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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN FINANCIAL HOLDING, INC.,
ISO ACQUISITION CORP.,
ISOLAGEN TECHNOLOGIES, INC.,
GEMINI IX, INC.,
AND
XXXXXXX X. BOSS, JR., XXXX XXXXX AND XXXXXX XXXXXX
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DATED AS OF AUGUST 1, 2001
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TABLE OF CONTENTS
ARTICLE I THE MERGER.............................................................................................1
1.1 The Merger..............................................................................................1
1.2 Effective Time..........................................................................................1
1.3 Effects of the Merger...................................................................................2
1.4 Tax Treatment...........................................................................................2
ARTICLE II THE SURVIVING CORPORATION.............................................................................2
2.1 Certificate of Incorporation............................................................................2
2.2 Bylaws..................................................................................................2
2.3 Directors and Officers..................................................................................2
ARTICLE III CONVERSION OF STOCK..................................................................................2
3.1 Conversion of Capital Stock.............................................................................2
3.2 Surrender and Payment...................................................................................3
3.3 No Fractional Shares....................................................................................4
3.4 Dissenter's Rights......................................................................................4
3.5 Closing.................................................................................................5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ISOLAGEN AND ISOLAGEN STOCKHOLDERS..................................5
4.1 Organization............................................................................................5
4.2 Capitalization..........................................................................................6
4.3 Authority; No Violation.................................................................................6
4.4 Financial Statements....................................................................................7
4.5 Absence of Certain Changes or Events....................................................................7
4.6 Legal Proceedings.......................................................................................7
4.7 Taxes and Tax Returns...................................................................................8
4.8 Employee Benefit Plans..................................................................................8
4.9 Compliance with Applicable Law..........................................................................9
4.10 Certain Contracts....................................................................................9
4.11 Properties and Insurance............................................................................10
4.12 Minute Books........................................................................................10
4.13 Environmental Matters...............................................................................10
4.14 Reserves............................................................................................11
4.15 Agreements with Governmental Entity.................................................................11
4.16 Labor Disputes......................................................................................11
4.17 Loans, Etc..........................................................................................11
4.18 Intellectual Property...............................................................................11
4.19 Isolagen Stockholders' Counsel......................................................................17
4.20 No Brokers..........................................................................................18
4.21 Bankruptcy; Criminal Proceedings....................................................................18
4.22 Disclosure..........................................................................................18
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF GEMINI..............................................................18
5.1 Organization...........................................................................................18
5.2 Capitalization.........................................................................................19
5.3 Authority; No Violation................................................................................19
5.4 Legal Proceedings......................................................................................20
5.5 Compliance with Applicable Law.........................................................................20
5.6 No Brokers.............................................................................................20
5.7 Bankruptcy; Criminal Proceedings.......................................................................21
5.8 Disclosure.............................................................................................21
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF COMPANY AND MERGER SUB.............................................21
6.1 Organization...........................................................................................21
6.2 Capitalization.........................................................................................22
6.3 Authority; No Violation................................................................................23
6.4 Legal Proceedings......................................................................................23
6.5 Compliance with Applicable Law.........................................................................24
6.6 Absence of Liabilities.................................................................................24
6.7 No Brokers.............................................................................................24
6.8 Bankruptcy; Criminal Proceedings.......................................................................24
6.9 Disclosure.............................................................................................25
ARTICLE VII COVENANTS OF THE PARTIES............................................................................25
7.1 Conduct of Business....................................................................................25
7.2 Negative Covenants and Dividend Covenants..............................................................25
7.3 No Solicitation........................................................................................26
7.4 Current Information....................................................................................27
7.5 Access to Properties and Records; Confidentiality......................................................27
7.6 Regulatory Matters.....................................................................................28
7.7 Further Assurances.....................................................................................28
7.8 Public Announcements...................................................................................28
7.9 Failure to Fulfill Conditions..........................................................................29
7.10 Disclosure Supplements..............................................................................29
7.11 Transfer of Shares..................................................................................29
7.12 Cooperation.........................................................................................29
7.13 Discharge of Indebtedness...........................................................................29
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF ISOLAGEN AND ISOLAGEN STOCKHOLDERS..........................30
8.1 Government Consents....................................................................................30
8.2 Documents..............................................................................................30
8.3 Private Placement......................................................................................30
8.4 Employment Agreements..................................................................................30
8.5 Conversion of Accrued Salaries.........................................................................31
8.6 Representations and Warranties; Performance of Obligations.............................................31
8.7 Opinion of Company Counsel.............................................................................31
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ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF GEMINI........................................................31
9.1 Government Consents....................................................................................31
9.2 Documents..............................................................................................31
9.3 Private Placement......................................................................................32
9.4 Employment Agreements..................................................................................32
9.5 Conversion of Accrued Salaries.........................................................................32
9.6 Representations and Warranties; Performance of Obligations.............................................32
9.7 Opinion of Company Counsel.............................................................................32
9.8 FDA Reports............................................................................................32
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND MERGER SUB.........................................33
10.1 Government Consents.................................................................................33
10.2 Documents...........................................................................................33
10.3 Private Placement...................................................................................33
10.4 Employment Agreements...............................................................................33
10.5 Conversion of Isolagen Notes........................................................................33
10.6 Conversion of Accrued Salaries......................................................................34
10.7 Consulting Agreements...............................................................................34
10.8 Representations and Warranties; Performance of Obligations..........................................34
10.9 Closing Balance Sheet...............................................................................35
10.10 Discharge of Indebtedness...........................................................................35
10.11 Release of Claims...................................................................................35
10.12 Opinion of Isolagen Counsel.........................................................................35
10.13 FDA Reports.........................................................................................35
ARTICLE XI POST-CLOSING OBLIGATIONS OF PARTIES..................................................................35
11.1 Officer and Board Appointees........................................................................35
11.2 Stock Option Plan...................................................................................35
ARTICLE XII TERMINATION OF AGREEMENT............................................................................35
12.1 Termination.........................................................................................35
12.2 No Liability for Proper Termination.................................................................37
ARTICLE XIII INDEMNIFICATION AND REMEDIES.......................................................................37
13.1 Stockholders' Indemnification.......................................................................37
13.2 Indemnification; Notice and Settlement..............................................................37
13.3 Survival; Non-Waiver of Rights......................................................................39
13.4 Limitation of Liability.............................................................................39
ARTICLE XIV MISCELLANEOUS.......................................................................................40
14.1 Governing Law.......................................................................................40
14.2 Assignment; Binding Upon Successors and Assigns.....................................................40
14.3 Severability........................................................................................40
14.4 Expenses............................................................................................40
14.5 Attorneys' Fees.....................................................................................40
14.6 Notices.............................................................................................40
14.7 Entire Agreement....................................................................................41
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14.8 U.S. Dollars........................................................................................42
14.9 Amendment...........................................................................................42
14.10 Extension; Waiver...................................................................................42
14.11 Counterparts........................................................................................42
14.12 Descriptive Headings................................................................................42
14.13 Knowledge...........................................................................................42
14.14 No Third Party Beneficiaries........................................................................42
14.15 Arbitration.........................................................................................42
14.16 Bridge Loan Transaction.............................................................................44
14.17 Line of Credit Transaction..........................................................................44
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AGREEMENT AND PLAN OF MERGER
This
Agreement and Plan of Merger (this "AGREEMENT") is entered into as
of August 1, 2001 by and among American Financial Holding, Inc., a Delaware
corporation (the "COMPANY"), ISO Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of the Company ("MERGER SUB"), Isolagen Technologies,
Inc., a Delaware corporation ("ISOLAGEN"), Gemini IX, Inc., a Delaware
corporation ("GEMINI"), and Xxxxxxx X. Boss, Jr., Xxxx Xxxxx and Xxxxxx XxXxxx,
the holders of a majority of the shares of capital stock of Isolagen
(collectively, the "ISOLAGEN STOCKHOLDERS" and each an "ISOLAGEN STOCKHOLDER").
The Company, Merger Sub, Isolagen, Gemini and the Isolagen Stockholders are each
a "PARTY" and together are "PARTIES" to this Agreement.
WITNESSETH
WHEREAS, the respective Boards of Directors of the Company, Merger Sub,
Isolagen and Gemini and the stockholders of Merger Sub, Isolagen and Gemini have
approved and declared advisable the merger of Merger Sub and Gemini with and
into Isolagen (the "MERGER"), upon the terms and conditions set forth herein;
and
WHEREAS, the respective Boards of Directors of the Company, Merger Sub,
Isolagen and Gemini have determined that the Merger is in furtherance of and
consistent with their respective long-term business strategies and is in the
best interests of their respective stockholders;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, do hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Merger Sub and Gemini shall be merged with and into Isolagen at the
Effective Time (as defined below). Following the Merger, the separate corporate
existence of Merger Sub and Gemini shall cease and Isolagen shall continue as
the surviving corporation (the "SURVIVING CORPORATION") and shall succeed to and
assume all the rights and obligations of Merger Sub and Gemini in accordance
with the DGCL and shall continue under the name "Isolagen Technologies, Inc."
1.2 Effective Time. Concurrently with the Closing (as defined below),
Merger Sub, Gemini and Isolagen will cause a Certificate of Merger (the
"CERTIFICATE OF MERGER"), executed in accordance with the relevant provisions of
the DGCL, to be filed with the Secretary of State of the State of Delaware. The
Merger shall become effective on the date and at the time when the Certificate
of Merger has been duly filed with the Secretary of State of the State of
Delaware (the "EFFECTIVE TIME").
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1.3 Effects of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL.
1.4 Tax Treatment. It is intended that the Merger shall constitute a
reorganization under Section 368(a)(1)(B) of the United States Internal Revenue
Code of 1986, as amended (the "Code").
ARTICLE II
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. A Certificate of Amendment of the
Certificate of Incorporation of Isolagen (the "CERTIFICATE OF AMENDMENT") will
be filed with the Secretary of State of the State of Delaware simultaneous with
the filing of the Certificate of Merger. The Certificate of Incorporation of
Isolagen, as amended by the Certificate of Amendment, in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation at and after the Effective Time until thereafter amended
in accordance with the terms thereof and the DGCL.
2.2 Bylaws. The bylaws of Isolagen as in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation at and after
the Effective Time, and thereafter may be amended in accordance with their terms
and as provided by the Certificate of Incorporation of the Surviving Corporation
and the DGCL.
2.3 Directors and Officers. At and after the Effective Time, the
directors and officers of Merger Sub shall be the directors and officers of the
Surviving Corporation until their respective successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate of Incorporation and
bylaws.
ARTICLE III
CONVERSION OF STOCK
3.1 Conversion of Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any capital
stock described below:
(a) Each share of common stock, par value $0.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective
Time ("MERGER SUB COMMON STOCK") shall be converted into one (1) share
of common stock, par value $0.01 per share, of the Surviving
Corporation ("SURVIVING CORPORATION COMMON STOCK") with the same
rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the
Surviving Corporation.
(b) Each share of common stock, par value $0.01 per share, of
Isolagen issued and outstanding immediately prior to the Effective Time
("ISOLAGEN COMMON STOCK") shall be converted into twenty-seven and
869385/100 (27.869385) shares of common stock, par value $0.001 per
share, of the Company ("COMPANY COMMON STOCK").
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(c) Each share of common stock, par value $0.0001 per share,
of Gemini issued and outstanding immediately prior to the Effective
Time ("GEMINI COMMON STOCK") shall be converted into three thousand two
hundred (3,200) shares of Company Common Stock.
(d) All shares of Merger Sub Common Stock, Isolagen Common
Stock and Gemini Common Stock, when so converted, will no longer be
outstanding and will automatically be retired and will cease to be
outstanding, and the holder of a certificate that, immediately prior to
the Effective Time, represented outstanding shares of Merger Sub Common
Stock, Isolagen Common Stock or Gemini Common Stock will cease to have
any rights with respect thereto, except the right to receive, upon the
surrender of such stock certificate, the applicable shares of either
Surviving Corporation Common Stock or Company Common Stock as set forth
in Sections 3.1(a), (b) and (c) above.
(e) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding and shall not be affected by the Merger.
3.2 Surrender and Payment.
(a) The parties agree that Fidelity Transfer Company shall act
as transfer agent hereunder (the "EXCHANGE AGENT") with respect to the
Merger.
(b) Promptly after the Effective Time, but in any event not
later than five (5) business days thereafter, the Exchange Agent shall
send, to each holder of a stock certificate or certificates that
immediately prior to the Effective Time represented outstanding Merger
Sub Common Stock, Isolagen Common Stock and Gemini Common Stock (the
"STOCK CERTIFICATES") a letter of transmittal and instructions for use
in effecting the exchange of the Stock Certificates for stock
certificates representing the applicable merger consideration described
in Section 3.1 above (the "MERGER CONSIDERATION"). Provision also shall
be made for holders of the Stock Certificates to procure in person
immediately after the Effective Time a letter of transmittal and
instructions and to deliver in person immediately after the Effective
Time such letter of transmittal and Stock Certificates in exchange for
the applicable Merger Consideration.
(c) After the Effective Time, the Stock Certificates shall
represent the right, upon surrender thereof to the Exchange Agent,
together with a duly executed and properly completed letter of
transmittal relating thereto, to receive in exchange therefor the
applicable Merger Consideration subject to any required tax
withholding, and the Stock Certificates so surrendered shall be
canceled. Until so surrendered, each Stock Certificate shall, after the
Effective Time, represent for all purposes only the right to receive
the applicable Merger Consideration.
