EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), is made and
entered into as of December 6, 2004, by and among INTRAC, INC., a Nevada
corporation (the "Parent"), INTRAC MERGER SUB INC., a Delaware corporation and a
newly-formed, wholly owned subsidiary of Parent (the "Merger Sub"), and
INNOVATIVE DRUG DELIVERY SYSTEMS, INC., a Delaware corporation (the "Company")
(Parent, Merger Sub and Company are sometimes collectively referred to
hereinafter as the "Parties"), with reference to the following facts:
RECITALS
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A. WHEREAS, the Company is a privately held corporation engaged in
the business of developing modes and routes of analgesic drug administration and
the Parent is a publicly reporting corporation not currently engaged in any
active business;
B. WHEREAS, as contemplated by a Term Sheet, dated November 17, 2004,
among the Parent, the Company and the other parties thereto, the Parent and the
Company have agreed to a merger on certain terms set forth therein;
C. WHEREAS, pursuant to the terms of a Private Placement Memorandum,
dated November 18, 2004 (the "PPM"), the Company is offering up to 8,333,333
shares of its Common Stock, $.001 par value ("Company Common Stock"), at a
purchase price of $3.00 per share (the "Placement");
D. WHEREAS, the respective Boards of Directors of the Company, the
Parent and Merger Sub have each determined that it is advisable and in the best
interests of their respective stockholders that the Parent acquire the Company
pursuant to the terms and conditions of this Agreement, and, in furtherance of
such acquisition, such Boards of Directors have approved the merger of Merger
Sub with and into the Company (the "Merger") in accordance with the terms of
this Agreement and the applicable provisions of the Delaware General Corporation
Law (the "Delaware Corporation Law");
E. WHEREAS, Parent has formed Merger Sub for the purposes of
effecting the Merger;
F. WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and that this Agreement shall be, and is hereby, adopted as a "plan of
reorganization" for purposes of Section 368(a) of the Code;
G. WHEREAS, pursuant to the Merger, (i) each outstanding share of
Company Common Stock shall be converted into the right to receive shares of
common stock of the Parent, $.001 par value per share ("Parent Common Stock"),
and (ii) each outstanding option or warrant to purchase shares of Company Common
Stock shall be exchanged for an option or warrant to purchase a corresponding
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number of shares of Parent Common Stock, at the exchange ratio set forth herein;
H. WHEREAS, the Parties have determined it to be in their best
interest for the Parent to issue its Parent Common Stock under the exemption
made available pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"); and
I. WHEREAS, the Parties desire to make certain representations,
warranties, covenants, and agreements in connection with, and establish certain
conditions precedent to, the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the Parties agree as follows:
ARTICLE I
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THE MERGER
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1.1 The Merger; The Merger Consideration.
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(a) As of the date of this Agreement and immediately prior to the
Effective Time (as defined below), the Parent has (and will have) outstanding
(i) 99,989 shares of Parent Common Stock, (ii) 200,000 shares of Series A
Preferred Stock, $.001 par value per share (the "Parent Preferred Stock"), and
(iii) 8% Series SPA Senior Subordinated Convertible Redeemable Debentures in the
aggregate principal amount of approximately $420,000 (the "Parent Debentures")
that are convertible into an aggregate of approximately 1,178,031 shares of
Parent Common Stock (subject to adjustment in certain circumstances described in
the Debenture Conversion Agreements) in accordance with the provisions of the
Debenture Conversion Agreements (as defined in Section 7.9 hereof) to be entered
into simultaneously with the execution of this Agreement.
(b) In connection with the Merger, (i) each holder of shares of
Company Common Stock will receive a number of shares of Parent Common Stock
based upon the exchange ratio of one share of Company Common Stock becoming
1.0184107 shares of Parent Common Stock, subject to adjustment as set forth on
Schedule 1.1 hereto (the "Exchange Ratio"), (ii) each holder of warrants or
options of the Company will receive corresponding instruments in the Parent
having substantially the same rights preferences and privileges as the original
Company instrument, adjusted as to exercise price and number of underlying
shares of Parent Common Stock based upon the Exchange Ratio, and (iii) the
Company will be operated as a wholly owned subsidiary of the Parent, which shall
own all of the issued and outstanding capital stock of the Company. All debts,
liabilities, obligations, contracts and assets of the Merger Sub will, by
operation of law as of the Effective Time, become the debts, obligations,
contracts, liabilities and assets of the Company, and Merger Sub will cease to
exist.
1.2 Certificate of Merger. A certificate of merger (the "Certificate of
Merger") shall be prepared, executed and delivered to the Secretary of State of
the State of Delaware (the "Delaware Secretary") for filing on the Closing Date,
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as defined in Section 3, in accordance with the Delaware Corporation Law.
1.3 Effective Time. The Merger shall become effective upon the filing of
the Certificate of Merger with the Delaware Secretary in accordance with the
provisions of the Delaware Corporation Law. The date and time of the filing with
the Delaware Secretary is referred to herein as the "Effective Time."
1.4 Tax-Free Merger. The Parties intend that the Merger will be treated
as a tax-free reorganization under Section 368 of the Code.
ARTICLE II
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EFFECT OF THE MERGER
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2.1 General. Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall merge with and into the Company in
accordance with the Delaware Corporation Law, the separate corporate existence
of Merger Sub shall cease, and the Company shall continue as the surviving
corporation in the Merger. The Company, in its capacity as the corporation
surviving the Merger, is sometimes referred to herein as the "Surviving
Corporation." The Surviving Corporation shall possess all the rights,
privileges, powers, immunities and franchises, of Merger Sub (sometimes referred
to hereinafter as the "Disappearing Corporation"); all property, real, personal
and mixed, and all debts due on whatever account, including subscriptions for
shares, stock options and warrants, and all choses in action, and all and every
interest, of or belonging to or due the Disappearing Corporation shall be taken
and deemed to be transferred to and vested in the Surviving Corporation without
further act or deed; and the title to any real estate, or any interest therein,
vested in the Disappearing Corporation shall not revert or be in any way
impaired by reason of the Merger. The Surviving Corporation shall have all the
rights, privileges, immunities and powers and shall be subject to all the duties
and liabilities of a corporation organized under the Delaware Corporation Law.
2.2 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the holder of any of
the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time and owned beneficially or of record by
Company stockholders shall be converted into and become 1.0184107 validly
issued, fully paid and non-assessable shares of Parent Common Stock, subject to
adjustment in accordance with Schedule 2.2 attached hereto.
(b) Each option, warrant and security convertible by its terms into
Company Common Stock that is outstanding immediately prior to the Effective Time
shall be assumed by the Parent and shall be deemed to constitute an option,
warrant or convertible security, as the case may be, to acquire, on the terms
and conditions as were applicable under such option, warrant or convertible
security, the same number of shares of Parent Common Stock as the holder of such
option, warrant or convertible security would have been entitled to receive
pursuant to the Merger had such holder exercised such option or warrant, or
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converted such convertible security, in full immediately prior to the Effective
Time (not taking into account whether such option, warrant or convertible
security was in fact exercisable or convertible at such time), and the exercise
or conversion price thereof shall be proportionately adjusted. As soon as
practicable after the Effective Time, the Parent shall deliver to each holder of
a Company option, warrant and convertible security an option, warrant or
convertible security, as the case may be, in the Parent, having substantially
identical terms as the original Company option, warrant or convertible security,
as the case may be.
2.3 Dissenting Shares. Notwithstanding any provision of this Agreement
to the contrary, dissenting shares of the Company as defined in the Delaware
Corporation Law ("Dissenting Shares") shall not be converted into the right to
receive shares of Parent Common Stock at or after the Effective Time unless and
until the holder of such Dissenting Shares withdraws his or her demand for
payment of the fair value of such shares in accordance with the provisions of
the Delaware Corporation Law or becomes ineligible for such payment. If a holder
of Dissenting Shares shall withdraw his or her demand for payment of the fair
value of such shares in accordance with the Delaware Corporation Law or shall
become ineligible to receive such payment, then, as of the later of the
Effective Time or the occurrence of such event, such holder's Dissenting Shares
shall be automatically converted into a corresponding number of shares of Parent
Common Stock in accordance with the terms of this Agreement. The Company shall
give the Parent prompt notice of any notices of intent to assert dissenters'
rights and to demand payment or withdrawals of notices of intent to assert
dissenters' rights and will not, except with the prior written consent of the
Parent, settle or compromise or offer to settle or compromise any such notices,
voluntarily make any payment with respect to any notice of intent to demand
payment for shares of Company Common Stock or approve any withdrawal of any such
notice. Each holder of Dissenting Shares shall have only such rights and
remedies as are granted to such holder under the Delaware Corporation Law. This
Section notwithstanding, in the event that two percent (2%) or more of the
outstanding shares of the Company are Dissenting Shares, the Company has the
sole discretion to terminate this Agreement, which shall forthwith become void
and of no further force and effect and the Parties shall be released from any
and all obligations hereunder; provided, however, that nothing herein shall
relieve any Party from liability for the breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
2.4 Exchange of Certificates.
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(a) Prior to the Closing Date, the Parent shall appoint its transfer
agent or such other person or entity as the Company may reasonably request to
act as exchange agent (the "Exchange Agent") in the Merger.
