U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31,
1999
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________
TO _____________
Commission File Number 0-11472
BIOMUNE SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0380088
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2401 South Foothill Drive
Salt Lake City, Utah 84109-1405
(Address of principal executive offices) (Zip Code)
(801) 466-3441
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No __
As of February 9, 2000, the issuer had issued and outstanding 4,999,312 shares
of common stock, par value $.0001.
1
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Page
No.
1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of December 31,
1999 and September 30, 1999 . . . . . . . . . . . . . . . . . . . . .3
Unaudited Condensed Consolidated Statements of Operations for
the three months ended December 31, 1999 and 1998 . . . . . . . . . .4
Unaudited Condensed Consolidated Statements of Cash Flows for
the three months ended December 31, 1999 and 1998 . . . . . . . . . .5
Notes to Unaudited Condensed Consolidated Financial Statements. . . .7
2. Management's Discussion and Analysis or Plan of Operation . . . . . 11
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 13
2
<PAGE>
PART I
ITEM 1 - Financial Statements
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
Dec. 31, Sep. 30,
1999 1999
Current assets:
<S> <C> <C>
Cash and cash equivalents $1,123,000 $ -
Receivables, net 253,716 483,995
Inventories, net 205,785 255,992
Prepaids 343,088 306,638
---------- ----------
Total current assets 1,925,589 1,046,625
Long-term Receivables, net 300,000 534,468
Property and equipment, net 67,070 82,805
Investments 2,019,410 1,977,026
Intangibles, net 320,877 554,081
Other assets, net 26,925 11,346
---------- ----------
Total assets $4,659,871 $4,206,351
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Current liabilities:
<S> <C> <C>
Accounts payable and accrued expenses $ 451,580 $ 628,230
Notes Payable 385,000 435,000
Total current liabilities 836,580 1,063,230
Shareholders' equity:
Preferred stock, $.0001 par value; 50,000,000 shares authorized
1,360,430 shares and 1,360,430 shares issued and outstanding
respectively 1,255,044 2,174,043
Common stock, $.0001 par value; 500,000,000 shares authorized
1,339,762 shares and 1,286,662 shares outstanding respectively 515 252
Additional paid-in capital 43,339,878 41,914,343
Stock subscriptions receivable (55,192) (55,192)
Deferred compensation and consulting (181,204) (202,486)
Accumulated other comprehensive income (loss) (768,200) (768,200)
Accumulated deficit (39,767,550) (39,919,639)
---------- ----------
Total shareholders' equity 3,823,291 3,143,121
---------- ----------
$ 4,659,871 $ 4,206,351
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
3
<PAGE>
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended Dcember 31,
1999 1998
-------- --------
<S> <C> <C>
REVENUES $ 143,448 $ 1,161,827
OPERATING EXPENSES:
Cost of revenues 50,207 489,892
Management, consulting and research fees 87,832 199,631
Other general and administrative 118,608 328,405
------------ ------------
Total operating expenses 256,647 1,017,928
INCOME (LOSS) FROM OPERATIONS (113,199) 143,899
OTHER INCOME (EXPENSE):
Interest income, net 9,713 41,079
Minority interest 301,775 10,665
Other, net ------------ ------------
Total other income, net 311,488 30,414
------------ ------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS 198,289 174,313
------------ ------------
NET INCOME (LOSS) 198,289 174,313
Preferred Stock dividends and accretion of
beneficial conversion feature (46,200) (56,238)
------------ ------------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES $ 152,089 $ 118,075
============ ============
NET INCOME (LOSS) PER COMMON SHARE (basic) $ 0.06 $ 0.09
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(basic) 2,697,523 1,331,104
NET INCOME (LOSS) PER COMMON SHARE (fully diluted) $ 0.04 $ 0.05
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 3,834,523 2,380,758
(diluted)
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
4
<PAGE>
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Three Months
Ended December 31,
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 198,289 $ 174,314
Adjustments to reconcile net loss to net cash used
in operating activities:
Gain on disposal of Volu-Sol, Inc. - -
Depreciation and amortization 39,111 35,612
Issuance of Common Stock, options and warrants for - -
services -----------
Amortization of deferred consulting expense 21,280 38,538
Cancellation of stock issued to consultants - -
Exchange of related-party note receivable - -
Changes in assets and liabilities:
Accounts receivable, net 279 648,656
Interest receivable - -
Inventories 50,207 81,120
Advances to related party - -
Prepaid expenses (36,450) (135,779)
Other assets (15,579) (13,551)
-----------
Accounts payable and accrued liabilities 176,650 245,112
-----------
Minority Interest - 15,083
Accrued payroll and payroll taxes
Net cash generated (used) in operating activities 80,487 1,089,105
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (5,646)
------------ -----------
Net (advances) repayments from related parties 230,000 (70,000)
Payments received on notes receivable - -
Sale of Product Line 862,513 -
Purchase Investments (235,000)
------------ -----------
Net generated (used) cash in investing activities 230,000 (310,646)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (50,000) (137,172)
------------ -----------
Net cash provided (used) by financing activities (50,000) (137,172)
------------ -----------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.
5
<PAGE>
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Three Months
Ended December 31,
1999 1998
--------- ----------
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 1,123,000 $ ( 641,287)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE PERIOD - 27,701
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF
THE PERIOD $ 1,123,000 $ 668,988
============ ============
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the three months ended December 31, 1998 the Company paid dividends on
its outstanding preferred stock by issuing additional shares of preferred stock
totaling $52,285.
The Company increased common stock and additional paid in capital and decreased
preferred stock by $17,129 due to the conversion of preferred stock to common
stock.
The Company increased preferred stock and decreased additional paid in capital
by $3,953 due to the preferred stock beneficial conversion feature.
During the three months ended December 31, 1999 the Company paid dividends on
outstanding preferred stock by issuing additional shares of preferred stock
totaling $46,200.
The accompanying notes are an integral part of these condensed consolidated
statements.
6
<PAGE>
BIOMUNE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying interim condensed consolidated financial statements are
unaudited and have been prepared consistent with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. These statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's annual report on Form 10-KSB for the fiscal year ended September
30, 1999. Reference to the Company or Biomune includes Biomune Systems, Inc. and
its subsidiaries, Optim Nutrition, Inc. and Rockwood Companies, LLC.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of normal
recurring adjustments) necessary to fairly present the Company's financial
position as of December 31, 1999 and the results of operations and cash flows
for the three months ended December 31, 1999 and 1998. The interim financial
statements should be read in conjunction with the following explanatory notes.
The results of operations for the three months ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
September 30, 2000.
(2) DIVESTITURE OF VOLU-SOL, INC.
On October 1, 1997, the Company divested itself of its wholly owned subsidiary
Volu-Sol, Inc., by distributing the common stock of Volu-Sol prorata to the
Company's stockholders of record as of March 5, 1997. The operations of Volu-
Sol, Inc. are reflected herein as discontinued operations during the affected
period.
(3) NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share ("Basic EPS") excludes dilution and is
computed by dividing net income (loss) by the weighted average number of common
shares outstanding during the period. Diluted net income (loss) per common share
("Diluted EPS") reflects the potential dilution that could occur if stock
options or other contracts to issue common stock including convertible preferred
stock were exercised or converted into common stock. The computation of Diluted
EPS does not assume exercise or conversion of securities that would have an
anti- dilutive effect on net income per common share.
At December 31, 1999, there were outstanding options and warrants to purchase
956,980 shares of common stock and there were 36,003 shares of preferred stock
outstanding, convertible into a minimum of 856,005 shares of common stock.
7
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<TABLE>
<CAPTION>
Convertible
Number of into #
Preferred Stock Preferred Shares of Common Shares
<S> <C> <C>
Series A 935 1,205
Series J 1,068 854,800
--------- ---------
36,003 856,005
========= =========
</TABLE>
(4) COMMON STOCK TRANSACTIONS
The Company has deferred consulting expense related to shares issued under
consulting agreements entered into prior to September 30, 1999. These deferred
amounts are being recognized over the terms of the agreements as services are
provided. Total amortization of these deferred consulting expenses was $21,280
for the three months ended December 31, 1999.
(5) STOCK OPTIONS AND WARRANTS
During the three months ended December 31, 1999, consultants of the Company
exercised 180,000 options at $1.00 per share. Also during the three months ended
December 31, 1999, the Company's President and Chief Executive Officer exchanged
a $15,000 loan to the Company into 30,000 shares of common stock.
(6) RELATED-PARTY TRANSACTIONS
During the quarter ended December 31, 1998, the Company recorded a management
fee of $225,000 from its Rockwood subsidiary.
(7) PREFERRED STOCK TRANSACTIONS
During the three months ended December 31, 1999, the Company accrued dividends
on its outstanding Series A, Series F and Series J Preferred stock of $2,625,
$15,200 and $28,375, respectively. Preferred stock dividends are payable in
either additional shares of preferred stock (of the same series) or in cash, at
the option of the Board of Directors. On December 31, 1999, accrued dividends on
Series A, E, F and J Preferred stock totaling $46,200, were paid by issuing 650
shares of Series A Preferred stock, 25,333 shares of Series F Preferred stock
and 28.4 shares of Series J Preferred stock.
During the three months ended December 31, 1999, 1,443,622 shares of the
Company's preferred stock was converted into 1,905,624 shares of common stock.
(8) ROCKWOOD TRANSACTION
In April 1998, the Company acquired a controlling (52%) equity interest in
Rockwood's successor, Rockwood Companies LLC (referred to as "Rockwood LC"), for
$360,000 cash, a commitment to issue 500,000 shares of preferred stock (payable
if certain benchmarks in sales are obtained), and covenants on the part of the
Company to loan $1,500,000 to Rockwood LC or its affiliates over a one-year
period. Rockwood LC distributes and sells health and beauty aids to wholesale
and retail chains. Rockwood LC retained the right to redeem a portion of the
Company's member interest if the Company fails to keep its covenants to make the
loans to Rockwood LC.
8
<PAGE>
As of December 31, 1998, the Company had not advanced $850,000 of the funds
it had covenanted to loan to Rockwood LC. By letter dated March 15, 1999
Rockwood exercised its right to reduce the Company's interest to 19% and to
terminate, effective December 31, 1998, other on-going commitments and
agreements between the Company and Rockwood.
Item 2 - Management's Discussion and Analysis or Plan of Operation
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes thereto appearing
elsewhere in this Quarterly Report on Form 10-QSB.
Overview
The Company is engaged in the research, development, distribution and sale
of biologic pharmaceutical products, nutraceutical food products and
supplements, medical foods and health and beauty aids. Certain of these products
have been developed by the Company and incorporate a patented whey protein
technology, which is designed to provide or increase protective immunities from
an immune response to disease and to provide nutritional supplementation. Until
January 2000, the Company marked a medical food bar patented formulation
developed by researchers at Beth Israel Deaconess Medical Center, Harvard
Medical School, under an exclusive license. The Company acquired and sold the
patent rights following the period covered by this report. The energy and sports
nutrition bars of the Company are also marketed under an exclusive license from
the developer of the products. Through a majority owned subsidiary, the Company
also distributes health and beauty aids and related products to national
wholesale and retail customers.
The Company believes its future results of operations will be affected by
factors such as:
. the availability of cash from financing activities to fund its
operations;
. the results of research and development efforts and the
clinical trials on BWPT-301, BWPT-302 and other future
pharmaceutical drug candidates based on or derived from the
Technology;
. market acceptance of Optimune, the nutrition bars, and
pharmaceutical drug candidates;
. increased competitive pressures;
. changes in raw material sources and costs; and
. adverse changes in general economic conditions in any market
in which the Company conducts or markets its products.
The Company believes that the majority of its future revenues will come
from its nutrition products and new nutraceutical products and pharmaceutical
drugs. The Company cannot determine the ultimate effect that new products will
have on revenues, earnings or the price of the Company's common stock.
9
<PAGE>
The Company's primary focus and efforts during the fiscal year ended
September 30, 1998, were the commercialization of its nutraceutical products,
assessing and obtaining additional nutraceutical and medical products to add to
product line, and, to a lesser extent, continuing its efforts to obtain FDA
approval of BWPT-301 for the treatment of cryptosporidiosis in people with AIDS
and BWPT-302 for the treatment of E. coli, strain 0157:H7. During the quarter
ended December 31, 1998, the Company's revenues were generated from the sale of
Optimune and Maximune, special food bars and nutrition bars, and sale of health
and beauty aids through the Company's majority owned Rockwood subsidiary.
Continuing in fiscal year 1999, the Company will focus its resources and
efforts on:
. commercialization of its nutraceutical products;
. continued marketing and selling of the NiteBite and Mountain
Lift bars;
. acquisition of new nutraceutical and or medical food products;
. development of one or more additional nutraceutical products
based on the Technology; and
. approval of BWPT-301 and BWPT-302.
Results of Operations
Comparison of the Three Months Ended December 31, 1999
with the Three Months Ended December 31, 1998
During the three months ended December 31, 1999, the Company had revenues
of $143,448 compared to $1,161,689 for the comparable three month period ended
December 31, 1998. The decrease in sales is due primarily to the Company
reducing its interest in Rockwood LC from 52% to 19%.
Cost of sales were $50,207 for the three months ended December 31, 1999
compared to cost of sales of $489,892 for the same period in 1998. The overall
gross margin for the quarter in 1998 was 65% of revenues, compared to 58% for
the comparable quarter in 1998. The increase in gross margin is due to the
higher margins from the Company's Optim subsidiary.
Management, consulting and research fees were $84,832 for the three months
ended December 31, 1999, as compared to $199,632 for the three months ended
December 31, 1998. The decrease in fees and expenses is due to the Company's
efforts to reduce overhead costs.
During the three months ended December 31, 1998, the Company had a net
profit $174,313 compared to a net profit of $198,289 for the three months ended
December 31, 1999. The increase in net-profit is due to the sale of the NiteBite
product line.
During the three months ended December 31, 1999, the Company entered into
Letters of Intent and Definitive Agreements with Amerifit Nutrition, Inc. and
ICN Pharmaceutical for the purchase and sale of the NiteBite product line. The
complicated transaction, involved among other things, issuing 200,000 shares of
restricted common stock to Amerifit Nutrition, Inc. The net result of this
transaction was a gain of $301,775 which is recorded in the statement of
operations and other income.
Net (fully diluted) income per common share was $(0.05) during the quarter
ended December 31, 1998 compared to net income per common share of $0.04 for the
quarter ended December 31, 1999.
10
<PAGE>
Liquidity and Capital Resources
Historically, the Company has been unable to finance its operations from
cash flows from operating activities. The Company expects it will require
substantial funds and time to commercialize its nutraceutical products, to
complete Phase II and Phase III clinical trials on BWPT-301 (assuming efficacy
is established during the Phase II clinical trials), to complete the necessary
clinical trials on BWPT-302 , to obtain regulatory approval for and
commercialize products utilizing the Technology and to develop and commercialize
additional nutraceutical products based on the Technology. Because
revenue-generating operating activities are not in place at significant levels
and because the Company will require significant capital to accomplish the
objectives set forth above, additional equity and/or debt funding will be
required, although such funding may not be available or may not be available on
favorable terms. Management believes that the Company-funded research and
development efforts to date have positioned the Company to pursue future
research and development efforts and clinical trials with joint venture,
strategic alliance, government or private grants or other third-party funding.
As of December 31, 1999, the Company had cash and cash equivalents of
$1,123,000 and working capital of $1,089,009 as compared to cash and cash
equivalents of $0 and working capital deficit of $16,605 as of September 30,
1999.
The Series A Preferred stock bears a 10% cumulative dividend payable
annually in cash or in additional shares of Series A Preferred stock, at the
election of the Company's Board of Directors. As of December 31, 1999, the
Company had accrued dividends on the Series A Preferred stock totaling $2,650,
which dividends the Company paid in additional shares of Series A Preferred
stock.
During the three months ended December 31, 1999, the Company's operating
activities generated $80,487 of cash. During the same period in the previous
fiscal year, the Company's operating activities generated $1,089,105 of cash.
The Company has no established credit facility with a bank of other lending
institution. The Company has in the past, from time to time, borrowed money from
certain shareholders, but there is no formal financing arrangement, agreement or
understanding in affect with any of its shareholders or any other related or
unrelated party at this time.
Special Statement Concerning Forward-looking Statements
This Report, in particular the "Management's Discussion and Analysis or
Plan of Operation" section, contains forward-looking statements concerning the
expectations and anticipated operating results of the Company. All such
forward-looking statements contained herein are intended to qualify for the safe
harbor protection provided by Section 21Eof the Securities Exchange Act of 1934,
as amended. The reader should understand that numerous factors govern whether
events described by any forward-looking statement made by the Company will
occur. Any one of such factors could cause actual results to differ materially
from those projected by the forward-looking statements made in this Report.
These forward-looking statements include plans and objectives of management for
future operations, including plans and objectives relating to the products and
the future economic performance of the Company.
11
<PAGE>
The forward-looking statements and associated risks relate to:
. market acceptance of the products;
. development of new nutraceutical products;
. the extent of additional research and development, general
and administrative and other direct costs associated with
obtaining final FDA approval on BWPT-301;
. the anticipated cost and related expense of the BWPT-301 and
BWPT- 302 clinical trials until final FDA approval has been
received;
. unexpected delays in receipt of final FDA approval on BWPT- 301;
. the estimated commencement date of Phase III clinical trials and
the completion of those clinical trials on BWPT-301; and
. and the lack of sufficient cash to fund current and
projected operations and budgeted research and development for
fiscal year 2000.
The forward-looking statements are based on current expectations that may
be affected by a number of risks and uncertainties and are based on certain
assumptions, such as:
. the Company will have adequate financing available.
