UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Information Required in Proxy Statement
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 Under Rule 14a-12.
CORONADO EXPLORATIONS LTD
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| | No fee required.
|X| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $.001 per share, of Coronado Explorations Ltd.
(2) Aggregate number of securities to which transaction applies:
50,000,000 shares of Common Stock.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: The filing fee was calculated pursuant to
Exchange Act Rule 0-11 (c)(1), and is the product of multiplying 1/50 of 1%
by an amount equal to the sum of (x) the product of ______________ shares of
Common Stock, par value $.001 per share, of Coronado Explorations Ltd.
multiplied by $_____________ per share, and (y) $___________ payable to
holders of outstanding options to purchase shares of Common Stock in exchange
for the cancellation of such options.
(4) Proposed maximum aggregate value of transaction: $16,500
(5) Total fee paid: $3.30
| | 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:
_____________________________________________
CORONADO EXPLORATIONS LTD.
397 Ventura Crescent
North Vancouver, B.C., Canada V7N 3G7
(604) 985-8940
Dear Coronado Explorations Ltd. Stockholder:
You are cordially invited to attend the Special meeting of stockholders
of Coronado Explorations Ltd., a Delaware corporation, ("Coronado") to be
held on __________, __________, 200_, at _____ a.m., local time, at The
Conference Room, Suite 115 - 1850 E. Flamingo Road, Las Vegas, Nevada 89119.
At the Special meeting, you will be asked to consider and vote upon;
1. The Merger Agreement, dated as of October ___, 2001, by and among
Coronado, Coronado Subsidiary Corp., a Nevada corporation and a wholly owned
subsidiary of Coronado and Naturol, Inc., a Nevada corporation, ("Naturol")
providing for the Merger (the "Merger") of Coronado Subsidiary Corp. into
Naturol. Pursuant to the Merger, 50,000,000 restricted shares of Coronado
will be exchanged for 100% of the issued and outstanding shares of Naturol.
Following the Merger, Naturol will have merged with Coronado Subsidiary Corp.
wherein Coronado Subsidiary Corp. will cease to exist and Naturol will become
a wholly owned subsidiary of Coronado;
2. To elect a new board of directors for Coronado to serve through the next
year, (current nominations are for Paul McClory, Isaac Moss, and Michael J.
Ram);
3. To change the name of Coronado Explorations Ltd. to Naturol, Inc.;
4. To change the Company's fiscal year end to December 31;
5. To transact such other business as may properly come before the Special
meeting or any adjournment or postponement.
The board of directors has specified October 5, 2001, at the close of
business, as the record date for the purpose of determining the stockholders
who are entitled to receive notice of and to vote at the special meeting. A
list of the stockholders entitled to vote at the special meeting will be
available for examination by any stockholder at the special meeting. For 10
days prior to the special meeting, this stockholder list will also be
available for inspection by stockholders at our corporate offices at 397
Ventura Crescent, North Vancouver, B.C., Canada V7N 3GC during ordinary
business hours.
Please read the proxy statement and other materials concerning Coronado
Explorations Ltd. and the merger, which were mailed with this notice, for a
more complete statement regarding the proposal to be acted upon at the
special meeting. This notice also constitutes notice of appraisal rights
under Delaware law in connection with the merger, as described in the proxy
statement.
Our board of directors, based in part on the recommendation of a special
committee of our board of directors, has determined that the merger is
advisable and in the best interests of Coronado Explorations Ltd. and our
stockholders and that the merger is fair to our stockholders. Accordingly,
our board of directors has approved the merger agreement and the merger and
recommends that you vote "FOR" adoption of the merger agreement and approval
of the merger.
The proposed Merger is an important decision for Coronado and its
stockholders. The Merger cannot occur unless, among other things, the Merger
agreement ("Merger Agreement") is approved by the holders of a majority of
the outstanding shares of Coronado common stock entitled to vote at the
Special meeting. The accompanying proxy statement explains the proposed
Merger and provides specific information concerning the Special meeting. We
encourage you to read this entire document carefully.
Whether or not you plan to attend the Special meeting, please take the
time to vote on the proposal submitted by completing and mailing the enclosed
proxy card to us. Please sign, date and mail your proxy card indicating how
you wish to vote. If you fail to return your proxy card, the effect will be a
vote against the Merger.
Sincerely,
/S/ Mary M. Hethey
Mary M. Hethey
PRESIDENT AND DIRECTOR
The Merger and other matters voted upon have not been approved or
disapproved by the Securities and Exchange Commission (the "SEC") or any
state securities regulators nor has the SEC or any state securities regulator
passed upon the fairness or merits of the Merger or upon the accuracy or
adequacy of the information contained in this proxy statement. Any
representation to the contrary is unlawful.
This proxy statement is dated ____________, 2001, and is first being
mailed to Coronado stockholders on or about _____________, 2001 to
stockholders of record as of October 5, 2001.
CORONADO EXPLORATIONS LTD.
397 Ventura Crescent
North Vancouver, B.C., Canada V7N 3G7
(604) 985-8940
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ________, ____________, 2001
Dear Coronado Stockholder:
We will hold the Special meeting of Stockholders of Coronado
Explorations Ltd. on _______, November ___, 2001, at ____ a.m., local time,
at the Conference Room, Suite 115, 1850 E. Flamingo Rd., Las Vegas, Nevada
89119, for the following purposes:
1. The Merger Agreement, dated as of October ___, 2001, by and among
Coronado, Coronado Subsidiary Corp., a Nevada corporation and a wholly owned
subsidiary of Coronado and Naturol, Inc., a Nevada corporation, ("Naturol")
providing for the Merger (the "Merger") of Coronado Subsidiary Corp. into
Naturol. Pursuant to the Merger, 50,000,000 restricted shares of Coronado
will be exchanged for 100% of the issued and outstanding shares of Naturol.
Following the Merger, Naturol will have merged with Coronado Subsidiary Corp.
wherein Coronado Subsidiary Corp. will cease to exist and Naturol will become
a wholly owned subsidiary of Coronado;
2. To elect a new board of directors for Coronado to serve through the next
year, (current nominations are for Paul McClory, Isaac Moss, and Michael J.
Ram);
3. To change the name of Coronado Explorations Ltd. to Naturol, Inc.;
4. To change the Company's year end to December 31, 2001;
5. To transact such other business as may properly come before the Special
meeting or any adjournment or postponement.
The board of directors, has determined that the terms and conditions of
the Merger are fair to, and in the best interests of, the Coronado
stockholders and unanimously recommends that you vote "FOR" the Merger.
Only Coronado stockholders of record at the close of business on October
5, 2001, are entitled to notice of and to vote at the Special meeting or any
adjournment or postponement thereof. A complete list of the stockholders
entitled to vote at the Special meeting or any adjournments or postponements
of the Special meeting will be available at and during the Special meeting.
YOUR VOTE IS IMPORTANT. TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE SPECIAL MEETING, YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY TO THE COMPANY, WHETHER OR NOT YOU PLAN TO
ATTEND THE SPECIAL MEETING IN PERSON. YOU MAY REVOKE YOUR PROXY IN THE MANNER
DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT ANYTIME BEFORE IT HAS BEEN
VOTED AT THE SPECIAL MEETING. IF YOU RETURN A PROXY WITHOUT SPECIFYING A
CHOICE ON THE PROXY, THE PROXY WILL BE VOTED "FOR" THE PROPOSALS. IT MAY BE
POSSIBLE FOR YOU TO VOTE IN PERSON AT THE SPECIAL MEETING EVEN IF YOU HAVE
RETURNED A PROXY. PLEASE REVIEW THE PROXY STATEMENT FOR MORE INFORMATION.
By Order of the Board of Directors
/S/ Mary M. Hethey
Mary M. Hethey
PRESIDENT AND DIRECTOR
North Vancouver, B.C., Canada
_________ ___, 2001
TABLE OF CONTENTS
PAGE
SUMMARY TERM SHEET 1
Date, Time and Place 1
Purpose of the Meeting 1
Stockholders Entitled to Vote 2
Vote Required 2
Parties to the Merger 2
Naturol, Inc. 2
Coronado Subsidiary Corp 3
Terms of the Merger 3
Exchange of Certificates 3
Recommendation of Coronado's Board of Directors 3
Dissenters' Rights 4
Federal Income Tax Consequences 4
Interest of Certain Persons in the Merger 4
Regulatory and Third Party Approvals 5
Conditions to the Merger 5
Termination 5
Effective Time 5
Operation of Naturol after the Merger 5
QUESTIONS AND ANSWERS ABOUT THE MERGER 7
WHO CAN HELP ANSWER YOUR QUESTIONS 7
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS 8
THE SPECIAL MEETING 9
Time, Place And Date 9
Purpose Of The Meeting 9
Record Date And Voting At The Special Meeting 9
Votes Required 10
Solicitation And Proxy Solicitor 10
Revocation And Use Of Proxies 10
Adjournments Or Postponements 10
Insider Participation in Compensation Decision 11
Board of Directors Report on Executive Compensation 11
Audit Committee (No Audit Committee Exists) 11
Independent Auditors 11
SPECIAL FACTORS OF MERGER 12
Background Of The Merger 12
Reasons For The Merger 12
Recommendation Of The Board Of Directors 12
About Naturol, Inc. 13
Certain Effects Of The Merger 18
Federal Income Tax Consequences 18
Selected Financial Information 20
THE MERGER 21
Effective Time 21
The Merger And Merger Consideration 21
Regulatory Requirements 21
Anticipated Tax and Accounting Treatment 22
Dissenter's and Appraisal Rights 22
Fees And Expenses 26
THE MERGER AGREEMENT 26
Representations And Warranties 26
Conduct Of Business Prior To The Merger 26
Additional Agreements Of Coronado 27
Director And Officer Indemnification 27
Cooperation And Reasonable Efforts 28
Conditions To The Merger 28
Termination Of The Merger Agreement 29
Extension, Waiver And Amendment 30
Election of Directors 30
Board of Directors Meeting 31
Summary Compensation 31
DIRECTORS AND EXECUTIVE OFFICERS OF CORONADO EXPLORATIONS 32
Executive Officers at Present 32
PRINCIPAL STOCKHOLDERS OF CORONADO EXPLORATIONS 33
OTHER MATTERS 33
EXPENSES OF PROXY SOLICITATION 33
WHERE YOU CAN FIND MORE INFORMATION 34
APPENDICES
Appendix A - Merger Agreement A-1
Appendix B - Rights of Dissenting Owners B-1
SUMMARY TERM SHEET
Throughout this proxy statement the term "Merger" means the Merger among
Naturol, Inc., a Nevada corporation ("Naturol"), Coronado Explorations Ltd.,
a Delaware corporation ("Coronado") and Coronado Subsidiary Corp., a wholly
owned subsidiary of Coronado, whereby Naturol will have merged with Coronado
Subsidiary Corp. wherein Coronado Subsidiary Corp. will cease to exist and
Naturol will become a wholly owned subsidiary of Coronado. The term "Merger
Agreement" means the Agreement and Plan of Merger dated as of October __,
2001, among Naturol, Coronado and Coronado Subsidiary Corp. A copy of the
Merger Agreement is attached as Appendix A to this proxy statement.
This summary highlights selected information included in this proxy
statement. This summary may not contain all of the information that is
important to you. For a more complete understanding of the Merger and the
other information contained in this proxy statement, you should read this
entire proxy statement carefully, as well as the additional documents to
which it refers. For instructions on obtaining more information, see "Where
You Can Find More Information."
IN ADDITION TO CERTAIN OTHER MATTERS WHICH WILL BE VOTED ON, THE MERGER
IS OF GREAT IMPORTANCE TO THE STOCKHOLDERS OF CORONADO EXPLORATIONS BECAUSE,
IF THE MERGER AND EXCHANGE OF SHARES ARE CONSUMMATED, THE STOCKHOLDER'S
EQUITY INVESTMENT IN CORONADO EXPLORATIONS WILL BE DILUTED FOR AN EQUITY
INVESTMENT IN NATUROL. ACCORDINGLY, STOCKHOLDERS ARE URGED TO READ AND
CAREFULLY CONSIDER THE INFORMATION SUMMARIZED BELOW AND PRESENTED ELSEWHERE
IN THIS PROXY STATEMENT.
Date, Time and Place of the
Special meeting of Coronado _______, ______ ___, 2001, at ___ a.m., Las
Stockholders Vegas time, at the Conference Room, Suite
115, 1850 East Flamingo Rd., Las Vegas,
Nevada, ("the Special Meeting"). (See
"INTRODUCTION")
Purpose of the Meeting 1. To consider and vote upon the Merger
Agreement, dated as of October __, 2001, by
and among Coronado, Coronado Subsidiary
Corp., a wholly owned subsidiary of
Coronado and Naturol, Inc., ("Naturol")
providing for the Merger (the "Merger") of
Coronado Subsidiary Corp. into Naturol.
Pursuant to the Merger, 50,000,000
restricted shares of Coronado will be
exchanged for 100% of the issued and
outstanding shares of Naturol. Following
the Merger, Naturol will have merged with
Coronado Subsidiary Corp. wherein Coronado
Subsidiary Corp. will cease to exist and
Naturol will become a wholly owned
subsidiary of Coronado.
2. To elect a new board of directors for
Coronado to serve through the next year,
(current nominations are for Paul McClory,
Isaac Moss, and Michael J. Ram);
3. To change the name of Coronado
Explorations Ltd. to Naturol, Inc.;
4. To change the Company's year end to
December 31, 2001;
5. To transact such other business as may
properly come before the Special meeting or
any adjournment or postponement.
Stockholders Entitled to Vote Only Coronado stockholders of record at
5:00 p.m., Las Vegas time on October 5,
2001 are entitled to notice of and to vote
at the Special Meeting.
Vote Required Under Delaware law, the approval and
adoption of the Merger Agreement requires
the affirmative vote of the holders of a
majority of the Coronado Common Stock
outstanding and entitled to vote. See
"Introduction," and "The Merger-Vote
Required."
Parties to the Merger:
Coronado Coronado Explorations Ltd., a Delaware
corporation was formed in February of 1999,
is engaged in the exploration of mineral
properties.
The principal executive offices of Coronado
are located at 397 Ventura Crescent, North
Vancouver, B.C., Canada V7N 3G7. (604) 985-
8940
Naturol, Inc. Naturol, Inc., a Nevada corporation was
formed in June of 2001 and is engaged in a
process and apparatus for preparing
extracts and oils from plants and other
materials. The Company has acquired the
rights to several International patents
which were primarily developed by Dr.
Frederick Wilde. The Company is engaged in
the business of both manufacturing and
marketing plant extracts and selling its
Extraction Technology to qualified
licensees in the United States, Canada and
Mexico
The principal executive offices of Naturol,
Inc. are located at 6265 Stevenson Way, Las
Vegas, Nevada 89120.
Coronado Subsidiary Corp. Coronado Subsidiary Corp., a Nevada
corporation and wholly owned subsidiary of
Coronado, was formed solely to merge with
and into Naturol and consequentially cease
to exist.
Terms of the Merger As a result of the Merger Naturol
shareholders will receive 50,000,000 shares
of common stock, $0.001 par value, of
Coronado ("Coronado Common Stock") in
exchange for 100% of their Naturol common
Stock. See "The Merger-Capitalization of
Coronado and Exchange of Shares."
Exchange of Certificates If the Merger is consummated, exchange of
certificates formerly representing shares
of Naturol Common Stock for certificates
representing the appropriate number of
shares of Coronado Common Stock will be
made upon surrender to Sperry Young &
Stoecklein, ("Exchange Agent") 1850 E.
Flamingo Rd., Suite 111, Las Vegas, Nevada,
89119, of the certificates formerly
representing 100% of Naturol Common Stock.
Recommendation of Coronado
Board of Directors; Reasons for The board of directors of Coronado has duly
the Merger; Fairness approved and executed the Merger Agreement
and recommends a vote in favor of it in the
belief that the Merger is in the best
interest of Coronado stockholders. Before
giving this approval, the Coronado board
reviewed a number of factors, including the
terms of the Merger Agreement, the shares
being issued to Naturol, and information
regarding the financial condition,
operations and prospects of both Naturol
and Coronado. The Coronado board also found
that the value of the Naturol Common Stock
to be issued pursuant to the Merger
Agreement compared favorably with the value
of Coronado Common Stock, in light of the
technology being acquired as the result of
the Naturol Merger and the current
financial condition and state of the
business of Coronado. See "Special Factors
of the Merger - Recommendation of Board of
Directors."
Dissenters' Rights Holders of Coronado Common Stock who
perfect dissenters' rights pursuant to
Section 262 of the Delaware General
Corporation Law will be entitled to receive
cash of the "fair value" for their shares
in accordance with such section. TO PERFECT
DISSENTERS' RIGHTS, IT IS IMPORTANT TO
FOLLOW THE PROCEDURES SET FORTH IN THE
DELAWARE STATUTE. See "The Merger -
Dissenters' Rights."
Federal Income Tax Consequences For federal income tax purposes, it is
intended that the Merger constitute a
"reorganization" under Section 368(a)(2)(E)
of the Internal Revenue Code so that no
gain or loss will be recognized by
Coronado. See "Special Factors of the
Merger - Federal Income Tax Consequences."
Interests of Certain Persons in The Merger agreement provides that
the Merger indemnification and insurance will be
maintained for Coronado shall, to the
fullest extent permitted by applicable law,
indemnify, defend and hold harmless each
person who is now, or has been at any time
prior to the date hereof, or who becomes
prior to the Effective Time, a director,
officer or employee of the parties hereto
or any subsidiary thereof (each an
"Indemnified Party" and, collectively, the
``Indemnified Parties") against all losses,
expenses (including reasonable attorneys'
fees and expenses), claims, damages or
liabilities. See "The Merger Agreement-
"Indemnification".
Regulatory and Third Party Other than compliance with the Hart-Scott-
Approvals Rodino Antitrust Improvements Act of 1976,
no material regulatory approvals are
required. Failure to obtain non-material
governmental consents will not prevent
completion of the Merger. See "The Merger -
Regulatory Requirements."
Conditions to the Merger;
Termination Notwithstanding approval of the Merger
Agreement by Coronado stockholders,
consummation of the Merger is subject to a
number of conditions which, if not
fulfilled or waived, permit termination of
the Merger Agreement, including the absence
of any temporary restraining order,
preliminary or permanent injunction, or
other order preventing consummation of the
Merger or any transaction contemplated by
the Merger Agreement. The Merger Agreement
will terminate by its terms if the Merger
has not occurred on or prior to the earlier
of February 1, 2002 or five business days
following the Coronado stockholder approval
of the Merger Agreement. The Merger may
also be abandoned by mutual consent, and in
certain other circumstances. See "The
Merger - Conditions to the Merger."
Effective Time If the Merger Agreement is adopted and
approved at the Special Meeting, and all
other conditions to the Merger have been
met or waived, the parties expect the
Merger to be effective as soon as possible
following the Special Meeting. See "The
Merger - Conditions to the Merger." If all
conditions are not met or waived, there
could be a delay in the Effective Time or
the Merger Agreement could be terminated.
Operation of Coronado (Naturol
Post Merger) after the Merger It is contemplated that, after the Merger,
Coronado (Naturol Post Merger after name
change) will operate through the current
facilities of Naturol. See "The Merger."
QUESTIONS AND ANSWERS ABOUT THE MERGER
WHAT DOES OUR BOARD OF DIRECTORS RECOMMEND?
Our board of directors recommends that you vote "FOR" adoption of the
merger agreement and approval of the merger. Our board of directors has
determined that the merger is advisable and in the best interests of Coronado
and our stockholders and that the merger is fair to our stockholders.
Our board of directors approved and recommended adoption of the merger
agreement
WHAT WILL HAPPEN TO CORONADO EXPLORATIONS AFTER THE MERGER?