(b) At least five (5) Business Days after the Effective Time, the
Parent shall cause the Exchange Agent to deliver to each holder of record of
shares of Parent Common Stock to be exchanged for the Company's outstanding
shares ("Outstanding Shares"), a form letter of transmittal (the "Letter of
Transmittal") for use in effecting the surrender of the stock certificates
representing the Outstanding Shares (the "Certificates"). For purposes of this
Agreement, "Business Day" shall mean a day other than a Saturday, Sunday or day
when commercial banks are not generally open to the public in New York, New
York. To the extent that holders of Outstanding Shares (each a "Holder") deliver
Certificates along with a duly executed and completed Letter of Transmittal to
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the Parent or Exchange Agent, then the Parent shall promptly deliver (or cause
and instruct the Exchange Agent to deliver) to such each Holder, a
certificate(s) representing the number of shares of Parent Common Stock to which
the Holder is entitled pursuant to Section 2.2 above. The Parent or Exchange
Agent shall effect delivery of the certificate for Parent Common Stock within
three (3) Business Days after due receipt of the Holder's Certificate and duly
completed and executed Letter of Transmittal. Each Certificate surrendered shall
immediately be canceled. At the Effective Time, no Holder of a Certificate shall
have any rights with respect to shares of Company Common Stock other than to
surrender such Certificate pursuant to this Section 2.4 or, if the Holder holds
Dissenting Shares, to demand payment of the fair value thereof pursuant to the
Delaware Corporation Law or to exercise any other rights under the Delaware
Corporation Law.
(c) The Parent and Exchange Agent shall follow the same procedure
with respect to lost, stolen or mutilated Certificates as the Company followed
with respect to lost, stolen or mutilated certificates prior to the Effective
Time which procedures shall include, at a minimum, receipt of an affidavit and
indemnity of lost certificate in customary form (but without the requirement of
any bond or security for such indemnity).
2.5 Distributions With Respect To Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock evidenced thereby, until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
certificates evidencing shares of Parent Common Stock issued in exchange
therefore (i) the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of dividends
or other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such shares of Parent Common Stock. No interest shall be paid on any amounts
payable under this Section 2.5.
2.6 No Further Rights in Company Stock. All shares of Parent Common Stock
issued upon exchange of the shares of Company Common Stock in accordance with
the terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
2.7 No Fractional Shares. No certificates or scrip evidencing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of the Parent. In lieu of
fractional shares of Parent Common Stock, any fractional share will be rounded
up to the nearest whole share of Parent Common Stock.
2.8 No Transfers of Stock After Effective Time. After the Effective Time,
there shall be no transfers of any shares of Company Common Stock on the stock
transfer books of the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be forwarded
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to the Parent or Exchange Agent and exchanged in accordance with Section 2.4(b),
subject to applicable law in the case of Dissenting Shares.
2.9 Restrictions on Transfer of New Parent Shares. The shares of Parent
Common Stock that are being issued in connection with the Merger (the "New
Parent Shares"), and any shares of Parent Common Stock issuable upon exercise or
conversion of options or warrants issued pursuant to Section 2.2(b),
(collectively with the New Parent Shares, the "New Parent Securities") are being
issued pursuant to an exemption from registration provided for in Section 4(2)
of the Securities Act. Each certificate representing any New Parent Securities
shall be subject to stop transfer instructions and shall bear all legends
required under all applicable federal and state securities laws.
2.10 Certificate of Incorporation and Bylaws of Surviving Corporation.
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(a) The Certificate of Incorporation of the Company in effect at the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation.
(b) The Bylaws of the Company in effect at the Effective Time shall
be the Bylaws of the Surviving Corporation.
2.11 Management of Surviving Corporation and Parent.
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(a) One or more of the directors of the Company immediately prior to
the Effective Time shall be the initial directors of Surviving Corporation and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or Bylaws of the Surviving Corporation or as
otherwise provided by applicable law.
(b) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation or Bylaws of the Surviving Corporation or as otherwise provided by
applicable law.
(c) At the Closing, the officers and directors of the Parent shall
resign, to be replaced by the officers and directors of the Company immediately
prior to the Effective Time, provided that at least one current director of the
Parent shall remain in office until at least ten (10) days after the Company
makes the filing with the SEC required by Rule 14f-1 (the "Rule") promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
mails the statement required by said Rule to the Parent's shareholders of
record. The new management shall also cause the Parent to make such filings as
may be required or indicated under the Exchange Act; provided, however, the
resignation of the directors of the Parent and the appointment of new directors
in accordance with the terms of this Section 2.11(c) shall accomplished through
the filling of vacancies in the Board of Directors of the Parent in compliance
with the applicable provisions of the Nevada Revised Statutes (the "Nevada
Corporation Law") and the Bylaws of the Parent and without the vote (by written
consent or otherwise) of the shareholders of the Parent.
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2.12 Taking of Necessary Action, Further Assurances. Each of the Company,
the Parent and Merger Sub shall use its or their commercially reasonable efforts
to take all such action as may be necessary or appropriate to effectuate the
Merger in accordance with this Agreement as promptly as possible and at the time
contemplated by this Agreement. If, at any time after the Effective Time, any
such further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets property, rights, privileges, powers and franchises of
the Company and Merger Sub, the officers and directors of the Company, the
Parent and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
ARTICLE III
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CLOSING
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3.1 Closing. Subject to the provisions of this Agreement, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take place
at the offices of Xxxxxx Xxxx & Priest LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX,
within two (2) Business Days after the date on which the last of the conditions
to Closing set forth in Article VIII shall have been satisfied or waived, or at
such other place and on such other date as is mutually agreeable to Parent and
the Company (the "Closing Date"). The Closing will be effective as of the
Effective Time.
3.2 Closing Deliveries. At the Closing, each of the Parties shall make
the Closing deliveries required of it pursuant to Article VIII of this
Agreement.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Except as set forth in the disclosure schedule attached hereto as
Exhibit A (the "Company Disclosure Schedule"), the Company represents and
warrants to the Parent that the statements contained in this Article IV are
true, correct and complete as of the date of this Agreement (or if made as of a
specified date, as of such date) and will be true, correct and complete as of
the Closing Date (or, if made as of a specified date, as of such date).
4.1 Organization and Qualification.
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(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business as it is now being
conducted. There is no pending or threatened proceeding for the dissolution or
liquidation of the Company.
(b) Except as set forth in the Company Disclosure Schedule, the
Company (i) does not, directly or indirectly, own any interest in any
corporation, partnership, joint venture, limited liability company, or other
Person and (ii) is not subject to any obligation or requirement to provide funds
to or to make any investment (in the form of a loan, capital contribution or
otherwise) in or to any Person. For purposes of this Agreement, "Person" shall
mean any individual, sole proprietorship, partnership, joint venture, trust,
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unincorporated organization, association, corporation, institution, government,
entity or government or any group comprised of one or more of the foregoing.
(c) The Company is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business or the
properties owned or leased by it makes such qualification or licensing
necessary, except for any such jurisdiction where the failure to so qualify or
be licensed, individually and in the aggregate for all such jurisdictions, would
not reasonably be expected to have a Material Adverse Effect. For purposes of
this Agreement, as to the Company, "Material Adverse Effect" means an action,
event or occurrence if it has, or could reasonably be expected to have, a
material adverse effect on the capitalization, financial condition or results of
operations of the Company. Any item or event susceptible of measurement in
monetary terms which, when considered together with similar items or events,
does not exceed the amount of $50,000, shall not be considered a Material
Adverse Effect.
(d) The Company has provided to the Parent complete and accurate
copies of the Certificate of Incorporation and Bylaws of the Company, as
currently in effect, and minutes and other records of the meetings and other
proceedings of the Board of Directors and stockholders of the Company. The
Company is not violation of any provisions of its Certificate of Incorporation
or Bylaws.
4.2 Capitalization. The authorized capital stock of Company consists of
80,000,000 shares of Company Common Stock, and 20,000,000 shares of Preferred
Stock, $.001 par value (the "Company Preferred Stock"), of which 9,962,656
shares of Company Common Stock, 4,014,125 shares of Series A Preferred Stock,
989,991 shares of Series B Preferred Stock, and 2,954,350 shares of Series C
Preferred Stock are issued and outstanding. All issued and outstanding shares of
Company Common Stock and Company Preferred Stock are validly issued and
outstanding, fully paid and non-assessable and free of preemptive rights. Other
than as set forth in the Company Disclosure Schedule, (i) there are no shares of
capital stock or other equity securities of Company outstanding and (ii) there
are no outstanding options, warrants, subscription rights (including any
preemptive rights), calls, or commitments, or convertible securities of any
character whatsoever to which the Company is a party or is bound, requiring or
which could require the issuance, sale or transfer by the Company of any shares
of capital stock of the Company or any securities convertible into or
exchangeable or exercisable for, or rights to purchase or otherwise acquire, any
shares of capital stock of the Company. There are no stock appreciation rights
or similar rights relating to the Company.
