U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
General form for registration of securities of small
business issuers Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
Nutripure.com
-------------
(Name of Small Business Issuer in its charter)
Nevada
------
(State or other jurisdiction of incorporation or organization)
Applied For
-----------
(I.R.S. Employer Identification No.)
1725 Gillespie Way, El Cajon, California 90220
----------------------------------------------
Principal Executive Offices
619 596 8600
------------
(Issuer's Telephone No.)
Securities to be Registered under Section 12(b) of the Act: None
Securities to be Registered under Section 12(g) of the Act: Common Stock
(Title of Stock)
Total number of pages: 82
Index to Exhibits Appears on Page 23
<PAGE>
Item 1
(a) Business Development
------------------------
Nutripure.com (Nutripure or the Company) was organized as a Nevada corporation
in December, 1999 as a wholly owned subsidiary of Innovative Medical Services
(IMS) for the purpose of conducting the below described e-commerce business. In
January 2000 the Board of Directors of IMS declared a dividend of one share of
Nutripure.com common stock for every ten shares of IMS held on the record date.
The record date for the dividend is April __, 2000.
On December 21, 1999, Nutripure.com entered into an Agreement with Bergen
Brunswig Corporation whereby Nutripure.com would develop and maintain the below
described e-commerce website. On March 5, 2000 the website became active.
(b) Narrative Description of Business
-------------------------------------
Nutripure.com is an e-commerce website providing consumers a wide variety of
vitamins, minerals, nutritional supplements, homeopathic remedies and natural
products. In addition to products, the website offers comprehensive health and
wellness information in an easy-to-access, intuitive reference format. The
website will also present the Nutripure line of water filtration systems.
The market for online vitamins, minerals and supplements as well as for water
treatment systems is growing rapidly as scientific research endorses the
benefits of such products. The ever growing consumer group for these products
include health conscious adults, fitness participants, athletes, parents, senior
citizens and people suffering from illnesses and ailments who are looking for
alternative or complementary treatments to traditional medicine.
Nutripure.com has formed a strategic alliance with Bergen Brunswig Corporation
to provide a seamless online interface for efficient, direct-to-consumer
distribution of products through Bergen Brunswig's strategically located,
state-of-the-art distribution facility in Louisville, Kentucky. Orders placed on
Nutripure.com are simultaneously transmitted to Bergen Brunswig's distribution
facility where the order is picked, packed and shipped to the consumer as
quickly as within 24 hours. The alliance combines the strengths of
Nutripure.com's aggressive sales, marketing and customer support programs with
Bergen Brunswig's leadership, buying power and order fulfillment and delivery
system.
Nutripure.com was formally launched on March 5, 2000.
Nutripure.com competes with retailers, wholesalers, manufacturers, catalog
sellers and online merchants. Within this competitive environment, Nutripure.com
has positioned itself as a premier source for specialty health products and
credible, scientifically-based health resource information. Online banner and
keyword advertising will be strongly supported by national advertising
campaigns, beginning with radio advertisements, that will drive consumers to the
website while branding the "Nutripure" name. As revenues from Nutripure.com
grow, so will the magnitude of the advertising campaigns, which may extend into
popular magazine print placement and television advertising.
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Bergen Brunswig will act as the sole wholesaler for products sold on
Nutripure.com. A leading supplier of pharmaceuticals, medical-surgical supplies
and specialty healthcare products, Bergen's customers include the nation's
healthcare providers (hospitals, nursing homes and physicians), drug stores,
manufacturers and patients. As such, Bergen Brunswig proves to be a reliable
source for products.
Nutripure.com has entered into a three-year internet fulfillment services
agreement with Bergen Brunswig Corporation. The contract provides for a monthly
service fee in addition to a per item fulfillment fee to be paid to Bergen
Brunswig by Nutripure.com. Nutripure.com will also pay a software and database
license fee for the product images and ingredient database for all Bergen
Brunswig products featured on the website. The contract also stipulates a rebate
program in which Bergen Brunswig will pay Nutripure.com quarterly rebates based
on purchase volume. Nutripure.com has also entered into licensing agreements
with Healthnotes and Utah Health Infomatics for third-party health resource
content and personal profiling tools, respectively.
Governmental regulation of some vitamins, minerals, supplements, homeopathic
remedies and natural products may in the future limit our sales or add
additional costs to distribution. At this time, however, Nutripure.com does not
expect any impact from government approval or regulation because, through Bergen
Brunswig, it is offering only products that comply with current regulatory
requirements, including FDA labeling rules.
As per the company's agreement with Bergen Brunswig, the company will obtain and
maintain a listed chemicals license from the DEA (Drug Enforcement
Administration) and will report the sale and shipment of all products pursuant
to the requirements of the DEA and comply with all comparable state
requirements.
Nutripure.com has four employees which are its executive officers.
Item 2. Management Discussion & Analysis or Plan of Operation
This section contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements are not guarantees of our future
performance. They are subject to risks and uncertainties related to business
operations, some of which are beyond our control. Our actual results may differ
materially from those anticipated in these forward-looking statements.
Plan of Operations
The Company's Plan of Operation for the fourth quarter of the current fiscal
year and for the next fiscal year is to hire its employees and commence a
multi-media advertising campaign to drive visits to the website and produce
revenue through sales.
At the present time, all of the personnel who developed and maintain the
Company's website are employees of Innovative Medical Services. In addition the
Company intends to hire full time webpage graphic designers, customer service
representatives and marketing representatives. The Company anticipates that it
will hire up to ten individuals during the current fiscal year and that its
parent corporation, Innovative Medical Services will provide all other
management, legal and accounting services.
The Company's advertising campaign is expected to be launched before the end of
the current fiscal year and reach its highest projected levels during the next
fiscal year. The multi-media program will include paid and bartered internet
advertising on internet portals such as America Online, Yahoo and Lycos and
websites whose operators are expected to execute cross marketing agreements with
the Company. The Company will also launch a radio advertising campaign and
enclose advertisements and coupons in the Innovative Medical Services Nutripure
residential water filtration products.
The Company is projecting expenditures of approximately $1,000,000 for
personnel, marketing, advertising, computer hardware and software,
administrative and other expenses over the next twelve months. The Company
anticipates funding these expenditures through loans or equity investment by
Innovative Medical Services, operational revenues or additional sales of
securities of the Company in private or public offerings. These funds are in
addition to the $500,000 received from the sale of 1,000,000 shares of its
common stock during the period of December 1999 through February 2000.
In December 1999, the Company purchased its HTML/ASP version website from its
parent corporation, Innovative Medical Services for $1,000,000 of which $407,000
has been paid. HTML/ASP stands for Hyper Text Mark-up Language and Active Server
Pages. These are the commonly used software for website design and operation.
The balance of $593,000 is included in accounts payable. In addition, Innovative
Medical Services agreed to create an XML version of the website on or before May
1, 2000 which it will sell to the Company for an additional $1,000,000. XML
stands for Extensible Mark-up Language which is the most advanced software for
website design and operation. The Company's Internet Fulfillment Services
Agreement with Bergen Brunswig requires a new website programmed in XML. Payment
of any amounts due to Innovative Medical Services will be deferred until such
time that the payments can be made from revenues or additional equity investment
without impairing the development of the Company's business.
3
<PAGE>
Item 3. Description of Property
The Company's business is operated from the headquarters of IMS. IMS operates in
a 10,000 square foot facility located in a light industrial/office park in El
Cajon, California. This location houses all administrative, executive, sales,
assembly, shipping and manufacturing functions for the IMS as well as the
Company. IMS leases the space from an unaffiliated third party under a
sixty-five month agreement commencing July 1, 1996. The monthly rental is $0.61
per square foot plus $0.08 per square foot for maintenance of common areas.
There is also a fixed yearly increase of 4%. IMS has also signed an amendment to
the lease to allow for an option to lease the building for an additional five
years.
<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners holding five percent
or greater of the 10,000,000 shares of common stock outstanding as of
March 21, 2000.
Title of Class Name and Address Amount and Nature % of
of Beneficial Owner of Beneficial Owner Class
Common Innovative Medical Services 8,000,000 80.4%
1725 Gillespie Way
El Cajon, CA 92020
(b) Security Ownership of Management
Name and Address(1) Amount and Nature % of
Title of Class of Beneficial Owner of Beneficial Owner Class
Common Michael Krall 200,000 2.0%
Rodney Adler(2) 350,000 3.5%
Mathew Kanter 300,000 3.0%
Donna Singer 75,000 0.75%
Gary Brownell 75,000 0.75%
William Shewalter 125,000 1.25%
Steven Nelson 50,000 0.5%
Dennis Brovarone 50,000 0.5%
All officers and Directors
as a Group (8 persons) 1,175,000 11.75%
(1) The address of the officers and directors is in care of the Company, 1725
Gillespie Way, El Cajon, California 92020.
(2) Includes 250,000 shares held by Adler Corporation Pty, Ltd., which Mr.
Adler controls.
4
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Item 5. Directors, Executive Officers, Promoters and Control Persons
(a) Directors and Executive Officers
Name Position First Year with Company
Michael L. Krall President, CEO & Director 1999
Donna Singer Secretary and Director 1999
Gary Brownell Chief Financial Officer 1999
Steven Nelson V-P of Pharm. Info. & Director 1999
Rodney Adler Director 1999
Dennis Brovarone Director 1999
Mathew Kanter Director 1999
William Shewalter Director 1999
Business Experience
RODNEY S. ADLER Rodney S. Adler served as CEO of FAI Insurances Limited for 11
years until the takeover of FAI by HIH Insurance Limited (HIH.AX). Mr. Adler
remains a Director of FAI and is a Director of HIH. Mr. Adler is a Governor of
The Sydney Institute, a Director of One.Tel Limited (ONE.AX), Chairman of
Medicine Quantale Limited (MQL.AX), a Director of Anaconda Nickel (ANL.AX) and
the Joint Chairman of Juvenile Diabetes Australia. Mr. Adler was appointed a
Member of the Order of Australia for his service to the community and to the
support of business and philanthropy. Mr. Adler holds a Bachelor of Commerce
Degree from the University of New South Wales, a Master of Economics Degree from
Macquarie University and is a Fellow of the Institute of Chartered Accountants
in Australia. Mr. Adler is an Adjunct Professor in the Faculty of Business at
the University of Technology Sydney, where he frequently lectures.
DR. STEVEN E. NELSON Dr. Steven E. Nelson has been practicing pharmacy for over
25 years, with an ongoing emphasis on nutritional supplementation and
nutritional medicine. Dr. Nelson maintains a private practice of clinical
wellness centers in Las Vegas, Nevada and Palm Springs, California in which he
focuses on the clinical use of natural medicines. Previously, Dr. Nelson owned
pharmacies and practiced pharmacy in many settings from retail and home health
care to hospital environments, including specialties of oncology, ophthalmology,
obstetrics and gynecology, surgery, pediatrics, general medicine and infectious
disease. Dr. Nelson holds a Bachelor of Science, Pharmacy degree from the
University of Wisconsin, a Doctor of Pharmacy degree from the University of
Michigan and a PhD in Clinical Nutrition from Purdue. Dr. Nelson belongs to the
International Association of Certified Clinical Nutritionists (IACCN) and is a
Clinical Fellow of the British Institute of Homeopathy.
DENNIS BROVARONE Mr. Brovarone has been Securities Law Counsel and a Director of
Innovative Medical Services since 1996. He has been practicing corporate and
securities law since 1986 and as a solo practitioner since 1990. Since December
1997, Mr. Brovarone has served as the President and Chairman of the Board of
Directors of Ethika Corporation, a publicly held, Mississippi corporation
investment holding company with its office in Westminster, Colorado. Since
January 1999 Mr. Brovarone has served as a Director of Elgrande.com, Inc., a
publicly held Nevada corporation with offices is Vancouver, British Columbia.
From January 1995 to March 1998 Mr. Brovarone served as President (Chairman) of
the Board of Directors of The Community Involved Charter School, a four year old
K-12 public school located in Lakewood, Colorado, operating under an independent
charter and serving approximately 350 students in an individualized,
experiential learning environment. Mr. Brovarone lives and works in Westminster,
Colorado.
5
<PAGE>
GARY W. BROWNELL Mr. Brownell has been the Chief Financial Officer and a
Director of Innovative Medical Services since 1996. Mr. Brownell is a Certified
Public Accountant in a private partnership practice. He is the partner in charge
of taxes and municipal audits for his firm. Mr. Brownell graduated from San
Diego State University in 1973 with a Bachelor of Science degree in accounting.
He received his Certified Public Accountant designation in 1983. Mr. Brownell
has been a partner in Brownell and Duffy since 1985.
MATTHEW D. KANTER Matthew D. Kanter has more than 20 years of experience in
technology management and services. Mr. Kanter is the President of USi New York
(NASDAQ: USIX) where he is responsible for all e-commerce and e-business
services for the northeast region of USinternetworking, Inc. Until it was
acquired by USi, Mr. Kanter served as President, CEO and Technical Director of
Advanced Communication Resources (ACR), which delivers applications development
and systems integration services to the financial services community in the
Northeastern United States. Before joining ACR, Mr. Kanter was Manager of
Technical Services at Simpson, Thacher and Bartlett, one of the largest law
firms in the country. Mr. Kanter has also served as an independent consultant,
and has in-depth expertise in databases and database architecture. Majoring in
statistics and information systems, Mr. Kanter attended Baruch College in the
City University of New York. He is a Microsoft Certified Systems Engineer, A
Sybase Certified Instructor, and a Novell Certified Network Instructor.
MICHAEL L. KRALL Mr. Krall is the President, CEO and Chairman of the Board of
Directors of Innovative Medical Services, a position he has held since 1993. He
is responsible for the strategic planning, product development, and day-to-day
operations of IMS. Previously, Mr. Krall was the President and CEO of
Bettis-Krall Construction, Inc. a successful building-development company of
custom homes and commercial property in San Diego County, California. He has
also held numerous positions in general management in the hospitality industry.
Mr. Krall attended Pepperdine University (economics, statistics mechanical
engineering). He previously served 4 years in the United States Marine Corps and
was elected, by general election, to a 4 year term on the Valle de Oro Planning
Board. Mr. Krall lives in El Cajon, California with his wife, Connie and two
children.
WILLIAM SHEWALTER Bill Shewalter has over 20 years of experience in finance,
management and new business development, primarily in the real estate
development industry. He is the Chief Operating Officer of The Goodman Company,
a West Palm Beach, Florida - based Real Estate Management and Development
Company. Mr. Shewalter has a Bachelor of Science Degree from Illinois State
University, an MBA from Northwestern University and is a Certified Public
Accountant.
DONNA SINGER Ms. Singer is the Executive Vice President of Innovative Medical
Services. From 1996-1998 Ms. Singer served as Vice President of Operations for
the Company. Ms. Singer is responsible for company operations, corporate
communications, investor relations, marketing and sales. Previously, Ms. Singer
served as the investor relations executive at Western Garnet International, a
Toronto Stock Exchange mining company. Ms. Singer graduated from Gonzaga
University with a Bachelor of Arts degree and lives with her husband in
Lakeside, California.
6
<PAGE>
Item 6.
(a) Executive Compensation Table
The Company has omitted the Executive Compensation Table as it has not paid any
cash or non-cash compensation to any of its officers.
(b) Option/SAR Grants in Last Fiscal Year (Individual Grants):
No options have been granted to date.
(c) Aggregated Option/SAR Exercises and Option/SAR Values for last fiscal year:
None
(d) Long-term Incentive Plans -- Awards in last fiscal year: None
The Company has not otherwise awarded any stock options, stock appreciation
rights or other form of derivative security or common stock or cash bonuses to
its executive officers and directors.
(e) Compensation of Directors
1. Standard Arrangements: The members of the Company's Board of Directors
are reimbursed for actual expenses incurred in attending Board
meetings.
2. Other Arrangements: There are no other arrangements.
(f) Employment Contracts, Termination of Employment, and Change-in-control
Arrangements
The Company's executive officers do not work pursuant to written employment
agreements or draw salaries. In the event compensation is to be paid at a future
time, such compensation will be determined by the Board of Directors and are
reviewed annually.
Item 7. Certain Relationships and Related Transactions
The Company's By-Laws include a provision regarding Related Party Transactions
which requires that each participant to such transaction identify all direct and
indirect interests to be derived as a result of the Company's entering into the
related transaction. A majority of the disinterested members of the board of
directors must approve any Related Party Transaction.
