Exhibit 10.2
STOCK EXCHANGE AGREEMENT
between
DTR-MED PHARMA CORP.,
DEVELOPED TECHNOLOGY RESOURCE, INC.,
PRO-PHARMACEUTICALS, INC.
and
THE SHAREHOLDERS OF PRO-PHARMACEUTICALS, INC.
April 25, 2001
INDEX
I. TRANSFER OF THE STOCK....................................................................................2
II. CONSIDERATION............................................................................................2
III. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.......................................................2
3.1 Organization and Power..........................................................................2
3.2 Qualification...................................................................................2
3.3 Authorization...................................................................................3
3.4 Validity of Stock...............................................................................3
3.5 Ownership and Authority to Deliver..............................................................3
3.6 Capital Stock...................................................................................3
3.7 Enforceability..................................................................................3
3.8 Conflict with Other Agreements, etc.............................................................3
3.9 Financial Statements............................................................................3
3.10 Interim Change..................................................................................4
3.11 Material Contracts..............................................................................4
3.12 Title to Assets.................................................................................5
3.13 Intellectual Property...........................................................................5
3.14 Real Property...................................................................................5
3.15 Personal Property Leases........................................................................5
3.16 Employees.......................................................................................6
3.17 Related Party Interests.........................................................................6
3.18 Litigation......................................................................................6
3.19 Compliance with Law.............................................................................6
3.20 ERISA...........................................................................................7
3.21 Governmental Consent, etc.......................................................................7
3.22 Brokers.........................................................................................7
3.23 Shareholders' Investment Representations........................................................7
IV. REPRESENTATIONS AND WARRANTIES OF RESOURCE...............................................................8
4.1 Organization and Power..........................................................................8
4.2 Authorization...................................................................................8
4.3 Capital Stock...................................................................................8
4.4 Validity of Shares..............................................................................8
4.5 Enforceability..................................................................................8
4.6 Conflict with Other Agreements etc..............................................................9
4.7 Brokers.........................................................................................9
4.8 The Company's Investment Representations........................................................9
4.9 Contracts Breaches or Defaults..................................................................9
4.10 Governmental Consent, etc.......................................................................9
4.11 Assets and Liabilities..........................................................................9
4.12 Taxes...........................................................................................9
4.13 Intellectual Property...........................................................................9
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4.14 Real Property..................................................................................10
4.15 Personal Property Leases.......................................................................10
4.16 Bank Accounts..................................................................................10
4.17 Employees......................................................................................10
4.18 Litigation.....................................................................................10
4.19 Compliance with Law............................................................................10
V. OTHER AGREEMENTS OF PRO-PHARMA AND THE SHAREHOLDERS.....................................................10
5.1 Interim Conduct of Business....................................................................10
5.2 Election of Director...........................................................................11
5.3 Merger of Pro-Pharma into Company..............................................................11
5.4 Filing with the Securities and Exchange Commission.............................................11
VI. OTHER AGREEMENTS OF THE COMPANY AND RESOURCE............................................................11
6.1 Interim Conduct of Business....................................................................11
6.2 Records and Documents..........................................................................12
6.3 Transfer of Assets.............................................................................12
6.4 Dividend.......................................................................................12
6.5 Merger of Pro-Pharma into Company..............................................................12
6.6 Filing with the Securities and Exchange Commission.............................................12
6.7 Pro-Pharma Convertible Notes...................................................................13
VII. OTHER AGREEMENTS OF ALL PARTIES.........................................................................13
7.1 Confidentiality................................................................................13
7.2 Publicity......................................................................................13
7.3 Expenses.......................................................................................13
VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF PRO-PHARMA AND THE SHAREHOLDERS..................................14
8.1 Accuracy of Warranties; Performance of Covenants...............................................14
8.2 No Pending Action..............................................................................14
8.3 Condition of Business..........................................................................14
8.4 Opinion of Counsel for Resource and the Company................................................14
8.5 Election of Directors..........................................................................15
8.6 Change of Name.................................................................................15
IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF RESOURCE AND THE COMPANY .......................................15
9.1 Accuracy of Warranties, Performance of Covenants...............................................15
9.2 No Pending Action..............................................................................16
9.3 Condition of Business..........................................................................16
9.4 Opinion of Counsel for Pro-Pharma and the Shareholders.........................................16
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X. CLOSING AND DELIVERY OF STOCK...........................................................................17
10.1 Closing........................................................................................17
10.2 Deliveries by the Resource or Company..........................................................17
10.3 Deliveries by Pro-Pharma or the Shareholders...................................................18
XI. SURVIVAL, INDEMNIFICATION, INJUNCTIVE RELIEF, etc.......................................................19
11.1 Survival.......................................................................................19
11.2 Indemnification by the Shareholders............................................................19
11.3 Indemnification by Resource and the Company....................................................19
11.4 Indemnification - General......................................................................19
11.5 Injunctive Relief, etc.........................................................................20
XII. VENUE AND JURISDICTION..................................................................................20
XIII. GENERAL PROVISIONS......................................................................................20
13.1 Amendment and Waiver...........................................................................20
13.2 Return of Documents............................................................................21
13.3 Notices........................................................................................21
13.4 Parties in Interest............................................................................21
13.5 Entire Transaction.............................................................................22
13.6 Applicable Law.................................................................................22
13.7 Severability...................................................................................22
13.8 Cooperation....................................................................................22
13.9 Headings.......................................................................................22
13.10 Counterparts...................................................................................22
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Exhibits
A. Copies of the Articles of Organization and ByLaws and amendments thereto of
Pro-Pharma.
B. Copies of the Articles of Incorporation and ByLaws and amendments thereto
of the Company.
Schedules
3.6 Rights to Acquire Capital Stock of the Company
3.10 Interim changes of Pro-Pharma from December 31, 2000
3.11 Material Contracts
3.13 Patents and Trademarks of Pro-Pharma
3.12 Title to Assets
3.14 Real Property Leases
3.15 Personal Property
3.17 Related Party Interests
3.18 Litigation
3.19 Compliance with Law
3.20 Benefit Plans
3.21 Governmental Consent, Etc.
3.22 Brokers
4.9 Contracts
4.10 Governmental Consent, Etc.
4.11 No Assets or Liabilities
4.12 Taxes
6.3 Contracts
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STOCK EXCHANGE AGREEMENT
This Agreement is entered into this 25th day of April, 2001, by and among
Developed Technology Resource, Inc., a Minnesota corporation ("Resource"),
DTR-Med Pharma Corp., a Nevada corporation (the "Company"), Pro-Pharmaceuticals,
Inc., a Massachusetts corporation ("Pro-Pharma"), and shareholders of Pro-Pharma
(the "Shareholders") who are individually identified in Article III and on the
signature page of this Stock Exchange Agreement (the "Agreement").
Premises
A. The common stock of Resource is registered under Section 12(g) of the
Securities Exchange Act of 1934.
B. The Company is a newly-organized wholly owned subsidiary of Resource.
C. Following the execution of this Agreement, Resource (i) is willing to
transfer to the Company its interest in a contract or contracts which may
provide the Company with revenue from the sale, development or licensing of a
technology described in Schedule 6.3 of this Agreement, and (ii) plans to
distribute, as a dividend, the shares of the Company to the shareholders of
Resource on a share for share basis.
D. The Shareholders are all of the shareholders of Pro-Pharma, and are
desirous of exchanging their shares of capital stock of Pro-Pharma for the
authorized but unissued shares of common stock of the Company, whereby
Pro-Pharma will become the wholly owned subsidiary of the Company, and the
Shareholders will own in excess of 90% of the outstanding capital stock of the
Company. As soon as practicable after such share exchange, Pro-Pharma will be
merged "upstream" into the Company and the Company will change its name to
"Pro-Pharmaceuticals, Inc."
E. Pro-Pharma has issued convertible notes (the "Convertible Notes") in
anticipation of the business combination evidenced hereby and the parties
contemplate that the Company will, as a result of the merger, become the obligor
under the Convertible Notes and issue its securities upon exercise of the
conversion rights thereunder.
