Document:

EX-10.11
                                   CONSULTING AGREEMENT

     This Consulting Agreement ("Agreement") is made effective the
1st day of November, 2001, between Phyllis Schombrun, an individual
("Consultant") and eCom.com, Inc.  ("Client").

     In consideration of the mutual promises, covenants and
agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Client and Consultant agree as follows:

     1.  ENGAGEMENT OF CONSULTANT.  The Client engages Consultant to
provide the consulting services described below, during the term of
this Agreement, until this Agreement is terminated as provided
herein.

     2.  SCOPE OF SERVICES TO BE PROVIDED BY CONSULTANT.  Consultant
agrees to perform for the Client all services and consulting related
to the Client obtaining a contract, with the Republican and/or
Democratic party and/or individual candidates seeking political
office, for the exclusive use by party or candidate of the
"pay-per-call" telephone numbers 1 900 "REPUBLICAN" and 1 900
"DEMOCRAT".  At the request of the Consultant, the Client will make
itself available to meet with representatives of the Republican
National Committee (RNC) and the Democratic National Committee (DNC)
and to discuss with the representatives of the RNC and DNC any
possible contractual arrangement between the Client and the RNC and
DNC.  The Client acknowledges that there is no assurance or guaranty
that the Client will be able to enter into any contractual
relationship with the RNC and/or the DNC as a result of the
consulting services to be provided to the Consultant hereunder, nor
has the Consultant made any representations or warranty to the Client
regarding any such contractual arrangement. Consultant agrees to
perform for the Client all services and consulting related to
Political fund raising and introduction to political candidates.  All
Services are to be provided on a "best efforts" basis through
Consultant's officers, or others employed or retained under the
direction of Consultant (collectively "Consultant's Personnel").

     3.  TERM.  This Agreement shall have an initial term of one
hundred and eighty (180) days (the "Primary Term"), starting with the
date appearing at the top of this Agreement (the "Effective Date"),
and it may be renewed by written notice of renewal signed by both
parties to this Agreement.

     4.  COMPENSATION.  In consideration of the Services
contemplated by this Agreement, Client agrees to pay Consultant the
following fees for the Services:

     A.  Initial Retainer Fee. In order to retain the Services of
     Consultant, and to compensate Consultant for sacrificing other
     opportunities in order to serve Client, Client agrees to
     transfer, or cause to be transferred, six million seven hundred
     fifty thousand  (6,750,000) shares of the Client's common stock
     in the following manner: (1) Six million seven hundred fifty
     thousand (6,750,000) shares of free-trading common stock in
     Client's company, issued pursuant to an S-8 registration
     statement under the Securities Act of 1933.  All such stock
     issued is agreed to be a non-refundable retainer fee.  The
     parties agree that such stock is deemed fully paid and
     non-assessable as of February 8, 2001.

     B.  Additional Payments for Additional Services.  Client may
     agree to issue additional shares, and Consultant may agree to
     perform additional services.  Such additional shares paid or
     additional services performed shall be deemed to be subject to
     all the terms of this Agreement, including the agreement that
     such shares shall be issued in a private, exempt transaction
     under Section 4(2) of the Act.

     5.  COSTS AND EXPENSES.  All third-party and out-of-pocket
expenses incurred by Consultant in performing the Services shall be
paid by the Client, or shall be reimbursed by Client if paid by
Consultant on behalf of the Client, within ten (10) days of receipt
of written notice by Consultant, provided that the Client must
approve in advance all expenses.  Expenses include but are not
limited to the following: (a) filing fees for any forms required by
state or federal agencies; (b) transfer agent fees, including fees
for printing of stock certificates; (c) long distance telephone and
facsimile costs; (d) copying, mail and Federal Express or other
express delivery costs; (e) fees associated with obtaining or
providing Consultant with Client's audited financial statements.

     6.  COMPENSATION FOR OTHER SERVICES.  If the Client after the
date hereof enters into a merger or acquisition, or enters into an
agreement for the purchase of assets, as a direct or indirect result
of Consultant's efforts, the Client agrees to pay Consultant in the
manner described below.

     If Consultant provides any material assistance to the Client in
a merger, acquisition or asset purchase of an entity ("Business
Opportunity"), which assistance includes (but is not limited to)
introducing the Business Opportunity to the Client or helping to
prepare documents used in negotiating such Business Opportunity,
Client agrees to pay Consultant 9.9% of the gross value of such
transaction with a Business Opportunity ("M&A Fee").

     If the Client acquires any asset or obtains any payment or other
benefit, other than a Business Opportunity described above, as a
result of Consultant's Services (an "Asset Opportunity"), the Client
agrees to pay Consultant 9.9% of the gross value of such Asset
Opportunity ("Consultant's Fee").

     The Client will pay each M&A Fee or Consultant's Fee in cash,
shares of the Client's stock or the stock of the Business Opportunity
or the Asset Opportunity, or in like kind.  Consultant has the sole
option to choose the form of payment.  Such payment shall be made on
the date the Client substantially completes the transaction involved.

     7.  TIME AND EFFORT OF CONSULTANT.  Consultant may allocate its
time and that of Consultant's Personnel as it deems necessary to
provide the Services.  In the absence of willful misfeasance, bad
faith, or reckless disregard for the obligations or duties of
Consultant under this Agreement, neither Consultant nor Consultant's
Personnel shall be liable to Client or any of its shareholders for
any act or omission connected with rendering the Services, including
but not limited to losses due to any corporate act undertaken by
Client as a result of advice provided by Consultant or Consultants's
Personnel.

     8.  BEST EFFORTS.  The Services are rendered to Client on a
"best efforts" basis, meaning that Consultant can not, and does not,
guarantee that its efforts will have any impact on Client's business
or that any subsequent financial improvement will result from
Consultant's efforts.

     9.  CLIENT'S REPRESENTATIONS.  Client  represents, warrants and
covenants to Consultant that each of the following are true and
complete as of the Effective Date:

     A.  Entity Existence. Client is a corporation or other legal
     entity duly organized, validly existing, and in good standing
     under the laws of the state of its formation, with full
     authority to own, lease and operate property and carry on
     business as it is now being conducted. Client is duly qualified
     to do business in and is in good standing in every jurisdiction
     where such qualification is necessary.

     B.  Client Authority for Agreement. Client has duly authorized
     the execution and delivery of this Agreement and the
     consummation of the transactions contemplated herein.  Client
     has duly executed and delivered this Agreement; it constitutes
     the valid and legally binding obligation of Client enforceable
     according to its terms.

     C.  Nature of Representations. No representation or warranty
     made by Client in this Agreement, nor any document or
     information furnished or to be furnished by Client to the
     Consultant in connection with this Agreement, contains or will
     contain any untrue statement of material fact, or omits or will
     omit to state any material fact necessary to make the statements
     contained therein not misleading, or omits to state any material
     fact relevant to the transactions contemplated by this Agreement.

     D.  Independent Legal/Financial Advice. Consultant is not a law
     firm or an accounting firm. Consultant employs lawyers and
     accountants to counsel Consultant on its Services.  Client has
     not nor will it rely on any legal or financial representation of
     Consultant. Client has and will continue to seek independent
     legal and financial advice regarding all material aspects of the
     transactions contemplated by this Agreement, including the
     review of all documents provided by Consultant to Client and all
     Opportunities Consultant introduces to Client. Client recognizes
     that the attorneys, accountants and other personnel employed by
     Consultant represent solely the interests of Consultant, and
     that no representation or warranty has been given to Client by
     Consultant as to any legal, tax, accounting, financial or other
     aspect of the transactions contemplated by this Agreement.

     10.  NON-CIRCUMVENTION.  Client agrees not to enter into any
transaction involving an Opportunity or asset introduced to Client by
Consultant without compensating Consultant pursuant to this
Agreement.  Client  will not terminate this Agreement solely as a
means to avoid paying Consultant compensation earned or to be earned
under this Agreement. Client will not act in any other way to
circumvent paying Consultant.

     11.  CONSULTANT IS NOT A BROKER-DEALER.  Consultant has fully
disclosed to Client that it is not a broker-dealer and does not have
or hold a license to act as such.  None of the activities of
Consultant are intended to provide the services of a broker-dealer to
the Client, and Client has been informed that a broker-dealer will
need to be engaged to perform any such services.  Client has full and
free discretion in the selection of a broker-dealer.

