of this Agreement, the number of seats on the Board shall be
five (5), which number shall not be changed without the prior written consent of
TGF, and the Company shall schedule no less than four (4) formal and in person
meetings of its Board per year, which meetings shall be held quarterly each year
and thirty (30) days advance written notice of such meetings shall be given to
the Representatives. The Company agrees to indemnify and hold TGF and the
Representatives harmless against any and all claims, actions, damages, costs and
expenses, and judgments arising solely out of the attendance and participation
of the Representatives at any such meeting described herein. In the event that
the Company shall maintain a liability insurance policy affording coverage for
the acts of its officers and directors, it shall include the Representatives as
an insured under such policy, if possible.
(e) Not issue any shares of Common Stock, Preferred Stock or any
warrants, options or other rights to purchase Common Stock or Preferred Stock
exceeding 5% of each class of aforesaid securities, in a single or a series of
related transactions, without the reasonable prior, written consent of TGF.
11. NOTICES. All notices, demands and requests required and permitted to
be given under the provisions of this Agreement shall be deemed duly given if
and when delivered personally or mailed by certified mail, postage prepaid,
addressed as follows or to such other address as The Company or TGF may
hereafter specify in writing:
If to The Company:
CORGENIX MEDICAL CORPORATION
00000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: , President
------------
If to TGF:
TransGlobal Financial Corporation
00000 X.X. Xxxxxxx 0, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Mustafoglu, President
12. GENERAL.
(a) This Agreement embodies the entire agreement and understanding
between the Company and TGF with respect to the subject matter hereof and it is
expressly agreed that any prior agreements or understandings between The Company
and TGF relating to the subject matter of this Agreement, whether oral or
written, are canceled by execution of this Agreement
(b) This Agreement shall be construed and governed in accordance with
the laws of the State of Florida.
(c ) This Agreement shall be binding upon and inure to the benefit of
the Company and TGF and their respective successors and assigns. Neither party
shall have the right to assign this Agreement, however, without the prior
written consent of the other party to this Agreement.
(d) No modifications or waiver of any provisions of this Agreement
shall be valid unless it is in writing and duly executed by the party to be
charged. No waiver at any time of any provision of this Agreement shall be
deemed a waiver of any other provision of this Agreement at that time or a
waiver of that or any other provision of this Agreement at any other time.
IN WITNESS WHEREOF, The Company and TGF have executed this Agreement as of
the day and year first above written.
CORGENIX MEDICAL CORPORATION:
By:
Its:
TransGlobal Financial Corporation:
By:
Xxxx X. Mustafoglu
President
EXHIBIT H
CORGENIX MEDICAL CORPORATION
CERTIFICATE OF DESIGNATIONS
OF PREFERENCES OF SERIES A 5%
CONVERTIBLE, PREFERRED STOCK
PURSUANT TO SECTION 78.1955(1) OF THE
GENERAL CORPORATION LAW OF NEVADA
The undersigned Xxxx Mustafoglu, being the President and the Secretary of
CORGENIX MEDICAL CORPORATION, a Nevada corporation (the "Corporation"), do
hereby make and execute this Certificate of Designations and do hereby certify
on behalf of the Corporation that:
1. They are respectively the duly elected and acting President and
Secretary of the Corporation.
2. On May 7, 1998 the Board of Directors of the Corporation duly adopted
the following resolutions designating shares of the Corporation's Preferred
Stock as Series A 5% Convertible Preferred Stock and fixing the voting powers,
designations, preferences, limitations, restrictions and relative rights
thereof:
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors by Article FOURTH of the Corporation's Certificate of Incorporation
and Section 78.1955(1) of the General Corporation Law of Nevada, there is hereby
established a series of shares of the authorized Preferred Stock of the
Corporation designated "Series A 5% Convertible Preferred Stock" (the "Series A
Preferred Stock"); that the shares constituting such series and to which this
resolution shall apply shall be One Million Five Hundred Thousand (1,500,000)
shares; and that the voting powers, designations, preferences, limitations,
restrictions and relative rights granted to or imposed on the Series A Preferred
Stock shall be as follows:
Section 1.DESIGNATION AND AMOUNT. The shares of such series shall be
designed as "Series A 5% Convertible, Preferred Stock" (herein referred to as
"Series A Preferred Stock"), having a par value per share equal to $.001, and
the number of shares constituting such series shall be 1,500,000.
Section 2.DIVIDENDS.
(a) The holders of Series A Preferred Stock shall be entitled to
receive dividends (the "Preferred Dividend") payable in cash or in shares of
Series A Preferred Stock, at the rate of $.05 per share per annum (the "Dividend
Rate") on a cumulative basis from the actual date of original issue of each
share of Series A Preferred Stock (the "Original Issue Date"), whether or not
declared, out of funds legally available therefore, payable quarterly in arrears
on the fifteenth day of each February, May, August, and November in each year
(each a "Dividend Payment Date"). Payments shall commence on August 15, 1998.
Each such Preferred Dividend shall be payable to the holders of record of the
Series A Preferred Stock at the close of business on the preceding December 31,
March 31, June 30, and September 30, respectively. Each dividend shall be
declared by the Board of Directors no more than fifteen (15) days prior to its
respective record date. Payments shall equal $.0125 per share on each Dividend
Payment Date or such lesser amount as shall result from any proration in respect
of any partial quarterly period. The amount of Preferred Dividends payable upon
the occurrence of any event described in Sections 3, 5 or 7 hereof shall be
computed by multiplying the applicable Dividend Rate by a fraction, the
numerator of which shall be the number of days since the preceding Dividend
Payment Date to the date of payment of such partial Preferred Dividend and the
denominator of which shall be 360. Any shares of Series A Preferred Stock issued
as a stock dividend shall be valued for purposes of the Dividend Rate at $1.00
per share of Series A Preferred Stock issued.
(b) The Dividend Rate shall be adjusted commencing twenty-four
(24) months after the Original Issue Date, by increasing the Dividend Rate to
$.10 per share per annum, with the quarterly Preferred Dividend being increased
to $.025 per share, and thereafter on each succeeding twelve (12) month
anniversary of the Original Issue Date, the Dividend Rate shall be increased
such that during the fourth and fifth years following the Original Issue Date
the Dividend Rate shall be $.12 and $.14, and the quarterly Preferred Dividend
shall be $.03 and $.035, respectively, and so on until all of the outstanding
shares of Series A Preferred Stock shall have been redeemed or converted as
provided in this Certificate of Designations.
