Signature Page Follows]
EXHIBIT
10.1
THIS
MERGER TERMINATION AND RELEASE AGREEMENT, dated as of April 17, 2008 (this
“Merger Termination
Agreement”), is entered into by and among Virium Holdings, Inc., a
Delaware corporation (“Holdings”), Virium
Pharmaceuticals Inc., a New York corporation and a wholly-owned subsidiary of
Holdings (the “Company”), REIT
Americas, Inc., a Maryland corporation (“RAI”), Virium
Pharmaceuticals, Inc., a Delaware corporation and direct, wholly-owned
subsidiary of RAI (“Pharmaceuticals”) and
Virium Merger Sub, Inc., a Delaware corporation and direct, wholly-owned
subsidiary of Pharmaceuticals (“Merger Sub”) and
Xxxxxx Xxxxx Securities, Inc. (“Xxxxxx”).
WHEREAS,
the parties previously entered into an Agreement and Plan of Merger dated as of
May 25, 2007, as amended (the “Merger Agreement”),
by and among the Company, RAI, Pharmaceuticals and Merger Sub pursuant to which
the Company would be merged with and into Merger Sub (the “Merger”);
WHEREAS,
the parties no longer wish to consummate the Merger and mutually desire to
terminate the Merger Agreement pursuant to the terms and conditions more fully
set forth below; and
WHEREAS,
the Company wishes to consider entering into an acquisition transaction (the
“Third Party
Transaction”) with a third party (the “Third Party”)
followed by an equity financing transaction;
NOW,
THEREFORE, in consideration of the mutual agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Termination. Effective
upon the execution hereof, the Merger Agreement shall be terminated, void and of
no further force or effect, and no party to the Merger Agreement shall have any
liability to any other person for any claim with respect to any provision
thereof, whether such claim arose prior to or after the date hereof, other than
pursuant to the provisions of Section 5.7 of the Merger Agreement.
2. Third Party
Release. Effective upon execution hereof, the Third Party
involved in the Third Party Transaction shall have no liability whatsoever for
any claims, liabilities or other damages arising under, or pursuant to, the
Merger Agreement and related transaction documents or otherwise based upon, or
related to the termination of the Merger Agreement and transactions contemplated
thereby and/or the pursuit or entry into any Third Party
Transaction.
3. Termination
Payment. If both the Third Party Transaction and the Qualified
Financing (as defined in Section 7 below) are consummated, then the Company
shall promptly pay to RAI, subject to Section 3 below, $535,000 cash (the “Termination Amount”),
in immediately available funds, by wire transfer to RAI pursuant to wire
instructions to be provided by RAI, which upon such consummation shall be the
sole and exclusive payment obligation of the Company with respect to the Merger
Agreement.
4. Stock
Payment. The Company may, at its sole and absolute discretion,
discharge $300,000 of the Termination Amount by issuing to RAI 718,257 (as
adjusted for stock splits, stock combinations, stock dividends and the like, the
“Share Amount”)
shares of the Company’s common stock, par value $0.001 per share (the “Stock Payment”);
provided, however, that if the
Company consummates the Third Party Transaction and, pursuant to the terms
thereof, shares of common stock of the successor or acquiring corporation in
such Third Party Transaction are received by or distributed to the holders of
the Company Common Stock in exchange therefor, then the Company (or its
successor or the acquiring corporation, as applicable) may thereafter make the
Stock Payment by delivering to RAI that number of shares of common stock of the
successor or acquiring corporation in the Third Party Transaction that would
have been received by a holder of that number of shares of Common Stock that is
equal to the Share Amount. Nothing in this Merger Termination
Agreement shall be deemed to create any obligation on the part of the Company or
any successor or acquiring corporation to pay any portion of the Termination
Amount in stock or other securities.
5. Name
Change. Promptly following the execution of this Merger
Termination Agreement, RAI, Pharmaceuticals and Merger Sub shall take such
action and execute such further certificates, instruments, documents and
agreements as may be reasonably requested by the Company in order either
dissolve or change the names of Pharmaceuticals and Merger Sub such that they no
longer contain the word “Virium”. RAI, Pharmaceuticals and Merger Sub
hereby acknowledge and agree that as between them and the Company, the Company
has all rights, title and interest in the name “Virium”.