(d) If any shares of Company Common Stock are to be issued to
a Person (as defined below) other than the registered holder of the
Stock Certificate(s) surrendered in exchange therefor, it shall be a
condition to such issuance or payment that the Stock Certificate(s)
surrendered shall be properly endorsed or otherwise be in proper form
for
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transfer and that the Person requesting such issuance shall pay to the
Exchange Agent any transfer or other taxes required as a result of such
issuance to a Person other than the registered holder or establish to
the satisfaction of the Exchange Agent that such tax has been paid or
is not applicable. As used herein, "PERSON" means an individual, a
corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including any
governmental or regulatory authority or agency.
(e) Any Merger Consideration that remains unclaimed by the
holders of Merger Sub Common Stock, Isolagen Common Stock or Gemini
Common Stock one (1) year after the Effective Time shall be returned to
the Company, upon demand, and any such holder who has not exchanged
such holder's Stock Certificates in accordance with this Section 3.2
prior to that time shall thereafter look only to the Company, as a
general creditor thereof, to exchange such Stock Certificates or to pay
amounts to which such holder is entitled pursuant to Section 3.1. If
outstanding Stock Certificates are not surrendered prior to six (6)
years after the Effective Time (or, in any particular case, prior to
such earlier date on which any Merger Consideration issuable or payable
in respect of such Stock Certificates would otherwise escheat to or
become the property of any governmental unit or agency), the Merger
Consideration issuable or payable in respect of such Stock Certificates
shall, to the extent permitted by applicable law, become the property
of the Company, free and clear of all claims or interest of any Person
previously entitled thereto. Notwithstanding the foregoing, none of the
parties hereto shall be liable to any holder of Stock Certificates for
any amount paid, or Merger Consideration delivered, to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
(f) If any Stock Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person
claiming such Stock Certificate to be lost, stolen or destroyed and, if
required by the Company, the posting by such Person of a bond in such
reasonable amount as the Company may direct as indemnity against any
claim that may be made against it with respect to such Stock
Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Stock Certificate the Merger Consideration in
respect thereof pursuant to this Agreement.
3.3 No Fractional Shares. No fractional shares of Company Common Stock
shall be issued in the Merger and fractional share interests shall not entitle
the owner thereof to vote or to any rights of a stockholder of the Company. All
holders of Company Common Stock shall be entitled to receive, in lieu thereof,
an amount calculated in accordance with the following: all fractional shares of
Company Common Stock greater than 0.5 shall be rounded up to the next whole
share and all fractional shares of Company Common Stock less than 0.5 shall be
rounded down to the next whole share without the payment of any cash amount for
such fractional shares.
3.4 Dissenter's Rights. Any shares of Isolagen Common Stock or Gemini
Common Stock that a stockholder thereof properly exercising its dissent or
appraisal rights under the DGCL (a "DISSENTING STOCKHOLDER") holds will be
converted into the right to receive such consideration as may be determined to
be due to such Dissenting Stockholder under the DGCL; except that any such
shares that a Dissenting Stockholder holds for which, after the Effective Time,
such Dissenting Stockholder withdraws its demand for purchase or loses its
purchase right
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as provided in the DGCL, will be deemed to be converted, as of the Effective
Time, into the right to receive the applicable Merger Consideration. Isolagen
and Gemini will give the Company (a) prompt notice of any written demands for
purchase, withdrawals of demands for purchase and any other instruments served
under the DGCL, and (b) the opportunity to direct all negotiations and
proceedings with respect to demands for purchase under the DGCL. Neither
Isolagen nor Gemini will voluntarily make any payment with respect to any
purchase demands and will not, except with the Company's prior written consent,
settle or offer to settle any such demands.
3.5 Closing. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Xxxxxx and Xxxxx,
L.L.P., legal counsel for the Company, located at 0000 Xxxxxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000, at 10:00 a.m., local time, on August 31, 2001 or at such
other date and time as the parties shall otherwise agree (the "CLOSING DATE").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ISOLAGEN AND ISOLAGEN STOCKHOLDERS
Isolagen and the Isolagen Stockholders hereby, jointly and severally,
represent and warrant to the Company that, to the best of their knowledge, each
of the following are true and correct:
4.1 Organization.
(a) Isolagen is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Isolagen
has the requisite corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business and is
in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in
good standing would not have a material adverse effect on the business,
operations, assets or financial condition of Isolagen. Schedule 4.1(a)
of the Disclosure Schedule delivered by Isolagen in connection with
this Agreement (the "ISOLAGEN DISCLOSURE SCHEDULE") sets forth true and
complete copies of the Certificate of Incorporation and bylaws of
Isolagen, each as amended and in effect on the date hereof (the
"ISOLAGEN GOVERNING DOCUMENTS").
(b) Isolagen does not have any Subsidiaries (as defined
below). The term "SUBSIDIARIES," when used in this Agreement with
respect to any party, means any corporation, joint venture,
association, partnership, trust or other entity in which such party
has, directly or indirectly, at least a fifty percent (50%) interest or
acts as a general partner. Except as set forth in Schedule 4.1(b) of
the Isolagen Disclosure Schedule, Isolagen does not own or control,
directly or indirectly, any equity interest in any corporation,
company, association, partnership, joint venture or other entity and
owns no real estate.
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4.2 Capitalization. As of the date hereof, the authorized capital stock
of Isolagen consists of an aggregate of 11,000,000 shares of stock, consisting
of 10,000,000 shares of Isolagen Common Stock and 1,000,000 shares of preferred
stock, par value $0.01 per share ("ISOLAGEN PREFERRED STOCK" and together with
Isolagen Common Stock, "ISOLAGEN STOCK"). As of the date hereof, there are
107,645 shares of Isolagen Common Stock issued and outstanding and no shares of
Isolagen Stock held in the treasury of Isolagen. The issued and outstanding
shares of Isolagen Stock are owned by the Persons and in the numbers specified
in Schedule 4.2 of the Isolagen Disclosure Schedule. As of the date hereof,
there are (i) no shares of Isolagen Preferred Stock issued and outstanding, and
(ii) no shares of Isolagen Stock issuable upon exercise of any outstanding
options granted pursuant to any Isolagen stock option or benefit plan. All of
the issued and outstanding shares of Isolagen Common Stock are duly authorized
and validly issued, and fully paid and no assessment has been made on such
shares. The authorized but unissued shares of Isolagen Stock are not subject to
any preemptive rights. Isolagen does not have, nor is it bound by, any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of Isolagen or any securities representing the right to purchase
or otherwise receive any shares of such capital stock or any securities
convertible into or representing the right to subscribe for any such shares, and
there are no agreements or understandings with respect to voting of any such
shares.
4.3 Authority; No Violation.
(a) Isolagen has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors and stockholders of Isolagen. No corporate proceedings on the
part of Isolagen are necessary to consummate the transactions
contemplated hereby. Each Isolagen Stockholder has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof.
This Agreement has been duly and validly executed and delivered by
Isolagen and each Isolagen Stockholder and constitutes the valid and
binding obligation of Isolagen and each Isolagen Stockholder,
enforceable against Isolagen and the Isolagen Stockholders in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Isolagen, nor the consummation by Isolagen of the transactions
contemplated hereby in accordance with the terms hereof, or compliance
by Isolagen with any of the terms or provisions hereof, will (i)
violate any provision of the Isolagen Governing Documents, (ii) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Isolagen or any of its properties or
assets, or (iii) except as set forth in Schedule 4.3(b) of the Isolagen
Disclosure Schedule, violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, claim, charge or other
encumbrance upon any of the properties or assets of Isolagen under any
of the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of
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trust, license, lease, agreement or other instrument or obligation to
which Isolagen is a party, or by which Isolagen or any of its
properties or assets may be bound or affected except, with respect to
(ii) and (iii) above, such as individually and in the aggregate will
not have a material adverse effect on the business, operations, assets
or financial condition of Isolagen, or the ability of Isolagen to
consummate the transactions contemplated hereby. No consents or
approvals of or filings or registrations with or notices to any public
body or authority are necessary on behalf of Isolagen in connection
with (x) the execution and delivery by Isolagen of this Agreement and
(y) the consummation by Isolagen of the transactions contemplated
hereby.
4.4 Financial Statements.
(a) Schedule 4.4(a) of the Isolagen Disclosure Schedule sets
forth copies of (i) the unaudited financial statements of Isolagen for
the twelve (12) month periods ended December 31, 1999 and December 31,
2000; and (ii) unaudited financial statements of Isolagen for the six
(6) month period ended June 30, 2001 (the "FINANCIAL STATEMENTS"). The
Financial Statements give a true and fair view of the state of affairs,
results of the operations and the cash flows of Isolagen for the
respective periods set forth therein and have been prepared in
accordance with generally accepted accounting principals ("GAAP")
consistently applied.
(b) The books and records of Isolagen have been and are being
maintained in material compliance with applicable legal and accounting
requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or
reserved against in the Financial Statements (including the notes
thereto), Isolagen did not have any liabilities, whether absolute,
accrued, contingent or otherwise, which are material to the business,
operations, assets or financial condition of Isolagen and which are
required by GAAP to be disclosed in the Financial Statements. Since
June 30, 2001 and to the date hereof, Isolagen has not incurred any
liabilities except in the ordinary course of business and consistent
with prudent business practice or except as specifically contemplated
by this Agreement. As of the Closing Date, all of the liabilities of
Isolagen for legal and consulting fees and expenses are set forth on
Schedule 4.4(c) of the Isolagen Disclosure Schedule.
4.5 Absence of Certain Changes or Events. There has not been any
material adverse change in the business, operations, assets or financial
condition of Isolagen since June 30, 2001 (including without limitation a
material adverse change arising from the institution of Legal Proceedings (as
defined in Section 4.6) or the occurrence of a default as described in Section
4.10(c)), and to Isolagen's and the Isolagen Stockholders' knowledge, no facts
or conditions exist which are reasonably likely to cause such a material adverse
change in the future.
4.6 Legal Proceedings. Except as disclosed in Schedule 4.6 of the
Isolagen Disclosure Schedule, as of the date of this Agreement, Isolagen is not
a party to any, and there are no pending or, to Isolagen's and the Isolagen
Stockholders' knowledge, no threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental (or otherwise)
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investigations of any nature ("LEGAL PROCEEDINGS") against Isolagen or against
any present or former Isolagen officer or director in their capacity as a
Isolagen officer or director which are material to Isolagen. Except as disclosed
in Schedule 4.6 of the Isolagen Disclosure Schedule, as of the date of this
Agreement Isolagen is not a party to any material order, judgment or decree
entered against Isolagen in any lawsuit or proceeding.
4.7 Taxes and Tax Returns.
(a) Isolagen has duly filed (and until the Closing Date will
so file) all returns, declarations, reports, information returns and
statements (collectively, the "RETURNS") required to be filed by it in
respect of other government's, national, regional, state and local
taxes (including property taxes, withholding taxes, penalties or other
payments required) (the "TAXES") and has duly paid (and until the
Closing Date will so pay) all such Taxes due and payable, other than
taxes or other charges which are being contested in good faith.
Isolagen has established (and until the Closing Date will establish) on
its books and records reserves that it reasonably believes are adequate
for the payment of all Taxes not yet due and payable, but are
anticipated to be incurred in respect of Isolagen through the Closing
Date. The Returns of Isolagen have been examined by the applicable
authorities (or are closed to examination due to the expiration of the
statute of limitations) and no deficiencies were asserted as a result
of such examinations which have not been resolved and paid in full. To
the knowledge of Isolagen and the Isolagen Stockholders, there are no
audits or other administrative or court proceedings presently pending,
or claims asserted, for taxes or assessments upon Isolagen nor has
Isolagen given any currently outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to
any taxes or Returns. No Taxes will accrue or occur as a result of the
Merger and the other transactions contemplated in this Agreement.
(b) Isolagen (i) has not requested any extension of time
within which to file any Tax Return which Return has not since been
filed, and (ii) is not a party to any agreement providing for the
allocation or sharing of Taxes.
4.8 Employee Benefit Plans.
(a) Isolagen does not maintain or contribute to any stock
option plan, stock purchase plan, deferred compensation plan, severance
plan, bonus plan, employment agreement or other similar plan, program
or arrangement.
(b) Isolagen does not maintain or otherwise pay for life
insurance policies (other than group term life policies on employees)
with respect to any director, officer or employee of Isolagen. Isolagen
owns no individual or group insurance policies issued by an insurer
which has been found to be insolvent or is in rehabilitation pursuant
to a state proceeding.
(c) Isolagen does not maintain any retirement plan or retiree
medical plan or arrangement for its directors, officers or employees.
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4.9 Compliance with Applicable Law. Except as set forth in Schedule 4.9
of the Isolagen Disclosure Schedule, Isolagen holds all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business, and has complied with and is not in default in any respect under any,
applicable law, statute, order, rule, regulation, policy and/or guideline of any
national, state or local governmental authority relating to Isolagen (other than
where such defaults or non-compliances will not, alone or in the aggregate,
result in a material adverse effect on the business, operations, assets or
financial condition of Isolagen) and Isolagen has not received notice of
violation of, nor does it know of any violations (other than violations which
will not, alone or in the aggregate, result in a material adverse effect on the
business, operations, assets or financial condition of Isolagen) of, any of the
above.
4.10 Certain Contracts.
(a) Except for plans referenced in Section 4.8 hereof or
disclosed in Schedule 4.10(a) of the Isolagen Disclosure Schedule,
Isolagen is not a party to or bound by any contract or understanding
(whether written or, to its knowledge, oral) with respect to the
employment or termination of any of its present or former officers,
employees, directors or consultants. Schedule 4.10(a) of the Isolagen
Disclosure Schedule sets forth true and correct copies of all written
employment agreements or termination agreements with current officers,
directors or consultants of Isolagen, to which Isolagen is a party.