(c) So long as any of the shares of Series A Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of or options, warrants or rights to subscribe for or purchase shares of Common
Stock) shall be declared or paid or set apart for payment by the Corporation or
other distribution of cash or other property declared or made directly or
indirectly by the Corporation or any affiliate or any person acting on behalf of
the Corporation or any of its affiliates with respect to any shares of Common
Stock, Preferred Stock or other capital stock over which the Series A Preferred
Stock has preference or priority in the payments of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation ("Junior Stock"), nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a purchase or other acquisition of
Common Stock made for purposes of any employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking-fund for the redemption of any shares of any
such stock) directly or indirectly by the Corporation or any affiliate or any
person acting on behalf of the Corporation or any of its affiliates (except by
conversion into or exchange for Junior Stock), nor shall any other cash or other
property otherwise be paid or distributed to or for the benefit of any holder of
shares of Junior Stock in respect thereof, directly or indirectly, by the
Corporation or any affiliate or any person acting on behalf of the Corporation
or any of its affiliates unless in each case (x) the full Preferred Dividends
(including all accumulated, accrued and unpaid dividends) on all outstanding
shares of Series A Preferred Stock shall have been paid or such dividends have
been declared and set apart for payment for the current dividend periods with
respect to the Series A Preferred Stock and (y) sufficient funds shall have been
paid or set apart for the payment of the full Preferred Dividend for the current
dividend period with respect to the Series A Preferred Stock.
(d) If and whenever a quarterly Preferred Dividend is not paid
on a Dividend Payment Date (whether or not declared), then the amount of such
Preferred Dividend remaining in arrears and unpaid from time to time shall bear
interest from such Dividend Payment Date until the date it is paid in full at an
annual rate equal to ten percent (10%). Interest payable in respect of Preferred
Dividends which are in arrears shall be computed on the basis of twelve (12),
thirty (30) day months and a 360-day year. No payment shall be applied to the
Preferred Dividend due on a Dividend Payment Date unless and until all arrears,
including interest thereon, with respect to accumulated, accrued but unpaid
Preferred Dividends shall have been paid.
Section 3.LIQUIDATION, DISSOLUTION, OR WINDING UP.
(a) In the event of any liquidation, dissolution, or winding up
of the Corporation, whether voluntary or involuntary, the holders of the Series
A Preferred Stock shall be entitled to be paid first out of the assets of the
Corporation available for distribution to holders of the Corporation's capital
stock of all classes and before any sums shall be paid or any assets distributed
among the holders of shares of any other class or series of capital stock of the
Corporation, including Common Stock, an amount per share equal to One and
10/100's Dollar ($1.10) ("Base Preference Amount") plus an amount equal to all
the accrued but unpaid Preferred Dividends (whether or not declared), and the
amount equal to all interest, if any, on any Preferred Dividends in arrears, in
each case to the date of final distribution to such holders (the "Preference
Amount"). The Preference Amount shall be adjusted commencing twelve (12) months
after the Original Issue Date, by increasing the Base Preference Amount to One
and 20/100's Dollars ($1.20), and thereafter on each succeeding twelve (12)
month anniversary of the Original Issue Date the Preference Amount shall be
increased by an amount equal to seven percent (7%) of the Base Preference Amount
in effect for the preceding twelve (12) month period, such that during the
third, fourth and fifth years following the Original Issue Date, the Preference
Amount shall be $1.284, $1.37388, and $1.4700516 respectively, and so on, on
each anniversary of the Original Issue Date until all of the outstanding shares
of Series A Preferred Stock shall have been redeemed or converted as provided in
this Certificate of Designations. Until the holders of the Series A Preferred
Stock have been paid the Preference Amount in full, no payment will be made to
any holder of Junior Stock upon the liquidation, dissolution or winding up of
the Corporation. If the assets of the Corporation shall be insufficient to
permit the payment in full to the holders of the Series A Preferred Stock of the
Preference Amount then the entire assets of the Corporation available for such
distribution shall be distributed ratably among the holders of the Series A
Preferred Stock in proportion to the Preference Amount each such holder is
otherwise entitled to receive. After payment of the Preference Amount shall have
been made in full to the holders of the Series A Preferred Stock or funds
necessary for such payment shall have been set aside by the Corporation in trust
for the account of holders of the Series A Preferred Stock so as to be available
for such payment, holders of the Series A Preferred Stock shall not be entitled
to participate in the distribution of any remaining assets of the Corporation.
(b) Any consolidation, merger or a statutory share exchange
(other than (i) merger with a wholly-owned subsidiary of the Corporation, (ii) a
mere reincorporation transaction, or (iii) a merger pursuant to which the
Corporation is the surviving entity and the capitalization of the Corporation
remains unchanged) in which the outstanding shares of capital stock of the
Corporation are exchanged for securities or other consideration of or from
another corporation, or a sale of all or substantially all the assets or stock
of the Corporation, shall be deemed to be a liquidation, dissolution, or winding
up of the affairs of the Corporation within the meaning of this Section 3, and
shall entitle the holders of the Series A Preferred Stock to receive on the
effective date of such event the Preference Amount, in cash, securities or other
property; provided, however, that any such event shall not be so regarded as a
liquidation, dissolution, or winding up of the affairs of the Corporation with
respect to the Series A Preferred Stock if the holders of two-thirds (2/3) of
the outstanding shares of the Series A Preferred Stock approve such event or
elect not to have any such event deemed to be a liquidation, dissolution, or
winding up of the affairs of the Corporation by giving written notice thereof to
the Corporation at least ten (10) days prior to the effective date of such
event.
(c) Whenever the distribution provided for in this Section 3
shall be paid in property other than cash, the value of such distribution shall
be the fair value thereof determined in good faith by the Board of Directors of
the Corporation.
Section 0.XXXXXX RIGHTS.
(a) Except as otherwise required by law, or as specifically
provided herein, the holders of Series A Preferred Stock shall have no voting
rights and powers; provided, however, the holders of Series A Preferred Stock
shall be entitled to vote pursuant to the provisions of Sections 4(b) and 4(c),
which govern the rights of the holders of Series A Preferred Stock with respect
to the election or removal of directors. Notwithstanding the foregoing, the
holders of the Series A Preferred Stock shall be entitled to notice of and to
attend any stockholders' meeting.