4.3 Authority.
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(a) The Company has the requisite corporate power and authority to
enter into this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to approval by its
stockholders. This Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms.
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(b) The execution and delivery by the Company of this Agreement does
not, and the consummation of the transactions contemplated thereby will not, (i)
conflict with, or result in a violation of, any provision of bylaws or other
charter documents of the Company, (ii) constitute or result in a breach of or
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the termination or suspension of, or
accelerate the performance required by, or result in a right of termination,
cancellation or acceleration of any obligation or a loss of a benefit under, any
note, bond, mortgage, indenture, deed of trust, lease, permit, concession,
franchise, license, agreement or other instrument or obligation to which the
Company is a party or to which the properties or assets of the Company are
subject, (iii) create any lien upon any of the properties or assets of the
Company, or (iv) constitute, or result in, a violation of any law applicable to
the Company or any of the properties or assets of the Company.
(c) No consent, approval, order or authorization of, notice to,
registration or filing with any governmental authority or other Person is
required to be obtained or made by the Company in connection with the execution
and delivery of this Agreement by the Company or the consummation by the Company
of the transactions contemplated by this Agreement, except for (i) filing of the
Certificate of Merger with the Delaware Secretary, and (ii) the filing of a Form
D and related state securities law notices in connection with the issuance of
the Excluded Securities.
4.4 Financial Statements.
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(a) The Company Disclosure Schedule sets forth copies of (i) the
audited balance sheets of the Company as of December 31, 2002 and December 31,
2003, and the audited statements of operations, redeemable preferred stock and
stockholders' deficit and cash flows for the years ended December 31, 2003,
December 31, 2002 and December 31, 2001, and (ii) the unaudited balance sheet of
the Company as of September 30, 2004 (the "Company September Balance Sheet") and
the unaudited statements of operations, redeemable preferred stock and
stockholders' deficit and cash flows for the nine-months period ended September
30, 2004 and September 30, 2003 (collectively, the "Company Financial
Statements"). The Company Financial Statements (including the related notes)
have been prepared in accordance with United States generally accepted
accounting principles consistently applied ("GAAP") during the periods involved
(except as may be indicated therein or in the notes thereto), and present fairly
the consolidated financial position of the Company as of the respective dates
set forth therein, and the consolidated results of the Company's operations and
its cash flows for the respective periods set forth therein in accordance with
GAAP (subject, in case of any unaudited interim financial statements, to normal
year-end adjustments).
(b) The books and records of the Company are being maintained in
material compliance with applicable legal and accounting requirements.
(c) Except as and to the extent reflected, disclosed or reserved
against in the Company Financial Statements (including the notes thereto) or in
the Company Disclosure Schedule, as of September 30, 2004, the Company had no
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets, financial condition or prospects of the Company
which were required by GAAP (consistently applied) to be disclosed in the
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Company's consolidated financial statements as of September 30, 2004, or the
notes thereto. The Company has not incurred any liabilities except in the
ordinary course of business and consistent with past practice, except as related
to the transactions contemplated by this Agreement or in the Company Disclosure
Schedule.
4.5 Absence of Certain Changes or Events. Except as disclosed in the
Company Disclosure Schedule, there has not been any material adverse change in
the business, operations, assets or financial condition of the Company since
September 30, 2004 and, to the best of the Company's knowledge, no facts or
condition exists which the Company believes will cause such a material adverse
change in the future.
4.6 Litigation. There are no legal actions (i) pending or, to the
knowledge of the Company, threatened against the Company or the transactions
contemplated by this Agreement or (ii) pending or, to the knowledge of the
Company, threatened against any current employee, officer or director of the
Company that, in any way relates to the Company. The Company is not subject to
any order, judgment, writ, injunction or decree of any governmental authority.
4.7 Taxes. The Company has timely filed all material tax returns and
reports required to be filed by it (after giving effect to any filing extension
properly granted by a governmental entity having authority to do so) ("Company
Tax Return"). Each such Company Tax Return is true, correct and complete in all
material respects. The Company has paid, within the time and manner prescribed
by law, all material taxes that are due and payable. To the Knowledge of the
Company, no Company Tax Return is the subject of any investigation, audit or
other proceeding by any federal, state or local tax authority.
4.8 Contracts.
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(a) The Company is not in violation or breach of any material
contract. There does not exist any event or condition that, after notice or
lapse of time or both, would constitute an event of default or breach under any
material contract on the part of the Company or, to the knowledge of the
Company, any other party thereto or would permit the modification, cancellation
or termination of any material contract or result in the creation of any lien
upon, or any person acquiring any right to acquire, any assets of the Company.
The Company has not received in writing any claim or threat that the Company has
breached any of the terms and conditions of any material contract.
(b) The consent of, or the delivery of notice to or filing with, any
party to a material contract is not required for the execution and delivery by
the Company of this Agreement or the consummation of the transactions
contemplated under the Agreement.
4.9 Employee Benefit Plans. Except as set forth in the Company
Disclosure Schedule, the Company does not maintain or contribute to any
"employee pension benefit plan" (the "Company Pension Plans"), as such term is
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), "employee welfare benefit plan," as such term is defined in
Section 3 of ERISA, stock option plan, stock purchase plan, deferred
compensation plan, cafeteria plan, severance plan, bonus plan, employment
agreement or other similar plan,
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program or arrangement. The Company has not contributed to, or been required to
contribute to, any "Multiemployer Plan", as such term is defined in Section
3(37) of ERISA.
4.10 Compliance With Applicable Law. To the Company's knowledge, the
Company has complied in all material respects with all applicable federal, state
and local laws and regulations to which it or its business may be subject,
except where the failure to so comply did not have and would not be a Material
Adverse Effect, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced against or, to
the Company's knowledge, has been threatened against the Company alleging any
failure to so comply.
4.11 Intellectual Property.
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(a) The Company owns, or has the right to use pursuant to valid
license, sublicense, agreement, or permission, all intellectual property rights
used in or necessary for the operation of the Company's business as presently
conducted. Except as set forth in the Company Disclosure Schedule, (i) such
intellectual property rights are owned free and clear of royalty obligations,
liens and encumbrances, (ii) the execution and delivery of this Agreement and
the closing of the transaction contemplated hereby will not alter or impair any
such rights, (iii) the use of all such intellectual property the Company does
not infringe or violate the intellectual property rights of any person or
entity, and (iv) the Company has not granted any person or entity any rights,
pursuant to written license agreement or otherwise, to use such intellectual
property. The Company has taken, and shall continue to take through the Closing
Date, all necessary action to maintain and protect each item of intellectual
property that it owns or uses.
(b) The Company Disclosure Schedule identifies (i) each patent,
trademark, trade name, service name or copyright with respect to any of the
Company's intellectual property, all applications and registration statements
therefor and renewals thereof (and sets forth correct and complete copies of all
such patents, registrations and applications (as amended to date)) and (ii) all
intellectual property that the Company uses pursuant to license, sublicense,
agreement, or permission, all of which are valid and in full force and effect,
and the execution and delivery of this Agreement and the closing of the
transaction contemplated hereby will not alter or impair any such rights.
(c) The Company has at all times used reasonable efforts to protect
all trade secrets related to its intellectual property.
4.12 Properties. Except as set forth in the Company Disclosure Schedule,
the Company has good and marketable title to all material assets and properties,
whether real or personal, tangible or intangible, listed on the Company
September Balance Sheet or the Company Disclosure Schedule, subject to no
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items that secure liabilities that are reflected in said Balance Sheet or the
note thereto or that secure liabilities incurred in the ordinary course of
business after the date of the Company September Balance Sheet, (ii) statutory
liens for amounts not yet delinquent or which are being contested in good faith
and (iii) such title imperfections that are not in the aggregate material to the
business, operations, assets, financial condition or prospects of the Company.
Except as affected by the transactions contemplated hereby, the Company as
lessee has the right under valid and subsisting leases to occupy, use, possess
11
and control all real property listed on the Company Disclosure Schedule in all
material respects as presently occupied, used, possessed and controlled by the
Company.
4.13 Insurance. The business operations and all insurable properties and
assets of the Company are insured for their benefit against all risks which, in
the reasonable judgment of the management of the Company, should be insured
against (including, without limitation, products liability for human clinical
trials, professional liability for insureds and employees and professional
liability for clinical sites and clinical investigators), in each case under
policies or bonds issued by insurers of recognized responsibility, in such
amounts with such deductibles and against such risks and losses as are in the
opinion of the management of the Company adequate for the business engaged in by
the Company. The Company has not received any notice of cancellation or notice
of a material amendment of any such insurance policy or bond.