The following shares were granted to the Officers and Directors upon the
organization of the Company for their agreement to serve:
Name # of Shares
----------------------------------------------
Michael Krall 200,000
Rodney Adler 100,000
Mathew Kanter 100,000
Donna Singer 75,000
<PAGE>
Gary Brownell 75,000
William Schewalter 75,000
Steven Nelson 50,000
Dennis Brovarone 50,000
In December 1999, the Company purchased its HTML/ASP version website from its
parent corporation, Innovative Medical Services for $1,000,000 of which $407,000
has been paid. The balance of $593,000 is included in accounts payable. In
addition, Innovative Medical Services agreed to create a XML version of the
website on or before May 1, 2000 which it will sell to the Company for an
additional $1,000,000. Payment of any amounts due to Innovative Medical Services
will be deferred until such time that the payments can be made from revenues or
additional equity investment without impairing the development of the Company's
business.
Item 8. Description of Securities
The authorized capital stock of Company consists of 50,000,000 shares of common
stock and 10,000,000 shares of preferred stock, the rights and preferences of
which may be determined by the Board of Directors prior to issuance. No warrants
to acquire common stock have been authorized. There are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of the Company's common stock.
The common stock carry no preemptive rights, are not convertible, redeemable,
assessable or entitled to the benefits of any sinking fund. The common stock
affords the holders no cumulative voting rights, and the holders of a majority
of the shares voting for the election of the directors can elect all of the
directors if they should choose to do so.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and Other
Shareholder Matters
(a) Market Information
The Company's stock is not listed for sale on any exchange or trading medium.
The Company intends to seek the listing of its Common Stock on the OTC
Electronic Bulletin Board upon the effectiveness of this Form 10-SB. Until such
time, there is no public market for the Company's Common Stock. During December
1999 through February 2000, the Company sold 900,000 shares for $450,000 to nine
accredited investors in a private placement of securities exempt from
registration pursuant to Rule 504 of Regulation D. There are 19 holders of
restricted securities as defined by Rule 144, none of which have not been held
in excess of one year. The shares held by the affiliates may only be sold
pursuant to Rule 144. The Company has not agreed to file any registration
statements for its existing shareholders.
(b) Holders
There are nineteen holders of the Company's Common Stock as of March 21, 2000.
(c) Dividends
The Company has paid no dividends to date on its Common Stock. The Company
reserves the right to declare a dividend when operations merit.
8
<PAGE>
Item 2. Legal Proceedings: There are no legal proceedings to report.
Item 3. Changes in and Disagreements with Accountants: None
Item 4. Recent Sales of Unregistered Securities
During the past three years, the Company sold securities which were not
registered under the Securities Act of 1933, as amended, as set forth below.
<TABLE>
<CAPTION>
Date Name # of shares issued Consideration (U.S. $)
- ---- ---- ------------------ ----------------------
<S> <C> <C> <C>
12/06/99 Innovative Medical Services 8,000,0000 $8000.00
Creative Corporate Solutions 200,000 Services
Michael Krall 200,000 Services
Rodney Adler 100,000 Services
Mathew Kanter 100,000 Services
Donna Singer 75,000 Services
Gary Brownell 75,000 Services
William Schewalter 25,000 Services
Steven Nelson 50,000 Services
Dennis Brovarone 50,000 Services
Eugene Peiser 25,000 Services
Patrick Galuska 25,000 Services
James Pritsiolas 25,000 Services
-------
Total 9,000,000
12/28/99 James Pritsiolas 50,000 $25,000
12/31/99 Strang Mechanical Inc. Emp. Ret. Trust 50,000 $25,000
12/31/99 Giltner B. Stevens 50,000 $25,000
01/05/00 Adler Corporation PTY, Ltd. 250,000 $125,000
01/06/00 Albert Pick III 100,000 $50,000
01/06/00 William Shewalter 50,000 $25,000
01/26/00 FTP, Inc. 150,000 $75,000
02/02/00 N. Herrick Irrev. Securities Trust 50,000 $25,000
02/15/00 N. Herrick Irrev. Securities Trust 50,000 $25,000
02/29/00 Mathew Kanter 200,000 $100,000
------- --------
Total 1,000,000 $500,000
</TABLE>
The Company was not a reporting company pursuant to the Securities Exchange Act
of 1934 nor was it a development stage company with no business plan. Thus it
was eligible to rely upon Rule 504 as a safe harbor exemption from the
registration requirements of the Securities Act of 1933. Moreover, Rule 504 was
available in that the Company sold less than $1,000,000.00 worth of securities
9
<PAGE>
in the previous 12 month period and except for the Company's officers and
directors, the purchasers were unaffiliated accredited investors. The Company
relied upon the exemption from registration set forth in Section 4(2) of the
Securities Act of 1933 and the Rule 504 safe harbor exemption for the sales of
securities for cash. These sales were entirely private transactions pursuant to
which all material information as specified in Rule 502(b)(2) was made available
to the purchasers.
Item 5. Indemnification of Directors and Officers
Article 11 of the Company's By-laws provides that every person who was or is a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or a person for whom he is the legal representative
is or was a director or officer of the corporation or is or was serving at the
request of the corporation or for its benefit as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust or other enterprise, shall be indemnified and held harmless to the fullest
extent legally permissible under the General Corporation Law of the State of
Nevada against all expenses, liability and loss (including attorney's fees,
judgments, fines and amounts paid or to be paid in settlement) reasonably
incurred or suffered by him in connection therewith. The expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if it
is ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the corporation. Such right of indemnification
shall be a contract right which may be enforced in any manner desired by such
person. Such right of indemnification shall not be exclusive of any other right
which such directors, officers or representatives may have or hereafter acquire
and, without limiting the generality of such statement, they shall be entitled
to their respective rights of indemnification under any bylaw, agreement, vote
of stockholders, provision of law or otherwise, as well as their rights under
Article 11.
Nevada Revised Statutes Section 78.7502 provides for discretionary and mandatory
indemnification of officers, directors, employees and agents as follows:
1. A corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed legal proceeding,
except by or in the right of the corporation, by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
the action, suit or proceeding if the person acted in good faith and in a manner
which was reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that the person is or was a director, officer, employee or agent of the
corporation, against expenses, including amounts paid in settlement and
attorneys' fees actually and reasonably incurred by the person in connection
with the defense or settlement of the action or suit if the person acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation.
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Indemnification may not be made for any claim, issue or matter as to which such
a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections 1 and 2, or in defense of any claim, issue
or matter therein, the corporation shall indemnify the person against expenses,
including attorneys' fees, actually and reasonably incurred in connection with
the defense.
Nevada Revised Statutes Section 78.751 requires authorization for discretionary
indemnification; advancement of expenses and limitation on indemnification and
advancement of expenses as follows:
1. Any discretionary indemnification under NRS 78.7502 unless ordered by a court
or advanced pursuant to subsection 2, may be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
action, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
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The following financial statements are filed as part of this registration
statement:
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
NUTRIPURE.COM
(A DEVELOPMENT STAGE COMPANY)
February 29, 2000
<PAGE>
C O N T E N T S
Page
----
Independent Auditors' Report 1
Financial Statements
Balance Sheet 2
Statements of Operations 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-10
12
<PAGE>
MILLER AND MCCOLOM
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors' Report
Board of Directors
NUTRIPURE.COM
We have audited the accompanying balance sheet of Nutripure.com (a
Development Stage Company) as of February 29, 2000, and the related statements
of operations, stockholders' equity, and cash flows for the period December 8,
1999 (inception) to February 29, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentations.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nutripure.com (a Development
Stage Company) as of February 29, 2000, and the results of its operations and
its cash flows for the period December 8, 1999 (inception) to February 29, 2000,
in conformity with generally accepted accounting principles.
/s/ Miller and McCollom
Denver, Colorado
March 7, 2000
2170 South Parker Road Suite 270 - Denver Colorado 80231-303 745-2217
Fax 303 745-2265
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NUTRIPURE.COM
(a Development Stage Company)
Balance Sheet
February 29, 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 850
Stock subscriptions receivable 100,000
Total current assets 100,850
-------
Property, plant and equipment
Internet supersite 1,000,000
---------
Total property, plant and equipment $1,000,000
---------
Total assets $1,100,850
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties $ 593,400
---------
STOCKHOLDERS' EQUITY (Note 4)
Class A common stock, $0.001 par value; authorized
10,00,000 shares, issued and outstanding 509,000
Accumulated deficit (1,550)
------
Total stockholders' equity 507,450
-------
Total liabilities and stockholders' equity $ 1,100,850
===========
The accompanying notes are an integral part of the financial statement.
2
<PAGE>
NUTRIPURE.COM
(a Development Stage Company)
For the Period December 8, 1999 (Inception) through February 29, 2000
Net sales $ -
Cost of sales -
--------
Gross profit -
--------
General and administrative expenses 1,550
--------
Total operating costs 1,550
--------
Operating income (loss) (1,550)
--------
Income (loss) before income taxes (1,550)
Federal and state income taxes -
--------
Net income (loss) $ (1,550)
--------
Net income (loss) per common share (basic) $ *
--------
Net income (loss) per common share (diluted) $ *
--------
Weighted average number of shares outstanding 9,500,000
=========
* Less than ($.01)
The accompanying notes are an integral part ofthe financial statement.
3
<PAGE>
NUTRIPURE.COM
(a Development Stage Company)
Statement of Stockholders' Equity
For the Period from December 8, 1999 (inception) through February 29, 2000
<TABLE>
<CAPTION>
Accumulated
Deficit during
Common Shares development
Shares Amount stage Total
---------------------------- ----------------------------
Balance, beginning of period
Common shares issued:
<S> <C> <C> <C> <C>
Issuance of common stock 8,000,000 $ 8,000 $ - $ 8,000
for cash on December 6, 1999
Issuance of common stock
for services on December 6, 1999 1,000,000 1,000 - 1,000
Issuance of common stock
for cash on December 28, 1999 50,000 25,000 - 25,000
Issuance of common stock
for cash on December 31, 1999 100,000 50,000 - 50,000
Issuance of common stock
for cash on January 5, 2000 250,000 125,000 - 125,000
Issuance of common stock
for cash on January 6, 2000 150,000 75,000 - 75,000
Issuance of common stock
for cash on January 26, 2000 150,000 75,000 - 75,000
Issuance of common stock
for cash on February 2, 2000 50,000 25,000 - 25,000
Issuance of common stock
for cash on February 15, 2000 50,000 25,000 - 25,000
Issuance of common stock
for cash on February 29, 2000 100,000 50,000 - 50,000
Stock subscription (Note 8) 100,000 50,000 - 50,000
Net loss for period - - (1,550) (1,550)
---------- --------- -------- ---------
Balance, end of period 10,000,000 $ 509,000 $ (1,550) $ 507,450
========== ========= ======== =========
</TABLE>
The accompanying notes are an integral part of the financial statement.
4
<PAGE>
NUTRIPURE.COM
(a Development Stage Company)
Statements of Cash Flows
For the Period from December 8, 1999 (inception) through February 29, 2000
Operating activities:
Net loss $ (1,550)
Stock issued for services 1,000
Changes in assets and liabilities
Increase in accounts payable 593,400
-----------
Net cash provided by operations 592,850
-----------
Investing activities
Acquisition of property and equipment (1,000,000)
-----------
Net cash (used by) investing activities (1,000,000)
-----------
Financing activities
Issuance of common stock 408,000
Offering costs -
--------
Net cash provided by financing activities 408,000
--------
Increase in cash 850
Cash at beginning of period -
--------
Cash at end of period $ 850
========
Supplemental disclosure of cash flow information
Cash paid during the period for
Interest $ -
Income taxes $ -
Supplemental schedule of noncash investing and financing activities
Issuance of 1,000,000 shares of
common stock for services $ 1,000
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
NUTRIPURE.COM
(a Development Stage Company)
Notes to Financial Statements
February 29, 2000
Note 1 - Summary of Significant Accounting Policies
Organization and Business Activity
Nutripure.com was incorporated in the state of Nevada on December 8, 1999. The
Company was formed as a wholly owned subsidiary of Innovative Medical Services
(IMS), a public company trading on NASDAQ under the symbol PURE. Nutripure.com
is an e-commerce web supersite providing consumers a wide variety of vitamins,
minerals, nutritional supplements, homeopathic remedies and natural products. In
addition to products, the website offers comprehensive health and wellness
information in an easy-to-access, intuitive reference format. The website will
also present the IMS Nutripure line of water filtration systems. The Company is
in the development stage as its operations principally involve internet sales
and have not generated any revenue from these activities. On March 1, 2000, the
Company launched its e-commerce web supersite.
Revenue Recognition
The Company will recognize revenue from product sales, net of any discounts,
when the products are shipped to customers. Outbound shipping and handling
charges will be included in net sales. The Company will provide an allowance for
sales returns based on historical experience.
Intangible Assets
SOP 98-1 requires all costs related to the development of internal use software
other than those incurred during the application development stage to be
expensed as incurred. Costs incurred during the application development stage
are required to be capitalized and amortized over the estimated useful life of
the software. No amortization expense has been recorded during the period ended
February 29, 2000.
In April 1998, the American Institute of Certified Public Accountants issued SOP
98-5, Reporting on the Costs of Start-up Activities. SOP 98-5 is effective for
the Company's fiscal year ending December 31, 1999. SOP 98-5 requires costs of
start-up activities and organization costs to be expensed as incurred. The
Company expensed $400 in organization during the period.
6
<PAGE>
NUTRIPURE.COM
(a Development Stage Company)
Notes to Financial Statements
February 29, 2000
Note 1 - Summary of Significant Accounting Policies
Long-Lived Assets
In accordance with Financial Accounting Standards Board ("FASB") Statement of
Financial Accounting Standards ("SFAS") No. 121, Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of, the carrying
value of intangible assets and other long-lived assets will be reviewed on a
regular basis for the existence of facts or circumstances, both internally and
externally, that may suggest impairment. To date, no such impairment has been
indicated. Should there be an impairment in the future, the Company will measure
the amount of the impairment based on undiscounted expected future cash flows
from the impaired assets. The cash flow estimates that will be used will contain
management's best estimates, using appropriate the customary assumptions and
projections at the time.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
Actual results could differ from those estimates.
Net Income (Loss) Per Common Share
The Company adopted FASB Statement No. 128, Earnings Per Share ("SFAS 128"),
which is effective for periods ending after December 15, 1997. Entities that
have only common stock outstanding are required to present basic earnings per
share amounts. Diluted per share amounts assume the conversion, exercise or
issuance of all potential common stock instruments unless the effect is to
reduce a loss or increase the income per common share from continuing
operations. The Company has authorized and issued only common stock as of
February 29, 2000.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of three months or less to be
cash equivalents.
Income Taxes
The Company recognizes deferred tax assets and liabilities based on differences
between the financial reporting and tax bases of assets and liabilities using
the enacted tax rates and laws that are expected to be in effect when the
differences are expected to be recovered.
7
<PAGE>
NUTRIPURE.COM
(a Development Stage Company)
Notes to Financial Statements
February 29, 2000
Note 2 - Property, Plant and Equipment
The following is a summary of property, plant, and equipment - at cost, net of
amortization:
Internet supersite $ 1,000,000
Less: accumulated amortization -
-----------
Total $ 1,000,000
===========
Amortization expense charged to general and administrative expense for the
period ended February 29, 2000, was $0.
Note 3 - Common Stock
On January 10, 2000, the Board of Directors of Innovative Medical Services voted
to declare a dividend in kind of NUTRIPURE.com common stock. Holders of
Innovative Medical Services Common Stock will receive one share of Nutripure.com
common stock for each ten shares of Innovative Medical Services common stock
held as of a record date to be specified. The distribution is expected to be
taxable as a dividend to each stockholder of Innovative Medical Services on the
date of distribution. Following the distribution, Innovative Medical Services
expects that a public market will exist for the Nutripure.com common stock. The
record date and distribution date for the dividend will promptly follow
completion of the registration of Nutripure.com as a reporting issuer with the
Securities and Exchange Commission.
Note 4 - Related Party Transactions
During the period ending February 29, 2000, the Company purchased a fully
functional e-commerce internet supersite (HTML/ASP version) from its parent
company Innovative Medical Services (IMS) for a purchase price of $1,000,000.