Agreement
Now, therefore, in consideration of the premises and mutual covenants
contained in this Agreement, the parties hereto agree as follows:
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ARTICLE I
TRANSFER OF THE STOCK
At the Closing (as defined in Article X), the Shareholders shall transfer,
assign and deliver to the Company, free and clear of all liabilities, liens,
security interests and other encumbrances, and the Company shall accept and
receive from the Shareholders, all rights, title and interest, both legal and
equitable, in and to all of the outstanding common stock of Pro-Pharma (the
"Stock") as identified on the signature page of this Agreement.
ARTICLE II
CONSIDERATION
The aggregate consideration (the "Consideration") to be paid to the
Shareholders at the Closing in exchange for the Stock will be certificates
registered in the name of Shareholders representing 12,354,670 shares of the
authorized but previously unissued common stock of the Company, having a par
value of $0.001 per share (authorized common stock of the Company is hereinafter
referred to as (the "Common Shares"). The Common Shares issued as the
Consideration represent as of the Closing (as defined in Section 10.1) at least
ninety-one percent (91%) of the issued and outstanding Common Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Xxxxx Xxxxx, Offer Binder, Xxxxx Xxxxx and Xxxxxxx Xxxxxxx, the beneficial
or record shareholders of Pro-Pharma (the "Shareholders"), represent and warrant
to Resource, such representations and warranties to survive the Closing and
continue in accordance with the terms of Article XI hereof, as follows:
3.1 Organization and Power. Pro-Pharma is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts, and has the corporate power and authority, and all material
requisite licenses, permits and franchises to own, operate or lease its
properties and to carry its business as now being conducted. Attached hereto as
Exhibit A, are true copies of the Articles of Organization and ByLaws of
Pro-Pharma, including all amendments thereto, in effect as of the date hereof.
3.2 Qualification. Pro-Pharma is duly qualified to do business as a foreign
corporation, and is in good standing in all jurisdictions where, by the nature
of its business or the character and location of its property or personnel,
failure to be so qualified would have a material adverse effect upon its
business as now being conducted.
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3.3 Authorization. The execution, delivery and performance of this
Agreement has been duly and validly authorized and approved by the Board of
Directors of Pro-Pharma and has been duly executed and delivered by an
authorized officer of Pro-Pharma. All corporate and other actions required to be
taken by Pro-Pharma to authorize the execution, delivery and performance by
Pro-Pharma of this Agreement and all transactions contemplated hereby have been,
or on the Closing Date will have been, duly and properly taken.
3.4 Validity of Stock. The Stock was duly authorized and validly issued by
Pro- Pharma, and is, or will be at the Closing Date, fully paid and
non-assessable.
3.5 Ownership and Authority to Deliver. Each Shareholder has full record
and beneficial ownership of the Stock owned by that Shareholder as reflected on
the signature page of this Agreement, with full power and authority to deliver
record and beneficial ownership of the Stock to the Company, free of all liens,
encumbrances and restrictions whatsoever, other than those imposed under
applicable state and federal securities laws.
3.6 Capital Stock. The authorized capital stock of Pro-Pharma consists of
200,000 shares of common stock, without par value, 100,000 shares of which are
outstanding and constitute the Stock. There are no outstanding options, warrants
or other rights to acquire capital stock or any other securities of Pro-Pharma,
except as set forth on Schedule 3.6.
3.7 Enforceability. This Agreement and the other documents to be delivered
at the Closing have been, or will be, duly executed and delivered by the
Shareholders and Pro-Pharma, and, or will be, the lawful, valid and legally
binding obligations of the Shareholders and Pro- Pharma, respectively,
enforceable in accordance with their respective terms, except as enforcement may
be limited by applicable bankruptcy, reorganization, insolvency, or similar
debtor relief legislation or decisions affecting the rights of creditors
generally and subject to the application of general principles of equity.
3.8 Conflict with Other Agreements, etc. The execution and delivery of this
Agreement by the Shareholders and Pro-Pharma, and the consummation of the
transactions contemplated hereby are not prohibited by, do not violate or
conflict with any provisions of, and will not result in a material default under
or a material breach of (i) the Articles of Organization or ByLaws of
Pro-Pharma, (ii) any material contract, agreement or other instrument to which
Pro-Pharma is a party, (iii) to the Shareholders' knowledge, any material order,
writ, decree or judgment of any court or governmental agency, or (iv) to the
Shareholders' knowledge, any material law or regulation applicable to them or
Pro-Pharma.
3.9 Financial Statements. The Shareholders have delivered to Resource the
following financial statements (the "Financial Statements"):
(a) The audited balance sheet of Pro-Pharma as of December 31, 2000;
and
(b) The audited statement of operations of Pro-Pharma for the period
since inception on July 10, 2000 and ended December 31, 2000.
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The Financial Statements present fairly, in all material respects, the financial
position and results of operations of Pro-Pharma as of their respective dates,
and were prepared on an accrual basis using generally accepted accounting
principles applied in a consistent manner, except as noted therein or in the
notes thereto.
3.10 Interim Change. Except as described in Schedule 3.10 hereto, since
December 31, 2000, there has not been any material adverse change in the
financial condition, assets, liabilities, personnel, properties, results of
operations or business of Pro-Pharma, and Pro-Pharma has, except as otherwise
disclosed in this Agreement, operated its business consistent with prior
practice.
3.11 Material Contracts. All agreements and instruments (other than those
entered into after the date hereof with the written consent of Resource)
relating to or involving Pro-Pharma or its business, to which Pro-Pharma is a
party or bound, or by which any of its properties are subject or bound, meeting
any of the descriptions set forth below (the "Material Contracts"), are listed
on Schedule 3.11:
(a) any lease of machinery, equipment or other personal property
involving payment of aggregate rentals in excess of $5,000 per year in any
lease year;
(b) any contract for the purchase of any materials or supplies in
excess of $5,000, except those incurred in the ordinary course of business;
(c) any contract for the purchase of equipment or any construction or
other similar agreement involving any expenditure in excess of $5,000;
(d) any instrument evidencing or related to indebtedness, obligation
or liability for borrowed money, or liability for the deferred purchase
price of property in excess of $5,000 (excluding normal trade payables),
any letter of credit in excess of $25,000 or any instrument guaranteeing or
in effect guaranteeing any indebtedness, obligation or liability, or any
obligation to incur any indebtedness, obligation or liability;
(e) any oral or written employment or consulting contract;
(f) any joint venture partnership or other cooperative arrangement;
(g) any sales agency, brokerage, distribution or similar contract;
(h) any license or franchising agreements;
(i) any agreement between Pro-Pharma and any person who is an officer,
director or shareholder of Pro-Pharma; and
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(j) any other documents meeting the descriptions (assuming no dollar
limitations) set forth in subsections (a), (b), (c) or (d) of this Section
3.11, if in the aggregate, in the case of each subsection, they involve a
liability in excess of $25,000.
With respect to the Material Contracts: (i) each is in full force and effect,
and to the Shareholders' knowledge, is valid, binding and enforceable, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency
or similar debtor relief legislation or decisions affecting the rights of
creditors generally and subject to the application of general principles of
equity; (ii) neither Pro-Pharma nor, to the Shareholders' knowledge, any party
thereto is in default in any material respect thereunder; (iii) the transactions
contemplated by this Agreement will not constitute a breach of, or default
under, any provision of any such Material Contract; and (iv) to the
Shareholders' knowledge, all material rights of Pro-Pharma under such Material
Contracts will be enforceable by Pro-Pharma in accordance with their terms and
conditions without the consent or agreement of any other party, except as
otherwise required thereunder and except as enforcement may be limited by
applicable bankruptcy, reorganization, insolvency or similar debtor relief
legislation or decisions affecting the rights of creditors generally and subject
to the application of general principles of equity.
3.12 Title to Assets. Pro-Pharma was the sole and exclusive legal and
equitable owner of all right and title in, and has good and indefeasible title
to, all of the assets reflected in its Financial Statements as being owned by
Pro-Pharma, as of the date thereof, free and clear of any pledge, lien, claim,
assessment, easement, restriction or other encumbrance of any kind or nature,
direct or indirect, whether accrued, absolute, contingent or otherwise, except
only those encumbrances or restrictions (i) as specifically set forth in
Schedule 3.12, or (ii) which are minor and will not materially restrict the use
or marketability of Pro-Pharma's assets or the value thereof.
