MERGER AGREEMENT
EXHIBIT
2.1
MERGER
AGREEMENT dated as of August 15, 2006 by and among NUTRITION 21 INC., a New
York
corporation having an office at 0 Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000-0000
(“N21”), N21 ACQUISITION CORP., a New York corporation that is a wholly owned
subsidiary of N21 (“NewCo”), and ICELAND HEALTH, INC., a New York corporation
having an office at 000 Xxxxxxxx Xxxxxx, 0xx
xxxxx,
Xxxxxxxx Xxxxx 00000 (“Iceland Health” or the “Company”), and XXXX X. XXXXXXXX
(“Xxxxxxxx”) and XXXXXX XXXXX (“Xxxxx”), each having an office c/o the Company
and together owing all of the capital stock of the Company. Xxxxxxxx and Xxxxx
are sometimes hereinafter referred to individually as a “Stockholder” and
collectively as the “Stockholders.”
W
I T N E
S S E T H:
IN
CONSIDERATION of the mutual covenants and agreements hereinafter set forth,
the
parties hereby agree as follows:
| 1. |
The
Merger.
|
| (a) |
The
Merger. Upon the terms and subject to the conditions hereof, and
in
accordance with the New York Business Corporation Law (“BCL”), on the
Closing Date (as hereinafter defined), Iceland Health shall be merged
with
and into NewCo and the separate existence of Iceland Health shall
thereupon cease (the “Merger”), and NewCo, as the corporation surviving
the Merger, shall by virtue of the Merger continue its corporate
existence
under the laws of the State of New
York.
|
| (b) |
Merger
Consideration. Subject to the terms and conditions of this Agreement
and
in consideration of the transactions contemplated hereby, if the
Merger is
effected, then all shares of capital stock of Iceland Health issued
and
outstanding immediately prior to the Closing Date (collectively,
the
“Iceland Health Shares”), shall entitle the holders thereof in the
aggregate to:
|
| (1) |
The
following consideration payable or deliverable at the
Closing:
|
| (a) |
8,000,000
shares (the “Initial Merger Shares”) of N21’s common stock (the “Common
Stock”);
|
| (b) |
$1,000,000
in cash; and
|
| (c) |
Promissory
notes of N21 in the form of Exhibit A and in the aggregate principal
amount of $2.5 million (the “Notes”). The Notes will be secured as
contemplated in Section 3(e)
|
| (2) |
The
additional consideration that is payable after the Closing as set
forth in
Section 5.
|
| (3) |
The
downside protection that is contingently deliverable after the Closing
as
set forth in Section 6.
|
| (c) |
Each
item of consideration referred to in clause (1), (2) and (3) of Section
(b)(1) shall be paid or delivered 50% to Xxxxxxxx and 50% to
Xxxxx.
|
| (d) |
Xxxxxxxx
and Xxxxx hereby irrevocably waive any and all appraisal rights in
respect
of the Merger.
|
| (e) |
Effective
Time of the Merger. The Merger shall become effective at the date
and time
when a Certificate of Merger meeting the requirements of the BCL
shall
have been duly executed and filed in accordance with such Section.
The
Certificate of Merger shall be filed concurrently with the
Closing.
|
| (f) |
Upon
effectiveness of the Merger:
|
| (i) |
by
virtue of the Merger and without any action on the part of X00, XxxXx,
Xxxxxxx Health or any stockholder of Iceland Health, all outstanding
Iceland Health Shares will be ipso facto revoked and
canceled.
|
| (ii) |
The
name of NewCo will be changed to “Iceland Health,
Inc.”
|
| (iii) |
The
certificate of incorporation of NewCo as in effect immediately prior
to
the effectiveness of the Merger shall continue to be the certificate
of
incorporation of NewCo as the surviving corporation, until thereafter
changed or amended in accordance with its terms and as provided by
law and
this Agreement, except that the name of the corporation in such
certificate of incorporation shall be amended to read “Iceland Health,
Inc.”
|
| (iv) |
The
By-laws of NewCo in effect immediately prior to the to the effectiveness
of the Merger shall continue to be the By laws of NewCo as the surviving
corporation, until thereafter changed or amended in accordance with
their
terms and as provided by law and this Agreement, except that the
name of
the corporation in such By-laws shall be amended to read “Iceland Health,
Inc.”
|
| (v) |
Board
of Directors and Officers. The directors of NewCo and the officers
of
NewCo in office immediately prior to the to the effectiveness of
the
Merger shall, from and after the effectiveness of the Merger, continue
to
be the directors and officers, respectively, of NewCo as the surviving
corporation, in each case until their respective successors have
been duly
elected or appointed and qualified or until their earlier death,
resignation or removal, in accordance with the Certificate of
Incorporation and By-laws of NewCo as the surviving
corporation.
|
| (vi) |
The
Merger shall have such other effects as are set forth in this Agreement
and in the BCL.
|
| (g) |
Each
Stockholder agrees to vote all of his Iceland Health Shares in favor
of
the Merger.
|
| (h) |
Following
the signing of the Agreement and until the earlier to occur of (i)
the
Closing (as defined below) or (ii) the termination of the Agreement,
neither Stockholder will sell any Iceland Health Shares or Security
Rights
(as defined in Section 9(g).
|
| (i) |
The
parties intend that the Merger qualify as a tax free reorganization
pursuant to Section 368 of the Internal Revenue Code of 1986, as
amended,
and mutually agree to file their respective tax returns consistently,
one
with the other, and with a view for qualifying for such
treatment.
|
| (j) |
So
long as the Stockholders own in the aggregate not less than 4,000,000
shares of Common Stock (as such number is appropriately adjusted
to
reflect stock splits, combinations or similar events), they shall
be
entitled to notice of all meetings of the Board of Directors of N21
and to
attend such meetings as non-voting
observers.
|
| 2. |
Closing.
|
| (a) |
The
closing of the Merger (the “Closing”) shall take place at 10:00 A.M.,
local time at the offices of counsel to N21,
on September 15, 2006, or such other day as the parties shall mutually
agree but not later than the fifth business day after satisfaction
or
waiver of the conditions set forth in Sections 12 and 13
hereof.
|
| (b) |
Should
any conditions set forth in Section 12
and/or 13
not be satisfied on or before September
15, 2006
or
such other date as the parties shall mutually agree as set forth
in clause
(a) above, this Agreement shall terminate
unless mutually extended by the parties, except that the parties
shall
continue to be liable for any breach by them of this Agreement prior
to
such termination, including, without limitation, the breach of any
covenant herein to use designated efforts to cause any one or more
of such
conditions to be satisfied.
|
2
| (c) |
The
day on which the Closing actually takes place is herein sometimes
referred
to as the “Closing Date.”
|
| 3. |
Other
Transactions Relating to Closing; Further
Assurances.
|
| (a) |
At
the Closing, Iceland Health will deliver to NewCo:
|
| (i) |
copies
of the certificate of incorporation and by laws of Iceland
Health, certified
by an officer of Iceland Health as a true and correct copy thereof
as of
the Closing Date;
|
| (ii) |
all
consents of third parties required hereunder as a condition to Closing
by
either party;
|
| (iii) |
an
opinion of Iceland Health’s counsel containing such opinions as are
customarily given in transactions of the type contemplated
hereby;
|
| (iv) |
an
opinion of Iceland Health’s tax counsel, reasonably satisfactory to the
Stockholders, containing such opinions as are customarily given in
transactions of the type contemplated hereby (the “Tax
Opinion”);
|
| (v) |
letters
of resignation of all directors of Iceland Health serving immediately
prior to the Effective Time;
|
| (vi) |
a
copy of the resolutions of the Board of Directors of Iceland Health,
together with resolutions of the stockholders of Iceland Health,
approving
the execution and delivery of this Agreement and the consummation
of all
of the transactions contemplated hereby, duly certified by an officer
of
Iceland Health; and
|
| (vii) |
such
other
documents
and agreements as may be required pursuant to this Agreement or as
may
reasonably be requested by N21 and its
counsel.
|
| (b) |
On
the Closing Date, N21 and/or NewCo shall deliver or cause to be delivered
to Iceland Health the following:
|
| (i) |
a
copy of the resolutions of the Board of Directors of N21 approving
the
execution and delivery of this Agreement and the consummation of
all of
the transactions contemplated hereby, duly certified by an officer
of
N21;
|
| (ii) |
a
copy of a resolution of the Board of Directors and stockholders of
NewCo,
approving the execution and delivery of this Agreement and the
consummation of all of the transactions contemplated hereby, duly
certified by an officer of NewCo;
|
| (iii) |
opinions
of counsel from each of N21’s and NewCo’s counsel containing such opinions
as are customarily given in transactions of the type contemplated
hereby;
|
| (iv) |
stock
certificates of N21 evidencing the issuance of the Initial Merger
Shares;
and
|
| (v) |
such
other documents and agreements as may be required pursuant to this
Agreement or as may reasonably be requested by Iceland Health and
its
counsel.
|
| (c) |
On
the Closing Date, N21 and/or NewCo shall deliver or cause to be paid
or
delivered to the Stockholders the consideration that is payable or
deliverable to the Stockholders at the Closing under the provisions
of
Section 1.
|
3
| (d) |
On
the Closing Date, N21 will execute and deliver with each Stockholder
an
employment agreement in the form of Exhibit 3(d)(i)
and a confidentiality and non-compete agreement in the form of Exhibit
3(d)(ii).
|
| (e) |
On
the Closing Date, NewCo will, by way of a security agreement in form
and
substance reasonably satisfactory to Stockholders and their counsel,
grant
to the Stockholders a security interest in the Iceland Health trade
name
and trademark to secure the obligations of N21 under the
Notes.
|
| (f) |
At
the Closing, each Stockholder will deliver to
NewCo
|
| (i) |
a
general release in favor of Iceland
Health;
|
| (ii) |
his
share certificates in Iceland Health for cancellation;
and
|
| (iii) |
notes
aggregating $170,000 (the “$170,000 Notes”) payable by the Stockholders to
the Company, representing amounts owed by them to the Company as
of the
Closing Date. The $170,000 Notes shall be in form similar to the
Notes,
shall bear interest at the rate set forth in the Notes and shall
be
payable by crediting the principal and interest owed thereunder against
amounts owed by N21 to the Stockholders under the Notes upon maturity
or
accelerated maturity.
|
| (g) |
Effective
as of the Closing Date, the Stockholders shall cause Iceland Health,
Inc.,
a Delaware corporation (“Iceland Delaware”), to change its name to a name
that does not include “Iceland,” ” and to have entered into a service
agreement with the Company in form and substance reasonably satisfactory
to N21. The Stockholders jointly and severally represent and warrant
to
N21 that Iceland Delaware has had no assets since its inception,
except
that it has opened certain bank accounts in which revenues have been
deposited on behalf of the Company.
|
| 4. |
Working
Capital Adjustment
|
| (a) |
The
term “Working Capital” as used herein means working capital as determined
in accordance with generally accepted accounting principles, as such
principles have to date been applied by
N21.
|
| (b) |
Within
60 days after the Closing, N21 shall pay in cash to the Stockholders
(allocated equally between them) the amount if any by which the Working
Capital of the Company as of the Closing shall have exceeded
$100,000.
|
| (c) |
Within
60 days after the Closing, the Stockholders shall jointly and severally
pay in cash to the Company the amount, if any, by which the Working
Capital of the Company as of the Closing shall have been less than
$100,000.
|
| (d) |
Working
Capital shall be computed on an accrual basis in accordance with
GAAP as
applied by N21. Any disagreements with respect to the calculation
and
determination of Working Capital shall be decided by an independent
accountant mutually acceptable to the parties (failing agreement
on which,
each shall designate accountants of their own selection which shall
themselves appoint accountants for such purpose), whose decision
shall be
binding and conclusive.
|
| (e) |
The
$170,000 Notes, and receivables from related parties, shall not be
considered receivables or assets for the purposes of the calculation
of
Working Capital
|
| 5. |
Additional
Consideration.
|
| (a) |
Certain
Definitions.
|
4
| (i) |
The
term “Eligible Product” means any product that is sold under the Iceland
Health trademark or that contains fish oil or omega
3.