(b) For a period of twenty-four (24) months from and after the
Original Issue Date, the holders of the Series A Preferred Stock, voting
separately as one class, shall have the exclusive and special right at all times
to elect two (2) directors (the "Preferred Directors") to the Board of Directors
of the Corporation provided, however, that so long as any shares of Series A
Preferred Stock are outstanding, the Board of Directors shall not consist of
more than five (5) members, unless the Preferred Directors voting as a class,
shall have previously approved any such increase to the Board of Directors
beyond five (5) members. The Preferred Directors shall be elected by the vote of
the holders of a majority, and removed by the vote of the holders of two-thirds
(2/3), of the shares of Series A Preferred Stock then outstanding. The right of
holders of the Series A Preferred Stock contained in this Section 4(b) may be
exercised either at a special meeting of the holders of Series A Preferred Stock
or at any annual or special meeting of the stockholders of the Corporation, or
by written consent of such holders in lieu of a meeting. Upon the written
request of the holders of record of at least a majority of the Series A
Preferred Stock then outstanding, the Secretary of the Corporation shall call a
special meeting of the holders of Series A Preferred Stock for the purpose of
(i) removing any Preferred Directors elected pursuant to this Section 4(b)
and/or (ii) electing a director to fill a vacancy of the directorship authorized
to be filled by the holders of Series A Preferred Stock pursuant to this Section
4(b). Such meeting shall be held at the earliest practicable date permitted by
law. At any meeting held for the purpose of electing or removing a Preferred
Directors, the presence, in person or by proxy, of the holders of record of a
majority of the Series A Preferred Stock then outstanding shall be required to
constitute a quorum of the Series A Preferred Stock for such election. A vacancy
in the directorship to be elected by the holders of Series A Preferred Stock
pursuant to this Section 4(b) may be filled only by vote or written consent in
lieu of a meeting of the holders of a majority of the shares of Series A
Preferred Stock then outstanding and may not be filled by the remaining
directors.
(c) If and whenever two (2) quarterly dividends (whether or not
consecutive) payable on the Series A Preferred Stock shall be in arrears (which
shall, with respect to any such quarterly dividend, mean that any such dividend
has not been paid in full), whether or not earned or declared, the number of
directors then constituting the Board of Directors shall be increased to a
number which allows for holders of the Series A Preferred Stock to elect a
majority of the entire Board of Directors at a special meeting of stockholders
called as hereinafter provided. Whenever all arrears in dividends on the Series
A Preferred Stock (together with interest on dividends in arrears pursuant to
Section 2(d) above) shall have been paid and dividends thereon for the current
quarterly dividend period shall have been paid or declared and set apart for
payment, then the right of the holders of the Series A Preferred Stock to elect
such additional directors shall cease (but subject always to the same provision
of the vesting of such special voting rights in the case of any similar future
arrearages in two (2) quarterly dividends), and the terms of office of all
persons elected as additional directors by the holders of the Series A Preferred
Stock pursuant to this Section 4(c) shall forthwith terminate and, if necessary,
the number of the Board of Directors shall be reduced accordingly. At any time
after such additional voting power shall have been so vested in the holders of
the Series A Preferred Stock, the Secretary of the Corporation may, and upon the
written request of any holder of Series A Preferred stock (addressed to the
Secretary at the principal office of the Corporation) shall, call a special
meeting of the holders of the Series A Preferred Stock for the election of the
additional directors to be elected by them as herein provided, such call to be
made by notice similar to that provided in the Bylaws of the Corporation for a
special meeting of the stockholders or as required by law. If any such special
meeting required to be called as above provided shall not be called by the
Secretary within twenty (20) days after receipt of any such request, then any
holder of Series A Preferred Stock may call such meeting, upon the notice above
provided, and for that purpose shall have access to the stock books of the
Corporation. The additional Preferred Directors elected at any special meeting
shall hold office until the next annual meeting of the stockholders or special
meeting held in lieu thereof if such office shall not have previously terminated
as above provided. If any vacancy shall occur among the additional Preferred
Directors, a successor shall be elected by the Board of Directors, upon the
nomination of the then remaining Preferred Directors or the successor of such
remaining directors, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as above provided.
Section 5.CONVERSION RIGHTS. The holders of the Series A
Preferred Stock shall have the following conversion rights:
(a) RIGHT TO CONVERT. Each share of Series A Preferred Stock
shall be convertible at any time, and from time to time, at the option of the
holder thereof, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing One Dollar ($1.00) (the "Numerator")
by the Conversion Price (as defined below) in effect at the time of conversion.
The conversion price at which shares of Common Stock shall be deliverable upon
conversion of Series A Preferred Stock without the payment of additional
consideration by the holder thereof (the "Conversion Price") initially shall be
One and No/100 Dollars ($1.00). Such initial Conversion Price, and the rate at
which shares of Series A Preferred Stock may be converted into shares of Common
Stock, shall be subject to adjustment as provided below. The conversion rights
of the holders of Series A Preferred Stock shall terminate (i) in the event of a
liquidation of the Corporation, at the close of business on the first full day
preceding the date fixed for the payment of any amounts distributable on
liquidation to the holders of Series A Preferred Stock; and (ii) in the event
shares of Series A Preferred Stock are called for redemption pursuant to Section
7 hereof, at the close of business on the Redemption Date (as defined in Section
7(a) below), unless the Corporation shall default in making payment in full of
the Redemption Price.
(b) ADJUSTMENT TO CONVERSION PRICE UPON OCCURRENCE OF
EXTRAORDINARY COMMON STOCK EVENT. Upon the happening of an Extraordinary Common
Stock Event (as hereinafter defined), the Conversion Price for the Series A
Preferred Stock, simultaneously with the happening of such Extraordinary Common
Stock Event, shall be adjusted by multiplying the then-effective Conversion
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such Extraordinary Common Stock
Event and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such Extraordinary Common Stock Event, and the
product so obtained thereafter shall be the Conversion Price for the Series A
Preferred Stock. The Conversion Price, as so adjusted, shall be readjusted in
the same manner upon the happening of any successive Extraordinary Common Stock
Event(s). "Extraordinary Common Stock Event" shall mean (i) the issuance of
additional shares of Common Stock as a dividend or other distribution on
outstanding Common Stock, (ii) a stock split or subdivision of outstanding
shares of Common Stock into a greater number of shares of Common Stock, or (iii)
a reverse stock split or combination of outstanding shares of Common Stock into
a smaller number of shares of Common Stock.