3.13 Intellectual Property. Schedule 3.13 identifies all patents and
trademarks owned by Pro-Pharma, and all patent applications and invention
disclosures filed with the United States Patent and Trademark Office, and any
foreign agency. Except as set forth on Schedule 3.13, Pro-Pharma is the
exclusive owner of such patents, patent applications and invention disclosures,
with the sole right, to the Shareholders' knowledge, to use or practice the art
described therein. Except as set forth on Schedule 3.13, Pro-Pharma is not a
licensee or licensor of any intellectual property, and the business of
Pro-Pharma and the exploitation of its intellectual property rights does not
require that it become a licensee of the intellectual property rights of others.
To the Shareholders' knowledge, Pro-Pharma has not infringed upon the
intellectual property rights of any other person, and the Shareholders do not
have any knowledge of any trademark, trademark rights, trade name, trade name
rights, service xxxx, copyright or application thereof or similar property which
would infringe upon, or be infringed upon by, any intellectual property rights
of Pro-Pharma.
3.14 Real Property. Pro-Pharma has no interests in real property, except as
identified in Schedule 3.14.
3.15 Personal Property Leases. Pro-Pharma is not a party to any personal
property lease, except as identified in Schedule 3.15.
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3.16 Employees. To the Shareholders' knowledge, Pro-Pharma is in
substantial compliance with all federal, state and local employee safety, labor
and other laws and regulations that materially concern or affect its business.
During the past three years Pro-Pharma has not been, and is not now subject to,
any adverse rulings, findings or determinations of unlawful employment practices
(including, without limitation, determinations of the Equal Employment
Opportunity Commission, the National Labor Relations Board, or any other state
or federal court or agency), or violations of other related material statutes,
and Pro-Pharma has not received any notice of any pending or threatened
investigation, proceeding, labor dispute or litigation of any unlawful
employment practice claim or claims (including alleged violations of the
National Labor Relations Act or Title VII of the Equal Employment Opportunity
Act), or violations of other related material state or federal statutes,
executive orders, or administrative determinations or regulations before any
commission, agency, tribunal, or court of law (state or federal).
3.17 Related Party Interests. Except as disclosed in Schedule 3.17, neither
the Shareholders, nor, any officer, director, agent or employee of Pro-Pharma,
nor any corporation, partnership, joint venture or other business organization
or facility in which any Shareholder has any direct or indirect interest or
investment:
(a) has any material cause of action or other claim whatsoever
against, owes any material amount to, or is owed any material amount by,
Pro-Pharma, except for compensation owed to Pro-Pharma's existing employees
as part of their regular salary in the ordinary course of business;
(b) has any interest in or owns any material property or right used in
the conduct of the business of Pro-Pharma;
(c) is a party to any material contract, lease, agreement, arrangement
or commitment with Pro-Pharma; or
(d) received from or furnished to Pro-Pharma or its business any
material amount of goods or services other than services performed as an
employee (with or without consideration) since December 31, 2000.
3.18 Litigation. Except as set forth in Schedule 3.18, Pro-Pharma is not
engaged in, a party to, or threatened in writing with, any material suit, claim,
action, proceeding, investigation or legal, administrative, arbitration or other
method of settling disputes or disagreements, or governmental investigation
before or by any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, domestic or foreign, including,
without limitation the Environmental Protection Agency and the Occupational
Safety and Health Commission. To the Shareholders' knowledge, neither Pro-Pharma
nor any of its assets are subject to any material order, writ, injunction, or
decree of any court, domestic or foreign, or any federal agency or
instrumentality.
3.19 Compliance with Law. Except as disclosed in Schedule 3.19, Pro-Pharma
(i) has obtained and is in substantial compliance with all material licenses,
permits, approvals,
6
franchises and other authorizations necessary in order to enable it to own its
properties and to engage in its business, and all such licenses, permits,
approvals, franchises and authorizations, where appropriate with respect to
activities heretofore performed, are in full force and effect, and will continue
to be in full force and effect for the benefit of Pro-Pharma following the
Closing Date, (ii) is in substantial compliance in all material respects with
all applicable federal, state and local laws, regulations, codes, orders and
decrees which are material to Pro-Pharma or its business, including federal,
state and local environmental protection and occupational safety and health laws
and regulations; and (iii) has no material liability for damage caused by
Pro-Pharma to any site, location or body of water (surface or subsurface), or,
to the Shareholders' knowledge, for any illness of or personal injury to any
employee or other individual for any reason under any environmental, health or
safety law.
3.20 ERISA. Except as set forth on Schedule 3.20, Pro-Pharma does not have
any liability (whether absolute or contingent, whether in the nature of
penalties, excise taxes, additional contributions or otherwise) with respect to
any pension, profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which
Pro-Pharma makes or has ever made a contribution and in which any employee of
Pro-Pharma is or has ever been a participant. With respect to such plans, to the
Shareholders' knowledge Pro-Pharma is in compliance in all material respects
with all applicable provisions of ERISA.
3.21 Governmental Consent, etc. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by
Pro-Pharma of this Agreement or any other agreements contemplated hereby, or the
consummation by Pro-Pharma of any other transactions contemplated hereby or
thereby, except as may be described under Schedule 3.21.
3.22 Brokers. Pro-Pharma has not retained any broker or finder, or incurred
any liability or obligation for any brokerage fees, commissions or finders fees
with respect to this Agreement or the transactions contemplated hereby, except
as set forth on Schedule 3.22.
3.23 Shareholders' Investment Representations. Each Shareholder is
acquiring the Common Shares hereunder for his own account, and has no present
intention of dividing such Shareholder's interest in such securities or
reselling such securities, in violation of the federal securities laws or any
applicable state securities laws. Each Shareholder understands that any
certificate representing the Common Shares will bear a legend stating in effect
that neither the issuance nor the sale of the Common Shares has been registered
under applicable securities laws, and understands that the Common Shares may not
be sold, transferred, assigned, pledged or otherwise disposed of in the absence
of an effective registration statement under applicable securities laws or an
opinion from counsel acceptable to the Company stating that such registration is
not required.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RESOURCE
Resource represents and warrants to Pro-Pharma and the Shareholders, such
representations and warranties to survive the Closing and continue in accordance
with the terms of Article XI hereof, as follows:
4.1 Organization and Power. Resource and the Company are corporations duly
organized, validly existing and in good standing under the laws of the state of
Minnesota and Nevada, respectively, and have the corporate power and authority
and all material requisite licenses, permits and franchises to own, operate, or
lease their respective properties and to carry on their respective businesses as
now being conducted. Attached hereto as Exhibit B are true copies of the
Articles of Incorporation and ByLaws of the Company, including all amendments
thereto, in effect as of the date hereof.
4.2 Authorization. The execution, delivery and performance of this
Agreement has been duly and validly authorized and approved by the Board of
Directors of both Resource and the Company and has been duly executed and
delivered by authorized officers of Resource and the Company, respectively. All
corporate and other actions required to be taken by Resource and the Company to
authorize the execution, delivery and performance by Resource and the Company,
respectively, of this Agreement, and all transactions contemplated hereby have
been, or on the Closing Date will have been, duly and properly taken.
4.3 Capital Stock. The authorized capital stock of the Company consists of
50,000,000 shares of common stock having a par value of $0.001 per share of
which 1,221,890 shares will be issued and outstanding on the Closing Date, and
all of which are or will be on the Closing Date, validly issued, fully paid and
non-assessable; and 5,000,000 shares of undesignated capital stock of which none
are designated or outstanding.
4.4 Validity of Shares. The Common Shares to be issued in consideration of
the exchange of the Stock of the Shareholders pursuant to Article II will be,
when issued, duly authorized, validly issued, fully paid and non-assessable, and
will be subject to no liens, encumbrances or restrictions other than those
caused by the Shareholders, and other than restrictions imposed by applicable
state and federal securities laws, which restrictions may be noted on the
certificate or certificates representing such Common Shares. No holder of
capital stock or any other security of the Company is entitled to preemptive or
similar rights to purchase any capital stock or securities by the Company by
reason of the issuance of the Common Shares pursuant hereto.
4.5 Enforceability. This Agreement and the other documents to be delivered
at the Closing have been, or will be, duly executed and delivered by Resource
and the Company, and are, or will be, the lawful, valid and legally binding
obligations of Resource and the Company, enforceable in accordance with their
respective terms, except as enforcement may be limited by applicable bankruptcy,
reorganization, insolvency, or similar debtor relief legislation or decisions
8
affecting the rights of creditors generally and subject to the application of
general principles of equity.
