UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 20, 1999
ACCESS PHARMACEUTICALS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
----------------------------------------------
(State of other jurisdiction of incorporation)
0-9314 83-0221517
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
2600 Stemmons Freeway, Suite 176, Dallas, Texas 75207
- --------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
---------------------------------------------------
(214) 905-5100
N/A
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Acquisition Or Disposition Assets.
----------------------------------
On February 23, 1999, Access Pharmaceuticals, Inc., a Delaware corporation (the
"Registrant"), entered into an Agreement of Merger and Plan of Reorganization,
as amended (the "Agreement") with Virologix Corporation, a Delaware
corporation ("Virologix"), and Access Holdings, Inc., a Delaware corporation and
a wholly-owned subsidiary of the Registrant (the "Merger Sub"). Pursuant to the
terms of the Agreement, on July 20, 1999 the Merger Sub merged with and into
Virologix, the separate existence of the Merger Sub ceased, and Virologix became
a wholly-owned subsidiary of the Registrant and each outstanding share of
Virologix' common stock were converted into 0.231047 shares of the Registrant's
common stock representing 1,000,000 shares of common stock of the Registrant.
The transaction will be accounted for as a purchase.
Item 7. Financial Statements, Pro Forma Financial Information And Exhibits.
-------------------------------------------------------------------
(a) Financial Statement of Business Acquired.
The financial statements of the business acquired are not being filed with this
Report. Such financial statements, if required, will be filed within 60 days
after the date this Report is filed with the Securities and Exchange
Commission (the "Commission").
(b) Pro Forma Financial Information.The pro forma financial information is not
being filed with this Report. Such financial statements, if required, will be
filed within 60 days after the date this Report is filed with the Commission.
(c) Exhibits.
Exhibit No. Description
- ----------- ------------
Exhibit 2.2 Agreement of Merger and Plan of Reorganization by and among
Access Pharmaceuticals, Inc., Access Holdings, Inc. and
Virologix Corporation, dated as of February 23, 1999, as
amended, including exhibits thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ACCESS PHARMACEUTICALS, INC.
By: /s/ Kerry P. Gray
------------------
Title: President and CEO
Dated: August 3, 1999
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
AGREEMENT (this "Agreement") dated as of February 23, 1999,
among ACCESS PHARMACEUTICALS, INC., a Delaware corporation
("Parent"), ACCESS HOLDINGS, INC., a Delaware corporation and direct
wholly-owned subsidiary of the Parent ("Acquiror"), and VIROLOGIX
CORPORATION, a Delaware corporation ("Target") and such stockholders of
the Target as have executed this Agreement on the signature pages hereto (the
"Founding Stockholders").
WHEREAS, the Boards of Directors of each of Parent, Acquiror, and
Target believe that the merger of Acquiror into Target (the "Merger") would
be advantageous and beneficial to their respective corporations and
stockholders;
WHEREAS, this Agreement is intended to be and is adopted as a plan
of reorganization within the meaning of paragraph 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree that Acquiror shall be merged with and into Target upon the terms and
subject to the conditions set forth in this Agreement.
1. The Merger.
1.1. Closing and Effective Date of Merger. Subject to
the closing conditions in Paragraphs 7 and 8 hereof, at a closing to be held at
the offices of Parent on such date and at such time prior to the termination
date referred to in Paragraph 14 as may be agreed to by the parties or, if not
agreed, then on such termination date (the "Closing Date"), Target and
Acquiror shall cause to be definitively executed and delivered to one
another the Certificate of Merger substantially in the form attached hereto
as Exhibit A (the "Certificate of Merger") and shall
cause such document to be filed with the Secretary of State
of Delaware, in order to cause the Merger contemplated by this Agreement to
become effective under the laws of the State of Delaware. The Merger shall
become effective on the date and at the time of the filing of the Certificate of
Merger with the Secretary of State of Delaware (the "Effective Date").
References herein to the "Surviving Corporation" shall mean Target on and
after the Effective Date.
1.2. Terms and Conditions of Merger. Upon the
Effective Date, pursuant to the Certificate of Merger and this Agreement,
(a) Acquiror shall be merged with and into
Target and the separate existence of Acquiror shall cease;
(b) Target shall continue as the Surviving
Corporation, organized under the laws of the state of Delaware, the authorized
capital stock of which shall be one thousand (1,000) shares of common stock,
par value $.01 per share;
<PAGE>
(c) the Certificate of Incorporation of the
Surviving Corporation shall be the Certificate of Incorporation of Acquiror in
effect immediately prior to the Effective Date;
(d) each share of Target's common stock
(assuming conversion of all shares of Target's preferred stock into shares of
Target's common stock), $0.001 par value per share ("Target Stock"), issued
and outstanding immediately prior to the Effective Date (other than any shares
held by dissenting stockholders referred to in Paragraph 2.2(d) below) shall by
virtue of the Merger become and be converted into .235398 shares (subject to
the payment of cash adjustments in lieu of the issuance of fractional shares as
provided in Paragraph 2.2(h) herein, the "Conversion Number") of the common
stock, par value $0.01 per share, of Parent ("Parent Stock"), subject to
adjustment as provided in Paragraph 2.1 below. As of the Effective Date,
each share of Target Stock shall be cancelled and shall cease to exist and no
payment shall be made with respect thereto;
(e) the capital stock of Acquiror shall remain
outstanding as the capital stock of the Surviving Corporation, all of which
shall be owned by Parent as of the Effective Date;
(f) the Surviving Corporation shall have as its
By-Laws the By-Laws of Acquiror in effect immediately prior to the Effective
Date;
(g) all of the estate, properties, rights,
privileges, powers and franchises of Target and Acquiror and all of their
property, real, personal and mixed, and all debts and obligations of any kind of
Target or Acquiror shall vest in the Surviving Corporation, without any further
act or deed being required therefor; and
(h) the directors and officers of the Surviving
Corporation as of the Effective Date shall be those specified in the Certificate
of Merger.
2. Antidilution; Payments, Etc.
2.1. Antidilution. If, subsequent to the date of this
Agreement but prior to the Effective Date, the shares of Parent Stock or Target
Stock issued and outstanding as of the date of this Agreement shall be
increased, decreased, or changed into or exchanged for a different number or
kind of shares or securities through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar changes in Parent's or Target's capitalization, then an appropriate and
proportionate adjustment shall be made to the Conversion Number so that each
holder of Target Stock immediately prior to the Effective Date shall receive
pursuant to Section 1.2(d) hereof: (a) in the event of any such change with
respect to Target Stock, that number of shares of Parent Stock (except for
fractional shares) that such holder would have received if such change had
never occurred, and (b) in the event of any such change with respect to Parent
Stock, that number of shares of Parent Stock (except for fractional shares) that
such holder would have received as a result of such change if such change had
occurred immediately after the Effective Date (and such holders were treated
for purposes of such change as holders of Parent Stock).
2.2. Procedures; Fractional Shares, Etc.
(a) Certificates that represent shares of Target
Stock that are outstanding immediately prior to the Effective Date (each a
"Certificate") and are converted into shares of Parent Stock pursuant to Section
1.2(d) shall, after the Effective Date, be deemed to represent the
<PAGE>
shares of the Parent Stock into which such shares have been converted and
shall be exchangeable by the holders thereof in the manner provided in
paragraphs (b) and (c) below for new certificates representing the shares of
Parent Stock into which such shares of Target Stock have been converted.
(b) As promptly as practicable after the
Effective Date, Parent or its transfer agent for Parent Stock shall send to each
holder of record of shares of Target Stock (other than any such shares held
directly or indirectly by Parent or Target) outstanding on the Effective Date
(the "Target Stockholders"), transmittal materials for use in exchanging the
Certificates for such shares for certificates for the shares of Parent Stock
into which such shares of Target Stock have been converted pursuant to Section
1.2(d). Upon surrender of a Certificate to Parent (or the transfer agent for
Parent Stock), together with a duly executed letter of transmittal and any other
required documents, the holder of such Certificate shall be entitled to receive,
in exchange therefore, a certificate for the number of shares of Parent Stock to
which such holder is entitled, and such Certificate shall forthwith be canceled.
(c) No dividend or other distribution payable
after the Effective Date with respect to Parent Stock shall be paid to the
holder of any unsurrendered Certificate until the holder thereof surrenders such
Certificate, at which time such holder shall receive all dividends and
distributions, without interest thereon, previously payable but withheld from
such holder pursuant hereto. After the Effective Date, there shall be no
transfers on the stock transfer books of Target of shares of Target Stock. If,
after the Effective Date, Certificates are presented to the Parent or its
transfer agent for Parent Stock for transfer,
they shall be canceled and exchanged for
the shares of Parent Stock deliverable in respect thereof as determined in
accordance with the provisions and procedures set forth in Section 1.2(d) and
this Section 2.2 (or returned to the presenting Person, if the shares of Target
Stock formerly represented by such Certificate are held of record by a former
Target Stockholder who has duly exercised the appraisal rights described in
Section 2.2(d) below).
(d) After the Effective Date, holders of Target
Stock shall cease to be, and shall have no rights as, stockholders of Target,
other than (i) to receive shares of Parent Stock into which such shares have
been converted pursuant to the provisions hereof, and (ii) any rights afforded
to any such holder who has demanded appraisal rights in compliance with all
provisions of the Delaware General Corporation law concerning the right of
such holder to dissent from the Merger and demand appraisal of such shares of
Target Stock.
(e) Neither Parent nor Target nor any other
Person shall be liable to any former holder of shares of Target Stock for any
shares or any dividends or distributions with respect thereto properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(f) If any Certificate shall have been lost,
stolen, or destroyed, Parent or its transfer agent for Parent Stock will, upon
receipt (i) of appropriate evidence as to such loss, theft, or destruction and
to the ownership of such Certificate by the person claiming such Certificate
to be lost, stolen, or destroyed, and (ii) of appropriate and customary
indemnification, issue in exchange for such lost, stolen, or destroyed
Certificate the shares of Parent Stock deliverable in respect thereof
pursuant to Section 1.2(d) and this Section 2.2.
(g) If any certificate representing shares of
Parent Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefore is registered, it
<PAGE>
shall be a condition to the
issuance thereof that the Certificate so surrendered shall be properly indorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer (including without limitation that the signature of the
transferor shall be properly guaranteed by a commercial bank, trust company
or member firm of the New York Stock Exchange), and that the Person
requesting such exchange shall pay to the Parent in advance any transfer or
other taxes required by reason of the issuance of a certificate representing
shares of Parent Stock in any name other than that of the registered holder of
the Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of Parent that such tax has been paid or is
not payable.
(h) In lieu of the issuance of fractional shares
of Parent Stock pursuant to Section 1.2(d), cash adjustments, without interest,
will be paid to the holders of Target Stock in respect of any fractional share
of Parent Stock that would otherwise be issuable and the amount of such cash
adjustment shall be equal to an amount equal to an amount in cash determined
by multiplying such holder's fractional interest by $3.00. For purposes of
determining whether, and in what amounts, a particular holder of Target Stock
would be entitled to receive cash adjustments under this Section 2.2(h), shares
of record held by such holder and represented by two or more certificates shall
be aggregated.
(i) Exercise of Options, Warrants and
Conversion of Notes. Except as set forth on Schedule 7.9 hereto, on or before
the Effective Date, all outstanding stock options, warrants and other rights to
purchase or acquire capital stock of the Target shall be exercised or exchanged
as provided in Paragraph 7.9 hereof and all outstanding securities exchangeable
for or convertible into capital stock of the Target shall be exchanged and/or
converted into capital stock of the Target. For all purposes of this Agreement,
the shares of the capital stock of the Target issued upon exercise or in
exchange for such outstanding stock options, warrants and other rights or upon
conversion of any other securities exchangeable for or convertible into the
capital stock of Target for purposes of this Agreement and the recipients
thereof shall be deemed to be stockholders of the Target.
3. Representations and Warranties of Target. Target and the
Founding Stockholders hereby represent and warrant to Parent and Acquiror as
follows. For purposes of this Agreement, the term "Knowledge" in relation to
Target means the knowledge of Joshua D. Schein or Judson A. Cooper.
3.1. Incorporation; Authority. Target is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own or
lease and operate its properties and to carry on its business as now conducted
in all material respects. Target has supplied to Parent complete and correct
copies of its Certificate of Incorporation and By-Laws and all amendments
thereto.
3.2. Corporate Power, Binding Effect. Subject to the
Target Stockholders' approval, Target has all requisite corporate power and
authority to enter into this Agreement and the Certificate of Merger, and to
perform all of its agreements and obligations under this Agreement and the
Certificate of Merger in accordance with their respective terms. This
Agreement has been duly authorized by Target's Board of Directors, has been
duly executed and delivered by Target and constitutes the legal, valid and
binding obligation of Target, enforceable against Target in accordance with its
terms, subject only, in respect of the consummation of the Merger, to requisite
approval by the Target Stockholders, and except that (i) such enforcement may
<PAGE>
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which a
proceeding therefor may be brought (collectively, the "Enforcement
Exceptions"). Upon execution and delivery by Target of the Certificate of
Merger on the Closing Date, the Certificate of Merger will have been duly
authorized, executed and delivered by, and constitute the legal, valid and
binding obligation of, Target subject to the Enforcement Exceptions. Neither
the execution, delivery or performance by Target of this Agreement nor of the
Certificate of Merger in accordance with their respective terms will result in
any violation of or default or creation of any lien under, or the acceleration
or vesting or modification of any right or obligation under, or in any conflict
with, Target's Certificate of Incorporation or by-laws or of any agreement,
instrument, judgment, decree, order, statute, rule or regulation binding on or
applicable to Target, except where any of the foregoing would not have a
material adverse effect on the business, assets or financial condition of
Target.
3.3. Subsidiaries. Target does not have any subsidiaries
and does not own or hold of record and/or beneficially any shares of any class
in the capital stock of any corporation. Target does not own any legal and/or
beneficial interests in any partnerships, business trusts or joint ventures or
in any other unincorporated business enterprise.
3.4. Qualification. Target is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the character of
the properties owned or leased or the nature of the activities conducted by it
makes such qualification necessary.
3.5. Capitalization. The authorized capital of Target
consists of (i) 25,000,000 shares of common stock, $.0001 par value per share,
3,659,288 shares of which are issued and outstanding on the date hereof, (ii)
120 shares of Series A Preferred Stock, $.0001 par value per share, of which
no shares are issued or outstanding on the date hereof, and (iii) 1,350,000
shares of Series B Preferred Stock, $.0001 par value per share, of which
294,418 shares are issued and outstanding on the date hereof (such Series B
Preferred Stock will convert into 588,836 shares of Target's common stock
upon the consummation of the Merger). All such outstanding shares of Target
Stock are owned of record by the Target's stockholders as set forth on
Schedule 3.5 hereto and are validly issued, fully paid and non-assessable.
Except as set forth in Schedule 3.5, Target is neither a party to nor is bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for Target to issue, deliver or sell, or
cause to be issued, delivered or sold any shares of Target Stock or any other
equity security of Target or any securities convertible into, exchangeable for
or representing the right to subscribe for, purchase or otherwise receive any
shares of Target Stock or any other equity security of Target or obligating
Target to grant, extend or enter into any such subscriptions, options, warrants,
calls, commitments or agreements. As of the date hereof there are no
outstanding contractual obligations of the Target to repurchase, redeem or
otherwise acquire any shares of capital stock of the Target.
3.6. Lawful Issuance. All of the outstanding shares of
Target Stock and Target Preferred Stock were issued pursuant to exemptions
from registration under the Securities Act of 1933, as amended (the "Securities
Act"), and applicable state and other securities laws, and all rules and
regulations thereunder. There exists no valid right to rescind any purchase
thereof from or issuance thereof by Target. No class of securities of Target is
required to be registered under any provision of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
<PAGE>
3.7. Financial Statements. Attached as Schedule 3.7
hereto, are copies of (i) the audited balance sheet of Target as of December 31,
1996, (the "Audited Balance Sheet"), and the related audited statements of
income and stockholders' equity and changes in financial position of Target for
the fiscal years ended December 31, 1995 and 1996 accompanied by a report
and opinion thereon of Price Waterhouse (currently known as
PricewaterhouseCoopers LLP) and (ii) the unaudited balance sheet of Target
for the quarter ended September 30, 1998, and related unaudited statements of
income and stockholders equity for such quarter. Additionally, Target has
provided Parent with unaudited quarterly balance sheets and related statements
of income for the year ended December 31, 1997 and all quarters after
December 31, 1997, and up to and including the date of execution and delivery
of this Agreement and will deliver any additional quarterly reports thereafter
up to and including the Closing Date. The Audited Balance Sheet and each other
such balance sheet fairly presents the financial condition of Target in all
material respects as of its date; and each of such statements of income and
stockholders' equity and changes in financial position and statements of
operations fairly presents the results of operations, stockholders' equity and
changes in financial position of Target for the period covered thereby.
3.8. Absence of Certain Changes. Except as set forth
on Schedule 3.8, since the date of the Audited Balance Sheet, there has not
been: (i) any change in the business and Business Plan of Target or in its
relationships with suppliers, licensees, scientists, researchers, licensors or
the like other than changes which were both in the ordinary course of business
and have not had a material adverse effect on the business, assets or financial
condition of Target; (ii) any acquisition or disposition by Target of any
material amount of assets or properties other than in the ordinary course of
business; (iii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting, either in any case or in the
aggregate, the business of Target; (iv) any declaration, setting aside or
payment of any dividend or any other distributions in respect of any class of
the capital stock of Target; (v) any issuance
of any shares of any class of the capital stock
of Target or any direct or indirect redemption, purchase or other acquisition of
any shares of any class of the capital stock of Target; (vi) any increase in the
compensation, pension or other benefits payable or to become payable by
Target to any of its officers or employees, or any bonus payments or
arrangements made to or with any of them; (vii) any entry by Target into any
transaction other than in the ordinary course of business; (viii) any incurrence
by Target of any material obligations or liabilities, whether absolute, accrued,
contingent or otherwise (including, without limitation, liabilities as guarantor
or otherwise with respect to obligations of others), other than obligations and
liabilities incurred in the ordinary course of business; (ix) any mortgage,
pledge, lien, lease, security interest or other charge or encumbrance on any of
the assets, tangible or intangible, of Target, other than those arising by
operation of law which do not materially impair the operation of Target's
business; (x) any change in accounting principles, practices or methods used by
Target; or (xi) any discharge or satisfaction by Target of any lien or
encumbrance or payment by Target of any obligation or liability (fixed or
contingent) other than (A) current liabilities included in the Audited Balance
Sheet and (B) current liabilities incurred since the date of the Audited Balance
Sheet in the ordinary course of business.
3.9. Title to Property, Leases, etc. Except as set forth
in Schedule 3.9(a) hereto, Target has good and marketable title to all of its
tangible properties and assets, including, without limitation, all those
reflected in the Audited Balance Sheet (except for properties or assets
sold or otherwise disposed of in the ordinary course of business since the
date of the Audited Balance Sheet) and in the Business Plan, all free and
clear of all liens, pledges, charges, security interests, mortgages,
encumbrances or title retention agreements of any kind or nature.
<PAGE>
Schedule 3.9(b) hereto sets forth a complete and correct list of
all capital assets and real properties of Target having a book
or fair market value in excess of $10,000. Schedule 3.9(c) hereto sets forth a
complete and correct description of all leases of real property under which
Target is lessor or lessee and all other leases having a remaining term of more
than twelve (12) months or an aggregate remaining rental obligation of more
than $10,000 to which Target is a party, whether as lessor or lessee. Complete
and correct copies of all such leases have been delivered to Parent. Each such
lease is valid and subsisting and no event or condition exists which
constitutes, or after notice or lapse of time or both would constitute, a
default thereunder.