     12.  NONEXCLUSIVE SERVICES.  Client acknowledge that Consultant
is currently providing services of the same or similar nature to
other parties. Client agrees that Consultant is not barred from
rendering services of the same or a similar nature to any other
individual or entity.

     13.  PLACE OF SERVICES.  The Services provided by Consultant or
Consultant's Personnel hereunder will be performed at Consultant's
offices except as otherwise mutually agreed by Consultant and Client.

     14.  INDEPENDENT CONTRACTOR.  Consultant, with Consultant's
Personnel, acts as an independent contractor in performing its duties
under this Agreement.  Accordingly, Consultant will be responsible
for paying all federal, state, and local taxes on compensation paid
under this Agreement, including income and social security taxes,
unemployment insurance, any other taxes regarding Consultant's
Personnel, and any business license fees.  This Agreement neither
expressly nor impliedly creates a relationship of principal-agent, or
employer-employee, between Client and Consultant's Personnel.
Neither Consultant nor Consultant's Personnel are authorized to enter
into any agreement on behalf of Client.  Client expressly retains the
right to make all final decisions, in its sole discretion, with
respect to approving, or effecting a transaction with, any
Opportunity located by Consultant.

     15.  REJECTED ASSET OPPORTUNITY OR BUSINESS OPPORTUNITY.  If
Client elects not to acquire, participate in, or invest in any
Opportunity located by Consultant during the Term of this Agreement,
notwithstanding the time and expense Client incurred reviewing such
Opportunity, such Opportunity shall revert  back to and become
proprietary to Consultant. Consultant shall be entitled to acquire
such rejected Opportunity for its own account, or submit such
Opportunity elsewhere.  In such event, Consultant shall be entitled
to all profits or fees resulting from Consultant's purchase, referral
or placement of any such rejected Opportunity, or Client's subsequent
purchase or financing with such Opportunity in circumvention of
Consultant.

     16.  NO AGENCY EXPRESS OR IMPLIED.  This Agreement neither
expressly nor impliedly creates a relationship of principal and agent
between the Client and Consultant, or employee and employer as
between Consultant's Personnel and the Client.

     17.  TERMINATION.  Either Client or Consultant may terminate
this Agreement prior to the expiration of the Primary Term or any
Extension Period by signed written notice.  Such notice is not
effective unless given at least thirty (30) days before the proposed
termination date.

     18.  INDEMNIFICATION.  Subject to the provisions herein, the
Client and Consultant agree to indemnify, defend and hold each other
harmless from and against all demands, claims, actions, losses,
damages, liabilities, costs and expenses, including without
limitation, interest, penalties and attorneys' fees and expenses
asserted against or imposed or incurred by either party by reason of
or resulting from the other party's breach of any representation,
warranty, covenant, condition, or agreement contained in this Agreement.

     19.  REMEDIES.  Consultant and the Client acknowledge that in
the event of a breach of this Agreement by either party, money
damages would be inadequate and the non-breaching party would have no
adequate remedy at law.  Accordingly, in the event of any controversy
concerning the rights or obligations under this Agreement, such
rights or obligations shall be enforceable in a court of equity by a
decree of specific performance.  Such remedy, however, shall be
cumulative and non-exclusive and shall be in addition to any other
remedy to which the parties may be entitled.

     20.  MISCELLANEOUS.

     A.  Amendment.  This Agreement may be amended or modified at
     any time or in any manner, but only by an instrument in writing
     executed by the parties hereto.

     B.  Entire Agreement.  This Agreement contains the entire
     agreement between Consultant and Client relating to the subjects
     addressed in this Agreement.  This Agreement supersedes any and
     all prior agreements, arrangements, or understandings (written or
     oral) between the parties.  No understandings, statements,
     promises, or inducements contrary to the terms of this Agreement
     exist.  No representations, warranties, covenants, or conditions,
     express or implied, other than as set forth herein, have been
     made by any party.

     C.  Waiver.  Any failure of any party to this Agreement to
     comply with any of its obligations, agreements, or conditions
     hereunder may be waived in writing by the party to whom such
     compliance is owed.  The failure of any party to this Agreement
     to enforce at any time any of the provisions of this Agreement
     shall in no way be construed to be a waiver of any such provision
     or a waiver of the right of such party thereafter to enforce each
     and every such provision.  No waiver of any breach of or
     non-compliance with this Agreement shall be held to be a waiver
     of any other or subsequent breach or non-compliance.

     D.  Headings and Captions.  The section and subsection headings
     in this Agreement are inserted for convenience only and shall not
     affect in any way the meaning or interpretation of this Agreement.

     E.  Governing Law.  The validity, interpretation, and
     performance of this Agreement shall be governed by the laws of
     the State of Nevada, regardless of its law on conflict of laws.
     Any dispute arising out of this Agreement shall be brought in a
     court of competent jurisdiction in Nevada. The parties expressly
     consent to the personal jurisdiction of the above-identified
     courts.  The parties agree to exclude and waive any statute, law
     or treaty which allows or requires any dispute to be decided in
     another forum or by rules of decision other than as provided in
     this Agreement.

     F.  Binding Effect.  This Agreement is binding on the parties
     hereto and inures to the benefit of the parties, their respective
     heirs, administrators, executors, successors, and assigns.

     G.  Attorney's Fees. If any action at law or in equity,
     including an action for declaratory relief, is brought to enforce
     or interpret the provisions of this Agreement, the prevailing
     party shall be entitled to recover reasonable attorney's fees,
     court costs, and other costs incurred in proceeding with the
     action from the other party. Should either party be represented
     by in-house counsel, all parties agree that such party may
     recover attorney's fees incurred by that in-house counsel in an
     amount equal to that attorney's normal fees for similar matters,
     or, should that attorney not normally charge a fee, by the
     prevailing rate charged by attorneys with similar background in
     that legal community.

     H.  Severability.  In the event that any one or more of the
     provisions contained in this Agreement shall for any reason be
     held to be invalid, illegal, or unenforceable in any respect,
     such invalidity, illegality or un-enforceability shall not affect
     any other provisions of this Agreement. Instead, this Agreement
     shall be construed as if it never contained any such invalid,
     illegal or unenforceable provisions.

     I.  Mutual Cooperation.  The parties shall cooperate with each
     other to achieve the purpose of this Agreement, and shall execute
     such other documents and take such other actions as may be
     necessary or convenient to effect the transactions described herein.

     J.  Counterparts.  A facsimile, telecopy, or other reproduction
     of this Agreement may be executed simultaneously in two or more
     counterparts, each of which shall be deemed an original, but all
     of which together shall constitute one and the same instrument.
     Such executed copy may be delivered by facsimile or similar
     instantaneous electronic transmission.  Such execution and
     delivery shall be considered valid for all purposes.

     K.  No Third Party Beneficiary.  Nothing in this Agreement,
     expressed or implied, is intended to confer upon any person,
     other than the parties hereto and their successors, any rights or
     remedies under or by reason of this Agreement, unless this
     Agreement specifically states such intent.

     L.  Time is of the Essence.  Time is of the essence of this
     Agreement and of each and every provision hereof.

IN WITNESS WHEREOF, the parties have hereto affixed their signatures.

"Client"
eCom.com, Inc.

By: /s/ Sidney B. Fowlds
Name: Sidney B. Fowlds
Title: President

"Consultant"

/s/ Phyllis Schombrun
Phyllis SchombrunEXECUTION COPY

Exhibit 10.1

 

EXECUTION COPY

POST-CLOSING COVENANTS AGREEMENT dated as of November 21,

2001 among JOHNSON & JOHNSON, a New Jersey corporation (“Parent”),

INVERNESS MEDICAL TECHNOLOGY, INC., a Delaware corporation (the “Company”), the

subsidiaries of the Company party hereto (together with the Company, the

“Sunrise Companies”), INVERNESS MEDICAL INNOVATIONS, INC., a Delaware

corporation (“Newco”), and the subsidiaries of Newco party hereto (the “Newco

Subsidiary Indemnitors”).