(b) Except as disclosed in Schedule 4.10(b) of the Isolagen
Disclosure Schedule or for commitments or agreements to purchase
materials or sell products in the ordinary course of business, (i) as
of the date of this Agreement, Isolagen is not a party to or bound by
any commitment, agreement or other instrument (excluding commitments
and agreements in connection with extensions of credit by Isolagen)
which contemplates the payment of amounts in excess of $10,000, or
which otherwise is material to the operations, assets or financial
condition of Isolagen, including but not limited to any royalty,
franchising fees, or any other fee based on a percentage of revenues or
income and (ii) no commitment, agreement or other instrument to which
Isolagen is a party or by which it is bound limits the freedom of
Isolagen to compete in any line of business or with any person.
(c) As of the date of this Agreement, except as disclosed in
Schedule 4.10(c) of the Isolagen Disclosure Schedule, Isolagen is not
in default in any material respect under any material lease, contract,
mortgage, promissory note, deed of trust, loan agreement, license
agreement (as to royalty payments) or other commitment or arrangement.
(d) As of the date of this Agreement, except as disclosed in
Schedule 4.10(d) of the Isolagen Disclosure Schedule, to the knowledge
of Isolagen and the Isolagen Stockholders, any other party thereto is
not in default in any material respect under any material lease,
contract, mortgage, promissory note, deed of trust, loan agreement or
other commitment or arrangement that is material to Isolagen.
(e) As of the date of this Agreement, except as disclosed in
Schedule 4.10(e) of the Isolagen Disclosure Schedule, to the knowledge
of Isolagen and the Isolagen
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Stockholders, all royalty payments, franchising fees, or any other
payments based on a percentage of revenues or income have been fully
paid by Isolagen to any other party.
4.11 Properties and Insurance.
(a) Isolagen has good and, as to owned real property, if any,
marketable title to all material assets and properties, whether real or
personal, tangible or intangible, reflected in Isolagen's balance sheet
as of June 30, 2001, or owned and acquired subsequent thereto (except
to the extent that such assets and properties have been disposed of for
fair value in the ordinary course of business since June 30, 2001),
subject to no encumbrances, liens, mortgages, security interests or
pledges, except (i) those items that secure liabilities that are
reflected in such balance sheet or the notes thereto or incurred in the
ordinary course of business after the date of such balance sheet, (ii)
statutory liens for amounts not yet delinquent or which are being
contested in good faith, (iii) such encumbrances, liens, mortgages,
security interests, pledges and title imperfections that are not in the
aggregate material to the business, operations, assets, and financial
condition of Isolagen and (iv) with respect to owned real property, if
any, title imperfections noted in title reports delivered to the
Company prior to the date hereof. Isolagen, as lessee, has the right
under valid and subsisting leases to occupy, use, possess and control,
in all material respects, all real property leased by it, as presently
occupied, used, possessed and controlled by it.
(b) Except as disclosed in Schedule 4.11(b) of the Isolagen
Disclosure Schedule and for software licenses associated with
stand-alone computers, leases of vehicles and leases or hire contracts
for miscellaneous office equipment and all sale-leaseback transactions,
all assets of Isolagen that exceed $5,000 in value, to include any and
all property, whether tangible or intangible, and including but not
limited to any and all Intellectual Property or the right to any and
all royalties accruing thereunder are the lawful property of Isolagen
and as such are freely and fully assignable or transferable except as
otherwise provided herein.
(c) Schedule 4.11(c) of the Isolagen Disclosure Schedule lists
all policies of insurance and bonds covering business operations and
insurable properties and assets of Isolagen, all risks insured against,
and the amount thereof and deductibles relating thereto. As of the date
hereof, Isolagen has not, since January 1, 1999, received any notice of
cancellation or notice of a material amendment of any such insurance
policy or bond and it is not in default in any material respect under
such policy or bond, and, to Isolagen's and Isolagen Stockholders'
knowledge, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion.
4.12 Minute Books. The minute books of Isolagen contain records which,
in all material respects, accurately record all meetings of its stockholders and
Board of Directors (including committees of its Board of Directors).
4.13 Environmental Matters. Except as disclosed in Schedule 4.13 of the
Isolagen Disclosure Schedule:
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(a) Isolagen has not received any written notice, citation,
claim, assessment, proposed assessment or demand for abatement alleging
that Isolagen is responsible for the correction or cleanup of any
condition resulting from the violation of any law, ordinance or other
governmental regulation regarding environmental matters, which
correction or cleanup would be material to the business, operations,
assets or financial condition of Isolagen. Isolagen has no knowledge
that any toxic or hazardous substances or materials have been emitted,
generated, disposed of or stored on any real property owned or leased
by Isolagen, or owned or controlled by Isolagen as a trustee or
fiduciary (collectively, "PROPERTIES"), in any manner that violates or,
after the lapse of time may violate, any presently existing federal,
regional, state or local law or regulation governing or pertaining to
such substances and materials, the violation of which would have a
material adverse effect on the business, operations, assets or
financial condition of Isolagen.
(b) Isolagen has no knowledge that any of the Properties has
been operated in any manner in the ten (10) years prior to the date of
this Agreement that violated any applicable national, state or local
law or regulation governing or pertaining to toxic or hazardous
substances and materials, the violation of which would have a material
adverse effect on the business, operations, assets or financial
condition of Isolagen.
4.14 Reserves. To the knowledge of Isolagen, the allowance for possible
losses in the June 30, 2001 Financial Statements was adequate at the time based
upon past loss experiences and potential losses at the time to cover all known
or reasonably anticipated losses.
4.15 Agreements with Governmental Entity. Isolagen is not a party to
any agreement or memorandum of understanding with, or a party to any commitment
letter, or board resolution submitted to a regulatory authority or similar
undertaking to, and is not a party to any order or directive by, and is not a
recipient of any court, governmental authority or other regulatory or
administrative agency or commission, domestic or foreign.
4.16 Labor Disputes. Isolagen is not directly or indirectly involved in
or threatened with any labor dispute or trouble or organizational effort,
including, without limitation, matters regarding actual or alleged
discrimination by reason of race, creed, sex, disability or national origin,
which might materially and adversely affect the financial condition, assets,
businesses or results of operations of Isolagen, taken as a whole.
4.17 Loans, Etc. As of the date of this Agreement, no Isolagen
Stockholder has any liabilities, obligations or indebtedness of any kind
whatsoever chargeable to the Isolagen Stockholder and payable to Isolagen by the
Isolagen Stockholder.
4.18 Intellectual Property.
(a) Intellectual Property Assets. The term "INTELLECTUAL
PROPERTY" includes the following:
(i) all United States, international and foreign
patents, patent applications and statutory invention
registrations, together with all reissues,
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divisions, continuations, continuations-in-part, extensions
and reexaminations thereof, all inventions therein, all rights
therein provided by international treaties or conventions and
all improvements thereto, and all other rights of any kind
whatsoever of Isolagen accruing thereunder or pertaining
thereto (the "PATENTS");
(ii) all trademarks (including, without limitation,
service marks), certification marks, collective marks, trade
dress, logos, domain names, product configurations, trade
names, business names, corporate names and other source
identifiers, whether or not registered, whether currently in
use or not, including, without limitation, all common law
rights and registrations and applications for registration
thereof, and all other marks registered in the U.S. Patent and
Trademark Office or in any office or agency of any State or
Territory of the United States or any foreign country (but
excluding any United States intent-to-use trademark
application prior to the filing and acceptance of a Statement
of Use or an Amendment to allege use in connection therewith
to the extent that a valid security interest may not be taken
in such an intent-to-use trademark application under
applicable law), and all rights therein provided by
international treaties or conventions, all reissues,
extensions and renewals of any of the foregoing, together in
each case with the goodwill of the business connected
therewith and symbolized thereby, and all rights corresponding
thereto throughout the world and all other rights of any kind
whatsoever of Isolagen accruing thereunder or pertaining
thereto (the "TRADEMARKS");
(iii) all copyrights, copyright applications,
copyright registrations and like protections in each work of
authorship, whether statutory or common law, whether published
or unpublished, any renewals or extensions thereof, all
copyrights of works based on, incorporated in, derived from,
or relating to works covered by such copyrights, together with
all rights corresponding thereto throughout the world and all
other rights of any kind whatsoever of Isolagen accruing
thereunder or pertaining thereto (the "COPYRIGHTS");
(iv) all confidential and proprietary information,
including, without limitation, know-how, trade secrets,
manufacturing and production processes and techniques,
inventions, research and development information, technical
data, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and
supplier lists and information of Isolagen (the "TRADE
SECRETS");
(v) all computer software programs and databases
(including, without limitation, source code, object code and
all related applications and data files), firmware, and
documentation and materials relating thereto, and all rights
with respect to the foregoing, together with any and all
options, warranties, service contracts, program services, test
rights, maintenance rights, improvement rights, renewal rights
and indemnifications and any substitutions, replacements,
additions or model conversions of any of the foregoing of
Isolagen (the "COMPUTER SOFTWARE");
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(vi) all license agreements, permits, authorizations
and franchises, whether with respect to the Patents,
Trademarks, Copyrights, URLs, Trade Secrets or Computer
Software, or with respect to the patents, trademarks,
copyrights, trade secrets, computer software or other
proprietary right of any other Person, and all income,
royalties and other payments now or hereafter due and/or
payable with respect thereto, subject, in each case, to the
terms of such license agreements, permits, authorizations and
franchises of Isolagen (the "LICENSES");
(vii) all URLs, domain names or other names or
addresses relating to Isolagen's operations with respect to
the Internet (including, without limitation, registrations and
applications for registration thereof with Network Solutions
or other applicable private or public URL registries, domestic
and foreign), together with all intellectual property and all
other rights of any kind whatsoever of Isolagen accruing
thereunder, pertaining thereto or associated therewith,
including, without limitation, all registrations,
applications, renewals, reissues, extensions, links
(including, without limitation, metal tags), and connections
("URLs").
(b) Agreements. Schedule 4.18(b) of the Isolagen Disclosure
Schedule contains a complete and accurate list and summary description,
including any royalties paid or received by Isolagen, of each written
or oral written lease, agreement, contract, commitment or license by
which Isolagen (a) has or may acquire any rights, (b) has or may become
subject to any obligation or liability, or (c) or any of the assets
owned or used by it is or may become bound ("ARRANGEMENTS") relating to
Intellectual Property to which Isolagen is a party or by which Isolagen
is bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs
with a value of less than $5,000 under which Isolagen is the licensee.
There are no outstanding and, to the knowledge of Isolagen and the
Isolagen Stockholders, no threatened disputes or disagreements with
respect to any such Arrangements. Except as disclosed in Schedule
4.18(b) of the Isolagen Disclosure Schedule, to the knowledge of
Isolagen and the Isolagen Stockholders, no party to an Arrangement
relating to the use by Isolagen of any Intellectual Property owned by
another person is or has at any time been in breach of such
Arrangements. Isolagen has not granted or is obligated to grant a
license, assignment or other right with respect to any Intellectual
Property, except as disclosed in Schedule 4.18(b) to the Isolagen
Disclosure Schedule.
(c) Know-How.
(i) The Intellectual Property includes all such
assets which are reasonably necessary for the operation of
Isolagen's businesses as it is currently conducted. Isolagen
is the owner of all right, title, and interest in and to all
Intellectual Property, free and clear of all liens, security
interests, encumbrances, equities, and other adverse claims,
and has the right to use without payment to a third party all
of the Intellectual Property.
(ii) Except as set forth in Schedule 4.18(c) of the
Isolagen Disclosure Schedule, all former and current employees
of Isolagen have executed written
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Arrangements with Isolagen that assign to Isolagen all rights
to any inventions, improvements, discoveries, or information
relating to the business of Isolagen. To the knowledge of
Isolagen and the Isolagen Stockholders, no employee of
Isolagen has entered into any Arrangement that restricts or
limits in any way the scope or type of work in which the
employee may be engaged or requires the employee to transfer,
assign, or disclose information concerning his or her work to
anyone other than Isolagen. No past or present shareholder,
employee, director, officer, contractor, agent or
representative of Isolagen has any ownership interest or any
other rights in or to any Intellectual Property. Except as set
forth in Schedule 4.18(c) of the Isolagen Disclosure Schedule,
no Arrangement or understanding exists between Isolagen and
any third party which would impede or prevent the continued
use of such right, title and interest of Isolagen in and to
the Intellectual Property as Isolagen had prior to the Closing
and used in the conduct of its business, subject to the rights
of licensors and licensees pursuant to existing Arrangements
listed on Schedule 4.18(b) to the Isolagen Disclosure
Schedule.
(d) Patents.
(i) Schedule 4.18(d) of the Isolagen Disclosure
Schedule contains a complete and accurate list and summary
description of all Patents. Isolagen is the owner of all
right, title, and interest in and to each of the Patents, free
and clear of all liens, security interests, encumbrances,
equities, and other adverse claims.
(ii) All Patents that have been registered with the
United States Patent and Trademark Office are currently in
compliance with all formal Legal Requirements (as defined
below) (including the timely post-registration filing of
affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject
to any maintenance fees or Taxes or actions falling due within
ninety (90) days after the Closing Date. As used herein "LEGAL
REQUIREMENTS" includes federal, state, local, municipal,
foreign, international, and multinational laws, including
administrative orders, constitutions, ordinances, principles
of common law, regulations, statutes and treaties, where
applicable.
(iii) No registered Patent or pending patent
application has been or is now involved in any opposition,
invalidation, or cancellation (except for a request to
resubmit) and, to knowledge of Isolagen and Isolagen
Stockholders, no such action is threatened with the respect to
any of the Patents.
(iv) To the knowledge of Isolagen and the Isolagen
Stockholders, there is no potentially interfering patent or
patent application of any third party.