If the Merger is approved by Coronado stockholders, Coronado will issue
50,000,000 shares in exchange for 100% of the shares of Naturol. Naturol's
board of directors are being concurrently elected to act as the board of
directors until the next stockholders meeting of Coronado. Further,
concurrently with the merger closing, Coronado will change its name to
Naturol, Inc., and will move its offices to the offices of Naturol.
ARE THERE RISKS TO BE CONSIDERED?
The Merger is contingent upon, among other things, stockholder approval
and governmental approvals. If any of these or other conditions are not
satisfied, or for some other reason the transaction does not close,
Coronado's stock would be subject to market risks.
IF MY SHARES OF CORONADO EXPLORATIONS COMMON STOCK ARE HELD IN "STREET NAME"
BY MY BROKER, WILL MY BROKER VOTE MY SHARES FOR ME?
No. The law does not allow your broker to vote your shares of Coronado
common stock on the Merger at the Special meeting without your direction. You
should follow the instructions from your broker on how to vote your shares.
Shares that are not voted because you do not instruct your broker are called
"broker non-votes," and will have the effect of a vote "AGAINST" the Merger.
IF I SEND IN MY PROXY CARD BUT DO NOT INDICATE MY VOTE, HOW WILL MY SHARES BE
VOTED?
If you sign and return your proxy card but do not indicate how to vote
your shares at the Special meeting, the shares represented by your proxy will
be voted "FOR" the Proposals.
WHAT IF I DON'T RETURN MY PROXY CARD?
Since it takes a majority of the shares outstanding to approve the
Proposals, not returning your proxy card is the same as voting against the
Merger.
WHAT SHOULD I DO NOW TO VOTE AT THE SPECIAL MEETING?
Sign, mark and mail your proxy card indicating your vote on the Merger
in the enclosed return envelope as soon as possible, so that your shares of
Coronado common stock can be voted at the Special meeting.
MAY I CHANGE MY VOTE AFTER I MAIL MY PROXY CARD?
Yes. You may change your vote at any time before your proxy is voted at
the Special meeting. You can do this in three ways:
* You can send Coronado a written statement that you revoke your proxy,
which to be effective must be received prior to the vote at the Special
meeting;
* You can send Coronado a new proxy card prior to the vote at the Special
meeting, which to be effective must be received by Coronado prior to the vote
at the Special meeting; or
* You can attend the Special meeting and vote in person. Your attendance
alone will not revoke your proxy. You must attend the Special meeting and
cast your vote at the Special meeting.
Send any revocation of a proxy or new proxy card to the attention of the
Corporate Secretary at Coronado, 397 Ventura Crescent, North Vancouver, B.C.,
Canada V7N 3G7 (604) 985-8940. If your shares are held in street name, you
must follow the directions provided by your broker to vote your shares or to
change your instructions.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the Merger or would like additional
copies of the proxy statement, you should contact:
Coronado Explorations Ltd.
397 Ventura Crescent
North Vancouver, B.C., Canada V7N 3G7
Attention: Mary M. Hethey
President, and Director
Telephone Number: (604) 985-8940
CAUTIONARY STATEMENT CONCERNING
FORWARD LOOKING STATEMENTS
This proxy statement and the documents to which we refer you to in this
proxy statement contain forward-looking statements. In addition, from time to
time, we or our representatives may make forward-looking statements orally or
in writing. We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information
currently available to us. Such forward-looking statements relate to future
events or our future performance, including:
* our financial performance and projections;
* our growth in revenue and earnings; and
* our business prospects and opportunities.
You can identify forward-looking statements by those that are not
historical in nature, particularly those that use terminology such as "may,"
"will," "should," "expects," "anticipates," "contemplates," "estimates,"
"believes", "plans," "projected," "predicts," "potential" or "continue" or
the negative of these or similar terms. In evaluating these forward-looking
statements, you should consider various factors, including
* our ability to retain the business of our significant customers;
* our ability to keep pace with new technology and changing market needs;
* our ability, upon completion of the merger, to obtain capital; and
* the competitive environment of our business.
These and other factors may cause our actual results to differ
materially from any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking
events discussed in this proxy statement, the documents to which we refer you
and other statements made from time to time by us or our representatives, may
not occur, and actual events and results may differ materially and are
subject to risks, uncertainties and assumptions about us. We are not
obligated to publicly update or revise any forward-looking statement, whether
as a result of uncertainties and assumptions, the forward-looking events
discussed in this proxy statement, the documents to which we refer you and
other statements made from time to time by us or our representatives, might
not occur.
THE SPECIAL MEETING
TIME, PLACE AND DATE
We are furnishing this proxy statement to Coronado stockholders in
connection with the solicitation of proxies by the Coronado board of
directors for use at the Special meeting of stockholders of Coronado to be
held on ___________, _______ __, 2001, at ____ a.m., local time, at the
Conference Room, Suite 115, 1850 East Flamingo Rd., Las Vegas, Nevada, or any
adjournment or postponement thereof, pursuant to the enclosed Notice of
Special Meeting of Stockholders.
PURPOSE OF THE MEETING
At the Special meeting, holders of Coronado common stock of record as of
the close of business on October 5, 2001 will be eligible to vote upon:
1. The Merger Agreement, dated as of October __, 2001, by and among
Coronado, Coronado Subsidiary Corp., a Nevada corporation and a wholly owned
subsidiary of Coronado and Naturol, Inc., a Nevada corporation, ("Naturol")
providing for the Merger (the "Merger") of Naturol into Coronado Subsidiary
Corp. Pursuant to the Merger, 50,000,000 restricted shares of Coronado will
be exchanged for 100% of the issued and outstanding shares of Naturol.
Following the Merger, Naturol will have merged with Coronado Subsidiary Corp.
wherein Coronado Subsidiary Corp. will cease to exist and Naturol will become
a wholly owned subsidiary of Coronado;
2. To elect a new board of directors for Coronado to serve through the next
year, (current nominations are for Paul McClory, Isaac Moss, and Michael J.
Ram);
3. To change the name of Coronado Explorations Ltd. to Naturol, Inc.;
4. To change the Company's year end to December 31, 2001;
5. To transact such other business as may properly come before the Special
meeting or any adjournment or postponement.
RECORD DATE AND VOTING AT THE SPECIAL MEETING
The board of directors has fixed the close of business on October 5,
2001, as the record date for the determination of the stockholders entitled
to notice of, and to vote at, the Special meeting and any adjournments and
postponements of the Special meeting. On that day, there were 25,000,000
shares of Coronado common stock outstanding, which shares were held by
approximately 74 stockholders of record. Holders of Coronado common stock are
entitled to one vote per share.
A majority of the issued and outstanding shares of Coronado common stock
on the record date, represented in person or by proxy, will constitute a
quorum for the transaction of business at the Special meeting. If a quorum is
not present, the Special meeting may be adjourned from time to time, until a
quorum is present. Abstentions and broker non-votes are counted as present
for purposes of determining the presence of a quorum at the Special meeting
for the transaction of business.
VOTES REQUIRED
Approval of any Proposal requires the affirmative vote of holders of a
majority of the outstanding shares of Coronado common stock entitled to vote
at the Special meeting. A failure to vote or a broker non-vote will have the
same legal effect as a vote cast against approval of any Proposal.
Brokers, and in many cases nominees, will not have discretionary power
to vote on the proposals to be presented at the Special meeting. Accordingly,
beneficial owners of shares must instruct their brokers or nominees how to
vote their shares at the Special meeting.
SOLICITATION AND PROXY SOLICITOR
Coronado will bear all expenses of the solicitation of proxies in
connection with this proxy statement, including the cost of preparing and
mailing this proxy statement. Coronado will reimburse brokers, fiduciaries,
custodians and their nominees for reasonable out-of-pocket expenses incurred
in sending this proxy statement and other proxy materials to, and obtaining
instructions relating to such materials from, beneficial owners of Coronado
common stock. Coronado stockholder proxies may be solicited by directors,
officers and employees of Coronado in person or by telephone, facsimile or by
other means of communication. However, they will not be paid for soliciting
proxies.
REVOCATION AND USE OF PROXIES
The enclosed proxy card is solicited on behalf of the Coronado board of
directors. A stockholder giving a proxy has the power to revoke it at any
time before it is exercised by (i) delivering a written notice revoking the
proxy to Coronado before the vote at the Special meeting; (ii) executing a
proxy with a later date and delivering it to Coronado before the vote at the
Special meeting; or (iii) attending the Special meeting and voting in person.
Any written notice of revocation should be delivered to the attention of the
Corporate Secretary at Coronado, 397 Ventura Crescent, North Vancouver, B.C.,
Canada V7N 3G7. Attendance at the Special meeting without casting a ballot
will not, by itself, constitute revocation of a proxy.
Subject to proper revocation, all shares of Coronado common stock
represented at the Special meeting by properly executed proxies received by
Coronado will be voted in accordance with the instructions contained in such
proxies. Executed, but unmarked, proxies will be voted "FOR" approval of the
Proposals.
ADJOURNMENTS OR POSTPONEMENTS
Although it is not expected, the Special meeting may be adjourned or
postponed for the purpose of soliciting additional proxies. Any adjournment
or postponement of the Special meeting may be made without notice, other than
by an announcement made at the Special meeting, by approval of the holders of
a majority of the votes present in person or represented by proxy at the
Special meeting, whether or not a quorum exists. Any signed proxies received
by Coronado will be voted in favor of an adjournment or postponement of the
Special meeting in these circumstances, unless either a written note on the
proxy delivered by the stockholder directs otherwise or the stockholder has
voted against the Merger agreement. Thus, proxies voting against the Merger
agreement will not be used to vote for adjournment of the Special meeting for
the purpose of providing additional time to solicit votes to approve the
Merger agreement. Any adjournment or postponement of the Special meeting for
the purpose of soliciting additional proxies will allow Coronado stockholders
who have already sent in their proxies to revoke them at any time prior to
their use.
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The Company has no separate Compensation Committee; the entire board of
directors makes decisions regarding executive compensation.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The board of directors has no existing policy with respect to the
specific relationship of corporate performance to executive compensation.
The Board has set executive compensation at what the Board considered to be
the minimal levels necessary to retain and compensate the officers of the
company for their activities on the Company's behalf.
AUDIT COMMITTEE
The board of directors, elected not to incur the expense of an Audit
Committee. Therefore, at this time the Company does not have an Audit
Committee.
INDEPENDENT AUDITORS
It is anticipated that Naturol, if the Merger is consummated, will
select an independent auditor for the year ended December 31, 2001.
Audit Fees
For professional services rendered with respect to the audit of
Coronado's annual financial statements for the year ended January 31, 2001,
Coronado paid to Andersen, Andersen & Strong, L.C. fees in the amount of
$1,700.
All Other Fees
Coronado did not pay to Andersen, Andersen & Strong, L.C. any fees in
its fiscal year ended January 31, 2001 for services other than those
described above.
In view of the fact that Coronado did not pay to Andersen, Andersen &
Strong, L.C. any fees in its fiscal year ended January 31, 2001 other than
fees for audit services, the board of directors was not required to consider
whether the provision of services other than audit services by Andersen,
Andersen & Strong, L.C. is compatible with maintaining Andersen, Andersen &
Strong, L.C.'s independence in performing audit services.
A representative of Andersen, Andersen & Strong, L.C. is not expected to
be present at the Special meeting.
SPECIAL FACTORS OF MERGER
BACKGROUND OF THE MERGER
At a board meeting on October 9, 2001, the board of directors of
Coronado determined that it was in the best interest of the Company and its
stockholders to pursue a merger candidate interested in pursuing new
business.
At the October 9, 2001 board meeting, the board of directors authorized
the President of Coronado to pursue the Merger with Naturol.
REASONS FOR THE MERGER
As a result, due to the board of directors' belief that the prospect of
increasing stockholder value through the pursuit of a strategic plan to
reposition Coronado involved a significant degree of uncertainty as well as
significant time to achieve, the board of directors determined in September
8, 2001 to consider the possible merger with Naturol as an alternative means
of providing some stockholder value. After careful consideration, the board
of directors concluded that a proposal for Coronado to merge with Naturol was
in the best interests of the Coronado's stockholders and, accordingly,
approved the Merger.
This discussion of the information and factors considered by Coronado's
board of directors is not intended to be exhaustive. In view of the variety
of factors considered in connection with its evaluation of the Merger,
Coronado's board did not find it practicable to, and did not quantify or
otherwise assign relative weight to, the specific factors considered in
reaching its determination.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The board of directors, has unanimously approved the Merger Agreement,
the Merger and the transactions contemplated by the Merger agreement and
recommends that the stockholders vote "FOR" approval and adoption of the
Merger agreement and the Merger. The board of directors believes that the
consideration to be received by Coronado stockholders is fair and in the best
interests of Coronado stockholders.
The recommendation of the board of directors is based upon the following
factors:
(i) reviewed the Merger agreement and discussed with the Board of Directors
of Coronado the course of negotiations with Naturol;
(ii) reviewed certain internal financial and operating information, including
financial forecasts and projections that were provided by Coronado, taking
into account (a) the growth prospects of Coronado and the various market
segments in which it competes, (b) the relation of projected trends to
Coronado's historical performance and track record of meeting its forecasts,
and (c) changes in management, organization structure and management
practices;
(iii) considered the current and historical market prices of the Coronado
common stock, as well as the limited trading volume and public float of the
Coronado common stock;
(iv) compared the valuation in the public market of companies similar to that
of Coronado in market, product types, and size; and
(v) considered current economic conditions.
ABOUT NATUROL, INC.
The following discussion relating to Naturol, Inc. contains forward-
looking statements. Forward-looking statements are only predictions. The
forward-looking events discussed in this section may not occur, and actual
events and results may differ materially and are subject to risks,
uncertainties and assumptions about Naturol, Inc. Naturol, Inc. is not
obligated to publicly update or revise any forward-looking statement, whether
as a result of uncertainties and assumptions, the forward-looking events
discussed in this section made from time to time by Naturol, Inc. or its
representatives, might not occur.
Naturol, Inc., ("Naturol"), was formed on June 19, 2001, as a Nevada
corporation, to operate as the exclusive North American licensee for the
purposes of commercializing all plant extraction technologies owned, patented
or in development by Naturol Limited of Saint Hellier, Jersey. Naturol
Limited's extraction technology offers a benign, safe, cost effective, high
quality alternative to current extraction technologies employed in the global
flavors, fragrances and pharmaceutical industries.
It is the intention of Naturol to become a world leader in the
commercialization of technology for the production of low cost, high quality
extracts from all types of plant life. Naturol's business plan projects
revenues from a number of sources including in-house manufacture, joint
venture and royalties via licensing of the technology for specific
applications.
Naturol has yet to generate revenues from any source and there is a
substantial going concern issue as to whether Naturol will ever be able to
commercialize its technology and generate sufficient, if any, revenues to
satisfy its working capital requirements. Since inception, Naturol has been
dependent on the sale of its equity securities and loans from affiliates to
satisfy its working capital needs. Naturol continues to have a working
capital deficiency that raises substantial concern regarding its ability to
continue as a going concern, as referenced in its audited financial
statements attached to this proxy statement.
Naturol will require substantial additional funds to fulfill its
business plan and successfully commercialize its technology. Naturol intends
to raise these needed funds from private placements of its securities, debt
financing or internally generated funds from the licensing of its technology
or the sale of products.
Narrative Description of Business
Technology Introduction. Naturol's licensed extraction technology
relates to a method of extracting and concentrating oils from materials in
which the oils are already contained. More particularly, the extraction
technology is concerned with the extraction of fixed and mineral oils and/or
volatile oils such as essential oils from materials using a process of
solvent extraction which is performed under pressure.
The term "Fixed Oil" is usually used to describe oils of vegetable or
animal origin which are not volatile oils. They routinely comprise natural
mixtures of mono di and triglycerides, fatty acids, sterols (and their esters-
- -any organic molecule produced by combining an acid with an alcohol) and
natural waxes.
"Mineral Oil" is a term usually used to describe petrochemical oils and
often derived from below ground level, which are normally mixtures of
aliphatic and aromatic hydrocarbons of a very wide variety of chain length
and molecular weight. These oils are often the sources of lubricating and
fuel oils.
The term "Essential Oil" is usually used to describe those volatile oils
of low molecular weight which incorporate the fragrance and flavor of
components derived from plant materials.
Traditional Extraction
Historically, solvents such as hexane, petroleum fractions, benzene and
methylene chloride have been widely used to extract fragrant oils, which are
flavorsome oleo-resins and drug containing extracts from an enormous range of
plant based raw materials. These solvents are in common use even in the
engineering, petroleum and mineral industries, where they are often used to
de-grease raw materials containing or coated in oil and to clean metal parts,
by the removal of oily lubricating preparations. Useful amounts of oils have
even been extracted from mineral raw materials such as oil shales and tar
sands with such solvents. Even soils contaminated with oily industrial waste
may be remediated with such solvents.
One disadvantage of generally highly flammable conventional solvent
systems such as hydrocarbon solvents, for example hexane, benzene and
petroleum fractions, has always been the dangers of fire or explosion and
incineration. These solvents also present further hazards to the operators of
such processes because many hydrocarbon and chlorinated solvents are harmful
or toxic if inhaled or ingested. They are frequently carcinogenic and all of
the hydrocarbon solvents used in current practice are classed as volatile
organic compounds (VOCs) which are said to have positive "Photo-Chemical
Ozone generating potential" and which can also cause asthma and bronchitis.
A further disadvantage of the most commonly used solvents, hexane and
"petroleum ether", is that their boiling points (at atmospheric
pressure-which is the pressure at any point in an atmosphere due solely to
the weight of the atmospheric gases above the point concerned) are in excess
of 50 degrees Celsius. Hence, in order to remove such solvents from the
solutions of the desired extracted components, the desired component must
either be exposed to high temperatures or high vacuum. Both of these
treatments detract from and are damaging and harmful to the quality of the
desired component or extract. Also, the evaporation of the solvent from the
solution of the oil, and the solvent recovery by condensation is expensive on
account of the energy costs. The finished products from such processes are
often intended for public consumption and the presence of toxic or harmful
residues may present difficulties when seeking regulatory approval of the
finished product.
These problems become even more serious when (as is increasingly the
case) statutory authorities are demanding that the solvent residue levels in
oils sold for use in human food products are required to meet increasingly
stringent requirements such as solvent residue levels of only 50, 10 and even
1 part per million. Achieving such levels of solvent residue requires that
the solution and extract be exposed to very high vacuum and/or very high
temperatures. Such treatment can result in serious loss of the precious
volatile components from the extracts and serious thermal damage to the
desirable component.
A strategy to overcome these problems has long been to employ
hydrocarbon solvents such as butane and even propane (in liquid form under
pressure). However, these processes are even more dangerous, as any leakage
of the (usually odorless) solvent vapors from the operating equipment, poses
a greatly enhanced risk and chance of explosion and incineration.
The use of less flammable solvents such as chlorinated hydrocarbon
solvents has gone some way in reducing these risks. For example, the use of
methylene chloride to extract valuable components such as caffeine from
coffee and tea has become common. Similarly, perchloroethylene has a long
history of use in the dry cleaning industry to de-grease oily clothing.
However, many of the traditional chlorinated solvents present their own
problems. Most of these materials are either harmful or toxic or may be
damaging to the environment. Their vapors are believed to deplete the
protective ozone in the stratosphere. Many of these chlorinated solvents are
also greenhouse gases and may lead to global warming.
Naturol's Extraction Technology
Naturol's process allows for the extraction of high quality, desirable
components such as oils, pigments, pharmacologically active ingredients and
resins from a wide range of substrates including plant, animal and mineral
matter, of both earthly and marine origin. The same process, when using the
solvent systems according to an embodiment of the invention, is able to
extract fixed and mineral oils.