. the efficacy of BWPT-301 will be established during the
ongoing Phase II clinical trials and the Phase III clinical
trials;
. the Company will be able to successfully undertake and complete
clinical trials on BWPT-302;
. the Company will be able to successfully market the health
and beauty aids and it's the nutraceutical products, and
successfully develop and commercialize other nutraceutical
products;
. the Company will be able to successfully develop and
commercialize the Technology;
. the Company will successfully conduct additional Phase II
clinical trials on BWPT-301and may need to conduct clinical
trials that are different from those that have been conducted to
date or that are currently contemplated by the Company; and
. the Company will be able to timely and properly quantify and
analyze the data derived from its clinical trials.
Assumptions involve judgments with respect to, among other things, future
economic, competitive and market conditions, future business decisions, and the
results of the clinical trials and the time and money required to successfully
complete those trials, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company.
12
<PAGE>
Although the Company believes that the assumptions underlying the
forward-looking statements in this Report are reasonable, any of these
assumptions could prove inaccurate. Therefore, there can be no assurance that
the results contemplated in any of the forward-looking statements will be
realized. Budgeting and other management decisions are subjective in many
respects and are susceptible to interpretations and periodic revision based on
actual experience and business developments, the impact of which may cause the
Company to alter its marketing capital expenditure plans or other budgets. This
will affect the Company's results of operations. In light of the significant
uncertainties inherent in the forward-looking statements, any such statement
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is party to certain legal proceedings as previously reported in
its public reports filed with the Securities and Exchange Commission. There has
been no change in these matters since the last report.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.118 Contract with Amerifit Nutrition, Inc.
10.119 License Agreement
10.120 Contract with ICN Pharmaceutical
10.121 Schedules to ICN Pharmaceutical Contract
10.122 Non-Competition Agreement
27 Financial Data Schedule
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BIOMUNE SYSTEMS, INC.
(Registrant)
Date: February 18, 2000 /s/ Michael G. Acton
-----------------------------------
Michael G. Acton,
Chief Executive Officer and
Controller (Principal Financial and
Accounting Officer)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as
of January __, 2000 (the "Effective Date") by and between Amerifit Nutrition,
Inc. ("Seller"), a Delaware corporation with its principal place of business at
166 Highland Park Drive, Bloomfield, Connecticut 06002, Biomune Systems, Inc., a
Nevada corporation with its principal place of business at 24015 Foothill Drive,
Salt Lake City, Utah 84109 ("Biomune"), and Optim Nutrition, Inc. ("Buyer"), a
Utah corporation which is a wholly-owned subsidiary of Biomune, and with its
principal place of business at 2401 S. Foothill Drive, Salt Lake City, Utah
84109.
RECITALS:
A. Seller is the owner of the Transferred Assets (as defined
below) relating to the Seller's NiteBite(R)Timed-Released Glucose Bar(TM)product
(the "Product").
B. Buyer desires to purchase the Transferred Assets from Seller and
license, on an exclusive basis within the therein-defined market and on a
non-exclusive basis elsewhere, the Licensed Trademark from Seller, and Seller
desires to sell, assign and transfer such Transferred Assets to Buyer and
license such Licensed Trademark to Buyer, pursuant to the terms and conditions
of this Agreement and the Buyer License Agreement (as defined below).
Therefore, in consideration of the mutual covenants and agreements
contained herein, the sufficiency of which are hereby acknowledged, the parties
agree as follows:
AGREEMENTS:
1 DEFINITIONS
1.1 The "Assumed Contract" shall mean that certain Supply
Agreement relating to the Product between Medical Foods, Inc. (Seller's
predecessor in interest) and Nellson Nutraceutical, dated May 28, 1997.
1.2 "Buyer License Agreement" shall have the meaning set forth in
Section 2.3.
1.3 "Deliverables" shall mean the materials listed in Schedule 1.3
hereto.
1.4 "Existing Agreement" shall mean that certain Product License
and Distribution Agreement dated September 25, 1998 by and between Buyer and
Seller.
1.5 "Intellectual Property" shall mean all intellectual property
rights relating to the Product, including without limitation all patents,
trademarks (including all associated goodwill), copyrights, trade secrets,
draft and filed patent applications or continuations, website domain names,
toll free numbers, and trademark and copyright applications, as specifically
listed in Schedule 1.5; provided, that "Intellectual Property" shall not include
the Licensed Trademark.
1.6 "Licenses" shall mean all registrations, licenses, approvals,
certificates, permits, consents, authorizations, and all draft and filed
applications for any of the foregoing, relating specifically to the manufacture
or sale of the Product, to the extent the transfer thereof to Buyer is
permitted by law or by any agreement between Seller and any third party, as
specifically listed in Schedule 1.6.
1
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1.7 "Licensed Trademark" shall mean the trademark "Timed-Release
Glucose Bar(TM)".
1.8 "Liens" shall mean any and all liens, security interests,
licenses, encumbrances and other third party claims of any type, whether
accrued, absolute or contingent, specifically including any and all royalty or
license fee payment obligations owed to third parties by Seller in connection
with the distribution or sale of the Product.
1.9 "Product" shall have the meaning set forth in Recital A above.
1.10 "Records" shall mean all books, files and records relating to
the Product, including all customer lists, customer databases and promotional
materials.
1.11 "Related Assets" means the following assets which are owned
by or licensed to Seller with the right to transfer as provided herein: all
know-how related to or used in the manufacture or sale of the Product, to the
extent necessary to manufacture, sell and otherwise exploit same as
currently manufactured or sold, as well as existing improvements, modified
versions, designs, technology, inventions, works of authorship, trade secrets,
formulas, processes, techniques, concepts, methods, ideas, research and lab
notes, files, test data, research, specifications, concepts, work papers,
and work product related to the Product if any exist at the Closing Date,
regardless of whether any or all of the foregoing constitutes copyrightable or
patentable subject matter. For purposes of this Agreement, "Related Assets"
shall not include the Licensed Trademark.
1.12 "Transferred Assets" shall mean the Product (other than the
Licensed Trademark), the Intellectual Property, the Licenses, the Related Assets
and the Records.
1.13 All other initially capitalized terms shall have the meanings
assigned to them in this Agreement.
2 ASSIGNMENT AND SALE
2.1 Assignment of Transferred Assets. Seller hereby assigns and
transfers to Buyer, effective at the Closing, all of Seller's right, title and
interest in and to the Transferred Assets.
2.2 Assumed Contract. The parties acknowledge and agree that
Seller has previously assigned the Assumed Contract to Biomune. To the extent
that any additional actions may hereafter become necessary or reasonably
advisable inorder to complete such assignment, the parties agree to take such
actions.
2.3 Buyer License Agreement. Effective on the Closing Date,
Seller shall enter into a License Agreement substantially in the form of
Exhibit D attached hereto with respect to the Licensed Trademark (the "Buyer
License Agreement").
3 CONSIDERATION.
3.1 Consideration to be Paid. In consideration for the assignment and
transfer of the Transferred Assets as set forth in Section 2, the license of the
Licensed Trademark as set forth in the Buyer License Agreement, and the
covenants set forth in Section 9 below, Buyer shall pay and deliver the
following consideration (the "Purchase Price") to Seller:
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3.1.1 Cash Payment. On the Closing Date, Buyer shall pay to
Seller the amount of six hundred fifty thousand dollars ($650,000.00) by wire
transfer to an account designated by Seller.
3.1.2 Stock Transfer. On the Closing Date, Buyer shall also
transfer to Seller two hundred thousand (200,000) shares of the common stock of
Biomune (the "Biomune Common Stock"). The shares of Biomune Common Stock to be
transferred to Seller will not have been registered and will be "restricted
securities" under the Securities Act of 1933, as amended (the "Securities
Act") and the rules promulgated thereunder, and may be resold without
registration under the Securities Act only in certain limited circumstances.
Each certificate evidencing shares of Biomune Common Stock will bear the
legends required by state securities laws as well as the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THE SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF REGISTRATION WITHOUT AN EXEMPTION UNDER
THE ACT OR AN OPINION OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED.
3.1.3 Registration Rights.
3.1.3.1 Registration. Commencing on the 181st day following
the execution of this Agreement, and for a period of 18 months thereafter,
Seller shall have the right to demand, once only, that Biomune file a
registration statement under the Securities Act of 1933, as amended ("Securities
Act") for the shares issued to Seller under this Agreement. Promptly after
receipt of such demand, Biomune shall (i) file with the Securities and
Exchange Commission ("SEC") a registration statement on Form S-3 (or such
other form as may then be available to Biomune for the registration of its
shares for sale by a selling shareholder) with respect to no fewer than 2/3 of
the shares of Biomune common stock issued to Seller under this Agreement (such
registration statement, together with any amendment and supplement filed in
connection therewith, the "Registration Statement") and shall use its
reasonable best efforts to cause the Registration Statement to become
effective as promptly as practicable after filing and to keep Registration
Statement effective until the Termination Date (as hereinafter defined); (ii)
prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may
be necessary, and comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities proposed to be
registered in the Registration Statement until the Termination Date (as
hereinafter defined); (iii) furnish to Seller such number of copies of any
prospectus (including any preliminary prospectus and any amended or supplemented
prospectus) in conformity with the requirements of the Securities Act, and such
other documents, as Seller may reasonably request in order to effect the offer
and sale of the shares to be offered and sold, but only while Biomune shall be
required under the provisions hereof to cause the registration statement to
remain current; and (iv) use reasonable efforts to register or qualify the
shares of Biomune common stock covered by the Registration Statement under the
securities or blue sky laws of such jurisdictions as Seller shall reasonably
request (provided that Biomune shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction where it has not been qualified).
For purposes of this Section, "Termination Date" means the earlier of (i)
January 21, 2002, (ii) the date on which Seller can sell all of the shares of
Biomune common stock to it under this Agreement pursuant to Rule 144 of the SEC
under the Securities Act, and (iii) the date on which all such shares of Biomune
common stock have been resold pursuant to Rule 144 or an effective registration
statement.
3.1.3.2 Notification of Certain Events. Biomune shall notify
Seller (i) when a prospectus or any prospectus supplement or post-effective
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amendment has been filed, and, with respect to the Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other governmental entity during the period of
effectiveness of the Registration Statement for amendments or supplements
to the Registration Statement or related prospectus or for additional
information relating to the Registration Statement, (iii) of the issuance by
the SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation
of any proceedings for that purpose, (iv) of the receipt by Biomune of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; or (v) of the
happening of any event which makes any statement made in the Registration
Statement or related prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or which
requires the making of any changes in the Registration Statement or prospectus
so that, in the case of the Registration Statement, it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. Biomune may, upon the happening of any event of the
kind described in clauses (iii), (iv) or (v) hereof, suspend use of the
prospectus on written notice to Seller, in which case Seller shall discontinue
disposition of the shares covered by the Registration Statement or prospectus
until copies of a supplemented or amended prospectus are distributed to Seller
or until Seller is advised in writing by Biomune that the use of the
applicable prospectus may be resumed. Biomune shall use its reasonable best
efforts to ensure that the use of the prospectus may be resumed as soon as
practicable. Biomune shall use every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration Statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the securities for sale in any jurisdiction, at the earliest
practicable moment. Biomune shall, upon the occurrence of any event contemplated
by clause (iv) or (v) above, prepare a supplement or post-effective amendment to
the Registration Statement or a supplement to the related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the shares being sold
thereunder, such prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
3.1.3.3 Obligations of Seller.
(a) Information. Seller shall provide all
information and materials to Biomune, and take all action, as may
be required in order to permit Biomune to comply with all applicable
requirements of the SEC and to obtain any desired acceleration of the
effective date of the Registration Statement. The provision of such
information and materials by Seller included in the Registration
Statement is a condition precedent to the obligations of Biomune
pursuant to this Agreement.
(b) Certain Limitations. (i) Seller shall not
offer, sell, exchange, pledge, transfer or otherwise dispose of or
engage in any transaction with respect to, any of the shares of Biomune
common stock issued under this Agreement unless at such time such
transaction shall be permitted pursuant to the provisions of SEC Rule
144 referred, or Seller shall have furnished to Biomune an opinion of
counsel, satisfactory to Biomune, to the effect that no registration
under the Securities Act would be required in connection with the
proposed offer, sale, exchange, pledge, transfer or other disposition
or transaction, or a Registration Statement under the Securities Act
covering the proposed offer, sale, exchange, pledge, transfer or other
disposition shall be effective under the Securities Act; (ii) Seller
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shall not offer or sell any of the shares of Biomune common stock
issued Seller under this Agreement except during such periods as
directors, officers and affiliates of Biomune are permitted to purchase
and sell Biomune common stock pursuant to the insider trading policies
of Biomune (the "Window Periods"); and (iii) during the effective
period of the Registration Statement, Seller shall (A) offer for sale
under the Registration Statement only those shares of Biomune common
stock which were issued to Seller pursuant to this Agreement are
registered under the Registration Statement; (B) sell such shares in
accordance with and subject to the terms, conditions and covenants set
forth in this Agreement and in the Registration Statement; (C) to the
extent required by applicable law, cause to be furnished to any
purchaser of such shares, and to the broker-dealer, if any, through
whom such shares may be offered, a copy of the final prospectus
contained in the Registration Statement, as supplemented or amended
through the date of the sale (the "Prospectus"); (D) not engage in any
stabilization activity in connection with any Biomune securities other
than as permitted under the Securities Exchange Act of 1934, as amended
("Exchange Act"); and (E) not bid for or purchase any securities of
Biomune or any rights to acquire Biomune securities, or attempt to
induce any person to purchase any
Biomune securities (except for Seller's shares of Biomune common stock
to be sold to such person by means of the Prospectus) or any rights to
acquire Biomune securities other than as permitted under the Exchange
Act.
3.1.3.4 Window Periods. Biomune shall use its best efforts to
keep effective the Registration Statement during Window Periods (subject to the
right of Biomune to suspend use of a prospectus pursuant to this Agreement).
Notwithstanding any other provision of this Agreement to the contrary, Biomune
shall not be required to keep the Registration Statement effective at any
times other than during Window Periods. Unless otherwise specified by Biomune
by written notice to Seller, Window Periods shall include the period commencing
at the opening of trading on the first day of the third month of each fiscal
quarter of Biomune and expiring at the close of trading on the second full
trading day following release of Biomune financial results for such fiscal
quarter (or, in the case of the fourth quarter of each year, for the fiscal
year). If a Window Period shall commence or shall expire or terminate on any
other date, Biomune shall provide advance written notice of such commencement
and prompt written notice of such expiration or termination. Biomune shall have
the affirmative right to suspend the effectiveness of any Registration
Statement filed by Biomune pursuant to this Agreement at any time and from time
to time during a Window Period, for the whole of such Window Period or any
portion thereof.
3.1.3.5 Legends. Biomune may, at its election, cause one
or more legends reflecting the limitations set forth in this Agreement
(including the limitations set forth in Sections 3.1.3.3 and 3.1.3.4 of this
Agreement) to be affixed to the certificate or certificates issued to Seller
representing the shares of Biomune common stock issued under this Agreement,
including a legend in substantially the form set forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH
THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
OTHER CONDITIONS SPECIFIED IN AN ASSET PURCHASE AGREEMENT BETWEEN THE
HOLDER OF THIS CERTIFICATE AND BIOMUNE SYSTEMS, INC., A COPY OF WHICH
AGREEMENT WILL BE FURNISHED BY BIOMUNE SYSTEMS, INC. TO THE HOLDER OF
THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT CHARGE."
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Biomune, in its discretion, may cause stop transfer orders to be placed with its
transfer agent with respect to the certificates for the shares that are required
to bear such legend. Such legend shall be removed in connection with the sale of
any stock at a time that the Registration Statement is effective or upon a sale
pursuant to SEC Rule 144, as provided in this Agreement.
3.1.3.6 Expenses. Seller and Buyer shall each pay an equal
share of all of the out-of-pocket expenses incurred in connection with any
registration pursuant to this Agreement, including, without limitation, all
underwriting discounts and commissions, SEC, NASD and blue sky registration
and filing fees, printing expenses, transfer agents' and registrars' fees,
and the reasonable fees and disbursements of Biomune's outside counsel and
independent accountants and counsel for Seller; provided, however, that
Seller's share of such expenses shall not exceed $10,000.
3.1.3.7 Indemnification. In the event of any offering
registered pursuant to this Agreement:
(a) Biomune will indemnify (i) Seller, (ii) its
directors, officers, legal counsel and independent accountants, (iii)
each underwriter, if any, of Biomune securities covered by the
Registration Statement, including each broker-dealer (if any) which may
be deemed to be an underwriter of the shares of Biomune common stock
covered by the Registration Statement, (iv) each person who controls
Seller or such underwriter within the meaning of Section 15 of the
Securities Act, (v) each other holder of shares of Biomune common stock
included in the Registration Statement and such holder's legal counsel
and independent accountants (each such person named in clauses (i)
through (v), a "Seller Indemnified Party") against all claims, losses,
damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in the Registration
Statement, or any prospectus, or any amendment or supplement thereto,
incident to any offering registered pursuant to this Agreement, or
based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they are made, not
misleading, or any violation by Biomune of any rule or regulation
promulgated under the Securities Act, or state securities laws
applicable to Biomune in connection with any such registration, and
subject to Section 3.1.3.7(c), will reimburse Seller for any legal and
any other out-of-pocket expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage,
liability or action, provided that Biomune will not be liable in any
such case to the extent that any such claim, loss, damage, or liability
arises out of or is based in any untrue statement or omission or
alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to Biomune by Seller or
controlling person and stated to be specifically for use therein.
(b) Seller will, if shares held by Seller are
included in the securities as to which such registration, qualification
or compliance is being effected, indemnify (i) Biomune, (ii) its
directors, officers, legal counsel and independent accountants, (iii)
each underwriter, if any, of Biomune securities covered by the
Registration Statement, (iv) each person who controls Biomune or such
underwriter within the meaning of Section 15 of the Securities Act, (v)
each other holder of shares of Biomune common stock included in the
Registration Statement and such holder's legal counsel and independent
accountants (each such person named in clauses (i) through (v), a
"Biomune Indemnified Party") against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in the Registration Statement, prospectus, offering circular
or other document, or any omission (or alleged omission) to state
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therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse Biomune,
such other holders, such directors, officers, legal counsel,
independent accountants, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with
investigating or defending any such claim loss, damage, liability or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in the Registration Statement, prospectus, offering
circular or other document in reliance upon and in conformity with
written information furnished to Biomune by Seller and stated to be
specifically for use therein; provided, however, that Seller's
obligations hereunder shall be several with all other holders of
securities included in the Registration Statement and not joint and
shall be limited to an amount equal to the net proceeds before expenses
and commissions to Seller of the shares sold as contemplated herein.
