ASSET PURCHASE AGREEMENT
between
DONLAR CORPORATION
and
BIOMUNE SYSTEMS, INC.
Dated as of August 8, 2000
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Exhibits
Exhibit A - Terms of Series H Preferred Stock
Schedules
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
August 8, 2000, by and between DONLAR CORPORATION, an Illinois corporation
("Donlar"), and BIOMUNE SYSTEMS, INC., a Nevada corporation ("Biomune").
WITNESSETH
WHEREAS, Donlar is engaged in the business of protein manufacture (the
"Business"); and
WHEREAS, Biomune desires to acquire the Business in which Donlar is
currently engaged and to acquire substantially all of the assets of Donlar and
to assume the liabilities of Donlar, and Donlar desires to sell and assign such
assets and liabilities to Biomune in exchange for Common Stock of Biomune, all
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
ACQUISITION OF DONLAR ASSETS AND LIABILITIES AND
ISSUANCE OF BIOMUNE SECURITIES
1.1 Definitions. Certain capitalized terms used in the Agreement are
defined in Article IX hereof; reference to a "Schedule" or "Exhibit" is, unless
otherwise specified, to a Schedule or Exhibit to this Agreement.
1.2 Purchase and Sale of Assets. On the Closing Date (as defined in Section
1.5), upon the terms and conditions herein set forth, Biomune shall purchase
from Donlar, and Donlar shall sell, transfer, convey and deliver to Biomune, all
of the Acquired Assets at the Closing (as defined in Section 1.5) for the
assumption of liabilities as provided in Section 1.3 and the Acquired Shares as
specified in Section 1.4. As used herein, "Acquired Assets" shall mean all
assets of Donlar, real or personal, tangible or intangible, existing or acquired
hereafter, whether or not reflected on Donlar's books or financial statements,
including, without limitation, the following:
(a) all inventory and supplies used in the normal course of the
operation of Donlar's business, on the premises of the business at Closing;
(b) real property, leaseholds and subleaseholds therein, improvements,
fixtures and fittings thereon, and easements, rights-of-way, and other
appurtenants thereto (such as appurtenant rights in and to public streets);
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(c) equipment leases, and rights thereunder;
(d) the agreements, Contracts, instruments, Security Interests,
guaranties, other similar arrangements, and rights thereunder listed in the
Donlar Schedules (as defined in Section 6.9);
(e) franchises, approvals, permits, licenses, orders, registrations,
certificates, variances, and similar rights obtained from governments and
governmental agencies (to the extent not part of the Trade Rights and to
the extent such are assignable or transferable by Seller); and
(f) books (excluding corporate record books), records, ledgers, files,
documents, correspondence, lists, plats, architectural plans, drawings, and
specifications, creative materials, advertising and promotional materials,
studies, reports, and other printed or written materials used in connection
with Donlar's business;
(g) claims by Donlar against third parties;
(h) assets related to employee benefit plans;
(i) benefits under insurance policies related to unassigned
liabilities; and
(j) all securities, notes and other instruments owned by Donlar.
Notwithstanding anything to the contrary in this Agreement, (i) the
Acquired Assets shall not include the intellectual property used in
connection with the Business, goodwill associated therewith, licenses and
sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions in
which Donlar conducts business (the "Trade Rights") which will be retained
by Donlar and licensed to Biomune pursuant to the License Agreement (as
defined in Section 4.1(k)) and (ii) this Agreement shall not constitute an
agreement to assign or transfer any government approvals, instrument,
Contract, lease, permit or other agreement or arrangement, or any claim,
right or benefit arising thereunder or resulting therefrom, if an
assignment or transfer or an attempt to make such an assignment or transfer
without the consent of a third party would constitute a breach or violation
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thereof or affect adversely the rights of Biomune or Donlar, and any
transfer or assignment or any interest under any such instrument, Contract,
lease, permit or other agreement or arrangement that requires the consent
of a third party shall be made subject to such consent or approval being
obtained. In the event any such consent or approval is not obtained on or
prior to the Closing Date, Donlar shall continue to use all reasonable
efforts to obtain such approval or consent after the Closing Date until
such time as such consent or approval has been obtained, and Donlar will
cooperate with Biomune in any lawful and economically feasible arrangement
to provide that Biomune shall receive the benefits under any such
instrument, Contract, lease, permit or other agreement or arrangement,
including performance by Donlar as agent, if economically feasible,
provided that Biomune shall undertake to pay or satisfy the corresponding
liabilities for the enjoyment of such benefit to the extent Biomune would
have been responsible therefor if such consent or approval had been
obtained.
1.3 Assumption of Liabilities. On the Closing Date, upon the terms and
conditions herein set forth, Biomune shall assume and become responsible for all
of the Assumed Liabilities. Biomune will not assume or have any responsibility,
however, with respect to any obligation or liability of Donlar or relating to
its Business or properties, included within the definition of Excluded
Liabilities. As used herein, "Assumed Liabilities" shall mean only the
liabilities and obligations of Donlar under the contracts, leases or other
arrangements included in Subsections (d), (e), (f) and (g) of the definition of
Acquired Assets and those liabilities and obligations disclosed in Donlar's June
30, 2000 balance sheet, together with all liabilities and obligations incurred
by Donlar in the Ordinary Course of Business prior to the Closing and all
liabilities, obligations and agreements disclosed on the Donlar Schedules.
1.4 Issuance and Purchase of the Acquired Shares.
(a) Prior to Closing, Biomune's Board of Directors shall authorize the
filing under the Laws of the State of Nevada of a certificate of
designation for "Series H" Preferred Stock having the terms described on
Exhibit A hereto, and shall authorize the issuance to Donlar of 10,000,000
shares of Series H Preferred Stock. The final form of such Certificate of
Designation (the "Series H Designation") shall be acceptable to Donlar. The
Series H Designation shall be in full force and effect under the laws of
the State of Nevada as of the Closing.
(b) Subject to the terms and conditions set forth herein, at the
Closing, Biomune shall issue and sell to Donlar, and Donlar shall purchase
from Biomune that number of fully paid and nonassessable shares (the
"Acquired Shares") of (a) 859,990 shares of Common Stock, and (b) 8,710,015
shares of Series H Preferred Stock
1.5 Closing. The closing shall take place in person or by telecopier at the
offices of Duane, Morris & Heckscher LLP, 227 West Monroe Street, Suite 3400,
Chicago, Illinois 60606, at 10:00 a.m. CDT, at a date and time as will be agreed
upon between Donlar and Biomune (such closing being called the "Closing" and
such date and time being called the "Closing Date"). At the Closing, (a) Donlar
shall deliver or cause to be delivered to Biomune such instruments of sale,
transfer, conveyance and assignment as Biomune may reasonably request to
evidence and confirm Donlar's sale and transfer of the Acquired Assets and
Assumed Liabilities to Biomune; and (b) Biomune shall issue and deliver to
Donlar stock certificates in definitive form, registered in the name of Donlar,
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representing the Acquired Shares being purchased by Donlar at the Closing as
payment in full for the Acquired Assets and Assumed Liabilities being purchased
by Biomune under this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BIOMUNE
Biomune represents and warrants to Donlar the matters set forth in this
Article II as of the Closing Date:
2.1 Organization, Standing and Qualification.
(a) Each Biomune Affiliated Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to own
or lease and operate its properties, to carry on its business as currently
conducted and as now proposed to be conducted, and to carry out the
transactions contemplated hereby. Each Biomune Affiliated Company is duly
qualified to do business as a foreign corporation and is in good standing
under the laws of the State of Utah, and Utah is the only state or other
jurisdiction in which either the ownership or use of the properties owned
or used by the Biomune Affiliated Companies, or the nature of the
activities conducted by them, require such qualification, except for those
jurisdictions in which failure to so qualify would not have a Material
Adverse Effect upon the applicable Biomune Affiliated Company. Biomune has
made available to Donlar true, correct and complete copies of the
Organizational Documents of each Biomune Affiliated Company, as currently
in effect, and has previously made available to Donlar Biomune's complete
corporate minute and stock books, which include all actions of Biomune's
Board of Directors and shareholders, whether by meeting or by written
consent in lieu of a meeting.
(b) Except as set forth on Schedule 2.1(b), Biomune does not own,
directly or indirectly, or have the right or obligation to acquire, any
interest in any business, association or other Person.
2.2 Investment Company Status. Each Biomune Affiliated Company is not an
"investment company" within the meaning of the Investment Company Act of 1940.
2.3 Anti-Takeover Statutes. Biomune's Board of Directors has taken all
necessary action so that no Nevada "control share acquisition" or other similar
anti-takeover statute (including, but not limited to, Sections 78.378 - 78.3793
and Sections 78.411 - 78.444 inclusive of the Nevada Revised Statutes) or
regulation or applicable provision in Biomune's Articles of Incorporation or
Bylaws prohibits the transactions contemplated by this Agreement. To the
Knowledge of Biomune, no other state takeover statute or regulation is
applicable to the transactions contemplated by this Agreement.
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2.4 Power and Authority. Biomune has the power and authority to execute and
deliver this Agreement, and upon satisfaction of all relevant conditions in
Article IV will have power and authority to execute and deliver all instruments
and documents required to be executed and delivered in connection with this
Agreement (collectively the "Transaction Documents") and to perform its
obligations under the Transaction Documents. In addition, the issuance, sale and
delivery of the Acquired Shares in accordance with the terms of this Agreement
have been duly authorized by all requisite corporate action of Biomune. When
issued, sold and delivered in accordance with this Agreement, the Acquired
Shares issued hereunder will be validly issued and outstanding, fully paid for,
nonassessable, and will not be subject to preemptive or any other similar rights
of the shareholders of Biomune or others; provided, however, that the Acquired
Shares may be subject to restrictions on transfer under applicable state and/or
federal securities laws.
2.5 Noncontravention. Neither the execution and the delivery of the
Transaction Documents nor the consummation of the transactions contemplated
thereby (including the assignments referred to in Article I above), will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Biomune is subject, (ii) violate any
provision of the articles of incorporation or bylaws of Biomune or (iii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Biomune is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest has not been waived
in writing or would not, individually or in the aggregate, (x) adversely affect
the legality, validity or enforceability of any of the Transaction Documents or
the transactions contemplated thereby, (y) have or result in a material adverse
effect on the Acquired Assets or (z) adversely impair Biomune's ability to
perform fully on a timely basis its obligations under any Transaction Document
(any of (x), (y) or (z) a Material Adverse Effect). Assuming satisfaction of all
relevant conditions in Article IV, Biomune does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments referred
to in Article II above), except where the failure to give notice, to file, or to
obtain any authorization, consent, or approval would not have a Material Adverse
Effect.
2.6 Validity. This Agreement constitutes the legal, valid and binding
obligation of Biomune, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditor's rights and general principles of equity and no representation is made
regarding the effect of laws relating to competition or antitrust.
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2.7 Capitalization; Ownership of Other Entities. The authorized capital
stock of Biomune immediately after the filing of the Series H Designation shall
consist of: (i) 500,000,000 shares of Common Stock, par value $.0001; and (ii)
50,000,000 shares of Preferred Stock, par value $.0001, of which 1,120,000
shares are reserved for Series A Preferred, 1,000,000 shares are reserved for
Series B Preferred, and 12,000,000 shares are reserved for Series H Preferred.