(c) RECAPITALIZATION OR RECLASSIFICATION. If the Common Stock
issuable upon the conversion of the Series A Preferred Stock shall be changed
into the same or a different number of shares of any class or classes of stock
of the Corporation, whether by recapitalization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for in Section 5(b) hereof, or a reorganization, merger, share exchange,
consolidation, or sale of assets provided for in Section 5(d) hereof), then and
in each such event the holder of each share of Series A Preferred Stock shall
have the right thereafter to convert such share into the kind and amount of
shares of stock and other securities and property receivable upon such
recapitalization, reclassification, or other change by holders of the number of
shares of Common Stock into which such share of Series A Preferred Stock might
have been converted immediately prior to such recapitalization,
reclassification, or change, all subject to further adjustment as provided
herein.
(d) CAPITAL REORGANIZATION, MERGER, SHARE EXCHANGE,
CONSOLIDATION, OR SALE OF ASSETS. If at any time or from time to time there
shall be a capital reorganization of the Common Stock, including a merger, share
exchange, consolidation, or sale of all or substantially all of the assets of
the Corporation (other than a subdivision or combination of shares or stock
dividend provided for in Section 5(b) hereof or a recapitalization or
reclassification provided for in Section 5(c) hereof), then, as a part of such
reorganization, provision shall be made so that the holders of the Series A
Preferred Stock thereafter shall be entitled to receive, upon conversion of each
share of the Series A Preferred Stock, the number of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
into which such shares of Series A Preferred Stock might have been converted
immediately prior to such capital reorganization would have been entitled to
receive. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 5 with respect to the rights of
the holders of the Series A Preferred Stock after the reorganization to the end
that the provisions of this Section 5 (including adjustment of the Conversion
Price then in effect and the number of shares acquired upon conversion of the
Series A Preferred Stock) shall be applicable after that event in as nearly
equivalent a manner as may be practicable. Notwithstanding the foregoing, in the
case of a consolidation, merger, share exchange, or sale of all or substantially
all the assets of the Corporation, the provisions of Section 3(b) shall apply to
the Series A Preferred Stock, and this Section 5(d) shall not apply, unless, as
provided in Section 3(b) the holders of two-thirds (2/3) of the outstanding
shares of Series A Preferred Stock elect that such event shall not be deemed to
be a liquidation, dissolution, or winding up of the affairs of the Corporation.
(e) CERTAIN DILUTIVE ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of
this Section 5(e), the following definitions apply:
(1) "Options" shall mean rights,
options, or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities (as defined below), except for (A)
warrants to purchase an aggregate of 2,000,000 shares of Common Stock
outstanding on the Original Issue Date (the "Anti-Dilution Warrants"); (B)
warrants to purchase an aggregate of 1,000,000 shares of Common Stock granted
and reserved for issuance on the Original Issue Date (the "Unit Warrants") and
(C) options to purchase shares of Common Stock of the Corporation pursuant to an
Incentive Stock Plan of the Corporation approved by the holders of shares of
Common Stock and Series A Preferred Stock, voting as classes, provided such
options each are exercisable at a price equal to the fair market value of the
Common Stock on the date such option was granted ("Approved ISOs").
(2) "Convertible Securities" shall mean
any evidences of indebtedness, shares of stock (other than Common Stock and
Series A Preferred Stock) or other securities convertible into or exchangeable
for Common Stock.
(3) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or deemed to be issued pursuant to
Section 5(e)(iii)) by the Corporation after the Original Issue Date, other than
shares of Common Stock issued or issuable upon (i) conversion of shares of
Series A Preferred Stock or as a dividend or distribution on Series A Preferred
Stock; (ii) the exercise of the Anti-Dilution Warrants; (iii) the exercise of
the Unit Warrants; and (iv) the exercise of the Approved ISO's.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. Any
provision herein to the contrary notwithstanding, no adjustment in the number of
shares of Common Stock into which shares of Series A Preferred Stock is
convertible shall be made, by adjustment in the Conversion Price, unless the
consideration per share (determined pursuant to Section 5(e)(v) hereof) for an
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the Fair Market Value (as defined in Section 5(h)
below) on the date of the issue of such Additional Shares of Common Stock.
(iii)ISSUE OF OPTIONS AND CONVERTIBLE
SECURITIES. In the event the Corporation at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible Securities or
shall fix a record date for the determination of holders of any class of
securities then entitled to receive any such Options or Convertible Securities,
then the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of business on
such record date, provided that Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 5(e)(v) hereof) of such Additional Shares of Common Stock
would be less than the Fair Market Value (as defined in Section 5(h) below) on
the date of such issue, or such record date, as the case may be, and provided
that in any such case in which Additional Shares of Common Stock are deemed to
be issued:
(1) no further adjustments in the
Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the Corporation, or
decrease or increase in the number of shares of Common Stock issuable upon the
exercise, conversion or exchange thereof, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities, provided, however, that no such
adjustment of the Conversion Price shall affect Common Stock previously issued
upon conversion of shares of Series A Preferred Stock;
(3) upon the expiration of any such
Options or any rights of conversion or exchange under such Convertible
Securities that shall not have been exercised, the Conversion Price computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as if:
(A) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares of Common
Stock issued were the shares of Common Stock, if any, actually issued upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the consideration
actually received by the Corporation for the issue of all such Options, whether
or not exercised, plus the consideration actually received by the Corporation
upon such exercise, or for the issue of all such Convertible Securities that
were actually converted or exchanged, plus the additional consideration, if any,
actually received by the Corporation upon such conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually issued
upon the exercise thereof were issued at the time of issue of such Options, and
the consideration received by the Corporation for the Additional Shares of
Common Stock deemed to have been then issued was the consideration actually
received by the Corporation for the issue of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the
Corporation (determined pursuant to Section 5(e)(v)) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
(4) no readjustment pursuant to Section
5(e)(iii)(2) or (3) above shall have the effect of increasing the Conversion
Price to an amount which exceeds the lower of (a) the Conversion Price prior to
the initial adjustment to which the readjustment applies, or (b) the Conversion
Price that would have resulted from any issuance of Additional Shares of Common
Stock between the date of the initial adjustment date and such readjustment
date; and
(5) in the event of any change in the
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of any Option or Convertible Security, including, but not limited to, a
change resulting from the antidilution provisions thereof, the Conversion Price
then in effect shall forthwith be readjusted to such Conversion Price as would
have been obtained had the adjustment which was initially made upon the issuance
of such unexercised Option or unconverted Convertible Security, been made upon
the basis of such subsequent change, but no further adjustment shall be made for
the actual issuance of Common Stock upon the exercise or conversion of any such
Option or Convertible Security.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation at
any time after the Original Issue Date shall issue Additional Shares of Common
Stock (including Additional Shares of Common Stock deemed to be issued pursuant
to Section 5(e)(iii)), without consideration or for a consideration per share
less than the Fair Market Value (as defined in Section 5(h) below) on the date
of such issue, then and in such event, the Conversion Price shall be reduced to
a price (calculated to the nearest cent) equal to either (A) the per share
consideration for such Additional Shares of Common Stock (or deemed Additional
Shares of Common Stock) pursuant to Section 5(e)(iii), or (B) in the case of
Additional Shares of Common Stock issued (or deemed to have been issued) without
consideration, the par value of the Common Stock. The provisions of this Section
5(e)(iv) do not apply if the provisions of any of Section 5(b), (c) or (d)
apply.