(v) To the knowledge of Isolagen and the Isolagen
Stockholders, no Patent is infringed or has been challenged or
threatened in any way. To the knowledge of Isolagen and the
Isolagen Stockholders, none of the Patents infringes or is
alleged to infringe any patent of any third party.
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(vi) All products and materials containing a
registered Patent bear the proper federal registration notice
where permitted by law.
(e) Trademarks.
(i) Schedule 4.18(e) of the Isolagen Disclosure
Schedule contains a complete and accurate list and summary
description of all Trademarks. Isolagen is the owner of all
right, title, and interest in and to each of the Trademarks,
free and clear of all liens, claims, security interests,
equities, and other adverse claims.
(ii) All Trademarks that have been registered with
the United States Patent and Trademark Office are currently in
compliance with all formal Legal Requirements (including the
timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or
Taxes or actions falling due within ninety (90) days after the
Closing Date.
(iii) No registered Trademark or pending trademark
application has been or is now involved in any opposition,
invalidation, or cancellation and, to the knowledge of
Isolagen and Isolagen Stockholders, no such action is
threatened with the respect to any of the Trademarks.
(iv) To the knowledge of Isolagen and the Isolagen
Stockholders, there is no potentially interfering trademark or
trademark application of any third party.
(v) To the knowledge of Isolagen and the Isolagen
Stockholders, no Trademark is infringed or has been challenged
or threatened in any way. To the knowledge of Isolagen and the
Isolagen Stockholders, none of the Trademarks infringes or is
alleged to infringe any trade name, trademark or service xxxx
of any third party.
(vi) To the knowledge of Isolagen and the Isolagen
Stockholders, all products and materials containing a
registered Trademark bear the proper federal registration
notice where permitted by law.
(f) Copyrights.
(i) Schedule 4.18(f) of the Disclosure Schedule
contains a complete and accurate list and summary description
of all Copyrights. Isolagen is the owner of all right, title,
and interest in and to each of the Copyrights, free and clear
of all liens, claims, security interests, equities, and other
adverse claims.
(ii) All the Copyrights which have been registered
are currently in compliance with formal Legal Requirements,
are valid and enforceable, and are not subject to any Taxes or
actions falling due within ninety (90) days after the Closing
Date.
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(iii) To the knowledge of Isolagen and the Isolagen
Stockholders, no Copyright is infringed or has been challenged
or threatened in any way. To the knowledge of Isolagen and the
Isolagen Stockholders, none of the subject matter of any of
the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on
the work of a third party.
(g) Trade Secrets.
(i) With respect to each Trade Secret, the
documentation relating to such Trade Secret is reasonably
current and sufficient in detail and content to identify and
explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual.
(ii) Isolagen has taken commercially reasonable
precautions to protect the secrecy, confidentiality and value
of the Trade Secrets.
(iii) Isolagen has good title and an absolute (but
not necessarily exclusive) right to use the Trade Secrets. To
the knowledge of Isolagen and the Isolagen Stockholders, the
Trade Secrets are not part of the public knowledge or
literature, and have not been used, divulged, or appropriated
either for the benefit of any Person (other than Isolagen) or
to the detriment of Isolagen. No Trade Secret is subject to
any adverse claim or has been challenged or threatened in any
way.
(h) Computer Software.
(i) Isolagen is the owner of all right, title, and
interest in and to the Computer Software, free and clear of
all liens, security interests, encumbrances, equities and
other adverse claims and the Computer Software may be used by
Isolagen following the Closing Date in the same manner as such
were used prior to the Closing Date without the payment of
additional fees.
(ii) The documentation regarding the Computer
Software is materially complete and accurately reflects the
Computer Software in all material respects. The Computer
Software performs in all material respects in accordance with
such software documentation.
(iii) Except for changes to be made in the ordinary
course of business which will not have a material adverse
effect on Isolagen's business to the knowledge of Isolagen and
the Isolagen Stockholders, no currently available or announced
technological advance or software release will result in the
obsolescence of any of the Computer Software within the next
twelve (12) months.
(i) URLs.
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(i) Isolagen is the owner of all right, title, and
interest in and to each URL, free and clear of all liens,
security interests, encumbrances, equities and other adverse
claims.
(ii) All URLs that have been registered with the
appropriate applicable private or public URL registries,
domestic and foreign, are currently in compliance with all
formal Legal Requirements (including the timely
post-registration filing of affidavits of use and
incontestability and renewal applications, if any), are valid
and enforceable, and are not subject to any maintenance fees
or Taxes or actions falling due within ninety (90) days after
the Closing Date.
(iii) No registered URL or pending URL application
has been or is now involved in any opposition, invalidation,
or cancellation and, to the knowledge of Isolagen and the
Isolagen Stockholders, no such action is threatened with the
respect to any of the URLs.
(iv) To the knowledge of Isolagen and the Isolagen
Stockholders, there is no potentially interfering URL or URL
application of any third party.
(v) To the knowledge of Isolagen and the Isolagen
Stockholders, no URL is infringed or has been challenged or
threatened in any way. To the knowledge of Isolagen and the
Isolagen Stockholders, none of the URLs infringes or is
alleged to infringe any URL of any third party.
(j) Licenses.
(i) Schedule 4.18(j) of the Isolagen Disclosure
Schedule contains a complete and accurate list and summary
description of all Licenses.
(ii) All Licenses are rightfully used and authorized
for use by Isolagen pursuant to a valid Arrangements with
respect to such Licenses. Isolagen has all rights with respect
to Licenses reasonably necessary to carry out Isolagen's
activities, including without limitation, if necessary to
carry out such activities, rights to make, use, exclude others
from using, reproduce, modify, adapt, create derivative works
based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly all third-party
Intellectual Property Rights making up each such License.
(iii) Isolagen is not, nor as a result of the
execution or delivery of this Agreement, or performance of
Isolagen's obligations hereunder, will the Company be, in
violation of any License.
4.19 Isolagen Stockholders' Counsel. The Isolagen Stockholders
acknowledge that the Isolagen Stockholders have had the opportunity to review
this Agreement, the exhibits and the schedules attached hereto, and the
transactions contemplated herein and therein with the Isolagen Stockholders' own
legal counsel.
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4.20 No Brokers. Except for Foresight Capital Partners, Inc.
("FORESIGHT"), neither Isolagen, nor the Isolagen Stockholders have employed or
authorized anyone to represent them as a broker or finder in connection with the
transactions contemplated by this Agreement, and no broker or other person is
entitled to any commission or finder's fee from Isolagen or the Isolagen
Stockholders in connection with the transactions contemplated herein. The
Isolagen Stockholders will, jointly and severally, indemnify and hold harmless
the Company from and against any and all losses, claims, demands, damages, costs
and expenses, including, without limitation, reasonable attorneys' fees and
expenses the Company or Isolagen may sustain or incur as a result of any claim
for a commission or fee by a broker or finder (other than Foresight) acting on
behalf of Isolagen or any Isolagen Stockholder.
4.21 Bankruptcy; Criminal Proceedings. To the best of the knowledge of
Isolagen and the Isolagen Stockholders, Isolagen, its officers, directors,
affiliates, promoters or any predecessor thereof and the Isolagen Stockholders
have not been subject to or suffered any of the following:
(a) Any bankruptcy petition filed by or against any business
of which such Person was a general partner or executive officer either
at the time of the bankruptcy or within two (2) years prior to that
time;
(b) Any conviction in a criminal proceeding or being subject
to a pending criminal proceeding (excluding traffic violations and
other misdemeanor offenses) within ten (10) years from the date hereof;
(c) Any order, judgement or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting such Person's involvement in any type of business, securities
or banking activities; or
(d) Being found guilty by a court of competent jurisdiction
(in a civil action), the Securities and Exchange Commission ("SEC") or
the Commodity Futures Trading Commission to have violated a federal or
state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
4.22 Disclosure. No representation or warranty contained in Article IV
of this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF GEMINI
Gemini hereby represents and warrants to the Company that, to the best
of its knowledge, each of the following are true and correct:
5.1 Organization.
(a) Gemini is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Gemini
has the requisite corporate
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power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the
failure to be so licensed, qualified or in good standing would not have
a material adverse effect on the business, operations, assets or
financial condition of Gemini. Schedule 5.1(a) of the Disclosure
Schedule delivered by Gemini in connection with this Agreement (the
"GEMINI DISCLOSURE SCHEDULE") sets forth true and complete copies of
the Certificate of Incorporation and bylaws of Gemini, each as amended
and in effect on the date hereof (the "GEMINI GOVERNING DOCUMENTS").
(b) Gemini does not have any Subsidiaries. Except as set forth
in Schedule 5.1(b) of the Gemini Disclosure Schedule, Gemini does not
own or control, directly or indirectly, any equity interest in any
corporation, company, association, partnership, joint venture or other
entity and owns no real estate.
5.2 Capitalization. As of the date hereof, the authorized capital stock
of Gemini consists of an aggregate of 3,000 shares of stock, consisting of 2,000
shares of Gemini Common Stock and 1,000 shares of preferred stock, par value
$0.0001 per share ("GEMINI PREFERRED STOCK" and together with Gemini Common
Stock, "GEMINI STOCK"). As of the date hereof, there are 1,232 shares of Gemini
Common Stock issued and outstanding and no shares of Gemini Stock held in the
treasury of Gemini. The issued and outstanding shares of Gemini Stock are owned
by the Persons and in the numbers specified in Schedule 5.2 of the Gemini
Disclosure Schedule. As of the date hereof, there are (i) no shares of Gemini
Preferred Stock issued and outstanding, and (ii) no shares of Gemini Stock
issuable upon exercise of any outstanding options granted pursuant to any Gemini
stock option or benefit plan. All issued and outstanding shares of Gemini Common
Stock are duly authorized and validly issued, and fully paid and no assessment
has been made on such shares. The authorized but unissued shares of Gemini Stock
are not subject to any preemptive rights. Gemini does not have, nor is it bound
by, any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the transfer, purchase or issuance of
any shares of capital stock of Gemini or any securities representing the right
to purchase or otherwise receive any shares of such capital stock or any
securities convertible into or representing the right to subscribe for any such
shares, and there are no agreements or understandings with respect to voting of
any such shares.
5.3 Authority; No Violation.
(a) Gemini has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors and stockholders of Gemini. No corporate proceedings on the
part of Gemini are necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed
and delivered by Gemini and constitutes the valid and binding
obligation of Gemini, enforceable against Gemini in accordance with its
terms.
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(b) Neither the execution and delivery of this Agreement by
Gemini, nor the consummation by Gemini of the transactions contemplated
hereby in accordance with the terms hereof, or compliance by Gemini
with any of the terms or provisions hereof, will (i) violate any
provision of Gemini's Governing Documents, (ii) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Gemini or any of its properties or assets, or
(iii) except as set forth in Schedule 5.3(b) of the Gemini Disclosure
Schedule, violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of, accelerate the performance required by, or result in
the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Gemini under any of
the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument
or obligation to which Gemini is a party, or by which Gemini or any of
its properties or assets may be bound or affected except, with respect
to (ii) and (iii) above, such as individually and in the aggregate will
not have a material adverse effect on the business, operations, assets
or financial condition of Gemini, or the ability of Gemini to
consummate the transactions contemplated hereby. No consents or
approvals of or filings or registrations with or notices to any public
body or authority are necessary on behalf of Gemini in connection with
(x) the execution and delivery by Gemini of this Agreement and (y) the
consummation by Gemini of the transactions contemplated hereby.
5.4 Legal Proceedings. Except as disclosed in Schedule 5.4 of the
Gemini Disclosure Schedule, as of the date of this Agreement, Gemini is not a
party to any, and there are no pending or, to Gemini's knowledge, no threatened
Legal Proceedings against Gemini or against any present or former Gemini officer
or director in their capacity as a Gemini officer or director which are material
to Gemini. Except as disclosed in Schedule 5.4 of the Gemini Disclosure
Schedule, as of the date of this Agreement Gemini is not a party to any material
order, judgment or decree entered against Gemini in any lawsuit or proceeding.
5.5 Compliance with Applicable Law. Except as set forth in Schedule 5.5
of the Gemini Disclosure Schedule, Gemini holds all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business, and has complied with and is not in default in any respect under any,
applicable law, statute, order, rule, regulation, policy and/or guideline of any
national, state or local governmental authority relating to Gemini (other than
where such defaults or non-compliances will not, alone or in the aggregate,
result in a material adverse effect on the business, operations, assets or
financial condition of Gemini) and Gemini has not received notice of violation
of, nor does it know of any violations (other than violations which will not,
alone or in the aggregate, result in a material adverse effect on the business,
operations, assets or financial condition of Gemini) of, any of the above.
5.6 No Brokers. Except for Foresight, Gemini has not employed or
authorized anyone to represent them as a broker or finder in connection with the
transactions contemplated by this Agreement, and no broker or other person is
entitled to any commission or finder's fee from Gemini in connection with the
transactions contemplated herein. Gemini will indemnify and hold harmless the
Company from and against any and all losses, claims, demands, damages, costs and
expenses, including, without limitation, reasonable attorneys' fees and expenses
the
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Company may sustain or incur as a result of any claim for a commission or fee by
a broker or finder (other than Foresight) acting on behalf of Gemini.
5.7 Bankruptcy; Criminal Proceedings. To the best of the knowledge of
Gemini, Gemini and its officers, directors, affiliates, promoters or any
predecessor thereof have not been subject to or suffered any of the following:
(a) Any bankruptcy petition filed by or against any business
of which such Person was a general partner or executive officer either
at the time of the bankruptcy or within two (2) years prior to that
time;
(b) Any conviction in a criminal proceeding or being subject
to a pending criminal proceeding (excluding traffic violations and
other misdemeanor offenses) within ten (10) years from the date hereof;
(c) Any order, judgement or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting such Person's involvement in any type of business, securities
or banking activities; or
(d) Being found guilty by a court of competent jurisdiction
(in a civil action), the SEC or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or
vacated.