Immediately prior to the Closing, 10,736,454 shares of Common Stock will be
validly issued and outstanding, fully paid and nonassessable and 38,523 shares
of Series A and Series B Preferred Stock which are convertible into 1,169 shares
of Common Stock will have been issued. In addition, 262,580 shares of Common
Stock are reserved for issuance under Biomune's Stock Incentive Plans and all
other rights to acquire equity securities of Biomune. The shareholders of record
and holders of subscriptions, warrants, options, convertible securities and
other rights, contingent or other, including those holding awards under the
Stock Incentive Plans to purchase or otherwise acquire equity securities of
Biomune, and the number of shares of Common Stock and the number of such
subscriptions, warrants, options, convertible securities, and other such rights
held by each or issuable to each, are as set forth in the attached Schedule 2.7.
The designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
Biomune are as set forth in Biomune's Articles of Incorporation and the
Certificates and Statements of Determination of Rights and Preferences of the
Series A, B and C Preferred Stock, as amended, and all such designations,
powers, preferences, rights, qualifications, limitations and restrictions are
(and with respect to the Series H Preferred Stock, will be as of the Closing)
valid, binding and enforceable and in accordance with all applicable laws.
Except as set forth in Schedule 2.7, (i) no Person owns of record or is Known to
Biomune to own beneficially any shares of Common Stock or Preferred Stock, or
any securities or instruments convertible into Common Stock or Preferred Stock;
(ii) no subscription, warrant, option, convertible security, or other right,
contingent or other, to purchase or otherwise acquire equity securities of
Biomune from Biomune is authorized or outstanding; (iii) no options, shares or
other rights have been granted or issued under the Stock Incentive Plans; and
(iv) there is no commitment by Biomune to issue shares, subscriptions, warrants,
options, convertible securities or other such rights or to distribute to holders
of any of its equity securities any evidence of indebtedness or asset. Except as
provided for in Biomune's Articles of Incorporation or as set forth in Schedule
2.7, Biomune has no obligation, contingent or otherwise, to purchase, redeem or
otherwise acquire any of its equity securities or any interest therein or to pay
any dividend or make any other distribution in respect thereof. Except as set
forth in Schedule 2.7, to the Knowledge of Biomune, there are no voting trusts
or agreements, shareholders agreements, pledge agreements, buy-sell agreements,
rights of first refusal, preemptive rights or proxies relating to any securities
of Biomune, whether or not Biomune is a party thereto. All of the outstanding
securities of Biomune were issued in compliance with all applicable federal and
state securities laws. Biomune's only Subsidiary is Optim Nutrition, Inc., a
Utah corporation ("Optim") and Biomune owns all of the outstanding capital stock
of Optim.
2.8 No Defaults. Except as set forth in Schedule 2.8, no Biomune Affiliated
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Company is in default: (a) under (i) its Organizational Documents, or (ii) any
material written, oral or implied Contract to which the Biomune Affiliated
Company is a party and, to the best Knowledge of Biomune, the other party to
such Contract is not in default thereunder; or (b) with respect to any order,
writ, injunction or decree of any court or any Government Entity which, in the
aggregate, will, or could reasonably be expected to, have a Material Adverse
Effect on an Biomune Affiliated Company's business, financial condition, results
of operations or prospects.
2.9 SEC Reports and Correspondence. Biomune has filed all proxy statements,
reports and other documents required to be filed by it under the Exchange Act
from and after January 1, 1997, and Biomune has furnished Donlar true and
correct copies of all annual reports, quarterly reports, proxy statements and
other reports under the Exchange Act filed by Biomune from and after such date,
each as filed with the SEC (collectively, the "Biomune SEC Reports" or "Biomune
Financial Reports"). On the date of filing, each SEC Report was in compliance in
all material respects with the requirements of its respective report form and
did not contain any 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 the light of the circumstances under which they were made, not
misleading, except to the extent corrected by a subsequently filed SEC Report,
and as of the date hereof there is no fact or facts not disclosed in the Biomune
SEC Reports that relate specifically to Biomune and that could, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
Biomune has made available for inspection by Donlar copies of all correspondence
between Biomune and the SEC from and after January 1, 1997. The Biomune SEC
Reports have been prepared from, and are in accordance with the books and
records of Biomune, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-QSB, as permitted by Form 10-QSB of the SEC) and fairly
presented the financial position of Biomune and its results of operation, cash
flows and changes in financial position as of and for the periods indicated,
except that the unaudited interim financial statements contained in the Biomune
SEC Reports were or are subject to normal and recurring year-end adjustments.
2.10 No Material Adverse Change. Since the date of Biomune's June 30, 2000
balance sheet (the "Biomune Balance Sheet"), there has not been any material
adverse change in the business, operations, properties, prospects, assets or
condition of any Biomune Affiliated Company, and to the Knowledge of Biomune, no
event has occurred or circumstance exists that may result in such a material
adverse change.
2.11 Books and Records. The books of account, minute books, stock record
books, ledgers, order books, and other records and documents of the Biomune
Affiliated Companies, all of which have been made available to Donlar, are
complete and correct and have been maintained in accordance with sound business
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practices and the requirements of Section 13(b)(2) of the Exchange Act
(regardless of whether or not the Biomune Affiliated Companies are subject to
that Section) including the maintenance of an adequate system of internal
controls.
2.12 Litigation. Except as set forth in Schedule 2.12, there is no: (a)
litigation, action, suit, claim, proceeding or investigation pending or, to the
best of Biomune's Knowledge, threatened against or affecting an Biomune
Affiliated Company, or any of its properties or assets, at law or in equity, or
before or by any Government Entity; or (b) governmental inquiry pending or, to
the best of Biomune's Knowledge, threatened against or affecting an Biomune
Affiliated Company, including without limitation any inquiry as to the
qualification of an Biomune Affiliated Company to hold or receive any license or
permit, and, to the best of Biomune's Knowledge, there is no basis for any of
the foregoing. No Biomune Affiliated Company has received any opinion or
memorandum or legal advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any liability that may be material to its business,
prospects, financial condition, operations, property or affairs, or which might
call into question the validity of this Agreement or any of the securities to be
issued hereunder or any action taken or to be taken pursuant hereto or thereto.
Except as set forth in Schedule 2.12, there is no action or suit by an Biomune
Affiliated Company pending or threatened against others.
2.13 Compliance. Each Biomune Affiliated Company is and has been in
compliance with all federal, state, local and foreign Laws, applicable to it or
to its business, operations, properties, assets, products and services,
including, but not limited to, all rules, regulations and other laws of the Food
and Drug Administration ("FDA") and each Biomune Affiliated Company has obtained
all necessary permits, licenses and other authorizations required to conduct its
business with such exceptions that do not have, and are not reasonably expected
to have, a Material Adverse Effect. Such licenses and permits are in full force
and effect and no violations have been recorded in respect of any such licenses
or permits, no proceeding is pending or, to the Knowledge of Biomune, threatened
to revoke or limit any thereof, and no notice of non-compliance, assessment or
material change has been received by an Biomune Affiliated Company. To the
Knowledge of Biomune, there is no existing Law that would prohibit or restrict
an Biomune Affiliated Company from, or otherwise adversely affect an Biomune
Affiliated Company in, conducting its business in any jurisdiction in which it
is conducting business.
2.14 Intellectual Property Rights. Each Biomune Affiliated Company owns or
has a valid right to use the Intellectual Property Rights (as defined below)
being used to conduct its business as now operated and as now proposed to be
operated (a complete list of licenses, registrations and applications for
registrations of such Intellectual Property Rights is attached hereto as
Schedule 2.14). To the Knowledge of Biomune, the conduct of each Biomune
Affiliated Company's business as now operated and as now proposed to be operated
does not and will not conflict with or infringe upon the Intellectual Property
Rights of others. Except as otherwise set forth on Schedule 2.14, no claim is
pending or, to the best of Biomune's Knowledge, threatened against an Biomune
Affiliated Company or its officers, employees and consultants to the effect that
any such Intellectual Property Right owned or licensed by the Biomune Affiliated
Company, or which the Biomune Affiliated Company otherwise has the right to use,
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is invalid or unenforceable by the Biomune Affiliated Company. Except pursuant
to the terms of any licenses specified on Schedule 2.14, no Biomune Affiliated
Company has an obligation to compensate any Person for the use of any such
Intellectual Property Rights and no Biomune Affiliated Company has granted any
Person any license or other right to use any of the Intellectual Property Rights
of the Biomune Affiliated Company, whether requiring payment of royalties or
not. Each Biomune Affiliated Company has taken all reasonable measures to
protect and preserve the security, confidentiality and value of its Intellectual
Property Rights, including its trade secrets and other confidential information.
Except as set forth in Schedule 2.14 hereof, all employees and consultants of
each Biomune Affiliated Company involved in the design, review, evaluation or
development of products or Intellectual Property Rights have executed a
nondisclosure and assignment of inventions agreement. For purposes of this
Agreement, "Intellectual Property Rights" shall mean all forms of intellectual
property rights and protections that may be obtained including, without
limitation, all right, title and interest in and to all foreign, federal, state
and common law rights relating to: (i) patents, patent rights and all filed,
pending or potential applications for patents or patent rights, including any
reissue, reexamination, division, continuation or continuation-in-part
applications now or hereafter filed; (ii) trade secret rights and equivalent
rights; (iii) copyrights, mask works and other literary property and authors'
rights, whether or not protected by copyright or as a mask work; and (iv)
trademarks, trade names, service marks, symbols, logos, brand names and other
proprietary indicia.
2.15 Title to Properties; Encumbrances.
(a) Each Biomune Affiliated Company owns, or has a valid leasehold
interest in, or valid license for, all assets necessary for the conduct of
its business as currently conducted. All tangible assets of each Biomune
Affiliated Company are in a good state of maintenance and repair and
adequate for use in the Biomune Affiliated Company's business to the extent
of its current operations. The Biomune Affiliated Companies own no real
property. Each Biomune Affiliated Company enjoys peaceful and undisturbed
possession under all leases under which it is operating, and all such
leases are valid and subsisting in full force and effect without any
default of the Biomune Affiliated Company thereunder and, to the best of
the Biomune Affiliated Company's Knowledge, without any default thereunder
of any other party thereto. To the Knowledge of Biomune, no event has
occurred and is continuing which, with due notice or lapse of time or both,
would constitute a default or event of default by the Biomune Affiliated
Company under any such lease or agreement or by any other party thereto.
Each Biomune Affiliated Company's possession of such property has not been
disturbed and no claim has been asserted against the Biomune Affiliated
Company that is adverse to its rights in such leasehold interests.
(b) Each Biomune Affiliated Company has good and marketable title to
its properties and assets reflected on the Biomune Financial Reports or
acquired by it since the date of the Biomune Financial Reports other than
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properties and assets disposed of in the ordinary course of business since
the date of the Biomune Financial Reports, and all such properties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges, claims, restrictions and other encumbrances, except for liens for
current taxes not yet due and payable and minor imperfections of title, if
any, not material in nature or amount and not materially detracting from
the value or impairing the use of the property subject thereto or impairing
the operations or proposed operations of the Biomune Affiliated Company.