The purchase agreement dated December 10, 1999, provided that IMS will sell to
the Company, its right, title and interest in the website including various
agreements with internet service providers, licensing agreements and fulfillment
services agreement with Bergen Brunswig Corporation (BBC) (see Note 9).
Additionally, IMS agreed to create a XML version of the website to meet BBC's
requirements on or before May 1, 2000. The Company agreed to pay IMS sum of
$1,000,000 upon completion and successfully re-launching the XML version. Of
this amount $407,000 has been paid, the remaining $593,000 is included in
accounts payable - related parties on the accompanying financial statements and
as a corresponding inter-company accounts receivable on the books of IMS.
8
<PAGE>
NUTRIPURE.COM
(a Development Stage Company)
Notes to Financial Statements
February 29, 2000
Note 5 - Income Taxes
No provision for income taxes have been provided in the accompanying financial
statement. The Corporation has a net operating loss carryforward of $1,550 which
will expire in 2020. The tax benefit of the net operating loss carryforward has
not been recognized due to the uncertainty of realization.
The net deferred tax asset due to loss carryforward is as follows:
Deferred tax asset $ 233
Valuation allowance (233)
------
$ -
======
Note 6 - Basis of Presentation
The Company has no revenue from its e-commerce web supersite. It is the
Company's intent to raise additional capital through private placements or
public offerings of its equity securities and use the capital for development of
its web supersite and advertising.
Note 7 - Uncertainty Due to the Year 2000 Issue
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date.
The effects of the Year 2000 issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure, which
could affect an entity's ability to conduct normal business operations. It is
not possible to be certain that all aspects of the Year 2000 issue affecting the
entity, including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
Note 8 - Stock Subscription Receivable
On March 3, 2000, the Company received $100,000 in cash as payment for its stock
subscription.
<PAGE>
NUTRIPURE.COM
(a Development Stage Company)
Notes to Financial Statements
February 29, 2000
Note 9 - Fulfillment Services Agreement
Nutripure.com has a three-year internet fulfillment services agreement with
Bergen Brunswig Corporation (Bergen Brunswig) whereby Bergen Brunswig will be
the sole wholesaler for products sold on the Company's website. The contract
provides for a monthly service fee in addition to a per item fulfillment fee to
be paid to Bergen Brunswig by the Company. Nutripure.com will also pay a
software and database license fee for the product images and ingredient database
for all Bergen Brunswig products features on the website. The contract also
stipulates a rebate program in which Bergen Brunswig will pay Nutripure.com
quarterly rebates based on purchase volume. Nutripure.com has also entered into
licensing agreements with Healthnotes and Utah Health Infomatics for third-party
health resource content and personal profiling tools, respectively. (See Note
4.)
-10-
<PAGE>
PART III
Item 1. Index to Exhibits
3. (i) Articles of Incorporation
(ii) By-laws
10.1 Internet Fulfillment Services Agreement dated December 21, 1999
(Certain sections omitted and filed under a Request for Confidential
Treatment)
10.2 Purchase Agreement between Nutripure.com and Innovative Medical
Services dated December 10, 1999
27 Finaicial Date Schedule
23
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
NUTRIPURE.COM.
By: /s/MICHAEL L. KRALL
-------------------
Michael L. Krall, President,
Chief Executive Officer, Director March 29, 2000
/s/ GARY BROWNELL
- -----------------
Gary Brownell, Chief Financial Officer, Director March 29, 2000
/s/ DONNA SINGER
- ----------------
Donna Singer, Secretary, Director March 29, 2000
/s/ RODNEY ADLER
- ----------------
Rodney Adler, Director March 30, 2000
/s/ DENNIS BROVARONE
- --------------------
Dennis Brovarone, Director March 29, 2000
/s/ MATHEW KANTER
- -----------------
Mathew Kanter, Director March 30, 2000
/s/ STEVEN NELSON
- -----------------
Steven Nelson, Director March 30, 2000
/s/ WILLIAM SCHEWALTER
- -----------------------
William Schewalter, Director March 30, 2000
24
<PAGE>
Filed
In the office of the
Secretary of State of the
STATE OF NEVEDA
DEC 08 1999
No. C30837-99
Dean Heller, Secretary of State
ARTICLES OF INCORPORATION
OF
NUTRIPURE.COM
KNOW ALL MEN BY THESE PRESENTS:
That undersigned, has this day voluntarily forming a corporation under the laws
of the State of Nevada and does hereby certify:
ARTICLE ONE
The name of this corporation is NUTRIPURE.COM
ARTICLE TWO
The resident agent of said corporation shall be Pacific Corporate Services Inc.,
7631 Bermuda Road, Las Vegas, NV., 89123 and such other offices as may be
determined by the By-Laws in and outside the State of Nevada.
ARTICLE THREE
The objects to be transacted, business and pursuit and nature of the business,
promoted or carried on by this corporation are and shall continue to be engaged
in any lawful activity.
ARTICLE FOUR
The members of the governing board shall be styled Directors and the first Board
of Directors shall consist of one (1). The number of directors of this
corporation may, from time to time, be increased or decreased by an amendment to
the By-Laws of this corporation in that regard, and without the necessity of
amending these Articles of Incorporation. The name and address of the first
Board of Directors and of the Incorporator signing these Articles as follows:
DENNIS BROVARONE
11249 W. 103RD DR.
WESTMINSTER, CO 80021
ARTICLE FIVE
The Corporation is to have perpetual existence.
<PAGE>
ARTICLE SIX
The total authorized capitalization of this Corporation shall be and is the sum
of 50,000,000 shares of Common Stock at $0.001 par value and 10,000 shares of
Preferred Stock at $0.001 par value. Said common stock shall not be entitled to
cumulative voting or pre-emptive rights. Said common shares shall be issued
fully paid at such time as the Board of Directors may designate in exchange for
cash, property, or services, the stock of other corporations or other values,
rights, or things, and the judgement of the Board of Directors as to the value
thereof shall be conclusive. The preferred stock may be issued in different
series, the rights and preferences there of shall be determined by the Board of
Directors.
ARTICLE SEVEN
The capital stock shall be and remain non-assessable. The private property of
the stockholders shall not be liable for the debts or liabilities of the
Corporation.
IN WITNESS WHEREOF, I have set my hand this 7th day of December, 1999.
/s/ Dennis Brovarone
- --------------------
Dennis Brovarone, Incorporator
On this 7th day of December, 1999 before me, a Notary Public in and for
Jefferson County, Colorado personally appeared, Dennis Brovarone known to me to
be the person whose name is subscribed to the foregoing instrument, and he duly
acknowledged to me that he executed the same for the purpose therein mentioned.
/s/ (Notary)
Notary Public
Kirk R McCrimmon
My Commission Expires
May 31, 2003
<PAGE>
BYLAWS
OF
NUTRIPURE.COM
A Nevada Corporation
ARTICLE 1
Offices
Section 1. The registered office of this corporation shall be in the County
of Clark, State of Nevada.
Section 2. The corporation may also have offices at such other places both
within and without the State of Nevada as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE 2
Meetings of Stockholders
Section 1. All annual meetings of the stockholders shall be held at the
registered office of the corporation or at such other place within or without
the State of Nevada as the Directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of the stockholders, commencing with the year
1999 shall be held on such date as may be set by the Board of Directors from
time to time, at which the stockholders shall elect by vote a Board of Directors
and transact such other business as may properly be brought before the meeting.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the President or the Secretary by resolution of
the Board of Directors or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose of the
proposed meeting.
Section 4. Notices of meetings shall be in writing and signed by the
President or Vice-President or the Secretary or an Assistant Secretary or by
such other person or persons as the Directors shall designate. Such notice shall
state the purpose or purposes for which the meeting is called and the time and
the place, which may be within or without this State, where it is to be held. A
copy of such notice shall be either delivered personally to or shall be mailed,
postage prepaid, to each stockholder of record entitled to vote at such meeting
not less than ten nor more than sixty days before such meeting. If mailed, it
shall be directed to a stockholder at his address as it appears upon the records
of the corporation and upon such mailing of any such notice, the service thereof
shall be complete and the time of the notice shall begin to run from the date
upon which such notice is deposited in the mail for transmission to such
stockholder. Personal delivery of any such notice to any officer of a
corporation or association, or to any member of a partnership shall constitute
delivery of such notice to such corporation, association or partnership. In the
event of the transfer of stock after delivery of such notice of and prior to the
holding of the meeting it shall not be necessary to deliver or mail notice of
the meeting to the transferee.
<PAGE>
Section 5. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 6. The holders of not less than 34% of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Articles of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote there at, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The Company may have more than one shareholder.
Section 7. When a quorum is present or represented at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall be sufficient to elect directors or to decide any
question brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the Articles of Incorporation, a
different vote shall govern and control the decision of such question.
Section 8. Each stockholder of record of the corporation shall be entitled
at each meeting of stockholders to one vote for each share of stock standing in
his name of the books of the corporation. Upon the demand of any stockholder,
the vote for Directors and the vote upon any question before the meeting shall
be by ballot.
Section 9. At any meeting of the stockholders any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No proxy or
power of attorney to vote shall be used to vote at a meeting of the stockholders
unless it shall have been filed with the secretary of the meeting when required
by the inspectors of election. All questions regarding the qualifications of
voters, the validity of proxies and the acceptance of or rejection of votes
shall be decided by the inspectors of election who shall be appointed by the
Board of Directors, or if not so appointed, then by the presiding officer of the
meeting.
Section 10. Any action which may be taken by the vote of the stockholders
at a meeting may be taken without a meeting if authorised by the written consent
of stockholders holding at least a majority of the voting power, unless the
provisions of the statutes or of the Articles of Incorporation require a greater
proportion of voting power to authorise such action in which case such greater
proportion of written consents shall be required.
ARTICLE 3
Directors
Section 1. The business of the corporation shall be managed by it's Board
of Directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the stockholders.
Section 2. The number of Directors which shall constitute the whole board
shall be eight. The number of Directors may from time to time be increased or
decreased to not less than one nor more than fifteen by action of the Board of
Directors. The Directors shall be elected at the annual meeting of the
stockholders and except as provided in section 2 of this Article, each Director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
<PAGE>
Section 3. Vacancies in the Board of Directors including those caused by an
increase in the number of directors, may be filled by a majority of the
remaining Directors, though less than a quorum, or by a sole remaining Director,
and each Director so elected shall hold office until his successor is elected at
an annual or a special meeting of the stockholders. The holders of a two-thirds
of the outstanding shares of stock entitled to vote may at any time peremptorily
terminate the term of office of all or any of the Directors by vote at a meeting
called for such purpose or by a written statement filed with the secretary or ,
in his absence, with any other officer. Such removal shall be effective
immediately, even if successors are not elected simultaneously and the vacancies
on the Board of Directors resulting therefrom shall only be filled from the
stockholders.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in case of the death, resignation or removal of any Directors, or if the
authorised number of Directors be increased, or if the stockholders fail at any
annual or special meeting of stockholders at which any Director or Directors are
elected to elect the full authorised number of Directors to be voted for at that
meeting.
The stockholders may elect a Director or Directors at any time to fill any
vacancy or vacancies not filled by the Directors. If the Board of Directors
accepts the resignation of a Director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorised number of Directors shall have the effect of
removing any Director prior to the expiration of his term of office.
ARTICLE 4
Meetings of the Board of Directors
Section 1. Regular meetings of the Board of Directors shall be held at any
place within or without the State which has been designated from time to time by
resolution of the Board or by written consent of all members of the Board. In
the absence of such designation regular meeting shall be held at the registered
office of the corporation. Special meetings of the Board may be held either at a
place so designated or at the registered office.
Section 2. The first meeting of each newly elected Board of Directors shall
be held immediately following the adjournment of the meeting of stockholders and
at the place thereof. No notice of such meeting shall be necessary to the
directors in order legally to constitute the meeting, provided a quorum be
present. In the event such meeting is not so held, the meeting may be held at
such time and place as shall be specified in a notice given hereinafter provided
for special meetings of the Board of Directors.
Section 3. Regular meetings of the Board of Directors may be held without
call or notice at such time and at such place as shall from time to time be
fixed and determined by the Board of Directors.
Section 4. Special meetings of the Board of Directors may be called by the
Chairman or the President or by the Vice-President or by any two directors.
Written notice of the time and place of special meetings shall be delivered
personally to each director, or sent to each director by mail or by other form
of written communication, charges prepaid, addressed to him at his address as it
is shown upon the records or if not readily ascertainable, at the place in which
the meetings of the directors are regularly held. In case such notice is mailed
or telegraphed, it shall be deposited in the United States mail or delivered to
the telegraph company at least forty-eight (48) hours prior to the time of the
holding of the meeting. In case such notice is delivered as above provided, it
shall be so delivered at least twenty-four (24) hours prior to the time of the
holding of the meeting. Such mailing, telegraphing or delivery as above provided
shall be due, legal and personal notice to such director.
Section 5. Notice of the time and place of holding an adjourned meeting
need not be given to the absent directors if the time and place be fixed at the
meeting adjourned.
<PAGE>
Section 6. The transaction of any meeting of the Board of Directors,
however called and noticed or wherever held, shall be as valid as though had at
a meeting duly held after regular call and notice, if a quorum be present, and
if, either before or after the meeting, each of the directors not present signs
a written waiver of notice, or a consent to holding such meeting, or approvals
of the minutes thereof. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Section 7. A majority of the authorised number of directors shall be
necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, unless a greater
number be required by law or by the Articles of Incorporation. Any action of a
majority, although not at a regularly called meeting, and the record thereof, if
assented to in writing by all of the other members of the Board shall be as
valid and effective in all respects as if passed by the Board in regular
meeting. In the event of a tie vote on any matter, the Chairman of the Board
shall cast the deciding vote.
Section 8. A quorum of the directors may adjourn any directors meeting to
meet again at stated day and hour; provided, however, that in the absence of a
quorum, a majority of the directors present at any directors meeting, either
regular or special, may adjourn from time to time until the time fixed for the
next regular meeting of the Board.
ARTICLE 5
Committees of Directors
Section 1. The Board of Directors may, by resolution adopted by a majority
of the whole Board, designate one or more committees of the Board of Directors,
each committee to consist of two or more of the directors of the corporation
which, to the extent provided in the resolution, shall and may exercise the
power of the Board of Directors in the management of the business and affairs of
the corporation and may have power to authorise the seal of the corporation to
be affixed to all papers which may require it. Such committee or committees
shall have such name or names as may be determined from time to time by the
Board of Directors. The members of any such committee present at any meeting and
not disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. At meetings of such
committees, a majority of the members or alternate members at any meeting at
which there is a quorum shall be the act of the committee.
Section 2. The committee shall keep regular minutes of their proceedings
and report the same to the Board of Directors.
Section 3. Any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting if a written consent thereto is signed by all members of the Board of
Directors or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
ARTICLE 6
Compensation of Directors
Section 1. The directors may be paid their expenses of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like reimbursement and compensation for attending
committee meetings.
<PAGE>
ARTICLE 7
Notices
Section 1. Notices to directors and stockholders shall be in writing and
delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
Section 2. Whenever all parties entitled to vote at any meeting, whether of
directors or stockholders, consent, either by a writing on the records of the
meeting or filed with the secretary, or by presence at such meeting and oral
consent entered on the minutes, or by taking part in the deliberations at such
meeting without objection, the doings of such meeting shall be as valid as if
had at a meeting regularly called and noticed, and at such meeting any business
may be transacted which is not excepted from the written consent to the
consideration of which no object for want of notice is made at the time, and if
any meeting be irregular for want of notice or of such consent, provided a
quorum was present at such meeting, the proceedings of said meeting may be
ratified and approved and rendered likewise valid and the irregularity or defect
therein waived by a writing signed by all parties having the right to vote at
such meeting; and such consent or approval of stockholders may be by proxy or
attorney, but all such proxies and powers of attorney must be in writing.
Section 3. Whenever any notice whatever is required to be given under the
provisions of the statutes, of the Articles of Incorporation or of these Bylaws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE 8
Officers
Section 1. The officers of the corporation shall be chosen by the Board of
Directors and shall be a President, a Secretary and a Treasurer. Any person may
hold two or more officers.
Section 2. The Board of Directors at it's first meeting after each annual
meeting of stockholders shall choose a Chairman of the Board who shall be a
director, and shall choose a President, a Secretary and a Treasurer, none of
whom need be directors.