5.8 Disclosure. No representation or warranty contained in Article V of
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF COMPANY AND MERGER SUB
The Company and Merger Sub hereby, jointly and severally, represent and
warrant to Isolagen, the Isolagen Stockholders and Gemini, that, to the best of
their knowledge, each of the following are true and correct:
6.1 Organization.
(a) The Company and the Merger Sub are each a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The Company and Merger Sub each have the requisite
corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted and is
duly licensed or qualified to do business and is in good standing in
each jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed, qualified or in good standing
would not have a material adverse effect on its business, operations,
assets or financial condition. Schedule 6.1(a) of the Disclosure
Schedule delivered in connection
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with this Agreement by the Company (the "COMPANY DISCLOSURE SCHEDULE")
sets forth true and complete copies of the Certificate of Incorporation
and bylaws of the Company and Merger Sub, respectively, each as amended
and in effect on the date hereof.
(b) Merger Sub is a wholly-owned Subsidiary of the Company.
Except for Merger Sub, the Company has no Subsidiaries. Merger Sub has
no Subsidiaries. Except as to Merger Sub, neither the Company, nor the
Merger Sub own or control, directly or indirectly, any equity interest
in any corporation, company, association, partnership, joint venture or
other entity or own real estate.
6.2 Capitalization.
(a) As of the date hereof, the authorized capital stock of the
Company consists of an aggregate of 55,000,000 shares of stock,
consisting of 50,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $0.001 per share ("COMPANY
PREFERRED STOCK" and together with Company Common Stock, "COMPANY
STOCK"). As of the date hereof, there are 3,599,550 shares of Company
Common Stock issued and outstanding and no shares of Company Stock held
in the treasury of the Company. The issued and outstanding shares of
Company Stock are owned by the Persons and in the numbers specified in
Schedule 6.2 of the Company Disclosure Schedule. As of the date hereof,
there are (i) no shares of Company Preferred Stock issued and
outstanding, and (ii) no shares of Company Stock issuable upon exercise
of any outstanding options granted pursuant to any Company stock option
or benefit plan. All issued and outstanding shares of Company Common
Stock are duly authorized and validly issued, and fully paid and no
assessment has been made on such shares. The authorized but unissued
shares of Company Stock are not subject to any preemptive rights. The
Company does not have, nor is it bound by, any outstanding
subscriptions, options, warrants, calls, commitments or agreements of
any character calling for the transfer, purchase or issuance of any
shares of capital stock of the Company or any securities representing
the right to purchase or otherwise receive any shares of such capital
stock or any securities convertible into or representing the right to
subscribe for any such shares, and there are no agreements or
understandings with respect to voting of any such shares.
(b) As of the date hereof, the authorized capital stock of
Merger Sub consists of an aggregate of 1,000 shares of stock,
consisting of 1,000 shares of Merger Sub Common Stock. As of the date
hereof, there are 1,000 shares of Merger Sub Common Stock issued and
outstanding and no shares of Merger Common Stock held in the treasury
of Merger Sub. As of the date hereof, there are no shares of Merger Sub
Common Stock issuable upon exercise of any outstanding options granted
pursuant to any Merger Sub stock option or benefit plan. All issued and
outstanding shares of Merger Sub Common Stock are duly authorized and
validly issued, and fully paid and no assessment has been made on such
shares. The authorized but unissued shares of Merger Sub Common Stock
are not subject to any preemptive rights. Merger Sub does not have, nor
is it bound by, any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the
transfer, purchase or issuance of any shares of capital stock of Merger
Sub or any securities representing the right to purchase or
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otherwise receive any shares of such capital stock or any securities
convertible into or representing the right to subscribe for any such
shares, and there are no agreements or understandings with respect to
voting of any such shares.
6.3 Authority; No Violation.
(a) Both the Company and Merger Sub have full corporate power
and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Company and the Board
of Directors and stockholders of Merger Sub. No corporate proceedings
on the part of either the Company or Merger Sub are necessary to
consummate the transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement by
the Company or Merger Sub, nor the consummation by the Company or
Merger Sub of the transactions contemplated hereby in accordance with
the terms hereof, or compliance by the Company or Merger Sub with any
of the terms or provisions hereof, will (i) violate any provision of
either the Company's or Merger Sub's Certificate of Incorporation or
bylaws, each as amended and in effect as of the date hereof, (ii)
violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to either the Company or
Merger Sub or any of their properties or assets, or (iii) except as set
forth in Schedule 6.3(b) of the Gemini Disclosure Schedule, violate,
conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of
any lien, security interest, charge or other encumbrance upon any of
the properties or assets of either the Company or Merger Sub under any
of the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument
or obligation to which either the Company or Merger Sub is a party, or
by which the Company or Merger Sub or any of their properties or assets
may be bound or affected except, with respect to (ii) and (iii) above,
such as individually and in the aggregate will not have a material
adverse effect on the business, operations, assets or financial
condition of either the Company or Merger Sub, or the ability of the
Company or Merger Sub to consummate the transactions contemplated
hereby. No consents or approvals of or filings or registrations with or
notices to any public body or authority are necessary on behalf of the
Company or Merger Sub in connection with (x) the execution and delivery
by the Company or Merger Sub of this Agreement and (y) the consummation
by the Company or Merger Sub the transactions contemplated hereby.
6.4 Legal Proceedings. Except as disclosed in Schedule 6.4 of the
Company Disclosure Schedule, as of the date of this Agreement, neither the
Company nor Merger Sub is a party to any, and there are no pending or, to either
the Company's or Merger Sub's knowledge, no threatened Legal Proceedings against
either the Company or Merger Sub or against any present or former Company or
Merger Sub officer or director in their capacity as a such officer or director
which are material to either the Company or Merger Sub. As of the date of this
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Agreement Gemini is not a party to any material order, judgment or decree
entered against either the Company or Merger Sub in any lawsuit or proceeding.
6.5 Compliance with Applicable Law. Both the Company or Merger Sub hold
all material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its respective businesses, and has complied with and is not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any national, state or local governmental
authority relating to either the Company or Merger Sub (other than where such
defaults or non-compliances will not, alone or in the aggregate, result in a
material adverse effect on the business, operations, assets or financial
condition of either the Company or Merger Sub) and the Company or Merger Sub
have not received notice of violation of, nor do they know of any violations
(other than violations which will not, alone or in the aggregate, result in a
material adverse effect on the business, operations, assets or financial
condition of either the Company or Merger Sub) of, any of the above.
6.6 Absence of Liabilities. Neither the Company, nor Merger Sub have
any liabilities, whether absolute, accrued, contingent or otherwise.
6.7 No Brokers. Except for Foresight, neither the Company, nor Merger
Sub have employed or authorized anyone to represent them as a broker or finder
in connection with the transactions contemplated by this Agreement, and no
broker or other person is entitled to any commission or finder's fee from the
Company or Merger Sub in connection with the transactions contemplated herein.
The Company will indemnify and hold harmless Isolagen, the Isolagen Stockholders
and Gemini from and against any and all losses, claims, demands, damages, costs
and expenses, including, without limitation, reasonable attorneys' fees and
expenses they may sustain or incur as a result of any claim for a commission or
fee by a broker or finder (other than Foresight) acting on behalf of the Company
or the Merger Sub.
6.8 Bankruptcy; Criminal Proceedings. To the best of the knowledge of
the Company and Merger Sub, the Company, its officers, directors, affiliates,
promoters or any predecessor thereof, Merger Sub and its officers, directors,
affiliates, promoters or any predecessor thereof, have not been subject to or
suffered any of the following:
(a) Any bankruptcy petition filed by or against any business
of which such Person was a general partner or executive officer either
at the time of the bankruptcy or within two (2) years prior to that
time;
(b) Any conviction in a criminal proceeding or being subject
to a pending criminal proceeding (excluding traffic violations and
other misdemeanor offenses) within ten (10) years from the date hereof;
(c) Any order, judgement or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting such Person's involvement in any type of business, securities
or banking activities; or
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(d) Being found guilty by a court of competent jurisdiction
(in a civil action), the SEC or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or
vacated.
6.9 Disclosure. No representation or warranty contained in Article VI
of this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein not misleading.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Conduct of Business.
(a) During the period from the date of this Agreement to the
Closing Date, Isolagen and Gemini shall conduct their businesses and
engage in transactions permitted hereunder only in the ordinary course
and consistent with prudent business practice, and the Isolagen
Stockholders shall take no action that is inconsistent with the
foregoing agreement, except with the prior consent of the Company,
which consent will not be unreasonably withheld. Isolagen and Gemini
shall each use all commercially reasonable efforts to (i) preserve its
business organization intact, (ii) keep available to itself the present
services of its employees and (iii) preserve for itself, the Company
and the Surviving Corporation the goodwill of its customers and others
with whom business relationships exist, in each case provided that
neither Isolagen, nor Gemini, shall not be required to take any
unreasonable or extraordinary act or any action which would conflict
with any other term of this Agreement.
(b) During the period from the date of this Agreement to the
Closing Date, the Company shall conduct its business and engage in
transactions permitted hereunder only in the ordinary course and
consistent with prudent business practice, and shall take no action
that is inconsistent with the foregoing agreement, except with the
prior consent of Isolagen, which consent will not be unreasonably
withheld. The Company shall use all commercially reasonable efforts to
(i) preserve its business organization intact, (ii) keep available to
itself the present services of its employees and (iii) preserve for
itself and the Surviving Corporation the goodwill of its customers and
others with whom business relationships exist, in each case provided
that the Company shall not be required to take any unreasonable or
extraordinary act or any action which would conflict with any other
term of this Agreement.
7.2 Negative Covenants and Dividend Covenants. The Company, Isolagen
and Gemini agree that from the date hereof to the Closing Date, except as
otherwise approved by Isolagen for the Company and the Company for either the
Isolagen and Gemini in writing, or as permitted or required by this Agreement,
they will not:
(a) change any provision of their Governing Documents;
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(b) except for the filing of the Certificate of Amendment with
the Secretary of State of the State of Delaware, the Bridge Loan
Transaction (as defined below), the Note Discharge Transaction (as
defined below), the Accrued Salaries Conversion (as defined below) and
the Line of Credit Transaction (as defined below), change the number of
shares of their authorized capital stock or issue any shares of capital
stock or issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating
to their authorized or issued capital stock or any securities
convertible into shares of such stock, or split, combine or reclassify
any shares of its capital stock, or 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 shares of such capital stock;
(c) grant any severance or termination pay other than in the
ordinary course of business consistent with past practices and policies
to, or enter into or amend any employment agreement with, any of their
directors, officers or employees; adopt any new employee benefit plan
or arrangement of any type or amend any such existing benefit plan or
arrangement; or award any increase in compensation or benefits to their
directors, officers or employees except with respect to salary
increases and bonuses for employees in the ordinary course of business
and consistent with past practices and policies;
(d) sell or dispose of any substantial amount of assets or
incur any significant liabilities other than in the ordinary course of
business consistent with past practices and policies;
(e) make any capital expenditures outside of the ordinary
course of business other than pursuant to binding commitments existing
on the date hereof and other than expenditures necessary to maintain
existing assets in good repair;
(f) file any applications or make any contract with respect to
branching or site location or relocation;
(g) agree to acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity;
(h) make any material change in its accounting methods or
practices, other than changes required in accordance with generally
accepted accounting principles;
(i) make any loan or loan commitment to any of their
stockholders; or
(j) agree to do any of the foregoing.
7.3 No Solicitation. From the date hereof until the Closing Date,
Isolagen, Gemini and the Isolagen Stockholders shall not, directly or
indirectly, encourage or solicit or hold discussions or negotiations with, or
provide any information to, any person, entity or group (other than the Company)
concerning any merger or sale of shares of capital stock of Isolagen or Gemini
or sale of substantial assets or liabilities not in the ordinary course of
business, or similar transactions involving Isolagen or Gemini (an "ACQUISITION
TRANSACTION"). From the date
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hereof until the Closing Date, Isolagen and Gemini will promptly communicate to
the Company the terms of any proposal, whether written or oral, which is
communicated to any member of the Board of Directors or any executive officer of
either Isolagen or Gemini or to any Isolagen Stockholder or their agents in
respect of any Acquisition Transaction.
7.4 Current Information. During the period from the date of this
Agreement to the Closing Date, Isolagen and Gemini will, at the request of the
Company, cause one or more of their designated representatives to confer on a
daily or more frequent basis with representatives of the Company regarding their
business, operations, properties, assets and financial condition and matters
relating to the completion of the transactions contemplated herein.
7.5 Access to Properties and Records; Confidentiality.
(a) During the period from the date of this Agreement to the
Closing Date, Isolagen and Gemini agree to permit the Company and its
agents and representatives, including, without limitation, officers,
directors, employees, attorneys, accountants and financial advisors
(collectively, "REPRESENTATIVES") reasonable access to their respective
properties, and Isolagen and Gemini agree to disclose and make
available to the Company and its Representatives, as the case may be,
all books, papers and records relating to their respective assets,
stock ownership, properties, operations, obligations and liabilities,
including, but not limited to, all books of account (including the
general ledger), tax records, minute books of directors' and
stockholders' meetings, organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority,
independent auditors' work papers (subject to the receipt by such
auditors of a standard access representation letter), litigation files,
plans affecting employees, and any other business activities or
prospects in which the Company and its Representatives may have a
reasonable interest.
