Exhibit 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INITIAL ACQUISITION CORP.,
A DELAWARE CORPORATION,
XXXXXX-XXXX, INC.,
A DELAWARE CORPORATION,
XXXXXXXXX X. XXXXX
(FOR PURPOSES OF SECTION 5.6 AND ARTICLE XI ONLY)
AND
XXXXXXX X. XXXXXX
(FOR PURPOSES OF SECTION 5.6 AND ARTICLE XI ONLY)
TABLE OF CONTENTS
PAGE
ARTICLE I
ADOPTION OF AGREEMENT AND PLAN OF MERGER . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Date of the Merger . . . . . . . . . . . . . 2
1.3 Surviving Corporation . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation of the
Surviving Corporation . . . . . . . . . . . . . . . . . 2
1.5 By-laws of the Surviving Corporation . . . . . . . . . 2
1.6 Directors and Officers . . . . . . . . . . . . . . . . 3
1.7 Plan of Merger . . . . . . . . . . . . . . . . . . . . 3
1.8 Exchange and Conversion of Shares of Xxxxxx-Xxxx
Common Stock and Outstanding Xxxxxx-Xxxx Warrants and
Xxxxxx-Xxxx Options . . . . . . . . . . . . . . . . . . 7
ARTICLE II
CLOSING . . . . . . . . . . . . 8
2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . 8
2.2 Execution of Formal Merger Documents . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXX-XXXX . . . 9
3.1 Due Incorporation . . . . . . . . . . . . . . . . . . . 9
3.2 Due Authorization . . . . . . . . . . . . . . . . . . . 9
3.3 Consents and Approvals; Non-Contravention . . . . . . . 10
3.4 Capitalization . . . . . . . . . . . . . . . . . . . . 11
3.5 Financial Statements; Undisclosed Liabilities; Other
Documents . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 No Adverse Effects or Changes . . . . . . . . . . . . . 11
3.7 Title to Properties . . . . . . . . . . . . . . . . . . 12
3.8 Liabilities . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Intellectual Property . . . . . . . . . . . . . . . . . 12
3.10 Contracts . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . 15
3.12 Employee Benefit Plans . . . . . . . . . . . . . . . . 15
3.13 Employees; Labor Matters . . . . . . . . . . . . . . . 15
3.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 16
3.15 Environmental Regulations . . . . . . . . . . . . . . . 17
3.16 Litigation . . . . . . . . . . . . . . . . . . . . . . 17
3.17 No Conflict of Interest . . . . . . . . . . . . . . . . 18
3.18 Bank Accounts . . . . . . . . . . . . . . . . . . . . . 18
3.19 Compliance with Laws. . . . . . . . . . . . . . . . . . 18
3.20 Broker's/Finder's Fees . . . . . . . . . . . . . . . . 18
3.21 Board Recommendation . . . . . . . . . . . . . . . . . 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IAC . . . . . 19
4.1 Due Incorporation . . . . . . . . . . . . . . . . . . . 19
4.2 Due Authorization . . . . . . . . . . . . . . . . . . . 19
4.3 Consents and Approvals; Non-Contravention . . . . . . . 19
4.4 Capitalization . . . . . . . . . . . . . . . . . . . . 20
4.5 Financial Statements; Undisclosed Liabilities; Other
Documents . . . . . . . . . . . . . . . . . . . . . . . 20
4.6 No Adverse Effects or Changes . . . . . . . . . . . . . 21
4.7 Title to Properties . . . . . . . . . . . . . . . . . . 21
4.8 Liabilities . . . . . . . . . . . . . . . . . . . . . . 21
4.9 Real Property . . . . . . . . . . . . . . . . . . . . . 21
4.10 Intellectual Property . . . . . . . . . . . . . . . . . 21
4.11 Contracts . . . . . . . . . . . . . . . . . . . . . . . 22
4.12 Employee Benefit Plans . . . . . . . . . . . . . . . . 23
4.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 23
4.14 Litigation . . . . . . . . . . . . . . . . . . . . . . 24
4.15 No Conflict of Interest . . . . . . . . . . . . . . . . 24
4.16 Bank Accounts . . . . . . . . . . . . . . . . . . . . . 25
4.17 Compliance with Laws . . . . . . . . . . . . . . . . . 25
4.18 Broker's/Finder's Fees . . . . . . . . . . . . . . . . 25
4.19 Board Recommendation . . . . . . . . . . . . . . . . . 25
4.20 Employee Matters . . . . . . . . . . . . . . . . . . . 25
4.21 SEC Filings . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
COVENANTS . . . . . . . . . . . . 26
5.1 Implementing Agreement . . . . . . . . . . . . . . . . 26
5.2 Access to Information and Facilities . . . . . . . . . 26
5.3 Preservation of Business . . . . . . . . . . . . . . . 26
5.4 IAC and Xxxxxx-Xxxx Stockholders' Meetings . . . . . . 29
5.5 Registration of IAC Common Stock . . . . . . . . . . . 29
5.6 Agreement to Vote . . . . . . . . . . . . . . . . . . . 30
5.7 Blue Sky Compliance . . . . . . . . . . . . . . . . . . 30
5.8 Listing . . . . . . . . . . . . . . . . . . . . . . . . 31
5.9 Consents and Approvals . . . . . . . . . . . . . . . . 31
5.10 Maintenance of Insurance . . . . . . . . . . . . . . . 31
5.11 Supplemental Information . . . . . . . . . . . . . . . 31
5.12 Xxxxxx-Xxxx Lock-Up Letters . . . . . . . . . . . . . . 31
5.13 Patent Analyses . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF IAC . . . . . . . . . . . . 33
6.1 Warranties True as of Both Present Date and
Closing Date . . . . . . . . . . . . . . . . . . . . . 33
6.2 Compliance With Agreements and Covenants . . . . . . . 33
6.3 Consents and Approvals . . . . . . . . . . . . . . . . 33
6.4 Documents . . . . . . . . . . . . . . . . . . . . . . . 33
6.5 No Material Adverse Change . . . . . . . . . . . . . . 34
6.6 Actions or Proceedings . . . . . . . . . . . . . . . . 34
6.7 Opinion of Counsel for Xxxxxx-Xxxx . . . . . . . . . . 34
6.8 Approval of Merger . . . . . . . . . . . . . . . . . . 34
6.9 IAC Redemption Right . . . . . . . . . . . . . . . . . 34
6.10 Patent Infringement and Patent Validity Analyses . . . 34
6.11 Appointment of Xxxxx as a Director . . . . . . . . . . 34
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX-XXXX . 34
7.1 Warranties True as of Both Present Date and
Closing Date . . . . . . . . . . . . . . . . . . . . . 35
7.2 Compliance with Agreements and Covenants . . . . . . . 35
7.3 Consents and Approvals . . . . . . . . . . . . . . . . 35
7.4 Documents . . . . . . . . . . . . . . . . . . . . . . . 35
7.5 No Material Adverse Change . . . . . . . . . . . . . . 35
7.6 Actions or Proceedings . . . . . . . . . . . . . . . . 35
7.7 Opinion of Counsel for IAC . . . . . . . . . . . . . . 35
7.8 Approval of Merger . . . . . . . . . . . . . . . . . . 35
7.9 Registration Statement Effective . . . . . . . . . . . 35
7.10 IAC Cash Position . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
DELIVERIES AT CLOSING . . . . . . . . . 36
8.1 Deliveries by Xxxxxx-Xxxx . . . . . . . . . . . . . . . 36
8.2 Deliveries by IAC . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX
TERMINATION; TERMINATION FEE . . . . . . . 37
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . 37
9.2 Effect of Termination . . . . . . . . . . . . . . . . . 38
9.3 Termination Fee . . . . . . . . . . . . . . . . . . . . 38
ARTICLE X
EXCLUSIVITY . . . . . . . . . . . 38
ARTICLE XI
INDEMNIFICATION . . . . . . . . . . 38
11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . 38
11.2 Indemnification by Xxxxxx . . . . . . . . . . . . . . . 39
11.3 Indemnification by Xxxxx . . . . . . . . . . . . . . . 39
11.4 Notice and Right to Defend Third Party Claims . . . . . 40
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . 41
12.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . 41
12.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . 41
12.3 Confidentiality and Return of Information . . . . . . . 41
12.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . 41
12.5 Waivers . . . . . . . . . . . . . . . . . . . . . . . . 42
12.6 Interpretation . . . . . . . . . . . . . . . . . . . . 42
12.7 Applicable Law . . . . . . . . . . . . . . . . . . . . 42
12.8 Assignment . . . . . . . . . . . . . . . . . . . . . . 42
12.9 No Third Party Beneficiaries . . . . . . . . . . . . . 42
12.10 Further Assurances . . . . . . . . . . . . . . . . . . 43
12.11 Severability . . . . . . . . . . . . . . . . . . . . . 43
12.12 Remedies Cumulative . . . . . . . . . . . . . . . . . . 43
12.13 Entire Understanding . . . . . . . . . . . . . . . . . 43
12.14 Counterparts . . . . . . . . . . . . . . . . . . . . . 43
EXHIBITS
Exhibit A - Form of Certificate of Merger
Exhibit B - Form of Opinion of Counsel for Xxxxxx-Xxxx
Exhibit C - Form of Opinion of Counsel for IAC
Exhibit D - Form of Escrow Agreement
SCHEDULES
Schedule 3.1 Xxxxxx-Xxxx Due Incorporation
Schedule 3.2 Xxxxxx-Xxxx Consents and Approvals
Schedule 3.4 Xxxxxx-Xxxx Capitalization
Schedule 3.5 Xxxxxx-Xxxx Undisclosed Liabilities
Schedule 3.6 Xxxxxx-Xxxx No Adverse Effects or Changes
Schedule 3.7 Xxxxxx-Xxxx Title to Properties
Schedule 3.8 Xxxxxx-Xxxx Liabilities
Schedule 3.9 Xxxxxx-Xxxx Intellectual Property
Schedule 3.10 Xxxxxx-Xxxx Contracts
Schedule 3.11 Xxxxxx-Xxxx Insurance
Schedule 3.12 Xxxxxx-Xxxx Employee Benefit Plans
Schedule 3.13 Xxxxxx-Xxxx Employees; Labor Matters
Schedule 3.14 Xxxxxx-Xxxx Tax Matters
Schedule 3.16 Xxxxxx-Xxxx Litigation
Schedule 3.17 Xxxxxx-Xxxx Conflicts of Interest
Schedule 3.18 Xxxxxx-Xxxx Bank Accounts
Schedule 3.19 Xxxxxx-Xxxx Compliance with Laws
Schedule 3.20 Xxxxxx-Xxxx Broker's/Finder's Fee
Schedule 5.13 Xxxxxx-Xxxx Products
Schedule 4.4 IAC Capitalization
Schedule 4.6 IAC No Adverse Effects or Changes
Schedule 4.10 IAC Intellectual Property
Schedule 4.11 IAC Contracts
Schedule 4.15 IAC No Conflict of Interest
Schedule 4.16 IAC Bank Accounts
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER dated as of November 1,
1996, by and among INITIAL ACQUISITION CORP., a Delaware
corporation ("IAC"), XXXXXXXXX X. XXXXX, an individual ("Xxxxx")
(for purposes of Section 5.6 and Article XI only), XXXXXX-XXXX,
INC., a Delaware corporation ("Xxxxxx-Xxxx"), and XXXXXXX X.
XXXXXX, an individual ("Xxxxxx") (for purposes of Section 5.6 and
Article XI only).
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, IAC desires to acquire Xxxxxx-Xxxx, and
Xxxxxx-Xxxx desires to be acquired by IAC, through the merger of
Xxxxxx-Xxxx with and into IAC pursuant to the terms hereinafter
set forth (the "Merger"); and
WHEREAS, IAC and Xxxxxx-Xxxx each intend, for Federal
income tax purposes, that the Merger contemplated hereby
constitutes a reorganization pursuant to Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Board of Directors of IAC deems it
advisable and in the best interest of IAC that Xxxxxx-Xxxx be
merged with and into IAC upon the terms and conditions
hereinafter specified; and
WHEREAS, the Board of Directors of Xxxxxx-Xxxx deems it
advisable and in the best interest of Xxxxxx-Xxxx that Xxxxxx-
Xxxx be merged with and into IAC upon the terms and conditions
hereinafter specified; and
WHEREAS, IAC has an authorized capital stock consisting
of 10,000,000 shares of Common Stock, $.01 par value per share
(the "IAC Common Stock"), of which 833,250 shares are currently
issued and outstanding, and 5,000 shares of Preferred Stock, $.01
par value per share (the "Preferred Stock"), of which no shares
are currently issued or outstanding; and
WHEREAS, Xxxxxx-Xxxx has an authorized capital stock
consisting of 30,000,000 shares of Common Stock, $.0001 par value
per share (the "Xxxxxx-Xxxx Common Stock"), of which 4,911,004
shares are currently issued and outstanding; and
WHEREAS, Xxxxxx-Xxxx currently also has outstanding
Common Stock purchase warrants and options entitling the holders
thereof to purchase an aggregate of up to 2,279,650 shares of
Xxxxxx-Xxxx Common Stock, all as further described herein
(collectively, the "Xxxxxx-Xxxx Warrants and Options"); and
WHEREAS, Xxxxx and Xxxxxx are the principal
stockholders of IAC and Xxxxxx-Xxxx, respectively.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements hereinafter contained, the parties
hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
ADOPTION OF AGREEMENT AND PLAN OF MERGER
1.1 The Merger. At the Effective Time (as defined in
----------
Section 1.2 herein), in accordance with this Agreement and the
relevant provisions of the Delaware General Corporation Law (the
"DGCL"), Xxxxxx-Xxxx shall be merged with and into IAC. IAC
shall be the Surviving Corporation to the Merger (the "Surviving
Corporation") and IAC shall continue, and be deemed to continue,
for all purposes after the Merger. The existence of Xxxxxx-Xxxx
shall cease at the Effective Time as a consequence of the Merger.
Immediately following the Effective Time, the name of IAC shall
be changed to "Xxxxxx-Xxxx Pharmaceuticals, Inc."
1.2 Effective Date of the Merger. This Agreement shall
-----------------------------
be submitted to the stockholders of each of Xxxxxx-Xxxx and IAC
as provided in Section 5.4 hereof, for approval as soon as
practicable after the Registration Statement (as defined in
Section 5.4 below) has been declared effective by the Securities
and Exchange Commission (the "SEC"). Subject to the terms and
conditions hereof, including, without limitation, IAC's and
Xxxxxx-Xxxx'x right to terminate this Agreement without liability
in accordance with Article IX hereof, upon the authorization,
approval and adoption of this Agreement by the affirmative vote
of the holders of not less than 66-2/3% of the outstanding shares
of IAC Common Stock and the affirmative vote of the holders of
not less than a majority of the outstanding shares of Xxxxxx-Xxxx
Common Stock, both as provided by the DGCL and the respective
Certificates of Incorporation of IAC and Xxxxxx-Xxxx, a
Certificate of Merger, substantially in the form annexed hereto
as Exhibit A (the "Certificate of Merger"), shall be executed in
accordance with Section 103 of the DGCL and delivered to the
Secretary of State of Delaware for filing (the time of such
filing being the "Effective Time" and the date of such filing
being the "Effective Date").
1.3 Surviving Corporation. Following the Merger, IAC
---------------------
shall continue to exist under, and be governed by, the laws of
the State of Delaware. Immediately following the Effective Time,
IAC's name shall be changed to "Xxxxxx-Xxxx Pharmaceuticals,
Inc."