3.10. Indebtedness. Except for Indebtedness (as defined
in Paragraph 16) reflected or reserved against in the Audited Balance Sheet and
Indebtedness incurred in the ordinary course of business after the date of the
Audited Balance Sheet, Target has no material Indebtedness outstanding at the
date hereof. Except as set forth on Schedule 3.10, Target is not in default
with respect to any outstanding Indebtedness or any instrument relating
thereto and no such Indebtedness or any instrument or agreement relating
thereto purports to limit the issuance of any securities by Target or the
operation of the business of Target. Complete and correct copies of all
instruments (including all amendments, supplements, waivers and consents)
relating to any Indebtedness of Target have been made available to Parent.
3.11. Absence of Undisclosed Liabilities. Except to the
extent reflected or reserved against in the Audited Balance Sheet or incurred in
the ordinary course of business after the date of the Audited Balance Sheet or
described in any Schedule hereto, Target has no liabilities or obligations of
any nature, whether accrued, absolute, contingent or otherwise (including,
without limitation, liabilities as guarantor or otherwise with respect to
obligations of others) and whether due or to become due, including, without
limitation, any liabilities for taxes due or to become due, which would be
required by generally accepted accounting principles to be reflected on a
balance sheet of Target.
3.12. Taxes and Tax Returns.
(a) All Taxes of any nature whatsoever due and payable
by Target prior to the execution hereof and all Tax Returns required to be filed
prior to such date have been properly computed in all respects, duly and timely
filed (taking into consideration extensions of time to file) and fully paid and
discharged. There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any Tax or Tax Return for any
period. Target has paid all Taxes which have become due pursuant to Tax
Returns and has paid all installments of estimated Taxes due. All Taxes and
other assessments and levies which it is required by law to withhold or to
collect have been duly withheld and collected, and have been paid over to the
proper governmental authorities to the extent due and payable. All Taxes not
yet due and payable have been properly accrued on the financial statements of
Target. Subsequent to the date hereof and prior to the Closing Date hereunder,
all Tax Returns shall be timely and accurately filed, and any Tax payable as
shown thereby shall be paid, as required by applicable law. Target has not
requested nor been granted an extension of the time for filing any Tax Return
to a date later than the Closing Date. There are no determined material tax
deficiencies or proposed tax assessments (or to the best of its knowledge and
belief, the prospects for the same) against it. Target has not incurred any
liability for penalties, assessments or interest under any federal, state,
local or foreign tax laws. Target has withheld and paid all Taxes required
to have been withheld and paid by it in
<PAGE>
connection with amounts paid or owing to any employee, creditor,
independent contractor or other third party.
(b) There are no liens for Taxes (other than
current Taxes not yet due and payable) on Target's assets. There is no audit,
action, suit, or taxing authority proceeding now in progress, pending or
threatened against Target or with respect to any Tax of Target, and no claim
has ever been made by a taxing authority in a jurisdiction where Target does
not pay Tax or file Tax Returns that Target is or may be subject to Taxes
assessed by that jurisdiction.
(c) Target has not been a member of any
affiliated group (as defined in Section 1504 of the Code) or filed or been
included in a combined, consolidated, aggregate, or unitary income Tax
Return. Target has never been and is not now a party to or bound by any Tax
indemnification, Tax allocation, or Tax sharing agreement or other contractual
obligation pursuant to which it is or may at any time in the future be obligated
to indemnify any other person or entity with respect to Taxes.
(d) Target is not a party to any agreement,
contract, arrangement, or plan that has resulted, or could result by reason of
the transactions contemplated hereby, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(e) Target has provided Parent with true and
complete copies of all Tax Returns filed with respect to it for taxable periods
ending after December 31, 1990, and all examination reports and statements of
deficiencies assessed against or agreed to be paid by it with respect to such
taxable periods.
3.13. Litigation, etc. Except as set forth on Schedule 3.13
hereto, no action, suit, proceeding or investigation (whether conducted by any
judicial or regulatory body or other person) is pending or, to the Knowledge of
Target, threatened against Target (nor is there any basis therefor to the
Knowledge of Target) which questions the validity of this Agreement or any
action taken or to be taken pursuant hereto or which might reasonably be
expected, either in any case or in the aggregate, to materially adversely affect
the business, assets, or financial condition of Target or materially impair the
right or the ability of Target to carry on its business substantially as now
conducted.
3.14. Safety, Zoning and Environmental Matters.
Neither the offices or properties in or on which Target carries on its business
nor the activities carried on therein are in violation of any zoning, health or
safety law or regulation, including, without limitation, the Occupational Safety
and Health Act of 1970, as amended, except where a violation would not have
a material adverse effect on the business, assets or financial condition of the
Target. To Target's Knowledge:
(a) Target is not in violation of any judgment,
decree, order, law, license, rule or regulation purporting to regulate
environmental matters, including without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local
<PAGE>
statute, regulation, ordinance,
order or decree relating to health, safety or the environment (hereinafter
"Environmental Laws"), which violation would have a material adverse effect
on the business, assets, or financial condition of Target;
(b) Target has not received notice from any third
party including without limitation any federal, state or local governmental
authority, (i) that Target or any predecessor in interest has been identified by
the United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous
waste as defined by 42 U.S.C. Paragraph 6903(5), any hazardous substances as
defined by 42 U.S.C. Paragraph 9601(14), any pollutant or contaminant as
defined by 42 U.S.C. Paragraph 9601(33) and any toxic substance,
oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which Target or any other person or entity has generated,
transported or disposed of has been found at any site at which a federal, state
or local agency or other third party has conducted or has ordered that Target
conduct a remedial investigation, removal or other response action pursuant to
any Environmental Law; or (iii) that Target is or shall be a named party to any
claim, action, cause of action, complaint (contingent or otherwise) legal or
administrative proceeding arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances;
(c) except where any of the following would not
have a material adverse effect on the business, assets, or financial condition
of Target, (i) no portion of the property of Target has been used for the
handling, manufacturing, processing, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for
Hazardous Substances is located on
such properties; (ii) in the course of any activities conducted by Target no
Hazardous Substances have been generated or are being used on such
properties except in accordance with applicable Environmental Laws; (iii) there
have been no releases (i.e. any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Substances on,
upon, into or from the properties of Target, which releases would have a
material adverse effect on the value of such properties or adjacent properties
or the environment; (iv) there have been no releases on, upon, from or into any
real property in the vicinity of the real properties of Target which, through
soil or groundwater contamination, have come to be located on, and which would
have a material adverse effect on the value of, the properties of Target; and
(v) in addition, any Hazardous Substances that have been generated on the
properties of Target, have been transported in accordance with applicable
Environmental Laws; and
(d) none of the properties of Target are
currently subject to any applicable environmental cleanup responsibility law or
environmental restrictive transfer law or regulation by virtue of the
transactions set forth herein and contemplated hereby.
3.15. Labor Relations. Target is in compliance in all
material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours
and nondiscrimination in employment, and is not engaged in any unfair labor
practice. There is no charge pending or, to the knowledge of Target,
threatened against Target alleging unlawful discrimination in employment
practices before any court or agency and there is no charge of or proceeding
with regard to any unfair labor practice against Target pending before the
National Labor Relations Board. There is no labor strike, dispute, slow-down
or work
<PAGE>
stoppage actually pending or to the knowledge of Target threatened
against or involving Target. No representation question exists respecting any
of the employees of Target. No grievance or arbitration proceeding arising out
of or under any collective bargaining agreement is pending against Target and
no claim therefor has been asserted. None of the employees of Target is
covered by any collective bargaining agreement, and no collective bargaining
agreement is currently being negotiated by Target. Except as described on
Schedule 3.15 hereto, Target has not experienced any work stoppage or other
material labor difficulty during the last five years.
3.16. Contracts. Except for contracts, agreements, or
other arrangements that have been fully performed and with respect to which
Target has no further obligations or liabilities and except as listed in
Schedule 3.16, Target is not a party to or otherwise bound by any agreement,
instrument, or commitment that is material to its financial condition,
operations, business or assets, and Target is not a party to or otherwise bound
by any agreement, instrument, or commitment that may materially and
adversely affect its ability to consummate the transactions contemplated hereby,
including without limitation any:
(a) agreement for the purchase, sale, lease, or
license by or from it of assets, products, or services requiring total payments
by or to it in excess of $10,000 in any instance, or entered into other than in
the ordinary course of the operation of its business;
(b) agreement or other commitment pursuant to
which it has agreed to indemnify or hold harmless any other Person, including
without limitation, for any liabilities, penalties, losses, damages, or costs,
or expenses related thereto, arising out of or in connection with any presence,
use, generation, treatment, storage, transportation, recycling, disposal, or
release of any Hazardous Substances;
(c) (i) employment agreement, (ii) consulting
agreement, or (iii) agreement providing for severance payments or other
additional rights or benefits (whether or not optional) in the event of the
sale or other change in control of it;
(d) agreement with any current or former
affiliate, stockholder, officer or director of it or with any Person in which,
to Target's Knowledge, any such affiliate of it has an interest;
Target has delivered or made available to Parent correct and
complete copies (or written summaries of the material terms of oral agreements
or understandings) of each agreement, instrument, and commitment listed in
Schedule 3.16 hereto, each as amended to date. Each such agreement,
instrument, and commitment is a valid, binding and enforceable obligation of
Target, and, to the Knowledge of Target, of the other party or parties thereto,
subject as to enforcement to the Enforcement Exceptions, and is in full force
and effect. Neither Target nor, to its Knowledge, any other party thereto, is
in breach of, default under or noncompliance with any term of any such
agreement, instrument, or commitment (nor to the Knowledge of Target is
there any reasonable basis for any of the foregoing). No agreement,
instrument, or commitment listed in Schedule 3.16 hereto, includes or
incorporates any provision, the effect of which could reasonably be expected to
enlarge or accelerate any of the obligations of Target or to give additional
rights to any other party thereto, or to terminate, lapse, trigger consent
rights of any other person or entity in respect thereof, or in any other way be
affected, by reason of the transactions contemplated by this Agreement.
<PAGE>
3.17. Intellectual Property. Schedule 3.17 contains an
accurate and complete list of all patents, patent applications, trademarks,
tradenames, service marks, logos, copyrights, and licenses known to be used in
or covenient or necessary to Target's business as now being conducted or as
described in the Business Plan (collectively, and together with any technology,
know-how, trade secrets, processes, research, data, clinical trial program,
formulations, works-in-process, formulas and techniques used in, in the
possession or control of, or necessary or convenient to its business, the
"Intellectual Property"). Target owns, or is licensed or otherwise has the full
unrestricted right to use (and has not received notice or any other indication
disputing or challenging its right of use thereof), all Intellectual Property
used in or necessary or convenient to its business or research program,
and no other intellectual property rights, privileges, licenses,
contracts, or other instruments, or evidences of interests
are believed necessary to the conduct of its business or
research program as currently conducted or as contemplated by Target's
Business Plan, a copy of which has been delivered to Parent. In any instance
where Target's rights to Intellectual Property arise under a license or similar
agreement, this is indicated in Schedule 3.17 and such rights are licensed
exclusively to it, except as indicated in Schedule 3.17. Except as indicated in
Schedule 3.17, it has no obligation to compensate any other Person for the use
of any Intellectual Property. Schedule 3.17 lists every instance in which
it has granted to any other person any license or other right to use
in any manner any of the Intellectual Property,
whether or not requiring the payment of royalties
(other than commercial licenses of software entered into in the ordinary course
of business). No other person has an interest in or right or license to use any
of its Intellectual Property. To the knowledge of Target, none of Target's
Intellectual Property is being infringed by others, or is subject to any
outstanding order, decree, judgment, or stipulation. Except as set forth in
Schedule 3.17, no litigation (or other proceedings in or before any court or
other governmental, adjudicatory, arbitral, or administrative body) relating to
its Intellectual Property is pending, or to the best of its knowledge,
threatened, nor is there any basis for any such litigation or proceeding.
No litigation (or
other proceedings in or before any court or other governmental, adjudicatory,
arbitral, or administrative body) charging Target with infringement of any
patent, trademark, copyright, or other proprietary right is pending, or
threatened, nor, to the best of Target's knowledge, is there any basis for any
such litigation or proceeding. Target maintains reasonable security measures
for the preservation of the secrecy and proprietary nature of such of its
Intellectual Property as constitutes trade secrets.
3.18. Insurance. Schedule 3.18 lists the policies of theft,
fire, liability (including products liability), worker's compensation, life,
property and casualty, directors' and officers', and other insurance owned or
held by it. Such policies of insurance are maintained with financially sound
and reputable insurance companies, funds, or underwriters, are of the kinds
and cover such risks, and are in such amounts and with such deductibles and
exclusions, as are consistent with prudent business practice. All such policies
are in full force and effect, are sufficient for compliance in all material
respects by it with all requirements of law and of all agreements to
which it is a party, and provide that they will remain in full force
and effect through the respective
dates set forth in Schedule 3.18 and will not terminate or lapse or otherwise be
affected in any way by reason of the Merger or the other transactions
contemplated hereby.
3.19. Governmental Consent, Non-Contravention, etc.
Except as described in Schedule 3.19, Target holds no licenses, permits or
other authorizations issued by any governmental agency to Target related to its
properties, Intellectual Property, research program or business. No consent,
approval or authorization of or registration, designation, declaration or filing
with any governmental authority, federal or other, on the part of Target, is
required in connection
<PAGE>
with the Merger or the consummation of any other
transaction contemplated hereby, except for the filing of the Certificate of
Merger with the Secretary of State of Delaware. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
will not violate (i) any provision of the charter or by-laws of Target, or
(ii) any order, judgment, injunction, award or decree of any court or
state or federal governmental or regulatory body applicable to Target.
3.20. Employee Benefit Plans. Target does not
maintain or have any obligation to make contributions to, any employee benefit
plan (an "ERISA Plan") within the meaning of Section 3(3) of the United
States Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or, except as set forth on Schedule 3.20 hereto, any other
retirement, profit sharing, stock option, stock bonus or employee benefit plan
(a "Non-ERISA Plan"). Target has heretofore delivered to Parent true, correct
and complete copies of each Non-ERISA Plan. All such Non-ERISA Plans
have been maintained and operated in all material respects in accordance with
all federal, state and local laws applicable to such plans, and the terms and
conditions of the respective plan documents.
3.21. Potential Conflicts of Interest. Except as set forth
on Schedule 3.21, no officer or director of Target (i) owns, directly or
indirectly, any interest in (excepting not more than 1% stock holdings for
investment purposes in securities of publicly held and traded companies) or is
an officer, director, employee or consultant of any Person that is a lessor,
lessee, customer or supplier of Target; (ii) owns, directly or indirectly, in
whole or in part, any tangible or intangible property which Target is using or
the use of which is necessary for the business of Target; or (iii) has any cause
of action or other claim whatsoever against, or owes any amount to, Target,
except for claims in the ordinary course of business, such as for accrued
vacation pay, accrued benefits under employee benefit plans and similar
matters and agreements.
3.22. Brokers. Except as set forth on Schedule 3.22, no
finder, broker, agent or other intermediary has been retained or utilized by, or
has acted for or on behalf of, Target in connection with the negotiation or
consummation of the transactions contemplated hereby.
3.23. Compliance with Other Instruments, Laws, etc.
Target has complied in all material respects with, and is in compliance in all
material respects with, (i) all laws, statutes, governmental regulations and all
judicial or administrative tribunal orders, judgments, writs, injunctions,
decrees or similar commands applicable to its business, (ii) all
unwaived terms and provisions of all contracts, agreements and
indentures to which Target is a
party, or by which Target or any of its properties is subject, and (iii) its
charter and by-laws, each as amended to date, except where any such failure to
comply would not have a material adverse effect on the business, assets or
financial condition of Target. Except as described on Schedule 3.23, Target
does not have or need any licenses, permits or other authorizations from
governmental authorities for the conduct of its business or in connection with
the ownership or use of its properties, except where the failure to have any
such license, permit or other authorization would not have a material adverse
effect on the business, assets or financial condition of the Target.
3.24. Minute Books. The minute books of Target made
available to Acquiror for inspection accurately record therein all actions taken
by Target's Board of Directors and shareholders.
<PAGE>
3.25. Absence of Registration Obligations. Except as set
forth on Schedule 3.25 hereto, Target has no obligation, contingent or
otherwise, by reason of any agreement to register any of its securities under
the Securities Act.
3.26. Ownership of Parent Stock. As of the date hereof,
the Target (i) does not beneficially own, directly or indirectly, and (ii) is
not a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of capital
stock of Parent, which in the aggregate represent 5% or more of the outstanding
shares of capital stock of Parent entitled to vote generally in the election
of directors.
3.27. Full Disclosure. No representation or warranty by
Target in this Agreement or in any Exhibit hereto or in its disclosure schedules
hereto or in its Business Plan contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not false
or misleading. There is no fact relating to the business, research program or
condition of Target that it has not disclosed to Parent in writing and that
could reasonably be expected to result in a Material Adverse Effect to Target.
3.28. Agreements to Vote in Favor of the Merger.
Target has received binding, written agreements to vote in favor of approving
this Agreement and the Merger from stockholders holding at least 50.1% of the
issued and outstanding shares of the voting capital stock of Target.
4. Representations and Warranties of Parent and Acquiror.
Parent and Acquiror represent and warrant to Target as follows. For purposes
of this Agreement, the term "Knowledge" in relation to Parent or Acquiror
means the knowledge of Kerry P. Gray or Stephen B. Thompson.
4.1. Organization and Standing of Parent and
Acquiror. Each of Parent and Acquiror is a corporation duly organized,
validly existing and in corporate good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own or lease
and operate its properties and to carry on its business as now conducted. Each
of Parent and Acquiror has delivered to Target complete and correct copies of
its Certificate of Incorporation and By-Laws and all amendments thereto.
Parent is duly qualified and in good standing as a foreign corporation in each
jurisdiction, if any, in which the character of the properties owned or leased
or the nature of the activities conducted by it makes such qualification
necessary.
4.2. Corporate Power, Binding Effect. Each of Parent
and Acquiror has all requisite corporate power and authority to enter into this
Agreement and the Registration Rights Agreement among the Parent and each
of the Target Stockholders substantially in the Form of Exhibit B attached
hereto (the "Registration Rights Agreement") and to perform all of its
agreements and obligations under this Agreement and the Registration Rights
Agreement in accordance with their respective terms. Acquiror has all
requisite power and authority to enter into the Certificate of Merger and to
perform all of its obligations under the Certificate of Merger. This Agreement
and the Registration Rights Agreement have been duly authorized by each of
Parent's and Acquiror's respective Boards of Directors, has been duly executed
and delivered by Parent and Acquiror and constitutes the legal, valid and
binding obligations of Parent and Acquiror, enforceable against Parent and
Acquiror in accordance with its terms. Neither the execution, delivery or
performance by either Parent or Acquiror of this Agreement or the Certificate
of Merger
<PAGE>
or the Registration Rights Agreement, as applicable, in accordance
with their respective terms will result in any violation of or default or
creation of any lien under, or the acceleration or vesting or modification
of any right or obligation under, or in any conflict with,
either Parent's or Acquiror's
Certificate of Incorporation or by-laws or of any agreement, instrument,
judgment, decree, order, statute, rule or regulation binding on or applicable to
Parent or Acquiror, except where any of the foregoing would not have a
material adverse effect on the business, assets or financial condition of Parent
or Acquiror.