 

WHEREAS,

Parent, SUNRISE ACQUISITION CORP., a Delaware corporation and a wholly owned

subsidiary of Parent (“Sub”), and the Company have entered into an Agreement

and Plan of Split-Off and Merger dated as of May 23, 2001 (the “Merger

Agreement”), providing for the Merger (as defined in the Merger Agreement) of

Sub with and into the Company, with the Company as the surviving corporation;

 

WHEREAS,

the Board of Directors of the Company has approved a Restructuring Agreement in

the form of Annex A to the Merger Agreement (the “Restructuring

Agreement”), which will be entered into prior to the Effective Time (as defined

in the Merger Agreement), pursuant to which prior to the Effective Time, among

other things (a) all the assets of the Company primarily related to the Newco

Business (as defined in the Restructuring Agreement) will be transferred to

Newco or one or more of Newco’s subsidiaries and (b) Newco or one or more

of its subsidiaries will assume the Assumed Liabilities (as defined in the

Restructuring Agreement);

 

WHEREAS,

the execution and delivery of this Agreement by the parties hereto is a

condition to the obligations of the parties to the Merger Agreement to

consummate the Merger; and

 

WHEREAS, the parties to this Agreement have

determined that it is necessary and desirable to set forth certain agreements

that will govern certain matters that may arise following the Effective Time.

 

NOW, THEREFORE, in consideration of the

foregoing, and the representations, warranties, covenants and agreements

contained in this Agreement, the parties hereto hereby agree as follows:

 

 

ARTICLE

I

 

DEFINITIONS

 

SECTION 1.01.      Definitions. 

Terms used but not defined in this Agreement shall have the meanings set

forth in the Merger Agreement or, if not set forth in the Merger Agreement, in

the Restructuring Agreement. In addition, the following terms shall have the

following meanings:

 

“Affiliate” of any person means another

person that directly or indirectly, through one or more intermediaries,

controls, is controlled by, or is under common control with, such first person;

provided, however, that for the purposes of this Agreement, from

and after the Effective Time, none of the Sunrise Companies shall be deemed to

be an Affiliate of any Newco Company and none of the Newco Companies shall be

deemed to be an affiliate of any Sunrise Company.

 

“Filings” shall mean the Parent Form S–4,

the Newco Form S–4, the Form 8–A and any other document filed or required to be

filed with the SEC in connection with the transactions contemplated by the

Transaction Agreements, or any preliminary or final form thereof or any

amendment or supplement thereto.

 

“Indemnifiable Losses” shall mean, subject

to Section 2.04, all losses, liabilities, damages, deficiencies,

obligations, fines, expenses, claims, demands, actions, suits, proceedings,

judgments or settlements, whether or not resulting from Third Party Claims,

including interest and penalties recovered by a third party with respect

thereto and out-of-pocket expenses and reasonable attorneys’ and accountants’ fees

and expenses incurred in the investigation or defense of any of the same or in

asserting, preserving or enforcing any of the Indemnitee’s rights hereunder,

suffered or incurred by an Indemnitee.

 

“Indemnitee”

shall mean any of the Parent Indemnitees or the Newco Indemnitees, as the case

may be, who or which may seek indemnification under this Agreement.

 

“Newco

Indemnitees” shall mean Newco, each Affiliate of Newco, including any of its

direct or indirect subsidiaries, each of their respective Representatives and

each of the heirs, executors, successors and assigns of any of the foregoing.

 

“Newco

Subsidiary Indemnitors” shall have the meaning set forth in the preamble

hereto.

 

 

2

 

“Newco

Recourse Right” shall have the meaning set forth in Section 3.07(a)

hereto.

 

“Parent

Indemnitees” shall mean Parent, each Affiliate of Parent, including any of its

direct or indirect subsidiaries (including, after the Effective Time, the

Sunrise Companies), each of their respective Representatives and each of the

heirs, executors, successors and assigns of any of the foregoing.

 

“Sunrise

Recourse Right” shall have the meaning set forth in Section 3.07(b)

hereto.

 

“Third

Party Claims” shall have the meaning set forth in Section 2.04(a).

 

ARTICLE

II

 

INDEMNIFICATION

 

SECTION 2.01.      Indemnification by Newco and the Newco Subsidiary

Indemnitors.  Subject to the

provisions of this Article II, Newco and the applicable Newco Subsidiary

Indemnitors, as described below, shall jointly and severally indemnify, defend

and hold harmless the Parent Indemnitees from and against, and pay or reimburse

the Parent Indemnitees for, all Indemnifiable Losses, as incurred:

 

(i)            relating to or arising from the

Newco Business, the Newco Assets or the Assumed Liabilities (including the

failure by Newco or any Newco Company to pay, perform or otherwise discharge

any of the Assumed Liabilities in accordance with their terms), whether such

Indemnifiable Losses relate to or arise from events, occurrences, actions,

omissions, facts or circumstances occurring, existing or asserted before, at or

after the Effective Time;

 

(ii)           relating to or arising from any

untrue statement or alleged untrue statement of a material fact relating to any

Newco Company contained in any of the Filings, or any omission or alleged

omission to state therein a material fact relating to any Newco Company

required to be stated therein or necessary to make the statements therein, in

light of the circumstances under which they were made, not misleading, but only

with respect to statements made therein or incorporated by reference therein

based upon information supplied by Newco or any Newco Company

 

3

 

specifically for inclusion or incorporation

by reference therein;

 

(iii)          relating to or arising from the breach

by any Newco Company of any agreement or covenant contained in any Transaction

Agreement which is to be performed or complied with after the Effective Time;

or 

 

(iv)          relating to or arising from the

matters set forth on Schedule 2.01(iv) hereto;

 

provided,

however, that notwithstanding the foregoing each Newco Subsidiary

Indemnitor shall only be liable for Indemnifiable Losses (A) in the case

of clause (i) of this Section 2.01, relating to or arising from

(x) the Newco Business conducted by such Newco Subsidiary Indemnitor

before, at or after the Effective Time, (y) the assets used, held for use

or intended for use in the Newco Business conducted by such Newco Subsidiary Indemnitor

and (z) the liabilities of or attributable to the Newco Business of such

Newco Subsidiary Indemnitor or such Newco Subsidiary Indemnitor and (B) in

the case of clause (iii) of this Section 2.01, relating to or arising

from a breach by such Newco Subsidiary Indemnitor.

 

SECTION 2.02.      Indemnification by the Sunrise Companies.  Subject to the provisions of this

Article II, the Sunrise Companies shall jointly and severally indemnify,

defend and hold harmless the Newco Indemnitees from and against, and pay or

reimburse the Newco Indemnitees for:

 

(i)            all Indemnifiable Losses, as

incurred, relating to or arising from the Sunrise Business, the Sunrise Assets

or the Sunrise Liabilities (including the failure by any Sunrise Company to

pay, perform or otherwise discharge any of the Sunrise Liabilities in

accordance with their terms), whether such Indemnifiable Losses relate to or

arise from events, occurrences, actions, omissions, facts or circumstances

occurring, existing or asserted before, at or after the Effective Time; or

 

(ii)           all Indemnifiable Losses, as incurred

(together with interest thereon at a rate equal to 15% per annum calculated

from the date written notice of a claim for indemnification relating to such

Indemnifiable Losses is delivered to the Company, but in no event prior to the

Effective Time), relating to or arising from the breach by any Sunrise Company

of any agreement or covenant contained in any Transaction

 

4

 

Agreement which is to be performed or complied

with after the Effective Time;

 

provided, however, that notwithstanding the foregoing each

Sunrise Company that is a subsidiary of the Company shall only be liable for

Indemnifiable Losses (A) in the case of clause (i) of this

Section 2.02, relating to or arising from (x) the assets used, held

for use or intended for use in the Sunrise Business conducted by such Sunrise

Company and (y) the liabilities of or attributable to the Sunrise Business

of such Sunrise Company and (B) in the case of clause (ii) of this

Section 2.02, relating to or arising from a breach relating to such

Sunrise Company.

 

In

the event the Company transfers any material portion of its assets, in a single

transaction or in a series of transactions, Parent promptly will either guarantee

the indemnification obligations referred to in Section 2.02(i) or take

such other action to insure that the ability of the Company, legal and

financial, to satisfy such indemnification obligations will not be diminished

in any material respect.

 

SECTION

2.03.      Indemnification by Parent.  Subject to the provisions of this

Article II, Parent shall indemnify, defend and hold harmless the Newco

Indemnitees from and against, and pay or reimburse the Newco Indemnitees for:

 

(i)            all Indemnifiable Losses, as incurred,

relating to or arising from any untrue statement or alleged untrue statement of

a material fact contained in any of the Filings, or any omission or alleged

omission to state therein a material fact required to be stated therein or

necessary to make the statements therein, in light of the circumstances under

which they were made, not misleading, but only with respect to statements made

therein or incorporated by reference therein based upon information supplied by

Parent specifically for inclusion or incorporation by reference therein; or

(ii)           all

Indemnifiable Losses, as incurred (together with interest thereon at a rate

equal to 15% per annum calculated from the date written notice of a claim for

indemnification relating to such Indemnifiable Losses is delivered to the

Company, but in no event prior to the Effective Time), relating to or arising

from the breach by any Sunrise Company of any agreement or covenant contained

in any Transaction

 

 

5

 

Agreement

which is to be performed or complied with after the Effective Time.