1.4 Certificate of Incorporation of the Surviving
----------------------------------------------
Corporation. The Certificate of Incorporation of Xxxxxx-Xxxx, as
-----------
in effect at the Effective Time, shall continue in full force and
effect as the Certificate of Incorporation of the Surviving
Corporation; provided, however, that at the Effective Time, IAC
will include in the Certificate of Merger a statement that IAC
is, immediately following the Effective Time, changing its name
to "Xxxxxx-Xxxx Pharmaceuticals, Inc."
1.5 By-laws of the Surviving Corporation. The By-laws
------------------------------------
of Xxxxxx-Xxxx, as in effect at the Effective Time, shall
continue in full force and effect as the By-laws of the Surviving
Corporation.
1.6 Directors and Officers. The directors and officers
----------------------
of the Surviving Corporation immediately following the Merger
shall be as follows:
Name Positions
---- ---------
Xxxxxxx X. Xxxxxx Chairman, President and Chief
Executive Officer and Director
Xxxxxxx X. Xxxxxxxxxxx, Ph.D. Chief Scientific Officer,
Director
Xxxxxx Xxxxxxx Xxxxxxx, Xx., M.D. Director, Chairman of the
Scientific Advisory Board
Xxxxxx X. Xxxxx Vice President-Controller
Xxxx Xxxxxx, Ph.D. Vice President-Regulatory
Affairs
J. Xxxx Xxxxxx III Director
Xxxxxxxxx X. Xxxxx Director
Xxxxxxx X. XxXxxxxxx Director
Such directors and officers shall continue to hold
office until the next annual meetings of the stockholders and
directors of the Surviving Corporation or until their successors
shall have been duly elected and shall have qualified.
1.7 Plan of Merger. The method of effecting the Merger
--------------
and the basis for exchanging and converting the outstanding
Common Stock of Xxxxxx-Xxxx and the outstanding Xxxxxx-Xxxx
Warrants and Options into shares of Common Stock of the Surviving
Corporation (the "Surviving Corporation Common Stock"), warrants
to purchase shares of Surviving Corporation Common Stock and
options to purchase shares of Surviving Corporation Common Stock
shall be as follows:
(a)(i) Each issued and outstanding share of
Xxxxxx-Xxxx Common Stock (other than those shares of Xxxxxx-Xxxx
Common Stock held by stockholders who shall have perfected their
rights to appraisal pursuant to Section 262 of the DGCL and shall
not have withdrawn or otherwise lost such rights (the "Dissenting
Stockholders")) shall, at the Effective Time, by virtue of the
Merger and without further action, be deemed canceled and cease
to exist and, upon presentation for surrender of a certificate
representing such share by each stockholder of Xxxxxx-Xxxx
participating in the Merger (collectively, the "Participating
Stockholders"), shall be converted into one share of Surviving
Corporation Common Stock.
(ii) At the Effective Time, each issued and
outstanding Xxxxxx-Xxxx Warrant shall, by virtue of the Merger
and without further action, be deemed canceled and cease to exist
and, upon presentation for surrender of a certificate
representing such Xxxxxx-Xxxx Warrant in accordance with Section
1.8 hereof, shall be converted into a warrant to purchase shares
of Surviving Corporation Common Stock, at an exercise price and
for an exercise period which is the same, respectively, as the
exercise price and the exercise period of the particular Xxxxxx-
Xxxx Warrant (collectively, the "Surviving Corporation
Warrants").
(iii) At the Effective Time, each issued and
outstanding Xxxxxx-Xxxx Option shall, by virtue of the Merger and
without further action, be deemed to be assumed by the Surviving
Corporation and modified so that, in lieu of having the right to
purchase shares of Xxxxxx-Xxxx Common Stock upon exercise, the
holder will have the right to purchase shares of Surviving
Corporation Common Stock upon exercise (collectively, the
"Surviving Corporation Options") at an exercise price and for an
exercise period which is the same, respectively, as the exercise
price and exercise period of the particular Xxxxxx-Xxxx Option.
The Surviving Corporation, at the Effective Time, will assume all
of Xxxxxx-Xxxx'x obligations under any option agreement
evidencing the grant of such Xxxxxx-Xxxx Options.
(iv) IAC will establish, subject to IAC
stockholder ratification and approval at the meeting of
stockholders of IAC to be held to approve the transactions
contemplated by the Merger (the "IAC Stockholders' Meeting")
prior to the Effective Time, an Employee Stock Option Plan (the
"IAC Employee Stock Option Plan") pursuant to which certain of
the Surviving Corporation Options referenced in clause (iii)
above will be governed. Such IAC Employee Stock Option Plan will
be on similar terms and conditions as the Xxxxxx-Xxxx Employee
Stock Option Plan pursuant to which certain of the Xxxxxx-Xxxx
Employee Stock Options were originally granted.
(b)(i) Notwithstanding Section 1.7(a) above,
shares of Xxxxxx-Xxxx Common Stock which are held by a Dissenting
Stockholder who has properly preserved and perfected dissenters'
rights with respect to such shares pursuant to Section 262 of the
DGCL shall not be converted into the right to receive shares of
Surviving Corporation Common Stock pursuant to Section 1.7(a)(i)
hereof, and instead shall be treated in accordance with those
provisions of the DGCL unless and until the right of such
Dissenting Stockholder under Section 262 of the DGCL to payment
for his shares shall cease.
(ii) If any Dissenting Stockholder shall
effectively withdraw or lose (through failure to perfect or
otherwise) such Dissenting Stockholder's right to payment for any
of such Dissenting Stockholder's shares under Section 262 of the
DGCL, such Dissenting Stockholder's shares shall automatically be
converted into the right to receive shares of Surviving
Corporation Common Stock in accordance with Section 1.7(a)(i)
hereto.
(iii) Each Dissenting Shareholder who becomes
entitled, pursuant to the provisions of Section 262 of the DGCL,
to payment of the fair value of any such Dissenting Stockholder's
shares shall receive payment therefor from the Surviving
Corporation pursuant to Section 262 of the DGCL.
(c)(i) As a condition to the consummation of
the Merger, IAC is required to obtain the consent of its
stockholders to the Merger. The beneficial owners of 600,000
shares of IAC Common Stock currently have the right, in lieu of
approving the Merger, to require IAC to redeem their shares of
IAC Common Stock (the "Redemption Right"). Those IAC
stockholders possessing the Redemption Right (the "Solicited
Stockholders") shall be solicited by IAC and offered the
opportunity to exchange their Redemption Right for the right to
receive additional shares of common stock of the Surviving
Corporation (the "Additional Merger Shares") in accordance with
this Section 1.7(c).
(ii) In order to perfect the right to receive
the Additional Merger Shares, if any, a Solicited Stockholder
must (A) not exercise his Redemption Right in connection with the
Merger and (B) within 60 days following the Effective Time, take
whatever action that may be necessary to cause such Solicited
Stockholder to become the registered owner of his shares of
Surviving Corporation Common Stock (each, a "Rights Share" and,
collectively, the "Rights Shares"). By not exercising his
Redemption Right in connection with the Merger, a Solicited
Stockholder shall be deemed to have waived his Redemption Right
and accepted IAC's offer to receive the right to receive
Additional Merger Shares, if any are issued (provided such
Solicited Stockholder is not a Dissenting Stockholder and becomes
the registered owner of his shares of Surviving Corporation
Common Stock as provided above). As soon as practicable
following the 60th day following the Effective Time, the
Surviving Corporation will cause to be issued to each Solicited
Stockholder who shall have perfected his right to receive
Additional Merger Shares, if any, certificates evidencing one
right (each, a "Right" and, collectively, the "Rights") for each
Rights Share held by such Solicited Stockholder (the "Rights
Certificates"). The Rights Certificates shall not be
transferable, assignable, subject to pledge or otherwise
alienable, and the registered holder of such Rights Certificates
shall forfeit the number of Rights (the "Forfeited Rights") equal
to the number of Shares of Surviving Corporation Common Stock
sold or otherwise transferred by such holder during the period
commencing at the Effective Time and ending on the date that a
final determination of whether any Additional Merger Shares will
be issued is made (i.e., the second anniversary of the Effective
Date) (the "Holding Period"). The Forfeited Rights, at the
moment of such sale or transfer, shall be null and void and have
no further force or effect.
(iii) Additional Merger Shares, if any, shall
be issued to the holders of Rights Certificates who have not
otherwise forfeited their Rights as a result of their selling or
otherwise transferring shares of Surviving Corporation Common
Stock during the Holding Period if, at no time during the 24-
month period immediately following the Effective Date, the
average Closing Price per share of Surviving Corporation Common
Stock over a period of 20 consecutive trading days equals or
exceeds $20.00 per share (subject to adjustment as set forth in
subsection (c)(vi) below). The Additional Merger Shares shall be
issued, in accordance with the records of the Surviving
Corporation, as promptly as practicable following the second
anniversary of the Effective Date to those holders of Rights
Certificates who have not otherwise forfeited their Rights. The
number of Additional Merger Shares, if any, to be issued to the
holders of the Rights Certificates shall be calculated as
follows: each outstanding Right (i.e., any Right other than the
Forfeited Rights) shall entitle the holder thereof to the number
of Additional Merger Shares equal to (A) the difference between
(i) $20.00 (subject to adjustment as set forth in subsection
(c)(vi) below) and (ii) the average of the highest 60 Closing
Prices per share of Surviving Corporation Common Stock during the
one-year period immediately prior to the second anniversary of
the Effective Date (the "Sixty Day Average Price"), divided by
----------
(B) the Sixty Day Average Price. No fractional Additional Merger
Shares shall be issued. In lieu thereof, any fractional shares
shall be rounded to the nearest whole share of Surviving
Corporation Common Stock. The amount of Additional Merger
Shares, if any, to be issued shall be computed by Price
Waterhouse LLP, independent public accountants, as soon as
practicable following the second anniversary of the Effective
Date. The determination by Price Waterhouse LLP shall be final
and binding on the Surviving Corporation and the holders of the
Rights.
(iv) For purposes of this Section 1.7 and
Section 11.2(c), "Closing Price" per share of Surviving
Corporation Common Stock on a Trading Day shall mean the last
reported sale price per share of Surviving Corporation Common
Stock regular way or, in case no such reported sale takes place
on such Trading Day, the average of the closing bid and asked
prices regular way for such Surviving Corporation Common Stock
for such Trading Day, in either case on the principal national
securities exchange on which the Surviving Corporation Common
Stock is listed or admitted to trading, or if the Surviving
Corporation Common Stock is not listed or admitted to trading on
any national securities exchange, but is traded in the over-the-
counter market, the closing sale price per share of such
Surviving Corporation Common Stock or, in case no sale is
publicly reported, the average of the closing bid and asked
quotations for the Surviving Corporation Common Stock, as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or any comparable system
or, if such Surviving Corporation Common Stock is not listed on
NASDAQ or a comparable system, the closing sale price of
Surviving Corporation Common Stock or, in case no sale is
publicly reported, the average of the closing bid and asked
prices per share, as furnished by two members of the National
Association of Securities Dealers, Inc. who make a market in such
Surviving Corporation Common Stock selected from time to time by
the Surviving Corporation for that purpose. In addition, for
purposes of this Section 1.7 and Section 11.2(c), a "Trading Day"
shall mean, if such Surviving Corporation Common Stock is listed
on any national securities exchange, a business day during which
such exchange was open for trading and at least one trade of
Surviving Corporation Common Stock was effected on such exchange
on such business day, or, if such Surviving Corporation Common
Stock is not listed on any national securities exchange but is
traded in the over-the-counter market, a business day during
which the over-the-counter market was open for trading and at
least one "eligible dealer" quoted both a bid and asked price for
Surviving Corporation Common Stock. An "eligible dealer" for any
day shall include any broker-dealer who quoted both a bid and
asked price for such day, but shall not include any broker-dealer
who quoted only a bid or only an asked price for such day.
(v) Notwithstanding the foregoing, the Sixty Day
Average Price shall in no event be less than $5.00 per share
(subject to adjustment as set forth in subsection (c)(vi) below).
(vi) In the event of a stock dividend, stock
split, share combination, exchange of shares, recapitalization,
merger, consolidation, acquisition or disposition of property or
shares, reorganization, liquidation or other similar change or
transaction of or by the Surviving Corporation following the
Effective Time, the Closing Price and the Sixty Day Average Price
shall be adjusted as appropriate to give proper effect to the
event.
(vii) Notwithstanding anything to the contrary
contained herein, the Surviving Corporation shall have the
unilateral right to redeem and cancel all, but not less than all,
of the Rights evidenced by the Rights Certificates, at a
redemption price of $.001 per Right, if the Surviving
Corporation, at any time during the Holding Period, closes an
equity offering pursuant to which the Surviving Corporation (A)
issues shares of Surviving Corporation Common Stock at a per
share price of not less than $15.00 per share and (B) raises net
proceeds to the Surviving Corporation of not less than $10
million.
1.8 Exchange and Conversion of Shares of Xxxxxx-Xxxx
-------------------------------------------------
Common Stock and Outstanding Xxxxxx-Xxxx Warrants and Xxxxxx-Xxxx
-----------------------------------------------------------------
Options. The manner of exchanging and converting shares of Xxxxxx
--------
Eden Common Stock, Xxxxxx-Xxxx Warrants and Xxxxxx-Xxxx Options
into shares of Surviving Corporation Common Stock, Surviving
Corporation Warrants and Surviving Corporation Options, as the
case may be, in accordance with Section 1.7 above, shall be as
follows:
(a) From and after the Effective Time, American
Stock Transfer & Trust Company (the "Exchange Agent") shall act
as exchange agent in effecting the exchange of certificates
representing shares of Xxxxxx-Xxxx Common Stock pursuant to
Section 1.7(a) hereof. As soon as practicable after the
Effective Time, and after surrender to the Exchange Agent by each
Participating Stockholder of certificates which prior to the
Effective Time represented shares of Xxxxxx-Xxxx Common Stock,
the Surviving Corporation shall cause to be distributed to such
Participating Stockholder in whose name such Common Stock
certificates shall have been registered, or in accordance with
the written instructions transmitted to the Exchange Agent by the
Participating Stockholder, certificates representing shares of
Surviving Corporation Common Stock, all in accordance with the
provisions of Section 1.7(a) hereof. Upon the surrender by
Participating Stockholders of each certificate representing
shares of Xxxxxx-Xxxx Common Stock, and the issuance and delivery
by the Exchange Agent of certificates representing shares of
Surviving Corporation Common Stock, the certificates which prior
to the Effective Time represented outstanding shares of Xxxxxx-
Xxxx Common Stock shall forthwith be canceled. Until so
surrendered and exchanged, each such certificate representing
shares of Xxxxxx-Xxxx Common Stock shall be deemed for all
purposes to evidence only a right to receive shares of Surviving
Corporation Common Stock, and the holders of such certificates
shall no longer be deemed, for any purpose, to be stockholders in
Xxxxxx-Xxxx.
(b) As soon as practicable after the Effective
Time, the Surviving Corporation shall cause to be distributed to
each holder of Xxxxxx-Xxxx Warrants or Xxxxxx-Xxxx Options,
certificates or option agreements, as the case may be,
representing Surviving Corporation Warrants or Surviving
Corporation Options in accordance with Section 1.7(a) hereof.
Upon the surrender by such holders of each certificate or
agreement representing Xxxxxx-Xxxx Warrants or Xxxxxx-Xxxx
Options and the delivery by the Surviving Corporation of
certificates or agreements representing Surviving Corporation
Warrants or Surviving Corporation Options, as the case may be,
the certificates and agreements which prior to the Effective Time
represented Xxxxxx-Xxxx Warrants and/or Xxxxxx-Xxxx Options shall
be forthwith be canceled. Until so surrendered and exchanged,
each such certificate or agreement representing Xxxxxx-Xxxx
Warrants and/or Xxxxxx-Xxxx Options shall be deemed for all
purposes to evidence only a right to receive Surviving
Corporation Warrants or Surviving Corporation Options, as the
case may be.