4.6 Conflict with Other Agreements etc. The execution and delivery of this
Agreement by Resource or the Company, and the consummation of the transactions
contemplated hereby are not prohibited by, do not violate or conflict with any
provisions of, and will not result in any material default under or any material
breach of (i) the Articles of Incorporation or ByLaws of Resource or the
Company, (ii) any material contract, agreement or other instrument to which
either Resource or the Company is a party, (iii) any material order, writ,
decree or judgment of any court or governmental agency, or (iv) any material law
or regulation applicable to Resource or the Company.
4.7 Brokers. Neither Resource nor the Company has retained any broker or
finder, or incurred any liability or obligation for any brokerage fees,
commissions or finders fees with respect to this Agreement or the transactions
contemplated hereby.
4.8 The Company's Investment Representations. The Company is acquiring the
Stock hereunder for its own account with the present intention of holding such
securities for purposes of investment, and has no present intention of dividing
its interest in such securities or reselling such securities in a public
distribution in violation of the federal securities laws or any applicable state
securities laws.
4.9 Contracts Breaches or Defaults. Except for this Agreement and as set
forth in Schedules 4.9 or 6.3, the Company is not a party to any executory
contract, and is not in default in any material respect under any material
contract or instrument to which it was a party, or any license, permit or other
regulatory authorization issued to it.
4.10 Governmental Consent, etc. No permit, consent, approval or
authorization of, or declaration to, or filing with, any governmental authority
is required in connection with the execution, delivery and performance by
Resource or the Company of this Agreement or the other agreements contemplated
hereby, or the consummation by Resource or the Company of any other transactions
contemplated hereby or thereby, except as may be set forth in Schedule 4.10.
4.11 Assets and Liabilities. As of the Closing Date, the Company will have
no assets or liabilities, either contingent or otherwise, other than as set
forth in Schedule 4.11.
4.12 Taxes. All material tax returns and reports of every nature required
to be filed by or on behalf of the Company or its business, including but not
limited to payroll tax deposits, have been filed or will be filed in due course,
and such returns are true, correct and complete in all material respects. Except
as disclosed in Schedule 4.12 hereto, no extensions of time in which to file any
such returns or reports are in effect and all taxes shown on such returns and
deficiency assessments, penalties and interests have been paid. As of the
Closing Date, no tax liabilities will have accrued to the Company which will
become payable at a later date.
4.13 Intellectual Property. To the knowledge of Resource, neither the
assets nor the business of the Company has infringed upon, nor does either
infringe upon, the intellectual
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property rights of any other person, and Resource does not have any knowledge of
any trademark, trademark rights, trade name, trade name rights, service xxxx,
copyright or application thereof or similar property which would infringe upon,
or be infringed upon by, any intellectual property rights of the Company.
4.14 Real Property. The Company has no interests in real property.
4.15 Personal Property Leases. The Company is not a party to any real or
personal property lease.
4.16 Bank Accounts. The Company has no account with any bank or other
financial institution.
4.17 Employees. The Company has no employees, and has never had any
employees.
4.18 Litigation. The Company is not engaged in, a party to, or threatened
in writing with, any material suit, claim, action, proceeding, investigation or
legal, administrative, arbitration or other method of settling disputes or
disagreements, or governmental investigation before or by any federal, state,
municipal or other governmental department, commission, board, agency or
instrumentality, domestic or foreign, including, without limitation, the
Environmental Protection Agency and the Occupational Safety and Health
Commission. Neither the Company nor its assets are subject to any material
order, writ, injunction, or decree of any court, domestic or foreign, or any
federal agency or instrumentality.
4.19 Compliance with Law. The Company (i) is in substantial compliance in
all material respects with all applicable federal, state and local laws,
regulations, codes, orders and decrees which are material to the Company or its
business, including federal, state and local environmental protection and
occupational safety and health laws and regulations; and (ii) has no material
liability for damage caused by the Company to any site, location or body of
water (surface or subsurface), or, to Resource's knowledge, for any illness of
or personal injury to any employee or other individual for any reason under any
environmental, health or safety law.
ARTICLE V
OTHER AGREEMENTS OF PRO-PHARMA AND THE SHAREHOLDERS
Pro-Pharma and the Shareholders hereby agree to the following:
5.1 Interim Conduct of Business. From the date hereof until the Closing
Date, except as permitted by this Agreement, Pro-Pharma shall, and the
Shareholders will cause Pro-Pharma to, use its best efforts to preserve, protect
and maintain Pro-Pharma's business and assets, and Pro-Pharma shall operate its
business consistent with prior practice and not other than in the ordinary
course of business.
10
5.2 Election of Director. The Shareholders will vote their Common Shares to
elect Xxxxx Xxxxxx, or his designee (the "Candidate") as a member of the Board
of Directors of the Company at any meeting of the shareholders of the Company at
which members of the Board of Directors are proposed for election. The
obligation of the Shareholders under this Section shall terminate with respect
to any meeting of the shareholders of the Company held after December 31, 2003.
The Shareholders shall not be obligated to vote their Common Shares for a
Candidate who does not consent in writing to act in such capacity, who refuses
to provide the Company with information concerning such Candidate as set forth
in Rule 401(a)(d)(e) and (f) of Regulation S-K of the 1934 Act, or whose
election to the Board of directors requires disclosure under Section 401(f) of
such Regulation S-K. Except for the sales of the Common Shares made in a
transaction described in Rule 144(f) under the Securities Act of 1933, the
Shareholders will take all steps reasonable and necessary to ensure that the
obligations of this Section 5.2 are assumed by any transferee of Common Shares
owned by a Shareholder, including causing a legend to be placed on certificates
representing Common Shares owned by the Shareholders, referencing this Section
5.2.
5.3 Merger of Pro-Pharma into Company. Immediately following the Closing,
the Shareholders shall cause the Company, as the holder of all the issued and
outstanding stock of Pro-Pharma, to effect a short-form "upstream" merger of
Pro-Pharma into the Company in accordance with the Massachusetts Business
Corporation Law and Chapter 92A of the Nevada Revised Statutes. In connection
therewith, the Shareholders will cause the Company to prepare and file such
documents and take such actions as are necessary or advisable to complete such
merger with the Massachusetts and Nevada secretaries of state or other
appropriate authorities.
5.4 Filing with the Securities and Exchange Commission. As soon as
practicable following the "upstream" merger contemplated in Section 5.3 hereof,
the Shareholders will cause the Company (under its new name,
"Pro-Pharmaceuticals, Inc.") to file, with the United States Securities and
Exchange Commission, a Form 10 or Form 10SB (as applicable) in compliance with
Section 12 of the Securities Exchange Act of 1934 (the "34 Act"), relating to
the registration under the 34 Act of the Common Shares of the Company. The
Shareholders warrant and represent that the Form 10 or Form 10-SB so filed will
contain all material information required to be included in said Form pursuant
to the rules and regulations established under the 34 Act, and that said Form as
filed and subsequently amended, shall not contain any untrue statement of
material fact, or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE VI
OTHER AGREEMENTS OF THE COMPANY AND RESOURCE
Resource and the Company agree to the following:
6.1 Interim Conduct of Business. From the date hereof until the Closing
Date, except as set forth in Schedule 4.11 or contemplated to consummate the
transactions provided for in this
11
Agreement, the Company will not conduct any business operations, incur any
liabilities or enter into any agreements.
6.2 Records and Documents. Upon the request of Pro-Pharma on or after the
Closing Date, Resource will deliver to the officers of the Company, and assist
such officers in obtaining possession of, the books, records, ledgers, files,
documents, correspondence, lists, reports and other printed or written materials
concerning the Company or its properties in the possession of Resource. For one
year following the Closing Date, Resource shall grant to the Company and its
representatives, at the Company's request, access to and the right to make
copies of those records and documents related to the Company, possession of
which is retained by Resource, as may be necessary or useful in connection with
the Company's conduct of its businesses after the Closing Date. If during such
period Resource or the Company shall determine to dispose of such records, it
shall first give Resource or the Company, as the case may be, sixty days' prior
written notice thereof, during which period the other party shall have the right
to take possession of such records.