 

SECTION

2.04.      Procedures Relating to

Indemnification.  (a)   In order for an Indemnitee to be entitled to

any indemnification provided for under this Agreement in respect of, arising out

of or involving a claim made by any Person who is not an Indemnitee against the

Indemnitee (a “Third Party Claim”), such Indemnitee must notify the party who

may become obligated to provide indemnification hereunder (the “Indemnifying

Party”) in writing, and in reasonable detail, of the Third Party Claim

reasonably promptly, and in any event within 20 business days after

receipt by such Indemnitee of written notice of the Third Party Claim; provided,

however, that failure to give such notification shall not affect the

indemnification provided hereunder except to the extent the Indemnifying Party

shall have been actually and materially prejudiced as a result of such failure;

provided  further, however, that with respect to any Third

Party Claim for which Newco or any Newco Subsidiary Indemnitor is the

Indemnifying Party, such Indemnifying Party shall be deemed to have received

notice with respect to such Third Party Claim by or against any Sunrise Company

for which the Company received notice prior to the Effective Time.  After any required notification (if

applicable), the Indemnitee shall deliver to the Indemnifying Party, promptly

after the Indemnitee’s receipt thereof, copies of all notices and documents

(including court papers) received by the Indemnitee relating to the Third Party

Claim.

 

(b)           If a Third Party Claim is made

against an Indemnitee, the Indemnifying Party will be entitled to participate

in the defense thereof and, if it so chooses, to assume the defense thereof (at

the expense of the Indemnifying Party) with counsel selected by the

Indemnifying Party and reasonably satisfactory to the Indemnitee.  Should the Indemnifying Party so elect to

assume the defense of a Third Party Claim, the Indemnifying Party will not be

liable to the Indemnitee for any legal expenses subsequently incurred by the

Indemnitee in connection with the defense thereof.  If the Indemnifying Party assumes such defense, the Indemnitee

shall have the right to participate in the defense thereof and to employ

counsel, at its own expense, separate from the counsel employed by the

Indemnifying Party, it being understood that the Indemnifying Party shall

control such defense.  The Indemnifying

Party shall be liable for the reasonable fees and expenses of counsel employed

by the Indemnitee for any period during which the Indemnifying Party has not

assumed the defense thereof (other than during any period in which

 

 

6

 

the

Indemnitee shall have failed to give notice of the Third Party Claim as

provided above).  Notwithstanding the

foregoing, the Indemnifying Party shall not be entitled to assume the defense

of any Third Party Claim (and shall be liable for the reasonable fees and

expenses of counsel incurred by the Indemnitee in defending such Third Party

Claim) if the Third Party Claim seeks an order, injunction or other equitable

relief or relief for other than money damages against the Indemnitee which the

Indemnitee reasonably determines, after conferring with its counsel, cannot be

separated from any related claim for money damages. The indemnification

required by Section 2.01, 2.02 or 2.03, as the case may be, shall be made

by periodic payments of the amount thereof during the course of the

investigation or defense, as and when bills are received or the Indemnifiable

Loss is incurred.  If the Indemnifying

Party chooses to defend or prosecute a Third Party Claim, all the parties

hereto reasonably necessary for such defense or prosecution shall cooperate in

the defense or prosecution thereof, which cooperation shall include the

retention in accordance with the Restructuring Agreement and (upon the

Indemnifying Party’s request) the provision to the Indemnifying Party of

records and information which are reasonably relevant to such Third Party

Claim, and making employees available on a mutually convenient basis to provide

additional information and explanation of any material provided hereunder.  If the Indemnifying Party chooses to defend

or prosecute any Third Party Claim, the Indemnitee will agree to any

settlement, compromise or discharge of such Third Party Claim which the

Indemnifying Party may recommend and which by its terms obligates the

Indemnifying Party to pay the full amount of liability in connection with such

Third Party Claim; provided, however, that, without the

Indemnitee’s consent, the Indemnifying Party shall not consent to entry of any

judgment or enter into any settlement (x) that provides for injunctive or

other nonmonetary relief affecting the Indemnitee or (y) that does not

include as an unconditional term thereof the giving by each claimant or

plaintiff to such Indemnitee of a release from all liability with respect to

such claim.  If the Indemnifying Party

shall have assumed the defense of a Third Party Claim, the Indemnitee shall not

admit any liability with respect to, or settle, compromise or discharge, such

Third Party Claim without the Indemnifying Party’s prior written consent (which

consent shall not be unreasonably withheld).

 

(c)           In order for an Indemnitee to be

entitled to any indemnification provided for under this Agreement in respect of

a claim that does not involve a Third Party Claim, the Indemnitee shall deliver

notice of such claim (in

 

 

7

 

reasonably

sufficient detail to enable the Indemnifying Party to evaluate such claim) with

reasonable promptness to the Indemnifying Party.  The failure by any Indemnitee so to notify the Indemnifying Party

shall not relieve the Indemnifying Party from any liability which it may have

to such Indemnitee under this Agreement, except to the extent that the

Indemnifying Party shall have been actually and materially prejudiced by such

failure.  If the Indemnifying Party does

not notify the Indemnitee within 20 business days following its receipt of

such notice that the Indemnifying Party disputes its liability with respect to

such claim under Section 2.01, 2.02 or 2.03, as the case may be, the claim

shall be conclusively deemed a liability of the Indemnifying Party under Section 2.01,

2.02 or 2.03, as the case may be, and the Indemnifying Party shall pay the

amount of such liability to the Indemnitee on demand or, in the case of any

notice in which the amount of the claim (or any portion thereof) is estimated,

on such later date when the amount of such claim (or such portion thereof)

becomes finally determined.  If the

Indemnifying Party has timely disputed its liability with respect to such

claim, as provided above, the Indemnifying Party and the Indemnitee shall

proceed in good faith to negotiate a resolution of such dispute and, if not

resolved through negotiations, such dispute shall be resolved by litigation in

an appropriate court of competent jurisdiction.

 

(d)           The parties hereto agree that Newco

shall be the representative of the Newco Subsidiary Indemnitors for all

purposes of this Section 2.04, and as such all deliveries, notices and

other communications made or delivered to Newco shall also be deemed to have

been made or delivered to the Newco Subsidiary Indemnitors, and all elections,

selections of counsel, choices, agreements and consents made or delivered by

Newco shall be deemed to have also been made or delivered by the applicable

Newco Subsidiary Indemnitors, and shall be binding thereon.  Notwithstanding the foregoing, the parties

hereto agree that nothing contained in this Section 2.04(d) shall in any

manner affect, limit or impair the rights of the Parent Indemnitees to

indemnification from Newco or any Newco Subsidiary Indemnitor pursuant to

Section 2.01.

 

(e)           The parties hereto agree that the

Company shall be the representative of the Sunrise Companies for all purposes

of this Section 2.04, and as such all deliveries, notices and other

communications made or delivered to the Company shall also be deemed to have

been made or delivered to the Sunrise Companies, and all elections, selections

of counsel, choices, agreements and consents made or delivered by the Company

shall be deemed to have also been made or

 

 

8

 

delivered

by the applicable Sunrise Company, and shall be binding thereon.  Notwithstanding the foregoing, the parties

hereto agree that nothing contained in this Section 2.04(e) shall in any

manner affect, limit or impair the rights of the Newco Indemnitees to

indemnification from any Sunrise Company pursuant to Section 2.02.

 

SECTION 2.05.  Certain Limitations. 

(a)     The amount of any

Indemnifiable Losses or other liability for which indemnification is provided

under this Agreement shall be net of any amounts actually recovered by the

Indemnitee from third parties (including, without limitation, amounts actually

recovered under insurance policies) with respect to such Indemnifiable Losses.