2.16 Inventory. Excluding return of product in the ordinary course of
business, all inventory of the Biomune Affiliated Companies, whether or not
reflected in the Biomune Balance Sheet, consists of a quality and quantity
usable and salable in the ordinary course of business, except for obsolete items
and items of below-standard quality, all of which have been written off or
written down to net realizable value in the Biomune Balance Sheet or on the
accounting records of the Biomune Affiliated Companies as of the Closing Date,
as the case may be. All inventories not written off have been priced at cost.
The quantities of each item of inventory (whether raw materials,
work-in-progress, or finished goods) are not excessive, but are reasonable in
the present circumstances of the Biomune Affiliated Companies.
2.17 Accounts Receivable. Except as described in Schedule 2.17, all
accounts and notes receivable and accrued interest receivable of the Biomune
Affiliated Companies have arisen in the Ordinary Course of Business and the
accounts receivable reserves reflected on the Biomune Balance Sheet are as of
such date established in accordance with GAAP consistently applied.
2.18 Suppliers. No Major Supplier has during the last twelve months
materially increased or, to the Knowledge of Biomune, threatened to materially
increase its prices or materially decreased or limited or, to the Knowledge of
the company, threatened to materially decrease or limit its provision of
services or supplies to Biomune. During the last twelve months, there has been
no termination, cancellation or limitation of, or any material change in, the
business relationships of Biomune with any Major Supplier. Except for the
potential sale of the Mountain Lift product line, to the Knowledge of Biomune,
there will not be any such change in relations with any Major Supplier or the
triggering of any right of termination, cancellation or penalty or other payment
by or to any Major Supplier in connection with or as a result of the
transactions contemplated by the Agreement that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.19 Products. There are no statements, citations or decisions by the FDA
or any other Government Entity stating that any product manufactured, sold,
rented, leased, designed, distributed or marketed at any time by any Biomune
Affiliated Company ("Biomune Products") is defective or unsafe or fails to meet
any standards promulgated by the FDA or such Government Entity. There is no (i)
fact relating to any Biomune Product that, to the Knowledge of the Biomune
Affiliated Companies, may impose upon any Biomune Affiliated Company a duty to
recall or retrofit such Biomune Product or a duty to warn customers of a defect
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in such Biomune Product, (ii) latent or overt design, manufacturing or other
defect in any Biomune Product that could, to the Knowledge of any Biomune
Affiliated Company, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect or (iii) Liability for warranty claims or returns
with respect to any Biomune Product that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.20 Environmental Matters. Biomune has no Knowledge of any claim and has
not received any notice of any claim, and no proceeding has been instituted
raising any claim against any Biomune Affiliated Company or any of its real
properties now or formerly owned, leased or operated by it or other assets,
alleging any damage to the environment or violation of any Environmental Laws.
Biomune has no Knowledge of any facts that would give rise to any claim, public
or private, of violation of Environmental Laws or damage to the environment
emanating from, occurring on or affecting real properties now or formerly owned,
leased or operated by any Biomune Affiliated Company or to other assets or their
use, and no Biomune Affiliated Company has stored any Hazardous Materials on
real properties now or, to the Knowledge of any Biomune Affiliated Company,
formerly owned, leased or operated by it or has disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws.
2.21 Taxes.
(a) The term "taxes" as used herein means all federal, state, local,
foreign and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs duties, or other
taxes, fees, assessments or other charges of any kind whatever, together
with any interest and any penalties, additions to tax or additional amounts
with respect thereto, and the term "tax" means any one of the foregoing
taxes. The term "returns" as used herein, means all returns, declarations,
reports, statements and other documents required to be filed in respect of
taxes, and "return" means any one of the foregoing returns. The term "Code"
means the Internal Revenue Code of 1986, as amended. All citations to the
Code, or to the Treasury Regulations promulgated thereunder, shall include
any amendments or any substitute or successor provisions thereto.
(b) Each Biomune Affiliated Company has filed all returns required to
be filed in accordance with applicable laws with the appropriate Government
Entity in all jurisdictions in which such returns are required to be filed.
Each Biomune Affiliated Company has paid all taxes required to have been
paid by it and adequate reserves have been established for all taxes
accrued but not yet payable. No issues have been raised and are currently
pending by any taxing authority in connection with any of the returns or
taxes. No waivers of statutes of limitation with respect to any of the
returns have been given by or requested from any Biomune Affiliated
Company. All deficiencies asserted or assessments made as a result of any
examinations have been fully paid, or are fully reflected as a Liability in
the Financial Reports as being contested and a reserve therefor has been
established and is fully reflected in the Financial Reports. There are no
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liens for taxes other than for current taxes not yet due and payable upon
the assets of any Biomune Affiliated Company. All elections with respect to
taxes affecting the Biomune Affiliated Companies as of the date hereof are
set forth in the Financial Reports or are annexed hereto. After the date
hereof, no election with respect to taxes will be made without the written
consent of Donlar. The Biomune Affiliated Companies have not agreed to
make, nor are they required to make, any adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise. No
Biomune Affiliated Company is a party to any agreement, Contract,
arrangement or plan that has resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code. No Biomune Affiliated Company has and
has not had a permanent establishment in any foreign country as defined in
any applicable tax treaty or convention between the United States of
America and such foreign country. Each Biomune Affiliated Company has
satisfied all federal, state, local and foreign withholding tax
requirements, including but not limited to income, social security and
employment tax.
(c) No Biomune Affiliated Company has ever filed: (i) an election
pursuant to Section 1362 of the Code that an Biomune Affiliated Company be
taxed as an S corporation; or (ii) a consent pursuant to Section 341(f) of
the Code relating to collapsible corporations.
2.22 Insurance. Each Biomune Affiliated Company carries insurance covering
its properties and businesses customary for the type and scope of its properties
and businesses, but in any event in the amounts sufficient to prevent the
Biomune Affiliated Company from becoming a co-insurer.
2.23 Other Agreements. Except as set forth in Schedule 2.23, to the
Knowledge of the Biomune Affiliated Companies, no Biomune Affiliated Company is
a party to or otherwise bound by any written, oral or implied Contract, or other
restriction which individually or in the aggregate could Materially Adversely
Affect the business, prospects, financial condition, operations, property or
affairs of an Biomune Affiliated Company. Each Biomune Affiliated Company and,
to the best of Biomune's Knowledge, each other party thereto, have in all
material respects performed all the obligations required to be performed by them
to date, have received no notice of default and are not in material default with
due notice or lapse of time or both under any lease, agreement or Contract now
in effect to which an Biomune Affiliated Company is a party or by which it or
its property may be bound. No Biomune Affiliated Company has a present
expectation or intention of not fully performing all its obligations under each
such Contract, and no Biomune Affiliated Company has Knowledge of any breach or
anticipated breach by the other party to any Contract to which the Biomune
Affiliated Company is a party.
2.24 Loans and Advances. Except as set forth in Schedule 2.24, no Biomune
Affiliated Company has any outstanding loans or advances to any Person or is
obligated to make any such loans or advances, except, in each case, for advances
to employees of the Biomune Affiliated Company in respect of reimbursable
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business expenses anticipated to be incurred by them in connection with their
performance of services for the Biomune Affiliated Company.
2.25 Assumptions and Guaranties of Indebtedness. No Biomune Affiliated
Company has assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on any indebtedness of any other Person including, without
limitation, Liability by way of agreement, contingent or otherwise, to purchase,
to provide funds for payment, to supply funds to or otherwise invest in the
debtor, or otherwise to assure the creditor against loss.
2.26 Governmental Approvals. No registration or filing with, or consent or
approval of or other action by, any Government Entity is or will be necessary
for the valid execution, delivery and performance by Biomune of this Agreement
and the issuance, sale and delivery of the Acquired Shares other than filings
pursuant to state securities laws and Regulation D under the Securities Act, all
of which filings have been made, or shall be timely made, by Biomune in
connection with the sale of the Acquired Shares.
2.27 Disclosure. Biomune has fully provided Donlar with all the information
that Donlar has requested. To the Knowledge of Biomune, neither this Agreement
and all Schedules and Exhibits hereto, nor any other written statements or
certificates made or delivered herewith or therewith, contains any untrue
statement of a material fact or omits to state a fact necessary to make the
statements contained herein or therein not misleading. There is no fact within
the Knowledge of Biomune or any of Biomune's executive officers which has not
been disclosed herein or in writing by them to Donlar and which Materially
Adversely Affects, or may be reasonably expected to Materially Adversely Affect
the business, properties, assets or condition, financial or otherwise, of the
Biomune Affiliated Company. Other than as stated in the Schedules, without
limiting the foregoing, Biomune has no Knowledge or belief that there exists, or
there is pending or planned, any patent, invention, device, application or
principle or any Law, standard or condition which would Materially Adversely
Affect the condition, financial or otherwise, or the operations or prospects of
Biomune or any other Biomune Affiliated Company.
2.28 Offering Exemption. Subject to the accuracy of the representations and
warranties of Donlar set forth under Article III of this Agreement, the offer
and sale of the Acquired Shares is exempt from registration under the Securities
Act pursuant to Section 4(2) thereof, and under applicable state securities and
"blue sky" laws.
2.29 Brokers. No broker, investment banker, finder, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based on arrangements made by or on behalf of Biomune.
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2.30 Officers.
(a) Set forth in Schedule 2.30 is a list of the names of the officers
and key employees of Biomune and each other Biomune Affiliated Company
(collectively, the "Key Employees") together with the title or job
classification of each such person and the total compensation anticipated
to be paid to each such person by Biomune or other Biomune Affiliated
Company, as applicable, in the year 2000. Except as set forth on Schedule
2.30, none of such persons has an employment agreement or understanding,
whether oral or written, with an Biomune Affiliated Company, which is not
terminable on notice by such Biomune Affiliated Company without cost or
other liability to any Biomune Affiliated Company.
(b) To the Knowledge of the Biomune Affiliated Companies, no officer,
employee or consultant of Biomune or any other Biomune Affiliated Company
is now in violation of any term of any employment contract, patent
disclosure agreement, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement or any
other similar contract or agreement or any restrictive covenant relating to
the right of any such officer, employee or consultant to be employed or
engaged by Biomune or any other Biomune Affiliated Company because of the
nature of the business conducted or to be conducted by Biomune or any other
Biomune Affiliated Company or relating to the use of trade secrets or
proprietary information of others, and the continued employment or
engagement of Biomune's and the other Biomune Affiliated Company's
officers, employees or consultants does not subject Biomune or any other
Biomune Affiliated Company or Donlar to any liability with respect to any
of the foregoing matters.
(c) No Key Employee of Biomune or any other Biomune Affiliated
Company, whose termination, either individually or in the aggregate, could
have a Material Adverse Effect on Biomune or any other Biomune Affiliated
Company, has terminated his or her employment, or, to Biomune's Knowledge,
has any present intention of terminating his or her employment with Biomune
or any other Biomune Affiliated Company or has any health problems that
could adversely affect his or her ability to continue performing his or her
duties for Biomune or any other Biomune Affiliated Company.