6.3 Transfer of Assets. Prior to the Closing Date, Resource will take all
steps as it reasonably deems necessary to transfer to the Company all of
Resource's interest under contracts identified in Schedule 6.3 (the "Contract
Rights"), without warranty or representation as to the value or validity
thereof, or the effectiveness of each transfer; provided, however, that (i)
Resource reasonably believes that the Company is entitled to rely for purposes
of its books and records on a valuation performed by an independent valuation
company of the Contract Rights in contemplation of this Agreement, a complete
and true copy of which Resource shall have delivered to the Company on or before
the date hereof, and (ii) Resource has not received any notice (whether orally
or in writing), nor does it have any grounds to believe (other than as stated in
Schedule 6.3) that the Contract Rights are or could be invalid or that the
transfer of the Contract Rights as contemplated by this Section 6.3 invalidate
or substantially diminish or reduce the Contract Rights.
6.4 Dividend. Prior to the Closing Date, Resource will declare and pay a
dividend to its shareholders in the form of the Common Shares owned by Resource,
on the basis of one Common Share for each share of the common stock of Resource
outstanding, and following the payment of such dividend, Resource shall no
longer own any Common Shares, either of record or beneficially.
6.5 Merger of Pro-Pharma into Company. DTR and the Company acknowledge that
it is the intention of the Company as soon as practicable after the Closing,
then as the holder of all the issued and outstanding stock of Pro-Pharma, in
accordance with the Massachusetts Business Corporation Law and Chapter 92A of
the Nevada Revised Statutes, to effect a short-form "upstream" merger of
Pro-Pharma with and into the Company and to qualify the Company as a foreign
corporation to do business in Massachusetts.
6.6 Filing with the Securities and Exchange Commission. Following the
Closing Date, the Company will file a Form 10 or Form 10SB with the United
States Securities and Exchange Commission as provided in Section 5.4.
12
6.7 Pro-Pharma Convertible Notes. The Company acknowledges that the
Convertible Notes were issued and sold by Pro-Pharma in contemplation of the
business combination evidenced hereby and that the Convertible Notes contemplate
a private placement of equity securities by the Company. The Company
acknowledges and agrees that pursuant to the "upstream" merger contemplated by
Section 6.5 hereof, the Convertible Notes shall become obligations of the
Company and that the Company shall issue Common Shares upon conversion of the
Convertible Notes and in other events pursuant to the terms and conditions
thereof.
ARTICLE VII
OTHER AGREEMENTS OF ALL PARTIES
The Shareholders, the Company and Resource agree to the following:
7.1 Confidentiality. All information received by any party to this
Agreement from any other party to this Agreement, in connection with the
transactions contemplated herein, will be treated as confidential to the extent
that the information was not known by the receiving party prior to the
commencement of the negotiations leading up to the transaction contemplated
hereby, or which could not have been obtained from any other source, which, in
the receiving party's reasonable belief, did not acquire such information by any
unlawful means. This provision shall not prevent any party hereto from
disclosing information (i) to certain selected employees and agents for the
purpose of consummating the transactions contemplated herein, or (ii) as may, in
the opinion of legal counsel for the disclosing party, be required under
applicable federal or state securities laws, or the rules or regulations
thereof.
7.2 Publicity. Except for disclosures to those requiring information in
connection with the transactions contemplated hereby, and disclosures which
would be permitted under Section 7.1, all releases or disclosures of information
by Resource or the Company regarding the transactions contemplated hereby will
be subject to the review and approval of Pro-Pharma, and all releases or
disclosures of information by Pro-Pharma or the Shareholders regarding the
transactions contemplated hereby will be subject to the review and approval of
Resource; provided that if approval for a public release is not obtained within
a reasonable time after submission for review, nothing herein will preclude
disclosure of information which is deemed appropriate by counsel for any party
hereto in view of federal or state securities laws.
7.3 Expenses. Each party to this Agreement shall pay all expenses incurred
by him or it in connection with the negotiation and preparation of this
Agreement and the transactions contemplated hereby.
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PRO-PHARMA AND THE SHAREHOLDERS
Each of the obligations of Pro-Pharma and the Shareholders to consummate
the transactions contemplated by this Agreement are subject to fulfillment,
prior to or as of the Closing Date, of the following conditions precedent, each
of which may be waived in whole or in part by Pro-Pharma or the Shareholders:
8.1 Accuracy of Warranties; Performance of Covenants. The representations
and warranties of Resource contained herein shall be accurate in all material
respects as if made on and as of the Closing Date, as well as on the date when
made. Resource and the Company shall have substantially performed each and all
of the obligations and substantially complied with each and all of the material
covenants, agreements and conditions specified herein to be performed or
complied with on or prior to the Closing Date.
8.2 No Pending Action. As of the Closing Date, no action or proceeding (nor
any investigation preliminary thereto) shall be instituted or threatened at any
time prior to or as of the Closing Date before any court or other governmental
body by any person or public authority seeking to restrain or prohibit, or
seeking damages or other relief in connection with, the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
8.3 Condition of Business. The business of the Company shall not have been
materially adversely affected in any way by any event or occurrence.
8.4 Opinion of Counsel for Resource and the Company. Resource and the
Company shall cause to be delivered to Pro-Pharma an opinion of Felhaber,
Larson, Xxxxxx & Xxxx, P.A., counsel for Resource and the Company, dated as of
the Closing Date, in form and substance satisfactory to legal counsel for
Pro-Pharma, to the effect that:
(a) Resource and the Company are corporations duly organized and
validly existing and in good standing under the laws of the State of
Minnesota and Nevada, respectively, have all requisite corporate power and
authority to own or lease their properties and assets and to carry on their
business.
(b) Resource and the Company have full corporate right, power,
authority and capacity to make, execute, deliver and perform this Agreement
without the approval or consent of any other person. The execution,
delivery and performance of this Agreement and all documents to be
delivered by Resource and the Company hereunder have been duly authorized
and approved by all requisite corporate action.
(c) This Agreement and each of the documents required to be executed
and delivered by Resource and the Company hereunder have been duly executed
and delivered and constitute valid and legally binding obligations of
Resource or the
14
Company, as the case may be, as applicable, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights, and subject to the application of general equity principles.
(d) To the knowledge of such counsel, all material consents, approvals
or authorizations of any governmental authority required in connection with
the execution, delivery and performance by Resource and the Company of this
Agreement and the other documentation referred to or provided for herein to
be executed and delivered by Resource and the Company in connection with
the transactions contemplated hereby have been duly obtained and are in
full force and effect.
(e) To the knowledge of such counsel, neither the execution nor
delivery of this Agreement by Resource or the Company, nor the consummation
of the transactions contemplated hereby, are prohibited by, violate or
conflict with any provisions of, or result in a material default under or a
material breach of (i) the Articles of Incorporation or ByLaws of Resource
or the Company, (ii) any material contract, agreement or other instrument
to which Resource or the Company is a party, (iii) any material order,
writ, decree or judgment of any court or governmental agency, or (iv) any
material law or regulation applicable to Resource or the Company.
8.5 Election of Directors. Xxxx Xxxx and Xxxxx Xxxxxxxxxx, shall have
resigned as members of the Board of Directors of the Company, and the remaining
member of the Company's Board of Directors, Xxxxx Xxxxxx, shall have caused
Xxxxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxx and Xxxxxx Xxxxxx to be
elected as the members of the Board of Directors of the Company.
8.6 Change of Name. The name of the Company will be Pro-Pharmaceuticals,
Inc.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF RESOURCE AND THE COMPANY
Each of the obligations of Resource and the Company to consummate the
transactions contemplated by this Agreement are subject to fulfillment, prior to
or as of the Closing Date, of the following conditions, each of which may be
waived in whole or in part by Resource or the Company:
9.1 Accuracy of Warranties, Performance of Covenants. The representations
and warranties of the Shareholders contained herein shall be accurate in all
material respects as if made on and as of the Closing Date, as well as on the
date when made. Pro-Pharma and the Shareholders shall have substantially
erformed each and all of the obligations and substantially
15
complied with each and all of the material covenants specified in this Agreement
to be performed or complied with on or prior to the Closing Date.
9.2 No Pending Action. As of the Closing Date, no action or proceeding (nor
investigation preliminary thereto) shall be instituted or threatened at any time
prior to or as of the Closing before any court or other governmental body or by
any person or public authority seeking to restrain or prohibit, or seeking
damages or other relief in connection with, the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
9.3 Condition of Business. The business of Pro-Pharma shall not have been
materially adversely affected in any way by any event or occurrence.