(c) Each Biomune Indemnified Party or Seller
Indemnified Party (an "Indemnified Party") claiming indemnification
under this section shall give notice to the party from whom
indemnification is sought (the "Indemnifying Party") promptly after
such Indemnified Party receives written notice of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by
such Indemnified Party (whose approval shall not be unreasonably
withheld), and such Indemnified Party may participate in such defense
at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Agreement, except
to the extent, but only to the extent, that the Indemnifying Party's
ability to defend against such claim or litigation is impaired as a
result of such failure to give notice. Notwithstanding the foregoing
sentence, an Indemnified Party seeking indemnification hereunder may
retain its own counsel to conduct the defense of any such claim or
litigation, and shall be entitled to be reimbursed by the Indemnifying
Party for expenses incurred by such Indemnified Party in defense of
such claim or litigation, in the event that the Indemnifying Party does
not assume the defense of such claim or litigation within sixty (60)
days after the Indemnifying Party receives notice thereof from such
Indemnified Party. Further, an Indemnifying Party shall be liable for
amounts paid in settlement of any such claim or litigation only if the
Indemnifying Party consents in writing to such settlement (which
consent shall not be reasonably withheld). No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or
enter any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified
Party a release from all liability in respect to such claim or
litigation.
(d) The obligations of Biomune and Seller under this
Section 3.1.3.7 shall survive the completion of any offering of stock
in a Registration Statement under this Agreement and otherwise.
3.2 Fair Consideration. Buyer and Seller acknowledge that the
Purchase Price is full, fair and sufficient consideration for the Transferred
Assets.
3.3 Satisfaction and Release of Claims. The parties agree that the
Purchase Price shall be paid in full satisfaction of any and all claims existing
between Seller (including Medical Foods, Inc, Seller's predecessor in
interest) and Buyer (including Biomune) that either party has or may have as a
result of pre-existing business relationships between Seller and Buyer
concerning the Transferred Assets. Following payment of the Purchase Price and
the issuance of the Biomune Common Stock, neither party shall have any further
obligations to the other party or its affiliates, except as expressly set
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forth in this Agreement or as the parties may hereafter agree in writing.
Effective at the Closing, each party hereby releases the other party and its
officers, directors, employees, agents, parent companies, subsidiaries,
successors, assigns from any and all claims, damages, demands, costs, causes
ofaction, and compensation of every kind and nature, known or unknown, fixed
or contingent, to which such party may have otherwise been entitled as a
result of any events that have occurred prior to the Closing Date.
3.4 Allocation of Consideration. The parties agree that the Purchase
Price shall be allocated in accordance with this Section 3.4, as set forth
below. Each party agrees to reflect the Transferred Assets and covenants not to
compete or solicit on their respective books for tax reporting purposes in
accordance with such allocation and to file all tax reports in accordance with
such allocation. The consideration paid shall be allocated as follows:
Seller's transfer of its interests in the Transferred Assets: fifty
percent (50%)
Seller's covenant not to compete or solicit: fifty percent (50%).
4 CLOSING; DELIVERIES. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Buyer at 2401 S.
Foothill Drive, Salt Lake City, Utah 84109, and shall occur seven (7) business
days after the Effective Date, or at such other time as the parties may agree
(the "Closing Date"). All representations and warranties of each party shall be
true as of the time initially made on the Effective Date, as well as on the
Closing Date.
4.1 On or before the Closing Date, Seller shall deliver the
following items to Buyer:
(a) a Bill of Sale in the form attached as Exhibit A;
(b) trademark and patent assignments in the forms
attached as Exhibits B and C;
(c) the Buyer License Agreement in the form attached as
Exhibit D; and
(d) all other Deliverables.
4.2 On or before the Closing Date, Buyer shall deliver the
following items to Seller:
(a) the Buyer License Agreement in the form attached as
Exhibit D;
(b) certificates representing the shares of Biomune
Common Stock; and
(c) the cash payment of funds, via wire transfer, as
described in Section 3.1.1.
5 SELLER'S WARRANTIES. Seller hereby represents, warrants, and covenants
to Buyer as follows:
5.1 Authority and Power. Seller is a corporation, legally
organized and existing and in good standing under the laws of the state of
Delaware. Seller has the corporate power to enter into and perform this
Agreement according to the terms and conditions of this Agreement. Any corporate
action on the part of Seller necessary for the authorization, execution,
delivery and performance of this Agreement and any other agreements contemplated
hereby has been taken. This Agreement and any other agreements contemplated
hereby, when executed and delivered by Seller, will constitute valid and
binding obligations of Seller enforceable in accordance with their respective
terms except as such enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally
and except that the availability of equitable remedies is subject to the
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discretion of the court before which any proceeding therefor may be brought.
5.2 No Violation. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not (i) materially modify, breach or constitute grounds for the
occurrence or declaration of a material default under any material agreement
by which the Transferred Assets may be bound or affected; (ii) result in the
creation or imposition of (or the obligation to create or impose) any
Lien on the Transferred Assets; (iii) to the best knowledge of Seller,
violate any law, regulation, order, judgment or decree of any court or
governmental agency; or (iv) violate any provision of the Certificate of
Incorporation or bylaws of Seller.
5.3 No Third Party Agreements or Consents. Other than as described
on Schedule 5 attached hereto, (a) there are no contracts, agreements or
understandings materially affecting the Transferred Assets, and (b) no consent
of any person not a party to this Agreement is required to be obtained on the
part of Seller to permit the consummation of the transactions contemplated by
this Agreement (including without limitation the transfer to Buyer of all
Seller's right, title and interest in and to the Transferred Assets).
5.4 No Litigation, Product Liability Claims, Etc. There is no
litigation, investigation, arbitration or other proceeding (formal or informal)
pending or, to the knowledge of Seller, threatened against or affecting the
Transferred Assets, the result of which could have a material adverse
effect on the Transferred Assets or Buyer's ability to freely use, market and
distribute the Transferred Assets; nor does Seller know or have reason to know
of any basis for the same. The Product is not the subject of any pending
or, to the best knowledge of Seller, threatened claim for breach of warranty
or product liability known to Seller.
5.5 No Broker's Fees. Seller has not incurred, and will not incur,
directly or indirectly, as a result of any action taken by it, any liability
for brokerage or finders' fees or agents' commissions or any similar charges
in connection with this Agreement that may be imposed against Buyer.
Seller agrees to indemnify and hold harmless Buyer from and against any claim
for brokerage or similar fees relative to the transaction contemplated hereby.
5.6 Title. Seller has good and marketable title to all of the
Transferred Assets, free and clear of any Liens. Prior to the Closing Date,
Seller has provided to Buyer a complete copy of all relevant documentation and
information with respect to (i) the buyout of all interests (including the
royalty interest) of Beth Israel Deaconess Medical Center in the Product and
Transferred Assets; and (ii) the settlement of all claims of Baker Norton
Pharmaceuticals with respect to the Product. The Transferred Assets, together
with the license granted to Buyer under the Buyer License Agreement, constitute
all property, assets and contractual rights necessary for the manufacture,
supply and commercial sale of the Product, as such business is currently
conducted.
5.7 Intellectual Property. Other than the patents and patent
applications included as part of the Intellectual Property, Seller has no issued
patents, patent applications pending, or patent applications or continuations
currently being prepared or under consideration by Seller, that cover any
aspect of the Product. Any proprietary information relating to the Transferred
Assets has been treated as proprietary and confidential by Seller.
5.8 Compliance with Laws. Seller is in compliance with all
material statutes, laws, rules and regulations with respect to or affecting the
ownership and use of the Transferred Assets.
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5.9 No Fraudulent Conveyance. Seller is not now insolvent and
will not be rendered insolvent by the sale of the Transferred Assets under the
terms of this Agreement. The transactions contemplated by this Agreement will
not constitute a fraudulent conveyance or any act with similar potential
consequences, or otherwise give any creditor of Seller rights to any of the
Transferred Assets.
5.10 Noninfringement, Etc. The Transferred Assets (i) to the best
knowledge of Seller, do not violate any copyright, trade secret, trademark,
patent or other proprietary right of any third party; (ii) to the best knowledge
of Seller, are not derived from any legally protectible third party materials
and do not contain any materials owned by third parties, except as set forth in
Schedule 5; and (iii) are not subject to any third party royalty obligations
or other material obligations, except as set forth in Schedule 5. Other than
Seller and those third parties listed in Schedule 5, all persons developing or
creating any part of the Transferred Assets either were acting as employees of
Seller or have executed agreements adequate to assign any interest they may
have in their creation to Seller. The patents listed on Schedule 1.5 constitute
all of the patents and patent applications included as part of the Intellectual
Property. To the best knowledge of Seller, all patent applications listed
therein have been filed and prosecuted in good faith as required by law
and are in good standing. No third party has notified Seller of any claim of
infringement by Seller of any patents or other intellectual property rights
of others in connection with the patents included as part of the Intellectual
Property. To the best knowledge of Seller, no interference or opposition
proceeding is pending or threatened relating to the patents included as
part of the Intellectual Property. Except as contemplated by this Agreement,
Seller has not granted any person or entity any right to use the patents
included as part of the Intellectual Property for any purpose.
5.11 Taxes and Audits. To the extent that a failure to do so
would adversely affect Buyer or the Transferred Assets, (a) Seller has timely
filed all federal, state and other returns and reports ("Returns") relating
to taxes or other governmental charges, obligations, filings or fees, including
without limitation income, business, sales or use, employment, withholding
and secondary or transferee liability for taxes and any related interest or
penalties ("Taxes"); (b) Seller's Returns are true and correct and were
completed in accordance with applicable laws; (c) Seller has paid all Taxes,
if any, due and payable in connection with Seller's business and its use and
ownership of the Assets; (d) Seller has withheld all required amounts and
paid such amounts to the appropriate governmental authority; and (e) there
are no current liens for Taxes and no pending or threatened audits,
examinations, assessments, asserted deficiencies or claims for Taxes. There
have been no governmental or other challenges to the status or validity of
Seller or its ability to transfer of the Product to Buyer.
5.12 Accuracy of Documents and Due Diligence Materials. All
documents provided to Buyer by Seller pursuant to or in connection with this
Agreement, including due diligence materials, are true and accurate in all
material respects.
6 BUYER'S AND BIOMUNE'S WARRANTIES Each of Buyer and Biomune hereby represents,
warrants, and covenants to Seller as follows:
6.1 Authority and Power. Buyer is a corporation, legally organized
and existing. Buyer has the corporate power to enter into and perform according
to the terms and conditions of this Agreement. Any corporate action on the
part of Buyer necessary for the authorization, execution, delivery and
performance of this Agreement and any other agreements contemplated hereby has
been taken. This Agreement and any other agreements contemplated hereby, when
executed and delivered by Buyer, will constitute valid and binding obligations
of Buyer enforceable in accordance with their respective terms except as such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.
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6.2 No Violation. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not (i) materially modify, breach or constitute grounds
for the occurrence or declaration of a material default under any material
agreement by which the Transferred Assets may be bound or affected; (ii)
result in the creation or imposition of (or the obligation to create or
impose) any Lien on the Transferred Assets; (iii) to the best knowledge of
Seller, violate any law, regulation, order, judgment or decree of any court or
governmental agency; or (iv) violate any provision of the Articles of
Incorporation or bylaws of Buyer.
6.3 No Litigation, Etc. There is no litigation, investigation,
arbitration or other proceeding (formal or informal) pending or, to the
knowledge of Buyer, threatened against or affecting Buyer, the result of which
could have a material adverse effect on Buyer's ability to purchase the
Transferred Assets or pay to Seller the consideration set forth in Section
3.1; nor does Buyer know or have reason to know of any basis for the same.
6.4 No Broker's Fees. Buyer has not incurred, and will not incur,
directly or indirectly, as a result of any action taken by it, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement that may be imposed against Seller. Buyer
agrees to indemnify and hold harmless Seller from and against any claim for
brokerage or similar fees relative to the transaction contemplated hereby.
6.5 Issuance of Shares. The shares of Biomune Common Stock have
been duly authorized and, when issued pursuant to the terms of this Agreement,
will be validly issued, fully paid and nonassessable.
7 INDEMNIFICATION
7.1 Seller's Duty to Indemnify. Seller agrees to indemnify and
hold Buyer and its affiliates harmless from all claims, losses, liabilities,
damages, deficiencies, costs, penalties, interest and expenses, including
reasonable attorneys' fees and expenses of investigation (a "Loss") incurred
by Buyer or any of its affiliates relating to or resulting from (i) any
inaccuracy of a representation or breach of any warranty of Seller, or
failure by Seller to perform or comply with any covenant, that is contained
herein or in any exhibit, schedule or other document delivered in connection
with this Agreement by Seller or its representatives; (ii) any claim or action
by any third party questioning the validity of or seeking to rescind
Seller's transfer of any of the Transferred Assets to Buyer; (iii) any
liabilities, obligations or commitments of, or claims against, Seller, or
against or involving any of the Transferred Assets arising out of any act or
omission of Seller prior to the Closing Date; or (iv) any claim of
infringement of any copyright, trade secret or other personal or proprietary
right relating to the Transferred Assets in the form transferred by Seller to
Buyer (excluding trademarks and patents, which are covered solely under
Sections 5.10 and 7.1(i)). In no event shall Seller be liable for, or subject
to indemnification obligations for, any claim or loss to the extent it arises
out of modifications or changes to the Product made by Buyer. In no event
shall Seller be liable for, or subject to indemnification obligations for,
any claim or loss to the extent it arises out of modifications or changes to the
Transferred Assets made by Buyer.
7.2 Buyer's Duty to Indemnify. Buyer agrees to indemnify and hold
Seller and its affiliates harmless from any Loss incurred by Seller or any of
its affiliates relating to or resulting from (i) any inaccuracy of a
representation or breach of any warranty of Buyer, or failure by Buyer to
perform or comply with any covenant, that is contained herein or in any exhibit,
schedule or other document delivered in connection with this Agreement by Buyer
or its representatives; and ii) any liabilities, obligations or commitments of,
or claims against, Seller, or against or involving any of the Transferred Assets
arising out of any act or omission of Buyer after the Closing Date.
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8 CONFIDENTIALITY.
8.1 Confidential Information. Seller acknowledges that, after the
Closing Date, the Transferred Assets will constitute proprietary and
confidential information of Buyer ("Confidential Information"), and agrees
that it will not use such Confidential Information or disclose it to any third
party without the prior written consent of Buyer; provided, however, that the
foregoing restriction shall not apply to any portion of the Confidential
Information which (a) is or becomes generally available to the public in any
manner or form through no fault of Seller or its employees, agents or
representatives, or (b) is rightfully received from another source on a
non-confidential basis, or (c) is released for disclosure with Buyer's prior
written consent, or (d) is required by a court or a governmental agency to be
disclosed or is otherwise required by law, or is necessary in order to establish
rights under this Agreement; provided, that, with respect to clause (d) above,
Seller shall first notify Buyer of such required disclosure and shall take
such steps as Buyer shall reasonably request to limit the scope of such
disclosure and otherwise protect the confidentiality of the Confidential
Information. Without limiting the foregoing, the terms and conditions of this
Agreement shall be considered confidential and shall not be disclosed
(except to either party's attorneys and accountants on a need-to-know basis)
without the prior written consent of the other party, except to the
extent reasonably necessary for purposes of this Agreement or in order to
fulfill obligations under this Agreement.
8.2 Public Announcements. The parties agree to coordinate and
agree in advance with respect to both the timing and contents of any public
announcements relating to this Agreement or the transactions contemplated
hereby. Each party shall have the right to review and approve, prior to
publication, the content of any press releases or public communications relating
to such party and this Agreement that are distributed or published by the other
party. Approval shall not be unreasonably withheld or delayed. Each party
shall cooperate reasonably in supplying requested information and quotes for
appropriate press releases.
9 Covenants Not to Compete or Solicit. In consideration of the payments
set forth in Section 3, the parties agree as follows:
9.1 Covenant Not to Compete. Seller hereby covenants and agrees
that during the period commencing on the Closing Date and continuing until the
tenth anniversary thereof, it will not, directly or indirectly, without the
prior written consent of Buyer, develop, market or sell, or assist in the
development, marketing or sale of, any timed-release glucose product for
people with diabetes or hypoglycemia, or any other product for the
nutritional management of hypoglycemia, throughout the world (a "Competitive
Product"); including without limitation providing consultative services,
owning, managing, operating, participating in, controlling, or being
connected as a majority stockholder, partner, or otherwise with any business,
individual or entity that creates, develops or markets a Competitive Product,
except as otherwise provided in Section 9.2 below. The parties acknowledge that
the worldwide geographic scope of this covenant is reasonably necessary to
protect Buyer's interests, that Buyer is currently marketing the Product
throughout the United States and in several additional countries, and that
there are currently plans to pursue marketing the Product in other foreign
countries and markets within the foreseeable future.
9.2 Investment in Competing Businesses. Notwithstanding anything
to the contrary in this Agreement, the parties hereby acknowledge and agree
that nothing in Section 9.1 above shall prevent or prohibit Seller from
investing in any business or entity, or any division or other portion of any
business or entity, which derives sales or revenues from the commercialization,
sale or importing of a Competitive Product; provided, however, if Seller owns
more than five percent (5%) of the stock or other ownership interests in any
such business or entity, then Seller shall divest itself of the excess ownership
interests in such business or portion of such business on reasonable
commercial terms and conditions until its ownership is five percent (5%) or
less of the business.
