SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CELCOR, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[x] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
Celcor, Inc. Common Stock, par value
$.001
2) Aggregate number of securities to which transaction
applies:
1,750,000
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11. (Set
forth the amount on which the filing fee is calculated
and state how it was determined):
$.625 based upon the August 4, 1995
average of the bid and ask price
4) Proposed maximum aggregate value of transaction:
$1,093,750.00
5) Total fee paid:
$218.75
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
CELCOR, INC.
1800 BLOOMSBURY AVENUE
OCEAN, NEW JERSEY 07712
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
(to be held on October 3, 1995)
Notice is hereby given that a special meeting of
stockholders of Celcor, Inc. (the "Company") will be held on
October 3, 1995 at 10:00 a.m., eastern time, at the Sheraton
LaGuardia East, 135-20 39th Avenue, Flushing, New York, to:
1. Consider and act upon a proposal to approve an
Agreement and Plan of Merger dated as of March 15, 1995, between
Northeast (USA) Corp. ("Northeast"), a New York corporation, the
shareholders of Northeast and the Company, which provides for,
among other things: (i) the merger of Northeast with and into
the Company (the "Merger"), with the Company continuing as the
surviving corporation; and (ii) the conversion of each
outstanding share of common stock, no par value, of Northeast
into 10,000 shares of common stock, par value $.001 per share, of
the Company ("Celcor Common Stock"); all as more fully described
in the attached Proxy Statement;
2. Elect seven persons to serve as directors of the
Company, each such director to serve for a period of one year and
thereafter until his successor shall have been duly elected and
shall have qualified;
3. Ratify the issuance by the Company of 275,000
shares of its Series C 8% Convertible Preferred Stock (the
"Series C Preferred Stock"), issued by the Company in June, 1994,
and approve an amendment to the Company's certificate of
incorporation expressly authorizing the board of directors of the
Company to establish the rights, preferences and limitations of
any other class or series of preferred stock which may be issued
in the future (none is presently contemplated); and
4. To consider and act upon any other matter which
may properly come before the meeting or any adjournment thereof.
The board of directors has fixed September 7, 1995 as
the record date for the special meeting and only holders of
record of Celcor Common Stock at the close of business on that
date will be entitled to receive notice of and to vote at the
special meeting or any adjournment or adjournments thereof.
Pursuant to the provisions of the Delaware General
Corporation Law, holders of Celcor Common Stock and Preferred
Stock will have statutory dissenters' rights with respect to the
Merger. A copy of Section 262 of the Delaware General
Corporation Law is annexed to this Proxy Statement as Exhibit A.
Stockholders are advised that they must follow the procedures set
forth therein in order to properly perfect their right to dissent
from the Merger.
The affirmative vote of a majority of the outstanding
shares of Celcor Common Stock is required to approve the Merger
and the other proposals described above.
All stockholders are requested to complete, sign, date
and return the enclosed Proxy promptly, whether or not they
expect to attend the special meeting.
By Order of the Board of Directors
___________________________________
Stephen E. Roman, Jr.,
Secretary
Ocean, New Jersey
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, MANAGEMENT
URGES YOU TO DATE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY
AS POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE. YOU MAY REVOKE THE
PROXY AT ANY TIME PRIOR TO ITS EXERCISE. IF YOU ATTEND THE
SPECIAL MEETING, YOU MAY VOTE IN PERSON.
PRELIMINARY PROXY STATEMENT
CELCOR, INC.
1800 Bloomsbury Avenue
Ocean, New Jersey 07712
The following Proxy Statement is furnished in
connection with the solicitation of proxies by the board of
directors of Celcor, Inc. (the "Company" or "Celcor"), a Delaware
corporation. The proxies will be used at a special meeting of
stockholders of the Company (the "Special Meeting") which will be
held at the Sheraton LaGuardia East, 135-20 39th Avenue,
Flushing, New York on Tuesday, October 3, 1995 at 10:00 a.m.
Proxies are being solicited from stockholders of record
of the Company in order to (i) consider and act upon an Agreement
and Plan of Merger, dated as of the 15th day of March, 1995 (the
"Merger Agreement"), a copy of which is annexed hereto as Exhibit
B, by and between the Company, Northeast (USA) Corp.
("Northeast") and the shareholders of Northeast providing, among
other things, for the merger of Northeast with and into the
Company (the "Merger"); (ii) elect seven persons to serve as
directors of the Company; and (iii) ratify the issuance by the
Company of 275,000 Shares of its Series C 8% Convertible
Preferred Stock (the "Series C Preferred Stock") and to approve
an amendment to the Company's certificate of incorporation (the
"Certificate of Incorporation"), expressly authorizing the board
of directors of the Company to establish the rights, preferences
and limitations of any other class or series of preferred stock
which may be issued in the future (none is presently
contemplated).
Upon the consummation of the Merger Agreement,
Northeast will be merged with and into the Company, with the
Company continuing as the surviving corporation. Each
outstanding share of common stock, no par value of Northeast
("Northeast Common Stock"), other than shares held by Northeast
stockholders who dissent from the Merger ("Dissenting Shares"),
will be converted into the right to receive 10,000 shares of
Celcor common stock, par value $.001 per share (the "Celcor
Common Stock"). Counsel for Celcor has furnished an opinion that
the Merger will constitute a reorganization for federal income
tax purposes.
It is anticipated that 1,750,000 shares of Celcor
Common Stock will be issued to the stockholders of Northeast
pursuant to the Merger Agreement. After giving effect to the
issuance of such shares, Northeast stockholders will hold
approximately 34% of the outstanding shares of Celcor Common
Stock (calculated before giving effect to the 825,000 shares of
Celcor Common Stock issuable upon the conversion of outstanding
Series C Preferred Stock).
The shares of Celcor Common Stock issuable to Northeast
stockholders will not be registered pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), or applicable
state securities laws in reliance on exemptions under such laws.
Accordingly, the subsequent sale or transfer of the Celcor Common
Stock issued to the stockholders of Northeast will be restricted.
The transfer of such shares will be permitted only if such shares
are registered for sale pursuant to the Securities Act and
applicable state securities laws, or will be transferred in a
transaction which is exempt from the registration requirements of
the Securities Act and such laws. The certificates for the
Celcor Common Stock issued to Northeast shareholders will bear an
appropriate restrictive legend to provide notice of the
restrictions on the further transfer of such shares.
Celcor Common Stock is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934. It is not actively
traded, but quotations are available in the "Pink Sheets." As a
result of the absence of an active market for the stock, bid-ask
spreads are often substantial. On August 12, 1994, the day prior
to the first public announcement of the Merger, the low bid and
high ask price per share of Celcor Common Stock was $1.00 and
$2.00, respectively. On March 17, 1995, the day prior to the
announcement of the signing of the Merger Agreement, the low bid
and high ask price per share of Celcor Common Stock was $.25 and
$2.25, respectively.
TABLE OF CONTENTS
Page
Available Information 1
Incorporation of Certain Documents by Reference 2
Information Concerning the Special Meeting 3
General 3
Date, Place and Time of Special Meeting 3
Purpose of Special Meeting 3
Voting; Revocation of Proxy; Quorum
and Vote Required 3
Costs of Solicitation 4
Proposal One - Approval of the Merger 5
Approval Sought 5
History of Celcor 5
Background of the Merger 6
Terms of the Merger 7
Business of Northeast 8
Recommendation of the Board of Directors 10
Fairness Opinion 11
Additional Terms of the Merger Agreement 12
Issuance of Restricted Shares 13
Effective Date of the Merger 13
Accounting Treatment 13
Federal Income Tax Consequences 14
Rights of Dissenting Stockholders 15
Selected Financial Data for the Company and Northeast 17
Celcor, Inc. 17
Northeast (USA) Corp. 18
Management's Discussion and Analysis of
Financial Condition and Results of Operations 19
Celcor, Inc. 19
Northeast (USA) Corp. 20
Proposal Two - Election of Directors 22
Nominees 22
Executive Compensation 24
Section 16 Compliance 25
Common Stock of the Company 25
Market Price Information 25
Dividend Policy 26
Security Ownership of Certain Beneficial
Owners and Management 27
Certain Relationships and Related
Party Transactions 29
Proposal Three - Ratification of Issuance of
Series C Preferred Stock; Approval
of Amendment to Certificate of Incorporation 29
Description of Capital Stock of the Company 31
Celcor Common Stock 31
Preferred Stock 31
Description of Series C Convertible Preferred Stock 32
Experts 34
Presence of Accountants at Special Meeting 34
Other Matters 34
EXHIBITS
Section 262 of the Delaware General Corporation
Law - Appraisal Rights A
Agreement and Plan of Merger among Celcor, Inc.,
Northeast (USA) Corp. and the Stockholders of Northeast B
Fairness Opinion of Chartered Capital Advisers, Inc. C
Form of Proxy D
Proposed Amendment to Certificate of Incorporation E
Financial Statements F-1
AVAILABLE INFORMATION
Celcor is subject to the information requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files proxy statements,
reports and other information with the Securities and Exchange
Commission (the "Commission"). Proxy statements, reports and
other information concerning Celcor can be inspected and copied
at Room 1024 of the Commission's offices at 450 Fifth Street, NW,
Washington, D.C. 20549 and at the Commission's regional offices
in New York (7 World Trade Center, 13th Floor, New York, New York
10048) and in Chicago (Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661). Copies of such
material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, NW, Washington, D.C. 20549, at
prescribed rates.
All information contained in this Proxy Statement with
respect to Northeast was furnished by Northeast. Although Celcor
has no actual knowledge that would indicate that any statements
or information (including financial statements) relating to
Northeast contained herein is inaccurate or incomplete, Celcor
does not warrant the accuracy or completeness of such statements
or information.
No person is authorized to give any information or to
make any representation not contained in this Proxy Statement
and, if given or made, such information or representation should
not be relied upon as having been authorized. Neither the
delivery of this Proxy Statement, nor any distribution of the
securities issuable in connection with the Merger Agreement,
shall, under any circumstances, create any implication that there
has been no change in the information concerning Celcor contained
in this Proxy Statement since the date of such information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and
Exchange Commission by the Company pursuant to the Exchange Act
are incorporated by reference in this Proxy Statement:
1. The Company's Annual Report on Form 10-K for its
fiscal year ended June 30, 1994.
2. The Company's Quarterly Reports on Form 10-QSB for
the quarters ended September 30, 1994, December 31, 1994 and
March 31, 1995.
3. The Company's Current Reports on Form 8-K dated
August 15, 1994 and March 20, 1995.
All documents and reports subsequently filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Proxy Statement and prior to
the date of the Special Meeting shall be deemed to be
incorporated by reference in this Proxy Statement and to be a
part hereof from the date of filing of such documents or reports.
Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be
modified or superseded for the purposes of this Proxy Statement
to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part of this Proxy Statement.
The Company hereby undertakes to provide, without
charge to each person, including any stockholder, to whom a copy
of this Proxy Statement has been delivered, upon written or oral
request of such person, a copy of any and all information that
has been incorporated by reference in this Proxy Statement
(excluding exhibits, unless specifically incorporated therein).
Requests for such copies should be directed to Celcor, Inc., 1800
Bloomsbury Ave., Ocean, New Jersey, 07712 Attention: Mr.
Stephen E. Roman, Jr., telephone number (908) 922-3158. In order
to insure timely delivery of the documents, any requests should
be made by September ___, 1995.
INFORMATION CONCERNING THE SPECIAL MEETING
General.
This Proxy Statement is being furnished to holders of
Celcor Common Stock in connection with the solicitation of
proxies by the board of directors of Celcor for use at a Special
Meeting of stockholders to be held on Tuesday, October 3, 1995,
and any adjournment or adjournments thereof, to consider and take
action upon (i) the Merger Agreement; (ii) the election of
directors; (iii) the ratification of the issuance by the Company
of 275,000 shares of its Series C Preferred Stock and to approve
an amendment to the Company's Certificate of Incorporation
expressly authorizing the board of directors of the Company to
establish the rights, preferences and limitations of any other
class or series of preferred stock which may be issued in the
future (none is presently contemplated); and (iv) the transaction
of such other business as may properly come before the Special
Meeting and any adjournment thereof.
This Proxy Statement, the attached Notice and the form
of Proxy enclosed herewith are first being mailed to stockholders
of Celcor on or about September __, 1995.
Date, Place and Time of Special Meeting.
The Special Meeting will be held at the Sheraton
LaGuardia East, 135-20 39th Avenue, Flushing, New York on
Tuesday, October 3, 1995 at 10:00 a.m., EST. Only holders of
record of Celcor Common Stock at the close of business on
September 7, 1995 will be entitled to receive notice of, and to
vote at, the Special Meeting. At the close of business on the
record date, there were 3,364,674 shares of Celcor Common Stock
outstanding and entitled to vote at the Special Meeting. Each
such share is entitled to one vote. This Proxy Statement is also
being furnished to holders of the Company's Series C Preferred
Stock; however, such stockholders will not be entitled to vote on
any of the matters presented to holders of Common Stock at the
Special Meeting.
Purpose of Special Meeting.
At the Special Meeting, the holders of Celcor Common
Stock will be asked to approve the Merger Agreement, a copy of
which is attached to this Proxy Statement as Exhibit B.
Stockholders are also being asked to elect directors and to
ratify the creation and issuance by the Company of 275,000 shares
of the Company's Series C Preferred Stock and to approve a
related amendment to the Company's Certificate of Incorporation.
Voting; Revocation of Proxy; Quorum and Vote Required.
A form of proxy is enclosed for use at the Special
Meeting if a stockholder is unable to attend in person. Each
proxy may be revoked at any time before it is exercised by giving
written notice to the secretary of the Special Meeting, or by
submitting a duly executed, later dated proxy. All shares
represented by valid proxies pursuant to this solicitation (and
not revoked before they are exercised) will be voted as specified
in the form of proxy. If the proxy is signed but no
specification is given, the shares subject thereto will be voted
in favor of the Merger, in favor of the board's nominees for
election to the board of directors, and in favor of the
ratification of the issuance of the Series C Preferred Stock and
approval of the amendment to the Certificate of Incorporation. A
majority of the shares outstanding on the record date will
constitute a quorum for purposes of the Special Meeting. Votes
will not be considered cast, however, if the shares are not voted
for any reason, including if an abstention is indicated as such
on a written proxy or ballot, or if votes are withheld by a
broker. Such abstentions and broker non votes will be considered
solely for purposes of determining whether a quorum is present.
Assuming that a quorum is present, directors will be elected by a
plurality of the votes cast. Each other proposal will require
the affirmative approval of a majority of the shares of Celcor
Common Stock outstanding on the record date.
Costs of Solicitation.
The entire cost of soliciting these proxies will be
borne by the Company. In following up the original solicitation
of proxies by mail, the Company may make arrangements with
brokerage houses and other custodians, nominees and fiduciaries
to send proxies and proxy materials to the beneficial owners of
Celcor Common Stock and may reimburse them for their expenses in
so doing. If necessary, the Company may also use its officers to
solicit proxies from stockholders, either personally, by
telephone or special letter. The officers will not be separately
compensated in connection therewith.
Even if they plan to attend the Special Meeting,
holders of Celcor Common Stock are requested to complete, date
and sign the accompanying proxy and return it promptly to the
Company in the enclosed, postage paid envelope.
PROPOSAL ONE
APPROVAL OF THE MERGER
Approval Sought.
Stockholders are being asked to approve an Agreement
and Plan of Merger, dated as of March 15, 1995 (the "Merger
Agreement"), a copy of which is annexed hereto as Exhibit B,
among the Company, Northeast (USA) Corp. and the shareholders of
Northeast, which provides for, among other things (i) the merger
of Northeast with and into the Company, with the Company
continuing as the surviving corporation (the "Merger"), and (ii)
the conversion of each outstanding share of common stock, no par
value, of Northeast ("Northeast Common Stock") into 10,000 shares
of Celcor Common Stock.
History of Celcor.
Celcor was organized on January 16, 1984 to exploit new
markets created by the approval of the new "cellular" mobile
telephone technology by the Federal Communications Commission and
the deregulation of the telecommunications industry. After the
completion of its initial public offering in February, 1985, the
Company extended its business into other areas in the
telecommunications field, such as radio paging and (through its
acquisition of the Pay Telephone Company, Inc. in December,
1985), the private pay telephone market, and the private network
switching business.
However, because the growth and profitability of its
operations fell short of expectations and because of the limited
success of a second public financing in July of 1987, the
Company, beginning in 1987, began selling or closing some of its
operations. By February, 1991, the Company had ceased or had
sold all of its operations.
Unable to obtain financing to repay debt or fund
operations of any kind, the Company, in April of 1991, filed for
protection under Chapter 11 of the United States Bankruptcy Code.
In March of 1992, the Company's only subsidiary, the Pay
Telephone Company, Inc., filed a Chapter 7 bankruptcy petition
and was liquidated. There was no distribution to creditors.
Pursuant to a Stock Purchase Agreement (the "Majestic
Agreement"), dated June 20, 1991 and amended October 29, 1991,
between the Company and Majestic International, Inc.
("Majestic"), the Company was able to secure additional equity
capital and emerge from bankruptcy. The Majestic Agreement,
among other things, provided for the sale by the Company to
Majestic of shares of Celcor Common Stock constituting a 49%
interest in the Company. The purchase price for the shares was
$155,000. Also, pursuant to the Majestic Agreement, the Company
filed a reorganization plan (the "Plan"), with the Bankruptcy
Court, which utilized the proceeds received from Majestic to pay
administrative claims associated with the bankruptcy proceeding
and to settle all existing debts of the Company. On May 28,
1992, the Plan was approved by the Bankruptcy Court.
Subsequently, 8,242,000 shares of Celcor Common Stock were sold
to Majestic (1,648,400 shares after giving effect to a subsequent
one for five reverse stock split) and 824,200 shares were issued
to two finders (618,150 shares to Lyncroft Corp. and 206,050 to
Yung Hua Ho). The result of these transactions was the emergence
of the Company from bankruptcy with virtually no assets or
liabilities.
Since its emergence from bankruptcy, the Company has
not conducted any business activities, but has been seeking new
business opportunities, especially with entities having business
interests or operations in and with the People's Republic of
China.
In order to raise capital with which to fund its
immediate limited operations, and to become more attractive to a
potential operational partner, the Company raised $825,000 during
May and June of 1994 from the sale of the Series C Preferred
Stock in a private placement. The Series C Preferred Stock was
sold to a group of individual investors and consisted of the sale
of 275,000 shares of such stock at a price of $3 per share. Each
share of Series C Preferred Stock is convertible into three
shares of Celcor Common Stock. See "Proposal Three -
Ratification of Sale of Series C Preferred Stock and Amendment to
the Certificate of Incorporation" and "Description of Capital
Stock of the Company."
Background of the Merger
Certain of the directors and shareholders of the
Company have significant experience doing business in China.
Based upon this experience, they believe there are significant
opportunities for American companies in China. Areas identified
as being of particular interest are the pharmaceutical and
cosmetics industries. Given the Company's limited resources, the
board determined to seek business opportunities for the Company
in the People's Republic of China through mergers, acquisitions
and joint ventures.
In May, 1994, the Company initiated discussions with
Northeast, a privately held company which has significant
business relationships with entities located in the People's
Republic of China, concerning a possible business combination
between the two companies. Organized in February, 1993,
Northeast may be deemed to be an affiliate of Celcor by virtue of
certain family inter-relationships among the individuals
controlling the two companies. Mr. Su Shi Lo is the controlling
shareholder of Majestic, which in turn, is the largest
shareholder of the Company, holding 19.4% of the outstanding
shares of Celcor Common Stock. Mr. Lo's daughter, Jennifer Lo
Wu, is the chairperson and her husband, Dr. Nanshan Wu, is the
president of Northeast. In addition, Jennifer Lo Wu is the sole
shareholder of Lyncroft Corp., a shareholder of both Northeast
and Celcor.
After a detailed analysis by the Board of the business
opportunities available to the Company through an affiliation
with Northeast, including due consideration to the conflicts
involved, on August 15, 1994, the Company signed a letter of
intent with Northeast under the terms of which the Company agreed
to effect the merger of Northeast with and into the Company. The
terms of the letter of intent provided that the consummation of
the Merger would be subject to the execution of a definitive
merger agreement, shareholder approval and the completion of due
diligence. None of the current members of the Board of Directors
of the Company is affiliated with Majestic or Northeast.
Northeast holds the rights to certain technology used
to manufacture various vitamin products and vitamin based
cosmetics and has entered into an agreement with Northeast
General Pharmaceutical Factory, one of the largest pharmaceutical
companies in the People's Republic of China, providing for the
production and distribution of vitamins and cosmetics. See
"Business of Northeast".
In August, 1994, in anticipation of the Merger, the
Company loaned $700,000 to Northeast, which was used by Northeast
to fund its obligations under the joint venture agreement between
Northeast and Northeast General Pharmaceutical Factory, described
in more detail below. The loan is secured by a pledge by the
stockholders of Northeast of their Northeast Common Stock.
During March, 1995, Stephen E. Roman, Jr., the
president of Celcor, met with Dr. Nanshan Wu, the president of
Northeast, to negotiate the definitive Merger Agreement.
Following these negotiations, the definitive Merger Agreement was
executed by the parties on March 15, 1995.
In July, 1995, the board of directors of the Company
unanimously determined, subject to the receipt of a fairness
opinion, that the Merger Agreement was in the best interests of
the Company and approved the execution and delivery of the
Agreement.
Terms of the Merger.
On the effective date of the Merger (the "Effective
Date"), Northeast will merge with and into Celcor, with Celcor
continuing as the surviving corporation. All of the common stock
of Northeast issued and outstanding immediately prior to the
consummation of the Merger (other than Dissenting Shares, if
any), will be converted into shares of Celcor Common Stock. All
of the Celcor Common Stock and Series C Preferred Stock which is
issued and outstanding immediately prior to the consummation of
the Merger will remain outstanding and will not change as a
result of the Merger. 3,364,674 shares of Celcor Common Stock
and 275,000 shares of Series C Preferred Stock are presently
outstanding. The Certificate of Incorporation of Celcor shall be
and remain the certificate of incorporation of the surviving
corporation and the by-laws of Celcor shall be the by-laws of the
surviving corporation.
Upon the Effective Date, each share of Northeast Common
Stock outstanding immediately prior to the Effective Date shall,
by virtue of the Merger, be converted into the right to receive
10,000 shares of Celcor Common Stock. Any shares of Northeast
Common Stock held by Celcor or Northeast on the Effective Date
shall be canceled and will be given no effect in the Merger. It
is anticipated that 1,750,000 shares of Celcor Common Stock will
be issued pursuant to the Merger. After giving effect to the
issuance of such shares, but excluding the shares of Celcor
Common Stock issuable upon the conversion of the Series C
Preferred Stock, the former Northeast stockholders will hold
approximately 34% of the outstanding Celcor Common Stock
(calculated before giving effect to the 825,000 shares of Celcor
Common Stock issuable upon the conversion of the outstanding
Series C Preferred Stock).
On or immediately after the Effective Date, each holder
of an outstanding certificate or certificates which prior thereto
represented shares of Northeast Common Stock, shall surrender the
same to Celcor. Each Northeast shareholder who shall have
surrendered its certificate representing shares of Northeast
Common Stock shall be entitled to receive, in exchange therefor,
a certificate or certificates representing the number of whole
shares of Celcor Common Stock into which the Northeast Common
Stock shall have been converted.
When the Merger becomes effective, the former
stockholders of Northeast shall thereupon cease to have any
rights in respect of Northeast Common Stock, other than the right
to receive the certificates for Celcor Common Stock. Unless and
until any certificates shall be so surrendered and exchanged, (i)
the holders of Northeast Common Stock shall not have any voting
rights in respect of the Celcor Common Stock into which the
shares of Northeast Common Stock shall have been converted, and
(ii) dividends or other distributions (if any) payable to holders
of record of shares of Celcor Common Stock shall not be paid to
the holder of the certificate. Upon surrender of the certificate
representing shares of Northeast Common Stock, the dividends or
other distributions which shall be or become payable subsequent
to the Effective Date with respect to the number of whole shares
of Celcor Common Stock represented by the certificate issued in
exchange for the surrendered Northeast certificate, shall be
paid, but without interest. No fraction of a share of Celcor
Common Stock will be issued pursuant to the Merger.
Business of Northeast
Northeast was organized in February, 1993 in the
expectation of pursuing business opportunities in China for the
production and distribution of pharmaceutical products and
cosmetics. The principal executive offices of Northeast are
located at 129-09 26th Avenue, Flushing, New York and the
telephone number at that address is (718) 886-3400.
In May, 1994, Northeast entered into a joint venture
agreement with Northeast General Pharmaceutical Factory
("Northeast General Pharmaceutical"), a state owned Chinese
pharmaceutical manufacturer located in Shenyang, China. Pursuant
to the joint venture agreement, the parties created Shenyang
United Vitatech as a Chinese limited company ("United Vitatech").
United Vitatech will have an initial capitalization of U.S. $5.75
million, U.S. $2.5 million to be contributed by Northeast General
Pharmaceutical and balance of U.S. $3.25 million to be provided
by Northeast through contributions of cash and technology. Of
the amount to be contributed by Northeast, U.S. $2.1 million will
be in cash (payable in three installments in July, 1994, June
1995 and December, 1995), with the balance of the capital to be
in the form of a contribution of proprietary technology and
formulae for the production of vitamin products. Of the amount
to be contributed by Northeast General Pharmaceutical, $750,000
will be in cash and the balance will consist of a contribution to
the venture of the development rights to build an office and
factory complex on an 84,000 square meter parcel of land located
in Shenyang, China. In exchange for its capital contribution,
Northeast received a 56% interest in the joint venture and elects
4 of 7 directors. In addition to the capital contributed by its
partners, the joint venture expects to obtain approximately U.S.
$4.25 million in additional financing from Chinese banks.
United Vitatech has received Chinese government
approval to produce a chewable Vitamin C tablet and is seeking
additional government approvals for a multi-vitamin and pre-natal
vitamin. The Vitamin C tablet is currently being manufactured
for the joint venture by Northeast General Pharmaceutical, but
once other products are approved, the joint venture intends to
construct its own factory in Shenyang to produce its own
products.
Under the current manufacturing agreement, Northeast
General Pharmaceutical provides labor and equipment to
manufacture the vitamins and Northeast provides managerial and
technical support. Plans to construct an office and factory
complex on the land contributed to the venture in Shenyang are
now being reviewed by Chinese regulatory authorities and it is
anticipated that construction will begin before the end of
calendar year 1995. The facility will be built in stages, with
an office complex to house managerial, technical, sales and
marketing personnel built first.