4.3. Capitalization. The authorized capital stock of
Acquiror consists of 1000 shares of common stock, par value $.001 per share,
all of which shares have been issued to and are owned by Parent as of the date
hereof. The authorized capital stock of Parent consists of 20,000,000 shares of
Parent Stock, 3,429,402 shares of which are issued and outstanding on the date
hereof and 2,000,000 shares of preferred stock, none of which shares of
preferred stock are issued and outstanding as of the date hereof. All of such
outstanding shares are validly issued and outstanding, fully paid and
nonassessable. All shares of Parent Stock to be issued to Target Stockholders
under this Agreement (including under Paragraphs 2.1, 2.2 and 2.3) will,
when issued, be duly authorized, validly issued, fully paid and
nonassessable and will not be
subject to the pre-emptive rights of others. Except as set forth in the Parent
Reports (as defined below), Parent is neither a party to nor is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for Parent to issue, deliver or sell, or cause to be
issued, delivered or sold any shares of any equity security of Parent or any
securities convertible into, exchangeable for or representing the right to
subscribe for, purchase or otherwise receive any shares of any equity security
of Parent or obligating Parent to grant, extend or enter into any such
subscriptions, options, warrants, calls, commitments or agreements.
4.4. Reports and Financial Statements. Parent has
previously furnished to Target complete and accurate copies, as amended or
supplemented, of its (i) Annual Reports on Form 10-K for the fiscal years
ended 1996 (the "1996 10-K") and 1997 (the "1997 10-K"), together with all
exhibits thereto, as filed with the Securities and Exchange Commission (the
"Commission"), (ii) proxy statements relating to the Special Meeting of
Stockholders and Annual Meeting of Stockholders held on April 14, 1998 and
June 12, 1998, respectively and, (iii) Quarterly Reports on Form 10-Q,
together with all exhibits thereto, as filed with the Commission since
December 31, 1997 and (iv) other reports filed by Parent with the Commission
since December 31, 1997 (such reports and other filings, together with any
amendments or supplements thereto, are collectively referred to herein as the
"Parent Reports"). The 1996 10-K and the 1997 10-K contain true and
complete copies of Parent's audited balance sheet (each, a "Parent Balance
Sheet") as at December 31, respectively, of 1996 and 1997 and audited
statements of operations and audited consolidated statements of cash flows for
each of the periods then ended (collectively, the "Parent Financial
Statements"). The Parent Financial Statements present fairly the financial
position of Parent as of December 31, respectively, of 1996 and 1997 and the
results of operations and cash flows for each of the respective periods then
ended all in conformity with generally accepted accounting principles applied
on a consistent basis, except as stated therein. Except as
set forth on Schedule 4.4 hereto and except as
contemplated by this Agreement or disclosed in the
1997 10-K or the Parent Financial Statements or in subsequent Forms 10-Q
filed by the Parent with the Commission or in the notes thereto, since
December 31, 1997, there has been no material adverse change in the business,
assets, financial condition or results of operations of the Parent.
<PAGE>
Parent has filed with the Commission all forms,
reports, schedules, statements and other documents required to be filed by it
since January 1, 1996 under the Securities Act (as herein defined) and the
Securities Exchange Act of 1934, as amended, except for any non-filings or
noncompliance which are not in the aggregate material to the financial
condition, results of operations or business of Parent or which will not prevent
or delay in any material respect the consummation of the transactions
contemplated hereby or under the Registration Rights Agreement including, but
not limited to, the filing of a registration
statement with respect to the shares of Parent Stock
to be issued in the Merger. No form, report, schedule, statement
or other document filed by Parent with the Commission since January 1, 1998
contained any untrue statement of a material fact or omitted to state a material
fact necessary, at the time such document was filed, in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, other than such facts as were corrected in any subsequent form,
report, schedule, statement or other document filed with the Commission by
the Parent.
4.5. Government Consents, etc. No consent, approval
or authorization of or registration, designation, declaration or filing with any
governmental authority, federal or other, on the part of it is required in
connection with the Merger or the consummation of any other transaction
contemplated hereby, except for the filing of the Certificate of Merger with the
Secretary of State of Delaware and any filings required under the Registration
Rights Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate (i) any
provision of the charter and by-laws of Parent or Acquiror, or (ii) any order,
judgment, injunction, award or decreed of any court or state or federal
governmental or regulatory body applicable to Parent or Acquiror.
4.6. Brokers. Neither Parent nor Acquiror has retained,
utilized or been represented by any broker or finder in connection with the
negotiation or consummation of this Agreement or the transactions
contemplated hereby.
4.7. Full Disclosure. To the best of its knowledge and
belief, no representations or warranties of Parent or Acquiror herein or in the
Schedules hereto are materially misleading.
4.8. Acquiror. Acquiror has been formed solely for the
purpose of executing and delivering this Agreement and consummating the
transactions contemplated hereby. Since the date of its incorporation, Acquiror
has neither engaged in nor transacted any business or activity of any nature
whatsoever other than activities related to its corporate organization and the
execution and delivery of this Agreement. Acquiror has no assets or properties
or debts, liabilities or obligations of any kind whatsoever, and with the
exception of this Agreement, is not a party to any contract, agreement or
undertaking of any nature.
4.9. Compliance with Other Instruments, Laws, etc.
Parent has complied in all material respects with, and is in compliance in all
material respects with, (i) all laws, statutes, governmental regulations and all
judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands
applicable to its business, (ii) all unwaived terms and provisions of
all contracts, agreements and indentures to which Parent is a party, or
by which Parent or any of its properties is subject, and (iii) its charter
and by-laws, each as amended to date, except where such failure to comply
would not have a material adverse effect on the business, assets or financial
condition of Parent. Except as set forth on Schedule 4.9, Parent does not have
or need any licenses, permits or other authorizations from governmental
authorities for the conduct of its
<PAGE>
business or in connection with the ownership
or use of its properties, except where the failure to have any such license,
permit or other authorization would not have a material adverse effect on the
business, assets or financial condition of Parent.
4.10. Minute Books. The minute books of the Parent and
the Acquiror made available to Target for inspection accurately record therein
all actions taken by Parent's and Acquiror's respective Boards of Directors and
shareholders.
5. Conduct of Target Business Prior to Effective Date.
Target covenants and agrees that, from and after the date of this
Agreement and until the Effective Date, except as otherwise provided herein or
specifically consented to or approved by Parent in writing:
5.1. Full Access. Target shall afford to Parent and
Acquiror and their authorized representatives full access during normal
business hours and with reasonable advance notice to all properties, books,
records, contracts and documents of Target and a full opportunity to make such
investigations as they shall reasonably desire to make of Target, and the Target
shall furnish or cause to be furnished to Parent and Acquiror and their
authorized representatives all such information with respect to the affairs and
businesses of Target as Parent or Acquiror may reasonably request.
5.2. Carry on in Regular Course. Target shall use
commercially reasonable efforts to preserve all of its accounting and business
records, corporate records, trade secrets and proprietary information and other
Intellectual Property for the benefit of the Surviving Corporation.
5.3. No Dividends, Issuances, Repurchases, etc. Target
shall not declare or pay any dividends (whether in cash, shares of stock or
otherwise) on, or make any other distribution in respect of any shares of its
capital stock, or, except as set forth on Schedule 5.3, issue, purchase, redeem
or acquire for value any shares of its capital stock, or issue any options,
warrants or other rights to acquire shares of its capital stock or securities
exchangeable for or convertible into shares of its capital stock, except for the
issuance of shares of capital stock of Target upon the exercise of options or
warrants outstanding on the date hereof or upon the conversion of convertible
promissory notes outstanding on the date hereof as provided in Paragraphs
2.2(i) and 7.9 of this Agreement.
5.4. Employment. Except as set forth on Schedule 5.4
hereto, Target does not employ any employees and has no obligations to any
former employees.
5.5. Contracts and Commitments. Target shall not
enter into any contract or commitment or engage in any transaction not in the
usual and ordinary course of business and consistent with its normal business
practices, including without limitation, any contract or commitment relating to
Target's Intellectual Property.
5.6. Sale of Capital Assets. Target shall not (i) sell,
lease as lessor, license as licensor, or otherwise dispose of any capital asset
with a market value in excess of $10,000, or of capital assets of market value
aggregating with respect to Target taken as a whole in excess of $10,000, (ii)
sell, lease as lessor, license as licensor, or otherwise dispose of any
asset other than in the ordinary course of business; provided, that Target
shall not license any of Target's Intellectual Property, (iii) borrow money,
(iv) incur or pay any material liability other than in the ordinary
<PAGE>
course of business, or (v) guarantee or otherwise incur any material liability
with respect to the obligation of any other Person.
5.7. Preservation of Organization. Target shall use
commercially reasonable efforts to preserve for Parent and Acquiror the
present relationships with suppliers, scientists, researchers, licensors,
parties to contracts and others having business relations with Target.
Target shall not amend its Certificate of Incorporation or by-laws.
Target shall not merge or consolidate with any other corporation, or
acquire any stock of, or, except in
the ordinary course of business, acquire any assets or property of any other
business entity whatsoever.
5.8. No Default. Target shall not do any act or omit to
do any act, or permit any act or omission to act, which will cause a material
breach of any contract, commitment or obligation of Target.
5.9. Compliance with Laws. Target shall duly comply
with all laws, regulations and orders applicable with respect to its business.
5.10. Advice of Change. Target shall promptly advise
Parent in writing of any development or change in circumstance (including any
litigation to which it may become a party or of which it may gain Knowledge)
that does or could reasonably be expected to (i) call into question the validity
of this Agreement or any action taken or to be taken pursuant hereto, (ii)
adversely affect the ability of the parties to consummate the transactions
contemplated hereby, or (iii) have any material adverse effect on the business,
Business Plan, financial condition, or assets of Target.
5.11. Target Stockholders Meeting; No Shopping, etc.
Target shall either call a special meeting of the Target Stockholders to
consider and vote upon the approval of this Agreement and the Merger and
the other transactions contemplated hereby or shall obtain the requisite
minimum required stockholder approval by written consent in accordance with
Target's Certificate of Incorporation, By-Laws and applicable Delaware law.
Target shall recommend to its stockholders the approval of this Agreement
and the Merger and the other transactions contemplated hereby and shall use
its best efforts to solicit and obtain the requisite vote of approval. From
the date hereof until March 31, 1999, Target shall not solicit from any
person or otherwise encourage or support any person in making any offers,
inquiries or proposals relating to the acquisition of any securities or
assets of Target or any merger with Target and will not supply to any
person any non-public information concerning Target for any such purpose
or with any such likely effect.
5.12. Consents of Third Parties. Target shall use
commercially reasonable efforts to secure, before the Closing Date, the
consent, in form and substance satisfactory to Parent and Parent's counsel, to
the consummation of the transactions contemplated by this Agreement, by each
party to any contract, commitment or obligation of Target, in each case under
which such consent is required.
5.13. Satisfaction of Conditions Precedent. Target shall
use commercially reasonable efforts to cause the satisfaction of the conditions
precedent contained in Paragraphs 7 and 8 hereof.
<PAGE>
5.14. Transactions with Affiliates. Target shall not enter
into any transactions with any of its affiliates without the prior written
consent of Parent, which consent will not be unreasonably withheld or delayed.
6. Conduct of Parent Business Prior to Effective Date.
Parent covenants and agrees that, from and after the date of this Agreement
and until the Effective Date, except as otherwise provided herein or
specifically consented to or approved by Target in writing:
6.1. Compliance with Laws. Parent shall duly comply
with all laws, regulations and orders applicable with respect to its business,
except where any of the foregoing would not have a material adverse effect on
the business, assets or financial condition of Parent.
6.2. Advice of Change. Parent shall promptly advise
Target in writing of any development or change in circumstance (including any
litigation to which it may become a party or of which it may gain Knowledge)
that does or could reasonably be expected to (i) call into question the validity
of this Agreement or any action taken or to be taken pursuant hereto, (ii)
adversely affect the ability of the parties to consummate the transactions
contemplated hereby, or (iii) have any material adverse effect on the business
or financial condition of Parent.
6.3. Satisfaction of Conditions Precedent. Parent shall
use its best efforts to cause the satisfaction of the conditions precedent
contained in Paragraphs 7 and 8 hereof.
6.4. Carry on in Regular Course. Parent shall use
commercially reasonable efforts to carry on its business in the usual and
ordinary course and to preserve its organization and relationships and not to
(i) issue any shares of Parent Stock, (ii) declare or pay any dividends to its
stockholders, or repurchase any shares of Parent Stock, (iii) amend its
corporate charter or by-laws, or (iv) sell or pledge, or agree to sell or
pledge, any shares of the capital stock of the Acquiror; provided, however,
that this Section 6.4 shall not operate as to prevent the entry into or
consummation of any of the transactions contemplated in this Agreement or
in the agreements constituting exhibits hereto, including without limitation
the private placement referred to in Section 7.18, below.
7. Conditions Precedent to Parent's and Acquiror's Obligations.
Notwithstanding the provisions of Paragraphs 1 and 2, Parent and
Acquiror shall be obligated to perform the acts contemplated for performance
by them under Paragraphs 1 and 2 only if each of the following conditions is
satisfied at or prior to the Closing Date, unless any such condition is waived
by Parent and Acquiror:
7.1. Accuracy of Representations and Warranties by Target.
The representations and warranties of Target set forth in Paragraph 3 of this
Agreement (including any schedules thereto) shall be true and correct in all
material respects as of the Closing Date with the same force and effect as
though made again at and as of the Closing Date, except for changes permitted
or required by this Agreement.
7.2. Compliance by Target. Target shall have
performed and complied in all material respects with all covenants and
agreements contained in this Agreement required to be performed or complied
with by it on or before the Closing Date.
<PAGE>
7.3. Approval by Target Stockholders; Delivery of
Agreement of Merger. The Target Stockholders shall have authorized and
approved this Agreement and the Merger contemplated hereby as required by
applicable law and the Certificate of Incorporation and By-laws of Target and
Target shall have duly executed and delivered or caused to be duly executed
and delivered the Certificate of Merger and the Related Agreements.
7.4. No Restraining Order. No restraining order or
injunction or other order issued by any court of competent jurisdiction, or
other legal restraint or prohibition shall prevent the consummation of the
Merger or other transactions contemplated by this Agreement, and no petition
or request for any such injunction or other order shall be pending.
7.5. No Material Change. There shall not have been any
material adverse change in the business or assets of Target.
7.6. Officers' Certificates. Target shall have executed
and delivered to Acquiror and Parent at and as of the Closing (i) a certificate,
duly executed by Target's President or any Vice President, in form and
substance satisfactory to Parent and Parent's counsel, certifying that each of
the conditions specified in this Paragraph 7 have been satisfied and (ii) a
certificate in the form of Exhibit C attached hereto.
7.7. Resignations of Directors and Officers. All of the
directors and officers of Target that Parent or the Acquiror have requested
resign their positions shall have resigned their positions with Target on or
prior to the Closing Date, and prior thereto shall have executed such
appropriate documents with respect to the transfer or establishment of bank
accounts, signing authority, etc., as Parent shall have requested.
7.8. Opinion of Target's Counsel. Target shall have
delivered to Parent and Acquiror an opinion of Ehrenreich Eilenberg Krause &
Zivian LLP, counsel to Target, dated the Closing Date, such opinion to contain
customary exceptions, limitations and assumptions, to be based in part on
customary certificates of public officials and Target officers, and to be in
form and substance reasonably satisfactory to Parent and substantially in the
form of Exhibit D attached hereto.
7.9. Exercise and Exchange of Stock Options;
Conversion of Convertible Promissory Notes; Release of Claims. Except as
provided on Schedule 7.9 hereto, each outstanding stock option, warrant, and
other right to acquire the capital stock of Target shall have been exercised,
waived or released and/or Target shall have entered into an agreement,
satisfactory in form and substance to Parent and its counsel, with each person
holding outstanding stock options, warrants, and other rights to purchase shares
of the capital stock of Target (including convertible debt). Target's Stock
Plan shall have been terminated as of the Closing Date and shall be of no
further force or effect.
7.10. Liabilities of Target. Other than (i) accounts
payable of not more than $157,890, (ii) the reasonable costs and expenses of
Target incurred (including the fees and disbursements of counsel) in connection
with the transactions contemplated in this Agreement and in the agreements
constituting Exhibits hereto, not to exceed $33,000 in the aggregate, (iii)
loans payable to the Founding Stockholders in the aggregate of $80,000, (iv)
future accounting expenses including, without limitation, the payment of
franchise taxes (not to exceed $3,000 in the
<PAGE>
aggregate), (v) costs associated
with two national stage filings and one PCT filing (approximately $41,000 in the
aggregate), (vi) costs associated with the maintenance of patent applications
(not to exceed $2,500 per month), and (vii) documented administrative
operating expenses of Target (but not including any payments of rent in respect
of Target's offices) incurred through the Closing (not to exceed $1,000 per
month in the aggregate), there shall be no other liabilities (and including no
capital lease obligations) shown on the unaudited balance sheet of Target dated
the Closing Date, such unaudited balance sheet fairly presenting the financial
condition of Target as of such date in all material respects and being
acceptable to Parent (the "Target Closing Balance Sheet").
7.11. Tax Opinion. The delivery by Bingham Dana LLP
to Parent and Acquiror of an opinion, in form and substance reasonably
acceptable to Parent and Acquiror, that the Merger is a tax free reorganization
under Section 368(a) of the Code.
7.12. Consents. All consents required to be secured by
Target pursuant to Paragraph 5.12 shall have been secured on or prior to the
Closing Date. Target shall further have obtained consent letters from
Rockefeller University and The National Institutes of Health in form and
substance reasonably satisfactory to Parent and Acquiror.
7.13. Lock-Up Agreement. Target Stockholders holding in
the aggregate ninety percent (90%) of the Target Stock shall have executed and
delivered to Parent Lock-Up Agreements substantially in the form of Exhibit E
attached hereto ("Lock-Up Agreements"); provided, however, that any Target
Stockholders who do not enter into a Lock-Up Agreement shall not be a party
to, and shall not receive the benefit of any registration rights under, the
Registration Rights Agreement. Lock-Up Agreements executed by Richard
Stone, Nathan Low, Judson A. Cooper, Joshua D. Schein and Steven Oliveira
shall have a term of one (1) year from the Effective Date and Lock-Up
Agreements executed by any other Target Stockholders shall have a term of six
(6) months from the Effective Date.
7.14. Employment Agreements. All of the employment
and consulting agreements to which Target is a party or to or by which Target
is bound shall have been resolved upon terms and conditions acceptable to
Parent. Without limiting the foregoing, Target shall have terminated all
employment agreements and other compensation arrangements with William
Hall and Hilary Koprowsi.
7.15. Proceedings and Documents Satisfactory. All
proceedings in connection with the Merger contemplated by this Agreement and
the other transactions contemplated hereby and all certificates and documents
delivered to Parent or Acquiror pursuant to this Paragraph 7 or otherwise
reasonably requested by Parent or Acquiror shall be executed and delivered by
Target and shall be reasonably satisfactory to Parent, Acquiror and their
counsel.
7.16. Private Placement. The issuance of the Parent
Stock to the Target Stockholders shall qualify as a private placement under
Regulation D of the Securities Act and shall be exempt from registration under
the Federal Securities laws and all state and other securities laws.
7.17. Dissenting Shares. Holders of at least 90% of the
issued and outstanding shares of Target Stock shall have voted in favor of or
consented to the Merger or shall have otherwise waived or failed to perfect any
appraisal rights to which they may otherwise be entitled
<PAGE>
under Section 262 of the Delaware General Corporation Law, as amended,
and the President and Secretary of Target shall have delivered to Parent a
certificate dated as of the Closing Date to the foregoing effect.