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9.3 Non-Solicitation Covenant. Seller covenants and agrees that
for a period of two (2) years from the Closing Date, it will not do anything,
directly or indirectly, which would solicit away from Buyer or otherwise tend
to divert from Buyer any business with a customer or prospective customer of
Buyer; including, without limitation, by providing customers' names,
contacts or business information to a competitor of Buyer; or solicit, recruit
or otherwise cause any employee of Buyer to cease providing services for Buyer;
provided, that the foregoing shall not apply to any generally-circulated
advertisement of Seller.
9.4 Acknowledgements; Injunctive Relief. Seller hereby
affirmatively represents that it acknowledges and agrees that (i) substantial
and valuable good will has developed through the parties' efforts with respect
to the business of selling the Product, which is being transferred to Buyer by
this Agreement and which is intended to be protected, in part, by this Section
9; (ii) in addition to patents and patent rights, there are substantial trade
secret elements related to the Product, including with respect to its
ingredients, recipes, formulae and production methods, which are also intended
to be protected by this Section 9; (iii) Buyer has a legitimate business purpose
in requiring Seller to abide by the restrictive covenants contained in this
Section 9; (iii) the restrictions contained herein are reasonably necessary
given Seller's knowledge of the Product and related trade secrets, and
its unique and valuable role in developing the Product; and (iv) competition
by Seller with the Product would severely injure Buyer, and monetary damages
would be difficult if not impossible to ascertain. In light of the foregoing
and the consideration given by Buyer under this Agreement, Seller specifically
agrees that in the event it violates any of the provisions of this Section 9,
irreparable harm will occur and thus shall be presumed and Buyer shall be
entitled to an immediate injunction from any court of competent jurisdiction.
Seller specifically releases Buyer from the requirement of posting any bond in
connection with temporary or interlocutory injunctive relief, to the extent
permitted by law. Seller covenants and agrees not to argue in any claim or
proceeding that Buyer has an adequate remedy at law with respect to any breach
of this covenant.
9.5 Severability. In the event that any restriction or term
herein is deemed to be unreasonable or invalid by a court of competent
jurisdiction, then it is agreed that such court shall reduce or modify such
term to the minimum extent necessary to make it reasonable, valid and
enforceable in the applicable jurisdiction of such court. If such term cannot
be so reduced or modified, it shall be severed and all other terms and
restrictions of this Agreement shall remain in ful force and effect and shall
be interpreted in such a way as to give maximum validity and enforceability to
this Agreement. Sections 9.1 and 9.2 are intended to be construed as a series
of separate covenants, one for each city, county, state, country or
geographic area in which Buyer does or intends or attempts to do business.
Except for geographic coverage, each such separate covenant shall be deemed
identical in terms.
10 Breach of Agreement; Remedies. If either party believes that the
other has materially breached any provision of this Agreement, the party
alleging the breach shall deliver notice to the other party, specifying the
nature of the alleged breach. The party alleged to be in breach shall have
sixty (60) days from the date of mailing of such notice in which to attempt to
cure the alleged breach. During such sixty (60) day period, either party may
request a personal meeting between the parties in which to negotiate in good
faith to attempt to resolve the dispute. If such negotiations are unsuccessful
and the alleged breach has not been cured by the end of such sixty (60) day
period, the party alleging the breach may pursue any and all rights and remedies
that it has under this Agreement, at law or in equity, in any judicial or
arbitration proceedings; provided, however, that Seller agrees that, except
in the event of Buyer's failure to deliver the Purchase Price set forth in
Section 3, rescission shall not be a remedy that is available to Seller.
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11 LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER OR NOT SUCH DAMAGES WERE
FORESEEN OR UNFORESEEABLE; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATION OF
LIABILITY SHALL NOT LIMIT THE INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 7
ABOVE.
12 Miscellaneous.
12.1 Expenses. Buyer and Seller shall each bear its own legal
fees and other expenses incurred by it in connection with the negotiation of
this Agreement and the carrying out of the transaction contemplated hereby.
12.2 Additional Actions and Documents. Each party agrees to
perform such additional acts and to execute such additional documents as are
reasonably necessary to carry out the transactions contemplated by this
Agreement and to assist Buyer to obtain, perfect and protect its interest in
the Product and other Transferred Assets.
12.3 Notice. All notices between the parties shall be in writing
and shall be sent by certified or registered mail or commercial overnight
delivery service, with provisions for a receipt, to the address of the other
party listed below (or to such other address as a party may furnish to the other
in writing):
If to Buyer: Mr. Peter J. Vitulli If to Seller: Randy E. Olshen
Amerifit Nutrition, Inc. Optim Nutrition, Inc.
166 Highland Park Drive 2401 S. Foothill Dr.
Bloomfield, CT 06002 Salt Lake City, UT
84109
With a copy to: Mintz, Levin, Cohn, With a copy to: Kevin R. Pinegar
Ferris,Glovsky & Durham Jones & Pinegar
Popeo, P.C. 50 South Main
One Financial Center Suite 850
Boston, MA 02111 SaltLake City, UT
Attn: Douglas A. Zingale 84144
12.4 Entire Agreement; Amendment; Waiver. This Agreement,
together with the Exhibits and Schedules hereto, which are incorporated herein
by reference, and the additional documents required to be delivered pursuant
hereto, constitutes the complete agreement between the parties and
supersedes all previous representations, written or oral, with respect to the
Product or other subject matter of this Agreement. Except as otherwise expressly
provided herein, this Agreement may be modified or amended only by a writing
signed by duly authorized representatives of both parties. The waiver by either
party of any default or breach of this Agreement, or any obligation hereunder,
shall be ineffective unless in writing, and shall not constitute a waiver of any
subsequent breach or default. No failure to exercise any right or power under
this Agreement or to insist on strict compliance by the other party shall
constitute a waiver of the right in the future to exercise such right or power
or to insist on strict compliance.
12.5 Legal Proceedings. The parties agree: (i) this Agreement shall
be construed in accordance with the internal laws of the State of Utah; (ii) if
any dispute arises concerning this Agreement, such action shall be brought in
a state or federal court in the state where the defendant's principal office
is located (i.e., Utah court if Buyer is the defendant and Connecticut court if
the Seller is the defendant), and such court shall have exclusive jurisdiction
over any dispute concerning this Agreement and each party hereby consents to the
personal jurisdiction of such court; and (iii) in the event that a dispute shall
arise concerning this Agreement, the prevailing party shall be entitled to
recover from the non-prevailing party all attorneys' fees and costs incurred
by the prevailing party in connection with such dispute, regardless of whether
such dispute results in the filing of a lawsuit.
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12.6 Cumulative Remedies. All rights and remedies provided in this
Agreement, at law or in equity are cumulative.
12.7 Severability. If any term of this Agreement is held
invalid or unenforceable by a court or arbitrator of competent jurisdiction,
such terms shall be reduced or otherwise modified by such court or arbitrator
to the minimum extent necessary to make it valid and enforceable. If such term
cannot be so modified, it shall be severed and the remaining terms of this
Agreement shall be interpreted in such a way as to give maximum validity and
enforceability to this Agreement.
12.8 Binding Effect. This Agreement is binding upon and shall
inure to the benefit of the parties and their respective successors,
representatives and assigns. Buyer may assign this Agreement and Buyer's
rights and obligations hereunder, including Buyer's rights as the beneficiary
of Seller's covenants under Section 9, to any third party. Seller may not
assign this Agreement or delegate its obligations hereunder without Buyer's
prior written consent, except that Seller may assign to any third party the
right to receive consideration paid hereunder.
12.9 Force Majeure. Neither party shall be liable for any failure
or delay in performing hereunder, if such failure or delay is due to war,
strike, government requirements, acts of nature, acts or omissions of carriers,
or other cause(s) beyond its reasonable control.
12.10 Counterparts. This Agreement may be executed in counterparts,
and all counterparts shall be deemed to be one and the same agreement.
12.11 No Agency. The parties are independent contractors, and this
Agreement shall not be construed to create any agency or partnership between
them. Neither party has authority to bind the other, to incur any liability or
act on behalf of the other, or to direct the other's employees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
Amerifit Nutrition, Inc. Optim Nutrition, Inc.
By: /s/ Peter J. Vitulli By:
------------------------------------ -----------------------------------
Peter J. Vitulli, President and CEO Randy E. Olshen, President
01/13/00
- --------------------------------------- --------------------------------------
Date Date
15
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LIST OF EXHIBITS AND SCHEDULES
Schedule 1.3: Deliverables
Schedule 1.5: Intellectual Property
Schedule 1.6: Licenses
Schedule 5: Exceptions to Warranties
Exhibit A: Bill of Sale
Exhibit B: Trademark Assignment
Exhibit C: Patent and Patent Application Assignment
Exhibit D: Buyer License Agreement
16
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SCHEDULE 1.3
Deliverables
Any and all records and files associated with the Transferred Assets, including
those relating to customers, retailers, wholesalers, contract manufacturers and
Intellectual Property.
17
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SCHEDULE 1.5
Intellectual Property
A.) All right, title and interest in and to all patents, patent
applications, and related documentation with respect to the Product,
specifically including the following:
(i) U.S. Patent No. 5,866,555
(ii) CIP U.S. Application # 09/241,004
(iii) all foreign patents and patent application filings, including
PCT application, with Designated Office Requirements met, in
EPO, China, Brazil, Israel, and Japan
(iv) All tangible intellectual property files related to the above
patent and applications, including those in the possession or
control of Seller's intellectual property firm, Hamilton,
Brook, Smith & Reynolds of Lexington, Massachusetts
(v) Any other files related to NiteBite patents and/or
applications, foreign or domestic
B.) All right, title and interest in and to all trademarks related to the
Product, as well as accompanying documentation, including:
(i) NiteBite(R)trademark.
(ii) All trademark files related to the foregoing, including those
in the possession or control of Peter Nils Baylor, Esq. and
Nutter, McClennen, & Fish of Boston, Massachusetts.
(iii) All foreign trademark rights, registrations and applications
with respect to NiteBite(R). The parties acknowledge that
NiteBite has been registered as a trademark in Chile,
Argentina, Brazil, ___________, and that applications for
trademark registration of NiteBite have been filed in .
-------
C.) All right, title and interest in and to the internet domain name:
www.nitebite.com.
D.) All right, title and interest in the following toll free phone number:
1-800-795-1880.
All right, title and interest in and to the copyright (owned by Medical
Foods, Inc., 1997) in the paper entitled, "Timed-Release Glucose:
Nutritional Management of Hypoglycemia", written by Drs. Bell and
Forse, which is the original, in-house publication of this paper. The
parties acknowledge that this paper was later edited and published by
The Diabetes Educator. The Diabetes Educator owns the copyright for the
version of the article published by it, and Buyer will not be
transferred ownership of that particular copyright.
18
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SCHEDULE 1.6
Licenses
None.
19
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SCHEDULE 5
Exceptions to Warranties
Section 5.3: Third Party Agreements or Consents:
- ------------------------------------------------
Supply Agreements with Nellson Nutraceutical
Technology Purchase and Sale Agreement between Seller and Beth Israel Deaconess
Medical Center (to be consummated prior to Closing)
Section 5.10: Exceptions to Title:
- ----------------------------------
Materials owned by third parties: Formulae, etc., owned by Nellson
Nutraceutical, as set forth in the Assumed Contract (as may be modified by the
current Supply Agreement between Nellson Nutraceutical and Optim Nutrition)
Non-employees creating portions of the Transferred Assets:
Beth Israel Deaconess Medical Center
20
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EXHIBIT A
FORM OF BILL OF SALE
For the sum of ten dollars ($10.00) and other good and valuable consideration
paid to Amerifit Nutrition, Inc., a corporation located in the State of
Connecticut ("Seller"), the receipt and sufficiency of which are acknowledged,
Seller sells, transfers, conveys and assigns to Optim Nutrition, Inc. ("Buyer")
all right, title and interest in and to the intellectual property related to the
NiteBite(R) product (the "Product", as more specifically described in the Asset
Purchase Agreement executed by Seller and Buyer of even date herewith (the
"Purchase Agreement")) developed by Seller, as described in the Purchase
Agreement, as well as the other Transferred Assets listed and defined in the
Purchase Agreement, free and clear of all liens, security interests, claims or
other restrictions, limitations and encumbrances.
This Bill of Sale is in accordance with, and is subject to, all of the
representations, warranties, covenants and exclusions set forth in the Purchase
Agreement.
Seller shall, at Buyer's request, execute and deliver such further instruments
of sale, assignment and transfer and take such further actions as Buyer may
reasonably request in order to vest in Buyer and put Buyer in possession of the
Product and Transferred Assets and assure to Buyer the benefits thereof.
In witness whereof, Seller has executed this Bill of Sale as of the date set
forth below.
Amerifit Nutrition, Inc. Optim Nutrition, Inc.
By: By:
----------------------------------- --------------------------------
Peter J. Vitulli, President and CEO Randy E. Olshen, President
Date: Date:
---------------------------------- ------------------------------
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EXHIBIT B
FORM OF TRADEMARK ASSIGNMENT
For the sum of ten dollars ($10.00) and other good and valuable consideration
paid to Amerifit Nutrition, Inc. ("Seller"), the receipt and sufficiency of
which are acknowledged, Seller sells, transfers, conveys and assigns to Optim
Nutrition, Inc. ("Buyer") all right, title and interest in and to the trademarks
and any registrations and pending registrations therefor (the "Trademarks"), all
as listed in Attachment 1 hereto, including all associated goodwill, together
with the right to sue and recover for any past infringements of the Trademarks,
and the right to file any domestic and foreign applications with respect to the
Trademarks under any law, convention or treaty.
Seller further sells, assigns and transfers to Buyer any and all renewals,
extensions and continuations of the Trademarks, secured or to be secured under
the United States trademark law or any other trademark law (statutory or common
law) now or hereafter in effect in the United States or any other countries or
pursuant to any treaties or conventions.
Seller agrees to cooperate with Buyer, to execute and deliver such other
documents, instruments of sale, assignment, transfer and recordation, files,
books and records and to do all such further acts as Buyer may reasonably
request to secure for Buyer, and its successors and assigns, the entire right,
title and interest in and to the Trademarks.
In witness whereof, Seller has executed this Trademark Assignment as of the date
set forth below.
Amerifit Nutrition, Inc. Optim Nutrition, Inc.
By: By:
------------------------------------ --------------------------------
Peter J. Vitulli, President and CEO Randy E. Olshen, President
- --------------------------------------- -----------------------------------
Date Date
22
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ATTACHMENT 1 TO TRADEMARK ASSIGNMENT
Federally Registered Trademark:
- ------------------------------
NiteBite(R)
23
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EXHIBIT C
A S S I G N M E N T
This Assignment ("Assignment") is made and entered into as of the ____
day of __________________, 1999, by Amerifit Nutrition, Inc. ("Assignor") in
favor of Optim Nutrition ("Buyer").
1. RECITALS AND REPRESENTATIONS:
A. Assignor owns the right, title, and interest in and to the
following (collectively the "Property"):
United States Patent ______ and Patent Application ________,
and the invention(s) therein described ("Invention"); [add any foreign
patents and patent applications];
The entire right, title and interest in said Invention in the
above-identified United States patent and patent application and in all
divisions, continuations and continuations-in-part of said application,
or reissues or extensions of Letters Patent or Patents granted thereon,
and in all corresponding applications filed in countries foreign to the
United States, and in all patents issuing thereon in the United States
and Foreign countries;
The right to file foreign patent applications on said
Invention in its own name, wherever such right may be legally
exercised, including the right to claim the benefits of the
International Convention for such applications;
The entire right, title and interest to any and all developed
ideas, trade secrets, confidential information, and copyrightable
matter directly related to said Invention; and
All extensions, modifications, new developments, improvements,
supplements, technical data, scientific know-how, and all other
property, legal, equitable, and contractual rights directly and
indirectly relating to said Invention, whether now existing or
hereafter arising.
B. Assignor desires to transfer all of its claims, right, title
and interest to any or all of the Property to Buyer, and Buyer desires to secure
same.
2. GRANT
A. In consideration of $______ and other good and valuable
consideration paid to Assignor by Buyer, the receipt and sufficiency of which
Assignor hereby acknowledges, Assignor hereby assigns to Buyer its entire claim,
right, title, and interest in the Property and in any portion thereof.
24
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3. MISCELLANEOUS
A. Assignor hereby authorizes and requests the United States
Commissioner of Patents and Trademarks, and such Patent Office officials in
foreign countries as are duly authorized by their patent laws to issue patents,
to issue any and all patents on said Invention to Buyer as the owner of the
entire interest, for the sole use and benefit of Buyer, its successors, assigns
and legal representatives.
B. Assignor hereby agrees, without further consideration to give
a full and frank disclosure of all information necessary or related to the
implementation of the above-identified invention which includes by way of
example and not by limitation, manufacturing and industrial concepts, ideas,
formulas, trade secrets, technical expertise, and specifications. Assignor
further agrees to provide all documents, drawings, schematics, and things used
to develop, implement, and reduce the invention to practice.
C. Assignor hereby agrees, without further consideration and
without expense to it, to sign all lawful papers and to perform all other lawful
acts which Buyer may request to make this assignment fully effective, including,
by way of example but not of limitation, the following:
Prompt execution of all original, divisional, substitute,
reissue, and other United States and foreign patent applications on
said Invention, and all lawful documents requested by Buyer to further
the prosecution of any of such patent applications; and
Cooperation to the best of its ability in the execution of all
lawful documents, the production of evidence, nullification, reissue,
extension, or infringement proceedings involving said Invention.
D. This Assignment and the terms of agreement herein shall be
binding upon Assignor's successors and legal representatives.
E. This Assignment contains the entire agreement between the
parties hereto with respect to the subject matter hereof. This Assignment
may be amended, modified, superseded, canceled, renewed, or extended and the
terms and conditions hereof may be waived only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance.
F. This Assignment shall be governed by and construed in
accordance with federal law and with the laws of the State of Utah, and any
lawsuit arising therefrom shall be heard in a court of competent jurisdiction
in the State of Utah.