|
| (ii) |
The
term “Net Sales” means gross sales by N21, and/or or its direct or
indirect assignees, licensees or sublicensees, less allowances, returns,
volume discounts, pricing discounts, guaranteed returns, freight,
taxes,
returns, cash discounts, and other sales deductions. Except as aforesaid,
Net Sales are computed on an accrual basis in accordance with GAAP
as
applied by N21. Any disagreements with respect to the calculation
and
determination of Net Sales shall be decided by an independent accountant
mutually acceptable to the parties (failing agreement on which, each
shall
designate accountants of their own selection which shall themselves
appoint accountants for such purpose), whose decision shall be binding
and
conclusive.
|
| (iii) |
The
term “Payment
Date” means August 31 in each year commencing 2007 until additional
consideration under this Section 5
aggregates $2,500,000. The term Eligible Period means each of the
successive years beginning with the Closing
Date.
|
| (b) |
On
each Payment Date, N21 shall pay to the Stockholders (allocated equally
between them) an amount equal to 3% of the amount by which Net Sales
during the then most recently elapsed Eligible Period exceeds $10,000,000,
provided that the total amount payable by N21 under this Section
5
shall in no event exceed an aggregate of $2,500,000. At the request
of the
Stockholders, N21 will quarterly during each Eligible Period make
advances
against additional consideration that the parties mutually expect
to
accrue under this Section for the Eligible Period, provided that
on the
Payment Date for the Eligible Period the Stockholders refund to N21
any
excess advances they may have received towards additional consideration
for the Eligible Period, and N21 shall pay to the Stockholders any
shortfall in payments it may have made towards additional consideration
for the Eligible Period.
|
| (i) |
Each
such payment by N21 shall be accompanied by a report that sets forth
Net
Sales for the relevant period and that is certified as to its accuracy
by
the chief financial officer of N21.
|
| (vi) |
N21
shall from time to time at the request of Stockholders give to
Stockholders and their representatives access to the records of N21
relating to Net Sales for Eligible Periods
hereunder.
|
| (iii) |
N21
shall provide adequate facilities and equipment and qualified technical
and marketing personnel, and otherwise use reasonable commercial
efforts,
for the sale of Eligible Products.
|
| 6. |
Additional
Common Stock
|
| (a) |
The
“then Per Share Market Value” means the average volume weighted closing
price of the common stock of N21 during the 30 trading days immediately
preceding the first anniversary of the
Closing.
|
| (b) |
The
“Aggregate First Anniversary Value” means 8,000,000 times the then Per
Share Market Value.
|
| (c) |
The
“Aggregate Value Shortfall” means the amount if any by which the Aggregate
First Anniversary Value is less than
$16,000,000.
|
| (d) |
The
Company shall within 30 days after the first anniversary of the Closing
issue to the Stockholders (allocated equally between them) a number
of
shares of Common Stock (the “Additional Merger Shares”) that has an
aggregate value (with each share being valued at the then Per Share
Market
Value) equal to the Aggregate Value Shortfall. However, the number
of
Additional Merger Shares shall in no event exceed 1,500,000. Certificates
for the Additional Merger Shares shall have the same legends as are
provided herein for the Initial Merger
Shares.
|
5
| (e) |
All
calculations under this Section shall be appropriately adjusted for
stock
splits, reverse stock splits and stock combinations and similar
matters.
|
| 7. |
Registration.
|
| (a) |
On
or before the 90th
day after the Closing, N21 will file a registration statement on
Form S-3
(or on such other form as may be available) with the Securities and
Exchange Commission (the “SEC”) for the public sale by the Stockholders
and by Xxxxxxx Xxxxxx, Xxxx Xxxxxxxx and Bathgate Capital Partners,
LLC
(as permitted transferees pursuant to Section 8(c))
of the Initial Merger Shares and the Additional Merger Shares
(collectively, the “Merger Shares”), provided that any sale by the
Stockholders shall in any event be subject to the lock-up provided
in
Section 8.
The registration statement documents shall include provisions for
mutual
indemnification by the Company and the Stockholders for any
misrepresentation or omission in the registration statement by it
or them,
respectively.
|
| (b) |
N21
shall use its best efforts to cause the registration statement referred
to
in this Section to become effective as promptly as possible after
the date
of filing, and to remain effective thereafter during the Effectiveness
Period as defined in and to the extent provided in the Registration
Schedule attached hereto. If the Registration Statement does not
become
effective, ceases to be effective or, once effective, is withdrawn
by N21,
then the Stockholders shall have the right to demand for their Merger
Shares and for the shares of the transferees (permitted under Section
8(c)),
registration pursuant to the terms and conditions set forth in the
Registration Schedule attached hereto. N21 shall use its best efforts
to
comply with all requirements and rules promulgated by the SEC in
order to
maintain the effectiveness of the registration statement as aforesaid,
including compliance with Rule 144 and Sections 12(g) and 15(d) of
the
Securities Exchange Act of 1934, as
amended.
|
| (c) |
All
expenses incident to N21's performance of or compliance with the
undertakings in this Section 7,
including but not limited to, all registration and filing fees, fees
and
expenses of compliance with securities or blue sky laws, printing
expenses, messenger expenses, telephone and delivery expenses, fees
and
disbursements of counsel to N21 and of independent certified public
accountants of N21 will be borne by N21, as well as up to $15,000
in fees
and disbursements of counsel to the Stockholders that accrue at such
counsel’s standard hourly rates.
|
| (d) |
If
the registration statement referred to in clause (a) above has not
been
declared effective by the first anniversary of the Closing Date and
if no
other registration statement pursuant to clause (a) above shall then
be
effective, then, for each full 30-day period thereafter until a
registration statement is declared effective or, if earlier, until
the
Stockholders are permitted to sell all of their Merger Shares under
Rule
144, the Company shall pay $25,000 to the Stockholders ($12,500 to
each
Stockholder) as liquidated damages.
|
| (e) |
N21
shall prepare and promptly file a listing application with NASDAQ
that
covers the Initial Merger Shares and any Additional Merger
Shares.
|
| 8. |
Lockup
and Disposal Schedule.
|
| (a) |
Whether
or not the securities constituting the Merger Shares have been registered
under Section 7,
but without limiting N21's obligation to effect such registration
pursuant
to Section 7,
each Stockholder agrees that he will not at any time sell, transfer
or
otherwise dispose of (“Transfer”) any Merger Shares except to the extent
that the same has theretofore been released from this lock-up. Of
each
Stockholder’s Merger Shares, 1/3 shall be released from this lock-up on
the first anniversary of the Closing, another 1/3 shall be released
from
this lock-up on the second anniversary of the Closing, and the final
1/3
shall be released from this lock-up on the third anniversary of the
Closing.
|
| (b) |
Each
Stockholder shall also be released from the lock-up upon (i) the
consummation of a sale by the Company of all or substantially all
of its
assets, (ii) the consummation of any other transaction as a result
of
which 35% or more of the then outstanding Common Stock is acquired
by any
person or entity and its affiliates, (iii) a Final Determination (as
hereinafter defined) that (1) the Company terminated such Stockholder’s
employment other than For Cause as defined in the employment agreement
referred to in Section 3(c),
or (2) such Stockholder resigned from N21 for Good Reason, as defined
in
such employment agreement. A
“Final Determination” on a matter occurs when the parties hereto agree in
writing on such matter or a court, or any other tribunal acceptable
to the
parties, makes a final and unappealable determination on such
matter.
|
6
| (c) |
The
Stockholders are permitted to transfer an aggregate of up to 920,000
shares of Initial Merger Shares to Xxxxxxx Xxxxxx, Xxxx Xxxxxxxx
and
Bathgate Capital Partners, LLC subject to the making by such persons
of
representations to N21 that are commonly requested for such transfers.
Such transferred shares shall be free of the lock-up
hereunder.
|
| (d) |
Certificates
for the Merger Shares shall be legended to reflect the
foregoing.
|
| 9. |
Representations
and Warranties by the Stockholders. The
Stockholders (as to themselves severally) and, until the Closing
Date, the
Company, jointly and severally represent and warrant
to
N21 and NewCo as follows, it being understood that all Schedules
referred
to in this Section shall be set forth on a separate Disclosure Schedule
initialed by the Stockholders on the date
hereof.
|
| (a) |
Organization
Qualification. Except
as set forth in Schedule 9(a), Iceland Health is a corporation duly
organized, validly existing and in good standing under the laws of
New
York, and it has all requisite corporate power and authority and
is
entitled to carry on its business as now being conducted and to own,
lease
or operate its properties as and in the places where such business
is now
conducted and such properties are now owned, leased or
operated.
|
| (b) |
Subsidiaries.
Iceland Health has no subsidiaries.
Iceland Health has and, throughout its existence and the existence
of any
of its predecessors has had, no interest, direct or indirect, and
has no
commitment to purchase any interest, direct or indirect, in any other
corporation or in any partnership, joint venture or other business
enterprise or entity other than as set forth on Schedule
|
| (c) |
Transactions
with Certain Persons.
|
| (i) |
Except
as set forth on Schedule
|
| (ii) |
Except
as set forth on Schedule 9
|
| (iii) |
No
part of the property or assets of any Stockholder
is used by Iceland Health.
|
7
| (d) |
Authorization
and Approval of Agreement. All proceedings or corporate action required
to
be taken by Iceland Health relating to the execution and delivery
of this
Agreement and the consummation of the transactions contemplated hereby
shall have been taken at or prior to the
Closing.
|
| (e) |
Execution,
Delivery and Performance of Agreement; Authority. Subject to the
obtainment of the consents required to be received by Iceland Health
by
Closing, neither the execution, delivery nor performance of this
Agreement
by Iceland Health will, with or without the giving of notice or the
passage of time, or both, conflict with, result in a default, right
to
accelerate or loss of rights under, or result in the creation of
any lien,
charge or encumbrance pursuant to, any provision of Iceland Health’s
certificate of incorporation or bylaws or any franchise, mortgage,
deed of
trust, lease, license, agreement, understanding, law, rule or regulation
or any order, judgment or decree to which Iceland Health is a party
or by
which it may be bound or affected. Iceland Health has the full power
and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby, and this Agreement constitutes a valid and binding
obligation of Iceland Health, enforceable in accordance with its
terms,
except (A) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights, and (B) as limited by laws
relating to the availability of specific performance, injunctive
relief,
or other equitable remedies.
|
| (f) |
Capitalization
etc.
|
| (i) |
The
presently authorized, issued and outstanding shares of each of Iceland
Health and the names of the record owners thereof as of immediately
prior
to the Closing Date are as set forth on Schedule
|
| (ii) |
Each
Stockholder owns the entire record and beneficial interest in his
or its
shares as set forth in Schedule 9(f)
to the Agreement, and such shares are free and clear of all liens,
charges, mortgages, pledges, security interests, claims, assessments,
options, warrants, rights and encumbrances
whatsoever.
|
| (g) |
Except
as set forth in Schedule 9(g)
to the Agreement, there are no outstanding subscriptions, options,
warrants, calls, commitments, convertible securities or other agreements
or arrangements of any character or nature whatsoever (“Security Rights”)
under which such Stockholder is or may become obligated to, assign
or
transfer any shares of Iceland Health, and there are no rights of
first
refusal, preemptive rights or similar rights with respect to any
such
shares.
|
| (h) |
Except
as set forth in Schedule 9(h),
there are no outstanding subscriptions, options, warrants, calls,
contracts, demands, commitments, convertible securities or other
agreements or arrangements of any character or nature whatever under
which
Iceland
Health or any shareholder of Iceland Health is or may become obligated
to
issue, assign or transfer any shares of Iceland Health, and there
are no
rights
of first refusal, preemptive rights or similar rights with respect
to any
such shares.
|
| (i) |
Financial
Statements.
|
| (i) |
The
term “Financial Statements” means the unaudited consolidated financial
statements of Iceland Health that have been delivered by Iceland
Health to
N21 (i) as of June 30, 2006 and for the six months then ended, and
(ii) as
of December 31, 2004 and 2005 for the years then
ended.
|
| (ii) |
The
Financial Statements are complete, have been prepared from the books
and
records of Iceland Health in accordance with U.S. generally accepted
accounting principles consistently applied (subject to the absence
of
footnotes and year-end accruals) and maintained throughout the period
indicated and fairly present the financial condition of Iceland Health
as
at the date thereof and the results of its operations for the period
covered thereby. The “Balance Sheet” means the balance sheet of Iceland
Health as of June 30, 2006 that is included in the Financial Statements,
and the “Balance Sheet Date” is June 30,
2006.
|
8
| (iii) |
The
statements of earnings included in the Financial Statements do not
contain
any items of special or nonrecurring income or any other income not
earned
in the ordinary course of business except as expressly specified
therein
or in a Schedule to this Agreement that refers to this Section
(iii)
|
| (j) |
Absence
of Undisclosed Liabilities. Except as and to the extent to be reflected
or
reserved against on the Balance Sheet and
except as set forth on Schedule 9(j),
as of the Balance Sheet Date Iceland Health had no debts, liabilities
or
obligations (whether absolute, accrued, contingent or otherwise)
of any
nature whatsoever, including, without limitation, any foreign or
domestic
tax liabilities or deferred tax liabilities incurred in respect of
or
measured by Iceland Health's income, or its property or authorized
or
outstanding capital stock
on
the Balance Sheet Date or any other debts, liabilities or obligations
relating to or arising out of any act, transaction, circumstance
or state
of facts which occurred or existed on the
Balance Sheet Date, whether or not then known, due or payable. None
of
Iceland Health's employees is now or, will by the passage of time
hereafter become, entitled to receive any vacation time, vacation
pay or
severance pay attributable to services rendered prior to the Balance
Sheet
Date except as disclosed on the face of the Balance Sheet
or
in Schedule 9(j).
|
| (k) |
Taxes.