6. Xxxxxx
Shares.
(a)
Issuance of Xxxxxx
Shares. Promptly following the execution hereof, Holdings
shall issue to Xxxxxx 1,675,933 shares of its common stock, par value $0.001 per
share, (the “Xxxxxx
Shares”) in lieu of the shares of common stock, par value $0.001 per
share, of the Company that would have been issued to Xxxxxx upon the closing of
the transactions pursuant to the Merger Agreement. Forty percent
(40%) of the Xxxxxx Shares shall vest immediately upon issuance thereof (the
“Vested
Shares”) and the remaining sixty percent (60%) of the Xxxxxx Shares shall
be restricted shares (the “Restricted
Shares”).
(b)
Vesting;
Restrictions. The Restricted Shares shall vest upon the
consummation of a Qualified Financing (the time of such consummation, the “Vesting
Time”). Until the Vesting Time, neither the Restricted Shares
nor any right or privilege pertaining thereto may be sold, transferred,
assigned, pledged, hypothecated or otherwise disposed of or encumbered in any
way, by operation of law or otherwise, and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of or encumber the Restricted Shares or
any right or privilege pertaining thereto, the Restricted Shares and all rights
and privileges given hereby shall immediately terminate and the Restricted
Shares shall be forfeited to Holdings pursuant to paragraph 6(c)
hereof.
2
(c)
Forfeiture.
(i)
All of Xxxxxx’x rights to, and interest in, the Restricted Shares shall
terminate and be forfeited to Holdings without payment of consideration if a
Qualified Financing is not consummated on or prior to the Closing Deadline (as
defined below).
(ii)
If at any time Xxxxxx forfeits any Restricted Shares pursuant to this Merger
Termination Agreement, Xxxxxx agrees to return the certificate or certificates
for such Restricted Shares to Holdings duly endorsed in blank or accompanied by
a stock power duly executed in blank.
(d)
Representations and
Warranties of Xxxxxx; Legends.
(i)
In connection with the issuance of the Xxxxxx Shares, Xxxxxx hereby represents
and warrants to Holdings that (A) Xxxxxx is acquiring the Xxxxxx Shares for its
own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with the intention of distributing or
reselling the same, (B) Xxxxxx is aware that none of the Xxxxxx Shares have been
registered under the Securities Act of 1933, as amended (the “Securities Act”), or
under applicable state securities or blue sky laws and (C) Xxxxxx is an
“Accredited Investor” as such term is defined in Rule 501 of Regulation D, as
promulgated under the Securities Act.
(ii)
Xxxxxx acknowledges and agrees that the certificates representing the Xxxxxx
Shares shall bear a customary legend restricting the sale thereof other than in
compliance with the Securities Act and applicable state securities or blue sky
laws and that the certificate representing the Restricted Shares shall bear an
additional legend to the effect that any transfer or disposition thereof is
subject to the restrictions set forth in this Merger Termination
Agreement.
(e)
Issuance or
Distribution of Third Party Stock. If at any time following,
or in connection with, a Third Party Transaction, shares of common stock of the
Third Party are issued or distributed to Xxxxxx in respect of the Restricted
Shares, whether directly by the Third Party or by Holdings, (any such shares,
“Restricted Third
Party Shares”), then all of the provisions (including, without limitation
the restrictions) set forth in this Section 6 (other than the provisions of
Section 6(a)) shall inure to the benefit of the Third Party and shall apply to
such Restricted Third Party Shares mutatis mutandis such that
the term “Restricted Shares” as used in such provisions shall be deemed to refer
to the Restricted Third Party Shares and the term “Holdings” as used in such
provisions shall be deemed to refer to the Third
Party. Notwithstanding any such application of the provisions of this
Section 6 to Restricted Third Party Shares, such provisions shall simultaneously
apply to Restricted Shares that remain outstanding.