(v) DETERMINATION OF CONSIDERATION. The
consideration received by the Corporation for the issue of any Additional Shares
of Common Stock shall be computed as follows:
(1) CASH, PROPERTY, AND OTHER
CONSIDERATION. Such consideration shall:
A. insofar as it consists of
cash, be computed as the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
B. insofar as it consists of
property, services, or other consideration other than cash, be computed at the
fair value thereof at the time of such issue, as determined in good faith by the
Board of Directors; and
C. in the event Additional
Shares of Common Stock are issued together with other shares or securities or
other assets of the Corporation for consideration which covers both, be the
proportion of the consideration so received, computed as provided in clauses (a)
and (b) above, as is determined in good faith by the Board of Directors.
(2) OPTIONS AND CONVERTIBLE
Securities. The consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued pursuant to Options
and Convertible Securities, shall be deemed to be the sum of the consideration
paid for such Option or Convertible Security, if any, plus the lowest
consideration per share then payable upon the exercise of Options, as set forth
in the instruments relating to such Options or Convertible Securities, without
regard to any provision contained therein designed to protect against dilution.
If Options or Convertible Securities are issued together with other securities
or instruments of the Corporation, the Board of Directors shall determine in
good faith the amount of consideration paid for such Option or Convertible
Securities.
(f) CERTIFICATE AS TO ADJUSTMENTS. In each case of an adjustment
or readjustment of the Conversion Price of the Series A Preferred Stock, the
Corporation will furnish each holder of the Series A Preferred Stock with a
certificate prepared by the Chief Financial Officer of the Corporation showing
such adjustment or readjustment and stating in detail the facts upon which such
adjustment or readjustment is based.
(g) EXERCISE OF CONVERSION PRIVILEGE. To exercise its conversion
privilege, a holder of Series A Preferred Stock shall surrender the
certificate(s) representing the shares being converted to the Corporation at its
principal office, accompanied by written notice to the Corporation at that
office that such stockholder elects to convert such shares (a "Conversion
Notice"). The Conversion Notice also shall state the name(s) and address(es) in
which the certificate(s) for shares of Common Stock issuable upon such
conversion shall be issued. The certificate(s) for shares of Series A Preferred
Stock surrendered for conversion shall be accompanied by proper assignment
thereof to the Corporation or in blank. The date when the Conversion Notice is
received by the Corporation together with the certificate(s) representing the
shares of Series A Preferred Stock being converted shall be the "Conversion
Date." As promptly as practicable after the Conversion Date, the Corporation
shall issue and deliver to the holder of the shares of Series A Preferred Stock
being converted, or on its written order, such certificate(s) as it may request
of the number of whole shares of Common Stock issuable upon the conversion of
such shares of Series A Preferred Stock in accordance with the provisions of
this Section 5 and cash, as provided in Section 5(h), in respect of any fraction
of a share of Common Stock issuable upon such conversion. Such conversion shall
be deemed to have been effected immediately prior to the close of business on
the Conversion Date, and at such time the rights of the holder as a holder of
the converted shares of Series A Preferred Stock shall cease and the person(s)
in whose name(s) any certificate(s) for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder(s) of record of
the shares of Common Stock represented thereby.
(h) CASH IN LIEU OF FRACTIONAL SHARES. No fractional shares of
Common Stock or scrip representing fractional shares shall be issued upon the
conversion of shares of Series A Preferred Stock. Instead of any fractional
shares of Common Stock that otherwise would be issuable upon conversion of a
series of Series A Preferred Stock, the Corporation shall pay to the holder of
the shares of Series A Preferred Stock that were converted a cash adjustment in
respect of such fractional shares in an amount equal to the same fraction of the
Fair Market Value price per share of the Common Stock at the close of business
on the Conversion Date. "Fair Market Value" shall mean (i) in the case of a
security listed or admitted to trading on any securities exchange, the last
reported sale price, regular way (as determined in accordance with the practices
of such exchange), on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day (and in the case of a
security traded on more than one national securities exchange, at such price or
such average, upon the exchange on which the volume of trading during the last
calendar year was the greatest), (ii) in the case of a security not then listed
or admitted to trading on any securities exchange, the last reported sale price
on such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reputable quotation service
designated by the Corporation, (iii) in the case of a security not then listed
or admitted to trading on any securities exchange and as to which no such
reported sale price or bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a reputable
quotation service, or the Wall Street Journal, or if there are no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported, and (iv) in the case of a
security determined by the Corporation's Board of Directors as not having an
active quoted market or in the case of other property, such fair market value as
shall be determined by the Board of Directors. The determination as to whether
any fractional shares are issuable shall be based upon the total number of
shares of Series A Preferred Stock being converted at any one time by any holder
thereof, not upon each share of Series A Preferred Stock being converted.
(i) RESERVATION OF COMMON STOCK. The Corporation at all times
shall reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the shares
of the Series A Preferred Stock, such number of its shares of Common Stock as
from time to time shall be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock.
Section 6.RESTRICTIONS AND LIMITATIONS: HOLDERS OF SERIES A
PREFERRED STOCK VOTING AS A CLASS; AND PREFERRED DIRECTORS VOTING
AS A CLASS.