Section 3. The Board of Directors may appoint a Vice-Chairman of the Board,
Vice-Presidents and one or more Assistant Secretaries and Assistant Treasurers
and such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors.
Section 4. The salaries and compensation of all officers of the corporation
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office at the
pleasure of the Board of Directors. Any officer elected or appointed by the
Board of Directors may be removed any time by the Board of Directors. Any
vacancy occurring in any office of the corporation by death, resignation,
removal or otherwise shall be filled by the Board of Directors.
Section 6. The CHAIRMAN OF THE BOARD shall, preside at meetings of the
stockholders and the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
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Section 7. The VICE-CHAIRMAN shall, in the absence or disability of the
Chairman of the Board, perform the duties and exercise the powers of the
Chairman of the Board and shall perform other such duties as the Board of
Directors may from time to time prescribe.
Section 8. The PRESIDENT shall be the chief executive officer of the
corporation and shall have active management of the business of the corporation.
He shall execute on behalf of the corporation all instruments requiring such
execution except to the extent the signing and execution thereof shall be
expressly designated by the Board of Directors to some other officer or agent of
the corporation.
Section 9. The VICE-PRESIDENT shall act under the direction of the
President and in the absence or disability of the President shall perform the
duties and exercise the powers of the President. They shall perform such other
duties and have such other powers as the President or the Board of Directors may
from time to time prescribe. The Board of Directors may designate one or more
Executive Vice-Presidents or may otherwise specify the order of seniority of the
Vice Presidents. The duties and powers of the President shall descend to the
Vice-Presidents in such specified order of seniority.
Section 10. The SECRETARY shall act under the direction of the President.
Subject to the direction of the President he shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record the
proceedings. He shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and will perform
other such duties as may be prescribed by the President or the Board of
Directors.
Section 11. The ASSISTANT SECRETARIES shall act under the direction of the
President. In order of their seniority, unless otherwise determined by the
President or the Board of Directors, they shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary. They
shall perform other such duties and have such other powers as the President or
the Board of Directors may from time to time prescribe.
Section 12. The TREASURER shall act under the direction of the President.
Subject to the direction of the President he shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the corporation as may be ordered by the President or the
Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at it's regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the corporation.
Section 13. If required by the Board of Directors, he shall give the
corporation a bond in such sum and with such surety as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
Section 14. The ASSISTANT TREASURER in the order of their seniority, unless
other wise determined by the President or the Board of Directors, shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.
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ARTICLE 9
Certificates of Stock
Section 1. Every stockholder shall be entitled to have a certificate signed
by the President or a Vice-President and the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the corporation,
certifying the number of shares owned by him in the corporation. If the
corporation shall be authorised to issue more than one class of stock or more
than one series of any class, the designations, preferences and relative,
participating, optional or other special rights of the various classes of stock
or series thereof and the qualifications, limitations or restrictions of such
rights, shall be set forth in full or summarised on the face or back of the
certificate which the corporation shall issue to represent such stock.
Section 2. If a certificate is signed (a) by a transfer agent other than
the corporation or it's employees or (b) by a registrar other than the
corporation or it's employees, the signatures of the officers of the corporation
may be facsimiles. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall cease to be such officer
before such certificate is issued, such certificate may be issued with the same
effect as though the person had not ceased to be such officer. The seal of the
corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorising such issue of a
new certificate or certificates, the Board of Directors may, in it's discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation, if it is satisfied that all provisions of the laws and
regulations applicable to the corporation regarding transfer and ownership of
shares have been complied with, to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
it's books.
Section 5. The Board of Directors may fix in advance a date not exceeding
sixty (60) days nor less than ten (10) days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining the
consent of stockholders for any purpose, as a record date for the termination of
the stockholders entitled to notice of and to vote at any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
give such consent, and in such case, such stockholders, and only such
stockholders as shall be stockholders of record on the date so fixed, shall be
entitled to notice of and to vote at such meeting, or any adjournment thereof,
or to receive such payment of dividend, or to receive such allotment of rights,
or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
any such record date fixed as aforesaid.
Section 6. The corporation shall be entitled to recognise the person
registered on it's books as the owner of shares to be the exclusive owner for
all purposes including voting and dividends, and the corporation shall not be
bound to recognise any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Nevada.
ARTICLE 10
General Provisions
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in shares of the capital stock, subject to
the provisions of the Articles of Incorporation.
<PAGE>
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalising dividends or for
repairing or maintaining any property of the corporation or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the Board of Directors.
Section 5. The corporation may or may not have a corporate seal, as may be
from time to time be determined by resolution of the Board of Directors. If a
corporate seal is adopted, it shall have inscribed thereon the name of the
corporation and the words "Corporate Seal" and "Nevada". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
ARTICLE 11
Indemnification
Every person who was or is a party or is a threatened to be made a party to
or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a director or officer of the
corporation or is or was serving at the request of the corporation or for it's
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
General Corporation Law of the State of Nevada time to time against all
expenses, liability and loss (including attorney's fees, judgements, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by him
in connection therewith. The expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.
The Board of Directors may cause the corporation to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as it's representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
The Board of Directors may from time to time adopt further Bylaws with
respect to indemnification and amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada.
<PAGE>
ARTICLE 12
Amendments
Section 1. The Bylaws may be amended by a majority vote of all the stock
issued and outstanding and entitled to vote at any annual or special meeting of
the stockholders, provided notice of intention to amend shall have been
contained in the notice of the meeting.
Section 2. The Board of Directors by a majority vote of the whole Board at
any meeting may amend these Bylaws, including Bylaws adopted by the
stockholders, but the stockholders may from time to time specify particular
provisions of the Bylaws which shall not be amended by the Board of Directors.
APPROVED AND ADOPTED this 7th day of December, 1999
/s/ Michael L. Krall
- --------------------
Michael L. Krall, President
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
INTERNET FULFILLMENT SERVICES AGREEMENT
This Internet Fulfillment Services Agreement ("Agreement") is made as
of December 21, 1999 ("Effective Date") by and between Bergen Brunswig Drug
Company, a California corporation ("BBDC"), and Innovative Medical Services dba
nutripure.com, a Nevada corporation ("IR").
RECITALS
A. IR is an Internet retailer and has created a marketing and sales program
designed to supply pharmaceutical products and related services to
individuals utilizing an Internet web site;
B. BBDC is a national distributor of, among other things, products in the
categories of over-the-counter pharmaceutical products, nutritional, health
and beauty care products and home health care products, described on
SCHEDULE 1.1 to the Terms and Conditions attached as EXHIBIT 1
(collectively, "Products");
C. IR wishes to contract with a fulfillment service provider to ship the
Products and provide related services to IR's customers in the United
States;
D. BBDC wishes to provide the services described in this Agreement to IR;
E. Under no circumstances will the Products include any prescription
pharmaceutical products; and
F. The parties wish to enter into this Agreement in order to set forth their
obligations to each other.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
in this Agreement, the parties agree as follows:
1. TERMS AND CONDITIONS.
The Terms and Conditions in EXHIBIT 1 ("Terms and Conditions") are
incorporated by this reference. Capitalized terms used without definition have
meanings in the Terms and Conditions.
2. TERM.
Subject to Sections 9 and 10 of the Terms and Conditions, the Term of this
Agreement will be three (3) years from the date of this Agreement.
3. MINIMUM ORDERS.
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION
4. FEES.
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In addition to payment for Products, IR will pay BBDC the following service
fees.
4.1 Set-Up Fee.
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION
4.2 Fulfillment Fee.
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION
4.3. THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION
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4.4 Consumer Image and Ingredient Database License Fee.
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION
4.5 Niche Products Storage Fee.
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION
4.6 IR Rebate Schedule.
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION
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4.7 Early Termination Fee.
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION
4.8. Collateral Materials
THE REGISTRANT HAS REQUESTED CONFIDENTIAL TREATMENT OF THIS SECTION.
5. SERVICE LEVELS.
During the first sixty (60) days following the date BBDC begins shipping
Products under this Agreement ("Start-up Period"), BBDC will comply with the
"Start-Up Service Levels" in EXHIBIT A. After the Start-Up Period, BBDC will
comply with the "Service Levels" in EXHIBIT A. Each of the Service Levels and
Start-Up Service Levels will be deemed a material term of this Agreement and any
failure to comply with them will entitle IR to terminate this Agreement pursuant
to Section 10.1.3 of the Terms and Conditions.
6. HOURS OF OPERATION.
BBDC's Internet fulfillment center currently operates from Sunday afternoon to
Thursday evening. Receiving, stocking and office personnel operate Monday to
Friday, normal business hours. BBDC and IR agree to explore additional hours of
operation as required to meet service levels. If IR's volume is not sufficient
to justify additional hours, IR agrees to pay the additional costs for such
additional hours to meet its requirements.
7. BUSINESS REVIEW.
BBDC and IR will perform a semi-annual business review of IR's account at
mutually agreeable times. The first such review will occur between July 1, 2000
and January 1, 2001, with subsequent reviews during each six (6) month period
thereafter. Each review will cover purchase volume histories, operational and
logistical information (including performance measures, shipping rates),
inventory movement statistics, economic factors and other factors as the parties
may determine.
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8. NOTICES.
Subject to Section 17.18 of the Terms and Conditions, notices to IR under
this Agreement will be sent to:
Innovative Medical Services
1725 Gillespie Way
El Cajon, CA 92020
Attn: Michael L. Krall, President & CEO
Fax: (619) 596-8700
9. EXHIBITS.
All exhibits to this Agreement listed below are incorporated by this
reference.
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Exhibit Number Exhibit Name
- -------------- ------------
1 Terms and Conditions
A Service Levels
IN WITNESS WHEREOF, the parties have executed this Internet Fulfillment
Services Agreement as of the date first written above.
IR:
nutripure.com
By: /s/ Michael L. Krall
Name: Michael L. Krall
Title: President
BBDC:
Bergen Brunswig Drug Company
By: /s/ Chuck Prieve
Name: Chuck Prieve
Title: Vice President, e-Commerce Sales & Marketing
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EXHIBIT 1
TO
INTERNET FULFILLMENT SERVICES AGREEMENT
TERMS AND CONDITIONS
1. PRODUCTS AND TERRITORY.
1.1 PRODUCTS. A list of the categories of the Products ("Product
Categories") is set forth in Schedule 1.1. BBDC will provide IR a list of
specific products ("Products") and related information ("Item Catalog
Information" [EDI 832 Transaction Set]) from time to time. BBDC may add or
delete available Products upon two (2) days' notice to IR; provided, however, IR
may elect not to offer added Products.
1.2 NICHE PRODUCTS. BBDC may elect to store and ship additional products
requested by IR, including private label products and other products that BBDC
does not otherwise carry, upon payment of the Niche Product fees set forth on
the cover page.
1.3 TERRITORY. BBDC will provide fulfillment services for the Products in
the Unites States of America and its territories and possessions and each other
territory listed on Schedule 1.3 ("Territory"). In no event will BBDC provide or
ship Products to IR's consumers outside the Territory.
1.4 EXCLUSIVITY. IR and its affiliates will utilize BBDC and its affiliates
exclusively for fulfillment of the Products to IR consumers within the
Territory. IR acknowledges that pricing it receives pursuant to this Agreement
is based on IR purchasing pursuant to an exclusive relationship with BBDC. IR
acknowledges and agrees that BBDC will provide the Products to IR's consumers on
a non-exclusive basis. IR acknowledges BBDC and its affiliates are developing
web sites for current and future consumers of BBDC and its affiliates obtained
through its independent efforts. In addition, BBDC and its affiliates have, and
will continue to have, discussions with other companies that seek to use Product
fulfillment services.
1.5 RIGHT OF FIRST REFUSAL. IR hereby grants to BBDC and its affiliates the
right of first refusal to provide fulfillment services to IR for all territories
in addition to the Territory and for all product lines in addition to the
Products. When IR intends to sell additional products or products in additional
territories, IR will first deliver to BBDC written notice of the proposed terms
("Notice"). BBDC will have thirty (30) days from receipt of the Notice to notify
IR of its desire to enter into an amendment to this Agreement with IR for such
territory or products upon terms no less favorable to IR than the terms set
forth in the Notice. If BBDC has not notified IR of its desire to enter into
such amendment as of the expiration of such thirty (30) day period and entered
into an amendment to this Agreement with IR with respect to such territory and
products within ninety (90) days of receipt of the Notice, IR may enter into an
agreement with a third party for such territory and products on terms and
conditions no less favorable to IR than those set forth in the Notice.
2. ORDERS; SHIPPING; RETURNS.
2.1 OPERATIONS MANUAL. The Operations Manual in Schedule 2.1 ("Operations
Manual") is incorporated by this reference. -
2.2 ORDERS. Orders for Products will be initially placed by IR's consumers
using IR's Internet web site. IR will forward all orders for Products to BBDC by
electronic data interchange ("EDI") pursuant to Section 3.8 at least four (4)
times per day ("Orders"). Orders will set forth a description of the Products,
SKU designations, quantities, requested method of delivery, the designated
delivery locations and other required information as agreed upon by the parties
from time to time.
2.3 INVENTORY. Subject to Section 4.2, BBDC will maintain sufficient
inventory of the Products in an effort to facilitate the delivery of all Orders
for the Products. Inquiries by IR to BBDC's customer service representatives
concerning any Products must reference BBDC's Product number.
2.4 SHIPPING. BBDC will cause all lawful Orders to be shipped in accordance
with the Operations Manual. Shipping guidelines may change due to legal and
product shipping requirements. Certain Products may be subject to special
shipping and handling fees. Title to, and risk of loss of, all Products will
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<PAGE>
pass from BBDC to IR immediately prior to BBDC's delivery of the Products to the
shipper for delivery to IR's consumer. BBDC will invoice IR weekly for all
shipping charges. IR will pay all shipping invoices within seven (7) days of
receipt. BBDC will use commercially reasonable efforts to ensure that IR
receives any volume discount normally given BBDC by its shipper. BBDC will use
commercially reasonable efforts to ensure that all Orders for Products received
before the daily "cut-off time" will be shipped by the corresponding shipping
time for such day. Out-of-stock or back-ordered Products will be shipped
promptly after BBDC's receipt of such Products from the manufacturer or other
supplier. Inquiries about shipping status will be directed to the shipper and
any such inquires to BBDC's customer service representatives where BBDC has
provided IR with a shipper's tracking number will be subject to an additional
charge. BBDC will not process any of the following shipments of Products: (i)
international shipments, (ii) COD shipments, (iii) shipments requiring a
declared value, (iv) shipments to freight forwarding agents, (v) shipments of
hazardous materials or other products requiring specialized shipping, and (vi)
Drug Enforcement Administration ("DEA") Schedule II controlled substances.
2.5 LABELS AND INVOICES. Unless modified by Exhibit 2, if any, IR will
provide BBDC standard packaging (standard size cardboard boxes, plain colored
plastic tape and plain bubble/paper packing material), labels and invoice forms
bearing IR's, and not BBDC's, name, logo and telephone number for BBDC's use in
shipping Products. IR may select from BBDC's standard invoice formats (inserting
IR's logo and return address) at no additional charge. Modifications and custom
work is subject to an additional charge at BBDC's then-current rates. If IR's
standard packaging, labels and invoice forms are not ordered through BBDC's
designated vendor (or IR uses non-standard packaging, labels or forms), IR will
be subject to additional charges for handling, storage and administration.
2.6 RETURNS. The Returned Goods Policy in Schedule 2.6 is incorporated by
this reference.
3. PRICING; PAYMENT.
3.1 PRICING AND FEES. BBDC will provide the Products to IR's consumers on a
net-billed or cost-plus basis, plus adjustable fees for fulfillment, shipping
(if not billed directly to IR), handling, packing of collateral items and other
services, each on a per-Order basis. The parties acknowledge and agree that
pricing for the Products has been set in advance, is consistent with fair market
value in an arms-length transaction, and has not been determined in a manner
that takes into account the volume or value of any referrals or business
otherwise generated between the parties.
3.2 PRICE ADJUSTMENTS. BBDC may change the pricing or fulfillment fees of
any Product at any time; provided, however, any such change will not be
effective with respect to Products ordered by IR's consumers within twenty-four
(24) hours of BBDC's electronic notice to IR.