4.14 Disclosure. The representations and warranties of the Company herein,
or in any document, exhibit, statement, certificate or schedule furnished by or
on behalf of Company to the Parent as required by this Agreement, do not contain
and will not contain any untrue statement of a material fact and do not omit and
will not omit to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF THE PARENT
--------------------------------------------
Except as set forth in the disclosure schedule attached hereto as
Exhibit B (the "Parent Disclosure Schedule"), the Parent represents and warrants
to the Company that the statements contained in this Article V are true, correct
and complete as of the date of this Agreement (or if made as of a specified
date, as of such date) and will be true, correct and complete as of the Closing
Date (or, if made as of a specified date, as of such date). Unless the context
otherwise requires, all references to the Parent contained in this Article V
will be read to include the Parent together with any of its direct or indirect
subsidiaries (including Merger Sub).
5.1 Organization and Qualification.
------------------------------
(a) The Parent is a corporation duly organized, validly existing and
in good standing under the laws of the state of Nevada and has the requisite
corporate power and authority to carry on its business as it is now being
conducted.
(b) Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Merger Sub was formed
solely for the purpose of the Merger and has no business, assets, liabilities,
contracts or commitments other than as set forth in this Agreement. There is no
pending or threatened proceeding for the dissolution or liquidation of Merger
Sub.
(c) Except for Merger Sub, the Parent (i) does not, directly or
indirectly, own any interest in any corporation, partnership, joint venture,
limited liability company, or other Person except for two subsidiaries described
in the Parent Disclosure Schedule that were formed for the sole purpose of a
12
transaction that did not materialized and are in the process of being dissolved,
and (ii) is not subject to any obligation or requirement to provide funds to or
to make any investment (in the form of a loan, capital contribution or
otherwise) in or to any Person.
(d) The Parent is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
properties owned or leased by it makes such qualification or licensing
necessary, except for any such jurisdiction where the failure to so qualify or
be licensed, individually and in the aggregate for all such jurisdictions, would
not reasonably be expected to have a Material Adverse Effect.
(e) The Parent has provided complete and accurate copies of the
Articles of Incorporation and Bylaws of the Parent and Merger Sub, as currently
in effect, and minutes and other records of the meetings and other proceedings
of the Board of Directors and shareholders of the Parent. Neither the Parent nor
Merger Sub is in violation of any provisions of its Articles of Incorporation or
Bylaws.
5.2 Capitalization.
---------------
(a) The authorized capital stock of the Parent consists of (i)
500,000,000 shares of Parent Common Stock, and (ii) 5,000,000 shares of Parent
Preferred Stock, 200,000 shares of which have been designated as Series A
Preferred Stock. The issued and outstanding capital stock of the Parent consists
entirely of (i) 99,989 shares of Parent Common Stock (exclusive of shares
issuable pursuant to the Debenture Conversion Agreements) and (ii) 200,000
shares of Parent Series A Preferred Stock. All issued and outstanding shares of
Parent Common Stock and Parent Series A Preferred Stock are validly issued and
outstanding, fully paid and nonassessable and free of preemptive rights. Other
than such shares and the Parent Debentures, there are no shares of capital stock
or other equity securities of the Parent outstanding and no outstanding options,
warrants, subscription rights (including any preemptive rights), calls, or
commitments, or convertible notes or instruments of any character whatsoever to
which the Parent is a party or is bound, requiring or which could require the
issuance, sale or transfer by the Parent of any shares of capital stock of the
Parent or any securities convertible into or exchangeable or exercisable for, or
rights to purchase or otherwise acquire, any shares of capital stock of the
Parent. There are no stock appreciation rights or similar rights relating to the
Parent.
(b) The authorized capital of Merger Sub consists of 1,000 shares of
common stock, $.01 par value per share, of which all 1,000 shares are issued and
outstanding and held by the Parent. Other than such outstanding shares, there
are no shares of capital stock or other equity securities of Merger Sub
outstanding and no outstanding options, warrants, subscription rights (including
any preemptive rights), calls, or commitments, or convertible notes or
instruments of any character whatsoever to which the Parent or Merger Sub is a
party or is bound, requiring or which could require the issuance, sale or
transfer by the Parent or Merger Sub of any shares of capital stock of Merger
Sub, any securities convertible into or exchangeable or exercisable for, or
rights to purchase or otherwise acquire, any shares of capital stock of Merger
Sub. There are no stock appreciation rights or similar rights relating to Merger
Sub.
(c) Upon completion of the Merger the outstanding shares of Parent
Common Stock shall be held as follows (excluding any shares of Parent Common
Stock issued to holders of Company Common Stock and exchanged for Parent Common
13
Stock as a result of the Merger):
(i) 99,989 shares held by the pre-existing shareholders of the
Parent; and
(ii) 1,178,031 shares (subject to adjustment in certain
circumstances described in the Debenture Conversion Agreements) to be issued to
holders of the Parent Debentures in connection with the conversion of all Parent
Debentures contemplated by the Debenture Conversion Agreements (as defined in
Section 7.9 hereof) immediately after the Merger.
(d) Upon completion of the Merger, all of the outstanding Parent
Series A Preferred shall be redeemed and retired at a price of $1.00, and the
holders thereof shall not thereafter have any claims or demands against the
Parent or the Company.
(e) Upon completion of the Merger, and other than any outstanding
options, warrants or convertible securities issued by the Company and converted
into options, warrants or convertible securities of the Parent as a result of
the Merger, there are no outstanding options, warrants, subscription rights
(including any preemptive rights), calls, or commitments, or convertible notes
or instruments of any character whatsoever to which the Parent is a party or is
bound, requiring or which could require the issuance, sale or transfer by the
Parent of any shares of capital stock of the Parent or any securities
convertible into or exchangeable or exercisable for, or rights to purchase or
otherwise acquire, any shares of capital stock of the Parent.
(f) All of the shares of Parent Common Stock issued and outstanding
immediately prior to the Effective Time (including the shares of Parent Common
Stock to be issued to holders of the Parent Debentures pursuant the Debenture
Conversion Agreements) (i) have been issued in compliance with Securities Act
and applicable state securities laws in reliance on exemptions from registration
or qualification thereunder and (ii) were issued and are currently held by
persons who are not deemed "underwriters" under applicable federal securities
laws.
(g) The list of all record holders of Parent Common Stock, Parent
Preferred Stock and the Parent Debentures included in the Parent Disclosure
Schedule is complete and correct.
5.3 Authority.
---------
(a) Each of the Parent and Merger Sub has the requisite corporate
power and authority to enter into this Agreement, to perform its obligations
thereunder, and to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement by the Parent and Merger Sub and the
consummation by the Parent and Merger Sub of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part
of the Parent and Merger Sub. This Agreement has been duly executed and
delivered by the Parent and Merger Sub and constitutes a legal, valid and
binding obligation of the Parent and Merger Sub, enforceable against each of
them in accordance with its terms. No vote or approval of the shareholders of
the Parent is required in connection with the Merger.
14
(b) The execution and delivery by the Parent and Merger Sub of this
Agreement does not, and the consummation of the transactions contemplated
thereby will not, (i) conflict with, or result in a violation of, any provision
of bylaws or other charter documents of the Parent or Merger Sub, (ii)
constitute or result in a breach of or default (or an event which with notice or
lapse of time, or both, would constitute a default) under, or result in the
termination or suspension of, or accelerate the performance required by, or
result in a right of termination, cancellation or acceleration of any obligation
or a loss of a benefit under, any note, bond, mortgage, indenture, deed of
trust, lease, permit, concession, franchise, license, agreement or other
instrument or obligation to which the Parent is a party or to which the
properties or assets of the Parent or Merger Sub are subject, (iii) create any
lien upon any of the properties or assets of the Parent or Merger Sub, or (iv)
constitute, or result in, a violation of any law applicable to the Parent or
Merger Sub or any of the properties or assets of either of them. (c) No consent,
approval, order or authorization of, notice to, registration or filing with any
governmental authority or other Person is necessary in connection with the
execution and delivery of this Agreement by the Parent and Merger Sub or the
consummation by the Parent and Merger Sub of the transactions contemplated by
this Agreement, except for (i) filing of the Certificate of Merger with the
Delaware Secretary, (ii) the filing of a Form D and related state securities law
notices in connection with the issuance of Parent Common Stock in connection
with the Merger and (iii) the filing of a current report on Form 8-K with the
Securities and Exchange Commission (the "SEC") announcing completion of the
Merger.
5.4 SEC Filings; Financial Statements.
---------------------------------
(a) The Parent has timely filed and made available to Company all
forms, reports, schedules, statements and other documents required to be filed
by the Parent with the SEC (collectively, the "Parent SEC Reports"). The Parent
SEC Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Parent SEC Reports or necessary in
order to make the statements in such Parent SEC Reports, in light of the
circumstances under which they were made, not misleading. None of the Parent's
subsidiaries is required to file any forms, reports, schedules, statements or
other documents with the SEC. The financial records of the Parent have been
prepared in compliance with SEC rules on internal financial controls.