25
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G. In the event that any condition, covenant, or other provision
herein contained is held to be invalid or unenforceable by any court of
competent jurisdiction, the same shall be deemed severable from the remainder
of this Assignment and shall in no way affect any other covenant or condition
herein contained. If such condition, covenant, or other provision shall be
deemed invalid or unenforceable due to its scope or breadth, such condition,
covenant, or other provision shall be deemed valid to the extent of the scope
or breadth permitted by law.
H. No party hereto shall be deemed to be the representative,
partner, joint-venturer, or agent of any other party hereto by virtue of this
Assignment.
I. Each person executing this Assignment does thereby represent
and warrant to each other person so signing (and each other entity for which
another person may be signing) that he or she has been duly authorized to
execute this Assignment in the capacity and for the entity set forth below.
IN WITNESS WHEREOF Assignor has hereunto set its hand:
Assignor: Amerifit Nutrition, Inc. Date: the ____ day of ______________, 1999
By:___________________________________
Peter J. Vitulli, President and CEO
STATE OF _________________ )
)
COUNTY OF ________________ )
On this ____ day of ________________, 2000, personally appeared before
me Peter J. Vitulli, who proved to me on the basis of satisfactory evidence to
be the president and chief executive officer of the Seller, Amerifit Nutrition,
Inc., and acknowledged that he executed this Assignment.
S
E ____________________________NOTARY PUBLIC
A ____________________COMMISSION EXPIRATION
L
26
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EXHIBIT D
Form of Buyer License Agreement
LICENSE AGREEMENT
This License Agreement (this "Agreement") is made effective as of
January ____, 2000 (the "Effective Date") by and between Amerifit Nutrition,
Inc., a Delaware corporation with its principal place of business at 166
Highland Park Drive, Bloomfield, Connecticut 06002 ("Licensor"), and Optim
Nutrition, Inc., a Utah corporation and a wholly-owned subsidiary of Biomune
Systems, Inc., and with its principal place of business at 2401 S. Foothill
Drive, Salt Lake City, Utah 84109 ("Licensee"). Licensor and Licensee are each
hereafter referred to individually as a "Party" and together as the "Parties".
WHEREAS, Licensor has transferred to Licensee certain assets related to
its NiteBite Product pursuant to an Asset Purchase Agreement of even date
herewith (the "Purchase Agreement"); and
WHEREAS, in connection with such acquisition, Licensor has agreed to
license to Licensee, on an exclusive basis with respect to the "Market" defined
herein and on a non-exclusive basis elsewhere, a certain Trademark in accordance
with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, including the
consideration received by Licensor pursuant to the Purchase Agreement, the
receipt and adequacy of which is hereby acknowledged, the Parties hereby agree
as follows:
1. DEFINITIONS
Whenever used in the Agreement with an initial capital letter, the
terms defined in this Section 1 shall have the meanings specified.
1.1 "Affiliate" means any corporation, firm, limited liability
company, partnership or other entity, which directly or indirectly controls
or is controlled by or is under common control with a Party to this Agreement.
"Control" means ownership, directly or through one or more Affiliates, of more
than fifty percent (50%) of the shares of stock entitled to vote for the
election of directors, in the case of a corporation, or more than fifty percent
(50%) of the equity interests in the case of any other type of legal entity,
status as a general partner in any partnership, or any other arrangement whereby
a Party controls or has the right to control the Board of Directors or
equivalent governing body of a corporation or other entity.
1.2 "Market" means the market for timed-release glucose products
for persons with diabetes or hypoglycemia.
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1.2 "Product" has the meaning set forth in the Purchase Agreement,
and includes future modified versions of such Product.
1.3 "Term" has the meaning set forth in Section 4.1.
1.4 "Territory" means worldwide.
1.5 "Trademark" means the mark "Timed-Release Glucose Bar(TM)".
2. LICENSE GRANT
2.1. License Grant. Licensor hereby grants to Licensee a perpetual
(subject to termination under Section 3 below), royalty-free license, with the
right to grant sublicenses as provided in Section 2.2, to use the Trademark
within the Territory in connection with the manufacturing, marketing and sale of
Products. This license shall be exclusive with respect to the Market for a
period of ten (10) years from the Effective Date. Licensor shall not itself
utilize the Trademark for any product within the Market during such period, and
shall not authorize others to use the Trademark within the Market during such
period. In all other markets, this license shall be non-exclusive.
2.2 Sublicense Rights. Licensee shall have the right to sublicense
the rights granted to it under Section 2.1 of this Agreement in whole or in part
to its Affiliates and to Licensee's other sublicensees and distributors with
respect to the Product, to use in connection with their sales and distributions
of the Product.
3. TERM AND TERMINATION
3.1. Term. This Agreement and the licenses granted hereunder shall
continue until terminated as provided in this Section 4.
3.2 Termination Provisions.
(a) This Agreement and the licenses granted herein may be
terminated by Licensor upon any breach by Licensee of any material obligation
or condition, effective sixty (60) days after giving written notice to
Licensee of such termination, which notice shall describe such breach in
reasonable detail, and opportunity to cure the breach. The foregoing
notwithstanding, if the default or breach is cured or shown to be non-existent
within the aforesaid or sixty (60) day period, the notice shall be deemed
automatically withdrawn and of no effect.
3.3 Termination by Licensee. Licensee may terminate this
Agreement, and the rights and obligations hereunder, in its sole discretion
at any time by giving written notice thereof to Licensor. Such termination shall
be effective fifteen (15) days following the date such notice is received by
Licensor and shall have all consequences as set forth in Section 3.4 and 3.6
below.
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<PAGE>
3.4 Effect of Termination. Upon termination of this Agreement
under Section 3.2 or Section 3.3, Licensee shall cease all use of the Trademark
and all relevant licenses and sublicenses granted by Licensor to Licensee
hereunder shall terminate and Licensee shall promptly transfer to Licensor or
destroy all documents, instruments, records and data relevant to the use of the
Trademark.
3.5 Remedies. If either Party shall fail to perform or observe
or otherwise breaches any of its material obligations under this Agreement, in
addition to any right to terminate this Agreement, the non-defaulting Party may
elect to obtain other relief and remedies available under law.
3.6 Surviving Provisions. Notwithstanding any provision herein
to the contrary, the rights and obligations set forth in Articles 3, and
Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.7, and 4.17 hereof shall survive the
expiration or termination of the Term of this Agreement.
4. MISCELLANEOUS
4.1 Licensor Representations. Licensor represents and warrants
that: (a) the execution and delivery of this Agreement and the performance
of the transactions contemplated hereby have been duly authorized by all
appropriate Licensor corporate action; (b) Licensor is under no obligation
which is inconsistent with this Agreement; and (c) Licensor is the owner of the
Trademark and that, to the best of its knowledge, it has the free and
unencumbered right to license the Trademark to Licensee as provided hereunder.
4.2 Licensee Representations. Licensee represents and warrants
that: (a) the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby have been duly authorized by all
appropriate Licensee corporate action; and (b) Licensee is under no obligation
which is inconsistent with this Agreement.
4.3 Limitation of Warranties.
EXCEPT AS SET FORTH IN SECTIONS 4.1 AND 4.2, THE PARTIES MAKE NO REPRESENTATIONS
AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.
4.4 Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
OTHERWISE, THE PARTIES WILL NOT BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF
THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL
OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
LICENSED TECHNOLOGY OR SERVICES.
29
<PAGE>
4.5 Trademark Enforcement. Licensor may, in its sole discretion,
(a) take all reasonable measures, including without limitations bringing civil
actions for trademark infringement, to stop the use of marks which, in its sole
judgment, are the same as or confusingly similar to the Trademark and (b) take
all reasonable measures, including without limitations bringing inter partes
proceedings in the United States Patent and Trademark Office, to prevent the
registration of marks which, in its sole judgment, are the same as or
confusingly similar to the Trademark. Licensor shall have the right to bring all
such actions involving the Trademark and any award received in any such actions
shall belong solely to Licensor. Licensor agrees to take such actions as are
reasonably requested by Licensee to require third parties who are using the
Trademark within the Market during the term of Licensee's exclusive license to
cease such use, including written demands to cease and desist such use; provided
that Licensor shall not be required to bring legal action against such
infringing users. However, if Licensor declines to bring any such action within
thirty (30) days after Licensee's written request, Licensee shall have the right
to bring such an action in order to protect the exclusivity of its license with
respect to the Market. Any award received in any such action brought by Licensee
shall belong solely to Licensee.
4.6 Notices. Any notices, requests, deliveries, approvals or
consents required or permitted to be given under this Agreement to Licensee or
Licensor shall be in writing and shall be personally delivered or sent by
telecopy (with written confirmation to follow via United States first class
mail), overnight courier providing evidence of receipt or certified mail,
return receipt requested, postage prepaid, in each case to the respective
address specified below (or to such address as may be specified in writing
to the other Party hereto):
If to Licensor:
Mr. Peter J. Vitulli
Amerifit Nutrition, Inc.
166 Highland Park Drive
Bloomfield, CT 06002
With a copy to:
Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo, P.C.
One Financial Center
Boston, MA 02111
Attn: Douglas A. Zingale
If to Licensee:
Randy E. Olshen
Optim Nutrition, Inc.
2401 S. Foothill Dr.
Salt Lake City, UT 84109
30
<PAGE>
With a copy to:
Kevin R. Pinegar
Durham Jones & Pinegar
50 South Main, Suite 850
Salt Lake City, UT 84044
Such notices shall be deemed to have been sufficiently given on: (a)
the date sent if delivered in person or transmitted by telecopy, (b) the next
business day after dispatch in the case of overnight courier or (c) five (5)
business days after deposit in the U.S. mail in the case of certified mail.
4.7 Governing Law. The Parties agree: (i) this Agreement will be
construed, interpreted and applied in accordance with the laws of the State of
Utah (excluding its body of law controlling conflicts of law); (ii) if any
dispute arises concerning this Agreement, such action shall be brought in a
state or federal court in the state of incorporation of the defendant in such
action (i.e., Utah court if Licensee is the defendant and Delaware court if the
Licensor is the defendant), and such court shall have exclusive jurisdiction
over any dispute concerning this Agreement and each Party hereby consents to the
personal jurisdiction of such court; and (iii) in the event that a dispute shall
arise concerning this Agreement, the prevailing Party shall be entitled to
recover from the non-prevailing Party all attorneys' fees and costs incurred by
the prevailing Party in connection with such dispute, regardless of whether such
dispute results in the filing of a lawsuit.
4.8 Limitations. Except as set forth elsewhere in this Agreement
or in a written agreement between the Parties, neither Party grants to the other
Party any right or license to any of its intellectual property.
4.9 Entire Agreement. This is the entire Agreement between the
Parties with respect to the subject matter herein. No modification shall be
effective unless in writing and signed by the Parties.
4.10 Waiver. The terms or conditions of this Agreement may be
waived only by a written instrument executed by the Party waiving compliance.
The failure of either Party at any time or times to require performance of any
provision hereof shall in no manner affect its rights at a later time to enforce
the same. No waiver by either Party of any condition or term shall be deemed as
a continuing waiver of such condition or term or of another condition or term.
4.11 Headings. Section and subsection headings are inserted for
convenience of reference only and do not form part of this Agreement.
31
<PAGE>
4.12 Assignment. This Agreement is binding upon and shall inure to
the benefit of the parties and their respective successors, representatives
and assigns. Licensee may assign this Agreement and Licensee's rights and
obligations hereunder to any third party in connection with a sale or transfer
of Licensee's rights in the Product to such third party.
4.13 Force Majeure. Neither Party shall be liable for failure of
or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is
due to natural disasters or any causes beyond the reasonable control of such
Party. In event of such force majeure, the Party affected thereby shall use
reasonable efforts to cure or overcome the same and resume performance of its
obligations hereunder.
4.14 Construction. The Parties hereto acknowledge and agree that:
(i) each Party and its counsel reviewed and negotiated the terms and provisions
of this Agreement and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against the
drafting Party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all Parties hereto and not in a favor of or against any Party, regardless
of which Party was generally responsible for the preparation of this Agreement.
4.15 Severability. If any provision(s) of this Agreement are or
become invalid, are ruled illegal by any court of competent jurisdiction or are
deemed unenforceable under then current applicable law from time to time in
effect during the Term hereof, it is the intention of the Parties that the
remainder of this Agreement shall not be affected thereby provided that a
Party's rights under this Agreement are not materially affected. The Parties
hereto covenant and agree to renegotiate any such term, covenant or application
thereof in good faith in order to provide a reasonably acceptable alternative
to the term, covenant or condition of this Agreement or the application
thereof that is invalid, illegal or unenforceable, it being the intent of the
Parties that the basic purposes of this Agreement are to be effectuated.
4.16 Status. Nothing in this Agreement is intended or shall be
deemed to constitute a partner, agency, employer-employee, or joint venture
relationship between the Parties.
4.17 Indemnification.
(a) Licensor shall indemnify, defend and hold harmless Licensee,
its Affiliates and their respective directors, officers, employees, and agents
and their respective successors, heirs and assigns (the "Licensee Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Licensee
Indemnitees, or any of them, in connection with any claims, suits, actions,
demands or judgments of third parties alleging that the Trademark infringes a
mark of such third party.
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<PAGE>
(b) The Licensee Indemnitees shall promptly notify Licensor of any
action or claim for which they are to be indemnified hereunder and Licensor
shall have the sole right to defend, settle or compromise any such claim or
action.
4.18 Further Assurances. Each Party agrees to execute, acknowledge
and deliver such further instructions, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of
this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representative in two (2) originals.
Amerifit Nutrition, Inc. Optim Nutrition, Inc.
By: By:
------------------------------------ ---------------------------------
Peter J. Vitulli, President and CEO Randy E. Olshen, President
Date: Date:
---------------------------------- -------------------------------
LICENSE AGREEMENT
This License Agreement (this "Agreement") is made effective as of
January 13, 2000 (the "Effective Date") by and between Amerifit Nutrition, Inc.,
a Delaware corporation with its principal place of business at 166 Highland Park
Drive, Bloomfield, Connecticut 06002 ("Licensor"), and Optim Nutrition, Inc., a
Utah corporation and a wholly-owned subsidiary of Biomune Systems, Inc., and
with its principal place of business at 2401 S. Foothill Drive, Salt Lake City,
Utah 84109 ("Licensee"). Licensor and Licensee are each hereafter referred to
individually as a "Party" and together as the "Parties".
WHEREAS, Licensor has transferred to Licensee certain assets related to
its NiteBite Product pursuant to an Asset Purchase Agreement of even date
herewith (the "Purchase Agreement"); and
WHEREAS, in connection with such acquisition, Licensor has agreed to
license to Licensee, on an exclusive basis with respect to the "Market" defined
herein and on a non-exclusive basis elsewhere, a certain Trademark in accordance
with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, including the
consideration received by Licensor pursuant to the Purchase Agreement, the
receipt and adequacy of which is hereby acknowledged, the Parties hereby agree
as follows:
1. DEFINITIONS
Whenever used in the Agreement with an initial capital letter, the
terms defined in this Section 1 shall have the meanings specified.
1.1 "Affiliate" means any corporation, firm, limited liability
company, partnership or other entity, which directly or indirectly controls
or is controlled by or is under common control with a Party to this Agreement.
"Control" means ownership, directly or through one or more Affiliates, of more
than fifty percent (50%) of the shares of stock entitled to vote for the
election of directors, in the case of a corporation, or more than fifty percent
(50%) of the equity interests in the case of any other type of legal entity,
status as a general partner in any partnership, or any other arrangement whereby
a Party controls or has the right to control the Board of Directors or
equivalent governing body of a corporation or other entity.
1
<PAGE>
1.2 "Market" means the market for timed-release glucose products
for persons with diabetes or hypoglycemia.
1.2 "Product" has the meaning set forth in the Purchase Agreement,
and includes future modified versions of such Product.
1.3 "Term" has the meaning set forth in Section 4.1.
1.4 "Territory" means worldwide.
1.5 "Trademark" means the mark "Timed-Release Glucose Bar(TM)".
2. LICENSE GRANT
2.1. License Grant. Licensor hereby grants to Licensee a perpetual
(subject to termination under Section 3 below), royalty-free license, with the
right to grant sublicenses as provided in Section 2.2, to use the Trademark
within the Territory in connection with the manufacturing, marketing and sale of
Products. This license shall be exclusive with respect to the Market for a
period of ten (10) years from the Effective Date. Licensor shall not itself
utilize the Trademark for any product within the Market during such period, and
shall not authorize others to use the Trademark within the Market during such
period. In all other markets, this license shall be non-exclusive.
2.2 Sublicense Rights. Licensee shall have the right to sublicense
the rights granted to it under Section 2.1 of this Agreement in whole or in part
to its Affiliates and to Licensee's other sublicensees and distributors with
respect to the Product, to use in connection with their sales and distributions
of the Product.
3. TERM AND TERMINATION
3.1. Term. This Agreement and the licenses granted hereunder shall
continue until terminated as provided in this Section 3.
3.2 Termination Provisions.
(a) This Agreement and the licenses granted herein may be
terminated by Licensor upon any breach by Licensee of any material obligation
or condition, effective sixty (60) days after giving written notice to Licensee
of such termination, which notice shall describe such breach in reasonable
detail, and opportunity to cure the breach. The foregoing notwithstanding, if
the default or breach is cured or shown to be non-existent within the aforesaid
2
<PAGE>
or sixty (60) day period, the notice shall be deemed automatically withdrawn and
of no effect.
3.3 Termination by Licensee. Licensee may terminate this
Agreement, and the rights and obligations hereunder, in its sole discretion at
any time by giving written notice thereof to Licensor. Such termination shall be
effective fifteen (15) days following the date such notice is received by
Licensor and shall have all consequences as set forth in Section 3.4 and 3.6
below.
3.4 Effect of Termination. Upon termination of this Agreement
under Section 3.2 or Section 3.3, Licensee shall cease all use of the Trademark
and all relevant licenses and sublicenses granted by Licensor to Licensee
hereunder shall terminate and Licensee shall promptly transfer to Licensor or
destroy all documents, instruments, records and data relevant to the use of the
Trademark.
