Subject: Re: Carbotix Termination
From: "Jeff Cooper" <[email-masked]>
To: "Lawrence Kaplan" <[email-masked]>
Cc: "Randy Delkus" <[email-masked]>, "Larry Washow" <[email-masked]>, "Greg Mefford" <[email-masked]>, "John Killoren" <[email-masked]>, "David Rosen" <[email-masked]>, "Christopher Buehrle" <[email-masked]>, "Hunter Biden" <[email-masked]>, "Scott Wanamaker" <[email-masked]>
Date: Wed, 26 Feb 2014 10:12:13 -0500

Larry,
I am sorry to hear it. I know how hard you worked on this project and I know that you didn't leave any stone unturned. I appreciate all of the blood, sweat and tears that went into your effort.  It always hurts when things don't work out, but I really respect and appreciate you for taking the chance for all of us. 
Jeff

Sent from my iPhone

> On Feb 26, 2014, at 10:03 AM, Lawrence Kaplan <[email-masked]> wrote:
> 
> This is to inform you that we are no longer pursuing the Carbotix opportunity.  After nine months of working on this (since last May), I am sorry it did not have a positive outcome.
> 
> Explanation
> 
> You will recall that our LOI for the acquisition of Medpak included a standstill clause under which Medpak agreed not to entertain any other offers.  Our primary goal during that period was to raise funds.  The LOI was originally set to expire in late November but was extended three times at our request, ultimately to February 15.  Medpak recently received an offer from a third party to license their technology on an exclusive basis for the region of China, and Medpak has informed us that they are pursuing that offer and thus any further dealings with us would exclude China.  A significant portion of our Carbotix plan and financial projections were based on China business.  Also, as there is only one known manufacturer of the underlying polymer and that manufacture is based in China and would need to serve the exclusive licensee; this would pose a significant challenge and risk for production and scaling.
> 
> For us to have moved forward with Carbotix by the expiration of the LOI, we needed to raise a minimum of $3M, though we would have considered starting with less (at least $2M) if additional near-term investors seemed highly likely.  We obtained commitments for about $1.2M, mostly in Q4 last year and were unable to generate any meaningful new commitments over the past couple months.  Of this amount, a commitment of $250K became less certain over time.  During the past weeks 4-6 weeks, we had been pursuing 5 large investors/groups that were each considering multi-million dollar investments ("Lead Investors").  Three of them informed us that they would only consider investing if Eudora (inclusive of its existing investors) first used their own money to acquire the Medpak assets and begin operating.  We were open to that possibility if we could agree with the Lead Investor in advance on the amount they would commit to investing and at what valuation, at least on a ballpark basis.  All three indicated that they were not willing to discuss those terms until after the acquisition.  We had given the other two Lead Investors a deadline of yesterday to make a decision (realizing internally, of course, that a positive decision would have required us to go back to Medpak and reclaim the China region, which may not have been possible).  One of the Lead Investors (a friend of Xiaoying's in China) informed us on Monday of this week that he will not be investing and the other one has not provided a response.  
> 
> Next Steps
> 
> As part of closing down this matter, we are obligated to return or destroy Medpak's confidential information.  We have thus prepared two forms of notices, one for individuals who agreed to invest and one for individuals who did not, as set forth below.  Please coordinate with Scott and me to ensure that these messages go out to all individuals to whom you sent Carbotix materials.  Please also destroy any confidential Carbotix materials in your own files.
> 
> Let me know if you have any questions.
> 
> Regards,
> Larry
> 
> 	For "Yes" Investors
> 
> We'd like to thank you for your interest in Carbotix over the past months.  We made substantial progress gaining investment commitments, but did not meet the minimum we believed we needed to properly capitalize the venture.  While we received significant interest from several potential lead investors who could have closed the gap, we were unable to reach agreement with them on terms that we believed would be fair for all stakeholders.  Consequently, we have decided not to pursue this venture further.  It's possible that a lead investor could return and reignite the project; however, we are proceeding as if that will not occur.  We greatly appreciate the time you spent engaging with us on this and look forward to finding another opportunity in the future to work together. 
> 
> We need to ask that you please destroy all confidential information relating to Carbotix and would appreciate your confirming that you've done this by reply to this email.
> 
> Thanks again.
> 
> 	For "No" Investors
>> Late last year or earlier this year, we communicated with you relating to an investment opportunity in Carbotix.  Though you decided not to participate, we greatly appreciate your having given it consideration. 
> 
>> We need to ask that you please destroy all confidential information relating to Carbotix and would appreciate your confirming that you've done this by reply to this email