(c) Participating Stockholders or holders of
Xxxxxx-Xxxx Warrants or Xxxxxx-Xxxx Options will, for all
purposes (except for the payment of possible dividends or other
distributions by the Surviving Corporation which will be withheld
until the exchange of certificates discussed above), be deemed to
be stockholders, warrantholders and/or optionholders of the
Surviving Corporation, as the case may be, as of the Effective
Time, irrespective of whether they have received their
certificates representing shares of Surviving Corporation Common
Stock, Surviving Corporation Warrants or Surviving Corporation
Options, as the case may be.
(d) Immediately prior to the Effective Time, the
Surviving Corporation shall provide the Exchange Agent with
certificates representing the maximum number of shares of
Surviving Corporation Common Stock as the Surviving Corporation
may be required to issue in accordance with Section 1.7(a)
hereof.
(e) Promptly after the Effective Time, the
Exchange Agent, on behalf of Xxxxxx-Xxxx and the Surviving
Corporation, shall mail to each holder of record of certificates
which immediately prior to the Effective Time represented shares
of Xxxxxx-Xxxx Common Stock, Xxxxxx-Xxxx Warrants or Xxxxxx-Xxxx
Options, a form of letter of transmittal and instructions for use
in surrendering such certificates and receiving certificates
representing shares of Surviving Corporation Common Stock,
Surviving Corporation Warrants or Surviving Corporation Options
therefor, as the case may be.
ARTICLE II
CLOSING
2.1 Closing Date. The closing of the Merger (the
------------
"Closing") and the other transactions contemplated by this
Agreement (the "Related Transactions") shall take place at the
offices of Xxxx & Priest LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 at 10:00 a.m., New York time, on January 15, 1997, or
such other date, time and place as the parties hereto may agree
upon (the "Closing Date").
2.2 Execution of Formal Merger Documents. On the
------------------------------------
Closing Date, Xxxxxx-Xxxx and IAC shall execute the Certificate
of Merger as provided by the laws of the State of Delaware. The
Certificate of Merger shall be transmitted by the parties to the
appropriate office for filing and/or recording on the Closing
Date, in order that the Merger contemplated by this Agreement
shall become effective at 5:00 p.m., New York time, on the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXX-XXXX
In order to induce IAC to enter into this Agreement and
to consummate the transactions, including the Merger,
contemplated hereby, Xxxxxx-Xxxx represents and warrants to IAC
as of the date of this Agreement and as of the Closing Date (as
if such representations and warranties were remade on the Closing
Date), as follows:
3.1 Due Incorporation. Xxxxxx-Xxxx is a corporation
-----------------
duly organized, validly existing and in good standing under the
laws of the State of Delaware, with all requisite power and
authority to own, lease and operate its properties and to carry
on its business as they are now being owned, leased, operated and
conducted. Xxxxxx-Xxxx is qualified or licensed to do business
and is in good standing as a foreign corporation in each
jurisdiction where the nature of the properties owned, leased or
operated by it and the business transacted by it requires such
qualification or licensing, except where the failure to be so
qualified or licensed could not have a Xxxxxx-Xxxx Material
Adverse Effect (as defined in Section 3.6 hereof). The
jurisdictions in which Xxxxxx-Xxxx is qualified or licensed to do
business as a foreign corporation are set forth on Schedule 3.1.
-------------
Xxxxxx-Xxxx has no direct or indirect subsidiaries or affiliates,
either wholly or partially owned, and Xxxxxx-Xxxx does not hold
any economic, voting or management interest in any corporation,
proprietorship, firm, partnership, limited partnership, trust,
association, individual or other entity (a "Person") or own any
security issued by any Person. True, correct and complete
copies of the Certificate of Incorporation and By-laws, as amended,
and minutes of meetings (or written consents in lieu of meetings)
of the Boards of Directors (and all committees thereof) and
stockholders of Xxxxxx-Xxxx have been, or prior to the Closing
Date will have been, delivered to IAC.
3.2 Due Authorization. Xxxxxx-Xxxx has full power and
-----------------
authority to enter into this Agreement and the Certificate of
Merger and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Xxxxxx-Xxxx
of this Agreement and the Certificate of Merger have been, or, in
the case of the Certificate of Merger, prior to the Closing Date
will be, duly and validly approved and authorized by the Board of
Directors of Xxxxxx-Xxxx, and, subject to obtaining the necessary
approval of the Merger by the stockholders of Xxxxxx-Xxxx, no
other actions or proceedings on the part of Xxxxxx-Xxxx are
necessary to authorize this Agreement, the Certificate of Merger
and the transactions contemplated hereby and thereby. Xxxxxx-
Xxxx has duly and validly executed and delivered this Agreement
and will duly and validly execute and deliver the Certificate of
Merger. Subject to obtaining the necessary approval of the
stockholders of Xxxxxx-Xxxx and the consents set forth on
Schedule 3.3, this Agreement constitutes the legal, valid and
-------------
binding obligation of Xxxxxx-Xxxx, enforceable in accordance
with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization or other laws from time
to time in effect which affect creditors' rights generally
and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity
or at law).
3.3 Consents and Approvals; Non-Contravention.
-----------------------------------------
(a) Except as set forth on Schedule 3.3, and except for
------------
the filing of the Certificate of Merger with the appropriate
authorities pursuant to the DGCL and the filing of the
Registration Statement (as set forth in Section 5.5), no permit,
consent, authorization or approval of, or filing or registration
with, any Governmental Authority or any other Person not a party
to this Agreement is necessary in connection with the execution,
delivery and performance by Xxxxxx-Xxxx of this Agreement or the
Certificate of Merger, or the consummation of the transactions
contemplated hereby or thereby, or for the lawful continued
operation by the Surviving Corporation following the Effective
Time of the business currently conducted by Xxxxxx-Xxxx.
"Governmental Authority" shall mean the government of the United
States or any foreign country or any state or political
subdivision thereof or any entity, body or authority exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
(b) Except as set forth on Schedule 3.3 and except as
------------
would not result in a Xxxxxx-Xxxx Material Adverse Effect, the
execution, delivery and performance by Xxxxxx-Xxxx of this
Agreement and the Certificate of Merger do not and will not (A)
violate any Law ("Law" meaning any law, statute, regulation,
ordinance, rule, order, decree, judgment, consent decree,
settlement agreement or governmental requirement enacted,
promulgated, entered into, agreed or imposed by any Governmental
Authority); (B) violate or conflict with, result in a breach or
termination of, constitute a default (or a circumstance which,
with or without notice or lapse of time or both, would constitute
a default) or give any third party any additional right
(including a termination right) under, permit cancellation of, or
result in the creation of any mortgage, lien (except for any lien
for taxes not yet due and payable), charge, restriction, pledge,
security interest, option, lease or sublease, claim, right of any
third party, easement, encroachment or encumbrance (collectively,
a "Lien") upon any of the assets or properties of Xxxxxx-Xxxx
under any contract to which Xxxxxx-Xxxx is a party or by which
Xxxxxx-Xxxx or any of its assets or properties is bound;
(C) permit the acceleration of the maturity of any indebtedness
of Xxxxxx-Xxxx or indebtedness secured by Xxxxxx-Xxxx'x assets or
properties; or (D) violate or conflict with any provision of the
Certificate of Incorporation or By-laws of Xxxxxx-Xxxx.
(c) Xxxxxx-Xxxx has obtained and is in compliance
with all governmental permits, licenses, registrations,
certificates of occupancy, approvals and other authorizations
(collectively, the "Permits") that are required for the complete
operation of the business of Xxxxxx-Xxxx as currently operated,
except for any Permits the absence of which would not result in a
Xxxxxx-Xxxx Material Adverse Effect. All of the Permits are
currently valid and in full force and, to Xxxxxx-Xxxx'x
knowledge, no revocation, cancellation or withdrawal thereof has
been threatened. Xxxxxx-Xxxx has filed such timely and complete
renewal applications as may be required with respect to the
Permits. Except as set forth on Schedule 3.3, to Xxxxxx-Xxxx'x
-------------
knowledge, the Permits, in their current state, will allow
Xxxxxx-Xxxx to continue to operate its business following
the Effective Time in substantially the same manner as
Xxxxxx-Xxxx'x business is currently operated.
3.4 Capitalization.
--------------
(a) The authorized capital stock of Xxxxxx-Xxxx
consists of 30,000,000 shares of Xxxxxx-Xxxx Common Stock. On
the date hereof, there are issued and outstanding 4,911,004
shares of Xxxxxx-Xxxx Common Stock. All of the issued and
outstanding shares of Xxxxxx-Xxxx Common Stock are validly
issued, fully paid and nonassessable and the issuance thereof was
not subject to preemptive rights.
(b) Except as set forth on Schedule 3.4, there are no
------------
shares of Xxxxxx-Xxxx Common Stock or other equity securities
(whether or not such securities have voting rights) of Xxxxxx-
Xxxx issued or outstanding or any subscriptions, options,
warrants, call rights, convertible securities or other agreements
or commitments of any character obligating Xxxxxx-Xxxx to issue,
transfer or sell any shares of capital stock or other securities
(whether or not such securities have voting rights) of Xxxxxx-
Xxxx. Except as set forth on Schedule 3.4, there are no
-------------
outstanding contractual obligations of Xxxxxx-Xxxx which relate
to the purchase, sale, issuance, repurchase, redemption,
acquisition, transfer, disposition, holding or voting of any
shares of capital stock or other securities of Xxxxxx-Xxxx.
3.5 Financial Statements; Undisclosed Liabilities;
-----------------------------------------------
Other Documents. For purposes of this Agreement, "Xxxxxx-Xxxx
---------------
Financial Statements" shall mean the audited financial statements
of Xxxxxx-Xxxx as of December 31, 1995 and December 31, 1994 and
the unaudited financial statements of Xxxxxx-Xxxx as of June 30,
1996 (including all notes thereto) which have been previously
delivered to IAC, consisting of the balance sheets at such dates
and, with respect to the audited Xxxxxx-Xxxx Financial
Statements, the related statements of income and cash flow for
each of the twelve-month periods ended December 31, 1995 and
December 31, 1994, and with respect to the unaudited Xxxxxx-Xxxx
Financial Statements, the related statements of income and cash
flow for the nine-month period ended September 30, 1996. The
Xxxxxx-Xxxx Financial Statements have been prepared in accordance
with generally accepted accounting principles ("GAAP")
consistently applied and present fairly the financial position,
assets and liabilities of Xxxxxx-Xxxx as at the dates thereof and
the revenues, expenses, results of operations and cash flows of
Xxxxxx-Xxxx for the periods covered then ended (subject, in the
case of the unaudited interim Xxxxxx-Xxxx Financial Statements,
to normal year-end audit adjustments consistent with past
practice and the absence of notes). The Xxxxxx-Xxxx Financial
Statements are in accordance with the books and records of
Xxxxxx-Xxxx, do not reflect any transactions which are not bona
fide transactions and do not contain any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements contained therein, in light of the
circumstances in which they were made, not misleading. The
Xxxxxx-Xxxx Financial Statements make full and adequate
disclosure of, and provision for, all obligations and liabilities
of Xxxxxx-Xxxx as of the date thereof.
3.6 No Adverse Effects or Changes. Except as listed on
-----------------------------
Schedule 3.6, or as disclosed in or reflected in the Xxxxxx-Xxxx
------------
Financial Statements, or as contemplated by this Agreement or the
Certificate of Merger, since September 30, 1996, Xxxxxx-Xxxx has
not (i) taken any of the actions set forth in Section 5.3, (ii)
suffered any Xxxxxx-Xxxx Material Adverse Effect, (iii) suffered
any damage, destruction or Loss to any of its assets or
properties (whether or not covered by insurance), or (iv)
increased the compensation of any executive officer of Xxxxxx-
Xxxx. "Loss" shall mean liabilities, losses, costs, claims,
damages (including consequential damages), penalties and expenses
(including attorneys' fees and expenses and costs of
investigation and litigation). For purposes of this Agreement,
"Xxxxxx-Xxxx Material Adverse Effect" shall mean an effect on the
business, operations, assets, liabilities, results of operations,
cash flows, condition (financial or otherwise) or prospects of
Xxxxxx-Xxxx which is materially adverse to Xxxxxx-Xxxx.
3.7 Title to Properties. Except as disclosed on
-------------------
Schedule 3.7, Xxxxxx-Xxxx (i) has good and marketable title to, and
------------
is the lawful owner of, all of the material tangible and
intangible assets, properties, including real property, and
rights reflected as being owned by Xxxxxx-Xxxx in the Xxxxxx-Xxxx
Financial Statements (other than assets disposed of in the
ordinary course of business since the date of the Xxxxxx-Xxxx
Financial Statements), and (ii) at the Effective Time, will have
good and marketable title to, and will be the lawful owner of,
all of such tangible and intangible assets, properties, including
real property, and rights, in any case free and clear of any
Lien, except for (x) any Lien for current taxes not yet due and
payable, and (y) minor Liens that have arisen in the ordinary
course of business and that do not (in any case or in the
aggregate) materially detract from the value of the assets
subject thereto or materially impair the operations of Xxxxxx-
Xxxx.
3.8 Liabilities. Except to the extent reflected or
-----------
reserved against on the balance sheets of Xxxxxx-Xxxx
constituting a part of the Xxxxxx-Xxxx Financial Statements,
Xxxxxx-Xxxx has no debts, liabilities or obligations of any
nature other than (i) non-material liabilities incurred
subsequent to the date of such balance sheets in the ordinary
course of Xxxxxx-Xxxx'x business and (ii) as set forth on
Schedule 3.8.
-------------
3.9 Intellectual Property.
---------------------
(a) Schedule 3.9 is a true and complete list of all of
------------
the material patents, patents pending, patent applications,
trademarks, tradenames, service marks and rights (collectively,
the "Intellectual Property") used by Xxxxxx-Xxxx in the conduct
of its business. Except as disclosed on Schedule 3.9:
------------
(i) all of the Intellectual Property is licensed by
Xxxxxx-Xxxx;
(ii) none of the Intellectual Property is the subject
of any pending or, to Xxxxxx-Xxxx'x knowledge,
threatened litigation or claim of infringement;
(iii) no license or royalty agreement to which Xxxxxx-
Xxxx is a party is in breach or default by
Xxxxxx-Xxxx or, to Xxxxxx-Xxxx'x knowledge, any
other party thereto or the subject of any notice
of termination given or threatened;
(iv) the services provided by Xxxxxx-Xxxx do not, to
Xxxxxx-Xxxx'x knowledge, infringe any trademark,
service xxxx, trade name, copyright, trade
secret, patent or confidential or proprietary
rights of another, and Xxxxxx-Xxxx has not
received any notice contesting its right to use
any Intellectual Property;
(v) Xxxxxx-Xxxx has not granted any license or agreed
to pay or receive any royalty in respect of any
Intellectual Property; and
(vi) Xxxxxx-Xxxx possesses adequate rights as licensee
in and to all Intellectual Property necessary to
conduct its business as presently conducted.
(b) Xxxxxx-Xxxx has obtained from each inventor of
the Patent Applications and Patents that such inventor(s) have
disclosed to counsel who prepared each of the Patent Applications
and the applications underlying the Patents all prior art of
which said inventor(s) are aware.
(c) Xxxxxx-Xxxx has no knowledge which, directly or
indirectly, indicates an infirmity in any claim of the Patents or
Patent Applications or any basis for invalidity or
unenforceability of any claim of the Patents or Patent
Applications.
(d) Xxxxxx-Xxxx has no knowledge which, directly or
indirectly, indicates that the licensor in each license agreement
under which Xxxxxx-Xxxx has been granted rights owns the entire
unencumbered right, title and interest in and to the inventions
and patent applications which are the subject of the license.