3.5 Remedies. If either Party shall fail to perform or observe or
otherwise breaches any of its material obligations under this Agreement, in
addition to any right to terminate this Agreement, the non-defaulting Party may
elect to obtain other relief and remedies available under law.
3.6 Surviving Provisions. Notwithstanding any provision herein to
the contrary, the rights and obligations set forth in Articles 3, and Sections
4.1, 4.2, 4.3, 4.4, 4.6, 4.7, and 4.17 hereof shall survive the expiration
or termination of the Term of this Agreement.
4. MISCELLANEOUS
4.1 Licensor Representations. Licensor represents and warrants
that: (a) the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby have been duly authorized by all
appropriate Licensor corporate action; (b) Licensor is under no obligation
which is inconsistent with this Agreement; (c) Licensor is the owner of the
Trademark and that, to the best of its knowledge, it has the free and
unencumbered right to license the Trademark to Licensee as provided hereunder;
and (d) to the best of Licensor's knowledge, the Trademark does not infringe
the rights of any third party.
4.2 Licensee Representations. Licensee represents and warrants
that: (a) the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby have been duly authorized by all
3
<PAGE>
appropriate Licensee corporate action; and (b) Licensee is under no obligation
which is inconsistent with this Agreement.
4.3 Limitation of Warranties.
EXCEPT AS SET FORTH IN SECTIONS 4.1 AND 4.2, THE PARTIES MAKE NO REPRESENTATIONS
AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.
4.4 Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT
OR OTHERWISE, THE PARTIES WILL NOT BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER
OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, LICENSED TECHNOLOGY OR SERVICES.
4.5 Trademark Enforcement. Licensor may, in its sole discretion,
(a) take all reasonable measures, including without limitations bringing civil
actions for trademark infringement, to stop the use of marks which, in its sole
judgment, are the same as or confusingly similar to the Trademark and (b) take
all reasonable measures, including without limitations bringing inter partes
proceedings in the United States Patent and Trademark Office, to prevent the
registration of marks which, in its sole judgment, are the same as or
confusingly similar to the Trademark. Licensor shall have the right to bring all
such actions involving the Trademark and any award received in any such actions
shall belong solely to Licensor. Licensor agrees to take such actions as are
reasonably requested by Licensee to require third parties who are using the
Trademark within the Market during the term of Licensee's exclusive license to
cease such use, including making written demands to cease and desist such use;
provided that Licensor shall not be required to bring legal action against such
infringing users. However, if Licensor declines to bring any such action within
thirty (30) days after Licensee's written request, Licensee shall have the right
4
<PAGE>
to bring such an action in order to protect the exclusivity of its license with
respect to the Market. Any award received in any such action brought by Licensee
shall belong solely to Licensee.
4.6 Notices. Any notices, requests, deliveries, approvals or
consents required or permitted to be given under this Agreement to Licensee or
Licensor shall be in writing and shall be personally delivered or sent by
telecopy (with written confirmation to follow via United States first class
mail), overnight courier providing evidence of receipt or certified mail,
return receipt requested, postage prepaid, in each case to the respective
address specified below (or to such address as may be specified in writing to
the other Party hereto):
If to Licensor:
Mr. Peter J. Vitulli
Amerifit Nutrition, Inc.
166 Highland Park Drive
Bloomfield, CT 06002
With a copy to:
Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo, P.C.
One Financial Center
Boston, MA 02111
Attn: Douglas A. Zingale
If to Licensee:
Randy E. Olshen
Optim Nutrition, Inc.
2401 S. Foothill Dr.
Salt Lake City, UT 84109
With a copy to:
Kevin R. Pinegar
Durham Jones & Pinegar
50 South Main, Suite 850
Salt Lake City, UT 84044
Such notices shall be deemed to have been sufficiently given on: (a)
the date sent if delivered in person or transmitted by telecopy, (b) the next
business day after dispatch in the case of overnight courier or (c) five (5)
business days after deposit in the U.S. mail in the case of certified mail.
5
<PAGE>
4.7 Governing Law. The Parties agree: (i) this Agreement will be
construed, interpreted and applied in accordance with the laws of the State of
Utah (excluding its body of law controlling conflicts of law); (ii) if any
dispute arises concerning this Agreement, such action shall be brought in a
state or federal court in the state in which the defendant's principal office is
located (i.e., Utah court if Licensee is the defendant and Connecticut court if
the Licensor is the defendant), and such court shall have exclusive jurisdiction
over any dispute concerning this Agreement and each Party hereby consents to the
personal jurisdiction of such court; and (iii) in the event that a dispute shall
arise concerning this Agreement, the prevailing Party shall be entitled to
recover from the non-prevailing Party all attorneys' fees and costs incurred by
the prevailing Party in connection with such dispute, regardless of whether such
dispute results in the filing of a lawsuit.
4.8 Limitations. Except as set forth elsewhere in this Agreement
or in a written agreement between the Parties, neither Party grants to the other
Party any right or license to any of its intellectual property.
4.9 Entire Agreement. This is the entire Agreement between the
Parties with respect to the subject matter herein. No modification shall be
effective unless in writing and signed by the Parties.
4.10 Waiver. The terms or conditions of this Agreement may be
waived only by a written instrument executed by the Party waiving compliance.
The failure of either Party at any time or times to require performance of any
provision hereof shall in no manner affect its rights at a later time to enforce
the same. No waiver by either Party of any condition or term shall be deemed as
a continuing waiver of such condition or term or of another condition or term.
4.11 Headings. Section and subsection headings are inserted for
convenience of reference only and do not form part of this Agreement.
4.12 Assignment. This Agreement is binding upon and shall inure to
the benefit of the parties and their respective successors, representatives
and assigns. Licensee may assign this Agreement and Licensee's rights and
obligations hereunder to any third party in connection with a sale or transfer
of Licensee's rights in the Product to such third party; provided that Licensee
gives Licensor prompt written notice of such assignment.
4.13 Force Majeure. Neither Party shall be liable for failure of
or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is
due to natural disasters or any causes beyond the reasonable control of such
Party. In event of such force majeure, the Party affected thereby shall use
reasonable efforts to cure or overcome the same and resume performance of its
obligations hereunder.
4.14 Construction. The Parties hereto acknowledge and agree that:
(i) each Party and its counsel reviewed and negotiated the terms and provisions
of this Agreement and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against the
drafting Party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all Parties hereto and not in a favor of or against any Party, regardless
of which Party was generally responsible for the preparation of this Agreement.
4.15 Severability. If any provision(s) of this Agreement are or
become invalid, are ruled illegal by any court of competent jurisdiction or are
deemed unenforceable under then current applicable law from time to time in
effect during the Term hereof, it is the intention of the Parties that the
remainder of this Agreement shall not be affected thereby provided that a
Party's rights under this Agreement are not materially affected. The Parties
hereto covenant and agree to renegotiate any such term, covenant or application
thereof in good faith in order to provide a reasonably acceptable alternative
to the term, covenant or condition of this Agreement or the application
thereof that is invalid, illegal or unenforceable, it being the intent of the
Parties that the basic purposes of this Agreement are to be effectuated.
4.16 Status. Nothing in this Agreement is intended or shall be
deemed to constitute a partner, agency, employer-employee, or joint
venture relationship between the Parties.
4.17 Indemnification.
(a) Licensor shall indemnify, defend and hold harmless Licensee,
its affiliates and their respective directors, officers, employees, and agents
and their respective successors, heirs and assigns (the "Licensee Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Licensee
Indemnitees, or any of them, in connection with any claims, suits, actions,
demands or judgments of third parties arising out of any inaccuracy in
Licensor's representations and warranties under Section 4.1. The Licensee
Indemnitees shall promptly notify Licensor of any action or claim for which they
are to be indemnified hereunder and Licensor shall have the sole right to
defend, settle or compromise any such claim or action.
(b) Licensee shall indemnify, defend and hold harmless Licensor,
its Affiliates and their respective directors, officers, employees, and agents
and their respective successors, heirs and assigns (the "Licensor Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Licensor
Indemnitees, or any of them, in connection with any claims, suits, actions,
demands or judgments of third parties arising out of any inaccuracy in
Licensee's representations and warranties under Section 4.2. The Licensor
Indemnitees shall promptly notify Licensee of any action or claim for which they
are to be indemnified hereunder and Licensee shall have the sole right to
defend, settle or compromise any such claim or action.
4.18 Further Assurances. Each Party agrees to execute,
acknowledge and deliver such further instructions, and to do all such other
acts, as may be necessary or appropriate in order to carry out the purposes
and intent of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representative in two (2) originals.
Amerifit Nutrition, Inc. Optim Nutrition, Inc.
By: /s/ Peter J. Vitulli By:
------------------------------------- --------------------------------
Peter J. Vitulli, President and CEO Randy E. Olshen, President
Date: Date:
----------------------------------- ------------------------------
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, (the Asset Purchase Agreement, together with all
exhibits, schedules and other documents attached hereto, hereinafter referred to
as the "Agreement") is made by and between Optim Nutrition, Inc., a Utah
Corporation (the "Seller") and ICN Pharmaceuticals, Inc., a Delaware corporation
(the "Purchaser"), on this _____ day of January, 2000.
WITNESSETH
WHEREAS, Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, certain of the assets, properties and
rights associated with Seller's product sold under the trademark "NiteBite" (the
"Product"), including Seller's licenses and rights to the "Timed-release Glucose
Bar" trademark.
NOW THEREFORE, for and in consideration of the premises, mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
agreed, and intending to be legally bound, the parties agree as follows:
ARTICLE 1
Assets, Liabilities and Purchase Price
1.01 Purchase and Sale of Assets. Subject to the terms and
conditions of this Agreement, the Seller hereby sells, transfers, conveys,
assigns and delivers ("Transfer") to the Purchaser, and the Purchaser hereby
purchases, acquires and accepts from the Seller, all of the Seller's rights,
titles, interests, properties, assets, and contracts of every kind, character
and description, whether tangible or intangible, and wherever located, owned by
the Seller and necessary for the manufacture and commercial sale of the Product
(hereinafter collectively referred to as the "Transferred Assets") free and
clear of all Liens (as defined in Section 3.07) including without limitation:
(a) all inventories of the Product, including, without limitation,
all work in process and finished goods (collectively, the
"Inventories"), a summary of which is set forth on Schedule
1.01(a);
(b) all packaging materials, shipping materials, supplies and
printed materials relating to the Product;
(c) all of the following which shall be specifically set forth on
Schedule 1.01(c): (1) United States and foreign patents
relating to the Product and all applications therefor,
(including without limitation U.S. Pat. No. 5,866,555); (2)
United States and foreign copyright rights and registrations
and applications therefor, for copyright works created prior
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to today's date by employees of the Seller that are used in
the commercial sale of the Product and which works and
copyright rights are in the possession of and/or owned or
licensed by the Seller as of today's date; (3) United States
and foreign trademarks, registered or unregistered, adopted
for use in the commercial sale of the Product which are owned
or licenced by the Seller as of today's date, and any
trademark registrations therefor (or applications for
trademark registrations), together with the goodwill
associated therewith; (4) all un-patented inventions, trade
secrets, confidential and proprietary information and know-how
relating to the Product, and which are immediately prior to
today's date, in possession of, used in the Product or owned
by the Seller; and (5) all rights to sue third parties for
infringement with respect to the foregoing;
(d) all rights in, to and under the contracts and agreements
relating to the Product, all of which are set forth on
Schedule 1.01(d);
(e) all marketing and sales materials, advertising materials,
catalogues and sales brochures relating to the Product;
(f) all permits, licenses, license applications, approvals,
certifications, product registrations and product and or
service clearances that are used in the commercial sale of the
Product including those that are set forth on Schedule 1.01(f)
(to the extent the same are transferable); and
(g) all books, records, manuals, files and other documentation,
whether written, electronic or otherwise, relating to the
Product, including without limitation, customer records,
supplier lists, distributor lists, purchase and sale records,
price lists, correspondence, quality control records, research
and development files, drawings, designs and accounting
records.
1.02 Liabilities. Any liabilities arising from the commercial sale
of the Product prior to today's date shall be the responsibility of the Seller
and shall not be transferred under this Agreement. The Purchaser shall assume
and agree to pay when due, all obligations and liabilities arising from the
commercial sale of the Product from and after today's date. With respect to
returns of expired or damaged Product, that is returned to the Purchaser by the
purchaser of the Product within twelve (12) months following the Closing and
sold by Seller prior to the Closing, Seller shall reimburse Purchaser for the
amount refunded such purchasers up to an aggregate amount not to exceed ONE
HUNDRED THOUSAND DOLLARS ($100,000.00) provided however, that such returns are
made in accordance with Purchaser's then current returned goods policy. Such
funds shall be deducted by Purchaser from the Purchase Price Deferral (as
defined below). Nothing contained in this paragraph shall be construed as a
limitation of Seller's liability to Purchaser for product liability claims.
1.03 Purchase Price. Subject to the Purchase Price Deferral the
parties have agreed on a Purchase Price equal to ONE MILLION FOUR HUNDRED
EIGHTY-TWO THOUSAND DOLLARS ($1,482,000.00) to be paid by the Purchaser to the
Seller by wire transfer to Seller's denominated account within three (3) days
from the Closing, and which shall be allocated as set forth on Schedule 1.03.
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1.04 Purchase Price Deferral. A portion of the Purchase Price
shall be deferred at Closing, and shall be reserved by Purchaser to offset any
liability from the Seller to the Purchaser which may arise pursuant to the
representations, warranties, indemnification obligations, and other terms or
conditions set forth in this Agreement (the "Purchase Price Deferral"). This
Purchase Price Deferral shall equal ten percent (10%) of the Purchase Price, and
shall be held by Purchaser for a period of twelve (12) months following Closing.
At the end of the twelve (12) month period, the Purchaser shall transfer the
Purchase Price Deferral, less any amounts appropriately withheld in accordance
with the terms of this Agreement or due to breach by Seller of any
representation or warranty, or under any indemnity granted hereunder, together
with six percent (6%) interest per annum thereon.
ARTICLE II
Closing
2.01 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will be contemporaneous herewith, and take place at
the Seller's place of business at 2401 South Foothill Drive, Salt Lake City,
Utah. At the Closing, the Purchaser shall pay the Purchase Price less the
Purchase Price Deferral to Seller by wire transfer of immediately available
funds to an account identified in writing by the Seller to the Purchaser.
2.02 Conveyance and Transfer. At the Closing, the Seller shall
deliver to the Purchaser such bills of sale, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer, in a form
reasonably satisfactory to the Purchaser, effective to vest in the Purchaser all
of the Seller's right, title, and interest in and to the Transferred Assets.
2.03 Further Assurances. From time to time after the Closing, and
without further consideration, the Seller shall execute and deliver such other
instruments of conveyance, assignment, transfer and delivery and take such other
actions as the Purchaser may reasonably request in order to more effectively
Transfer to the Purchaser the rights, properties, assets intended to be
transferred hereunder.
ARTICLE III
Representations and Warranties of the Seller
Except as set forth in the disclosure schedule attached hereto (the
"Disclosure Schedule") the Seller hereby represents and warrants to the
Purchaser as follows:
3.01 Corporate Existence. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Utah and has full corporate power and authority to conduct its business as it is
now being conducted and to own or lease its properties and assets. The Seller is
duly qualified or licensed to do business as a foreign corporation, and is in
good standing as a foreign corporation, in every jurisdiction in which the
conduct of its business or ownership of its assets requires such qualification
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or license, except where the failure to be so qualified would not have a
material adverse affect on the Transferred Assets.
3.02 Corporate Power and Authority. The Seller has full corporate
power and authority to enter into this Agreement, perform its obligations
hereunder, Transfer the Transferred Assets and carry out the transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance by the Seller of its obligations hereunder and the consummation of
the transactions contemplated herein have been duly authorized by all corporate,
shareholder and other actions on the part of the Seller required by applicable
law, its articles of incorporation and its by-laws. This Agreement constitutes
the legal, valid and binding obligation of the Seller, enforceable against it in
accordance with its terms, except (1) as the same may be limited by bankruptcy,
insolvency reorganization, moratorium or similar laws now or hereafter in effect
relating to creditor's rights generally and (2) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
3.03 No Violation. Neither the execution and delivery of this
Agreement nor the performance by the Seller of its obligations hereunder nor the
consummation of the transactions contemplated hereby will (a) contravene any
provision of the articles of incorporation or by-laws of the Seller; (b)
violate, be in conflict with, constitute a default under, permit the termination
of, cause the acceleration of the maturity of any debt or obligation of the
Seller, require the consent of any other party to, constitute a breach of,
create a loss of a material benefit under, or result in the creation or
imposition of any Lien, upon any property or Transferred Assets under any
mortgage, indenture, lease, contract, agreement or instrument to which the
Seller is a party or by which the Seller or any of its assets may be bound; (c)
to the best of the Seller's knowledge, violate any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental
authority to which the Seller or the Business is subject or by which the Seller
or Business, or any of either of their assets or properties are bound; or (d)
result in the loss of any material licence or permit benefitting the Product.
3.04 Consents and Approvals of Governmental Authorities. No
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority is required to be made or
obtained by the Seller in connection with the execution, delivery or
performance of this Agreement by the Seller.
3.05 Financial Representation. Net sales of the Product, calculated
according to U.S. Generally Accepted Accounting Practices, for the twelve (12)
month period ending December 31, 999, were in excess of six hundred ten thousand
dollars ($610,000.00).
3.06 Absence of Certain Changes. Since January 1, 1999, the Seller
has conducted its business in all material respects in the ordinary course of
business and has not:
(a) suffered any material adverse change in its condition,
operations, assets or business;
(b) suffered any damage, destruction or loss materially adversely
affecting its business, operations, assets or condition;
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(c) except in the ordinary course of business, canceled or
compromised any material debts, or waived any material claims
or rights, or sold, assigned or transferred any of its
properties or assets material to the Product;
(d) offered any irregular inducement to gain sales of the Product;
(e) made any change in any method of accounting or accounting
practice;
(f) entered into any agreement to take any action referred to in
this Section 3.06.