United Vitatech is also importing into China a soft gel
skin care series called Jennifer-E-18. This product comes in
heart shaped capsules which are broken open and applied to a
person's face. The principal ingredients of the product are
ginseng and Vitamin E. Test marketing of this product began in
Shenyang, China in March, 1995 and test marketing expanded to
Beijing in April, 1995. Limited distribution of this product has
also commenced in the United States.
Initially, United Vitatech will seek to distribute its
products primarily in Liao Ning Province and the surrounding
region. Located in northeast China, this region (formerly known
as Manchuria) has a population in excess of 200 million people
and is believed by the management of Northeast to be among the
most promising in China for the distribution of consumer
products. Northeast has initiated an advertising campaign for
its products on Chinese television and recognized the first
meaningful revenues in the second calendar quarter of 1995.
In addition to its participation in the joint venture,
Northeast is involved in importing and distributing bulk ascorbic
acid in the United States. Ascorbic acid, which is used to
manufacture synthetic vitamin C, is derived from corn. The
largest corn fields in China are located in the northeast region
of the country, making the region conducive to supporting the
growth of this business. Management of Northeast believes that
by producing this product in China, Northeast will gain a
significant price advantage over its much larger U.S. and
European competitors. Since July, 1994, Northeast has imported
and sold approximately 135 tons of ascorbic acid in the United
States. Its initial customers have been firms that sell bulk
chemicals to pharmaceutical companies. The bulk ascorbic acid
purchased by pharmaceutical companies will be processed and used
in vitamin products. Northeast also expects to begin selling the
ascorbic acid to food products companies, which use ascorbic acid
in juice products and as a preservative.
Northeast also owns a small parcel of land in Queens,
New York, which has been contributed to the corporation by one of
its shareholders in exchange for Northeast Common Stock. The
area in which the land is located is a mixed residential and
commercial neighborhood with a high concentration of Chinese
businesses and residents. Although it is not actively pursuing
the development at the present time, Northeast has plans to
develop this parcel as a combined residential and office facility
to provide living and office space to individuals from the
northeast region of China who are in New York for an extended
visit.
Recommendation of the Board of Directors.
The board of directors of Celcor unanimously approved
the Merger Agreement on July 11, 1995. The board believes that
the Merger is in the best interests of stockholders and
recommends that stockholders vote for the proposed Merger. The
current members of the Board of Directors are David Chow and
Stephen E. Roman, Jr., neither of whom are affiliated with
Majestic or Northeast.
Numerous factors were considered by the board in
approving and recommending that stockholders approve the Merger
Agreement. Most important of these factors is the manner in
which the board believes Northeast can help the Company achieve
its long-term objective (as expressed in the Company's strategic
plan) of entering into the pharmaceutical and cosmetics
industries in the People's Republic of China. The board believes
that, based upon the relationships which Northeast has with
important manufacturing and distribution partners in China,
Northeast will be able to provide the Company with unique access
to Chinese production facilities and markets.
The Board recognized that there are significant risks
associated with doing business in China, and in particular, in
concentrating the Company's future business activities in China.
Among the more significant risks are the great political and
economic instability prevailing in China including the ever-
changing political relationships between China and the United
States, the continuing evolution of the Chinese economy from pure
communism to a mixed economy, an uncertain legal and regulatory
environment, currency fluctuations and uncertainty concerning the
ability of the Company to repatriate its investment from China.
Nevertheless, the Board has concluded that the potential returns
available justify the level of risk being assumed.
Other factors considered by the Board included the
agreed upon exchange ratio and the tax-free nature of the
transaction to the stockholders of both companies for federal
income tax purposes. The board also evaluated and took into
consideration the following:
(i) the board's familiarity with the financial
condition, business prospects and strategic objectives of
Celcor. Since emerging from bankruptcy in the summer of
1992, the Company has been unable to conduct any operations
and has had no revenues. The Company is unable to enter
into a new line of business without a significant capital
infusion. The Board believes that a sale of the Company is
not feasible since the Company has no significant assets to
sell. Accordingly, the Board believes that it is in the
best interests of shareholders to merge with another
company. During the last three years, the Company has made
inquiries to identify other prospective merger partners, but
has been unable to locate any other company with an interest
in merging with the Company;
(ii) the trading history of Ceclor's Common
Stock;
(iii) the board's analysis of Northeast's
history, business, financial condition and prospects;
(iv) the familiarity which each of the directors
has with business conditions and opportunities and the
difficulties encountered by American companies in attempting
to do business in the People's Republic of China; and
(v) the terms and conditions of the Merger
Agreement, including that fact that the consideration will
consist of the issuance of additional shares of Common Stock
of the Company.
In addition, the directors met with Chartered Capital
Advisers, Inc., investment bankers retained by the Company to
evaluate the Merger from a financial point of view. Based upon
these discussions, and the analysis conducted by the investment
bankers, the investment bankers issued and the board considered
the fairness opinion provided by the investment bankers.
Fairness Opinion.
The Company has retained the investment banking firm of
Chartered Capital Advisers, Inc. ("Chartered Capital") to serve
as its financial advisor in connection with the Merger.
Chartered Capital provides merger and acquisition and
valuation services on behalf of corporate clients, investors,
financial institutions, investment funds, attorneys, the courts
and participants in employee benefit plans.
Chartered Capital has rendered its opinion to the board
of directors of Celcor that the terms of the Merger are fair to
the stockholders of Celcor from a financial point of view. In
reaching its conclusion, Chartered Capital considered, among
other things, certain financial and publicly available
information concerning the trading of, and the market for, the
Celcor Common Stock. Chartered Capital also reviewed various
documents with respect to Northeast, including, but not limited
to: (i) historical financial information; (ii) prospective
financial information; (iii) a business plan; (iv) manufacturing
and distribution agreements; (v) a technology agreement; and (vi)
a real estate development agreement. Chartered Capital reviewed
the Merger Agreement, and interviewed the management of each
company and their advisers. To evaluate the fairness of the
Merger, Chartered Capital considered various financial, economic,
and market information deemed to be relevant, including:
- The financial condition of Celcor;
- The historical market prices of Celcor Common Stock;
- The tangible and intangible assets of Northeast;
- The current value of the real estate owned by
Northeast;
- Capitalization multiples by publicly held companies
deemed to be relevant to the value of Northeast;
- Capitalization multiples that have been paid in
acquisitions deemed to be relevant to Northeast; and
- Discounted cash flow analysis.
In rendering its opinion, Chartered Capital relied,
without independent verification, on the accuracy and
completeness of the information concerning each corporation which
it considered necessary in rendering its opinion. Copies of the
written opinion, which describe the assumptions made and the
matters considered by such firm, is attached to this Proxy
Statement as Exhibit C and such opinion should be read by each
stockholder in its entirety.
Celcor has agreed to pay to Chartered Capital a fee of
$15,000 for its services in connection with the Merger. Of such
fee, $5,000 became payable at the time Chartered Capital was
retained, $5,000 was payable upon the completion of the valuation
analysis and the remaining $5,000 is payable at the time the
fairness opinion is delivered. Celcor has also agreed to
reimburse Chartered Capital for certain of its expenses and to
indemnify Chartered Capital against certain potential liabilities
and expenses, including liabilities under the federal securities
laws.
Additional Terms of the Merger Agreement.
The Merger Agreement provides for customary
representations and warranties by each party to the transaction
including, among others, (i) its due incorporation and
organization, (ii) capitalization, (iii) title and condition of
assets, (iv) material contracts, (v) absence of employee benefit
plans, (vi) licenses and permits, (vii) compliance with other
instruments, (viii) need for consents, (ix) compliance with laws,
(x) accuracy of financial statements,(xi) authority and
enforceability of Merger Agreement, and (xii) absence of
litigation.
Prior to the Effective Date (as defined in the Merger
Agreement), each corporation has agreed to conduct its business
only in the ordinary course of business and to provide access to
the other company to facilitate the completion of all necessary
due diligence investigations.
The obligations of Celcor and Northeast to consummate
the Merger are subject to the satisfaction of the following
conditions, among others, unless waived: (i) approval and
adoption of the Merger Agreement by the requisite stockholder
votes by the stockholders of each corporation, (ii) the absence
of any pending litigation or proceeding initiated by any
governmental authority to enjoin or prohibit the Merger, (iii)
the continued accuracy of the representations and warranties made
by the parties, (iv) the performance by each party of its
respective obligations under the Merger Agreement, and (v) the
receipt of certain opinions, certificates and consents.
The stockholders of Northeast are obligated to
indemnify Celcor against any claims, actions, suits, proceedings,
investigations and damages arising from or relating to (i) any
breach or failure of Northeast to perform any of its covenants or
agreements, (ii) the inaccuracy of any representation or warranty
made by Northeast, (iii) any fixed or contingent obligation or
liability not disclosed in Northeast's financial statements, and
(iv) any liability for taxes, other than those which were accrued
as liabilities by Northeast on its balance sheet.
Issuance of Restricted Shares.
The shares of Celcor Common Stock issuable pursuant to
the Merger will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), or the securities laws
of any state, but will be issued in reliance upon the exemption
from registration afforded by Section 4(2) of the Securities Act
and Regulation D promulgated by the Securities and Exchange
Commission thereunder and similar exemptions from registration
available under state securities laws. The shareholders of
Northeast will be required to make certain representations to
Celcor at the closing concerning the sophistication and
suitability of each such shareholder to acquire restricted
shares.
The Celcor Common Stock issuable to the Northeast
shareholders may not be sold or transferred in the absence of
registration under the Securities Act and applicable state
securities laws, or the availability of an exemption from such
registration requirements. Each certificate of Celcor Common
Stock issued pursuant to the Merger will bear an appropriate
restrictive legend prohibiting the transfer of such shares.
Effective Date of the Merger.
The Merger will become effective at the time that a
Certificate of Merger is filed in accordance with the Delaware
General Corporation Law and Articles of Merger are filed in
accordance with the New York Business Corporation Act. These
filings will be made within five days after the Merger Agreement
is approved by the stockholders of Celcor, unless the parties
agree to a later date.
Accounting Treatment.
The Merger will be accounted for by Celcor under the
purchase method of accounting in accordance with generally
accepted accounting principles. The Celcor Common Stock will be
valued using the book value of the net assets of Northeast in a
manner similar to a reverse acquisition.
The unaudited pro forma financial information contained
in this Proxy Statement has been prepared accounting for the
Merger as a purchase.
Federal Income Tax Consequences.
THE FOLLOWING IS A SUMMARY DESCRIPTION OF CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. THIS SUMMARY IS
NOT A COMPLETE DESCRIPTION OF ALL THE CONSEQUENCES OF THE MERGER.
THIS SUMMARY IS BASED UPON RELEVANT PROVISIONS OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE APPLICABLE
TREASURY REGULATIONS PROMULGATED THEREUNDER, JUDICIAL AUTHORITY
AND CURRENT ADMINISTRATIVE RULINGS AND PRACTICE, ALL OF WHICH ARE
SUBJECT TO CHANGE, POSSIBLY ON A RETROACTIVE BASIS. THIS SUMMARY
DOES NOT ADDRESS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY
BE RELEVANT TO PARTICULAR SHAREHOLDERS IN LIGHT OF THEIR PERSONAL
CIRCUMSTANCES, OR TO SHAREHOLDERS SUBJECT TO SPECIAL TREATMENT
UNDER THE CODE (FOR EXAMPLE, S CORPORATIONS, CERTAIN ESTATES AND
TRUSTS, INSURANCE COMPANIES, FOREIGN PERSONS, TAX EXEMPT
ORGANIZATIONS, TAXPAYERS SUBJECT TO THE ALTERNATIVE MINIMUM TAX,
FINANCIAL INSTITUTIONS, BROKERS, DEALERS OR HOLDERS THAT OWN 10%
OR MORE OF THE VOTING POWER OF NORTHEAST). THE COMPANY HAS NOT
REQUESTED A RULING FROM THE INTERNAL REVENUE SERVICE WITH RESPECT
TO THESE MATTERS.
EACH STOCKHOLDER'S INDIVIDUAL CIRCUMSTANCES MAY AFFECT
THE TAX CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER. IN
ADDITION, NO INFORMATION IS PROVIDED HEREIN WITH RESPECT TO THE
TAX CONSEQUENCES OF THE MERGER UNDER APPLICABLE FOREIGN, STATE OR
LOCAL LAWS. CONSEQUENTLY, EACH NORTHEAST STOCKHOLDER IS ADVISED
TO CONSULT ITS OWN TAX ADVISOR AS TO THE SPECIFIC IMPACT ON SUCH
STOCKHOLDER OF FEDERAL, FOREIGN, STATE OR LOCAL LAWS.
It is intended that the Merger will be treated as a tax-
free reorganization as defined in Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that,
accordingly, (i) no gain or loss will be recognized by the
stockholders of Northeast upon the exchange of their shares of
Northeast Common Stock solely for shares of Celcor Common Stock
pursuant to the Merger; (ii) the basis of the Celcor Common Stock
received by each stockholder of Northeast in exchange for shares
of Northeast Common Stock will be the same, immediately after the
exchange, as the basis of such stockholders' Northeast Common
Stock exchanged therefor, and (iii) the holding period for any
Celcor Common Stock received in exchange for Northeast Common
Stock will include the period during which the Northeast Common
Stock surrendered for exchange was held, provided such stock was
held as a capital asset on the date of the exchange.
A dissenting Northeast stockholder who receives only
cash for his shares of Northeast Common Stock will recognize gain
or loss for federal income tax purposes measured by the
difference, if any, between such holder's basis in the stock and
the amount received by him for his stock. The gain or loss will
be characterized for federal income tax purposes as capital gain
or loss or as ordinary income. The gain or loss will be
characterized as capital if (i) the holder's shares of Northeast
Common Stock are held as capital assets, and (ii) the holder
receives cash with respect to all shares of Northeast Common
Stock which he owns, including shares owned by application of the
attribution rules of Section 318 of the Code.
Section 318 of the Code provides, in part, that a
stockholder will be considered to be the owner of shares which
are owned by certain corporations, partnerships, trusts and
estates in which the stockholder has a beneficial ownership
interest, shares which such stockholder has an option to acquire,
and shares owned by certain members of his family (not including
brothers and sisters). Under certain circumstances, the
attribution rules with respect to shares attributed from a family
member may be waived.
Rights of Dissenting Stockholders.
Pursuant to Section 262 of the General Corporation Law
of the State of Delaware, a copy of which is attached hereto as
Exhibit A, any holder of Celcor Common Stock or Series C
Preferred Stock who objects to the Merger will be entitled to
exercise appraisal rights. That Section enables an objecting
stockholder to be paid, in cash, the value of his Celcor Common
Stock or Series C Preferred Stock, as applicable, as determined
by the Delaware Court of Chancery, provided that the following
conditions are satisfied:
(1) Such stockholder must file with the Company a
written demand for appraisal of his shares, separate and
apart from any proxy or vote against the Merger, before the
taking of the vote on the Merger.
(2) Such stockholder must not vote in favor of the
Merger, nor submit a proxy in which directions are not
given.
(3) Within 120 days after the Effective Date of the
Merger, either the Company or any stockholder who has
complied with Section 262 may, by petition filed in the
Delaware Court of Chancery, demand a determination by the
Court of the value of the shares of all objecting
stockholders with whom agreements as to the value of such
shares have not been reached.
Within 10 days after the Effective Date of the Merger, the
Company will notify each stockholder who has complied with
Section 262 and not voted for, or consented to, the Merger of the
date on which the Merger became effective.
Notwithstanding the foregoing, at any time within 60
days after the Effective Date of the Merger or thereafter, with
the written approval of the Company, any objecting stockholder
shall have the right to withdraw his demand for appraisal and to
accept the terms offered pursuant to the Merger, provided that no
appraisal proceeding in the Delaware Court of Chancery may be
dismissed without the approval of such Court. The costs of an
appraisal proceeding may be determined by such Court and taxed
upon the parties as the Court deems equitable under the
circumstances.
FAILURE BY A STOCKHOLDER TO FOLLOW THE STEPS REQUIRED
BY DELAWARE LAW FOR PERFECTING HIS DISSENTER'S RIGHTS WILL RESULT
IN THE LOSS OF SUCH RIGHTS.
SELECTED FINANCIAL DATA
FOR THE COMPANY AND NORTHEAST
The following is a summary of selected financial data
for the Company and Northeast. See the financial statements
included herein for more complete information.
CELCOR, INC.
The following financial information has been derived
from Celcor's financial statements for each of the fiscal years
set forth below, which statements are unaudited, except for the
fiscal years ended June 30, 1993 and 1994. The statements for
the fiscal year ended June 30, 1993 have been audited by Curchin
& Company, P.A., independent certified public accountants, as
indicated in their report included herein. The statements for
the fiscal year ended June 30, 1994 have been audited by BDO
Seidman, independent certified public accountants, as indicated
in their report included herein. The information for the years
ended June 30, 1992, 1991 and 1990 and for the nine months ended
March 31, 1994 and March 31, 1995 is unaudited but, in the
opinion of management of Celcor, includes all adjustments,
consisting of normal recurring adjustments, necessary to present
fairly the financial data for such periods. The following should
be read in conjunction with the financial statements and notes
related thereto included elsewhere herein.
<TABLE>
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
At March At March
31, 1995 31, 1994
and for and for
the nine the nine
months months At June 30 and for the year then ended
then ended then ended 1994 1993 1992 1991 1990
(unaudited------------------)
Revenues from
continuing operations - - - - - - -
Net loss before
discontinued
operations and
extraordinary
item.......... ($14) ($44) ($54) ($ 4) ($23) ($135) -
Net income (loss)(1) ( 41) (44) (54) (4) 2,010 (133) ($568)
Net loss per common
share before
discontinued opera-
tions and extraordinary
item................. (.01) (.01) (.02) - (.05) (.10) -
Net income (loss) per
common share (.01) (.01) (.02) - 1.30 (.10) (.35)
Working capital 725 (8) 765 19 (157) (2,166) (2,033)
Total assets 731 2 769 19 - 29 71
Total liabilities 6 53 4 25 157 2,195 2,104
Long-term debt and
redeemable
preferred stock - - - 25 - 139 200
Stockholders' equity 725 (51) 765 (6) (157) (2,166) (2,033)
Book value per share - - .
Dividends per common
share None None None None None None
_______
</TABLE>
(1) For the 1991 period, income from discontinued operations
totaled $1,501. For the 1992 period, discontinued operations
consisted of a $447,129 gain on the liquidation of a subsidiary
and a $1,585,184 gain on extinguishment of debt as an
extraordinary item.
The above information reflects the consolidated results
of Celcor, Inc. and The Pay Telephone Company, Inc. through the
1992 fiscal year. The Pay Telephone Company filed for
liquidation pursuant to Chapter 7 of the United States Bankruptcy
Code and was liquidated during the 1992 fiscal year. Effective
July 1, 1992, the Company adopted fresh start reporting standards
as a result of its reorganization under Chapter 11 of the
Bankruptcy Code. Consequently, the 1993 fiscal year and
subsequent periods may not be comparable to the earlier periods
reported above.
NORTHEAST (USA) CORP.
The following financial information has been derived
from Northeast's financial statements for each of the fiscal
years set forth below, which statements have been audited by BDO
Seidman, independent certified public accountants, as indicated
in their report included herein. The information for the nine
months ended March 31, 1995 and 1994 is unaudited but, in the
opinion of management of Northeast, includes all adjustments,
consisting of normal recurring adjustments, necessary to present
fairly the financial data for such periods. The following
should be read in conjunction with the financial statements and notes
related thereto included elsewhere herein.
<TABLE>
(In thousands)
<C> <S> <S> <S> <S>
At March 31, At March 31, At June 30
1995 and for 1994 and for At June 30 and and for the
the nine the nine for the year then ended
months then months then then ended 1993(1)
ended ended 1994
Revenues $ 488 -- -- --
Net income (loss) (304) (131) ($234) ($16)
Working capital 99 978 699 124
Total assets 3,777 2,908 3,416 136
Total liabilities 919 132 155 2
Long-term debt - - - -
Stockholders' equity 584 294 $841 134
Dividends per common None None None None
share
</TABLE>
_______________
(1) The date of inception of Northeast's operations was February, 1993
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CELCOR
Liquidity
Since its emergence from Chapter 11 Bankruptcy proceedings at the
beginning of its 1993 fiscal year, the Company has had no operations or
business. Subsequent to its reorganization, the Company had virtually no
assets or liabilities and its need for working capital has been minimal. At
the time of its emergence from bankruptcy, the Company was able to secure
$40,000 in loans from an unaffiliated investor, which was sufficient
to fund the Company's minimal administrative expenses. In order for the
Company to actively pursue its business plan to seek new business
opportunities, such as mergers, acquisitions or joint ventures, more
substantial permanent financing was required. In fiscal 1994, the
Company was able to obtain $780,000 in equity capital through the
private placementof the Series C Preferred Stock. The holder of the
$40,000 loan payable by the Company converted the loan and interest
payable thereon to shares of the Series C Preferred Stock, making the
total proceeds received from the Series C Preferred Stock issuance
$825,000. After the conclusion of the offering of the Series C Preferred
Stock, $700,000 of the proceeds was loaned to Northeast. The Company
believes that if the Merger with Northeast is consummated (see Note 7 to the
Company's Financial Statements), the Company will require significant
additional capital to fund its obligations under the joint venture
agreement with Northeast General Pharmaceutical, to pay ongoing
operating expenses and to support the Company's working capital needs.
In the event the Merger is not consummated, the Company believes that
its liquidity and cash resources are sufficient for its current needs.
Statement Of Operations
Fiscal Year 1993 Compared to Fiscal Year 1994
During its 1993 fiscal year, the Company had no operations and
maintained its corporate existence with minimal administrative expenditures.
The 1993 fiscal year loss was reduced by proceeds of $5,250 derived from
the sale of an asset. During the 1994 fiscal year, the Company was more
actively involved in seeking new business opportunities. Additionally,
the Company distributed an annual report, solicited proxies,
effectuated a one for five reverse stock split and held an annual
meeting, none of which occurred in the 1993 fiscal year. Costs
relating to these activities generated a substantial portion of
the net loss for fiscal 1994.
Nine Months ended March 31, 1994
Compared to Nine Months Ended March 31, 1995
In both nine month periods, the Company had no ongoing
operations and no revenues. It incurred a relatively modest
amount of expenses in order to maintain its corporate existence
(SEC filings, tax returns, audit expense and stock transfer
fees). The Company also incurred legal, accounting and
administrative expenses in connection with the anticipated merger
with Northeast. (See Note 7 to the Company's Financial
Statements). While the nine month 1994 fiscal period loss was
reduced by a $5,250 gain on the sale of an asset, the loss for
the nine months ended March 31, 1995 was similar to the loss for
the first nine months of the 1994 fiscal year.
NORTHEAST (USA) CORP.
Results of Operations
Nine months ended March 31, 1994
Compared to the nine months ended March 31, 1995.
For the nine months ended March 31, 1994, Northeast had
no revenues from operations. During this period Northeast was in
the process of establishing its operations, both in the U.S. and
in Shenyang, China. The loss is primarily the result of general
and administrative expenses incurred for this purpose.
For the nine months ended March 31, 1995, Northeast
recognized its first revenues, primarily a result of sales of
bulk ascorbic acid (vitamin C), which it purchased in China and
resold in the United States. As Northeast prepared a selling
effort for its Chinese subsidiary to market its cosmetics
products, selling expenses were incurred with little revenue
being realized from this source. As in the 1994 period,
Northeast continued to incur substantial general and
administrative expenses which were necessary for it to continue
to build its organization. The incurrence of these expenses was
the primary contributor to the net loss for the period.
Financial Condition and Liquidity
While Northeast had a cash balance of $553,000 at March
31, 1995, it believes that additional capital will be required to
carry out its business plans. Northeast believes that much of
its ability to raise additional capital will be dependent upon
its ability to consummate the proposed Merger with Celcor (see
Note 2 to Northeast's financial statements). Should the Merger
be consummated, the combined Company would have a greater ability
to raise additional capital through a private placement and/or
public offering of debt or equity securities. It is believed
that sufficient capital can be raised in this manner to allow the
combined company to operate to the point of achieving profitability
and positive cash flow from operations. Notwithstanding the above,
Northeast must fund the following cash requirements in the foreseeable
future:
1. Pursuant to the terms of the joint venture
agreement under which Northeast's majority owned subsidiary,
United Vitatech, was formed, Northeast must make additional cash
investments in United Vitatech according to the following
schedule:
By June 30, 1995 - U.S. $600,000
By December 31, 1995 - 500,000
Total additional cash investment
required U.S. $1,100,000
The capital contribution scheduled to be made on June 30, 1995
has been deferred until United Vitatech's cash requirements
generate a need for the additional capital contribution.
Northeast has obtained a verbal commitment from a private
investor to make a loan to Northeast to enable Northeast to
satisfy its $600,000 obligation to United Vitatech. It is
anticipated that should the Merger with Celcor take place, this
Loan will be converted into Celcor Common Stock. No terms for
any such conversion have been discussed. Should the Merger not
be consummated, Northeast has no current identifiable source to
repay this loan, other than to issue additional stock of
Northeast.
2. On October 31, 1995, a note in the amount of
$700,000 payable to Celcor will come due. Should the Merger with
Celcor be consummated, the note will be cancelled. Should the
Merger not be consummated by October 31, 1995, but still be in
progress, it is anticipated that Celcor will extend the due date.
If the Merger is never consummated and Northeast is unable to
repay the note, Celcor will have the right to exercise its
remedies under the terms of a pledge agreement whereby the
Northeast shareholders pledged their shares of Northeast to
Celcor as security for the note. In such event, Celcor would
have the right to acquire the shares itself or sell them to a
third party.
3. Northeast believes it will require approximately
$2.0 million in working capital to fund losses and to fulfill its
obligations to the joint venture until such time as its
operations become profitable and/or cash flow positive. At
present, Northeast is dependent upon the future ability of the
combined Celcor/Northeast company to raise capital for this
purpose.
PROPOSAL TWO
ELECTION OF DIRECTORS
Nominees
The holders of Celcor Common Stock will elect seven
directors at the special meeting, each of whom will be elected
for a one year term. Unless a stockholder either indicates
"withhold authority" on his proxy or indicates on his proxy that
his shares should not be voted for certain nominees, it is
intended that the persons named in the proxy will vote for the
election of the persons named in the table below to serve until
the expiration of their terms and thereafter until their
successors shall have been duly elected and shall have qualified.
Discretionary authority is also solicited to vote for the
election of a substitute for any of said nominees who, for any
reason presently unknown, cannot be a candidate for election.