(a) So long as any shares of Series A Preferred Stock remain
outstanding, in addition to any other vote or consent of stockholders required
by law or the Certificate of Incorporation, neither the Corporation, nor any
subsidiary of the Corporation MUTATIS MUTANDIS, will take any of the following
actions without the affirmative vote or consent (with each share of Series A
Preferred Stock being entitled to one vote) of the holders of at least
two-thirds (2/3) of the outstanding shares of the Series A Preferred Stock
voting as a class, given in writing or by resolution adopted at a meeting called
for such purpose:
(i) amend the Certificate of Incorporation
or Bylaws of the Corporation if such amendment would:
(1) reduce the Dividend Rate on the
Series A Preferred Stock provided for herein, make such dividends noncumulative,
defer the date from which dividends will accrue, cancel accrued and unpaid
dividends, or change the relative seniority rights of the holders of the Series
A Preferred Stock as to the payment of dividends in relation to the holders of
any other capital stock of the Corporation;
(2) reduce the amount payable to the
holders of the Series A Preferred Stock upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, or change the
relative seniority of the liquidation preferences of the holders of the Series A
Preferred Stock;
(3) reduce the Redemption Price
specified in Section 7 hereof with respect to the Series A
Preferred Stock;
(4) cancel or modify the conversion
rights of the Series A Preferred Stock provided for in Section 5
hereof; or
(5) adversely affect any of the rights,
preferences or privileges provided for herein for the benefit of any shares of
Series A Preferred Stock; provided that no issuance of equity securities which
shall have been approved under Section 6(a)(iv) hereof (or which does not
require approval under such Section 6(a)(iv)) shall be deemed to have such an
adverse effect.
(ii) redeem, purchase or otherwise acquire
for value (or pay into or set aside for a sinking fund for such purpose) any
share or shares of Series A Preferred Stock otherwise than by redemption of
Series A Preferred Stock in accordance with Section 7 hereof or by conversion in
accordance with Section 5 hereof;
(iii)redeem, purchase or otherwise acquire
(or pay into or set aside for a sinking fund for such purpose) any share or
shares of Junior Stock, except for a purchase or other acquisition of Common
Stock made for purposes of any employee incentive or benefit plan of the
Corporation or any subsidiary;
(iv) authorize or issue, or obligate itself
to issue, any other equity security (1) senior to or on a parity with the Series
A Preferred Stock as to dividend rights or redemption rights or liquidation
preferences or (2) which entitles the holders thereof to voting rights equal to
at least twenty percent (20%) of the outstanding voting power of all capital
stock of the Corporation or to elect directors which constitute twenty percent
(20%) or more of the Board of Directors;
(v) effect any sale, lease, assignment,
transfer, or other conveyance of all or substantially all of the assets of the
Corporation or any of its subsidiaries, or any consolidation, merger or a share
exchange involving the Corporation or any of its subsidiaries, except (i) a
merger with a wholly-owned subsidiary of the Corporation, (ii) a mere
reincorporation transaction, (iii) a merger pursuant to which the Corporation is
the surviving entity and the capitalization of the Corporation remains
unchanged, or (iv) upon an election by the holders of Series A Preferred Stock
pursuant to Section 3(b) hereof;
(vi) increase or decrease (other than by
redemption or as a result of the conversion thereof) the total
number of authorized shares of any class or series of capital
stock; or
(vii)effect any change in the rights or
limitations of the Common Stock, or any recapitalization of the
Corporation.
(b) PREFERRED DIRECTORS VOTING AS A CLASS. In addition to any
other rights of approval attaching to the Series A Preferred Stock under this
Certificate of Designations, the approval of the Preferred Directors, voting as
a class, shall be required prior to the Corporation, or any subsidiary of the
Corporation, issuing additional securities, other than securities underlying the
Anti-Dilution Warrants, Unit Warrants or Approved ISO's, entering into a merger,
reorganization, share exchange or acquisition transaction, selling all, or
substantially all of its assets, or incurring additional indebtedness or making
capital expenditures other than in accordance with the Corporation's Business
Plan approved as contemplated by Section 7.9(a) of the 5% Series A Convertible
Preferred Stock Offshore Securities Purchase Agreement among the Corporation and
the holders of shares of Series A Preferred Stock outstanding on the Original
Issue Date ("Securities Purchase Agreement").
(c) SPECIAL VOTING RIGHT. For a period equal to the greater of
(a) twenty-four (24) months from the Original Issue Date or (b) the time when
there shall be less than 250,000 shares of the Series A Preferred Stock issued
and outstanding, in addition to any other remedies available under this
Certificate of Designations, at law or in equity, if the Corporation breaches
any of the provisions of this Certificate of Designations, including without
limitation, the restrictions and limitations set forth in Section 6 of this
Certificate of Designations, and/or breaches any covenant contained in Section 7
of the Securities Purchase Agreement, and such breach shall continue for a
period of forty-five (45) days after written notice of such breach shall have
been sent to the Corporation in accordance with Section 12.12 of the Securities
Purchase Agreement, the holders of shares of Series A Preferred Stock will be
empowered with a number of votes sufficient to elect a majority of the Board of
Directors of the Corporation, which right will be exercisable by TransGlobal
Financial Corporation, as financial advisor to the Corporation and holder of a
voting proxy over each of the shares of Series A Preferred Stock issued by the
Corporation ("Special Voting Right"). The actual number of votes represented by
the Special Voting Right upon the occurrence of any particular breach will be
equal to (A) the total number of the Corporation's common equivalent shares then
outstanding minus (B) the number of shares of Common Stock then held by the
purchasers of shares of Common Stock in the Company's equity offering described
in the Information Statement of REAADS Medical Products, Inc. ("REAADS"), dated
April 8, 1998, as amended by a supplement dated April 23, 1998 describing a
proposed merger relating to REAADS and the Company. The Special Voting Right
will continue until the first to occur of (i) remedy of the noncompliance or
(ii) the date when less than 250,000 shares of Preferred Stock remain
outstanding, and upon each and every vesting of the Special Voting Right, the
Corporation shall reconstitute the Board of Directors in the manner described in
Section 4(c) of the Certificate of Designations.
Section 7.REDEMPTION.
(a) REDEMPTION AT THE OPTION OF THE CORPORATION. Shares of
Series A Preferred Stock shall not be redeemable by the Corporation at any time
prior to the second anniversary of the Original Issue Date. On and after the
second (2nd) anniversary of the Original Issue Date, at the option of the
Corporation, the Corporation may fix a date (the "Redemption Date") on which it
shall redeem all (but not less than all) of the then outstanding shares of
Series A Preferred Stock by paying in cash, out of funds legally available
therefor, to the holders thereof and in respect of each such share of Series A
Preferred Stock, the Redemption Price (as defined below), (i) at any time prior
to the fourth anniversary of the Original Issue Date but only in the event that
the average bid price of the Common Stock of the Corporation exceeds Five and
No/100 Dollars ($5.00) per share (without giving effect to any stock splits,
stock dividends or recapitalizations after the Original Issue Date), with
respect to each of the twenty (20) consecutive Trading Days (as defined below)
immediately preceding the date of the Redemption Notice (as defined in Section
7(b) below); or (ii) at any time on or after the fourth anniversary of the
Original Issue Date. A holder of Series A Preferred Stock may elect, by written
notice delivered to the Corporation not less than ten (10) days prior to the
Redemption Date, to waive its right to have redeemed all (but not less than all)
of the shares of Series A Preferred Stock held by such holder which are eligible
to be redeemed on such Redemption Date, provided that on such Redemption Date
each such share of Series A Preferred Stock which is not redeemed shall be
converted automatically into shares of Common Stock at the Conversion Price then
in effect on such Redemption Date. The term "Trading Day" shall mean any day
other than Saturday or Sunday on which national securities exchanges are open
for trading and trades in the Corporation's Common Stock occur. The term
"Redemption Price" shall mean an amount per share equal to the Preference Amount
(as the same shall be adjusted from time to time in accordance with Section 3(a)
hereof).