(e) Xxxxxx-Xxxx has used its reasonable commercial
efforts to receive from each inventor named in each Patent
Application and Patent all prior art, written or otherwise
available from such inventor, relating to the subject matter
claimed in any of them, and the names of each contributor toward
the invention(s) claimed in each.
(f) Xxxxxx-Xxxx has delivered to IAC for inspection
and copying a true copy of each document in Xxxxxx-Xxxx'x
possession relating directly or indirectly to each Patent
Application, Patent and license agreement relating to the
technology of Xxxxxx-Xxxx'x present and intended business
activities and has disclosed to IAC each and all facts, test
results and other information known to Xxxxxx-Xxxx which has, or
to its knowledge may have, any negative impact upon the efficacy
of the technology of the Patent Applications and Patents.
3.10 Contracts. "Contract" shall mean any material
---------
contract, lease, commitment or understanding, sales order,
purchase order, agreement, indenture, mortgage, note, bond,
instrument or license, whether written or verbal, which is
intended or purports to be binding and enforceable and, in the
case of a Person which is a corporation, general partnership or
limited partnership, such Person's certificate or articles of
incorporation and by-laws or partnership agreement, as the case
may be. Schedule 3.10 lists all the material Contracts and
--------------
arrangements of the following types to which Xxxxxx-Xxxx is a
party or by which it is bound, or to which any of its assets
or properties is subject:
(a) any collective bargaining agreement;
(b) any Contract or arrangement of any kind with any
employee, consultant, medical advisor, officer or director of
Xxxxxx-Xxxx;
(c) any Contract or arrangement with a sales
representative, manufacturer's representative, distributor,
dealer, broker, sales agency, advertising agency or other Person
engaged in sales, distributing or promotional activities, or any
Contract to act as one of the foregoing, on behalf of any Person;
(d) any Contract or arrangement of any nature which
involves the payment or receipt of cash or other property, an
unperformed commitment, or goods or services, having a value in
excess of $10,000;
(e) any Contract or arrangement pursuant to which
Xxxxxx-Xxxx has made or will make loans or advances, or has or
will have incurred debts or become a guarantor or surety or
pledged its credit on or otherwise become responsible with
respect to any undertaking of another (except for the negotiation
or collection of negotiable instruments in transactions in the
ordinary course of business);
(f) any indenture, credit agreement, loan agreement,
note, mortgage, security agreement, lease of real property or
personal property or agreement for financing;
(g) any Contract or arrangement involving a
partnership, joint venture or other cooperative undertaking;
(h) any Contract or arrangement involving any
restrictions with respect to the geographical area of operations
or scope or type of business of Xxxxxx-Xxxx;
(i) any power of attorney or agency agreement or
arrangement with any Person pursuant to which such Person is
granted the authority to act for or on behalf of Xxxxxx-Xxxx, or
Xxxxxx-Xxxx is granted the authority to act for or on behalf of
any Person;
(j) any Contract for which the full performance
thereof may extend beyond 60 days from the date of this
Agreement;
(k) any Contract not made in the ordinary course of
business which is to be performed at or after the date of this
Agreement;
(l) any Contract relating to any acquisition or
disposition of Xxxxxx-Xxxx, or any acquisition or disposition of
any subsidiary, division, line of business, or Real Property,
during the five years prior to the date of this Agreement; and
(m) any Contract not specified above that is material
to Xxxxxx-Xxxx.
Xxxxxx-Xxxx has made available to IAC true and complete copies of
each document listed on Schedule 3.10, and a written description
of -------------
each oral arrangement so listed. Except as disclosed on Schedule
--------
3.10, the cancellation of any such Contracts at any time by the
----
other party, would not have a Xxxxxx-Xxxx Material Adverse
Effect.
3.11 Insurance. Schedule 3.11 contains an accurate and
--------- -------------
complete list of all policies of fire, liability, workers'
compensation, product liability, professional malpractice, title
and other forms of insurance owned or held by Xxxxxx-Xxxx, and
Xxxxxx-Xxxx has heretofore delivered to IAC a true and complete
copy of all such policies. All such policies are in full force
and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been, or prior
to the Closing Date, will be, paid, and no notice of cancellation
or termination has been received with respect to any such policy.
Except as set forth in Schedule 3.11, Xxxxxx-Xxxx has not been
-------------
refused any insurance with respect to its assets or operations,
and its coverage has not been limited by any insurance carrier to
which it has applied for any such insurance or with which it has
carried insurance, during the last two years. Such insurance
policies provide types and amounts of insurance customarily
obtained by businesses similar to the business of Xxxxxx-Xxxx.
3.12 Employee Benefit Plans. Neither Xxxxxx-Xxxx nor
----------------------
any other member of the Controlled Group (i) has at any time
maintained, contributed to or participated in, (ii) has or had at
any time any obligation to maintain, contribute to or participate
in, or (iii) has any liability or contingent liability, direct or
indirect, with respect to: any employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), oral or written
retirement or deferred compensation plan, incentive compensation
plan, stock plan, consulting agreement, unemployment compensation
plan, vacation pay plan, severance plan, bonus plan, stock
compensation plan or any other type or form of employee-related
(or independent contractor-related) arrangement, program, policy,
plan or agreement. For purposes of this Agreement, the term
"Controlled Group" shall refer to Xxxxxx-Xxxx and each other
corporation or other entity under common control with Xxxxxx-Xxxx
(pursuant to the provisions of Sections 414(b), (c), (m) or (o)
of the Code) at any time during the 60-month period ending on the
Closing Date.
3.13 Employees; Labor Matters. (a) Xxxxxx-Xxxx has
------------------------
conducted and currently is conducting its business in material
compliance with all Laws relating to employment and employment
practices, terms and conditions of employment, wages and hours
and nondiscrimination in employment. In the opinion of
management, the relationship of Xxxxxx-Xxxx with its employees is
good and there is, and during the past two years there has been,
no labor strike, dispute, slow-down, work stoppage or other labor
difficulty pending or, to Xxxxxx-Xxxx'x knowledge, threatened
against or involving Xxxxxx-Xxxx. None of the employees of
Xxxxxx-Xxxx is covered by any collective bargaining agreement, no
collective bargaining agreement is currently being negotiated and
no attempt is currently being made, or during the past two years
has been made, to organize any employees of Xxxxxx-Xxxx to form
or enter a labor union or similar organization.
(b) Except as disclosed on balance sheets of Xxxxxx-
Xxxx forming a part of the Financial Statements or on Schedule
---------
3.13, Xxxxxx-Xxxx has no material liability for any vacation time,
----
vacation pay, retirement benefits, disability or other insurance
benefits or severance pay attributable to services rendered prior
to the date of each such balance sheet.
3.14 Tax Matters.
-----------
(a) "Taxes", as used in this Agreement, means any
-----
Federal, state, county, local or foreign taxes, charges, fees,
levies, or other assessments, including all net income, gross
income, sales and use, ad valorem, transfer, gains, profits,
excise, franchise, real and personal property, gross receipt,
capital stock, production, business and occupation, disability,
employment, payroll, license, estimated, stamp, custom duties,
severance or withholding taxes or charges imposed by any
Governmental Authority, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes and any
expenses incurred in connection with the determination, settlement
or litigation of any tax liability. "Tax Return", as used in this
----------
Agreement, means a report, return or other information required
to be supplied to a Governmental Authority with respect to Taxes
including, where permitted or required, combined or consolidated
returns for any group of entities that includes Xxxxxx-Xxxx on
the one hand, or IAC on the other hand.
(b) Xxxxxx-Xxxx has duly filed all Tax Returns
required to be filed by it under applicable law or filed
appropriate extensions which have not yet expired and will file
all Tax Returns required to be filed by it at or prior to the
Effective Time under applicable law. All Tax Returns were in all
material respects (and, as to Tax Returns not filed as of the
date hereof, will be) true, complete and correct and filed on a
timely basis, or extended as permitted by law.
(c) Xxxxxx-Xxxx has, within the time and in the
manner prescribed by law, paid (and until the Effective Time will
pay within the time and in the manner prescribed by law) all
Taxes that are currently due and payable except for those
contested in good faith and for which adequate reserves have been
taken.
(d) There are no material Tax liens upon the assets
of Xxxxxx-Xxxx except liens for Taxes not yet due.
(e) Xxxxxx-Xxxx has complied (and until the Effective
Time will comply) in all material respects with the provisions of
the Code relating to the payment and withholding of Taxes and
has, within the time and in the manner prescribed by Law,
withheld from employee wages and paid over to the proper
Governmental Authorities all amounts required.
(f) Except as disclosed on Schedule 3.14, no audits or
-------------
other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of
Xxxxxx-Xxxx.
(g) Except as disclosed on Schedule 3.14, Xxxxxx-Xxxx
-------------
has not received any Tax Rulings (as defined below) or entered
into any Closing Agreements (as defined below) with any taxing
authority that would have a continuing adverse effect after the
Effective Time. "Tax Ruling", as used in this Agreement, shall mean
----------
a written ruling of a taxing authority relating to Taxes. "Closing
--------
Agreement", as used in this Agreement, shall mean a written and
---------
legally binding agreement with a taxing authority relating to
Taxes.
(h) Schedule 3.14 contains a list of states,
-------------
territories and jurisdictions (whether foreign or domestic) to
which any Tax is properly payable by Xxxxxx-Xxxx.
3.15 Environmental Regulations. Xxxxxx-Xxxx is in
-------------------------
compliance in all material respects with all applicable federal,
state and local laws and regulations governing the environment,
public health and safety and employee health and safety
(including all provisions of the Occupational Safety and Health
Act ("OSHA")) and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand or notice has been filed or
commenced against Xxxxxx-Xxxx and, to the knowledge of Xxxxxx-
Xxxx, no such charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand or notice is pending or
threatened.
3.16 Litigation.
----------
(a) Except as disclosed in Schedule 3.16, there are no
-------------
actions, suits, arbitrations, regulatory proceedings or other
litigation, proceedings or governmental investigations pending
or, to Xxxxxx-Xxxx'x knowledge, threatened against Xxxxxx-Xxxx or
any of Xxxxxx-Xxxx'x officers or directors in their capacity as
such, or any of their respective properties or businesses, and
Xxxxxx-Xxxx is not aware of any facts or circumstances which may
reasonably be likely to give rise to any of the foregoing.
Except as set forth on Schedule 3.16, all of the proceedings
-------------
pending against Xxxxxx-Xxxx are covered and being defended by
insurers (subject to such deductibles as are set forth in such
Schedule). Except as disclosed on Schedule 3.16, Xxxxxx-Xxxx is not
-------------
subject to any order, judgment, decree, injunction, stipulation or
consent order of or with any court or other Governmental Authority.
Since January 1, 1993, Xxxxxx-Xxxx has not entered into any
agreement to settle or compromise any proceeding pending or
threatened against it which has involved any obligation for which
Xxxxxx-Xxxx has any continuing obligation.
(b) There are no claims, actions, suits, proceedings,
or investigations pending or, to Xxxxxx-Xxxx'x knowledge,
threatened by or against Xxxxxx-Xxxx with respect to this
Agreement or the Certificate of Merger, or in connection with the
transactions contemplated hereby or thereby, and Xxxxxx-Xxxx has
no reason to believe there is a valid basis for any such claim,
action, suit, proceeding or investigation.
3.17 No Conflict of Interest. Except as disclosed on
-----------------------
Schedule 3.17, to Xxxxxx-Xxxx'x knowledge, none of the stockholders
-------------
of Xxxxxx-Xxxx has or claims to have any direct or indirect
interest in any tangible or intangible property used in the
business of Xxxxxx-Xxxx, except as a holder of shares of Xxxxxx-
Xxxx Common Stock. Except as disclosed on Schedule 3.17, to
-------------
Xxxxxx-Xxxx'x knowledge, none of the stockholders of Xxxxxx-Xxxx
has any direct or indirect interest in any other Person which
conducts a business similar to, has any Contract or arrangement
with, or does business or is involved in any way with, Xxxxxx-
Xxxx except for the ownership of less than 1% of the outstanding
stock of any publicly held corporation.
3.18 Bank Accounts. Schedule 3.18 sets forth the names
------------- -------------
and locations of each bank or other financial institution at
which Xxxxxx-Xxxx has either an account (giving the account
numbers) or safe deposit box and the names of all Persons
authorized to draw thereon or have access thereto, and the names
of all Persons, if any, now holding powers of attorney or
comparable delegation of authority from Xxxxxx-Xxxx and a summary
statement thereof.
3.19 Compliance with Laws. Except as set forth on
--------------------
Schedule 3.19, Xxxxxx-Xxxx is not in default under any order of any
-------------
court, Governmental Authority or other agency or arbitration
board or tribunal to which Xxxxxx-Xxxx is or was subject within
the past two years or in violation of any laws, ordinances,
governmental rules or regulations (including, but not limited to,
those relating to environmental, safety, building, product safety
or health standards or labor or employment matters) to which
Xxxxxx-Xxxx is or was subject within the past two years, except
to the extent failure to comply would not have a Xxxxxx-Xxxx
Material Adverse Effect. The business of Xxxxxx-Xxxx is being,
and at the Closing will be, conducted in compliance with all
applicable laws, ordinances, rules and regulations applicable to
it (including, but not limited to, those relating to
environmental, safety, building, product safety or health
standards or labor or employment matters, except to the extent
failure to comply would not have a Xxxxxx-Xxxx Material Adverse
Effect).
3.20 Broker's/Finder's Fees. Xxxxxx-Xxxx retained
----------------------
Xxxxxxx Equities ("Xxxxxxx") in connection with the transactions
contemplated by this Agreement and shall issue to Xxxxxxx
warrants to purchase an aggregate of up to 452,830 shares of
Surviving Corporation Common Stock at an exercise price of $2.48
per share upon the Closing of the Merger as a fee for their
services. IAC does not have, nor shall have, any liability or
otherwise suffer or incur any loss as a result of or in
connection with such fee payable to Xxxxxxx. Except for Xxxxxxx,
Xxxxxx-Eden has not used any broker or finder in connection with
the transactions contemplated by this Agreement, and IAC has not
and shall not have any liability or otherwise suffer or incur any
loss as a result of or in connection with any brokerage or
finder's fee or other commission payable as a result of any
actions taken by Xxxxxx-Xxxx with respect to any broker or finder
in connection with the Merger contemplated by this Agreement.
3.21 Board Recommendation. The Board of Directors of
--------------------
Xxxxxx-Xxxx, at a special meeting of such Board held on
November 1, 1996, approved this Agreement, the Merger and the
other transactions contemplated hereby on the terms and
conditions set forth herein and has determined to recommend that
the stockholders of Xxxxxx-Xxxx approve this Agreement and the
Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IAC
In order to induce Xxxxxx-Xxxx to enter into this
Agreement and to consummate the transactions, including the
Merger, contemplated hereby, IAC represents and warrants to
Xxxxxx-Xxxx as of the date of this Agreement and as of the
Closing Date (as if such representations and warranties were
remade on the Closing Date), as follows:
4.1 Due Incorporation. IAC is a corporation duly
-----------------
organized, validly existing and in good standing under the laws
of the State of Delaware with all requisite power and authority
to own, lease and operate its properties and to carry on its
business as they are now being owned, leased, operated and
conducted. IAC, in light of its current operations and
properties, is not required to qualify as a foreign corporation
in any jurisdiction and is not qualified to do business in any
jurisdiction other than its jurisdiction of incorporation. True,
correct and complete copies of the Certificate of Incorporation
and By-laws, as amended, and minutes of meetings (or written
consents in lieu of meetings) of the Board of Directors (and all
committees thereof) and stockholders of IAC have been, or prior
to the Closing Date will have been, delivered to Xxxxxx-Xxxx.