The Board of Directors has no reason to believe that any of the
nominees will be unavailable for election. Directors will be
elected by a plurality of the votes cast at the Special Meeting.
Each of the nominees named below has consented to being
named as a nominee in this Proxy Statement and has agreed to
serve as a director at the Special Meeting, but such consent is
conditioned upon the approval of the Merger by stockholders.
The table below sets forth the names and ages (as of
July ____, 1995) of each of the nominees, the other positions and
offices presently held by each such person with the Company, the
period during which each such person has served on the board of
directors of the Company, and the principal occupations and
employment of each such person during the past five years.
DIRECTOR
OF THE
NAME AGE PRESENT POSITION COMPANY
SINCE
Stephen E. Roman, 47 Director 1994
Jr.(1)
David Chow (2) 35 Director 1993
Eugene Cha (3) 38 -- --
Frank Nelson (4) 73 -- --
Jennifer Lo Wu (5) 42 -- --
Chin-Sung (Joe) Chen(6) 43 -- --
Michael Hsu (7) 55 -- --
_______________
(1) Mr. Roman was elected to the Board of Directors of the
Company in June, 1994. He has served as president and
secretary since June of 1994 on a part-time basis. Was vice
president - finance and chief financial officer since 1984
and served in this capacity on a part-time basis from
October, 1989 to June, 1994. Mr. Roman is a certified
public accountant and is self-employed. Mr. Roman is also
the chief financial officer of a privately held company
involved in the personal security industry and has a number
of other business interests. Mr. Roman beneficially owns
16,153 shares of Celcor Common Stock.
(2) David Chow is Managing Director of Center Laboratories,
Taiwan, and Center Pharmaceutical Co., Ltd., People's
Republic of China. Additionally, Mr. Chow is Chairman of
the Taiwan Pharmaceutical Association, Director of the China
Pharmaceutical Development Association and Director of the
GMP Committee of the China Pharmaceutical Industrial
Association. Mr. Chow does not beneficially own any shares
of Celcor Common Stock.
(3) Eugene Cha is an attorney and since 1987 had been a partner
in the law firm of Cha & Pan, a firm with offices in New
York and China. He holds law degrees from both National
Taiwan University and the University of Michigan. He is
also a member of the National Assembly of the Republic of
China. Mr. Cha does not beneficially own any shares of
Celcor Common Stock.
(4) Frank A. Nelson is president of Zhou Lin International, Inc.
and has served in this capacity for more than 12 years.
Zhou Lin is a medical devices manufacturing and marketing
company. From 1988 to 1994, Mr. Nelson was also president
of Natural Pharmaceutical International, Inc., a natural
pharmaceutical products research and development company.
Since January, 1994, Mr. Nelson has also served as Chairman
of Health Guard International, Inc., a health food
manufacturing and marketing company. Mr. Nelson does not
beneficially own any shares of Celcor Common Stock.
(5) Jennifer Lo Wu is a trained pharmacist and from February,
1993 until the present date has served as chairperson of
Northeast. Ms. Wu also serves as chairperson of Shenyang
United Vitatech Ltd., Northeast's Chinese joint venture.
Prior to her association with Northeast, Ms. Wu was a real
estate agent in Flushing, New York. Ms. Wu is married to
Dr. Nanshan Wu, the president of Northeast. Ms. Wu is the
sole shareholder of Lyncroft Corp., which owns 123,630
shares of Celcor Common Stock and 10 shares of Northeast
Common Stock.
(6) Chin-Sung (Joe) Chen is presently general manager of Hyscios
Pharmacy International Co., Ltd., a distributor of
pharmaceutical products based in Taipei, Taiwan. Prior to
his association with Hyscios, Mr. Chen was employed for
approximately 16 years by Lederle, where he served in a
variety of increasing responsible positions. From April,
1991 to November, 1993, Mr. Chen was national marketing
manager of Lederle Taiwan. Mr. Chen does not beneficially
own any shares of Celcor Common Stock.
(7) Michael Hsu has served as a part time vice-president-finance
of the Company since June 1994. Mr. Hsu is also a self-
employed certified public accountant and has been engaged in
this capacity for more than the last 5 years. Mr. Hsu does
not beneficially own any shares of Celcor Common Stock.
Presently, the Company has two directors - David Chow
and Stephen E. Roman, Jr., both of whom are standing for re-
election. The last meeting of stockholders of the Company at
which directors were elected was held on November 20, 1993. At
the time, stockholders elected Paul Siu, David Chow and Hong Yuan
Shi to serve as directors. On May 18, 1994, Mr. Shi resigned as
a director and on May 23, 1994, Mr. Siu resigned as a director.
Mr. Roman was elected to the Board in June, 1994 by Mr. Chow, the
remaining director, following the resignation of Messrs. Shi and
Siu, each of whom resigned because of an inability to participate
as board members in a meaningful way. Mr. Shi is the deputy
managing director of Northeast General Pharmaceutical Factories
Group and chief economist and general director of Northeast
General Pharmaceutical Factory. As a resident of China, Mr. Shi
was unable to attend meetings of the Board. Mr. Siu resigned for
personal reasons to pursue other opportunities. The board of
directors does not presently have an audit, compensation or
nominating committee. There was one meeting of the board of
directors during the fiscal year ended June 30, 1995, which was
attended by Mr. Roman and Mr. Chow (either in person or by
proxy).
Executive Compensation
During the Company's fiscal year ended June 30, 1995,
Mr. Roman received an aggregate of $15,750 in compensation from
the Company. This amount includes all cash and non-cash
compensation, bonuses, deferred compensation and perquisites. No
other compensation of any kind was paid to any executive officer
or director of the Company. The Company does not presently have
any long-term incentive plan, deferred compensation plan, stock
option or stock grant plan, pension plan or other benefit plans.
The Company does not presently have any employment contracts,
termination of employment, or change in control arrangements with
any of its executive officers.
Under the terms of the Merger Agreement, the following
persons have been designated to serve as executive officers of
the Company following the consummation of the Merger:
Name Age Title
Dr. Nanshan Wu President
Stephen E. Roman, Jr. 47 Vice president,
secretary and chief
financial officer
Michael Hsu 55 Treasurer
Information concerning Mr. Roman has been provided
above. Mr. Hsu is and for the last five years has been a self-
employed certified public accountant. He has served without
compensation as vice president - finance and treasurer of the
Company since June 1994 on a part-time basis. Dr. Wu presently
serves as the president of Northeast and has served in this
capacity since Northeast was first organized in February, 1993.
Dr. Wu is also an obstetrician/gynecologist and for the last five
years has maintained an active medical practice.
Section 16 Compliance
Based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to Celcor, Celcor believes that
Messrs. Chow and Hsu have not yet filed Form 3s required to be
filed by them as officers or directors of the Company. Neither
individual owns any shares of Celcor Common Stock. Celcor
understands that such forms have been prepared and will be filed
shortly. In addition, Celcor believes that Majestic
International, Inc., Shenyang Tianfa Social Service Company and
Verchi Holdings Limited, each of which is believed to be the
beneficial owner of more than 10% of the outstanding Celcor
Common Stock, have not filed any required Form 3 or Form 4.
Celcor understands that such forms have been prepared and are
expected to be filed shortly.
COMMON STOCK OF THE COMPANY
Market Price Information
The Company's Common Stock is traded over-the-counter
and its quotations are carried in the National Quotation Bureau's
daily "Pink Sheets".
The following table shows the range of high and low bid
or last trade quotations for the Company's Common Stock in the
over-the-counter market as reported to the Company by the
National Quotation Bureau Incorporated. No review of the daily
Pink Sheets for the periods indicated has been undertaken by the
Company. The quotations reflect prices between dealers, without
retail mark-ups, mark-downs or commissions and may not
necessarily represent actual transactions or be indicative of
prices at which the Company's stock was traded. In November of
1993, the Company effected a reverse stock split on a one for
five basis. All bids reflected below have been adjusted to give
effect to the reverse split.
FISCAL YEAR FISCAL QTR. ENDED LOW BID HIGH BID
1993 September 30, 1992 .05 .10
December 31, 1992 .01 .05
March 31, 1993 .01 .03
June 30, 1993 .001 .02
1994 September 30, 1993 .005 .05
December 31, 1993 .02 .025
March 31, 1994 .05 .05
June 30, 1994 .25 .31
1995 September 30, 1994 .12 1.25
December 31, 1994 .25 .87
March 31, 1995 .25 .87
On August 12, 1994, the day prior to the first reported
announcement of the Merger, the low bid and high ask price for
Celcor Common Stock was $1.00 and $2.00, respectively. On March
17, 1995, the day prior to the signing of the definitive Merger
Agreement, the low bid and high ask price was $.25 and $2.25,
respectively.
The number of record holders of the Company's Common
Stock, as of March 31, 1995, was approximately 370. However, the
Company believes that there may be substantially more beneficial
holders.
Dividend Policy.
The Company has not paid any dividends on its Common
Stock since its inception. The Company anticipates that for the
foreseeable future, earnings, if any, will be retained for use in
the business or for other corporate purposes, and it is not
anticipated that cash dividends will be paid on its Common Stock.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of
Celcor Common Stock owned by each person who, as of March 31,
1995, owned of record, or was known by the Company to own
beneficially, more than 5% of the outstanding shares of Celcor
Common Stock, as well as the ownership of Celcor Common Stock by
each current director of the Company, each nominee for director
and the shares beneficially owned by all current executive
officers and directors as a group.
Name and Address of Amount and Nature
Beneficial Owner of Beneficial Percent of
Ownership Class
Majestic 648,400 19.4%
International, Inc.
227 Gloucester Rd.
Wan Chi, Hong Kong
Shenyang Tianfa 450,000 13.5%
Social Service Company
No 37 Zhong Gong Bei
Street
Tiexi District
Shenyang, Peoples
Republic
of China
Verchi Holdings 550,000 16.5%
Limited
Room 312, Entrance 3,
Bldg 14, Compound 3,
Jingouhe Road
Wukesong - Haidian
District
Beijing, Peoples
Republic of
China
Barbara Edwards 219,810 6.53%
800 Palisades Avenue
Fort Lee, NJ 07024
Builtland Partners 171,800 (1) 5.1%
1271 Ave. of the
Americas
Suite 4200
New York, NY
David Chow -- --
Shinwi Road
Section 2
No. 34
6th Floor
Taipei, Taiwan
Stephen E. Roman, Jr. 16,153 --
1800 Bloomsbury
Avenue
Ocean, New Jersey
Eugene Cha -- --
c/o Cha & Pan
36 W. 44th Street
New York, New York
10036
Frank A. Nelson -- --
4296 Lares Circle
Salt Lake City, Utah
84124
Jennifer Lo Wu 123,620 (2) 3.67%
129-09 26th Avenue
Suite 202
Flushing, NY 11355
Chin-Sung Chen -- --
Peian Rd.
No. 21, Lane 595
3rd Floor
Taipei, Taiwan
Michael Hsu -- --
136-21 Roosevelt
Avenue
Flushing, NJ 11354
Executive Officers 16,153 --
and Directors as a
group (3 persons)
_______________
(1) Includes 34,800 shares held by the Milstein Foundation, an
affiliate of Builtland. Builtland Partners is a partnership
comprised of the following partners: Seymour Milstein,
Howard Milstein, Paul Milstein (a former director of the
Company), Philip Milstein, Edward Milstein, Barbara
Zalaznik, Dr. Roslyn Meyer and Constance Lederman.
(2) Includes shares owned by Lyncroft Corp., a corporation of
which Ms. Wu is the sole shareholder.
Certain Relationships and Related Party Transactions
Celcor and Northeast may be deemed to be related
parties by virtue of certain family inter-relationships among the
individuals controlling the two companies. Mr. Su Shi Lo is the
controlling shareholder of Majestic, which, in turn, is the
largest shareholder of the Company, holding 19.4% of the
outstanding shares of Celcor Common Stock. Mr. Lo's daughter,
Jennifer Lo Wu is the chairperson and her husband, Dr. Nanshan
Wu, is the president of Northeast. In addition, Jennifer Lo Wu
is the sole shareholder of Lyncroft Corp., a shareholder of both
Northeast and Celcor.
In August, 1994, the Company made a loan to Northeast
in the amount of $700,000, which was used by Northeast to fund a
portion of its obligation to contribute capital under the joint
venture agreement with Northeast General Pharmaceutical. The
loan is evidenced by a promissory note dated August 9, 1994. The
loan is on an interest free basis until November, 1995 and
thereafter accrues interest at an annual rate of fifteen (15%)
per annum. The Company has obtained a stock pledge from the
stockholders of Northeast whereby all of the outstanding stock of
Northeast secures the repayment of the loan. At the time the
Merger is consummated, the loan will be cancelled. If the Merger
is not consummated and Northeast is unable to repay the loan at
maturity, the Company will be entitled to exercise its remedies
under the Pledge Agreement.
PROPOSAL THREE
RATIFICATION OF ISSUANCE OF SERIES C PREFERRED STOCK; APPROVAL OF
AMENDMENT TO CERTIFICATE OF INCORPORATION
In May and June of 1994, the Company issued and sold
275,000 shares of a new series of preferred stock, designated as
Series C 8% Convertible Preferred Stock ("Series C Preferred
Stock"). The shares were issued at $3.00 per share and resulted
in gross proceeds to the Company of $825,000. The Series C
Preferred Stock was issued to a group of individual investors in
a private placement.
The Series C Preferred Stock provides for the payment
of cumulative dividends at an annual rate of 8%. Each share is
convertible at any time after July 1, 1994 and prior to June 30,
1997 into three shares of Celcor Common Stock, subject to
adjustment in certain circumstances. The holders of the Series C
Preferred Stock generally do not vote on any matter submitted to
stockholders for a vote. For more information concerning the
rights, preferences and limitations of the Series C Preferred
Stock, see "Description of Capital Stock of the Company -
Description of Series C 8% Convertible Preferred Stock."
The Certificate of Incorporation of the Company
authorizes the issuance of 2,000,000 shares of preferred stock.
Section 151(g) of the Delaware General Corporation Law provides
that a board of directors may establish the powers, designations,
preferences and relative rights of a new class or series of
capital stock if expressly authorized to do so by the certificate
of incorporation. Although the Company believes that this
authority was intended by the Company's Certificate of
Incorporation, there is no express delegation to the board of
power to specify the relative rights and preferences of the
Series C Preferred Stock. Accordingly, the board is asking
shareholders to ratify (i) the creation of the Series C Preferred
Stock, and (ii) the issuance by the Company of 275,000 shares of
such class.
The Company is also seeking stockholder approval to
amend its Certificate of Incorporation to insert express language
confirming the right of the board, in the future, to create one
or more additional series or classes of capital stock, each
containing such powers, designations, preferences and relative
rights as may be established by the board. The Company has no
present plans to issue any additional shares of preferred stock
of any class or series; however, as the Company's business
expands following the Merger, it will face a continuing need for
capital. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." A copy of the proposed
Amendment is annexed hereto as Exhibit E.
The board believes that such authority is necessary in
order to ensure that the Company has sufficient flexibility to
create new securities, as needed, on an expeditious basis, in
order to meet the Company's needs. Accordingly, the board
recommends that stockholders vote in favor of this proposal. The
affirmative vote of a majority of the outstanding shares of
Celcor Common Stock is required for the approval of this
proposal.
This authority would remain subject to the limitation,
presently contained in the Certificate of Incorporation, limiting
the aggregate number of shares of preferred stock which may be
issued to 2,000,000.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
The authorized capital stock of the Company consists of
20,000,000 shares of Celcor Common Stock and 2,000,000 shares of
preferred stock, $.001 par value (the "Preferred Stock"). The
following summary is qualified in its entirety by reference to
the Company's Restated Certificate of Incorporation, a copy of
which is available for inspection at the Company's executive
offices. The discussion below assumes that stockholders approve
the proposed amendment to the Company's certificate of
incorporation, described above under the caption "Proposal Three
- - Ratification of Issuance of Series C Preferred Stock; Approval
of Amendment to Certificate of Incorporation."
Celcor Common Stock
Subject to the prior rights, if any, of holders of the
Preferred Stock, the holders of Celcor Common Stock have equal
rights to dividends when, as and if declared by the board of
directors, from funds legally available therefor. Holders of
Celcor Common Stock do not have any pre-emptive rights, nor are
any shares subject to redemption. Upon liquidation, dissolution
or winding up of the Company, and after payment to creditors and
subject to the rights of the holders of Preferred Stock, the
assets will be divided pro rata on a share-for-share basis among
the holders of the shares of Celcor Common Stock. All shares of
Celcor Common Stock now outstanding, and shares to be outstanding
upon consummation of the Merger, are and will be fully paid,
validly issued and nonassessable.
The holders of Celcor Common Stock exercise all of the
voting power, except as required by law or as specifically
reserved to other classes upon the occurrence of certain events
as described below. Each share of Celcor Common Stock allows the
holder thereof to one vote. Holders of the Celcor's Common Stock
do not have cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of
directors can elect all of the directors and, in that event, the
holders of the remaining shares will not be able to elect anyone
to the board of directors.
The Company has never paid any dividends to holders of
Celcor Common Stock. It is the present intention of the Company
not to pay any cash or stock dividends on Celcor Common Stock for
the foreseeable future.
Preferred Stock
Shares of Preferred Stock are issuable from time to
time in one or more series and with such designations, powers,
preferences, rights, qualifications, limitations, or restrictions
as may be determined by the board of directors, consistent with
the Certificate of Incorporation, and with the laws of the State
of Delaware. Unless the nature of a particular transaction and
the rules of law applicable thereto require such approval, the
board of directors has the authority to issue these shares
without stockholder approval. The board of directors, without
stockholder approval, can thus issue preferred stock with voting
and conversion rights which could adversely affect the voting
power of the common stockholders. The Preferred Stock could thus
be used to discourage the acquisition of the Company or its
Common Stock. The Company has no present plans, arrangements,
commitments or understandings to issue any additional Preferred
Stock.
Series A and Series B Preferred shares have previously
been retired or converted as applicable.
Description of Series C 8% Convertible Preferred Stock
Dividends
Holders of Series C Preferred Stock have a preference
in the payment of dividends over the payment of dividends on
Celcor Common Stock, or any other class of Celcor stock junior to
the Series C Preferred Stock with respect to dividends (other
than a dividend payable in the form of Celcor Common Stock or
such other junior stock). Dividends are cumulative and payable
quarterly on the last day of March, June, September and December
at a rate of $0.24 per annum per share out of funds legally
available therefor.
Preemptive Rights
Holders of Series C Preferred Stock are not entitled to
preemptive or subscriptive rights for the purchase of additional
shares of any class of Celcor capital stock.
Liquidation
If Celcor voluntarily or involuntarily liquidates,
dissolves or winds-up (any of the above referred to as a
"Liquidation") the holders of Series C Preferred Stock will have
a preference of $3.00 per share, plus all dividends accrued and
unpaid thereon, whether or not declared, to the date of payment,
or such lesser amount remaining after the claims of all creditors
have been satisfied, before any payments will be made with
respect to Celcor Common Stock or any other class of Celcor stock
ranking junior to the Series C Preferred Stock as to payment upon
liquidation. In the event that, upon any such Liquidation, the
available assets of Celcor are insufficient to pay the
liquidation preference on the outstanding shares of Series C
Preferred Stock, the holders of all such shares will share
ratably in any distribution of assets in proportion to the full
amounts to which they would otherwise be respectively entitled.
Redemption
Shares of Series C Preferred Stock will be redeemable,
in whole or in part, at any time after July 1, 1996, at the
option of the board of directors of Celcor, at $4.50 per share
plus all dividends accrued and unpaid on such shares to the date
of redemption. If any proposed redemption shall be of less than
all of the outstanding shares of Series C Preferred Stock, the
redemption shall be effected pro rata according to the number of
shares held by each holder of such shares.
Conversion
Holders of shares of Series C Preferred Stock have the
right, at their option, at any time during the period beginning
July 1, 1994 and ending on June 30, 1997 (unless the shares have
been called for redemption, in which case such period shall end
on, but not after, the close of business on the date fixed for
redemption) (the "Conversion Period"), to convert each share of
Series C Preferred Stock into three shares of fully paid and non-
assessable shares of Celcor Common Stock. Shares of Celcor
Common Stock will be delivered, and the person exercising such
option will be deemed to be the holder of shares of Celcor Common
Stock, upon surrender to Celcor, or its transfer agent appointed
for such conversion, of the certificate or certificates
representing shares of Series C Preferred Stock being converted.
Upon conversion, no allowance or adjustment will be made with
respect to the dividends upon either class of Celcor stock.
Shares of Series C Preferred Stock that have been converted will
not be reissued.
The number of shares of Celcor Common Stock issuable
upon conversion of a share of Series C Preferred Stock is subject
to adjustment (to the nearest one-hundred thousandth (1/100,000)
of a share, or the nearest one one-thousandth (1/1,000) of one
cent, as appropriate) in certain events, including (i)
subdivision, combination, reclassification or split-up of Celcor
Common Stock; (ii) the issuance of Celcor Common Stock as a
dividend on Celcor Common Stock; (iii) the issuance or sale of
Celcor Common Stock (excluding certain shares described below)
including an issuance or sale by way of the issuance of options
or rights to subscribe for shares of Celcor Common Stock or the
issuance of securities convertible into, exchangeable for, or
carrying rights of purchase of, shares of Celcor Common Stock,
for a consideration per share other than the Conversion Price
then in effect. The Conversion Price is an amount equal to the
number of shares of Celcor Common Stock into which one share of
Series C Preferred Stock will be converted, divided by three
dollars ($3.00) and is initially set at one dollar ($1.00).
Notwithstanding the above, no adjustment will be made to the
number of shares of Celcor Common Stock issuable upon conversion
of Series C Preferred Stock upon the issuance of shares pursuant
to options or stock purchase agreements granted to, or entered
into with, officers and employees of Celcor, or of any subsidiary
thereof, provided that the number of shares so issued does not
exceed 300,000 shares of Celcor Common Stock, as such number of
300,000 shares shall be adjusted in the case of subdivision,
combination, reclassification, split-up or stock dividend of the
outstanding shares of Celcor Common Stock. Except as described
above, no adjustment will be made to the number of shares of
Celcor Common Stock issuable upon conversion of Series C
Preferred Stock.
No adjustment in the conversion rate will be required,
however, unless such adjustment (aggregated with any other
adjustments calculated, but not previously effected by reason of
this limitation) would require an increase or decrease in the
Conversion Price of at least ten cents ($0.10). Any calculated
adjustment not effected because of this limitation, however, will
be carried forward and taken into account in any subsequent
adjustment.
Voting
Holders of Celcor Series C Preferred Stock have no
voting rights, except as provided by law and except that, so long
as any shares of Celcor Series C Preferred Stock are outstanding,
Celcor may not, without the consent of the holders of at least 66
2/3% of the aggregate number of shares of Celcor Series C
Preferred Stock then outstanding:
(i) alter or change the preferences, special rights or
powers of the Celcor Preferred Stock so as to adversely
affect the Celcor Series C Preferred Stock; or
(ii) consolidate or merge with or into another
corporation (whether or not Celcor is the surviving
Corporation), or sell all or substantially all of its assets
to another corporation, unless in connection therewith,
lawful and adequate provision is made whereby the holders of
Celcor Series C Preferred Stock shall receive the right to
convert during the Conversion Period (as defined above) into
the kind and amount of shares of stock and other securities
to be received by holders of the number of shares of Celcor
Common Stock into which the Celcor Series C Preferred Stock
might have been converted immediately prior to such
consolidation, merger or sale, which right is subject to
adjustment as described above.
Experts
The audited financial statements of Celcor and
Northeast included in this proxy statement have been audited by
BDO Seidman, LLP, independent certified public accountants, to
the extent and for the periods indicated in their reports,
appearing elsewhere herein, and are included herein in reliance
upon such reports given upon the authority of said firm as
experts in accounting and auditing. The audited financial
statements of Celcor included in this proxy statement for its
fiscal year ended June 30, 1993 have been included herein in
reliance upon the report of Curchin & Company, P.A., independent
certified public accountants, upon the authority of said firm as
experts in accounting and auditing.
Presence of Accountants
at Special Meeting
Representatives of BDO Seidman, the Company's
independent accountants for the Company's current and most
recently completed fiscal years, are not expected to be present
at the Special Meeting, but will be available by telephone to
respond to appropriate questions of stockholders.
Other Matters
At the time that this Proxy Statement was mailed to
stockholders, management was not aware of any matter, other than
the matters described herein, that would be presented for action
at the Special Meeting. If other matters properly come before
the Special Meeting, it is intended that shares represented by
proxies will be voted with respect to those matters in accordance
with the best judgment of the persons voting them.
If a stockholder intends to present a proposal at the
next Annual Meeting of Stockholders, the proposal must be
received by the Company in writing no later than ______, 1995, in
order for such proposal to be eligible for inclusion in the
Company's Proxy Statement and form of proxy for next year's
meeting.
By Order of the Board of Directors
Stephen E. Roman, Jr., Secretary
Dated: September ___, 1995
<\PAGE>
<PAGE> Celcor, Inc./Northeast (USA) Corp.
Index to Financial Statements
Celcor, Inc. Pro Forma Condensed Consolidated Financial
Statements - Unaudited:
Introduction F-3
Balance sheet as of March 31, 1995 F-4
Statements of operations for the nine months ended
March 31, 1995 and year ended June 30, 1994 F-5 - F-6
Notes to pro forma condensed consolidated
financial statements F-7
Celcor, Inc. Financial Statements - Audited:
Report of independent certified public accountants F-8 - F-9
Balance sheet as of June 30, 1994 F-10
Statements of operations for the years ended
June 30, 1994 and 1993 F-11
Statements of stockholders' equity for the years ended
June 30, 1994 and 1993 F-12
Statements of cash flows for the years ended
June 30, 1994 and 1993 F-13
Notes to financial statements F-14 - F-17
Celcor, Inc. Financial Statements - Unaudited:
Balance sheet as of March 31, 1995 F-18
Statements of operations for the nine months ended
March 31, 1995 and 1994 F-19
Statements of cash flows for the nine months ended
March 31, 1995 and 1994 F-20
Notes to financial statements F-21
Northeast (USA) Corp. Consolidated Financial Statements -
Audited:
Report of independent certified public accountants F-22
Balance sheet as of June 30, 1994 F-23
Statements of operations for the year ended
June 30, 1994 and periods from February 24, 1993
(inception) to June 30, 1993 and 1994 F-24
Statements of stockholders' equity for the period
from February 24, 1993 (inception) to June 30, 1993
and year ended June 30, 1994 F-25
Statements of cash flows for the year ended
June 30, 1994 and the periods from February 24, 1993
(inception) to June 30, 1993 and 1994 F-26
Summary of accounting policies F-27 - F-28
Notes to consolidated financial statements F-29 - F-31
Northeast (USA) Corp. Consolidated Financial Statements -
Unaudited:
Balance sheet as of March 31, 1995 F-32
Statements of operations for the nine months ended
March 31, 1995 and 1994 F-33
Statements of cash flows for the nine months ended
March 31, 1995 and 1994 F-34
Notes to consolidated financial statements F-35
Celcor, Inc. Unaudited Pro Forma Condensed Consolidated Financial
Statements
Introduction
The following unaudited pro forma condensed consolidated balance
sheet as of March 31, 1995, and the unaudited pro forma condensed
consolidated statements of operations for the nine months ended
March 31, 1995 and the year ended June 30, 1994 reflect the pro
forma condensed consolidated financial statements of Celcor, Inc.
giving effect to the pro forma adjustments described herein as
though the merger with Northeast (USA) Corp. had been consummated
at March 31, 1995 for the condensed consolidated balance sheet
and at July 1, 1993 for the condensed consolidated statements of
operations.