3.07 Title to Properties; Encumbrances. The Seller has good and
marketable title to all of its properties and assets constituting the
Transferred Assets. None of the Transferred Assets are subject to any Lien. When
used in this Agreement, "Lien" shall mean any mortgage, pledge, security
interest, conditional sale or other title retention agreement, encumbrance,
lien, easement, claim, right, covenant, restriction, right of way, warrant,
option or charge of any kind.
3.08 Patents, Trademarks, Trade Names. Schedule 3.08 contains a
true and complete list of (a) all present patents, trademark registrations and
copyright registrations material to the Product, all applications for
registration thereof and all intellectual property license agreements relating
thereto and (b) all material agreements in existence on today's date relating to
technology, know-how or processes that are necessary for the manufacture or
commercial sale of the Product No licenses, sub-licenses or agreements with
third parties exist as of today's date that were entered into by the Seller
granting rights in such patents, trademarks or copyrights included in the
Transferred Assets, except as described in Schedule 3.08. The Seller has the
right to use all information and know-how that are used in the manufacture and
commercial sale of the Product as currently conducted. Except as set forth in
Schedule 3.08, all items listed on Schedule 3.08 are transferred free and clear
of all Liens. To the Seller's knowledge, its operations do not infringe any
third-party patents.
3.09 Litigation. There are no actions, claims, proceedings or
investigations (collectively "Actions") pending, or threatened, against the
Seller or any of its assets, properties or rights before any court, arbitrator,
mediator or administrative or governmental body, that would have a material
adverse effect upon the Transferred Assets or Seller's ability to consummate the
transactions set forth in this Agreement. There is no action pending or
threatened, against the Seller or any of its assets, properties or rights before
any court, arbitrator, mediator, or administrative or governmental body that
questions or challenges the validity of this Agreement or any actions taken or
proposed to be taken by the Seller pursuant to this Agreement.
3.10 Insurance. Schedule 3.10 sets forth a true and complete list
of all policies of product liability insurance owned or held by the Seller which
provide coverage or have provided coverage for the Product. The Seller has not
received any notice of cancellation with respect thereto. All such policies are
valid and binding and in full force and effect as of the date hereof, and Seller
warrants that coverage for Product sold by Seller prior to the Closing shall be
extended for a period of two years after Closing at Seller's expense.
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3.11 Contracts and Commitments.
(a) Schedule 3.11 and the technology licenses and agreements set
forth on Schedule 3.08, contain a true and complete list and
description of:
(1) All contracts or agreements with distributors, brokers,
manufacturer's, or others engaged in the sale or distribution
of the Products;
(2) Any outstanding purchase orders issued by the Seller in
excess of $5,000.00, and any outstanding sales order accepted
by the Seller in excess of $5,000.00;
(3) All joint venture or similar agreements to which the
Seller is a party that provide for the manufacture, marketing,
sale or distribution of the Product.
(b) The Seller has made available to the Purchaser copies of the
documents identified on Schedules 3.08 and 3.11 (collectively
the "Material Contracts") and shall deliver true and complete
copies of all other agreements and documents related to the
Transferred Assets as the Purchaser may reasonably request.
The foregoing disclosures are subject to certain confidential
terms in such documents being blacked out, in the Seller's
reasonable discretion, where it is not necessary for the
Purchaser to have knowledge of such terms.
(c) Except for licenses, distributorship agreements and similar
agreements, that by their terms are for specific geographical
areas, the Seller is not a party to any agreement that would
restrict sales of the Product anywhere in the world.
(d) Each of the Material Contracts that calls for the receipt of
payment of more than $5,000.00 has been entered into in the
ordinary course of business. The Seller has not received
written notice of any asserted claim of default by the Seller
with respect to any of the Material Contracts that calls for
the receipt or payment of more than $5,000.00.
3.12 Suppliers and Customers. Schedule 3.12 contains a true and
complete list of all suppliers and customers with whom Seller did business
relating to the Product during the twelve (12) month period ended December 31,
1999. The Seller has no knowledge that any such supplier or customer expects to
reduce its business.
3.13 Employment Law Matters. The Seller is in compliance in all
material respects with all material laws and regulations relating to employment
practices. The Seller has not received written notice within the last year that
it has not complied with any applicable law relating to the employment of labor,
including any provisions thereof relating to the wages, hours, collective
bargaining, the payment of social security and similar taxes, equal employment
opportunity, employment discrimination and employment safety, or that it is
liable for any arrearage of wages or any taxes or penalties for failure to
comply with any of the foregoing. If required under Worker Adjustment,
Retraining and Notification Act or other similar law, the Seller shall timely
file and comply with all notice and other requirements therein or under such
laws.
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3.14 Environmental Matters. The Seller is in compliance in a
material respects with all federal, state and local environmental laws and
regulations (collectively, "Environmental Laws"). The Seller has obtained all
material permits, licenses and other authorizations that are required under
Environmental Laws and is in compliance in all respects therewith. Set forth on
Schedule 3.14 are all Actions about which the Seller has received written
notice that are pending before any court or governmental agency or, threatened
for (1) noncompliance by the Seller with any Environmental Law or (2) relating
to the release into the environment by the Seller of any pollutant, toxic,
radioactive or hazardous material or waste generated by the Seller, whether or
not occurring at or on a site owned, leased, occupied, or operated by the
Seller.
3.15 Compliance with Laws. During the previous three (3) years,
the Seller has not been charged with, and is not threatened with or under any
investigation with respect to, any charge concerning any material violation of
any federal, state, local or foreign law or regulation. The Seller is not in
default with respect to any order, writ, injunction or decree of any court, or
agency.
3.16 Licenses, Permits and Authorizations. The Seller has all
licenses, permits and authorizations (collectively "Permits") required to
conduct its business as it is now being conducted, the lack of which would
have an adverse affect on the Transferred Assets. All such Permits are valid
and in full force and effect. Schedule 3.16 contains a true and complete list of
all such Permits. There is no Action pending, or threatened, that disputes the
validity of such Permits.
3.17 Sufficiency of Assets. The Transferred Assets constitute all
property, assets and contractual rights necessary for the manufacture supply and
commercial sale of the Product as currently conducted. The Seller has as of
today's date, a normal operating supply of Inventories, and supplies, sufficient
to last sixty (60) days of normal sales.
3.18 Tax Returns and Payments. The Seller has not taken or failed
to take any action that would create any tax lien on the Transferred Assets.
3.19 Broker's and Finder's Fees. The Seller has satisfied, or will
satisfy out of the proceeds hereof, any obligation under any contract for the
payment of any broker's or finder's fee (or other similar fee) in connection
with the origin, negotiation, execution or performance of this Agreement. In no
event shall Purchaser be responsible for any such obligation.
3.20 Inventories. The Inventories of the Seller's business included
in the Transferred Assets and listed on Schedule 3.20 hereto, consist of items
of a quality and quantity usable and saleable in the normal course of its
business, with a shelf life extending, at a minimum, to July 2001.
3.21 Defaults. The Seller is not in default in any respect under
any contract, agreement or lease, where such default would have a material
adverse effect upon the Transferred Assets or the Transfer. No other party to
any contract or agreement to which the Seller is a party and which relates to
the Product is in material default under or in material breach of any material
provision thereof.
3.22 Shareholder Approval. Biomune Systems, Inc., Seller's sole
shareholder has approved the Transfer contemplated hereunder, and has consented
to the execution of this Asset Purchase Agreement.
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3.23 Transactions with Management. During the past year, no
current director, officer, or employee of the Seller has engaged in any
material transaction with the Seller except for the receipt of compensation for
services rendered as an employee, where transaction would have a material
adverse effect upon the Transferred Assets or the Transfer.
3.24 Assignment of Material Contracts. All Material Contracts
relating to the Product are freely assignable by Seller to Purchaser without
procurement of any consent, and shall inure to the benefit of Purchaser upon
Closing.
ARTICLE IV
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Seller as follows:
4.01 Existence. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as it is now
being conducted and to own or lease its properties and assets. The Purchaser is
duly qualified or licensed to do business as a foreign corporation, and is in
good standing as a foreign corporation, in every jurisdiction in which the
ownership of its property or assets or the conduct of its business requires
such qualification or license, except where the failure to be so qualified would
not have a material adverse effect to the Purchaser.
4.02 Corporate Power and Authority. The Purchaser has full
corporate power and authority to enter into this Agreement, perform its
obligations hereunder, purchase the Transferred Assets and carry out the
transactions contemplated herein. The execution and delivery of this
Agreement, the performance by the Purchaser of its obligations hereunder and the
consummation of the transactions contemplated herein have been duly
authorized by all corporate, shareholder and other actions on the part of the
Purchaser required by applicable law, its certificate of incorporation and
its by-laws. This Agreement constitutes the legal, valid and binding obligation
of the Purchaser, enforceable against it in accordance with its terms, except
(1) as the same may be limited by bankruptcy, insolvency reorganization,
moratorium or similar laws now or hereafter in effect relating to creditor's
rights generally and (2) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
4.03 No Violation. Neither the execution and delivery of this
Agreement nor the performance by the Purchaser of its obligations hereunder
nor the consummation of the transactions contemplated hereby will (a) contravene
any provision of the certificate of incorporation or by-laws of the Purchaser;
(b) violate, be in conflict with, constitute a default under, permit the
termination of, cause the acceleration of the maturity of any debt or obligation
of the Purchaser under, require the consent of any other party to, constitute a
breach of, create a loss of a material benefit under, or result in the
creation or imposition of any Lien upon any property or assets of the Purchaser
under any mortgage, indenture, lease, contract, agreement, instrument or
commitment to which the Purchaser is a party or by which the Purchaser, or any
of its assets or properties may be bound; (c) to the Purchaser's best knowledge,
violate any statute or law or any judgment, decree, order, regulation or rule of
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any court or governmental authority to which the Purchaser is subject or by
which the Purchaser, or any of its assets or properties are bound; (d) result
in the loss of any license, privilege or certificate benefitting the Purchaser;
(e) violate any contract or agreement to which any of the Purchaser's directors,
officers or shareholders are bound; or (f) violate any stock exchange or
commission rule or regulation.
4.04 Brokers and Finder's Fees. The Purchaser is not a party to,
nor in any way obligated to make any payment relating to, any contract for the
payment of any broker's or finder's fee in connection with the origin,
negotiation, execution or performance of this Agreement.
4.05 Litigation. There are no actions, claims, proceedings or
investigations (collectively "Actions") pending, or threatened, against the
Purchaser or any of its assets, properties or rights before any court,
arbitrator, mediator or administrative or governmental body, that would have a
material adverse effect upon the Purchaser's ability to consummate the
transactions set forth in this Agreement. There is no action pending or
threatened, against the Purchaser or any of its assets, properties or rights
before any court, arbitrator, mediator, or administrative or governmental body
that questions or challenges the validity of this Agreement or any actions taken
or proposed to be taken by the Purchaser pursuant to this Agreement.
ARTICLE V
Certain Post Closing Covenants
5.01 Books and Records; Access.
(a) Unless otherwise consented to in writing by the Seller, for a
period of seven (7) years after the Closing, the Purchaser
shall not destroy, alter or otherwise dispose of any original
books or records included in the Transferred Assets without
first offering to surrender such books and records to the
Seller and shall maintain such books and records in good
condition in a reasonably accessible location. The Purchaser
shall allow the Seller reasonable access during normal
business hours to examine and copy such books and records.
(b) Unless otherwise consented to in writing by the Purchaser, for
a period of seven (7) years after the Closing, the Seller
shall not destroy, alter or otherwise dispose of any original
books or records of Seller's business without first offering
to surrender such books and records to the Purchaser and shall
maintain such books and records in good condition in a
reasonably accessible location. The Seller shall allow the
Purchaser reasonable access during normal business hours to
examine and copy such books and records.
5.02 Cooperation. The Seller shall use its best efforts to seek the
consent of customers to assign customer agreements. The Seller shall give prompt
notice to the Purchaser of any written notice from any third party alleging that
the consent of such third party is or may be required in connection with the
transaction contemplated by this Agreement.
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5.03 Non-Compete Covenant. Pursuant to an agreement to be executed
contemporaneously herewith, for a period of five (5) years Seller, or its parent
company, Biomune Systems, Inc., will not (and cause their affiliates not to)
sell the Product, or other timed-release glucose products for people with
diabetes or hypoglycemia.
5.04 Assets. After the Closing, the Seller shall turn over to the
Purchaser any and all Transferred Assets that are or come into the possession of
the Seller.
ARTICLE VI
Condition to Purchaser's Obligations
6.01 Corporate Guarantee. The Purchaser's obligations under this
Agreement are conditioned upon receipt of signed written guarantee by Seller's
parent, Biomune Systems, Inc. In the form set forth on Schedule 6.01.
ARTICLE VII
Survival of Representations and Warranties
7.01 Survival of Representations and Warranties. Notwithstanding
the making of this Agreement, any examination made by or on behalf of the
parties hereto and the Closing hereunder, the representations and warranties
of the Seller and the Purchaser contained in this Agreement or in any agreement
or document delivered in connection with the transactions contemplated by this
Agreement shall survive the Closing as follows:
(a) Claims for breach of any representation or warranty relating
to products liability or environmental matters shall survive
this Agreement indefinitely and there shall be no time limit
within which to bring a claim; provided, however, that the
Seller shall not be liable for any products liability claim
except to the extent it relates to Product sold prior to the
Closing and Product Inventory transferred to the Purchaser
hereunder;
(b) Claims for breach of any representation or warranty relating
to the payment of taxes, or compliance with tax laws, whether
federal, state, or local, shall survive this Agreement for the
relevant statute(s) of limitations plus three months;
(c) Claims for breach of any other representation or warranty, not
set forth in Section 7.01 subsections (a) and (b) shall
survive this Agreement for a period of two years.
7.02 Indemnification. Subject to Section 7.01 above, from and after
the Closing, the Seller and the Purchaser each shall indemnify and save
harmless, the other party and its officers, directors, employees and advisers
(the "Indemnified Party") from and against any loss, claim, liability, expense
(including reasonable attorney's fees) or other damage of any kind or nature
(collectively the "Damages") caused to such party by or arising out of (1) the
failure by the party against which indemnification is sought (the "Indemnifying
Party") to perform any covenant or agreement required to be performed by it in
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this Agreement or in any agreement or document delivered in connection
with the transactions contemplated by this Agreement; (2) any breach of
warranty or misrepresentation in this Agreement or in any agreement or
document delivered in connection with the transactions contemplated by this
Agreement; or (3) failure of the Indemnifying Party to fulfill its obligation
regarding liability as apportioned in Section 1.02 above. The Indemnified
Party shall promptly notify the Indemnifying Party in writing of each claim
it may have for indemnification under this Section 7.02, within the limitations
period as set forth in Section 7.01 above, and in accordance with Section 8.05
below.
7.03 Limitation of Warranties and Liability. EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTIES WHATSOEVER WITH
RESPECT TO ITS BUSINESS OR THE TRANSFERRED ASSETS, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES WITH RESPECT TO
MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE VIII
Miscellaneous Provisions
8.01 Public Announcements. Except as the other party hereto
shall authorize in writing or as required by law, including without limitation,
applicable securities laws, the parties hereto shall not, and shall cause their
respective officers, directors, employees, affiliates and advisors not to
disclose any matter or matters relating to this transaction to any person not an
officer, director, employee, affiliate or advisor of such party. The Purchaser
and Seller shall agree about the content of any statement or communication to
the public or the press prior to issuing any statement or communication to the
public or the press regarding the transactions contemplated by this Agreement.
Nothing in this Section 8.01 shall restrict the Purchaser from promoting the
Product in any manner it deems appropriate after the Closing.
8.02 Amendment; Waiver. Neither this Agreement, nor any of the
terms or provisions hereof, may be amended, modified, supplemented or waived,
except by a written instrument signed by the parties hereto. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof, nor shall such waiver constitute a continuing
waiver. No failure of either party to insist upon strict compliance by the other
party with any obligation, covenant, agreement or condition contained in this
Agreement shall operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
8.03 Fees and Expenses. Each of the parties shall bear and pay its
own costs and expenses incurred in connection with the origin, preparation,
negotiation, execution and delivery of this Agreement and the agreements,
instruments, documents and transactions referred to in or contemplated by this
Agreement including, without limitation, any fees, expenses or commissions of
any of its advisors, agents, finders or brokers. The Seller shall indemnify the
Purchaser against any claims of third parties of any brokerage, finder's agent's
or similar fees or commissions in connection with the transactions contemplated
hereby insofar as such claims are alleged to be based on arrangements or
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contacts made by, to or with the Seller or its respective advisors or
representatives.
8.04 Creditor Claims. In addition to any other indemnities provided
in this Agreement, the Seller shall indemnify and hold the Purchaser harmless
from and against any and all liens claimed against any of the Transferred Assets
by any creditor arising from any credit extended to the Seller prior to the
Closing.
8.05 Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and mailed by certified mail,
faxed with a copy by certified mail or delivered by courier with signature
required for delivery:
(i) If to the Seller, to: Optim Nutrition
` 2401 South Foothill Drive
Salt Lake City, Utah 84109
Fax (801) 466-3741
Attention: Randy Olshen
With a copy to: Durham Jones & Pinegar
Key Bank Tower
50 South Main, Suite 800
Salt Lake City, Utah 84144
Fax (801) 538-2425
Attention: Kevin R. Pinegar
(ii) If to the Purchaser, to: ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
Fax No. (714) 641-7274
Attention: General Counsel
All notices that are addressed as provided in this Section 8.05 (1) if delivered
personally against proper receipt or by fax with copy by certified mail shall be
effective upon delivery and (2) if delivered by certified by registered mail
with postage prepaid or by Federal Express or similar Courier service with
courier fees paid by the sender shall be effective upon receipt.