(b) All information furnished by the parties hereto previously
in connection with transactions contemplated by this Agreement, shall
be kept confidential and shall be treated as the sole property of the
party delivering the information until consummation of the Merger
contemplated hereby and, if the Merger shall not occur, each party and
each party's Representatives shall return to the other party all
documents or other materials containing, reflecting or referring to
such information, will not retain any copies of such information, shall
keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or commercial
purposes or any other purpose not expressing permitted hereby. The
obligation to keep such information confidential shall continue for
thirty (30) months from the date this Agreement is terminated or
abandoned.
(c) In addition to all other remedies that may be available to
any party hereto in connection with a breach by any other party hereto
of its or its Representative's obligations under this Section 7.5, each
party hereto shall be entitled to specific performance and injunctive
and other equitable relief with respect to this Section 7.5. Each party
hereto waives, and agrees to use all reasonable efforts to cause its
Representatives to waive, any requirement to secure or post a bond in
connection with any such relief.
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7.6 Regulatory Matters.
(a) The parties hereto will cooperate with each other and use
all reasonable efforts to prepare all necessary documentation, to
effect all necessary filings and to obtain all necessary permits,
consents, approvals and authorizations of all third parties and
governmental bodies necessary to consummate the transactions
contemplated by this Agreement as soon as possible. The parties shall
each have the right to review in advance and comment on all information
relating to the other, as the case may be, which appears in any filing
made with, or written material submitted to, any third party or
governmental body in connection with the transactions contemplated by
this Agreement.
(b) Each of the parties will promptly furnish each other with
copies of written communications received by them from, or delivered by
any of the foregoing to, any governmental body in respect of the
transactions contemplated hereby.
(c) Between the date of this Agreement and the Closing Date,
Isolagen and Gemini shall cooperate with the Company to reasonably
conform (as of the Closing Date) their policies and procedures to those
of the Company as the Company may reasonably identify to Isolagen or
Gemini from time to time.
(d) Between the date of this Agreement and the Closing Date,
Isolagen, Gemini and the Isolagen Stockholders agree to file any and
all notices, if any, required by any regulatory authority. Isolagen,
Gemini and the Isolagen Stockholders further agree to make such filings
in a timely fashion so that any required waiting periods will have
lapsed before the Closing Date. Isolagen, Gemini and the Isolagen
Stockholders shall provide the Company copies of all such filings, but
need not provide copies of any personal financial information required
by such filings.
7.7 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions to Closing and to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated by this Agreement and using all
reasonable efforts to prevent the breach of any representation, warranty,
covenant or agreement of such party contained or referred to in this Agreement
and to promptly remedy the same. Nothing in this Section shall be construed to
require any party to participate in any threatened or actual Legal Proceedings
(other than Legal Proceedings to which it is otherwise a party or subject or
threatened to be made a party or subject) in connection with consummation of the
transactions contemplated by this Agreement unless such party shall consent in
advance and in writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all costs and damages
related thereto.
7.8 Public Announcements. The parties hereto shall cooperate with each
other in the development and distribution of all news releases and other public
disclosures with respect to this Agreement or any of the transactions
contemplated hereby, except as may be otherwise
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required by law or regulation or as to which the party releasing such
information has used all reasonable efforts to discuss with the other party in
advance.
7.9 Failure to Fulfill Conditions. The parties agree to take all
commercially reasonable to cause the Closing to occur on or before August 31,
2001 (the "CUTOFF DATE"). In the event that any Isolagen, Gemini or the Company
reasonably determines that a material condition to its obligation to consummate
the transactions contemplated hereby cannot be fulfilled on or prior to the
Cutoff Date, and that it will not waive that condition, it will promptly notify
the other parties. Isolagen, Gemini and the Company will promptly inform the
other of any facts applicable to Isolagen, Gemini or the Company, respectively,
or their respective directors or officers, that would be likely to prevent or
materially delay approval of the Merger by any governmental authority or which
would otherwise prevent or materially delay completion of the Merger or the
Closing.
7.10 Disclosure Supplements. Each party hereto will promptly supplement
or amend (by written notice to the other) its respective Disclosure Schedules
delivered pursuant hereto with respect to any matter hereafter arising which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedules or which is
necessary to correct any information in such Schedules which has been rendered
materially inaccurate thereby. For the purpose of determining satisfaction of
the conditions set forth in Articles VIII, IX and X, no supplement or amendment
to such Schedules shall correct or cure any warranty which was untrue when made,
but supplements or amendments may be used to disclose subsequent facts or events
to maintain the truthfulness of any warranty.
7.11 Transfer of Shares. Except pursuant to this Agreement, from the
date hereof until the Closing, the Isolagen Stockholders agree not transfer any
shares Isolagen Stock.
7.12 Cooperation. From and after the date of this Agreement until one
(1) year following the Closing Date, the Isolagen Stockholders will use their
reasonable best efforts in good faith to answer any questions relating to
Isolagen and Isolagen's business which the Company may ask or make inquiry.
7.13 Discharge of Indebtedness. Prior to the Closing, Xxxxxxx X. Boss,
Jr. and Xxxx Xxxxx agree to forgive and discharge in full the indebtedness of
Isolagen to them, as represented by those certain promissory notes described in
Exhibit A attached hereto (the "NOTES"), and in connection therewith Xxxxxxx X.
Boss, Jr. and Xxxx Xxxxx agree to return the Notes to Isolagen for cancellation.
In exchange for such forgiveness, Isolagen shall issue Xxxxxxx X. Boss, Jr.
three thousand eight hundred twenty-two and 50/100 (3,822.50) shares of Isolagen
Common Stock (equivalent to one hundred six thousand five hundred thirty-one
(106,531) shares of Company Common Stock to be issued as part of the Merger
Consideration in the Merger) and Xxxx Xxxxx three thousand six hundred
seventy-five and 75/100 (3,675.75) shares of Isolagen Common Stock (equivalent
to one hundred two thousand four hundred forty-one (102,441) shares of Company
Common Stock to be issued as part of the Merger Consideration in the Merger)
(collectively, the "NOTE DISCHARGE TRANSACTION").
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF ISOLAGEN AND ISOLAGEN
STOCKHOLDERS
The obligations of Isolagen and the Isolagen Stockholders to consummate
the Merger and the transaction contemplated herein are subject to the
fulfillment or satisfaction, on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Isolagen and/or the
Isolagen Stockholders in their sole discretion, but only in a writing signed
Isolagen and/or the Isolagen Stockholders):
8.1 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits and/or authorizations, and there shall have been
taken such other action by any regulatory authority having jurisdiction over the
parties and the actions herein proposed to be taken, as may be required to
lawfully consummate the Merger and the transaction contemplated herein and for
Isolagen as the Surviving Corporation to continue to conduct its business as
presently conducted, including but not limited to requirements under applicable
U.S. securities, corporations, and investment laws.
8.2 Documents. The Company, Merger Sub and Gemini must have caused the
following documents to be delivered to Isolagen and the Isolagen Stockholders:
(a) the Certificate of Merger, duly executed by each of Merger
Sub and Gemini;
(b) certificates of the Secretary of State and the taxing
authorities of the State of Delaware, dated not more than five (5) days
prior to the Closing Date, attesting to the organization and good
standing of each of the Company, Merger Sub and Gemini as a corporation
in its jurisdiction of incorporation, and to the payment of all state
taxes due and owing thereby;
(c) copies, certified by a certificate of the Secretary of the
Company, Merger Sub and Gemini as of the Closing Date, of resolutions
duly adopted by the Boards of Directors of each of the Company, Merger
Sub and Gemini, and by the stockholders of Merger Sub and Gemini,
authorizing the execution and delivery by the Company, Merger Sub and
Gemini of this Agreement and all other agreements attached hereto as
Exhibits or contemplated herein, the consummation of the Merger, and
the taking of all such other corporate action as shall have been
required as a condition to, or in connection with the consummation of
the transactions contemplated by this Agreement.
8.3 Private Placement. Simultaneous with the Closing, the Company shall
have consummated and received the proceeds from the sale of shares of Company
Common Stock for at least Two Million and No/100 Dollars ($2,000,000) (the
"PRIVATE PLACEMENT").
8.4 Employment Agreements. The Company and Xxxx Xxxxx shall have each
duly executed an Employment Agreement, substantially in the form attached hereto
as Exhibit B (the "MARKO EMPLOYMENT AGREEMENT"). The Company and Xxxxxx XxXxxx
shall have each duly
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executed an Employment Agreement, substantially in the form attached hereto as
Exhibit C (the "MCGILL EMPLOYMENT AGREEMENT").
8.5 Conversion of Accrued Salaries. Prior to the Effective Time,
Xxxxxxx X. Boss, Jr., Xxxx Xxxxx and Xxxxxx XxXxxx (collectively, the "ISOLAGEN
EMPLOYEES") shall have agreed in writing to, and Isolagen shall have converted,
an aggregate of Three Hundred Twenty-Eight Thousand One Hundred Twenty-Five and
No/100 Dollars ($328,125) of accrued salary owed to the Isolagen Employees into
an aggregate of two thousand five hundred eleven and 66/100 (2,511.66) shares of
Isolagen Common Stock (equivalent to seventy thousand (70,000) shares of Company
Common Stock to be issued as part of the Merger Consideration in the Merger)
(the "ACCRUED SALARIES CONVERSION").
8.6 Representations and Warranties; Performance of Obligations. The
representations and warranties of the Company, Merger Sub and Gemini contained
in this Agreement, other than representations and warranties which are expressly
stated to be made as of the date hereof or as of any other particular date,
shall be true and correct in all material respects on the Closing Date as though
made on and as of the Closing Date. The Company, Merger Sub and Gemini shall
each have performed in all material respects, the agreements, covenants and
obligations to be performed by them prior to the Closing Date. The Company,
Merger Sub and Gemini shall each deliver to Isolagen and the Isolagen
Stockholders a certificate dated as of the Closing Date signed by their
respective President or Vice President certifying as to the fulfillment of the
conditions of this Section 8.6.
8.7 Opinion of Company Counsel. Isolagen and the Isolagen Stockholders
shall have received an opinion of Xxxxxx and Xxxxx, L.L.P., legal counsel for
the Company, substantially in the form attached hereto as Exhibit D (the
"COMPANY OPINION").
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF GEMINI
The obligations of Gemini to consummate the Merger and the transaction
contemplated herein are subject to the fulfillment or satisfaction, on and as of
the Closing, of each of the following conditions (any one or more of which may
be waived by Gemini in its sole discretion, but only in a writing signed
Gemini):
9.1 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits and/or authorizations, and there shall have been
taken such other action by any regulatory authority having jurisdiction over the
parties and the actions herein proposed to be taken, as may be required to
lawfully consummate the Merger and the transaction contemplated herein,
including but not limited to requirements under applicable U.S. securities,
corporations, and investment laws.
9.2 Documents. The Company, Merger Sub, Isolagen and the Isolagen
Stockholders must have caused the following documents to be delivered to Gemini:
(a) the Certificate of Merger, duly executed by each of Merger
Sub and Isolagen, and the Certificate of Amendment, duly executed by
Isolagen;
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(b) certificates of the Secretary of State and the taxing
authorities of the State of Delaware, dated not more than five (5) days
prior to the Closing Date, attesting to the organization and good
standing of each of the Company, Merger Sub and Isolagen as a
corporation in its jurisdiction of incorporation, and to the payment of
all state taxes due and owing thereby;
(c) copies, certified by a certificate of the Secretary of the
Company, Merger Sub and Isolagen as of the Closing Date, of resolutions
duly adopted by the Boards of Directors of each of the Company, Merger
Sub and Isolagen, and by the sole stockholder of Merger Sub and by 80%
of the stockholders of Isolagen, authorizing the execution and delivery
by the Company, Merger Sub and Isolagen of this Agreement and all other
agreements attached hereto as Exhibits or contemplated herein, the
consummation of the Merger, and the taking of all such other corporate
action as shall have been required as a condition to, or in connection
with the consummation of the transactions contemplated by this
Agreement.
9.3 Private Placement. The Company shall have consummated and received
the proceeds from the Private Placement.
9.4 Employment Agreements. The Company and Xxxx Xxxxx shall have each
duly executed the Marko Employment Agreement. The Company and Xxxxxx XxXxxx
shall have each duly executed the McGill Employment Agreement.
9.5 Conversion of Accrued Salaries. Prior to the Effective Time, the
Isolagen Employees and Isolagen shall have consummated the Accrued Salaries
Conversion.
9.6 Representations and Warranties; Performance of Obligations. The
representations and warranties of the Company, Merger Sub, Isolagen and the
Isolagen Stockholders contained in this Agreement, other than representations
and warranties which are expressly stated to be made as of the date hereof or as
of any other particular date, shall be true and correct in all material respects
on the Closing Date as though made on and as of the Closing Date. The Company,
Merger Sub, Isolagen and the Isolagen Stockholders shall each have performed in
all material respects, the agreements, covenants and obligations to be performed
by them prior to the Closing Date. The Company, Merger Sub and Isolagen shall
each deliver to Gemini a certificate dated as of the Closing Date signed by
their President or Vice President certifying as to the fulfillment of the
conditions of this Section 9.6. Each Isolagen Stockholder shall deliver to
Gemini a certificate dated as of the Closing Date certifying as to the
fulfillment of the conditions of this Section 9.6
9.7 Opinion of Company Counsel. Gemini shall have received the Company
Opinion.
9.8 FDA Reports. The Company and Gemini shall have received a report(s)
from the U.S. Department of Health and Human Services Food and Drug
Administration ("FDA") consultants selected by them regarding the FDA approval
of certain products of Isolagen and such report(s) shall be satisfactory to them
in their sole discretion.