The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the notes thereto
and with the historical financial statements of Celcor, Inc. and
Northeast (USA) Corp. included elsewhere herein. See "Index to
Financial Statements". The unaudited pro forma condensed
consolidated statements of operations are not necessarily
indicative of operating results that would have been achieved had
the merger actually been consummated at July 1, 1993 and should
not be construed as indicative of future operations.
Under the terms of the merger agreement, Celcor, Inc. will issue
1,750,000 shares of its common stock in exchange for all of the
outstanding shares of common stock of Northeast (USA) Corp. The
transaction is being accounted for in a manner similar to a
reverse acquisition and, accordingly, net assets have been
recorded at book value.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
March 31, 1995
<TABLE>
<S> <C> <C> <C> <C>
Northeast
Celcor, Inc. (USA) Corp. Adjustments Pro forma
Assets
Current:
Cash and cash equivalents $ 30,704 $553,067 $ - $583,771
Receivables 700,000 33,493 (700,000)(2) 33,493
Inventory - 296,688 - 296,688
Other - 135,385 - 135,385
730,704 1,018,633 (700,000) 1,049,337
Property and equipment, net - 932,100 - 932,100
Intangible assets - 1,807,235 50,000(3) 1,857,235
Other assets - 18,716 - 18,716
$730,704 $3,776,684 $(650,000) $3,857,388
Liabilities and
Stockholders' Equity
Current:
Accounts payable $1,375 $27,841 $50,000(3) $ 79,216
Accrued expenses 4,689 141,544 - 146,233
Notes payable - 750,000 (700,000)(2) 50,000
6,064 919,385 (650,000) 275,449
Minority interest - 2,273,597 - 2,273,597
6,064 3,192,982 (650,000) 2,549,046
Stockholders' equity:
Preferred stock 275 - 275
(1,050,000)(1)
Common stock 3,515 1,050,000 1,750(1) 5,265
Additional paid-in capital 1,570,476 - 494,616(1) 2,065,092
Accumulated deficit (98,526) (553,634) 553,634(1) (98,526)
Treasury stock (751,100) - - (751,100)
Foreign translation adjustment - 87,336 - 87,336
724,640 583,702 - 1,308,342
$730,704 $3,776,684 $(650,000) $3,857,388
See accompanying notes to pro forma condensed
consolidated financial statements.
Nine months ended March 31, 1995
<S> <C> <C> <C> <C>
Northeast
Celcor, Inc. (USA) Corp. Adjustments Pro forma
Sales $ - $488,473 $- $488,473
Expenses:
Cost of sales - 473,885 - 473,885
Selling, general and
administrative 40,521 459,043 - 499,564
Interest expense - 6,157 - 6,157
40,521 939,085 - 979,606
(40,521) (450,612) - (491,133)
Minority interest - 147,015 - 147,015
Net loss $(40,521) $(303,597) $- $(344,118)
Net loss per share $ (.01) $ (.07)
Weighted average common shares
outstanding 3,364,674 5,114,674(4)
See accompanying notes to pro forma condensed
consolidated financial statements.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Year ended June 30, 1994
<S> <C> <C> <C> <C>
Celcor, Inc. Northeast
(USA) Corp. Adjustments Pro forma
Sales $- $- $- $-
Expenses:
Cost of sales - - - -
Selling, general
and administrative 50,325 321,268 - 371,593
Interest expense (income) 3,261 (7,622) - (4,361)
53,586 313,646 - 367,232
(53,586) (313,646) - (367,232)
Minority interest - 79,487 - 79,487
Net loss $(53,586) $(234,159) $- $ (287,745)
Net loss per share $(.02) $ (.06)
Weighted average common shares
outstanding 3,364,674 5,114,674(4)
See accompanying notes to pro forma condensed
consolidated financial statements.
</TABLE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. To record issuance of 1,750,000 shares of Celcor, Inc.
common stock to acquire Northeast (USA) Corp. As discussed in the
introduction section, the acquisition was recorded in a manner
similar to a reverse acquisition and all net assets have been
recorded at book value.
2. To eliminate intercompany loan.
3. To accrue costs (professional fees) relating to the merger.
Amortization of the resulting intangible asset (using a twenty-
year life) would be immaterial and no adjustment has been made
herein.
4. Average number of Celcor, Inc. common stock plus 1,750,000
shares issued to merge with Northeast (USA) Corp.
BDO Seidman, LLP
Accountants and Consultants
Report of Independent Certified Public Accountants
The Board of Directors and Stockholders
Celcor, Inc.
Ocean, New Jersey
We have audited the accompanying balance sheet of Celcor, Inc. as
of June 30, 1994, and the related statements of operations,
stockholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Celcor, Inc. as of June 30, 1994, and the results of its
operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
BDO Seidman, LLP
New York, New York
September 15, 1994
CHURCHIN & COMPANY, P.A.
Certified Public Accountants
125 Half Mile Road
Red Bank, New Jersey 07701-6749
Tel (908) 747-0500
Fax (908) 747-7700
Board of Directors and Stockholders
Celcor, Inc.
Ocean, New Jersey
We have audited the balance sheet of Celcor, Inc. as of June 30,
1993 and the related statements of operations, stockholders'
deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Celcor, Inc. as of June 30, 1993 and the results of its
operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ CHURCHIN & COMPANY
_________________________
August 5, 1993
BALANCE SHEET
June 30, 1994
Assets
Cash $769,284
Liabilities and Stockholders' Equity
Current:
Accounts payable $ 4,124
Total current liabilities 4,124
Stockholders' equity:
Preferred stock - 8% convertible;
$.001 par value; liquidation
preference of $3.00; Series C -
1,000,000 shares authorized;
275,000 shares issued and
outstanding (Note 6) 275
Common stock - $.001 par value;
20,000,000 shares authorized;
3,514,894 shares issued and
3,364,674 outstanding in 1994 and
1993, respectively 3,515
Additional paid-in capital 1,570,475
Accumulated deficit (Note 3) (58,005)
Treasury stock - 150,220 shares at cost (751,100)
Total stockholders' equity 765,160
$769,284
See accompanying notes to financial statements.
STATEMENT OF OPERATIONS
Year ended June 30, 1994 1993
Revenue $- $-
General and administrative expenses 50,325 9,315
Operating loss (50,325) (9,315)
Other expense:
Interest expense (3,261) (354)
Loss before reorganization item (53,586) (9,669)
Reorganization item:
Gain on sale of asset - 5,250
Net loss $(53,586) $(4,419)
Net loss per share $ (.02) $ -
See accompanying notes to financial statements.
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Common stock Preferred stock
Additional Accumulated Treasury
Shares(1) Amount Shares Amount paid-in capital deficit stock Total
Consolidated balance,
June 30, 1992 (unaudited)
(debtor-in-possession) 1,701,654 $1,702 300,000 $ 300 $10,680,779 $(10,088,516) $(751,100) $(156,835)
Issuance of common stock in
relation to reorganization 1,813,240 1,813 - - 153,187 - - 155,000
Preferred stock cancelled in
relation to reorganzation - - (300,000) (300) 300 - -
Elimination of accumulated
deficit in relation to
reorganization - - - - (10,088,516) 10,088,516 - -
Net loss - - - - - (4,419) - (4,419)
Balance, June 30, 1993 3,514,894 3,515 - - 745,750 (4,419) (751,100) (6,254)
Sale of cumulative preferred
Series C shares in private
placement (Note 6) - - 260,000 260 779,740 - - 780,000
Conversion of notes payable
to Series C preferred
shares (Note 4) - - 15,000 15 44,985 - - 45,000
Net loss - - - - - (53,586) - (53,586)
Balance, June 30, 1994 3,514,894 $3,515 275,000 $ 275 1,570,475 $(58,005) $(751,100)$765,160
See accompanying notes to financial statements.
</TABLE>
(1) Adjusted retroactively for the effect of a one-for-five
reverse stock split (Note 2).
STATEMENT OF CASH FLOWS
<TABLE>
<S> <C> <C>
Year ended June 30, 1994 1993
Cash flows from operating activities:
Net loss $(53,586) $(4,419)
Adjustments to reconcile net loss to
net cash used in operatingactivities:
Gain on sale of assets - (5,250)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 4,124 -
Pre-petition current liabilities - (101,713)
Accrued administrative and legal fees - (55,288)
Accrued interest (354) 354
Net cash used in operating activities (49,816) (166,316)
Cash flows from investing activities:
Proceeds from sale of assets - 5,250
Cash flows from financing activities:
Borrowings of notes payable (Note 4) 20,000 25,000
Proceeds from sale of stock 780,000 155,000
Net cash provided by financing
activities 800,000 180,000
Net increase (decrease) in cash 750,184 18,934
Cash, beginning of year 19,100 166
Cash, end of year $769,284 $19,100
</TABLE>
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business Celcor, Inc. (the "Company") is a Delaware
corporation. The Company emerged from Chapter 11
bankruptcy proceedings in July of 1992 and has
had no business operations since 1991. Its
current business plans include the seeking of
business opportunities in the People's
Republic of China through acquisitions, mergers,
joint ventures and/or the formation of operating
subsidiaries.
2. Summary of Bankruptcy
Significant
Accounting Policies Pursuant to Statement of Position 90-7, issued by
the American Institute of Certified Public
Accountants in November 1990, the Company has
adopted the principles of financial reporting
during reorganization proceedings and financial
reporting when entities emerge from Chapter 11
reorganization (Fresh Start Accounting).
Common Stock
On September 20, 1993, the Company's Board of
Directors approved a one-for-five reverse stock
split. Accordingly, all share data has been
restated for periods prior to the stock
split.
Net Loss Per Common Share
The weighted average number of common shares
outstanding used in computing net loss per
common share was 3,364,674 in 1994 and
3,230,544 in 1993. The weighted average number of
common shares used in computing the net loss per
common share does not include any shares
issuable upon the assumed conversion of the
preferred stock, since the effect would have
been to decrease net loss per common share in
each period.
3. Petition for Relief In April 1991, the Company filed for protection
Under Chapter 11 under chapter 11 of the Federal Bankruptcy laws in
and Reorganization the United States for the District of New Jersey
due to the facts that the Company had ceased
operations, it was unable to obtain financing,
and it had a working capital deficiency.
In connection with the plan of reorganization, the
Company executed a Stock Purchase Agreement
(the "Agreement"), dated June 20, 1991, amended
October 29, 1991, with Majestic International
Inc. that secured additional equity capital. The
Agreement, among other things, provided for the
sale, by the Company to Majestic, of that
number of common shares which would give
Majestic a 49% interest in the Company. The
purchase price for said shares was $155,000.
Also pursuant to the Agreement, the Company
filed a Reorganization Plan (the "Plan") with the
Bankruptcy Court, which utilized all proceeds to
be received from Majestic to settle all existing
debts of the Company. On May 28, 1992, the Plan
was approved by the Bankruptcy Court.
Consequently, 1,648,400 common shares were sold to
Majestic and 164,840 shares were issued to a
"finder" on July 28, 1992. The end result was
the emergence of the Company from bankruptcy with
virtually no assets or liabilities.
The Company adopted fresh start reporting because
holders of existing voting shares immediately
before filing and confirmation of the Plan
received less than 50% of the voting shares of the
emerging entity and its reorganization value is
less than its post-petition liabilities and
allowed claims, as shown below:
Post-petition current liabilities $55,288
Allowed claims 101,713
Total post-petition liabilities and allowed
claims 157,001
Reorganization value (155,000)
Excess of liabilities over reorganization value $2,001
Pursuant to the Plan, the Company realized an
extraordinary gain on the extinguishment of
debt of $1,585,184 for the year ended
June 30, 1992.
In addition, as required by fresh start reporting
standards, the Company eliminated its
accumulated deficit of $10,088,516 which
existed just prior to the confirmation of the
Plan and the consummation of the agreement.
4. Notes Payable
June 30, 1994 1993 1994 1993
Promissory note - due July 1, 1995,
bearing interest at the rate
of 10% per annum payable upon
maturity $ - $ 5,000
Promissory note - due July 1, 1995,
bearing interest at the rate
of 10% per annum payable upon
maturity - 20,000
$- $25,000
During the year ended June 30, 1994,
an additional $20,000 was borrowed.
In connection with the offering of 8%
cumulative preferred shares (Note 6),
the noteholder converted all
outstanding notes into Series C preferred
stock at a rate of $3.00 per share.
5. Income Taxes Concurrent with the adoption of fresh start
accounting, the Company adopted SFAS 109.
Under SFAS 109, deferred income taxes are
provided at the enacted marginal rates
on the difference between the financial
statement and income tax carrying amounts
of assets and liabilities. The effect of
adopting SFAS 109 was not material.
Due to the ownership change which occurred as
a result of the reorganization, the Company has
forfeited its net operating loss carryforwards
effective with the year ended June 30, 1994.
6. Preferred Stock In May 1994, the Company sold 260,000 shares
of its newly designated Series C convertible
preferred stock, $.001 par value, for an
aggregate amount of $780,000 to a group
of private investors. The preferred shares
may be converted in whole or in part at any
time through June 30, 1997 into three
shares of common stock. The Company has the
right, at any time after July 1, 1996, to
redeem the shares at $4.50. The shares
carry a stated dividend rate of 8% per annum.
Dividends are cumulative and are payable on
June 30, 1997 and quarterly thereafter.
7. Subsequent Event On August 15, 1994, the Company signed a
letter of intent to acquire Northeast
(USA) Corp. ("Northeast"). The transaction
is subject, among other conditions, to a due
diligence examination, the signing of a
formal merger agreement, and stockholder
approval. Northeast stockholders would receive
1,750,000 shares of the Company's common stock
for all of the issued and outstanding shares of
Northeast. Northeast is a start-up company which
will manufacture and distribute various
vitamin products with operations in the People's
Republic of China and the United States.
On August 9, 1994, the Company loaned $700,000
to Northeast. This loan, evidenced by a
promissory note, does not bear interest
until the maturity date, November 30, 1994, at
which time interest will accrue at 15% per
annum. Concurrent to the note, Northeast's
stockholders pledged all existing shares of their
common stock as collateral.
Balance Sheet
(Unaudited)
March 31, 1995
Assets
Cash $ 30,704
Note receivable 700,000
$ 730,704
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable $ 1,375
Accrued expenses 4,689
6,064
Stockholders' equity:
Preferred stock - 8% convertible;
$.001 par value; Series C -
1,000,000 shares authorized;
275,000 shares issued
and outstanding 275
Common stock, $.001 par value;
20,000,000 shares authorized;
3,514,894 shares issued 3,515
Additional paid-in capital 1,570,476
Accumulated deficit (98,526)
Treasury stock (150,220 shares) (751,100)
724,640
$ 730,704
See accompanying notes to financial statements.
Statements of Operations
(Unaudited)
Nine months ended March 31, 1995 1994
General and administrative expenses $ 45,771 $ 44,462
Gain on sale of assets (5,250) -
Net loss $(40,521) $(44,462)
Net loss per share $ (.01) $ (.01)
Weighted average number of shares 3,364,674 3,364,674
See accompanying notes to financial statements.
Statements of Cash Flows
Nine months ended March 31, 1995 1994
Cash flows used in operating activities $(38,580) $(34,827)
Cash flows used in investing activities:
Issuance of note (700,000) -
Cash flows provided by financing activities:
Proceeds from debt - 18,000
Net decrease in cash (738,580) (16,827)
Cash, beginning of period 769,284 19,100
Cash, end of period $30,704 $ 2,273
See accompanying notes to financial statements.
1. Basis of Presentation The accompanying financial statements
have been prepared in accordance with
generally accepted accounting principles for
interim financial information and with
the instructions to Regulation S-B (including
Item 310(b) thereof). Accordingly, they do not
include all of the information and footnotes
required by generally accepted accounting
principles for complete financial statements.
In the opinion of the Company's management,
all adjustments (consisting of only
normal recurring accruals) considered necessary
for a fair presentation have been included.
The accompanying financial statements should
be read in conjunction with the audited
financial statements of the Company for the
fiscal year ended June 30, 1994, included
elsewhere herein.
2. Potential Acquisition
and Notes Receivable On August 15, 1994, the Company signed a
letter of intent to acquire Northeast
(USA) Corp. ("Northeast") and, on March 15,
1995, executed an Agreement and Plan of
Merger with Northeast. The transaction is
subject, among other conditions, to completion
of a due diligence examination and stockholder
approval. Northeast stockholders would receive
1,750,000 shares of the Company's common stock
for all of the issued and outstanding shares
of Northeast. Northeast is a manufacturer and
distributor of various vitamin products
with operations in the People's Republic of
China and the United States.
On August 9, 1994, the Company loaned $700,000
to Northeast. This loan, evidenced by a
promissory note, does not bear interest
until the original maturity date, November
30, 1994, at which time interest would have
accrued at 15% per annum. The maturity
date of the loan has been extended to October
31, 1995 by the Company as the Company's
proposed merger with Northeast continues
to proceed. Concurrent to the note, Northeast's
stockholders pledged all existing shares of
their common stock as collateral.
Report of Independent Certified Public Accountants
Northeast (USA) Corp.
New York, New York
We have audited the accompanying consolidated balance sheet of
Northeast (USA) Corp. and subsidiaries (a company in the
development stage) as of June 30, 1994, and the related
consolidated statements of operations, stockholders' equity, and
cash flows for the period from February 24, 1993 (inception) to
June 30, 1993, the year ended June 30, 1994 and the period from
February 24, 1993 (inception) to June 30, 1994. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Northeast (USA) Corp. and subsidiaries at June 30,
1994, and the results of their operations and their cash flows
for the period from February 24, 1993 (inception) to June 30,
1993, the year ended June 30, 1994 and the period from
February 24, 1993 (inception) to June 30, 1994, in conformity
with generally accepted accounting principles.
BDO Seidman, LLP
New York, New York
December 2, 1994, except for
Note 7, which is as of
March 15, 1995
Northeast (USA) Corp. and Subsidiaries
(a company in the development stage)
Consolidated Balance Sheet
June 30, 1994
Assets
Current:
Cash and cash equivalents $850,210
Receivables 2,371
Inventory - sample 1,200
Total current assets 853,781
Property and equipment, net (Note 2) 794,270
Intangible assets - land use rights 1,759,990
Other assets 8,375
$3,416,416
Liabilities and Stockholders' Equity
Current:
Demand loans due to officer (Note 3) $ 40,000
Accrued expenses 113,511
Income taxes payable 1,244
Total current liabilities 154,755
Commitments (Notes 1 and 5)
Minority interest (Note 1) 2,420,812
Stockholders' equity (Note 7):
Common stock, no par value -
shares authorized 200; issued and
outstanding 175 1,050,000
Deficit accumulated during the development stage (250,038)
Foreign translation adjustments 40,887
Total stockholders' equity 840,849
$3,416,416
See accompanying summary of accounting policies
and notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF OPERATIONS
Period from Period from
February 24, 1993 February 24, 1993
(inception) to Year ended (inception) to
June 30, 1993 June 30, 1994 June 30, 1994
Revenues $- $- $-
Expenses and other:
General, administrative
and start-up expenses 15,364 312,800 328,164
Interest expenses - 910 910
Interest income - (8,532) (8,532)
Foreign currency loss - 7,739 7,739
Total expenses and other 15,364 312,917 328,281
Loss before income taxes
and minority interest (15,364) (312,917) (328,281)
Income taxes (Note 4) 515 729 1,244
Loss before minority
interest (15,879) (313,646) (329,525)
Minority interest in loss
of joint venture - 79,487 79,487
Net loss $(15,879) $(234,159) $(250,038)
See accompanying summary of accounting policies
and notes to consolidated financial statements.
Consolidated Statements of Stockholders' Equity
Period from February 24, 1993 (inception) to June 30, 1993 and year
ended June 30, 1994
<TABLE>
<S> <C> <C> <C> <C>
Foreign Total
translation stockholders'
Common Stock Deficit adjustments equity
Balance, February 24, 1993
(inception) $ - $ - $- $ -
Issuance of 20 shares for cash 150,000 - - 150,000
Net loss - (15,879) - (15,879)
Balance, June 30, 1993 150,000 (15,879) - 134,121
Issuance of 45 shares for cash 300,000 - - 300,000
Issuance of 30 shares for property 600,000 - - 600,000
Issuance of 80 shares for technology - - - -
Net loss - (234,159) - (234,159)
Translation adjustments - - 40,887 40,887
Balance, June 30, 1994 $1,050,000 $(250,038) $40,887 $840,849
</TABLE>
See accompanying summary of accounting policies
and notes to consolidated financial statements.
<TABLE>
Consolidated Statements of Cash Flows
<S> <C> <C> <C>
Period from Period from
February 24, 1993 February 24, 1993
(inception) to Year ended (inception) to
June 30, 1993 June 30, 1994 June 30, 1994
Cash flows from operating activities:
Net loss $(15,879) $(234,159) $(250,038)
Adjustments to reconcile net
loss to net cash used in operating
activities:
Depreciation and amortization 184 9,332 9,516
Minority interest - (79,487) (79,487)
Increase in:
Receivables - (2,371) (2,371)
Inventory - (1,200) (1,200)
Increase in:
Accrued expenses 1,665 113,090 114,755
Increase in other assets (8,818) (700) (9,518)
Other - (9,691) (9,691)
Total adjustments (6,969) 28,973 22,004
Net cash used in operating
activities (22,848) (205,186) (228,034)
Cash flows from investing activities:
Capital expenditures (1,019) (201,624) (202,643)
Cash flows from financing activities:
Proceeds from sale of stock 150,000 300,000 450,000
Proceeds from note payable -
stockholder - 40,000 40,000
Proceeds from minority investor - 750,000 750,000
Net cash provided by financing
activities 150,000 1,090,000 1,240,000
Translation adjustments - 40,887 40,887
Net increase in cash and cash
equivalents 126,133 724,077 850,210
Cash and cash equivalents,
beginning of period - 126,133 -
Cash and cash equivalents, end of
period $126,133 $850,210 $850,210
Noncash financing and
investing activities:
In 1994, the Company issued
110 shares of its common stock,
valued at $600,000, for
property and technology.
In 1994, the minority investor in a
joint venture contributed
land use rights, valued at
$1,750,000, to the joint venture.
</TABLE>
See accompanying summary of accounting policies
and notes to consolidated financial statements.
SUMMARY OF ACCOUNTING POLICIES
Line of Business Northeast (USA) Corp. (the "Company") was
incorporated on February 24, 1993 in New
York. The Company and its subsidiaries
entered into an agreement with Northeast
General Pharmaceutical Factory ("NEGPF")
in China to become the preferred
sales agent for NEGPF to market certain
vitamin and cosmetic products initially
into the Chinese market. The Company has also
acquired land in Queens, New York which, in
the future, it plans to build a combined
residential and office facility to be used
mainly by individuals of companies from the
northeast region of China.
The Company is in the development stage and
its activities to date include start-up and
development activities.
Principles of Consolidation The consolidated financial statements include
the accounts of the Company, Shenyang United
Vitatech Ltd. ("UV"), a majority-owned joint
venture (see Note 1), and Northeast
(Shenyang) Consulting Co., Ltd., an
inactive wholly-owned subsidiary. Both
subsidiaries are located in Shenyang,
China. All material intercompany accounts and
transactions are eliminated.
Cash and Cash Equivalents The Company considers investments with
original maturities of three months or less when
purchased to be cash equivalents. Cash
balances at June 30, 1994 consist
primarily of Chinese bank accounts.
Property and Equipment,
and Depreciation Property and equipment are stated at cost,
less depreciation. Depreciation is computed
on the straight-line method over the estimated
useful lives of the assets.
Intangible Assets In fiscal 1994, the Company issued 80 shares
of its common stock to Mannion Consultants
Ltd. ("Mannion", a Chinese company) to obtain
certain proprietary technology which
is finished and ready for commercialization
and which will be used in producing the
Company's vitamin and cosmetic products.
The technology did not have an ascertainable
book value as of the date of the transfer.
Accordingly, no valuation has been assigned
by the Company for this technology or the
issued common shares. The minority
investor, NEGPF, contributed certain land use
rights in mainland China as part of its
investment in UV. This subsidiary will build
a factory to produce and sell vitamin and
cosmetic products on this land. NEGPF's cost
basis for the land use rights ($1,750,000)
was used to value this contribution. The
rights have a life of 30 years, the life of the
joint venture agreement (see Note 1).
Translation of Foreign
Currencies The financial position and results of
operations of the Company's foreign
subsidiaries are accounted for using the
local currency as the functional
currency. Assets and liabilities of these
subsidiaries are translated at the exchange
rate in effect at year-end. Income
statement accounts are translated at the
average rate of exchange prevailing during
the year. Translation adjustments arising from
the use of differing exchange rates from period
to period and exchange gains and losses on
intercompany balances of a long-term
investment nature are included in the
cumulative translation adjustment account
in stockholders' equity.
Income Taxes The Company follows Statement of Financial
Accounting Standards No. 109 ("SFAS No.
109"), "Accounting for Income Taxes".
SFAS No. 109 is an asset and liability approach
that requires the recognition of deferred
tax assets and liabilities for the expected
future tax consequences of events
that have been recognized in the Company's
financial statements or tax returns.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Joint Venture Agreement The Company formed a joint venture
agreement with NEGPF whereby both companies
agreed to establish UV. UV will construct a
factory to produce and sell vitamin and
cosmetic products. The Company will contribute
a portion of the technology it acquired in
fiscal 1994 (see Summary of Accounting
Policies) and cash of $2.1 million in
consideration of 56.52% ownership of UV.
In October 1994, the Company paid $1 million
to UV. The balance of the Company's cash
investment ($1.1 million) is to be paid
by December 31, 1995.