7.18. Closing of Private Placement. Parent shall have
successfully closed in a private placement qualified as such pursuant to
Regulation D of the Securities Act a transaction for the sale of $3,000,000 in
shares of Parent Stock to be issued at a price of $3.00 per share of Parent
Stock to subscribers therefor.
7.19. NIH Licensing Agreement. The exclusive Patent
License Agreement among the Target, The National Institutes of Health, the
Centers for Disease Control and Prevention, the Food and Drug administration
and certain other parties thereto (the "NIH License Agreement") shall have
been executed in form and substance satisfactory to Parent and Acquiror.
License payments pursuant to the NIH License Agreement will be for the
account of the Surviving Corporation.
7.20. Preferred Stock. No shares of preferred stock of
the Target shall be issued or outstanding and any shares thereof previously
outstanding shall have been converted to or exchanged for shares of Target
Stock on terms and conditions and with such documentation as are in form and
substance reasonably satisfactory to Parent and Acquiror.
8. Conditions Precedent to Target's Obligations.
Notwithstanding the provisions of Paragraphs 1 and 2, Target and Target
Stockholders shall be obligated to perform the acts contemplated for
performance by them under Paragraphs 1 and 2 only if each of the following
conditions is satisfied at or prior to the Closing Date, unless any such
condition is waived by Target:
8.1. Accuracy of Representations and Warranties by
Parent and Acquiror. The representations and warranties of Parent and
Acquiror set forth in Paragraph 4 of this Agreement and in any Schedules to this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same force and effect as though made again at and as of the
Closing Date, except for changes permitted or required by this Agreement.
8.2. Compliance by Parent and Acquiror. Parent and
Acquiror shall have performed and complied in all material respects with all of
the covenants and agreements required to be performed or complied with by
them by the Closing Date.
8.3. No Restraining Order. No restraining order or
injunction or other order issued by any court of competent jurisdiction, or
other legal restraint or prohibition shall prevent the Merger or other
transactions contemplated by this Agreement, and no petition or request for
any such injunction or other order shall be pending.
8.4. Parent Certificates. Parent shall have delivered to
Target (i) a certificate of its President or one of its Vice Presidents dated
the Closing Date, in form and substance satisfactory to Target and Target's
counsel, certifying that the conditions set forth in each of Paragraphs
8.1, 8.2, and 8.3 have been satisfied, and (ii) a certificate in the form
attached hereto as Exhibit F.
8.5. Opinion of Parent's Counsel. Parent shall have
delivered to Target an opinion of Bingham Dana LLP, counsel for Parent and
Acquiror, dated the Closing Date, such
<PAGE>
opinion to contain customary
exceptions, limitations and assumptions and to be based in part on customary
certificates of public officials and Parent officers, and to be in form and
substance reasonably satisfactory to Target and substantially similar to Exhibit
G attached hereto.
8.6. No Material Change. There shall not have been any
material adverse change in the business or assets of Parent.
8.7. Proceedings and Documents Satisfactory. All
proceedings in connection with the Merger contemplated by this Agreement and
the other transactions contemplated hereby and all certificates and documents
delivered to Target pursuant to this Section 8 or otherwise reasonably requested
by Target shall be executed and delivered by Parent and shall be reasonably
satisfactory to Target and its counsel.
8.8. Closing of Private Placement. Parent shall have
successfully closed in a private placement qualified as such pursuant to
Regulation D of the Securities Act a transaction for the sale of $3,000,000 in
shares of Parent Stock to be issued at a price of $3.00 per share of Parent
Stock to subscribers therefor.
9. Covenants of the Parties.
9.1. No Solicitation. Unless and until this Agreement
shall have been terminated by Acquiror or Target pursuant to Section 14
hereof, neither Target nor any of its offices, directors, employees,
representatives, or agents (including without limitation their investment
bankers, accountants and counsel, collectively, the "Target Agents") shall
directly or indirectly encourage, solicit, initiate, or participate in any
discussions or negotiations with, or provide any information to, any Person
(other than the other parties hereto) concerning any offer or proposal for any
merger, tender offer, sale, lease as lessor, license as licensor, or other
disposition of substantial assets, sale of shares of capital stock or debt
securities, or similar transaction involving it (an "Acquisition Proposal"), and
shall not enter into any discussion of any business
transaction with a third party that would involve
any receipt, transmission, or disclosure of its confidential
information, except in the ordinary course of business. Each of the Target and
any of the Target Agents shall immediately communicate to Parent the terms of
any proposal, discussion, negotiation, or inquiry relating to an Acquisition
Proposal (including the identity of the party making such proposal or inquiry)
that it receives in respect of any such transaction (which shall mean that any
such communication shall be delivered no less promptly than by telephone or
telecopy within two business days of receipt of any such proposal or inquiry).
9.2. Approval of Stockholders. Acquiror and Target shall
(i) as promptly as practicable, take all steps necessary duly to call, give
notice of, convene, and hold a meeting of its stockholders for the purposes of
approving this Agreement, the Merger and the other transactions contemplated
hereby, (ii) recommend to its stockholders, the approval of such matters to be
submitted by it to its stockholders, and (iii) use its best efforts to obtain
the necessary approvals of its stockholders of the proposals described above.
9.3. Affiliates. Acquiror and Target shall, not later than
ten (10) days after the date of this Agreement, identify in a letter to the
other, after consultation with outside counsel, all Persons that it believes
may be deemed to be "affiliates" of such party, as that term is used in and
for purposes of Accounting Series Release 130 and 135, as amended, of the SEC.
<PAGE>
9.4. Further Assurance. Subject to the terms and
conditions set forth in this Agreement, each of the parties to this Agreement
shall use its best efforts, as promptly as practicable, to take or cause to be
taken, all actions, and to do or cause to be done, all other things, as are
necessary, proper, or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement.
9.5. Disclosure Statements. From time to time prior to
the Effective Date, and in any event immediately prior to the Effective Date,
each party shall promptly supplement or amend its disclosure schedules with
respect to any matter hereafter arising that, if existing, occurring, or know at
the date of this Agreement, would have been required to be set forth or
described in such disclosure schedules or that is necessary to correct any
information in such disclosure schedules that is or has become inaccurate.
Notwithstanding the foregoing, if any such supplement or amendment discloses
a Material Adverse Effect, the conditions to consummate the Merger set forth
in Section 7 shall be deemed not to have been satisfied.
9.6. Satisfaction of Conditions Precedent. Each of the
parties to this Agreement shall use its best efforts to cause the satisfaction
on or before June 1, 1999 of the conditions precedent contained in Sections 7
and 8 of this Agreement that impose obligations on it or require action on
its part or the part of any of its stockholders or affiliates.
10. Confidential Information; No Publicity. Any and all
non-public information disclosed by Parent and Acquiror to Target or by
Target to Parent or Acquiror as a result of the negotiations leading to the
execution of this Agreement, or in furtherance hereof, shall remain confidential
and be subject to the Confidentiality Agreement dated October 27, 1998
between Parent and Target. If the consummation of the transactions
contemplated by this Agreement does not take place for any reason, each of
Parent and Acquiror on the one hand and Target on the other will return
promptly all documents containing non-public information relating to the other
side.
11. Securities Laws Matters. Target agrees to cooperate with
Parent and Acquiror in qualifying the issue of Parent Stock to the Target
Stockholders under Paragraph 4(2) and/or Regulation D of the Commission under
the Securities Act and in complying with all state and other securities laws in
respect thereto. Neither Target nor any of its agents is or shall be authorized
to act on Parent's or Acquiror's behalf with respect to any aspect of the
transactions contemplated by this Agreement or make any solicitations of or
representations to any of the Target Stockholders on Parent's or Acquiror's
behalf. Neither this Agreement nor any other by Parent or Acquiror shall be
deemed an offer with respect to Parent Stock.
12. Survival and Materiality of Representations. Each of the
representations and warranties made by the parties hereto shall survive the
Closing Date and Effective Date and consummation of the transactions
contemplated hereby.
13. Tax Consequences to the Parties. Parent and Acquiror, on
the one hand, and Target, on the other, understand and agree that neither
Parent and Acquiror, on the one hand, nor Target, on the other, are making
any representation or warranty as to the tax consequences of this Agreement
and the events and actions contemplated hereby. Nonetheless, all parties hereto
agree to report the transactions contemplated hereby on their respective federal
income tax returns as a tax-free reorganization under Paragraph 368(a) of the
Code and to take no action inconsistent with such characterization.
<PAGE>
14. Termination; Liabilities Consequent Thereon. This
Agreement, the Related Agreements and (if executed) the Certificate of Merger
may be terminated and the Merger contemplated hereby abandoned at any time
prior to the Effective Date (whether before or after approval of the Merger by
the Target Stockholders or by Parent as sole stockholder of Acquiror) only as
follows:
(a) by Parent or Acquiror, upon notice to Target
if (i) Target shall be in material breach of its obligations hereunder and shall
not have cured such breach within a period of ten (10) days after written notice
from Parent or Acquiror or (ii) if the conditions set forth in Paragraph 7 shall
not have been satisfied, or waived by Parent, on or prior to June 1, 1999 or
(iii) a material adverse change in any representation or warranty made by Target
herein or (iv) any material adverse change in the business or operations of the
Target; or
(b) by Target, upon notice to Parent, if
(i) Parent or Acquiror shall be in material breach of its obligations hereunder
and shall not have cured such breach within a period of ten (10) days after
receipt of written notice from Target or (ii) if the conditions set forth in
Paragraph 8 shall not have been satisfied, or waived by Target, on or prior
to June 1, 1999 or (iii) a material adverse change in any representation or
warranty made by Parent or Acquiror herein or (iv) any material adverse
change in the business or operations of Parent; or
(c) at any time by mutual agreement of the
Boards of Directors of Parent and Target.
15. Indemnification.
15.1. By Target's Stockholders.
(a) If the Closing occurs, then each of the
Target Stockholders severally shall indemnify and hold Parent and Acquiror
and their respective directors, officers, employees, shareholders, agents,
attorneys, successors, assigns and affiliates (collectively, the "Access
Indemnified Parties") harmless from and with respect to any and all claims,
judgments, proceedings, actions, suits, investigations, liabilities, losses,
reasonable costs (including the reasonable fees and disbursements of attorneys),
expenses and damages including without limitation under federal or state
securities laws (collectively, "Damages") related to or arising out of (i) any
material failure or breach of any representation or warranty of Target or the
Target Stockholders, or (ii) any material failure to perform any covenant,
obligation, undertaking or agreement of Target or of any of the Target
Stockholders contained in this Agreement (including any Schedules hereto) or
in the Agreements constituting Exhibits hereto.
(b) The parties hereto agree and acknowledge that
the obligations of the Target Stockholders under this Paragraph 15.1 shall be
limited to the forfeiture (pursuant to the procedure set forth in Paragraph
15.3, below) to the Access Indemnified Parties, forthwith on demand therefor,
of a number of shares of Parent Stock (the "Forfeited Shares") equal to the
quotient obtained by dividing the amount of any claim for Damages by $3.00;
provided, however, that regardless of the amount of any claims for Damages by
the Access Indemnified Parties, none of the Target Stockholders shall be
required to forfeit to the Access Indemnified Parties a number of shares of
Parent Stock in the aggregate in excess of the lesser of (i) twenty percent
(20%) of the number of shares of Parent Stock which such Target Stockholder
is entitled to receive by operation of Paragraph 1.2 of this Agreement,
<PAGE>
or (ii) his pro rata share of
any such claim for Damages by the Access Indemnified Parties; provided,
further, however, that any cap on the indemnification obligation of the Target
Stockholders set forth in this Paragraph 15.1(b) shall not apply to claims,
if any, which are based upon (x) fraud, or (y) a knowing or intentional breach
of any representation, warranty or covenant.
(c) The Target Stockholders shall have no
liability for indemnification hereunder unless and until the aggregate Damages
of the Access Indemnified Parties exceed Fifty Thousand Dollars ($50,000), in
which event the Target Stockholders' indemnification obligation shall include
the amount of such Damages between zero and $50,000.
(d) The adoption of this Agreement and the
approval of the Merger by the Target Stockholders shall constitute approval by
the Target Stockholders of all of the arrangements relating hereto and thereto,
including without limitation, (i) the appointment of the Representatives (as
hereinafter defined), and (ii) the authority of the Representatives to defend
and/or settle any claims for which the Target Stockholders may be required to
indemnify the Access Indemnified Parties pursuant to this Paragraph 15. All
decisions and actions by the Representatives shall be binding upon all Target
Stockholders and no Target Stockholders shall have the right to object, dissent,
protest or otherwise contest the same.
(e) The Parent and Surviving Corporation agree
that they will not seek indemnification from any of Judson A. Cooper, Nathan
Low, Steven Oliveira, Joshua D. Schein or Richard Stone without at the same
time seeking indemnification from the other four of such persons.
(f) Notwithstanding any other provision of this
Paragraph 15, the indemnification obligations of each of the Target Stockholders
hereunder shall be limited to claims in respect of any breach of any
representation, warranty or covenant by the Target or by each of such Target
Stockholders individually; provided, however, that the limitation set forth in
this clause (f) shall not apply to claims, if any, which are based upon (x)
fraud, or (y) a knowing or intentional breach of any such representation,
warranty or covenant. In addition, such indemnification obligations shall
survive for a period of six months from the Closing except for (x) claims
based upon fraud or a knowing or intentional breach of any such
representation, warranty, or covenant and (y) claims for which Parent or
the Surviving Corporation delivered a notice to the Representatives (as
defined in Paragraph 15.4 hereof) prior to the end of such six month period.
15.2. Of Target's Officers and Directors. If the Closing
occurs, then from and after the Effective Date, the Surviving Corporation shall
indemnify, defend and hold harmless William W. Hall, Judson A. Cooper and
Joshua D. Schein (the "D/O Indemnified Parties", who are referred to
hereinafter collectively with the Access Indemnified Parties as the "Indemnified
Parties") against any Damages (including without limitation any Damages
relating to this Agreement or the transactions contemplated hereby), but only to
the extent based or arising in whole or in part on or out of the fact that such
of the D/O Indemnified Parties is or was an officer or director of Target,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time, and whether asserted or
claimed prior to, at, or after the Effective Time;
provided, however, that to the extent any claim for indemnification pursuant to
this Paragraph 15.2 involves claims for payments to third parties including
without limitation payments in settlement of any claim, action, suit, proceeding
or investigation, the D/O Indemnified Parties shall not be entitled to
indemnification pursuant to this Paragraph 15.2 unless the Surviving
Corporation shall have given its prior written consent to
<PAGE>
such payment; provided, further,
however, that notwithstanding any other provision hereof, the D/O Indemnified
Parties shall under no circumstances be entitled to indemnification in
respect of any claims, actions or Damages relating to any matter or Damages
in connection with or in respect of which the Access Indemnified Parties are
entitled to indemnification pursuant to Paragraph 15.1 hereof.
15.3. Method of Asserting Claims.
(a) All claims for indemnification by any
Indemnified Parties pursuant to this Paragraph 15 shall be made in accordance
with the provisions of this Agreement.
(b) The Indemnified Parties shall give prompt
written notification to the Representatives or the Surviving Corporation, as
applicable, of the actual or threatened commencement of any action, suit or
proceeding (and the facts constituting the basis therefor) or any other basis
for which indemnification pursuant to this Paragraph 15 may be sought (an
"Indemnification Notice"). Such Indemnification Notice shall specify, if
known, the amount or an estimate of the amount of the liability arising
therefrom.
(c) In the case of a claim for indemnification
brought by any of the Access Indemnified Parties, each of the Target
Stockholders shall, forthwith upon receipt of an Indemnification Notice,
forward (pursuant to Paragraph 18.2 hereof) to Parent certificates representing
a number of shares of Parent Stock at least equal to the number of Forfeited
Shares required (or estimated to be required) to be forfeited by each such
Target Stockholder; promptly upon receipt of such certificate(s) from the Target
Stockholders, the Parent shall (x) distribute the Forfeited Shares (or,
as agreed between Parent and any other Access
Indemnified Parties, the proceeds thereof,
valued at $3.00 per share of Parent Stock) to the Access Indemnified Parties,
and (y) return to each of the Target Stockholders certificates representing the
difference, if any, between the number of shares of Parent Stock represented
by the certificate(s) surrendered to the Parent pursuant to this Paragraph
15.3(c) and the number of Forfeited Shares forfeited by each such Target
Stockholder pursuant to the terms of this Paragraph 15.
(d) Within thirty (30) days after delivery of an
Indemnification Notice, the Representatives or the Surviving Corporation, as
the case may be, may, upon written notice thereof to the applicable
Indemnified Parties, assume control of the defense of any action, suit or
proceeding brought by any person other than the applicable Indemnified Parties
with counsel reasonably satisfactory to the applicable Indemnified Parties. If
the Representatives or the Surviving Corporation, as applicable, do(es) not so
assume control of such defense, then the applicable Indemnified Parties shall
control such defense. The party not controlling such defense may participate
therein at its own expense; provided that if the Representatives
or the Surviving Corporation, as the case may
be, assume(s) control of such defense and the counsel
selected by the Representatives or the Surviving Corporation (as
applicable) concludes that such counsel has a conflict of interest due to the
existence of conflicting or different defenses available to the Target
Stockholders or Surviving Corporation, as applicable, and Indemnified Parties
with respect to such action, suit or proceeding, then the reasonable fees and
expenses of one firm of separate counsel for all of the applicable Indemnified
Parties shall be paid by the Target Stockholders or Surviving Corporation, as
applicable. The party controlling such defense shall keep the other party
advised of the status of such action, suit or proceeding and the defense thereof
and shall consider in good faith recommendations made by the other party with
respect thereto. The applicable Indemnified Parties shall not agree to any
settlement of such action, suit or proceeding without the prior written consent
<PAGE>
of the Representatives or the Surviving Corporation, as applicable, which
consent shall not be unreasonably withheld. The Representatives or the
Surviving Corporation, as applicable, shall not agree to any settlement of such
action, suit or proceeding without the prior written consent of the applicable
Indemnified Parties, which consent shall not be unreasonably withheld.
(e) The provisions of this Article 15 shall
survive any termination of this Agreement and shall inure to the benefit of, and
be enforceable by, any heirs, successors, assigns or representatives of any of
the Indemnified Parties.
15.4. Appointment of Representatives.
(a) Target and Target Stockholders hereby
appoint Joshua D. Schein and Judson A. Cooper (the "Representatives" and
each a "Representative") to represent the Target Stockholders for the purposes
specified in this Agreement (including acting as a purchaser representative
under Regulation D of the Securities Act if necessary).
(b) The Representatives shall not be liable for
any error of judgment, or any action taken, suffered or omitted to be taken
hereunder except in the case of bad faith, nor shall they be liable for the
default or misconduct of any employee, agent or attorney appointed by them
who shall have been selected with reasonable care. The Representatives may
consult with counsel of their own choice and shall have full and complete
authorization and protection for any action taken or suffered by them hereunder
in good faith or in accordance with the opinion of such counsel.
(c) The Representatives (or any successor
Representatives hereunder) may at any time resign and be discharged of the
duties imposed hereunder by giving at least fifteen (15) days' prior notice to
the Target Stockholders, in which event, or upon the death or legal disability
of any Representative, the Target Stockholders shall appoint a successor
Representative by written consent of the holders of a majority of the capital
stock of Target at the Effective Date ("Pro Rata Shares").