2.31 Employees. Each Biomune Affiliated Company has complied with all
applicable Laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes, and with the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
2.32 Transactions with Affiliates. Except as set forth in Schedule 2.32, no
director, officer, employee or shareholder of Biomune or any other Biomune
Affiliated Company or member of the family of any such person, or any
corporation, partnership, trust or other entity in which any such person or any
member of the family of any such person, has a substantial interest or is an
officer, director, trustee, partner or holder of more than 5% of the outstanding
capital stock thereof, is a party to any transaction with Biomune or any other
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Biomune Affiliated Company, including any loan, debt or Contract, agreement or
other arrangement providing for the employment of, furnishing of services by,
rental of real or personal property from or otherwise requiring payments to, any
such person or firm, or has a pecuniary interest in any supplier or customer of
Biomune or any other Biomune Affiliated Company or in any other business
enterprise with which Biomune or any other Biomune Affiliated Company conducts
business.
2.33 U.S. Real Property Holding Corporation. Biomune is not now and has
never been a "United States real property holding corporation," as defined in
Section 897(c) (2) of the Code and Section 1.897-2(b) of the regulations
promulgated by the Internal Revenue Service.
2.34 Employees; Benefit Plans. No Biomune Affiliated Company is a party to
any collective bargaining agreement and is not a party to any pending or
threatened labor dispute. There is no employee of Biomune or any other Biomune
Affiliated Company whose employment is not terminable at will. Neither Biomune
nor any other Affiliated Company has any employee benefit plans.
2.35 Contracts; No Defaults.
(a) No Biomune Affiliated Company has any Applicable Contract:
(i) that involves performance of services or delivery of goods or
materials by one or more Biomune Affiliated Companies of an amount or
value in excess of $25,000;
(ii) that involves performance of services or delivery of goods
or materials to one or more Biomune Affiliated Companies of an amount
or value in excess of $25,000;
(iii) that was not entered into in the Ordinary Course of
Business and that involves expenditures or receipts of one or more
Biomune Affiliated Companies in excess of $10,000;
(iv) that affects the Biomune Affiliated Company's ownership of,
leasing of, title to, use of, or any leasehold or other interest in,
any real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item
or aggregate payments of less than $25,000 and with terms of less than
one year);
(v) that evidences a licensing agreement or other Applicable
Contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former
employees, consultants, or contractors regarding the appropriation or
the non-disclosure of any of the Intellectual Property Rights;
(vi) that evidences a collective bargaining agreement or other
Applicable Contract to or with any labor union or other employee
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representative of a group of employees;
(vii) that evidences a joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of profits,
losses, costs, or liabilities by any Biomune Affiliated Company with
any Person;
(viii) that contains covenants that in any way purport to
restrict the business activity of any Biomune Affiliated Company or
any affiliate of an Biomune Affiliated Company or limit the freedom of
any Biomune Affiliated Company or any affiliate of an Biomune
Affiliated Company to engage in any line of business or to compete
with any Person;
(ix) that provides for payments to or by any Person based on
sales, purchases, or profits, other than direct payments for goods;
(x) that evidences a power of attorney that is currently
effective and outstanding;
(xi) that was entered into other than in the Ordinary Course of
Business that contains or provides for an express undertaking by any
Biomune Affiliated Company to be responsible for consequential
damages;
(xii) that requires capital expenditures in excess of $10,000;
(xiii) that evidences a written warranty, guaranty, and or other
similar undertaking with respect to contractual performance extended
by any Biomune Affiliated Company other than in the Ordinary Course of
Business; and
(xiv) that evidences an amendment, supplement or modification
(whether oral or written) in respect of any of the foregoing.
(b) To the Knowledge of the Biomune Affiliated Companies, no officer,
director, agent, employee, consultant, or contractor of any Biomune
Affiliated Company is bound by any Contract that purports to limit the
ability of such officer, director, agent, employee, consultant, or
contractor to (A) engage in or continue any conduct, activity, or practice
relating to the business of any Acquired Company, or (B) assign to any
Biomune Affiliated Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Each Contract identified or required to be identified in Part
2.35(a) is in full force and effect and is valid and enforceable in
accordance with its terms.
(d) Except as set forth in the Schedules to this Agreement:
(i) each Biomune Affiliated Company is, and at all time since
January 1, 1997 has been, in full compliance with all applicable terms
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and requirements of each Contract under which such Biomune Affiliated
Company has or had any obligation or Liability or by which such
Biomune Affiliated Company or any of the assets owned or used by such
Biomune Affiliated Company is or was bound;
(ii) each other Person that has or had any obligation or
Liability under any Contract under which an Biomune Affiliated Company
has or had any rights is, and at all times since January 1, 1997 has
been, in full compliance with all applicable terms and requirements of
such Contract;
(iii) to the Knowledge of the Biomune Affiliated Companies, no
event has occurred or circumstance exists that (with or without notice
or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give any Biomune Affiliated Company or
other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(iv) no Biomune Affiliated Company has given to or received from
any other Person, at any time since January 1, 1997, any notice or
other communication (whether oral or written) regarding any actual,
alleged, possible, or potential violation or breach of, or default
under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to
any Biomune Affiliated Company under current or completed Contracts with
any Person and no such Person has made written demand for such
renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of the Biomune Products or services by the Biomune Affiliated
Companies have been entered into in the Ordinary Course of Business and
have been entered into without the commission of any act alone or in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Law.
2.36 Year 2000. Each Biomune Affiliated Company's computer system and
software including all software and applications developed for or sold to any
customer or client, and all other systems of Biomune are able to accurately
process date data, including but not limited to, calculating, comparing and
sequencing from, into and between the twentieth century through year 1999, the
year 2000 and the twenty-first century, including leap year calculations. To the
Knowledge of Biomune, it is not aware of any inability on the part of any
service provider to any Biomune Affiliated Company to timely remedy such service
provider's own deficiencies in respect of the year 2000 problem.
2.37 Compliance with the Nasdaq Market Listing Requirements. Biomune has
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fully disclosed to Donlar all communications with Nasdaq regarding its SmallCap
Market listing since January 1, 2000.
2.38 Compensation of Key Employees. Biomune has not increased or otherwise
changed the compensation of, or paid any bonuses to, any Key Employee at any
time during the period commencing 90 days prior to the date of this Agreement
through the date of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DONLAR
Subject in every respect to exceptions which may hereafter be disclosed on
the Donlar Schedules, Donlar represents and warrants to Biomune that the
statements contained in this Article III are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article III), except as set forth in the
disclosure Schedules described herein.
3.1 Organization of Donlar. Donlar is a corporation duly organized, validly
existing, and in good standing under the laws of Illinois.
3.2 Authorization of Transaction. Donlar has the power and authority to
execute and deliver this Agreement and, upon satisfaction of all relevant
conditions in Article IV will have power and authority to execute and deliver
the Transaction Documents. This Agreement constitutes the valid and legally
binding obligation of Donlar, enforceable in accordance with its terms and
conditions.
3.3 Validity. This Agreement constitutes the legal, valid and binding
obligation of Biomune, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditor's rights and general principles of equity and no representation is made
regarding the effect of laws relating to competition or antitrust.
3.4 Noncontravention. Neither the execution and the delivery of the
Transaction Documents nor the consummation of the transactions contemplated
thereby (including the assignments referred to in Article I above), will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Donlar is subject, (ii) violate any
provision of the articles of incorporation or bylaws of Donlar or (iii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Donlar is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets), except where the violation,
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conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest has not been waived
in writing or would not, individually or in the aggregate, (x) adversely affect
the legality, validity or enforceability of any of the Transaction Documents or
the transactions contemplated thereby, (y) have or result in a material adverse
effect on the Acquired Assets or (z) adversely impair Donlar's ability to
perform fully on a timely basis its obligations under any Transaction Document
(any of (x), (y) or (z) a Material Adverse Effect). Assuming satisfaction of all
relevant conditions in Article IV, Donlar does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments referred
to in Article II above), except where the failure to give notice, to file, or to
obtain any authorization, consent, or approval would not have a Material Adverse
Effect.
3.5 Brokers' Fees. Donlar has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Biomune could become liable or
obligated.
3.6 Title to Tangible Assets. Donlar has good title to, or a valid
leasehold interest in, the Acquired Assets. Effective upon the assumption by
Biomune of the Assumed Liabilities and the transfer of certain liens in favor of
Donlar creditors (the "Donlar Liens") to Biomune in connection with such
assumption, Donlar will have at the Closing good, valid and indefeasible title
to, or a valid leasehold interest in, the Acquired Assets, free and clear of the
Donlar Liens.
3.7 Subsidiaries. Donlar has no Subsidiaries.
3.8 Financial Statements. Within 30 days of the date of this Agreement,
Donlar will deliver to Biomune the following financial statements of Donlar
(collectively the "Financial Statements"): (i) unaudited balance sheets and
statements of income, changes in shareholders' equity, and cash flow as of and
for the fiscal years ended December 31, 1999, 1998 and 1997 for Donlar; and (ii)
unaudited balance sheets and statements of income, changes in shareholders'
equity, and cash flow (the "Most Recent Financial Statements") as of and for any
fiscal quarter completed after December 31, 1999, if any (the "Most Recent
Fiscal Month End") for Donlar. The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and present fairly the financial
condition of Donlar as of such dates and the results of operations of Donlar for
such periods.
3.9 Material Liabilities; Material Adverse Events.
(a) Donlar does not have any material liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due, including any liability for taxes), except
for (i) liabilities set forth on the face of Donlar's Financial Statements
(rather than in any notes thereto) and (ii) liabilities which have arisen
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after March 31, 2000 in the Ordinary Course of Business.
(b) Since December 31, 1999, there has not been any material adverse
change in the financial condition of Donlar taken as a whole. Without
limiting the generality of the foregoing, since that date Donlar has not
engaged in any practice, taken any action, or entered into any transaction
outside the Ordinary Course of Business except for the acquisition of
Donlar common stock pursuant to that certain Stock Purchase Agreement dated
August 7, 2000 by and between Donlar and Biomune and the transactions
contemplated by this Agreement.
3.10 Legal Compliance. Donlar has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), except where the failure to comply,
individually or in the aggregate would not have a Material Adverse Effect.
3.11 Tax Matters.
(a) Donlar has filed all tax returns that it was required to file, and
has paid all taxes shown thereon as owing, except where the failure to file
tax returns or to pay taxes would not have a Material Adverse Effect.
(b) Prior to Closing, Donlar will make available to Biomune correct
and complete copies of all federal tax returns, examination reports, and
statements of deficiencies assessed against or agreed to by any of Donlar
and its Subsidiaries since December 31, 1997.
(c) Donlar has not waived any statute of limitations in respect of
taxes or agreed to any extension of time with respect to any tax assessment
or deficiency.
(d) Donlar is not a party to any tax allocation or sharing agreement.
(e) Donlar has not been a member of an Affiliated Group filing a
consolidated federal tax return.