NEGPF agreed to contribute land use rights
(see Summary of Accounting Policies) and
cash of $750,000 in consideration of
43.48% ownership of UV. These contributions were
made prior to June 30, 1994.
The minority interest balance of $2.4 million
at June 30, 1994 represents NEGPF's investment
in UV as of that date, reduced for its share
of UV's losses.
2. Property and Equipment Property and equipment consist of the
following:
June 30, 1994
Land (a) $600,000
Machinery and equipment 26,367
Furniture and fixtures 19,393
Automobiles 156,883
802,643
Less: Accumulated depreciation 8,373
$794,270
___________
(a) Thirty (30) shares of the Company's common
stock were issued to Dziou Tai Associates
(a company controlled by a relative of
the chief executive officer of the Company)
in exchange for land in Queens, New York.
The property acquired was valued at the
predecessor owner's cost basis. The
Company will use this land and approved
blueprints to build a residential and
office complex to be used by individuals of
companies from the northeast region of
China.
3. Related Party Transactions The Company borrowed funds from one of the
Company's officers. The loan is due on demand
at an interest rate of 8%.
4. Income Taxes Income taxes consist of state and local
minimum taxes.
At June 30, 1994, the Company had a net operating
loss for a Federal income tax purposes of
$150,000 which expires in 2007. A deferred
tax asset of $50,000 has been offset by a
valuation allowance of the same amount. The
Company also has a foreign net operating loss
in the amount of $180,000 which expires in
1999.
5. Commitments The Company leases office space under a
noncancellable lease agreement which expires
on July 31, 1996. Future minimum rentals
are as follows:
Year ending June 30,
1995 $16,500
1996 18,000
1997 1,500
Total minimum payments required $36,000
Rent expense totaled $9,000 in 1993
and $28,000 in 1994.
6. Segment Data The Company is located in New York and the
subsidiaries (which were formed in fiscal 1994)
are located in China. The identifiable assets
of the Chinese operation total $2,350,000 at
June 30, 1994. The pre-tax loss of the
Chinese operation totals $180,000 and the capital
expenditures were $198,000 for the year ended
June 30, 1994.
7. Subsequent Event In August 1994, the Company signed a letter
of intent to merge with a public "shell" company,
Celcor, Inc. ("Celcor"). On March 15, 1995, a
definitive agreement was signed by the parties.
The merger is subject to certain matters
including due diligence procedures and
stockholders' approval.
In August 1994, Celcor loaned $700,000 to the
Company, which funds were used to invest in
UV (see Note 1). The loan is due on September
15, 1995 and bears interest (commencing
September 30, 1995) at the rate of 15% per
annum. All of the Company's shares of common
stock are pledged as collateral
for the loan.
Consolidated balance Sheet
(Unaudited)
March 31, 1995
Assets
Current:
Cash and cash equivalents $553,067
Receivables 33,493
Inventory 296,688
Other 135,385
Total current assets 1,018,633
Property and equipment, net 932,100
Intangible assets 1,807,235
Other assets 18,716
$3,776,684
Liabilities and Stockholders' Equity
Current:
Note payable - Celcor, Inc. $700,000
Note payable - bank 50,000
Accounts payable 27,841
Accrued expenses 141,544
Total current liabilities 919,385
Minority interest 2,273,597
Stockholders' equity:
Common stock, no par value - shares authorized 200; issued and
outstanding 175 1,050,000
Accumulated deficit (553,634)
Foreign translation adjustment 87,336
Total stockholders' equity 583,702
$3,776,684
See accompanying notes to consolidated financial statements.
Nine months ended March 31, 1995 1994
Sales $488,473 $ -
Expenses:
Cost of sales 473,885 -
Selling, general and administrative 459,043 149,440
Interest 6,157 -
939,085 149,440
Loss before minority interest (450,612) (149,440)
Minority interest 147,015 18,229
Net loss $(303,597) $(131,211)
See accompanying notes to consolidated financial statements.
Nine months ended March 31, 1995 1994
Cash flows used in operating activities $(886,574) $(82,930)
Cash flows used in investing activities:
Capital additions (167,020) (40,624)
Cash flows from financing activities:
Proceeds from sale of stock - 250,000
Proceeds from notes 750,000 65,000
Repayment of notes (40,000) -
Proceeds from minority interest - 750,000
Net cash provided by financing
activities 710,000 1,065,000
Translation adjustments 46,451 41,088
Net increase (decrease) in cash and cash
equivalents (297,143) 982,534
Cash and cash equivalents,
beginning of period 850,210 126,133
Cash and cash equivalents, end of period $553,067 $1,108,667
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation The accompanying consolidated financial
statements have been prepared in accordance
with generally accepted accounting principles
for interim financial information and with
the instructions to Regulation S-B (including
Item 310(b) thereof). Accordingly, they do
not include all of the information and
footnotes required by generally accepted
accounting principles for complete financial
statements. In the opinion of the Company's
management, all adjustments (consisting
of only normal recurring accruals) considered
necessary for a fair presentation have been
included. Operating results for the
nine-month period ended March 31, 1995 are not
necessarily indicative of the results that
may be expected for the full fiscal year
ended June 30, 1995. The accompanying
consolidated financial statements should be
read in conjunction with the audited financial
statements of the Company for the fiscal year
ended June 30, 1994, included elsewhere herein.
During the period ended March 31, 1995, the
Company commenced operations; accordingly, it
is no longer considered to be a development
stage company.
2. Potential Acquisition and
Notes Receivable On August 15, 1994, the Company signed a
letter of intent to merge with Celcor,
Inc. ("Celcor") and, on March 15, 1995,
executed an Agreement and Plan of Merger
with Celcor. The transaction is subject,
among other conditions, to completion of a
due diligence examination and stockholder
approval. The Company's stockholders would
receive 1,750,000 shares of Celcor's common
stock for all of the issued and outstanding
shares of the Company.
On August 9, 1994, Celcor loaned $700,000
to the Company. This loan, evidenced by a
promissory note, does not bear interest
until the original maturity date, November 30,
1994, at which time interest would have
accrued at 15% per annum. The maturity
date of the loan has been extended to
October 31, 1995 by Celcor as the proposed
merger continues to proceed. Concurrent to
the note, the Company's stockholders pledged
all existing shares of their common stock as
collateral.
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Proxy Statement of Celcor, Inc.
of our report dated August 5, 1993, relating to the financial
statements of Celcor, Inc. for its fiscal year ended June 30,
1993, appearing in this Proxy Statement.
We also consent to the reference to us under the heading
"Experts" in such Proxy Statement.
Dated: August 3, 1995 CURCHIN & COMPANY, P.A.
Certified Public Accountants
Red Bank, New Jersey
By: /s/ DOUGLAS P. STIVES, CPA
__________________________
Name: Douglas P. Stives, CPA
Title: Partner
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Celcor, Inc.
Ocean, New Jersey
We hereby consent to the use in the Proxy Statement relative to
the October 3, 1995 meeting of the stockholders of our report
dated September 15, 1994, relating to the financial statements of
Celcor, Inc. and our report dated December 2, 1994, except for
Note 7, which is as of March 15, 1995, relating to the financial
statements of Northeast (USA) Corp., which are contained in that
Proxy Statement.
We also consent to the reference to us under the caption
"Experts" in the Proxy Statement.
/s/ BDO Seidman LLP
__________________
New York, New York
August 4, 1995
EXHIBIT A
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to such
shares, who continuously holds such shares through the effective
date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in
writing pursuant to 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of his
shares of stock under the circumstances described in subsections
(b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock
corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what
is ordinarily meant by those words and also membership interest
of a member of a nonstock corporation; and the words "depository
receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or
fractions thereof, solely of stock of a corporation, which stock
is deposited with the depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to 251, 252,
254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect thereof,
at the record date fixed to determine the stockholders entitled
to receive notice of and to vote at the meeting of stockholders
to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or
(ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a merger
if the merger did not require for its approval the vote of the
holders of the surviving corporation as provided in subsection
(f) of 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of
stock or depository receipts at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs
a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs
a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under 253 of this title
is not owned by the parent corporation immediately prior to the
merger, appraisal rights shall be available for the shares of the
subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any
merger or consolidation in which the corporation is a constituent
corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including those
set forth in subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date
for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof
that appraisal rights are available for any or all of the shares
of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the
appraisal of his shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written
demand for appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of his shares. A proxy or vote
against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by
a separate written demand as herein provided. Within 10 days
after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder
of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
228 or 253 of this title, the surviving or resulting
corporation, either before the effective date of the merger or
consolidation or within 10 days thereafter, shall notify each of
the stockholders entitled to appraisal rights of the effective
date of the merger or consolidation and that appraisal rights are
available for any or all of the shares of the constituent
corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered
mail, return receipt requested, addressed to the stockholder at
his address as it appears on the records of the corporation. Any
stockholder entitled to appraisal rights may, within 20 days
after the date of mailing of the notice, demand in writing from
the surviving or resulting corporation the appraisal of his
shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his
shares.
(e) Within 120 days after the effective date of the merger
or consolidation, the surviving or resulting corporation or any
stockholder who has complied with subsections (a) and (d) hereof
and who is otherwise entitled to appraisal rights, may file a
petition in the Court of Chancery demanding a determination of
the value of the stock of all such stockholders. Notwithstanding
the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have
the right to withdraw his demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days
after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections
(a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the
stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation
or within 10 days after expiration of the period for delivery of
demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall, within 20 days after such
service, file in the office of the Register of Chancery in which
the petition was filed a duly verified list containing the names
and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or
resulting corporation, the petition shall be accompanied by such
a duly verified list. The Register in Chancery, if so ordered by
the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown
on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week before
the day of the hearing, in a newspaper of general circulation
published in the City of Wilmington, Delaware or such publication
as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for their
shares and who hold stock represented by certificates to submit
their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the
Court may dismiss the proceedings as to such stockholder;
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining their
fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such
fair value, the Court shall take into account all relevant
factors. In determining the fair rate of interest, the Court may
consider all relevant factors, including the rate of interest
which the surviving or resulting corporation would have had to
pay to borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other
pretrial proceedings and may proceed to trial upon the appraisal
prior to the final determination of the stockholder entitled to
an appraisal. Any stockholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is
finally determined that he is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of
holders of shares represented by certificates, upon the surrender
to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the Court
of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the
value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded his appraisal
rights as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive payment
of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written
withdrawal of his demand for an appraisal and an acceptance of
the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder
to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
EXHIBIT B
AGREEMENT AND PLAN
OF MERGER
AMONG
CELCOR, INC.,
NORTHEAST (USA) CORP.
and
THE STOCKHOLDERS
of
NORTHEAST (USA) CORP.
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 1-1
ARTICLE II THE PLAN OF MERGER 2-1
2.01 The Merger and the Surviving Corporation 2-1
2.02 Effectiveness of the Merger 2-2
2.03 Exchange of Securities 2-2
2.04 Adjustment Upon Recapitalization 2-3
2.05 Securities Law Matters 2-3
ARTICLE III REPRESENTATIONS AND WARRANTIES 3-1
3.1. Representation and Warranties of Northeast
and Stockholders 3-1
3.1.1 Organization of Northeast 3-1
3.1.2 Capitalization 3-1
3.1.3 Subsidiaries 3-1
3.1.4 Foreign Qualifications 3-2
3.1.5 Other Business Names 3-2
3.1.6 Owned Real Estate Interests 3-2
3.1.7 Leased Real Estate 3-2
3.1.8 Tangible Personal Property 3-2
3.1.9 Intangible Personal Property; Computer Programs 3-2
3.1.10 Stockholders; Title to Northeast Stock 3-3
3.1.11 Title to Assets 3-3
3.1.12 Material Contracts 3-4
3.1.13 Labor Matters 3-4
3.1.14 Benefit Plans; ERISA 3-5
3.1.15 Licenses and Permits 3-5
3.1.16 Authority Relative to Agreement; Enforceability 3-5
3.1.17 Compliance with Other Instruments; Consents 3-6
3.1.18 Compliance with Applicable Laws 3-6
3.1.19 Environmental Compliance 3-6
3.1.20 Financial Statements 3-7
3.1.21 Taxes 3-7
3.1.22 Litigation 3-8
3.1.23 Brokerage 3-8
3.1.24 Full Disclosure 3-8
3.2 Representations and Warranties of Celcor 3-8
3.2.1 Organization 3-8
3.2.2 Capitalization 3-8
3.2.3 Authorization 3-9
3.2.4 Title to Assets 3-9
3.2.5 No Third Party Consent Required; No Violation of
Other Instruments 3-9
3.2.6 Litigation 3-9
3.2.7 Brokerage 3-10
3.2.8 Financial Statements 3-10
3.2.9 Full Disclosure 3-10
ARTICLE IV ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES4-1
4.01 Corporate Approval 4-1
4.02 Stockholders' Agreement to Vote 4-1
4.03 Conduct of Business 4-1
4.04 Negative Covenants 4-1
4.05 Filing with Securities and Exchange Commission 4-1
4.06 Access 4-1
4.07 Best Efforts 4-2
4.08 Brokers or Finders 4-2
4.09 Environmental Matters 4-2
4.10 Exclusive Dealing 4-3
ARTICLE V THE CLOSING 5-1
5.01 The Closing 5-1
5.02 Termination 5-1
5.03 Liability on Termination 5-1
5.04 Termination Fees 5-2
ARTICLE VI CONDITIONS TO OBLIGATION OF EACH PARTY 6-1
6.01 No Prohibition of Transaction 6-1
6.02 Compliance with Law 6-1
6.03 Proceedings, Documentation and Consents 6-1
6.04 Tax Free Reorganization 6-1
ARTICLE VII CONDITIONS TO THE OBLIGATION OF CELCOR TO CLOSE 7-1
7.01 Representations and Warranties True at
the Closing Date 7-1
7.02 No Material Adverse Change: Officers' Certificates 7-1
7.03 Corporation's Performance 7-1
7.04 Necessary Corporate Approvals 7-1
7.05 Resolutions Authorizing the Execution of
this Agreement 7-1
7.06 Opinion of Counsel 7-1
7.07 Investment Letters 7-1
7.08 Satisfactory Searches 7-2
7.09 Environmental Review 7-2
7.10 Consents to Transaction 7-2
7.11 Dissenters' Rights 7-2
7.12 Title Insurance 7-2
7.13 Financial Statements 7-2
7.14 Fairness Opinion 7-2
7.15 Results of Investigation 7-2
ARTICLE VIII CONDITIONS TO NORTHEAST'S OBLIGATION TO CLOSE 8-1
8.01 Representations and Warranties True at the Closing 8-1
8.02 Celcor's Performance 8-1
8.03 No Material Adverse Change 8-1
8.04 Authority 8-1
8.05 Opinion of Celcor's Counsel 8-1
8.06 Results of Investigation 8-1
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION 9-1
9.01 Representations to Survive Closing 9-1
9.02 Indemnification by the Stockholders 9-1
9.03 Indemnification by Celcor 9-1
9.04 Enforcement of Indemnification Rights 9-2
9.05 Remedies Cumulative 9-3
ARTICLE X MISCELLANEOUS 10-1
10.01 Notices 10-1
10.02 Assignability and Parties in Interest 10-1
10.03 Expenses 10-2
10.04 Governing Law 10-2
10.05 Counterparts 10-2
10.06 Headings 10-2
10.07 Pronouns 10-2
10.08 Complete Agreement 10-2
10.09 Modifications, Amendments and Waivers 10-2
10.10 Severability 10-2
APPENDICES
SECTION
DESCRIPTION REFERENCE
Appendix A Private Placement Questionnaire 2.05(a), 7.07
Appendix B Opinion of Northeast's Counsel 7.06
Appendix C Opinion of Celcor's Counsel 8.05
EXHIBITS
EXHIBIT
DESCRIPTION REFERENCE
Shareholders of Subsidiaries which are not wholly owned 3.1.3
Description of real estate interests 3.1.6
Leased real estate 3.1.7
Equipment List 3.1.8
Joint Venture and similar agreements 3.1.9
Shareholder List 3.1.10
Material Contracts 3.1.12
U.S. Employees 3.1.13
Underground Tanks 3.1.19
Tax elections 3.1.21
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") has
been made and entered into as of this ____ day of ___________,
1995, among Celcor, Inc., a Delaware corporation ("Celcor"),
Northeast (USA) Corp., a New York corporation ("Northeast"), and
the shareholders of Northeast listed on the signature page of
this Agreement ("Stockholders").
R E C I T A L S:
1. The respective Boards of Directors of Celcor and
Northeast have determined that it is in the best interests of
each corporation and its respective stockholders that Northeast
be merged with and into Celcor (the "Merger") in accordance with
the laws of the States of Delaware and New York in the manner and
on the terms and conditions set forth herein.
2. Stockholders own 100% of the issued and
outstanding voting stock of Northeast and have agreed to vote
their shares in favor of the Merger contemplated hereby.
3. Pursuant to the Merger, the outstanding capital
stock of Northeast will be converted into the right to receive
shares of Celcor common stock ("Celcor Stock") on the basis of
10,000 shares of Celcor Stock for each outstanding share of
Northeast common stock.
4. The respective Boards of Directors of Celcor and
Northeast desire to effectuate the Merger as a tax free
reorganization for United States federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual
agreements and covenants contained herein, the parties hereby
adopt this Agreement as and for a Plan of Reorganization (the
"Plan") under Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended and agree that Northeast shall be merged with
and into Celcor and that the terms and conditions of such Merger
and the mode of carrying the same into effect shall be as
follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article (except as otherwise
expressly provided in this Agreement) for all purposes of this
Agreement shall have the respective meanings specified in this
Article.
1.01 "Affiliate" shall mean any entity controlling or
controlled by another person, under common control with another
person, or controlled by any entity which controls such person.
1.02 "Agreement" shall mean this Agreement, and all the
exhibits and other documents attached to or referred to in the
Agreement, and all amendments and supplements, if any, to the
Agreement.
1.03 "Closing" shall mean the meeting of the parties at
which the Closing Documents shall be exchanged by the parties,
except for those documents, or other items specifically required
to be exchanged at a later time.
1.04 "Closing Date" shall mean May 25, 1995, or such
other date as agreed to by the parties on which the Closing
occurs.
1.05 "Closing Documents" shall mean the papers,
instruments and documents required to be executed and delivered
at the Closing pursuant to this Agreement.
1.06 "Code" shall mean the Internal Revenue of 1986, or
any successor law, and regulations issued by the Internal Revenue
Service pursuant to the Internal Revenue Code or any successor
law.
1.07 "Encumbrance" shall mean any charge, claim,
community property interest, condition, equitable interest, lien,
option, pledge, security interest, right of first refusal, or
restriction of any kind, including any restriction on use, voting
(in the case of any security), transfer, receipt of income, or
exercise of any other attribute of ownership.
1.08 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.09 "GAAP" shall mean generally accepted accounting
principles applied in a manner consistent with prior periods.
1.10 "Knowledge" Any limitation or qualification of a
representation or warranty made in this Agreement which is based
on "knowledge" shall include facts known, or which should be
known, to the following person, in the case of a representation
or warranty by Celcor: Stephen E. Roman, Jr. and the following
person in the case of a representation or warranty made by
Northeast: Nanshan Wu.
1.11 "Ordinary Course of Business" shall mean actions
consistent with the past practices of the designated party which
are similar in nature and style to actions customarily taken by
the designated party and which do not require, and in the past
have not received, specific authorization by the board of
directors of the designated party.
1.12 "Regulated Substances" includes any pollutant,
chemical substance, hazardous wastes, hazardous substances or
contaminant regulated under, or defined in or pursuant to the
Solid Waste Disposal Act, as amended (42 U.S.C. 6901 et seq.)
("SWDA"), the Comprehensive Environmental Response Compensation
and Liability Act (42 U.S.C. 9601 et seq.) ("CERCLA"), the Toxic
Substance Control Act, as amended (15 U.S.C. 2601, et seq.), the
Clean Air Act, as amended (42 U.S.C. 7401 et seq.), the Clean
Water Act, as amended (33 U.S.C. 1251, et seq.), and any other
federal, state or local law or regulation designed to provide
safe and healthful working conditions and to reduce occupational
safety and health hazards.
1.13 "SEC" shall mean the Securities and Exchange
Commission.
1.14 "Taxes" shall include federal, state and local
income taxes, capital gains tax, value-added taxes, franchise,
personal property and real property taxes, levies, assessments,
tariffs, duties (including any customs duty), business license or
other fees, sales, use and any other taxes relating to the assets
of Celcor or Northeast, as applicable, or the business of Celcor
or Northeast, as applicable, for all periods up to and including
the Closing Date, together with any related charge or amount,
including interest, fines, penalties and additions to tax, if
any, arising out of tax assessments.
1.15 "Transaction" shall mean the transaction
contemplated by this Agreement.
1.16 Terms Defined in Other Sections. The following
terms are defined elsewhere in this Agreement in the following
Sections:
Act 2.05(a)
Celcor Heading
Celcor Stock 2.03(a)
Effective Date 2.01(a)
Loss or Losses 10.02
Merger Recital 1
Northeast Heading
Northeast Stock 2.03(b)
Outside Date 5.01
Plan Recitals
Stockholders Heading
Surviving Corporation 2.01(a)
ARTICLE II
THE PLAN OF MERGER
2.01 The Merger and the Surviving Corporation.
(a) Merger. Upon the date on which the Merger is
to be effective, as determined pursuant to Section 2.02
("Effective Date"), Northeast shall be merged with and into
Celcor. Celcor shall be the surviving corporation (the
"Surviving Corporation"). The separate existence of Northeast
shall cease and the existence of Celcor shall continue unaffected
and unimpaired by the Merger, with all of the rights, privileges,
immunities and powers, and subject to all of the duties and
liabilities of a corporation organized under the general
corporation law of the State of Delaware. All rights,
privileges, powers, immunities and franchises of Northeast shall,
on the Effective Date, be automatically vested in Celcor. All
real and personal property of Northeast, tangible and intangible,
of every kind and description, shall become vested in Celcor and
all liabilities, claims and obligations of Northeast may be
enforced against Celcor, all without further action or deed by
either party. In all other respects, the effect of the Merger
shall be as set forth in Delaware General Corporation Law 252
("Delaware General Corporation Law" or "DGCL").
(b) Certificate of Incorporation. The
Certificate of Incorporation of Celcor shall be and remain the
Certificate of Incorporation of the Surviving Corporation
following the Effective Date, until the same shall be altered or
amended, except that such Certificate of Incorporation shall be
amended (i) to change the name of the Surviving Corporation to
"Northeast, Inc." and (ii) to increase, if determined to be
necessary, the authorized capital stock to that number of shares
which is sufficient to enable Celcor to issue the number of
shares of its common stock contemplated by the Merger.
(c) By-Laws. The by-laws of Celcor shall be the
by-laws of the Surviving Corporation following the Effective
Date, until the same shall be altered or amended.
(d) Directors. From and after the Effective
Date, the Board of Directors of the Surviving Corporation shall
consist of Eugene Cha, Frank Nelson, Jennifer Lo Wu, Joe Chen,
David Chow, Shi Hong-Yuan and Michael Hsu, until their respective
successors shall be duly elected and qualified.
(e) Officers. From and after the Effective Date,
the officers of the Surviving Corporation shall consist of the
persons listed below, holding the respective office listed
opposite such person's name, until their respective successors
shall be duly elected or appointed and qualified:
Name Title
Nanshan Wu President
Stephen E. Roman, Jr. Vice President, Treasurer and
Chief Financial Officer
Michael Hsu Secretary
2.02 Effectiveness of Merger.
(a) Certificate of Merger. Following the
approval of the Merger by the respective stockholders of Celcor
and Northeast and upon the fulfillment or waiver of the
conditions specified in Articles VI, VII and VIII hereof, and
provided that this Agreement has not been terminated and
abandoned pursuant to Article V hereof, Celcor shall cause a
Certificate of Merger to be executed, acknowledged and filed with
the Secretary of State of Delaware as provided in Section 252(c)
of the DGCL and with the New York Department of State, as
provided in Sections 904 and 907 of the Business Corporation Law
of the State of New York ("B.C.L.").
(b) Effective Date. The Merger shall become
effective immediately upon the filing of the Certificate of
Merger referred to in Section 2.02(a) hereof with the Secretary
of State of the State of Delaware and with the Secretary of State
of the State of New York.
2.03 Exchange of Securities. The manner of converting
the securities of Northeast into securities of the Surviving
Corporation at the Effective Date shall be as follows:
(a) Celcor's Shares. Each share of common stock
of Celcor ("Celcor Stock") which shall be outstanding at the
Effective Date shall remain outstanding, as the outstanding
common stock of the surviving corporation.
(b) Northeast Common Stock. Each share of Common
Stock, no par value, of Northeast ("Northeast Stock") outstanding
immediately prior to the Effective Date shall, by virtue of the
Merger and without any action on the part of the holder thereof,
be converted into the right to receive 10,000 shares of Celcor
Stock.
(c) Treasury Stock. Any shares of Northeast
Stock held by Celcor, any subsidiary of Celcor, or in Northeast's
treasury on the Effective Date shall be canceled and given no
effect in the Merger.
(d) Records. For the purposes of this Agreement,
the stock transfer books of Northeast shall be closed as of the
Effective Date, and no transfer of record of any shares of
Northeast Stock shall take place after the Effective Date.
(e) Surrender of Northeast Stock Certificates.
On or immediately after the Closing Date, each holder of an
outstanding certificate or certificates which prior thereto
represented shares of Northeast Stock shall surrender the same to
Celcor. Each Stockholder who shall have surrendered his
certificate for shares of Northeast Stock shall be entitled to
receive in exchange therefor a certificate or certificates
representing the number of whole shares of Celcor Stock into
which Northeast Stock shall have been converted and exchanged.
When the Merger becomes effective, the former stockholders of
Northeast shall thereupon cease to have any rights in respect of
Northeast Stock, other than to receive the certificates for
Celcor Stock described in Section 2.03(b) hereof. Unless and
until any certificates shall be so surrendered and exchanged, (i)
the holder shall not have any voting rights in respect of Celcor
Stock into which the shares of Northeast Stock shall have been so
converted and exchanged, and (ii) dividends or other
distributions payable to holders of record of shares of Celcor
Stock following the Effective Date shall not be paid to the
holder of the certificate. Upon surrender of the certificate
representing shares of Northeast Stock, there shall be paid to
the record holder of the certificate the amount of the dividends
or other distributions which shall have become payable following
the Effective Date with respect to the number of whole shares of
Celcor Stock represented by the certificate issued in exchange
for the surrendered certificate, but without interest.