9.4 Opinion of Counsel for Pro-Pharma and the Shareholders. Pro-Pharma and
the Shareholders shall have delivered to Resource an opinion of Xxxxxxx, Xxxxx &
Xxxxx, LLP, counsel for Pro-Pharma and the Shareholders, dated as of the Closing
Date, in form and substance satisfactory to legal counsel for Resource and the
Company, to the effect that:
(a) Pro-Pharma is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts, and
has all requisite corporate power and authority to own or lease its
properties and assets and to carry on its business.
(b) Pro-Pharma and (to such counsel's knowledge based upon
representations of the Shareholders) the Shareholders have full right,
power, authority and capacity to make, execute, deliver and perform this
Agreement without the approval or consent of any other person, and the
execution, delivery and performance of this Agreement and all documents to
be delivered by Pro-Pharma hereunder have been duly authorized and approved
by all requisite corporate action.
(c) This Agreement and each of the documents required to be executed
and delivered by Pro-Pharma and the Shareholders hereunder have been duly
executed and delivered and constitute valid and legally binding obligations
of Pro-Pharma and the Shareholders, as the case may be, enforceable in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights, and subject to the application of general
equity principles.
(d) All shares of the Stock issued by Pro-Pharma and delivered by the
Shareholders to the Company under Article II have been validly issued and
are fully paid and non-assessable, and upon such delivery are subject to no
restrictions or encumbrances except those imposed under the applicable
state and federal securities laws.
(e) To the knowledge of such counsel, all material consents, approvals
or authorizations of any governmental authority required in connection with
the execution,
16
delivery and performance by Pro-Pharma and the Shareholders of this
Agreement, and the other documentation referred to or provided for herein
to be executed and delivered by Pro-Pharma and the Shareholders in
connection with the transactions contemplated hereby have been duly
obtained and are in full force and effect.
(f) To the knowledge of such counsel, neither the execution nor
delivery of this Agreement by Pro-Pharma or the Shareholders, nor the
consummation of the transactions contemplated hereby, are prohibited by,
violate or conflict with any provisions of, or result in a material default
under or a material breach of (i) the Articles of Organization or ByLaws of
Pro-Pharma, (ii) any material contract, agreement or other instrument to
which Pro-Pharma is a party, (iii) any material order, writ, decree or
judgment of any court or governmental agency, or (iv) any material law or
regulation applicable to Pro- Pharma or the Shareholders.
ARTICLE X
CLOSING AND DELIVERY OF STOCK
10.1 Closing. The delivery of the Stock and the delivery of the
Consideration specified in Article II contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxxxxx, Xxxxx & Xxxxx, LLP, Xxx
Xxxxxx Xxxxxx, Xxxxxx, XX 00000 at 10:00 a.m. on May 15, 2001 (the "Closing
Date"). At the Closing, all transactions shall be conducted substantially
concurrently and no transaction shall be deemed to be completed until all are
completed. In the event the Closing has not occurred as of the date that is 30
days after the date hereof, by reason of the failure of any of the parties
hereto to meet any condition to Closing described in Articles VIII or IX hereof,
either Resource (if the failure is that of Pro-Pharma or any Shareholder), at
its option, or Pro-Pharma (if the failure is that of Resource or the Company) at
its option, may terminate this Agreement, without any liability to any other
party hereto, so long as the terminating party and its shareholders or
subsidiary, as the case may be, are not in material breach of any of its
covenants set forth in this Agreement, and the terminating party has used its
best efforts to consummate the transaction contemplated hereunder; provided that
a party shall not be required to expend material amounts of money in order to be
considered to have used best efforts.
10.2 Deliveries by Resource or Company. At the Closing, Resource or the
Company shall deliver to Pro-Pharma or the Shareholders the following:
(a) A certificate of the President of Resource certifying as to the
continued accuracy of the representations and warranties, the performance
of the covenants and the compliance with the conditions precedent contained
in Articles IV, VI, VII and VIII, respectively, of this Agreement;
(b) An opinion of legal counsel to Resource and the Company to the
effect described in Section 8.4 hereof;
17
(c) Certificates representing and aggregate of 12,354,670 Common
Shares, registered in the names of the Shareholders, for the amount of
common stock in each case, as set forth on the signature page hereof;
(d) A certificate from the Secretary of State of Nevada as to the good
standing of the Company as a corporation organized in that state;
(e) A certificate of the respective secretaries of Resource and the
Company certifying as to the adoption of resolutions of the Board of
Directors of each corporation authorizing execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and
that such resolutions have not been amended or rescinded and remain in full
force and effect; and
(f) Such other instrument or documents as may be reasonably necessary
to carry out the transactions contemplated hereby and to comply with the
terms hereof.
10.3 Deliveries by Pro-Pharma or the Shareholders. At the Closing,
Pro-Pharma or the Shareholders shall deliver or cause to be delivered to
Resource or the Company the following:
(a) A certificate of the President of Pro-Pharma certifying as to the
continued accuracy of the representations and warranties, the performance
of the covenants and the compliance with the conditions precedent contained
in Articles III, V, VII and IX, respectively, of this Agreement;
(b) An opinion of legal counsel to Pro-Pharma and the Shareholders to
the effect described in Section 9.4 hereof;
(c) Certificates representing the Stock, accompanied by one or more
assignments duly executed by the Shareholders effectively transferring the
Stock to the Company in such form as is reasonably satisfactory to counsel
for Resource;
(d) A certificate of the President of Pro-Pharma certifying as to the
resolutions of the Board of Directors of Pro-Pharma authorizing execution
and delivery of this Agreement, and the consummation of the transactions
contemplated hereby, and that such resolutions have not been amended or
rescinded and remain in full force and effect;
(e) Certificate from the Secretary of the Commonwealth of
Massachusetts as to the good standing of Pro-Pharma as a corporation
organized in that state; and
(f) Such other instruments or documents as may be reasonably necessary
to carry out the transactions contemplated hereby and to comply with the
terms hereof.
18
ARTICLE XI
SURVIVAL, INDEMNIFICATION, INJUNCTIVE RELIEF, ETC.
11.1 Survival. All representations, warranties, covenants and agreements
contained in this Agreement, and all representations and warranties contained in
any document delivered pursuant hereto shall be deemed to be material and to
have been relied upon by the parties hereto (unless otherwise stated in such
document), and, except with respect to agreements and covenants requiring
performance after the Closing Date, shall survive the Closing exclusively for
purposes of the indemnity afforded by this Article XI for a period (the
"Indemnity Period") extending for eighteen months after the Closing Date. Upon
the expiration of the Indemnity Period, all such representations, warranties,
covenants and agreements shall expire, terminate and be of no further force or
effect, except to the extent that any covenants contained in Articles V, VI,
VII, XI and XIII specifically require performance following the Closing Date,
and except that no representation, warranty, covenant or agreement shall expire
to the extent that a written notice has been provided to an indemnifying party
within the Indemnity Period pursuant to which a breach of any such
representation, warranty, covenant or agreement is alleged, and such notice
specifies the claim for which indemnification is sought.
11.2 Indemnification by the Shareholders. Subject to the limitations of
Section 11.1 above, the Shareholders shall indemnify, defend and hold harmless
Resource and the Company from and against any and all loss, damage (except
incidental and consequential damages), expense (including court costs,
reasonable attorneys' fees, interest expenses and amounts paid in compromise or
settlement), suits, actions, claims, penalties, liabilities or obligations
(collectively, "Losses") related to, caused by, arising from or on account of
any misrepresentation, or breach of any representation, warranty, covenant or
agreement of the Shareholders, made or contained in this Agreement, or arising
from any action taken by the Company following the Closing Date.
11.3 Indemnification by Resource and the Company. Subject to the
limitations of Section 11.1 above, Resource shall indemnify, defend and hold
harmless Pro-Pharma and the Shareholders from and against any and all Losses
related to, caused by, arising from or on account of any misrepresentation, or
breach of any representation warranty, covenant or agreement of Resource or the
Company, made or contained in this Agreement, or arising from any action taken
by the Company (up to the Closing) or Resource.