4.2 Due Authorization. IAC has full power and
-----------------
authority to enter into this Agreement and the Certificate of
Merger and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by IAC of this
Agreement and the Certificate of Merger have been, or, in the
case of the Certificate of Merger, prior to the Closing Date will
be, duly and validly approved and authorized by the Board of
Directors of IAC, and, subject to obtaining the necessary
approval of the Merger by the stockholders of IAC, no other
actions or proceedings on the part of IAC are necessary to
authorize this Agreement, the Certificate of Merger and the
transactions contemplated hereby and thereby. IAC has duly and
validly executed and delivered this Agreement and will duly and
validly execute and deliver the Certificate of Merger. Subject
to obtaining the necessary approval of the stockholders of IAC,
this Agreement constitutes the legal, valid and binding
obligation of IAC, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or other laws from time to time in effect which
affect creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
4.3 Consents and Approvals; Non-Contravention.
-----------------------------------------
(a) With the exception of filing the Certificate of
Merger with the appropriate authorities pursuant to the DGCL and
the filing of the Registration Statement (as set forth in Section
5.5), no permit, consent, authorization or approval of, or filing
or registration with, any Governmental Authority or any other
Person not a party to this Agreement is necessary in connection
with the execution, delivery and performance by IAC of this
Agreement or the Certificate of Merger, or the consummation of
the transactions contemplated hereby or thereby.
(b) Except as would not result in an IAC Material
Adverse Effect (as defined in Section 4.6 below), the execution,
delivery and performance by IAC of this Agreement and the
Certificate of Merger do not and will not (A) violate any Law,
(B) violate or conflict with, result in a breach or termination
of, constitute a default (or a circumstance which, with or
without notice or lapse of time or both, would constitute a
default) or give any third party any additional right (including
a termination right) under, permit cancellation of, or result in
the creation of any Lien (except for any Lien for taxes not yet
due and payable) upon any of the assets or properties of IAC
under any contract to which IAC is a party or by which IAC or any
of its assets or properties is bound; (C) permit the acceleration
of the maturity of any indebtedness of IAC or indebtedness
secured by IAC's assets or properties; or (D) violate or conflict
with any provision of the Certificate of Incorporation or By-laws
of IAC.
(c) IAC has obtained and is in compliance with all
Permits that are required for the complete operation of the
business of IAC as currently operated, except for any Permits the
absence of which would not result in an IAC Material Adverse
Effect. All of the Permits are currently valid and in full force
and, to the knowledge of IAC, no revocation, cancellation or
withdrawal thereof has been threatened. IAC has filed such
timely and complete renewal applications as may be required with
respect to the Permits.
4.4 Capitalization.
--------------
(a) The authorized capital stock of IAC consists of
10,000,000 shares of IAC Common Stock and 5,000 shares of
Preferred Stock. On the date hereof, there are issued and
outstanding 833,250 shares of IAC Common Stock and no shares of
Preferred Stock. All of the issued and outstanding shares of IAC
Common Stock are validly issued, fully paid and nonassessable and
the issuance thereof was not subject to preemptive rights.
(b) Except as set forth on Schedule 4.4, there are no
------------
shares of IAC Common Stock or other equity securities (whether or
not such securities have voting rights) of IAC issued or
outstanding or any subscriptions, options, warrants, call rights,
convertible securities or other agreements or commitments of any
character obligating IAC to issue, transfer or sell any shares of
capital stock or other securities (whether or not such securities
have voting rights) of IAC. Except as set forth on Schedule 4.4,
------------
there are no outstanding contractual obligations of IAC which
relate to the purchase, sale, issuance, repurchase, redemption,
acquisition, transfer, disposition, holding or voting of any
shares of capital stock or other securities of IAC. Except as
set forth on Schedule 4.4, all of the warrants listed on Schedule
------------ --------
4.4 redeemable by IAC, subject only to the prior consummation by IAC
---
of a "business combination" (as defined in such warrants) and the
occurrence of certain trading prices of the IAC Common Stock at
the prices and for the periods described in such warrants.
4.5 Financial Statements; Undisclosed Liabilities;
-----------------------------------------------
Other Documents. For purposes of this Agreement, "IAC Financial
---------------
Statements" shall mean the audited financial statements of IAC as
of December 31, 1995 and December 31, 1994 and the unaudited
financial statements of IAC as of June 30, 1996 (including all
notes thereto) which have been previously delivered to Xxxxxx-
Xxxx, consisting of the balance sheets at such dates and, with
respect to the audited IAC Financial Statements, the related
statements of income and cash flow for each of the twelve-month
periods ended December 31, 1995 and December 31, 1994, and with
respect to the unaudited IAC Financial Statements, the related
statements of income and cash flow for the six-month period ended
June 30, 1996. The IAC Financial Statements have been prepared
in accordance with GAAP consistently applied and present fairly
the financial position, assets and liabilities of IAC as at the
dates thereof and the revenues, expenses, results of operations
and cash flows of IAC for the periods covered then ended
(subject, in the case of the unaudited interim IAC Financial
Statements to normal year-end audit adjustments consistent with
past practice). The IAC Financial Statements are in accordance
with the books and records of IAC, do not reflect any
transactions which are not bona fide transactions and do not
contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made,
not misleading. The IAC Financial Statements make full and
adequate disclosure of, and provision for, all obligations and
liabilities of IAC as of the date thereof.
4.6 No Adverse Effects or Changes. Except as disclosed
-----------------------------
in or reflected in the IAC Financial Statements, or as
contemplated by this Agreement or the Certificate of Merger,
since June 30, 1996, IAC has not (i) taken any of the actions set
forth in Section 5.3, (ii) suffered any IAC Material Adverse
Effect, (iii) suffered any damage, destruction or Loss to any of
its assets or properties (whether or not covered by insurance),
or (iv) increased the compensation of any executive officer of
IAC. For purposes of this Agreement, "IAC Material Adverse
Effect" shall mean an effect on the business, operations, assets,
liabilities, results of operations, cash flows, condition
(financial or otherwise) or prospects of IAC which is materially
adverse to IAC.
4.7 Title to Properties. IAC (i) has good and
-------------------
marketable title to, and is the lawful owner of, all of the
tangible and intangible assets, properties and rights reflected
in the IAC Financial Statements and (ii) at the Effective Time
will have good and marketable title to, and will be the lawful
owner of, all of such tangible and intangible assets, properties
and rights, in any case free and clear of any Lien, except for
(x) any Lien for current taxes not yet due and payable, and (y)
minor Liens that have arisen in the ordinary course of business
and that do not (in any case or in the aggregate) materially
detract from the value of the assets subject thereto or
materially impair the operations of IAC.
4.8 Liabilities. Except to the extent reflected or
-----------
reserved against on the balance sheets of IAC constituting a part
of the IAC Financial Statements, IAC has no debts, liabilities or
obligations of any nature other than liabilities incurred
subsequent to the date of such balance sheets in the ordinary
course of IAC's business.
4.9 Real Property. IAC does not have, and at the
-------------
Closing Date will not have, any Real Property.
4.10 Intellectual Property. Schedule 4.10 is a true and
--------------------- -------------
complete list of all Intellectual Property used by IAC in the
conduct of its business. Except as disclosed on Schedule 4.10:
-------------
(a) all of the Intellectual Property is owned by IAC
free and clear of all Liens, and is not subject to any license,
royalty or other agreement;
(b) none of the Intellectual Property has been or is
the subject of any pending or, to the best of knowledge of IAC,
threatened litigation or claim of infringement;
(c) no license or royalty agreement to which IAC is a
party is in breach or default by IAC or, to IAC's knowledge, any
other party thereto or the subject of any notice of termination
given or threatened;
(d) the services provided by IAC and any process,
method, part, design or material it employs, do not, to IAC's
knowledge, infringe any trademark, service xxxx, trade name,
copyright, trade secret, patent or confidential or proprietary
rights of another, and IAC has not received any notice contesting
its right to use any Intellectual Property;
(e) IAC has not granted any license or agreed to pay
or receive any royalty in respect of any Intellectual Property;
and
(f) IAC owns or possesses adequate rights in
perpetuity in and to all Intellectual Property necessary to
conduct its business as presently conducted.
4.11 Contracts. Schedule 4.11 lists all the material
--------- -------------
Contracts and arrangements of the following types to which IAC is
a party or by which it is bound, or to which any of its assets or
properties is subject:
(a) any collective bargaining agreement;
(b) any Contract or arrangement of any kind with any
employee, consultant, medical advisor, officer or director of
IAC;
(c) any Contract or arrangement with a sales
representative, manufacturer's representative, distributor,
dealer, broker, sales agency, advertising agency or other Person
engaged in sales, distributing or promotional activities, or any
Contract to act as one of the foregoing, on behalf of any Person;
(d) any Contract or arrangement of any nature which
involves the payment or receipt of cash or other property, an
unperformed commitment, or goods or services, having a value in
excess of $10,000;
(e) any Contract or arrangement pursuant to which IAC
has made or will make loans or advances, or has or will have
incurred debts or become a guarantor or surety or pledged its
credit on or otherwise become responsible with respect to any
undertaking of another (except for the negotiation or collection
of negotiable instruments in transactions in the ordinary course
of business);
(f) any indenture, credit agreement, loan agreement,
note, mortgage, security agreement, lease of real property or
personal property or agreement for financing;
(g) any Contract or arrangement involving a
partnership, joint venture or other cooperative undertaking;
(h) any Contract or arrangement involving any
restrictions with respect to the geographical area of operations
or scope or type of business of IAC;
(i) any power of attorney or agency agreement or
arrangement with any Person pursuant to which such Person is
granted the authority to act for or on behalf of IAC, or IAC is
granted the authority to act for or on behalf of any Person;
(j) any Contract for which the full performance
thereof may extend beyond 60 days from the date of this
Agreement;
(k) any Contract not made in the ordinary course of
business which is to be performed at or after the date of this
Agreement;
(l) any Contract relating to any acquisition or
disposition of IAC, or any acquisition or disposition of any
subsidiary, division, line of business, or Real Property, during
the five years prior to the date of this Agreement; and
(m) any Contract not specified above that is material
to IAC.
IAC has made available to Xxxxxx-Xxxx true and complete copies of
each document listed on Schedule 4.11, and a written description
-------------
of each oral arrangement so listed. The cancellation of any such
Contracts at any time by the other party would not have an IAC
Material Adverse Effect.
4.12 Employee Benefit Plans.
----------------------
IAC has no employee benefit plan other than the
contemplated IAC Employee Stock Option Plan referenced in Section
1.7(a)(iii)(1) above.
4.13 Tax Matters.
-----------
(a) IAC has duly filed all Tax Returns required to be
filed by it under applicable law or filed appropriate extensions
which have not yet expired and will file all Tax Returns required
to be filed by it at or prior to the Effective Time under
applicable law. All Tax Returns were in all material respects
(and, as to Tax Returns not filed as of the date hereof, will be)
true, complete and correct and filed on a timely basis or
extended as permitted by law.
(b) IAC has, within the time and in the manner
prescribed by law, paid (and until the Effective Time will pay
within the time and in the manner prescribed by law) all Taxes
that are currently due and payable except for those contested in
good faith and for which adequate reserves have been taken.
(c) There are no material Tax liens upon the assets
of IAC except liens for Taxes not yet due.
(d) IAC has complied (and until the Effective Time
will comply) in all respects with the provisions of the Code
relating to the payment and withholding of Taxes, including,
without limitation, the withholding and reporting requirements
under Code Sections 1441 through 1464, 3401 through 3606, 6041
and 6049, as well as similar provisions under any other Laws, and
has, within the time and in the manner prescribed by Law,
withheld from employee wages and paid over to the proper
Governmental Authorities all amounts required.
(e) No audits or other administrative proceedings or
court proceedings are presently pending with regard to any Taxes
or Tax Returns of IAC.
(f) IAC has not received any Tax Rulings or entered
into any Closing Agreements with any taxing authority that would
have a continuing adverse effect after the Effective Time.
(g) As soon as practicable after the Closing Date,
IAC will make available to Xxxxxx-Xxxx complete and accurate
copies of (i) all Tax Returns, and any amendments thereto, filed
by IAC, (ii) all audit reports received from any taxing authority
relating to any Tax Return filed by IAC and (iii) any Closing
Agreements entered into by IAC with any taxing authority.
(h) The United States government (with respect to
United States Federal income taxes) and Delaware (with respect to
Delaware franchise taxes) are the only states, territories and
jurisdictions (whether foreign or domestic) to which any Tax is
properly payable by IAC.
4.14 Litigation.
----------
(a) There are no actions, suits, arbitrations,
regulatory proceedings or other litigation, proceedings or
governmental investigations pending or, to IAC's knowledge,
threatened against IAC or any of the officers or directors of IAC
in their capacity as such, or any of their respective properties
or businesses, and IAC is not aware of any facts or circumstances
which may give rise to any of the foregoing. IAC is not subject
to any order, judgment, decree, injunction, stipulation or
consent order of or with any court or other Governmental
Authority. Since January 1, 1993, IAC has not entered into any
agreement to settle or compromise any proceeding pending or
threatened against it which has involved any obligation for which
IAC has any continuing obligation.
(b) There are no claims, actions, suits, proceedings,
or investigations pending or, to IAC's knowledge, threatened by
or against IAC with respect to this Agreement or the Certificate
of Merger, or in connection with the transactions contemplated
hereby or thereby, and IAC has no reason to believe there is a
valid basis for any such claim, action, suit, proceeding or
investigation.
4.15 No Conflict of Interest. Except as disclosed on
-----------------------
Schedule 4.15, to IAC's knowledge, none of the stockholders of IAC
-------------
has or claims to have any direct or indirect interest in any
tangible or intangible property used in the business of IAC,
except as a holder of shares of IAC Common Stock. Except as
disclosed on Schedule 4.15, to IAC's knowledge, none of the
--------------
stockholders of IAC has any direct or indirect interest in any
other Person which conducts a business similar to, has any Contract
or arrangement with, or does business or is involved in any way with,
IAC except for the ownership of less than 1% of the outstanding stock
of any publicly held corporation.
4.16 Bank Accounts. Schedule 4.16 sets forth the names
------------- -------------
and locations of each bank or other financial institution at
which IAC has either an account (giving the account numbers) or
safe deposit box and the names of all Persons authorized to draw
thereon or have access thereto, and the names of all Persons, if
any, now holding powers of attorney or comparable delegation of
authority from IAC and a summary statement thereof.
4.17 Compliance with Laws. IAC is not in default under
--------------------
any order of any court, Governmental Authority or other agency or
arbitration board or tribunal to which IAC is or was subject
within the past two years or in violation of any laws,
ordinances, governmental rules or regulations (including, but not
limited to, those relating to environmental, safety, building,
product safety or health standards or labor or employment
matters) to which IAC is or was subject within the past two
years, except to the extent failure to comply would not have an
IAC Material Adverse Effect. The business of IAC is being, and
at the Closing will be, conducted in compliance with all
applicable laws, ordinances, rules and regulations applicable to
it (including, but not limited to, those relating to
environmental, safety, building, product safety or health
standards or labor or employment matters), except to the extent
failure to comply would not have an IAC Material Adverse Effect.
4.18 Broker's/Finder's Fees. IAC retained Gruntal &
----------------------
Co., Incorporated ("Gruntal") in connection with the transactions
contemplated by this Agreement and shall pay to Gruntal 50,000
shares of Surviving Corporation Common Stock as a fee for their
services. Xxxxxx-Xxxx does not have, nor shall have, any
liability or otherwise suffer or incur any loss as a result of or
in connection with such fee payable to Gruntal.