Naturol's process comprises the contacting of the substrate (such as
bulk raw material in which the desired component is already contained) with a
solvent so as to allow the desired component to dissolve in the solvent. This
allows for the removal and separation of the solution of the desired
component in the solvent from the substrate. Further, it provides for the
removal of the solvent from the solution and its recovery for recycling and
re-use, and for the harvesting of the solute (desired dissolved substance)
from which the solvent has been removed. The solute, in such cases, comprises
the desired component so that the extracted oil may easily satisfy any
present or future regulatory requirements. Naturol's process is also intended
to dispense with the need for evaporation and condensation of large
quantities of solvents in order to obtain the final product from the solvent.
Market Overview.
Naturol believes that its extraction technology has applications in a
variety of important markets in North America. These include Fixed Oils (such
as the extraction of oils from Soybean, Sunflower, Maize, Canola, etc.),
Volatile oils and bioactive compounds for the Pharmaceutical, Food, Fragrance
and bio-insecticide markets.
The extraction of Oils and Bioactive compounds from plants is a multi-
billion dollar global business with far reaching applications to the flavors,
fragrances and pharmaceutical industries. A February 2001 market research
report by The Freedonia Group reports that the US demand for Plant-Derived
Chemicals was in excess of $2 billion in 2000 with worldwide demand exceeding
$8.4 billion. US sales are projected to approach $2.8 billion by 2005.
Product Development
Industries in which Naturol intends to operate are characterized by
rapid technological changes. There can be no assurance that Naturol's
extraction technology will not be rendered obsolete as a result of
technological developments. New developments are expected to continue at a
rapid pace in both industry and academia. There can be no assurance that
research and development by others will not render Naturol's product non-
competitive or obsolete. Many companies with substantially greater resources
than Naturol are engaged in the development of products and approaches to
address areas of these markets. Commercial availability of such systems could
render Naturol's product obsolete, and would have a materially adverse effect
on its business, financial condition and results of operations.
Recently Naturol formed Naturol Canada Limited as a 49% owned subsidiary
of Naturol to provide a vehicle for the development of its technology in
Canada. Naturol Canada Limited is negotiating an agreement with PEI Food
Technology Centre in Charlottetown, Prince Edward Island, Canada. The Food
Technology Centre is a Provincially funded research institute involved in the
development of innovative food products and processes which add value to
locally produced food products in Prince Edward Island.
The PEI Food Technology Centre and Naturol Canada Limited have initially
agreed to form an alliance to jointly develop Naturol's plant extraction
technology over a nine month period and to assess the potential value of
Naturol's technologies as applied to certain local plant and acquatic
materials in Prince Edward Island and neighboring Canadian Provinces. At the
successful conclusion of the period it is anticipated that Naturol Canada
Limited and the Food Technology Centre will establish a world class Toll
Extraction Facility on Prince Edward Island to service companies in Canada
and the United States who wish to access state of the art plant extraction
technology.
License Agreement.
On August 20, 2001 Naturol entered into a License Agreement with Naturol
Limited, incorporated under the laws of Jersey on April 29, 1998. Naturol
Limited obtained the Extraction Technology in an agreement executed by and
between Naturol Limited and Dr. Peter Wilde, wherein Mr. Wilde received 2,500
shares of stock of Naturol Limited. In addition, Willow Holdings, Inc.,
controlled by the interests of Paul McClory, president and a director of
Naturol, owns 7,500 shares of stock of Naturol Limited, the Licensor of the
extraction technology.
The term of the license is for the term of the patent. Consideration for
the license is a payment of $360,000 in the first year and a minimum payment
of $360,000 annually until a first commercial sale of licensed product and
for three (3) years thereafter. After license year 5, compensation will
consist solely of royalties. Royalties consist of an 8% fee based on the net
sales of licensed products. In addition, a 2% royalty shall be paid on the
use of licensee or any sublicensee of the trademark.
Pursuant to the terms and conditions of the License Agreement, Naturol
acquired all the rights to utilize the extraction technology for purposes of
manufacture, development, production, marketing, distribution, and
sublicensing of such technology.
Intellectual Property
Naturol regards the protection of its copyrights, service marks,
trademarks and trade secrets as critical to its future success and will rely
on a combination of copyright, trademark, service mark and trade secret laws
and contractual restrictions to establish and protect its proprietary rights
in products and services. Naturol will enter into confidentiality agreements
with licensees, potential licensees, consultants and strategic partners in
order to limit access to and disclosure of its proprietary information. These
contractual arrangements or the other steps taken by Naturol to protect its
intellectual property may not prove sufficient to prevent misappropriation of
its technology or to deter independent third-party development of similar
technologies. Naturol pursues the registration of trademarks and service
marks in the United States.
Naturol has acquired the North American rights to the following intellectual
property:
INTERNATIONAL PATENT NAME DATE
APPLICATION NUMBER
PCT/GBOO/00125 Extraction of Fixed Oils 1999
PCT/GBOO/02957 Extraction of Oils using ITFM 1999
GB0106972.3 Refining of crude extracts using HFC134a 2001
The Company has been licensed the North American rights and assigned the
rights to other future technology. While the patent rights are very
important, Naturol's greatest protection may be its trade secrets and know-
how derived from the scientific and technical knowledge of Peter Fredrick
Wilde, and Naturol's other scientists and technical advisors regarding the
design and functioning of extraction technology devices and the ability of
these devices to produce solutions tailored to fit the needs of particular
applications.
CERTAIN EFFECTS OF THE MERGER
Coronado Subsidiary Corp. will be merged into Naturol, and Coronado will
issue 50,000,000 restricted shares of its Common Stock and Coronado shall
assume all current outstanding stock of Naturol. As a result of the Merger,
Coronado will own the business of Naturol, and Coronado will change its name
to Naturol.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material United
States federal income tax consequences of the Merger. This discussion is
based upon the Internal Revenue Code of 1986, as amended (the "Code"),
regulations promulgated by the United States Treasury Department, judicial
authorities, and current rulings and administrative practice of the Internal
Revenue Service (the "Service"), as currently in effect, all of which are
subject to change at anytime, possibly with retroactive effect. This
discussion does not address all aspects of federal income taxation that might
be relevant to particular holders of Coronado common stock in light of their
status or personal investment circumstances; nor does it discuss the
consequences to such holders who are subject to Special treatment under the
federal income tax laws such as foreign persons, dealers in securities,
regulated investment companies, life insurance companies, other financial
institutions, tax-exempt organizations, pass-through entities, taxpayers who
hold Coronado common stock as part of a "straddle," "hedge" or "conversion
transaction" or who have a "functional currency" other than the United States
dollar or to persons who have received their Coronado common stock as
compensation. Further, this discussion does not address the state, local or
foreign tax consequences of the Merger.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABILITY TO YOUR PARTICULAR
SITUATION OF THE TAX CONSIDERATIONS CONTAINED IN THIS SUMMARY AND THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
Coronado has not requested an opinion, nor does Coronado intend to
request an opinion to the effect that the Merger will be treated as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code. However, Coronado has attempted to structure the Merger as a
reorganization for tax purposes. Since Coronado stockholders will not be
receiving shares in the Merger, management determined that it would not
request such an opinion.
If the Merger qualifies as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, then, subject to the
assumptions, limitations and qualifications referred to herein, the Merger
should result in the following federal income tax consequence:
No gain or loss will be recognized by Naturol in receipt of Coronado
shares as the result of Naturol exchanging Naturol shares for Coronado
shares.
A successful Internal Revenue Service challenge to the reorganization
status of the Merger would result in Naturol stockholders recognizing taxable
gain or loss with respect to each share of Naturol stock surrendered equal to
the difference between Naturol's basis in such share and the fair market
value, as of the effective time of the Merger, of the Coronado common stock
received in exchange therefore. In such event, Naturol's aggregate basis in
the Coronado common stock so received would equal its fair market value as of
the effective time of the Merger, and Naturol's holding period for such stock
would begin the day after the Merger. The gain or loss generally will be a
capital gain or loss.
SELECTED FINANCIAL DATA
The summary financial information set forth below is derived from the
unaudited financial statements of (i) Coronado for the year ending January
31, 2001 and (ii) audited financial statements for Naturol for the period
June 19, 2001 (Inception) to September 30, 2001.
CONDENSED CONSOLIDATED BALANCE SHEET
Historical Historical
Coronado Naturol, Inc.
Audited as audited as of June 19,
of 2001 (inception) to
January 31, September 30, 2001
2001
ASSETS
Current assets:
Cash and cash equivalents $ $ 53,750
-
License Agreement - 360,000
Total assets $ $ 413,750
-
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payabl $ $ 360,000
23,549
Total current 23,549 360,000
liabilities
Stockholders' equity
Common stock, $.001 par value, 2,500
25,000,000
Common stock, $.001 par value, 48,615
48,615,000
Additional paid in capital 21,600 53,535
Subscription receivable - (28,400)
Accumulated (deficit) (47,649) (20,000)
Total stockholders' equity (23,549) 53,750
Total liabilities and $ $ 413,750
stockholders' equity -
THE MERGER
THE FOLLOWING IS A BRIEF SUMMARY OF MERGER AGREEMENT, A COPY OF WHICH IS
ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT AND INCORPORATED BY REFERENCE
IN THIS PROXY STATEMENT. YOU SHOULD READ THE MERGER AGREEMENT IN ITS ENTIRETY
FOR A MORE COMPLETE DESCRIPTION OF THE MERGER. IN THE EVENT OF ANY
DISCREPANCY BETWEEN THE TERMS OF THE MERGER AGREEMENT AND THE FOLLOWING
SUMMARY, THE MERGER AGREEMENT WILL CONTROL.
EFFECTIVE TIME
The Merger agreement provides that the Merger will become effective upon
the filing of the Certificate of Merger with the Secretary of State of the
State of Nevada or at such other time as the parties may agree and specify in
the Certificate of Merger (the "Effective Time"). If the Merger is approved
at the Special meeting by the holders of a majority of all outstanding shares
of common stock entitled to vote at the Special meeting, and the other
conditions to the Merger are satisfied or waived, it is currently anticipated
that the Merger will become effective as soon as practicable after the
Special meeting; however, there can be no assurance as to the timing of the
consummation of the Merger or that the Merger will be consummated.
THE MERGER AND MERGER CONSIDERATION
At the Effective Time, Coronado Subsidiary Corp. will be merged into
Naturol and will become a wholly owned subsidiary of Coronado. Pursuant to
the Merger agreement and at the Effective Time:
* Coronado will issue 50,000,000 restricted shares of its Common Stock to
Naturol stockholders in exchange for 100% of Naturol.
REGULATORY REQUIREMENTS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), certain Merger transactions may not be consummated
unless notice has been given and certain information furnished to the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") and the Federal Trade Commission (the "FTC") and specified waiting
period requirements have been satisfied, unless earlier termination has been
granted.
Coronado and Naturol have each made their respective determination that
the approval of the Department of Justice and the Federal Trade Commission
will not be required. Thus, the applicable waiting period will not be
required. The Department of Justice and the Federal Trade Commission, as well
as a state or private person, may challenge the Merger at any time before or
after its completion. Neither Coronado nor Naturol is aware of any other
material governmental or regulatory approval required for completion of the
Merger, other than compliance with applicable corporate law of Nevada.
ANTICIPATED TAX AND ACCOUNTING TREATMENT
For federal income tax purposes, it is intended that the Merger
constitute a "reorganization" under Section 368(a)(2)(E) of the Internal
Revenue Code so that no gain or loss will be recognized by Naturol
stockholders who exchange their shares of Naturol Common Stock in the Merger
(except with respect to cash received in lieu of fractional shares and for
shares as to which stockholders exercise dissenters' rights). Additionally,
the Merger is anticipated to be accounted for as a purchase of Coronado by
Naturol (more commonly referred to as a reverse acquisition).
DISSENTER'S AND APPRAISAL RIGHTS
Coronado stockholders are entitled to dissenters rights in the proposed
merger under Delaware General Corporation Law 262. A copy of the statute is
attached to this proxy statement as Appendix B. Coronado stockholders who are
considering exercising dissenters rights should review DGCL 262 carefully,
particularly the steps required to perfect dissenters rights. No provision
under Delaware law provides a stockholder the right to later withdraw a
dissent and demand for payment. Set forth below is a summary of the steps to
be taken by a holder of record to exercise the right to appraisal. This
summary should be read in conjunction with the full text of DGCL 262.
Holders of record of Coronado Common Stock who do not approve the Merger
by written consent and who otherwise comply with the procedures set forth in
Section 262 of the DGCL, and summarized herein, will be entitled to have
their shares of Coronado Common Stock appraised (the "Appraisal Shares") and
will receive a payment in cash for such shares ("Appraisal Rights"). The
failure of a Coronado stockholder to follow the appropriate procedures set
forth in Section 262 will result in the termination or waiver of the
stockholder's Appraisal Rights. A person having a beneficial interest in
shares of Coronado Common Stock held of record in the name of another person,
such as a broker or nominee, must act promptly to cause the record holder to
follow the steps summarized below properly and in a timely manner to perfect
Appraisal Rights.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW
PERTAINING TO APPRAISAL RIGHTS UNDER THE DGCL AND IS QUALIFIED IN ITS
ENTIRETY BY THE FULL TEXT OF SECTION 262 WHICH IS REPRINTED IN ITS ENTIRETY
AS APPENDIX B. ALL REFERENCES IN SECTION 262 AND THIS SUMMARY TO A
"STOCKHOLDER" OR "HOLDER" ARE TO THE RECORD HOLDER OF THE SHARES OF CORONADO
COMMON STOCK AS TO WHICH APPRAISAL RIGHTS ARE ASSERTED.
Under the DGCL, holders of shares of Coronado Common Stock who follow
the procedures set forth in Section 262 will be entitled to have their
Appraisal Shares appraised by the Delaware Chancery Court and to receive
payment in cash of the "fair value" of such Appraisal Shares, exclusive of
any element of value arising from the accomplishment or expectation of the
Merger, together with a fair rate of interest, if any, as determined by such
court.
Under Section 262, where a proposed merger (like the Merger) is approved
pursuant to a written consent of the stockholders in lieu of a meeting as
provided by Section 228 of the DGCL, each constituent corporation of the
merger, either before the effective time of the merger or within 10 days
thereafter, shall notify each of the holders of any class or series of stock
of such constituent corporation who are entitled to Appraisal Rights of the
approval of the merger and that Appraisal Rights are available for any or all
shares of such class or series of stock of such constituent corporation;
provided, however, that, if the notice is given on or after the effective
time of the merger, such notice shall be given by the surviving corporation
to all such holders of any class or series of stock of a constituent
corporation that are entitled to Appraisal Rights. Such notice also includes
a copy of Section 262, and may, if given on or after the effective time of
the merger, shall, also notify such stockholders of the effective time of the
merger. If such notice did not notify stockholders of the effective time of
the merger, either: (i) each constituent corporation shall send a second
notice before the effective time of the merger notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to Appraisal Rights of the effective time of the merger; or (ii) the
surviving corporation shall send such a second notice to all such holders on
or within 10 days after such effective time; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to Appraisal Rights and who has demanded appraisal of such holder's
shares in accordance with Section 262 of the DGCL.
This Proxy Statement constitutes notice to the holders of Coronado
Common Stock of their Appraisal Rights as required by Section 262. Section
262 is attached to this Proxy Statement as Appendix B. Any Coronado
stockholder who wishes to exercise his, her or its Appraisal Rights, or who
wishes to preserve his, her or its right to do so, should review the
following discussion and Appendix B carefully. Failure to comply timely and
properly with the procedures specified in Section 262 will result in the loss
of Appraisal Rights.
A HOLDER OF APPRAISAL SHARES WISHING TO EXERCISE SUCH HOLDER'S APPRAISAL
RIGHTS MUST: (1) NOT APPROVE THE MERGER BY WRITTEN CONSENT; AND (2) WITHIN 20
DAYS AFTER THE DATE OF MAILING OF A NOTICE FROM CORONADO OR THE SURVIVING
CORPORATION NOTIFYING THE HOLDER OF APPRAISAL SHARES OF THE EFFECTIVE TIME OF
THE MERGER, DEMAND IN WRITING FROM CORONADO OR THE SURVIVING CORPORATION, AS
THE CASE MAY BE, APPRAISAL OF HIS, HER OR ITS SHARES. A HOLDER OF APPRAISAL
SHARES WISHING TO EXERCISE SUCH HOLDER'S APPRAISAL RIGHTS MUST BE THE RECORD
HOLDER OF SUCH APPRAISAL SHARES ON THE DATE THE WRITTEN DEMAND FOR APPRAISAL
IS MADE AND MUST CONTINUE TO HOLD SUCH APPRAISAL SHARES OF RECORD UNTIL THE
EFFECTIVE TIME OF THE MERGER. ACCORDINGLY, A HOLDER OF APPRAISAL SHARES WHO
IS THE RECORD HOLDER OF APPRAISAL SHARES ON THE DATE THE WRITTEN DEMAND FOR
APPRAISAL IS MADE, BUT WHO THEREAFTER TRANSFERS SUCH APPRAISAL SHARES PRIOR
TO THE EFFECTIVE TIME OF THE MERGER, WILL LOSE ANY RIGHT TO APPRAISAL IN
RESPECT OF SUCH APPRAISAL SHARES. FAILURE TO APPROVE THE MERGER BY WRITTEN
CONSENT DOES NOT IN ITSELF CONSTITUTE A DEMAND FOR APPRAISAL.
Only a holder of record of Appraisal Shares is entitled to assert
Appraisal Rights for the Appraisal Shares registered in that holder's name.
A demand for appraisal should be executed by or on behalf of the holder of
record, fully and correctly, as such holder's name appears on such holder's
stock certificate. If the Appraisal Shares are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, execution of
the demand should be made in that capacity, and if the Appraisal Shares are
owned of record by more than one person as in a joint tenancy or tenancy in
common, the demand should be executed by or on behalf of all joint owners.
An authorized agent, including one or more joint owners, may execute a demand
for appraisal on behalf of a holder of record; however, the agent must
identify the record owner or owners and expressly disclose the fact that, in
executing the demand, the agent is agent for such owner or owners. A record
holder such as a broker who holds Appraisal Shares as a nominee for several
beneficial owners may exercise Appraisal Rights with respect to the Appraisal
Shares held for one or more beneficial owners while not exercising such
rights with respect to the Appraisal Shares held for other beneficial owners;
in such case, the written demand should set forth the number of Appraisal
Shares as to which appraisal is sought. When no number of Appraisal Shares
is expressly mentioned, the demand will be presumed to cover all Appraisal
Shares held in the name of the record owner. Stockholders who hold their
Appraisal Shares in brokerage accounts or other nominee forms and who wish to
exercise Appraisal Rights are urged to consult with their brokers to
determine the appropriate procedures for the making of a demand for appraisal
by such a nominee.
ALL WRITTEN DEMANDS FOR APPRAISAL SHOULD BE SENT OR DELIVERED TO
CORONADO, INC., 397 Ventura Crescent, North Vancouver, B.C., Canada V7N 3G7
ATTENTION: PRESIDENT.
Within 120 days after the effective time of the Merger but not
thereafter, the surviving corporation or any stockholder who has complied
with the statutory requirements summarized above may file a petition in the
Delaware Chancery Court demanding a determination of the fair value of the
Appraisal Shares. Accordingly, it is the obligation of the stockholders to
initiate all necessary action to perfect their Appraisal Rights within the
time prescribed in Section 262. At any time within 60 days from the
effective time of the Merger, a stockholder may withdraw his, her or its
demand for appraisal, and accept the terms offered under the Merger
Agreement.