11.4 Indemnification - General. Promptly after discovery by an indemnified
party under Section 11.2 or 11.3 of any facts or circumstances which form the
basis for a claim of indemnification, such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under Section 11.2
or 11.3, notify in writing the indemnifying party of such facts or
circumstances. The omission of the indemnified party to promptly notify the
indemnifying party will not relieve the indemnifying party from any liability or
obligation under Section 11.2 or 11.3 as to the particular item for which
indemnification is then being sought, unless such omission materially impairs
the indemnifying party's ability to adequately remedy such facts or
circumstances, or to defend any third party action based in whole or part
thereon. In case any third party action is brought against any indemnified party
and it seeks
19
indemnification hereunder, the indemnifying party will be entitled to
participate therein, and, to the extent that it may wish, to assume the defense
thereof, with counsel who shall be to the reasonable satisfaction of such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under Section
11.2 or 11.3 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. Any such indemnifying party shall not be liable to any
such indemnified party on account of any settlement with a third party of any
claim or action effected without the consent of such indemnifying party. An
indemnified party shall have the right to employ its own counsel in any matter
with respect to which indemnity may be sought by the indemnified party against
an indemnifying party in which event the fees and expenses of separate counsel
shall be borne by the indemnified party.
11.5 Injunctive Relief, etc. It is acknowledged by all parties that it
would likely not be able to determine damages as the result of a breach of the
filing requirements set down under Sections 5.4 and 6.7 of this Agreement by the
Shareholders. Accordingly, Resource may commence an action against the
Shareholders and the Company to seek injunctive or other equitable relief to
cause the Shareholders and the Company to comply with Sections 5.4 and 6.7,
respectively. Unless such action is deemed to have been brought frivolously or
without any basis in fact, Resource shall be entitled to recover all of its
costs and disbursements (including reasonable attorney's fees, incurred in
commencing and maintaining such action, regardless of the outcome. In addition,
if Resource is successful in obtaining an order of a court granting equitable
relief in such action, Resource will be entitled to liquidated damages from the
Shareholders equal to $100,000.
ARTICLE XII
VENUE AND JURISDICTION
With respect to any action brought against any party with respect to this
Agreement, or any controversy arising out of this Agreement, such action must be
brought and venued in the district court for the County of Hennepin, State of
Minnesota, and each party hereto submits and consents to the jurisdiction of
such court with respect to any such action.
ARTICLE XIII
GENERAL PROVISIONS
13.1 Amendment and Waiver. No amendment or waiver of any provision of this
Agreement shall in any event be effective, unless the same shall be in writing
and signed by the parties hereto, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
20
13.2 Return of Documents. In the event this Agreement is terminated, and
the transactions as contemplated hereunder are not consummated, Pro-Pharma and
the Shareholders shall return to Resource and the Company all information and
records relating to the business of Resource and the Company, and all copies
thereof, which it has received from Resource or the Company in connection with
negotiations leading to the execution of this Agreement, and Resource and the
Company will return to Pro-Pharma and the Shareholders, all information and
records relating to the business of Pro-Pharma, and all copies thereof, which it
has received from Pro-Pharma or the Shareholders in connection with negotiations
leading to the execution of this Agreement.
13.3 Notices. To be effective, all notices or other communications required
or permitted hereunder shall be in writing. A written notice or other
communication shall be deemed to have been given hereunder (i) if delivered by
hand, when the notifying party delivers such notice or other communication to
all other parties to this Agreement, (ii) if delivered by telecopier or
overnight delivery service, on the first business day following the date such
notice or other communication is transmitted by telecopier or timely delivered
to the overnight courier, or (iii) if delivered by mail, on the fourth business
day following the date such notice or other communication is deposed in the U.S.
mail by certified or registered mail addressed to the other party, whichever
occurs earlier. Mailed or telecopied communications shall be directed as follows
unless written notice of a change of address or telecopier number has been given
in writing in accordance with this paragraph:
To Pro-Pharma and the Shareholders: Pro-Pharmaceuticals, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Copy to: Xxxxxxxx X. Guest
Xxxxxxx, Xxxxx & Xxxxx, LLP
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
To: Resource and the Company: Xxxx Xxxx
Developed Technology Resource, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxx.
Xxxxx, XX 00000
Copy to: Xxxxx X. Xxxxxxxx
Felhaber, Larson, Xxxxxx & Xxxx, P.A.
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000-0000
Facsimile No. (000) 000-0000
13.4 Parties in Interest. This Agreement shall inure to the benefit of and
be binding upon the parties named herein and their respective successors and
assigns. Any assignment of
21
this Agreement or the rights hereunder by a party hereto without the prior
written consent of the other parties shall be void.
13.5 Entire Transaction. This Agreement and the other documents referred to
herein shall contain the entire understanding among the parties with respect to
the transactions contemplated hereby and shall supersede all other agreements
and understandings among the parties.
13.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Minnesota.
13.7 Severability. Should any provision of this Agreement be declared
invalid, void or unenforceable for any reason, the remaining provisions hereof
shall remain in full force and effect.
13.8 Cooperation. Subsequent to the Closing, the parties hereto will
execute such documents and take such actions as are reasonably requested by any
other party to carry out the intent of this Agreement.
13.9 Headings. The Article, Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.10 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
[signature page follows]
22
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day and year first above written, before the
undersigned witnesses.
DEVELOPED TECHNOLOGY RESOURCE, INC.
By: /s/ Xxxx Xxxx
--------------------------------------------
Xxxx Xxxx, President
DTR-Med Pharma Corp.
By: /s/ Xxxx Xxxx
---------------------------
Xxxx Xxxx, President
Pro-Pharmaceuticals, Inc.
By: /s/ Xxxxx Xxxxx
---------------------------
Xxxxx Xxxxx, President
Number of Shares of Pro- Number of Shares of the
SHAREHOLDERS Pharma Owned Company to be Received
-------------------------- ------------------------ -----------------------
/s/ Xxxxx Xxxxx 40,000 4,941,868
--------------------------
Xxxxx Xxxxx
/s/ Offer Binder 10,000 1,235,467
--------------------------
Offer Binder
/s/ Xxxxx Xxxxx 40,000 4,941,868
--------------------------
Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxxxx 10,000 1,235,467
--------------------------
Xxxxxxx Xxxxxxx
23
SCHEDULE 3.6
RIGHTS TO ACQUIRE CAPITAL STOCK OF PRO-PHARMA
No exceptions as to Pro-Pharma; however, holders of the convertible notes
referred to in Schedule 3.11A have rights thereunder to receive Common Shares of
the Company.
24
SCHEDULE 3.10
INTERIM CHANGES OF PRO-PHARMA FROM DECEMBER 31, 2000
See disclosure in Schedule 3.18.
25
SCHEDULE 3.11
MATERIAL CONTRACTS
1. Convertible Notes issued to the following persons in the amounts shown
in Schedule 3.11A hereto.
2. "Non-Exclusive Best Efforts Finder's Fee Agreement" dated March 20, 2001
with Xxxxxxxxx Programs Inc. entered into for purposes of sale of the
Convertible Notes.
3. Oral Agreement with Toxikon Corporation, of Bedford, MA, with respect to
animal tests of compounds furnished by Pro-Pharma.
4. Oral Agreement with Argus International, Inc., of Horsham, PA, with
respect to a project leading to development of an investigational new drug
application for Pro-Pharma.