(b) PROCEDURES FOR REDEMPTION OF SERIES A PREFERRED STOCK. At
least thirty (30) days but not more than forty-five (45) days prior to the
Redemption Date the Corporation shall mail a written notice, first class postage
prepaid, to each holder of record at the close of business on the business day
preceding the day on which notice is given, of the Series A Preferred Stock to
be redeemed, at the address last shown on the records of the Corporation for
such holder, notifying such holder of the redemption to be effected, specifying
(i) that all shares of Series A Preferred Stock shall be redeemed from such
holder, (ii) the Redemption Date, (iii) the Redemption Price, (iv) the place at
which payment may be obtained, (v) advising such holder of its right to elect to
waive its right to have all (but not less than all) such shares redeemed and
that, if such election is made, such shares of Series A Preferred Stock which
are not redeemed shall be converted automatically into shares of Common Stock at
the Conversion Price then in effect (setting forth such Conversion Price), and
(vi) calling upon such holder to surrender to the Corporation, in the manner and
at the place designated, its certificate or certificates representing the shares
to be redeemed (the "Redemption Notice"). On or after the Redemption Date, each
holder of Series A Preferred Stock to be redeemed shall surrender to the
Corporation the certificate or certificates representing such shares, in the
manner and at the place designated in the Redemption Notice, and thereupon the
Redemption Price of such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof and
each surrendered certificate shall be canceled. From and after each Redemption
Date, unless there shall have been a default in payment of the Redemption Price,
any shares of Series A Preferred Stock redeemed on such Redemption Date shall
not be entitled to any further rights as Series A Preferred Stock and shall not
be deemed outstanding for any purpose. If the funds of the Corporation legally
available for redemption of shares of Series A Preferred Stock on any Redemption
Date are insufficient to redeem the total number of shares of Series A Preferred
Stock to be redeemed on such date, those funds which are legally available will
be used to redeem the maximum possible number of such shares ratably among the
holders of such shares to be redeemed based upon the number of shares of Series
A Preferred Stock held by each such holder. The shares of Series A Preferred
Stock not redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of shares of Series A
Preferred Stock such funds will be used immediately to redeem the balance of the
shares which the Corporation has become obliged to redeem on any Redemption
Date, but which it has not redeemed, it being understood that any such
redemption shall not constitute a waiver by a holder of Series A Preferred Stock
of any rights arising from the failure to redeem on the Redemption Date.
Section 0.XX REISSUANCE OF CONVERTIBLE SERIES A PREFERRED STOCK; STATUS OF
STOCK. No share of Series A Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion, or otherwise shall be reissued, and
all such shares shall be restored to the status of authorized but unissued
shares of preferred stock, without designation as to rights, limitations or
preferences.
Section 0.XX DILUTION OR IMPAIRMENT. The Corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, share exchange, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of the Series A Preferred Stock
set forth herein, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Series A
Preferred Stock against dilution or other impairment.
Section 10. NOTICES OF RECORD DATE. In the event of any:
(a) taking by the Corporation of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, or otherwise acquire any shares of stock of any class
or any other securities or property, or to receive any other right; or
(b) capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation,
any merger, consolidation, or share exchange of the Corporation, or any transfer
of all or substantially all the assets of the Corporation to any other
corporation, or any other entity or person; or
(c) voluntary or involuntary dissolution, liquidation, or
winding up the Corporation; then and in each such event the Corporation shall
mail or cause to be mailed to each holder of Series A Preferred Stock a notice
specifying (i) the record date for such dividend, distribution, or right and a
description of such dividend, distribution, or right, (ii) the date on which any
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, share exchange, dissolution, liquidation, or winding up
is expected to become effective, and (iii) the time, if any, that is to be fixed
as to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger, share
exchange, dissolution, liquidation, or winding up. Such notice shall be mailed
at least ten (10) days prior to the date specified in such notice on which such
action is to be taken.
3. This Certificate of Designations, which will constitute an amendment to
the Corporation's Certificate of Incorporation, shall be effective upon filing
by the Secretary of State of Nevada.
IN WITNESS WHEREOF, this Certificate of Designations has been executed and
acknowledged by the Corporation's President and Secretary, who hereby affirms
and acknowledges that this Certificate of Designations is the act and deed of
the Corporation and that the statements made herein are true under the penalties
of perjury. Dated this day of , 1998.
---- --------
Xxxx X. Mustafoglu, President and Secretary
STATE OF NEVADA )
) SS.:
COUNTY OF )
On , 1998, personally appeared before me, a Notary Public,
------------
Xxxx X. Mustafoglu, who acknowledged that he executed the above instrument.
Signature of Notary
EXHIBIT I
THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF
AN OFFER TO BUY THE WARRANT IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE SOLD,
PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS,
OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF
THE SECURITIES ACT AND UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS; AND
IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS RECEIVED AN OPINION FROM
THEIR COUNSEL THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION OF THE
SECURITIES.
STOCK PURCHASE WARRANT
No.
--
To Purchase Shares of Common Stock of
------
CORGENIX MEDICAL CORPORATION
THIS CERTIFIES that, for value received,
---------------------------
(the "Investor"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after April , 1998 and on or prior
---
to April , 2003 (the "Termination Date") but not thereafter, to subscribe for
---
and purchase from CORGENIX MEDICAL CORPORATION, a corporation incorporated under
the laws of the State of Nevada (the "Company"), ( )
----------------- ---------
shares (the "Warrant Shares") of Common Stock, $.001 par value per share of the
Company (the "Common Stock"). The purchase price of one share of Common Stock
(the "Exercise Price") under this Warrant shall be equal to $2.00. The Exercise
Price and the number of shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. This Warrant is being issued in
connection with the Securities Purchase Agreement dated April , 1998 (the
---
"Agreement") and is subject to its terms and conditions. In the event of any
conflict between the terms of this Warrant and the Agreement, the Agreement
shall control.