Except for Gruntal, IAC has not used any broker or
finder in connection with the transactions contemplated by this
Agreement, and Xxxxxx-Xxxx has not and shall not have any
liability or otherwise suffer or incur any loss as a result of or
in connection with any brokerage or finder's or other commission
payable as a result of any actions taken by IAC with respect to
any broker or finder in connection with the Merger contemplated
by this Agreement.
4.19 Board Recommendation. The Board of Directors of
--------------------
IAC, at a special meeting of such Board held on November 1, 1996,
approved this Agreement, the Merger and the other transactions
contemplated hereby on the terms and conditions set forth herein
and has determined to recommend that the stockholders of IAC
approve this Agreement and the Merger (subject to the fiduciary
duty of the Board of Directors under applicable law).
4.20 Employee Matters. With the exception of Xxxxxxxxx
----------------
X. Xxxxx, President of IAC, IAC does not presently have any
employees and will not have any employees from the date hereof to
the Effective Time. IAC is not a party to any employment
agreement or consulting or similar agreement for the present or
future provision of services to IAC. IAC has conducted and
currently is conducting its business in material compliance with
all Laws relating to employment and employment practices, terms
and conditions of employment, wages and hours and
nondiscrimination in employment. IAC has no liability for any
vacation pay, vacation time, retirement benefits, health,
disability or other insurance benefits or severance pay.
4.21 SEC Filings. IAC has heretofore delivered to
-----------
Xxxxxx-Xxxx all registrations statements filed with the
Securities and Exchange Commission ("SEC"), its most recent Form
10-K for the fiscal year ended December 31, 1995 and all
intervening Form 8-K's, Form 10-Q's, proxy statements and other
documents together with all exhibits thereto, as filed with the
SEC (the "SEC Filings"). The SEC Filings were timely filed with
the SEC and do not contain a misstatement of a material fact or
an omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading as of the
time such documents were filed. No other document or report has
been required to be filed by IAC with the SEC which has not been
filed and, with the exception of the consummation of the Merger,
no event or transaction has occurred or is contemplated which
will hereafter be required to be disclosed by the Company in a
Form 10-K, Form 10-Q, Form 8-K or similar filing. IAC shall
cause to be filed all periodic and current reports required to be
filed with the SEC for all periods after execution of the
Agreement through the Closing Date.
ARTICLE V
COVENANTS
5.1 Implementing Agreement. Subject to the terms and
----------------------
conditions hereof, each party hereto shall use its best effort to
take all action required of it to fulfill its obligations under
the terms of this Agreement and the Certificate of Merger and to
facilitate the consummation of the transactions contemplated
hereby and thereby.
5.2 Access to Information and Facilities. (a) From and
------------------------------------
after the date of this Agreement, Xxxxxx-Xxxx shall allow IAC and
its representatives access during normal business hours to all of
the facilities, properties, books, Contracts, commitments and
records of Xxxxxx-Xxxx and shall make the officers and employees
of Xxxxxx-Xxxx available to IAC and its representatives as IAC or
its representatives shall from time to time reasonably request.
IAC and its representatives will be furnished with any and all
information concerning Xxxxxx-Xxxx which IAC or its
representatives reasonably request.
(b) From and after the date of this Agreement, IAC
shall give Xxxxxx-Xxxx and its representatives access during
normal business hours to all of the facilities, properties,
books, Contracts, commitments and records of IAC and shall make
the officers and employees of IAC available to Xxxxxx-Xxxx and
its representatives as Xxxxxx-Xxxx or its representatives shall
from time to time reasonably request. Xxxxxx-Xxxx and its
representatives will be furnished with any and all information
concerning IAC which Xxxxxx-Xxxx or its representatives
reasonably request.
5.3 Preservation of Business. From the date of this
------------------------
Agreement until the Closing Date, each of Xxxxxx-Xxxx and IAC, as
the case may be, shall operate only in the ordinary and usual
course of business consistent with past practice, and shall use
reasonable commercial efforts to (a) preserve intact the present
business organization of Xxxxxx-Xxxx and IAC, as the case may be,
(b) preserve the good will and advantageous relationships of
Xxxxxx-Xxxx and IAC, as the case may be, with employees and other
Persons material to the operation of their respective businesses,
and (c) not permit any action or omission within its control
which would cause any of the representations or warranties of
Xxxxxx-Xxxx and IAC, as the case may be, contained herein to
become inaccurate in any material respect or any of the covenants
of Xxxxxx-Xxxx and IAC, as the case may be, to be breached in any
material respect. Without limiting the generality of the
foregoing, except as set forth on Schedule 3.6 with respect to
-------------
Xxxxxx-Xxxx, and Schedule 4.6 with respect to IAC, prior to the
-------------
Closing, neither Xxxxxx-Xxxx nor IAC will, without having
obtained the prior written consent of the other:
(i) incur any obligation or enter into any Contract
which either (x) requires a payment by any party
in excess of, or a series of payments which in
the aggregate exceed, $10,000 or provides for the
delivery of goods or performance of services, or
any combination thereof, having a value in excess
of $10,000, or (y) has a term of, or requires the
performance of any obligations by Xxxxxx-Xxxx or
IAC, as the case may be, over a period in excess
of, six months;
(ii) take any action, or enter into or authorize any
Contract or transaction other than in the
ordinary course of business and consistent with
past practice;
(iii) as applicable, sell, transfer, convey, assign or
otherwise dispose of any of its assets or
properties, except in the ordinary course of
business;
(iv) waive, release or cancel any claims against third
parties or debts owing to it, or any rights which
have any value in an amount greater than $10,000
other than actions taken consistent with normal
past business practices;
(v) make any changes in its accounting systems,
policies, principles or practices;
(vi) authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver
(whether through the issuance or granting of
options, warrants, convertible or exchangeable
securities, commitments, subscriptions, rights to
purchase or otherwise) any shares of its capital
stock or any other securities, or amend any of
the terms of any such securities;
(vii) split, combine, or reclassify any shares of its
capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash,
stock or property or any combination thereof) in
respect of its capital stock, or redeem or
otherwise acquire any of its securities;
(viii) make any borrowings, incur any debt (other than
trade payables in the ordinary course of business
or equipment leases entered into in the ordinary
course of business), or assume, guarantee,
endorse or otherwise become liable (whether
directly, contingently or otherwise) for the
obligations of any other Person other than a
subsidiary, or make any unscheduled payment or
repayment of principal in respect of any Long
Term Debt. "Long Term Debt" shall mean the
aggregate original principal amount (less any
cash repayments of principal previously made) of,
and any and all accrued interest on, all
indebtedness with respect to borrowed money and
all other obligations (or series of related
obligations) to pay money with respect to
extensions of credit, including capitalized lease
and deferred compensation obligations, except
indebtedness or obligations for which all
installments are payable within six months from
the date of the advancement of funds or extension
of credit. The term "Long Term Debt" shall
include any amount listed or to be listed as a
current liability on financial statements which
reflects the current portion or final
installments of obligations originally reflected
as noncurrent liabilities;
(ix) make any new loans, advances or capital
contributions to, or new investments in, any
other Person other than to a subsidiary
consistent with normal business practices;
(x) except as contemplated by this Agreement, enter
into, adopt, amend or terminate any bonus, profit
sharing, compensation, termination, stock option,
stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred
compensation, employment, severance or other
employee benefit agreements, trusts, plans, funds
or other arrangements for the benefit or welfare
of any director, officer or employee, or increase
in any manner the compensation or fringe benefits
of any director, officer or employee or pay any
benefit not required by any existing plan and
arrangement or enter into any contract,
agreement, commitment or arrangement to do any of
the foregoing other than actions taken in the
ordinary course of business consistent with prior
business practices;
(xi) except for capital expenditures contemplated by
(xii) below, acquire, lease or encumber any
assets outside the ordinary course of business or
any assets which are material to its operations;
(xii) authorize or make any capital expenditures which
individually or in the aggregate are in excess of
$10,000 other than planned expenditures for the
development, establishment or expansion of
clinics and other operations consistent with past
business practices;
(xiii) make any Tax election or settle or compromise any
federal, state, local or foreign income Tax
liability, or waive or extend the statute of
limitations in respect of any such Taxes;
(xiv) pay or agree to pay any amount in settlement or
compromise of any suits or claims of liability
against it or its directors, officers, employees
or agents in an amount more than $10,000; or
(xv) terminate, modify, amend or otherwise alter or
change any of the terms or provisions of any
Contract other than in accordance with ordinary
business practices, or pay any amount not
required by Law or by any Contract in an amount
more than $10,000.
5.4 IAC and Xxxxxx-Xxxx Stockholders' Meetings.
------------------------------------------
(a) IAC, promptly following the execution of this
Agreement, shall call a meeting of stockholders (the "IAC
Stockholders' Meeting") to be held as promptly as practicable
following the declaration of effectiveness by the SEC of the
Registration Statement (as defined below) at IAC's principal
executive offices, for the purpose, among others, of voting on
the Merger contemplated herein and to approve the creation of the
IAC Employee Stock Option Plan. In connection with the IAC
Stockholders' Meeting, IAC shall promptly prepare and file with
the SEC, as part of IAC's Registration Statement on Form S-4 with
respect to the Merger (the "Registration Statement"), a joint
proxy statement/prospectus (the "Joint Proxy Statement") for
dissemination to each holder of shares of IAC Common Stock. IAC
shall promptly amend or supplement the Registration Statement to
the extent necessary in order to make the statements therein not
misleading. IAC shall use its reasonable, good faith efforts to
have the Registration Statement declared effective by the SEC
under the provisions of the Securities Act of 1933, as amended
(the "Act"). IAC shall provide Xxxxxx-Xxxx with copies of all
filings made pursuant to this Section 5.4 and shall consult with
Xxxxxx-Xxxx on responses to any comments made by the staff of the
SEC with respect thereto.
(b) Xxxxxx-Xxxx, promptly following the execution of
this Agreement, shall call a meeting of stockholders (the
"Xxxxxx-Xxxx Stockholders' Meeting" and, together with the IAC
Stockholders' Meeting, the "Meetings") to be held as promptly as
practicable following the declaration of effectiveness by the SEC
of the Registration Statement at Xxxxxx-Xxxx'x principal
executive offices, for the purpose, among others, of voting on
the Merger contemplated herein. In connection with the Xxxxxx-
Xxxx Stockholders' Meeting, Xxxxxx-Xxxx shall disseminate to each
holder of shares of Xxxxxx-Xxxx Common Stock for his or its
information a copy of the Joint Proxy Statement. Xxxxxx-Xxxx
shall cause its representatives to cooperate with IAC and its
representatives in connection with the preparation and filing
with the SEC of the Registration Statement.
5.5 Registration of IAC Common Stock. (a) As soon as
--------------------------------
practicable after the execution of this Agreement, IAC shall file
the Registration Statement with the SEC for the purpose of
registering the shares of Surviving Corporation Common Stock and
Surviving Corporation Warrants for distribution to Xxxxxx-Xxxx'x
stockholders and warrantholders in the Merger.
(b) The information specifically designated as being
supplied by IAC for inclusion in the Registration Statement shall
not, at the time the Registration Statement is declared
effective, at the time the Joint Proxy Statement is first mailed
to Xxxxxx-Xxxx and IAC stockholders, at the time of the Meetings
and on the Effective Date, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, not misleading.
(c) The information specifically designated as being
supplied by Xxxxxx-Xxxx for inclusion in the Registration
Statement shall not, at the time the Registration Statement is
declared effective, at the time the Joint Proxy Statement is
first mailed to Xxxxxx-Xxxx and IAC stockholders, at the time of
the Meetings and on the Effective Date, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, not misleading.
(d) If, at any time prior to the Effective Date, any
event or circumstance relating to IAC or its officers or
directors should be discovered by IAC which should be set forth
in an amendment to the Registration Statement or a supplement to
the Joint Proxy Statement, IAC shall promptly inform Xxxxxx-Xxxx
and IAC shall promptly file such amendment to the Registration
Statement.
(e) If, at any time prior to the Effective Date, any
event or circumstance relating to Xxxxxx-Xxxx or its officers or
directors should be discovered by Xxxxxx-Xxxx which should be set
forth in a supplement to the Joint Proxy Statement, Xxxxxx-Xxxx
shall promptly inform IAC of the same, and IAC shall promptly
file such supplement to the Joint Proxy Statement.
(f) All documents that IAC is responsible for filing
with the SEC in connection with the transactions contemplated
herein will comply as to form and substance in all material
respects with the applicable requirements of the Act and the
rules and regulations thereunder and the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder.
(g) Xxxxxx-Xxxx shall cooperate and use its best
efforts to supply IAC with all requisite information necessary to
complete the Registration Statement, including, but not limited
to, information relative to proxy solicitation of Xxxxxx-Xxxx'x
stockholders for approval of the Merger contemplated herein.
5.6 Agreement to Vote. (a) Xxxxxx, Chairman of the
-----------------
Board of Xxxxxx-Xxxx, shall vote all shares of Xxxxxx-Xxxx Common
Stock owned by him in favor of the Merger contemplated herein and
use his best efforts to cause the other holders of shares of
Xxxxxx-Xxxx Common Stock to vote their shares in favor of the
Merger.
(b) Xxxxx, Chairman of the Board of IAC, shall vote
all shares of IAC Common Stock owned by him in favor of the
Merger contemplated herein and use his best efforts to cause the
other holders of shares of IAC Common Stock to vote their shares
in favor of the Merger.
5.7 Blue Sky Compliance. IAC shall use its best efforts
-------------------
to qualify the shares of Surviving Corporation Common Stock to be
issued pursuant to the Merger under the securities or "blue sky"
laws of every jurisdiction of the United States in which a
Xxxxxx-Xxxx stockholder has an address on the records of Xxxxxx-
Xxxx on the record date for determining the Xxxxxx-Xxxx
stockholders entitled to notice of and to vote on the Merger,
except any such jurisdiction with respect to which counsel for
IAC has determined that such qualification is not required under
the securities or "blue sky" laws of such jurisdiction.
5.8 Listing. IAC shall use its best efforts to cause
-------
the shares of Surviving Corporation Common Stock to be issued
pursuant to the Merger to be listed on the Nasdaq National Market
System at the Effective Time, free of restrictions on transfer
other than restrictions pursuant to Rule 144 and Rule 145
promulgated under the Act.
5.9 Consents and Approvals.
----------------------
(a) Xxxxxx-Xxxx shall use reasonable commercial
efforts to obtain all consents, approvals, certificates and other
documents required in connection with the performance by it of
this Agreement and the consummation of the transactions
contemplated hereby, including all such consents and approvals by
each party to any of the Contracts referred to on Schedule 3.3.
------------
Xxxxxx-Xxxx shall make all filings, applications, statements and
reports to all Governmental Authorities and other Persons which
are required to be made prior to the Closing Date by or on behalf
of Xxxxxx-Xxxx pursuant to any applicable Law or Contract in
connection with this Agreement and the transactions contemplated
hereby.
(b) IAC shall use reasonable commercial efforts
to obtain all consents, approvals, certificates and other
documents required in connection with the performance by it of
this Agreement and the consummation of the transactions
contemplated hereby. IAC shall make all filings, applications,
statements and reports to all Governmental Authorities and other
Persons which are required to be made prior to the Closing Date
by or on behalf of IAC pursuant to any applicable Law or Contract
in connection with this Agreement and the transactions
contemplated hereby.
5.10 Maintenance of Insurance. Xxxxxx-Xxxx shall
------------------------
continue to carry its existing insurance, and shall not allow any
breach, default, termination or cancellation of such insurance
policies or agreements to occur or exist.