2.04 Adjustment Upon Recapitalization. Subject to the
limitations of Section 4.03 hereof, the number of shares of
Celcor Stock to be issued at the Closing shall be appropriately
adjusted in the event that, prior to the Effective Date, the
Celcor Stock should be split, combined, or otherwise
recapitalized, or if any stock dividend should be paid on the
Celcor Stock, or the record date for the payment of any such
stock dividend should occur.
2.05 Securities Law Matters.
(a) Private Offering. Northeast and Stockholders
understand that the Celcor Stock to be issued and delivered to
Stockholders pursuant to the Merger will not be registered under
the Securities Act of 1933, as amended (the "Act"), but will be
issued in reliance upon the exemption afforded by Section 4(2) of
the Act and Regulation D promulgated by the SEC thereunder, and
that Celcor is relying upon the truth and accuracy of the
representations set forth in the answers to the questionnaire in
the form of Appendix A hereto delivered concurrently with the
execution of this Agreement. Each certificate of Celcor Stock
issued pursuant to this Agreement shall bear the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE TRANSFERRED UNLESS THEY ARE SO REGISTERED
OR, IN THE OPINION OF COUNSEL ACCEPTABLE TO
THIS CORPORATION, SUCH TRANSFER IS EXEMPT FROM
REGISTRATION.
Celcor shall give instructions to its transfer agent consistent
with the foregoing legend.
(b) Limited Transfer Rights. The Stockholders
may not transfer, sell or assign the Celcor Stock until such
shares are registered pursuant to the Act; provided that, in the
absence of such registration, a Stockholder may transfer shares
of Celcor Stock to one or more members of a group consisting of
(i) the spouse or children of any Stockholder, and (ii) one or
more trusts for their benefit; provided however, that the
transferee in each case will furnish Celcor with an investment
letter in form and substance satisfactory to counsel for Celcor
who shall be satisfied with the competence of such persons to
give an investment letter.
(c) Blue Sky Filings. Celcor shall promptly
institute and diligently prosecute such proceedings before, and
make such filings with, such state regulatory agencies as may be
necessary or appropriate in connection with or preliminary to the
issuance of Celcor Stock required to be issued to the
Stockholders pursuant to the Merger and any solicitation of the
Stockholders for their approval of the Plan and the matters
related hereto.
(d) Removal of Legend. If any Stockholder
desires to sell his Celcor Stock at any time after the Closing,
he shall notify Celcor of that desire and the number of shares he
desires to sell, together with such other information concerning
the transferee or purchaser and the manner of sale as counsel to
Celcor shall request. If counsel for Celcor is of the opinion
that such Celcor Stock may be sold without registration under the
Act, and shall render that opinion in writing to the Stockholder
and the Transfer Agent for Celcor Stock, the Transfer Agent shall
deliver to that Stockholder, certificates which are free of any
restrictive legend representing shares of Celcor Stock equal in
number to the number of shares submitted for transfer by that
Stockholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Northeast and
Stockholders. Northeast and the Stockholders jointly and
severally represent and warrant to Celcor as follows:
3.1.1 Organization of Northeast. Northeast is a
corporation, duly organized, validly existing, and in good
standing under the laws of the State of New York, and has all
requisite corporate power, franchises, and licenses to own its
property and conduct the business in which it is engaged.
Complete copies of Northeast's certificate of incorporation, by-
laws, as amended, minutes, stock transfer records and agreements,
if any, among some or all of the Stockholders have been delivered
to Celcor.
3.1.2 Capitalization.
3.1.2.1 Northeast has an authorized capital stock
consisting of 200 shares of common stock, no par value per
share, of which 175 shares are issued and outstanding. All
of such shares of Northeast Stock have been validly issued,
fully paid, are non-assessable, and were issued in
compliance with applicable federal and state securities
laws.
3.1.2.2 Northeast does not have outstanding any
subscriptions, options, rights, warrants, convertible
securities or other agreements or commitments to issue, or
contracts or any other agreements obligating Northeast to
issue, or to transfer from treasury, any shares of its
capital stock of any class or kind, or securities
convertible into such stock. No persons who are now holders
of Northeast Stock, and no persons who previously were
holders of Northeast Stock, are or ever were entitled to pre-
emptive rights, other than persons who exercised or waived
those rights.
3.1.3 Subsidiaries. Northeast does not directly or
indirectly have any subsidiaries, nor hold any equity interest in
any corporation, partnership or joint venture, other than
Shenyang United Vitatech Ltd. and Northeast (Shenyang) Consulting
Co. Ltd. (together, the "Subsidiaries"). The Subsidiaries are
each corporations, duly organized, validly existing and in good
standing under the laws of The Peoples Republic of China, and
each has all requisite corporate power, licenses and franchises
to own its properties and assets and conduct the business in
which it is engaged. Complete copies of the certificate of
incorporation, by-laws, as amended, minutes, stock transfer
records and agreements, if any, among some or all of the
stockholders of the Subsidiaries (if not wholly owned by
Northeast) have been delivered to Celcor. Exhibit 3.1.3 lists
the shareholders of any Subsidiary which is not wholly owned.
3.1.4 Foreign Qualifications. Northeast and each
Subsidiary is duly qualified to conduct business as a foreign
corporation in each state or other jurisdiction in which it is
required to be so qualified.
3.1.5 Other Business Names. Neither Northeast nor
any Subsidiary transacts business under any trade name or
fictitious name.
3.1.6 Owned Real Estate; Real Estate Interests.
3.1.6.1 Northeast and each Subsidiary has
good and marketable title to the land which it owns, all of
which is listed on Exhibit 3.1.6 annexed hereto. The real
estate owned by Northeast is unimproved vacant land which
has been acquired to build a residential and office facility
located in Queens, New York. The land is not subject to any
mortgage, lien or similar encumbrance.
3.1.6.2 The interest held by Shenyang United
Viatech, Ltd. in certain real estate located in Shenyang,
China to develop a factory to produce vitamin and cosmetic
products is also described in Exhibit 3.1.6 annexed hereto.
3.1.7 Leased Real Estate. Neither Northeast nor
any Subsidiary leases any real estate from any person, nor has
Northeast or any Subsidiary leased any real estate to any person,
except as described in Exhibit 3.1.7.
3.1.8 Tangible Personal Property.
3.1.8.1 Exhibit 3.1.8 annexed hereto identifies
all items initially valued at more than $10,000.00 of
machinery, motor vehicles, computer equipment, furniture,
fixtures, leasehold improvements, and all other tangible
personal property owned and used by Northeast and its
Subsidiaries in connection with their business on the date
hereof.
3.1.8.2 Northeast and its Subsidiaries do not
lease any equipment which involve monthly payments of more
than $1,000.00 on account of any such lease. Copies of all
equipment leases which are in effect have been or will
promptly be furnished to Celcor. Northeast is not in
default under any of such equipment leases and is not aware
of any fact which, with notice and/or passage of time, would
constitute such a default. All personal property owned by
Northeast or its Subsidiaries, or leased and used by
Northeast or any Subsidiary in its business is in good
condition, normal wear and tear excepted, and is in good
operating order.
3.1.9 Intangible Personal Property; Computer
Programs.
3.1.9.1 Northeast and its Subsidiaries do not own
any patents, patent applications, inventions, trademarks,
trademark applications, copyrights, trade names or
proprietary technology, except for certain formulas for the
production of vitamins and cosmetic products described on
Exhibit 3.1.9. Except as listed on Exhibit 3.1.9 annexed
hereto, neither Northeast nor any Subsidiary is a party to
any distributorship, franchise, joint venture or license
agreements (whether as grantor or grantee). Copies of all
written instruments which evidence such intangible personal
property have been or will promptly be delivered to Celcor.
3.1.9.2 There are no infringement or other claims
or demands against Northeast or its Subsidiaries with
respect to any items of intangible personal property, and no
proceedings have been instituted, are pending, or to the
knowledge of Northeast, have been threatened to terminate or
cancel any agreement affording to Northeast the right to use
any intangible asset, or which challenge the rights of
Northeast or its Subsidiaries with respect to any of its
intangible assets; and there are no facts known to Northeast
which make it likely that any such license or similar
agreement will not be renewed at its next expiration date or
which might reasonably serve as the basis, in whole or in
part, of any claim that any part of the business carried on
by Northeast or any Subsidiary infringes the patent,
trademark, trade name, copyright, or other rights of any
other person. Northeast (or one of its Subsidiaries) is the
sole and exclusive owner of each of said items of intangible
personal property.
3.1.9.3 Northeast does not use, is not licensed
to use and has no need to use any patent, patent
application, trademark, trademark application, trade name,
formula or copyright which is owned by an unrelated third
party.
3.1.10 Stockholders; Title to Northeast Stock.
Exhibit 3.1.10 annexed hereto contains a complete list of the
names and addresses of all the Stockholders of Northeast and the
number of shares of Northeast Stock owned by each of them. Each
of the persons listed on such Exhibit is the record and
beneficial owner of the shares of Northeast Stock listed on that
Exhibit, owns those shares of Northeast Stock free and clear of
any security interests, liens, encumbrances or claims, (other
than a pledge of the shares in favor of Celcor), and has the
unrestricted right to vote the Northeast Stock owned by such
person in favor of the Transaction and transfer such shares to
Celcor without the consent of any person.
3.1.11 Title to Assets. Northeast and its
Subsidiaries have good and marketable title in and to all of
their property reflected in the most recent consolidated
financial statement plus all assets purchased by Northeast and
its Subsidiaries since the date of that financial statement, less
all assets which Northeast and its Subsidiaries have disposed of
in the ordinary course, which property is free and clear of any
security interests, consignments, liens, judgments, encumbrances,
restrictions, or claims of any kind. The only liens or security
interests which exist and, at the Closing will exist, on
Northeast's assets are those which either (a) secure liabilities
disclosed on the financial statements annexed hereto, or (b) are
liens for current taxes or assessments not yet due.
3.1.12 Material Contracts. Exhibit 3.1.12 annexed
hereto identifies the following contracts, leases and other
obligations to which Northeast or any of its Subsidiaries is a
party or by which any of them is bound and which are not
identified elsewhere in any other Exhibit to this Agreement: (a)
contracts with or loans to any of Northeast's stockholders,
officers, directors, employees, agents, consultants, advisors,
salesmen, distributors or sales representatives; (b) secured
loans and unsecured loans and lines of credit; (c) contracts
restricting Northeast or any of its Subsidiaries from doing
business in any areas or in any way limiting competition; (d)
contracts calling for aggregate payments by Northeast or by any
of its Subsidiaries in excess of $50,000 and which are not
terminable without cost or liability on notice of 60 days or
less; and (e) guarantees by Northeast or by any of its
Subsidiaries of the obligations of any other party, except those
resulting from the endorsement of customer checks deposited by
the payee for collection. Except as disclosed on Exhibit 3.1.12,
Northeast and each of its Subsidiaries have, in all material
respects, performed or complied with all material obligations
required on their part to be performed or complied with through
the date hereof under any of such contracts, obligations or
commitments to which each is a party or otherwise bound and no
default has occurred thereunder, whether waived or not waived,
which could have an adverse effect upon the business or financial
condition of or impose a liability upon Northeast or any of its
Subsidiaries. All parties to such contracts, obligations or
commitments with Northeast or any of its Subsidiaries are in
substantial compliance therewith and no event has occurred which,
through the giving of notice or the passage of time or both,
would cause or constitute a material default under any such
contracts, obligations or commitments, or would cause the
acceleration of any obligation of any party thereto. Copies of
the contracts listed or referred to in Exhibit 3.1.12 have been
or will promptly be delivered or made available to Celcor.
3.1.13 Labor Matters.
3.1.13.1 There are presently no employment or
consulting contracts with or covenants against competition
by, any present or former employees of Northeast or any of
its Subsidiaries.
3.1.13.2 Annexed hereto as Exhibit 3.1.13 is a
current list showing the names of all United States
employees of Northeast and its Subsidiaries, their original
dates of employment, job titles and annual rate of pay for
salaried employees and hourly rates for hourly employees.
3.1.13.3 All employees of Northeast and its
Subsidiaries are employees at will who may be terminated by
Northeast at any time with no obligation to make any payment
except wages to the date of termination.
3.1.13.4 Neither Northeast nor any of its
Subsidiaries is indebted to, nor a creditor of, any
Stockholder or of any relative of any of such Stockholder,
except for accrued wages and salaries.
3.1.13.5 Northeast and its Subsidiaries are in
compliance with all federal and state laws respecting
employment, wages and hours, and in compliance with any
relevant Chinese laws. Northeast and its subsidiaries are
not engaged in any discriminatory hiring or employment
practices or any unfair labor practices nor have any
employment discrimination or unfair labor practice
complaints against Northeast or any of its Subsidiaries been
filed, or to the knowledge of Northeast or any Subsidiary
threatened to be filed, with any Chinese, or any U.S.
federal or state agency having jurisdiction over Northeast's
labor matters. Neither Northeast nor any of its
Subsidiaries has been threatened by any former employee with
any suit alleging wrongful termination, nor does Northeast
have knowledge of facts which might form a basis for such a
suit.
3.1.13.6 Northeast and its Subsidiaries have not,
directly or through agents and independent contractors,
employed any unauthorized aliens, as defined in 8 U.S.C.
Section 1324a(h)(3). Northeast and its Subsidiaries have
complied, or caused any such agent or independent
contractor, to comply with the employment verification and
record-keeping requirements of 8 U.S.C. Section 1324a and 8
C.F.R. Section 274a, as amended.
3.1.14 Benefit Plans; ERISA. Neither Northeast, nor
any of its Affiliates maintains a group health plan (within the
meaning of Section 5000(b)(1) of the Code). Northeast does not
now and has never maintained, sponsored or contributed to any
plan or program or arrangement providing post-termination of
employment retirement, health, dental, disability or life
insurance benefits with respect to employees or former employees
and their spouses and dependents.
3.1.15 Licenses and Permits. Northeast and its
Subsidiaries and their respective employees or agents have all
material licenses, permits, orders, approvals and authorizations
required by Northeast or any such Subsidiary for the conduct of
businesses as presently and anticipated to be conducted
(including both U.S. and Chinese licenses, permits,
authorizations or approvals). Northeast and its Subsidiaries are
acting within the terms of such licenses, permits, orders, and
approvals. Neither Northeast nor any of its Subsidiaries has
received any notice of investigation, evaluation or suspension of
any such licenses, permits, orders, approvals or authorizations.
To the best knowledge of Northeast and its Subsidiaries, no
suspension or cancellation of any such licenses, permits, orders,
approvals and authorizations has been threatened or is
contemplated.
3.1.16 Authority Relative to Agreement;
Enforceability. The execution, delivery and performance of this
Agreement is within the legal capacity and power of Northeast and
the Stockholders and have been duly authorized by all requisite
corporate action on the part of Northeast. This Agreement is a
legal, valid and binding obligation of Northeast and the
Stockholders, enforceable against Northeast and the Stockholders
in accordance with its terms, except insofar as its enforcement
may be limited by (a) bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and (b) equitable principles limiting the availability
of equitable remedies. All persons who execute this Agreement on
behalf of Northeast have been duly authorized to do so.
3.1.17 Compliance with Other Instruments; Consents.
Neither the execution of this Agreement, nor the consummation of
the Transaction, will conflict with, violate or result in a
breach or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default), or result in
the termination of, or accelerate the performance required by, or
result in the creation of any lien or encumbrance upon any of the
assets of Northeast or any of its Subsidiaries under any
provision of any certificate of incorporation, by-law, indenture,
mortgage, lien, lease, agreement, contract, instrument, or any
other restriction of any kind or character to which Northeast or
any of its Subsidiaries is subject or by which Northeast or any
of its Subsidiaries is bound, or require the consent of any third
party or governmental agency. To the extent the consent of
Celcor to the Merger is required under the terms of that certain
pledge agreement among Celcor and the shareholders of Northeast,
by its execution of this Agreement, Celcor consents to the
Merger.
3.1.18 Compliance with Applicable Laws. Northeast
and its Subsidiaries are in compliance with all Chinese and U.S.
federal, state, county, and municipal laws, ordinances,
regulations, judgments, orders or decrees applicable to the
conduct of the business of each, or to the assets owned, used, or
occupied by each, and neither Northeast nor any of its
Subsidiaries has received notice or advices to the contrary. All
reports required by any or all Chinese and U.S. federal, state
and local governments have been timely filed and all information
contained therein is true and correct. Neither the execution of
this Agreement, nor consummation of the Transaction will (a)
violate any order, writ, injunction, statute, rule or regulation
applicable to Northeast or any of its Subsidiaries, or (b)
require the consent, approval, authorization or permission of, or
the filing with or the notification of any Chinese or U.S.
federal, state or local government agency.
3.1.19 Environmental Compliance.
3.1.19.1 Northeast and its Subsidiaries are in
compliance with all applicable Chinese and U.S. federal,
state and local laws and regulations relating to pollution
control and environmental contamination and all laws and
regulations with regard to record-keeping, notification and
reporting requirements respecting Regulated Substances.
Neither Northeast nor any of its Subsidiaries has been
alleged to be in violation of, nor has any of the foregoing
Companies been subject to any administrative or judicial
proceeding pursuant to such laws or regulations, either now
or any time during the past three years.
3.1.19.2 None of the real property owned, used
and/or occupied by Northeast or any Subsidiary and located
in the United Stated has ever been used by previous or
current owners, users and/or operators to generate,
manufacture, refine, transport, treat, store, handle,
dispose, transfer or process Regulated Substances.
3.1.19.3 Except as listed on Exhibit 3.1.19
annexed hereto, Northeast and its Subsidiaries do not own or
use underground storage tanks at any of the real property
owned or occupied by Northeast or any of its Subsidiaries.
If such tanks are owned or used, Northeast and its
Subsidiaries have complied in all respects with all laws
regulating underground storage tanks and the Federal
Technical Standards and Corrective Action Requirements for
Owners and Operators of Underground Storage Tanks (40 C.F.R.
Part 280).
3.1.20 Financial Statements. Northeast and its
Subsidiaries have delivered to Celcor consolidated balance sheets
and related consolidated statements of operations, changes in
stockholders' equity and cash flows for the fiscal years ended
June 30, 1993 and June 30, 1994 and the four months and one year
then ended, in each case audited by BDO Seidman, independent
certified public accountants. Within thirty days of the date of
this Agreement, Northeast and its Subsidiaries will deliver an
unaudited consolidated balance sheet dated December 31, 1994 and
consolidated statement of operations, changes in stockholders'
equity and cash flows for the six months ended December 31, 1994.
The audited financial statements fairly present and the interim
financial statements, when delivered, will present, the financial
position of Northeast and its Subsidiaries and the results of
their operations as at the dates and for the periods to which
they apply, and such statements have been (and in the case of the
interim statements, will be) prepared in conformity with GAAP,
applied on a consistent basis throughout the periods involved.
The interim statements will include all adjustments (subject only
to normal year-end audit adjustments) necessary for a fair
presentation of Northeast's consolidated financial position and
results of operations for that period.
3.1.21 Taxes.
3.1.21.1 All tax and information returns required
to have been filed by Northeast or any of its Subsidiaries
have either been filed with the appropriate taxing authority
or Northeast has filed for any required extension; and all
Taxes of Northeast and its Subsidiaries have been paid (or
estimated taxes have been deposited) to the extent such
payments are required prior to the date hereof or accrued on
the books of Northeast and its Subsidiaries. The returns
were (or will be) correct as (or when) filed. Northeast's
consolidated financial statements include adequate provision
for Taxes incurred or accrued as of the date of the most
recent balance sheet. True and complete copies of the most
recent federal, state and local tax returns of Northeast or
any of its Subsidiaries will promptly be delivered to Celcor
when filed.
3.1.21.2 None of the federal taxes and state and
local franchise and sales tax returns of Northeast and its
Subsidiaries have been audited (or examined by IRS in the
case of federal tax returns). No assessments or additional
Taxes have been proposed or threatened against Northeast or
any Subsidiary or any of their respective assets, and
neither Northeast nor any Subsidiary has executed any waiver
of the statute of limitations on the assessment or
collection of any Tax Liabilities.
3.1.21.3 There are no pending investigations of
Northeast or any of its Subsidiaries or their respective tax
returns by any federal, state or local taxing authority, and
there are no federal, state, local or foreign tax liens upon
any of Northeast's assets or the assets of any Subsidiary.
3.1.21.4 Exhibit 3.1.21 annexed hereto lists any
elections which Northeast has made with respect to the
income tax treatment of any items which cannot be revoked
without the consent of the Commissioner of Internal Revenue.
3.1.22 Litigation. There are no legal,
administrative, arbitration or other proceedings or claims
pending or to the knowledge of Northeast, threatened, against
Northeast, or any of its Subsidiaries, nor is Northeast or any
Subsidiary subject to any existing judgment which might affect
the financial condition, business, property or prospects of
Northeast or any Subsidiary; nor has Northeast or any Subsidiary
received any inquiry from an agency of the federal or of any
state or local government about the Transaction, or about any
violation or possible violation of any law, regulation or
ordinance affecting its business or assets; nor has Northeast or
any Subsidiary been subject to any products liability claims
during the three years ended on the date of this Agreement.
3.1.23 Brokerage. No broker or finder has rendered
services to Northeast or to any Stockholder in connection with
the Transaction.
3.1.24 Full Disclosure. No representation or
warranty made by Northeast or any Subsidiary in this Agreement,
and no certification furnished or to be furnished to Celcor
pursuant to this Agreement contains or will contain any untrue
statement of a material fact or omits, or will omit, to state a
material fact necessary to make the statements contained herein
or therein not misleading.
3.2 Representations and Warranties of Celcor. Celcor
hereby represents and warrants to Northeast and Stockholders
that:
3.2.1 Organization. Celcor is duly organized,
validly existing, and in good standing under the laws of the
state of its incorporation and has the corporate power to
execute, deliver, and perform this Agreement.
3.2.2 Capitalization.
3.2.2.1 Celcor has an authorized capital stock
consisting of 20,000,000 shares of common stock, par value
$0.001 per share, of which 3,364,674 shares are issued and
outstanding and 2,000,000 shares of preferred stock, par
value $0.001 per share, of which 275,000 shares are issued
and outstanding. All of such shares of stock have been
validly issued, fully paid, are non-assessable, and were
issued in compliance with applicable federal and state
securities laws.
3.2.2.2 Except for its outstanding convertible
preferred stock, Celcor does not have outstanding any
subscriptions, options, rights, warrants, convertible
securities or other agreements or commitments to issue, or
contracts or any other agreements obligating Celcor to
issue, or to transfer from treasury, any shares of its
capital stock of any class or kind, or securities
convertible into such stock. No persons who are now holders
of Celcor Stock, and no persons who previously were holders
of Celcor Stock, are or ever were entitled to pre-emptive
rights other than persons who exercised or waived those
rights.
3.2.3 Authorization. The execution and delivery of
this Agreement and the consummation of the Transaction have been
duly authorized by the Board of Directors of Celcor. This
Agreement constitutes the legal, valid and binding obligation of
Celcor, enforceable against it in accordance with its terms,
except insofar as the enforcement thereof may be limited by
bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally and subject to equitable
principles limiting the availability of equitable remedies. All
persons who have executed this Agreement on behalf of Celcor have
been duly authorized to do so.
3.2.4 Title to Assets. Celcor has good and
marketable title in and to all of its properties reflected in the
most recent financial statement, plus all assets purchased by
Celcor since the date of that financial statement, less all
assets which Celcor has disposed of in the ordinary course, which
property is free and clear of any security interests,
consignments, liens, judgments, encumbrances, restrictions, or
claims of any kind. The only liens or security interests which
exist and, at the Closing will exist, on Celcor's assets are
those which either (a) secure liabilities disclosed in the
financial statements annexed hereto, (b) secure the ownership
interests of lessors' of equipment used by Celcor, or (c) are
liens for current taxes or assessments not yet due.
3.2.5 No Third Party Consent Required; No Violation
of Other Instruments. Except for the need to obtain the consent
of its stockholders, neither the execution nor the performance of
this Agreement by Celcor requires the consent of any third party,
nor will it violate or result in a breach or constitute a default
under any provision of the certificate of incorporation or by-
laws of Celcor, or any indenture, mortgage, lien, lease,
agreement, contract, instrument, order, judgment, decree,
statute, ordinance, regulation or any other restriction of any
kind or character to which Celcor is subject or by which it is
bound.
3.2.6 Litigation. There are no legal,
administrative, arbitration or other proceedings or claims
pending, or to the knowledge of Celcor, threatened, against
Celcor, nor is Celcor subject to any existing judgment which
might affect the financial condition, business, property or
prospects of Celcor; nor has Celcor received any inquiry from an
agency of the federal or of any state or local government about
the Transaction, or about any violation or possible violation of
any law, regulation or ordinance affecting its business or
assets; nor has Celcor been subject to any products liability
claims during the three years ended on the date of this
Agreement.
3.2.7 Brokerage. No broker or finder has rendered
services to Celcor in connection with the Transaction.
3.2.8 Financial Statements. Celcor has delivered
to Northeast Celcor's Annual Report to the SEC on Form 10-K for
its year ended June 30, 1994, which includes its financial
statements as of that date and for two years then ended, and its
quarterly report to the SEC on Form 10-Q for the three and six
month periods ended December 31, 1994. Those statements fairly
present the financial position of Celcor as at the dates and for
the periods to which they apply and have been prepared in
conformity with GAAP.
3.2.9 Full Disclosure. No representation or
warranty made by Celcor in this Agreement, and no certification
furnished or to be furnished to Northeast and the Stockholders
pursuant to this Agreement contains or will contain any untrue
statement of a material fact or omits, or will omit, to state a
material fact necessary to make the statements contained herein
or therein not misleading.
ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS OF
THE PARTIES
4.01 Corporate Approval. Promptly following the date
hereof, Celcor will call a special meeting of its stockholders
for the purpose of considering and approving this Agreement, the
Transaction and the Plan. Celcor shall promptly call that
meeting by preparing a proxy statement and giving written notice
to all its stockholders in accordance with its by-laws and
applicable corporation law.
4.02 Stockholders' Agreement to Vote. Promptly
following the date hereof, Northeast will either call a special
meeting of its stockholders for the purpose of considering and
approving this Agreement, the Transaction and the Plan, or will
obtain the written consent of its stockholders with respect to
such matters. The undersigned Stockholders hereby agree to vote
all Northeast Stock which they own in favor of the Transaction.