3.3 REBATES. As additional consideration under this Agreement, IR hereby
assigns to BBDC all ancillary benefits extended by any manufacturer or supplier
of the Products to the distributor, purchaser or user of the Products, including
cash or other rebates based upon purchase volume or other criteria, sales
promotions, allowances, free goods, and the like, other than discounts and
rebates intended by the manufacturer or supplier to be passed on to retailers or
consumers.
3.4 TAXES. IR will obtain and maintain a resale tax certificate in Kentucky
and each other jurisdiction in which BBDC delivers Products to IR's shipper. IR
will collect and remit all applicable sales taxes and other taxes on the sale or
provision of Products to IR's consumers. IR will be responsible for and will pay
any excise, sales or use tax or other similar charge in the nature of a tax
imposed with respect to transactions under this Agreement (other than income or
other taxes on BBDC's net icome) and, if paid or required to be paid by BBDC,
such amount will be added to and become part of the amount payable by IR.
3.5 TIMING OF PAYMENT. BBDC will submit invoices for the Products to IR on
a per-Order basis for each Order received from IR's consumer. Unless modified by
Exhibit 2, if any, IR will pay such invoices within twenty-four (24) hours of
receipt of funds but in no event later than five (5) business days after BBDC
delivers Products to IR's shipper for delivery to IR's consumer. Funds will be
transferred to BBDC on a daily basis (weekends and banking holidays excluded).
IR's obligation to pay for all purchases invoiced will be absolute and
unconditional and will not be subject to any abatement, reduction, set-off,
defense, counterclaim, interruption, deferment or recoupment for any reason
whatsoever, and such payments will be and continue to be payable in all events.
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3.6 LATE PAYMENT. If payment is not received as described in Section 3.5, a
late payment penalty of the lower of one-and-one-half percent (1 1/2%) per month
or part thereof or the maximum rate permitted by law will be assessed on the
outstanding balance, commencing from the first (1st) business day after such due
date. The right of BBDC to assess penalties for IR's payment delays will not
relieve IR of its obligation to make prompt payment in accordance with this
Section 3.
3.7 FINANCIAL RECONCILIATION. The Financial Reconciliation Process in
Schedule 3.7 ("Financial Reconciliation Process") is incorporated by this
reference.
3.8 EDI/EFT. The EDI/EFT Agreement in Schedule 3.8 is incorporated by this
reference. All Orders, IR sales reports, BBDC invoices and remittance detail
information will be transmitted by EDI. All funds will be transferred between
the parties by electronic funds transfers ("EFT"). All data files transmitted
over the public Internet will be encrypted in adherence with EDIINT standards.
4. IR'S COVENANTS.
4.1 WEB SITE. IR will, at its cost, develop, produce, implement and
test its web site and supporting electronic commerce enabling software, as well
as provide technical support, including developing and procuring credit card
processing and encryption software, subject, however, to the reasonable approval
of BBDC in relation to its fulfillment responsibilities under this Agreement. In
addition, IR will, at its cost, develop and procure all software interfaces or
programs necessary to enable IR to connect with BBDC's systems and operations
facilities. All software and hardware developed or purchased by IR to support
BBDC under this Agreement will remain the property of IR. Each screen accessible
to consumers on IR's web site will clearly identify IR. Unless modified by
Exhibit 2, if any, no content on IR's web site will directly or indirectly (a)
identify BBDC or (b) lead any consumer or potential consumer to believe that IR
or its web site is the manufacturer of a Product. IR will update its web site to
indicate that a Product is unavailable or subject to other special conditions
based upon BBDC's Product notices and any failure to do so that results in
additional handling, storage, administrative or other costs to BBDC will subject
IR to an additional charge.
4.2 MARKETING. IR will, at its cost, market IR's program on the Internet,
including IR's Internet web site. BBDC acknowledges that IR has sole authority
and control over each stage of marketing for its program; provided however, if
IR is prohibited by law from performing any contemplated marketing activities,
BBDC may perform such functions at IR's expense to the extent BBDC may lawfully
do so. IR will provide reasonable advance notice of special offers, such as
bundled items, featured items and sales, advertising campaigns and other events
that can be reasonably expected to generate unusual volume (either overall or
for specific Products) in order to allow BBDC to have adequate inventory, staff
and other resources available to handle such volume.
4.3 CONSUMER ENROLLMENt. IR will have sole responsibility for enrolling
consumers in IR's program.
4.4 RECORDS. IR will retain all documentation required by federal and state
statutes and regulations.
4.5 LICENSE REVOCATION. IR will inform BBDC in writing within three (3)
business days after receiving notice of any action or proceeding from any
federal, state, or local agency to restrict, suspend, or revoke any of IR's
required licenses, permits or registrations or any other approval required to
supply the services described in this Agreement.
4.6 COMPLIANCE WITH LAW. IR will perform all of its duties under this
Agreement in full compliance with all applicable federal, state, and local laws
and regulations.
4.7 ADEQUATE SPACE AND PERSONNEL. IR represents and warrants that it has,
and agrees that it will continue to maintain or enlarge, as appropriate, such
space, equipment, resources, and personnel at its sole cost and expense
necessary to promote its web site and perform under this Agreement.
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4.8 PROHIBITION AGAINST PUBLICATION OF CERTAIN MATERIALS. IR will not
knowingly or unknowingly incorporate in IR's web site any of the following
material (including pictures, links, or any other content, whether visible or
invisible with a web browser):
4.8.1 any material which violates or infringes any national or
international copyright, trademark, trade secret, patent, statutory, common
law or other proprietary rights of others, including any party's privacy
right or right of publicity, in effect or which may hereafter be enacted
and applicable to this Agreement or web sites;
4.8.2 any material that is libelous, slanderous, harmful, abusive,
threatening, obscene or pornographic; or
4.8.3 distribution lists to be used for unsolicited electronic mail or
other mass electronic mailings.
4.9 ADVERSE EVENT REPORTING. IR will report all adverse events relating to
the Products pursuant to the requirements of the Food and Drug Administration.
4.10 LISTED CHEMICALS. IR will obtain and maintain a Listed Chemicals
license from the DEA and will report the sale and shipment of all Products
pursuant to the requirements of the DEA and comply with all comparable state
requirements.
4.11 PRODUCT RECALLS. IR acknowledges and agrees that BBDC will not be
obligated to recall any Product which is the subject of a manufacturer or
supplier recall but that either party may elect to do so from time to time in
its sole discretion, provided that any recall undertaken by BBDC on behalf of IR
will be at IR's sole cost and expense.
4.12 SUPPORT. BBDC and IR will jointly evaluate which party will provide
other support functions relating to the Products.
5. BBDC'S COVENANTS.
5.1 RECORDS. BBDC agrees that it will retain all documentation required
by federal and state statutes and regulations. If and to the extent required by
Section 1395x(v) (1) of Title 42 of the United States Code, as subsequently
amended from time to time, until the expiration of four (4) years after the
termination of this Agreement, BBDC will make available upon written request to
the Secretary of the United States Department of Health and Human Services, or
upon request to the Comptroller General of the United States General Accounting
Office, or any of their duly authorized representatives, a copy of this
Agreement and such books, documents, and records as are adequate to certify the
nature and extent of the costs of the goods and services provided by BBDC under
this Agreement. BBDC further agrees that in the event BBDC carries out any of
its duties under this Agreement through a subcontract, with a value or cost of
Ten Thousand Dollars ($10,000) or more over a twelve (12) month period, with a
related organization, such contract will contain a clause to the effect that
until the expiration of four (4) years after the furnishing of such services
pursuant to such subcontract, the related organization will make available, upon
written request to the Secretary of the United States Department of Health and
Human Services, or upon request to the Comptroller General of the United States
General Accounting Office, or any of their duly authorized representatives, a
copy of such subcontract and such books, documents and records of such
organizations as are necessary to verify the nature and extent of such costs.
Notwithstanding anything set forth in this Agreement to the contrary, BBDC will
have no obligation under this Agreement to make public attorney-client
privileged documents.
5.2 LICENSE REVOCATION. BBDC agrees that it will inform IR promptly after
receiving notice of any action or proceeding from any federal, state, or local
agency to restrict, suspend, or revoke any of BBDC's required licenses, permits
or registrations or any other approval required to supply the services described
in this Agreement.
5.3 COMPLIANCE WITH LAW. BBDC agrees that it will perform all of its duties
under this Agreement in full compliance with all applicable federal, state, and
local laws and regulations.
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6. REPRESENTATIONS OF THE PARTIES.
6.1 REPRESENTATIONS AND WARRANTIES OF BBDC. BBDC hereby represents and
warrants to IR that (i) it is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was organized; (ii) the
person executing this Agreement on its behalf is duly authorized to bind it to
all terms of this Agreement; (iii) it will have good title to all Products
delivered pursuant to this Agreement (unless such Product is subject to a
chargeback agreement); (iv) except as otherwise provided, all such Products will
be free from any security interest or other lien (unless such Product is subject
to a chargeback agreement); (v) all Products will be delivered without damage to
IR's shipper for delivery to IR's consumer; (vi) this Agreement, when executed
and delivered by it, will be its legal, valid, and binding obligation,
enforceable against it in accordance with its terms; and (vii) its execution,
delivery and performance of this Agreement will not conflict with or breach its
charter documents, delegations of authority or any material agreement to which
it is a party, or require the consent of or notice to any third party or
governmental authority.
6.2 NO REPRESENTATIONS OR WARRANTIES REGARDING PRODUCTS. BBDC makes, and
will be deemed to make, no representations or warranties, express or implied,
written or oral, as to the value, absence of defect, absence of infringement, or
the absence of any obligation based on strict liability in tort, or any other
representation or warranty whatsoever, express or implied, with respect to the
Products and services provided in this Agreement. BBDC EXPRESSLY DISCLAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING BUT NOT LIMITED TO
THOSE OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE REGARDING THE
PRODUCTS AND SERVICES PROVIDED IN THIS AGREEMENT. IR understands that BBDC is
not the manufacturer of any Products and agrees that IR will settle all claims,
defenses, set-offs and counterclaims it may have with or against any
manufacturer directly with the manufacturer and will not assert any such claims,
defenses, set-offs or counterclaims against BBDC. IR agrees BBDC has made no
such representations or warranties, written or oral, express or implied, about
the Products or their fitness for any purpose. Accordingly, IR agrees that BBDC,
its subsidiaries and affiliates and the directors, officers, shareholders and
agents of each will not be liable to IR for any liability, claim, loss, damage
(consequential or otherwise) or expense of any kind caused, directly or
indirectly by (i) the inadequacy of the Products for any purpose, (ii) any
deficiency or defect, (iii) any delay in providing the Products, (iv) failure to
provide the Products, or (v) death or bodily injury which may be caused by the
Products.
6.3 REPRESENTATIONS AND WARRANTIES OF IR. IR hereby represents and warrants
to BBDC that (i) it is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it was organized; (ii) the person
executing this Agreement on behalf of IR is duly authorized to bind IR to all
terms of this Agreement; (iii) this Agreement, when executed and delivered by
IR, will be the legal, valid, and binding obligation of IR, enforceable against
IR in accordance with its terms; (iv) its execution, delivery and performance of
this Agreement will not conflict with or breach its charter documents,
delegations of authority or any material agreement to which it is a party, or
require the consent of or notice to any third party or governmental authority;
and (v) IR holds all valid licenses, permits and registrations in appropriate
jurisdictions to permit IR to operate its Internet services.
7. SOFTWARE AND DATABASE LICENSE.
7.1 GRANT OF LICENSE. For BBDC's Consumer Image and Ingredient Database
and each software application and/or database BBDC may provide to IR, to the
extent of BBDC's legal capacity to do so, grants IR a non-exclusive,
nontransferable and revocable license for the use of such software and/or
database ("Software") and its related documentation ("Documentation") subject to
payment by IR of the applicable licensing fee established by BBDC from time to
time. Each license is granted solely during the Term. BBDC does not grant to IR
any rights to any copyright, patent, trademark, trade name or similar rights
with respect to any Software or Documentation or any other information provided
to IR by BBDC. IR will not use the name, trade name, trademarks, service marks,
trade dress, logos or other intellectual property of BBDC, Product manufacturers
or suppliers or any of BBDC's affiliates in its web site, publicity releases,
advertising, sales literature or materials, or in any similar activity without
BBDC's prior written consent.
7.2 NO SUBLICENSE. IR may not sublicense, lease, distribute or otherwise
transfer Software or Documentation or IR's right to use the Software or
Documentation.
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7.3 NO COPIES. IR may not make, or allow anyone else to make, copies of the
Software or related Products, beyond one copy for backup and archival purposes,
except as BBDC may otherwise agree in writing. IR may not remove, obscure, or
deface any proprietary notices contained in the Software or Documentation, and
IR must include such notices in any permitted copy of the Software.
7.4 NO ALTERATIONS. IR may not alter, modify or adapt any Software or
Documentation or create derivative works from them. IR may not translate,
reverse engineer, disassemble or decompile the Software. BBDC will have no
liability for any claims by third parties or IR based upon altered Software or
Documentation.
7.5 TERMINATION OF LICENSE. The license to any part of the Software and
Documentation will terminate automatically if IR fails to comply with the terms
of this license or any other material provision in this Agreement, or if the
Products for which IR is using the Software are discontinued. Upon termination
of a license, IR must cease using the Software and Documentation and, at BBDC's
election, return or destroy all copies of the Software and Documentation IR may
have in its possession or under its control, and certify to BBDC that IR has
done so. All of IR's obligations in this Agreement will survive termination of
any license.
7.6 DISCLAIMER. BBDC disclaims any representation or warranty regarding the
Software and Documentation. IR acknowledges the possibility that (i) the
Software may not operate in combination with other software or hardware or in
the manner IR or its consumers may select for use and (ii) Software may not
operate without interruption or be error-free.
7.7 NO RIGHTS IN DATA. All files, input materials and output materials, the
media upon which they are located (including cards, tapes, discs and other
storage facilities), and all Software (together with any Documentation, source
codes, object codes, upgrades, revisions, modifications and any related
materials) which are utilized by or developed for IR in connection with this
Agreement will be the property of BBDC.
7.8 NOTICE OF CLAIMS; REMOVAL OF PRODUCTS AND CONTENT. Notwithstanding
Section 14.2.1, IR will immediately notify BBDC of any written or oral claim
that any Software or Documentation used by IR in its web site or otherwise
infringes on the rights of any third party. Immediately upon notice from BBDC,
IR will discontinue the offering of any Product and the use of any Software and
Documentation that BBDC determines may subject BBDC or IR to liability to any
third party. Failure to notify BBDC in writing within three (3) business days of
the receipt of an oral or written claim that any Software or Documentation used
by IR in its web site or otherwise infringes on the rights of any third party
will terminate and rescind all of BBDC's representations, warranties, and
indemnification obligations with respect to the subject matter of the claim.
8. WARRANTS.
As additional consideration under this Agreement, IR and BBDC will enter
into a Securities Purchase Agreement in the form of Schedule 8.1 and a
Registration Rights Agreement in the form of Schedule 8.2, and IR will issue to
BBDC warrants to purchase securities of IR in the form of Schedule 8.3.
9. TERM.
Unless terminated earlier pursuant to Section 10, the term of this
Agreement will be for the period years set forth on the cover page of this
Agreement from the date of this Agreement and will be automatically extended for
additional, successive one (1) year terms (collectively, the "Term") unless
either party gives written notice to the other of its intention to not extend at
least ninety (90) days prior to the end of the then current Term.
10. TERMINATION OF AGREEMENT.
10.1 DEFAULT. This Agreement may be terminated by IR by providing written
notice of termination to BBDC upon a default by BBDC under this Agreement. This
Agreement may be terminated by BBDC by providing written notice of termination
to IR upon a default by IR under this Agreement. For purposes of this provision,
a default will be deemed to have occurred upon the happening of any of the
following:
10.1.1 With respect to either party (A) filing an application by such
party for, or consent to, appointment of a trustee, receiver, or custodian
of its assets; (B) entry of an order for relief in proceedings under the
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United States Bankruptcy Code, as amended or superseded from time to time;
(C) making a general assignment for the benefit of creditors; (D) entry of
an order by any court of competent jurisdiction appointing a trustee,
receiver, or custodian of its assets unless the proceedings and the person
appointed are dismissed within ninety (90) days; or (E) failure generally
to pay its debts as the debts become due within the meaning of Section
303(h)(1) as amended or superseded from time to time, of the United States
Bankruptcy Code, as determined by a Bankruptcy Court, or in the event of a
party's admission in writing of its inability to pay its debts as they
become due.