5.11 Supplemental Information. From time to time prior
------------------------
to the Closing, Xxxxxx-Xxxx, on the one hand, and IAC, on the
other hand, will promptly disclose in writing to the other any
matter hereafter arising which, if existing, occurring or known
at the date of this Agreement would have been required to be
disclosed to the other parties hereto or which would render
inaccurate any of the representations, warranties or statements
set forth in Articles III and IV, respectively, hereof.
Disclosure of supplemental information pursuant to this Section
5.11 shall insulate the party disclosing such information from a
claim by the other parties hereto of a breach of representation
with respect to such disclosed information.
5.12 Xxxxxx-Xxxx Lock-Up Letters. Xxxxxx-Xxxx shall use
---------------------------
reasonable commercial efforts to obtain signed letters from as
many Xxxxxx-Xxxx stockholders as possible, which letters shall
acknowledge such Xxxxxx-Xxxx stockholders' agreement not to sell
any shares of Surviving Corporation Common Stock to be issued to
them in, and as a result of, the Merger, for the nine-month
period immediately following the Effective Time.
5.13 Patent Analyses. (a) Within 45 days hereof, IAC, at
---------------
its option and at its own expense, shall cause to be undertaken
and completed by intellectual property counsel selected by IAC
(or such counsel's representatives) (collectively, "IAC
Counsel"), a patent infringement investigation including a search
and an analysis (the "Patent Infringement Analysis") to determine
whether, under the U.S. and Canadian Patent Laws then in
existence, the manufacture, use, offer for sale or sale of any of
Xxxxxx-Xxxx'x products set forth on Schedule 5.13 infringes one
--------------
or more claims of any unexpired United States or Canadian patent
("Third-Party Patent"). In the event as a result of the Patent
Infringement Analysis it is the opinion of IAC Counsel that one or
more claims of Third-Party Patents are infringed, IAC Counsel shall
within 45 days thereafter cause to be conducted and completed
a patent validity investigation to determine whether in the
opinion of IAC
Counsel each of such infringed Third-Party Patent claims is valid
and enforceable (the "Patent Validity Analysis"). The final
opinion of IAC Counsel after completing said Patent Infringement
Analysis and, if necessary, said Patent Validity Analysis, shall
include an opinion as to whether any finding of patent
infringement by IAC Counsel will have an "unavoidable" Xxxxxx-
Xxxx Material Adverse Effect upon the products set forth on
Schedule 5.13. In construing the term "unavoidable" as used in
--------------
this Section, the parties understand and agree that, by way of
example, in the event it is the opinion of IAC Counsel that
there is infringement of one or more valid claims of a
Third-Party Patent, but that it is demonstrated to the good
faith reasonable satisfaction of IAC Counsel that either
(i) a license is available to Xxxxxx-Xxxx under such infringed
Third-Party Patent, or (ii) that a non-infringing commercial
alternative is available to Xxxxxx-Xxxx to enable it to avoid
liability for patent infringement, the existence of either of
such Xxxxxx-Xxxx options (i) or (ii) shall be construed as
satisfying the condition under this Section that liability for
such patent infringement can be "avoided" by Xxxxxx-Xxxx. IAC
shall, reasonably promptly after receipt of the aforesaid
completed Patent Infringement Analysis and, if completed, the
Patent Validity Analysis, provide to Xxxxxx-Xxxx a copy of same.
Moreover, IAC shall provide to Xxxxxx-Xxxx copies of all
documents pertinent to IAC Counsel's said analyses as they are
received, including, without limitation, the results of IAC
Counsel's prior art search and analysis, its file history
analysis, and a detailed claim chart for each claim identified by
IAC Counsel as being infringed, together with all related
documents, in order to permit H-E Counsel (as defined below) to
(a) evaluate same prior to the final opinion of IAC Counsel and
(b) to have an opportunity prior to said IAC Counsel final
opinion to either obtain a license under each infringed Third-
Party Patent and/or provide to IAC Counsel for consideration one
or more non-infringing alternatives which will render the patent
infringement "avoidable". IAC Counsel shall within 15 business
days after receipt of same and all supporting documents, evaluate
each such Xxxxxx-Xxxx proposed non-infringing alternative with a
view toward confirming or revising IAC Counsel's final opinion.
(b) In the event, in the final opinion of IAC Counsel, there
is an "unavoidable" Xxxxxx-Xxxx Material Adverse Effect upon the
products set forth on Schedule 5.13 as a result of infringement of
-------------
a Third-Party Patent, then within 45 days after receipt of such
IAC Counsel final opinion Xxxxxx-Xxxx, at its option and at its
own expense, shall cause to be undertaken and completed by
intellectual property counsel selected by Xxxxxx-Xxxx (or such
counsel's representatives) (collectively "H-E Counsel"), its own
like patent infringement and patent validity investigations, to
determine whether H-E Counsel is in agreement with the opinion of
IAC Counsel. Xxxxxx-Xxxx shall reasonably promptly after receipt
of the aforesaid completed H-E Counsel analyses provide to IAC a
copy of same, including, without limitation, the results of H-E
Counsel's prior art search and analysis, its file history
analysis, and a detailed claim chart for each claim identified by
IAC Counsel as being infringed, together with all related
documents. Furthermore, Xxxxxx-Xxxx shall provide to IAC a copy
of documents pertinent to H-E Counsel's said analyses as they are
received, in order to permit IAC Counsel to evaluate same prior
to the final opinion of H-E Counsel.
(c) In the event the final opinions IAC Counsel and H-E
Counsel reach opposite conclusions, the parties shall in good
faith select independent intellectual property counsel with at
least ten years of first chair patent trial experience and from
an intellectual property boutique with an "av" Martindale Xxxxxxx
rating ("Independent Counsel"). Such Independent Counsel shall
be retained by and at the shared (50% each) expense of the
parties for the purpose of providing an independent opinion as to
whether there is a reasonably strong likelihood that, under the
U.S. and Canadian Patent Laws then in existence, the manufacture,
use, offer for sale or sale of any of Xxxxxx-Xxxx'x products set
forth on Schedule 5.13 will infringe one or more claims of a
------------
Third-Party Patent, and whether such infringement will in the
opinion of Independent Counsel have an "unavoidable" Xxxxxx-Xxxx
Material Adverse Effect upon said products. Independent Counsel,
upon being retained, shall be provided with both (i) a copy of
the final opinions of IAC Counsel and H-E Counsel (together with
supporting documents) and (ii) an opportunity for each of IAC
Counsel and H-E Counsel to be heard. The independent opinion
of Independent Counsel shall be final and shall be binding upon
IAC and Xxxxxx-Xxxx.
(d) As soon as possible following the execution of this
Agreement, Xxxxxx-Xxxx shall deliver, or cause to be delivered,
to IAC all documentation in the possession of Xxxxxx-Xxxx and
Xxxxxx-Xxxx'x attorneys and other representatives regarding
Xxxxxx-Xxxx'x licensed Intellectual Property.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF IAC
The obligations of IAC under this Agreement are subject
to the satisfaction or waiver by IAC of the following conditions
precedent on or before the Closing Date:
6.1 Warranties True as of Both Present Date and Closing
--------------------------------------------------
Date. The representations and warranties of Xxxxxx-Xxxx contained
----
herein shall be true and correct in all material respects on and
as of the date of this Agreement, and shall also be true and
correct in all material respects on and as of the Closing Date
with the same force and effect as though made on and as of the
Closing Date.
6.2 Compliance With Agreements and Covenants. Xxxxxx-
----------------------------------------
Eden shall have performed and complied with all of its covenants,
obligations and agreements contained in this Agreement to be
performed and complied with by it on or prior to the Closing
Date.
6.3 Consents and Approvals. IAC, on the one hand, and
----------------------
Xxxxxx-Xxxx, on the other hand, shall have received written
evidence satisfactory to them that all consents and approvals
required for the consummation of the transactions contemplated
hereby have been obtained, and all required filings have been
made, including (without limitation) those set forth on Schedule 3.3
------------
hereto.
6.4 Documents. IAC shall have received all of the
---------
agreements, documents and items specified in Section 8.1 below.
6.5 No Material Adverse Change. Since the date hereof,
--------------------------
no "Material Adverse Change to Xxxxxx-Xxxx" shall have occurred.
Material Adverse Change to Xxxxxx-Xxxx shall mean a change in the
business, operations, assets, liabilities, results of operations,
cash flows, condition (financial or otherwise) or prospects of
Xxxxxx-Xxxx which is materially adverse to Xxxxxx-Xxxx.
6.6 Actions or Proceedings. No action or proceeding by
----------------------
any Governmental Authority or other Person shall have been
instituted or threatened which (a) is likely to have a Xxxxxx-
Xxxx Material Adverse Effect, or (b) could enjoin, restrain or
prohibit, or could result in substantial damages in respect of,
any provision of this Agreement or the consummation of the
transactions contemplated hereby.
6.7 Opinion of Counsel for Xxxxxx-Xxxx. IAC shall have
----------------------------------
received the opinion of Xxxxxx Godward LLP, counsel for Xxxxxx-
Xxxx, substantially in the form annexed hereto as Exhibit B.
6.8 Approval of Merger. The stockholders of Xxxxxx-Xxxx
-------------------
and IAC shall have approved this Agreement and the Merger
contemplated hereby in accordance with their respective charters
and by-laws and the DGCL and, with respect to IAC, in the manner
set forth in IAC's Prospectus dated May 15, 1995 (the
"Prospectus").
6.9 IAC Redemption Right. The Solicited Stockholders
--------------------
holding 15% or more of the shares of IAC Common Stock shall not
have exercised their Redemption Rights in accordance with the
Prospectus.
6.10 Patent Infringement and Patent Validity Analyses.
------------------------------------------------
The Patent Infringement Analysis and, if necessary, the Patent
Validity Analysis, contemplated in Section 5.13 above, and, if
given, the final opinion of Independent Counsel (which final
opinion shall be binding upon the parties), shall not have
resulted in an opinion of a patent infringement which will have
an "unavoidable" Xxxxxx-Xxxx Material Adverse Effect upon the
products set forth on Schedule 5.13.
-------------
6.11 Appointment of Xxxxx as a Director. Xxxxx shall
----------------------------------
have been appointed a Director of the Surviving Corporation,
effective at the Effective Time.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX-XXXX
The obligations of Xxxxxx-Xxxx under this Agreement are
subject to the satisfaction or waiver by Xxxxxx-Xxxx of the
following conditions precedent on or before the Closing Date:
7.1 Warranties True as of Both Present Date and Closing
--------------------------------------------------
Date. The representations and warranties of IAC contained herein
----
shall be true and correct in all material respects on and as of
the date of this Agreement, and shall also be true and correct in
all material respects on and as of the Closing Date with the same
force and effect as though made by IAC on and as of the Closing
Date.
7.2 Compliance with Agreements and Covenants. IAC shall
----------------------------------------
have performed and complied with all of its covenants,
obligations and agreements contained in this Agreement to be
performed and complied with by it on or prior to the Closing
Date.
7.3 Consents and Approvals. Xxxxxx-Xxxx, on the one
----------------------
hand, and IAC, on the other hand, shall have received written
evidence satisfactory to them that all consents and approvals
required for the consummation of the transactions contemplated
hereby have been obtained, and all required filings have been
made, including (without limitation) those set forth on Schedule
------------
3.3 hereto.
---
7.4 Documents. Xxxxxx-Xxxx shall have received all of
---------
the agreements, documents and items specified in Section 8.2.
7.5 No Material Adverse Change. Since the date hereof,
--------------------------
no "Material Adverse Change to IAC" shall have occurred.
Material Adverse Change to IAC shall mean a change in the
business, operations, assets, liabilities, results of operations,
cash flows, condition (financial or otherwise) or prospects of
IAC which is materially adverse to IAC.
7.6 Actions or Proceedings. No action or proceeding by
----------------------
any Governmental Authority or other Person shall have been
instituted or threatened which (a) is likely to have an IAC
Material Adverse Effect, or (b) could enjoin, restrain or
prohibit, or could result in substantial damages in respect of,
any provision of this Agreement or the consummation of the
transactions contemplated hereby.
7.7 Opinion of Counsel for IAC. Xxxxxx-Xxxx shall have
--------------------------
received the opinion of Xxxx & Priest LLP, counsel for IAC,
substantially in the form annexed hereto as Exhibit C.
7.8 Approval of Merger. The stockholders of Xxxxxx-Xxxx
------------------
and IAC shall have approved this Agreement and the Merger
contemplated hereby in accordance with their respective charters
and by-laws and the DGCL and, with respect to IAC, in the manner
set forth in its Prospectus.
7.9 Registration Statement Effective. The Registration
--------------------------------
Statement shall have been declared effective by the SEC in
accordance with the Act and the rules and regulations promulgated
thereunder.
7.10 IAC Cash Position. Xxxxxx-Xxxx shall be satisfied,
-----------------
in good faith, that IAC, as of the date of this Agreement and as
of the Effective Time, has not less than $6.5 million of cash on
hand, in excess of all liabilities.
ARTICLE VIII
DELIVERIES AT CLOSING
8.1 Deliveries by Xxxxxx-Xxxx. At the Closing, in
-------------------------
addition to any other documents or agreements required under this
Agreement, Xxxxxx-Xxxx shall deliver to IAC the following:
(a) Evidence, in form satisfactory to IAC, that all
filings, approvals and other matters set forth on Schedule 3.3
----------
have been obtained;
(b) A certificate, dated the Closing Date, of an
officer of Xxxxxx-Xxxx, certifying as to the compliance by it
with Sections 6.1 and 6.2 hereof;
(c) A certificate of the secretary or equivalent
Person (a "Secretary") of Xxxxxx-Xxxx certifying resolutions of
the Board of Directors and stockholders of Xxxxxx-Xxxx approving
and authorizing the execution, delivery and performance of this
Agreement and the Certificate of Merger and the consummation of
the transactions contemplated hereby and thereby, including the
Merger (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of Xxxxxx-Xxxx);
(d) The Certificate of Incorporation of Xxxxxx-Xxxx,
certified by the Secretary of State of Delaware, and the by-laws
of Xxxxxx-Xxxx, certified by the Secretary of Xxxxxx-Xxxx;
(e) Certificates of Good Standing for Xxxxxx-Xxxx from
the State of Delaware and all the other jurisdictions set forth
on Schedule 3.1 hereof;
------------
(f) The opinion referenced in Section 6.7 above;
(g) Copies of the signed letters received by Xxxxxx-
Xxxx as contemplated by Section 5.12 above; and
(h) The Certificate of Merger.
8.2 Deliveries by IAC. At the Closing, in addition to
-----------------
any other documents or agreements required under this Agreement,
IAC shall deliver to Xxxxxx-Xxxx the following:
(a) Evidence, in form satisfactory to Xxxxxx-Xxxx,
that all filings, approvals and other matters contemplated in
Section 4.3 have been obtained;
(b) A certificate, dated the Closing Date, of an
officer of IAC, certifying as to compliance by IAC with Sections
7.1, 7.2 and 7.10 hereof;
(c) A certificate of the Secretary of IAC certifying
resolutions of the Board of Directors and stockholders of IAC
approving and authorizing the execution, delivery and performance
of this Agreement and the Certificate of Merger and the
consummation of the transactions contemplated hereby and thereby,
including the Merger (together with an incumbency and signature
certificate regarding the officer(s) signing on behalf of IAC);
(d) The Certificate of Incorporation of IAC, certified
by the Secretary of State of Delaware, and the by-laws of IAC,
certified by the Secretary of IAC;
(e) A Certificate of Good Standing for IAC from the
State of Delaware;
(f) The opinion referenced in Section 7.7 above;
(g) The Certificate of Merger; and
(h) Written evidence, in form reasonably satisfactory
to Xxxxxx-Xxxx, that IAC has delivered to the Exchange Agent
certificates representing the maximum number of shares of
Surviving Corporation Common Stock, Surviving Corporation
Warrants and Surviving Corporation Options that may be issued in
connection with the Merger.