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ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND MERGER SUB
The obligations of the Company and Merger Sub to consummate the Merger
and the transaction contemplated herein are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by the Company and/or Merger Sub in their
sole discretion, but only in a writing signed the Company and/or Merger Sub):
10.1 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits and/or authorizations, and there shall have been
taken such other action by any regulatory authority having jurisdiction over the
parties and the actions herein proposed to be taken, as may be required to
lawfully consummate the Merger and the transaction contemplated herein,
including but not limited to requirements under applicable U.S. securities,
corporations, and investment laws.
10.2 Documents. Isolagen, the Isolagen Stockholders and Gemini must
have caused the following documents to be delivered to the Company and Merger
Sub:
(a) the Certificate of Merger, duly executed by each of
Isolagen and Gemini, and the Certificate of Amendment, duly executed by
Isolagen;
(b) certificates of the Secretary of State and the taxing
authorities of the State of Delaware, dated not more than five (5) days
prior to the Closing Date, attesting to the organization and good
standing of each of Isolagen and Gemini as a corporation in its
jurisdiction of incorporation, and to the payment of all state taxes
due and owing thereby;
(c) copies, certified by a certificate of the Secretary of
Isolagen and Gemini as of the Closing Date, of resolutions duly adopted
by the Boards of Directors of each of Isolagen and Gemini, and by the
stockholders of Gemini and by 80% of the stockholders of Isolagen,
authorizing the execution and delivery by Isolagen and Gemini of this
Agreement and all other agreements attached hereto as Exhibits or
contemplated herein, the consummation of the Merger, and the taking of
all such other corporate action as shall have been required as a
condition to, or in connection with the consummation of the
transactions contemplated by this Agreement.
10.3 Private Placement. The Company shall have consummated and received
the proceeds from the Private Placement.
10.4 Employment Agreements. The Company and Xxxx Xxxxx shall have each
duly executed the Marko Employment Agreement. The Company and Xxxxxx XxXxxx
shall have each duly executed the McGill Employment Agreement.
10.5 Conversion of Isolagen Notes. Prior to the Effective Time, all of
the holders of those certain promissory notes listed on Exhibit E attached
hereto (collectively, the "ISOLAGEN NOTES" and each an "ISOLAGEN NOTE") shall
have agreed in writing to exchange the Xxxxxxxx
00
00
Notes for an aggregate of sixty-two thousand seven hundred ninety-one and 53/100
(62,791.53) shares of Isolagen Common Stock (equivalent to one million seven
hundred fifty thousand (1,750,000) shares of Company Common Stock to be issued
as part of the Merger Consideration in the Merger) and shall have each delivered
a letter of transmittal, satisfactory in form to the Company, regarding such
exchange and their original Isolagen Note to Isolagen (the "NOTE CONVERSION").
10.6 Conversion of Accrued Salaries. Prior to the Effective Time, the
Isolagen Employees and Isolagen shall have consummated the Accrued Salaries
Conversion.
10.7 Consulting Agreements. The Company and Xxxxxxx X. Boss, Jr. shall
have each duly executed a Consulting Agreement in a form satisfactory to the
Company and Xxxxxxx X. Boss, Jr. and such Consulting Agreement shall provide the
following:
(a) Upon the Merger Xxxxxxx X. Boss, Jr. will be appointed
Co-Chairman of the Surviving Corporation;
(b) In exchange for 60,000 shares of Company Common Stock
Xxxxxxx X. Boss, Jr. will not receive a salary for twelve (12) months
after the Effective Time;
(c) Twelve (12) months after the Effective Time Xxxxxxx X.
Boss, Jr. will be eligible to receive an annual salary of $75,000;
(d) Twenty-four (24) months after the Effective Time Xxxxxxx
X. Boss, Jr. will be eligible to receive an annual salary of $100,000;
(e) Xxxxxxx X. Boss, Jr. will receive a $50,000 bonus upon the
FDA's final approval of the Isolagen product for cosmetic purposes or
upon Isolagen receiving a U.S. patent for such product; and
(f) If Xxxxxxx X. Boss, Jr. is terminated without cause he
will be entitled to a ninety (90) day severance package.
The Company and Xxxxxxxx Xxxxx shall have each duly executed a Consulting
Agreement in a form satisfactory to the Company and Xxxxxxxx Xxxxx.
10.8 Representations and Warranties; Performance of Obligations. The
representations and warranties of Isolagen, the Isolagen Stockholders and Gemini
contained in this Agreement, other than representations and warranties which are
expressly stated to be made as of the date hereof or as of any other particular
date, shall be true and correct in all material respects on the Closing Date as
though made on and as of the Closing Date. Isolagen, the Isolagen Stockholders
and Gemini shall each have performed in all material respects, the agreements,
covenants and obligations to be performed by them prior to the Closing Date.
Isolagen and Gemini shall each deliver to the Company and Merger Sub a
certificate dated as of the Closing Date signed by their President or Vice
President certifying as to the fulfillment of the conditions of this Section
10.8. Each Isolagen Stockholder shall deliver to the Company a certificate dated
as of the Closing Date certifying as to the fulfillment of the conditions of
this Section 10.8.
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10.9 Closing Balance Sheet. Isolagen shall have submitted the balance
sheet of Isolagen dated as of the day immediately preceding the Closing (the
"CLOSING BALANCE SHEET") to the Company and the Company shall have approved the
Closing Balance Sheet, in its sole discretion.
10.10 Discharge of Indebtedness. Prior to the Closing, Xxxxxxx X. Boss,
Jr. and Xxxx Xxxxx shall have forgiven and discharged in full all of the
indebtedness of Isolagen to them, as represented by the Notes, and returned the
Notes to Isolagen for cancellation.
10.11 Release of Claims. Prior to the Closing, the Isolagen
Stockholders shall have released any and all claims against Isolagen, matured or
unmatured, arising or accruing on or before the Effective Time.
10.12 Opinion of Isolagen Counsel. The Company shall have received an
opinion from Xxxxxxx Xxxxxxxxx, legal counsel for Isolagen, substantially in the
form attached hereto as Exhibit F.
10.13 FDA Reports. The Company and Gemini shall have received a
report(s) from the FDA consultants selected by them regarding the FDA approval
of certain products of Isolagen and such report(s) shall be satisfactory to them
in their sole discretion.
ARTICLE XI
POST-CLOSING OBLIGATIONS OF PARTIES
11.1 Officer and Board Appointees. Effective as of the Effective Time,
the Board of Directors of the Company shall elect and appoint the persons listed
on Exhibit G attached hereto to the Company offices set forth opposite their
names on Exhibit G. Following the Closing, the Company shall take all
commercially reasonable actions to have the Board of Directors of the Company
elect and appoint Xxxxxxx K Boss, Jr. and Xxxxxxxx Xxxxx to the Board of
Directors of the Company and to elect and appoint Xxxxxxx X. Boss, Jr.
Co-Chairman of the Board of Directors of the Company effective as of the Closing
Date.
11.2 Stock Option Plan. Following the Closing, the Board of Directors
of the Company shall adopt a stock option plan, substantially in the form
attached hereto as Exhibit H (the "PLAN"), and, on a timely basis, submit the
Plan to the stockholders of the Company for their approval and adoption.
ARTICLE XII
TERMINATION OF AGREEMENT
12.1 Termination. This Agreement may be terminated at any time prior to
or at the Closing:
(a) By the mutual written consent of the Company, Isolagen,
the Isolagen Stockholders and Gemini;
(b) By the Company, if the conditions precedent set forth in
Article X shall have not been complied with, waived or performed and
such noncompliance or
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nonperformance shall not have been cured or eliminated (or by its
nature cannot be cured or eliminated) on or before midnight, Houston,
Texas time on September 15, 2001 (the "TERMINATION DATE");
(c) By Isolagen and/or the Isolagen Stockholders, if the
conditions precedent set forth in Article VIII shall have not been
complied with, waived or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its
nature cannot be cured or eliminated) on or before the Termination
Date;
(d) By Gemini, if the conditions precedent set forth in
Article IX shall have not been complied with, waived or performed and
such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) on or
before the Termination Date;
(e) By the Company, if any material item of disclosure or
information obtained during the Company's ongoing due diligence
investigation of Isolagen and Gemini shall warrant termination of this
Agreement and the transactions contemplated herein, as determined in
the Company's reasonable discretion using any relevant information;
(f) By the Company, Isolagen, the Isolagen Stockholders or
Gemini, if the Closing Date shall not have occurred on or prior to the
Cutoff Date unless the failure of such occurrence shall be due to the
failure of the party seeking to terminate this Agreement to perform or
observe its agreements set forth herein to be performed or observed by
such party at or before the Closing Date;
(g) By any party, upon written notice to the other parties if
any application for regulatory or governmental approval necessary to
consummate the Merger and the other transactions contemplated hereby
shall have been denied or withdrawn at the request or recommendation of
the applicable regulatory agency or governmental authority or by the
Company upon written notice to the other parties if any such
application is approved with conditions which materially impair the
value of Isolagen, taken as a whole, to the Company;
(h) By the Company, if (i) there shall have occurred a
material adverse change in the business, operations, assets, or
financial condition of Isolagen or Gemini from that disclosed by
Isolagen or Gemini on the date of this Agreement, or (ii) there was a
material breach in any representation, warranty, covenant, agreement or
obligation of Isolagen, the Isolagen Stockholders or Gemini hereunder
and such breach shall not have been remedied within thirty (30) days
after receipt by the breaching party of notice in writing from the
Company specifying the nature of such breach and requesting that it be
remedied;
Except as otherwise specifically set forth herein, any termination of
this Agreement under this Section 11.1 will be effective by the delivery of
notice of the terminating party to the other parties hereto.
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12.2 No Liability for Proper Termination. Any termination of this
Agreement in accordance with this Article XII will be without further obligation
or liability upon any party in favor of the other party hereto or to its
stockholders, directors or officers; provided, however, that nothing herein will
limit the obligation of any party for any willful breach hereof or failure to
use their reasonable best efforts to cause the Merger and the transaction
contemplated herein to be consummated. In the event of the termination of this
Agreement pursuant to this Article XII, this Agreement shall thereafter become
void and have no effect and each party shall be responsible for its own expenses
incurred in connection herewith.
ARTICLE XIII
INDEMNIFICATION AND REMEDIES
13.1 Stockholders' Indemnification. To the fullest extent permitted by
applicable law, the Isolagen Stockholders, hereby, jointly and severally, agree
to indemnify, defend and hold the Company, and its respective officers,
directors, employees, representatives and agents, harmless from and against any
claims, actions, causes of action, assessments, losses, demands, damages,
(including incidental and consequential damages) judgments, liabilities, costs
and expenses, including without limitation, costs of defense, attorneys' fees,
interest, penalties and reasonable expenses or diminution of value (whether or
not involving a third-party claim), net of any insurance proceeds received by
the Company with respect thereto, including without limitation any diminution in
the value of the Surviving Corporation ("CLAIMS" or "CLAIM"), asserted against,
imposed upon, suffered or incurred by, the Company and its respective officers,
directors, employees, representatives and agents arising out of or relating to
(i) the breach, default or failure to perform by Isolagen and/or the Isolagen
Stockholders of any of the terms, covenants, conditions, representations or
warranties made by Isolagen and/or the Isolagen Stockholders in this Agreement,
the Isolagen Disclosure Schedule or any certificates or documents delivered in
connection with the Agreement, (ii) any products or services manufactured, sold,
delivered, marketed or provided by Isolagen to any third party prior to the
Closing Date and (iii) any Claim by any person or entity (other than Foresight)
for brokerage or finder's fees or commissions or similar payments based upon any
Arrangement or understanding alleged to have been made by such person or entity
with Isolagen and/or the Isolagen Stockholders (or any person or entity acting
on their behalf) in connection with any of the transactions contemplated in the
Agreement.
13.2 Indemnification; Notice and Settlement. For purposes of this
Article XIII, the term "INDEMNIFYING PARTY" when used in connection with a
particular Claim means the person or entity (whether one or more) having an
obligation to indemnify with respect to such Claim pursuant to this Article
XIII, and the term "INDEMNIFIED PARTY" when used in connection with a particular
Claim means the person or entity (whether one or more) having the right to be
indemnified with respect to such Claim pursuant to this Article XIII. The
following procedures will apply to the indemnification obligations set forth in
this Agreement:
(a) Direct Claims. If any Indemnified Party should have a
Claim against any Indemnifying Party hereunder that does not involve a
Claim against such Indemnified Party by a third party, the Indemnified
Party will transmit to the Indemnifying Party a written notice with
respect to such Claim, specifying the basis therefor; provided,
however, that any failure or delay in providing such notice to the
Indemnifying Party will
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not relieve the Indemnifying Party of any obligation hereunder except
to the extent and only to the extent the Indemnifying Party was
actually prejudiced by such delay or failure. If the Indemnifying Party
does not notify the Indemnified Party within thirty (30) days from its
receipt of such notice (the "ELECTION PERIOD") that the Indemnifying
Party disputes such Claim, the Claim specified by the Indemnified Party
in such notice will be deemed a liability of the Indemnifying Party
hereunder. Payment of all specific amounts identified owing by the
Indemnifying Party under such Claim will be paid in cash within five
(5) days after expiration of the Election Period, and if not timely
made, such amounts will accrue interest until paid in full at the
annual rate of 18% (or the highest interest rate permitted under
applicable law) from and after the day following the expiration of the
Election Period. If the Indemnifying Party has timely disputed such
Claim, such dispute shall be resolved in accordance with Section 14.15.
If a Claim may be deemed to involve both a direct Claim (and thus
subject to the terms of this Section 13.3(a)) and a Claim involving a
third party (and thus subject to the terms of Section 13.3(b)), it will
be treated hereunder as a Claim involving a third party.