Within 120 days after the effective time of the Merger, any stockholder
who has complied with the requirements for exercise of Appraisal Rights will
be entitled, upon written request, to receive from the surviving corporation
a statement setting forth the aggregate number of Appraisal Shares and the
aggregate number of holders of such Appraisal Shares not approving the Merger
by written consent and with respect to which demands for appraisal have been
received and the aggregate number of holders of such shares. The surviving
corporation must mail the statement within 10 days after it has received such
written request.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders
entitled to Appraisal Rights and will appraise the fair value of their
Appraisal Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
Stockholders considering whether to seek appraisal should be aware that the
fair value of their Appraisal Shares as determined under Section 262 could be
more than, the same as or less than the value of the consideration they would
receive pursuant to the Merger Agreement if they did not seek appraisal of
their Appraisal Shares. Investment banking opinions as to fairness from a
financial point of view are not necessarily opinions as to fair value under
Section 262. The Delaware Supreme Court has stated that proof of value by
any techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court should be considered in
the appraisal proceedings.
The Delaware Chancery Court will determine the amount of interest, if
any, to be paid upon the amounts to be received by persons whose Appraisal
Shares have been appraised. The costs of the action may be determined by the
Delaware Chancery Court and taxed upon the parties as the Delaware Chancery
Court deems equitable. The Delaware Chancery Court may also order that all
or a portion of the expenses incurred by any stockholder in connection with
an appraisal, including, without limitation, reasonable attorneys' fees and
the fees and expenses of experts utilized in the appraisal proceeding, be
charged pro rata against the value of all the Appraisal Shares entitled to
appraisal.
Any holder of Appraisal Shares who had duly demanded an appraisal in
compliance with Section 262 will not, after the effective time of the Merger,
be entitled to vote the Appraisal Shares subject to such demand for any
purpose or be entitled to the payment of dividends or other distributions on
those Appraisal Shares (except dividends or other distributions payable to
holders of record of Appraisal Shares as of a record date prior to the
effective time of the Merger).
If any stockholder who properly demands appraisal of his Appraisal
Shares under Section 262 fails to perfect, or effectively withdraws or loses,
his, her or its Appraisal Rights, the Appraisal Shares of such stockholder
will be converted into the right to receive the consideration receivable with
respect to such Appraisal Shares in accordance with the Merger Agreement. A
stockholder will fail to perfect, or effectively lose or withdraw his, her or
its right to appraisal if, among other things, no petition for appraisal is
filed within 120 days after the effective time of the Merger, or if the
stockholder delivers to the surviving corporation a written withdrawal of
his, her or its demand for appraisal. Any such attempt to withdraw an
appraisal demand more than 60 days after the effective time of the Merger
will require the written approval of the surviving corporation.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 FOR PERFECTING
APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS (IN WHICH EVENT A
STOCKHOLDER WILL BE ENTITLED TO RECEIVE THE CONSIDERATION RECEIVABLE WITH
RESPECT TO SUCH APPRAISAL SHARES IN ACCORDANCE WITH THE MERGER AGREEMENT).
IN VIEW OF THE COMPLEXITY OF THE PROVISIONS OF SECTION 262, CORONADO
STOCKHOLDERS WHO ARE CONSIDERING OBJECTING TO THE MERGER SHOULD CONSULT THEIR
OWN LEGAL ADVISORS.
FEES AND EXPENSES
We estimate that Merger-related fees and expenses, consisting primarily
of SEC filing fees, fees and expenses of attorneys and accountants and other
related charges, will total approximately $___________ assuming the Merger is
completed. This amount consists of the following estimated fees:
DESCRIPTION AMOUNT
Legal fees and expenses 25,000
Accounting fees and expenses
SEC filing fee 3.30
Printing, solicitation and mailing costs
Total
Coronado will be responsible for paying all of its expenses incurred in
connection with the Merger, except fees relating to Naturol attorneys fees
which are unknown to Coronado.
THE MERGER AGREEMENT
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN MATERIAL PROVISIONS OF THE
MERGER AGREEMENT THAT HAVE NOT BEEN PREVIOUSLY DISCUSSED. THIS SUMMARY DOES
NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE MERGER AGREEMENT, WHICH IS ATTACHED TO THIS PROXY STATEMENT AS APPENDIX A
AND IS INCORPORATED HEREIN BY REFERENCE.
REPRESENTATIONS AND WARRANTIES
In the Merger agreement, Coronado made customary representations and
warranties to the other parties with respect to its business, organization,
operations and financial condition and other matters. The Merger agreement
also contains customary representations and warranties of Naturol relating to
their business. The representations and warranties in the Merger agreement do
not survive after the Effective Time, except certain covenants and agreements
which by their terms contemplate performance following the Effective Time.
CONDUCT OF BUSINESS PRIOR TO THE MERGER
Naturol has agreed that, until the completion or termination of the
Merger, unless Coronado consents in writing, Naturol will conduct their
businesses in the ordinary course of business in substantially the manner
conducted prior to the date of the Merger agreement. Coronado has also agreed
to, and cause its subsidiaries to, use reasonable efforts consistent with
past practice and policies to preserve intact its present business
organizations, keep available the services of its present officers and key
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with
it.
ADDITIONAL AGREEMENTS OF CORONADO EXPLORATIONS
Coronado has further agreed, among other things specifically identified
in the Merger agreement:
* to provide Naturol reasonable access to its facilities, records and all
other information as Naturol may reasonably request;
* prepare and file the proxy statement with the SEC as soon as it is
reasonably practicable and use reasonable best efforts to have the proxy
statement cleared by the SEC under the Exchange Act;
* take all reasonable action to comply with the state blue sky or federal
or state securities laws in connection with the transactions contemplated by
the Merger agreement;
* cooperate with Naturol to remove any injunction or other impediment to
the consummation of the Merger;
* to make all necessary filings and obtain any consents and approvals as
may be required in connection with the Merger agreement and the Merger; and
* to consult with Naturol and obtain prior approval of Naturol before
issuing any press release or making any other public disclosure regarding the
Merger agreement or the transactions contemplated thereby, except as may be
required by law, by obligations of Coronado pursuant to any listing agreement
with any national securities exchange or relating to consultation with its
legal counsel, financial advisor or accountants relating to the transaction
contemplated by the Merger agreement.
DIRECTOR AND OFFICER INDEMNIFICATION
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from and
after the Effective Time, Coronado shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "Indemnified Party" and, collectively, the
``Indemnified Parties") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to
the proviso of the next succeeding sentence, amounts paid in settlement
arising out of actions or omissions occurring at or prior to the Effective
Time and whether asserted or claimed prior to, at or after the Effective
Time) that are in whole or in part (i) based on, or arising out of the fact
that such person is or was a director, officer or employee of such party or a
subsidiary of such party or (ii) based on, arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such
loss expense, claim, damage or liability (whether or not arising before the
Effective Time), (i) Coronado shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to Coronado, promptly after statements therefor are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, in either case to
the extent not prohibited by the NGCL or its certificate of incorporation or
bylaws, (ii) Coronado will cooperate in the defense of any such matter and
(iii) any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under the
NGCL and Coronado's certificate of incorporation or bylaws shall be made by
independent counsel mutually acceptable to Coronado and the Indemnified
Party; provided, however, that Coronado shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld). The Indemnified Parties as a group may retain only
one law firm with respect to each related matter except to the extent there
is, in the opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, conflict on any significant issue between
positions of any two or more Indemnified Parties.
(b) In the event Coronado or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any person, then and in either such case, proper provision shall be made so
that the successors and assigns of Coronado shall assume the obligations.
(c) To the fullest extent permitted by law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
employees, agents, directors or officers of Coronado and Naturol and their
subsidiaries with respect to their activities as such prior to the Effective
Time, as provided in Coronado's and Naturol's certificate of incorporation or
bylaws, in effect on the date thereof or otherwise in effect on the date
hereof, shall survive the Merger and shall continue in full force and effect
for a period of not less than six years from the Effective Time.
COOPERATION AND REASONABLE EFFORTS
Pursuant to the Merger agreement, and subject to certain conditions and
limitations described therein, the parties have agreed to cooperate with each
other and to use their respective reasonable best efforts to take all action
under the terms of the Merger agreement and to do all things necessary,
proper or advisable in order to consummate and make effective the
transactions contemplated by the Merger agreement.
CONDITIONS TO THE MERGER
Coronado's and Naturol's respective obligations to complete the Merger
and the related transactions are subject to the satisfaction or waiver of
each of the following conditions before completion of the Merger:
* the representations and warranties of each party must be true and
correct when made and as of the closing of the Merger, except for changes
contemplated by the Merger agreement, or where such representation or
warranty speaks of a different date or the failure to be true and correct
could not reasonably be expected to have a material adverse effect on such
party;
* each party has complied in all material respects with all of its
covenants in the Merger agreement, except where the failure to perform or
comply with such covenants could not reasonably be expected to have a
material adverse effect on such party;
* each party has received a certificate executed on behalf of the other
party's chairman of the board and chief executive officer or vice president
to the effect that the conditions set forth in the immediately preceding
bullet points have been satisfied;
* the Merger agreement and the Merger have been approved by the
affirmative vote of a majority of the holders of the issued and outstanding
shares of Coronado's common stock;
* no order, writ, injunction or decree is in force or pending that makes
the Merger illegal or otherwise prohibits completion of the Merger; and
* all consents, approvals and authorization legally required to consummate
the Merger and the other transactions contemplated by the Merger agreement
must have been obtained from all governmental entities, including such
approvals, waivers and consents as may be required under the antitrust laws.
TERMINATION OF THE MERGER AGREEMENT
The Merger agreement may be terminated at any time before the completion
of the Merger, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Coronado, as summarized
below:
* the Merger agreement may be terminated by mutual written consent of
Naturol and Coronado;
* the Merger agreement may be terminated by either Coronado or Naturol if
the conditions to completion of the Merger would not be satisfied because of
either (a) a material breach of an agreement or obligation in the Merger
agreement by the other party or (b) a material breach of a representation,
warranty or covenant of the other party in the Merger agreement, and such
breach shall not have been cured within 30 business days following receipt of
written notice by the non-breaching party or is otherwise incapable of being
cured;
* the Merger agreement may be terminated by either Coronado or Naturol if
the Merger is not completed, without the fault of the terminating party, by
February 1, 2002,
* the Merger agreement may be terminated by either Coronado or Naturol if
(a) a statute, rule, regulation or executive order shall have been enacted,
entered or promulgated prohibiting the consummation of the Merger or (b) a
final court or governmental order prohibiting the Merger is issued and is
final and not appealable; provided that, the party seeking to terminate the
agreement has used reasonable best efforts to remove such order; or
* the Merger agreement may be terminated by Naturol if the Merger fails to
receive requisite stockholder approval.
The party desiring to terminate the Merger agreement shall give written
notice of such termination to the other party in accordance with the terms
thereof. In the event of termination of the Merger agreement, no party shall
have any liability or further obligation to any other party.
EXTENSION, WAIVER AND AMENDMENT
The Merger agreement may be amended or its conditions precedent to
closing waived at any time before or after the Special meeting, but after the
Special meeting no amendment or waiver shall be made without the further
approval of Coronado's stockholders which reduces the consideration payable
to the stockholders, or changes the form of such consideration. Any amendment
to the Merger agreement must be in writing and signed by all of the parties.
Either Coronado or Naturol may, in writing, extend the other's time for
the performance of any of the obligations or other acts under the Merger
agreement, waive any inaccuracies in the other's representations and
warranties and waive compliance by the other with any of the agreements or
conditions contained in the Merger agreement.
ELECTION OF DIRECTORS
The directors are to be elected to the board of directors, effective
concurrently with the close of the Merger, for one year to serve until the
2002 Annual meeting of stockholders and until their successors are elected
and qualified.
If one or more of the nominees should at the time of the meeting be
unable or unwilling to serve, the stockholders may vote for other nominees
and for any substitute nominee or nominees designated by the board of
directors. At this time, Coronado is not aware of any reason why the
nominees named would be unavailable to serve. The following table sets forth
information regarding each nominee.
Positions and Offices
With Coronado
Name Age Post Merger
Paul McClory 60 CEO, President, Chairman and Director
Isaac Moss 49 Secretary, Treasurer and Director
Michael J. Ram 60 Director
Paul G. McClory, age 60, is Chairman of the Board & Chief Executive Officer
of Naturol, Inc. Mr. McClory is the founder of Naturol, Inc. Mr. McClory has
a background in international business and bringing environmental and other
technologies to commercial reality. Mr. McClory was a founding director and
shareholder of Advanced Material Resources, currently listed on the Toronto
Stock Exchange. In 1990 Mr. McClory founded North American Tire Recycling
which was taken over by a NASDAQ listed company in 1992.
Isaac Moss, age 49, is Secretary/Treasurer and a Director of Naturol, Inc.
For the past ten years Isaac Moss has specialized in providing investment
banking and strategic business advisory services, initially as an independent
consultant, and more recently under Securities Trading Services, Inc. of
Geneva, Switzerland. Mr. Moss is a graduate of the University of Cape Town
and has a Bachelor of Social Science, Masters Degree in Public
Administration, and a post-graduate business qualification.
Michael J. Ram, age 60, is a Director of Naturol, Inc. Dr. Ram received his
B.S. from Lafayette College, and his M.S. and D.Sc in chemical engineering
from New Jersey Institute of Technology. He obtained his law degree from
Seton Hall Law School in 1972, and has been practicing in the field of
intellectual property law since 1973. Dr. Ram, holder of more than 20 U.S.
patents, is admitted to practice before the United States Patent & Trademark
Office and the state bars of California, New York, and New Jersey. Prior to
entering private practice, Dr. Ram was a Senior Research Engineer with
Celanese Research Company, Patent Counsel and Director of Technical Liaison
for C.R.Bard, Inc.; Vice President of Research & Development for Starr
Surgical; and General Counsel for Kabi Pharmacia Ophthalmics, Inc. He was
formerly a partner of Arant, Kleinberg, Lerner & Ram, Senior Counsel with
Loeb & Loeb, both Los Angeles law firms. He is presently Senior Counsel with
Koppel & Jacobs.
There are no family relationships between any of the above persons
Executive officers are to be elected by the board of directors of
Coronado at its meeting of directors held immediately following the Special
meeting of stockholders to serve for the ensuing year or until their
successors have been elected. There are no arrangements or understandings
between any officer and any other person pursuant to which the officer is to
be elected.
BOARD OF DIRECTORS MEETING
The board of directors of Coronado met ______ during the fiscal year
ended January 31, 2001.
SUMMARY COMPENSATION
The compensation which the Company accrued or paid to the Officers for
services in all capacities and for the fiscal years indicated, was as
follows:
Long Term
Special Compensation Compensation
Other Restricted
Name Year Salary Bonus Special Stock Options
Compensation
Mary Hethey- 2000- $2,750 -0- -0- -0- -0-
President and 2001
Director
Carsten Mide- 2000- -0- -0- -0- -0- -0-
Director 2001
Stacey Bligh- 2000- -0- -0- -0- -0- -0-
Secretary/ Treasurer 2001
DIRECTORS AND EXECUTIVE OFFICERS OF CORONADO EXPLORATIONS
EXECUTIVE OFFICERS AT PRESENT
Mary Hethey, 49, is the Registrant's founder and has been its President
since inception She was born in Galt, Ontario, Canada. She was educated at
the University of Toronto where she obtained a Bachelor of Arts degree in
honors Economics and Mathematics. Subsequent to graduation she was employed
with Burrows Business Machines as a computer programmer during 1974 and 1975
in Vancouver, British Columbia. Subsequently she became a student in
accounting and articled with Clarkson Gordon (1975-1978) and Collins Burrows
(1978 - 1980). In 1979 she obtained her degree as a Chartered Accountant.
Mrs. Hethey was the Secretary Treasurer of Goldking Resources Inc., a company
listed on the OTC Bulletin Board but is no longer in that position. Nine
years ago she was a director and officer of Arthurian Resources Inc. and a
director of Creative Products Inc.; both companies formerly listed on the
Vancouver Stock Exchange. Mrs. Hethey has had experience in mining companies
having performed accounting and auditing services for them as well as being a
director of Arthurian Resources Inc., a company which had a mineral property
in Ontario.
Carsten Mide, 54, has been in the property development business for the
past thirty three years and in residential home building for the past 28
years. He is currently a director and officer of several private companies.
Mr. Mide has not been involved in any public company either in Canada or the
United States and has not been associated with any OTC Bulletin Board company
to date. As noted above, Mr. Mide has had experience in mining and has been a
director of several mining companies during the past several years.
Stacey Bligh, 26, has been the Secretary Treasurer of the Registrant
since its inception. She graduated from Edward Milne Secondary School in 1990
with the Dogwood Diploma after having achieved the Honor Roll Status for four
consequent years before obtaining a position with Westport Design Centre
where her responsibilities were preparing bid sheets for large development
projects, job costing and co-coordinating activities with various
departments. In 1992 she attended the University of Victoria for two years
where she majored in Biology. Subsequent to leaving university Ms. Bligh
became an assistant appraiser for D.R. Coell & Associates in Victoria,
British Columbia where her duties comprised proof reading all residential
property appraisals and ensuring the legal matters were attended to. In 1995
she moved to Whistler, British Columbia and worked for Re/Max completing all
closing documentation for real estate projects. Subsequently she was employed
by Whistler Resort Association where she was responsible for food and
beverage accounting and supervising all staff at functions involving cash
sales. Presently Ms. Bligh is employed by her personal wholly-owned company
undertaking administrative work for various other companies.
PRINCIPAL STOCKHOLDERS OF CORONADO EXPLORATIONS
The following table sets forth pre-merger and as of the day after
closing, the beneficial ownership of the Coronado common stock of each
beneficial owner of more than 5% of the common stock, director, officer,
proposed officer and director, and all directors and officers of Coronado as
a group:
Number Percent Number Percent
of Shares Of Class of Shares Of Class
(Pre-Merger) (Pre-Merger) (Post- (Post-
Name of Owner (1) (2) Merger) Merger) (2)
Paul McClory,
Proposed director &
officer 0 0% 48,400,000 65%
Isaac Moss, Proposed
director & officer
0 0% 0 0%
Michael J. Ram,
Proposed director 0 0% 0 0%
Mary M. Hethey,
President & director
(3) 2,500,000 10% 2,500,000 3%
Carsten Mide,
Director (4) 2,000,000 8% 2,000,000 3%
Stacey Bligh,
Secretary &
Treasurer 500,000 2% 500,000 1%
Jack Cewe (5) 1,750,000 7% 1,750,000 2%
Michael Thachuk (6) 1,500,000 6% 1,500,000 2%
E. Del Thachuk (7) 1,500,000 6% 1,500,000 2%
John Krushnisky (8) 1,500,000 6% 1,500,000 2%
Officers and
Directors as a Group 5,000,000 20% 48,400,000 65%
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or shared
investment power with respect to a security (i.e., the power to dispose of,
or to direct the disposition of, a security).
(2) Figures are rounded to the nearest percentage.
(3) The sons of Mary Hethey each own 250,000 shares in the capital stock of
the Company. These shares have been added to her personal shares to equal
the number shown above.
(4) The wife of Carsten Mide owns 1,000,000 shares which haven been added to
this total.
(5) The wife of Jack Cewe owns 1,000,000 shares which have been added to
this total.
(6) The wife of Michael Thachuk owns 750,000 shares which have been added to
this total.
(7) The wife of E. Del Thachuk owns 750,000 share which have been added to
this total.
(8) The wife of John Krushnisky owns 750,000 shares which have been added to
this total.
OTHER MATTERS
As of the date of this proxy statement, the board of directors does not
intend to bring any other business before the Special meeting of Coronado
stockholders and, so far as is known to the board of directors, no matters
are to be brought before the Special meeting except as specified in the
notice of Special meeting. However, as to any other business that may
properly come before the Special meeting, the proxy holders intend to vote
the proxies in respect thereof in accordance with the recommendation of the
board of directors.