(d) All actions of the Representatives under this
Paragraph 15 may be taken by either Representative individually or both
Representatives jointly, except that each Representative agrees not to take
any action singly unless it is impracticable under the circumstances to first
consult with the other Representative.
16. Expenses. All expenses incurred by Target or any
Target Stockholder in connection with the preparation and execution of this
Agreement and the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby, including
any expenses of finders, brokers, attorneys or the like, shall be borne by
Target or the Target Stockholders, as the case may be; provided, however, that
the reasonable expenses (including, without limitation, the fees and
disbursements of counsel to the Target) incurred by Target in connection with
the preparation and execution of this Agreement and the Agreements
constituting Exhibits hereto shall be deemed to be acceptable to Parent for
purposes of the Target Closing Balance Sheet (as such term is defined in
Section 7.10, above), so long as such expenses do not exceed $33,000 in the
aggregate. All expenses incurred by Parent or Acquiror shall be borne by
Parent.
<PAGE>
17. Certain Definitions.
As used herein the following terms not otherwise defined shall have
the following respective meanings:
"Business Plan": the business plan of Target dated November 1998, a
copy of which has been delivered to Parent.
"Indebtedness": (a) All indebtedness for borrowed money or other
obligations, commitments or liabilities, whether current or long-term,
contingent or matured, secured or unsecured, (b) all indebtedness of the
deferred purchase price of property or services represented by a note or
security agreement, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement (even though the rights and
remedies of the seller or lender under such agreement in the event of default
may be limited to repossession or sale of such property), (d) all indebtedness
secured by a purchase money mortgage or other lien to secure all or part to the
purchase price of property subject to such mortgage or lien, (e) all obligations
under leases that have been or must be, in accordance with GAAP, recorded as
capital leases in respect of which it is liable as lessee, (f) any liability in
respect of banker's acceptances or letters of credit, and (g) all indebtedness
of Target, the Target Stockholders or any other Person that is guaranteed by
Target or that Target has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which Target has otherwise assured a
creditor against loss.
"Person": any natural person, entity, or association, including without
limitation any corporation, partnership, limited liability company, government
(or agency or subdivision thereof), trust, joint venture, or proprietorship.
"Securities Act": shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect from time to time.
"Tax": any federal, state, local, or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"Tax Return": any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
18. Miscellaneous Provisions.
18.1. Amendments. This Agreement may be amended in any
manner and at any time prior to the submission of this Agreement to the Target
Stockholders and, after such submission, may be amended to extend the
Closing Date and termination date referred to in Paragraph 14 or to make
other amendments which, in the opinion of the respective counsel for Parent
and Target, do not substantially alter the terms hereof,
by written instrument stating that it is an amendment of this
<PAGE>
Agreement executed by Parent, Acquiror and Target and
approved by the Boards of Directors of Acquiror and Target.
18.2. Notices and Representatives. Any notice expressly
provided for under this Agreement shall be in writing, shall be given either
manually or by written telecommunication, fax or mail, and shall be deemed
sufficiently given when received by the party to be notified at its address set
forth below or if and when mailed by registered mail, postage prepaid,
addressed to such party at such address. Any party and any representative
designated below may, by notice to the others, change its address for receiving
such notices. Target agrees to forward any notices addressed to any of the
Target Stockholders to such Target Stockholder(s) at the address of record
reflected in the books and records of the Target.
Address for notices to Parent and Acquiror:
ACCESS Pharmaceuticals, Inc.
2600 Stemmons Frwy, Suite 176
Dallas, TX 75207-2107
Attn: Kerry P. Gray, President
Fax: (214) 905-5101
Phone: (214) 905-5100
with a copy to:
John J. Concannon III, Esq.
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Fax: (617) 951-8736
Phone: (617) 951-8000
Address for notices to Target and to the Target Stockholders:
Virologix Corporation
420 Lexington Avenue, Suite 620
New York, NY 10017
Fax: (212) 697-3160
Phone: (212) 672-9170
with a copy to the Representative:
Messrs. Judson A. Cooper and Joshua D. Schein
Prism Ventures LLC
420 Lexington Avenue, Suite 620
New York, NY 10017
Fax: (212) 697-3160
Phone: (212) 672-9150
<PAGE>
and with another copy to:
Adam D. Eilenberg, Esq.
Ehrenreich, Eilenberg, Krause & Zivian LLP
11 East 44th Street
New York, NY 10017
Fax: (212) 986-2399
Phone: (212) 986-9700
18.3. Assignment and Benefits of Agreement. This
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors, but may not be assigned without the written
consent of the other parties to this Agreement. Except as aforesaid, nothing in
this Agreement, express or implied, is intended to confer upon any person
other than the parties hereto any rights under or by reason of this Agreement.
18.4. Governing Law. This Agreement shall be construed
and enforced in accordance with, and rights of the parties shall be governed
by, the internal laws of the State of Delaware (without reference to principles
of conflicts or choice of law that would cause the application of the internal
laws of any other jurisdiction).
18.5. SUBMISSION TO JURISDICTION; WAIVERS.
PARENT, ACQUIROR, TARGET, THE TARGET STOCKHOLDERS AND
EACH OF THE OTHER TARGET STOCKHOLDERS (BY APPROVAL OF
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY), FOR ITSELF AND ON BEHALF OF ITS SUCCESSORS,
ASSIGNS AND TRANSFEREES, HEREBY IRREVOCABLY AND
UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS
PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR FOR
RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE
NONEXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF TEXAS, THE COURTS OF
THE UNITED STATES OF AMERICA FOR THE
DISTRICT OF TEXAS AND APPELLATE COURTS
FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION
OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS, AND WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING
WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS
IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, AT ITS ADDRESS AS PROVIDED
IN PARAGRAPH 17.2 HEREOF OR AT SUCH OTHER ADDRESS AS
IT SHALL HAVE NOTIFIED EACH OF THE OTHER
PARTIES HERETO IN THE MANNER PROVIDED IN
PARAGRAPH 17.2 HEREOF;
<PAGE>
(iv) AGREES THAT NOTHING HEREIN
SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW; AND
(v) WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
18.6. Counterparts. This Agreement may be executed by
the parties in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
18.7. Section Headings. All enumerated subdivisions of
this Agreement are herein referred to as "Paragraph." The headings of sections
or subsections are for reference only and shall not limit or control the
meaning thereof.
18.8. Public Statements or Releases. The parties hereto
each agree that no party to this Agreement shall make, issue or release any
public announcement, statement or acknowledgment of the existence of, or
reveal the status of, the transactions provided for herein, without first
obtaining the consent of the other parties hereto. Nothing contained in
this Paragraph 18.8 shall prevent any party from making such public
announcements as such party may consider necessary in order to satisfy such
party's legal or contractual obligations.
[ Remainder of Page Intentionally Left Blank ]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as an instrument under seal as of the date and year first above
written.
PARENT:
ACCESS Pharmaceuticals, Inc.
By: /s/ Kerry P. Gray
-------------------
President & Chief Executive Officer
ACQUIROR:
ACCESS Holdings, Inc.
By: /s/ Kerry P. Gray
-------------------
President & Chief Executive Officer
TARGET:
Virologix Corporation
By: /s/ Josua D. Schein
--------------------
Title: Director
FOUNDING STOCKHOLDERS:
/s/ Judson A. Cooper
-----------------
Judson A. Cooper
/s/ Joshua D. Schein
-----------------
Joshua D. Schein
/s/ Richard Stone
--------------
Richard Stone
<PAGE>
Acknowledged and Agreed for the purpose of being bound by any terms of this
Agreement relating to the agreements, obligations and covenants of the
Representatives:
/s/ Joshua D. Schein
-----------------
Joshua D. Schein
/s/ Judson A. Cooper
-----------------
Judson A. Cooper
<PAGE>
DISCLOSURE SCHEDULES, VIROLOGIX CORPORATION ("VIROLOGIX")
Schedule 3.5
VIROLOGIX COMMON STOCK
(assuming conversion of all Series B Preferred*)
Allie, Gary & Barbara 18,000
Amore Perpetuo Trust 36,000
Anzalone Family LP DTD 12-30-93 34,250
Alfred J. Anzalone Family LP 54,000
Anzalone 1995 Trust 90,000
Ash, David 285,834
Blumenthal, Harry 36,000
Carroll, Douglas 4,500
Carson, James 18,000
Central Yeshiva 30,000
Chelsey Capital 4,500
Chiarulli, Frank 4,500
Chidyllo, Peter & Nancy 22,834
Cooper, Judson 543,750
Corbin, Charles 4,500
Fish, Daniel 27,000
Gold, Kenneth 2,250
Goldblatt, Herbert & Marlene 2,250
Gross Foundation 120,000
Hall, William 215,000
Herman, Gabriel & Ellen 2,250
Heymann, Jerry 37,500
Hudak, Thomas 117,668
Hurwitz, Marc 36,000
Jacobson, Eli 24,000
Kaufman, Gary 4,500
Kaufman, David 50,000
Lanier, Thomas 1,800
Low, Nathan 159,375
Markowitz, Jeffrey 4,500
McCooey, David 4,500
Mendel, Gary 18,000
Michelizzi, Maryann 15,000
Milstein, Albert 4,500
Milstein, Howard 311,288
Nayden, Denis 108,000
Oliviera, Steven 393,750
Prism Ventures 50,000
Peck, Barton & Alice 4,500
Praschil, Robert 4,500
Reich, Yaron 18,000
Rickel, Robert 39,000
Rozen, David 36,000
Schein, Joshua 543,750
Shoup, Stefan 18,000
<PAGE>
Shoup, Jane 18,000
Sirotkin, Paul 36,000
Sirotkin, Martin 36,000
Smith, Beverly 15,000
Spitz, Howard 2,700
Stanley, Glenn 4,500
Stanley, Joseph 4,500
Stanley, Rita 4,500
Stanley, Stuart 4,500
Stone, David 60,000
Stone, Richard 354,375
Takahashi, Hidehiro 90,000
Teate, William 9,000
Winston IPO Investments 36,000
Zukier, Herz 13,500
---------
Total: 4,248,124
=========
*OUTSTANDING SERIES B PREFERRED STOCK
(to be converted into 2 shares of Virologix Common Stock prior to Closing)
Name of Shareholder No. of Shares of Series B No. of Shares of Common
After Conversion
- ------------------------ ------------------------- -----------------------
Allie, Gary & Barbara 9,000 18,000
Anzalone Family LP 13,750 27,500
Ash, David 64,167 128,334
Carson, James 9,000 18,000
Chidyllo, Peter & Nancy 9,167 18,334
Fish, Daniel 13,500 27,000
Hudak, Thomas 18,334 36,668
Mendel, Gary 9,000 18,000
Milstein, Howard 54,000 108,000
Nayden, Denis 54,000 108,000
Sirotkin, Paul 18,000 36,000
Sirotkin, Martin 18,000 36,000
Teate, William 4,500 9,000
------- -------
Total: 294,418 588,836
======= =======
VIROLOGIX OPTIONS
Golikov, Peter 12,500 @ $6.00 per share
Song, Elizabeth 2,500 @ $6.00 per share
------------------------
Total: 15,000 @ $6.00 per share
========================
<PAGE>
VIROLOGIX WARRANTS
Anzalone Family LP 7,500 @ $3.00 per share
Ash, David 35,000 @ $3.00 per share
Chidyllo, Peter & Nancy 5,000 @ $3.00 per share
Hudak, Thomas 10,000 @ $3.00 per share
Koprowski, Hilary 10,000 @ $3.00 per share
Milstein, Howard 50,000 @ $3.00 per share
-------------------------
Total: 117,500 @ $3.00 per share
=========================
Total Common Stock, Options and Warrants: 4,380,624
=========
Schedule 3.7
Virologix Financial Statements
December 31, 1996 - attached
September 30, 1998 - attached
Schedule 3.8
(i) Material Changes since December 31, 1996:
Personnel: Peter Golikov resigned as President on 3/2/98; Elizabeth Song
resigned as Director of Viral Research on 8/3/98. Dr. William Hall, Chief
Scientific Officer, is owed approximately $75,000 by Virologix for accrued and
unpaid compensation under his Employment Agreement; Judson Cooper and
Joshua Schein resigned as Chief Financial Officer and Executive Vice
President, respectively, in August 1998. In December 1997, CSO Ventures
LLC agreed to terminate its 6/1/96 consulting agreement with Virologix. In
August 1998, Prism Ventures LLC (of which Messrs. Cooper and Schein are
members) agreed to terminate its 1/1/98 consulting agreement with Virologix
and David Kaufman terminated his 3/7/98 consulting agreement.
(ii)Acquisition or disposition of assets: None
(iii)Damages, destruction or loss: None
(iv)Dividends or distributions: None
(v) Issuances of securities:
<PAGE>
Date Transaction
- ------------------ -----------------
April 1997 $300,000 loan and 50,000 warrants issued at $3.00 per share.
The loan subsequently converted to into 203,288 shares of
Common Stock.
June, August 1997 Series A Preferred Stock Offering, $864,000 raised,
converted into a total of 576,000 shares of Common Stock
October 1997 Series B Preferred Stock Offering, $ 486,000 raised,
189,000 shares of Series B Preferred Stock issued (each
to be converted into two (2) shares of Common
Stock as a closing condition to the Merger); $287,500
principal amount of 1996 bridge loans converted into 105,
418 Series B Preferred Stock (each to be converted into
two (2) shares of Common Stock as a closing condition to the
Merger) and an aggregate of 57,500 warrants at an exercise
price of $3.00 per share issued to the four (4) lenders
who elected to convert.
August 1998 Cancellation of existing Cooper and Schein Employment
Agreements and forgiveness of all amounts owed and owing
to Cooper and Schein under such agreements in consideration
for the issuance of an aggregate amount of
150,000 shares of Common Stock to each of Cooper and
Schein. Cancellation of Prism Ventures LLC Consulting
Agreement and David Kaufman Consulting
Agreement and forgiveness of all amounts owed and owing
thereunder (except for $70,000 still owing to Prism) in
consideration for the issuance of an aggregate amount of
50,000 shares of Common Stock to each of Prism and Kaufman.
Other Former employees Elizabeth Song and Peter Golikov have
options to purchase 2,500 shares and 12,500 shares
respectively of the Company's Common Stock
at an exercise price of $6.00 per share. Hilary Koprowski,
who was to sit on the Company's Scientific Advisory Board,
has options to purchase 10,000 shares of the Company's
Common Stock at an exercise price of $3.00 per share.
(vi)Increase in compensation: None
(vii) Non-ordinary course transactions: None
(viii)Incurrence of material obligations: None
(ix)Mortgages, liens: None
(x)Changes in accounting principles: None
(xi) Discharge of Liens: None
Schedule 3.9
(a)Liens: None
(b)Tangible assets greater than $10,000: None
<PAGE>
(c)Leases: Virologix has a month-to-month lease arrangements for office
facilities at 420 Lexington Avenue, New York, NY with SIGA
Pharmaceuticals, Inc. ("SIGA"), a Delaware public company in which the
Founding Stockholders collectively are controlling stockholders and whose
officers and directors include Judson Cooper and Joshua Schein. The rent is
$1,000 per month, commencing March 1998 and will terminate upon
consummation of the Merger. All of the rent has been paid.
Schedule 3.10
Indebtedness: Loans in November 1998 of $80,000 in aggregate from Richard
Stone, Steven Oliveira, Judson Cooper and Joshua Schein ($20,000 each),
payable upon the earlier of 1 year or the consummation of a financing or
merger transaction by Virologix, at a rate of interest equal to the minimum
applicable rate as announced by the Treasury Department in effect as of
November 1, 1998. The loans will be repaid upon consummation of the
Merger.
Schedule 3.13
Litigation: Litigation threatened by stockholder David Ash against broker
Steven Oliveira, CSO Investments LLC and Virologix regarding his initial and
follow-on investments in Virologix. To the knowledge of Virologix, no action
has been commenced against the Company. Mr. Ash has commenced an
arbitration against Mr. Oliveira.
Schedule 3.15
Labor Relations Issues: None
Schedule 3.16
Contracts:
1. Rockefeller License Agreement, 2/27/96
2. NIH License Agreement (signature of NIH is pending)
3. Judson Cooper Employment Agreement dated as of 1/1/96, as amended
2/10/97 and termination agreement dated 8/2/98
4. Joshua Schein Employment Agreement dated as of 1/1/96, as amended
2/10/97 and termination agreement dated 8/2/98
<PAGE>
5. David Kaufman Consulting Agreement dated 3/7/98 and termination
agreement dated 8/2/98
6. Research Support Agreement dated as of 2/1/96 with University College
Dublin, expired 12/31/97 (Virologix is in arrears in the last quarterly payment
of $53,625)
7. Elizabeth Song Employment Agreement, 1/1/97 (terminated)
8. Peter Golikov Employment Agreement, 2/10/97 (terminated)
9. Dr. William Hall Employment Agreement dated as of 1/1/96 (Virologix is
in arrears in the amount of approximately $75,000)
10. Prism Ventures LLC Consulting Agreement dated as of 1/1/98 and
termination agreement dated 8/2/98
11. CSO Ventures LLC Consulting Agreement dated as of 6/1/96 and
termination agreement dated 12/1/97
Schedule 3.17
Intellectual Property:
1. Technology licensed by Virologix under Rockefeller License Agreement as
described therein.
2. Negotiations regarding licensing by Virologix of technology from the NIH
as described in the draft license agreement as provided to
3. Virologix is not a licensor of any intellectual property
Schedule 3.18
Insurance policies: Virologix currently maintains only one insurance policy for
officers' and directors' liability (General Star Indemnity Company, Policy No.
IYA829073A).
Schedule 3.19
Governmental permits: None
Schedule 3.20
Employee Benefit Plans:
1. 1996 Incentive and Non Qualified Stock Option Plan, 375,000 shares
authorized; 90,000 options originally granted; 15,000 options currently
outstanding
2. 401(k) Plan: Participants Elizabeth Song and Peter Golikov have withdrawn
their accounts; only remaining beneficiary is Dr. William Hall with an account
balance of less than $8,000
<PAGE>
Schedule 3.21
Conflicts of Interest:
1. Virologix Lease: See Schedule 3.9(c)
2. Judson Cooper and Joshua Schein, directors of Virologix and formerly
officers, are members of Prism Ventures LLC which terminated its consulting
agreement with Virologix in August 1998.
3. Judson Cooper and Joshua Schein, directors of Virologix and formerly
officers, were members of CSO Ventures LLC which terminated its consulting
agreement with Virologix in December 1997.
Schedule 3.22
Contract Defaults:
1. Research Support Agreement (expired), University College, Dublin (last
quarter's payment still owing)
2. Employment Agreement with Dr. William Hall (approximately $75,000
owing)
Schedule 3.25
Registration Rights: None
Schedule 4.9
Licenses, Permits and Other Governmental Authorizations: None
Schedule 5.3
Changes in capitalization: conversion of any outstanding Series B Preferred
Stock
Schedule 5.4
Obligations to former employees: Dr. William Hall, approximately $75,000.
Schedule 7.9
VIROLOGIX OPTIONS
<PAGE>
Golikov, Peter 12,500 @ $6.00 per share
Song, Elizabeth 2,500 @ $6.00 per share
------------------------
Total: 15,000 @ $6.00 per share
========================
<PAGE>
VIROLOGIX WARRANTS
Anzalone Family LP 7,500 @ $3.00 per share
Ash, David 35,000 @ $3.00 per share
Chidyllo, Peter & Nancy 5,000 @ $3.00 per share
Hudak, Thomas 10,000 @ $3.00 per share
Koprowski, Hilary 10,000 @ $3.00 per share
Milstein, Howard 50,000 @ $3.00 per share
-------------------------
Total: 117,500 @ $3.00 per share
=========================
<PAGE>
Exhibit A
CERTIFICATE OF MERGER
OF
ACCESS HOLDINGS, INC.