 

(b)           All indemnification payments

under this Agreement shall be (i) increased to take account of any net tax

cost incurred by the Indemnitee arising from the receipt of indemnification

payments hereunder (grossed up for such increase) and (ii) reduced to take

account of any net tax benefit realized by the Indemnitee arising from the

incurrence or payment of any Indemnifiable Loss.  In computing the amount of any such tax cost or tax benefit, the

Indemnitee shall be deemed to recognize all other items of income, gain, loss

deduction or credit before recognizing any item arising from the receipt of any

indemnification payment hereunder or the incurrence or payment of any

Indemnifiable Loss.

 

SECTION

2.06.      Exclusivity of Tax

Allocation Agreement. 

Notwithstanding anything in this Agreement to the contrary, the Tax

Allocation Agreement shall be the exclusive agreement among the parties with

respect to all Tax matters, including indemnification in respect of Tax

matters.

 

SECTION

2.07.      Production of Witnesses;

Records; Cooperation.  After the

Effective Time, except (i) in the case of a dispute between Parent or a Sunrise

Company, on the one hand, and a Newco Company, on the other hand, and (ii) for

Third Party Claims that the Indemnifying Party participates in the defense or

prosecution of pursuant to Section 2.04(b) hereof (in which case the relevant

provisions of such Section will apply), each party hereto shall use

commercially reasonable efforts to make available to each other party, upon

written request, the former, current and future directors, officers, employees,

other personnel and agents of such party as witnesses and any books, records or

other documents within its control or which it otherwise has the ability to

make available, to the extent that any such person (giving consideration to

 

 

9

 

business

demands of such directors, officers, employees, other personnel and agents) or

books, records or other documents may reasonably be required in connection with

any demand, action, suit, countersuit, arbitration, inquiry, proceeding or

investigation by or before any federal, state, local, foreign or international

governmental authority or any arbitration or mediation tribunal (“Action”) in

which the requesting party may from time to time be involved, regardless of

whether such Action is a matter with respect to which indemnification may be

sought hereunder.  The requesting party

shall bear all reasonable costs and expenses (including reasonable allocated

costs of in-house personnel) in connection therewith unless such costs and

expenses are otherwise subject to indemnification of the requesting party by

the producing party.

 

ARTICLE

III

 

OTHER

AGREEMENTS

 

SECTION 3.01.      Insurance.  (a)       In the event that any Sunrise Asset

suffers any damage, destruction or other casualty loss, Newco shall, or shall

cause a Newco Company to, surrender to Parent (i) all insurance proceeds

received with respect to such damage, destruction or loss and (ii) all

rights of the Newco Companies with respect to any causes of action in

connection with such damage, destruction or loss.  Newco shall, and shall cause each Newco subsidiary to, make

available to the Sunrise Companies the benefit of any workers’ compensation,

general liability, product liability, automobile liability, umbrella (excess)

liability or crime or other insurance policy covering or relating to the

Sunrise Business, the Sunrise Assets or the Sunrise Liabilities.  The Newco Companies shall promptly pay to

Parent all insurance proceeds relating to the Sunrise Business, the Sunrise

Assets or the Sunrise Liabilities received by any Newco Company under any

insurance policy.  Nothing in this

Section 3.01 shall reduce, limit or otherwise affect the right of Newco to

seek or obtain insurance proceeds with respect to any damage, destruction or

loss to or of a Newco Asset, nor shall anything in this Section 3.01

reduce, limit or otherwise affect any of the rights of Parent or any Parent

Indemnitee set forth in Article II.

 

(b)           In the event that any Newco Asset

suffers any damage, destruction or other casualty loss, the Company shall, or

shall cause a Sunrise Company to, surrender to Newco (i) all insurance

proceeds received with respect to such damage, destruction or loss and

(ii) all rights of the

 

 

10

 

Sunrise Companies

with respect to any causes of action in connection with such damage,

destruction or loss.  The Company shall,

and shall cause each of its subsidiaries to, make available to the Newco

Companies the benefit of any workers’ compensation, general liability, product

liability, automobile liability, umbrella (excess) liability or crime or other

insurance policy covering or relating to the Newco Business, the Newco Assets

or the Assumed Liabilities.  The Sunrise

Companies shall promptly pay to Newco all insurance proceeds relating to the

Newco Business, the Newco Assets or the Assumed Liabilities received by any

Sunrise Company under any insurance policy. 

Nothing in this Section 3.01 shall reduce, limit or otherwise

affect the right of the Company to seek or obtain insurance proceeds with

respect to any damage, destruction or loss to or of a Sunrise Asset, nor shall

anything in this Section 3.01 reduce, limit or otherwise affect the right

of the Company to seek or obtain insurance proceeds with respect to any damage,

destruction or loss to or of a Sunrise Asset, nor shall anything in this

Section 3.01 reduce, limit or otherwise affect any of the rights of Newco

or any Newco Indemnitee set forth in Article II.

 

SECTION

3.02.      Expenses.  Notwithstanding anything to the contrary set

forth in the Merger Agreement, the Company (and not Newco) shall be responsible

for and agrees to pay all expenses of the Company and its subsidiaries (before

giving effect to the Restructuring) directly related to the Restructuring, the

Split-Off and the Merger up to the amount set forth on Schedule 3.02 (a)

hereto, and Newco (and not the Company) shall be responsible for and agrees to

pay all expenses of the Company and its subsidiaries (before giving effect to

the Restructuring) in excess of such amount.

 

SECTION

3.03.      Characterization of

Payments.  The payments made

pursuant to this Agreement shall be treated as occurring immediately before the

Effective Time, and none of the Newco Companies, the Sunrise Companies and

Parent and its subsidiaries shall take any position inconsistent with such

treatment before any Taxing Authority, except to the extent that a Final

Determination (as defined in the Tax Allocation Agreement) with respect to the

recipient party causes any such payment to not be so treated.

 

SECTION

3.04.      Agreement Not to Compete;

Agreement Not to Solicit or Hire Employees.  (a)        Newco understands

that Parent shall be entitled to protect and preserve the going concern value

of the Sunrise Business to the extent permitted by law and that Parent would

not have entered into the Merger Agreement absent the provisions of this

 

 

11

 

Section 3.04.  Newco acknowledges and agrees that the

purpose of this Section 3.04 is to exclude it, except as expressly provided

below, from the field of diabetes generally and specifically from competing

with the businesses of the Company and Parent’s LifeScan franchise relating to

the research, development, manufacturing, marketing and sale of test strips,

pumps and meters for a period of ten (10) years. Therefore, Newco agrees that,

commencing at the Effective Time and continuing until the date that is ten

years from the Effective Time, it shall not, and shall not permit any of its

Affiliates, in any manner, directly or indirectly, alone or in association with

any person, to:

 

(i)            compete

with Parent, the Company or any of their respective Affiliates in the field of

diabetes generally (including without limitation the testing, monitoring,

diagnosing, prognostication, treatment, management or cure of diabetes and

diabetes symptoms and conditions) (the “Diabetes Field”) (it being acknowledged

that the following shall not be deemed to be in the Diabetes Field: (x) such

activities with respect to cholesterol, creatinine and other similar analytes

used primarily with respect to diseases other than diabetes, (y) the

development and subsequent manufacture of prescription pharmaceutical products

(meaning products that are therapeutically active in  vivo) (other

than insulin) and the sale of such products (including the conversion of

pharmaceutical products developed by Newco to over-the-counter status), and (z)

development, manufacture, sale, servicing, use and licensing of Multi-Analyte

Systems as defined in the License Agreement);

 

(ii)           engage

in any activity in the Diabetes Field (including without limitation

researching, developing, manufacturing, marketing, selling, distributing or

licensing (to or from third parties) of technology or products or providing services

for the testing, monitoring, diagnosing, prognostication, treatment, management

or cure of diabetes and diabetes symptoms and conditions); or

 

(iii)          actively

participate in, control, manage, own any interest in or share in the earnings

of, finance or invest in the capital stock of any person who is engaged in any

activity in the Diabetes Field or, with the exception of Ernest Carabillo,

consult with any person on matters in the Diabetes Field except PPM Activities;

except that Newco and its subsidiaries

 

 

12

 

in

the aggregate, and each other Affiliate of Newco may acquire:

 

(A)          an entity which participates in the

Diabetes Field if and only if at the time of the acquisition and during the 10

year period referred to above, (x) such entity’s activity in the Diabetes Field

is limited to the sale of products and services (as distinguished from the

licensing, distribution, manufacture, design, research or development of

products, technologies and services) and (y) the revenues derived from the sale

of such products and services (it being understood that such entity shall not

receive any royalty revenue from the Diabetes Field) constitute no more than 3%

of such entity’s total revenues; and

 

(B)           up to 2% of the equity or voting

interest in an entity that is engaged in activities in the Diabetes Field so

long as none of Ron Zwanziger, David Scott or Jerry McAleer is actively

involved, whether directly or indirectly, in the management of such entity

during the period of the applicable non-competition covenants set forth in

those certain Consulting and Noncompetition Agreements each dated the same date

as the Merger Agreement among Parent, the Company and such individual.