Except as set forth in Schedule 9(k),
|
| (i) |
all
taxes, including, without limitation, income, property, sales, use,
franchise, value added, employees' or other third party income tax
withholding and social security taxes, imposed by the United States
or any
State or any other foreign country or by any municipality, subdivision
or
instrumentality of the United States or any State or of any other
country,
or by any other taxing authority, which are due and
payable by Iceland Health, and all interest and penalties thereon,
whether
disputed or not, have been paid in
full;
|
| (ii) |
all
tax returns required to be filed by Iceland Health have been duly
and
timely filed and are complete and correct in all material
respects;
|
| (iii) |
all
taxes or deposits in respect thereof required by applicable law to
be
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, stockholder or other third party
have
been so withheld and paid, and all Forms W-2 and 1099 required with
respect to such amounts paid or owing have been properly completed
and
timely filed;
|
| (iv) |
Iceland
Health has not been delinquent in the payment of any foreign or domestic
tax, assessment or governmental charge or deposit and has no tax
deficiency or claim outstanding, proposed or assessed against it,
and
there is no basis for any such deficiency or
claim;
|
| (v) |
Iceland
Health’s corporate income tax returns have not
been
audited by
any
income tax authority,
or any state or municipality for
its
prior six
fiscal years through the year ended
(and to the knowledge of Stockholders, there is no audit which is
pending
or contemplated to commence),
and there is not now in force any extension of time with respect
to the
date on which any tax return was or is due to be filed by Iceland
Health,
or any waiver or agreement by it for the extension of time for the
assessment of any tax;
and
|
| (vi) |
Iceland
Health and each predecessor of Iceland Health has been a validly
electing
S corporation within the meaning of sections 1361 and 1362 of the
Internal
Revenue Code of 1986, as amended, and has been treated as such for
income
tax purposes in all states and localities in which it has done business
or
has been considered to have done business at all times during its
existence and Iceland Health will be an S corporation up to and including
the Closing.
|
9
| (l) |
Absence
of Changes or Events. Except as set forth on Schedule 9(l)
and except in connection with the transaction contemplated by this
Agreement,
since the Balance Sheet Date:
|
| (i) |
the
business of Iceland Health has been conducted in the ordinary course
and
consistent with past practice;
|
| (ii) |
there
has not been:
|
| (1) |
any
material adverse change in the relationships of Iceland Health with
its
licensees, customers, suppliers, payors, reimbursers, and/or persons
or
organizations that refer business to
it;
|
| (2) |
any
material damage, destruction or casualty loss (whether or not covered
by
insurance) suffered by Iceland
Health;
|
| (3) |
any
transaction material to the business or the assets of Iceland Health,
except in the ordinary course of
business;
|
| (4) |
any
employment agreement or deferred compensation agreement entered into
between Iceland Health and any of its
employees;
|
| (5) |
any
issuances or grants of shares, subscriptions, options, warrants,
calls,
contracts, demands, commitments, convertible securities or other
agreements or arrangements of any character or nature whatever under
which
Iceland Health is or may become obligated to issue, assign or transfer
any
shares of the capital stock of Iceland
Health;
|
| (6) |
any
increase, not in the ordinary course of business, in the compensation
payable or to become payable by Iceland Health or the adoption of
any new
(or amendment to or alteration of any existing) bonus, incentive,
compensation, pension, stock, matching gift, profit sharing, retirement,
death benefit or other fringe benefit
plan;
|
| (7) |
any
increase in the aggregate indebtedness for borrowed money or any
increase
in purchase commitments or other liabilities or obligations (whether
absolute, accrued, contingent or otherwise) incurred by Iceland Health,
except for liabilities, commitments and obligations incurred in the
ordinary course of business consistent with past
practice;
|
| (8) |
any
lien created on any of the assets of Iceland Health, other than (i)
liens
for taxes not yet due and payable and (ii) liens other than for borrowed
money that are created in the ordinary course of business consistent
with
past practice as reflected in the Financial
Statements;
|
| (9) |
any
material labor dispute involving the employees of Iceland
Health;
|
| (10) |
any
sale, assignment, transfer or other disposition or license of any
material
tangible or intangible assets of Iceland Health, in excess of $25,000
per
transaction, other than the sale of inventory in the ordinary course
of
business consistent with past
practice;
|
| (11) |
any
amendment, termination or waiver by Iceland Health of any right of
substantial value belonging to it;
|
| (12) |
any
amendment of the Certificate of Incorporation or bylaws of Iceland
Health;
|
| (13) |
inventory
purchases or sales, in excess of $10,000, out of the ordinary course
of
business;
|
| (14) |
any
one or more capital expenditures or commitments by Iceland Health
not
fully paid for in excess of $25,000 in the aggregate;
or
|
10
| (15) |
any
change, event or condition which, in any case or in the aggregate,
has had
or is reasonably expected to have a materially adverse affect on
Iceland
Health's condition (financial or otherwise), properties, assets,
liabilities, operations or
prospects,
taken
as a whole;
|
| (16) |
any
transaction, contract or commitment other than in the ordinary course
of
business; or
|
| (17) |
any
agreement or any commitment to take any of the foregoing
actions.
|
| (m) |
Litigation.
Except
as set forth in Schedule 9
|
| (n) |
Compliance
with Laws and Other Instruments.
|
| (i) |
Except
as set forth in Schedule 9
|
| (ii) |
Iceland
Health is and has been in compliance in all material respects with
legal
requirements applicable to Iceland Health. Iceland Health is not
in
default under, or in violation of, any statute, law, order, requirement
or
regulation of any governmental authority. Iceland Health has not
received
or entered into any citations, complaints, consent orders, compliance
schedules, or other similar enforcement orders or received any written
notice from any governmental authority or any other written notice
that
would indicate that it is not currently in compliance with all such
legal
requirements.
|
| (o) |
Title
to Properties.
|
| (i) |
Except
as set forth in Schedule 9(o)(i),
Iceland Health has good
title to all the properties and assets reflected in the Balance Sheet
(except for inventory
sold
after the Balance Sheet Date in the ordinary course of
business).
|
| (ii) |
Except
as set forth in Schedule 9(o)(ii),
none of such properties and assets are subject to any mortgage, pledge,
lien, charge, security interest, encumbrance, restriction, lease,
license,
easement, liability or adverse claim of any nature whatsoever, whether
accrued, absolute, contingent or otherwise, except as expressly set
forth
in the Balance Sheet as securing specific liabilities or as otherwise
expressly permitted by the terms hereof or those imperfections of
title
and encumbrances, if any, which
|
| (1) |
are
not substantial in character, amount or extent and do not materially
detract from the value of the properties subject
thereto,
|
| (2) |
do
not interfere with either the present and continued use of such property
or the conduct of Iceland Health's normal operations
and
|
11
| (3) |
have
arisen only in the ordinary course of
business.
|
| (iii) |
All
of the properties and assets owned, leased or used by Iceland Health
are
in operating
condition,
are suitable for the purposes used, are adequate for the current
operations of Iceland Health.
|
| (p) |
Schedule
|
| (i) |
All
real property owned by Iceland Health or in which Iceland Health
has a
leasehold or other interest or which is used by Iceland Health in
connection with the operation of its
business,
|
| (ii) |
Any
material lease or other agreement that is terminable on a change
of
control of Iceland Health or on the sale of its
assets;
|
| (iii) |
As
of a date no earlier than the Balance Sheet Date, all of Iceland
Health's
receivables (which shall include accounts receivable, loans receivable
and
any advances), together with information as to each such listed receivable
which has been outstanding for more than 90
days, to the extent such receivables are not included as bad debts
or
otherwise reflected in the Financial
Statements.
|
| (iv) |
All
machinery, tools, equipment, motor vehicles, rolling stock and other
tangible personal property (other than inventory and supplies), owned,
leased or used by Iceland Health except for items having a value
of less
than $5,000
which do not, in the aggregate, have a total value of more than
$25,000.
|
| (v) |
All
fire, theft, casualty, liability and other insurance policies insuring
Iceland Health.
|
| (vi) |
All
sales agency or route distributorship agreements or franchises or
agreements providing for the services of an independent contractor
to
which Iceland Health is a party or by which it is
bound.
|
| (vii) |
All
material contracts, agreements, commitments or licenses relating
to
patents, trademarks, trade names, copyrights, inventions, processes,
know-how, formulae or trade secrets to which Iceland Health is a
party or
by which it is bound.
|
| (viii) |
All
loan agreements, indentures, mortgages, pledges, conditional sale
or title
retention agreements, security agreements, equipment obligations,
guaranties, leases or lease purchase agreements to which Iceland
Health is
a party or by which it is bound.
|
| (ix) |
All
material contracts, agreements and commitments, whether or not fully
performed, in respect of the issuance, sale or transfer of the capital
stock, bonds or other securities of Iceland Health to which Iceland
Health
is a party or pursuant to which Iceland Health has acquired any
substantial portion of its business or
assets.
|
| (x) |
All
material contracts, agreements, commitments or other understandings
or
arrangements to which Iceland Health is a party or by which it or
any of
its property is bound but excluding purchase and sales orders and
commitments made in the ordinary course of
business.
|
| (xi) |
employment
and consulting agreements, employee stock options plans to which
Iceland
Health is a party or is bound.
|
| (xii) |
The
names and current monthly salary rates of all persons who are employed
or
retained by Iceland
Health as of the date of this Agreement, showing separately for each
such
person the amounts paid or payable as salary, bonus payments and
any
indirect compensation in 2005 and to date in
2006.
|
12
| (xiii) |
The
names of all of Iceland Health's directors and officers; the name
of each
bank in which Iceland Health has an account or safe deposit box,
and the
names of all persons, if any, holding tax or other powers of attorney
from
Iceland Health.
|
| (xiv) |
All
of the contracts, agreements, leases, licenses and commitments required
to
be listed on any Schedule to this Agreement (other than those which
have
been fully performed) are valid and binding, enforceable in accordance
with their respective terms, except (A) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws
of
general application affecting enforcement of creditors’ rights, and (B) as
limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and in full force
and
effect. Except as disclosed in the relevant Schedule, there is not
under
any such contract, agreement, lease, license or commitment any existing
default by Iceland Health or any other party thereto, or event which,
after notice or lapse of time, or both, would constitute a default
or
result in a right to accelerate or loss of
rights.
|
| (q) |
Intangible
Property.
|
| (i) |
Schedule
|
| (1) |
all
trademarks, service marks, trade names, patents, copyrights, royalty
rights, logos, applications therefor and registrations thereof and
inventions (collectively, “Proprietary Rights”) that are owned by Iceland
Health or are applicable to the business of Iceland Health (the “Iceland
Health Proprietary Rights”), and the jurisdictions in which the Iceland
Health Proprietary Rights have been registered, filed or issued,
if any,
and all licenses to use any Proprietary Rights of others that are
applicable to the business of Iceland
Health;
|
| (2) |
contracts,
agreements or understandings pursuant to which Iceland Health has
authorized any person to use any of the Iceland Health Proprietary
Rights
(other than such license rights as may be ancillary to sales distribution
agreements for its products); and
|
For
the
purpose of this Section 9(q),
the
term “Iceland Health Trade Secrets” shall mean the research and development
results, records of experiments, scientific, technical, engineering and
marketing data and literature and other know-how, formulae and techniques,
recorded or available in any form whatsoever that were developed by Iceland
Health, are owned by Iceland Health and are applicable to the business of
Iceland Health.
| (ii) |
The
Iceland Health Proprietary Rights have been properly registered,
filed or
issued in the offices and jurisdictions set forth in Schedule 9(q),
and all applicable fees due and payable in connection with such
registrations have been paid. Except as otherwise indicated in Schedule
|
| (iii) |
Except
as set forth in Schedule
|
| (iv) |
Except
as disclosed in Schedule
|
13
| (v) |
The
Iceland Health Trade Secrets have not been, and will not be, disclosed
by
Iceland Health to any person other than under standard non disclosure
agreements.
|
| (vi) |
Without
limiting the generality of the foregoing, the Iceland Health Proprietary
Rights also include all rights to the name and xxxx “Iceland Health,” and
neither Stockholder shall hereafter directly or indirectly use such
name
or xxxx or any similar name or xxxx except on behalf of N21 in connection
with their employment by N21 or in accordance with rights granted
to them
under the security agreement referred to in Section 3(e).
|
| (r) |
No
Guaranties. Except as indicated on Schedule
|
| (s) |
Inventory.