1. TITLE OF WARRANT. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
2. AUTHORIZATION OF SHARES. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant and full
payment of the Exercise Price, 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).
3. EXERCISE OF WARRANT. Except as provided in Section 11 of this
warrant, exercise of the purchase rights represented by this Warrant may be made
at any time or times, before the close of business on the Termination Date, or
such earlier date on which this Warrant may terminate as provided in this
Warrant, 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 hereof 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; whereupon the holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. Certificates
for shares purchased hereunder shall be delivered to the holder hereof within
three (3) calendar days after the date on which this Warrant shall have been
exercised as aforesaid, or be subject to the damages set forth in the Agreement.
Payment of the Exercise Price may be by certified check or cashier's check or by
wire transfer to an account designated by the Company in an amount equal to the
Exercise Price multiplied by the number of Warrant Shares.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the holder hereof 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 of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and provided further, that upon any transfer involved in the issuance or
delivery of any certificates for shares of Common Stock, 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 shareholder books
or records in any manner which prevents the timely exercise of this Warrant for
a period of time in excess of five (5) trading days per year.
7. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise thereof. Upon the surrender of this Warrant
and the payment of the aggregate Exercise Price, 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.
8. ASSIGNMENT AND TRANSFER OF WARRANT. This Warrant may be assigned
by the surrender of this Warrant and the Assignment 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 hereof
at the address of such holder appearing on the books of the Company); provided,
however, that the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any expenses of transfer incidental thereto
and that this Warrant may not be resold or otherwise transferred except (i) in a
transaction registered under the Securities Act of 1933 (the "Securities Act"),
or (ii) in a transaction pursuant to an exemption, if available, from such
registration and whereby, if requested by the Company, an opinion of counsel is
obtained by the holder of this Warrant to the effect that the transaction is so
exempt.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF Warrant. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
certificate 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, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, 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
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday in the State of Nevada,
then such action may be taken or such right may be exercised on the next
succeeding day not a legal holiday.
11. EFFECT OF CERTAIN EVENTS.
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction"), in which
the consideration to be received by the Company or its shareholders consists
solely of cash, the Company shall give the holder of this Warrant thirty (30)
days' notice of such termination and of the proposed effective date of the
transaction, and this Warrant shall terminate if the Warrant has not been
exercised by the effective date of such transaction.
(b) In case the Company shall at any time effect a Sale or
Merger Transaction in which the consideration to be received by the Company or
its shareholders consists in part of consideration other than cash, the holder
of this Warrant shall have the right thereafter to purchase, by exercise of this
Warrant and payment of the aggregate Exercise Price in effect immediately prior
to such action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the happening
of such transaction had this Warrant been exercised immediately prior thereto.
12. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. 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 upon the
happening of any of the following.
In case the Company shall (i) declare or 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,
(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 of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
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 of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per such 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.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and/or extend the Termination Date 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 promptly mail by registered or certified mail, return receipt requested,
to the holder of this Warrant notice of such adjustment or adjustments setting
forth 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. Such notice, in absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
15. AUTHORIZED SHARES. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant. 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 NASDAQ Small Cap
Stock Market or any domestic securities exchange upon which the Common Stock may
be listed.
16. TRANSFER RESTRICTIONS REGARDING COMMON STOCK UNDERLYING THE
WARRANT. The certificate or certificates representing the shares of Common Stock
to be issued at any time prior to forty one days after the issuance of the
Warrant, upon exercise of any part or all of this Warrant, shall be subject to
the following legend restricting transfer under the Securities Act of 1933, such
legend to be substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"). THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR ASSIGNED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR IN A
TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF
THE SECURITIES ACT AND UNDER PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY
HAS RECEIVED AN OPINION FROM THEIR COUNSEL THAT SUCH TRANSACTION DOES
NOT REQUIRE REGISTRATION OF THE SECURITIES."
17. GENERAL.
(a) ISSUE DATE; JURISDICTION. The provisions of this Warrant
shall be construed and shall be given effect in all respects as if it had been
issued and delivered by the Company on the date hereof. This Warrant shall be
binding upon any successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of the State of Nevada, without regard to
its conflict of law, principles or rules.
(b) RESTRICTIONS. The holder hereof 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) MODIFICATION AND WAIVER. Except as otherwise provided in
this Warrant, this Warrant and any provisions hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by each of the
Company and Investor.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof by the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
(e) CAPITALIZED TERMS. All capitalized terms not otherwise
defined herein shall have the meaning assigned to them in the Agreement.
(f) ENTIRE AGREEMENT. This Warrant, together with all documents
referenced herein, embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior oral or written agreements and understandings relating to the subject
matter hereof. No statement, representation, warranty, covenant or Warrant of in
the Agreement of any kind not expressly set forth in this Agreement shall
affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: April , 1998
---
CORGENIX MEDICAL CORPORATION
By:
, President
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
----------------------------------------------.
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Dated: ,
---------------
Holder's Signature:
-----------------------------
Holder's Address:
-----------------------------
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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 an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
REGULATION S NOTICE OF EXERCISE
(To be Executed by the Registered Holder in order for the Company to
Issue Unrestricted Common Stock issued upon exercise of the Warrant)
The undersigned hereby irrevocably elects to have the restrictive legend which
was placed on the shares of Common Stock issued upon exercise of Warrant
------
No. be removed according to the conditions hereof, as of the date written
----
below.
The undersigned represents and warrants that:
(i) The undersigned represents and warrants that all offers and sales by
the undersigned of the shares of Common Stock issued to the undersigned
upon exercise of the Warrant shall be made in compliance with Regulation
S, pursuant to an exemption from registration under the Act, or pursuant
to registration of the Common Stock under the Securities Act of 1933, as
amended (the "Securities Act'), subject to any restrictions on sale or
transfer set forth in the Offshore Securities Subscription Agreement
between the Company and the original holder of the exercised Warrant.
(ii) The undersigned has not engaged in any transaction or series of
transactions that is a part of or a plan or scheme to evade the
registration requirements of the Securities Act.
(iii)The undersigned represents that it is not a U.S. Person, no is this
Warrant being exercised on behalf of a U.S. Person (as this term is
defined in Regulation S).
----------------
Date
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Signature Name
Address: Delivery of Shares of Common Stock
to:
