AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made this
17th day of June, 2004, by and among Email Real Xxxxxx.xxx, Inc., a
Colorado corporation having its principal place of business at 00 Xxxxxx
Xxxxxx, #X, Xxxxxx Xxxx, XX 00000 ("EMLR"), EMLR Acquisition Corp., a
Delaware corporation having its principal place of business at 00 Xxxxxx
Xxxxxx, #X, Xxxxxx Xxxx, XX 00000 ("EMLR Acquisition") and Xxxxxx Health
Sciences, Inc., a Delaware corporation having its principal place of
business at 000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxx Xxxxxxxxx,
XX 00000 ("Xxxxxx").
WHEREAS, Xxxxxx is authorized to issue 15,000,000 shares of its
common stock, par value $.01 per share ("Xxxxxx Common Stock"), of which
6,179,829 shares ("Issued Xxxxxx Shares") are issued and outstanding;
and
WHEREAS, immediately upon execution of this Agreement, Xxxxxx
intends to offer in a private placement up to 3,700,000 shares of its
newly designated Series A Convertible Preferred Stock, par value $.01
per share (the "Xxxxxx Series A Shares");
WHEREAS, the outstanding capitalization of Xxxxxx is as set forth
on Schedule A annexed hereto; and
WHEREAS, EMLR is authorized to issue 100,000,000 shares of common
stock, par value $.001 per share (the "EMLR Common Stock") of which
24,996,000 shares are issued and outstanding (the "Issued EMLR Shares");
the outstanding shares of EMLR Common Stock are referred to herein as
the "EMLR Shares"; and
WHEREAS, EMLR Acquisition Corp. is a wholly owned subsidiary of
EMLR and is authorized to issue 1,000 shares of common stock, par value
$.001 (referred to as the "EMLR Acquisition Shares"), all of which are
issued and outstanding and owned by EMLR; and
WHEREAS, the respective Boards of Directors of EMLR, EMLR
Acquisition and Xxxxxx (the "Companies") deem it advisable and in the
best interests of the Companies, and their respective shareholders, that
EMLR Acquisition be merged with and into Xxxxxx under the terms and
conditions hereinafter set forth (the "Merger"), the Merger to be
effected pursuant to the Delaware General Corporation Law and the Merger
to be a tax free reorganization under Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises, covenants and
conditions hereof, the parties hereto do mutually agree as follows:
1. Votes on Merger and Related Matters. EMLR Acquisition and
Xxxxxx (the "Constituent Corporations") shall each, as soon as
practicable but prior to Closing (as defined below) (i) cause a special
meeting of its stockholders to be called to consider and vote upon the
Merger on the terms and conditions hereinafter set forth, or (ii) obtain
written consent of such stockholders, as applicable, as is necessary to
approve the Merger. If the Merger is approved in accordance with
applicable law, subject to the further conditions and provisions of this
Agreement, a closing of the Merger shall be held (the "Closing") and a
Certificate of Merger (the "Certificate of Merger"), and all other
documents or instruments deemed necessary or appropriate by the parties
hereto to effect the Merger, shall be executed and filed with the
Secretary of State of the State of Delaware as promptly as possible
thereafter. The Certificate of Merger so filed shall be substantially
in the form of Exhibit A annexed hereto, with such changes therein as
the Board of Directors of each of EMLR Acquisition and Xxxxxx shall
mutually approve. The date of the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware shall be referred
to herein as the "Effective Date," and the time of such filing shall be
referred to as the "Effective Time."
2. Representations, Warranties and Covenants of Xxxxxx. Xxxxxx
represents, warrants and covenants as follows, except to the extent set
forth on the corresponding sections of the schedule of exceptions
attached hereto as Schedule B and made a part hereof (the "Xxxxxx
Schedule of Exceptions"):
2.1 Organization; Capitalization. Xxxxxx is, and on the Effective
Date will be, a duly organized and a validly existing corporation in
good standing under the laws of its state of formation. There are
issued and outstanding, and on the Effective Date there will be issued
and outstanding, only the Issued Xxxxxx Shares, all of which are, and on
the Effective Date will be, duly authorized and validly issued. There
are, and on the Effective Date there will be, no outstanding rights,
options or warrants to purchase any equity interest in Xxxxxx, and there
will be no other or any other issued or outstanding securities of any
nature convertible into or exercisable or exchangeable for equity of
Xxxxxx. No person has any right of first refusal, right of
participation, or any similar right with respect to disposition of the
Issued Xxxxxx Shares.
2.2 Authority. Xxxxxx has, and on the Effective Date will have,
full power and authority to enter into this Agreement and, subject to
any third party approval in accordance with the laws of the State of
Delaware, to consummate the transactions contemplated hereby. This
Agreement and the transactions contemplated hereby have been duly
approved by the Board of Directors of Xxxxxx and, prior to the Closing,
by all stockholders of Xxxxxx whose consent is required under applicable
law.
2.3 Binding Agreement. This Agreement has been duly executed and
delivered by Xxxxxx and constitutes the legal, valid and binding
obligation of Xxxxxx, enforceable against it in accordance with the
terms hereof, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of rights hereunder or general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
2.4 No Conflicts. The execution and delivery by Xxxxxx of this
Agreement, the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by Xxxxxx
will not conflict with, result in a breach of or constitute or give rise
to a default under (i) any indenture, mortgage, deed of trust or other
agreement, instrument or contract to which Xxxxxx is now a party or by
which it or any of its assets or properties are bound; (ii) Xxxxxx'x
certificate of incorporation and bylaws, in each case as amended; or
(iii) any law, order, rule, regulation, writ, injunction, judgment or
decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over Xxxxxx or any of its
business or properties wherein such breach could have a material adverse
effect on Xxxxxx or any of its business or properties.
2.5 Subsidiaries. Xxxxxx does not have, and on the Effective Date
will not have, any subsidiaries, nor does it own any direct or indirect
interest in any other business entity.
2.6 Foreign Qualifications. Xxxxxx is, and on the Effective Date
will be, qualified or licensed as a foreign corporation in all
jurisdictions where its business or ownership of assets so requires,
except where the failure to be qualified or licensed would not be
reasonably expected to have a material adverse effect on the business of
Xxxxxx. A list of all such jurisdictions where Xxxxxx is qualified or
licensed as a foreign corporation is attached hereto as Schedule 2.6.
The business of Xxxxxx does not require it to be registered as an
investment company or investment adviser, as such terms are defined
under the Investment Company Act of 1940 and the Investment Advisers Act
of 1940, each as amended.
2.7 Financial Statements. Xxxxxx has furnished EMLR with a true
and complete copy of (i) the audited balance sheets of Xxxxxx as of
December 31, 2002 and December 31, 2003, and the related audited
statements of income and statements of cash flow of Xxxxxx for the
fiscal years ended December 31, 2002 and December 31, 2003 (the
"Financial Statements"). The Financial Statements fairly present in all
material respects the financial position, results of operations and
other information purported to be shown thereon of Xxxxxx, at the dates
and for the respective periods to which they apply. All such Financial
Statements have been audited by X.X. Xxxx LLP and are accompanied by
their audit report and were prepared in conformity with United States
generally accepted accounting principles consistently applied throughout
the periods involved ("GAAP"), and have been adjusted for all normal and
recurring accruals.
2.8 No Adverse Events. Since December 31, 2003:
(i) there has not been any material adverse change in the
financial position or condition of Xxxxxx, its liabilities, assets or
any damage, loss or other change in circumstances materially affecting
Xxxxxx, its business or assets or Xxxxxx' right to carry on its
business, other than changes in the ordinary course of business or due
to general economic, industry or political conditions;
(ii) Xxxxxx has not entered into any transaction other than
transactions in the ordinary course of business consistent with past
practice;
(iii) there has been no sale, assignment, transfer, mortgage,
pledge, encumbrance or lease of any asset or property of Xxxxxx that was
not in the ordinary course of business consistent with past practice;
(iv) there has been (x) no declaration or payment of a dividend,
or any other declaration, payment or distribution of any type or nature
to any stockholder of Xxxxxx in respect of its stock, whether in cash or
property, and (y) no purchase or redemption of any share of the capital
stock of Xxxxxx;
(v) there has been no declaration, payment, or commitment for the
payment, by Xxxxxx, of a bonus or other additional salary, compensation,
or benefit to any employee of Xxxxxx;
(vi) there has been no release, compromise, waiver or cancellation
of any debt to or claim by Xxxxxx, or waiver of any right of Xxxxxx;
(vii) there have been no capital expenditures by Xxxxxx in excess
of $50,000 for any single item, or $100,000 in the aggregate;
(viii) there has been no change in accounting methods or practices
or revaluation of any asset of Xxxxxx;
(ix) there has been no material damage or destruction to, or loss
of, physical property (whether or not covered by insurance) adversely
affecting the business or the operations of Xxxxxx;
(x) there has been no loan by Xxxxxx, or guaranty by Xxxxxx of any
loan, to any employee of Xxxxxx;
(xi) Xxxxxx has not ceased to transact business with any customer,
or received notice that any customer intends to cease transacting
business with Xxxxxx, that, as of the date of such cessation or notice,
represented more than 5 percent of the annual gross revenues of Xxxxxx
for the fiscal year ended December 31, 2003;
(xii) there has been no termination or resignation of any key
employee or officer of Xxxxxx, and to the knowledge of Xxxxxx, no such
termination or resignation is threatened;
(xiii) there has been no amendment or termination of any material
oral or written contract, agreement or license to which Xxxxxx is or was
a party or by which Xxxxxx is or was bound, except in the ordinary
course of business or as expressly contemplated hereby;
(xiv) Xxxxxx has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current liabilities in
the ordinary course of business;
(xv) there has been no agreement or commitment by Xxxxxx to do any
of the foregoing; and
(xvi) there has been no other event or condition of any character
that has had, or could reasonably be expected to have, a material
adverse effect on the properties, business, operations, financial
condition, assets or prospects of Xxxxxx.
2.9 Ordinary Course of Business. Except for transactions
occurring in the ordinary course of business, there has not been, and on
the Effective Date there will not have been, any transactions involving
Xxxxxx since December 31, 2003 in an amount in excess of $100,000.
2.10 Liabilities; Claims. There are, and on the Effective Date
will be, no liabilities (including, but not limited to, tax liabilities)
or claims against Xxxxxx (whether such liabilities or claims are
contingent or absolute, direct or indirect, matured or unmatured) not
appearing on the Financial Statements, other than (i) liabilities
incurred in the ordinary course of business since December 31, 2003,
(ii) taxes accrued on earnings since December 31, 2003 which are not yet
due or payable or (iii) other liabilities which do not exceed $100,000
in the aggregate.
2.11 Tax Returns. All federal, state, county and local income,
excise, property and other tax returns required to be filed by Xxxxxx
are true and correct in all material respects and have been timely
filed, and all required taxes, fees or assessments have been paid or an
adequate reserve therefor has been established in the Financial
Statements. The federal income tax returns and state and foreign income
tax returns of Xxxxxx have not been audited by the Internal Revenue
Service ("IRS") or any other taxing authority within the past five (5)
years. Neither the IRS nor any state, local or other taxing authority
has proposed any additional taxes, interest or penalties with respect to
Xxxxxx or any of its operations or businesses. There are no pending, or
to the knowledge of Xxxxxx, threatened, tax claims or assessments, and
there are no pending, or to the knowledge of Xxxxxx, threatened, tax
examinations by any taxing authorities. Xxxxxx has not given any
waivers of rights (which are currently in effect) under applicable
statutes of limitations with respect to the federal income tax returns
of Xxxxxx for any year.
2.12 Title to Assets. Except as provided for in the Financial
Statements, Xxxxxx, has, and on the Effective Date will have, good and
marketable title to all of its furniture, fixtures, equipment, inventory
and other assets owned by Xxxxxx, and such assets are owned free and
clear of all security interests, pledges, liens, restrictions and
encumbrances of every kind and nature. Xxxxxx was, on the date of the
most recent Financial Statement, the owner of its inventory as set forth
in such Financial Statement and has good and marketable title thereto.
2.13 Accounts Receivable. The accounts receivable as set forth in
the Financial Statements represent amounts due for goods sold or
services rendered by Xxxxxx in the ordinary course of business and,
except as reserved for in the Financial Statements, Xxxxxx believes are
collectable in the ordinary course of business, without any claims by
the obligor for set-off, deductions or counterclaims.
2.14 Material Contracts. A copy (or summary, if oral) of all
agreements, contracts, letters of intent, arrangements, understandings
and commitments, whether written or oral, to which Xxxxxx is or on the
Effective Date will be, a party, or from which Xxxxxx will receive
substantial benefits and which are material to Xxxxxx (collectively,
"Xxxxxx Contracts"), have been delivered to EMLR or its counsel and are
listed hereto on Schedule 2.14. Any Xxxxxx Contracts entered into
between the date hereof and the Effective Date will be delivered to EMLR
or its counsel prior to Closing. The validity and enforceability of,
and rights of Xxxxxx contained in, each such Xxxxxx Contract shall not
be adversely effected by the Merger or the transactions contemplated
hereby or any actions taken in furtherance hereof. Xxxxxx is not, and
on the Effective Date will not be, in material default under any Xxxxxx
Contract.
2.15 Legal Proceedings. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature pending, or
to Xxxxxx'x knowledge, threatened, directly or indirectly involving
Xxxxxx or its officer, directors, employees or affiliates, individually
or in the aggregate, in which an unfavorable determination could result
in suspension or termination of Xxxxxx'x business or authority to
conduct such business in any jurisdiction or could result in the payment
by Xxxxxx of more than $25,000, or challenging the validity or propriety
of the transactions contemplated by this Agreement. Xxxxxx is not a
party to any order, judgment or decree which will, or might reasonably
be expected to, materially adversely affect the business, operations,
properties, assets or financial condition of Xxxxxx.
2.16 Certain Transactions. Since December 31, 2003 there have
been, and through the Effective Date there will be (i) no bonuses or
extraordinary compensation to any of the officers or directors of
Xxxxxx, (ii) no loans made to or any other transactions with any of the
officers or directors of Xxxxxx or their families or affiliates and
(iii) no dividends or other distributions declared or paid by Xxxxxx.
2.17 Insurance. Xxxxxx has, and on the Effective Date will have,
maintained casualty and liability policies and other insurance policies
with respect to its business which are appropriate and customary for
businesses similar in size, industry and risk profile. Copies of all of
the policies of insurance and bonds presently in force with respect to
Xxxxxx, including without limitation those covering properties,
buildings, machinery, equipment, worker's compensation, product
liability, officers and directors and public liability, have been made
available to EMLR. All such insurance is outstanding and in full force
and effect, with all premiums thereon duly paid, and Xxxxxx has not
received any notice of cancellation of any such policies.
2.18 Intellectual Property.
(a) Set forth on Schedule 2.18 is a true and complete list of all
material proprietary technology, patents, trademarks, trade names,
service marks and registered copyrights (and all pending applications or
current registrations for any of the foregoing), and all licenses
granted to Xxxxxx by third parties of patent rights, trademark rights,
trade name rights and service xxxx rights, used by Xxxxxx in the conduct
of its business (together with trade secrets and know how used in the
conduct of their business, the "Xxxxxx Intellectual Property Rights").
Xxxxxx owns, or has validly licensed or otherwise has the right to use
or exploit, as currently used or exploited, and as contemplated to be
used and exploited in the future, all of the Xxxxxx Intellectual
Property Rights, free of any lien or any obligation to make any payment
(whether of a royalty, license fee, compensation or otherwise). No
claims are pending or threatened against Xxxxxx that Xxxxxx is
infringing or otherwise violating the rights of any individual,
partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, limited liability company,
joint venture, government entity or other entity (a "Person") with
regard to any Xxxxxx Intellectual Property Right or that any Xxxxxx
Intellectual Property Right is invalid or unenforceable. No Person is
infringing the rights of Xxxxxx with respect to any Xxxxxx Intellectual
Property Right nor, to the knowledge of Xxxxxx, has any Person
threatened to do so. Neither Xxxxxx, nor any of its employees, agents
or independent contractors, in connection with the performance of such
Person's services with Xxxxxx, as the case may be, has used,
appropriated or disclosed, directly or indirectly, any trade secret or
other proprietary or confidential information of any other Person
without the right to do so, or otherwise violated any confidential
relationship with any other Person, other than such actions that were
not, or would not reasonably be expected to be, materially adverse to
the business of Xxxxxx.
(b) Except as set forth on the Xxxxxx Schedule of Exceptions:
(i) All former and current consultants or contractors of Xxxxxx
have executed and delivered written instruments with Xxxxxx, that assign
to Xxxxxx all rights to any inventions, improvements, discoveries or
information developed by them for or on behalf of Xxxxxx. All employees
of Xxxxxx who participated in the creation or contributed to the
development of the Xxxxxx Intellectual Property Rights were employees of
Xxxxxx at the time of rendering such services, such services were within
the scope of their employment and such employees have validly assigned
all rights to the Xxxxxx Intellectual Property Rights to Xxxxxx; and
(ii) Xxxxxx has taken all such security measures as it has
determined are commercially reasonable and appropriate, including
entering into appropriate confidentiality and nondisclosure agreements
with all of their employees, consultants and contractors, and any other
persons with access to the Xxxxxx Intellectual Property Rights, trade
secrets or know how of Xxxxxx, to protect the secrecy, confidentiality
and value of all such Xxxxxx Intellectual Property Rights, trade secrets
or know how and there has not been any breach by Xxxxxx, nor, to the
knowledge of Xxxxxx, any other party to any such related agreements,
other than such that could not reasonably be expected to cause a
material adverse effect to Xxxxxx.
2.19 Compliance with Laws. Xxxxxx has, and on the Effective Date
will have, in all material respects operated its business and conducted
its affairs in compliance with all applicable laws, rules and
regulations, except where the failure to so comply did not have and
would not be expected to have a material adverse effect on its business
or property.
2.20 Related Party Contracts. There are, and on the Effective
Date there will be, no loans, leases, agreements, arrangements
understandings or Xxxxxx Contracts outstanding between Xxxxxx and any of
its officers, directors or affiliates or any person related to or
affiliated with any such officers or directors.
2.21 Officer and Director Information. During the past ten year
period neither Xxxxxx, nor, to its knowledge, any of its officers or
directors, nor any person intended upon consummation of the Merger to be
nominated by Xxxxxx to become an officer or director of EMLR or any
successor entity or subsidiary, has been the subject of:
(a) a petition under the federal bankruptcy laws or any other
insolvency or moratorium law or has a receiver, fiscal agent or similar
officer been appointed by a court for the business or property of Xxxxxx
or such person, or any partnership in which Xxxxxx or any such person
was a general partner at or within two years before the time of such
filing, or any corporation or business association of which Xxxxxx or
any such person was an executive officer at or within two years before
the time of such filing;
(b) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not
relate to driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining Xxxxxx or any such person from, or
otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the United
States Commodity Futures Trading Commission or the Securities and
Exchange Commission (the "Commission") or an associated person of any of
the foregoing, or as an investment adviser, underwriter, broker or
dealer in securities, or as an affiliated person, director or employee
of any investment company, bank, savings and loan association or
insurance company, or engaging in or continuing any conduct or practice
in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation of
federal, state or other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of
Xxxxxx or any such person to engage in any activity described in the
preceding sub-paragraph, or to be associated with persons engaged in any
such activity;
(e) a finding by a court of competent jurisdiction in a civil
action or by the Commission to have violated any securities law,
regulation or decree and the judgment in such civil action or finding by
the Commission has not been subsequently reversed, suspended or vacated;
or
(f) a finding by a court of competent jurisdiction in a civil
action or by the United States Commodity Futures Trading Commission to
have violated any federal commodities law, and the judgment in such
civil action or finding has not been subsequently reversed, suspended or
vacated. All items described in clauses (a) through (f) above are
collectively referred to herein as "Adverse Events."
2.22 Benefit Plans. Xxxxxx does not have any pension plan, profit
sharing or similar employee benefit plan.
2.23 Consents and Approvals. Except for the consent and approval
of the stockholders of Xxxxxx and the filing of the Certificate of
Merger, no consents or approvals of, or filings or registrations with,
any third party or any public body or authority (any of the foregoing, a
"Consent") are necessary in connection with the execution and delivery
by Xxxxxx of this Agreement and the consummation by Xxxxxx of the Merger
and all other transactions contemplated hereby.
2.24 Finder's Fees. Xxxxxx knows of no person who rendered any
service in connection with the introduction of the Companies to any of
the other Companies for a "finder's fee" or similar type of fee in
connection with the Merger and the other transactions contemplated
hereby.
2.25 Employee Matters. No employees of Xxxxxx are on strike or,
to the best of Xxxxxx'x knowledge, threatening any strike or work
stoppage. Xxxxxx does not have any obligations under any collective
bargaining or labor union agreements, nor is Xxxxxx involved in any
material controversy with any of its employees or any organization
representing any of its employees. Xxxxxx believes its relationships
with its employees are good.
2.26 Disclosure. To the knowledge of Xxxxxx, none of the
information supplied or to be supplied by or about Xxxxxx herein or for
inclusion or incorporation by reference in any information to be
supplied to holders of EMLR Shares concerning the Merger contains any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
2.27 Actions Prior to Closing. Except as otherwise contemplated
by this Agreement, from the date hereof through the Closing, Xxxxxx
shall not, other than in the ordinary course of business, consistent
with past practice, without the prior written consent of EMLR:
(a) sell, lease, assign, transfer or otherwise dispose of any
material assets;
(b) agree to assume or assume, guarantee, endorse or otherwise in
any way be, or become responsible or, liable for, directly or
indirectly, any material contingent obligation;
(c) participate or engage in any discussions or negotiations with
any Person regarding, or enter into any transaction concerning, a
merger, stock exchange or consolidation, other than with the other
parties hereto, or liquidate or dissolve itself (or suffer any
liquidation or dissolution) or convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of related
transactions, all or a substantial part of its property, business,
assets or capital stock or securities convertible into equity, or make
any material change in its present method of conducting business;
(d) make any amendment to its certificate of incorporation or
bylaws;
(e) enter into or amend any employment agreements or increase the
salary or bonus of any existing employee or with any person to become an
officer of Xxxxxx;
(f) create, incur, assume or suffer to exist, any mortgage,
pledge, lien, charge, security interest or encumbrance of any kind upon
any of its property, assets, income or profits, whether now owned or
hereafter acquired;
(g) declare or authorize any dividends or distributions on any
shares of its capital stock; or
(h) make any commitment, agreement or understanding with respect
to any of the foregoing.
2.28 Charter Documents. The charter documents of Xxxxxx have not
been altered since its incorporation, except as filed in the record
books of Xxxxxx or with the Secretary of State of the State of Delaware
and, in either case, have all been delivered to EMLR.
2.29 Corporate Minute Books. The corporate minute books of Xxxxxx
are complete and correct and the minutes and consents contained therein
accurately reflect actions taken at a duly called and held meeting or by
sufficient consent without a meeting. All actions by Xxxxxx which
required director or shareholder approval are reflected on the corporate
minute books of Xxxxxx. Xxxxxx is not in violation or breach of, or in
default with respect to, any term of its certificate of incorporation
(or other charter documents) or by-laws.
2.30 Trading With the Enemy Act; Patriot Act. No sale of Xxxxxx'x
securities nor Xxxxxx'x use of the proceeds from such sale has violated
the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto. Without limiting the foregoing, Xxxxxx
(a) is not a Person whose property or interests in property are blocked
pursuant to Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) and
(b) does not engage in any dealings or transactions, or is otherwise
associated, with any such person. Xxxxxx is in compliance with the USA
Patriot Act of 2001 (signed into law October 26, 2001).
3. Representations, Warranties and Covenants Regarding EMLR
Acquisition. EMLR and EMLR Acquisition each jointly and severally
represents, warrants and covenants as follows with respect to EMLR
Acquisition:
3.1 Organization; Capitalization. EMLR Acquisition is, and on the
Effective Date will be, a duly organized and validly existing
corporation in good standing under the laws of the State of Delaware,
authorized to issue only the EMLR Acquisition Shares. On the Effective
Date there will be issued and outstanding all of the EMLR Acquisition
Shares, which shall be fully paid and nonassessable and all of which
shall be owned solely by EMLR. There are no, and on the Effective Date
there will be no, issued or outstanding options or warrants to purchase
EMLR Acquisition Shares or any issued or outstanding securities of any
nature convertible into EMLR Acquisition Shares, or any agreements or
understandings to issue any EMLR Acquisition Shares, options or
warrants.
3.2 Authority. EMLR Acquisition has, and on the Effective Date
will have, full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated hereby have been duly approved by the Board of
Directors of EMLR Acquisition.
3.3 Binding Agreement. This Agreement has been duly executed and
delivered by EMLR Acquisition and constitutes the legal, valid and
binding obligation of EMLR Acquisition, enforceable against it in
accordance with the terms hereof, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of rights
hereunder or general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.4 No Business Activity; Financial Condition. EMLR Acquisition
has been organized solely for the purpose of consummating the Merger
and, since its inception, has had no business activity of any nature
other than those related to its organization or as contemplated by this
Agreement. EMLR Acquisition has, and on the Effective Date will have,
no contracts or commitments to which it is, or on the Effective Date
will be, a party, except for this Agreement and other documents and
instruments contemplated hereby in connection with the Merger. Except
for (i) the incurring of expenses of its organization, (ii) the issuance
of the EMLR Acquisition Shares to EMLR, (iii) the incurring of expenses
relating to this Agreement and the consummation of the transactions
contemplated by this Agreement and (iv) the consummation of the Merger,
EMLR Acquisition has had, and on the Effective Date will have had, no
financial or other transactions of any nature whatsoever.
3.5 Issuance of Securities. Since its inception, EMLR Acquisition
has not issued or committed itself to issue, and to the Effective Date
will not issue or commit to issue, any EMLR Acquisition Shares or any
options, rights, warrants, or other securities convertible into EMLR
Acquisition Shares, except for the issuance of the EMLR Acquisition
Shares to EMLR.
3.6 Consents and Approvals. Except for the consent and approval
of the Board of Directors and the sole shareholder of EMLR Acquisition,
and the filing of the Certificate of Merger, no consents or approvals
of, or filings or registrations with, any third party or any public body
or authority are necessary in connection with (i) the execution and
delivery by EMLR Acquisition of this Agreement and (ii) the consummation
by EMLR Acquisition of the Merger and the other transactions
contemplated hereby.
3.7 No Conflicts. The execution and delivery by EMLR Acquisition
of this Agreement, the consummation and performance by it of the
transactions herein contemplated, and compliance with the terms of this
Agreement by EMLR Acquisition, will not conflict with, result in a
breach of or constitute or give rise to a default under, any indenture,
mortgage, deed of trust or other agreement, instrument or contract to
which EMLR Acquisition is now a party or by which it or any of its
assets or properties are bound or its certificate of incorporation or
the bylaws of EMLR Acquisition, or any law, order, rule or regulation,
writ, injunction, judgment or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
EMLR Acquisition or any of its businesses or properties.
3.8 Subsidiaries. EMLR Acquisition has, and on the Effective Date
will have, no subsidiaries, nor does it own any direct or indirect
interest in any other business entity.
3.9 Liabilities. EMLR Acquisition has, and on the Effective Date
will have, no liabilities (including, but not limited to, tax
liabilities) nor are there, or on the Effective Date will there be, any
claims against EMLR Acquisition (whether such liabilities or claims are
contingent or absolute, direct or indirect, and matured or unmatured)
except for liabilities for its organization expenses or expenses
incurred in connection with the Merger and the consummation of the
transactions contemplated by this Agreement.
3.10 Assets. EMLR Acquisition has, and on the Effective Date will
have, no fixtures, furniture, equipment, inventory, accounts receivable
or other assets other than its interest in this Agreement.
3.11 Legal Proceedings. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against
EMLR Acquisition, or challenging the validity or propriety of the
transactions contemplated by this Agreement and, to EMLR Acquisition's
best knowledge, there is no reasonable basis for any other proceeding,
claim, action or governmental investigation against EMLR Acquisition.
EMLR Acquisition is not a party to any order, judgment or decree which
will, or might reasonably be expected to, materially adversely affect
the business, operations, properties, assets or financial condition of
EMLR Acquisition.
3.12 Employee Matters; Related Party Transactions. Since the
inception of EMLR Acquisition there have been, and to the Effective Date
there will be (i) no salaried or otherwise compensated employees and no
bonuses paid to any officer or director of EMLR Acquisition; (ii) no
loans made to or any transactions with, any officer or director of EMLR
Acquisition; (iii) no dividends or other distributions declared or paid
by EMLR Acquisition; and (iv) no purchase by EMLR Acquisition of any
EMLR Acquisition Shares.
3.13 Intellectual Property. EMLR Acquisition has no patents,
patent applications, trademarks, trademark registrations, tradenames,
copyrights, copyright registrations or applications therefor or any
other intellectual property.
3.14 Compliance with Laws. Since its inception, EMLR Acquisition
has, and on the Effective Date will have, in all material respects
conducted its affairs in compliance with all applicable laws, rules and
regulations.
3.15 Officer and Director Information. During the past ten year
period, no officer or director of EMLR Acquisition has been the subject
of any Adverse Event.
3.16 Benefit Plans. EMLR Acquisition has no pension plan, profit
sharing or similar employee benefit plan.
3.17 Finder's Fees. EMLR Acquisition knows of no person who
rendered any service in connection with the introduction of the
Companies to any of the other Companies for a "finder's fee" or similar
type of fee in connection with the Merger and the other transactions
contemplated hereby.
3.18 Charter Documents. The charter documents of EMLR Acquisition
have not been altered since its incorporation.
3.19 Corporate Minute Books. The corporate minute books of EMLR
Acquisition are complete and correct and the minutes and consents
contained therein accurately reflect the actions that were taken at a
duly called and held meeting or by appropriate consent without a
meeting. All actions by EMLR Acquisition which require director or
stockholder approval, including, but not limited to those required in
connection with the Merger and the other transactions contemplated by
this Agreement, are reflected on the corporate minute books of EMLR
Acquisition. EMLR Acquisition is not in violation or breach of, or in
default with respect to, any term of its certificate of incorporation
(or other charter documents) or by-laws.
4. Representations, Warranties and Covenants of EMLR. EMLR hereby
represents, warrants and covenants as follows, except to the extent set
forth on the corresponding sections of the schedule of exceptions
attached hereto as Schedule C and made a part hereof ("EMLR Schedule of
Exceptions"):
4.1 Organization; Capitalization. EMLR is a duly organized and
validly existing corporation in good standing under the laws of the
State of Colorado, authorized to issue an aggregate of 100,000,000
shares of EMLR Common Stock and 10,000,000 shares of preferred stock,
par value $.01 per share, none of which are issued or outstanding. On
the Effective Date, there will be issued and outstanding 24,996,000
shares of EMLR Common Stock, all of which will be validly issued, fully
paid and nonassessable. Except as contemplated by this Agreement, on the
Effective Date there will be no issued or outstanding securities and no
issued or outstanding options, warrants or other rights, or commitments
or agreements of any kind, contingent or otherwise, to purchase or
otherwise acquire EMLR Shares or any issued or outstanding securities of
any nature convertible into EMLR Shares. There is no proxy or any other
agreement, arrangement or understanding of any kind authorized,
effective or outstanding which restricts, limits or otherwise affects
the right to vote any EMLR Shares.
4.2 Binding Agreement. This Agreement and the transactions
contemplated hereby have been duly approved by the Board of Directors of
EMLR. This Agreement has been duly executed and delivered by EMLR and
constitutes the legal, valid and binding obligation of EMLR enforceable
against it in accordance with the terms hereof, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of rights
hereunder or general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.3 Authority. EMLR has, and on the Effective Date will have,
full power and authority to enter into this Agreement and, subject to
any third party approval in accordance with the laws of the State of
Colorado, to consummate the transactions contemplated hereby. This
Agreement and the transactions contemplated hereby have been duly
approved by the Board of Directors of EMLR.
4.4 No Conflicts. The execution and delivery by EMLR of this
Agreement, the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by EMLR
will not conflict with, result in a breach of or constitute or give rise
to a default under (i) any indenture, mortgage, deed of trust or other
agreement, instrument or contract to which EMLR is now a party or by
which it or any of its assets or properties are bound; (ii) EMLR's
certificate of incorporation and bylaws, in each case as amended; or
(iii) any law, order, rule, regulation, writ, injunction, judgment or
decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over EMLR or any of its
business or properties wherein such breach could have a material adverse
effect on EMLR or any of its business or properties.
4.5 Recent Business Operations. Except as set forth in its
filings with the Commission, EMLR has not been engaged in any other
business activity since at least February 28, 2003, other than the
search for an acquisition or merger partner.
4.6 Foreign Qualifications. EMLR is, and on the Effective Date
will be, duly authorized, qualified and licensed under any and all
applicable laws, regulations, ordinances or orders of public authorities
to carry on its business in the places and in the manner as presently
conducted. The business of EMLR does not require it to be registered as
an investment company or investment advisor, as such terms are defined
under the Investment Company Act and the Investment Advisors Act of
1940.
4.7 Subsidiaries. EMLR has, and on the Effective Date will have,
no subsidiaries, except for EMLR Acquisition, nor does it own any direct
or indirect interest in any other business entity.
4.8 Financial Statements. The financial statements of EMLR,
consisting of its Balance Sheets, Statement of Operations, Statement of
Stockholders' Equity and Statement of Cash Flows, all as at or for years
ending February 29, 2004 and February 28, 2003, and all together with
accompanying notes, if any, are complete and correct in all material
respects, present fairly the financial position of EMLR, the results of
operations and changes in financial position for the period covered
thereby, and were prepared in accordance with GAAP, and have been
adjusted for all normal and recurring accruals. All the financial
statements referenced herein regarding EMLR are collectively referred to
as the "EMLR Financial Statements", all of which have been delivered to
Xxxxxx and are true, correct and complete in all material respects.
4.9 No Adverse Changes. There has not been, and on the Effective
Date there will not have been, any material change in the financial
condition of EMLR from that set forth in the EMLR Financial Statements
except for (i) transactions in the ordinary course of business and (ii)
transactions, including but not limited to the incurring of expenses and
liabilities, relating to this Agreement.
4.10 Liabilities. There are, and on the Effective Date will be,
no liabilities (including, but not limited to, tax liabilities) or
claims against EMLR (whether such liabilities or claims are contingent
or absolute, direct or indirect, accrued or unaccrued and matured or
unmatured) not appearing on the EMLR Financial Statements, except for
(i) liabilities for expenses incurred relating to this Agreement and the
consummation of the transactions contemplated hereby and (ii)
liabilities and commitments incurred or made in the ordinary course of
EMLR's business or taxes incurred on earnings since February 29, 2004.
4.11 Tax Returns. All federal, state, county and local income,
excise, property or other tax returns required to be filed by EMLR have
been timely filed and all required taxes, fees and assessments have been
paid or an adequate reserve therefor has been provided for in the EMLR
Financial Statements. The federal income tax returns and state and
foreign income tax returns of EMLR have not been audited by the IRS or
any other taxing authority within the past five (5) years. Neither the
IRS nor any state, local or other taxing authority has proposed any
additional taxes, interest or penalties with respect to EMLR or any of
its operations or businesses. There are no pending, or to the knowledge
of EMLR threatened, tax claims or assessments, and there are no pending,
or to the knowledge of EMLR threatened, tax examinations by any taxing
authorities. EMLR has not given any waivers of rights (which are
currently in effect) under applicable statutes of limitations with
respect to the federal income tax returns of EMLR for any year.
4.12 Assets. Except as set forth in the SEC Reports (as
hereinafter defined), EMLR has, and on the Effective Date will have, no
fixtures, furniture, equipment, inventory, accounts receivable or other
assets except for no more than $100.00 in cash.
4.13 Material Contracts. Except as set forth in the SEC Reports,
EMLR has, and on the Effective Date will have, no material contracts to
which it is, or on the Effective Date will be, a party.
4.14 No Conflicts. The execution and delivery by EMLR of this
Agreement, the consummation and performance of the transactions herein
contemplated and compliance with the terms of this Agreement by EMLR
will not conflict with, result in a breach of or constitute a default
under (i) any indenture, mortgage, deed of trust or other agreement,
instrument or contract to which EMLR is now a party or by which it or
any of its assets or properties is bound; (ii) the certificate of
incorporation or the bylaws of EMLR, in each case as amended; or (iii)
any law, order, rule, regulation, writ, injunction, judgment or decree
of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over EMLR or any of its business or
properties.
4.15 Legal Proceedings. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature pending, or
to EMLR's knowledge threatened, against EMLR, including, but not limited
to any shareholder claims or derivative actions, or challenging the
validity or propriety of the transactions contemplated by this
Agreement, and, to EMLR's best knowledge, there is no reasonable basis
for any proceeding, claim, action or governmental investigation against
EMLR. EMLR is not a party to any order, judgment or decree.
4.16 Certain Transactions. There have been, and to the Effective
Date there will be (i) no loans made to, or transactions with, any
officer or director of EMLR and (ii) no dividends or other
distributions declared or paid by EMLR.
4.17 Insurance. EMLR has not, and on the Effective Date will not
have, maintained casualty and liability policies and other insurance
policies with respect to its business.
4.18 Issuances of Securities. Except as set forth in the SEC
Reports, EMLR has not, except for the Issued EMLR Shares, issued or
committed itself to issue, and prior to the Effective Date will not
issue or commit itself to issue, any EMLR Shares or any options, rights,
warrants or other securities convertible into EMLR Shares, except as
contemplated by this Agreement.
4.19 Intellectual Property. EMLR has no patents, patent
applications, trademarks, trademark registrations, trade names,
copyrights, copyright registrations or applications therefor. EMLR has
no knowledge of any infringements by EMLR of any third party's
intellectual property.
4.20 Compliance with Laws. EMLR has, and on the Effective Date
will have, in all material respects operated its business and conducted
its affairs in compliance with all applicable laws, rules and
regulations, except where the failure to so comply did not have and
would not be expected to have, a material adverse effect on its business
or property. To the best of its knowledge, EMLR is not in violation of
any federal, state or local environmental law or regulation.
4.21 Related Party Transactions. On the Effective Date there will
be no loans, leases, commitments, arrangements or other contracts of any
kind or nature outstanding between (i) EMLR or (ii) any officer or
director of EMLR, or any person related to or affiliated with any
officer or director of EMLR.
4.22 Officers and Directors. During the past ten year period, no
current officer or director of EMLR has been the subject of any Adverse
Event.
4.23 Benefit Plans. EMLR has no pension plan, profit sharing or
similar employee benefit plan.
4.24 Consents. Except for the filing of the Certificate of Merger
and the filing of Commission Form 8-K, no consents or approvals of, or
filings or registrations with, any third party or any public body or
authority are necessary in connection with (i) the execution and
delivery by EMLR of this Agreement or (ii) the consummation by EMLR of
the transactions contemplated hereby. EMLR has, and on the Effective
Date will have, full power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby.
4.25 Finder's Fees. EMLR knows of no person who rendered any
service in connection with the introduction of the Companies to any of
the other Companies, for a "finder's fee" or similar type of fee in
connection with the Merger and the other transactions contemplated
hereby.
4.26 Employees. Except as set forth in the SEC Reports, EMLR has
no employees.
4.27 Disclosure. To the knowledge of EMLR, none of the
information supplied or to be supplied by or about EMLR to Xxxxxx
concerning the Merger contains any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.28 SEC Reports; Financial Statements. EMLR has filed all
reports required to be filed by it under the Securities Act of 1933, as
amended (the "Securities Act") and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), including pursuant to Section 13(a) or
15(d) thereof, since May 16, 2001 (the foregoing materials being
collectively referred to herein as the "SEC Reports"). As of their
respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the
rules and regulations of the Commission promulgated thereunder, and none
of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
financial statements of EMLR included in the SEC Reports complied in all
material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements were prepared in
accordance with GAAP, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all
material respects the financial position of the EMLR as of and for the
dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to
normal, immaterial, year-end audit adjustments.
4.29 Charter Documents. The charter documents of EMLR have not
been altered since incorporation, except as filed in the record books of
EMLR.
4.30 Corporate Minute Books. The corporate minute books of EMLR
are complete and correct and the minutes and consents contained therein
accurately reflect actions taken at a duly called and held meeting or by
sufficient consent without a meeting. All actions by EMLR which required
director or shareholder approval are reflected on the corporate minute
books of EMLR. EMLR is not in violation or breach of, or in default
with respect to, any term of its certificate of incorporation (or other
charter documents) or by-laws.
5. Representations to Survive Closing. All of the
representations, covenants and warranties contained in this Agreement
(including, but not limited to, all statements contained in any
certificate or other instrument delivered by or on behalf of EMLR, EMLR
Acquisition or Xxxxxx pursuant hereto or in connection with the
transactions contemplated hereby) shall survive the Closing for a period
of one (1) year from the Effective Date.
6. Surviving Corporations. The surviving entity in the Merger
shall be Xxxxxx. Xxxxxx' name, identities, certificate of
incorporation, bylaws, existence, purposes, powers, objects, franchises,
rights and immunities shall be unaffected and unimpaired by the Merger,
except as described in the Certificate of Merger.
7. Treatment of Securities of Constituent Corporations in the
Merger. The terms and conditions of the Merger, the mode of carrying
the same into effect, and the manner and basis of converting the
securities of each of the Constituent Corporations are as follows:
7.1 Treatment of the Issued Xxxxxx Shares. At the Effective Time,
each Issued Xxxxxx Share shall be converted into and exchangeable for
one share of fully paid and non-assessable shares of EMLR's newly-
designated Series B Convertible Preferred Stock, par value $.01 per
share (the "EMLR Series B Shares"). The EMLR Series B Shares shall have
the terms, rights and preferences substantially as set forth on the
Certificate of Designation for the EMLR Series B Shares attached hereto
as Exhibit C. Each EMLR Series B Share shall be initially convertible
into a number of shares of EMLR Common Stock equal to the quotient
resulting from dividing (a) the product resulting from multiplying (i)
the total number of shares of EMLR Common Stock outstanding on a fully-
diluted basis immediately prior to the Effective Time by (ii) 6.692308,
by (b) the total number of Issued Xxxxxx Shares outstanding on a fully-
diluted basis immediately prior to the Effective Time (the "Exchange
Ratio"), subject to adjustment for stock splits, combinations,
recapitalizations and similar events.
7.2 Treatment of the Xxxxxx Series A Shares. At the Effective
Time, each Xxxxxx Series A Share issued and outstanding shall be
converted into and exchangeable for one (1) share of fully paid and non-
assessable share of EMLR's newly-designated Series A Convertible
Preferred Stock, par value $.01 per share (the "EMLR Series A Shares").
The EMLR Series A Shares shall have the terms, rights and preferences
substantially as set forth on the Certificate of Designation for the
EMLR Series A Shares attached hereto as Exhibit B. Each EMLR Series A
Share shall be initially convertible into a number of shares of EMLR
Common Stock equal to the Exchange Ratio, subject to adjustment for
stock splits, combinations, recapitalizations and similar events.
7.3 Treatment of Xxxxxx Warrants. All outstanding warrants and
other rights to purchase or acquire shares of Xxxxxx Common Stock
outstanding immediately prior to the Closing shall convert to the right
to purchase the same number of shares of EMLR Common Stock on the same
basis of conversion set forth in Section 7.1 above; provided that the
exercise price per share of EMLR Common Stock under each such converted
warrant or right will be equal to the quotient obtained by dividing the
exercise price per share of Xxxxxx Common Stock under each outstanding
Xxxxxx warrant or right by the applicable Exchange Ratio.
7.4 Treatment of Xxxxxx Options. All outstanding options to
purchase shares of Xxxxxx Common Stock outstanding immediately prior to
the Closing shall convert to the right to purchase the same number of
shares of EMLR Common Stock on the same basis of conversion set forth in
Section 7.1 above; provided that the exercise price per share of EMLR
Common Stock under each such converted option will be equal to the
quotient obtained by dividing the exercise price per share of Xxxxxx
Common Stock under each outstanding Xxxxxx option or right by the
applicable Exchange Ratio.
7.5 Treatment of EMLR Acquisition Shares. Each issued and
outstanding share of common stock of EMLR Acquisition held by EMLR
immediately prior to the Effective Time will be converted into and
become one validly issued, fully paid and non-assessable share of common
stock of Xxxxxx.
7.6 Existence of EMLR Acquisition. The separate existence and
corporate organization of EMLR Acquisition, except insofar as it may be
continued by statute, shall cease on Effective Date and Xxxxxx shall
become a wholly owned subsidiary of EMLR.
7.7 Rights of Holders of Xxxxxx Shares.
(a) On and after the Effective Time and until surrendered for
exchange, each outstanding certificate that immediately prior to the
Effective Time represented Issued Xxxxxx Shares (except Dissenting
Shares) shall be deemed for all purposes, to evidence ownership of and
represent the number of whole EMLR Series B Shares into which such
Issued Xxxxxx Shares are convertible pursuant to Section 7.1 above. The
record holder of each such outstanding certificate representing Issued
Xxxxxx Shares shall, after the Effective Date, be entitled to vote the
EMLR Series B Shares into which such Issued Xxxxxx Shares shall have
been converted or are convertible on any matters on which the holders of
record of the EMLR Series B Shares, as of any date subsequent to the
Effective Date, shall be entitled to vote. In any matters related to
such certificates of Issued Xxxxxx Shares, EMLR may conclusively rely
upon the record of stockholders maintained by EMLR containing the names
and addresses of the holders of record of Issued Xxxxxx Shares on the
Effective Date.
(b) On and after the Effective Time and until surrendered for
exchange, each outstanding certificate that immediately prior to the
Effective Time represented Xxxxxx Series A Shares shall be deemed for
all purposes, to evidence ownership of and represent the number of whole
EMLR Series A Shares into which such Xxxxxx Series A Shares are
convertible pursuant to Section 7.2 above. The record holder of each
such outstanding certificate representing Xxxxxx Series A Shares shall,
after the Effective Date, be entitled to vote the EMLR Series A Shares
into which such Xxxxxx Series A Shares shall have been converted or are
convertible on any matters on which the holders of record of the EMLR
Series A Shares, as of any date subsequent to the Effective Date, shall
be entitled to vote. In any matters related to such certificates of
Xxxxxx Series A Shares, EMLR may conclusively rely upon the record of
stockholders maintained by EMLR containing the names and addresses of
the holders of record of Xxxxxx Series A Shares on the Effective Date.
7.8 Dissenting Shares. Issued Xxxxxx Shares held by stockholders
of Xxxxxx who have properly exercised and preserved appraisal rights
with respect to those shares ("Dissenting Shares") in accordance with
Section 262 of the Delaware General Corporation Law ("DGCL") shall not
be converted into or represent a right to receive EMLR Series B Shares
pursuant to Section 7.1 above, but the holders thereof shall be entitled
only to such rights as are granted by Section 262 of the DGCL. Each
holder of Dissenting Shares who becomes entitled to payment for such
shares pursuant to Section 262 of the DGCL shall receive payment
therefor from Xxxxxx, as the surviving corporation, in accordance with
such laws; provided, however, that if any such holder of Dissenting
Shares shall have effectively withdrawn such holder's demand for
appraisal of such shares or lost such holder's right to appraisal and
payment of such shares under Section 262 of the DGCL, such holder or
holders (as the case may be) shall forfeit the right to appraisal of
such shares and each such share shall thereupon be deemed to have been
canceled, extinguished and converted, as of the Effective Time, into and
represent the right to receive payment from EMLR of EMLR Series B Shares
as provided in Section 7.1 above.
8. Rights and Liabilities of Surviving Corporation in Merger. On
and after the Effective Date, Xxxxxx, as the surviving corporation of
the Merger, shall succeed to and possess, without further act or deed,
all of the estate, rights, privileges, powers and franchises, both
public and private, and all of the property, real, personal, and mixed,
of EMLR Acquisition; all debts due to EMLR Acquisition on whatever
account shall be vested in Xxxxxx; all claims, demands, property,
rights, privileges, powers, franchises and every other interest of EMLR
Acquisition shall be as effectively the property of Xxxxxx as they were
of EMLR Acquisition; the title to any real estate by deed or otherwise
in EMLR Acquisition shall not revert or be in any way impaired by reason
of the Merger, but shall be vested in Xxxxxx; all rights of creditors
and all liens upon any property of EMLR Acquisition shall be preserved
unimpaired, limited in lien to the property affected by such lien at the
Effective Date; and all debts, liabilities and duties of EMLR
Acquisition shall thenceforth attach to Xxxxxx and may be enforced
against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it.
9. Further Assurances of Title. As and when requested by Xxxxxx,
or by any of its successors or assigns, EMLR Acquisition shall execute
and deliver, or cause to be executed and delivered, all such deeds and
instruments and will take or cause to be taken all such further action
as Xxxxxx may xxxx necessary or desirable in order to vest in and
confirm to Xxxxxx title to and possession of the property acquired by
Xxxxxx by reason or as a result of the Merger, and otherwise to carry
out the intent and purposes hereof, and the officers, directors of
Xxxxxx and EMLR, as applicable, are fully authorized in the name of
Xxxxxx or EMLR or otherwise to take any and all such action.
10. Conditions of Obligations of EMLR Acquisition and EMLR. The
obligation of EMLR Acquisition and EMLR to consummate the Merger and
other transactions contemplated hereby is subject to the following
conditions prior to the Effective Date:
10.1 Compliance with Representations and Warranties. Xxxxxx shall
be in compliance with its representations, warranties and covenants
contained herein in all material respects, and EMLR Acquisition and EMLR
each shall receive from Xxxxxx certificates to such effect from the
President of Xxxxxx as of the Effective Date.
10.2 Losses. Xxxxxx shall not have suffered a loss on account of
fire, flood, accident or other calamity of such a character as to
interfere materially with the continuous operation of its business or
materially adversely affect its condition, financial or otherwise,
regardless of whether or not such loss shall have been insured.
10.3 No Material Adverse Change. Except as disclosed in this
Agreement or in the schedules annexed hereto, no material adverse change
in the aggregate shall have occurred in the financial condition,
business, properties, assets, liabilities, results of operations or
prospects of Xxxxxx since December 31, 2003.
10.4 Disposition of Assets. None of the properties or assets of
Xxxxxx shall have been sold or otherwise disposed of other than in the
ordinary course of business in accordance with past practice during such
period, except with the prior written consent of EMLR.
10.5 Conditions. Xxxxxx shall have performed and complied with
the provisions and conditions of this Agreement on its part to be
performed and complied with.
10.6 Filings and Approvals. All applicable filings and regulatory
approvals required to be made or obtained by Xxxxxx shall have been made
or obtained.
10.7 Other Approvals. This Agreement and the transactions
contemplated hereby shall have been approved by appropriate action of
the Board of Directors and stockholders, as required, of Xxxxxx and
resolutions to that effect shall have been delivered to EMLR. Xxxxxx
shall have obtained all consents required to be obtained.
10.8 Compliance with Securities Laws. There shall have been full
compliance with the applicable securities or "blue sky" laws and
regulations of any state or other governmental body having jurisdiction
over the Merger.
10.9 Opinion of Counsel. EMLR shall have received an opinion from
counsel to Xxxxxx in form and substance reasonably satisfactory to EMLR.
10.10 Private Placement. That certain private placement of Xxxxxx
Series A Shares providing minimum aggregate gross proceeds to Xxxxxx of
$7,014,000 shall have been consummated (the "Private Placement").
10.11 Voting Agreement. R&R Biotech Partners, LLC shall have
executed and delivered a voting agreement, agreeing to vote all Issued
EMLR Shares beneficially owned by it in favor of the transactions
contemplated hereby.
Compliance with the provisions of this Section 10 shall be
certified to at the Closing of the Merger by the President and Secretary
of Xxxxxx.
11. Conditions of Obligations of Xxxxxx. The obligations of
Xxxxxx to consummate the Merger are subject to the following conditions
prior to the Effective Date:
11.1 Compliance with Representations and Warranties. EMLR
Acquisition and EMLR shall be in compliance with their respective
representations, warranties and covenants contained herein, and Xxxxxx
shall have received from each of EMLR Acquisition and EMLR a certificate
to such effect from their respective Presidents as of the Effective
Date.
11.2 Losses. EMLR Acquisition and EMLR shall not have suffered
any loss on account of fire, flood, accident or other calamity of such a
character as to interfere materially with the continuous operation of
their respective businesses or materially adversely affect their
respective condition, financial or otherwise, regardless of whether or
not such loss shall have been insured.
11.3 No Material Transactions. No material transactions shall
have been entered into by EMLR Acquisition or EMLR, other than
transactions in the ordinary course of business, since February 29,
2004, other than as referred to in this Agreement or in connection
herewith, except with the prior written consent of Xxxxxx.
11.4 No Material Adverse Change. No material adverse change shall
have occurred in the financial condition, business, properties, assets,
liabilities, results of operations or prospects of EMLR Acquisition or
EMLR since February 29, 2004, other than as referred to in this
Agreement.
11.5 Disposal of Assets; Liabilities. None of the properties or
assets of EMLR Acquisition or EMLR shall have been sold or otherwise
disposed of, other than in the ordinary course of business since
February 29, 2004, except with the written consent of Xxxxxx. Neither
EMLR nor EMLR Acquisition shall have any liabilities or claims, whether
such liabilities or claims are contingent or absolute, direct or
indirect, accrued or unaccrued and matured or unmatured, including
without limitation, amounts owed to their respective financial advisors,
accountants and counsel.
11.6 Compliance with Conditions. EMLR Acquisition and EMLR shall
each have performed and complied with the provisions and conditions of
this Agreement on its part to be performed and complied with.
11.7 Filings and Approvals. All applicable filings required to be
made and regulatory approvals, as well as any other third party
approvals, required to be obtained by EMLR have been made or obtained,
including the filing with the Commission and mailing to its shareholders
a statement containing the information required by Rule 14f-1 under the
Exchange Act. Without limiting the generality of the foregoing, EMLR
shall have also filed with the Commission its quarterly report on Form
10-QSB for its quarter ended May 31, 2004, which report shall comply in
all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
11.8 Board Resignations. EMLR shall have held a meeting of its
Board of Directors at which meeting all of its directors except one (the
"EMLR Board Member") shall have resigned and the persons designated by
Xxxxxx shall have been appointed as directors of EMLR, to fill the
vacancies created thereby, all subject to the consummation of the
Merger. Upon such appointment, the remaining EMLR Board Member shall
resign.
11.9 Opinion. Xxxxxx shall have received an opinion from counsel
to EMLR Acquisition and EMLR in form and substance reasonably
satisfactory to Xxxxxx.
11.10 Private Placement. The Private Placement shall have been
consummated.
Compliance with the provisions of this Section 11, as well as such
other reasonable certifications as Xxxxxx shall require, including but
not limited to certification of the shareholder list, bylaws and charter
documents of EMLR, shall be certified to at the Closing of the Merger by
the President and Secretary of EMLR .
12. Other Covenants.
12.1 Preparation of Information Statement. As promptly as
practicable after the execution of this Agreement, EMLR will prepare and
file with the Commission and mail to its shareholders a notice that
complies with Rule 14f-1 under the Exchange Act and will prepare and use
commercially reasonable efforts to file any other filings required to be
filed by it under the Exchange Act, the Securities Act or any other
federal, state or foreign laws relating to the Merger and the
transactions contemplated by this Agreement. EMLR and Xxxxxx shall
promptly supply the other with any information which may be required in
order to effectuate any filings pursuant to this Section 12.1.
12.2 Expenses. Except as otherwise provided in this Agreement,
all fees and expenses incident to the negotiation, preparation and
performance of this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses, including,
without limitation, fees, expenses and disbursements of their respective
financial advisors, accountants and counsel.
12.3 Tax Treatment. None of EMLR, EMLR Acquisition or Xxxxxx
shall knowingly take any action that could reasonably be expected to
disqualify the Merger as a "reorganization" within the meaning of
Section 368(a) of the Code.
12.4 Reverse Split. The parties acknowledge and agree that,
following the Closing, EMLR intends to effect a reverse split of the
EMLR Common Shares in order to allow for the conversion of the EMLR
Series A and Series B Preferred Shares (the "Reverse Split"). The
Reverse Split shall be effected at a ratio not to exceed 1-for-12. The
Reverse Split may also be effected through a merger with a wholly-owned
subsidiary of EMLR for purposes of completing a reincorporation under
Delaware law in which each share of outstanding EMLR Common Stock is
exchanged for no less than one-twelfth (1/12) of a common share of the
surviving corporation in such merger.
13. Abandonment. This Agreement and the Merger may be abandoned
by any of the Companies, acting by its Board of Directors, by written
notice to the other parties hereto, at any time in the event of the
failure of any condition in favor of such entity as to which the
consummation of the Merger is subject. In the event of abandonment of
this Agreement, the same shall become wholly void and of no effect, and
there shall be no further liability or obligation hereunder on the part
of any of the Companies, their respective Boards of Directors or any
other party to any other party to this Agreement.
14. Closing or Termination. In the event the Closing shall not
take place due to failure of any condition required herein, then any
party shall have the right to terminate this Agreement, in which event
no party shall have any further right or obligation as against any
other.
15. Delivery of Corporate Proceedings of EMLR and EMLR
Acquisition. At the Closing, EMLR and EMLR Acquisition shall deliver to
counsel for Xxxxxx the originals of all of the corporate proceedings of
EMLR and EMLR Acquisition, relating to this Agreement and Xxxxxx shall
deliver to counsel for EMLR the originals of all of the corporate
proceedings of Xxxxxx, duly certified by their respective Secretaries,
relating to this Agreement.
16. Limitation of Liability. The representations and warranties
made by any party to this Agreement are intended to be relied upon only
by the other parties to this Agreement and by no other Person. Nothing
contained in this Agreement shall be deemed to confer upon any Person
not a party to this Agreement any third party beneficiary rights or any
other rights of any nature whatsoever.
17. Further Instruments and Actions. Each party shall deliver
such further instruments and take such further action as may be
reasonably requested by any other party hereto in order to carry out the
intent and purposes of this Agreement.
18. Governing Law. This Agreement is being delivered and is
intended to be performed in the State of New York, and shall be
construed and enforced in accordance with the laws of such state,
without regard to conflicts of laws thereof. Each party agrees that
all legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
documents executed in connection herewith (whether brought against a
party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, New York for
the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the documents executed in
connection herewith), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such
suit, action or proceeding is improper. Each party hereto (including
its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out
of or relating to this Agreement or the transactions contemplated
hereby. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by delivering a copy thereof via overnight delivery (with
evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. If any party
shall commence an action or proceeding to enforce any provisions hereof,
then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
19. Notices. All notices or other communications to be sent by
any party to this Agreement to any other party to this Agreement shall
be sent by certified mail, personal delivery or nationwide overnight
courier to the addresses hereinbefore designated, or such other
addresses as may hereafter be designated in writing by a party. Notice
shall be deemed given and received on the date of actual delivery to the
address specified thereon.
20. Binding Agreement. This Agreement represents the entire
agreement among the parties hereto with respect to the matters described
herein and is binding upon and shall inure to the benefit of the parties
hereto and their legal representatives, successors and permitted
assigns. This Agreement may not be assigned and, except as stated
herein, may not be altered or amended except in a writing executed by
all of the parties hereto.
21. Counterparts. This Agreement may be executed in counterparts,
all of which, when taken together, shall constitute the entire
Agreement.
22. Severability. The provisions of this Agreement shall be
severable, so that the unenforceability, validity or legality of any one
provision shall not affect the enforceability, validity or legality of
the remaining provisions hereof.
23. Joint Drafting. This Agreement shall be deemed to have been
drafted jointly by the parties hereto, and no inference or
interpretation against any party shall be made solely by virtue of such
party allegedly having been the draftsperson of this Agreement.
24. Reliance on Certificates. In rendering any opinion referred
to herein, counsel for the parties hereto may rely, as to any factual
matters involved in their respective opinions, on certificates of public
officials and of corporate and company officers, and on such other
evidence as such counsel may reasonably deem appropriate and, as to the
matters governed by the laws of jurisdictions other than the United
States or the States of Delaware or Colorado, an opinion of local
counsel in such other jurisdiction(s), which counsel shall be
satisfactory to the other parties in the exercise of their reasonable
discretion.
25. Public Announcements. All parties hereto agree that any
public announcement, press release or other public disclosure of the
signing of this Agreement shall be made jointly and only after all
parties hereto have reviewed and approved the language and timing of
such disclosure.
26. Consent. Whenever consent is required to be given by any
party to any other party hereunder in connection with any matter
contemplated hereby, such consent shall not be unreasonably withheld,
delayed or conditioned.
Signature page follows.
IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
EMAIL REAL XXXXXX.XXX, INC.,
a Colorado corporation
By:
-------------------------
Name: Xxx X'Xxxxx
Title: Chief Executive Officer
EMLR ACQUISITION CORP.,
a Delaware corporation
By:
-------------------------
Name: Xxx X'Xxxxx
Title: Chief Executive Officer
XXXXXX HEALTH SCIENCES, INC.,
a Delaware corporation
By:
-------------------------
Name: Xxxx X. Xxx
Title: President and
Chief Executive Officer
Index to Schedules and Exhibits
Exhibit A: Certificate of Merger
Exhibit B: Form of Certificate of Designation of
EMLR Series A Shares
Exhibit C: Form of Certificate of Designation of
EMLR Series B Shares
Schedule A: Xxxxxx Capitalization Schedule
Schedule B: Xxxxxx Schedule of Exceptions
Schedule C: EMLR Schedule of Exceptions
Schedule 2.6: Xxxxxx Foreign Qualifications
Schedule 2.14: Xxxxxx Contracts
Schedule 2.18: Xxxxxx Intellectual Property Rights
Exhibit A
---------
CERTIFICATE OF MERGER
of
EMLR ACQUISITION CORP.
into
XXXXXX HEALTH SCIENCES, INC.
Pursuant to Title 8, Section 251 of the General Corporation Law of
the State of Delaware, Xxxxxx Health Sciences, Inc. certifies:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
Name State of Incorporation
------ ----------------------
EMLR Acquisition Corp. Delaware
Xxxxxx Health Sciences, Inc. Delaware
SECOND: That an Agreement and Plan of Merger has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with the requirements of Section 251 of the
General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation of the merger is
Xxxxxx Health Sciences, Inc., the name of which is hereby changed to
Hana Biosciences, Inc.
FOURTH: The certificate of incorporation and Bylaws of Xxxxxx
Health Sciences, Inc. will be the certificate of incorporation and
Bylaws of the surviving corporation.
FIFTH: The executed Agreement and Plan of Merger is on file at an
office of the surviving corporation, the address of which is 000 Xxxxxx
Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
SIXTH: That a copy of the Agreement and Plan of Merger will be
furnished by the surviving corporation, on request and without cost, to
any stockholder of any constituent corporation.
SEVENTH: This merger shall be effective at the time of filing of
this Certificate of Merger with the Secretary of State of Delaware.
The undersigned corporation has caused this certificate of merger
to be signed on , 2004.
--------
XXXXXX HEALTH SCIENCES, INC.
By:
-------------------------
Xxxx X. Xxx
President and
Chief Executive Officer
Exhibit B
---------
EMAIL REAL XXXXXX.XXX, INC.
Certificate of Designation of
Series A Convertible Preferred Stock
EMAIL REAL XXXXXX.XXX, INC., a corporation organized and existing
under the laws of the State of Colorado (the "Corporation"), does hereby
certify that, pursuant to the authority conferred on the Board of
Directors of the Corporation by the Articles of Incorporation, as
amended and restated to date (the "Articles of Incorporation"), of the
Corporation and in accordance with Section 0-000-000 of the Colorado
Business Corporation Act, the Board of Directors of the Corporation
adopted the following resolution establishing a series of
( ( )) shares of Preferred Stock of the
--------------- ---------------
Corporation designated as "Series A Convertible Preferred Stock":
RESOLVED, that pursuant to the authority conferred on the Board of
Directors of this Corporation by the Articles of Incorporation, a series
of Preferred Stock, par value $0.01 per share, of the Corporation is
hereby established and created, and that the designation and number of
shares thereof and the voting and other powers, preferences and
relative, participating, optional or other rights of the shares of such
series and the qualifications, limitations and restrictions thereof are
as follows:
1. Designation. The series of preferred stock established hereby
shall be designated the "Series A Convertible Preferred Stock" (and
shall be referred to herein as the "Preferred Shares") and the
authorized number of Preferred Shares shall be ( ).
2. Rank. With respect to any Liquidation Event (as defined
herein), the Preferred Shares shall rank prior to the Corporation's
common stock, par value $.001 per share (the "Common Stock"), and the
Corporation's Series B Convertible Preferred Stock, par value $.01 per
share (the "Series B Shares," and together with the Common Stock, the
"Junior Securities").
3. Voting Rights. Along with the holders of the Common Stock,
each holder of Preferred Shares shall have one vote on all matters
submitted to the holders of Common Stock for each share of Common Stock
into which such Preferred Shares would be converted if converted as of
the date of such vote based on the Conversion Ratio (as herein defined)
then in effect, but regardless as to whether the Preferred Shares are
then convertible. In addition, without the affirmative vote of the
holders (acting together as a class) of at least a majority of Preferred
Shares at the time outstanding given in person or by proxy at any annual
or special meeting, or, if permitted by law, in writing without a
meeting, the Corporation shall not alter, change or amend the
preferences or rights of the Preferred Shares.
4. Dividends. The Preferred Shares shall not be entitled to
receive a dividend and, as long as any Preferred Shares remain
outstanding, no dividends shall be declared on any Junior Security
without the consent in writing of holders of at least a majority of the
Preferred Shares then outstanding. Subject to the foregoing sentence,
in the event that the Corporation declares or pays any dividends upon
the Common Stock (whether payable in cash, securities or other
property), other than dividends payable solely in shares of Common
Stock, the Corporation shall also declare and pay to the holders of the
Preferred Shares at the same time that it declares and pays such
dividends to the holders of the Common Stock, the dividends which would
have been declared and paid with respect to the Common Stock issuable
upon conversion of the Preferred Shares had all of the outstanding
Preferred Shares been converted immediately prior to the record date for
such dividend or, if no record date is fixed, the date as of which the
record holders of Common Stock entitled to such dividends are to be
determined; provided that for purposes of determining the number of
shares of Common Stock into which the Preferred Shares are converted, it
shall be assumed that a Recapitalization Event has been effected.
5. Liquidation Right and Preference. In the event of the
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary (a "Liquidation Event"), the holders of
Preferred Shares shall be entitled to receive in cash, out of the assets
of the Corporation, an amount per share for each outstanding Preferred
Share equal to $(3.34) (herein, "Liquidation Value"), before any
payments shall be made or any assets distributed to the holders of any
Junior Securities. If, upon any Liquidation Event, the assets of the
Corporation are insufficient to pay the Liquidation Value, the holders
of such Preferred Shares shall share pro rata in any such distribution
in proportion to the full amounts to which they would otherwise be
respectively entitled. After payment of the full Liquidation Value to
which each holder of Preferred Shares is entitled, the holders of the
Preferred Shares will not be entitled to any further participation as
such in any distribution of assets of the Corporation.
6. Conversion Rights.
(a) Conversion Ratio. The Preferred Shares shall be initially
convertible into Common Stock at the rate of (Merger Exchange Ratio)
shares of Common Stock per Preferred Share converted (the "Conversion
Ratio"). The shares of Common Stock issuable upon conversion of the
Preferred Shares shall be referred to herein as the "Conversion Shares."
The Conversion Ratio shall be subject to adjustment pursuant to
Sections 8(a) and (b). For the avoidance of doubt, a Recapitalization
Event shall trigger an appropriate adjustment to the Conversion Ratio
under Section 8(a) and (b).
(b) Optional Conversion. Following the time upon which a
Recapitalization Event becomes effective under all applicable provisions
of the Colorado Business Corporation Act and the Corporation's Articles
of Incorporation and Bylaws, the Preferred Shares may be convertible
into such number of shares of Common Stock based on the Conversion Ratio
then in effect. As used herein, the term "Recapitalization Event" means
a combination of the Corporation's Common Stock on the basis of at least
1-for-(12), or a merger with a wholly-owned subsidiary of the
Corporation pursuant to which each outstanding share of Common Stock is
to be exchanged for no more than 1/(12) of a share of common stock of
the surviving corporation in such merger.
(c) Automatic Conversion. The Preferred Shares shall,
automatically and without any action on the part of the holders thereof,
convert into a number of fully paid and nonassessable shares of Common
Stock based on the then applicable Conversion Ratio upon the earlier of
(i) such time as the United States Securities and Exchange Commission
has declared effective a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), covering the resale of
Conversion Shares, or (ii) the date on which the Conversion Shares
relating to such Preferred Shares are eligible for resale pursuant to
Rule 144(k) promulgated under the Securities Act (or any successor rule
thereto), but regardless of whether the holder of any such Preferred
Shares is then deemed an affiliate of the Corporation; provided,
however, in either case, that a Recapitalization Event has occurred. The
Conversion Ratio shall be subject to adjustment pursuant to Sections
8(a) and (b).
(d) Optional Conversion Mechanics. In order to exercise the
conversion privilege described in paragraph (b) of this Section, a
holder of Preferred Shares shall (1) notify the Corporation in writing
of such holder's intent to convert a specified portion of such shares
(the "Conversion Notice" and the date of such notice which shall be the
same or later than the date notice is given, the "Conversion Notice
Date") and (2) provide, on or prior to the Conversion Notice Date, to
the Corporation at its principal office the certificate evidencing the
Preferred Shares being converted, duly endorsed to the Corporation and
accompanied by written notice to the Corporation that the holder elects
to convert a specified portion or all of such Preferred Shares.
Preferred Shares converted in accordance with paragraph (b) of this
Section shall be deemed to have been converted on the day of receipt by
the Corporation of the certificate representing such shares for
conversion in accordance with the foregoing provisions (the "Conversion
Date"), and at such time the rights of the holder of such Preferred
Shares other than the right to receive shares of Common Stock upon
conversion of the Preferred Shares pursuant to the terms hereof, as such
holder, shall cease and such holder shall be treated for all purposes as
the record holder of Common Stock issuable upon conversion. As promptly
as practicable on or after the Conversion Date, the Corporation shall
issue and mail or deliver to such holder a certificate or certificates
for the number of shares of Common Stock issuable upon conversion,
computed to the nearest full share, and a certificate or certificates
for the balance of Preferred Shares surrendered, if any, not so
converted into Common Stock.
(e) Automatic Conversion Mechanics. The Corporation shall not be
obligated to issue the shares of Common Stock issuable upon the
automatic conversion of the Preferred Shares, as described in paragraph
(c) of this Section, unless certificates evidencing such Preferred
Shares are either delivered to the Corporation or the holder notifies
the Corporation that such certificates have been lost, stolen or
destroyed, and executes agreements satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection
therewith. Upon the occurrence of any automatic conversion of the
Preferred Shares pursuant to paragraph (c) of this Section, the holders
of the Preferred Shares shall surrender the certificates representing
the Preferred Shares for which such automatic conversion has occurred to
the Corporation and the Corporation shall cause its transfer agent to
deliver the shares of Common Stock issuable upon such conversion to the
holder within three business days of the holder's delivery of the
applicable Preferred Share certificate(s).
7. Preemptive Rights. Holders of Preferred Shares shall have no
preemptive rights with respect to any future issuances of securities by
the Corporation.
8. Other Terms of Preferred Shares.
(f)Stock Split, Stock Dividend, Recapitalization, etc. If the
Corporation, at any time while any Preferred Shares are outstanding, (a)
shall pay a stock dividend or otherwise make a distribution or
distributions payable in shares of its capital stock (whether payable in
shares of its Common Stock or of capital stock of any class), (b)
subdivide outstanding shares of Common Stock into a larger number of
shares, (c) combine outstanding shares of Common Stock into a smaller
number of shares, or (d) issue by reclassification of shares of Common
Stock any shares of capital stock of the Corporation, the Conversion
Ratio in effect immediately prior thereto shall be adjusted so that the
holder of any Preferred Shares thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock which
such holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Preferred Shares
been converted immediately prior to the happening of such event or the
record date therefor, whichever is earlier. Any adjustment made
pursuant to this Section shall become effective immediately after the
record date for the determination of shareholders entitled to receive
such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification.
(g) No Impairment. Unless approved in accordance with Section 3
hereof the Corporation will not, by amendment of its Articles of
Incorporation or this Certificate of Designation or through any
reorganization, transfer of assets, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Corporation but will at all times in good
faith assist in the carrying out of all the provisions of Section 8(a)
and in the taking of all such action as may be necessary or appropriate
in order to protect the Conversion Rights of the holders of the
Preferred Shares against impairment.
(h) Notices of Record Date. In the event that this Corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned
surplus (for avoidance of doubt, the foregoing phrase does not include
any stock split or reverse stock split which results in an automatic
adjustment of the Conversion Ratio purchase to Section 8(a) above);
(ii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or
(iii) to merge with or into any other corporation (other than a
merger in which the holders of the outstanding voting equity securities
of the Corporation immediately prior to such merger hold more than fifty
percent (50 percent) of the voting power of the surviving entity
immediately following such merger), or sell, lease or convey all or
substantially all its property or business, or to liquidate, dissolve or
wind up;
then, in connection with each such event, this Corporation shall send to
the holders of the Preferred Stock:
(1) at least ten (10) days' prior written notice of the date on
which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of
Common Stock shall be entitled thereto) or for determining rights to
vote in respect of the matters referred to in (ii) and (iii) above; and
(2) in the case of the matters referred to in (ii) and (iii)
above, at least ten (10) days' prior written notice of the date when the
same shall take place (and specifying the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such
event).
Each such written notice shall be given by first class mail,
postage prepaid, addressed to the holders of Preferred Shares at the
address for each such holder as shown on the books of this Corporation
and shall be deemed given when so mailed.
(i) Reservation of Shares Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose
of effecting the conversion of the shares of the Preferred Shares, such
number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Preferred Shares;
and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all
then outstanding Preferred Shares, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
(j) Status of Converted Stock. In the event any Preferred Shares
shall be converted pursuant to Section 6 hereof, (i) the Preferred
Shares so converted shall be retired and cancelled and shall not be
reissued and (ii) the authorized number of Preferred Shares set forth in
Section 1 hereof shall be automatically reduced by the number of
Preferred Shares so converted and the number of shares of the
Corporation's undesignated Preferred Stock shall be deemed increased by
such number.
(k) Loss, Theft, Destruction of Preferred Shares. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction
or mutilation of certificates representing Preferred Shares and, in the
case of any such loss, theft or destruction, upon receipt of indemnity
or security reasonably satisfactory to the Corporation, or, in the case
of any such mutilation, upon surrender and cancellation of the Preferred
Shares, the Corporation shall make, issue and deliver, in lieu of such
lost, stolen, destroyed or mutilated certificates representing Preferred
Shares, new certificates representing Preferred Shares of like tenor.
IN WITNESS WHEREOF, Email Real Xxxxxx.xxx, Inc. has caused this
Certificate to be signed on its behalf, as of this day of
, 2004.
EMAIL REAL XXXXXX.XXX, INC.
By:
-------------------------
Xxx X'Xxxxx
Its: President and
Chief Executive Officer
Exhibit C
---------
EMAIL REAL XXXXXX.XXX, INC.
Certificate of Designation of
Series B Convertible Preferred Stock
EMAIL REAL XXXXXX.XXX, INC., a corporation organized and existing
under the laws of the State of Colorado (the "Corporation"), does hereby
certify that, pursuant to the authority conferred on the Board of
Directors of the Corporation by the Articles of Incorporation, as
amended and restated to date (the "Articles of Incorporation"), of the
Corporation and in accordance with Section 0-000-000 of the Colorado
Business Corporation Act, the Board of Directors of the Corporation
adopted the following resolution establishing a series of
( ( )) shares of Preferred Stock of the
--------------- ---------------
Corporation designated as "Series B Convertible Preferred Stock":
RESOLVED, that pursuant to the authority conferred on the Board of
Directors of this Corporation by the Articles of Incorporation, a series
of Preferred Stock, par value $0.01 per share, of the Corporation is
hereby established and created, and that the designation and number of
shares thereof and the voting and other powers, preferences and
relative, participating, optional or other rights of the shares of such
series and the qualifications, limitations and restrictions thereof are
as follows:
1. Designation. The series of preferred stock established hereby
shall be designated the "Series B Convertible Preferred Stock" (and
shall be referred to herein as the "Preferred Shares") and the
authorized number of Preferred Shares shall be ( ).
2. Rank. With respect to any Liquidation Event (as defined
herein), the Preferred Shares shall rank junior to the Corporation's
Series A Convertible Preferred Stock, par value $.01 per share ("Series
A Preferred Shares"), but prior to the Corporation's common stock, par
value $.001 per share (the "Common Stock," and collectively with any
other security of the Corporation ranking junior to the Preferred
Shares, the "Junior Securities").
3. Voting Rights. Along with the holders of the Common Stock,
each holder of Preferred Shares shall have one vote on all matters
submitted to the holders of Common Stock for each share of Common Stock
into which such Preferred Shares would be converted if converted as of
the date of such vote based on the Conversion Ratio (as herein defined)
then in effect, but regardless as to whether the Preferred Shares are
then convertible. In addition, without the affirmative vote of the
holders (acting together as a class) of at least a majority of Preferred
Shares at the time outstanding given in person or by proxy at any annual
or special meeting, or, if permitted by law, in writing without a
meeting, the Corporation shall not alter, change or amend the
preferences or rights of the Preferred Shares.
4. Dividends. The Preferred Shares shall not be entitled to
receive a dividend and, as long as any Preferred Shares remain
outstanding, no dividends shall be declared on any Junior Security
without the consent in writing of holders of at least a majority of the
Preferred Shares then outstanding. Subject to the foregoing sentence,
in the event that the Corporation declares or pays any dividends upon
the Common Stock (whether payable in cash, securities or other
property), other than dividends payable solely in shares of Common
Stock, the Corporation shall also declare and pay to the holders of the
Preferred Shares at the same time that it declares and pays such
dividends to the holders of the Common Stock, the dividends which would
have been declared and paid with respect to the Common Stock issuable
upon conversion of the Preferred Shares had all of the outstanding
Preferred Shares been converted immediately prior to the record date for
such dividend or, if no record date is fixed, the date as of which the
record holders of Common Stock entitled to such dividends are to be
determined; provided that for purposes of determining the number of
shares of Common Stock into which the Preferred Shares are converted, it
shall be assumed that a Recapitalization Event has been effected.
5. Liquidation Right and Preference. In the event of the
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary (a "Liquidation Event"), the holders of
Preferred Shares shall be entitled to receive in cash, out of the assets
of the Corporation, an amount per share for each outstanding Preferred
Share equal to $3.34 (herein, "Liquidation Value"), before any payments
shall be made or any assets distributed to the holders of any Junior
Securities. If, upon any Liquidation Event, the assets of the
Corporation are insufficient to pay the Liquidation Value, the holders
of such Preferred Shares shall share pro rata in any such distribution
in proportion to the full amounts to which they would otherwise be
respectively entitled. After payment of the full Liquidation Value to
which each holder of Preferred Shares is entitled, the holders of the
Preferred Shares will not be entitled to any further participation as
such in any distribution of assets of the Corporation.
6. Conversion.
(a) Conversion Ratio. The Preferred Shares shall be initially
convertible into Common Stock at the rate of (Merger Exchange Ratio)
shares of Common Stock per Preferred Share converted (the "Conversion
Ratio"). The shares of Common Stock issuable upon conversion of the
Preferred Shares shall be referred to herein as the "Conversion Shares."
The Conversion Ratio shall be subject to adjustment pursuant to
Sections 8(a) and (b). For the avoidance of doubt, a Recapitalization
Event shall trigger an appropriate adjustment to the Conversion Ratio
under Section 8(a) and (b).
(b) Automatic Conversion. The Preferred Shares shall,
automatically and without further action of the holders thereof, convert
into a number of fully paid and nonassessable shares of Common Stock
based on the Conversion Ratio then in effect at such time that a
Recapitalization Event becomes effective under all applicable provisions
of the Colorado Business Corporation Act and the Corporation's Articles
of Incorporation and Bylaws. As used herein, the term "Recapitalization
Event" means a combination of the Corporation's Common Stock on the
basis of at least 1-for-12, or a merger with a wholly-owned subsidiary
of the Corporation pursuant to which each outstanding share of Common
Stock is to be exchanged for no more than 1/12 of a share of common
stock of the surviving corporation in such merger.
(c) Conversion Mechanics. At the effective time of the
Recapitalization Event, the rights of the holder of Preferred Shares
(other than the right to receive shares of Common Stock upon conversion
of the Preferred Shares pursuant to the terms hereof, as such holder)
shall cease and such holder shall be treated for all purposes as the
record holder of the Conversion Shares. As promptly as practicable on
or after the Recapitalization Event, the Corporation shall issue and
cause to be mailed or delivered to such holder a notice stating that a
Recapitalization Event has occurred and that the Preferred Shares have
been deemed to have converted in accordance with paragraph (b) of this
Section. The Corporation shall not be obligated to issue the shares of
Common Stock issuable upon such conversion, however, unless certificates
evidencing such Preferred Shares are either delivered to the Corporation
or the holder notifies the Corporation that such certificates have been
lost, stolen or destroyed, and executes agreements satisfactory to the
corporation to indemnify the Corporation from any loss incurred by it in
connection therewith. Upon the occurrence of an automatic conversion of
the Preferred Shares pursuant to paragraph (b) of this Section, the
holders of the Preferred Shares shall surrender the certificates
representing the Preferred Shares for which such conversion has occurred
to the Corporation and the Corporation shall cause its transfer agent to
deliver the shares of Common Stock issuable upon such conversion to the
holder within three business days of the holder's delivery of the
applicable Preferred Share certificate(s).
7. Preemptive Rights. Holders of Preferred Shares shall have no
preemptive rights with respect to any future issuances of securities by
the Corporation.
8. Other Terms of Preferred Shares.
(d) Stock Split, Stock Dividend, Recapitalization, etc. If the
Corporation, at any time while any Preferred Shares are outstanding, (a)
shall pay a stock dividend or otherwise make a distribution or
distributions payable in shares of its capital stock (whether payable in
shares of its Common Stock or of capital stock of any class), (b)
subdivide outstanding shares of Common Stock into a larger number of
shares, (c) combine outstanding shares of Common Stock into a smaller
number of shares, or (d) issue by reclassification of shares of Common
Stock any shares of capital stock of the Corporation, the Conversion
Ratio in effect immediately prior thereto shall be adjusted so that the
holder of any Preferred Shares thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock which
such holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Preferred Shares
been converted immediately prior to the happening of such event or the
record date therefor, whichever is earlier. Any adjustment made
pursuant to this Section shall become effective immediately after the
record date for the determination of shareholders entitled to receive
such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification.
(e) No Impairment. Unless approved in accordance with Section 3
hereof the Corporation will not, by amendment of its Articles of
Incorporation or this Certificate of Designation or through any
reorganization, transfer of assets, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Corporation but will at all times in good
faith assist in the carrying out of all the provisions of Section 8(a)
and in the taking of all such action as may be necessary or appropriate
in order to protect the Conversion Rights of the holders of the
Preferred Shares against impairment.
(f) Notices of Record Date. In the event that this Corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned
surplus (for avoidance of doubt, the foregoing phrase does not include
any stock split or reverse stock split which results in an automatic
adjustment of the Conversion Ratio purchase to Section 8(a) above);
(ii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or
(iii) to merge with or into any other corporation (other than a
merger in which the holders of the outstanding voting equity securities
of the Corporation immediately prior to such merger hold more than fifty
percent (50 percent) of the voting power of the surviving entity
immediately following such merger), or sell, lease or convey all or
substantially all its property or business, or to liquidate, dissolve or
wind up;
then, in connection with each such event, this Corporation shall send to
the holders of the Preferred Stock:
(1) at least ten (10) days' prior written notice of the date on
which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of
Common Stock shall be entitled thereto) or for determining rights to
vote in respect of the matters referred to in (ii) and (iii) above; and
(2) in the case of the matters referred to in (ii) and (iii) above,
at least ten (10) days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon the occurrence of such event).
Each such written notice shall be given by first class mail,
postage prepaid, addressed to the holders of Preferred Shares at the
address for each such holder as shown on the books of this Corporation
and shall be deemed given when so mailed.
(g) Reservation of Shares Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose
of effecting the conversion of the shares of the Preferred Shares, such
number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Preferred Shares;
and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all
then outstanding Preferred Shares, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
(h) Status of Converted Stock. In the event any Preferred Shares
shall be converted pursuant to Section 6 hereof, (i) the Preferred
Shares so converted shall be retired and cancelled and shall not be
reissued and (ii) the authorized number of Preferred Shares set forth in
Section 1 hereof shall be automatically reduced by the number of
Preferred Shares so converted and the number of shares of the
Corporation's undesignated Preferred Stock shall be deemed increased by
such number.
(i) Loss, Theft, Destruction of Preferred Shares. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction
or mutilation of certificates representing Preferred Shares and, in the
case of any such loss, theft or destruction, upon receipt of indemnity
or security reasonably satisfactory to the Corporation, or, in the case
of any such mutilation, upon surrender and cancellation of the Preferred
Shares, the Corporation shall make, issue and deliver, in lieu of such
lost, stolen, destroyed or mutilated certificates representing Preferred
Shares, new certificates representing Preferred Shares of like tenor.
IN WITNESS WHEREOF, Email Real Xxxxxx.xxx, Inc. has caused this
Certificate to be signed on its behalf, as of this day of
, 2004.
EMAIL REAL XXXXXX.XXX, INC.
By:
-------------------------
Xxx X'Xxxxx
Its: President and
Chief Executive Officer
SCHEDULE A
Xxxxxx Outstanding Capitalization
Authorized Shares of Common Stock: 15,000,000
Authorized Shares of Preferred Stock: 5,000,000
Outstanding Shares of Common Stock: 6,179,829
Shares of Common Stock Issuable Upon
Exercise of Outstanding Options/Warrants: 1,311,065
----------
Fully-Diluted Common Shares Outstanding: 7,490,894
==========
SCHEDULE B
Disclosure Schedules
of
Xxxxxx Health Sciences, Inc.
Attached hereto are the Disclosure Schedules of Xxxxxx Health
Sciences, Inc., a Delaware corporation ("Xxxxxx"), referred to the
Merger Agreement dated as of June 17, 2004 (the "Agreement") by and
among Xxxxxx, Email Real Xxxxxx.xxx, Inc. ("EMLR") and EMLR Acquisition
Corp. ("EMLR Acquisition"). Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Agreement.
Xxxxxx'x disclosure schedules are qualified in their entirety by
reference to specific sections of the Agreement, and are not intended to
constitute, and shall not be construed as constituting, representations
or warranties of Xxxxxx, except as and to the extent provided in the
Agreement.
Matters reflected in Xxxxxx'x disclosure schedules are not
necessarily limited to the matters required by the Agreement to be
disclosed in the disclosure schedules. Such additional matters are set
forth for informational purposes and do not necessarily include other
matters of a similar nature.
Dated as of June 17, 2004
Section 2.8
Material Adverse Change
(1) Pursuant to certain promissory notes (the "Notes") issued to
Horizon Biomedical Ventures, LLC or Paramount Capital Investments, LLC
(collectively, the "Paramount Lenders"), both of which are wholly owned
by Xxxxxxx X. Xxxxxxxxx, M.D., the Paramount Lenders have loaned to us
the aggregate amount of approximately $774,000. The Notes accrue
interest at the rate of 5 percent per annum. Pursuant to a letter
agreement dated January 15, 2004, the Notes are payable upon the earlier
to occur of the earlier of (a) ten (10) business days following the date
on which Xxxxxx has received gross proceeds equal to $5,000,000, in the
aggregate, through the sale of debt or equity securities of Xxxxxx in
one or more public offerings or private placements, and (b) January 15,
2005. The Notes are summarized below:
Principal Amount
Holder of Note Date of Note Owed Under Note
---------------------------------- ------------ ----------------
1. Horizon Biomedical Ventures, LLC 10/24/2002 $ 8,393.68
2. Horizon Biomedical Ventures, LLC 11/21/2002 $ 9,807.11
3. Horizon Biomedical Ventures, LLC 12/27/2002 $ 12,756.01
4. Paramount Capital Investments, LLC 1/27/2003 $ 959.27
5. Paramount Capital Investments, LLC 1/30/2003 $ 111,054.20
6. Paramount Capital Investments, LLC 2/28/2003 $ 3,926.81
7. Paramount Capital Investments, LLC 3/13/2003 $ 600.00
8. Paramount Capital Investments, LLC 3/25/2003 $ 3,817.35
9. Paramount Capital Investments, LLC 4/14/2003 $ 50,000.00
10. Paramount Capital Investments, LLC 4/23/2003 $ 305.00
11. Paramount Capital Investments, LLC 5/16/2003 $ 50,000.00
12. Paramount Capital Investments, LLC 8/14/2003 $ 50,000.00
13. Paramount Capital Investments, LLC 10/30/2003 $ 50,000.00
14. Paramount Capital Investments, LLC 12/3/2003 $ 200,000.00
15. Paramount Capital Investments, LLC 12/19/2003 $ 125,000.00
16. Paramount Capital Investments, LLC 1/29/2004 $ 125,000.00
(2) On February 19, 2004, Xxxxxx completed a private placement of
1,987,846 shares of its common stock at a per share price of $2.375.
Paramount BioCapital, Inc. (f/k/a Paramount Capital, Inc.) acted as
placement agent in connection with the private placement, for which it
received aggregate commissions of $326,979.40 (not including a $10,000
expense allowance), plus 5-year warrants to purchase an aggregate of
196,679 shares of Xxxxxx common stock at an exercise price of $2.61.
Section 2.8
Material Adverse Change
(Continued)
(3) Xxxxxx has hired several employees since December 31, 2003.
The following table sets forth the name of each such new employee, and
their respective title(s), salary and other compensation, and option
awards:
Bonus $ No of
Other Option
Name Title Salary($) Comp($) Shares
---- -------------------- ---------- ---------- ----------
Xxxxxxxx X. Xxxxxx CFO/VP of Admin. 175,000 25,000(1) 100,000
Xxxx Xxxxxx VP-Bus. Development 75,000 40,000(2) 100,000
Xxx Xxx Director of Research 125,000 10,000(3) 40,000
Xxxx Xxxxxxxxxxxx Controller 85,000 0 20,000
(1) Represents signing bonus. Also eligible for periodic incentive
bonuses upon the achievement of milestones to be determined by CEO, not
to exceed $50,000.
(2) Represents signing bonus. Also eligible for periodic incentive
bonuses upon the achievement of milestones to be determined by CEO, not
to exceed $50,000.
(3) Represents signing bonus.
Section 2.9
Ordinary Course of Business
See Section 2.8 of this Exhibit B.
Section 2.10
Liabilities and Claims
See item (1) in Section 2.8 of this Exhibit B.
Section 2.16
Certain Transactions
See item (3) of Section 2.8 of this Exhibit B.
Section 2.20
Related Party Contracts
See item (1) in Section 2.8 of this Exhibit B.
Section 2.22
Benefit Plans
(1) Xxxxxx maintains a 401(k) Plan with Fidelity Investments, as
trustee, for its employees.
(2) Xxxxxx maintains a Stock Option Plan, adopted on October 10, 2003.
Schedule 2.24
Finder's Fees
Xxxxxx is obligated to pay a fee of $50,000 to Xxxxxx Xxxxx (or his
affiliates or assigns) upon the Effective Date.
SCHEDULE C
Disclosure Schedules
of
Email Real Xxxxxx.xxx., Inc. and Email Acquisition Corp.
Attached hereto are the Disclosure Schedules of Email Real
Xxxxxx.xxx, Inc., a Colorado corporation and Email Acquisition Corp. a
Delaware corporation ("Company" or "EMLR"), referred to in the Agreement
and Plan of Merger dated as of June 17, 2004 (the "Agreement") by and
among Xxxxxx Health Sciences, Inc. a Delaware corporation, Email
Acquisition Corp. and Email Real Xxxxxx.xxx, Inc. Capitalized terms used
but not defined herein shall have the meanings ascribed to them in the
Agreement.
Matters reflected in these disclosure schedules are not necessarily
limited to the matters required by the Agreement to be disclosed in the
disclosure schedules. Such additional matters are set forth for
informational purposes and do not necessarily include other matters of a
similar nature.
Dated as of June 17, 2004
EMAIL REAL XXXXXX.XXX, INC.
Section 4.1
Organization; Capitalization
The number of outstanding shares of EMLR Common Stock is subject to
adjustment as provided in that certain Common Stock Purchase Agreement
dated June 16, 2004 by and among EMLR, The Washington Trust, R&R Biotech
Partners, LLC, Turquoise Partners, LLC and Chase Financing, Inc. and the
"Escrow Agreement" described therein.
Section 4.8
Financial Statements
The financial statements of EMLR are true and correct.
The Company is now a fully reporting company under Section 12(g) of
the Securities Exchange Act.
Section 4.12
Assets
The Company has no leases and no assets other than cash and the website
which it built for its business and which is no longer operative.
Section 4.21
Related Party Transactions
None
Section 4.23
Benefit Plans
None
EMAIL ACQUISITION CORP.
No exceptions
SCHEDULE 2.6
FOREIGN QUALIFICATIONS
Xxxxxx is qualified as a foreign corporation in the State of California.
SCHEDULE 2.14
MATERIAL CONTRACTS
1. See promissory notes described in Section 2.8 of Exhibit B.
2. See items listed in Section 2.22 of Exhibit B.
3. Employment Agreements between Xxxxxx and each of Xxxx X. Xxx,
Xxxxxxxx X. Xxxxxx and Xxxx Xxxxxx.
4. Subscription agreements, registration rights agreement and escrow
agreement to be entered into by Xxxxxx in connection with the
Private Placement.
5. Exclusive License Agreement among Xxxxxx, Yale University and SUNY
dated February 4, 2004.
6. PT 523 License Agreement among Xxxxxx, Xxxx Xxxxxx Cancer Institute,
Inc. and Ash Xxxxxxx, Inc. dated on or about December 19, 2002.
7. Office Lease dated December 1, 2003 between Xxxxxx and Kashiwa
Fudosan America, Inc.
SCHEDULE 2.18
INTELLECTUAL PROPERTY
1. Pursuant to that certain PT 523 License Agreement among Xxxxxx,
Xxxx Xxxxxx Cancer Institute, Inc. ("DFCI") and Ash Xxxxxxx, Inc. dated
on or about December 19, 2002, Xxxxxx has the exclusive worldwide
license (subject to a non-exclusive license to the United States of
America) to utilize certain technology and know-how related to the
following patent rights:
(a) U.S. Patent No. 4,767,761 entitled "Omithine Derivatives and
their Use as Methotrexate Resistant Cell Inhibitions," issued as of
August 30, 1988 to DFCI;
(b) U.S. Provisional Patent Application, Serial No. 60/376,615
entitled "Pharmaceutically Active Omithine Derivatives, Ammonium Salts
Thereof and Methods of Making Same" filed April 30, 2002 and
applications derived therefrom, including continuations, any claim(s) in
any continuation-in-part to the extent that the claims are directed to
subject matter specifically described in USSN 60/376,615 and entitled to
priority date of the application under 35 U.S.C. section 120,
divisionals, substitutions, and any patents issuing thereon; any
reissuances, reexaminations or extensions of the patents; and any
foreign counterparts of the patent application. Patent application,
Serial No. 60/376,615, is jointly owned by DFCI and Ash Xxxxxxx.
2. Pursuant to that certain Exclusive License Agreement among
Xxxxxx, Yale University ("Yale") and The Research Foundation of the
State University of New York ("SUNY") dated February 4, 2004, Xxxxxx has
an exclusive, worldwide license to the following patents or patent
applications:
Appln File Patent
CNTRY Title (ASSIGNEE) Number Date Number
------------- ------------------------ ---------- ---------- ----------
United States 5-Ioso 2-Pyrimidinone
Nucleoside (FOUNDATION) - - 4,895,937
Canada Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 2,103,050 5/15/1992 -
European Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 912221.6-1216 5/15/1992 -
Ireland Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) IR 92/1581 5/15/1992 -
Israel Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 101,879 5/15/1992 101,879
Japan Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 92/500240 5/15/1992 -
South Korea Determination of prodrugs
(Republic of metabolizable by the liver
Korea) and therapeutic use thereof
(YALE) 245252 5/15/1992 245252
SCHEDULE 2.18
INTELLECTUAL PROPERTY
(Continued)
Appln File Patent
CNTRY Title (ASSIGNEE) Number Date Number
------------- ------------------------ ---------- ---------- ----------
United States Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 08/146,164 4/19/1994 5,728,684
Israel Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 121,375 7/23/1997 121,375
Issue
CNTRY Title (ASSIGNEE) Date Status
------------- ------------------------ ---------- ----------
United States 5-Ioso 2-Pyrimidinone
Nucleoside (FOUNDATION) 1/23/90 Issued
Canada Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) - Pending
European Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) - Pending
Ireland Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) - Pending
Israel Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 5/15/1992 Issued
Japan Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) - Pending
South Korea Determination of prodrugs
(Republic of metabolizable by the liver
Korea) and therapeutic use thereof
(YALE) 11/27/1999 Issued
United States Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 3/17/1998 Issued
Israel Determination of prodrugs
metabolizable by the liver
and therapeutic use thereof
(YALE) 8/13/1999 Issued