EXPENSES OF PROXY SOLICITATION
The principal solicitation of proxies will be made by mail. However,
certain officers of the Company, none of whom will be compensated therefore,
may solicit proxies by letter, telephone or personal solicitation. Expense of
distributing this Proxy Statement to stockholders, which may include
reimbursements to banks, brokers, and other custodians for their expenses in
forwarding this Proxy Statement, will be borne exclusively by Coronado.
WHERE YOU CAN FIND MORE INFORMATION
Coronado files Special, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may
read and copy any reports, statements or other information that Coronado
files with the Securities and Exchange Commission at the Securities and
Exchange Commission's world wide web site at "http://www.sec.gov."
The Securities and Exchange Commission allows Coronado to "incorporate
by reference" information into this proxy statement, which means that the
Coronado can disclose important information to you by referring you to other
documents filed separately with the Securities and Exchange Commission. The
information incorporated by reference is considered part of this proxy
statement, except for any information superseded by information contained
directly in this proxy statement or in later filed documents incorporated by
reference in this proxy statement.
This proxy statement incorporates by reference the documents set forth
below that Coronado previously filed with the Securities and Exchange
Commission. These documents contain important business and financial
information about Coronado that is not included in or delivered with this
proxy statement.
CORONADO EXPLORATIONS FILINGS
(FILE NO. 0-26309 PERIOD
Registration Statement Form 10SB Filed June 9, 1999 and amended October 15,
1999 and December 27, 1999
Annual Report on Form 10-KSB Fiscal Years ended January 31, 2000 and
2001
Quarterly Reports on Form 10-QSB Quarters ended April 30,200 &2001, July
31, 1999,2000 & 2001, October 31, 1999 &
2000
Current Reports on Form 8-K None
Coronado also incorporates by reference additional documents that may be
filed with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act between the date of this proxy
statement and the date of the Special meeting. These include periodic
reports, such as Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-
QSB and Current Reports on Form 8-K, as well as proxy statements.
Coronado has supplied all information contained or incorporated by
reference in this proxy statement relating to Coronado and Naturol has
supplied all such information relating to Naturol.
You can obtain any of the documents incorporated by reference through
Coronado, or the Securities and Exchange Commission's Internet web site as
described above. Documents incorporated by reference are available from
Coronado without charge, excluding all exhibits, except that if Coronado has
specifically incorporated by reference an exhibit in this proxy statement,
the exhibit will also be provided without charge. Stockholders may obtain
documents incorporated by reference in this proxy statement by requesting
them in writing or by telephone from the Coronado at the following address:
CORONADO EXPLORATIONS LTD.
397 Ventura Crescent
North Vancouver, B.C., Canada V7N 3G7
(604) 985-8940
You should rely only on the information contained or incorporated by
reference in this proxy statement. We have not authorized anyone to provide
you with information that is different from what is contained in this proxy
statement. This proxy statement is dated October ___, 2001. You should not
assume that the information contained in this proxy statement is accurate as
of any date other than that date. Neither the mailing of this proxy statement
to stockholders nor the issuance of Coronado common stock in the merger
creates any implication to the contrary.
FRONT SIDE OF PROXY
PROXY
CORONADO EXPLORATIONS LTD.
397 Ventura Crescent
North Vancouver, B.C., Canada V7N 3G7
(604) 985-8940
SPECIAL MEETING OF STOCKHOLDERS
______________, NOVEMBER ___, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF CORONADO EXPLORATIONS LTD.
The undersigned stockholder of CORONADO EXPLORATIONS LTD., a Delaware
corporation (the "Company"), hereby appoints _______________, as proxies,
with the power to appoint his or her substitute, and hereby authorizes either
of them to represent, and to vote as designated on the reverse side, all the
shares of common stock of Coronado Explorations Ltd. held of record by the
undersigned on November ___, 2001, at the Special Meeting of Stockholders of
Coronado Explorations Ltd., to be held at The Conference Room, Suite 115 -
1850 E. Flamingo Road, Las Vegas, Nevada 89119, on __________, November ___,
2001, at __:00 a.m. local time and at all adjournments or postponements
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE BOARD OF DIRECTORS AS NOMINATED, THE APPROVAL OF THE
ACCOUNTING FIRM OF WEAVER AND MARTIN, AND THE APPROVAL OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
[X] PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE
THE BOARD OF DIRECTORS OF CORONADO EXPLORATIONS LTD. RECOMMENDS A VOTE
FOR THE AGREEMENT AND PLAN OF MERGER.
1. Proposal to approve and adopt the Merger Agreement, dated as of
October __, 2001, by and among Coronado Explorations Ltd., Naturol, Inc. and
Coronado Subsidiary Corp., a wholly owned subsidiary of Coronado Explorations
Ltd. as heretofore and hereinafter amended, and the transactions contemplated
thereby:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be dated, and signed on reverse side)
2. Proposal to approve the following Directors to serve effective upon
closing of the Merger: Paul McClory, Isaac Moss and Michael J. Ram:
Paul McClory [ ] FOR [ ] AGAINST [ ] ABSTAIN
Isaac Moss [ ] FOR [ ] AGAINST [ ] ABSTAIN
Michael J. Ram [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To change the name of Coronado to Naturol, Inc., to be effective
upon closing of the Merger:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To change the Company's year end to December 31, 2001:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to transact such other business as may properly come
before the Special meeting or any adjournment or postponement:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER
BUSINESS, WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF AND MATTERS INCIDENT TO THE CONDUCT OF THE SPECIAL
MEETING. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING AND PROXY STATEMENT.
Date: ___________________, 2001
_______________________________ ____________________________________
(Signature) (Joint Owner's Signature)
Please sign exactly as your name appears on proxy. When signing as attorney,
guardian, executor, administrator or trustee, please give title. If the
signer is a corporation, give the full corporate name and sign by a duly
authorized officer, showing the officer's title. EACH joint owner is
requested to sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
APPENDIX A
ACQUISITION AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 16, 2001
BETWEEN
CORONADO EXPOLORATIONS LTD.
AND
NATUROL, INC.
TABLE OF CONTENTS
ARTICLE 1. The Merger 1
Section 1.1. The Merger 1
Section 1.2. Effective Time 1
Section 1.3. Closing of the Merger 2
Section 1.4. Effects of the Merger 2
Section 1.5. Board of Directors and Officers 2
Section 1.6. Conversion of Shares 3
Section 1.7. Exchange of Certificates 3
Section 1.8. Stock Options 4
Section 1.9. Taking of Necessary Action; Further Action 4
ARTICLE 2. Representations and Warranties of Coronado 5
Section 2.1. Organization and Qualification 5
Section 2.2. Capitalization of Coronado 5
Section 2.3. Authority Relative to this Agreement;
Recommendation. 6
Section 2.4. SEC Reports; Financial Statements 6
Section 2.5. Information Supplied 7
Section 2.6. Consents and Approvals; No Violations 7
Section 2.7. No Default 8
Section 2.8. No Undisclosed Liabilities; Absence of Changes 8
Section 2.9. Litigation 8
Section 2.10. Compliance with Applicable Law 9
Section 2.11. Employee Benefit Plans; Labor Matters 9
Section 2.12. Environmental Laws and Regulations 11
Section 2.13. Tax Matters 11
Section 2.14. Title To Property 12
Section 2.15. Intellectual Property 12
Section 2.16. Insurance 12
Section 2.17. Vote Required 12
Section 2.18. Tax Treatment 13
Section 2.19. Affiliates 13
Section 2.20. Certain Business Practices 13
Section 2.21. Insider Interests 13
Section 2.22. Opinion of Financial Adviser 13
Section 2.23. Brokers 13
Section 2.24. Disclosure 13
Section 2.25. No Existing Discussion 13
Section 2.26. Material Contracts 14
ARTICLE 3. Representations and Warranties of Naturol. 14
Section 3.1. Organization and Qualification 14
Section 3.2. Capitalization of Naturol 15
Section 3.3. Authority Relative to this Agreement;
Recommendation 16
Section 3.4. SEC Reports; Financial Statements 16
Section 3.5. Information Supplied 16
Section 3.6. Consents and Approvals; No Violations 17
Section 3.7. No Default 17
Section 3.8 No Undisclosed Liabilities; Absence of Changes 17
Section 3.9. Litigation 18
Section 3.10. Compliance with Applicable Law 18
Section 3.11. Employee Benefit Plans; Labor Matters 19
Section 3.12. Environmental Laws and Regulations 20
Section 3.13. Tax Matters 20
Section 3.14. Title to Property 21
Section 3.15. Intellectual Property 21
Section 3.16. Insurance 21
Section 3.17. Vote Required 21
Section 3.18. Tax Treatment 22
Section 3.19. Affiliates 22
Section 3.20. Certain Business Practices 22
Section 3.21. Insider Interests 22
Section 3.22. Opinion of Financial Adviser 22
Section 3.23. Brokers 22
Section 3.24. Disclosure 22
Section 3.25. No Existing Discussions 22
Section 3.26. Material Contracts 22
ARTICLE 4. Covenants 23
Section 4.1. Conduct of Business of Coronado 23
Section 4.2. Conduct of Business of Naturol 25
Section 4.3. Preparation of 8-K and the Proxy Statement 27
Section 4.4. Other Potential Acquirers 27
Section 4.5. Meetings of Stockholders 27
Section 4.6. NASD OTC:BB Listing 28
Section 4.7. Access to Information 28
Section 4.8. Additional Agreements; Reasonable Efforts. 28
Section 4.9. Employee Benefits; Stock Option and Employee
Purchase Plans 28
Section 4.10. Public Announcements 29
Section 4.11. Indemnification 29
Section 4.12. Notification of Certain Matters 30
ARTICLE 5. Conditions to Consummation of the Merger 30
Section 5.1. Conditions to Each Party's Obligations to Effect
the Merger 30
Section 5.2. Conditions to the Obligations of Coronado 31
Section 5.3. Conditions to the Obligations of Naturol 31
ARTICLE 6. Termination; Amendment; Waiver 32
Section 6.1. Termination 33
Section 6.2. Effect of Termination 33
Section 6.3. Fees and Expenses 33
Section 6.4. Amendment 33
Section 6.5. Extension; Waiver 33
ARTICLE 7. Miscellaneous 34
Section 7.1. Nonsurvival of Representations and Warranties 34
Section 7.2. Entire Agreement; Assignment 34
Section 7.3. Validity 34
Section 7.4. Notices 34
Section 7.5. Governing Law 35
Section 7.6. Descriptive Headings 35
Section 7.7. Parties in Interest 35
Section 7.8. Certain Definitions 35
Section 7.9. Personal Liability 35
Section 7.10. Specific Performance 36
Section 7.11. Counterparts 36
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
October 16, 2001, is between CORONADO EXPOLORATIONS LTD., a Delaware
corporation ("Coronado") with a place of business at 535 Thurlow Street,
Suite 801, BC, Canada, V7N 3G7, and NATUROL, INC., a Nevada corporation
("Naturol") with a place of business at 6265 Stevenson Way, Las Vegas, NV
89119.
Whereas, the Boards of Directors of Coronado and Naturol each have, in
light of and subject to the terms and conditions set forth herein, (i)
determined that the Merger (as defined below) is fair to their respective
stockholders and in the best interests of such stockholders and (ii) approved
the Merger in accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
Whereas, Coronado and Naturol desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger.
Now, therefore, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Coronado and Naturol hereby agree as
follows:
ARTICLE I
The Merger
Section 1.1. The Merger. Prior to the Effective Time (as defined below)
Coronado shall take such action as is necessary to form a new corporation, as
a wholly owned subsidiary of Coronado, Coronado Subsidiary Corp. ("CSC") as a
Nevada corporation. At the Effective Time and upon the terms and subject to
the conditions of this Agreement and in accordance with the General
Corporation Law of the state of Nevada (the "NGCL"), CSC shall be merged with
and into Naturol (as defined below) (the ``Merger`). Following the Merger,
Naturol shall continue as the surviving corporation (the "Surviving
Corporation"), shall continue to be governed by the laws of the jurisdiction
of its incorporation or organization and the separate corporate existence of
CSC shall cease. Naturol shall continue its existence as a wholly owned
subsidiary of Coronado. Prior to the Effective Time, the parties hereto
shall mutually agree as to the name of the Surviving Corporation; however,
initially the Surviving Corporation shall be named NATUROL, INC., a Delaware
corporation. The Merger is intended to qualify as a tax-free reorganization
under Section 368 of the Code as relates to the non-cash exchange of stock
referenced herein.
Section 1.2. Effective Time. Subject to the terms and conditions set
forth in this Agreement, a Certificate of Merger (the "Merger Certificate")
shall be duly executed and acknowledged by each of Naturol, CSC and Coronado,
and thereafter the Merger Certificate reflecting the Merger shall be
delivered to the Secretary of State of the State of Nevada for filing
pursuant to the NGCL on the Closing Date (as defined in Section 1.3). The
Merger shall become effective at such time as a properly executed and
certified copy of the Merger Certificate is duly filed by the Secretary of
State of the State of Nevada in accordance with the NGCL or such later time
as the parties may agree upon and set forth in the Merger Certificate (the
time at which the Merger becomes effective shall be referred to herein as the
"Effective Time"). Concurrently, at the Effective Time Coronado shall amend
its Certificate of Incorporation to change its name to Naturol, Inc.
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 5
(the "Closing Date"), at the offices of Sperry Young & Stoecklein, 1850 E.
Flamingo Rd., Suite 111, Las Vegas, Nevada, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights,
privileges, powers of CSC shall vest in the Surviving Corporation, and all
debts, liabilities and duties of CSC shall become the debts, liabilities and
duties of the Surviving Corporation. Concurrently, Naturol shall remain a
wholly owned subsidiary of Coronado.
Section 1.5. Board of Directors and Officers.
(a) Board of Directors of CSC. At or prior to the Effective Time,
Coronado agrees to take such action as is necessary (i) to cause the number
of directors comprising the full Board of Directors of CSC to be one (1)
person and (ii) to cause Richard T. Hethey, (the "Coronado Designee") to be
elected as director of CSC.
(b) Board of Directors of Coronado. At or prior to the Effective Time,
each of Naturol and Coronado agrees to take such action as is necessary (i)
to cause the number of directors comprising the full Board of Directors of
Coronado to be three (3) persons and (ii) to cause Paul McClory, Isaac Moss,
and Michael J. Ram, (the "Naturol Designees") to be elected as directors of
Coronado. In addition, majority stockholders of Coronado at the Effective
Time shall take all action necessary to cause, to the greatest extent
practicable, the Naturol Designees to serve on Coronado's Board of Directors
until the 2002 Annual Meeting. If the Naturol Designee, respectively, shall
decline or be unable to serve as a director prior to the Effective Time,
Naturol shall nominate another person to serve in such person's stead, which
such person shall be subject to approval of the other party. From and after
the Effective Time, and until successors are duly elected or appointed and
qualified in accordance with applicable law, Paul McClory shall be Chief
Executive Officer, President Chairman, Isaac Moss shall be Secretary and
Treasurer of Coronado.
Section 1.6. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value $.001
per share of Naturol (individually a "Naturol Share" and collectively,
the "Naturol Shares") issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on
the part of Naturol, Coronado, CSC or the holder thereof, be converted
into and shall become fully paid and nonassessable Coronado common
shares determined by dividing (i) Fifty Million (50,000,000), by (ii)
the total number of shares of Naturol, anticipated to be Fifty Million
(50,000,000) outstanding at the Effective Time (such quotient, the
"Exchange Ratio"). The holder of one or more shares of Naturol common
stock shall be entitled to receive in exchange therefor a number of
shares of Coronado Common Stock equal to the product of (x) (the number
of shares of Naturol common stock (50,000,000), times (y) (the Exchange
Ratio). Coronado Shares and Naturol Shares are sometimes referred to
collectively herein as "Shares." By way of example,
50,000,000/50,000,000 = 1.00 (the Exchange Ratio). The number of shares
of Naturol common stock held by a stockholder (100,000) times the
Exchange Ratio of 1.00 equals 100,000 shares of Coronado Shares to be
issued.
(b) At the Effective Time, each Naturol Share held in the treasury of
Naturol, by Naturol immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of Naturol, CSC or Coronado
be canceled, retired and cease to exist and no payment shall be made with
respect thereto.
Section 1.7. Exchange of Certificates.
(a) Prior to the Effective Time, Coronado shall enter into an agreement
with, and shall deposit with, Sperry Young & Stoecklein, or such other agent
or agents as may be satisfactory to Coronado and Naturol (the "Exchange
Agent"), for the benefit of the holders of Naturol Shares, for exchange
through the Exchange Agent in accordance with this Article I: (i)
certificates representing the appropriate number of Coronado Shares to be
issued to holders of Naturol Shares issuable pursuant to Section 1.6 in
exchange for outstanding Naturol Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Naturol Shares (the "Certificates") whose shares were converted
into the right to receive Coronado Shares pursuant to Section 1.6: (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Exchange Agent and shall be in such form and have
such other provisions as Naturol and Coronado may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing Coronado Shares. Upon surrender of a
Certificate to the Exchange Agent, together with such letter of transmittal,
duly executed, and any other required documents, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole Coronado Shares and, if applicable, a check
representing the cash consideration to which such holder may be entitled on
account of the Cash Fund, which such holder has the right to receive pursuant
to the provisions of this Article I, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Naturol
Shares which are not registered in the transfer records of Naturol, a
certificate representing the proper number of Coronado Shares may be issued
to a transferee if the Certificate representing such Naturol Shares is
presented to the Exchange Agent accompanied by all documents required by the
Exchange Agent or Coronado to evidence and effect such transfer and by
evidence that any applicable stock transfer or other taxes have been paid.
Until surrendered as contemplated by this Section 1.7, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing Coronado Shares as
contemplated by this Section 1.8.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to Coronado Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the Coronado Shares represented thereby until the holder of
record of such Certificate shall surrender such Certificate.
(d) In the event that any Certificate for Naturol Shares or Coronado
Shares shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange therefor, upon the making of an affidavit of that fact by
the holder thereof such Coronado Shares and cash in lieu of fractional
Coronado Shares, if any, as may be required pursuant to this Agreement;
provided, however, that Coronado or the Exchange Agent, may, in its
respective discretion, require the delivery of a suitable bond, opinion or
indemnity.
(e) All Coronado Shares issued upon the surrender for exchange of
Naturol Shares in accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights pertaining to such
Naturol Shares. There shall be no further registration of transfers on
the stock transfer books of either of Naturol or Coronado of the Naturol
Shares or Coronado Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are
presented to Coronado for any reason, they shall be canceled and
exchanged as provided in this Article I.
(f) No fractional Coronado Shares shall be issued in the Merger, but in
lieu thereof each holder of Naturol Shares otherwise entitled to a fractional
Coronado Share shall, upon surrender of its, his or her Certificate or
Certificates, be entitled to receive an additional share to round up to the
nearest round number of shares.
Section 1.8. Stock Options. At the Effective Time, each outstanding
option to purchase Naturol Shares, if any (a "Naturol Stock Option" or
collectively, "Naturol Stock Options") issued pursuant to any Naturol Stock
Option Plan or Naturol Long Term Incentive Plan whether vested or unvested,
shall be cancelled.
Section 1.9. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, Naturol or Coronado reasonably determines that any
deeds, assignments, or instruments or confirmations of transfer are necessary
or desirable to carry out the purposes of this Agreement and to vest Coronado
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of Naturol, the officers and directors of
Coronado and Naturol are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and
necessary or desirable action.
ARTICLE 2
Representations and Warranties of Coronado
Except as set forth on the Disclosure Schedule delivered by Coronado to
Naturol (the "Coronado Disclosure Schedule"), Coronado hereby represents and
warrants to Naturol as follows:
Section 2.1. Organization and Qualification.