Except as indicated on Schedule
|
| (t) |
Receivables.
Except
as indicated on Schedule 9(t),
all
receivables of Iceland Health (including accounts receivable, loans
receivable and advances) which are reflected in the Balance Sheet,
and all
such receivables which will have arisen since the date thereof, shall
have
arisen only from bona fide transactions in the ordinary course of
Iceland
Health's business
and shall be collected in full, without resort to litigation, within
90
days after they arose.
|
| (u) |
Labor
Matters. Except as set forth in Schedule
|
| (v) |
Securities
Related Representations
|
| (i) |
Each
Stockholder will acquire his Merger Shares for
investment solely for the Stockholder’s own account and not with a view to
or for the resale or distribution
thereof.
|
| (ii) |
Each
Stockholder has reviewed the risk factors for N21 that are set forth
in
the SEC Documents.
|
| (iii) |
Each
Stockholder understands that the Stockholder may sell or otherwise
transfer the Restricted Securities only if such transaction is duly
registered under the Securities Act of 1933, as amended (the “Act”), under
a registration statement or otherwise, or if Stockholder shall have
received the opinion of counsel to the holder, which opinion shall
be
reasonably satisfactory to counsel to N21, to the effect that such
sale or
other transfer may be made in the absence of registration under the
Act
and in the absence of registration or qualification in each applicable
state where the Restricted Securities are proposed to be sold or
transferred. The Stockholder agrees to the imprinting of the following
legend on certificates representing the Merger
Shares issued or issuable to it:
|
14
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED, DIRECTLY
OR INDIRECTLY, WITHOUT A REGISTRATION STATEMENT IN EFFECT OR AN EXEMPTION FROM
REGISTRATION.”
| (iv) |
Each
Stockholder realizes that the Merger Shares are not a liquid
investment.
|
| (v) |
Each
Stockholder has not relied upon the advice of a “Purchaser Representative”
(as defined in Regulation D of the Act) in evaluating the risks and
merits
of the investment in the equity securities of the N21, and that it
has the
knowledge and experience to evaluate N21 and the risks and merits
relating
thereto.
|
| (vi) |
Each
Stockholder is either (i) an accredited investor as such term is
defined
in Rule 501 of Regulation D promulgated pursuant to the Act or (ii)
a
person who is a non-United States person who is not and has not been
a US
citizen or US resident within the meaning of Regulation S of the
Act, and
shall be such on the date any securities are issued to the
holder.
|
| (vii) |
Each
Stockholder is able to bear the economic risk of losing Stockholder’s
entire investment in the securities and understands that an investment
in
the N21 involves substantial risks.
|
| (w) |
Records.
The books of account, minute books, stock certificate books and stock
transfer ledgers of Iceland Health are complete and correct in all
material respects, and there have been no transactions involving
the
business of Iceland Health which properly should have been set forth
therein and which have not been accurately so set
forth.
|
| (x) |
Absence
of Certain Business Practices. Neither Iceland Health nor any officer,
employee or agent of Iceland Health, nor any other person acting
on its
behalf, has, directly or indirectly, within the past five years given
or
agreed to give any gift or similar benefit to any customer (except
as made
generally available to customers), supplier, governmental employee
or
other person who is or may be in a position to help or hinder the
business
of Iceland Health (or assist Iceland Health in connection with any
actual
or proposed transaction) which might subject Iceland Health to any
damage
or penalty in any civil, criminal or governmental litigation or
proceeding.
|
| (y) |
Suppliers
and Customers.
Schedule 9(y)
sets forth (i) the names of the 10 principal suppliers of Iceland
Health
collectively during each of the years ended December 31, 2004 and
December
31, 2005 and the six months ended June 30, 2006, together with the
dollar
amount of goods purchased by Iceland Health from each such supplier
during
each such period, and (ii) the names of the 10 principal customers
of
Iceland Health during each such period, together with the dollar
amount of
net sales to each such customer during each such period. Except as
otherwise set forth in Schedule 9(y),
Iceland Health maintains good business relations with all suppliers
and
customers listed or required to be listed in the Schedule 9(y)
as well as with governments, partners, financing sources and other
parties
with whom Iceland Health has significant relations, and no such party
has
canceled, terminated or has given to Iceland Health notice that it
intends
to cancel or otherwise terminate its relationship with Iceland Health
or
to materially decrease its services or supplies to Iceland Health
or its
direct or indirect purchase or usage of the products of Iceland Health
or
to otherwise materially adversely modify its relations with Iceland
Health.
|
| (z) |
Outstanding
Purchase Orders.
Schedule 9(z)
sets forth as of July 31, 2006 Iceland Health's outstanding purchase
orders received from customers and Iceland Health's purchase orders
that
were delivered by Iceland Health to its
suppliers.
|
| (aa) |
Products,
Services and Authorizations.
|
15
| (i) |
Since
January 1, 2005, each product sold by Iceland Health has been manufactured
and distributed in accordance with (i) the specifications under which
the
product is normally and has normally been manufactured, and (ii)
the
provisions of all applicable laws, policies, guidelines and any other
governmental requirements.
|
| (ii) |
There
have been no recalls of any products since January 1,
2005.
|
| (iii) |
Iceland
Health has received no notice of any claims existing under or pursuant
to
any warranty, whether express or implied, on products sold by Iceland
Health.
|
| (iv) |
Iceland
Health maintains product liability insurance in such amounts, with
such
deductibles and against such risks and loss as are
reasonable.
|
| (bb) |
Iceland
Health has had an opportunity to discuss the business, management
and
financial affairs of N21 and has had access to the management of
N21 and
has had the opportunity to review all information requested by Iceland
Health. Iceland Health has had the opportunity to review the SEC
Documents
(as such term is defined below) and the risk factors set forth
therein.
|
| (cc) |
Iceland
Health does not maintain, and since January 1, 2003 has not maintained,
any plan or benefit that is governed by
ERISA.
|
| 10. |
Representations
and Warranties by N21 and XxxXx. X00
and NewCo represent and warrant to Iceland Health and the Stockholders
as
follows, it being understood that all Schedules referred to in this
Section shall be set forth on a separate Disclosure
Schedule:
|
| (a) |
Organization,
Standing and Qualification. N21 is a corporation duly organized,
validly
existing and in good standing under the laws of New York; it has
all
requisite corporate power and authority and is entitled to carry
on its
business as now being conducted and to own, lease or operate its
properties as and in the places where such business is now conducted
and
such properties are now owned, leased or operated; and it is duly
qualified, licensed or domesticated and in good standing as a foreign
corporation authorized to do business in the states disclosed in
its SEC
Documents or as disclosed and listed on Schedule 10(a),
which,
except as disclosed in its SEC Documents or as disclosed and set
forth on
Schedule 10(a),
are the only states where the nature of the activities conducted
by it or
the character of the properties owned, leased or operated by it require
such qualification, licensing or
domestication.
|
NewCo
is
a newly incorporated New York corporation. Except in connection with this
Agreement, NewCo has not conducted and will not conduct prior to the Effective
Time any operations, enter into any agreements and has no and will not have
prior to the Effective Time or the earlier termination of this Agreement any
obligations or liabilities, either accrued, absolute, contingent or
otherwise.
| (b) |
Authorization
and Approval of Agreement. All proceedings or corporate action required
to
be taken by N21 and by NewCo relating to the execution and delivery
of
this Agreement and the consummation of the transactions contemplated
hereby shall have been taken at or prior to the
Closing.
|
| (c) |
Execution,
Delivery and Performance of Agreement; Authority. Neither the execution,
delivery nor performance of this Agreement by N21 or by NewCo will,
with
or without the giving of notice or the passage of time, or both,
conflict
with, result in a default, right to accelerate or loss of rights
under, or
result in the creation of any lien, charge or encumbrance pursuant
to, any
provision of N21’s or NewCo's certificate of incorporation or by-laws or
any franchise, mortgage, deed of trust, lease, license, agreement,
understanding, law, rule or regulation or any order, judgment or
decree to
which N21 and/or NewCo is a party or by which either of them is bound
or
affected. Both N21 and NewCo have the full power and authority to
enter
into this Agreement and to carry out the transactions contemplated
hereby
and this Agreement constitutes a valid and binding obligation of
N21 and
NewCo, enforceable in accordance with its terms, except (A) as limited
by
applicable bankruptcy, insolvency, reorganization, moratorium, and
other
laws of general application affecting enforcement of creditors’ rights,
and (B) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable
remedies..
|
16
| (d) |
Issuance
of Shares. The issuance and delivery of the Merger Shares in accordance
with this Agreement shall be, at or prior to the Closing Date, duly
authorized by all necessary corporate action on the part of N21,
and, when
issued on the Closing Date as contemplated hereby, such shares of
equity
securities will be duly and validly issued, fully paid and nonassessable
and issued in compliance with all applicable laws including United
States
federal and state securities laws. Such equity securities, when so
issued
and delivered in accordance with the provisions of this Agreement,
shall
be free and clear of all liens and encumbrances and adverse claims,
other
than restrictions on transfer created by applicable securities laws
and
will not have been issued in violation of their respective properties
or
any preemptive rights or rights of first refusal or similar
rights.
|
| (e) |
SEC
Documents; Financial Statements. N21 has filed all reports, schedules,
forms, statements and other documents required to be filed by it
with the
Securities and Exchange Commission (“SEC”) pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior
to the
date hereof since January 1, 2004
(including all exhibits included therein and financial statements
and
schedules thereto and documents incorporated by reference therein)
being
referred to hereinafter as the “Filed SEC Documents.” None of the Filed
SEC Documents, at the time they were filed with the SEC, contained
any
untrue statement of a material fact or omitted to state a material
fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not
misleading. As of their respective dates, the consolidated financial
statements of N21 included in the Filed SEC Documents complied as
to form
in all material respects with applicable accounting requirements
and the
published rules and regulations of the SEC with respect thereto.