7. Certain Defined
Terms. For purposes of this Merger Termination
Agreement:
(a)
“Closing
Deadline” shall mean the later of (i) June 12, 2008 and (ii) the New
Maturity Date;
3
(b)
“New Maturity
Date” shall mean the date to which all of the maturity dates of the
Second Bridge Notes (as defined in Schedule A) are
extended, if, prior to June 12, 2008 the Third Party, with the assistance of
Xxxxxx, is able to negotiate an extension of the maturity dates of all of the
Second Bridge Notes, on terms and conditions reasonably satisfactory to the
Third Party; and
(c)
“Qualified
Financing” shall mean an equity financing transaction by the Third Party
with a closing date no later than the Closing Deadline and gross proceeds to the
Third Party from investors introduced to the Third Party by Xxxxxx Xxxxx
Securities, Inc. of not less than an amount equal to $2,500,000 reduced by the
principal amounts of any Bridge Notes set forth on Schedule A hereto
that are fully converted into equity securities of the Third Party on or prior
to the closing date of such equity financing transaction.
8. Counterparts. This
Merger Termination Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but which together shall constitute one and
the same instrument. The executed signature pages hereto may be
delivered by facsimile or other means of electronic image transmission, such a
copy of any signature page hereto shall have the same force an effect as an
original thereof.
9. Governing
Law. This Merger Termination Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York without
reference to principles of conflicts of law.
[Signature Page
Follows]
4
IN WITNESS WHEREOF, the parties hereto
have executed this Merger Termination Agreement as a document under seal as of
the date first above written.
| Virium Pharmaceuticals Inc. | ||
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| By: |
/s/
Xxxxx X. Xxxxxxxx
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Name:
Xxxxx X. Xxxxxxxx
Title:
President
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| REIT Americas, Inc. | ||
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| By: |
/s/
F. Xxxx Xxxxxxx
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Name:
F. Xxxx Xxxxxxx
Title:
President
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Virium Pharmaceuticals, Inc.
(Delaware)
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| By: |
/s/
F. Xxxx Xxxxxxx
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Name:
F. Xxxx Xxxxxxx
Title:
President
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| Virium Merger Sub, Inc. | ||
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| By: |
/s/
F. Xxxx Xxxxxxx
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Name:
F. Xxxx Xxxxxxx
Title:
President
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| Virium Holdings, Inc. | ||
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/s/
Xxxxx X. Xxxxxxxx
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Name: Xxxxx
X. Xxxxxxxx
Title:
President
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Xxxxxx
Xxxxx Securities, Inc.
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/s/
Xxxxx
X. Xxxxxxxxx
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Name: Xxxxx
X. Xxxxxxxxx
Title:
Managing Partner
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[Signature
Page to Merger Termination Agreement]
6
Schedule A
to
Merger Termination
Agreement
Bridge
Notes
“Bridge Notes”
pursuant to the Merger Termination Agreement shall include all of the
following:
First
Bridge Notes
The
following note issued by the Company pursuant to the Subscription Agreement
dated as of May 30, 2007 by and between the Company and Strategic Capital
Resources, Inc.:
|
Name
|
Amount
of Note
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Note
Number
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Strategic
Capital Resources, Inc.
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$500,000
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PN-May-1
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Second
Bridge Notes
The
following notes (the “Second Bridge Notes”)
issued by the Company pursuant to the Subscription Agreement dated as of
December 12, 2007 by and between the Company and each of the following
persons:
|
Name
|
Amount
of Note
|
Note
Number
|
||
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Xxxx
Xxxxxxxx
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$
25,000
|
PN-Dec07-1
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||
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Xxxxxx
Xxxxxx
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$
25,000
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PN-Dec07-2
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||
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Xxxx
Xxxxxx
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$
50,000
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PN-Dec07-3
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||
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Xxxxx
Xxxxxx
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$
50,000
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PN-Dec07-4
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||
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SCO
Capital Partners, LLC
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$
50,000
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PN-Dec07-6
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SCO
Capital Partners, L.P
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$
175,000
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PN-Dec07-7
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Xxxxx
Xxxxx
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$
100,000
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PN-Dec07-5
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||
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Xxxxx
Xxxxxxx
|
$
25,000
|
PN-Dec07-8
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7