WITH AND INTO
VIROLOGIX CORPORATION
The undersigned hereby certify as follows:
1. The respective names and states of incorporation of the
constituent corporations participating in the merger hereby
effected (the "Merger") are Access Holdings, Inc. ("Holdings"),
a Delaware corporation, and Virologix Corporation
("Virologix"), a Delaware corporation.
2. An Agreement of Merger and Plan of Reorganization
(the "Merger Agreement"), dated as of February 23, 1999, by
and among Holdings, ACCESS Pharmaceuticals, Inc., a
Delaware corporation, and Virologix, has been approved,
adopted, certified, executed, and acknowledged by each of the
constituent corporations in accordance with Section 251 of the
Delaware General Corporation Law.
3. The name of the surviving corporation in the Merger is
Virologix Corporation.
4. The Certificate of Incorporation and By-Laws,
respectively, of Holdings, as amended and in effect immediately
prior to the effective time of the Merger, shall be, respectively,
the Certificate of Incorporation and By-Laws of the surviving
corporation.
5. A copy of the Merger Agreement is on file at the
principal place of business of the surviving corporation, the
address of which is as follows:
Virologix Corporation
c/o ACCESS Pharmaceuticals, Inc.
2600 N. Stemmons Freeway, Suite 176
Dallas, Texas 75207-2107
6. A copy of the Merger Agreement will be furnished by
the surviving corporation, on request and without cost, to any
stockholder of the constituent corporations.
7. This Certificate of Merger shall be effective upon the
filing hereof with the Secretary of State of the State of
Delaware.
<PAGE>
Executed on ______ __, 1999.
ACCESS Holdings, Inc. Virologix Corp.
By____________________ By____________________
Kerry P. Gray Name
President and President
Chief Executive Officer
Attest: Attest:
______________________ ____________________
Name Name
Secretary Secretary
<PAGE>
Exhibit B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated
as of February 23, 1999, is made by and among ACCESS PHARMACEUTICALS, INC.,
a Delaware corporation (the "Company"), and each of the individuals or
entities listed on Schedule 1 attached hereto (the "Stockholders").
NOW THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Definitions. All capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the
Agreement of Merger and Plan of Reorganization (the "Merger
Agreement"), dated as of even date herewith, by and among the
Company, ACCESS Holdings Inc., a Delaware corporation, and
Virologix Corporation, a Delaware corporation. For the purposes of
this Agreement, the following terms shall have the respective meanings
set forth below or elsewhere in this Agreement as referred to below:
"Business Day" shall mean any day that is not a
Saturday, a Sunday or a legal holiday in the State of Delaware.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
"Registrable Securities" shall mean, collectively, any
and all shares of Parent Stock now or hereafter issued to the
Stockholders pursuant to the Merger Agreement; provided, however,
that with respect to any such shares of Parent Stock, such shares of
Parent Stock shall cease to be Registrable Securities when (a) such
shares of Parent Stock have been disposed of by the Stockholders
thereof in a public distribution of securities effected pursuant to this
Agreement, (b) such shares of Parent Stock become eligible for resale
pursuant to Rule 144 promulgated under the Securities Act (as
hereinafter defined) or other provision of substantially similar effect, or
(c) such shares of Parent Stock have ceased to be outstanding.
"Required Stockholders" shall mean, at the relevant time
of reference thereto, those Stockholders holding, in the aggregate, thirty
percent (30%) of the Registrable Securities then held by all Stockholders.
"Securities Act" shall mean the Securities Act of 1933,
as amended and in effect from time to time.
2. Registration and Sale.
<PAGE>
(a) Subject to the limitations set forth in this
Paragraph 2(a) and in Paragraphs 2(b) and (c) below, on such dates no later
than six (6) months and twelve (12) months (as applicable) after the Effective
Date (each a "Registration Date") or at any earlier time in the discretion of
the Company, subject, however, to the provisions of Paragraph 7 herein, the
Company shall use commercially reasonable efforts to cause all of the
Registrable Securities held by the Stockholders as of such date to be
registered for resale to the public pursuant to a registration statement on
Form SB-2 (or comparable or successor form) under the Securities Act,
which shall be a "shelf registration" made pursuant to Rule 415 adopted
pursuant to the Securities Act. On or before each Registration Date, the
Company shall prepare and file, and use commercially reasonable
efforts to prosecute to effectiveness, an appropriate filing with the
Commission of a registration statement covering all of the Registrable
Securities of the Stockholders as of such Registration Date as have not
previously been registered as of such Registration Date.
Notwithstanding anything to the contrary contained in this Paragraph 2(a),
the Company shall have no obligation of any kind whatsoever under this
Paragraph 2(a) with respect to registering Registrable Securities under the
Securities Act unless the number of Registrable Securities issued to the
Stockholders on such date to be registered for resale to the public under
the Securities Act by the Stockholders (net of Registrable Securities that
have been withdrawn from registration pursuant to the last two
sentences of Paragraph 2(c) below) is equal at least to 100,000 shares.
(b) Notwithstanding anything to the contrary set
forth in Paragraph 2(a) above, the Company shall not be obligated to prepare or
file any registration statement pursuant to Paragraph 2(a) hereof, or to
prepare or file any amendment or supplement thereto, and the Stockholders agree
that they shall not sell any Registrable Securities, at any time when the
Company, in the good faith and reasonable judgment of its Board of
Directors, reasonably believes that the filing thereof at that time, or the
offering or sale of Registrable Securities pursuant thereto, (a) would
materially adversely affect a pending or proposed public offering of
capital stock of the Company, or an acquisition, merger,
recapitalization, consolidation, reorganization or other transaction, or
any negotiations, discussions or pending proposals with respect thereto,
or (b) would require the disclosure of information that would have a
material adverse effect on the Company, is likely to materially
adversely affect the Company or any pending transaction or negotiations
of the Company, or would constitute a violation of the Securities Act or
any state or other applicable securities laws; provided, however, that the
filing of a registration statement, or any supplement or amendment
thereto, by the Company may be deferred pursuant to this Paragraph 2(b), and
the restrictions on the sale of Registrable Securities by the Stockholders
shall be effective, only for the minimum period of time necessary under
the circumstances, but not to exceed sixty (60) days and in any event no
more than two deferrals shall be allowed in any twelve (12) month
period. In the case of any such delay, the Company shall deliver to the
Stockholders or the Representative a written certificate of the
Company's Chief Executive Officer certifying that such delay is
necessary in the good faith and reasonable judgment of the Company.
(c) The Company shall be entitled to include in any
registration statement filed or to be filed by the Company pursuant to
Paragraph 2(a) above shares of the capital stock of the Company to be sold by
the Company for its own account or for the account of any other
stockholders of the Company.
<PAGE>
3. Further Obligations of the Company. Whenever the
Company is required to register Registrable Securities under this
Agreement, it agrees that it shall also do the following as expeditiously
as commercially reasonable:
(a) prepare and file with the Commission a
registration statement on Form SB-2 (or other applicable form, as
determined by the Company) with respect to such Registrable Securities
and use commercially reasonable efforts to cause such registration
statement to become and remain effective for a period of time required
for the disposition of such Registrable Securities by the Stockholders
thereof; provided, however, that such period shall not be longer than
the second anniversary of the Closing Date of the Merger or, if less,
the date on which the Registrable Securities may be sold under
Rule 144 or any successor provision promulgated under the Securities
Act having substantially similar effect, unless the Company otherwise
agrees in its sole discretion;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for the applicable time period set
forth in Section 3(a);
(c) furnish to each Stockholder offering Registrable
Securities under such registration statement such number of copies of a
summary prospectus or other final prospectus as such Stockholder may
reasonably request;
(d) register or qualify the Registrable Securities
covered by such registration statement under the securities or blue sky
laws of such jurisdictions within the United States as each Stockholder
shall reasonably request unless an available exemption to such
registration or qualification requirements is then available; provided that
the Company shall not be obligated to register or qualify such
Registrable Securities in any jurisdiction in which such registration or
qualification would require the Company to qualify as a foreign
corporation or file any general consent to service of process where it is
not then so qualified or otherwise required to be qualified or has not
theretofore so consented;
(e) timely file with the Commission such
information as the Commission may prescribe under Sections 13 or
15(d) of the Securities Exchange Act of 1934, as amended, and
otherwise use commercially reasonable efforts to ensure that the public
information requirements of Rule 144 under the Securities Act are
satisfied with respect to the Company; and
(f) notify the Stockholders of the issuance by the
Commission of any stop order suspending the effectiveness of a
registration statement registering the Registrable Securities or their
resale which is known to the Company or the initiation of any
proceedings for that purpose which are known to the Company.
4. [Reserved].
5. Expenses; Limitations on Registration.
<PAGE>
(a) All expenses incurred by the Company in
complying with its obligations under this Agreement shall be paid by
the Company, except that the Company shall not be liable for any fees,
discounts or commissions to any underwriter or any fees or
disbursements of counsel for any underwriter or any Stockholder (other
than such one attorney or law firm retained by the Stockholders, and
reasonably satisfactory to the Company) in respect of the Registrable
Securities sold by any Stockholders.
(b) It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this
Agreement in respect of the Registrable Securities which are to be
registered at the request of any Stockholder that such Stockholder shall
furnish to the Company or the underwriters such information regarding
the Stockholder and the Registrable Securities held by such Stockholder
as the Company or the underwriters shall reasonably request and shall
be required in connection with the action taken by the Company.
6. Indemnification and Contribution.
(a) Indemnification by the Company. If any
Registrable Securities are registered for resale under the Securities Act
pursuant to this Agreement, the Company shall indemnify and hold
harmless each Stockholder of such Registrable Securities and such
Stockholder's directors, officers, employees and agents, against any
losses, claims, damages, liabilities or expenses, joint or several, to
which such Stockholder or any such director, officer, employee or agent
may become subject under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement of any material fact contained, on the effective
date thereof, in any registration statement under which such Registrable
Securities were registered under the Securities Act or any final
prospectus contained therein (in each case as amended or supplemented,
including without limitation, any update pursuant to Rule 424(b) under
the Securities Act), provided that such final prospectus was used to
effect a sale by such Stockholder; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon any
untrue statement or alleged untrue statement or any omission or alleged
omission made in such registration statement, final prospectus, or
amendment or supplement in reliance upon and in conformity with
information furnished to the Company by such Stockholder or by
Virologix Corporation. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
Stockholder or such director, officer, employee or agent.
(b) Stockholders' Indemnification. In connection
with any registration statement in which a Stockholder is participating,
each such Stockholder will furnish to the Company such information as
shall reasonably be requested by the Company for use in any such
registration statement or prospectus and shall severally, and not jointly,
indemnify, to the extent permitted by law, the Company, its directors,
officers, employees and agents against any losses, claims, damages,
liabilities and expenses (under the Securities Act, at common law or
otherwise) caused by or resulting from any untrue statement or alleged
untrue statement of a material fact contained in any registration
statement filed by the Company under the Securities Act, or any final
prospectus included therein (in each case as
<PAGE>
amended or supplemented,
including without limitation, any update pursuant to Rule 424(b) under
the Securities Act), but only to the extent that such untrue statement of
a material fact is contained in, or such material fact is omitted from,
information furnished by such Stockholder, and such Stockholder shall
reimburse the Indemnitees for any legal and any other expenses
reasonably incurred in connection with investigating or defending,
settling or satisfying any such loss, claim, damage, liability or expense;
provided, however, that the obligations of such Stockholders hereunder
shall be limited to an amount equal to the proceeds to each Stockholder
of Registrable Securities sold in connection with such registration.
(c) Indemnification Procedures. Promptly after
receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof (an "Indemnification
Notice"), but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party
unless the indemnifying party is materially and adversely affected
thereby. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake
the defense thereof and, after notice from the indemnifying party to
such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Paragraph 6(c) for any legal expenses subsequently
incurred by such indemnified party in connection with the defense
thereof. Notwithstanding the foregoing, the indemnified party shall
have the right to employ its own counsel at its expense unless (i) the
employment of such counsel shall have been authorized in writing by
the indemnifying party or (ii) the attorneys for the indemnifying party
shall have concluded that there are defenses available to the indemnified
party that are different from or additional to those available to the
indemnifying party and such counsel reasonably concludes that it is
therefore unable to represent the interests of both the indemnified and
indemnifying party (in which case the indemnifying party may employ
separate counsel). In no event shall the indemnifying party be liable for
fees and expenses of more than one counsel separate from its own
counsel.
7. Termination of Registration Rights. Notwithstanding
anything in this Agreement to the contrary, the registration rights
provided to the Stockholders pursuant to Section 2 of this Agreement
shall terminate and be of no further force or effect as to any particular
Registrable Securities, when such Registrable Securities may be publicly
sold pursuant to Rule 144 under the Securities Act.
8. Miscellaneous.
(a) Notices. All notices and other
communications pursuant to this Agreement shall be in writing, either
hand delivered or sent by certified or registered mail with charges
prepaid or by commercial courier guaranteeing next business day
delivery, or sent by telex, facsimile machine or telegraph, and shall be
addressed:
(i) in the case of the Company, to the
Company at its principal office set forth in the Merger Agreement; and
<PAGE>
(ii) in the case of a Stockholder, to the
address set forth on Schedule 1 to this Agreement.
Any notice or other communication pursuant to this Agreement shall be
deemed to have been duly given or made and to have become effective
(i) when delivered in hand to the party to which it was directed, (ii) if
sent by telex, telecopier, facsimile machine or telegraph and properly
addressed in accordance with the foregoing provisions of this Section
8(a), when received by the addressee, (iii) if sent by commercial courier
guaranteeing next business day delivery, on the business day following
the date of delivery to such courier, or (iv) if sent by first-class mail,
postage prepaid, and properly addressed in accordance with the
foregoing provisions of this Section 8(a), (A) when received by the
addressee, or (B) on the third business day following the day of
dispatch thereof, whichever of (A) or (B) shall be the earlier.
(b) Assignment. This Agreement shall inure to the
benefit of and be binding upon each Stockholder and its, his or her
heirs and successors. This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns. The
Stockholders' rights and obligations and each Stockholder's rights and
obligations under this Agreement may only be assigned or delegated if
each Stockholder's Registrable Securities are assigned to the same party
to which the rights hereunder are assigned or delegated, and such
assignment of Registrable Securities is not in violation of the Securities
Act or any state securities laws as set forth in the written opinion of
counsel to such Stockholder, reasonably satisfactory to the Company.
The Company's rights and obligations under this Agreement shall not be
assigned or delegated.
(c) Amendment and Waiver. This Agreement may
not be amended except by an instrument in writing signed by the
Company and by the Required Stockholders. Any Stockholder may
waive any of its, his or her rights under this Agreement (including,
without limitation, such Stockholder's right to cause any other Person to
comply with such other Person's obligations under this Agreement) only
by an instrument in writing signed by such Stockholder; provided,
however, that (i) any rights under this Agreement which inure to the
benefit of any and all Stockholders (including, without limitation, the
right of any and all Stockholders to cause any other Person to comply
with such other Person's obligations under this Agreement) may be
waived on behalf of any and all Stockholders by an instrument in
writing signed by the Required Stockholders. Any waiver, pursuant to
this Subsection 8(c), of a breach of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
(d) Governing Law; Headings. This agreement
shall be governed by and construed in accordance with the laws of the
State of Delaware. The headings in this Agreement are for convenience
only and shall not affect the construction hereof.
(e) Severability. In the event that any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
<PAGE>
(f) Entire Agreement. This Agreement is intended
by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the
subject matter contained herein and therein.
(g) Gender and Number. Whenever the context
may require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the plural form of names,
defined terms, nouns and pronouns shall include the singular and vice-
versa.
(h) Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the Company and the
Stockholders have executed this Agreement under seal as of the date
first above written.
ACCESS PHARMACEUTICALS, INC.
By:________________________
Kerry P. Gray, President
STOCKHOLDER REPRESENTATIVE
By_________________________
[ Remainder of Page Intentionally Left Blank ]
<PAGE>
Schedule 1
Stockholders
<PAGE>
Exhibit C
Virologix Corporation
OFFICER'S CERTIFICATE
I, __________________________, the duly elected, qualified and acting
__________________________________ of
Virologix Corporation, a Delaware corporation ("Virologix"), do
hereby certify in such capacity and not individually that:
1. The representations and warranties made by
Virologix contained in the Agreement of Merger and Plan of
Reorganization (the "Merger Agreement") dated as of February
23, 1999, by and among Virologix, Access Holdings, Inc., a
Delaware corporation ("Holdings"), and Access
Pharmaceuticals, Inc., a Delaware corporation (the "Parent"),
are true and correct in all material respects at and as of the date
hereof with the same effect as though such representations and
warranties had been made or given at and as of the date hereof,
except to the extent that any such representation or warranty
relates specifically to an earlier date.
2. Virologix has performed and complied in all
material respects with all of the obligations to be performed or
complied with by it under the Merger Agreement on or prior to
the date hereof.
3. To the best of my knowledge, no restraining
order or injunction or other order or other legal restraint or
prohibition exists which would have the effect of preventing the
merger contemplated by the Merger Agreement or the other
transactions contemplated thereby.
4. Each of the conditions to the obligations of the
Parent and Access Holdings set forth in Section 7 of the Merger
Agreement have been satisfied on or prior to the date hereof.
4. Virologix mailed the [Information
Memorandum, dated ______, 1999] to all of the Stockholders of
Virologix on or about ______ __, 1999.
IN WITNESS WHEREOF, I have hereunto set my hand
on this ______ day of ______ __, 1999.
_______________________________
By:
Title:
<PAGE>
Exhibit D
February ____, 1999
ACCESS Pharmaceuticals, Inc.
2600 N. Stemmons Frwy.
Dallas, TX 75207-2107
Re: Virologix Corporation
Ladies and Gentlemen:
We have acted as counsel to Virologix Corporation (the
"Company"), a Delaware corporation, in connection with the
negotiation, execution and delivery of the agreement of Merger and
Plan of Reorganization, dated as of February 23, 1999 (the "Merger
Agreement"), by and among the Company, ACCESS Pharmaceuticals,
Inc., a Delaware corporation ("Parent"), ACCESS Holdings, Inc., a
Delaware corporation and direct wholly-owned subsidiary of Parent
("Acquirer"), and certain stockholders of the Company (the
"Stockholders"), and the merger of the Acquirer with and into the
Company pursuant to the Merger Agreement and the consummation of
the other transactions contemplated by the Merger Agreement.
Capitalized terms used and not otherwise defined in this opinion letter
have the respective meanings ascribed to them in the Merger
Agreement.
We have examined copies of the Merger Agreement, the
Registration Rights Agreement and such other agreements, instruments,
certificates, corporate and public records, and other documents as we
have deemed necessary for purposes of this opinion.
As to any opinion below relating to the existence, qualification
or standing of the Company in any jurisdiction, our opinion relies
entirely upon, and is limited by, those certificates of public officials
attached as Exhibit A.
We have assumed the genuineness of all signatures, the
conformity to the originals of all documents reviewed by us as copies,
the authenticity and completeness of all original documents reviewed by
us in original or copy form, the authority of each person executing any
document or instrument (other than on behalf of the Company) to
execute such document or instrument, and the legal competence of each
individual executing any document or instrument. We have assumed
that the Merger Agreement has been duly authorized, executed, and
delivered by each of the parties thereto (other than the Company) and
constitutes the valid and binding obligation of such parties, and is
enforceable against such parties in accordance with its terms.