(a) Coronado is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not have a Material Adverse Effect (as defined below) on
Coronado. When used in connection with Coronado, the term "Material Adverse
Effect" means any change or effect (i) that is or is reasonably likely to be
materially adverse to the business, results of operations, condition
(financial or otherwise) or prospects of Coronado, other than any change or
effect arising out of general economic conditions unrelated to any business
in which Coronado is engaged, or (ii) that may impair the ability of Coronado
to perform its obligations hereunder or to consummate the transactions
contemplated hereby.
(b) Coronado has heretofore delivered to Naturol accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of Coronado. Except as set forth on
Schedule 2.1 of the Coronado Disclosure Schedule, Coronado is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in
such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not have a Material Adverse Effect on Coronado.
Section 2.2. Capitalization of Coronado.
(a) The authorized capital stock of Coronado consists of Two Hundred Million
(200,000,000) Coronado Common Shares, of which, as of July 31, 2001,
25,000,000 Coronado Shares were issued and outstanding. All of the
outstanding Coronado Shares have been duly authorized and validly issued, and
are fully paid, nonassessable and free of preemptive rights. Except as set
forth herein, as of the date hereof, there are no outstanding (i) shares of
capital stock or other voting securities of Coronado, (ii) securities of
Coronado convertible into or exchangeable for shares of capital stock or
voting securities of Coronado, (iii) options or other rights to acquire from
Coronado and, except as described in the Coronado SEC Reports (as defined
below), no obligations of Coronado to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of Coronado, and (iv) equity equivalents, interests in
the ownership or earnings of Coronado or other similar rights (collectively,
"Coronado Securities"). As of the date hereof, except as set forth on
Schedule 2.2(a) of the Coronado Disclosure Schedule there are no outstanding
obligations of Coronado or its subsidiaries to repurchase, redeem or
otherwise acquire any Coronado Securities or stockholder agreements, voting
trusts or other agreements or understandings to which Coronado is a party or
by which it is bound relating to the voting or registration of any shares of
capital stock of Coronado. For purposes of this Agreement, ``Lien" means,
with respect to any asset (including, without limitation, any security) any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
(b) The Coronado Shares constitute the only class of equity securities of
Coronado registered or required to be registered under the Exchange Act.
(c) Coronado does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity, other than as specifically disclosed in the
disclosure documents.
Section 2.3. Authority Relative to this Agreement; Recommendation.
(a) Coronado has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly and validly authorized
by the Board of Directors of Coronado (the "Coronado Board") and no other
corporate proceedings on the part of Coronado are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, except, as
referred to in Section 2.17, the approval and adoption of this Agreement by
the holders of at least a majority of the then outstanding Coronado Shares.
This Agreement has been duly and validly executed and delivered by Coronado
and constitutes a valid, legal and binding agreement of Coronado, enforceable
against Coronado in accordance with its terms.
(b) The Coronado Board has resolved to recommend that the stockholders of
Coronado approve and adopt this Agreement.
Section 2.4. SEC Reports; Financial Statements.
(a) Coronado has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since the filing of its 10SB
on June 9, 1999, each of which has complied in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act (and the rules and regulations
promulgated thereunder, respectively), each as in effect on the dates such
forms, reports and documents were filed. Coronado has heretofore delivered or
promptly will deliver prior to the Effective Date to Naturol, in the form
filed with the SEC (including any amendments thereto but excluding any
exhibits), (i) its Annual Report on Form 10-KSB for the fiscal year ended
January 31, 2001, (ii) all definitive proxy statements relating to Coronado's
meetings of stockholders (whether annual or special) held since January 31,
2001, if any, and (iii) all other reports or registration statements filed by
Coronado with the SEC since January 31, 2001 (all of the foregoing,
collectively, the "Coronado SEC Reports"). None of such Coronado SEC Reports,
including, without limitation, any financial statements or schedules included
or incorporated by reference therein, contained, when filed, any untrue
statement of a material fact or omitted to state a material fact required to
be stated or incorporated by reference therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited financial statements of Coronado included
in the Coronado SEC Reports fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis (except as may
be indicated in the notes thereto), the financial position of Coronado as of
the dates thereof and its results of operations and changes in financial
position for the periods then ended. All material agreements, contracts and
other documents required to be filed as exhibits to any of the Coronado SEC
Reports have been so filed.
(b) Coronado has heretofore made available or promptly will make available to
Naturol a complete and correct copy of any amendments or modifications which
are required to be filed with the SEC but have not yet been filed with the
SEC, to agreements, documents or other instruments which previously had been
filed by Coronado with the SEC pursuant to the Exchange Act.
Section 2.5. Information Supplied. None of the information supplied or to be
supplied by Coronado for inclusion or incorporation by reference in
connection with the Merger (the "Proxy Statement") will at the date mailed to
stockholders of Coronado and at the times of the meeting or meetings of
stockholders of Coronado to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement, insofar as it relates to the meeting of
Coronado's stockholders to vote on the Merger, will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
Section 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act
of 1916, as amended (the ``HSR Act''), the rules of the National Association
of Securities Dealers, Inc. ("NASD"), the filing and recordation of the
Merger Certificate as required by the NGCL, and as set forth on Schedule 2.6
of the Coronado Disclosure Schedule no filing with or notice to, and no
permit, authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by
Coronado of this Agreement or the consummation by Coronado of the
transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or
give such notice would not have a Material Adverse Effect on Coronado.
Except as set forth in Section 2.6 of the Coronado Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by Coronado
nor the consummation by Coronado of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
Coronado, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Coronado is a party or by which any of its properties or
assets may be bound, or (iii) violate any order, writ, injunction, decree,
law, statute, rule or regulation applicable to Coronado or any of its
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which would not have a Material Adverse Effect on
Coronado.
Section 2.7. No Default. Except as set forth in Section 2.7 of the Coronado
Disclosure Schedule, Coronado is not in breach, default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a breach default or violation) of any term, condition or provision
of (i) its Certificate of Incorporation or Bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Coronado is
now a party or by which any of its respective properties or assets may be
bound or (iii) any order, writ injunction, decree, law, statute, rule or
regulation applicable to Coronado or any of its respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or
defaults that would not have a Material Adverse Effect on Coronado. Except as
set forth in Section 2.7 of the Coronado Disclosure Schedule, each note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Coronado is now a party or by which its
respective properties or assets may be bound that is material to Coronado and
that has not expired is in full force and effect and is not subject to any
material default thereunder of which Coronado is aware by any party obligated
to Coronado thereunder.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as set
forth in Section 2.8 of the Coronado Disclosure Schedule and except as and to
the extent publicly disclosed by Coronado in the Coronado SEC Reports, as of
September 18, 2001, Coronado does not have any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
balance sheet of Coronado (including the notes thereto) or which would have a
Material Adverse Effect on Coronado. Except as publicly disclosed by
Coronado, since September 18, 2001, Coronado has not incurred any liabilities
of any nature, whether or not accrued, contingent or otherwise, which could
reasonably be expected to have, and there have been no events, changes or
effects with respect to Coronado having or which reasonably could be expected
to have, a Material Adverse Effect on Coronado. Except as and to the extent
publicly disclosed by Coronado in the Coronado SEC Reports and except as set
forth in Section 2.8 of the Coronado Disclosure Schedule, since September 18,
2001, there has not been (i) any material change by Coronado in its
accounting methods, principles or practices (other than as required after the
date hereof by concurrent changes in generally accepted accounting
principles), (ii) any revaluation by Coronado of any of its assets having a
Material Adverse Effect on Coronado, including, without limitation, any
write-down of the value of any assets other than in the ordinary course of
business or (iii) any other action or event that would have required the
consent of any other party hereto pursuant to Section 4.1 of this Agreement
had such action or event occurred after the date of this Agreement.
Section 2.9. Litigation. Except as publicly disclosed by Coronado in the
Coronado SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Coronado, threatened against
Coronado or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
Coronado or could reasonably be expected to prevent or delay the consummation
of the transactions contemplated by this Agreement. Except as publicly
disclosed by Coronado in the Coronado SEC Reports, Coronado is not subject to
any outstanding order, writ, injunction or decree which, insofar as can be
reasonably foreseen in the future, could reasonably be expected to have a
Material Adverse Effect on Coronado or could reasonably be expected to
prevent or delay the consummation of the transactions contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as publicly disclosed by
Coronado in the Coronado SEC Reports, Coronado holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the
`'Coronado Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders and approvals which would not have a Material
Adverse Effect on Coronado. Except as publicly disclosed by Coronado in the
Coronado SEC Reports, Coronado is in compliance with the terms of the
Coronado Permits, except where the failure so to comply would not have a
Material Adverse Effect on Coronado. Except as publicly disclosed by Coronado
in the Coronado SEC Reports, the business of Coronado is not being conducted
in violation of any law, ordinance or regulation of any Governmental Entity
except that no representation or warranty is made in this Section 2.10 with
respect to Environmental Laws (as defined in Section 2.12 below) and except
for violations or possible violations which do not, and, insofar as
reasonably can be foreseen, in the future will not, have a Material Adverse
Effect on Coronado. Except as publicly disclosed by Coronado in the Coronado
SEC Reports, no investigation or review by any Governmental Entity with
respect to Coronado is pending or, to the knowledge of Coronado, threatened,
nor, to the knowledge of Coronado, has any Governmental Entity indicated an
intention to conduct the same, other than, in each case, those which Coronado
reasonably believes will not have a Material Adverse Effect on Coronado.
Section 2.11. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2.11(a) of the Coronado Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained or contributed to at
any time by Coronado or any entity required to be aggregated with Coronado
pursuant to Section 414 of the Code (each, a "Coronado Employee Plan"), no
event has occurred and to the knowledge of Coronado, no condition or set of
circumstances exists in connection with which Coronado could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on Coronado.
(b) (i) No Coronado Employee Plan is or has been subject to Title IV of ERISA
or Section 412 of the Code; and (ii) each Coronado Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code is the subject of a favorable Internal
Revenue Service determination letter, and nothing has occurred which could
reasonably be expected to adversely affect such determination.
(c) Section 2.11(c) of the Coronado Disclosure Schedule sets forth a true and
complete list, as of the date of this Agreement, of each person who holds any
Coronado Stock Options, together with the number of Coronado Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 2.11(c) of the Coronado
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. Coronado has furnished Naturol with
complete copies of the plans pursuant to which the Coronado Stock Options
were issued. Other than the automatic vesting of Coronado Stock Options that
may occur without any action on the part of Coronado or its officers or
directors, Coronado has not taken any action that would result in any
Coronado Stock Options that are unvested becoming vested in connection with
or as a result of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(d) Coronado has made available to Naturol (i) a description of the terms of
employment and compensation arrangements of all officers of Coronado and a
copy of each such agreement currently in effect; (ii) copies of all
agreements with consultants who are individuals obligating Coronado to make
annual cash payments in an amount exceeding $60,000; (iii) a schedule listing
all officers of Coronado who have executed a non-competition agreement with
Coronado and a copy of each such agreement currently in effect; (iv) copies
(or descriptions) of all severance agreements, programs and policies of
Coronado with or relating to its employees, except programs and policies
required to be maintained by law; and (v) copies of all plans, programs,
agreements and other arrangements of Coronado with or relating to its
employees which contain change in control provisions all of which are set
forth in Section 2.11(d) of the Coronado Disclosure Schedule.
(e) There shall be no payment, accrual of additional benefits, acceleration
of payments, or vesting in any benefit under any Coronado Employee Plan or
any agreement or arrangement disclosed under this Section 2.11 solely by
reason of entering into or in connection with the transactions contemplated
by this Agreement.
(f) There are no controversies pending or, to the knowledge of Coronado,
threatened, between Coronado and any of their employees, which controversies
have or could reasonably be expected to have a Material Adverse Effect on
Coronado. Neither Coronado nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by Coronado or any of its subsidiaries (and neither Coronado
nor any of its subsidiaries has any outstanding material liability with
respect to any terminated collective bargaining agreement or labor union
contract), nor does Coronado know of any activities or proceedings of any
labor union to organize any of its or employees. Coronado has no knowledge of
any strike, slowdown, work stoppage, lockout or threat thereof, by or with
respect to any of its employees.
Section 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by Coronado in the Coronado SEC Reports, (i)
Coronado is in material compliance with all applicable federal, state, local
and foreign laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance that would
not have a Material Adverse Effect on Coronado, which compliance includes,
but is not limited to, the possession by Coronado of all material permits and
other governmental authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions thereof; (ii) Coronado has
not received written notice of, or, to the knowledge of Coronado, is the
subject of, any action, cause of action, claim, investigation, demand or
notice by any person or entity alleging liability under or non-compliance
with any Environmental Law (an ``Environmental Claim") that could reasonably
be expected to have a Material Adverse Effect on Coronado; and (iii) to the
knowledge of Coronado, there are no circumstances that are reasonably likely
to prevent or interfere with such material compliance in the future.
(b) Except as publicly disclosed by Coronado, there are no Environmental
Claims which could reasonably be expected to have a Material Adverse Effect
on Coronado that are pending or, to the knowledge of Coronado, threatened
against Coronado or, to the knowledge of Coronado, against any person or
entity whose liability for any Environmental Claim Coronado has or may have
retained or assumed either contractually or by operation of law.
Section 2.13. Tax Matters.
(a) Except as set forth in Section 2.13 of the Coronado Disclosure Schedule:
(i) Coronado has filed or has had filed on its behalf in a timely manner
(within any applicable extension periods) with the appropriate Governmental
Entity all income and other material Tax Returns (as defined herein) with
respect to Taxes (as defined herein) of Coronado and all Tax Returns were in
all material respects true, complete and correct; (ii) all material Taxes
with respect to Coronado have been paid in full or have been provided for in
accordance with GAAP on Coronado's most recent balance sheet which is part of
the Coronado SEC Documents. (iii) there are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any
federal, state, local or foreign income or other material Tax Returns
required to be filed by or with respect to Coronado; (iv) to the knowledge of
Coronado none of the Tax Returns of or with respect to Coronado is currently
being audited or examined by any Governmental Entity; and (v) no deficiency
for any income or other material Taxes has been assessed with respect to
Coronado which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
Section 2.14. Title to Property. Coronado has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on Coronado; and, to Coronado's knowledge, all leases pursuant to
which Coronado leases from others real or personal property are in good
standing, valid and effective in accordance with their respective terms, and
there is not, to the knowledge of Coronado, under any of such leases, any
existing material default or event of default (or event which with notice of
lapse of time, or both, would constitute a default and in respect of which
Coronado has not taken adequate steps to prevent such a default from
occurring) except where the lack of such good standing, validity and
effectiveness, or the existence of such default or event, would not have a
Material Adverse Effect on Coronado.
Section 2.15. Intellectual Property.
(a) Coronado owns, or possesses adequate licenses or other valid rights to
use, all existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets and applications therefor that are
material to its business as currently conducted (the "Coronado Intellectual
Property Rights").
(b) The validity of the Coronado Intellectual Property Rights and the title
thereto of Coronado is not being questioned in any litigation to which
Coronado is a party.
(c) Except as set forth in Section 2.15(c) of the Coronado Disclosure
Schedule, the conduct of the business of Coronado as now conducted does not,
to Coronado's knowledge, infringe any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any Coronado
Intellectual Property Rights.
(d) Coronado has taken steps it believes appropriate to protect and maintain
its trade secrets as such, except in cases where Coronado has elected to rely
on patent or copyright protection in lieu of trade secret protection.
Section 2.16. Insurance. Coronado currently does not maintain general
liability and other business insurance.
Section 2.17. Vote Required. The affirmative vote of the holders of at least
a majority of the outstanding Coronado Shares is the only vote of the holders
of any class or series of Coronado's capital stock necessary to approve and
adopt this Agreement and the Merger.
Section 2.18. Tax Treatment. Neither Coronado nor, to the knowledge of
Coronado, any of its affiliates has taken or agreed to take action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 2.19. Affiliates. Except for Principal Coronado Stockholder ("PCS")
and the directors and executive officers of Coronado, each of whom is listed
in Section 2.19 of the Coronado Disclosure Schedule, there are no persons
who, to the knowledge of Coronado, may be deemed to be affiliates of Coronado
under Rule 1-02(b) of Regulation S-X of the SEC (the "Coronado Affiliates").
Section 2.20. Certain Business Practices. None of Coronado or any directors,
officers, agents or employees of Coronado has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended (the "FCPA"), or (iii) made any other unlawful payment.
Section 2.21. Insider Interests. Except as set forth in Section 2.21 of the
Coronado Disclosure Schedule, neither PCS nor any officer or director of
Coronado has any interest in any material property, real or personal,
tangible or intangible, including without limitation, any computer software
or Coronado Intellectual Property Rights, used in or pertaining to the
business of Coronado, except for the ordinary rights of a stockholder or
employee stock optionholder.
Section 2.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the Coronado Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of Coronado Shares.
Section 2.23. Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Coronado.
Section 2.24. Disclosure. No representation or warranty of Coronado in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to Naturol pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 2.25. No Existing Discussions. As of the date hereof, Coronado is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any Third Party Acquisition (as defined in
Section 4.4).
Section 2.26. Material Contracts.
(a) Coronado has delivered or otherwise made available to Naturol true,
correct and complete copies of all contracts and agreements (and all
amendments, modifications and supplements thereto and all side letters to
which Coronado is a party affecting the obligations of any party thereunder)
to which Coronado is a party or by which any of its properties or assets are
bound that are, material to the business, properties or assets of Coronado
taken as a whole, including, without limitation, to the extent any of the
following are, individually or in the aggregate, material to the business,
properties or assets of Coronado taken as a whole, all: (i) employment,
product design or development, personal services, consulting,
non-competition, severance, golden parachute or indemnification contracts
(including, without limitation, any contract to which Coronado is a party
involving employees of Coronado); (ii) licensing, publishing, merchandising
or distribution agreements; (iii) contracts granting rights of first refusal
or first negotiation; (iv) partnership or joint venture agreements; (v)
agreements for the acquisition, sale or lease of material properties or
assets or stock or otherwise entered into since July 1, 2001; (vi) contracts
or agreements with any Governmental Entity. and (vii) all commitments and
agreements to enter into any of the foregoing (collectively, together with
any such contracts entered into in accordance with Section 4.1 hereof, the
"Coronado Contracts"). Coronado is not a party to or bound by any severance,
golden parachute or other agreement with any employee or consultant pursuant
to which such person would be entitled to receive any additional compensation
or an accelerated payment of compensation as a result of the consummation of
the transactions contemplated hereby.
(b) Each of the Coronado Contracts is valid and enforceable in accordance
with its terms, and there is no default under any Coronado Contract so listed
either by Coronado or, to the knowledge of Coronado, by any other party
thereto, and no event has occurred that with the lapse of time or the giving
of notice or both would constitute a default thereunder by Coronado or, to
the knowledge of Coronado, any other party, in any such case in which such
default or event could reasonably be expected to have a Material Adverse
Effect on Coronado.
(c) No party to any such Coronado Contract has given notice to Coronado of or
made a claim against Coronado with respect to any breach or default
thereunder, in any such case in which such breach or default could reasonably
be expected to have a Material Adverse Effect on Coronado.
ARTICLE 3
Representations and Warranties of Naturol
Except as set forth on the Disclosure Schedule delivered by Naturol to
Coronado (the "Naturol Disclosure Schedule"), Naturol hereby represents and
warrants to Coronado as follows:
Section 3.1. Organization and Qualification.
(a) Each of Naturol and its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to
own, lease and operate its properties and to carry on its businesses as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power and authority would not have a Material
Adverse Effect (as defined below) on Naturol. When used in connection with
Naturol, the term "Material Adverse Effect'' means any change or effect (i)
that is or is reasonably likely to be materially adverse to the business,
results of operations, condition (financial or otherwise) or prospects of
Naturol and its subsidiaries, taken as a whole, other than any change or
effect arising out of general economic conditions unrelated to any businesses
in which Naturol and its subsidiaries are engaged, or (ii) that may impair
the ability of Naturol to consummate the transactions contemplated hereby.