(b) Each of the financial statements (including, in each case, any
related notes), contained in the Parent SEC Reports, including any Parent SEC
Reports filed after the date of this Agreement until the Closing, complied, as
of its respective filing date, in all material respects with all applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved and fairly presented the consolidated
financial position of the Parent as at the respective dates and the results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
15
(c) Between January 1, 2004 and the date hereof, except as disclosed
in the Parent SEC Reports, there has not been any change in the business,
operations or financial condition of the Parent that has had or reasonably would
be expected to have a material adverse effect on the Parent.
(d) Except for the Parent Debentures, the Parent and Merger Sub do
not have any liability or obligation (absolute, accrued, contingent or
otherwise) other than those arising under this Agreement and the Debenture
Conversion Agreements.
5.5 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Parent, Merger Sub or any shareholder of the Parent.
5.6 Ownership of Merger Sub, No Prior Activities. As of the date hereof
and as of the Effective Time, except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated hereby or thereby, Merger Sub has not
and will not have incurred, directly or indirectly, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.
5.7 Litigation. There are no legal actions (i) pending or, to the
knowledge of the Parent, threatened against the Parent, Merger Sub or the
transactions contemplated by this Agreement or (ii) pending or, to the knowledge
of the Parent, threatened against any current employee, officer or director of
the Parent that, in any way relates to the Parent. The Parent is not subject to
any order, judgment, writ, injunction or decree of any governmental authority.
5.8 Taxes. The Parent has timely filed all material tax returns and
reports required to be filed by it (after giving effect to any filing extension
properly granted by a governmental entity having authority to do so) ("Parent
Tax Return"). Each such Parent Tax Return is true, correct and complete in all
material respects. The Parent has paid, within the time and manner prescribed by
law, all material taxes that are due and payable. No Parent Tax Return is the
subject of any investigation, audit or other proceeding by any federal, state or
local tax authority.
5.9 No Employees; Labor Matters. Neither the Parent nor Merger Sub has
any employees or consultants. No unfair labor practice, or race, sex, age,
disability or other discrimination, complaint is pending, nor is any such
complaint, to the knowledge of the Parent, threatened against the Parent before
the National Labor Relations Board, Equal Employment Opportunity Commission or
any other governmental authority, and no grievance is pending, nor is any
grievance, to the knowledge of the Parent, threatened against the Parent or
Merger Sub.
5.10 Benefit Plans. The Parent has not adopted nor is it party to any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other employee benefit plan, arrangement or understanding (whether or not
legally binding) providing benefits to any current or former employee, officer
or director of the Parent or any person affiliated with the Parent under Section
16
414(b), (c), (m) or (o) of the Code; provided except to the extent permitted in
Section 6.1(b)(i) hereof.
5.11 Contracts and Commitments.
-------------------------
(a) Except for this Agreement and the agreements and transactions
specifically contemplated by this Agreement, neither the Parent nor Merger Sub
is a party to or subject to, nor plans to enter into:
(i) any agreement or other commitments requiring any payments or
performance of services by the Parent or Merger Sub;
(ii) any agreement or other commitments containing covenants
limiting the freedom of the Parent or Merger Sub to compete in any line of
business or with any Person or in any geographic location or to use or disclose
any information in their possession;
(iii) any license agreement (as licensor or licensee) or royalty
agreement;
(iv) any agreement of indemnification, other than indemnification
rights granted in the Bylaws of the Parent;
(v) any agreement or undertaking pursuant to which the Parent is:
(A) borrowing or is entitled to borrow any money; (B) lending or has committed
itself to lend any money; or (C) a guarantor or surety with respect to the
obligations of any Person;
(vi) any powers of attorney granted by the Parent; and
(vii) any leases of real or personal property.
(b) The Parent is not in violation or breach of any contract. There
does not exist any event or condition that, after notice or lapse of time or
both, would constitute an event of default or breach under any contract on the
part of the Parent or, to the knowledge of the Parent, any other party thereto
or would permit the modification, cancellation or termination of any contract or
result in the creation of any lien upon, or any person acquiring any right to
acquire, any assets of the Parent or Merger Sub. The Parent has not received in
writing any claim or threat that Parent or Merger Sub has breached any of the
terms and conditions of any contract.
(c) The consent of, or the delivery of notice to or filing with, any
party to a contract is not required for the execution and delivery by the Parent
of this Agreement or the consummation of the transactions contemplated under the
Agreement.
5.12 Books and Records. The books and records of the Parent have been
maintained and preserved in accordance with applicable regulations and business
practices. The corporate minutes books of the Parent and Merger Sub are complete
and correct and the minutes and consents contained therein accurately reflect
actions taken at a duly called and held meeting or by sufficient consent without
a meeting. All actions by the Parent and Merger Sub which required director or
shareholder approval are reflected on the respective corporate minute books.
17
5.13 Assets. The Parent has no fixtures, furniture, equipment, inventory,
intellectual property, accounts receivable or other assets other than cash and
its interest in this Agreement.
5.14 Compliance. To the Parent's knowledge, the Parent has complied in all
material respects with all applicable federal, state and local laws and
regulations to which it or its business may be subject, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against or, to the Parent's knowledge, has been
threatened against the Parent alleging any failure to so comply.
5.15 Disclosure. The representations and warranties of the Parent and
Merger Sub herein, or in any document, exhibit, statement, certificate or
schedule furnished by or on behalf of the Parent or Merger Sub to Company as
required by this Agreement, do not contain and will not contain any untrue
statement of a material fact and do not omit and will not omit to state any
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE VI
----------
PRE-CLOSING COVENANTS
---------------------
6.1 Operation of the Parent.
-----------------------
(a) Except as specifically provided in this Agreement between the
date of this Agreement and the Effective Time, the Parent shall:
(i) maintain its books of account and records in the usual and
ordinary manner, and in conformity with its past practices;
(ii) pay accounts payable and other obligations when they become
due and payable in the ordinary course of business consistent with past
practices except to the extent disputed in good faith;
(iii) conduct its business, if any, in the ordinary course
consistent with past practices, or as required by this Agreement;
(iv) pay all taxes when due and file all Parent Tax Returns on or
before the due date therefor except to the extent disputed in good faith;
(v) make appropriate provisions in its books of account and
records for taxes relating to its operations during such period (regardless of
whether such taxes are required to be reflected in a tax return having a due
date on or prior to the Closing Date);
(vi) withhold all taxes required to be withheld and remitted by
or on behalf of the Parent in connection with amounts paid or owing to any
Parent personnel or other person, and pay such taxes to the proper governmental
authority or set aside such taxes in accounts for such purpose;
18
(vii) make all required filings on a timely basis with the SEC or
any other state, federal or local regulatory body, including, without
limitation, making all filings under the Securities Act and the Exchange Act, on
a timely basis so as to maintain the Parent's status as a reporting company in
good standing under the Exchange Act; and
(viii) comply with the listing requirements of, and take all
steps reasonably necessary to maintain Parent's listing on, the OTC Bulletin
Board.
(b) Without the prior written consent of the Company, between the
date of this Agreement and the Effective Time (or termination of this
Agreement), neither the Parent nor Merger Sub shall:
(i) issue any capital stock (except for the issuance of Parent
Common Stock or common stock of Merger Sub specifically contemplated by this
Agreement) or any options (except for the adoption of an incentive plan based
upon the Company's Amended and Restated 2000 Omnibus Stock Incentive Plan),
warrants or other rights to subscribe for or purchase any capital stock or any
securities convertible into or exchangeable or exercisable for, or rights to
purchase or otherwise acquire, any shares of the capital stock of the Parent or
Merger Sub;
(ii) directly or indirectly redeem, purchase, sell or otherwise
acquire any capital stock of the Parent, except as specifically contemplated by
this Agreement;
(iii) hire any employee or retain any consultant;
(iv) borrow or agree to borrow any funds, incur any indebtedness
or directly or indirectly guarantee or agree to guarantee the obligations of
others, or draw or borrow on any lines of credit that may be available to the
Parent or Parent Sub;
(v) except as specifically contemplated by this Agreement, enter
into any oral or written agreement, contract, lease or other commitment;
(vi) place or allow to be placed a lien on any of the assets of
the Parent or Merger Sub;
(vii) except as specifically contemplated by this Agreement,
cancel, discount or otherwise compromise any indebtedness owing to the Parent or
any claims which the Parent may possess or waive any rights of material value;
(viii) sell or otherwise dispose of any assets of the Parent,
except in the ordinary course of business consistent with past practices;
(ix) commit any act or omit to do any act which will cause a
breach of this Agreement or any other material agreement, contract, lease or
commitment;
(x) violate any law or governmental approval, including, without
limitation any federal or state securities laws;
19
(xi) make any loan, advance, distribution or payment of any type
or to any Person other than as specifically contemplated by this Agreement;
(xii) amend its Articles of Incorporation or Bylaws;
(xiii) merge or consolidate with, or agree to merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any business or any Person or division thereof;
(xiv) make any tax election or settle or compromise any tax
liability other than in the ordinary course of business consistent with past
practices;
(xv) lease or purchase or agree to lease or purchase any assets
or properties;
(xvi) take any action or series of actions that results in or is
likely to result in (i) the delisting of the Parent Common Stock from trading on
the OTC Bulletin Board, or (ii) the Parent losing its status as a reporting
company in good standing under the Exchange Act; or
(xvii) enter into any negotiations, commitments or agreements
that would result in undertaking any of the actions specified in this Subsection
6.1(b).