10.1.2 A party's failure to pay any amount that is due to the other
party under this Agreement and such failure continues for five (5) days
after written notice from the other party; or
10.1.3 A party's failure to perform any other material obligation
under this Agreement, and such failure continues for thirty (30) days after
such party receives written notice of such breach from the non-breaching
party; provided, however, if the breaching party has commenced to cure such
breach within such thirty (30) days, but such cure is not completed within
the thirty (30) days, such party will be afforded the amount of additional
time reasonably necessary to complete its cure, provided it diligently
pursues doing so until completion.
10.2 ADVERSE REGULATORY CHANGES. In the event the laws of any jurisdiction
change so as to negatively effect through increased regulations, liability, or
otherwise, BBDC's fulfillment operations or the Internet sale of Products, then
either party may terminate this Agreement upon written notice to the other
without further obligation.
10.3 LICENSES. If any required licenses, permits or registrations of BBDC
or IR are revoked or suspended so as to materially impair such party's ability
to perform under this Agreement, BBDC or IR may terminate this Agreement upon
thirty (30) days' written notice without further obligation.
10.4 EFFECT OF TERMINATION OR EXPIRATION. Upon termination or expiration of
this Agreement for any reason, BBDC will be entitled to payment of any amounts
owed to it by IR for Products ordered prior to termination or expiration and
shipped to IR's consumers. The obligations of the parties described in Sections
4, 5, 6, 7 (except the license granted thereunder), 8, 11, 12, 13, 14, 15 and 16
and any provision the context of which shows that the parties intended the
provision to survive will remain in effect notwithstanding the expiration or
termination of this Agreement. Additionally, termination of this Agreement will
have no effect upon the obligation of the parties under the terms of any other
agreements entered into between the parties, except as set forth otherwise in
such other agreements.
11. CONFIDENTIALITY.
11.1 "CONFIDENTIAL INFORMATION". "Confidential Information" will mean any
and all information disclosed in writing or orally by either party to the other
party, which is either confidential or proprietary in nature. "Confidential
Information" will not include: (i) information that is or will become generally
available to the public through no fault of the receiving party; (ii)
information that was known to the receiving party before that party received it
under this Agreement and was free of any obligation of nondisclosure; or (iii)
information that is disclosed in good faith to the receiving party by a third
party lawfully in possession of such information and who is not under an
obligation of nondisclosure with respect to such information.
11.2 NONDISCLOSURE. During the Term and for ten (10) years thereafter,
neither party will, without the prior written consent of the other party,
disclose to any third party (unless such disclosures are required by law) or use
for its own purposes (except as contemplated by this Agreement) this Agreement
or any other Confidential Information concerning the other party's business,
operations, or products that is obtained in the course of performing this
Agreement. Notwithstanding the foregoing, the parties may issue a joint press
release as promptly as practicable after the execution of this Agreement and may
continue to communicate with employees, customers, suppliers, lenders,
shareholders and others as may be legally required or appropriate and not
inconsistent with the best interests of the other party or the prompt
consummation of the activities contemplated by this Agreement.
11.3 CUSTOMER LISTS. BBDC and IR will each retain ownership of its own
customer lists.
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12. NON-SOLICITATION.
12.1 COVENANT NOT TO SOLICIT. Each party agrees that neither it nor its
employees, agents, or representatives will, during the Term and for a period of
two (2) years following this Agreement's expiration or termination
("Non-Solicitation Period") without the other party's prior written consent
hire, or solicit for hire, any person who was employed by the other party or any
of its subsidiaries or affiliates
12.2 DAMAGES. Because of the difficulty of measuring economic losses as a
result of the breach of any of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which the other party
would have no other adequate remedy, each party agrees that, in the event of a
breach by it of any of the covenants set forth in this Section, the other party
or its subsidiary or affiliate may, at its option, in addition to obtaining any
other remedy or relief available to them (including damages at law), enforce the
provisions of this Section by injunction and other equitable relief.
12.3 REASONABLE RESTRAINT. Each party agrees that the covenants contained
in this Section impose a reasonable restraint in light of the other party's
activities, business and future plans.
12.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant will not affect
the provisions of any other covenant in this Section or in this Agreement. In
the event any court of competent jurisdiction will determine that the scope,
time or territorial restrictions set forth in this Section are unreasonable,
then it is the intention of the parties that such restrictions be enforced to
the fullest extent which the court deems reasonable, and the provisions of this
Section will thereby be reformed.
12.5 INDEPENDENT COVENANT. Each of the covenants in this Section will be
construed as a covenant independent of any other provision of this Agreement,
and the existence of any claim or cause of action of one party against the
other, or any of its subsidiaries or affiliates, whether predicated on this
Agreement or otherwise, will not constitute a defense to the enforcement by such
party or such subsidiaries or affiliates of such covenants.
12.6 COMPUTATION OF THE NON-SOLICITATION PERIOD. The Non-Solicitation
Period will be computed by excluding from such computation any time during which
either party is in violation of any provision of this Section and any time
during which there is pending in any court of competent jurisdiction any action
(including any appeal from any judgment) in which a party seeks to enforce the
covenants contained in this Section or in which the other party contests the
validity or enforceability of any such covenant or seeks to avoid the
performance or enforcement of any such covenant.
12.7 MATERIALITY. Each party acknowledges and agrees that the covenants set
forth in this Section are a material and substantial part of this Agreement.
13. INSURANCE.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
During the Term and for two (2) years thereafter, IR will maintain at its
own cost and expense:
(a) Commercial General Liability Insurance covering its premises,
including bodily injury, property damage, broad form contractual liability,
independent contractors and products liability/completed operations
coverages, with limits of not less than $1,000,000 per occurrence and
$2,000,000 aggregate or $2,000,000 single limit.
(b) Workers' Compensation Insurance as mandated or allowed by all
states in which IR's business is being performed, including at least
$1,000,000 coverage for Employer's Liability.
(c) All Risk Property Insurance in an amount adequate to cover the
cost of replacement of all equipment, improvements, and betterments at IR
locations in the event of loss or damage. (d) Errors and Omissions
Insurance in the amount of $1,000,000, naming BBDC as an additional
insured.
All such policies will be written by a carrier or carriers rated "A" or
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above by Best, will contain a clause requiring the carrier to give BBDC at least
thirty (30) days' prior written notice of any material change or cancellation of
coverage for any reason, and simultaneously with IR's execution of this
Agreement and annually thereafter, IR will deliver to BBDC original Certificates
of Insurance evidencing coverage required by this Section.
14. INDEMNIFICATION.
14.1 INDEMNIFICATION BY IR. IR will indemnify, defend, and hold harmless
BBDC and its officers, directors, agents and affiliates from and against any and
all claims, demands, actions, causes of action, losses, judgments, damages,
costs and expenses (including, but not limited to, attorneys' fees, court costs,
and costs of settlement) ("Claim") to the extent arising out of claims against
BBDC for: (1) the death of, or bodily injury to, any person on account of the
use of a Product that results from IR's sale of such Product; or (2) any breach
by IR of any of its representations, warranties or covenants in this Agreement.
14.1.1 NOTICE BY BBDC. Upon receipt of any notice of a Claim, BBDC
will promptly notify IR in writing of any such Claim; provided, however,
any failure to so notify IR will not relieve BBDC of any liability it may
have to IR except to the extent such liability was caused by such failure.
14.1.2 RETENTION OF COUNSEL. IR will retain counsel at its expense to
act as lead counsel in the defense of all Claims against BBDC. The
Indemnified Party may retain counsel. BBDC may retain counsel of its own
choice at BBDC's expense to the extent necessary to protect BBDC's
interests and to act as co-counsel in the litigation or settlement of any
Claim or threatened Claim. So long as IR does not enter into any settlement
agreement or consent judgment that admits liability on the part of BBDC or
that fails to include an unconditional release of BBDC from all liability
from all asserted or threatened Claims, IR will have the right to control
the defense, settlement, and prosecution of any litigation.
14.2 INDEMNIFICATION BY BBDC. BBDC will indemnify, defend, and hold
harmless IR and its officers and directors from and against any and all Claims
to the extent arising out of claims against IR for: (1) the dishonest,
fraudulent, negligent, willful, or criminal acts of BBDC or BBDC's employees,
agents, or representatives acting alone or in collusion with others; or (2) any
breach by BBDC of any of its representations, warranties or covenants in this
Agreement.
14.2.1 NOTICE BY IR. Upon receipt of any notice of a Claim, IR will
promptly notify BBDC in writing of any such claim; provided, however, any
failure to so notify BBDC will not relieve IR of any liability it may have
to BBDC except to the extent such liability was caused by such failure or
as provided in Section 7.8.
14.2.2 RETENTION OF COUNSEL. BBDC will retain counsel at its expense
to act as lead counsel in the defense of all Claims against IR. IR may
retain counsel of its own choice at IR's expense to the extent necessary to
protect IR's interests and to act as co-counsel in the litigation or
settlement of any Claim or threatened Claim. So long as BBDC does not enter
into any settlement agreement or consent judgment that admits liability on
the part of IR or that fails to include an unconditional release of IR from
all liability from all asserted or threatened Claims, BBDC will have the
right to control the defense, settlement, and prosecution of any
litigation.
15. LIMIT ON LIABILITY.
BBDC WILL NOT BE LIABLE FOR ANY CLAIM ARISING OUT OF THIS AGREEMENT FOR
INDIRECT, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES, WHETHER OR NOT BBDC KNEW
OR HAD REASON TO KNOW OF THE POSSIBILITY OF SUCH DAMAGES, AND BBDC'S AGGREGATE
LIABILITY UNDER THIS AGREEMENT FOR ANY AND ALL CLAIMS, WHETHER IN CONTRACT,
TORT, OR OTHERWISE, WILL NOT EXCEED BBDC'S RECEIPTS FOR PRODUCTS SOLD UNDER THIS
AGREEMENT DURING THE TWELVE (12) MONTHS IMMEDIATELY PRECEDING A FINAL
DETERMINATION OF SUCH LIABILITY.
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
16. INDEPENDENT CONTRACTOR.
Each party is an independent contractor and is solely responsible for all
taxes, withholdings, and other similar statutory obligations, including, but not
limited to, workers' compensation insurance. None of a party's employees,
agents, or associates are employees the other party and each party agrees to
defend, indemnify and hold the other harmless from any and all claims made by
any of its employees, agents, or associates, or by any entity or agency on
account of an alleged failure to satisfy any such tax or withholding
obligations. Neither party has authority to act on behalf of or to enter into
any contract, incur any liability, or make any representation on behalf of the
other.
17. MISCELLANEOUS.
17.1 EXTRAORDINARY EVENTS. In the event BBDC's delivery or arranging
for delivery of Products under this Agreement is prevented, impaired, reduced or
restricted by reason of force majeure, labor disputes, fire, acts of God, or any
other similar or dissimilar cause beyond its control, including but not limited
to the unavailability of such Products, transportation, shortage of materials or
fuel, delay in delivery or failure to deliver by BBDC's suppliers, loss of
facilities of distribution, the voluntary foregoing of the right to acquire or
use any materials in order to accommodate or comply with the orders, requests,
regulations, recommendation or instructions of any governmental authority
(whether in furtherance of national defense or war activities or to meet any
other emergency), or the compliance with any law, order, ruling, regulation,
instruction or requirements of any governmental authority or any political
subdivision or agency thereof, or for any other cause whether of the same or
different character than specified in this Agreement, beyond the reasonable
control of the affected party, BBDC, without liability or obligation, may reduce
or eliminate Products during the period of any such disability. In any such
case, Products that BBDC is unable to supply will be eliminated from this
contract by written notice describing the amounts eliminated and the estimated
time period during which deliveries are to be suspended; and BBDC will be
relieved of any liability with respect to such Products during the time BBDC may
be unable to deliver such Products. In addition, due to circumstances beyond its
control, BBDC, at its discretion, may add to the cost of Products for any
account, regardless of location, its fuel costs, including any taxes and
surtaxes, and other related costs associated with its delivery of Products so
long as such circumstances continue to affect BBDC's costs.
17.2 SEVERABILITY. In the event that any provision in this Agreement is
held to be invalid, unenforceable, void or illegal, in whole or in part, by any
court of competent jurisdiction, it will be deemed severable from the remainder
of this Agreement and will in no way affect, impair or invalidate any other
provision in this Agreement. If such provision will be deemed invalid due to its
scope or breadth, such provision will be deemed valid to the extent of the scope
of breadth permitted by
law.
17.3 GOVERNING LAW, Choice of Forum and Time for Bringing Action. The
validity, construction and performance of this Agreement will be governed by and
construed in accordance with the internal laws of the State of California
without regard to its choice of laws provisions and, if applicable, the laws of
the United States. In the event any legal action is necessary to enforce or
interpret the terms of this Agreement, the parties agree that such action will
be brought in Superior Court for the State of California, County of Orange, or
the U.S. District Court for the Central District of California, and the parties
hereby submit to exclusive jurisdiction of such courts. Each party further
agrees that personal jurisdiction over it may be effected by service of process
by registered or certified mail, return receipt requested, and that when so made
will be as if served upon it personally within the State of California. Any
action for a breach of this Agreement must commence within one (1) year after
the cause of action has accrued.
17.4 ENTIRE AGREEMENT. This Agreement and all exhibits and schedules and
related agreements incorporated by reference constitute the complete agreement
between IR and BBDC with respect to the subject matter of this Agreement and
replace and supersede all prior written and oral agreements or statements by and
among the parties concerning the subject matter. No representation or warranty
concerning the subject matter not contained in this Agreement will be binding on
the parties or have any force or effect whatsoever.
17.5 AMENDMENTS. This Agreement may not be amended, modified or waived in
any respect without further written agreement of both parties, signed by their
respective authorized representatives.
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17.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which will together constitute but one and the same instrument.
17.7 WAIVERS. Neither party's failure to insist, in one or more instances,
upon the performance of any term of this Agreement will be construed as a waiver
or relinquishment of its right to such performance or other performance of such
term, and the other party's obligations will continue in full force. Either
party's consent to any act by the other party on any one occasion will not be
deemed a consent of the same act on any other occasion.
17.8 TIME IS OF THE ESSENCE. Time is of the essence in each provision of
this Agreement.
17.9 CAPTIONS. The captions and heading in this Agreement are for
convenience only and will not affect in any way the meaning or interpretation of
this Agreement.
17.10 ASSIGNMENT. Neither party may assign any rights or delegate any
duties under this Agreement without the prior written consent of the other
party, which will not be unreasonably withheld or delayed. Notwithstanding the
foregoing, IR acknowledges that BBDC has affiliates and subsidiaries and may
assign performance of some or all of the terms of this Agreement to one or more
such related entities. For purposes of this Section, any transfer, sale, merger
or consolidation of IR, or a substantial portion of IR's assets, whether by
contract or operation of law, or any other transaction or series of related
transactions transferring all or substantially all of IR's business, assets
(including this Agreement), stock or control will be deemed an assignment and
require such prior written consent by BBDC, but will not modify, supplement or
terminate the rights or obligations of the parties under this Agreement. For
purposes of the preceding sentence, "control" means, with respect to a
corporation or limited liability company, the right to exercise, directly or
indirectly, more than fifty percent (50%) of the voting rights attributable to
the controlled corporation or limited liability company and, with respect to any
individual, partnership, trust, other entity or association, the possession,
directly or indirectly, of the power to direct or cause the direction of any
management or policies of the controlled entity. Subject to the foregoing, the
provisions of this Agreement will be binding upon and will inure to the benefit
of the successors and assigns of the respective parties, including without
limitation any partnerships, corporations, or other entities in which the
parties may have a controlling interest or position. Except as expressly
provided, this Section will not be construed as a consent by either party to an
assignment of this Agreement or any interest in it by either party.
17.11 FURTHER ASSURANCES. Each party, at its own cost and expense, and at
the reasonable request of the other party, agrees to undertake all such further
acts and to execute all such further documents as may be necessary and
reasonably requested by either party to effectuate the performance of this
Agreement in accordance with the parties' intentions.
17.12 AFFILIATE COMPANIES. In order to better serve the needs of IR,
Products may, from time to time, be provided by an affiliate company of BBDC. IR
hereby acknowledges this fact and expressly consents to this distribution
arrangement. IR further agrees to be liable for all payments due under this
Agreement to any such affiliate.