(b) Naturol has heretofore delivered to Coronado accurate and complete
copies of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of Naturol. Each of Naturol and its
subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary except in such jurisdictions where the failure to be
so duly qualified or licensed and in good standing would not have a Material
Adverse Effect on Naturol.
Section 3.2. Capitalization of Naturol.
(a) As of August 1, 2001, the authorized capital stock of Naturol
consists of; (i) Fifty Million (50,000,000) Naturol common Shares,
$0.001 par value, 48,400,000 common Shares were issued and were
outstanding. All of the outstanding Naturol Shares have been duly
authorized and validly issued, and are fully paid, nonassessable and
free of preemptive rights.
(b) Except as set forth in Section 3.2(b) of the Naturol Disclosure
Schedule, Naturol is the record and beneficial owner of all of the issued and
outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the Naturol Disclosure
Schedule and the 506 offering dated August 15, 2001 and any amendment
thereto, whereby Naturol is offering 1,600,000 Shares at $0.25 per share,
between September 1, 2001 and the date hereof, no shares of Naturol's capital
stock have been issued and no Naturol Stock options have been granted. Except
as set forth in Section 3.2(a) above, as of the date hereof, there are no
outstanding (i) shares of capital stock or other voting securities of
Naturol, (ii) securities of Naturol or its subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of Naturol,
(iii) options or other rights to acquire from Naturol or its subsidiaries, or
obligations of Naturol or its subsidiaries to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Naturol, or (iv) equity equivalents, interests
in the ownership or earnings of Naturol or its subsidiaries or other similar
rights (collectively, "Naturol Securities"). As of the date hereof, there are
no outstanding obligations of Naturol or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Naturol Securities. There are no
stockholder agreements, voting trusts or other agreements or understandings
to which Naturol is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of Naturol.
(d) Except as set forth in Section 3.2(d) of the Naturol Disclosure
Schedule, there are no securities of Naturol convertible into or exchangeable
for, no options or other rights to acquire from Naturol, and no other
contract, understanding, arrangement or obligation (whether or not
contingent) providing for the issuance or sale, directly or indirectly, of
any capital stock or other ownership interests in, or any other securities
of, any subsidiary of Naturol.
(e) The Naturol Shares constitute the only class of equity securities of
Naturol or its subsidiaries.
(f) Except as set forth in Section 3.2(f) of the Naturol Disclosure
Schedule, Naturol does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) Naturol has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of Naturol (the "Naturol Board"), and no other
corporate proceedings on the part of Naturol are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, except, as
referred to in Section 3.17, the approval and adoption of this Agreement by
the holders of at least a majority of the then outstanding Naturol Shares.
This Agreement has been duly and validly executed and delivered by Naturol
and constitutes a valid, legal and binding agreement of Naturol, enforceable
against Naturol in accordance with its terms.
(b) The Naturol Board has resolved to recommend that the stockholders of
Naturol approve and adopt this Agreement.
Section 3.4. SEC Reports; Financial Statements. Naturol is not required
to file forms, reports and documents with the SEC.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by Naturol for inclusion or incorporation by reference to (i)
the 8-K will, at the time the 8-K is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii)
the Proxy Statement will, at the date mailed to stockholders of Coronado, if
any, and at the times of the meeting or meetings of stockholders of Coronado
to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement,
insofar as it relates to the meeting of Naturol's stockholders to vote on the
Merger, will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder, and the 8-K
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder.
Section 3.6. Consents and Approvals; No Violations. Except as set forth
in Section 3.6 of the Naturol Disclosure Schedule, and for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the
filing and recordation of the Merger Certificate as required by the NGCL, no
filing with or notice to, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the execution and delivery by
Naturol of this Agreement or the consummation by Naturol of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on Naturol.
Neither the execution, delivery and performance of this Agreement by
Naturol nor the consummation by Naturol of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or Bylaws (or similar governing
documents) of Naturol or any of Naturol's subsidiaries, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Naturol or any of
Naturol's subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound or (iii) violate any order,
writ, injunction, decree, law, statute, rule or regulation applicable to
Naturol or any of Naturol's subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which would not have a Material Adverse Effect on
Naturol.
Section 3.7. No Default. None of Naturol or any of its subsidiaries is in
breach, default or violation (and no event has occurred which with notice or
the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
Bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Naturol or any of its subsidiaries is now a party or by
which any of them or any of their respective properties or assets may be
bound or (iii) any order, writ, injunction, decree, law, statute, rule or
regulation applicable to Naturol, its subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults that would not have a Material Adverse Effect on
Naturol. Each note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Naturol or any of its
subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound that is material to Naturol and
its subsidiaries taken as a whole and that has not expired is in full force
and effect and is not subject to any material default thereunder of which
Naturol is aware by any party obligated to Naturol or any subsidiary
thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as and to
the extent disclosed by Naturol in the Naturol, none of Naturol or its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance
sheet of Naturol and its consolidated subsidiaries (including the notes
thereto) or which would have a Material Adverse Effect on Naturol. Except as
disclosed by Naturol, none of Naturol or its subsidiaries has incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise,
which could reasonably be expected to have, and there have been no events,
changes or effects with respect to Naturol or its subsidiaries having or
which could reasonably be expected to have, a Material Adverse Effect on
Naturol. Except as and to the extent disclosed by Naturol there has not been
(i) any material change by Naturol in its accounting methods, principles or
practices (other than as required after the date hereof by concurrent changes
in generally accepted accounting principles), (ii) any revaluation by Naturol
of any of its assets having a Material Adverse Effect on Naturol, including,
without limitation, any write-down of the value of any assets other than in
the ordinary course of business or (iii) any other action or event that would
have required the consent of any other party hereto pursuant to Section 4.2
of this Agreement had such action or event occurred after the date of this
Agreement.
Section 3.9. Litigation. Except as set forth in Schedule 3.9 of the Naturol
Disclosure Schedule there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Naturol, threatened against
Naturol or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
Naturol or could reasonably be expected to prevent or delay the consummation
of the transactions contemplated by this Agreement. Except as disclosed by
Naturol, none of Naturol or its subsidiaries is subject to any outstanding
order, writ, injunction or decree which, insofar as can be reasonably
foreseen in the future, could reasonably be expected to have a Material
Adverse Effect on Naturol or could reasonably be expected to prevent or delay
the consummation of the transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as disclosed by
Naturol, Naturol and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "Naturol Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not have a Material Adverse Effect on
Naturol. Except as disclosed by Naturol, Naturol and its subsidiaries are in
compliance with the terms of the Naturol Permits, except where the failure so
to comply would not have a Material Adverse Effect on Naturol. Except as
disclosed by Naturol, the businesses of Naturol and its subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity except that no representation or warranty is made in this
Section 3.10 with respect to Environmental Laws and except for violations or
possible violations which do not, and, insofar as reasonably can be foreseen,
in the future will not, have a Material Adverse Effect on Naturol. Except as
disclosed by Naturol no investigation or review by any Governmental Entity
with respect to Naturol or its subsidiaries is pending or, to the knowledge
of Naturol, threatened, nor, to the knowledge of Naturol, has any
Governmental Entity indicated an intention to conduct the same, other than,
in each case, those which Naturol reasonably believes will not have a
Material Adverse Effect on Naturol.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by Naturol, any of its subsidiaries or any entity
required to be aggregated with Naturol or any of its subsidiaries pursuant to
Section 414 of the Code (each, a "Naturol Employee Plan"), no event has
occurred and, to the knowledge of Naturol, no condition or set of
circumstances exists in connection with which Naturol or any of its
subsidiaries could reasonably be expected to be subject to any liability
which would have a Material Adverse Effect on Naturol.
(b) (i) No Naturol Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each Naturol Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended
to qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 3.11(c) of the Naturol Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any Naturol Stock Options, together with the number of Naturol Shares which
are subject to such option, the date of grant of such option, the extent to
which such option is vested (or will become vested as a result of the
Merger), the option price of such option (to the extent determined as of the
date hereof), whether such option is a nonqualified stock option or is
intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code, and the expiration date of such option. Section
3.11(c) of the Naturol Disclosure Schedule also sets forth the total number
of such incentive stock options and such nonqualified options. Naturol has
furnished Coronado with complete copies of the plans pursuant to which the
Naturol Stock Options were issued. Other than the automatic vesting of
Naturol Stock Options that may occur without any action on the part of
Naturol or its officers or directors, Naturol has not taken any action that
would result in any Naturol Stock Options that are unvested becoming vested
in connection with or as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(d) Naturol has made available to Coronado (i) a description of the
terms of employment and compensation arrangements of all officers of Naturol
and a copy of each such agreement currently in effect; (ii) copies of all
agreements with consultants who are individuals obligating Naturol to make
annual cash payments in an amount exceeding $60,000; (iii) a schedule listing
all officers of Naturol who have executed a non-competition agreement with
Naturol and a copy of each such agreement currently in effect; (iv) copies
(or descriptions) of all severance agreements, programs and policies of
Naturol with or relating to its employees, except programs and policies
required to be maintained by law; and (v) copies of all plans, programs,
agreements and other arrangements of the Naturol with or relating to its
employees which contain change in control provisions.
(e) Except as disclosed in Section 3.11(e) of the Naturol Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any Naturol
Employee Plan or any agreement or arrangement disclosed under this Section
3.11 solely by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of Naturol
threatened, between Naturol or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on Naturol. Neither Naturol nor
any of its subsidiaries is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by Naturol or any
of its subsidiaries (and neither Naturol nor any of its subsidiaries has any
outstanding material liability with respect to any terminated collective
bargaining agreement or labor union contract), nor does Naturol know of any
activities or proceedings of any labor union to organize any of its or any of
its subsidiaries' employees. Naturol has no knowledge of any strike,
slowdown, work stoppage, lockout or threat thereof by or with respect to any
of its or any of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a) Except as disclosed by Naturol, (i) each of Naturol and its
subsidiaries is in material compliance with all Environmental Laws, except
for non-compliance that would not have a Material Adverse Effect on Naturol,
which compliance includes, but is not limited to, the possession by Naturol
and its subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws, and compliance
with the terms and conditions thereof; (ii) none of Naturol or its
subsidiaries has received written notice of, or, to the knowledge of Naturol,
is the subject of, any Environmental Claim that could reasonably be expected
to have a Material Adverse Effect on Naturol; and (iii) to the knowledge of
Naturol, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as disclosed by Naturol, there are no Environmental Claims
which could reasonably be expected to have a Material Adverse Effect on
Naturol that are pending or, to the knowledge of Naturol, threatened against
Naturol or any of its subsidiaries or, to the knowledge of Naturol, against
any person or entity whose liability for any Environmental Claim Naturol or
its subsidiaries has or may have retained or assumed either contractually or
by operation of law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
Naturol Disclosure Schedule: (i) Naturol and each of its subsidiaries has
filed or has had filed on its behalf in a timely manner (within any
applicable extension periods) with the appropriate Governmental Entity all
income and other material Tax Returns with respect to Taxes of Naturol and
each of its subsidiaries and all Tax Returns were in all material respects
true, complete and correct; (ii) all material Taxes with respect to Naturol
and each of its subsidiaries have been paid in full or have been provided for
in accordance with GAAP on Naturol's most recent balance sheet which is part
of the Naturol SEC Documents; (iii) there are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any
federal, state, local or foreign income or other material Tax Returns
required to be filed by or with respect to Naturol or its subsidiaries; (iv)
to the knowledge of Naturol none of the Tax Returns of or with respect to
Naturol or any of its subsidiaries is currently being audited or examined by
any Governmental Entity; and (v) no deficiency for any income or other
material Taxes has been assessed with respect to Naturol or any of its
subsidiaries which has not been abated or paid in full.
Section 3.14. Title to Property. Naturol and each of its subsidiaries
have good and defensible title to all of their properties and assets, free
and clear of all liens, charges and encumbrances except liens for taxes not
yet due and payable and such liens or other imperfections of title, if any,
as do not materially detract from the value of or interfere with the present
use of the property affected thereby or which, individually or in the
aggregate, would not have a Material Adverse Effect on Naturol; and, to
Naturol's knowledge, all leases pursuant to which Naturol or any of its
subsidiaries lease from others real or personal property are in good
standing, valid and effective in accordance with their respective terms, and
there is not, to the knowledge of Naturol, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default and in respect of
which Naturol or such subsidiary has not taken adequate steps to prevent such
a default from occurring) except where the lack of such good standing,
validity and effectiveness, or the existence of such default or event of
default would not have a Material Adverse Effect on Naturol.
Section 3.15. Intellectual Property.
(a) Each of Naturol and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and foreign
patents, trademarks, trade names, services marks, copyrights, trade secrets,
and applications therefor that are material to its business as currently
conducted (the "Naturol Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the Naturol Disclosure
Schedule the validity of the Naturol Intellectual Property Rights and the
title thereto of Naturol or any subsidiary, as the case may be, is not being
questioned in any litigation to which Naturol or any subsidiary is a party.
(c) The conduct of the business of Naturol and its subsidiaries as now
conducted does not, to Naturol's knowledge, infringe any valid patents,
trademarks, tradenames, service marks or copyrights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any Naturol Intellectual Property Rights.
(d) Each of Naturol and its subsidiaries has taken steps it believes
appropriate to protect and maintain its trade secrets as such, except in
cases where Naturol has elected to rely on patent or copyright protection in
lieu of trade secret protection.
Section 3.16. Insurance. Naturol and its subsidiaries maintain general
liability and other business insurance that Naturol believes to be reasonably
prudent for its business.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding Naturol Shares is the only vote of the
holders of any class or series of Naturol's capital stock necessary to
approve and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither Naturol nor, to the knowledge of
Naturol, any of its affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a reorganization qualifying under
the provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of Naturol, each of whom is listed in Section 3.19 of the Naturol
Disclosure Schedule, there are no persons who, to the knowledge of Naturol,
may be deemed to be affiliates of Naturol under Rule 1-02(b) of Regulation
S-X of the SEC (the "Naturol Affiliates").
Section 3.20. Certain Business Practices. None of Naturol, any of its
subsidiaries or any directors, officers, agents or employees of Naturol or
any of its subsidiaries has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the FCPA, or (iii) made any other
unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21 of
the Naturol Disclosure Schedule, no officer or director of Naturol has any
interest in any material property, real or personal, tangible or intangible,
including without limitation, any computer software or Naturol Intellectual
Property Rights, used in or pertaining to the business of Naturol or any
subsidiary, except for the ordinary rights of a stockholder or employee stock
optionholder.
Section 3.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the Naturol Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of Naturol Shares.
Section 3.23. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finders or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Naturol.
Section 3.24. Disclosure. No representation or warranty of Naturol in
this Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to Coronado pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, Naturol is
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined in
Section 5.4).
Section 3.26. Material Contracts.
(a) Naturol has delivered or otherwise made available to Coronado true,
correct and complete copies of all contracts and agreements (and all
amendments, modifications and supplements thereto and all side letters to
which Naturol is a party affecting the obligations of any party thereunder)
to which Naturol or any of its subsidiaries is a party or by which any of
their properties or assets are bound that are, material to the business,
properties or assets of Naturol and its subsidiaries taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or
assets of Naturol and its subsidiaries taken as a whole, all: (i) employment,
product design or development, personal services, consulting,
non-competition, severance, golden parachute or indemnification contracts
(including, without limitation, any contract to which Naturol is a party
involving employees of Naturol); (ii) licensing, publishing, merchandising or
distribution agreements; (iii) contracts granting rights of first refusal or
first negotiation; (iv) partnership or joint venture agreements; (v)
agreements for the acquisition, sale or lease of material properties or
assets or stock or otherwise. (vi) contracts or agreements with any
Governmental Entity; and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 5.2 hereof, the `Naturol Contracts"). Neither
Naturol nor any of its subsidiaries is a party to or bound by any severance,
golden parachute or other agreement with any employee or consultant pursuant
to which such person would be entitled to receive any additional compensation
or an accelerated payment of compensation as a result of the consummation of
the transactions contemplated hereby.
(b) Each of the Naturol Contracts is valid and enforceable in accordance
with its terms, and there is no default under any Naturol Contract so listed
either by Naturol or, to the knowledge of Naturol, by any other party
thereto, and no event has occurred that with the lapse of time or the giving
of notice or both would constitute a default thereunder by Naturol or, to the
knowledge of Naturol, any other party, in any such case in which such default
or event could reasonably be expected to have a Material Adverse Effect on
Naturol.
(c) No party to any such Naturol Contract has given notice to Naturol of
or made a claim against Naturol with respect to any breach or default
thereunder, in any such case in which such breach or default could reasonably
be expected to have a Material Adverse Effect on Naturol.
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of Coronado. Except as contemplated by
this Agreement or as described in Section 4.1 of the Coronado Disclosure
Schedule, during the period from the date hereof to the Effective Time,
Coronado will conduct its operations in the ordinary course of business
consistent with past practice and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organization, keep
available the service of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing,
except as otherwise expressly provided in this Agreement or as described in
Section 4.1 of the Coronado Disclosure Schedule, prior to the Effective Time,
Coronado will not, without the prior written consent of Naturol:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of any stock of any class or any other securities
(except bank loans) or equity equivalents.
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of Coronado (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person.
(iii) make any loans, advances or capital contributions to, or investments
in, any other person; (iv) pledge or otherwise encumber shares of capital
stock of Coronado; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon (other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent Coronado from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees for fiscal 1999 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 1999 in amounts previously disclosed to Naturol (to the extent that
such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to
Coronado);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to Coronado; (iii) authorize any new
capital expenditure or expenditures which, individually is in excess of
$1,000 or, in the aggregate, are in excess of $5,000; provided, however that
none of the foregoing shall limit any capital expenditure required pursuant
to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to Coronado;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
Coronado;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or in the
ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(m) or any action which would make
any of the representations or warranties of contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of Naturol. Except as contemplated by
this Agreement or as described in Section 4.2 of the Naturol Disclosure
Schedule during the period from the date hereof to the Effective Time,
Naturol will conduct its operations in the ordinary course of business
consistent with past practice and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organization, keep
available the service of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing,
except as otherwise expressly provided in this Agreement or as described in
Section 4.2 of the Naturol Disclosure Schedule, prior to the Effective Time,
Naturol will not, without the prior written consent of:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities (except bank loans) or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution, merger
consolidation, restructuring, re-capitalization or other reorganization of
Naturol (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business. (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iii) make any loans, advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber shares of capital stock
of Naturol or its subsidiaries; or (v) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to exist any material
Lien thereupon (other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent Naturol or its subsidiaries from (i) entering
into employment agreements or severance agreements with employees in the
ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 1999 in the ordinary course of yearend
compensation reviews consistent with past practice and paying bonuses to
employees for fiscal 1999 in amounts previously disclosed to (to the extent
that such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to
Naturol);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory of writing-off notes
or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to Naturol; (iii) authorize any new
capital expenditure or expenditures which, individually, is in excess of
$1,000 or, in the aggregate, are in excess of $5,000: provided, however that
none of the foregoing shall limit any capital expenditure required pursuant
to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to Naturol and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
Naturol;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or except in
the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of the Naturol contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of 8-K and the Proxy Statement. Naturol and
Coronado shall promptly prepare and file with the SEC the Proxy Statement, if
required by counsel.
Section 4.4. Other Potential Acquirers.
(a) Naturol, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
with respect to any Third Party Acquisition.