For
purposes of this Agreement, SEC Documents shall mean the Filed SEC
Documents together with any report, schedule, form, statement and
other
document filed by N21 with the SEC from the date
hereof.
|
| (f) |
Financial
Statements.
|
| (i) |
The
unaudited consolidated financial statements of N21 for the nine months
ended March 31, 2006 that are included in the Filed SEC Documents
have
been prepared from the books and records of N21 in accordance with
U.S.
generally accepted accounting principles consistently applied (subject
to
the absence of footnotes and year-end accruals) and maintained throughout
the period indicated and fairly present the financial condition of
N21 as
at the date thereof and the results of its operations for the period
covered thereby.
|
| (ii) |
The
statements of earnings included in the Financial Statements do not
contain
any items of special or nonrecurring income or any other income not
earned
in the ordinary course of business except as expressly specified
therein
or in the Filed SEC Documents.
|
| (g) |
Taxes.
|
| (i) |
all
taxes, including, without limitation, income, property, sales, use,
franchise, value added, employees' or other third party income tax
withholding and social security taxes, imposed by the United States
or any
State or any other foreign country or by any municipality, subdivision
or
instrumentality of the United States or any State or of any other
country,
or by any other taxing authority, which are due and
payable by N21, and all interest and penalties thereon, whether disputed
or not, have been paid in full;
|
| (ii) |
all
tax returns required to be filed by N21 have been duly and timely
filed
and are complete and correct in all material
respects;
|
| (iii) |
all
taxes or deposits in respect thereof required by applicable law to
be
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, stockholder or other third party
have
been so withheld and paid, and all Forms W-2 and 1099 required with
respect to such amounts paid or owing have been properly completed
and
timely filed; and
|
17
| (iv) |
N21
has not been delinquent in the payment of any foreign or domestic
tax,
assessment or governmental charge or deposit and has no tax deficiency
or
claim outstanding, proposed or assessed against it, and there is
no basis
for any such deficiency or claim;
|
| (h) |
N21
has had an opportunity to discuss the business, management and financial
affairs of Iceland Health and has had access to, the management of
Iceland
Health and has had the opportunity to review all information requested
by
N21.
|
| 11. |
Conduct
of Business Prior to Closing.
|
| (a) |
Prior
to the Closing, the Stockholders shall cause Iceland Health to conduct
its
business and affairs only in the ordinary course of business in
consultation with N21 on all material matters, to maintain, keep
and
preserve its assets and
properties in good condition and repair and maintain insurance thereon
in
accordance with present practices, and to use reasonable commercial
efforts to preserve the business and organization of Iceland Health
intact, to keep available the services of Iceland Health’s present
officers and employees, to preserve the goodwill of Iceland Health’s
suppliers and customers and others having business relations with
it.
Without
limiting the generality of the foregoing, prior to the Closing,
Stockholders will not suffer or permit Iceland Health to:
|
| (i) |
change
its certificate of incorporation or merge or consolidate or obligate
itself to do so with or into any other
entity;
|
| (ii) |
enter
into any material contract, agreement, commitment or other understanding
or arrangement except in the ordinary course of business or those
of the
type which would not have to be listed and described under Section
9,
except as required hereunder;
|
| (iii) |
perform,
take any action or incur or permit to exist any of the acts, transactions,
events or occurrences of the type described in Section
|
| (iv) |
repay
any indebtedness to any person or entity, except for repayments due
to any
bank and payments to be made in the ordinary course of
business;
|
| (v) |
make
any distributions to Iceland Health’s shareholders other than dividends or
distributions for the payment of taxes or as compensation for services
rendered;
|
| (vi) |
issue
any shares of Iceland Health or any options or warrants;
or
|
| (vii) |
expend
any cash other than for Iceland Health’s normal operating activities and
in connection with the transactions contemplated
hereunder.
|
| (b) |
Subject
to standard confidentiality undertakings, Iceland Health shall give
to
X00, XxxXx and their attorneys, accountants and other representatives,
upon reasonable notice to Iceland Health, full access (so long as
it does
not interfere with Iceland Health's operations), during Iceland Health’s
regular business hours, to Iceland Health’s personnel and all properties,
documents, contracts, books and records of Iceland Health and will
furnish
N21 and NewCo with copies of such documents (certified by Iceland
Health’s
officers if so requested) and with such information with respect
to the
affairs of Iceland Health as N21 and/or NewCo may from time to time
reasonably request. Any such furnishing of such information to N21
and/or
NewCo or any investigation by N21 and/or NewCo shall not affect N21’s and
NewCo’s right to rely on any representations and warranties made in this
Agreement.
|
18
| (c) |
Public
Disclosure. Prior to the consummation of the Merger and subject to
the
provisions of this Section 11(c),
the parties hereto shall not issue any statement or communication
to the
public or press concerning this Agreement, the Merger or any of the
other
transactions contemplated by this Agreement, except as provided hereunder.
Before a party releases any information concerning this Agreement,
the
Merger or any of the other transactions contemplated by this Agreement
which is intended for or may result in public dissemination thereof,
such
party shall cooperate with the other parties, shall furnish drafts
of all
documents or proposed oral statements to the other parties for comments,
and shall not release any such information without the written consent
of
the other parties. Nothing contained herein shall prevent a party
hereto
from releasing any information if required to do so by law in the
opinion
of its counsel.
|
| (d) |
Best
Efforts; Regulatory Filings. Subject to the terms and conditions
set forth
in this Agreement, each of the parties hereto shall use commercially
reasonable best efforts to take, or cause to be taken, all actions,
and to
do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the
Merger
and the other transactions contemplated by this Agreement, including
using
commercially reasonable efforts to cause the conditions set forth
in
Sections 12
and 13
to
be satisfied.
|
| (e) |
Iceland
Health will not, prior to Closing, make or change any tax election;
change
any tax accounting period or tax accounting method; settle any tax
dispute; or extend any statute of limitations for the assessment
or
collection of any tax without the consent of N21, which consent N21
shall
not unreasonably withhold.
|
| (f) |
The
provisions of that certain Non-Disclosure Agreement signed by N21
(the
“NDA”) shall apply
to any disclosure of confidential information made by Iceland Health
hereunder and N21 shall continue to comply and shall ensure compliance
by
NewCo with the provisions of the NDA. A breach of the NDA shall be
deemed
a breach hereunder, for all intents and
purposes.
|
| (g) |
So
long as this Agreement is in effect neither Iceland Health nor either
Stockholder shall entertain, negotiate or deal with, or provide any
Confidential Information (as defined in Exhibit 3(d)(ii)) to, any
person
or entity who or which proposes to purchase all or any substantial
part of
the assets of Iceland Health other than in the ordinary course of
business, or to purchase from Iceland Health or any Stockholders
any
equity interest in Iceland Health.
|
| 12. |
Conditions
Precedent to N21’s and NewCo's Obligations. All obligations of N21 and
NewCo hereunder are subject, at the option of N21 and NewCo, to the
fulfillment of each of the following conditions at or prior to the
Closing:
|
| (a) |
All
representations and warranties of the Stockholders contained herein
shall
be true and correct in all material respects when made and shall
be deemed
to have been made again at and as of the date of the Closing, and
shall
then be true and correct in all material
respects.
|
| (b) |
All
covenants, agreements and obligations required by the terms of this
Agreement to be performed by Iceland Health and the Stockholders
at or
before the Closing shall have been duly and properly performed in
all
material respects.
|
| (c) |
Since
the date of this Agreement there shall not have occurred any material
adverse change in the condition (financial or otherwise), business,
properties or assets of Iceland
Health.
|
| (d) |
There
shall be delivered to N21 and NewCo a certificate executed by an
authorized officer of Iceland Health on behalf of Iceland Health,
dated
the date of the Closing, certifying that the conditions set forth
in
paragraphs
|
| (e) |
All
documents required under this Agreement to be delivered by Iceland
Health
and the Stockholders to N21 and NewCo at or prior to the Closing
shall
have been so delivered.
|
19
| (f) |
There
shall not be outstanding any debt or other obligation by Iceland
Health to
any Stockholder or any affiliate of any
Stockholder.
|
| (g) |
N21
and NewCo
|
| (i) |
shall
have completed their due diligence review of the books and records
and
business and operations of Iceland Health, which N21 and NewCo undertake
to continue promptly after the execution of this Agreement and for
which
Iceland Health agrees to furnish such materials for inspection as
N12 and
NewCo and their agents shall reasonably request and to make available
members of management of the Company, and
|
| (ii) |
shall
have no material objection as to any matters disclosed to them in
such
review.
|
| 13. |
Conditions
Precedent to Iceland Health’s and Stockholders Obligations. All
obligations of Iceland Health and Stockholders at the Closing are
subject,
at the option of Iceland Health, to the fulfillment of each of the
following conditions at or prior to the
Closing:
|
| (a) |
All
representations and warranties of N21 and NewCo contained herein
shall be
true and correct in all material respects when made and shall be
deemed to
have been made again at and as of the date of the Closing, and shall
then
be true and correct in all material
respects.
|
| (b) |
All
covenants, agreements and obligations required by the terms of this
Agreement to be performed by N21 and NewCo at or before the Closing
shall
have been duly and properly performed in all material
respects.
|
| (c) |
Since
the date of this Agreement there shall not have occurred any material
adverse change in the condition (financial or otherwise), business,
properties or assets of N21.
|
| (d) |
There
shall be delivered to Iceland Health a certificate executed by an
authorized officer of N21 and NewCo, dated the date of the Closing,
certifying that the conditions set forth in paragraphs
|
| (e) |
All
documents required under this Agreement to be delivered to Iceland
Health
and/or the Stockholders by N21 and NewCo at or prior to the Closing
shall
have been so delivered.
|
| (f) |
There
shall have been approved by NASDAQ an additional listing application
with
respect to the Initial Merger Shares and any Additional Merger
Shares.
|
| (g) |
Stockholders
|
| (i) |
shall
have completed their due diligence review of the books and records
and
business and operations of N21 and NewCo, which Stockholders undertake
to
continue promptly after the execution of this Agreement and for which
N21
and NewCo agree to furnish such materials for inspection as Stockholders
and their agents shall reasonably request, and to make available
members
of management, and
|
| (ii) |
shall
have no material objection as to any matters disclosed to them in
such
review.
|
| 14. |
Indemnification.
|
| (a) |
Subject
to the provisions of Section 14(e), each Stockholder and, if there
is no
Closing, Iceland Health (each, a “Seller Indemnifying Party”) jointly and
severally undertake and agree to indemnify N21 against and in respect
of
any and all direct losses, damages, costs and expenses (including
reasonable legal fees and expenses) and
shall on demand reimburse N21 for:
|
20
| (i) |
any
and all loss, liability or damage suffered or incurred by N21 and/or
NewCo
(the “N21 Indemnified Party”) by reason of (i) any untrue representation,
breach of warranty or non-fulfillment of any covenant by Iceland
Health or
any Stockholder contained herein or (ii) any liability or obligation
(a
“Non-Assumed Liability”) that is not listed as an “Assumed Liability” in
the Stockholder’s Disclosure
Schedule;
|
| (ii) |
the
amount of any receivables that are not paid within 90 days after
they are
due;
|
| (iii) |
any
and all loss, liability or damage suffered or incurred by the N21
Indemnified Party by reason of or in connection with any claim for
finder's fee or brokerage or other commission arising by reason of
any
services alleged to have been rendered to or at the instance of the
Seller
Indemnifying Party with respect to this Agreement or any of the
transactions contemplated hereby;
|
| (iv) |
any
and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs, and expenses, including, without limitation, reasonable
legal fees and expenses, incident to any of the foregoing or incurred
in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this
indemnity.
|
| (b) |
Subject
to the provisions of Section 14(e), N21 (the “N21 Indemnifying Party”)
hereby undertakes and agrees to indemnify each Stockholder and Iceland
Health against and in respect of any and all direct losses, damages,
costs
and expenses (including reasonable legal fees and expenses) and shall
on
demand reimburse each Stockholder
for
|
| (i) |
any
and all loss, liability or damage suffered or incurred by such Stockholder
or Iceland Health (each, a “Seller Indemnified Party”) by reason of any
untrue representation, breach of warranty or non-fulfillment of any
covenant by N21 and/or NewCo contained
herein;
|
| (ii) |
any
and all loss, liability or damage suffered or incurred by the Seller
Indemnified Party by reason of or in connection with any claim for
finder's fee or brokerage or other commission arising by reason of
any
services alleged to have been rendered to or at the instance of the
N21
Indemnifying Party with respect to this Agreement or any of the
transactions contemplated hereby;
|
| (iii) |
any
and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs, and expenses, including, without limitation, reasonable
legal fees and expenses, incident to any of the foregoing or incurred
in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this
indemnity.
|
| (c) |
The
right of any Indemnified Party to recover a loss under this Section
14
is
subject to the condition that a claim therefor from such Indemnified
Party
is received by the Indemnifying Party within 24 months from the Closing
Date.