With respect to all matters of fact (including factual conclusions
and characterizations and descriptions of purpose, intention, or other
state of mind), we have relied entirely upon the representations of
Holdings, Parent and the Company set forth in the Merger Agreement,
and certificates of officers of the Company, and have assumed, without
independent inquiry or investigation, the accuracy of those
representations and certificates.
<PAGE>
When an opinion set forth below is given to our knowledge, the
relevant knowledge is limited to the actual knowledge of the individual
lawyers in this firm who have participated directly in the specific
transactions to which this opinion relates, and without any special or
additional inquiry or investigation undertaken for the purposes of this
opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against the Company is subject to the
following general qualifications:
(i) as to any instrument delivered by the
Company, we assume that Holdings or Parent, as appropriate,
has received the agreed-to consideration therefor;
(ii) as to any agreement to which the
Company is a party, we assume that such agreement is the
binding obligation of each other party thereto (except for the
Company);
(iii) the enforceability of any obligation of
the Company may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, marshaling,
or other laws and rules of law affecting the enforcement
generally of creditors' rights and remedies (including such as
may deny giving effect to waivers of debtors' or guarantors'
rights), and may be subject to or limited by considerations of
public policy;
(iv) no opinion is given herein as to the
enforceability of any particular provision of any agreement
relating to remedies after default or as to the availability of any
specific or equitable relief of any kind;
(v) the enforcement of any of your rights
may in all cases be subject to an implied duty of good faith and
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity);
and
(vi) the enforceability of any obligation of
the Company to provide indemnification or contribution in
connection with any liability under federal or state securities
laws may be subject to limitations arising under federal or state
securities laws or public policy on the enforceability of
provisions providing for indemnity or contribution.
We give no opinion herein with respect to any antitrust laws of
any jurisdiction. We give no opinion herein with respect to the
securities laws of any jurisdiction, other than the Federal laws of the
United States of America.
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of
this opinion. This opinion is limited solely to the laws of State of New
York, the General Corporation Law of the State of Delaware, as applied
by courts located in Delaware (the "DGCL"), and the Federal laws of
the United States of America, in each case to the extent that the same
may apply to or govern such transactions. We note that the Merger
Agreement states that it is governed by the laws of the State of
Delaware. To the extent that any matter with respect to which we give
any opinion herein is governed by the laws of any other jurisdiction
(including without limitation the contract and other laws of the State of
Delaware), we have assumed, with your permission and without
investigation, that such laws are the same as the
<PAGE>
internal substantive laws of the State of New York. No opinion is given herein
as to the choice of law, or except as specifically set forth above, internal
substantive rules of law that any tribunal may apply to the transactions
referred to herein.
We understand that all of the foregoing assumptions and
limitations are acceptable to you.
Based upon the subject to the foregoing, it is our opinion that
except as disclosed in or contemplated by the Merger Agreement
(including the schedules and exhibits thereto):
1. The Company is a corporation validly existing and in
corporate good standing under the laws of the State of Delaware, with
all requisite corporate power and authority to own its properties and to
conduct its business as now conducted. The Company is not required
to be qualified to do business in any other jurisdictions to conduct its
business as presently conducted by it.
2. The authorized capital stock of the Company consists of
(i) 25,000,000 shares of Common Stock, $.0001 par value per share, of
which 4,248,124 shares are issued and outstanding as of the date hereof
(and all of which have been duly authorized and validly issued and are
fully paid, non-assessable and owned of record as set forth on Schedule
3.5 to the Merger Agreement), (ii) 120 shares of Series A Preferred
Stock, $.0001 par value per share, of which no shares are issued or
outstanding on the date hereof, and (iii) 1,350,000 shares of Series B
Preferred Stock, $.0001 par value per share, of which no shares are
issued or outstanding on the date hereof. To the best of our knowledge,
the Company neither has nor is bound by any (i) outstanding
subscriptions, options, rights, warrants, calls, commitments,
understandings, or agreements of any character, including any right of
conversion or exchange under any outstanding security, instrument, or
agreement, obligating the Company to issue, deliver, or sell, or cause to
be issued, delivered, or sold, any shares of its Common Stock,
Preferred Stock or any other equity security of it, or any securities
described in the following clause, (ii) securities convertible into,
exchangeable for, or representing the right to subscribe for, purchase,
or otherwise receive any shares of its Common Stock, Preferred Stock
or any other equity security of it, or obligating it to grant, extend, or
enter into any such subscriptions, options, warrants, calls,
commitments, or agreements, (iii) outstanding obligations, contractual
or otherwise, to repurchase, redeem, or otherwise acquire any shares of
its capital stock, (iv) any agreement or instrument relating to the voting
of any of its voting securities, or (v) agreement or instrument under
which any Person has the right to require the Company to effect, or to
include any securities held by such Person in, any registration under the
Securities Act of 1933, as amended (the "Securities Act").
3. Assuming compliance by Parent and Acquirer with
applicable requirements of the General Corporation Law of the State of
Delaware (the "DGCL"), upon the due filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and the
recording of the Delaware Certificate of Merger in the office of the
Recorder for the County of New Castle, Delaware, the Merger will
become effective in accordance with the General Corporation Law of
the State of Delaware, the Merger Agreement and the Certificate of
Merger.
4. The Company has all requisite corporate power and
authority to execute and deliver the Merger Agreement, to perform its
obligations thereunder, and to consummate the Merger and the other
transactions contemplated by the Merger Agreement. The execution
and delivery by the Company of the Merger Agreement, the
performance by the Company of its obligations thereunder,
<PAGE>
and the consummation by the Company of the Merger Agreement have been
duly authorized by all necessary corporate action on the part of the
Company, including the approval of its stockholders, in accordance with
the DGCL, and no further action on the part of the Company or its
stockholders is required under the DGCL to consummate the Merger,
other than the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and the recording thereof with the
County Recorder for the County of New Castle, Delaware. The
Merger Agreement has been duly executed and delivered by the
Company and is a legal, valid, and binding obligation of the Company
and the Founding Stockholders, enforceable against the Company and
the Founding Stockholders in accordance with its terms.
5. The execution, delivery, and performance by the
Company of its obligations under the Merger Agreement and the
consummation by it of the Merger and the other transactions
contemplated by the Merger Agreement (i) do not and will not violate
any provisions of its Certificate of Incorporation or By-Laws, each as
amended to date, (ii) do not and will not violate the DGCL or any law,
statute, rule, or regulation of the federal government of the United
States, the State of New York, or the State of Delaware, (iii) do not and
will not require the Company to obtain any approval, consent, or
waiver of, or to make any filing with, any governmental body or
regulatory agency of the United States of America, (iv) to the best of
our knowledge, do not and will not require the Company to obtain any
approval, consent, or waiver of, or to make any filing with, any other
Person that has not already been obtained or made, and (v) to the best
of our knowledge, do not and will not result (with or without the giving
of notice or the lapse of time or both) in any violation of or default or
creation of any lien under, or the acceleration or vesting or modification
of any right or obligation under, or in any conflict with, any judgement,
decree, or other order of a court or governmental authority binding on
or applicable to it, or any agreement or instrument to which it is a party
or by which it is bound, including without limitation any agreement or
instrument under which any Person has the right to acquire securities
from the Company or to require the Company to register securities in a
registration statement under the Securities Act.
6. The Merger has been duly authorized by all requisite
corporate action on the part of the Company, including the approval of
its shareholders, in accordance with the DGCL and no further action on
the part of the Company or its shareholders is required under the
DGCL to consummate the Merger, other then the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware and the recording of the Certificate of Merger in the office of
the Recorder for the County of New Castle, Delaware.
7. To the best of our knowledge and except as disclosed in
the Merger Agreement or the schedules annexed thereto, there is no
action, suit, proceeding, or investigation pending or threatened against
the Company or its stockholders that is reasonably likely to result,
either in any case or in the aggregate, in any material adverse change
with respect to it, or that calls into question the validity of the Merger
Agreement or any action taken or to be taken by the Company pursuant
thereto.
All of the opinions rendered herein are as of the date hereof.
We assume no obligation to update such opinions to reflect any facts or
circumstances that hereafter may come to our attention or any changes
in the law have hereafter may occur. This opinion is being rendered
solely for your benefit and is not to be relied upon by any third party
without our express prior written consent.
<PAGE>
Very truly yours,
EHRENREICH EILENBERG KRAUSE
& ZIVIAN LLP
<PAGE>
Exhibit E
February ___, 1999
ACCESS Pharmaceuticals, Inc.
2600 N. Stemmons Frwy.
Dallas, TX 75207
Re: Lock-Up Agreement
Ladies and Gentlemen:
The undersigned understands that Virologix Corporation, a
Delaware corporation ("Virologix"), intends to merge (the "Merger") with
ACCESS Holdings, Inc., a Delaware corporation and direct wholly-owned
subsidiary of ACCESS Pharmaceuticals, Inc., a Delaware corporation (the
"Parent"), pursuant to an Agreement of Merger and Plan of
Reorganization, of even date herewith (the "Merger Agreement"), with
Virologix being the surviving corporation. In connection with the Merger
and pursuant to the terms of the Merger Agreement, all of the outstanding
shares of capital stock of Virologix will automatically be converted into
shares of Parent Stock (as such term is defined in the Merger Agreement).
All capitalized terms used herein without definition shall have the
definitions assigned to them in the Merger Agreement.
In partial satisfaction of the conditions to the closing of the Merger
pursuant to the Merger Agreement, the undersigned hereby agrees not to
offer for sale, sell, transfer, distribute, grant any option for the sale of,
assign, sell short or otherwise dispose of, directly or indirectly, or exercise
any registration rights with respect to (collectively, to "Sell"), any shares
of Parent Stock that are beneficially owned by the undersigned or which
the undersigned has the right to acquire (collectively, the "Shares") during
the period commencing on the Closing Date of the Merger and ending on
the [ first ] anniversary thereof, at which time the limitations in this
Agreement shall terminate.
If the Merger Agreement is terminated by either Parent or
Virologix or otherwise pursuant to the terms of the Merger Agreement,
then the undersigned will no longer be bound by this Agreement.
By:____________________
Name:
<PAGE>
Exhibit F
ACCESS Pharmaceuticals, Inc.
Access Holdings, Inc.
OFFICER'S CERTIFICATE
I, Kerry P. Gray, the duly elected, qualified and acting President of
Access Holdings, Inc. ("Holdings"), a Delaware corporation, and the
duly elected, qualified and acting President of Access Pharmaceuticals,
Inc. (the "Parent"), a Delaware Corporation, do hereby certify in such
capacities and not individually that:
1. The representations and warranties made by
Holdings and Parent in the Agreement of Merger and Plan of
Reorganization (the "Merger Agreement"), dated as of February
23, 1999, by and among Holdings, Parent and Virologix
Corporation, a Delaware corporation ("Virologix"), are true
and correct in all material respects at and as of the date hereof
with the same effect as though such representations and
warranties had been made or given at and as of the date hereof,
except to the extent that any such representation or warranty
relates specifically to an earlier date.
2. Holdings and Parent have performed and
complied in all material respects with all of the obligations to be
performed or complied with by them under the Merger
Agreement on or prior to the date hereof.
3. To the best of my knowledge, no restraining
order or injunction or other order or other legal restraint or
prohibition exists which would have the effect of preventing the
merger contemplated by the Merger Agreement or the other
transactions contemplated thereby.
4. Each of the conditions to the obligations of
Virologix set forth in Sections 8.1, 8.2 and 8.3 of the Merger
Agreement have been satisfied on or prior to the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand
on this ______ day of _____, 1999.
_____________________________
Kerry P. Gray
President, Access Holdings, Inc. &
ACCESS Pharmaceuticals, Inc.
<PAGE>
Exhibit G
Subject to Internal
Review and Clearance
February __, 1999
Virologix Corporation
420 Lexington Avenue, Suite 620
New York, NY 10017
Re: ACCESS Pharmaceuticals, Inc.
Ladies and Gentlemen:
We have acted as counsel to ACCESS Pharmaceuticals, Inc., a
Delaware corporation ("Parent"), and Access Holdings, Inc., a
Delaware corporation ("Holdings"), in connection with (i) the
negotiation, execution, and delivery of the Agreement of Merger and
Plan of Reorganization, dated as of February 23, 1999 (the "Merger
Agreement"), by and among Holdings, Parent and Virologix
Corporation, a Delaware corporation ("Virologix"), and (ii) the merger
of Holdings with and into Virologix (the "Merger") pursuant to the
Merger Agreement and the consummation of the other transactions
contemplated by the Merger Agreement. Capitalized terms used and
not otherwise defined in this opinion letter have the respective meanings
ascribed to them in the Merger Agreement.
We have examined copies of the Merger Agreement, the
Registration Rights Agreement and such other agreements, instruments,
certificates, corporate and public records, and other documents as we
have deemed necessary for purposes of this opinion.
As to any opinion below relating to the existence, qualification
or standing of Holdings or Parent in any jurisdiction, our opinion relies
entirely upon, and is limited by, those certificates of public officials
attached as Exhibit A.
We have assumed the genuineness of all signatures, the
conformity to the originals of all documents reviewed by us as copies,
the authenticity and completeness of all original documents reviewed by
us in original or copy form, the authority of each person executing any
document or instrument (other than on behalf of Holdings or Parent) to
execute such document or instrument, and the legal competence of each
individual executing any document or instrument. We have assumed
that the Merger Agreement has been duly authorized, executed, and
delivered by each of the parties thereto (other than Parent and Holdings)
and constitutes the valid and binding obligation of such parties, and is
enforceable against such parties in accordance with its terms.
With respect to all matters of fact (including factual conclusions
and characterizations and descriptions of purpose, intention, or other
state of mind), we have relied entirely upon the
<PAGE>
Virologix Corporation
February __, 1999
Page 2
representations of Holdings, Parent and you set forth in the Merger Agreement,
and certificates of officers of Holdings and Parent, and have assumed,
without independent inquiry or investigation, the accuracy of those
representations and certificates.
When an opinion set forth below is given to our knowledge, the
relevant knowledge is limited to the actual knowledge of the individual
lawyers in this firm who have participated directly in the specific
transactions to which this opinion relates, and without any special or
additional inquiry or investigation undertaken for the purposes of this
opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against Holdings or Parent is subject to the
following general qualifications:
(i) as to any instrument delivered by Holdings
or Parent, we assume that Holdings or Parent, as appropriate,
has received the agreed-to consideration therefor;
(ii) as to any agreement to which Holdings or
Parent is a party, we assume that such agreement is the binding
obligation of each other party thereto (except for Parent or
Holdings);
(iii)the enforceability of any obligation of
Holdings or Parent may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, marshaling,
or other laws and rules of law affecting the enforcement
generally of creditors' rights and remedies (including such as
may deny giving effect to waivers of debtors' or guarantors'
rights), and may be subject to or limited by considerations of
public policy;
(iv) no opinion is given herein as to the
enforceability of any particular provision of any agreement
relating to remedies after default or as to the availability of any
specific or equitable relief of any kind;
(v) the enforcement of any of your rights may
in all cases be subject to an implied duty of good faith and to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity);
and
(vi) the enforceability of any obligation of
Holdings or Parent to provide indemnification or contribution in
connection with any liability under federal or state securities
laws may be subject to limitations arising under federal or state
securities laws or public policy on the enforceability of
provisions providing for indemnity or contribution.
We give no opinion herein with respect to any antitrust laws of
any jurisdiction. We give no opinion herein with respect to the
securities laws of any jurisdiction, other than the Federal laws of the
United States of America (but only as specifically set forth in the last
sentence of paragraph 8).
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of
this opinion. This opinion is limited solely to the laws of The
Commonwealth of Massachusetts, the General Corporation Law of the
State of Delaware, as applied by courts located in Delaware (the
"DGCL"), and the Federal laws of the United States of
<PAGE>
Virologix Corpoartion
February __, 1999
Page 3
America, in each case to the extent that the same may apply to or govern such
transactions. We note that the Merger Agreement states that it is
governed by the laws of the State of Delaware. To the extent that any
matter with respect to which we give any opinion herein is governed by
the laws of any other jurisdiction (including without limitation the
contract and other laws of the State of Delaware), we have assumed,
with your permission and without investigation, that such laws are the
same as the internal substantive laws of the Commonwealth of
Massachusetts. No opinion is given herein as to the choice of law, or
except as specifically set forth above, internal substantive rules of law
that any tribunal may apply to the transactions referred to herein.
We understand that all of the foregoing assumptions and
limitations are acceptable to you.
Based upon and subject to the foregoing, it is our opinion that,
except as disclosed in or contemplated by the Merger Agreement
(including the schedules and exhibits thereto):
1. Each of Holdings and Parent is a corporation validly
existing and in corporate good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to enter into
the transactions contemplated by the Merger Agreement and the
Registration Rights Agreement.
2. The authorized capital stock of Holdings consists of
1,000 shares of Common Stock, $.001 par value per share. To our
knowledge, there are no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements,
rights, or warrants, including any right of conversion or exchange under
any outstanding security, instrument or agreement, obligating Holdings
to issue, deliver, or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of Holdings or obligating Holdings
to enter into any such agreement or commitment. To our knowledge,
there are no voting trusts, or other agreements or understandings with
respect to the voting of any shares of Holdings' capital stock to which
Holdings is a party or by which it is bound.
3. Assuming (i) compliance by you with the applicable
provisions of the DGCL and your certificate of incorporation and
bylaws and (ii) that the Merger Agreement has been duly approved and
adopted by your stockholders, upon the due filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and
recording of the Certificate of Merger in the office of the Recorder for
the County of New Castle, Delaware, the Merger will become effective
in accordance with the DGCL, the Merger Agreement and the
Certificate of Merger.
4. Each of Holdings and Parent has all requisite corporate
power and authority to execute and deliver the Merger Agreement and
the Registration Rights Agreement. The Merger Agreement has been
duly authorized, executed, and delivered by Holdings and Parent, and
constitutes a valid and binding obligation of each of Holdings and
Parent, enforceable against each of Holdings and Parent in accordance
with its terms.
5. None of the execution and delivery of the Merger
Agreement or the Registration Rights Agreement by Holdings or Parent,
the performance by Holdings or Parent of its obligations thereunder,
nor the consummation by Holdings or Parent of the transactions thereby
contemplated (i) has violated or will violate any provision of either of
Holdings' or Parent's Certificate of Incorporation or by-laws, in each
case as amended and in effect on the date hereof, (ii) to our
<PAGE>
Virologix Corporation
February __, 1999
Page 3
knowledge, has resulted or will result in any material breach or material
violation by Holdings or Parent of, or constitute a default by Holdings or
Parent under, any material indenture, material mortgage, material deed of
trust, material loan or credit agreement, or other material agreement or
material instrument by which Holdings or Parent or either of their
properties are bound, (iii) to our knowledge, has violated or will violate
any order, writ, judgment, injunction, or decree of any court or other
governmental agency or instrumentality applicable to Holdings or Parent
or either of their properties, or (iv) to our knowledge, has required or
will require Holdings or Parent to obtain any approval, consent, or
waiver of, or to make any filing with, any other Person that has not
already been obtained or made (other than any required filings under
the Securities Act of 1933).
6. To our knowledge, but without having investigated any
governmental records or court dockets, and without having made any
other independent investigation, there is no action, suit or proceeding
pending against the Parent before any court or any governmental body
in which there is a reasonable possibility of an adverse decision which
could reasonably be expected to impair the consummation of the
transactions contemplated by the Merger Agreement and the
Registration Rights Agreement.