3.12 Real Property. The Donlar Schedules will list and describe briefly all
real property leased or subleased to Donlar. Prior to Closing, Donlar will make
available to Biomune correct and complete copies of the leases and subleases (as
amended to date) listed in the Donlar Schedules. With respect to each lease and
sublease listed in the Donlar Schedules, and except as otherwise disclosed
therein:
(i) the lease or sublease is legal, valid, binding, enforceable, and
in full force and effect;
(ii) the lease or sublease will continue to be legal, valid, binding,
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enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification, or acceleration
thereunder;
(iv) no party to the lease or sublease has repudiated any provision
thereof;
(v) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and warranties
set forth in subsections (i) through (v) above are true and correct with
respect to the underlying lease;
(vii) Donlar has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or
subleasehold, except for term financing existing as of the date of this
Agreement;
(viii) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits)
required in connection with the operation thereof and have been operated
and maintained in accordance with applicable laws, rules, and regulations;
and
(ix) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said
facilities.
3.13 Intellectual Property. The Donlar Schedules will identify all
trademarks, patents, copyrights, each patent or registration which has been
issued to Donlar with respect to any of its intellectual property and any other
intellectual property owned by Donlar, identifies each pending patent
application or application for registration which Donlar has made with respect
to any of its intellectual property, and identifies each license, agreement, or
other permission which Donlar has granted to any third party with respect to any
of its intellectual property.
3.14 Contracts. The Donlar Schedules will list all written contracts and
other written agreements to which Donlar is a party the performance of which
will involve consideration in excess of $10,000. Prior to Closing, Donlar will
make available to Biomune a correct and complete copy of each such contract or
other agreement so listed (as amended to date).
3.15 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Donlar.
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3.16 Litigation. The Donlar Schedules will set forth each instance in which
Donlar (i) is subject to any outstanding injunction, judgment, order, decree,
ruling, or charge or (ii) is a party to any action, suit, proceeding, hearing,
or investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction, except where the
injunction, judgment, order, decree, ruling, action, suit, proceeding, hearing,
or investigation would not have a Material Adverse Effect.
3.17 Employees; Employee Benefits. Each Donlar Affiliated Company has
complied with all applicable Laws relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity, collective bargaining
and the payment of Social Security and other taxes, and with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). No Donlar
Affiliated Company is a party to any collective bargaining agreement and is not
a party to any pending or threatened labor dispute. Except as set forth in the
Donlar Schedules, there is no employee of Donlar or any other Donlar Affiliated
Company whose employment is not terminable at will. Donlar's and the other
Donlar Affiliated Company's only employee benefit plans are listed in the Donlar
Schedules (the "Employee Benefit Plans"). With respect to the Employee Benefit
Plans: (a) each Donlar Affiliated Company is, and always has been, in compliance
in all material respects with the applicable provisions of ERISA and the Code
and the regulations promulgated thereunder; (b) there has been no violation of
ERISA's fiduciary obligations nor have there been any prohibited transactions;
(c) there does not exist any Liability for any federal, state or local taxes nor
does any Employee Benefit Plan have any unfunded Liability; and (d) all reports
required to be filed with all Government Entities have been so filed.
3.18 Environmental, Health, and Safety Matters. Donlar has no Knowledge of
any claim and has not received any notice of any claim, and no proceeding has
been instituted raising any claim against any Donlar Affiliated Company or any
of its real properties now or formerly owned, leased or operated by it or other
assets, alleging any damage to the environment or violation of any Environmental
Laws. Except as set forth in the Donlar Schedules, (i) Donlar has no Knowledge
of any facts that would give rise to any claim, public or private, of violation
of Environmental Laws or damage to the environment emanating from, occurring on
or affecting real properties now or formerly owned, leased or operated by any
Donlar Affiliated Company or to other assets or their use, and (ii) no Donlar
Affiliated Company has stored any Hazardous Materials on real properties now or,
to the Knowledge of any Donlar Affiliated Company, formerly owned, leased or
operated by it or has disposed of any Hazardous Materials in a manner contrary
to any Environmental Laws.
3.19 Certain Business Relationships with Donlar Shareholders. Donlar has
not been involved in any material business arrangement or relationship with any
Donlar shareholders within the past 12 months, and none of Donlar's shareholders
or their Affiliates owns any material asset, tangible or intangible, which is
used in the business of Donlar.
3.20 Disclaimer of other Representations and Warranties. Except as
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expressly set forth in this Article III, Donlar makes no representation or
warranty, express or implied, at law or in equity, in respect of any of its
assets (including, without limitation, the Acquired Assets), liabilities or
operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. Biomune hereby acknowledges and
agrees that, except to the extent specifically set forth in this Article III,
Biomune is purchasing the Acquired Assets on an "as-is, where-is" basis. Without
limiting the generality of the foregoing, Donlar makes no representation or
warranty regarding any assets other than the Acquired Assets or any liabilities
other than the Assumed Liabilities, and none shall be implied at law or in
equity.
3.21 Investor Status. Donlar is an "accredited investor" within the meaning
of Rule 501 under the Securities Act.
3.22 Sophistication. Donlar has sufficient Knowledge and experience in
investing in companies similar to Biomune in terms of Biomune's stage of
development so as to be able to evaluate the risks and merits of its investment
in Biomune and it is able financially to bear the risks thereof, and it has been
afforded the opportunity during the course of negotiating the transactions
contemplated by this Agreement to ask questions of, and to secure such
information from, the Donlar Affiliated Companies and their officers and
directors as it deems necessary to evaluate the merits of entering into such
transactions. All such questions have been answered satisfactorily and Donlar or
its counsel have received and reviewed the due diligence materials delivered to
it/them by the Donlar Affiliated Companies;
3.23 Restrictions on Resale of Acquired Shares. Donlar understands that the
Acquired Shares have not been registered under the Securities Act and are
restricted shares. Donlar understands that no shares can be sold unless they are
first registered under the Securities Act or unless an exemption from such
registration is available;
3.24 Investment Intent. Donlar is acquiring the Acquired Shares for its own
account for investment only, and not as a nominee and not with a view towards
distribution of any part thereof, and that Donlar has no present intention of
selling, granting any participation in, or otherwise distributing the same;
3.25 Exemption from Registration. Donlar understands that the Acquired
Shares has not been registered under the Securities Act. Donlar also understands
that the Acquired Shares is being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon Donlar's
representations contained in the Agreement;
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ARTICLE IV
CONDITIONS TO THE OBLIGATIONS
OF THE PARTIES
4.1 Conditions to the Obligations of Donlar. The obligation of Donlar to
purchase and pay for the Acquired Shares and sell and transfer the Acquired
Assets and assign the Assumed Liabilities on the Closing Date is, at its option,
subject to the satisfaction or waiver by Donlar, on or before the Closing Date,
of the following conditions:
(a) Opinion of Biomune's Counsel. Donlar shall have received from
Durham Jones & Pinegar, counsel for Biomune, an opinion dated the Closing
Date in form and substance reasonably satisfactory to Donlar.
(b) Representations and Warranties of Biomune to be True and Correct.
The representations and warranties contained in Article II shall be true,
complete and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date, and the President and Treasurer of Biomune shall have certified to
Donlar in writing to such effect.
(c) Performance. Biomune shall have performed and complied with all
agreements contained herein required to be performed or complied with by it
prior to or at the Closing Date, and the President and Treasurer of Biomune
shall have certified to Donlar in writing to such effect and to the further
effect that all of the conditions set forth in this Section 4.1 have been
satisfied.
(d) Due Diligence. Donlar shall have completed its due diligence
investigation of Biomune and shall be satisfied in its sole discretion in
all respects with the findings thereof.
(e) Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by Biomune in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Donlar and its counsel, and Donlar
and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they reasonably may request.
(f) Purchase by Donlar. Subject to the conveyance of the Acquired
Assets and Assumed Liabilities to Biomune for the Acquired Shares on the
Closing Date, Biomune shall have delivered a stock certificate or
certificates representing the Acquired Shares.
(g) Supporting Documents. Donlar and its counsel shall have received
copies of the following documents:
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(i) (A) a certificate of the Secretary of State of Nevada dated
as of a recent date as to the due incorporation and good standing of
Biomune; and (B) a certificate of the Secretary of State of Utah as to
the good standing of Biomune with the State of Utah.
(ii) a certificate of the Secretary or an Assistant Secretary of
Biomune dated the Closing Date and certifying: (A) that attached
thereto is a true and complete copy of the Bylaws of Biomune as in
effect on the date of such certification; (B) that attached thereto is
a true and complete copy of all resolutions adopted by the Board of
Directors or the shareholders of Biomune authorizing the execution,
delivery and performance of this Agreement, the issuance, sale and
delivery of the Acquired Shares and that all such resolutions are in
full force and effect and are all the resolutions adopted in
connection with the transactions contemplated by this Agreement; (C)
that Biomune's Articles of Incorporation have not been amended since
the date of the last amendment referred to in the certificate
delivered pursuant to clause (i)(A) above; and (D) to the incumbency
and specimen signature of each officer of Biomune executing this
Agreement, and any of the stock certificates representing the Acquired
Shares and any certificate or instrument furnished pursuant hereto and
a certification by another officer of Biomune as to the incumbency and
signature of the officer signing the certificate referred to in this
clause (ii); and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of Biomune as Donlar or its
counsel reasonably may request.
(h) Preemptive Rights; Termination of Shareholder Agreements. All
shareholders of Biomune having any preemptive, first refusal or other
rights with respect to the issuance of the Acquired Shares shall have
irrevocably waived the same in writing. All shareholder agreements, voting
agreements, registration rights agreements and similar agreements relating
to the capital stock of Biomune shall have been terminated by all parties
to such agreements.
(i) Other Waivers and Consents. Biomune shall have obtained all other
necessary waivers or consents to the execution of this Agreement and the
related agreements.
(j) Stockholder Approvals. As required by applicable Law, this
Agreement shall have been approved and adopted by the requisite vote of the
shareholders of Biomune and Donlar and the issuance of the Acquired Shares
pursuant to this Agreement shall have been approved by the requisite vote
of the shareholders of Biomune.
(k) License Agreement. Biomune and Donlar shall have entered into a
mutually acceptable exclusive License Agreement (the "License Agreement")
whereby Donlar shall license the Trade Rights to Biomune, which License
Agreement shall provide, among other things, for payment of a two percent
(2%) license fee on all sales revenues for products deriving in any way
from the Trade Rights, which License Agreement shall continue until the
latest expiration of any patent comprised within the Trade Rights.
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(l) Reverse Stock Split. Biomune shall have effected a twenty-five to
one (25 : 1) reverse stock split of all Common Stock.
4.2 Conditions to the Obligations of Biomune. The obligation of Biomune to
issue the Acquired Shares and purchase the Acquired Assets and Assumed
Liabilities on the Closing Date is, at its option, subject to the satisfaction
or waiver by Biomune, on or before the Closing Date, of the following
conditions:
(a) Opinion of Donlar's Counsel. Biomune shall have received from
Duane, Morris & Heckscher, counsel for Donlar, an opinion dated the Closing
Date in form and substance reasonably satisfactory to Biomune.
(b) Representations and Warranties of Donlar to be True and Correct.
The representations and warranties of Donlar contained in Article III shall
be true, complete and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and
as of such date, and the President and Treasurer of Donlar shall have
certified to Biomune in writing to such effect.
(c) Performance. Donlar shall have performed and complied with all
agreements contained herein required to be performed or complied with by it
prior to or at the Closing Date, and the President and Treasurer of Donlar
shall have certified to Biomune in writing to such effect and to the
further effect that all of the conditions set forth in this Section 4.2
have been satisfied.