8.07 Assignment. This Agreement and all of the provisions hereof
shall be binding and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by the parties
hereto without the prior written consent of the other party. Any assignment
that is in violation of this Section 8.07 shall be void ab initio.
12
<PAGE>
8.08 Entire Agreement. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter.
8.09 Legal Proceedings. The parties agree: (i) this Agreement
shall be construed in accordance with the internal laws of the State of Utah;
(ii) if any dispute arises concerning this Agreement, such action shall be
brought in a state or federal court in the state in which the defendant's
principal offices are located (i.e., Utah court if the Seller is the defendant
and California court if the Purchaser is the defendant), and such court shall
have exclusive jurisdiction over any dispute concerning this Agreement and each
party hereby consents to the personal jurisdiction of such court.
8.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which shall deemed to
be one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this agreement, effective
as of the date first set forth above.
OPTIM NUTRITION, INC. ICN PHARMACEUTICALS, INC.
By: /s/ Randy Olshen By: /s/ Bill A. MacDonald
------------------------------------ -------------------------------
Randy Olshen Bill A. MacDonald
President Executive Vice President
Strategic Planning
13
List of Schedules
1.01 (a) Product Inventory
1.01 (b) Packaging Inventory
1.01 (c) US and foreign patents, trademarks, and registrations relating to the
product
1.01 (d) Contracts and Agreements
1.01 (e) Marketing and sales materials
1.01 (f) Permits, approvals, and certifications
1.01 (g) Product records
1.03 Seller's Bank Account
3.08 Patents, trademarks, and trade names
3.10 Insurance Binder
3.11 Contracts and Agreements
3.12 Customer List
3.14 Environmental matters
3.16 Permits
3.20 See 1.01 (a)
6.01 Corporate guarantee
<PAGE>
Schedule 1.01 (a)
Product Inventory*
I. Chocolate NiteBite
A. Cases of Six Count Boxes Approximately 610
B. Cases of Thirty Count Boxes Approximately 200
C. 100-Count boxes Approximately 100
II. Peanut Butter NiteBite
A. Cases of Six Count Boxes Approximately 290
B. Cases of Thirty Count Boxes Approximately 100
C. 100-Count boxes Approximately 100
III. Banana NiteBite
A. Cases of Six Count Boxes Approximately 500
B. Cases of Thirty Count Boxes Approximately 110
C. 100-Count boxes Approximately 65
* There are 12 six-counts per case and 6 thirty-counts per case
<PAGE>
Schedule 1.01 (b)
Packaging Inventory
Approximate # Impressions
I. Bar Wrap
A. Chocolate Flavor* 939,600
B. Peanut Butter Flavor* 1,044,000
C. Banana Flavor 904,800
II. Display Boxes Approximate # Remaining
A. Six-count display boxes
1.) Chocolate Flavor* 1,275
2.) Peanut Butter Flavor* 6,495
3.) Banana Flavor 17,100
B. Thirty-count display boxes
1.) Chocolate Flavor* 4,150
2.) Peanut Butter Flavor* 2,653
3.) Banana Flavor 6,000
III. Master Shippers
A. Six-count master shippers
1.) Chocolate Flavor* 1,050
2.) Peanut Butter Flavor* 510
3.) Banana Flavor 1,565
C. Thirty-count display boxes
1.) Chocolate Flavor* 655
2.) Peanut Butter Flavor* 315
3.) Banana Flavor 1,200
* These totals are prior to January 2000 production run at Nellson
Nutraceutical
<PAGE>
Schedule 1.01 (c)
US and Foreign patents, trademarks, and registrations
A. US Patent No. 5,866,555
B. CIP US Application # 09/241,004
C. Foreign patent and patent application filings including: PCT
application, EPO, China, Brazil, Israel, and Japan
D. NiteBite(R)trademark
E. Any and all foreign trademark rights with respect to NiteBite
(including registrations in Chile, Argentina and Brazil)
F. Timed-release Glucose Bar(TM)rights pursuant to License Agreement with
Amerifit Nutrition, Inc.
<PAGE>
Schedule 1.01 (d)
Contracts and Agreements
A. Contract with Product manufacturer, Nellson Nutraceutical
B. Toll-free Product number 1-800-795-1880
C. Internet Domain Name www.nitebite.com
<PAGE>
Schedule 1.01 (e)
Marketing and Sales Materials
Item / Descripion Approximate Number
NiteBite Envelopes 60,000
NiteBite Brochures 62,000
NiteBite Summer Camp Materials 200
NiteBite Night Shirts 200
NiteBite Prescription Pads 350
NiteBite Exercise Study Reprints 12,000
NiteBite Trial Size Brochure Cards 42,000
NiteBite Trial Size Display Box 2,900
NiteBite Free Sample Brochure Cards 45,000
NiteBite Free Sample Display Box 3,000
NiteBite Shipping Boxes 6,300
NiteBite Artwork CD ROM
<PAGE>
Schedule 1.01 (f)
Permits, Approvals, Certifications
None
<PAGE>
Schedule 1.01 (g)
Product Records
A. Customer List
B. Customer Files
C. Maximizer Database Records
<PAGE>
Schedule 1.03
Seller's Bank Account Information and Allocation
Bank Information
Zion's Bank
Harrison Blvd Office
4286 Harrison Blvd
Ogden, UT 84403
Phone 801-626-2841
Account Information
Optim Nutrition
Acct # 067-00455-6
ABA # 124 000 054
Allocation of Purchase Price
Inventory $ 100,000.00
Non-compete $ 25,000.00
Goodwill $1,357,000.00
<PAGE>
Schedule 3.08
Patents, Trademarks, and Trade Names
See Schedule 1.01 (c)
<PAGE>
Schedule 3.10
Insurance Binder
A. Copy of Agreement
<PAGE>
Schedule 3.11
Contracts and Agreements
Outstanding Purchase Orders:
Customer Date PO # Amount
McKesson 12-27-99 PO# 173257040 333.60
McKesson 12-27-99 PO# 176257055 725.40
McKesson 12-27-99 PO# 183257052 333.60
McKesson 12-27-99 PO# 813257051 137.70
McKesson 12-27-99 PO# 152257041 195.90
McKesson 12-27-99 PO# 154257047 195.90
McKesson 12-27-99 PO# 128257038 370.44
McKesson 12-27-99 PO# 129257042 137.70
McKesson 12-27-99 PO# 131257042 195.90
McKesson 12-27-99 PO# 132257038 391.80
McKesson 12-27-99 PO# 148257055 391.80
McKesson 12-27-99 PO# 110257035 884.40
McKesson 12-27-99 PO# 101257048 58.20
Cardinal 01-04-00 PO# 89905 275.40
American Sales 01-05-00 PO# 101-3147 1744.20
McKesson 01-04-00 PO# 165002030 333.60
McKesson 01-04-00 PO# 164002035 174.60
McKesson 01-04-00 PO# 147002045 413.10
McKesson 01-04-00 PO# 125002028 333.60
McKesson 01-04-00 PO# 113002038 116.40
McKesson 01-04-00 PO# 101002041 58.20
Bindley Western 12-28-99 PO# 55723CD 174.24
Bindley Western 12-30-99 PO# 44737KD 413.10
Bindley Western 12-30-99 PO# 12391BD 116.16
Walsh Distribution 01-07-00 PO# 338448 291.00
Bergen Brunswig 01-07-00 PO# 011460870 1386.18
Bergen Brunswig 01-07-00 PO# 012799673 957.78
Bergen Brunswig 01-07-00 PO# 015526944 137.70
Bergen Brunswig 01-07-00 PO# 016633991 719.10
Bergen Brunswig 01-07-00 PO# 017495722 116.28
Bergen Brunswig 01-07-00 PO# 020034494 936.36
Bergen Brunswig 01-07-00 PO# 024720898 602.82
Bergen Brunswig 01-07-00 PO# 030825205 333.54
Bergen Brunswig 01-07-00 PO# 032449321 137.70
<PAGE>
Schedule 3.11 Continued
Outstanding Purchase Orders:
Customer Date PO # Amount
Bergen Brunswig 01-07-00 PO# 035071250 253.98
Bergen Brunswig 01-07-00 PO# 036101530 639.54
Bergen Brunswig 01-07-00 PO# 037527416 275.40
Bergen Brunswig 01-07-00 PO# 038746377 862.92
Bergen Brunswig 01-07-00 PO# 039524569 58.14
Bergen Brunswig 01-07-00 PO# 040499849 116.28
Bergen Brunswig 01-07-00 PO# 041490510 58.14
Bergen Brunswig 01-07-00 PO # 049036298 195.84
Bergen Brunswig 01-07-00 PO# 072335310 137.70
Bergen Brunswig 01-07-00 PO# 081498854 232.56
Amerisource 01-12-00 PO# 2297467 104.10
McKesson 01-11-00 PO# 813007033 58.20
McKesson 01-11-00 PO# 195007036 471.30
McKesson 01-11-00 PO# 190007023 58.20
McKesson 01-11-00 PO# 176007037 116.34
McKesson 01-11-00 PO# 170007033 58.20
McKesson 01-11-00 PO# 147007026 391.80
McKesson 01-11-00 PO# 131007030 58.20
McKesson 01-11-00 PO# 129007039 195.90
McKesson 01-11-00 PO# 109007039 116.40
Distribution Agreements:
A. Roche Diagnostics NZ Limited
B. Chemipal Ltd
Other Contracts and Agreements:
See Schedule 1.01 (d)
<PAGE>
Schedule 3.12
Customer Lists
The full customer lists will be provided to the Purchaser prior to or at the
Closing, in the following formats:
A. Maximizer Database Files
B. Printout of customers from Maximizer
<PAGE>
Schedule 3.14
Environmental Matters
None.
<PAGE>
Schedule 3.16
Permits
None.
<PAGE>
Schedule 3.20
Inventories
See Schedules 1.01 (a) and 1.01 (b)
NON-COMPETITION AGREEMENT
THIS AGREEMENT, ("Agreement"), is made by and between Biomune Systems,
Inc., a _______ corporation, Optim Nutrition, Inc., a Utah corporation, and ICN
Pharmaceuticals, Inc., ("ICN") a Delaware corporation, on this ____ day
of _________, 2000.
WITNESSETH:
WHEREAS, Optim Nutrition, Inc. ("OPTIM") is a wholly owned subsidiary
of Biomune Systems, Inc. ("BIOMUNE") (collectively the "Promisors") and is
engaged in the development, marketing, sales and distribution of timed release
glucose products for people with hypoglycemia or diabetes, including the product
sold under OPTIM's trademark "NiteBite" (the "Product").
WHEREAS, concurrently herewith, OPTIM and ICN are entering into an
Asset Purchase Agreement transferring certain of OPTIM's assets, properties, and
rights relating to the Product, and ICN desires to ensure that during the course
of this Agreement neither of the Promisors will utilize their special skills,
knowledge, expertise and goodwill to develop, market, sell or distribute the
Product, or any other timed release glucose product for people with hypoglycemia
or diabetes.
NOW THEREFORE, for and in consideration of the Asset Purchase
Agreement, the premises, mutual covenants and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and agreed, and intending to be legally bound, the parties
agree as follows:
ARTICLE I
Confidentiality
1.01 Confidential Information. The Promisors acknowledge that they are
acquainted with data, information, know-how, process parameters, fabrication and
manufacture techniques, technical plans, documentation, customer lists, price
lists, business plans, marketing plans, financial information, and the like, in
whatever form or medium (collectively "Confidential Information"), which:
(a) relate to the Product or other products in the same category
of Products and which (1) have not been disclosed to the
general public or to the trade or industry, and (2) are not
generally known in the public or in the trade or industry; or
1
<PAGE>
(b) were received by the Promisors from a third party under an
ongoing obligation of confidentiality to the third party.
1.02 Disclosure. Promisors shall not use or disclose (directly or
indirectly) any Confidential Information at any time or in any manner, except
(i) as expressly consented to in writing by ICN, (ii) as directed by a court of
competent jurisdiction after notice to ICN, (iii) in order to comply with a
governmental order or other legal obligation to disclose (in which event ICN
will be first notified and given sufficient opportunity to seek and obtain a
protective order), (iv) with respect to information that is or becomes generally
available to the public in any manner or form through no fault of the Promisors
or their employees, officers or agents, and (v) with respect to information that
is rightfully received from another source who is not under an obligation of
confidentiality or non-use, on a non-confidential basis.
ARTICLE II
Non-Competition and Unfair Competition
In consideration of the transactions contemplated in the Asset Purchase
Agreement, and the mutual covenants contained herein and therein, the Promisors
each agree and acknowledge that a breach of any of the following would
constitute an act of unfair competition against ICN:
2.01 Prohibited Business Activities. For a period of five (5)
years (hereinafter the "Covenant Period"), Promisors shall not engage in any
other business duties or pursuits whatsoever, or directly or indirectly
render any services of a business, commercial or professional nature to any
other person or entity, whether for compensation or otherwise, engaged in any
business competing with the Product (i.e., any timed-release glucose bar or
other product for the nutritional management of diabetes or hypoglycemia),
in the United States, or any other country in the world (hereinafter the
"Covenant Area") or participate in or encourage or assist any other person
or entity in the development, marketing, sale or distribution of the Product
or any other product for the nutritional management of diabetes or hypoglycemia
(including but not limited to timed-release glucose bars) in the Covenant Area,
whether as a director, officer, employee, consultant, adviser, independent
contractor or otherwise.
2.02 Prohibited Ownership Interests. During the Covenant Period,
Promisors shall not hold a legal or beneficial interest in any person or entity
which is engaged in any business competing with the Product, in the Covenant
Area, whether such interest is as an owner, investor, partner, creditor (other
than as a trade creditor in the ordinary course of business), joint venturer or
otherwise; provided however, that nothing in the foregoing shall prevent
Promisors from owning capital stock or other equity interests up to a maximum of
five percent (5%) in any entity with shares or other equity interests registered
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934.
2.03 Prohibited Solicitation. During the Covenant Period, Promisors
shall not solicit, divert or attempt to divert from ICN any customer of the
Product. The foregoing shall not be deemed to apply to any solicitation of
2
<PAGE>
customers by Promisors relating to products or services other than products
for the nutritional management of diabetes or hypoglycemia (including
timed-release glucose bars).
ARTICLE III
General Provisions
3.01 Reasonableness of Terms. The Promisors agree and acknowledge
that the scope of their sales are worldwide and thus, the Covenant Area
is a reasonable protected territory considering the transactions contemplated in
the Asset Purchase Agreement, and furthermore, that a period of five (5) years
is a reasonable Covenant Period given the purchase price and the type of
business to which this Agreement relates.
3.02 Breach by Promisors. The Promisors acknowledge that their
obligations hereunder are necessary and reasonable to protect the Product, and
expressly agree that monetary damages would be inadequate to compensate ICN for
any breach of any provision set forth herein. Accordingly, the Promisors agree
and acknowledge that any such violation will cause irreparable injury to ICN,
and that in addition to any other remedies that may be available, in law, in
equity, or otherwise, that ICN shall be entitled to obtain injunctive relief
against the threatened breach of this Agreement or the continuation of any such
breach, without the necessity of proving actual damages.
3.03 Waiver. No waiver of any provision of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided in writing. This Agreement may not be superseded,
amended or modified except by written agreement signed by the party against whom
it is to be enforced.
3.04 Notice. All notices and other communications required or
permitted under this Agreement shall be in writing and mailed by certified mail,
faxed with a copy by certified mail or delivered by courier with signature
required for delivery:
(a) If to Promisors, to: Optim Nutrition
2401 South Foothill Drive
Salt Lake City, Utah 84109
Fax No. (801) 466-3741
Attn: Randy Olshen
(b) If to ICN, to ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
Fax No. (714) 641-7274
Attn: General Counsel
3
<PAGE>
All notices that are addressed as provided in this Section 3.04 (1) if delivered
personally against proper receipt or by fax with copy by certified mail shall be
effective upon delivery and (2) if delivered by certified or registered mail
with postage prepaid or by Federal Express or similar Courier service with
courier fees paid by the sender shall be effective upon receipt.
3.05 Assignment. This Agreement and its rights and obligations may
be assigned by ICN to a successor to its rights in the Product, or to its
Affiliates without the prior written consent the Promisors. Otherwise, neither
this Agreement nor any of the rights and obligations of a party hereunder shall
be assigned, delegated, sold, transferred, licensed or otherwise disposed of, by
operation of law or otherwise, to any third party, without the prior written
consent of the other party, and any attempt to do so shall be a material breach
of this Agreement by the attempting party, and shall be void ab initio.
3.06 Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns, and in the case of ICN, its Affiliates. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto (and in the case of ICN, its Affiliates), or their successors
or permitted assigns, any rights or remedies under or by reason of this
Agreement.
3.07 Severability. If any provision of this Agreement is held
invalid or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect. If any provision is held invalid or
unenforceable with respect to any particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
Finally, in the event a court finds any term to be unreasonable and therefore
unenforceable, the parties agree that the court should replace the unreasonable
term with a term that it deems to be reasonable under the circumstances.
3.08 Headings. The section headings contained in this Agreement
are for convenience only and shall not affect the construction or interpretation
of this Agreement.
3.09 Entire Agreement. This Agreement together with the Asset
Purchase Agreement and all attachments thereto contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements and understandings, oral or written, with respect to such
matter.
3.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which shall deemed to
be one and the same agreement.
4
<PAGE>
IN WITNESS WHEREOF, the Promisors and ICN have signed this Agreement on
the day and year first above written.
OPTIM NUTRITION, INC. ICN PHARMACUETICALS, INC.
By: /s/ By: /s/
----------------------------------- ------------------------------
Name: Randy Olshen Name: Bill A. McDonald
--------------------------------- ----------------------------
Title: President Title: EVP Strategic Planning
-------------------------------- ---------------------------
BIOMUNE SYSTEMS, INC.
By: /s/
-----------------------------------
Name: Michael G. Acton
---------------------------------
Title: President & CEO
--------------------------------
5
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