 

For

purposes of this Section 3.04, “actively involved” includes, without

limitation, acting directly or indirectly as an officer, director, proprietor,

employee, partner, lender, or, on matters in the Diabetes Field, as a

consultant, advisor, agent or representative.  

Notwithstanding anything to the contrary herein, Ernest Carabillo may

serve as a director of companies to which he is permitted to consult under this

Agreement, including without limitation, Boston Medical Technologies, Inc., and

the successors to their businesses.

 

(b)           Newco agrees that for a period of

three years from the Effective Time, it shall not, and shall cause its

Affiliates not to, in any manner, directly or indirectly, (i) induce any person

that has been an employee of any of the Sunrise Companies at any time  between January 1, 2001 and the Effective

Time, to leave the employ of any Sunrise Company, (ii) except in response

to a good faith request by a person that is not an Affiliate of Newco for a

recommendation regarding the employment qualifications of such employee, recommend

to any other person that they

 

 

13

 

employ any

such employee, or (iii) hire any such employee, except as set forth on

Schedule 3.04.

 

(c)           Newco agrees that for a period of

five years from the Effective Time, it shall not, and shall cause its

Affiliates not to, in any manner, directly or indirectly, (i) solicit by mail,

by telephone, by personal meeting or by any other means, either directly or

indirectly, any customer or supplier of Parent, the Company or any of their

respective Affiliates to transact business in the Diabetes Field with a

business or enterprise that competes with Parent, the Company or any of their

respective Affiliates in the Diabetes Field or reduce or refrain from doing any

business with Parent, the Company or any of their respective Affiliates in the

Diabetes Field except PPM Activities, or (ii) disparage (including by relative

comparison) Parent or the Company or any of their products or activities in the

Diabetes Field except good faith comparative assessment with respect to PPM

Activities.

 

(d)           Notwithstanding the termination of

this Agreement for any reason, and irrespective of the time, manner or cause of

termination, Newco’s obligations under this Section 3.04 run with the business of

Newco and shall survive and remain in full force and effect for the periods

therein provided, and the provisions for equitable relief against Newco shall

continue in full force and effect. 

Notwithstanding the foregoing, the provisions of Section 3.04(a) and (c)

shall not be applicable to an acquirer (including any of its Affiliates other

than Newco and its subsidiaries) of all or any part of the Newco Business if

(x) such acquiror acquired Newco in a bona fide, arms-length transaction

and (y) none of Ron Zwanziger, David Scott or Jerry McAleer are actively

involved, whether directly or indirectly, in the management of such acquirer’s

business in the Diabetes Field during the period of the applicable

non-competition covenants set forth in those certain Consulting and

Noncompetition Agreements each dated the same date as the Merger Agreement

among Parent, the Company and such individual.

 

(e)           The foregoing notwithstanding,

nothing in Section 3.04(a) - (d) shall prevent Newco, or Affiliates of Newco,

from participating, directly or indirectly, in any manner whatsoever in PPM

Activities in the Diabetes Field, including, without limitation, competing,

engaging, controlling, managing, owning, investing, consulting, soliciting

customers.  For purposes of this Agreement,

“PPM Activities” shall mean and be limited to the following:

 

1.                                       Owning physician practices;

 

 

14

 

2.                                       Providing “back office” management services to physicians and

practitioners (both physicians and practitioners are collectively referred to

as “members”) (such as billing, collections, scheduling, reimbursement etc.);

 

3.                                       Compiling data from its members for the purposes of establishing

disease management best practices; and

 

4.                                       Providing group-buying services for its members, excluding any

and all products and services in the Diabetes Field and excluding Multi-Analyte

Systems which include Diabetes Tests as defined in the License Agreement;

 

it being

agreed and acknowledged that Newco shall not in any way direct or influence the

purchasing decisions of members with respect to products and services in the

Diabetes Field or with respect to Multi-Analyte Systems which include Diabetes

Tests as defined in the License Agreement.

 

SECTION

3.05.      Net Cash Adjustment.  (a)  Not

less than four business days prior to the Closing Date and in accordance with

the Restructuring Agreement, Newco shall prepare and deliver to Parent the

Initial Statement setting forth the Estimated Net Cash.  Within 10 days after the Closing Date,

Newco shall prepare and deliver to Parent a statement (the “Closing Statement”

and, together with the Initial Statement, the “Statements”) setting forth Net

Cash  (which amount shall not include

the Net Cash Adjustment Amount) (“Closing Net Cash”).

 

During the 10 day period following Parent’s

receipt of the Closing Statement, Parent and its independent auditors will be

permitted to review Newco’s working papers relating to the Statements.  The Statements shall become final and

binding upon the parties on the tenth day following receipt of the Closing

Statement, unless Parent gives written notice of its disagreement with either

Statement (“Notice of Disagreement”) to Newco prior to such date.  Any Notice of Disagreement shall (i) specify

in reasonable detail the nature of any disagreement so asserted and (ii) only

include disagreements based on Estimated Net Cash or Closing Net Cash, as the

case may be, not being calculated in accordance with this Section 3.05.  If a Notice of Disagreement is received by

Newco in a timely manner, then the Statements (as revised in accordance with

clauses (A) or (B) below) shall become final on the earlier of (A) the date

Parent and Newco resolve in writing any differences they have with respect to

the matters specified in the Notice of Disagreement or (B) the date any

disputed

 

 

15

 

matters are finally resolved in writing by

the Accounting Firm (as defined below).

 

During

the 20 day period following delivery of a Notice of Disagreement, Parent and

Newco shall seek in good faith to resolve in writing any differences that they

may have with respect to the matters specified in the Notice of

Disagreement.  During such period Newco

and its independent auditors shall have access to the working papers relating

to the Notice of Disagreement.  At the

end of such 20 day period, Parent and Newco shall submit to an independent

accounting firm (the “Accounting Firm”) for review and resolution any and all

matters that remain in dispute and which were properly included in the Notice

of Disagreement.  The Accounting Firm

shall be a nationally recognized independent public accounting firm agreed upon

by Parent and Newco in writing, other than Arthur Andersen LLP or

PricewaterhouseCoopers LLP.  Parent and

Newco shall jointly use all reasonable efforts to cause the Accounting Firm to

render a decision within 20 days following submission.  Parent and Newco agree that judgment may be

entered upon the determination of the Accounting Firm in any court having

jurisdiction over the party against which such determination is to be

enforced.  The cost of any dispute

resolution (including the fees and expenses of the Accounting Firm and

reasonable attorney fees and expenses of the parties) pursuant to this Section

3.05 shall be borne by Parent and Newco in inverse proportion as they may

prevail on matters resolved by the Accounting Firm, which proportionate

allocations shall also be determined by the Accounting Firm at the time the

determination of the Accounting Firm is rendered on the merits of the matters

submitted.  The fees and disbursements

of Newco’s independent auditors in connection with their review of any Notice

of Disagreement shall be borne by Newco and the fees and disbursements of

Parent’s independent auditors incurred in connection with their review of the

Statements shall be borne by Parent.

 

(b)           If the sum of (x) Closing Net

Cash and (y) the Net Cash Adjustment Amount exceeds $40,000,000, Newco

shall, within 10 days after the Statements become final and binding on the

parties, make payment to the Company by wire transfer of immediately available

funds of such excess, together with interest thereon at a rate equal to the

rate of interest from time to time announced publicly by Citibank, N.A. as its

prime rate, calculated on the basis of the actual number of days elapsed

divided by 365, from the Closing Date to the date of payment.

 

(c)           The scope of the disputes to be

resolved by the Accounting Firm is limited to whether the Statements

 

 

16

 

were

prepared in compliance with the requirements of this Section 3.05, and the

Accounting Firm is not to make any other determination.

 

(d)           During the period of time from and

after the delivery of the Closing Statement to Parent through the date the

Statements becomes final and binding on the parties, Newco shall cause the

Newco Companies to afford to Parent and any accountants, counsel or financial

advisors retained by Parent in connection with the adjustment contemplated by

this Section 3.05 reasonable access during normal business hours to the Newco

Companies’ books and records to the extent relevant to the adjustment

contemplated by this Section 3.05.