(d) Due Diligence. Biomune shall have completed its due diligence
investigation of Donlar and shall be satisfied in its sole discretion in
all respects with the findings thereof.
(e) Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by Donlar in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Biomune, and Biomune and its counsel
shall have received all such counterpart originals or certified or other
copies of such documents as they reasonably may request.
(f) Conveyance of the Acquired Assets. Donlar shall have conveyed the
Acquired Assets to Biomune on the Closing Date.
(g) Opinions of Financial Advisors. Biomune shall have received an
opinion from independent financial advisors to be retained by Biomune which
advisors shall be reasonably acceptable to Donlar on or prior to the
Closing Date to the effect that, as of the date of such opinion, the
exchange of the Acquired Shares for the Acquired Assets and Assumed
Liabilities is fair to the shareholders of Biomune from a financial point
of view. If such opinion determines that a lower number of Acquired Shares
than those contemplated by Section 1.4(b) would be fair to the Biomune
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shareholders, then Donlar may, at its option and in its sole discretion,
(i) accept such lower number (which shall then be the Acquired Shares for
purposes of this Agreement) in which event the condition of this Section
4.2(g) shall be deemed satisfied or (ii) terminate this Agreement pursuant
to Section 7.1(d)
(h) Stockholder Approvals. As required by applicable law, this
Agreement shall have been approved and adopted by the requisite vote of the
shareholders of Biomune and Donlar and the issuance of the Acquired Shares
pursuant to this Agreement shall have been approved by the requisite vote
of the shareholders of Biomune.
(i) No Adverse Action. There shall not be any injunction, judgment,
order, decree, ruling, or charge in effect preventing consummation of any
of the transactions contemplated by this Agreement.
(j) Certificate of Donlar. Donlar shall have delivered to Biomune a
certificate to the effect that each of the conditions specified above in
Sections 4.2(a) through (i) is satisfied in all respects;
(k) Final Inspection of Acquired Assets. Biomune or its
representatives shall have been afforded an opportunity, within forty-eight
(48) hours prior to Closing, to conduct an on-site inspection of the
Acquired Assets and based on such inspection or otherwise shall have
reasonably determined that the Acquired Assets shall be acceptable to
Biomune.
(l) License Agreement. Biomune and Donlar shall have entered into the
License Agreement.
(m) Payment of Promissory Note. Donlar will have repaid any amounts
owing to Biomune under the Promissory Note or any other instrument of
indebtedness owed by Donlar to Biomune.
ARTICLE V
COVENANTS OF BIOMUNE
Biomune covenants and agrees that, unless Donlar otherwise agrees in
writing, from the date of this Agreement until the Closing:
5.1 Financial Statements, Reports, etc. Biomune shall maintain proper books
of accounts and records and shall deliver to Donlar:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of Biomune, a copy of the annual audit report for such
year for Biomune including therein a balance sheet of Biomune as of the end
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of such fiscal year and the statements of income, retained earnings and of
changes in financial position of Biomune for such fiscal year, prepared in
accordance with GAAP by a firm of independent public accountants selected
by Donlar and accompanied by an opinion of the accounting firm;
(b) as soon as available and in any event within 45 days after the end
of each fiscal quarter in each fiscal year of Biomune a balance sheet of
Biomune and the statements of income and retained earnings as of the end of
such quarter, and of changes in financial position of Biomune for such
quarter and for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, unaudited but prepared in
accordance with GAAP subject to year-end adjustments and as otherwise
permitted by Form 10-QSB of the SEC and certified by the Chief Executive
Officer or Chief Financial Officer of Biomune, in each case with
comparative statements for the corresponding period in the prior fiscal
year;
(c) promptly following receipt by Biomune, each audit response letter,
accountant's management letter and other written report submitted to
Biomune by its independent public accountants in connection with an annual
or interim audit of the books of Biomune;
(d) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations and inquiries of the type
described in Section 2.12 that could Materially Adverse Affect Biomune;
(e) promptly upon sending, making available or filing the same, all
press releases, reports and financial statements that Biomune sends or
makes available to its shareholders generally; and
(f) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property or affairs
of Biomune as Donlar reasonably may request.
5.2 No Issuance of Shares; Right of First Offer. Biomune shall not issue
any of its securities other than debt securities with no equity feature without
Donlar's prior written consent. In the event Donlar so consents to any issuance
of securities by Biomune, Biomune shall, prior to any issuance by Biomune of any
of its securities other than debt securities with no equity feature, offer to
Donlar by written notice the right, for a period of 30 days, to purchase
Donlar's pro rata portion of such securities (as defined below) for cash at an
amount equal to the price or other consideration for which such securities are
to be issued; provided, however, that the first offer rights of Donlar pursuant
to this Section 5.2 shall not apply to securities issued: (a) upon conversion of
any of the Preferred Shares; (b) as a stock dividend or upon any subdivision of
shares of Common Stock, provided that the securities issued pursuant to such
stock dividend or subdivision are limited to additional shares of Common Stock;
(c) pursuant to subscriptions, warrants, options, convertible securities, or
other rights that are listed in Schedule 2.7 as being outstanding on the Closing
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Date; (d) solely in consideration for the acquisition, whether by merger or
otherwise, by Biomune of all or substantially all of the stock or assets of any
other entity where such acquisition was approved by Donlar; (e) pursuant to an
underwritten public offering; or (f) pursuant to the exercise of options to
purchase Common Stock granted to employees, directors or consultants of Biomune,
not to exceed in the aggregate 262,580 shares, appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and the like with respect
to the Common Stock, less the number of shares as so adjusted issued pursuant to
options outstanding on the date of this Agreement and listed in Schedule 2.7
pursuant to clause (c) above (the shares exempted by this clause (f) being
hereinafter referred to as the "Reserved Employee Shares"). For purposes of this
Section 5.2, Donlar's pro rata portion shall be an amount equal to the total
number of securities to be offered by Biomune multiplied by a fraction, the
numerator of which is the number of shares of Common Stock held by Donlar and
the denominator of which is the sum of the total number of shares of Common
Stock that are issued and outstanding. Biomune's written notice to Donlar shall
describe the securities proposed to be issued by Biomune and shall specify the
number, price and payment terms. Donlar may accept Biomune's offer as to the
full number of securities offered to it or any lesser number, by written notice
thereof given by it to Biomune prior to the expiration of the aforesaid 30-day
period, in which event Biomune shall promptly sell and Donlar shall buy, upon
the terms specified, the number of securities agreed to be purchased by Donlar.
Biomune shall be free at any time prior to 60 days after the expiration of such
30-day period, to offer and sell to any third party or parties the number of
such securities not agreed by Donlar to be purchased by it, at a price and on
payment terms no less favorable to Biomune than those specified in such notice
of offer to Donlar. However, if such third party sale or sales are not
consummated within such 60-day period, Biomune shall not sell such securities as
shall not have been purchased within such period without again complying with
this Section 5.2.
5.3 Corporate Existence. Biomune shall maintain, and shall cause each other
Biomune Affiliated Company to maintain, its corporate existence and all of its
rights and licenses necessary to maintain its business in full force and effect.
5.4 Properties, Business, Insurance. Biomune shall maintain, and shall
cause each other Biomune Affiliated Company to maintain, as to its properties
and business, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
consistent with its Ordinary Course of Business; provided, however, that Biomune
may acquire and/or divest itself of the Mountain Lift product line or rights and
properties associated with that product line and Biomune may sell shares of
Purizer Corporation owned by Biomune as of the date of this Agreement without
limitation and without further consent or action by Donlar.
5.5 Inspection, Consultation and Advice. Biomune shall permit, and shall
cause each other Biomune Affiliated Company to permit, Donlar and its
representatives, upon reasonable advance notice to Biomune, to visit and inspect
any of the properties of the Biomune Affiliated Companies, examine their books
and records and take copies and extracts therefrom, discuss the affairs,
finances and accounts of the Biomune Affiliated Companies with their officers,
employees and public accountants and Biomune hereby authorizes, and shall cause
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each other Biomune Affiliated Company to authorize, said accountants to discuss
with Donlar and such designees such affairs, finances and accounts, and consult
with and advise the management of Biomune and each other Biomune Affiliated
Company as to its affairs, finances and accounts, all at reasonable times and
upon reasonable notice.
5.6 Restrictive Agreements Prohibited. No Biomune Affiliated Company shall
become a party to any agreement that by its terms restricts Biomune's
performance of this Agreement or Biomune's Articles of Incorporation.
5.7 Transactions with Affiliates. Except as set forth in Schedule 5.7, or
as otherwise approved by the Board of Directors of Biomune after the Closing
Date, Biomune shall not enter into any transaction with any director, officer,
employee or holder of more than 5% of the outstanding capital stock of any class
or series of capital stock of Biomune, member of the family of any such person,
or any corporation, partnership, trust or other entity in which any such person,
or member of the family of any such person, is a director, officer, trustee,
partner or holder of more than 5% of the outstanding capital stock thereof,
except for transactions on customary terms related to such person's employment.
5.8 Compensation. Biomune, through its President, may pay, accrue or
otherwise provide compensation and bonuses to any employee in any amounts that
he or she deems reasonable; provided, however, that Biomune shall not, without
Donlar's prior written consent, after recommendation by the President: (a) award
or grant any options to Key Employees for the purchase of Common Stock or
Preferred Stock or award, grant, issue or sell any Common Stock or Preferred
Stock to any Key Employees; (b) increase the base salary paid, accrued or
otherwise provided to any of the Key Employees in or with respect of any fiscal
year by an amount in excess of 10% of such base salary in or with respect of the
prior fiscal year, provided that no such increase may be effected until after
the first anniversary of the Closing Date; or (c) pay bonuses to Key Employees
for any fiscal year.
5.9 Bylaws. Biomune shall at all times cause its Bylaws to provide that
unless otherwise required by the laws of the state of its incorporation, (a) any
one director and (b) any holder or holders of at least 19.9% of the outstanding
shares of Common Stock, shall have the right to call a meeting, respectively, of
the Board of Directors or shareholders. Biomune shall at all times maintain
provisions in its Bylaws and Articles of Incorporation indemnifying all
directors against Liability and absolving all directors from Liability to
Biomune and its shareholders to the maximum extent permitted under the laws of
the state of its incorporation. Biomune's Bylaws shall provide that at least one
of the directors designated solely by a holder of at least 19.9% of the
outstanding shares of Common Stock will be a member of any committee created by
the Board of Directors.
5.10 Granting of Options. Biomune shall not grant to any of its officers,
employees or consultants options to purchase Common Stock or any security
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convertible into Common Stock or change the pricing or other terms of any
outstanding options without Donlar's prior written consent.
5.11 Compliance with Laws. Biomune shall comply, and shall cause each other
Biomune Affiliated Company to comply, with all applicable Laws, noncompliance
with which could Materially Adversely Affect an Biomune Affiliated Company's
business or condition, financial or otherwise.
5.12 Change in Nature of Business. Biomune shall not, and shall cause each
other Biomune Affiliated Company not to, make any material change in the nature
of its business to something unrelated to that conducted on the Closing Date,
except as approved by Donlar.