4.03 Conduct of Business. Prior to the Closing Date,
each corporation shall conduct its business only in the Ordinary
Course of Business, except as otherwise permitted by this
Agreement or consented to the other party in writing. Each party
shall promptly advise the other in writing of any material
adverse change in the business, assets or prospects of such
corporation. Without the prior consent of the other party,
neither Northeast nor Celcor shall, prior to the Effective Date,
(a) issue, sell, purchase or redeem, or grant options or warrants
or rights to purchase, or otherwise agree to issue, sell,
purchase or redeem, any common stock or other securities; (b)
incur any indebtedness or other liability, or discharge any
obligation or liability other than in the Ordinary Course of
Business; (c) make any distribution to its stockholders; (d)
amend its Certificate of Incorporation or by-laws; (e) enter into
an employment agreement or make any changes in compensation or
other employment benefits for its executive officers; (f) sell or
otherwise dispose of any of its material assets; (g) mortgage,
pledge or subject to lien or other Encumbrance any of its assets;
or (h) acquire or enter into a contract to acquire any business
or material asset.
4.05 Filing With Securities And Exchange Commission.
Northeast recognizes that Celcor may be required to report the
Transaction to the SEC on Form 8-K and will be obligated to
solicit shareholder approval pursuant to a proxy statement, each
of which must be accompanied by financial statements of
Northeast. Northeast shall cause its regular accountants to
furnish such statements to Celcor and to consent to the use of
those statements and their related report in said proxy statement
and Form 8-K.
4.06 Access. Between the date hereof and the Closing
Date, each party shall give to the other and their respective
designees full access, during normal business hours and upon
reasonable notice, in such a manner as not to disrupt normal
business activities, to the premises, property, material
contracts and books of account and records of such party. Each
party will hold, and will cause all of its directors, officers,
employees and representatives to hold in complete confidence, all
information so obtained and will use such information only for
the purpose of conducting its due diligence investigation. If
the Transaction is not consummated as contemplated herein, each
party will return to the other all returnable information and
data and will not disclose any such data or information to any
other person. Such obligation of confidentiality shall not
extend to any information which is shown to have been previously
known to the party to whom the information was provided, or
generally known to others engaged in the same trade or business
as the party who provided the information, or that is part of
public knowledge.
4.07 Best Efforts. Northeast, the Stockholders and
Celcor shall use their best efforts, and shall cooperate with and
assist each other in their efforts to obtain such consents and
approvals of third parties as may be necessary to consummate the
Transaction and to permit each party to enjoy the benefits of the
Transaction without any cost beyond that contemplated by this
Agreement.
4.08 Brokers or Finders. Each party agrees to hold the
other harmless and to indemnify it against the claims of any
persons or entities claiming to be entitled to any brokerage
commission, finder's fee, advisory fee or like payment from such
other party based upon actions of the indemnifying party in
connection with the Transaction.
4.09 Environmental Matters.
4.9.1 Celcor shall have the right, at its expense,
to make such environmental studies of any real property owned by
Northeast and its Subsidiaries, or any real property which
Northeast and its Subsidiaries have the right to acquire, as it
shall deem necessary to determine whether there is any reason to
believe there is contamination to any soil, subsurface condition
or groundwater caused by the presence of a Regulated Substance
which could give rise to an obligation to perform remediation or
clean-up, and whether Northeast's underground fuel storage tanks,
if any, leak. If there should be evidence of the presence of any
Regulated Substance or improper installation or leakage of a
tank, Celcor will so advise the Stockholders who will cause
Northeast to take whatever action is necessary to remediate the
situation, including clean up of contaminated soil, removal of
the tank, if appropriate, or removal of the contents of the tank
and filling of the tank with sand or other non-polluting
material. The entire cost of that cleanup shall be accrued as a
liability of Northeast.
4.9.2 If the Closing shall occur prior to the
completion of that remediation, the cleanup cost, as estimated by
a consultant acceptable to Celcor and Northeast, shall be accrued
as a liability of Northeast. If the actual cost of that cleanup,
including but not limited to the cost of preliminary studies,
tank and soil removal, installation and operation of monitoring
wells, governmental fees and fines relating to that pollution and
remediation should exceed the estimate, the Stockholders shall
jointly and severally reimburse Celcor for the excess cost.
4.9.3 If Celcor determines that any such tank is
not leaking, it shall so advise the Stockholders who shall then
have no further obligation with respect to the tank other than to
pay for the cost of upgrading the tank as required by the Federal
Technical Standards and Correction Action Requirements for Owners
and Operators of Underground Storage Tanks and any applicable
state statute or regulation dealing with Northeast's underground
tanks.
4.10 Exclusive Dealing. Until this Agreement shall be
consummated or terminated in accordance with its terms, neither
Northeast nor any Stockholder shall take, or permit any other
person acting on its or his behalf, to take or refrain from
taking any action, directly or indirectly, to encourage, initiate
or engage in discussions or negotiations with, or provide
information to, any person or group other than Celcor with
respect to any purchase of the stock of Northeast or any purchase
of any substantial portion of the assets of, or merger with,
Northeast, other than disclosures consented to in writing by
Celcor. Northeast and the Stockholders shall promptly notify
Celcor of any solicitation or inquiry which any of them receive
with respect to any such matter.
ARTICLE V
THE CLOSING
5.01 The Closing. The Closing shall take place at the
offices of Lowenstein, Sandler, Kohl, Fisher & Boylan, 65
Livingston Avenue, Roseland, New Jersey 07068, commencing at
9:00 a.m. local time on the Closing Date, provided that all
conditions precedent to the obligations of Northeast and Celcor
to close have then been met or waived. Either party may postpone
the Closing for a reasonable period of time if necessary to
enable it to perform any obligations hereunder. If the Closing
shall not take place on or before the 120 day following the date
hereof (the "Outside Date"), this Agreement may be terminated at
the option of either party, other than a party whose act or
failure to act prevented the Closing from occurring on or before
the Outside Date.
5.02 Termination. This Agreement may be terminated at
any time until completion of the Closing as follows: (a) by
mutual consent of Celcor and Northeast; (b) by Celcor or
Northeast, respectively, if, at or before the completion of the
Closing, any material condition set forth herein upon the
obligation of such party to consummate the Transaction shall not
have been duly satisfied or waived; (c) by Celcor or Northeast if
the Closing shall not have occurred on or before the Outside
Date, but no party shall be entitled to terminate pursuant to
this clause if its own acts or failures to act delay the Closing
beyond the Outside Date; or (d) by Celcor or Northeast,
respectively, if it shall have discovered that any representation
or warranty made herein for its benefit, or in any certificate,
schedule or document furnished to it, pursuant to this Agreement
is untrue in any material respect, or if the other party shall
have defaulted in the performance of any obligation to be
performed by such party under this Agreement; provided, however,
that in order to terminate this Agreement under Section 5.02 (b)
or (d), the party seeking to terminate this Agreement shall, upon
discovery of a breach or default, give written notice thereof to
the other party and the other party shall fail to cure the breach
or default within ten (10) days after receipt of such notice.
5.03 Liability on Termination. Upon any termination of
this Agreement pursuant to Section 5.02 (a), no party shall have
any liability or obligation hereunder (except to observe the
confidentiality provisions hereof), and each party shall bear the
expenses incurred by it. If a party should terminate pursuant to
Section 5.02(b) or Section 5.02(d), the terminating party shall
have no liability, but the defaulting party shall not be excused
from liability to the other party unless it can clearly
demonstrate that the failure to perform was caused by persons or
acts beyond its control. If the termination is the result of an
event described in Section 5.02(c) above, the terminating party
shall have no liability to the other party provided that the
terminating party did not delay the closing beyond the Outside
Date, but the party causing that delay shall not be excused from
liability to the other party unless it can clearly demonstrate
that such delay was caused by persons or acts beyond its control.
5.04 Termination Fees. In order to induce each party
to enter into this Agreement, and as a means of compensating the
parties for the substantial efforts and direct and indirect
monetary costs incurred and to be incurred in connection with the
Transaction, (i) in the event that Celcor terminates this
Agreement as a result of Northeast's failure to satisfy any of
the conditions set forth in Article VII, Northeast shall
reimburse Celcor for all reasonable out-of-pocket expenses
actually incurred by it or on its behalf in connection with this
Agreement and the Transaction in an amount not to exceed $25,000;
and (ii) in the event that Northeast terminates this Agreement as
a result of Celcor's failure to satisfy any of the conditions set
forth in Article VIII, Celcor shall reimburse Northeast for all
reasonable out-of-pocket expenses actually incurred by it or on
its behalf in connection with this Agreement and the transaction
in an amount not to exceed $25,000; provided, however, that any
claim that a representation of a party, which is based on the
knowledge of such party, is false shall not give rise to a claim
under this Section unless that representation is false to the
knowledge of such party on the date of this Agreement.
ARTICLE VI
CONDITIONS TO OBLIGATION OF EACH PARTY
The obligation of each party to effect the Transaction
shall be subject to the fulfillment, at or prior to the Closing
Date, of the following conditions:
6.01 No Prohibition of Transaction.
(a) No third party shall have instituted any suit
or proceeding to restrain, enjoin or otherwise prevent the
consummation of the Transaction, or to seek damages from or
impose obligations upon either party by reason of the Transaction
which, in such party's reasonable judgment, would involve expense
or lapse of time that would be materially adverse to that party's
interest.
(b) No order shall have been issued by any court
or administrative body to inquire into, restrain, enjoin or
otherwise prevent consummation of the Transaction.
6.02 Compliance with Law. There shall have been
obtained all permits, approvals and consents of any governmental
body or agency which counsel for Celcor or Northeast may
reasonably deem necessary or appropriate to consummate the
Transaction in compliance with laws applicable to the
Transaction, assets or business of either party.
6.03 Proceedings, Documentation and Consents. All
proceedings and Closing Documents contemplated by this Agreement,
together with all consents to and approvals of the Transaction
(the form and substance of all of which shall be reasonably
satisfactory to the parties) as are necessary to effect the
Merger, shall have been obtained.
6.04 Tax Free Reorganization. The Merger and the
receipt by the shareholders of Northeast of shares of Celcor
Stock in exchange for their shares of Northeast Stock shall
constitute a tax free reorganization pursuant to Section
368(a)(i)(A) of the Internal Revenue Code of 1986, as amended.
ARTICLE VII
CONDITIONS TO THE OBLIGATION OF CELCOR TO CLOSE
The obligations of Celcor hereunder are subject to the
satisfaction, on or prior to the Closing Date, of all the
following conditions, compliance with which or the occurrence of
which may be waived in whole or in part by Celcor in writing.
7.01 Representations and Warranties True at the Closing
Date. Except for changes contemplated by this Agreement and
changes which do not individually or in the aggregate have a
material adverse effect upon the assets or business acquired, the
representations and warranties of Northeast contained in Article
III shall be deemed to have been made again at and as of the
Closing Date and shall then be true and correct, except for
changes in the Ordinary Course of Business of Northeast.
7.02 No Material Adverse Change; Officers'
Certificates. During the period from the date of this Agreement
to the Closing Date there shall not have been any material
adverse change in the financial condition, results of operations
or prospects of Northeast, nor any material loss or damage to its
assets, whether or not insured, which materially adversely
affects its ability to conduct its business.
7.03 Corporation's Performance. Each of the
obligations of Northeast to be performed on or before the Closing
Date pursuant to the terms of this Agreement shall have been duly
performed.
7.04 Necessary Corporate Approvals. The board of
directors and stockholders of Northeast shall have duly
authorized and approved the execution and delivery of this
Agreement and all corporate action necessary or proper on the
part of Northeast to authorize the execution, delivery and
performance of this Agreement and the Plan, shall have been taken
on or prior to the Closing Date.
7.05 Resolutions Authorizing the Execution of this
Agreement. At the Closing, Northeast will furnish to Celcor
copies of the resolutions or consents of Northeast's board of
directors and its stockholders, appropriately certified by
Northeast's secretary, authorizing the execution, delivery, and
performance of this Agreement and the Plan.
7.06 Opinion of Counsel. Northeast shall have
furnished Celcor with a favorable opinion dated on and as of the
Closing Date, of Cha and Pan, counsel to Northeast, in the form
of Appendix B hereto.
7.07 Investment Letters. On or prior to the Closing
Date, each Stockholder shall have executed and delivered to
Celcor a letter agreement and questionnaire in the form of
Appendix A hereto, it being understood that Celcor, in issuing
the Celcor Stock, will be relying on the representations of said
persons therein contained.
7.08 Satisfactory Searches. Celcor shall have received
evidence, satisfactory to it, that (a) Northeast is duly
organized, validly existing and in good standing in its state of
incorporation, (b) Northeast is qualified to do business as a
foreign Corporation where, in the opinion of counsel to
Northeast, it is required to be so qualified, and (c) Northeast
has good title to all assets listed in its financial statements
free and clear of all Encumbrances.
7.09 Environmental Review. Celcor shall not have
discovered the presence of Regulated Substances on any real
property owned by Northeast requiring remediation under any
federal or state law, rule or regulation, nor any improper
installation of or leakage from any underground storage tanks on
such real property, or any violation of environmental laws, rules
or regulations with regard to such Regulated Substance or such
tanks on such property that shall not have been remediated prior
to the Closing Date.
7.10 Consents to Transaction. On or prior to the
Closing Date, Northeast shall furnish Celcor with such consents
to the Transaction as in the opinion of Celcor or its counsel are
required to permit Ceclor to enjoy the benefits of the
Transaction without any cost beyond that contemplated by this
Agreement.
7.11 Dissenters' Rights. Northeast shall not have
received notices from any holders of any class of Northeast Stock
of their intent to dissent from the Transaction.
[7.12 Title Insurance. Celcor shall have obtained
a title insurance policy or binder insuring the Surviving
Corporation's interest in any real estate owned by Northeast.]
7.13 Financial Statements. Northeast shall have
delivered to Celcor, at Northeast's expense, a consolidated
balance sheet of Northeast as of June 30, 1994, and consolidated
statements of income and cash flows for the year ended June 30,
19994, certified by BDO Seidman and interim financial statements
for the six months ended December 31, 1994, all, as required by
SEC Regulation S-X.
7.14 Fairness Opinion. Celcor shall have received an
opinion from Chartered Capital Advisors, Inc., dated as of the
date of the proxy statement sent to its stockholders, to the
effect that the rate of exchange of Celcor Stock for Northeast
Stock is fair to the stockholders of Celcor from a financial
point of view, and such opinion shall not have been withdrawn
prior to the date of the meeting of Celcor stockholders held for
the purpose of approving the Plan.
7.15 Results of Investigation. Celcor shall have
determined in good faith that the results of its investigation do
not show any losses, liabilities, commitments, contingencies or
other conditions of or relating to Northeast which are not set
forth or reflected in the financial statements of Northeast
previously delivered to Celcor or have not been otherwise
disclosed to Celcor and which in the aggregate materially and
adversely affect the business, financial condition, properties,
results of operations, forecasts or prospects of Northeast (as
defined in SEC regulations).
ARTICLE VIII
CONDITIONS TO NORTHEAST'S OBLIGATION TO CLOSE
The obligations of Northeast hereunder are subject to
the satisfaction, on or prior to the Closing Date, of the
following conditions, compliance with which, or the occurrence of
which may be waived in whole or in part in writing by Northeast.
8.01 Representations and Warranties True at the
Closing. The representations and warranties of Celcor contained
in Article III shall be deemed to have been made again at and as
of the Closing Date and shall then be true and correct in all
material respects except for changes in the Ordinary Course of
Business of Celcor.
8.02 Celcor's Performance. Each of the obligations of
Celcor to be performed on or before the Closing Date, pursuant to
the terms of this Agreement, shall have been duly performed at
the Closing Date. There shall have been no change in Celcor's
financial or business condition, nor any litigation or
proceeding, actual or threatened, which is reasonably likely to
prevent Celcor from performing any obligation undertaken by it
under this Agreement which is to be performed after the Closing.
8.03 No Material Adverse Change. During the period
from the date of this Agreement to the Closing Date, there shall
not have been any material adverse change in the financial
condition, results of operations or prospects of Celcor, nor any
material loss or damage to its assets, whether or not insured,
which materially affects Celcor's ability to conduct its
business.
8.04 Authority. All actions required to be taken by or
on the part of Celcor to authorize the execution, delivery and
performance of this Agreement by Celcor and the consummation of
the Transaction shall have been duly and validly taken by the
Board of Directors and stockholders of Celcor.
8.05 Opinion of Celcor's Counsel. Celcor shall have
furnished Northeast with an opinion of Lowenstein, Sandler, Kohl,
Fisher & Boylan, P.C., counsel to Celcor, dated the Closing Date,
in the form of Appendix C hereto. Such opinion may expressly
rely as to matters of fact upon certificates of appropriate
officers of Celcor or appropriate governmental officials. Copies
of such certificates shall be delivered to Northeast.
8.06 Results of Investigation. Northeast shall have
determined in good faith that the results of its investigation do
not show any losses, liabilities, commitments, contingencies or
other conditions of or relating to Celcor which are not set forth
or reflected in the financial statements of Celcor previously
delivered to Northeast or have not been otherwise disclosed in
writing to Northeast and which in the aggregate materially and
adversely affect the business, financial condition, properties,
results of operations, forecasts or prospects of Celcor.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
9.01 Representations to Survive Closing. The
representations and warranties of Celcor, Northeast and the
Stockholders contained herein or in any document furnished
pursuant hereto shall survive the Closing of the Transaction, but
the exclusive remedy following the Closing for a breach of any
representation or warranty shall be to assert a claim in
accordance with the provisions of this Article IX. Except as
provided in this Article IX, neither Celcor, Northeast, nor their
respective stockholders, directors or officers, shall have any
liability to the other after the Effective Date on account of any
breach or failure or the incorrectness of any of those
representations and warranties.
9.02 Indemnification by the Stockholders.
(a) Obligation to Indemnify. The Stockholders
jointly and severally agree to and do hereby indemnify, and agree
to defend and hold Celcor and the Surviving Corporation and their
respective directors, officers, employees, fiduciaries, agents
and affiliates, and each other person, if any, who controls such
persons, harmless against any claims, actions, suits,
proceedings, investigations, losses, expenses, damages,
obligations, liabilities, judgments, fines, fees, costs and
expenses (including costs and reasonable attorneys' fees) and
amounts paid in settlement of any pending, threatened or
completed claim, action, suit, proceeding or investigation
(collectively "Loss" or "Losses") which arise or result from or
are related to (i) any breach or failure of Northeast and the
Stockholders to perform any of their covenants or agreements set
forth herein, (ii) the inaccuracy of any representation or
warranty made by Northeast and Stockholders herein, (iii) any
fixed or contingent obligation or liability of Northeast
(including but not limited to liabilities arising in tort,
contract, guarantees and indemnities) which existed as of the
Closing Date and would be required by GAAP to be disclosed on
Northeast's financial statements, or in the notes thereto, and is
not so disclosed prior to Closing, and (iv) any liability for
Taxes, other than those which are accrued as liabilities of
Northeast, together with interest and penalties and additions to
tax, if any, arising out of tax assessments. No liability shall
attach under this Section 9.02, however, until Celcor has
incurred a Loss or Losses in the aggregate totaling fifty
thousand dollars ($50,000) and no claim shall be asserted by
Celcor after one year in the case of claims asserted on the basis
of clause (i), two years in the case of a claim asserted on the
basis of clause (ii) or (iii), and no time limitation in the case
of a claim asserted on the basis of clause (iv).
(b) Reimbursement on Demand. The Stockholders
will reimburse Celcor from time to time on demand for any payment
made by Celcor at any time in respect of any Loss which Celcor
may sustain or incur to which the foregoing indemnity relates.
9.03 Indemnification by Celcor.
(a) Obligation to Indemnify. Celcor agrees to
and does hereby indemnify and hold Northeast and the Stockholders
harmless against any claims, losses, damages, expenses or
liabilities (including costs and reasonable attorney's fees)
resulting to Northeast and the Stockholders from (i) any breach
or failure of Celcor to perform any of its covenants or
agreements set forth herein, (ii) the inaccuracy of any
representations or warranties made by Celcor herein, (iii) any
fixed or contingent obligation or liability of Celcor (including
but not limited to liabilities arising in tort, contract,
guarantees and indemnities) which existed as of the Closing Date
and would be required by GAAP to be disclosed on Celcor's
financial statements, or in the notes thereto, and is not so
disclosed prior to closing, and (iv) any liability for Taxes,
other than those which are accrued as liabilities of Celcor,
together with interest and penalties and additions to tax, if
any, arising out of tax assessments. No liability shall attach
under this Section 9.03, however, until the stockholders have
incurred a Loss or Losses in the aggregate totaling fifty
thousand dollars ($50,000) and no claim shall be asserted by
Northeast or the stockholders after one year in the case of
claims asserted on the basis of clause (i), two years in the case
of a claim asserted on the basis of clause (ii) or (iii) and no
time limitation in the case of a claim asserted on the basis of
clause (iv).
(b) Reimbursement on Demand. Celcor will
reimburse the Stockholders from time to time on demand for any
payment made by the Stockholders at any time in respect of any
Loss which the Stockholders may sustain or incur to which the
foregoing indemnity relates.
9.04 Enforcement of Indemnification Rights.
(a) Notification. Any person or entity seeking
enforcement of indemnification rights hereunder shall notify each
potentially liable person or entity of (i) any payment made in
respect of any liability, obligation or claim to which the
foregoing indemnity applies, (ii) any Loss which such person or
entity may sustain or incur, to which the foregoing indemnity
relates, and (iii) any claim made or suit filed against such
person or entity with respect to Northeast or Celcor, as
applicable, their respective assets or this Agreement. Such
notification shall include a specific demand for indemnification
and defense if such person or entity wishes to assert his or its
indemnification rights hereunder.
(b) Disputes. If there is any dispute as to the
right to indemnification and defense hereunder, the disputing
party shall give the other party written notice of such dispute,
specifying in detail the basis of the dispute, not later than 20
days after receipt of demand for indemnification. The parties
agree to resolve any such dispute pursuant to the New Jersey
Alternate Procedure for Dispute Resolution Act (N.J.S.A. 2A:23A).
All parties hereto agree to submit to the jurisdiction of such
court for the purpose of such suit or suits.
(c) Time Limit. If there is no dispute as to the
right to indemnification with respect to any such demand within
such 20 day period, TIME BEING OF THE ESSENCE, or upon resolution
of any such dispute by the parties or by a court, the person or
entity entitled to indemnification shall be promptly paid the
amount of such demand, the amount agreed to by the parties or the
amount ordered by a court.
(d) Calculation of Loss. In determining the
amount of any Loss, net after tax proceeds of insurance received
shall reduce the Loss. Tax benefits, if any, derived from such
Loss by the party seeking indemnification shall not reduce the
Loss, unless the amount paid to indemnify it for such Loss shall
not be treated by it as income subject to federal or state income
tax, in which event the amount of the Loss shall be reduced by
the tax benefits derived therefrom.
(e) Litigation Procedure. If a party entitled to
be indemnified pursuant to this Article IX notifies the other
party of the commencement of an action against it, the party
obligated to provide indemnification will be entitled, at his or
its own expense, to (i) participate in, and (ii) except in the
case of a claim that relates to a tax liability, assume the
defense of the action. If the indemnifying party wishes to
assume the defense of that action, counsel selected by the
indemnifying party shall be reasonably satisfactory to the
indemnified party, and the indemnified party shall cooperate in
all reasonable respects, at its cost and expense, with the
indemnifying party and such counsel in the investigation and
defense of such action and any appeal arising therefrom. After
the indemnifying party shall notify the indemnified party of its
election to assume the defense of any such action, the
indemnifying party will not be liable to the indemnified party
under this Article IX for any legal fees or other expense
subsequently incurred by the indemnified party in connection with
the defense thereof. Even if the indemnifying party should
assume the defense of any such actions, the indemnified party
shall have the right at its expense to participate in the defense
thereof. If the indemnifying party assumes the defense of any
such actions, it shall not settle or otherwise compromise any
such action without the prior written consent of the indemnified
party. If the indemnifying party should fail or refuse to assume
the defense of any such action, the indemnifying party shall
jointly and severally reimburse the indemnified party for the
fees and expenses of counsel engaged by it to defend that action.
9.05 Remedies Cumulative. Persons or entities entitled
to indemnification hereunder shall be entitled to such
indemnification from time to time and shall be entitled to rely
upon one or more provisions of this Agreement without waiving its
right to rely upon any other provisions at the same time or any
other time.
ARTICLE X
MISCELLANEOUS
10.01 Notices. All notices, requests, demands and
other communications hereunder shall be in writing and shall be
deemed delivered if delivered by hand, by telecopier, by courier
or mailed by certified or registered mail, postage prepaid,
addressed as follows:
If to Celcor:
Celcor, Inc.
Attn: Mr. Stephen E. Roman, Jr.
1800 Bloomsbury Avenue
Wanamassa, NJ 07712
Tel: (908) 922-3158
Fax No.: (908) 922-2221
with a copy to:
Lowenstein, Sandler, Kohl, Fisher & Boylan
Attn: George J. Mazin, Esq.
65 Livingston Avenue
Roseland, NJ 07068
Tel. (201) 992-8700
Fax No. (201) 992-5820
If to Northeast or the Stockholders:
Northeast (USA) Corp.
Attn: Dr. N. Wu
129-09 26th Ave.
Flushing, N.Y. 11355
Fax No.
with copy to:
Cha Pan
36 West 44th Street
New York, NY 10036
Fax No. (212) 575-1830
10.02 Assignability and Parties in Interest. This
Agreement shall not be assignable by any of the parties hereto
without the consent of all other parties hereto. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto and their respective successors. Nothing in this
Agreement is intended to confer, expressly or by implication,
upon any other person any rights or remedies under or by reason
of this Agreement.
10.03 Expenses. Each party shall, except as
otherwise specifically provided, bear its own expenses and costs,
including the fees of any attorney retained by it, incurred in
connection with the preparation of this Agreement and
consummation of the Transaction.
10.04 Governing Law. This Agreement shall be
governed by, and construed and enforced in accordance with, the
laws of the State of New Jersey. Northeast consents to the
personal jurisdiction of the federal and state courts in the
State of New Jersey in connection with any action arising under
or brought with respect to this Agreement.
10.05 Counterparts. This Agreement may be executed
as of the same effective date in one or more counterparts, each
of which shall be deemed an original.
10.06 Headings. The headings and subheadings
contained in this Agreement are included solely for ease of
reference, and are not intended to give a full description of the
contents of any particular Section and shall not be given any
weight whatever in interpreting any provision of this Agreement.
10.07 Pronouns, etc. Use of male, female and
neuter pronouns in the singular or plural shall be understood to
include each of the other pronouns as the context requires. The
word "and" includes the word "or". The word "or" is disjunctive
but not necessarily exclusive.