ARTICLE IX
TERMINATION; TERMINATION FEE
9.1 Termination. Anything herein or elsewhere to the
-----------
contrary notwithstanding, this Agreement may be terminated and
the Merger contemplated hereby may be abandoned at any time prior
to the Closing Date, as follows:
(a) With the mutual consent of all parties hereto;
(b) Prior to, but not after, the approval hereof by
the stockholders of each of Xxxxxx-Xxxx and IAC, by Xxxxxx-Xxxx
or IAC, as the case may be, if the Closing shall not have taken
place on or before February 15, 1997 (or such later date as
contemplated by Section 5.13 above to permit the parties hereto
to complete their patent analyses within the time parameters set
forth in Section 5.13 above); provided, however, that the right
------------ -----------------
to terminate this Agreement under this Section 9.1(b) shall not be
available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such date;
(c) By either party hereto if any court of competent
jurisdiction in the United States or other United States
governmental body shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise
prohibiting the Merger or any of the other transactions
contemplated hereby and such order, decree, ruling or other
action shall have become final and non appealable;
(d) By IAC, if Solicited Stockholders holding 15% or
more of the shares of IAC Common Stock shall have exercised their
Redemption Rights in accordance with the Prospectus; or
(e) By IAC, if the condition precedent set forth in
Section 6.10 hereof is not satisfied by the Closing Date.
9.2 Effect of Termination. If this Agreement is
---------------------
terminated pursuant to Section 9.1, all obligations of the
parties hereunder (except with respect to the obligations
enumerated in Sections 9.3 and 12.3 below) shall terminate,
except that no such termination shall relieve any party from
liability for any prior willful breach of this Agreement.
9.3 Termination Fee. IAC and Xxxxxx-Xxxx each
---------------
acknowledge that upon the execution of this Agreement, Xxxxxx-
Xxxx placed $100,000 into an escrow account with Xxxx & Priest
LLP, as escrow agent, pursuant to an Escrow Agreement of even
date herewith (the "Escrow Agreement"), a form of which is
annexed hereto as Exhibit D. Pursuant to the terms of the Escrow
Agreement, in the event that Xxxxxx-Xxxx terminates this
Agreement and abandons the Merger contemplated hereby for any
reason, other than due to a reason described in Section 9.1
above, the Escrow Agent shall release the $100,000 from escrow
and deliver such sum to IAC as reimbursement for its costs and
expenses in connection with this Agreement and the proposed
Merger. In addition, and notwithstanding anything to the
contrary set forth herein, in the event that IAC terminates this
Agreement and abandons the Merger contemplated hereby in
accordance with Section 9.1(e) above, the Escrow Agent shall
release from escrow and deliver to IAC such sum as may be
necessary to reimburse IAC for its costs and expenses in
connection with this Agreement and the proposed Merger.
ARTICLE X
EXCLUSIVITY
From and after the date of this Agreement and until
either the Effective Time of the Merger or the termination of
this Agreement in accordance with Article IX hereof, neither
Xxxxxx-Xxxx nor any of its affiliates shall solicit, initiate,
encourage, continue or enter into negotiations or discussions of
any type, directly or indirectly, with any other person, with
respect to an offer for the sale of Xxxxxx-Xxxx, or any
substantial portion of Xxxxxx-Xxxx'x assets, or Xxxxxx-Xxxx'x
capital stock, directly by merger, consolidation or any other
form of purchase (collectively, an "Offer"); provided, however,
that the foregoing shall not prohibit Xxxxxx-Xxxx and its
affiliates from soliciting, initiating, encouraging, continuing
or entering into negotiations or discussions for the limited
purpose of raising capital for Xxxxxx-Xxxx.
ARTICLE XI
INDEMNIFICATION
11.1 Survival. Solely for purposes of indemnification
--------
for the representations listed in Sections 11.2(a) and 11.3(a)
below, the representations, warranties and covenants made herein
and in the Schedules hereto by Xxxxxx-Xxxx and IAC shall survive
the Closing and continue in full force and effect until and
including the date which is one year after the Closing Date. No
other representation, warranty or covenant made herein shall
survive the Closing Date.
11.2 Indemnification by Xxxxxx.
-------------------------
(a) Subject to Section 11.2(c) below, and in addition
to the indemnification provided for in Section 11.2(b) below,
Xxxxxx hereby agrees to defend, indemnify and hold harmless IAC,
the Surviving Corporation and their respective affiliates,
officers, directors, stockholders, agents and employees (other
than Xxxxxx) (collectively, the "IAC Indemnified Parties"), from
and against any and all loss or liability, accrued, absolute or
otherwise, in respect of losses, suits, proceedings, demands,
judgments, damages, expenses and costs (including reasonable
attorneys' fees and litigation expenses, whether arising out of a
third party claim or relating to recovering indemnifiable damages
from Xxxxxx) (collectively, the "IAC Indemnifiable Damages")
which any of the IAC Indemnified Parties may suffer or incur by
reason of the breach by Xxxxxx-Xxxx of any of its representations
and warranties set forth in Section 3.3, the third sentence of
Section 3.4(b) (provided, however, that such numbers may vary by
5% without any breach taking place), Section 3.7(i) (provided,
however, that no indemnification shall be made with respect to
title to intangible assets) and Sections 3.8, 3.12, 3.14, 3.16
and 3.19 of this Agreement. Notwithstanding the foregoing,
Xxxxxx' indemnification obligations under this Section 11.2 shall
only be triggered if Xxxxxx knew, at the date of this Agreement
or at the Closing Date, that the representation or warranty in
question was false or misleading when made or given by Xxxxxx-
Xxxx.
(b) In addition to the indemnification provided for in
Section 11.2(a) above, Xxxxxx shall indemnify and hold harmless
IAC, the Surviving Corporation and Xxxxx from any and all losses
or liabilities that IAC, Xxxxx or the Surviving Corporation may
suffer or incur in the event any party other than Xxxxxxx claims
that a brokerage or finder's fee is payable as a result of
actions taken by Xxxxxx or Xxxxxx-Xxxx in connection with the
Merger.
(c) Xxxxxx shall not be required to indemnify the IAC
Indemnified Parties pursuant to Section 11.2(a) above (i) except
to the extent that the aggregate amount of IAC Indemnifiable
Damages exceeds $25,000, in which case Xxxxxx shall only be
responsible for such IAC Indemnifiable Damages in excess of
$25,000 in the aggregate or (ii) for any amounts in excess of
$250,000. Xxxxxx may pay such Indemnifiable Damages in cash or
by transfer of his shares of Surviving Corporation Common Stock
pro rata to such IAC Indemnified Parties at the fair market price
of such Surviving Corporation Common Stock calculated by
reference to the average Closing Price per share of the Surviving
Corporation Common Stock over a period of twenty consecutive
Trading Days immediately prior to the date of receipt by Xxxxxx
of a claim for IAC Indemnifiable Damages made by such IAC
Indemnified Party.
11.3 Indemnification by Xxxxx. (a) Subject to Section
------------------------
11.3(c) below, and in addition to the indemnification provided
for in Section 11.3(b) below, Xxxxx hereby agrees to defend,
indemnify and hold harmless, Xxxxxx-Xxxx, the Surviving
Corporation and their respective affiliates, officers, directors,
stockholders, agents and employees (other than Xxxxx)
(collectively, the "Xxxxxx-Xxxx Indemnified Parties"), from and
against any and all loss or liability, accrued, absolute or
otherwise, in respect of losses, suits, proceedings, demands,
judgments, damages, expenses and costs (including reasonable
attorneys' fees and litigation expenses, whether arising out of a
third party claim or relating to recovering indemnifiable damages
from Xxxxx) (collectively, the "Xxxxxx-Xxxx Indemnifiable
Damages") which any of the Xxxxxx-Xxxx Indemnified Parties may
suffer or incur by reason of the breach by IAC of any of its
representations or warranties set forth in Sections 4.3, 4.4,
4.7, 4.8, 4.12, 4.13, 4.14 and 4.17. Notwithstanding the
foregoing, Xxxxx'x indemnification obligations under this Section
11.3 shall only be triggered if Xxxxx knew, at the date of this
Agreement or at the Closing Date, that the representation or
warranty in question was false or misleading when made or given
by IAC.
(b) In addition to the indemnification provided for in
Section 11.3(a) above, Xxxxx shall indemnify and hold harmless
Xxxxxx-Xxxx, the Surviving Corporation and Xxxxxx from any and
all losses or liabilities that Xxxxxx-Xxxx, the Surviving
Corporation or Xxxxxx may suffer or incur in the event any party
other than Gruntal claims that a brokerage or finder's fee is
payable as a result of actions taken by IAC or Xxxxx in
connection with the Merger.
(c) Xxxxx shall not be required to indemnify the
Xxxxxx-Xxxx Indemnified Parties pursuant to Section 11.3(a) above
(i) except to the extent that the aggregate amount of Xxxxxx-Xxxx
Indemnifiable Damages exceeds $25,000, in which case Xxxxx shall
only be responsible for such Xxxxxx-Xxxx Indemnifiable Damages in
excess of $25,000 in the aggregate or (ii) for any amounts in
excess of $250,000. Xxxxx may pay such Indemnifiable Damages in
cash or by transfer of his shares of Surviving Corporation Common
Stock pro rata to such Xxxxxx-Xxxx Indemnified Parties at the
fair market price of such Surviving Corporation Common Stock
calculated by reference to the average Closing Price per share of
the Surviving Corporation Common Stock over a period of twenty
consecutive Trading Days immediately prior to the date of receipt
by Xxxxx of a claim for Xxxxxx-Xxxx Indemnifiable Damages made by
such Xxxxxx-Xxxx Indemnified Party.
11.4 Notice and Right to Defend Third Party Claims.
---------------------------------------------
Promptly upon receipt of notice of any third party claim, demand
or assessment or the commencement of any suit, action or
proceeding, or promptly following awareness of all relevant facts
necessary to conclude that a non-third party claim may be made,
in respect of which indemnity may be sought on account of an
indemnity agreement contained in this Article XI, the party(ies)
seeking indemnification (the "Indemnitee") will notify in
writing, within sufficient time to respond to such claim or
answer or otherwise plead in such action, the party(ies) from
whom indemnification is sought (the "Indemnitor"). In case any
claim, demand or assessment is asserted or suit, action or
proceeding is commenced against an Indemnitee, and it notifies
the Indemnitor of the commencement thereof, the Indemnitor will
be entitled to participate therein, and, to the extent that it
may wish, to assume the defense, conduct or settlement thereof,
with counsel reasonably satisfactory to the Indemnitee, whose
consent to the selection of counsel will not unreasonably be
withheld. After notice from the Indemnitor to the Indemnitee of
its election so to assume the defense, conduct or settlement
thereof, the Indemnitor will not be liable to the Indemnitee for
any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense, conduct or settlement
thereof. The Indemnitee will cooperate with the Indemnitor in
connection with any such claim, make personnel, books and records
relevant to the claim available to the Indemnitor, and grant such
authorization or powers of attorney to the agents,
representatives and counsel of the Indemnitor as the Indemnitor
may reasonably consider desirable in connection with the defense
of any such claim.
ARTICLE XII
MISCELLANEOUS
12.1 Expenses. Each party hereto shall bear its own
--------
expenses with respect to the transactions contemplated hereby.
12.2 Amendment. This Agreement may be amended, modified
---------
or supplemented but only in a writing signed by the parties
hereto.
12.3 Confidentiality and Return of Information.
-----------------------------------------
(a) On and after the date of this Agreement, IAC will
keep secret and confidential (i) all information heretofore or
hereafter acquired by it and deemed to be confidential by Xxxxxx-
Xxxx and (ii) all other information provided by Xxxxxx-Xxxx to
IAC relating to the business, operations, employees, customers
and distributors of Xxxxxx-Xxxx, including, but not limited to,
any customer or distributor lists, documentation regarding
Intellectual Property, marketing arrangements, business plans,
sales plans, promotional sales materials, pricing information,
manuals, correspondence, notes, financial data or employee
information (all such information described in clauses (i) and
(ii) above is hereinafter collectively referred to as
"Confidential Information").
(b) Upon any termination of this Agreement pursuant to
Article IX hereof, IAC shall return to Xxxxxx-Xxxx all documents
and copies of documents in its possession relating to any
Confidential Information, and no director, officer, employee or
representative of IAC shall make or retain any copy or extract of
any of the foregoing.
12.4 Notices. Any notice, request, instruction or other
-------
document to be given hereunder by a party hereto shall be in
writing and shall be deemed to have been given (a) when received
if given in person, (b) on the date of transmission if sent by
telex, facsimile or other wire transmission or (c) three business
days after being deposited in the U.S. mail, certified or
registered mail, postage prepaid:
(a) If to Xxxxxx-Xxxx or Xxxxxx:
000 X.X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
with a copy to:
Cooley Godward LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) If to IAC or Xxxxx:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may
designate for itself by notice given as herein provided.
12.5 Waivers. The failure of a party hereto at any time
-------
or times to require performance of any provision hereof shall in
no manner affect its right at a later time to enforce the same.
No waiver by a party of any condition or of any breach of any
term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in
any one or more instances shall be deemed to be a further or
continuing waiver of any such condition or breach in other
instances or a waiver of any other condition or breach of any
other term, covenant, representation or warranty.
12.6 Interpretation. The headings preceding the text of
--------------
Articles and Sections included in this Agreement and the headings
to Schedules attached to this Agreement are for convenience only
and shall not be deemed part of this Agreement or be given any
effect in interpreting this Agreement. The use of the masculine,
feminine or neuter gender herein shall not limit any provision of
this Agreement. The use of the terms "including" or "include"
shall in all cases herein mean "including, without limitation" or
"include, without limitation," respectively.
12.7 Applicable Law. This Agreement shall be governed by
---------------
and construed and enforced in accordance with the internal laws
of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
12.8 Assignment. This Agreement shall be binding upon
----------
and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no
assignment of any rights or obligations shall be made by any
party without the prior written consent of all the other parties
hereto.
12.9 No Third Party Beneficiaries. This Agreement is
----------------------------
solely for the benefit of the parties hereto and, to the extent
provided herein, their respective directors, officers, employees,
agents and representatives, and no provision of this Agreement
shall be deemed to confer upon other third parties any remedy,
claim, liability, reimbursement, cause of action or other right.
12.10 Further Assurances. Upon the request of the
------------------
parties hereto, the other parties hereto will, on and after the
Closing Date, execute and deliver such other documents, releases,
assignments and other instruments as may be required to
effectuate completely the transactions contemplated by this
Agreement.
12.11 Severability. If any provision of this Agreement
------------
shall be held invalid, illegal or unenforceable, the validity,
legality or enforceability of the other provisions hereof shall
not be affected thereby, and there shall be deemed substituted
for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
12.12 Remedies Cumulative. The remedies provided in this
-------------------
Agreement shall be cumulative and shall not preclude the
assertion or exercise of any other rights or remedies available
by law, in equity or otherwise.
12.13 Entire Understanding. This Agreement and the
--------------------
Certificate of Merger set forth the entire agreement and
understanding of the parties hereto and supersede all prior
agreements, arrangements and understandings between the parties.
12.14 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on the date first above
written.
INITIAL ACQUISITION CORP.
By: /s/ Xxxxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxx
Title: Chairman and President
XXXXXX-XXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
FOR PURPOSES OF SECTION 5.6 AND
ARTICLE XI ONLY:
/s/ Xxxxxxxxx X. Xxxxx
---------------------------------
Xxxxxxxxx X. Xxxxx
FOR PURPOSES OF SECTION 5.6 AND
ARTICLE XI ONLY:
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