5.13 Tax Payments. Biomune shall, and shall cause each other Biomune
Affiliated Company to, prepare and timely file all tax returns required to be
filed by it, and Biomune shall, and shall cause each other Biomune Affiliated
Company to, timely pay any taxes and estimated taxes, including additions to
tax, interest and penalties, required to be paid by Biomune after the date
hereof. All transfer, excise or other taxes payable to any jurisdiction in the
United States and outside the United States by reason of the sale and transfer
of the Acquired Shares pursuant to this Agreement shall be paid or provided for
by Biomune. All federal and state income tax returns of the Biomune Affiliated
Companies for any period shall be prepared and signed by a nationally recognized
accounting firm. The preparation of such returns shall be at an Biomune
Affiliated Company's expense.
5.14 Material Changes and Litigation. Biomune shall use reasonable efforts
to promptly notify of Donlar of any material adverse change in the business,
properties, assets or condition of any Biomune Affiliated Company, financial or
otherwise, as distinguished from general information about the biopharmaceutical
and nutraceutical industries or general market and economic conditions and of
any litigation or governmental proceeding or investigation pending or, to the
Knowledge of Biomune, threatened against any Biomune Affiliated Company, or
against any officer, director, Key Employee or principal shareholder, which, if
adversely determined, would Materially Adversely Affect an Biomune Affiliated
Company's present or then contemplated business, properties, assets or
condition, financial or otherwise.
5.15 New Developments. Biomune shall cause, and shall cause each other
Biomune Affiliated Company to cause, all technological developments, patentable
or unpatentable inventions, discoveries or improvements by any Biomune
Affiliated Company's employees or consultants to be documented in accordance
with industry practice and, where possible and appropriate, to file and
prosecute, on a timely basis, United States and foreign patent, copyright,
trademark, mask work or other Intellectual Property Rights applications relating
to and protecting the Biomune Affiliated Company's inventions, discoveries or
developments on behalf of the Biomune Affiliated Company.
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5.16 Assets. Except for the sale of the Mountain Lift product line and
sales of Purizer Corporation common stock, in either case only if the sale
proceeds are used for satisfaction of outstanding accounts payable owed to
independent third parties, Biomune shall not, and shall cause each other Biomune
Affiliated Company not to, sell (other than sales of inventory in the Ordinary
Course of Business), lease, or otherwise dispose of any asset or property,
including Intellectual Property Rights, of any Biomune Affiliated Company or
mortgage, pledge or permit the imposition of any lien or other encumbrance on
any asset or property, including Intellectual Property Rights, of any Biomune
Affiliated Company.
5.17 No Negotiation. Biomune shall not, and shall cause each other Biomune
Affiliated Company not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Donlar) relating to any
transaction involving the sale of the business or assets (other than the sale of
the Mountain Life product line and sales of inventory in the Ordinary Course of
Business) of any Biomune Affiliated Company, or any of the capital stock of any
Biomune Affiliated Company, or any merger, consolidation, business combination,
or similar transaction involving any Biomune Affiliated Company. Nothing
contained in this Section 5.17 shall prohibit the Board of Directors of Biomune
from furnishing information to, or entering into discussions or negotiations
with, any Person that makes an unsolicited bona fide proposal to acquire an
Biomune Affiliated Company pursuant to a merger, consolidation, business
combination, or similar transaction, if, and only to the extent that, (a) the
Board of Directors of Biomune, after consultation with and based upon the advice
of independent legal counsel, determines in good faith that such action is
required for the Board of Directors of Biomune to comply with its fiduciary
duties to shareholders imposed by law, (b) prior to furnishing such information
to, or entering into discussions or negotiations with, such person, Biomune
provides written notice to Donlar to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person,
and (c) Biomune keeps Donlar informed, on a current basis, of the status and
details of any such discussions or negotiations.
5.18 Shareholder Meeting. Biomune shall call and hold a meeting of its
shareholders (the "Shareholders' Meeting"), as promptly as practicable after the
date of this Agreement for the purpose of voting on the adoption of this
Agreement. Biomune shall use its best efforts to solicit from its shareholders
proxies in favor of the adoption of this Agreement, and shall take all other
action necessary or advisable to secure the vote(s) of its shareholders required
by Nevada Law as applicable to obtain such adoption, provided, however, that
Biomune shall not be obligated to solicit proxies in favor of the adoption of
this Agreement at the Shareholders' Meeting to the extent that Biomune's Board
of Directors determines in good that such failure to solicit proxies is required
in order to comply with its fiduciary duties under applicable Law after
receiving advice to such effect from independent legal counsel.
5.19 Appropriate Action; Consents; Filings. Biomune shall use its best
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efforts to (i) take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable under applicable law
to consummate and make effective the transactions contemplated by this
Agreement; (ii) obtain all consents, licenses, permits, waivers, approvals,
authorizations or orders required under Law (including, without limitation, all
foreign and domestic (federal, state and local) governmental and regulatory
rulings and approvals of parties to Contracts) in connection with the
authorization, execution and delivery of this Agreement and the consummation by
Biomune of the transactions contemplated hereby; and (iii) make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement required under (A) the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder, and any other applicable
federal or state securities laws; and (B) any other applicable Law.
5.20 Indemnification.
(a) In addition to all rights and remedies available to Donlar at law
or in equity, Biomune shall indemnify, defend and hold harmless Donlar and
any parent, subsidiary, associate, affiliate, partner, shareholder,
director, officer, employee or agent of Donlar (all of the foregoing are
collectively referred to as the "Indemnified Parties") from and against and
pay on behalf of or reimburse such party as and when incurred all losses,
including, without limitation, diminutions in value, Liabilities, demands,
claims, actions or causes of action, costs, damages, judgments, debts,
settlements, assessments, deficiencies, taxes, penalties, fines or
expenses, whether or not arising out of any claims by or on behalf of any
third party, including interest, penalties, reasonable attorneys' fees and
expenses and all reasonable amounts paid in investigation, defense or
settlement of any of the foregoing (collectively, "Losses") which any such
party may suffer, sustain or become subject to, as a result of, in
connection with, or relating to or by virtue of:
(i) any material misrepresentations or material breach of
warranty on the part of Biomune under Article II;
(ii) any material misrepresentation in or material omission from
any of the representations or warranties contained in any certificate,
document or instrument or the Schedules delivered to Donlar by or on
behalf of Biomune in connection herewith;
(iii) any material nonfulfillment or breach of any covenant or
agreement on the part of Biomune under this Agreement or under any
certificate, document or instrument delivered in connection therewith;
or
(iv) any action, demand, proceeding, investigation or claim by
any third party, including, without limitation, Government Entities
against or affecting an Biomune Affiliated Company or any of their
affiliates which, if successful, would give rise to or evidence the
existence of or relate to a material breach of (A) any of the material
representations or warranties at the time made or (B) the covenants of
Biomune.
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(b) All indemnification rights hereunder shall survive the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereunder indefinitely, regardless of any investigation,
inquiry or examination made for or on behalf of, or any Knowledge of,
Donlar and/or any of the other Indemnified Parties or the acceptance by
Donlar of any certificate or opinion.
(c) If for any reason the indemnity provided for in this Section 5.20
is unavailable to any Indemnified Party or is insufficient to hold each
such Indemnified Party harmless from all such Losses arising with respect
to the transactions contemplated hereunder, then Biomune and the
Indemnified Party shall each contribute to the amount paid or payable by
such Loss in such proportion as is appropriate to reflect not only the
relative benefits received by Biomune on the one hand, and such Indemnified
Party on the other, but also the relative fault of Biomune on the one hand,
and the Indemnified Party on the other, as well as any relevant equitable
considerations. In addition, Biomune agrees to reimburse any Indemnified
Party upon demand for all reasonable expenses, including legal counsel
fees, incurred by such Indemnified Party or any such other person in
connection with investigating, preparing or defending any such action or
claim. The indemnity, contribution and expense reimbursement obligations
that Biomune has under this Section 5.20 shall be in addition to any
liability that Biomune may otherwise have. Biomune further agrees that the
indemnification and reimbursement commitments set forth in this Agreement
shall apply whether or not the Indemnified Party is a formal party to any
such lawsuits, claims or other proceedings.
(d) Any indemnification of either Donlar or any other Indemnified
Party by Biomune pursuant to this Section 5.20 shall be effected by wire
transfer of immediately available funds from Biomune to an account
designated by Donlar or such other Indemnified Party within 15 days after
the determination thereof.
5.21 No Incurrence of Debt. Biomune shall not, and shall cause each other
Biomune Affiliated Company not to, other than in the Ordinary Course of
Business, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other Person.
5.22 Confidentiality. Biomune shall, and shall cause each other Biomune
Affiliated Company to, maintain in confidence, and cause their respective
directors, officers, employees, agents and advisors to maintain in confidence,
any written, oral or other information obtained in confidence from Donlar in
connection with this Agreement or the contemplated transactions. If this
Agreement is terminated, Biomune shall return or destroy as much of such written
information as Donlar may reasonably request.
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ARTICLE VI
COVENANTS OF DONLAR
Donlar covenants and agrees that, unless Biomune otherwise agrees in
writing, from the date of this Agreement until the Closing:
6.1 Operation of Business. From and after the date of this Agreement and
until the Closing Date, Donlar will conduct its business in a reasonable and
prudent manner in accordance with past practices, and will use its best efforts
to preserve its existing business and relationships with its employees,
customers, suppliers, and others, to preserve and protect its properties, and to
conduct its business in compliance with all applicable laws and regulations.
During that period, Donlar will not make any material divestitures of assets
(other than inventory sold in the normal and Ordinary Course of Business as
presently conducted), and will not encumber any of the Acquired Assets, or any
other assets, rights, or interests which are subject to this Agreement. Donlar
will not otherwise engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business.
6.2 Full Access. Donlar will permit representatives of Biomune to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of Donlar, to all premises, properties, personnel,
books, records (including tax records), contracts, and documents of or
pertaining to Donlar.
6.3 Exclusivity. Donlar will not solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of all or substantially all of the capital stock or assets of Donlar (including
any acquisition structured as a merger, consolidation, or share exchange).
6.4 Shareholder Meeting. Donlar shall call and hold a meeting of its
shareholders (the "Donlar Shareholders' Meeting"), as promptly as practicable
after the date of this Agreement for the purpose of voting on the adoption of
this Agreement. Donlar shall use its best efforts to solicit from its
shareholders proxies in favor of the adoption of this Agreement, and shall take
all other action necessary or advisable to secure the votes of its shareholders
required by Illinois law as applicable to obtain such adoption, provided,
however, that Donlar shall not be obligated to solicit proxies in favor of the
adoption of this Agreement at the Donlar Shareholders' Meeting to the extent
that Donlar's Board of Directors determines in good that such failure to solicit
proxies is required in order to comply with its fiduciary duties under
applicable Law after receiving advice to such effect from independent legal
counsel.
6.5 Appropriate Action; Consents; Filings. Donlar shall use its best
efforts to (i) take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable under applicable law
to consummate and make effective the transactions contemplated by this
Agreement; (ii) obtain all consents, licenses, permits, waivers, approvals,
authorizations or orders required under Law (including, without limitation, all
foreign and domestic (federal, state and local) governmental and regulatory
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rulings and approvals of parties to Contracts) in connection with the
authorization, execution and delivery of this Agreement and the consummation by
Donlar of the transactions contemplated hereby; and (iii) make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement required under (A) the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder, and any other applicable
federal or state securities laws; and (B) any other applicable Law.