10.08 Complete Agreement. This Agreement, the
Appendices hereto, and the documents delivered pursuant hereto or
referred to herein or therein contain the entire agreement
between the parties with respect to the Transaction and, except
as provided herein, supersede all previous negotiations,
commitments and writings.
10.09 Modifications, Amendments and Waivers. This
Agreement shall not be modified or amended except by a writing
signed by Celcor and Northeast. Prior to the Closing, either
Celcor or Northeast may amend any of the exhibits to Article III
by giving the other party notice of such amendments. If such
amended disclosures reveal material adverse information about the
party making the change, the recipient of the information may
terminate this Agreement without liability to the other party.
10.10 Severability. If any term or other provision
of this Agreement is invalid, illegal, or incapable of being
enforced by any rule of law or public policy, all other terms and
provisions of this Agreement will nevertheless remain in full
force and effect so long as the economic or legal substance of
the Transaction is not affected in any manner adverse to any
party hereto. Upon any such determination that any term or other
provision is invalid, illegal, or incapable of being enforced,
the parties hereto will negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in any acceptable manner to the end that the
Transaction is consummated to the extent possible.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
ATTEST: CELCOR, INC.
/S DARLENE L. RUBIN By: /S STEPHEN E. ROMAN, JR.
President
ATTEST: NORTHEAST (USA) CORP.
/S DEBRA WANG By: /S JENNIFER LO
Jennifer Lo Chairperson
Stockholders
By: /S TING-HUI LIN
Ting-Hui Lin President
Mannion Consultants, Ltd.
By: /S S.Y. UENG
S.Y. Ueng General Manager
Fowler Holding Ltd.
By: /S T. Y. WU
T. Y. Wu General Partner
Dziou Tai Associates
By: /S CHRISTINE HUANG
Christine Huang Secretary
Lyncroft Corporation
By: /S DENG MING MING
Deng Ming Ming Representative in USA
Northeast General Pharmaceutical Factory
EXHIBIT A
QUESTIONNAIRE
This form should be completed by a corporate officer of the Stockholder.
1. Please furnish the following information:
Name of Stockholder: _________________________________________
Name of person completing form: ______________________________
Address: ____________________________________________________
______________________________________________________________
Telephone Number: ( ) ________________________________
Taxpayer Identification Number(s) of Stockholder: ___________
Provide the following information for the person making investment decisions
for the Stockholder:
2. Employment Information:
Occupation or Profession(s): ________________________________
Current Position or Title: __________________________________
Length of Time in Present Position: _________________________
Nature of Business: _________________________________________
Name and Address of Employer(s): ____________________________
Office Telephone Number: ( ) __________________________
3. List any business or professional education, including degrees
received, if any:
_____________________________________________________________
_____________________________________________________________
4. List any professional licenses or registrations,
including bar admissions, accounting certificates, real
estate brokerage licenses, and SEC, NASD, or state broker-
dealer registrations held by you:
5(a). If the Stockholder is an accredited investor within the
meaning of Section 501(a) of Regulation D, as adopted pursuant to
the Securities Act of 1933, check the appropriate box below to
indicate the basis upon which the undersigned stockholder
qualifies as an accredited investor:
CHECK THE APPROPRIATE BOX(ES).
Subscriber is:
[ ] A corporation, business trust or
partnership which has not been formed
for the purpose of making this
investment and which has total assets
in excess of $5,000,000.
[ ] An entity which has not been formed
for the purpose of making an
investment in the Company and in which
all of the equity owners are qualified
accredited investors, on the basis of
income (annual income of not less than
$200,000, or $300,000 with a spouse)
or net worth (not less than $1,000,000
net worth, including home, furnishings
and automobiles).
5(b). The undersigned stockholder is not an accredited investor
_____________.
Approximate net worth $_______________.
6. Rule 506 of the Securities and Exchange Commission requires
that each purchaser have sufficient knowledge and experience
in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the
Common Stock, or that such purchaser retain the services of a
Purchaser Representative (who may be an attorney, accountant
or other financial advisor) for the purpose of this
particular transaction.
I hereby represent that:
The officers and professional advisors of the undersigned
stockholder have such knowledge and experience in financial
and business matters that they are capable of evaluating the
merits and risks of an investment in the Common Stock.
I understand that the Company will be relying on the accuracy
and completeness of my responses to the questions in this
questionnaire and I represent and warrant to the Company as
follows:
(i) The answers to the above questions are complete and
correct and may be relied upon by the Company in
determining whether the offering in connection with
which I have executed this questionnaire is exempt from
registration under the Securities Act of 1933, pursuant
to Rule 506 or otherwise; and
(ii) I will notify the Company immediately of any material
change in any statement made herein that occurs prior
to the consummation of the Merger.
Date: _______________ Stockholder Name: ______________
Signed by: _____________________
Title: _________________________
APPENDIX B
_____________, 1995
Celcor, Inc.
1800 Bloomsbury Avenue
Wanamassa, New Jersey 07712
Dear Ladies and Gentlemen:
We have acted as counsel to Northeast (USA) Corp., a New York
corporation (the "Company" or "Northeast"), in connection with
its merger with Celcor, Inc. ("Celcor"), pursuant to an Agreement
and Plan of Merger among the Company, Celcor and the stockholders
of Northeast (the "Northeast Stockholders"), dated as of
__________, 1995 (the "Agreement"). This opinion is delivered
pursuant to Section 7.06 of the Agreement. Capitalized terms not
otherwise defined herein shall have the meanings provided in the
Agreement.
As counsel to the Company, we have reviewed the Agreement and
have examined such corporate records, certificates and other
documents, and have considered such questions of law as we
considered appropriate for purposes of rendering this opinion.
In our examination of such records and documents, we have assumed
the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to
authentic documents of all documents submitted to us as
certified, conformed or photostatic copies.
As to certain factual matters material to the opinions expressed
herein, we have relied on the representations of Northeast in the
Agreement and on certificates of public officials and officers of
Northeast, all without independent investigation.
In this opinion, we express no opinion as to the laws of any
jurisdiction other than the federal laws of the United States of
America, the laws of the State of New York and to the extent
relevant, The People's Republic of China.
Based upon the foregoing and subject to the qualifications,
exceptions and limitations set forth herein, we are of the
opinion that:
1. The Company is duly organized, validly existing and in good
standing under the laws of the State of New York and has all
requisite corporate power, franchises and licenses to own its
property and conduct the business in which it is engaged.
2. The Company has the corporate power and authority to enter
into and perform the Agreement.
3. The Company does not directly or indirectly have any
subsidiaries, nor hold any equity interest in any corporation,
partnership or joint venture, other than Shenyang United Vitatech
Ltd. and Northeast (Shenyang) Consulting Co. Ltd. (together, the
"Subsidiaries"). The Subsidiaries are each corporations, duly
organized, validly existing and in good standing under the laws
of The Peoples Republic of China, and each has all requisite
corporate power, licenses and franchises to own its properties
and assets and conduct the business in which it is engaged.
4. The Company has an authorized capital stock consisting of
200 shares of common stock, no par value, of which 175 shares are
presently issued and outstanding. The outstanding shares of
Northeast common stock are validly issued, fully paid and non-
assessable.
5. To the best of our knowledge, the Company does not have
outstanding any subscriptions, options, rights, warrants,
convertible securities or other agreements or commitments to
issue, or contracts or any other agreements obligating Northeast
to issue, or to transfer from treasury, any shares of its capital
stock of any class or kind, or securities convertible into such
stock. No persons who are now holders of Northeast Stock, and no
persons who previously were holders of Northeast Stock, are or
ever were entitled to pre-emptive rights, other than persons who
exercised or waived those rights.
6. The Company and each Subsidiary is duly qualified to conduct
business as a foreign corporation in each state or other
jurisdiction in which it is required to be so qualified.
7. To the best of our knowledge, neither the Company nor any
Subsidiary transacts business under any trade name or fictitious
name.
8. The execution and delivery of this Agreement and the
consummation of the transaction contemplated thereby (the
"Transaction") have been duly authorized by the Board of
Directors and Northeast Stockholders. The Agreement constitutes
the legal, valid and binding obligation of Northeast, enforceable
against it and its shareholders in accordance with its terms,
except insofar as the enforcement thereof may be limited by
bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally and subject to equitable
principles limiting the availability of equitable remedies. All
persons who have executed this Agreement on behalf of Northeast
have been duly authorized to do so.
9. Neither the execution of this Agreement, nor
consummation of the Transaction will (a) violate any order, writ,
injunction, statute, rule or regulation applicable to Northeast
or any of its Subsidiaries, or (b) require the consent, approval,
authorization or permission of, or the filing with or the
notification of any Chinese or U.S. federal, state or local
government agency. Neither the execution nor the performance of
this Agreement by Northeast will conflict with, violate or result
in a breach or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default), or
result in the termination of, or accelerate the performance
required by, or result in the creation of any lien or encumbrance
upon any of the assets of Northeast or any of its Subsidiaries
under any provision of the certificate of incorporation or by-
laws of Northeast or its Subsidiaries, or any indenture,
mortgage, lien, material lease, agreement, or other material
contract or instrument known to us, or any order, judgment or
decree of which we are aware, or any statute, ordinance or
regulation to which Northeast or its Subsidiaries are subject or
by which they are bound.
10. To the best of our knowledge (i) there are no infringement
or other claims or demands against Northeast or its Subsidiaries
with respect to any items of intangible personal property; and
(ii) no proceedings have been instituted, are pending, or have
been threatened to terminate or cancel any agreement affording to
Northeast the right to use any intangible asset, or which
challenge the rights of Northeast or its Subsidiaries with
respect to any of its intangible assets.
11. To the best of our knowledge, Northeast is not in default of
any of its obligations under the Joint Venture Agreement and
related regulations with China Northeast Pharmaceutical Factory
pursuant to which Shenyang United Vitatech Pharmaceutical Factory
was established and such agreement is in full force and effect.
12. To the best of our knowledge, (i) the Company and its
Subsidiaries and their respective employees or agents have all
material licenses, permits, orders, approvals and authorizations
required by Northeast or any such Subsidiary for the conduct of
business as presently and anticipated to be conducted (including
both U.S. and Chinese licenses, permits, authorizations or
approvals); (ii) Northeast and its Subsidiaries are acting within
the terms of such licenses, permits, orders, and approvals; (iii)
neither Northeast nor any of its Subsidiaries has received any
notice of investigation, evaluation or suspension of any such
licenses, permits, orders, approvals or authorizations; and (iv)
no suspension or cancellation of any such licenses, permits,
orders, approvals and authorizations has been threatened or is
contemplated.
13. To the best of our knowledge, the Company and its
Subsidiaries are in compliance with all Chinese and U.S. laws,
ordinances, regulations, judgments, orders or decrees applicable
to the conduct of the business of each, or to the assets owned,
used, or occupied by each, and neither Northeast nor any of its
Subsidiaries has received notice or advices to the contrary.
14. To our best knowledge (i) there are no legal,
administrative, arbitration or other proceedings or claims
pending or threatened, against Northeast; (ii) Northeast is not
subject to any existing judgment which might affect the financial
condition, business, property or prospects of Northeast; (iii)
Northeast has not received any inquiry from an agency of the
federal or of any state or local government about the
Transaction, or about any violation or possible violation of any
law, regulation or ordinance affecting its business or assets;
and (iv) Northeast has not been subject to any products liability
claims during the three years ended on the date of this
Agreement.
15. Upon the filing of the Certificate of Merger with the
Secretary of State of New York, the merger will have become
effective in accordance with the provisions of the Business
Corporation Law of the State of New York.
This opinion is rendered to you solely for your benefit in
connection with the Agreement. This opinion may not be relied
upon by you for any other purpose, nor may it be disclosed to or
relied upon by any other person, firm or corporation for any
purpose without our prior written consent.
Very truly yours,
CHA & PAN
By: ________________________
___________________, Esq.
APPENDIX C
[Letterhead of Lowenstein, Sandler, Kohl, Fisher & Boylan]
_____________, 1995
Northeast (USA) Corp.
129-09 26th Ave.
Flushing, N.Y. 11355
Dear Ladies and Gentlemen:
We have acted as counsel to Celcor, Inc., a Delaware corporation
(the "Company"), in connection with its merger with Northeast
(USA) Corp. ("Northeast"), pursuant to an Agreement and Plan of
Merger among the Company, Northeast and the stockholders of
Northeast (USA) Corp. (the "Northeast Stockholders"), dated as of
__________, 1995 (the "Agreement"). This opinion is delivered
pursuant to Section 8.05 of the Agreement. Capitalized terms not
otherwise defined herein shall have the meanings provided in the
Agreement.
As counsel to the Company, we have reviewed the Agreement and
have examined such corporate records, certificates and other
documents, and have considered such questions of law as we
considered appropriate for purposes of rendering this opinion.
In our examination of such records and documents, we have assumed
the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to
authentic documents of all documents submitted to us as
certified, conformed or photostatic copies.
As to certain factual matters material to the opinions expressed
herein, we have relied on the representations of Celcor in the
Agreement and on certificates of public officials and officers of
Celcor, all without independent investigation.
In this opinion, we express no opinion as to the laws of any
jurisdiction other than the federal laws of the United States of
America, the laws of the State of New Jersey and to the extent
relevant, the laws of the State of Delaware.
Based upon the foregoing and subject to the qualifications,
exceptions and limitations set forth herein, we are of the
opinion that:
1. The Company is validly existing and in good standing under
the laws of Delaware.
2. The Company has the corporate power and authority to enter
into and perform the Agreement.
3. The Company has an authorized capital stock consisting of
20,000,000 shares of common stock, par value $0.001 per share,
and 2,000,000 shares of preferred stock, par value $0.001 per
share. The shares of Celcor common stock being issued to the
Northeast Stockholders upon consummation of the merger will be
validly issued, fully paid and non-assessable.
4. The execution and delivery of this Agreement and the
consummation of the Transaction have been duly authorized by the
Board of Directors of Celcor. This Agreement constitutes the
legal, valid and binding obligation of Celcor, enforceable
against it in accordance with its terms, except insofar as the
enforcement thereof may be limited by bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights
generally and subject to equitable principles limiting the
availability of equitable remedies. All persons who have
executed this Agreement on behalf of Celcor have been duly
authorized to do so.
5. Except for the need to obtain the consent of its
stockholders, which consent has been obtained, neither the
execution nor the performance of this Agreement by Celcor
requires the consent of any third party, nor will it violate or
result in a breach or constitute a default under any provision of
the certificate of incorporation or by-laws of Celcor, or any
indenture, mortgage, lien, material lease, agreement, or other
material contract or instrument known to us, or any order,
judgment or decree of which we are aware, or any statute,
ordinance or regulation to which Celcor is subject or by which it
is bound.
6. To our best knowledge (i) there are no legal,
administrative, arbitration or other proceedings or claims
pending or threatened, against Celcor; (ii) Celcor is not subject
to any existing judgment which might affect the financial
condition, business, property or prospects of Celcor; (iii)
Celcor has not received any inquiry from an agency of the federal
or of any state or local government about the Transaction, or
about any violation or possible violation of any law, regulation
or ordinance affecting its business or assets; and (iv) Celcor
has not been subject to any products liability claims during the
three years ended on the date of this Agreement.
7. Upon the filing of the Certificate of Merger with the
Secretary of State of Delaware, the merger will have become
effective in accordance with the provisions of the Delaware
General Corporation Law.
This opinion is rendered to you solely for your benefit in
connection with the Agreement. This opinion may not be relied
upon by you for any other purpose, nor may it be disclosed to or
relied upon by any other person, firm or corporation for any
purpose without our prior written consent, except that copies of
this opinion may be furnished to and relied upon by the Northeast
Stockholders.
Very truly yours,
LOWENSTEIN, SANDLER, KOHL,
FISHER & BOYLAN
A Professional Corporation
By: ________________________
George J, Mazin, Esq.
A Member of the Firm
EXHIBIT C
August 9, 1995
Board of Directors
Celcor, Inc.
Post Office Box 2184
Ocean, New Jersey 07712
Dear Members of the Board of Directors:
We understand that Celcor, Inc. ("Celcor") and
Northeast (USA) Corp. ("Northeast") have entered into a
merger agreement (the "Merger") pursuant to which Northeast
will be merged into Celcor. In connection with the Merger,
Celcor will issue 1,750,000 shares of its common stock in
exchange for all of the outstanding common stock of
Northeast.
You have requested our opinion of the Merger with
respect to fairness, from a financial point of view, to
Celcor. Chartered Capital Advisers, Inc. is customarily
engaged in the valuation of businesses and their securities
in connection with mergers & acquisitions, private
placements, shareholder transactions, estate and gift taxes,
litigation, and for other purposes.
In connection with rendering our opinion we have, among
other things:
(1) Reviewed the Agreement and Plan of Merger Among
Celcor, Inc., Northeast (USA) Corp. and the Stockholders of
Northeast (USA) Corp.;
(2) Reviewed the Preliminary Proxy Statement
prepared by Celcor;
(3) Analyzed financial information with respect to
Northeast, including but not limited to audited financial
statements as of and for the period from inception (February
24, 1993) through June 30, 1994, unaudited financial
statements as of and for the nine months ended March 31,
1995, and management forecasts of sales and earnings through
1998;
(4) Reviewed various documents with respect to
Northeast, including but not limited to, a business plan and
agreements pertaining to: (a) the manufacture and sale of
products in China; (b) the distribution outside of China of
products manufactured by the Chinese joint venture partner
of Northeast; (c) the rights to the technology to produce
certain products to be sold by Northeast; and (d) the
development of vacant land owned by Northeast;
(5) Analyzed financial information with respect to
Celcor, including but not limited to, the Form 10Q as of and
for the nine months ended March 31, 1995, the Form 10K as of
and for the year ended June 30, 1994, the 1993 annual
report, and a private placement memorandum prepared in
connection with the issuance of Series C 8% Convertible
Preferred Stock;
(6) Engaged an experienced real estate appraiser
who has visited the undeveloped property located in
Flushing, New York that is owned by Northeast, and confirmed
to us that its fair market value, exclusive of soft costs,
was not materially different from the amount disclosed in
the balance sheet of Northeast as of June 30, 1994;
(7) Held discussions with certain members of both
Northeast and Celcor senior management and with the
independent accountant of Northeast concerning the past,
current, and planned operations, financial condition, and
business prospects of each company;
(8) Discussed with the legal advisors of Celcor the
results of their due diligence of Northeast;
(9) Reviewed the historical market prices of Celcor
common stock;
(10) Reviewed the composition of ownership of
Northeast and Celcor common stock;
(11) Reviewed the financial terms of the Merger; and
(12) Considered such other information, financial
studies, and analyses as we deemed relevant, and performed
such analyses, studies, and investigations as we deemed
appropriate.
Chartered Capital Advisers, Inc. has assumed and relied
upon, without independent verification, the accuracy and
completeness of the information reviewed by us. With
respect to any projections, we assumed that they have been
reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial
performance of Northeast. We have also assumed without
independent verification that Northeast owns and has
adequate legal protection for all material tangible assets
and intellectual property that it purports to own, and that
key agreements to which Northeast purports to be a party are
valid and enforceable. We have also assumed that the Merger
will be a nontaxable transaction that will be accounted for
as a purchase. Accordingly, we do not make any warranties,
nor do we make any representations with respect to the
aforementioned items.
We have not performed an appraisal of the assets,
liabilities, or intellectual property of Northeast, nor have
we been furnished with any such valuations or appraisals.
We have assumed that the assessments of management have been
made in good faith and reflect the best currently available
management judgments as to the matters covered. Our opinion
is necessarily based upon economic, market, and other
conditions as in effect on, and the information made
available to us as of, the date of this letter. Our opinion
is limited to the fairness of the Merger as of the date
hereof, from a financial point of view. We make no
representations with respect to the business decision to
effect the Merger or any other terms of the Merger. This
opinion does not represent our opinion as to what the value
of Celcor or Northeast may be as of the date of this letter.
We understand that in considering the Merger, the Board
of Directors of Celcor has considered a wide range of
financial and nonfinancial factors, many of which are beyond
the scope of this letter. This letter is not intended to
substitute for the Board's exercise of its own business
judgment in reviewing the Merger.
Based upon and subject to the foregoing considerations,
it is our opinion as financial advisors that the Merger is
fair from a financial point of view to Celcor.
The foregoing opinion is to be used solely for the
information and assistance of Celcor. Accordingly, it is
understood and agreed that no person other than Celcor and
its officers and directors shall be allowed to use or rely
upon this opinion.
Very truly yours,
CHARTERED CAPITAL ADVISERS,
INC.
Ronald G. Quintero, CPA, CFA
Managing Director
EXHIBIT D
CELCOR, INC.
This Proxy is Solicited from all holders of Common Stock by the Board of
Directors for a Special Meeting of Stockholders, October 3, 1995.
The undersigned hereby appoints Stephen E. Roman, Jr. and Michael
Hsu, and each of them, attorneys and proxies, with power of
substitution in each of them, to vote for and on behalf of the
undersigned at the Special Meeting of Stockholders of Celcor,
Inc. ("Celcor") to be held on October 3, 1995, and at any
adjournment or adjournments thereof, upon matters properly coming
before the Special Meeting as set forth in the related Notice of
Meeting and Proxy Statement (the "Proxy Statement"), both of
which have been received by the undersigned, and upon all such
other matters that may properly be brought before the meeting
and/or any adjournment or adjournments thereof, as to which the
undersigned hereby confers discretionary authority upon said
proxies. Without otherwise limiting the general authorization
given hereby, said attorneys and proxies are instructed to vote
as follows:
1. Approval of an Agreement and Plan of Merger (the "Merger
Agreement"), among Celcor, Northeast (USA) Corp.
("Northeast"), and the shareholders of Northeast, providing,
among other things, for the merger of Northeast with and
into Celcor, and the issuance of shares of Celcor Common
Stock to the holders of Northeast Common Stock, as more
fully described in the Proxy Statement. (The Board of
Directors recommends a vote "FOR".)
[ ] FOR [ ]AGAINST [ ] ABSTAIN
2. Election of the Board's nominees for Directors. (The Board
of Directors recommends a vote "FOR".)
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees
listed below
Nominees: Stephen E. Roman, Jr., Eugene Cha, Frank
Nelson, Jennifer Lo Wu, Chin-Sung (Joe) Chen, David
Chow and Michael Hsu
Instruction: To withhold authority to vote for any one or more
nominees, write the name(s) of such nominee(s) in the
space provided: _____________________________________
3. Ratification and confirmation of the authorization and
issuance of Series C 8% Convertible Preferred Stock, par
value one mil ($0.001) per share, as more fully described in
the Proxy Statement and the related amendment to the
Company's Certificate of Incorporation expressly authorizing
the Board of Directors to establish the rights, preferences
and limitations of any class or series of preferred stock
which may be issued in the future. (The Board of Directors
recommends a vote "FOR".)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, said proxies are authorized to vote
upon such other business as may properly come before the
Special Meeting.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED IN THIS
PROXY, THIS PROXY WILL BE VOTED (i) FOR THE RATIFICATION AND
APPROVAL OF THE MERGER AGREEMENT, (ii) FOR THE ELECTION OF
ALL OF THE BOARD'S NOMINEES FOR DIRECTOR, AND (iii) FOR THE
RATIFICATION AND CONFIRMATION OF THE AUTHORIZATION AND
ISSUANCE OF SERIES C 8% CONVERTIBLE PREFERRED STOCK AND THE
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
Please sign this proxy and return it promptly whether or not
you expect to attend the Special Meeting. You may
nevertheless vote in person if you attend.
Please sign exactly as your name appears hereon. Give full
title if an Attorney, Trustee, Guardian, etc. For an
account in the name of two or more persons, each should
sign, or if one signs, he should attach evidence of his
authority.
This proxy is to be used only by holders of Celcor, Inc.
Common Stock.
Dated:__________________, 1995
Signed:____________________
___________________________
EXHIBIT E
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CELCOR, INC.
Celcor, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State
of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of
Celcor, Inc. resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling
a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed
amendment is attached hereto as Exhibit A.
SECOND: That thereafter, pursuant to resolution of its
Board of Directors, a special meeting of the stockholders of said
corporation was duly called and held, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware, at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in
accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Celcor, Inc. has caused this
Certificate to be signed by Stephen E. Roman, Jr., its President,
and Michael W. Hsu, its Secretary, this ___ day of _______, 1995.
By: _______________________________
Stephen E. Roman, Jr., President
ATTEST: __________________________
Michael W. Hsu, Secretary
EXHIBIT A
RESOLVED, that it is advisable that Article FIRST of the
Certificate of Incorporation of the Corporation be deleted in its
entirety and replaced with the following:
FIRST: The name of the corporation
(hereinafter called the "corporation") is
Northeast (USA) Corp.
RESOLVED, that it is advisable that Article FOURTH of the
Certificate of Incorporation of the Corporation be deleted and
replaced with the following:
FOURTH: The total number of shares of
all classes of stock which the corporation
shall have authority to issue is twenty two
million (22,000,000), of which two million
(2,000,000) shares are to be Preferred Stock,
par value one mil ($.001) per share
("Preferred Stock"), and twenty million
(20,000,000) shares are to be Common Stock,
par value one mil ($.001) per share ("Common
Stock"). The Board of Directors shall have
the right to divide the preferred stock into
one or more series, each containing the
number of shares and the relative powers,
designations, preferences and relative,
participating, optional or other rights, and
qualifications, limitations or restrictions
as may be determined by the board from time
to time, each such series to be distinctly
designated.
For purposes of illustration only, the
foregoing power of the board includes, but is
not limited to, the determination of: (i)
the number of shares constituting each
series; (ii) the rate and times at which,
and the terms and conditions on which,
dividends on shares of a series will be paid,
and whether the dividends are cumulative or
non-cumulative or are participating or non-
participating; (iii) the voting rights of
the holders of shares of the series,
including whether the shares shall have no
voting rights, or multiple, full, limited, or
special voting rights; (iv) the right, if
any, of the holders of shares of a series to
convert their shares into, or exchange them
for, shares of other classes or series of
stock of the corporation, and the terms and
conditions of the conversion or exchange,
including provisions for adjustment of the
conversion price or rate in such events as
the board shall determine; (v) the right, if
any, of the corporation or the holders of the
shares to cause the shares of the series to
be redeemed, and the redemption price or
prices and the time or times at which, and
the terms and conditions on which, shares of
the series may be redeemed; (vi) the rights
of the holders of shares of the series upon
the voluntary or involuntary dissolution,
liquidation or winding-up of the corporation
and whether those rights are limited or
participating; and (vii) the obligation, if
any, of the corporation to establish a
sinking fund for the purchase of redemption
of the shares of the series, the amounts and
time of payments to that fund, and the other
terms and conditions of that fund.