6.2 Operation of Company.
--------------------
(a) Except as specifically provided in this Agreement, between the
date of this Agreement and the Effective Time, the Company shall:
(i) maintain its books of account and records in the usual and
ordinary manner, and in conformity with its past practices;
(ii) pay accounts payable and other obligations when they become
due and payable in the ordinary course of business consistent with past
practices except to the extent disputed in good faith;
(iii) conduct its business, if any, in the ordinary course
consistent with past practices, or as required by this Agreement or the PPM;
(iv) pay all taxes when due and file all Company Tax Returns on
or before the due date therefor except to the extent disputed in good faith;
(v) make appropriate provisions in its books of account and
records for taxes relating to its operations during such period (regardless of
whether such taxes are required to be reflected in a tax return having a due
date on or prior to the Closing Date); and
(vi) withhold all taxes required to be withheld and remitted by
or on behalf of the Company in connection with amounts paid or owing to any
Company personnel or other person, and pay such taxes to the proper governmental
20
authority or set aside such taxes in accounts for such purpose.
(b) Without the prior written consent of the Parent, between the date
of this Agreement and the Effective Time (or termination of this Agreement), the
Company shall not:
(i) except as contemplated by this Agreement or the Placement,
issue any capital stock or any options, warrants or other rights to subscribe
for or purchase any capital stock or any securities convertible into or
exchangeable or exercisable for, or rights to purchase or otherwise acquire, any
shares of the capital stock of the Company;
(ii) directly or indirectly redeem, purchase, sell or otherwise
acquire any capital stock of the Company, except as specifically contemplated by
this Agreement;
(iii) grant any increase in the compensation payable, or to
become payable, to any Company personnel or enter into any bonus, insurance,
pension, severance, change-in-control or other benefit plan, payment, agreement
or arrangement for or with any Company personnel, except as consistent with past
practices in the ordinary course of business or in accordance with prior
recommendations of the Compensation Committee of the Company;
(iv) except as may be required or reasonably necessary in order
to complete the transactions contemplated by this Agreement or the Placement,
agree to borrow any funds, incur any indebtedness or directly or indirectly
guarantee or agree to guarantee the obligations of others, or draw or borrow on
any lines of credit that may be available to Company;
(v) place or allow to be placed a lien on any of the assets of
the Company;
(vi) sell or otherwise dispose of any assets of the Company,
except in the ordinary course of business consistent with past practices;
(vii) commit any act or omit to do any act which will cause a
breach of this Agreement or any other material agreement, contract, lease or
commitment to which the Company is party;
(viii) violate any law or governmental approval, including,
without limitation any federal or state securities laws;
(ix) make any loan, advance, distribution or payment of any type
or to any Person other than as contemplated by this Agreement or the PPM;
(x) amend its Certificate of Incorporation or Bylaws;
(xi) except as contemplated by this Agreement, consolidate with,
or agree to merge or consolidate with, or purchase substantially all of the
assets of, or otherwise acquire any business or any Person or division thereof;
(xii) make any tax election or settle or compromise any tax
liability other than in the ordinary course of business consistent with past
practices;
21
(xiii) lease or purchase or agree to lease or purchase any assets
or properties; or
(xiv) enter into any negotiations, commitments or agreements that
would result in undertaking any of the actions specified in this Subsection
6.2(b).
ARTICLE VII
-----------
ADDITIONAL AGREEMENTS
---------------------
7.1 Access to Information.
---------------------
(a) From the date hereof to the Effective Time, the Company shall
afford, and shall cause its officers, directors, employees, representatives and
agents to afford, to the Parent and to the officers, employees and agents of the
Parent reasonable access during normal business hours to the Company's officers,
employees, agents, representatives, properties, books, records and contracts,
and shall furnish to the Parent all financial, operating and other data and
information as the Parent, through its agents, officers, employees or other
representatives, may reasonably request.
(b) From the date hereof to the Effective Time, the Parent shall
afford, and shall cause its officers, directors, employees, representatives and
agents to afford, to the Company and to the officers, employees and agents of
the Company reasonable access during normal business hours to the Parent's
officers, employees, agents, representatives, properties, books, records and
contracts, and shall furnish to the Company all financial, operating and other
data and information as the Company, through its agents, officers, employees or
other representatives, may reasonably request.
(c) No investigation pursuant to Section 7.1(a) shall affect any
representations or warranties of the Parties herein or the conditions to the
obligations of the Parties.
7.2 Expenses and Taxes. Except to the extent otherwise set forth herein,
each of the Parties shall pay its respective costs incurred in connection with
the preparation, negotiation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, the fees of the attorneys, accountants and advisors.
7.3 News Releases. Except as required by applicable law, any news
releases or other public disclosure pertaining to the transactions contemplated
hereby shall be delivered to the other Party for review and approval in writing
at least two (2) Business Days prior to the dissemination thereof.
7.4 Additional Agreements. Subject to the terms and conditions of this
Agreement, each Party 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 necessary,
proper or advisable under applicable law to consummate and make effective the
transactions contemplated by this Agreement. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
22
the constituent corporations, the proper officers and directors of each such
corporation shall take all such necessary or desirable action.
7.5 Notification of Certain Matters.
-------------------------------
(a) The Company shall give prompt notice to the Parent of any
material inaccuracy in any representation or warranty made by it herein, or any
material failure of the Company to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by the Company under
this Agreement; provided, however, that no such notification shall affect the
representations or warranties or covenants or agreements of the Company or the
conditions to the obligations of the Parent hereunder.
(b) The Parent shall give prompt notice to the Company of any
material inaccuracy in any representation or warranty made by it herein, or any
material failure of the Parent to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the representations or
warranties or covenants or agreements of the Parent or the conditions to the
obligations of the Company hereunder.
(c) The Company and the Parent shall each promptly advise the other
orally and in writing of any change or event having, or which, insofar as can
reasonably be foreseen, in the future would have, a Material Adverse Effect or
any adverse effect on the right or ability of any Party to enter into and
complete the Merger and other transactions contemplated hereby.
7.6 Confidentiality.
---------------
(a) Each Party shall hold, and shall cause its officers, employees,
agents and representatives, including, without limitation, attorneys,
accountants, consultants and financial advisors who obtain such information to
hold, in confidence, and not use for any purpose other than evaluating the
transactions contemplated by this Agreement, any confidential information of
another Party obtained through the investigations permitted hereunder, which for
the purposes hereof shall not include any information which (i) is or becomes
generally available to the public other than as a result of disclosure by a
Party or one of its affiliates in violation of its obligations under this
Subsection, (ii) becomes available to a Party on a non-confidential basis from a
source, other than the Party which alleges the information is confidential or
its affiliates, which has represented that such source is entitled to disclose
it, or (iii) was known to a Party on a non-confidential basis prior to its
disclosure to such Party hereunder. If this Agreement is terminated, at the
request of a Party, the other Party shall deliver, and cause its officers,
employees, agents, and representatives, including, without limitation,
attorneys, accountants, consultants and financial advisors who obtain
confidential information of the requesting Party pursuant to investigations
permitted hereunder, to deliver to the requesting Party all such confidential
information that is written (including copies or extracts thereof).
(b) If a Party or a Person to whom a Party transmits confidential
information of another Party is requested or becomes legally compelled (by oral
questions, interrogatories, requests for information or documents, subpoena,
criminal or civil investigative demand or similar process) to disclose any of
such confidential information, such Party or other Person will provide the other
23
Party with prompt written notice so that such Party may seek a protective order
or other appropriate remedy or waive compliance with Section 7.6(a). If such
protective order or other remedy is not obtained, or if the applicable Party
waives compliance with Section 7.6(a), the Party or Person subject to the
request will furnish only that portion of such confidential information which is
legally required and will exercise reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded such confidential
information.