|
| (d) |
The
indemnity obligations of N21 and NewCo, on the one hand, and of Iceland
Health or the Stockholders, on the other hand, shall in no event
exceed
the value of the purchase price hereunder, with each Initial Merger
Share
being valued for this purpose at the greater of the per share closing
price on the Closing Date or $2.00, and each Additional Merger Share
being
valued at the then Per Share Market Value for this
purpose.
|
| (e) |
Carve
out
|
| (i) |
The
Stockholders shall have no indemnification obligation hereunder for
the
first $200,000 of claims for which indemnification would otherwise
be
required by them hereunder.
|
21
| (ii) |
N21
shall have no indemnification obligation hereunder for the first
$200,000
of claims for which indemnification by it would otherwise be required
hereunder.
|
| (iii) |
No
indemnification shall in any event be required for any individual
claim
for less than $30,000, except to the extent that the aggregate of
all such
individual claims that are less than $30,000 exceeds $100,000.
|
| (f) |
The
Indemnification obligations of the Stockholders shall be satisfied
as
follows:
|
| (i) |
First
by deeming the principal amount of the Notes to be satisfied in an
amount
equal to the required indemnification; all such offsets and reductions
in
principal amounts to be applied equally against the Notes respectively
issued to the Stockholders
respectively;
|
| (ii) |
Second,
by offsets against payments relating to sales of Eligible Products
that
have theretofore accrued for a Payment Period that has
elapsed;
|
| (iii) |
Third,
by cancellation of Additional Merger Shares (allocated equally against
Merger Shares respectively owned by the Stockholders) that then remain
subject to the lock-up in Section 8,
with each such share being valued at the Per Share Market Value (adjusted
for stock splits, combinations and similar matters) for this
purpose;
it
being understood that all Additional Merger Shares shall be legended
to
reflect this potential offset;
|
| (iv) |
Fourth,
by cancellation of Initial Merger Shares (allocated equally against
Merger
Shares respectively owned by the Stockholders) that then remain subject
to
the lock-up in Section 8,
with each such share being valued at the per share closing price
on the
Closing Date;
it
being understood that all Initial Merger Shares shall be legended
to
reflect this potential offset; and
|
| (v) |
Fifth,
by the Stockholders personally and jointly and
severally.
|
| (g) |
Indemnity
Procedure.
|
| (i) |
In
the event a party seeks indemnification pursuant to this Section
14,
the Indemnified Party shall give prompt notice to the party or parties
from whom such indemnification is sought of the assertion of any
claim, or
the commencement of any action or proceeding, in respect of which
indemnity may be sought hereunder.
|
| (ii) |
The
Indemnifying Party shall have the right to assume the defense of
any such
action or proceeding at its own
expense.
|
| (iii) |
In
any such action or proceeding, the Indemnified Parties collectively
shall
have the right to retain one counsel; but the fees and expenses of
such
counsel shall be the expense of the Indemnified Parties unless (i)
the
Indemnifying Party and the Indemnified Party shall have mutually
agreed to
the retention of such counsel or (ii) the named parties to any suit,
action or proceeding (including any impleaded parties) include both
the
Indemnifying Party and the Indemnified Party and representation of
all
parties by the same counsel would be inappropriate due to actual
or
potential conflict of interests between
them.
|
| (iv) |
An
Indemnifying Party shall not be liable under this Agreement for any
settlement effected without its consent (which shall not be unreasonably
withheld) of any claim, litigation or proceeding in respect of which
indemnity may be sought hereunder.
|
22
| (v) |
The
Indemnifying Party may settle any claim without the consent of the
Indemnified Party, but only if the sole relief awarded is monetary
damages
that are paid in full by the Indemnifying Party. In all other cases
consent of the Indemnifying Party shall be required and shall not
be
-unreasonably withheld.
|
| 15. |
Survival
of Representations, Warranties, Covenants and
Obligations.
|
| (a) |
Notwithstanding
any right of N21 and NewCo to fully investigate the affairs of Iceland
Health and notwithstanding any knowledge of facts determined or
determinable by N21 and NewCo pursuant to such investigation or right
of
investigation, N21 and NewCo has the right to rely fully upon the
representations and warranties of Iceland Health contained in this
Agreement.
|
| (b) |
Notwithstanding
any right of Iceland Health to fully investigate the affairs of N21
and
NewCo and notwithstanding any knowledge of facts determined or
determinable by Iceland Health pursuant to such investigation or
right of
investigation, Iceland Health has the right to rely fully upon the
representations and warranties of N21 and NewCo contained in this
Agreement.
|
| (c) |
Except
for the representations and warranties set forth in Section 9(k),
above,
which shall survive until the appropriate statute of limitations
for
assessment of tax has expired, and except that registration rights
and
other covenants which survive pursuant to their terms shall survive
in
accordance with such terms, the representations, warranties, covenants
and
obligations of each party shall survive the execution and delivery
of this
Agreement and the Closing hereunder and shall thereafter continue
in full
force for 24 full calendar months after the Closing Date. If
any claim for indemnification hereunder that has been previously
asserted
by a party to this Agreement in accordance with Section
|
| (d) |
Each
party shall at the request of any other party reasonably
cooperate in the filing of tax returns, the defense of tax audits,
and the
prosecution and settlement of any tax litigation or other tax
proceedings.
|
| 16. |
Notices.
Any and all notices or other communications required or permitted
to be
given under any of the provisions of this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered
or
forty-eight (48) hours after being forwarded for priority delivery
by
Federal Express or other recognized courier, addressed, if to Iceland
Health or N21 to it at its then headquarters address, and, if to
any
Stockholder, to it
c/o the Company (or at such other address as any party may specify
by
notice to all other parties given as
aforesaid).
|
| 17. |
Miscellaneous.
|
| (a) |
This
writing, the Schedules hereto and all other written agreements executed
and delivered on this date or hereafter, together constitute the
entire
agreement of the parties with respect to the subject matter hereof
and may
not be modified, amended or terminated except by a written agreement
specifically referring to this Agreement signed by all of the parties
hereto. Such entire agreement supersedes all prior agreements or
understandings, whether written, oral or otherwise, which may have
been
previously made, discussed or addressed by the
parties.
|
| (b) |
No
waiver of any breach or default hereunder shall be considered valid
unless
in writing and signed by the party giving such waiver, and no such
waiver
shall be deemed a waiver of any subsequent breach or default of the
same
or similar nature.
|
| (c) |
This
Agreement shall be binding upon and inure to the benefit of each
corporate
party hereto, its successors and assigns, and each individual party
hereto
and his heirs, personal representatives, successors and
assigns.
|
23
| (d) |
The
paragraph headings contained herein are for the purposes of convenience
only and are not intended to define or limit the contents of said
paragraphs.
|
| (e) |
Each
party hereto shall cooperate, shall take such further action and
shall
execute and deliver such further documents as may be reasonably requested
by any other party in order to carry out the provisions and purposes
of
this Agreement.
|
| (f) |
This
Agreement may be executed in one or more counterparts, all of which
taken
together shall be deemed one original. This Agreement may be signed
by
facsimile.
|
| (g) |
This
Agreement and all amendments thereof shall be governed by and construed
in
accordance with the law of the State of New York applicable to contracts
made and to be performed therein.
|
| (h) |
The
parties consent to the exclusive jurisdiction of the state and federal
courts in New York City in any action arising out of or connected
in any
way with this Agreement, and the parties hereto further agree that
the
service of process or of any other papers upon them or any of them
in the
manner provided for notices hereunder shall be deemed good, proper
and
effective service upon them. Trial
by jury is waived.
|
| (i) |
X00,
XxxXx and Iceland Health shall each be responsible for their own
fees and
expenses (including attorneys fees) with respect to the transactions
set
forth in this Agreement, it being understood that the Stockholders
may
cause Iceland Health prior to the Closing to pay up to $100,000 in
legal
and accounting fees with respect to the transaction contemplated
hereby.
Attorney fees and expenses for the Tax Opinion shall be in addition
to the
$100,000 set forth above and shall be paid 50% by N21 and 50% by
the
Stockholders, provided that the amount to be paid by N21 shall in
no event
exceed $20,000, and the balance of such fees and expenses shall be
paid by
the Stockholders. Neither the payments by Iceland Health referred
to in
this Section, nor any other payment or distribution, whether or not
permitted hereunder, shall affect or limit the obligations of the
Stockholders in respect of Working Capital as set forth in Section
4.
|
24
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
ICELAND
HEALTH, INC.
By
/s/
Xxxx X. Stenberg___________
Name:
Xxxx X. Xxxxxxxx
Title:
Chief Executive Officer
/s/
Xxxx X. Stenberg______________
Xxxx
Xxxxxxxx
/s/
Xxxxxx Blair__________________
Xxxxxx
Xxxxx
By:
/s/
Xxxx Xxxxxxxxxx
Name:
Xxxx Xxxxxxxxxx
Title:
Chief Executive Officer
N21
ACQUISITION CORP.
By:
/s/
Xxxx Xxxxxxxxxx
Name:
Xxxx Xxxxxxxxxx
Title:
Chief Executive Officer
25
Exhibit
A
PROMISSORY
NOTE
| $[ ] |
_______ [__],
2006
|
Holder:
Holder’s
Address: ________
FOR
VALUED RECEIVED, on
August
____, 2009, NUTRITION 21 INC., a New York corporation (“Maker”) hereby promises
to pay to Holder, the principal sum of [ ] DOLLARS ($ ), together with interest
accruing thereon at the rate of 5% per annum. Maker may at its option prepay
all
or any amount of this Note, applied first to interest and then to
principal.
This
note
and another note issued concurrently herewith (collectively, the “Notes”) are
being issued pursuant to a Merger Agreement dated _____ (the “Merger
Agreement”). This Note is subject to offsets as set forth in the Merger
Agreement. This Note is secured by the security interest referred to in Section
3(e) of the Merger Agreement.
1. Events
of
Default. The following are “Events of Default” hereunder:
(a) any
failure by Maker to pay principal hereunder when due that is not cured within
five days after written notice;
(b) if
Maker
or any subsidiary of Maker shall (i) apply for or consent to the appointment
of
a receiver, trustee, custodian or liquidator or any of its property, (ii) admit
in writing its inability to pay its debts as they mature, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated bankrupt or
insolvent or be the subject of an order for relief under Title 11 of the United
States Bankruptcy Code, (v) file a voluntary petition in bankruptcy or a
petition for bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation, or an answer admitting the material allegations
of a
petition filed against it in any proceeding under any such law
and such
petition or proceeding shall remain undismissed or unstayed for 60
days,
or (vi)
take or permit to be taken any action in furtherance of or for the purpose
of
effecting any of the foregoing;
(c) if
Maker
breaches a material covenant or agreement under this Note or the Merger
Agreement and Maker shall fail to cure such breach within ten (10) days after
receipt by Maker of written notice of such failure from Holder;
(d) any
dissolution, liquidation or winding up of Maker or any substantial portion
of
its business or a material subsidiary.
2. Remedies
on Default. If any Event of Default shall occur and be continuing, then the
entire principal under this Note shall upon notice by Holder become immediately
due and payable, and Holder shall be entitled to exercise its rights and
remedies under the Security Agreement referred to in Section 3(e) of the Merger
Agreement.
3. Certain
Waivers. Except as otherwise expressly provided in this Note, Maker hereby
waives diligence, demand, presentment for payment, protest, dishonor,
nonpayment, default and notice of any and all of the foregoing.
4. Amendments.
This Note may not be changed orally, but only by an agreement in writing and
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.
26
5. GOVERNING
LAW; JURISDICTION. This Note shall be governed by and construed in accordance
with the law of the State of New York applicable to contracts made and to be
performed therein. The parties consent to the exclusive jurisdiction of the
federal and state courts in New York in any action arising out of or connected
in any way with this Note, and the parties hereto further agree that the service
of process or of any other papers upon them or any of them in the manner
provided for notices hereunder shall be deemed good, proper and effective
service upon them.
6. Notices.
All notices and communications shall be in writing and shall be as provided
for
in the Merger Agreement.
7. Successors
and Assigns. This Note and the obligations and rights of Maker hereunder, shall
be binding upon and inure to the benefit of Maker, the holder of this Note,
and
their respective successors and assigns. This Note is assignable by
Holder
to any other person or entity without the consent of Maker.
[THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
27
IN
WITNESS WHEREOF, Maker has duly caused this Note to be signed on its behalf,
in
its company name and by its duly authorized officer as of the date first set
forth above.
| Nutrition 21 Inc. | ||
| |
|
|
| By: | ||
| Name: | ||
| Title | ||
Acknowledged
by:
[_________________________]
By:_______________________________
Name:
Title:
28
Exhibit
3(d)(i)
Xx.
Xxxx
Xxxxxxxx
[address]
[Xxxxxx Xxxxx]
Dear
Xxxx:
This
Letter Agreement (“Agreement”) is between you and Nutrition 21, Inc. (“Nutrition
21” or the “Company”) regarding your position as __________ of Nutrition 21
reporting to the Chief Executive Officer (and, in the absence of a Chief
Executive Officer, to the Board of Directors), and is for the period commencing
on this date and ending on the day before the third anniversary of this
date.
| 1) |
GENERAL
You agree that your employment by Nutrition 21 shall be full time
(telecommuting shall be included as part of your commitment of full
time
employment) and that you shall engage in no other business or employment.
However, you may supervise your passive investments, and you may
act as a
consultant, and receive therefor compensation in either cash or equity
(as
determined at your discretion) on activities that would not be violative
of the non-compete provisions referred to in Section 8)
were you personally to engage in such activities, provided that you
do not
devote such time to such consulting services as in the reasonable
opinion
of the CEO of N21 detracts significantly from the performance of
your
duties under this Agreement. You may serve as a non-executive director
on
Boards of other companies only with the written permission of the
Nutrition 21 Board, provided that no permission shall be necessary
for
service as a non-executive director on the Boards of charitable
entities.
|
| 2) |
COMPENSATION
Your direct annualized base compensation will be $225,000, and will
be
paid in ordinary payroll installments, subject to withholding and
similar
deductions.
|
| 3) |
BONUS
AND STOCK OPTIONS
|
| a) |
For
each full fiscal year of Nutrition 21 during your employment in which
Nutrition 21 has positive EBITDA, Nutrition 21 will pay to you a
bonus
equal to 0.25% (but not more than $50,000) of N21’s direct response sales
in excess of $30 million during such fiscal year, plus 2.5% (but
not more
than $100,000) of direct response operating profits in excess of
$3
million during such fiscal year.
|
| b) |
The
following definitions apply if Nutrition 21, during the period (the
“Option Period”) from the Closing until December 31, 2007, grants to
similarly situated executives options to purchase in excess of 2,000,000
shares of Nutrition 21 common stock (“Common
Stock”):
|
| i) |
“All
Options” means all options granted by Nutrition 21 during the Option
Period to all its executives who are similarly
situated;
|
| ii) |
“Excess
Options” means the number by which All Options exceeds
2,000,000;
|
| iii) |
“Your
Similar Employee Percentage” means the percentage that during the Option
Period your base salary is of the total of your base salary and the
base
salaries of executives who are similarly
situated.
|
| c) |
If
you are employed throughout the Option Period, Nutrition 21 will
during
the Option Period grant to you a number of options equal to Your
Similar
Employee Percentage of the Excess Options. Your options shall have
the
same vesting and other terms that apply to the Excess Options, provided
that the exercise price of your options shall not be less per share
than
the closing price of a share of Common Stock on the date of
grant.
|
| d) |
Share
amounts in this Section shall be appropriately adjusted to reflect
stock
splits, reverse stock splits, combinations and similar
matters.
|
29
| e) |
If
you are employed after the Option Period you will be eligible for
additional options for this later period at the discretion of the
Board.
|
| 4) |
OTHER
BENEFITS Coverage for group insurance, e.g., medical, dental, life
insurance, AD&D, Short and Long Term Disability, Business Travel
Insurance, etc. as well as the Nutrition 21 sponsored savings plan
will be
provided to the extent offered to similarly situated executives.
You will
have a $500 per month car allowance. Nutrition 21 will reimburse
you for
your reasonable out of pocket expenses, but not for your home, office,
secretarial or similar or related expenses other than telephone expenses.
You will seek prior approval of disbursements that are atypical in
amount
or kind.
|
| 5) |
VACATION
Annual paid vacation and holidays will accrue in accordance with
Nutrition
21's vacation policy and any unused vacation time shall be paid upon
any
termination of your employment.
|
| 6) |
PERIOD
OF EMPLOYMENT Your employment with Nutrition 21 shall be for a three
-year
term beginning on this date, but Nutrition 21 may terminate your
employment For Cause or without cause as provided in Section 7, and
you
may terminate your employment for Good Reason as provided in Section
7.
|
| 7) |
TERMINATION
|
| a) |
Termination
for Good Reason
|
| i) |
Your
employment will be considered to have been terminated by you for
“Good
Reason” if you give notice to Nutrition 21 that Nutrition 21 has breached
any provision of this Agreement and has failed to cure the breach
within
30 days after the Company has received from you a notice of this
breach
and a demand that it be cured.
|
| b) |
Termination
for Cause
|
| i) |
Your
employment will be considered terminated by the Company “For Cause” if the
Board notifies you that such termination is on account of: (i) your
failure to perform your duties for Nutrition 21 other than any such
failure resulting from your disability, after (A) a written demand
for
performance was delivered to you by the Board of Directors which
specifically identified the manner in which the Board believes that
you
have not performed your duties, and (B) your failure to reasonably
comply
with such demand within thirty days after notice to you,(ii) your
failure
to perform your duties in accordance with the Company’s Standards of
Business Conduct (iii) your engagement in conduct materially and
demonstrably injurious to Nutrition 21, (iv) your violation of any
provision of the Confidentiality and Non-compete Agreement incorporated
into Section 8),
or (v) your conviction of any felony from which all appeals have
been
exhausted.
|
| c) |
Your
Rights after Termination
|
| i) |
In
the event that you resign other than for Good Reason or if your employment
is terminated For Cause, you shall be entitled to receive your salary
and
benefits accrued to the date of termination, and you shall not be
entitled
to any salary or benefit
continuation.
|
| ii) |
In
the event that you resign for Good Reason or Nutrition 21 terminates
your
employment other than For Cause, and you thereafter execute and deliver
to
Nutrition 21 a general release in standard form, you will receive
a
continuation of your base salary, in ordinary payroll installments
and
subject to withholding, for 12 months or, if less, for the balance
of your
employment term hereunder.
|
| 8) |
There
are incorporated herein each of the provisions of the Confidentiality
and
Non-Compete Agreement between the Company and you dated as of this
date.
|
30
| 9) |
The
federal and state courts sitting in the State of New York shall have
exclusive jurisdiction with respect to this Agreement. Trial by jury
is
waived.
|
| 10) |
Any
and all notices or other communications required or permitted to
be given
under any of the provisions of this Agreement shall be in writing
and
shall be deemed to have been duly given when personally delivered
or when
forwarded for priority delivery by Federal Express or other recognized
courier, addressed, if to the Company, to it at its then principal
offices, attn: President, and, if to you, to you at __________ (or
at such
other address as any party may specify by notice to all other parties
given as aforesaid).
|
| 11) |
This
employment agreement supersedes all prior agreements and understandings
(whether in writing, oral in board resolutions or otherwise) with
respect
to the subject matter of this agreement. Without limiting the generality
of the foregoing, it sets forth all of your rights to compensation
and
other benefits both during your employment and thereafter. It may
not be
changed or terminated orally. All notices hereunder shall be in
writing.
|
If
you
agree with the foregoing, would you please sign and return the original of
this
letter to Nutrition 21. Please retain the duplicate for your
records.
Yours
sincerely,
___________________
Agreed
to
and accepted:
___________________
[Xxxx
Xxxxxxxx] [Xxxxxx Xxxxx]
31
Exhibit
3(d)(ii)
Confidentiality
and Non-Compete Agreement
The
undersigned (the “Executive”) is a shareholder or an employee of ICELAND HEALTH,
INC., a New York corporation (“Iceland Health”), and wishes to induce Nutrition
21, Inc., a New York corporation (the “Corporation”) to acquire Iceland Health
by merger into a subsidiary of the Corporation concurrently herewith. Iceland
Health and the Corporation are each hereafter sometimes referred to as the
“Company.”
In
consideration of the foregoing and the Executive’s being employed or retained to
perform or to continue to perform services for the Company (the period of such
employment or retention being referred to herein as the “Employment Period”),
Executive hereby agrees as follows:
1. Obligation
of Confidentiality.
1.1
“Confidential
Information” means any information and data of a confidential nature disclosed
by the Company whether in oral, written, graphic, or machine-readable form,
but
does not include any information which (a) at the time of disclosure was part
of
the public domain; (b) after disclosure becomes part of the public domain by
publication or otherwise, except by breach of this agreement by Executive;
(c)
is independently created or discovered by Executive at any time more than three
months after the termination of the Employment Period; or (d) at any time after
the termination of the Employment Period is disclosed to Executive by a third
party not known to Executive to be under any confidentiality obligation to
the
Company.
1.2
The
Executive hereby agrees to hold the Company’s Confidential Information in strict
confidence and not to disclose such Confidential Information to any third
parties nor make use of such Confidential Information for his own benefit or
for
the benefit of another, or for any use other than in the course of providing
services for the Company in the course of employment, provided, however, that
Executive is not restricted under this Section 1.2 from any dealings with,
for
his own benefit or otherwise, the persons listed as vendors on Schedule 9(p)(vi)
to the Merger Agreement (other than Lysi Ltd. and suppliers of ingredients
for
products made or distributed by or for Iceland Health or the Company), provided
that Executive does not breach any of the other provisions of this
Agreement.
1.3
Upon
the
written request of Company or termination of the Executive’s relationship with
the Company, for any reason whatsoever, the Executive shall return to Company
and/or destroy all Confidential Information, and all copies thereof, properly
belonging to Company, unless otherwise instructed in writing by Company. In
addition, upon request by the Company, the Executive shall promptly deliver
a
written certification affirming that Executive has complied with this
Section.
1.4
The
obligations of confidentiality set forth in this Section 1
shall
bind the Executive during his employment or retention by the Company and at
all
times thereafter.
2. Obligation
Not To Compete
2.1
The
term
“Restricted Period” means the period beginning on the date of this Agreement and
ending on the later of (i) the fifth anniversary of the date of this Agreement,
or (ii) two years after the termination of his employment or retention by the
Company or Executive for any reason or for no reason and whether or not for
cause.
2.1.1 During
the Restricted Period, except on behalf of the Company, Executive will not
anywhere directly or indirectly (whether through family members or other
affiliated parties or otherwise) be employed or retained by, provide financing
for, or solicit, contract or offer to provide or sell or purchase or otherwise
deal in or with (i) any product that contains fish oil or Omega 3, or (ii)
any
product or service similar to or in competition with any product or service
sold
or provided by the Company at the time of termination of his employment or
during the twelve months immediately preceding such termination, or (iii) any
product or service that is provided or sold by Lysi Ltd.
32
3. No-Hire.
Executive covenants that at all times during the Restricted Period, Executive
will not directly or indirectly:
3.1
solicit
or hire or retain any person who was an Executive or consultant of the Company
at any time during the then preceding two years, or
3.2
encourage
or solicit any person to leave the employ of the Company.
4. Intellectual
Property.
4.1
All
inventions, software, ideas, strategies, methods, trade secrets, and associated
documentation, whether or not patentable or copyrightable, made or conceived
solely or jointly by Executive during the Executive’s employment at Iceland
Health prior to the date hereof or during the Employment Period, which relate
in
any manner to the actual or anticipated business, including research and
development, of the Company or are suggested by Executive or result from work
assigned to Executive or work performed by Executive (“Intellectual Property”),
shall be the property of the Company. In addition, Executive
agrees:
| a. |
To
promptly and fully disclose in writing to the Company all such
Intellectual Property;
|
b. To
cooperate with the Company in all reasonable ways to protect the Company's
rights therein, including the execution of papers deemed by the Company to
be
desirable or necessary to enable the Company to apply for, secure, and maintain
patent or copyright protection thereon in the United States and in foreign
countries;
4.2
To
the
extent the Company’s ownership of the Intellectual Property is ever at issue,
Executive, on behalf of Executive and Executive’s heirs and successors in
interest, does hereby irrevocably assign, free of any liens or encumbrances,
all
his worldwide rights, title and interest in and to said Intellectual Property
to
the Company, including, without limitation, any and all copyrights and all
patents of said Intellectual Property, to have and to hold unto its successors
and assigns, and this Agreement shall be proper evidence thereof.