17.13 INTERPRETATION. In the event of any claimed conflict, omission or
ambiguity in this Agreement, no presumption or burden of proof or persuasion
will be implied by virtue of the fact that this Agreement was prepared by or at
the request of a particular party. This Agreement will be interpreted equally as
to both parties and not against the party that drafted it. Whenever the context
requires, the gender of all words will include the masculine, feminine and
neuter, and the number of all words will include the singular and plural. The
word "and" includes the word "or". The word "or" is disjunctive but not
necessarily exclusive.
17.14 PARTIES IN INTEREST. Nothing in this Agreement will confer any rights
on any third parties other than IR and BBDC and their respective successors and
assigns, nor will any provision give any third person any right of subrogation
or action over or against any party to this Agreement.
17.15 INFORMATION REVIEWED. IR has received and reviewed all information it
considers necessary or appropriate for deciding whether to purchase Products
from BBDC. IR has had an opportunity to ask questions and receive answers from
BBDC regarding the terms of the purchase of the Products and has further had the
17
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opportunity to obtain all information which it deems necessary to evaluate the
purchase of the Products and to verify the accuracy of information otherwise
provided to IR by BBDC.
17.16 RELIANCE ON AUTHORITY OF PERSON SIGNING AGREEMENT. Neither IR nor
BBDC will be required to determine the authority of the individual signing this
Agreement to make any commitment or undertaking on behalf of such entity or to
determine any fact or circumstance bearing upon the existence of the authority
of such individual.
17.17 ATTORNEYS' FEES. In the event that any dispute between IR and
BBDC should result in litigation, arbitration, or mediation the prevailing party
in such dispute will be entitled to recover from the other party all reasonable
fees, costs and expenses of enforcing any right of the prevailing party,
including reasonable attorneys' fees and expenses, all of which will be deemed
to have accrued upon the commencement of such action and will be paid whether or
not such action is prosecuted to judgment. Any judgment or order entered in such
action will contain a specific provision providing for the recovery of
attorneys' fees and costs incurred in enforcing such judgment and an award of
prejudgment interest from the date of the breach at the maximum rate of interest
allowed by law. "Attorneys' fees" include (1) post-judgment motions; (2)
contempt proceedings; (3) garnishment, levy, and debtor and third party
examinations; (4) discovery; and (5) bankruptcy litigation.
"Prevailing party" means the party who is determined in the proceeding to have
prevailed or who prevails by dismissal, default or otherwise.
17.18 NOTICES. All notices must be given in writing and be personally
delivered or delivered by facsimile or by certified or registered mail, return
receipt requested, postage prepaid, addressed to the parties as set forth
opposite their respective names below:
IR: To the address set forth on the cover page
of this Agreement.
BBDC: Bergen Brunswig Drug Company
4000 Metropolitan Drive
Orange, CA 92868
Attn: Vice President, eCommerce Sales & Marketing
Fax: (714) 385-6826
with a copy to: Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, CA 92868
Attn: Executive Vice President,
Chief Legal Officer & Secretary
Fax: (714) 978-1148
Items delivered personally will be deemed delivered on the date of actual
delivery. Items sent electronically or by facsimile will be deemed delivered on
the first business day after the date of transmission. Items sent by certified
or registered mail will be deemed delivered three (3) business days after
mailing. A party may change the foregoing information or notices by notifying
the other party of such change in writing in accordance with the foregoing.
[END OF TERMS AND CONDITIONS]
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
LIST OF SCHEDULES
TO
TERMS AND CONDITIONS
Schedule Number Schedule Name
1.1 Product Categories
1.3 Additional Territories
2.1 Operations Manual
2.6 Returned Goods Policy
3.7 Financial Reconciliation Process
3.8 EDI/EFT Agreement
8.1 Securities Purchase Agreement
8.2 Registration Rights Agreement
8.3 Warrant to Purchase Securities
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 1.1
Product Categories
FINELINE
CODE CODE DESCRIPTION
010 ANALGESIC
011 ANALGESIC, INTERNAL
012 ANALGESIC, EXTERNAL
030 ANTACIDS
031 ANTACIDS, LIQUID
032 ANTACIDS, OTHER
070 BABY NEEDS
071 BABY CARE
073 BABY FEEDING ACCESSORIES
074 BABY DIROSABLE DIAPERS
110 COSMETICS, POPULAR PRICE
111 COSMETICS FOR LIPS
112 COSMETICS FOR FACE
113 COSMETICS FOR EYES
150 COUGHS & COLDS
151 COUGH & COLD LIQUIDS
152 COLD RUBS, INHALANTS, LOZENGES
153 COLD TABLETS & CAPSULES
154 NOSE DROPS & SPRAYS
170 DEODORANTS
171 DEODORANTS, AEROSOL
173 DEODORANTS, OTHER
190 DIET PRODUCTS
191 SUGAR & SALT SUBSTITUTES
192 FOODS, SPEC. OR SUPPLEMENTARY
193 WEIGHT CONTROL
205 BATTERIES
210 EYE PREPARATIONS
211 CONTACT LENS PREPARATIONS
212 EYE PREPARATIONS
230 FEMININE HYGIENE
231 SANITARY NAPKINS & TAMPONS
232 SANITARY BELTS & PANTS
233 FEMININE DEODORANTS
234 FEMININE DOUCHES
235 FEMININE SYRINGES
236 VAGINAL JELLY & CREAM
237 PROPHYLACTICS
250 FIRST AID
251 FIRST AID DRESSING
252 FIRST AID TREATMENTS
254 ELASTIC GOODS
270 FOOT CARE
271 FOOT PADS
272 FOOT PRODUCTS
296 TOILETRY SETS
310 HAIR ACCESSORIES
330 HAIR CARE
331 SHAMPOO
332 PERMANENTS & STRAIGHTENERS
333 HAIR SPRAY
334 HAIR SETTING
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335 HAIR COLOR
337 MEDICATED SHAMPOO
370 LAXATIVES
371 LAXATIVES, TABLETS & LIQUIDS
372 LAXATIVES, OTHER
390 MANICURE PEDICURE
391 MANICURE IMPLEMENTS & ACCESSORIES
392 NAIL POLISH & REMOVER
410 MEN'S TOILETRIES
411 MEN'S COLOGNE, AFTER SHAVE
412 MEN'S HAIR PREPARATIONS
413 MEN'S TOILETRY SETS
450 ORAL HYGIENE
451 TOOTH PASTE & TOOTH POWDERS
452 TOOTH BRUSHES & FLOSS
453 DENTURE PRODUCTS
454 MOUTH WASH & GARGLES
455 ORAL HYGIENE ACCESSORIES
470 PACKAGED REMEDIES
471 SEDATIVES & STIMULANTS
472 ASTHMA PREPARATIONS
473 TABLETS & CAPSULES
474 WETS & DRYS
476 OINTMENTS, CREAMS & LIQUIDS
477 NICOTINE REPLACEMENT THERAPY
490 PAPER PRODUCTS
491 FACIAL TISSUE
492 TOILET TISSUE & TOWELS
520 DIABETIC PRODUCTS
521 ALCOHOL SWABS
522 BLOOD GLUCOSE MONITORS/KITS
523 TESTING STRIPS
524 DIABETIC SUPPLIES
525 LANCETS
530 PHOTOGRAPHY
531 FILM & FLASH BULBS
550 PRIVATE LABEL
570 SEASONAL PRODUCTS
571 SUN TAN PREPARATIONS
572 INSECT REPELLANTS
610 BLADES
613 SHAVING CREAM
614 NON-ELECTRIC RAZORS
620 WELLNESS
621 HOMEOPATHIC
622 HERBAL
630 SICKROOM SUPPLIES
631 AMBULATORY AIDS
632 BATHROOM SAFETY PRODUCTS
633 WHEELCHAIRS & ACCESSORIES
634 HOSPITAL BEDS & ACCESSORIES
635 SCOOTERS & LIFTOUT CHAIRS
636 OSTOMY
637 INCONTINENCE CARE
638 SKIN CARE
639 WOUND CARE
640 CUSHIONING & PRESSURE RELIEF
641 DIAGNOSTICS
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642 RESPIRATORY CARE
643 HEALTH & FITNESS
644 ORTHOPEDIC SUPPORTS & BRACES
645 VASCULAR SUPPORTS
646 AIDS FOR DAILY LIVING
647 MISCELLANEOUS
650 LADIES TOILETRIES
651 ACNE MEDICATIONS
652 PERSONAL SOAP
653 HAND, BODY & FACE LOTIONS, CREAMS
654 BATH PRODUCTS
655 COTTON BALLS, SWABS & PADS
656 FRAGRANCE PRODUCTS
657 DEPILATORY
658 LADIES TOILETRY SETS
22
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 1.3
Additional Territories
None.
23
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 2.1
Operations Manual
[To Be Attached]
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 2.6
Returned Goods Policy
1. BBDC will not accept any returns of Products by IR consumers that do not
include a Returned Product Authorization ("RPA"), which IR's consumers may
obtain from an IR customer service representative. IR will electronically
transmit to BBDC the RPA, and related information, on a daily basis.
2. Subject to the limitations and handling charges set forth in this policy,
IR will be given full credit for unopened and unused Products or defective
Products returned in accordance with this policy.
3. In no event will BBDC accept returns in any month which in the aggregate
exceed five percent (5%) of the Orders for the current month.
4. IR (or its consumers) will be responsible for the shipping costs associated
with the return of Products, unless caused by an error in BBDC's picking or
packaging, in which case BBDC will pay for such shipping costs. IR will
receive full credit (IR's acquisition cost) on:
(a) Filling Errors
(b) Guaranteed Sale Items
(c) Ordering Errors
(d) Shipping Errors
(e) Billing Errors
(f) Shortages, Claims
(g) Concealed Shipping Damages
5. BBDC will electronically notify IR of its receipt of Products from IR's
consumer and IR will be responsible for processing the credit to the
consumer's credit card.
6. Products returned and received by BBDC twenty (20) or more days after
shipment by BBDC will be subject to a ten percent (10%) handling charge.
Unsalable merchandise as a general rule will not be returnable.
7. Credits are posted to statements twice a month (on the 15th and 30th).
(a) Ordering/shipping errors and all other salable items will be processed
and posted within two (2) weeks of receipt of merchandise.
(b) All unsalable Products (expired, outdated, shop worn, etc.) will be
processed and posted within four (4) weeks of receipt of merchandise.
8. Items requiring special handling:
(a) Specially handled Items: Salable items requiring special handling
(refrigeration, ORM-D items, and/or Listed Chemicals) should be held
under proper storage for special approval and instructions regarding
return shipping requirements.
9. Items that may not be returned:
(a) Unsalable Products from manufacturers whose policy will not allow the
wholesaler to handle. BBDC will assist you in contacting these
manufacturers to help effect the return, if desired.
(b) Products that are outdated past allowable time given by the
manufacturer for return.
(c) Products with broken seals and/or partial contents.
(d) Promotional goods such as "cents off", bonus pack or trial size, or
other Products sold on a no return basis.
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 3.7
Financial Reconciliation Process
[To Be Attached]
26
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 3.8
Electronic Payments Agreement
This Electronic Payments Agreement ("Agreement") effective as of December 21,
1999 is entered into by and between nutripure.com, a __________ corporation,
located at 1725 Gillespie Way, El Cajon, California 92020 ("Originator") and
Bergen Brunswig Drug Company, a California corporation, located at 4000
Metropolitan Drive, Orange, California 92868 ("Beneficiary").
RECITALS
A. Originator and Beneficiary are or may become parties to one or more
Business Agreements, including the Internet Fulfillment Services Agreement
dated December 21, 1999, pursuant to which Originator may, from time to
time, become obliged to make payments to Beneficiary.
B. Originator and Beneficiary desire to establish terms and conditions upon
which Originator will make such payments and communicate associated
Remittance Information in electronic form.
AGREEMENT
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS
1.1 Terms as Defined in this Agreement. As used in this Agreement, the
following terms have the following meanings:
(a) Beneficiary's Account: The deposit account at Beneficiary's Bank
designated in Appendix ss.1.1 that is to be credited with payments from
Originator.
(b) Beneficiary's Bank: The bank designated by Beneficiary in Appendix
ss.1.1 for receiving payment from Originator.
(c) Business Agreements: All contractual relationships between the
parties giving rise to an obligation of Originator to pay Beneficiary,
designated in Appendix ss.1.4.
(d) Payment Obligation: An obligation of Originator to pay money to
Beneficiary pursuant to the Business Agreements.
(e) Remittance Information: The information relating to a payment
designated in Appendix ss.2.2.
(f) Third Party Service Provider: An entity designated by a party in
Appendixss.1.2 to assist the party in the communication of Transaction Sets
and notice between the parties separate from any payment order.
(g) Transaction Set: A collection of data that is communicated between
the parties, as designated in Appendixss.2.1 or as otherwise agreed by the
parties.
1.2 Terms Defined in Article 4A. Terms used in this Agreement but not
otherwise defined will be defined as provided in Uniform Commercial Code Article
4A as enacted in the jurisdiction whose law governs this Agreement.
2. AGREEMENT AND AUTHORIZATION
2.1 Credits. Originator agrees and Beneficiary authorizes Originator to (i)
satisfy its Payment Obligation by initiating funds transfers that result in
payment to the Beneficiary by credit to Beneficiary's Account, and (ii)
communicate associated Remittance Information to Beneficiary in accordance with
this Agreement.
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2.2 Debits. Neither party will initiate a transaction in connection with a
Payment Obligation for the purpose of debiting a bank account of the other
party.
3. PAYMENT AND REMITTANCE PROCEDURE
3.1 Payment. Originator will instruct its bank to process funds transfers
hereunder using the funds-transfer system or other mechanism specified in
Appendixss.1.3, in accordance with this Agreement and the rules of such
funds-transfer system.
3.2 Remittance Information. For each funds transfer initiated under this
Agreement, Originator will communicate the associated Remittance Information to
Beneficiary as specified in Appendixss.2.
3.3 No Warranty of Funds. Beneficiary acknowledges that its receipt of
Remittance Information communicated separately from the funds transfer to which
the Remittance Information relates will not constitute a warranty by Originator
that the funds transfer has been initiated on a timely basis or that any
resulting payment order will be accepted by Beneficiary's Bank on any date
specified therein.
4. TIMING OF PAYMENTS
4.1 Timeliness. A payment from Originator to Beneficiary will be considered
timely with respect to any payment due date determined in accordance with the
applicable Business Agreement if the corresponding funds transfer is completed
on the day such payment is due. If the funds transfer cannot be completed on
such date, Originator's payment is timely if the funds transfer is completed on
the next day completion can occur.
4.2 Effect of Delay. Originator will not be in breach of this Agreement or
the applicable Business Agreement, or suffer any loss of discount or other
penalty, with respect to a funds transfer that was initiated properly and timely
by Originator to the extent its completion is delayed because of failure or
delay by the funds-transfer system or other mechanism designated in Appendix
ss.1.3, the operation of a funds-transfer system rule which could not be
anticipated by the Originator, or rejection by the Beneficiary's Bank. However,
any such failure, delay or rejection does not extinguish the Originator's
obligation to pay the Beneficiary as soon as practical after the failure, delay
or rejection is discovered.
5. DISCHARGE OF PAYMENT OBLIGATIONS
5.1 Discharge: Credit to Originator. Upon completion of a funds transfer
authorized by Agreementss.2.1, the corresponding Payment Obligation of the
Originator will be discharged to the same extent as if such payment had been
received in cash. Beneficiary will credit Originator for the amount of such
payment, as of the date the funds transfer was completed.
5.2 Disallowance of Credits Taken. If Beneficiary disallows any discounts,
allowances, adjustments or other credits against a Payment Obligation taken by
Originator in conjunction with a funds transfer, Beneficiary will promptly
notify Originator of the amount of and reason for such disallowance in
accordance with Appendixss.2.1
5.3 Partial Payments. Notwithstanding any statement contained in any
Remittance Information or related Transaction Set, the completion of any funds
transfer hereunder will not constitute full satisfaction of any portion of the
corresponding Payment Obligation greater than the amount paid.