7.7 Consents and Filings. The Parties shall, promptly after execution of
this Agreement, make all required filings and submissions with respect to the
Merger and the Placement. Each Party will take all reasonable actions to obtain
any other consent, authorization, order or approval of, or any exemption by, any
Person required to be obtained or made in connection with the Merger, the
Placement, and the other transactions contemplated by this Agreement. Each Party
will cooperate with and promptly furnish information to the other Party in
connection with obtaining such consents or making any such filings and will
promptly furnish to the other Party a copy of all filings made with a
governmental authority.
7.8 Parent SEC Filings. Between the date hereof and the Closing Date, the
Company shall cooperate with the Parent in connection with the preparation and
filing of, and provide to the Parent for inclusion or incorporation by reference
in, any reports, filings, schedules or registration statements (including any
prospectus contained in any such registration statement) to be filed by the
Parent with the SEC (the "Parent Filings"). Without limiting the foregoing, the
Company shall take all commercially reasonable actions requested by the Parent
to enable the Parent to include or incorporate by reference in the Parent
Filings any Financial Statement of Company, including, without limitation, and
any auditors' report thereon. The Parent agrees that (i) at least three (3)
Business Days prior to filing, the Parent shall furnish the Company copies of
all proposed Parent Filings relating to, disclosing or describing the
transactions contemplated by this Agreement or the Placement, and (ii) it shall
not make any Parent Filing described in the immediately preceding clause (i)
without the prior consent of the Company, which shall not be unreasonably
withheld, conditioned or delayed.
7.9 Conversion Agreements. Simultaneously with the execution of this
Agreement:
(a) Parent Preferred Stock. The holders of Parent Series A Preferred
Stock shall surrender and relinquish all of the issues and outstanding Parent
Preferred Stock for an aggregate cash payment of $1.00.
(b) Debenture Conversion. The Parent and each holder of Parent
Debentures (the "Parent Debenture Holders") shall enter into a Debenture
Conversion Agreement, in substantially the same form attached hereto as Exhibit
C (the "Debenture Conversion Agreements"), pursuant to which Parent Debenture
Holders shall agree to convert all Parent Debentures into an aggregate of not
more than 1,178,031 shares of Parent Common Stock (subject to adjustment in
certain circumstances in accordance with the Debenture Conversion Agreements).
The conversions contemplated by the Debenture Conversion Agreements shall be
effective immediately after the Effective Time.
7.10 Company Placement. The Company shall enter into one or more
subscription agreements pursuant to which the investors shall agree to purchase
a minimum of 5,000,000 shares and a maximum of 8,333,333 shares of Company
24
Common Stock, on substantially the same terms as described in the Placement, the
closing of which shall occur simultaneously with the Merger.
7.11 Company Preferred Stock. The Company shall cause all the holders of
its outstanding shares of Preferred Stock to convert such shares into Company
Common Stock.
7.12 Registration Rights. The Parent shall assume the obligations of the
Company under the Registration Rights Agreement being entered into among the
Company and the investors in the Placement.
ARTICLE VIII
------------
CLOSING DELIVERIES AND CONDITIONS TO CLOSING
--------------------------------------------
8.1 Documents to be Delivered by Parent. At the Closing, the Parent shall
deliver to the Company the following:
(a) A certificate, executed by an officer of the Parent in such
detail as the Company shall reasonably request, certifying that all
representations, warranties and covenants of the Parent and Merger Sub herein
are true and correct as of the Effective Time. The delivery of such certificate
shall constitute a representation and warranty of the Parent as to the
statements set forth therein.
(b) A copy of the resolutions adopted by (i) the shareholders and
Board of Directors of Merger Sub, and (ii) the Board of Directors of the Parent,
approving this Agreement, the Merger and the transactions contemplated hereby,
certified by their respective Secretaries.
(c) The Certificate of Merger, duly executed by the Parent and Merger
Sub.
(d) Factual certificates, in a form and substance reasonably
satisfactory to the Company and its counsel, confirming and supporting the
representations of the Parent contained in Section 5.2 hereof.
(e) An opinion of counsel, dated as of the Closing Date, in a form
reasonably acceptable to Company, with respect to the matters of set forth in
Exhibit E to this Agreement.
(f) Such other customary certificates or documents as may be
reasonably required by the Company.
8.2 Documents to be Delivered by the Company. At the Closing, the Company
shall deliver to the Parent the following:
(a) A certificate, executed by the President of the Company, in such
detail as the Parent shall reasonably request, certifying that all
representations, warranties and covenants of the Company herein are true and
correct as of the Effective Time. The delivery of such certificate shall
constitute a representation and warranty of the Company as to the statements set
forth therein.
25
(b) A copy of the resolutions adopted by the stockholders and Board
of Directors of the Company approving this Agreement, the Merger, and the
transactions contemplated hereby, certified by the Secretary of the Company.
(c) An opinion of counsel, dated as of the Closing Date, with respect
to such matters, as may be reasonably requested by the Parent.
8.3 Conditions to Obligations of Each Party. Each Party's obligations to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction or waiver at or prior to the Closing, of each of the following
conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order issued by any governmental authority or other material
legal restraint or prohibition issued or promulgated by a governmental authority
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect or shall be threatened, and there shall not be any law or
regulation enacted or deemed applicable to the transactions contemplated by this
Agreement that makes consummation of such transactions illegal.
(b) The Certificate of Merger shall have been filed simultaneously
with the Closing.
8.4 Conditions to Obligations of the Parent and Merger Sub. The
obligation of Parent and Merger Sub to consummate the transactions contemplated
by this Agreement are subject to the satisfaction or waiver, at or prior to the
Closing, of each of the following conditions:
(a) Each of the representations and warranties of the Company set
forth in this Agreement (i) that are not qualified by materiality must have been
true and correct in all material respects as of the Closing Date, and (ii) that
are qualified by materiality must have been true and correct as of the Closing
Date; except, in each case, for inaccuracies that would not individually or in
the aggregate have a Material Adverse Effect on the Company.
(b) All of the obligations, covenants and agreements with which the
Company is required to comply or that the Company is required to perform under
this Agreement at or prior to the Closing shall have been complied with and
performed in all material respects.
(c) The Company shall have completed the Placement of at least
5,000,000 shares of Company Common Stock at a gross price of at least $3.00 per
share, pursuant to the terms of the PPM.
(d) The documents required to be delivered by the Company pursuant to
Section 8.2 above shall have been delivered simultaneously with the Closing.
8.5 Conditions to Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or waiver, at or prior to the Closing, of each of
the following conditions:
(a) Each of the representations and warranties of the Parent and
Merger Sub set forth in this Agreement (i) that are not qualified by materiality
must have been true and correct in all material respects as of the Closing Date,
26
and (ii) that are qualified by materiality must have been true and correct as of
the Closing Date; except, in each case, for inaccuracies that would not
individually or in the aggregate have a material adverse effect on the Parent.
(b) All of the obligations, covenants and agreements with which the
Parent or Merger Sub is required to comply or that the Parent or Merger Sub is
required to perform under this Agreement at or prior to the Closing shall have
been complied with and performed in all material respects.
(c) The Company shall have completed the Placement of at least
5,000,000 shares of Company Common Stock, at a gross price of at least $3.00 per
share, pursuant to the terms of the PPM.
(d) The documents required to be delivered by the Parent pursuant to
Section 8.1 hereof shall have been delivered simultaneously with the Closing.
(e) The Debenture Conversion Agreements shall have been executed and
delivered and shall be in full force and effect.
(f) The conversions of the Company's Preferred Stock into Company
Common Stock as contemplated by Section 7.11 shall have been completed
immediately prior to the Closing.
ARTICLE IX
----------
NO SOLICITATION; TERMINATION
9.1 No Solicitation. Unless and until this Agreement shall have been
terminated prior to the Closing Time pursuant to and in compliance with Section
9.2 hereof, neither the Parent nor the Company shall (whether directly or
indirectly through its respective advisors, agents or other intermediaries), nor
shall the Company or the Parent authorize or permit any of its respective
officers, directors, agents, employees, representatives or advisors to (i)
solicit, initiate, encourage (including by way of furnishing information) or
take any action to facilitate the submission of any inquiries, proposals or
offers (whether or not in writing) from any person (other than the Parent or the
Company, as the case may be, and its respective affiliates) relating to (A) any
acquisition or purchase of any of the assets of the Company or the Parent, as
the case may be, or of any class of equity securities of the Company or Parent,
as the case may be (other than the securities as contemplated in the Placement),
B) any tender offer (including a self tender offer) or exchange offer, (C) any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or Parent, as the case may be, or (D) any other transaction the
consummation of which would or would reasonably be expected to impede, interfere
with, prevent or materially delay the Merger or which would or would reasonably
be expected to materially dilute the benefits to the other Party hereto of the
transactions contemplated by this Agreement (collectively, "Acquisition
Proposals"), or agree to, recommend or endorse any Acquisition Proposals, (ii)
enter into or execute any agreement with respect to any of the foregoing or
(iii) enter into or participate in any discussions or negotiations regarding any
of the foregoing, or furnish to any other person any information with respect to
27
its business, properties or assets in connection with the foregoing, or
otherwise cooperate in any way with, or participate in or assist, facilitate, or
encourage, any effect or attempt by any other person (other than the Company or
the Parent, as the case may be, and its respective affiliates) to do or seek any
of the foregoing. If either the Parent or the Company is contacted by a third
party with respect to an Acquisition Proposal, it shall immediately notify the
other Party hereto of the identity of the third party and the nature of the
Acquisition Proposal.