(b) Third Party Claims. Promptly after receipt of written
notice of a claim involving a third party, the Indemnified Party
against whom such Claims is asserted will give the Indemnifying Party
written notice of any such Claim; provided, however, that any failure
or delay in providing such notice to the Indemnifying Party will not
relieve the Indemnifying Party of any obligations hereunder except to
the extent and only to the extent the Indemnifying Party was actually
prejudiced by such delay or failure. The Indemnifying Party will
promptly designate counsel chosen by it and reasonably acceptable to
the Indemnified Party to represent the Indemnified Party in connection
with such Claim and the Indemnifying Party will pay all costs of
investigation, litigation or arbitration incurred in connection with
such Claim including, without limitation, fees and expenses of such
counsel. The Indemnifying Party will not be liable for the fees or
expenses of separate counsel for the Indemnified Party, unless the
counsel designated by the Indemnifying Party is unable, due to ethical
considerations, to fully represent the Indemnified Party with respect
to such Claim, in which case the Indemnifying Party will be liable for
the fees and expenses of one separate counsel for the Indemnified
Party. Unless the Indemnifying Party has delivered to the Indemnified
Party a written statement in form and substance acceptable to the
Indemnified Party acknowledging and confirming that a subject Claim is
fully within the scope of the indemnification obligations of the
Indemnifying Party under this Agreement, the Indemnified Party will
have the sole right to direct the conduct of the defense of such Claim
and to settle or compromise such Claim on such terms as the Indemnified
Party will determine in its sole discretion without prejudice to the
rights of the Indemnified Party to seek indemnity under this Agreement.
If the Indemnifying Party delivers to the Indemnified Party the written
statement referred to in the preceding sentence, the subject Claim may
not be settled or compromised without the prior written consent of the
Indemnifying Party. The Indemnified Party will use its reasonable
efforts to cooperate fully with respect to the defense of any Claim.
Unless the Indemnifying Party has delivered to the Indemnified Party a
written statement in form and substance acceptable to the Indemnified
Party acknowledging and confirming that a subject Claim is fully within
the scope of indemnification obligations of the Indemnifying Party
under this Agreement, if after the
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passage of a reasonable period of time after notice of any Claim, the
Indemnifying Party has not initiated a defense against such Claim, the
Indemnified Party will have the right to undertake the defense,
compromise or settlement of such Claim at any time prior to settlement,
compromise or final determination thereof and any action so taken by
the Indemnified Party with regard to such defense, compromise or
settlement will be deemed to be within the protection afforded by this
Agreement; provided, however, that any settlement of any such Claim
shall require the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed.
Anything in this Section 13.3 to the contrary notwithstanding, (i) if
there is a reasonable possibility that a Claim may materially adversely affect
the Indemnified Party other than as a result of money damages or other money
payments that are within the protection afforded by this Agreement, the
Indemnified Party will have the right, at the Indemnified Party's cost and
expense, to defend, and, with the consent of the Indemnifying Party (which
consent will not be unreasonably withheld or delayed), to compromise or settle
such claim, and (ii) the Indemnifying Party will not settle or compromise any
Claim or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnified Party a full, irrevocable and unconditional release from all
liability in respect of such Claim. In the event that there is more than one
Indemnified Party or more than one Indemnifying Party with respect to any Claim,
any notice contemplated by this Section 13.3 to be given to the Indemnified
Party or the Indemnifying Party will be deemed to be given for purposes hereof
if it is given to any Indemnified Party, in the case of notices to the
Indemnified Party, or to any Indemnifying Party, in the case of notices to the
Indemnifying Party.
13.3 Survival; Non-Waiver of Rights. The representations, warranties,
covenants and agreements made or deemed made by any party to another shall
survive for one (1) year after the Closing and the delivery of all documents,
funds and investments delivered pursuant hereto and shall not be affected or
deemed waived by reason of the fact that another party or its representatives
knew or should have known that any such representations, warranties, covenants
or agreement is or might be inaccurate in any respect. Any furnishing of
information by any party to another pursuant to, or otherwise in connection
with, this Agreement, including, without limitation, any information contained
in any document, contract, book or record of the delivering party to which
another party shall have access or any information obtained by, or made
available to, any party as a result of any investigation made by or on behalf of
such party prior to or after the date of this Agreement, shall not affect such
party's right to rely on any representation, warranty, covenant or agreement
made or deemed made by another party in this Agreement and shall not be deemed a
waiver thereof.
13.4 Limitation of Liability. The liability of the Isolagen
Stockholders pursuant to their indemnification obligations under Section 13.1
hereof shall be limited, in the aggregate, to (a) the shares of Company Common
Stock received by the Isolagen Stockholders in the Merger or the transactions
contemplated by this Agreement, (b) any cash or securities received by the
Isolagen Stockholders on the sale, transfer or exchange of such Company Common
Stock and (c) any consideration or distributions received for or with respect to
such Company Common Stock in connection with (i) any sale by the Company of all
or substantially all its assets or (ii) any merger or consolidation of the
Company.
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ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Delaware without regard to its conflicts of law doctrine. Each of
the parties hereto irrevocably consents to the jurisdiction of the courts
located in the state and federal courts situated in Xxxxxx County,
Texas.
14.2 Assignment; Binding Upon Successors and Assigns. Neither party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other parties hereto, except that the Company may assign
its respective rights and/or obligations to any entity formed by and between the
Company and Isolagen to carry out the parties' business and financing plan for
Isolagen or its successor. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. A change in control of the Company shall be deemed to be an assignment.
14.3 Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
14.4 Expenses. Each party will bear its respective expenses and legal
fees incurred with respect to this Agreement, and the transactions contemplated
hereby.
14.5 Attorneys' Fees. Should a suit be brought to enforce or interpret
any part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court rendering the judgment (including without limitation,
costs, expenses and fees on any appeal). The prevailing party will be entitled
to recover its costs of the suit, regardless of whether such suit proceeds to
final judgment.
14.6 Notices. All notices and other communications required or
permitted under this Agreement will be in writing and will be either hand
delivered in person, sent by telecopier, sent by certified or registered first
class mail, postage pre-paid, or sent by nationally recognized express courier
service. Such notices and other communications will be effective upon receipt if
hand delivered or sent by telecopier, five (5) days after mailing if sent by
mail, and one (l) day after dispatch if sent by express courier, to the
following addresses, or to such other addresses or fax number as any party may
notify the other parties in accordance with this Section:
If to the Company or Merger Sub:
American Financial Holding, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
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Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Xxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Isolagen: Isolagen Technologies, Inc.
00 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Boss, Jr.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Xxxxxxx Xxxxxxxxx, Esq.
000 Xxxxxxxx Xxx.
Xxxxxxxxxxx, Xxx Xxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Isolagen Stockholders: to the address set forth opposite
their name on Schedule 4.2 of the Isolagen Disclosure Schedule
If to Gemini: Gemini IX, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx XxXxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
14.7 Entire Agreement. This Agreement, the exhibits and schedules
hereto constitute the entire understanding and agreement of the parties hereto
with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto. The
express terms hereof control and supersede any course of performance or usage of
the trade inconsistent with any of the terms hereof. Neither this Agreement nor
any uncertainty or ambiguity herein will be construed or resolved against any
party, whether under any rule of construction or otherwise. None of the parties
hereto shall be considered the draftsman. The parties acknowledge and agree that
this Agreement has been reviewed, negotiated and accepted by all parties and
their attorneys, and will be construed and interpreted according to the ordinary
meaning of the words used so to fairly accomplish the purposes and intentions of
the parties.
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14.8 U.S. Dollars. Unless otherwise expressly provided herein, all
references to amounts of money or dollars herein refer to United States dollars.
14.9 Amendment. Prior to the Closing, this Agreement may not be
amended except by an instrument in writing signed by or on behalf of the
parties. Following the Closing, this Agreement may not be amended except by an
instrument in writing signed by or on behalf of the Company, the Surviving
Corporation and a majority of the Isolagen Stockholders.
14.10 Extension; Waiver. The parties may, at any time prior to the
Closing Date, (i) extend the time for the performance of any of the obligations
or other acts of the other parties hereto; (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant thereto; or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party against which the waiver is sought to be
enforced.
14.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
14.12 Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
14.13 Knowledge. For purposes of this Agreement, information shall be
deemed known to a party hereto if it is actually known by one or more of such
party's executive officers.
14.14 No Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
14.15 Arbitration.
(a) Resolution of Disputes. All controversies, disputes or
claims ("DISPUTES") arising among the parties arising out of or
relating to this Agreement or the subject matter hereof, and the
arbitrability of any Dispute, shall be settled by arbitration as
provided below. The arbitration and all preliminary proceedings
related thereto shall be conducted in accordance with such rules as
may be agreed upon by the parties, or, failing agreement on such
rules within thirty (30) days or written request for such agreement,
in accordance with the Commercial Rules and Procedures of the
American Arbitration Association ("AAA"), as amended from time to
time and as modified by this Agreement. This dispute shall be
presented to a single arbitrator (the "AAA ARBITRATOR"), sitting in
Houston,
Texas.
(b) Selection of AAA Arbitrator. The AAA Arbitrator shall
be selected jointly by the parties within ten (10) days after demand
for arbitration is made by a party. If the
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parties are unable to agree on an AAA Arbitrator within that period,
then any party may request that the AAA select the AAA Arbitrator in
accordance with its then existing rules for doing so. The AAA
Arbitrator shall be limited to attorneys at law who (i) arbitrate
AAA's Large, Complex cases, and (ii) have practiced law for at least
fifteen (15) years as attorneys specializing in either general
commercial litigation or general corporate, securities and commercial
matters.
(c) Discovery. Any discovery permitted shall be limited to
information directly relevant to the controversy or Dispute in
arbitration. In the event of discovery disputes, the AAA Arbitrator
is directed to issue such orders as are appropriate to limit
discovery in accordance with the foregoing and as are reasonable in
light of the issues in dispute, the amount in controversy, and other
relevant considerations. To the extent the parties are unable to
agree on the scope of discovery, the AAA Arbitrator shall require the
party seeking discovery on an issue to present the legal and factual
basis for the Dispute and shall permit the party opposing discovery
to respond. The AAA Arbitrator shall permit discovery on an issue
only if the AAA Arbitrator concludes that there is a reasonable and
good faith basis in law and in fact for bringing such allegations and
that the discovery appears likely to present substantive evidence
regarding that Dispute. The AAA Arbitrator may permit limited
discovery to permit investigation of some of the Disputes or to
determine whether a Dispute has sufficient basis in law or in fact to
warrant further discovery, but shall issue appropriate orders to
restrict the scope of such discovery. The federal or state rules of
procedure and evidence shall not apply to the arbitration
proceedings, including without limitation the rules of discovery. The
AAA Arbitrator shall consider claims of privilege, work product and
other restrictions on discovery as appear to be warranted.
(d) Fees. The AAA Arbitrator shall award the prevailing
party its attorneys' and experts' fees and disbursements incurred in
resolving the dispute and shall award double costs and expenses or
other sanctions to the extent the AAA Arbitrator finds any Dispute
advanced in the proceedings to be frivolous or without a good faith
basis in fact and in law when such Dispute was first presented for
arbitration.
(e) Award/Consent to Jurisdiction. Except as may otherwise
be agreed in writing by the parties or as ordered by the AAA
Arbitrator upon substantial justification shown, the hearing for the
Dispute shall be held within sixty (60) days of submission of the
Dispute to arbitration. The AAA Arbitrator shall render a final award
within thirty (30) calendar days following conclusion of the hearing
and any required post-hearing briefing or other proceedings ordered
by the AAA Arbitrator. The AAA Arbitrator shall state the factual and
legal basis for the award. The decision of the AAA Arbitrator shall
be final and binding, except as provided in the Federal Arbitration
Act, 9 U.S.C. Section 1, et seq., and except for errors of law based
on the findings of fact. Final judgment may be entered upon such an
award in any court of competent jurisdiction, but entry of such
judgment shall not be required to make the award effective. The
parties hereby irrevocably submit to the exclusive jurisdiction and
venue of courts located in Houston,
Texas. THE PARTIES EXPRESSLY
WAIVE THEIR RIGHTS TO A TRIAL BY JURY.
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14.16 Bridge Loan Transaction. The parties contemplate that prior to
the Effective Time, Isolagen shall have consummated and received the proceeds
from a bridge loan transaction with certain accredited investors in the
principal amount of up to Three Hundred Thousand and No/100 Dollars ($300,000)
(the "BRIDGE LOAN TRANSACTION").
14.17 Line of Credit Transaction. Isolagen has obtained a line of
credit in the amount of Seventy-Five Thousand and No/100 Dollars ($75,000) from
Trident III, LLC in exchange for the issuance of four thousand four hundred
eighty-five and 21/100 (4,485.21) shares of Isolagen Common Stock (equivalent to
one hundred twenty-five thousand (125,000) shares of Company Common Stock to be
issued as part of the Merger Consideration in the Merger) (the "LINE OF CREDIT
TRANSACTION").
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement to be duly executed and delivered, all as of the day and year first
above written.
AMERICAN FINANCIAL HOLDING, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
ISO ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
ISOLAGEN TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Boss, Jr.
-------------------------------------
Name: Xxxxxxx X. Boss, Jr.
Title: CEO
ISOLAGEN STOCKHOLDERS:
/s/ Xxxxxxx X. Boss, Jr.
----------------------------------------------
XXXXXXX X. BOSS, JR.
/s/ Xxxx Xxxxx
----------------------------------------------
XXXX XXXXX
/s/ Xxxxxx XxXxxx
----------------------------------------------
XXXXXX XXXXXX
GEMINI IX, INC.
By: /s/ Xxxxx XxXxxx
-------------------------------------
Name Xxxxx XxXxxx
Title: President
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