5.4 Effect of Payment on Other Rights. Notwithstanding the terms of
Agreement ss.5.1, the completion of a funds transfer will not constitute a
waiver of any contract right under the corresponding Business Agreement that
would be deemed waived by the acceptance of such payment in cash if within ten
(10) business days after the completion of such funds transfer or such other
time period as allowed by applicable law or Business Agreement, Beneficiary
sends an equivalent payment amount to Originator in accordance with Agreement
ss.5.5 and notifies Originator of the reason for the return in accordance with
Agreement ss.11.1.
5.5 Payment Returns, Adjustments, Credits and Rebates. If Beneficiary
elects to exercise a right to return a payment received from Originator or is
required to pay Originator any adjustment, rebate, or other credit because of,
for example, duplicate payments (rather than by crediting Originator's account
balance), Beneficiary will make such payment by initiating a new payment in the
manner specified in Appendixss.1.6.
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6. RECEIPT, ACKNOWLEDGMENT AND VERIFICATION
6.1 Receipt. A Transaction Set or notice communicated in accordance with
this Agreement will be considered received when it is accessible by the intended
recipient as specified in Appendixss.2.3.
6.2 Acknowledgment. To the extent required by Appendixss.2.1, a party that
receives a Transaction Set or notice from the other party will acknowledge that
such Transaction Set or notice was received and is syntactically correct by
communicating the Acknowledgment specified in Appendixss.2.1 to the sender
within five (5) business days of receipt.
6.3 Verification. The recipient of a Transaction Set or notice will take
reasonable steps to verify the claimed identity of the sender and the integrity
of the content of a Transaction Set or notice (as specified in Appendixss.4)
before relying upon it. If a Transaction Set or notice is received in garbled
form, or cannot be so verified, the recipient will notify the sender of the
problem within five (5) business days unless the sender's identity cannot be
discerned. In the absence of such notice to an identifiable sender, the sender's
version of the Transaction set or notice will control.
6.4 Validity and Enforceability. Neither party will contest the validity or
enforceability of Transaction Sets or notices communicated in electronic form
pursuant to this Agreement on grounds related to the absence of paper-based
writings, signing or originals. Each Transaction Set or notice communicated in
electronic form pursuant to this Agreement will be considered to be:
(a) "in writing" and "written" to an extent no less than as if in paper
form;
(b) "signed" where the signer includes data intended as a signature to an
extent no less than as if undertaken with pen and paper; and
(c) an original.
7. SECURITY PROCEDURES
7.1 Procedures. Each party will employ reasonable security procedures to
ensure that Transaction Sets, notices and other information specified in this
Agreement that are electronically created, communicated, processed, stored,
retained or retrieved are authentic, accurate, reliable, complete and
confidential.
7.2 Effect of Non-Party Security. The communication of any Transaction Set
or notice via a funds-transfer system will not constitute a breach of
Agreementss.7.1.
8. CONFIDENTIALITY
8.1 Confidential Information. Information that is considered confidential
by either party is identified in Appendixss.3. Such information will be held in
confidence by the recipient and will be disclosed only to those of its employees
or authorized representatives who require access in the performance of their
duties to the recipient. The recipient will exercise reasonable care in the
safeguarding of such confidential information.
8.2 Exceptions. Neither party will be liable for the disclosure or use of
any information designated in Appendix ss.3 as confidential that: (a) is, or
becomes publicly known, other than by breach of this Agreement; (b) is obtained
by the recipient from another person without restriction; (c) is previously
known by the recipient without restrictions; (d) is, at any time, developed by
the recipient independently of any disclosures hereunder; (e) is disclosed
pursuant to the consent of the party that considers such information
confidential; or (f) is required to be disclosed by law, provided that prior to
disclosing such information the recipient will promptly notify the other party
of the demand to disclose or provide the information and the recipient agrees to
reasonably cooperate if the other party deems it necessary to seek a protective
order.
8.3 Survival of Obligation. These obligations and restrictions will survive
the termination of this Agreement for a period of ten (10) years.
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9. LIABILITY
9.1 Breach of Business Agreements. Except as otherwise specifically
provided herein, this Agreement neither enlarges nor diminishes the respective
rights and obligations of the parties under any Business Agreement, and the
liability of a party for breach of a Business Agreement will be determined by
the provisions of that agreement and applicable law.
9.2 Conduct of Third Parties. Except as otherwise limited herein, each
party will be liable to the other for the acts or omissions of its respective
banks and Third Party Service Providers designated hereunder with respect to
their conduct in connection with such party's performance under this Agreement.
Neither party will be liable to the other for the acts or omissions of any
funds-transfer system operator, or for the acts or omissions of any banks or
third party not selected by such party.
9.3 Consequential Damages. Neither Party will be liable to the other under
this Agreement for any special, indirect or consequential damages, even if such
party has been advised of the possibility of such damages (except for liability
directly resulting from a breach of the confidentiality or security obligations
of this agreement).
9.4 Costs. Each party will bear the respective fees and other charges
assessed by its designated banks and Third Party Service Providers (except as
otherwise provided in Appendixss.1.5).
10. CHANGES, SUSPENSIONS AND TERMINATION
10.1 Change of Designations. Either party may change its designations of an
account, bank, or Thirty Party Service Provider by notice to the other party.
Any such change will be effective twenty-five (25) business days after notice of
such change from the party entitled to make the original designation is received
by the other party.
10.2 Suspension of Operations. Either party may suspend operations under
this Agreement:
(a) upon notice to the other party, in the event that the notifying party
has a good faith belief that the information of either party may be
materially threatened or compromised; or
(b) if the performance of a party under this Agreement is delayed or
prevented by an act of God, natural disaster, computer or
communications failure or other cause beyond the affected party's
reasonable control.
10.3 Termination of Agreement. Either party may terminate this Agreement at
any time upon ninety (90) days' notice to the other. Notwithstanding such
termination, this Agreement will remain in effect as to all funds transfers and
Transaction Sets that have been initiated by the Originator and not canceled
prior to termination of this Agreement.
11. MISCELLANEOUS
11.1 Notice. Unless otherwise specified herein, any notice required or
permitted under this Agreement will be communicated in the manner specified in
Appendixss.5 and addressed to the intended recipient at its notice address by
notifying the other party. Either party may from time to time designate a
different notice address by notifying the other party.
11.2 Waiver. No provision of this Agreement or any breach thereof will be
deemed waived unless such waiver is in writing and signed/communicated by the
party claimed to have waived such provision or breach. No waiver of a breach
will constitute a waiver or excuse any different or subsequent breach.
11.3 Assignment. This agreement is binding upon and inures to the benefit
of the parties hereto and their respective successors and assigns. However,
neither party may assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other party, which
consent will not be unreasonably withheld, conditioned or delayed.
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
11.4 Choice of Law. This Agreement is governed by and interpreted in
accordance with the laws of the State of California.
11.5 Conflict Rules. In the event of any inconsistency between this
Agreement and another agreement between the parties addressing the subject
matter of this agreement, this agreement will control. Any remittance
instructions contained in purchase order from Originator are superseded by this
Agreement. The parties agree to be bound by the rules of the funds-transfer
system or other mechanism used to communicate a payment order.
11.6 Entire Agreement. This Agreement and the Appendix hereto constitute
the entire agreement of the parties relating to the matters specified in this
Agreement and supersede all prior communications and agreements with respect to
such matters.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
nutripure.com, a NEVADA corporation Bergen Brunswig Drug Company, a
California corporation
By: /s/ Michael Krall By: /s/ Chuck Prieve
Name: Michael Krall Name: Chuck Prieve
Title: President Title: V.P. e-Commerce Sales &
Marketing
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
APPENDIX
SECTION 1. DESIGNATIONS
1.1 Beneficiary's Bank
--- ------------------
ABA Transit Routing Number:
Beneficiary's Account Number:
Administrative Contact:
Special Instruction:
1.2 Third Party Service Providers.
--- ------------------------------
1.2.1 Originator's Third Party Service Provider:
1.2.2 Beneficiary's Third Party Service Provider:
1.3 Funds Transfer System or Other Mechanism
--- ----------------------------------------
Originator will pay Beneficiary via
1.4 Business Agreement.
--- -------------------
The original Internet Fulfillment Services Agreement dated December 21,
1999 and any current addendum or extension.
1.5 Allocation of Costs.
--- --------------------
1.6 Procedure for Payment Returns.
--- ------------------------------
Check payable to:
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
SECTION 2. TRANSACTION SETS
2.1 Transaction Sets.
Transaction Set Transaction Set Method of Acknowledgment
Function Format Communication Requirement
- --------------------------------------------------------------------------------
Remittance
Disallowance of Credits
Acknowledgment
Other Specify
2.2 Remittance Information.
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For each payment, the Remittance Information Transaction Set must
contain the following specified data:
(i) invoice number and date, (ii) invoice amount, (iii) discounts and
allowances taken against each invoice, (iv) net amount paid on each
invoice, and (v) identification of adjustments.
2.3 Receipt of Transaction Sets.
--- ----------------------------
A Transaction Set will not be deemed to have been properly received by the
intended recipient, and no Transaction Set will give rise to any obligation,
until it is accessible to the receiving party at such party's receipt computer
described below:
2.3.1 Originator's computer make and model:_______________________
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2.3.2 Beneficiary's computer make and model: ______________________
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SECTION 3. CONFIDENTIAL INFORMATION
All data is to be kept confidential.
SECTION 4. VERIFICATION AND SECURITY PROCEDURES
All transactions by both parties (Originator and Beneficiary) are carried
out through their respective banks. Appropriate verification and security
procedures are the responsibility of each party and its bank.
SECTION 5. NOTICE
5.1 Originator Notice Address
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-----------------------
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
5.2 Beneficiary Notice Address
Bergen Brunswig Drug Company
4000 Metropolitan Drive
Orange, CA 92668
Attn:
with a copy to:
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, California 92868
Attn: Executive Vice President,
Chief Legal Officer & Secretary
Facsimile: (714) 978-1148
5.3 Method for Communication of Notice
The method for communication of notice will be in written form.
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<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 8.1
Securities Purchase Agreement
[To Be Attached]
35
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 8.2
Registration Rights Agreement
[To Be Attached]
36
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
Schedule 8.3
Warrant to Purchase Securities
[To Be Attached]
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<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN SECTIONS OF THIS AGREEMENT
EXHIBIT A
Service Levels
<TABLE>
<CAPTION>
<S> <C> <C>>
Performance Measure Service Levels Start-Up Service Levels
Receiving accuracy per
10,000 lines 10.0 errors per 10,000 lines 11.0 errors per 10,000 lines
Replenishment/stocking
accuracy per 10,000 lines
received 10.0 errors per 10,000 lines 11.0 errors per 10,000 lines
Order filling accuracy per
10,000 lines filled 10.8 errors per 10,000 12.0 errors per 10,000 lines
Order delivery accuracy 0.8 errors per 1,000 deliveries 0.9 errors per 1,000 deliveries
Document delivery accuracy 0.8 errors per 1,000 deliveries 0.9 errors per 1,000 deliveries
Percent of lines filled 94.6% 85.1%
Percent of adjusted lines
filled 98.2% 88.9%
Percent of "A" lines
filled 99.5% 89.5%
Percent of fail to picks 0.1% 0.11%
Returns cycle time 4 days 5 days
</TABLE>
Receiving Accuracy. A receiving error is defined as an error regarding an
incorrect quantity received, an incorrect item received, and/or an incorrect
data entry code used for exceptions. Each condition is considered an error, so
it is possible to have more than one error on a single line. It is considered an
error once it is entered into the system.
Replenishment/Stocking Accuracy. A replenishment/stocking error is defined
as an error placing an item in the incorrect location whether that location is
primary, secondary, or bulk.
Order Filling Accuracy. The Customer Call Log, maintained in customer
service, is used to track the number of line items reported by customers on
mispicks, shortages, and outdates each week. Total lines filled information
comes from the Outbound Service Level Report. The error rate is calculated per
10,000 lines filled. All Products reported as damaged when received by the
customer will be considered a delivery error.
Order Delivery Accuracy. Order delivery errors are shipped Orders delivered
to wrong consumers, packages left on truck, and damaged items (broken, crushed,
cut tops, leaking caps, etc). Each line will be considered 1 error.
Document Delivery Errors. Document delivery errors are deliveries made
without invoices or price stickers, and invoices or stickers delivered late or
to the wrong customer.
Percent of Lines Filled, Percentage of Adjusted Lines Filled, Percentage of
Fail to Picks and Percent of Adjusted "A" Lines. The Percent of Lines Filled,
Adjusted Lines Filled, Fail to Picks, and Percent of Adjusted A Lines are
tracked daily on the Outbound Service Level Report. The monthly totals are
transferred by Performance & Quality Measurement into the Critical Success
Measures report.
Returns Cycle Time. Consumer returns will be shipped directly from the
consumer to the BBDC Fulfillment Center. The date that the return is received at
the BBDC Fulfillment Center is considered the start date. The completion date is
the date that the credit is transmitted to IR. The calculation is for the number
of working days between the receipt of the consumer return and the credit to IR.
38
<PAGE>
PURCHASE AGREEMENT
THIS AGREEMENT is made this 10th day of December, 1999, by and between
NUTRIPURE.COM, (hereinafter "Buyer") and INNOVATIVE MEDICAL SERVICES,
(hereinafter "Seller").
WHEREAS, Seller is the owner, creator and current operator of that certain
Internet website known as "Nutripure.com", (hereinafter "website") and has
invested its time and resources to creating, assembling and completing the
content thereof, and is in the process of completing the web site engine
programming and site's links to various search engines, and
WHEREAS, Buyer is desirous of acquiring substantially all of Seller's right,
title and interest in and to the website including all past and future
progressive development, including the Bergen Brunswig agreement (BBC), Health
Notes agreement (HN), Utah Health agreement (UH), Yahoo! Banner/key-word
agreement (Yahoo!), Lycos Banner/key-word agreement (Lycos) and AOL
Banner/key-word agreement (AOL) for the purpose of operating the site for
offering Buyer's products, services and advertisements to the general public,
and
WHEREAS, Buyer has contracted on December 9th, 1999, for Seller to complete
creation of the website and to thereafter progressively acquire the website for
approximately $2,000,000 as outlined herein
IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:
Buyer will pay Seller the sum of $1,000,000 for all work and expenses completed
past and present on the website and upon execution of the BBC contract.
Seller will negotiate and exercise the agreements with BBC, HN and UH by January
31, 2000 in favor of Nutripure.com and, Seller will transfer all right, title
and interest to any and all banner and key-word contracts with Yahoo!, Lycos and
AOL.
Seller agrees to progressively create two versions of the internet website (per
BBC requirements) 1) HTML/ASP version that will comply with BBC's requirements
for site design and pass BBC's testing requirements for EDI sale, order,
invoicing, fulfillment, shipping and payment procedures and 2) XML version that
will import all prior data and comply with BBC's requirements for site design
and EDI - sale, order, invoicing, fulfillment, shipping and payment procedures
and pass all BBC's testing requirements. And to secure its connection to
substantially every available internet search engine.
Seller will complete the "soft launch" of the HTML/ASP version of the Internet
website on or before March 1, 2000. and
Seller will complete the "XML" version "re-launch" of the internet website
simultaneously with BBC's scheduled "re-launch" of their "XML" version to occur
on or before May 1, 2000. and
Buyer will pay Seller the additional sum of $1,000,000 when the "re-launch" is
successfully accomplished.
<PAGE>
Seller will complete the "re-launch" of the XML version of the internet website
on or before May 1, 2000.
It is anticipated and agreed to by the parties that IMS will continue to provide
services and support including future customized programming to Nutripure.com
for which it is agreed that IMS shall be paid an amount in excess of this base
agreement. It is further agreed that any modification or addition to this
agreement will be by written addendum
NUTRIPURE.COM
By: /s/ Michael L Krall
Michael L. Krall, President
By: /s/ Donna Singer
Donna Singer, Secretary
INNOVATIVE MEDICAL SERVICES
By: /s/ Michael L. Krall
Michael L. Krall, President
By: /s/ Dennis B. Atchley
Dennis B. Atchley, Secretary
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> DEC-08-1999
<PERIOD-END> FEB-29-2000
<CASH> 850
<SECURITIES> 0
<RECEIVABLES> 100,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100,850
<PP&E> 1,000,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,100,850
<CURRENT-LIABILITIES> 593,400
<BONDS> 0
0
0
<COMMON> 507,450
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,100,850
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,550
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,550)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,550)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,550)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