 

SECTION

3.06.      Successors.  None of Newco or any of the Newco Subsidiary

Indemnitors shall consolidate with or merge with or into, or sell, convey,

transfer or lease, in one transaction or a series of transactions, all or

substantially all of its assets to, any person, unless the resulting, surviving

or transferee person (the “Successor Company”) shall expressly assume, by an

instrument in form and substance reasonably satisfactory to Parent, all the

obligations of such Newco Indemnitor under this Agreement.  The Successor Company shall be the successor

to Newco or such Newco Indemnitor, as applicable, and shall succeed to, and be

substituted for, such Newco or Newco Indemnitor, as applicable, under this

Agreement, but, in the case of a sale, conveyance, transfer or lease, Newco or

such Newco Indemnitor, as applicable, shall not be released from its

obligations hereunder.

 

SECTION

3.07.      Third Party Rights.  (a)        In the event that after the Effective

Time any of the Newco Companies holds any right to indemnification other than a

right to indemnification under this Agreement or any other contractual or other

right (collectively, a “Newco Recourse Right”) with respect to any Sunrise

Liability or any Assumed Liability for which any of the Sunrise Companies are

held responsible, then (i) to the extent possible such Newco Recourse

Right shall be deemed to be held as a shared right of the applicable Newco

Companies and the applicable Sunrise Companies to the extent necessary to

protect the Sunrise Companies against such Sunrise Liability or such Assumed

Liability, and (ii) to the extent not so possible, Newco shall, or shall

cause a Newco Company to, assert or otherwise make available to the Sunrise

Companies the full benefit of such Newco Recourse Right by making a claim on

behalf of the Sunrise Companies or taking other steps reasonably requested by

the Sunrise Companies.

 

 

17

 

(b)           In the event that after the Effective

Time any of the Sunrise Companies holds any right to indemnification or any

other contractual or other right (collectively, a “Sunrise Recourse Right”)

with respect to any Assumed Liability or any Sunrise Liability for which any of

the Newco Companies are held responsible, then (i) to the extent possible

such Sunrise Recourse Right shall be deemed to be held as a shared right of the

applicable Sunrise Companies and the applicable Newco Companies to the extent

necessary to protect the Newco Companies against such Assumed Liability or such

Sunrise Liability, and (ii) to the extent not so possible, the Company

shall, or shall cause a Sunrise Company to, assert or otherwise make available

to the Newco Companies the full benefit of such Sunrise Recourse Right by

making a claim on behalf of the Newco Companies or taking other steps

reasonably requested by the Newco Companies.

 

ARTICLE

IV

 

MISCELLANEOUS

AND GENERAL

 

SECTION 4.01.      Effectiveness; Modification or Amendment.  The parties hereto agree that this Agreement

will become effective at the Effective

Time.  The parties hereto may modify or

amend this Agreement only by written agreement executed and delivered by duly

authorized officers of the respective parties.

 

SECTION 4.02.      Extension; Waiver. 

At any time the parties may (a) extend the time for the performance

of any of the obligations or other acts of the other parties or (b) waive

compliance with any of the agreements or conditions contained herein.  Any agreement on the part of a 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. 

The failure of any party to this Agreement to assert any of its rights

under this Agreement or otherwise shall not constitute a waiver of such rights.

 

SECTION 4.03.      Counterparts. 

This Agreement may be executed in one or more counterparts, all of which

shall be considered one and the same agreement and shall become effective when

one or more counterparts have been signed by each of the parties and delivered

to the other parties.

 

SECTION 4.04.      Governing Law. 

This Agreement shall be governed by, and construed in accordance with,

the laws of the State of Delaware, regardless of the laws that might otherwise

govern under applicable principles of

 

 

18

 

conflicts of laws thereof.

 

SECTION 4.05.      Notices.  All

notices, requests, claims, demands and other communications under this

Agreement shall be in writing and shall be deemed given if delivered

personally, telecopied (which is confirmed) or sent by overnight courier

(providing proof of delivery) to the parties at the following addresses (or at

such other address for a party as shall be specified by like notice):

 

(a)           if to Parent or the Sunrise Companies

(including, after the Effective Time, the Company), to

 

Johnson & Johnson

One Johnson & Johnson Plaza

New Brunswick, NJ 08933

 

Telecopy No.:  (732) 524-2788

 

Attention: 

Office of General Counsel

 

with a copy to:

 

Cravath, Swaine & Moore

825 Eighth Avenue

New York, NY 10019

 

Telecopy No.:  (212) 474–3700

 

Attention: 

Robert I. Townsend, III

 

(b)           if to the Company (prior to the

Effective Time), to

 

Inverness Medical

Technology, Inc.

51 Sawyer Road,

Suite 200

Waltham, MA 02453

 

Telecopy No.:  (781) 647–3939

 

Attention: 

Chief Executive Officer

 

with a copy to:

 

Goodwin Procter LLP

53 State Street

Boston, MA 02109

 

Telecopy No.:  (617) 523–1231

 

Attention:   Paul D. Schwartz, P.C.

 

 

19

 

Stephen W. Carr,  P.C.

 

(c)           if to Newco or the Newco Companies,

to

 

Inverness Medical

Innovations, Inc.

51 Sawyer Road, Suite 200

Waltham, MA 02453

 

Telecopy No.:  (781) 647–3939

 

Attention: 

Chief Executive Officer

 

with a copy to:

 

Goodwin Procter LLP

53 State Street

Boston, MA 02109

 

Telecopy No.:  (617) 523–1231

 

Attention:   Paul D. Schwartz, P.C.

Stephen W.

Carr,  P.C.

 

SECTION 4.06.      Captions.  All

the Article, Section and paragraph captions herein are for convenience of

reference only, do not constitute part of this Agreement and shall not be

deemed to limit or otherwise affect any of the provisions hereof.

 

SECTION 4.07.      Assignment. 

Except as provided in Section 3.06, neither this Agreement nor any

of the rights, interests or obligations under this Agreement shall be assigned,

in whole or in part, by operation of law or otherwise by any of the parties

without the prior written consent of the other parties.  Subject to the preceding sentence, this

Agreement will be binding upon, inure to the benefit of, and be enforceable by,

the parties and their respective successors and assigns.

 

SECTION

4.08.      Entire Agreement.  The Transaction Agreements (including the

documents and instruments referred to therein, the Annexes thereto, the Parent

Disclosure Schedule and the Company Disclosure Schedule) and the

Confidentiality Agreement constitute the entire agreement, and supersede all

prior agreements and understandings, both written and oral, among the parties

with respect to the subject matter hereof and thereof.

 

SECTION

4.09.      Certain Obligations.  Whenever this Agreement requires any of the

subsidiaries of any party to take any action, this Agreement will be deemed to

include an

 

 

20

 

undertaking

on the part of such party to cause such subsidiary to take such action; provided,

however, that for this purpose, after the Effective Time, the Newco

Companies shall not be considered to be subsidiaries of the Company unless

specifically included.

 

SECTION

4.10.      Severability.  If any provision of this Agreement is

invalid, illegal or incapable of being enforced by any rule of law or public

policy, all other conditions and provisions of this Agreement shall

nevertheless remain in full force and effect. 

Upon such determination that any term or other provision is invalid,

illegal or incapable of being enforced, the parties hereto shall negotiate in

good faith to modify this Agreement so as to effect the original intent of the

parties as closely as possible to the fullest extent permitted by applicable

law in an acceptable manner to the end that the transactions contemplated

hereby are fulfilled to the extent possible.

 

SECTION 4.11.      No Third Party Beneficiaries.  Nothing contained in this Agreement is intended to confer upon

any person or entity other than the parties hereto and their respective

successors and permitted assigns, any benefit, right or remedies under or by

reason of this Agreement, except that the provisions of Article II hereof

shall inure to the benefit of Indemnitees.

 

SECTION 4.12       Specific Enforcement; Jurisdiction.  The parties agree that irreparable damage

would occur and that the parties would not have any adequate remedy either

pursuant to the indemnification provisions of Section 2.01, 2.02 or 2.03, as

the case may be, or at law in the event that any of the provisions of this

Agreement, including, but not limited to Section 3.04, were not performed in

accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties

shall be entitled to an injunction or injunctions to prevent breaches of this

Agreement and to enforce specifically the terms and provisions of this

Agreement in any Federal court located in the State of Delaware in any state

court in the State of Delaware, this being in addition to any other remedy to

which they are entitled at law or in equity. 