Section 4.5. Meetings of Stockholders. Each of Naturol and Coronado
shall take all action necessary, in accordance with the respective General
Corporation Law of its respective state, and its respective certificate of
incorporation and bylaws, to duly call, give notice of, convene and hold a
meeting of its stockholders as promptly as practicable, to consider and vote
upon the adoption and approval of this Agreement and the transactions
contemplated hereby. The stockholder votes required for the adoption and
approval of the transactions contemplated by this Agreement shall be the vote
required by the NGCL and its charter and bylaws, in the case of Coronado and
the General Corporation Law of its respective state, and its charter and
bylaws, in the case of Naturol. Coronado and Naturol will, through their
respective Boards of Directors, recommend to their respective stockholders
approval of such matters
Section 4.6. OTC:BB Listing. The parties shall use all reasonable
efforts to cause the Coronado Shares, subject to Rule 144, to be traded on
the Over The Counter Bulletin Board (OTC:BB).
Section 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, Coronado will give
Naturol and its authorized representatives, and Naturol will give Coronado
and its authorized representatives, reasonable access to all employees,
plants, offices, warehouses and other facilities and to all books and records
of itself and its subsidiaries, will permit the other party to make such
inspections as such party may reasonably require and will cause its officers
and those of its subsidiaries to furnish the other party with such financial
and operating data and other information with respect to the business and
properties of itself and its subsidiaries as the other party may from time to
time reasonably request.
(b) Between the date hereof and the Effective Time, Coronado shall
furnish to Naturol, and Naturol will furnish to Coronado, within 25
business days after the end of each quarter, quarterly statements
prepared by such party (in conformity with its past practices) as of the
last day of the period then ended.
(c) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to
it in connection with the transactions contemplated by this Agreement.
Section 4.8. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in the preparation and filing of the Proxy Statement and the
8-K, any filings that may be required under the HSR Act, and any amendments
to any thereof; (ii) obtaining consents of all third parties and Governmental
Entities necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement; (iii) contesting any legal
proceeding relating to the Merger and (iv) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, Naturol and Coronado
agree to use all reasonable efforts to cause the Effective Time to occur as
soon as practicable after the stockholder votes with respect to the Merger.
In case at any time after the Effective Time any further action is necessary
to carry out the purposes of this Agreement, the proper officers and
directors of each party hereto shall take all such necessary action.
Section 4.9. Employee Benefits; Stock Option and Employee Purchase
Plans. It is the parties' present intent to provide after the Effective Time
to employees of Naturol employee benefit plans (other than stock option or
other plans involving the potential issuance of securities of Coronado)
which, in the aggregate, are not less favorable than those currently provided
by Naturol. Notwithstanding the foregoing, nothing contained herein shall be
construed as requiring the parties to continue any specific employee benefit
plans.
Section 4.10. Public Announcements. Naturol, and Coronado will consult
with one another before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement, including, without limitation, the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable law or by obligations
pursuant to any listing agreement with the NASD Over The Counter Bulletin
Board (OTC:BB) as determined by Naturol or Coronado.
Section 4.11. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies,
from and after the Effective Time, Coronado shall, to the fullest extent
permitted by applicable law, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof, or
who becomes prior to the Effective Time, a director, officer or employee
of the parties hereto or any subsidiary thereof (each an "Indemnified
Party" and, collectively, the ``Indemnified Parties") against all
losses, expenses (including reasonable attorneys' fees and expenses),
claims, damages or liabilities or, subject to the proviso of the next
succeeding sentence, amounts paid in settlement arising out of actions
or omissions occurring at or prior to the Effective Time and whether
asserted or claimed prior to, at or after the Effective Time) that are
in whole or in part (i) based on, or arising out of the fact that such
person is or was a director, officer or employee of such party or a
subsidiary of such party or (ii) based on, arising out of or pertaining
to the transactions contemplated by this Agreement. In the event of any
such loss expense, claim, damage or liability (whether or not arising
before the Effective Time), (i) Coronado shall pay the reasonable fees
and expenses of counsel selected by the Indemnified Parties, which
counsel shall be reasonably satisfactory to Coronado, promptly after
statements therefor are received and otherwise advance to such
Indemnified Party upon request reimbursement of documented expenses
reasonably incurred, in either case to the extent not prohibited by the
NGCL or its certificate of incorporation or bylaws, (ii) Coronado will
cooperate in the defense of any such matter and (iii) any determination
required to be made with respect to whether an Indemnified Party's
conduct complies with the standards set forth under the NGCL and
Coronado's certificate of incorporation or bylaws shall be made by
independent counsel mutually acceptable to Coronado and the Indemnified
Party; provided, however, that Coronado shall not be liable for any
settlement effected without its written consent (which consent shall not
be unreasonably withheld). The Indemnified Parties as a group may retain
only one law firm with respect to each related matter except to the
extent there is, in the opinion of counsel to an Indemnified Party,
under applicable standards of professional conduct, conflict on any
significant issue between positions of any two or more Indemnified
Parties.
(b) In the event Coronado or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any person, then and in either such case, proper provision shall be made so
that the successors and assigns of Coronado shall assume the obligations set
forth in this Section 4.11.
(c) To the fullest extent permitted by law, from and after the Effective
Time, all rights to indemnification now existing in favor of the employees,
agents, directors or officers of Coronado and Naturol and their subsidiaries
with respect to their activities as such prior to the Effective Time, as
provided in Coronado's and Naturol's certificate of incorporation or bylaws,
in effect on the date thereof or otherwise in effect on the date hereof,
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time.
(d) The provisions of this Section 4.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 4.12. Notification of Certain Matters. The parties hereto shall
give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties, businesses or
results of operations of such party and its subsidiaries taken as a whole to
which such party or any of its subsidiaries is a party or is subject, (iv)
any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, or (v) any material adverse
change in their respective financial condition, properties, businesses,
results of operations or prospects taken as a whole, other than changes
resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 4.12 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of Coronado and Naturol;
(b) this Agreement shall have been approved and adopted by the Board of
Directors of Coronado and Naturol;
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(d) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices
or approvals required with respect to the transactions contemplated hereby
shall have been either filed or received; and
Section 5.2. Conditions to the Obligations of Coronado. The obligation
of Coronado to effect the Merger is subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) the representations of Naturol contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on Naturol) at and as of the Effective Time with the same effect as if made
at and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing
Naturol shall have delivered to Coronado a certificate to that effect;
(b) each of the covenants and obligations of Naturol to be performed at
or before the Effective Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or before the Effective
Time and at the Closing Naturol shall have delivered to Coronado a
certificate to that effect;
(d) Naturol shall have obtained the consent or approval of each person
whose consent or approval shall be required in order to permit the Merger as
relates to any obligation, right or interest of Naturol under any loan or
credit agreement, note, mortgage, indenture, lease or other agreement or
instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of Coronado, individually or
in the aggregate, have a Material Adverse Effect on Naturol;
(e) there shall have been no events, changes or effects with respect to
Naturol or its subsidiaries having or which could reasonably be expected to
have a Material Adverse Effect on Naturol; and
Section 5.3. Conditions to the Obligations of Naturol. The respective
obligations of Naturol to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions:
(a) the representations of Coronado contained in this Agreement or in
any other document delivered pursuant hereto shall be true and correct
(except to the extent that the breach thereof would not have a Material
Adverse Effect on Coronado) at and as of the Effective Time with the same
effect as if made at and as of the Effective Time (except to the extent such
representations specifically related to an earlier date, in which case such
representations shall be true and correct as of such earlier date), and at
the Closing Coronado shall have delivered to Naturol a certificate to that
effect;
(b) each of the covenants and obligations of Coronado to be performed at
or before the Effective Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or before the Effective
Time and at the Closing Coronado shall have delivered to Naturol a
certificate to that effect; and
(c) there shall have been no events, changes or effects with respect to
Coronado having or which could reasonably be expected to have a Material
Adverse Effect on Coronado.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval and adoption of this Agreement by Coronado's or Naturol's
stockholders:
(a) by mutual written consent of Coronado and Naturol;
(b) by Naturol or Coronado if (i) any court of competent jurisdiction in
the United States or other United States Governmental Entity shall have
issued a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action is or shall have become
nonappealable or (ii) the Merger has not been consummated by February 1,
2002; provided, however, that no party may terminate this Agreement
pursuant to this clause (ii) if such party's failure to fulfill any of
its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date;
(c) by Coronado if (i) there shall have been a breach of any
representation or warranty on the part of Naturol set forth in this
Agreement, or if any representation or warranty of Naturol shall have become
untrue, in either case such that the conditions set forth in Section 5.2(a)
would be incapable of being satisfied by February 1, 2002 (or as otherwise
extended), (ii) there shall have been a breach by Naturol of any of their
respective covenants or agreements hereunder having a Material Adverse Effect
on Naturol or materially adversely affecting (or materially delaying) the
consummation of the Merger, and Naturol, as the case may be, has not cured
such breach within 20 business days after notice by Coronado thereof,
provided that Coronado has not breached any of its obligations hereunder,
(iii) Coronado shall have convened a meeting of its stockholders to vote upon
the Merger and shall have failed to obtain the requisite vote of its
stockholders; or (iv) Coronado shall have convened a meeting of its Board of
Directors to vote upon the Merger and shall have failed to obtain the
requisite vote;
(d) by Naturol if (i) there shall have been a breach of any
representation or warranty on the part of Coronado set forth in this
Agreement, or if any representation or warranty of Coronado shall have become
untrue, in either case such that the conditions set forth in Section 5.3(a)
would be incapable of being satisfied by February 1, 2002 (or as otherwise
extended), (ii) there shall have been a breach by Coronado of its covenants
or agreements hereunder having a Material Adverse Effect on Coronado or
materially adversely affecting (or materially delaying) the consummation of
the Merger, and Coronado, as the case may be, has not cured such breach
within twenty business days after notice by Naturol thereof, provided that
Naturol has not breached any of its obligations hereunder, (iii) the Coronado
Board shall have recommended to Coronado's stockholders a Superior Proposal,
(iv) the Coronado Board shall have withdrawn, modified or changed its
approval or recommendation of this Agreement or the Merger or shall have
failed to call, give notice of, convene or hold a stockholders' meeting to
vote upon the Merger, or shall have adopted any resolution to effect any of
the foregoing, (v) Naturol shall have convened a meeting of its stockholders
to vote upon the Merger and shall have failed to obtain the requisite vote of
its stockholders or (vi) Coronado shall have convened a meeting of its
stockholders to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 6.2 and Sections 4.7(c) and 6.3
hereof. Nothing contained in this Section 6.2 shall relieve any party from
liability for any breach of this Agreement.
Section 6.3. Fees and Expenses. Except as specifically provided in this
Section 6.3, each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by action taken by
Coronado and Naturol at any time before or after approval of the Merger by
the stockholders of Coronado and Naturol (if required by applicable law) but,
after any such approval, no amendment shall be made which requires the
approval of such stockholders under applicable law without such approval.
This Agreement may not be amended except by an instrument in writing signed
on behalf of the parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in
the representations and warranties of any other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by any other party with any of the agreements or conditions
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to each other party as follows:
If to Naturol:
NATUROL, INC.
Paul McClory
6265 Stevenson Way,
Las Vegas, Nevada 89119
with a copy to:
Stoecklein Law Group
Donald J. Stoecklein, Esq.
Suite 400
402 West Broadway
San Diego, California 92101
if to Coronado:
COLORADO EXPOLORATIONS LTD.
535 Thurlow Street
Suite 801
BC, Canada V7N 3G7
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard
to the principles of conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 2.19,
3.19 and 4.13) a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "knowledge'' or "known'' means, with respect to any matter in
question, if an executive officer of Coronado or Naturol or its subsidiaries,
as the case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of Coronado, Naturol or any other
person, means any corporation, partnership, limited liability company,
association, trust, unincorporated association or other legal entity of which
Coronado, Naturol or any such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the capital stock, the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of Coronado, Naturol or any officer,
director, employee, agent, representative or investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that,
if a party hereto is entitled to receive any payment or reimbursement of
expenses pursuant to Sections 6.3(a), (b) or (c), it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be duly
executed on its behalf as of the day and year first above written.
NATUROL, INC.
By:/S/ Paul McClory
Name: Paul McClory
Title: President
COLORADO EXPOLORATIONS LTD.
By:/S/ Mary M. Hethey
Name: Mary M. Hethey
Title: President
CORONADO DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Amended
Articles/Bylaws/Minutes
Schedule 2.2(c) Subsidiary Coronado Subsidiary
Corp.-100% owned
Schedule 2.6 Consents & Approvals None Required
Schedule 2.7 No Default Not Applicable
Schedule 2.8 No Undisclosed Liability None Exist
Schedule 2.9 Litigation None Exist
Schedule 2.10 Compliance with Applicable Law Not Applicable-full
disclosed in 10KSB
Schedule 2.11 Employee Benefit Plans Section 2.11(a) Not
Applicable - None Exist
Section 2.11(b) No Benefit
Plan Exist
Section 2.11( c)No Options
Exist
Section 2.11(d) No
Agreements Exist
Schedule 2.12 Environmental Laws and Regs Not Applicable
Schedule 2.13 Tax Matters None Exist
Schedule 2.14 Title to Property None Exist
Schedule 2.15 Intellectual Property None Exist
Schedule 2.16 Insurance None Exist
Schedule 2.17 Vote Required See Shareholder Meeting
Certificate
Schedule 2.18 Tax Treatment Not Applicable
Schedule 2.19 Affiliates Mary M. Hethey
Carsten Mide
Stacey Bligh
Schedule 2.20 Certain Business Practices None Exist
Schedule 2.21 Insider Interest None Exist
Schedule 2.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.1 Conduct of Business See Amended & Restated
Articles
NATUROL DISCLOSURE SCHEDULE
Schedule 3.2(b) Subsidiary Stock None Exist
Schedule 3.2(c) Capital Stock Rights None Exist other than as in
Articles
Schedule 3.2(d) Securities conversions None Exist
Schedule 3.2 (f) Subsidiaries None Exist
Schedule 3.6 Consents & Approvals None Required
Schedule 3.7 No Default Not Applicable
Schedule 3.8 No Undisclosed Liability None Exist
Schedule 3.9 Litigation None Exist
Schedule 3.10 Compliance with Applicable Law Not Applicable
Schedule 3.11 Employee Benefit Plans Section 3.11( c)No Options
Exist
Section 3.11(e) No
Agreements Exist
Schedule 3.12 Environmental Laws and Regs Not Applicable
Schedule 3.13 Tax Matters None Exist
Schedule 3.14 Title to Property None Exist
Schedule 3.15(b) Intellectual Property None Exist
Schedule 3.16 Insurance None Exist
Schedule 3.17 Vote Required See Shareholder Meeting
Certificate
Schedule 3.18 Tax Treatment Not Applicable
Schedule 3.19 Affiliates Paul McClory
Isaac Moss
Michael J. Ram
Schedule 3.20 Certain Business Practices None Exist
Schedule 3.21 Insider Interest None Exist
Schedule 3.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.2 Conduct of Business See Amended & Restated
Articles
APPENDIX B
DELAWARE
262. 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 the stockholder's 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 or 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 (other than a merger effected pursuant to 251(g)
of this title), 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
stockholders 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 in
respect thereof) 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 subsection (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 such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's 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 such stockholder's 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, each consitutent corporation, either before the effective
date of the merger or consolidation or within ten days thereafter, shall
notify each of the holders of any class or series of stock of such
constitutent corporation who are entitled to appraisal rights of the approval
of the merger or consolidation and that appraisal rights are available for
any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section;
provided that, if the notice is given on or after the effective date of the
merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of
a constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to appraisal rights
may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's 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 such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constitutent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constitutent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on
or within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constitutent corporation may fix, in advance, a record date that shall
be not more than 10 days prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the record
date shall be the close of business on the day next preceding the day on
which the notice is given.
(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 such stockholder's 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 such stockholder's 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 in
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 such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder 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 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 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 such stockholder's 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.
APPENDIX C
NATUROL, INC.
FINANCIAL STATEMENTS
Period of inception (June 18,2001)
to September 30, 2001
TABLE OF CONTENTS
PAGE #
INDEPENDENT AUDITORS REPORT 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6
Report of Independent Certified Public Accountants
Stockholders and Directors
Naturol, Inc.
We have audited the accompanying balance sheet of Naturol, Inc. (a
development stage company) as of September 30, 2001 and the related
statements of operations, shareholders' equity, and cash flows for the six
month period of inception (June 18,2001) to September 30, 2001. These
financial statements are the responsibility of the management of the Company.
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 in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Naturol, Inc. as of
September 30, 2001 and the results of their operations and their cash flows
for period of inception (June 18, 2001) to September 30, 2001 in conformity
with generally accepted accounting principles in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company does not have any business operations to
date and is dependent upon the continued sale of its securities or obtaining
debt financing for funds to meet its cash requirements. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans with regard to these matters are also described in Note 2.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Weaver & Martin, LLC
Kansas City, Missouri
October 5 ,2001
Naturol, Inc.
Balance Sheet
September 30, 2001
Current assets:
Cash $ 53,750
License Agreement 360,000
$ 413,750
Current liabilities:
Payment due on license agreement $ 360,000
Shareholder's Equity:
Common stock 50,000,000 shares authorized, par value
$.001 and 48,615,000 shares at 9/30/00 48,615
issued and outstanding
Paid-In Capital 53,535
Subscription receivable (28,400)
Deficit accumulated during the development stage (20,000)
$ 413,750
See notes to financial statements.
Naturol, Inc.
Statement of Operations
Period of inception (June 18,2001) to September 30, 2001
Period Of
Inception To
September 30,
2001
Legal costs $ 20,000
Net loss $ 20,000
See notes to financial statements.
Naturol, Inc.
Statement Of Shareholders' Equity
Deficit
Common Stock Accumulated
During The
Per Subscription Paid In Development
Share Shares Amount Receivable Capital Stage
Inception- $0.00 48,400,00 $48,400 $ (28,400) -- $--
shares sold 10 0
Shares sold $0.25 215,000 215 -- 53,535 --
00
Net loss -- -- -- -- (20,000)
Balance 48,615,00 $48,615 $ (28,400) $53,53 $(20,000)
September 0 5
30, 2001
See notes to financial statements.
Naturol, Inc.
Statement of Cash Flows
Period of inception (June 18,2001) to September 30, 2001
Net loss $ (20,000)
Financing activities:
Stock sold 73,750
Cash provided from financing activities 73,750
Increase in cash 53,750
Cash, beginning --
Cash, ending $ 53,750
Non cash financing activities:
Subscription receivable for stock issued $ 28,400
License agreement $ 360,000
See notes to financial statements.
Naturol, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENT
The company was organized June 18, 2001, under the laws of the state of
Nevada. The Company currently has no operations and is considered a
development stage company.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The Company's policy is to use the accrual method of accounting and to
prepare and present financial statements which conform to United States
generally accepted accounting principles. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities and reported amounts of revenues and expenses. Actual
results could differ from those estimates.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The ability of the Company to continue as a going
concern is dependent upon the ability in its endeavors to seek additional
sources of capital, and in attaining future profitable operations. The
accompanying financial statements do not include any adjustments that might
be necessary should the company be unable to continue as a going concern.
NOTE 3-SUBSCRIPTIONS RECEIVABLE
The company has a subscription receivable for the sale of stock The
receivable is due in the next fiscal year with no interest being charged.
NOTE 4-LICENSE AGREEMENT
The Company has entered into a license agreement whereby it has been
assigned the rights in the invention of a process and apparatus for preparing
extracts and oils from natural plants. The Company has rights and licenses
to practice the invention in the United States, Canada and Mexico. The term
of the agreement is for the term of the patent. Consideration for the
agreement is a payment of $360,000 in the first year and a minimum payment of
$360,000 annually until a first commercial sale of licensed product and for
three years thereafter. After license year 5 compensation will consist of
royalties. Royalties consist of a 8% fee based on net sales of the licensed
products. In addition a 2% royalty shall be paid on the use of licensee or
any sublicensee of the trademark. The first year payment has been recorded
as an asset which will be amortized over the next year and an account
payable.