26
SCHEDULE 3.11A
CONVERTIBLE NOTE HOLDERS
NAME AMOUNT
Xxxxxx, Xxxxx and Xxxxxxx $10,000
Xxxxxxx, Xxxxxxxx $10,000
Xxxxx, Xxxxx and Xxxxx $10,000
Xxxxxxx, Xxxxxx X. $25,000
Chess, Xxxxx X. $10,000
Xxxxxxx, Xxxx $6,000
Xxxxxxx, Xxxx and Xxxxx $2,500
Xxxxx, Xxxxxxx and Xxxxxx $50,000
Xxxxx, Xxxxxx X. Living Trust dated 1/21/1987 $100,000
Xxxxxxx, Xxxxxxx X. Revocable Trust Dated 4-11-97 $15,000
Xxxxx, Xxxxxx $10,000
Xxxxxxx, Xxxx $10,000
Xxxxxxx, Xxxx $40,000
Xxxxxxx, Xxxxx X. $10,000
Xxxxxxx, Xxxxxx X. $20,000
Xxxxxxx, Xxxxxx X. $10,000
Xxxxxxx, Xxxxxx X. $30,000
Xxxxxx, Xxxxxx $100,000
Xxxxxxxx, Xxxxx X. $12,500
Xxxxxx, Xxxx-Xxx and Xxxxxx Xxxxxxxx Xx. $12,500
Xxxxxxxx, Xxxxxxx X. $10,000
Xxxxxx, Xxxxxxxx X. $10,000
Xxxxxx, Xxxxxx $10,000
Xxxxx, Xxxxxx $10,000
Xxxxxxxxx, Xxxxx $25,000
Xxxxx, Xxxxx and Xxxxxx Xxx $10,000
Xxxxxxxx, Xxxxxx $20,000
Xxxxxx, Xxxxxxx X. $50,000
Xxxxxxx, X. Xxxxxxx and Xxxxxx $20,000
Xxxxxxx, Xxxxxx X. $10,000
Xxxxx, Xxxxxxx X. $10,000
Xxxxx, Xxxxxx $30,000
Xxxxx, Xxxxxxx $10,000
Xxxxx, Xxxxxx $10,000
Xxxxxx, Xxxxxxxxx and Xxxxxx $12,500
Xxxxxxx, Xxxx $10,000
Xxxxxxx, Xxxxxxxxx $10,000
27
SCHEDULE 3.11A (CONT.)
CONVERTIBLE NOTE HOLDERS
Xxxxx, Xxxxxxx $10,000
Xxxxxxx, Xxxxxx $5,000
Nuriel, Gali $80,000
Xxx, Xxxxx X. $10,000
Xxxxxxxx, Xxxx $10,000
Xxxxx, Xxxxx $10,000
Prince, Xxxxxx X. $10,000
Xxxxxxx, Xxxx $25,000
Ran, Talia Irrevocable Trust $3,334
Ran, Xxxxx X. Irrevocable Trust UAD $3,334
Ran, Xxxxxxx X. Irrevocable Trust UAD $3,334
Ran, Yigal $5,000
Ran, Xxxxxxx X. $50,000
Rome, Xxxxxx X. $80,000
Xxxx, Xxxxxxx X. $10,000
Xxxxxxx, Xxxxxx and Xxxxx $10,000
Xxxxxxx, Xxxxxx X. $10,000
Xxxxxxxxx, Xxxxxx and Xxxxxxx X. $28,600
Van Leijenhorst, X.X. $20,000
Xxxxxxxx, Xxxx $20,000
White Family Living Trust $15,000
White, Xxxxx X. Xxxxx Trust dated 6/8/95 $20,000
Total $1,199,602.00
28
SCHEDULE 3.12
TITLE TO ASSETS
No exceptions.
29
SCHEDULE 3.13
PATENTS AND TRADEMARKS OF PRO-PHARMA
1. Provisional Patent Application entitled "Drug Formulations and
Modifications with Carbohydrates" (application no. 60/229,270) filed with the
U.S. Patent and Trademark Office on August 30, 2000 and assigned by Xxxxx Xxxxx,
Ph.D., the inventor thereunder, to Pro-Pharma under Assignment dated September
20, 2000 and recorded September 29, 2000 (reel 011161/frame 0008).
2. Provisional Patent Application entitled "Synthesis of Galactomycin"
(application no. 60/235,141) filed with the U.S. Patent and Trademark Office on
September 25, 2000 and assigned by Xxxxx Xxxxx, Ph.D., the inventor thereunder,
to Pro-Pharma under Assignment dated October 5, 2000 and recorded November 1,
2000.
Pro-Pharma may permit one or both of these provisional applications to
expire as a result of not filing an actual application.
3. On March 27, 2001, Xxxxx Xxxxx and Xxxxxxx Xxxxxxx, co-inventors,
delivered for filing with the U.S. Patent and Trademark Office a utility patent
application entitled "Delivery of a Therapeutic Agent in a Formulation for
Reduced Toxicity". Such co-inventors have assigned all their rights to such
invention and patent application to Pro-Pharma.
Pro-Pharma has investigated the registrability of certain trademarks but
has not filed registration applications.
30
SCHEDULE 3.14
REAL PROPERTY LEASES
No exceptions.
31
SCHEDULE 3.15
PERSONAL PROPERTY
No exceptions.
32
SCHEDULE 3.17
RELATED PARTY INTERESTS
See disclosure in Schedule 3.18
33
SCHEDULE 3.18
LITIGATION
Pro-Pharma is not a party to any litigation, nor has it been directly
threatened with any litigation. However, SafeScience, Inc., a publicly traded
corporation ("SafeScience") founded by Dr. Xxxxx Xxxxx and of which he is a
stockholder, by letter dated February 15, 2001 (i) alleged that "the business of
Pro-Pharmaceuticals is directly competitive with that of SafeScience" and thus
in violation of Xx. Xxxxx'x employment agreement with SafeScience dated June 29,
1999, the non-competition covenant of which was continued in a severance letter
with Xx. Xxxxx dated May 31, 2000, and (ii) demanded that Xx. Xxxxx cease such
conduct. Xx. Xxxxx responded in a letter from counsel dated February 19, 2001,
which argued that, as a developer of a drug delivery system for chemotherapies
already in use, Pro-Pharma is not competitive with SafeScience, which is
developing new chemotherapy drugs. Such letter more particularly stated that
SafeScience is engaged in development of drugs based on GBC 590, a galacturonic
acid polymer, for application to a new oncology drug structure seeking to
inhibit metastasis and shrink tumors, whereas Pro-Pharma aims to reduce the
toxicity and increase the efficacy of chemotherapy drugs now in widespread use,
by encapsulating them in polymannose, based on different carbohydrate chemistry,
so as to target delivery of such drugs to diseased tissue. Counsel to the
parties held a meeting and agreed on an informal "standstill" pending occurrence
of a meeting between scientist representatives of SafeScience and Pro-Pharma to
discuss whether their respective technologies would lead to competitive
businesses.
34
SCHEDULE 3.19
COMPLIANCE WITH LAW
No exceptions.
35
SCHEDULE 3.20
BENEFIT PLANS
No exceptions.
36
SCHEDULE 3.21
GOVERNMENTAL CONSENT, ETC.
Pro-Pharma is engaged in a business subject to regulation by the Food and
Drug Administration.
37
SCHEDULE 3.22
BROKERS
No exceptions.
38
SCHEDULE 4.9
CONTRACTS
1. The Company is a party to an Agreement for Transfer of Patent and
Proprietary Rights dated September 5, 1995, as amended on August 29, 1996 (the
"Agreement"), as a result of the assignment and acceptance of the rights and
obligations of Developed Technology Resource, Inc. under the Agreement. Other
parties to the Agreement are Xxxxx X. Xxxxxxxxx, Artann Corporation, a New
Jersey corporation, and ArMed, Inc., a Delaware corporation and successor to
ArMed, LLC, an Alabama limited liability company, and an original signatory to
the Agreement, a copy for which has been provided to the Shareholders.
2. The Company will have likely entered into an agreement with a transfer
agent for its outstanding shares of the Company's common stock.
39
SCHEDULE 4.10
GOVERNMENTAL CONSENT, ETC.
The Company contemplates, or is obligated, under the Agreement, to take
certain action following the closing date which will require filings with
governmental agencies, including those required in connection with the filing of
a Form 10-KSB with the Securities and Exchange Commission, and the merger of
Pro-Pharmaceuticals, Inc. into the Company, and the qualification of the Company
to do business in Massachusetts.
40
SCHEDULE 4.11
NO ASSETS OR LIABILITIES
1. See Schedule 4.9 for contractual rights and obligations.
2. The Company may have a liability to the stock transfer agent appointed
for its common stock.
3. The Company will have liabilities relating to the transactions
contemplated in this Agreement, including liabilities to appraisers, lawyers,
accountants, printers and the stock transfer agent for Resource, not to exceed
$35,000 in the aggregate.
41
SCHEDULE 4.12
TAXES
None.
42
SCHEDULE 6.3
CONTRACTS
See Schedule 4.9.
The Company may not have a perfected security interest in the membership
units of ArMed, LLC (a Delaware limited liability company) or the capital stock
of its successor, ArMed, Inc., a Delaware corporation.
Xxxxx X. Xxxxxxxxx and Artann Corporation could claim that the assignment
of the contractual rights in the "Agreement" (defined in Schedule 4.9) require
their consent.
43