5. Remedies.
In the
event of breach or threatened breach by Executive of any provision of this
Agreement, the Company shall be entitled to apply for relief by temporary
restraining order, temporary injunction, or permanent injunction, without
requirement of posting a bond or any other security, and to all other relief
to
which it may be entitled, including any and all monetary damages which the
Company may incur as a result of said breach, violation or threatened breach
or
violation.
6. No
Offsets.
The
validity of this Agreement and the covenants thereunder shall in no way be
affected by any valid or invalid claims or causes of action that Executive
has
or will have against the Company for any matter or thing, including without
limitation, the termination by the Company of Executive’s employment without
cause, breach by the Company of any agreement with the Company or the failure
by
the Company to pay any amount to the Executive.
7. Miscellaneous.
7.1
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York and embodies all of the understandings and obligations between
the parties with respect to the subject matter hereof. This agreement supersedes
all prior agreements entered into by the parties with respect to the subject
matter hereof. In the event of any inconsistency between this Agreement and
any
other agreement with the Executive, this Agreement shall govern and be binding.
This Agreement shall not be changed, modified or amended except in a writing
signed by both parties.
7.2
This
Agreement is not an employment agreement and gives no right to Executive to
be
retained for any period or any duration, or any other rights.
33
7.3
To
the
extent any provision of this Agreement is held to be unenforceable or invalid,
the remainder of the Agreement shall be remain in full force and effect and
the
Agreement shall be interpreted to give effect to the such provision to the
maximum extent permitted by law.
7.4
No
failure or delay (in whole or in part) on the part of either party hereto to
exercise any right or remedy hereunder will impair any such right or remedy,
operate as a waiver thereof, or affect any right or remedy hereunder. All rights
and remedies hereunder are cumulative and are not exclusive of any other rights
or remedies provided hereunder or by law.
7.5
Notice.
Any
and
all notices or other communications required or permitted to be given under
any
of the provisions of this Agreement shall be in writing and shall be deemed
to
have been duly given when personally delivered or when forwarded for priority
delivery by Federal Express or other recognized courier, addressed, if to the
Company, to it at its then principal offices, attn: President, and, if to the
Executive, to him at __________ (or at such other address as any party may
specify by notice to all other parties given as aforesaid).
7.6
Governing
Law; Resolution of Disputes; Service of Process. This Agreement shall in all
respects be construed according to the laws of the State of New York. Service
of
process shall be effective when given in the manner provided for notices
hereunder. The
federal and state courts sitting in the State of New York shall have exclusive
jurisdiction with respect to this Agreement. Trial by jury is
waived.
7.7
Executive
acknowledges receipt of this Agreement, and that his ability to earn a
livelihood will not be unreasonably affected hereby. He has discussed this
Agreement with his counsel.
7.8
This
Agreement may be signed by facsimile and in counterparts.
Dated
_________ 2006
|
By:
Name:
Title:
Chief Executive Officer
Date:
____________________
|
Executive
__________________
Name:
______________________
Date:_______________________
|
34
Registration
Rights Schedule
1. Definitions.
Capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Merger Agreement dated August __, 2006, between
N21 and NewCo and the Stockholders. As used in this Schedule, the following
terms shall have the following meanings:
Affiliate:
With
respect to any specified person, (i) any other person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
such specified person or (ii) any officer or director of such other person.
For
purposes of this definition, the term “control” (including the terms “controlled
by” and “under common control with”) of a person means the possession, direct or
indirect, of the power (whether or not exercised) to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
Business
Day:
Each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in the City of New York are authorized or obligated by
law
or executive order to close.
Common
Stock:
The
shares of “Common Stock”.
Corporation:
N21.
Effectiveness
Period:
The
period commencing with the date hereof and ending on the date that the last
securities constituting Registrable Securities shall have ceased to be
Registrable Securities.
Exchange
Act:
The
Securities Exchange Act of 1934, as amended, and the rules and regulations
of
the SEC promulgated thereunder.
Holders:
The
Stockholders and any other holders from time to time of the Common Stock,
including Xxxxxxx Xxxxxx, Xxxx Xxxxxxxx and Bathgate Capital Partners,
LLC.
Person:
An
individual, a corporation, a partnership, an association, a limited liability
company, a trust or any other entity or organization, including a government
or
political subdivision or an agency or instrumentality thereof.
Prospectus:
The
prospectus included in the Registration Statement, as amended or supplemented
by
any amendment or prospectus supplement, including post-effective amendments,
and
all material incorporated by reference or deemed to be incorporated by reference
in such Prospectus.
Registrable
Securities:
The
Common Stock of the Corporation held by the Stockholders and any security issued
or issuable with respect thereto upon any dividend, distribution,
recapitalization, stock split, merger, consolidation or similar event, so long
as, in the case of such Common Stock or any other security issued or issuable
with respect thereto, (i) it has not been effectively registered under the
Securities Act and has not been disposed of in accordance with the Registration
Statement covering it, (ii) it has not become saleable by the holder thereof
pursuant to Rule 144(k) or (iii) it has not been sold to the public pursuant
to
Rule 144, and, as a result of the event or circumstance described in any of
the
foregoing clauses (i) through (iii), the legends with respect to transfer
restrictions required under the Stockholders Agreement have not been removed
or
have not become eligible to be removed.
Registration
Statement:
A
registration statement of the Corporation that covers the Registrable Securities
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
Rule
144:
Rule
144 under the Securities Act, as such Rule may be amended from time to time,
or
any similar rule or regulation hereafter adopted by the SEC.
35
Rule
144(k):
Rule
144(k) under the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the SEC.
SEC:
The
Securities and Exchange Commission.
Securities
Act:
The
Securities Act of 1933, as amended, and the rules and regulations promulgated
by
the SEC thereunder.
Underwriter:
A
securities dealer that purchases any Registrable Securities as principal and
not
as part of such dealer’s market-making activities.
2. The
following provisions apply only in the events set forth in the Merger Agreement
to which this Registration Schedule is attached.
Registration
Rights.
(a) Shelf
Registration.
(i) The
Corporation shall prepare and file with the SEC on or before the 90th
day
after the Closing (the “Filing Date”), a Registration Statement for an offering
to be made on a continuous basis pursuant to Rule 415 under the Securities
Act
(the “Shelf Registration Statement”) registering the resale of the Registrable
Securities from time to time by the holders of all the Registrable Securities
held thereby (the “Shelf Registration”). The Shelf Registration shall be on Form
S-1 or S-3 (as appropriate) or another appropriate form permitting registration
of the resale of the Common Stock. The Corporation shall use its best efforts
to
cause the Shelf Registration to be declared effective under the Securities
Act
as promptly as possible after the Filing Date and to keep the Shelf Registration
continuously effective under the Securities Act until the expiration of the
Effectiveness Period.
(ii) If
the
Shelf Registration ceases to be effective for any reason as a result of the
issuance of a stop order by the SEC at any time during the Effectiveness Period,
the Corporation shall use its best efforts to obtain the prompt withdrawal
of
any order suspending the effectiveness thereof, and in any event shall within
thirty (30) days of such cessation of effectiveness amend the Shelf Registration
in a manner reasonably expected to obtain the withdrawal of the order suspending
the effectiveness thereof.
(iii) The
Corporation shall supplement and amend the Shelf Registration if required by
the
rules, regulations or instructions applicable to the registration form used
by
the Corporation for such Shelf Registration, if required by the Securities
Act
or if reasonably requested by the Holders holding a majority of the Registrable
Securities covered by such Registration Statement.
(iv) In
the
event that, in the judgment of the Corporation, it is advisable to suspend
use
of the Prospectus for a discrete period of time because of (A) stop order,
request for additional information or threatened suspension of any applicable
Governmental Authority or (B) any pending material corporate or other
developments that have not yet been publicly disclosed and as to which the
Corporation in good faith believes public disclosure is reasonably likely to
be
detrimental to the Corporation, the Corporation shall deliver a certificate
in
writing, signed by an authorized executive officer of the Corporation, to the
Holders to the effect of the foregoing and, upon such notice, the Corporation
may suspend use of the Registration Statement until a supplemented or amended
Prospectus is filed with the SEC, or until the Holders are advised in writing
by
the Corporation that the Prospectus may be used, and the Holders have received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus. The Corporation will use its
best
efforts to ensure that the use of the Prospectus may be resumed, and the use
of
the Registration Statement will commence, as soon as practicable and, in the
case of a pending development or event referred to in this Section, as soon
as
the earlier of (x) public disclosure of such pending material corporate
development or similar material event or (y) the date upon which, in the good
faith judgment of the Corporation, public disclosure of such material corporate
development or similar material event would not be reasonably likely to be
detrimental to the Corporation. Notwithstanding the foregoing, the Corporation
shall not under any circumstances be entitled to exercise its right under this
Section 2(a)(iv) to suspend the use of the Registration Statement except as
follows: The Corporation may suspend the use of the Registration Statement
in
accordance with this Section 2(a)(iv) for a period (such period being “Deferral
Period”) not to exceed (i) an aggregate of 45 days (in no more than two separate
periods) in any three-month period and (ii) an aggregate of 90 days (in no
more
than four separate periods) in any 12-month period, and the period in which
the
use of the Registration Statement is suspended shall not exceed fifteen (15)
days unless the Corporation shall deliver to the Holders a second notice to
the
effect set forth above, which shall have the effect of extending the period
during which the use of the Registration Statement is deferred by up to an
additional fifteen (15) days, or such shorter period of time as is specified
in
such second notice.
36
(b) Demand
Registration.
(i) If
the
shelf registration ceases to be effective for a period of ninety (90)
consecutive days during the Effectiveness Period, Holder or Holders holding
more
than twenty percent (20%) of the Registrable Securities at such time outstanding
may make a written request (a “Demand Request”) for registration under the
Securities Act of all or part of its Registrable Securities in a shelf
registration (a “Demand Registration”); provided that the Corporation shall not
be obligated to effect a registration of any Registrable Securities within
180
days after any underwritten offering of equity securities by the Corporation
or
to effect a Demand Registration on more than two occasions (provided that a
registration shall not be counted as a Demand Registration for such purpose
unless it has become effective. The Corporation shall file a registration
statement with respect to the Demand Registration as soon as practicable
thereafter and in any event within 60 days (or 90 days if the Corporation is
not
then eligible to use Form S-3) after receiving a Demand Request (such 60th
or
90th day being referred to herein as the “Required Filing Date”) and shall use
its best efforts to cause the same to be subsequently declared effective by
the
SEC as promptly as practicable after such filing.
(ii) The
Corporation shall deliver notice to all other Holders within fifteen (15)
business days of receiving a Demand Request. A Holder receiving such notice
may
elect to participate in the request by notifying the party or parties who
delivered such notice within fifteen (15) business days of the receipt thereof
of the intention to participate and the number of shares of Registrable
Securities such Holder wants to sell.
(c) Piggyback
Registration.
If
the
Corporation proposes to file a registration statement under the Securities
Act
with respect to an offering of equity securities (other than an offering on
Form
S-4 or Form S-8) (A) for the Corporation’s own account or (B) for the account of
any of the holders of its equity securities, then, unless the following
provision is prohibited by contract, the Corporation shall give written notice
of such proposed filing to each Holder as soon as practicable (but in no event
less than 20 business days before the anticipated filing date), and such notice
shall offer such Holder the opportunity to register such number of shares of
Registrable Securities as such Holder may request on the same terms and
conditions as the Corporation’s or such Holder’s equity securities (a “Piggyback
Registration”). Each Holder who desires to have its Registrable Securities
included in such registration statement shall so advise the Corporation in
writing (stating the number of shares of Common Stock desired to be registered)
within 15 business days after the date of such notice from the Corporation.
Any
Holder shall have the right to withdraw such request for inclusion of such
Holder’s Registrable Securities in any registration statement pursuant to this
section by giving written notice to the Corporation of such withdrawal prior
to
the effective date of the Registration Statement. The Corporation shall include
in such registration statement all such Registrable Securities requested to
be
included therein; provided, however, that the Corporation may at any time
withdraw or cease proceeding with any such registration if it shall at the
same
time withdraw or cease proceeding with the registration of all other securities
originally proposed to be registered.
37