7. The Merger has been duly authorized by all requisite
corporate action on the part of Holdings, including the approval of its
stockholder, in accordance with the DGCL, and no further action on the
part of Holdings or its stockholders is required under the DGCL to
consummate the Merger, other than the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and the
recording of the Certificate of Merger in the office of the Recorder for
the County of New Castle, Delaware.
8. The shares of Parent Stock, when issued in accordance
with the provisions of the Merger Agreement, will be duly and validly
issued, fully paid and non-assessable shares of the common stock of the
Parent, free of pre-emptive rights arising under the DGCL or Parent's
Certificate of Incorporation or By-Laws. The issuance of the shares of
Parent Stock by Parent to the Target Stockholders will not be subject to
the registration requirements of the Securities Act of 1933, as amended.
All of the opinions rendered herein are as of the date hereof.
We assume no obligation to update such opinions to reflect any facts or
circumstances that hereafter may come to our attention or any changes
in the law that hereafter may occur. This opinion is being rendered
solely for your benefit and is not to be relied upon by any third party
without our express prior written consent.
Very truly yours,
BINGHAM DANA LLP
<PAGE>
Exhibit A
(attach copies of certificates of public officials)
<PAGE>
AMENDMENT NO. 1 TO AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This Amendment No. 1 (this "Amendment") to the Agreement
of Merger and Plan of Reorganization, dated as of February 23, 1999
(the "Agreement"), is made as of the ___ day of April 1999, among
ACCESS PHARMACEUTICALS, INC., a Delaware corporation
("Parent"), ACCESS HOLDINGS, INC., a Delaware corporation and
direct wholly-owned subsidiary of the Parent ("Acquiror"), and
VIROLOGIX CORPORATION, a Delaware corporation ("Target") and
such stockholders of the Target as have executed the Agreement on the
signature pages thereto (the "Founding Stockholders").
BACKGROUND
WHEREAS, the parties have entered into the Agreement which,
among other matters, provides for the merger of Acquiror with and into
Target; and
WHEREAS, the parties hereto wish to amend the terms of the
Agreement in certain respects;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally bound
hereby, do hereby agree as follows:
1. Capitalized terms used but not otherwise defined herein
shall have such meanings herein as are ascribed thereto in the
Agreement.
2. Section 1.2(d) of the Agreement is hereby amended by
deleting it in its entirety and inserting, in its place, the following:
"(d) each share of Target's common stock (assuming
conversion of all shares of Target's preferred stock into shares
of Target's common stock), $0.001 par value per share ("Target
Stock"), issued and outstanding immediately prior to the
Effective Date (other than any shares held by dissenting
stockholders referred to in Paragraph 2.2(d) below) shall by virtue of
the Merger become and be converted into .231047 shares (subject
to the payment of cash adjustments in lieu of the issuance of
fractional shares as provided in Paragraph 2.2(h) herein, the
"Conversion Number") of the common stock, par value $0.01 per share, of
Parent ("Parent Stock"), subject to adjustment as provided in
Paragraph 2.1 below, provided, however, that under no circumstances
shall the Target Stockholders (as such term is defined in
Paragraph 2.2(b), below) receive, in the aggregate, more than 1,000,000
shares of Parent Stock upon the conversion and exchange of
such Target Stock into shares of Parent Stock. As of the
Effective Date, each share of Target Stock shall be cancelled
and shall cease to exist and no payment shall be made with
respect thereto;"
3. Schedule 3.5 of the Agreement is hereby amended by
deleting it in its entirety and inserting, in its place, the following:
<PAGE>
"Schedule 3.5
VIROLOGIX COMMON STOCK
(assuming conversion of all Series B Preferred*)
Allie, Gary & Barbara 18,000
Amore Perpetuo Trust 36,000
Anzalone Family LP DTD 12-30-93 34,250
Alfred J. Anzalone Family LP 54,000
Anzalone 1995 Trust 90,000
Ash, David 365,834
Blumenthal, Harry 36,000
Carroll, Douglas 4,500
Carson, James 18,000
Central Yeshiva 30,000
Chelsey Capital 4,500
Chiarulli, Frank 4,500
Chidyllo, Peter & Nancy 22,834
Cooper, Judson 543,750
Corbin, Charles 4,500
Fish, Daniel 27,000
Gold, Kenneth 2,250
Goldblatt, Herbert & Marlene 2,250
Gross Foundation 120,000
Hall, William 215,000
Herman, Gabriel & Ellen 2,250
Heymann, Jerry 37,500
Hudak, Thomas 117,668
Hurwitz, Marc 36,000
Jacobson, Eli 24,000
Kaufman, Gary 4,500
Kaufman, David 50,000
Lanier, Thomas 1,800
Low, Nathan 159,375
Markowitz, Jeffrey 4,500
McCooey, David 4,500
Mendel, Gary 18,000
Michelizzi, Maryann 15,000
Milstein, Albert 4,500
Milstein, Howard 311,288
Nayden, Denis 108,000
Oliviera, Steven 393,750
Prism Ventures 50,000
Peck, Barton & Alice 4,500
Praschil, Robert 4,500
Reich, Yaron 18,000
Rickel, Robert 39,000
Rozen, David 36,000
Schein, Joshua 543,750
Shoup, Stefan 18,000
Shoup, Jane 18,000
Sirotkin, Paul 36,000
Sirotkin, Martin 36,000
Smith, Beverly 15,000
Spitz, Howard 2,700
Stanley, Glenn 4,500
<PAGE>
Stanley, Joseph 4,500
Stanley, Rita 4,500
Stanley, Stuart 4,500
Stone, David 60,000
Stone, Richard 354,375
Takahashi, Hidehiro 90,000
Teate, William 9,000
Winston IPO Investments 36,000
Zukier, Herz 13,500
---------
Total: 4,328,124
=========
*OUTSTANDING SERIES B PREFERRED STOCK
(to be converted into 2 shares of Virologix Common Stock prior to Closing)
Name of Shareholder No. of Shares of Series B No. of Shares of Common
After Conversion
- ----------------------- ------------------------- ------------------------
Allie, Gary & Barbara 9,000 18,000
Anzalone Family LP 13,750 27,500
Ash, David 64,167 128,334
Carson, James 9,000 18,000
Chidyllo, Peter & Nancy 9,167 18,334
Fish, Daniel 13,500 27,000
Hudak, Thomas 18,334 36,668
Mendel, Gary 9,000 18,000
Milstein, Howard 54,000 108,000
Nayden, Denis 54,000 108,000
Sirotkin, Paul 18,000 36,000
Sirotkin, Martin 18,000 36,000
Teate, William 4,500 9,000
------- -------
Total: 294,418 588,836
======== =======
VIROLOGIX OPTIONS
Golikov, Peter 12,500 @ $6.00 per share
Song, Elizabeth 2,500 @ $6.00 per share
------------------------
Total: 15,000 @ $6.00 per share
========================
VIROLOGIX WARRANTS
Anzalone Family LP 7,500 @ $3.00 per share
Ash, David 35,000 @ $3.00 per share
Chidyllo, Peter & Nancy 5,000 @ $3.00 per share
Hudak, Thomas 10,000 @ $3.00 per share
Koprowski, Hilary 10,000 @ $3.00 per share
Milstein, Howard 50,000 @ $3.00 per share
-------------------------
Total: 117,500 @ $3.00 per share
=========================
Total Common Stock, Options and Warrants: 4,460,624"
=========
4.Schedule 3.8 of the Agreement is hereby amended by deleting it in its
entirety and inserting, in its place, the following:
"Schedule 3.8
<PAGE>
(i) Material Changes since December 31, 1996:
Personnel: Peter Golikov resigned as President on 3/2/98; Elizabeth
Song resigned as Director of Viral Research on 8/3/98. Dr. William
Hall, Chief Scientific Officer, is owed approximately $75,000 by
Virologix for accrued and unpaid compensation under his Employment
Agreement; Judson Cooper and Joshua Schein resigned as Chief
Financial Officer and Executive Vice President, respectively, in August
1998. In December 1997, CSO Ventures LLC agreed to terminate its
6/1/96 consulting agreement with Virologix. In August 1998, Prism
Ventures LLC (of which Messrs. Cooper and Schein are members)
agreed to terminate its 1/1/98 consulting agreement with Virologix and
David Kaufman terminated his 3/7/98 consulting agreement.
(ii)Acquisition or disposition of assets: None
(iii)Damages, destruction or loss: None
(iv)Dividends or distributions: None
(v) Issuances of securities:
Date Transaction
- ----------------- ----------------------
April 1997 $300,000 loan and 50,000 warrants issued at $3.00 per share.
The loan subsequently converted into 203,288 shares of
Common Stock.
June, August 1997 Series A Preferred Stock Offering, $864,000 raised, converted
into a total of 576,000 shares of Common Stock
October 1997 Series B Preferred Stock Offering, $ 486,000 raised, 189,000
shares of Series B Preferred Stock issued (each to be
converted into two (2) shares of Common Stock as a closing
condition to the Merger); $287,500 principal amount of
1996 bridge loans converted into 105,418 Series B Preferred
Stock (each to be converted into two (2) shares of Common
Stock as a closing condition to the Merger) and an aggregate
of 57,500 warrants at an exercise price of $3.00 per share
issued to the four (4) lenders who elected to convert.
August 1998 Cancellation of existing Cooper and Schein Employment
Agreements and forgiveness of all amounts owed and owing
to Cooper and Schein under such agreements in consideration
for the issuance of an aggregate amount of 150,000 shares of
Common Stock to each of Cooper and Schein. Cancellation
of Prism Ventures LLC ("Prism") Consulting Agreement and
David Kaufman Consulting Agreement and forgiveness of all
amounts owed and owing thereunder in consideration for the
issuance of an aggregate amount of 50,000
shares of Common Stock to each of Prism and Kaufman and
the payment of $70,000 to Prism.
Other Former employees Elizabeth Song and Peter Golikov have
options to purchase 2,500 shares and 12,500 shares
respectively of the Company's Common Stock at an exercise
price of $6.00 per share. Hilary Koprowski, who was to
sit on the Company's Scientific Advisory Board, has options
to purchase 10,000 shares of the Company's Common Stock at
an exercise price of $3.00 per share. On March 2, 1999,
the Company issued to David Ash 80,000 shares of
Virologix common stock in settlement of a dispute.
<PAGE>
(vi)Increase in compensation: None
(vii) Non-ordinary course transactions: None
(viii)Incurrence of material obligations: None
(ix)Mortgages, liens: None
(x)Changes in accounting principles: None
(xi) Discharge of Liens: None"
5.Schedule 3.13 to the Agreement is hereby amended by deleting it in
its entirety and inserting, in its place, the following:
"Schedule 3.13
No litigation is threatened or has been commenced against Virologix."
6.Except as specifically amended hereby, the Agreement remains in full
force and effect in the form and substance in effect immediately prior to
the effectiveness of this Amendment.
7.For purposes of Section 18.1 of the Agreement, this Amendment No.
1 forms a part of the Agreement.
8.This Amendment (i) may be executed by facsimile signature which
shall be deemed to be an original for all purposes, (ii) may be executed
in any number of counterparts, each of which shall be deemed to be an
original and all of which, when taken together, shall constitute but one
and the same instrument, and (iii) shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
internal laws of the State of Delaware (without reference to principles of
conflicts or choice of law that would cause the application of the
internal laws of any other jurisdiction).
[ Remainder of Page Intentionally Left Blank ]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as an instrument under seal as of the date and
year first above written.
PARENT:
ACCESS Pharmaceuticals, Inc.
By: /s/ Kerry P. Gray
----------------------
President & Chief Executive Officer
ACQUIROR:
ACCESS Holdings, Inc.
By: /s/ Kerry P. Gray
---------------------
President & Chief Executive Officer
TARGET:
Virologix Corporation
By: /s/ Joshua D. Schein
----------------------
Title: Director
FOUNDING STOCKHOLDERS:
/s/ Judson A. Cooper
----------------------
Judson A. Cooper
/s/ Joshua D. Schein
----------------------
Joshua D. Schein
/s/ Richard Stone
----------------------
Richard Stone
<PAGE>
Acknowledged and Agreed
for the purpose of being
bound by any terms of this
Agreement relating to the
agreements, obligations and
covenants of the
Representatives
/s/ Judson A. Cooper
-----------------------
Judson A. Cooper
/s/ Joshua D. Schein
-----------------------
Joshua D. Schein
<PAGE>
AMENDMENT NO. 2 TO AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This Amendment No. 2 (this "Amendment") to the Agreement of
Merger and Plan of Reorganization,
dated as of February 23, 1999 (the "Agreement"), is made as of the 1st
day of June 1999, among ACCESS PHARMACEUTICALS, INC., a
Delaware corporation ("Parent"), ACCESS HOLDINGS, INC., a
Delaware corporation and direct wholly-owned subsidiary of the Parent
("Acquiror"), and VIROLOGIX CORPORATION, a Delaware
corporation ("Target") and such stockholders of the Target as have
executed the Agreement on the signature pages thereto (the "Founding
Stockholders").
BACKGROUND
WHEREAS, the parties have
entered into the Agreement which, among other matters, provides for
the merger of Acquiror with and into Target; and
WHEREAS, the parties
hereto wish to amend the terms of the Agreement in certain respects;
NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, do hereby agree as
follows:
1. Capitalized terms used
but not otherwise defined herein shall have such meanings herein as are
ascribed thereto in the Agreement.
2. Section 5.11 of the
Agreement is hereby amended by deleting the date "March 31, 1999" set
forth in the eighth line thereof and substituting in its place the date
"June 30, 1999".
3. Section 9.6 of the
Agreement is hereby amended by deleting the date "June 1, 1999" set
forth in the second line thereof and substituting in its place the date
"June 30, 1999".
4. Section 14(a) of the
Agreement is hereby amended by deleting the date "June 1, 1999" set
forth in the fourth line thereof and substituting in its place the date
"June 30, 1999".
5. Section 14(b) of the
Agreement is hereby amended by deleting the date "June 1, 1999" set
forth in the fourth line thereof and substituting in its place the date
"June 30, 1999".
6. Except as specifically
amended hereby, the Agreement remains in full force and effect in the
form and substance in effect immediately prior to the effectiveness of
this Amendment.
7. For purposes of Section
18.1 of the Agreement, this Amendment No. 2 forms a part of the
Agreement.
8. This Amendment (i) may
be executed by facsimile signature which shall be deemed to be an
original for all purposes, (ii) may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which, when taken together, shall constitute but one and the same
instrument, and (iii) shall be construed and enforced in
<PAGE>
accordance with,
and the rights of the parties shall be governed by, the internal laws of
the State of Delaware (without reference to principles of conflicts or
choice of law that would cause the application of the internal laws of
any other jurisdiction).
[The remainder of this page is intentionally left blank]
<PAGE>
IN WITNESS WHEREOF,
the parties hereto have duly executed this Agreement as an instrument
under seal as of the date and year first above written.
PARENT:
ACCESS Pharmaceuticals, Inc.
By: /s/ Kerry P. Gray
----------------------
President & Chief Executive Officer
ACQUIROR:
ACCESS Holdings, Inc.
By: /s/ Kerry P. Gray
----------------------
President & Chief Executive Officer
TARGET:
Virologix Corporation
By: /s/ Joshua D. Schein
---------------------
Title: President
FOUNDING STOCKHOLDERS:
/s/ Joshua A. Cooper
----------------------
Judson A. Cooper
/s/ Joshua D. Schein
----------------------
Joshua D. Schein
/s/ Richard Stone
----------------------
Richard Stone
<PAGE>
Acknowledged and Agreed
for the purpose of being
bound by any terms of this
Agreement relating to the
agreements, obligations and
covenants of the
Representatives
/s/ Judson A. Cooper
----------------------
Judson A. Cooper
/s/ Joshua D. Schein
----------------------
Joshua D. Schein
<PAGE>
AMENDMENT NO. 3 TO AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This Amendment No. 3 (this
"Amendment") to the Agreement of Merger and Plan of Reorganization,
dated as of February 23, 1999, as amended (the "Agreement"), is made
as of the 30th day of June 1999, among ACCESS
PHARMACEUTICALS, INC., a Delaware corporation ("Parent"),
ACCESS HOLDINGS, INC., a Delaware corporation and direct
wholly-owned subsidiary of the Parent ("Acquiror"), and VIROLOGIX
CORPORATION, a Delaware corporation ("Target") and such
stockholders of the Target as have executed the Agreement on the
signature pages thereto (the "Founding Stockholders").
BACKGROUND
WHEREAS, the parties have
entered into the Agreement which, among other matters, provides for
the merger of Acquiror with and into Target; and
WHEREAS, the parties
hereto wish to amend the terms of the Agreement in certain respects;
NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, do hereby agree as
follows:
1. Capitalized terms used
but not otherwise defined herein shall have such meanings herein as are
ascribed thereto in the Agreement.
2. Section 5.11 of the
Agreement is hereby amended by deleting the date "June 30, 1999" set
forth in the eighth line thereof and substituting in its place the date
"July 30, 1999".
3. Section 7.18 of the
Agreement is hereby amended by deleting the price "$3.00 per share"
set forth in the third line thereof and substituting in its place the price
"$2.00 per share".
4. Section 8.8 of the
Agreement is hereby amended by deleting the price "$3.00 per share" set
forth in the third line thereof and substituting in its place the price
"$2.00 per share".
5. Section 9.6 of the
Agreement is hereby amended by deleting the date "June 30, 1999" set
forth in the second line thereof and substituting in its place the date
"July 30, 1999".
6. Section 14(a) of the
Agreement is hereby amended by deleting the date "June 30, 1999" set
forth in the fourth line thereof and substituting in its place the date
"July 30, 1999".
7. Section 14(b) of the
Agreement is hereby amended by deleting the date "June 30, 1999" set
forth in the fourth line thereof and substituting in its place the date
"July 30, 1999".
8. Except as specifically
amended hereby, the Agreement remains in full force and effect in the
form and substance in effect immediately prior to the effectiveness of
this Amendment.
<PAGE>
9. For purposes of Section
18.1 of the Agreement, this Amendment No. 3 forms a part of the
Agreement.
10. This Amendment
(i) may be executed by facsimile signature which shall be deemed to be
an original for all purposes, (ii) may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which, when taken together, shall constitute but one and the same
instrument, and (iii) shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the internal laws of
the State of Delaware (without reference to principles of conflicts or
choice of law that would cause the application of the internal laws of
any other jurisdiction).
[The remainder of this page is intentionally left blank]
<PAGE>
IN WITNESS WHEREOF,
the parties hereto have duly executed this Amendment as an instrument
under seal as of the date and year first above written.
PARENT:
ACCESS Pharmaceuticals, Inc.
By: /s/ Kerry P. Gray
------------------
Title: President and CEO
ACQUIROR:
ACCESS Holdings, Inc.
By: /s/ Kerry P. Gray
------------------
Title: President
TARGET:
Virologix Corporation
By: /s/ Joshua D. Schein
---------------------
Title: President
FOUNDING STOCKHOLDERS:
/s/ Judson A. Cooper
--------------------
Judson A. Cooper
/s/ Joshua D. Schein
--------------------
Joshua D. Schein
/s/ Richard Stone
-------------------
Richard Stone
<PAGE>
Acknowledged and Agreed
for the purpose of being
bound by any terms of this
Agreement relating to the
agreements, obligations and
covenants of the
Representatives
/s/ Judson A. Cooper
---------------------
Judson A. Cooper
/s/ Joshua D. Schein
---------------------
Joshua D. Schein