9.2 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of each of the Parties hereto at any
time prior to the Closing;
(b) by the Parent in the event of a material breach by the Company of
any provision of this Agreement for which written notice has been given to the
Company and which breach has not been cured prior to December 30, 2004 (the
"Termination Date"); provided, however that the right to terminate this
Agreement under this Section 9.2(b) shall not be available to the Parent if the
Parent or Merger Sub have materially breached or failed to perform any provision
of this Agreement and such breach or failure remains uncured;
(c) by the Company in the event of a material breach by Parent or
Merger Sub of any provision of this Agreement which breach has not been cured
prior to the Termination Date; provided, however, that the right to terminate
this Agreement under this Section 9.2(c) shall not be available to the Company
if the Company has materially breached or failed to perform any provision of
this Agreement and such breach or failure remains uncured;
(d) by either the Parent or the Company if the Closing shall not have
occurred the Termination Date; provided, however, the right to terminate this
Agreement under this Section 9.2(d) shall not be available (i) to any Party
whose failure to fulfill any obligation hereunder has been the cause of, or
results in, the failure of the Closing to have occurred on or before the
Termination Date, or (ii) to the Parent or Merger Sub, if the failure of the
Closing to have occurred is the result of a failure by the Parent to obtain
executed Debenture Conversion Agreements from all holders of the Parent
Debentures and surrender of its Series A Preferred Stock, (iii) any failure by
the Parent or Merger Sub to deliver (or have available for immediately delivery)
all documents required to be delivered by Parent pursuant to Section 8.1 of this
Agreement, or (iv) any failure by Parent or Merger Sub to comply with all
pre-closing covenants of the Parent or Merger Sub contained in Article VII or
Section 6.1 of this Agreement;
(e) by the Company if the Parent fails to obtain executed Debenture
Conversion Agreements from all holders of the Parent Debentures in accordance
with Section 7.9 of this Agreement or fails to obtain surrender of its Series A
Preferred Stock or if the Placement is not consummated; or
(f) by the Parent or the Company if the other Party pursues or
otherwise enters into negotiations with respect to an Acquisition Proposal or
enters into any agreement or understanding with respect to an Acquisition
Proposal.
28
9.3 Effect of Termination. Except for the provisions of Sections 7.2,
7.3, 7.6, 9.4 and the provisions of Article X hereof, each of which shall
survive any termination of this Agreement, in the event of termination of this
Agreement pursuant to Section 9.2, this Agreement shall forthwith become void
and of no further force and effect and the Parties shall be released from any
and all obligations hereunder; provided, however, that, except as specifically
provided in Section 9.4 below, nothing herein shall relieve any Party from
liability for the breach of any of its obligations under this Agreement.
9.4 Damages Fee.
-----------
(a) (i) In the event of any valid termination of this Agreement by
the Parent in accordance with the provisions of Section 9.2(b) or (f) above, the
Parent shall be entitled to a lump sum payment from the Company equal to $50,000
plus Parent's documented transaction-related legal expenses in an amount not to
exceed $50,000 (collectively, the "Damages Fee").
(ii) In the event of any valid termination of this Agreement by
the Company in accordance with the provisions of Section 9.2(c), (e) or (f)
above, the Company shall be entitled to a lump sum payment from the Parent equal
to the Damages Fee.
(b) The Parties to this Agreement agree that it may be difficult, if
not impossible, to accurately determine the amount of damages that may be
incurred by the Parent and Merger Sub, on one hand, or the Company, on the other
hand, as a result of any failure to close the transactions contemplated by this
Agreement. Accordingly, the Parties hereto agree that the Damages Fee payable by
a Party under the circumstances described in Section 9.4(a) above is reasonable
and shall be the sole and exclusive remedy of the Parent and Merger Sub against
the Company or the Company against the Parent and Merger Sub (or any of its
respective stockholders, officers, directors, agents, employees or direct or
indirect affiliates) in the event of any termination of this Agreement prior to
Closing which gives rise to a claim for the Damages fee. Any dispute concerning
payment of the Damages Fee or the termination of this Agreement by the Parent
shall be settled by binding arbitration in accordance with the provisions of
Section 10.8 hereof; provided, however, that the arbitrator shall have no
authority to change the amount of the Damages Fee from $50,000; however, the
arbitrator may assess costs, including reasonable counsel fees.
ARTICLE X
---------
GENERAL PROVISIONS
------------------
10.1 Amendment. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the Parties.
10.2 Waiver. At any time prior to the Effective Time, whether before or
after approval of this Agreement and the Merger by the Company's stockholders,
any Party may (i) extend the time for the performance of any of the obligations
or other acts of any other Party hereto or (ii) waive compliance with any of the
agreements of any other Party or with any conditions to its own obligations. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of the Party making the waiver or granting the
extension by a duly authorized officer. No waiver of any of the provisions of
29
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
10.3 Assignment and Binding Effect. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by the Company without the prior
written consent of the Parent or assigned by Parent without the prior written
consent of Company. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
transferees and assigns, and no other Person shall have any right, benefit or
obligation hereunder.
10.4 Governing Law. Except as to matters relating to the internal laws of
a jurisdiction, this Agreement shall be governed by, and construed in accordance
with, the law of the State of Delaware, without regard to the conflicts of law
principles thereof.
10.5 Entire Agreement. This Agreement constitutes the entire agreement
between the Parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties with respect to the subject matter hereof.
10.6 Severability. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
10.7 Titles. The titles, captions or headings of the Articles and Sections
herein are for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
10.8 Attorneys' Fees. Should any Party institute any Action to enforce any
provision of this Agreement, including, without limitation, an Action for
declaratory relief, damages by reason of an alleged breach of any provision of
this Agreement, equitable relief or otherwise in connection with this Agreement,
or any provision hereof, the prevailing Party shall be entitled to recover from
the losing Party or Parties reasonable attorneys' fees and costs for services
rendered to the prevailing Party in such Action.
10.9 Multiple Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
10.10 Notices. Unless applicable law requires a different method of giving
notice, any and all notices, demands or other communications required or desired
to be given hereunder by any Party shall be in writing. Assuming that the
contents of a notice meet the requirements of the specific Section of this
Agreement which mandates the giving of that notice, a notice shall be validly
given or made to another Party if served either personally or if deposited in
the United States mail, certified or registered, postage prepaid, or if
transmitted by telegraph, telecopy or other electronic written transmission
device or if sent by overnight courier service, and if addressed to the
30
applicable Party as set forth below. If such notice, demand or other
communication is served personally, service shall be conclusively deemed given
at the time of such personal service. If such notice, demand or other
communication is given by mail, service shall be conclusively deemed given two
(2) Business Days hours after the deposit thereof in the United States mail. If
such notice, demand or other communication is given by overnight courier, or
electronic transmission, service shall be conclusively deemed given at the time
of confirmation of delivery. The addresses for the Parties are as follows:
If to the Company: Innovative Drug Delivery Systems, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxxxx, President
Fax: (000) 000-0000
with a copy to: Xxxxxx Xxxx & Priest LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
If to the Parent or Merger Sub: Intrac, Inc.
x/x Xxxxxx X. X. Xxxxxx, Xxx.
000 Xxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to: Xxxxxx X. X. Xxxxxx, Esq.
000 Xxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Any Party may change such Party's address for the purpose of receiving notices,
demands and other communications as herein provided, by a written notice given
in the aforesaid manner to the other Parties.
10.11 Joint Drafting. This Agreement shall be deemed to have been drafted
jointly by the Parties hereto, and no inference or interpretation against a
Party shall be made solely by virtue of such Party allegedly having been the
draftsperson of this Agreement.
10.12 Incorporation by Reference. All Exhibits and Schedules attached
hereto or to be delivered in connection herewith are incorporated herein by this
reference.
[SIGNATURES CONTINUED ON NEXT PAGE]
31
IN WITNESS WHEREOF, each of Parent, Merger Sub and Company has caused
this Agreement to be executed as of the date first written above by its officer
thereunto duly authorized.
INNOVATIVE DRUG DELIVERY SYSTEMS, INC.
By: /s/ Xxxx Xxxxxxxxxxx
--------------------
Xxxx Xxxxxxxxxxx, President
INTRAC, INC.
By: /s/ Xxxxxxxx Alison
-------------------
Name:
Title:
INTRAC MERGER SUB INC.
By: /s/ Xxxxxxxx Xxxxxx
-------------------
Name:
Title:
32
[EXHIBITS AND SCHEDULES OMITTED]
D-1