In addition, each of the parties hereto (a) consents to submit

itself to the personal jurisdiction of any Federal court located in the State

of Delaware or of any state court located in the State of Delaware in the event

any dispute arises out of this Agreement or the transactions contemplated by

this Agreement, (b) agrees that it will not attempt to deny or defeat such

personal jurisdiction by motion or other request for leave from any such court

and

 

 

21

 

(c)  

agrees that it will not bring any action relating to this Agreement or

the transactions contemplated by this Agreement in any court other than a

Federal court located in the State of Delaware or a state court located in the

State of Delaware.

 

 

22

 

IN

WITNESS WHEREOF, this Agreement has been duly executed and delivered by the

duly authorized officers of the parties hereto on the date first hereinabove

written.

 

	

   

  	

  JOHNSON & JOHNSON,

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    /s/ 

  ERIC MILLEDGE

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Eric Milledge

  
	

   

  	

   

  	

  Title:

  	

  Company Group Chairman

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  INVERNESS MEDICAL TECHNOLOGY, INC.,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    /s/ 

  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  President and Chief

  
	

   

  	

   

  	

   

  	

  Executive Officer

  
						

 

 

 

 

[Post-Closing

Covenants Agreement]

 

	

   

  	

  INVERNESS MEDICAL LIMITED,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  Director

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  INTEG INCORPORATED,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CAN-AM CARE CORPORATION,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  INVERNESS MEDICAL EUROPE GmbH,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  OTTO WAHL

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Otto Wahl

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  LXN CORPORATION,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  INVERNESS MEDICAL ASIA-PACIFIC PTY LTD.,  

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  ROBERT M. DELBRIDGE

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Robert M. Delbridge

  
	

   

  	

   

  	

  Title:

  	

  Director

  
						

 

[Post-Closing

Covenants Agreement]

 

	

   

  	

  INVERNESS MEDICAL INNOVATIONS, INC

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  President and Chief

  
	

   

  	

   

  	

   

  	

  Executive Officer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  INVERNESS MEDICAL, INC.,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  President and Chief

  
	

   

  	

   

  	

   

  	

  Executive Officer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  INVERNESS MEDICAL CANADA INC.,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  President 

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CAMBRIDGE DIAGNOSTICS IRELAND LTD.,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  Director

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  INVERNESS MEDICAL BENELUX Bvba,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  TINE CATTEEUW

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Tine Catteeuw

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  ORGENICS, LTD.,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  EMANUEL HART

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Emanuel Hart

  
	

   

  	

   

  	

  Title:

  	

  President

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  F. FISH

  	

   

  
	

   

  	

   

  	

  Name:

  	

  F. Fish

  
	

   

  	

   

  	

  Title:

  	

  Vice President

  
						

 

[Post-Closing

Covenants Agreement]

 

	

   

  	

  ORGENICS INTERNATIONAL HOLDINGS B.V.,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  KENNETH D. LEGG

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Kenneth D. Legg

  
	

   

  	

   

  	

  Title:

  	

  Managing Director

  
	

   

  	

   

  
	

   

  	

  SELFCARE TECHNOLOGY, INC.,

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  

  	

    

  /s/  RON ZWANZIGER

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Ron Zwanziger

  
	

   

  	

   

  	

  Title:

  	

  President

  
					

 

[Post-Closing

Covenants Agreement]

 

 

 

 

 

INVERNESS MEDICAL TECHNOLOGY, INC.

Schedules to Post-Closing Covenants Agreement

 

 

 

INVERNESS MEDICAL TECHNOLOGY, INC.

Schedules to Post-Closing Covenants Agreement

 

 

Schedule 2.01(iv)

 

Certain

Warrant Matters

 

 

                It

is contemplated, pursuant to Section 7.1 of the Restructuring Agreement and

Section 6.04(g) of the Merger Agreement, that outstanding warrants to purchase

Company Common Stock will be converted into warrants to purchase Newco Common

Stock and Parent Common Stock as and to the extent set forth in such sections

(the “Conversions”).  The Company has

agreed to use commercially reasonable efforts to take all action as is

necessary to effect such Conversions, including to obtain the Amendments (as

defined below).  The Company may need to

obtain the consent of the holders of USBIII Warrants and USBIV Warrants (as

defined in Section 4.01(c) of the Company Disclosure Schedule) (collectively,

the “USB Warrants”) representing the right to purchase an aggregate of 270,680

shares of Company Common Stock to amend the terms of such USB Warrants to

facilitate such Conversions (the “Amendments”).  Section 7.02(e) of the Merger Agreement contemplates that Parent

is not obligated to consummate the transactions contemplated by the Merger

Agreement in the event holders of USB Warrants representing the right to

purchase in the aggregate more than 10,000 shares of Company Common Stock do

not consent to the Amendments.

 

                In

the event that the holders of USB Warrants fail to consent to the Amendments in

respect of any USB Warrants, Newco agrees to indemnify (subject to the proviso

at the end of this sentence) Parent and the Company for all Indemnifiable

Losses arising from the failure to obtain the consent of holders of USB

Warrants to the Amendments to such USB Warrants prior to the Effective Time,

including for any consideration issued in excess of what would have been issued

had such consents been obtained prior to the Effective Time; provided, however,

that such indemnification obligations shall apply only with respect to

USB Warrants representing the right to purchase up to 50,000 shares of Company

Common Stock in the aggregate.  As a

condition to Newco’s willingness to so indemnify Parent and the Company, Parent

and the Company covenant and agree that, with respect to the USB Warrants, (i)

neither Parent nor the Company shall settle any claims made by the holders of

such USB Warrants with cash or any other property (other than solely the shares

of Parent Common Stock that would have been issued if such USB Warrants had

been exercised immediately prior to the Effective Time), and (ii) upon

Newco’s settlement of any such claim or satisfaction of Indemnifiable Losses

with respect to any such claim, Parent and the Company shall deliver, at the

written request of Newco, to Newco or its designees, the shares of Parent

Common Stock that would have been issued if the USB Warrants for which Newco

settles such claim or provides indemnification to the Parent or the Company

under this Schedule 2.01(iv) had been exercised immediately prior to the

Effective Time.

 

                For

the avoidance of doubt, the matters set forth in this Schedule 2.01(iv)

shall be subject to Article II of the Post-Closing Covenants Agreement,

including Section 2.04 thereof.

 

INVERNESS MEDICAL TECHNOLOGY, INC.

Schedules to Post-Closing Covenants Agreement

 

 

Schedule 3.02

 

Maximum

Amount of Expenses

 

The maximum amount of expenses under Section

3.02 of the Post-Closing Covenants agreement for which the Company shall be

responsible shall be Twelve Million Dollars plus all: (i) fees and expenses

incurred by the parties hereto in connection with any litigation to the extent

arising out of or related in any way to the transactions contemplated by the

Transaction Agreements (the “Transactions”), 

including without limitation litigation based upon any registration

statement or proxy statement filed or used in connection with the Transactions

or proceedings based upon state law fiduciary duty claims related to the

Transactions; and (ii) fees and expenses (not to exceed Two Million Dollars)

incurred by the parties hereto in connection with the financing contemplated by

Section 7.02(g) of the Merger Agreement.

 

INVERNESS MEDICAL TECHNOLOGY, INC.

Schedules to Post-Closing Covenants Agreement

 

 

Schedule 3.04

 

 

Employees

Exempt from Agreement Not to Solicit or Hire

 

 

Lesley Scott

 

Jack Wilkens — The provisions of Section 3.04(b) will

continue to apply with respect to Jack Wilkins until the six month anniversary

of the Effective Time.

John Alberico — The provisions of Section 3.04(b) will

continue to apply with respect to John Alberico until the six month anniversary

of the Effective Time.

Amy Coletti — The provisions of Section 3.04(b) will

continue to apply with respect to Amy Coletti until the termination of her

employment by a Sunrise Company or an Affiliate thereof.

Ryan Daly — The provisions of Section 3.04(b) will

continue to apply with respect to Ryan Daly until the termination of his

employment by a Sunrise Company or an Affiliate thereof.

David Stepper — The provisions of Section 3.04(b) will

continue to apply with respect to David Stepper until the termination of his

employment by a Sunrise Company or an Affiliate thereof.

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