6.6 Indemnification.
(a) In addition to all rights and remedies available to Biomune at law
or in equity, Donlar shall indemnify, defend and hold harmless Biomune and
any parent, Subsidiary, associate, Affiliate, partner, shareholder,
director, officer, employee or agent of Biomune (all of the foregoing are
collectively referred to as the "Biomune Indemnified Parties") from and
against and pay on behalf of or reimburse such party as and when incurred
all losses, including, without limitation, diminutions in value,
Liabilities, demands, claims, actions or causes of action, costs, damages,
judgments, debts, settlements, assessments, deficiencies, taxes, penalties,
fines or expenses, whether or not arising out of any claims by or on behalf
of any third party, including interest, penalties, reasonable attorneys'
fees and expenses and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing (collectively, "Biomune Losses")
which any such party may suffer, sustain or become subject to, as a result
of, in connection with, or relating to or by virtue of:
(i) any material misrepresentations or material breach of
warranty on the part of Donlar under Article III;
(ii) any material misrepresentation in or material omission from
any of the representations or warranties contained in any certificate,
document or instrument or the Schedules delivered to Biomune by or on
behalf of Donlar in connection herewith;
(iii) any material nonfulfillment or breach of any covenant or
agreement on the part of Donlar under this Agreement or under any
certificate, document or instrument delivered in connection therewith;
or
(iv) any action, demand, proceeding, investigation or claim by
any third party, including, without limitation, Government Entities
against or affecting an Donlar Affiliated Company or any of their
affiliates which, if successful, would give rise to or evidence the
existence of or relate to a material breach of (A) any of the material
representations or warranties at the time made or (B) the covenants of
Donlar.
(b) All indemnification rights hereunder shall survive the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereunder indefinitely, regardless of any investigation,
inquiry or examination made for or on behalf of, or any Knowledge of,
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Biomune and/or any of the other Biomune Indemnified Parties or the
acceptance by Biomune of any certificate or opinion.
(c) If for any reason the indemnity provided for in this Section 6.6
is unavailable to any Biomune Indemnified Party or is insufficient to hold
each such Biomune Indemnified Party harmless from all such Biomune Losses
arising with respect to the transactions contemplated hereunder, then
Donlar and the Biomune Indemnified Party shall each contribute to the
amount paid or payable by such Biomune Loss in such proportion as is
appropriate to reflect not only the relative benefits received by Donlar on
the one hand, and such Biomune Indemnified Party on the other, but also the
relative fault of Donlar on the one hand, and the Biomune Party on the
other, as well as any relevant equitable considerations. In addition,
Donlar agrees to reimburse any Biomune Party upon demand for all reasonable
expenses, including legal counsel fees, incurred by such Biomune
Indemnified Party or any such other person in connection with
investigating, preparing or defending any such action or claim. The
indemnity, contribution and expense reimbursement obligations that Donlar
has under this Section 6.6 shall be in addition to any liability that
Donlar may otherwise have. Donlar further agrees that the indemnification
and reimbursement commitments set forth in this Agreement shall apply
whether or not the Biomune Indemnified Party is a formal party to any such
lawsuits, claims or other proceedings.
(d) Any indemnification of either Biomune or any other Biomune
Indemnified Party by Donlar pursuant to this Section 6.6 shall be effected
by wire transfer of immediately available funds from Donlar to an account
designated by Biomune or such other Biomune Indemnified Party within 15
days after the determination thereof.
6.7 No Incurrence of Debt. Donlar shall not, and shall cause each other
Donlar Affiliated Company not to, other than in the Ordinary Course of Business
or in connection with the closing of the transactions contemplated by this
Agreement, incur any additional indebtedness for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other Person.
6.8 Confidentiality. Donlar shall, and shall cause each other Donlar
Affiliated Company to, maintain in confidence, and cause their respective
directors, officers, employees, agents and advisors to maintain in confidence,
any written, oral or other information obtained in confidence from Biomune in
connection with this Agreement or the contemplated transactions. If this
Agreement is terminated, Donlar shall return or destroy as much of such written
information as Biomune may reasonably request.
6.9 Donlar Schedules. Within ten (10) business days of the date of this
Agreement, Donlar will deliver to Biomune a set of schedules (the "Donlar
Schedules") indicating (a) the Acquired Assets described in Section 1.2(d), and
(b) any exceptions to the representations and warranties of Donlar set forth in
Article III.
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ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by the written agreement of Donlar and Biomune;
(b) by either Donlar or Biomune by written notice to the other party
if the transactions contemplated hereby shall not have been consummated
pursuant hereto by 5:00 p.m. CST on October 31, 2000, or such later date as
selected by the mutual written consent of Donlar and Biomune, provided that
no party may give such notice if its breach of this Agreement has precluded
the consummation of this Agreement;
(c) by Biomune by written notice to Donlar if (i) the representations
and warranties of Donlar shall not have been true and correct in all
respects (in the case of a representation or warranty containing a
materiality qualification) or in all material respects (in the case of a
representation or warranty without a materiality qualification) as of the
date when made, or (ii) if any of the conditions set forth in Section 4.2
shall not have been, or if it becomes apparent that any of such conditions
will not be, fulfilled by 5:00 p.m. CST on October 30, 2000, or such later
date as selected by the mutual written consent of Donlar and Biomune,
unless such failure shall be due to the failure of Biomune to perform or
comply with any of the covenants, agreements, or conditions hereof to be
performed or complied with by it prior to the Closing; or
(d) by Donlar by written notice to Biomune if (i) the representations
and warranties of Biomune shall not have been true and correct in all
respects (in the case of a representation or warranty containing a
materiality qualification) or in all material respects (in the case of a
representation or warranty without a materiality qualification) as of the
date when made, (ii) if any of the conditions set forth in Section 4.1
shall not have been, or if it becomes apparent that any of such conditions
will not be, fulfilled by 5:00 p.m. CST on October 30, 2000, or such later
date as selected by the mutual written consent of Donlar and Biomune,
unless such failure shall be due to the failure of Donlar to perform or
comply with any of the covenants, agreements, or conditions hereof to be
performed or complied with by it prior to the Closing, or (iii) in the
event Donlar elects to terminate by reason of the option provided in
Section 4.2(g).
7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall become void, without any
liability to any party in respect hereof or the transactions contemplated hereby
on the part of any party hereto or any of their respective directors, officers,
employees, agents, consultants, representatives, advisers or shareholders,
except, provided, however, that: (a) nothing shall release a breaching party
from liability resulting from such party's breach of this Agreement, (b)
Sections 5.21, 5.22, 7.2, 7.3 and Articles VIII and IX shall survive
indefinitely subject to applicable statutes of limitations, and (c) if Donlar
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refuses or fails to consummate the transactions contemplated by this Agreement
for any reason other than the failure of the conditions set forth in Section 4.1
or pursuant to the termination right under Section 4.2(g), then Donlar shall pay
to Biomune a break-up fee in the amount of Three Hundred Thousand Dollars
($300,000) (the "Break-up Fee"), and (d) if Biomune refuses or fails to
consummate the transactions contemplated by this Agreement for any reason other
than the failure of the conditions set forth in Section 4.2, then Biomune shall
pay the Break-up Fee to Donlar.
7.3 Donlar's Put Right.
(a) Upon termination of this Agreement pursuant to Section 7.1, Donlar
shall have the right, but not the obligation, to put any or all shares of
the Common Stock (the "Put Shares") acquired by Donlar pursuant to that
Stock Purchase Agreement dated as of August 7, 2000, by and between Donlar
and Biomune (the "Stock Purchase Agreement"), to Biomune and Biomune shall
be obligated to purchase the Put Shares for cash payable to Donlar by wire
transfer, if Donlar has paid cash in whole or in part, or by redelivery to
Donlar of any outstanding promissory notes previously delivered by Donlar
in payment for the Put Shares (the "Put Right"). The price payable by
Biomune per share shall be equal to the Aggregate Purchase Price paid by
Donlar to acquire the Put Shares (as defined in the Asset Purchase
Agreement) divided by the total number of Put Shares acquired by Donlar in
that transaction (the "Per Share Price").
(b) In the event Donlar decides the exercise the Put Right, Donlar
shall provide Biomune with written notice of its intent to exercise the Put
Right specifying the number of shares which it intends to put and the wire
instructions for payment. Donlar shall also provide Biomune such additional
documentation as Biomune may reasonably request to convey and transfer the
Put Shares to Biomune. Notwithstanding the foregoing, no later than ten
business days after Biomune's receipt of the written notice from Donlar,
Biomune shall wire an amount equal to the product of the number of shares
put by Donlar multiplied by the Per Share Price to Donlar pursuant to the
wire instructions provided in the notice.
(c) The Put Right shall be exercisable in whole or in part at any time
from the date this Agreement is terminated until the expiration of 60 days
thereafter and may be exercised on one or more separate occasions.
(d) In order to meet its potential obligations under the Put Right,
until the Closing, Biomune agrees that it will keep any proceeds received
by it from Donlar under the Stock Purchase Agreement segregated from
Biomune's other assets and will not use such proceeds for any purpose.
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ARTICLE VIII
MISCELLANEOUS
8.1 Expenses. Each party hereto will pay its own expenses in connection
with the transactions contemplated hereby, whether or not such transactions
shall be consummated.
8.2 Survival of Agreements. All covenants, agreements, representations and
warranties made herein or in any other agreement, or any certificate or
instrument delivered to Donlar pursuant to or in connection with this Agreement,
shall survive the Closing for a period of two years.
8.3 Remedies. In case any one or more of the representations, warranties,
covenants or agreements set forth in this Agreement shall have been breached by
any party hereto, the party or parties entitled to the benefit of such
representations, warranties, covenants or agreements may proceed to protect and
enforce their rights either under the indemnification provisions of this
Agreement or by suit in equity and/or action at law, including, but not limited
to, an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Agreement. The rights, powers and remedies of the parties under this Agreement
are cumulative and not exclusive of any other right, power or remedy which such
parties may have under any other agreement or law. No single or partial
assertion or exercise of any right, power or remedy of a party hereunder shall
preclude any other or further assertion or exercise thereof.
8.4 Brokerage. Each party will indemnify and hold harmless the other
against and in respect of any claim for brokerage or other commissions relative
to this Agreement or to the transactions contemplated hereby, based in any way
on agreements, arrangements or understandings made or claimed to have been made
with any third party.
8.5 Parties in Interest. All representations, covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not. Without limiting the generality of
the foregoing, all representations, covenants and agreements benefiting Donlar
shall inure to the benefit of any and all subsequent holders from time to time
of the Acquired Shares.
8.6 Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person or sent by
overnight delivery or by certified or registered mail, return receipt requested,
addressed as follows:
(a) if to Biomune, at Biomune Systems, Inc., 64 East Winchester, Suite
303, Salt Lake City, Utah 84107, telecopier: (801) 261-5123, Attention:
President, with a copy to Kevin R. Pinegar, Esquire, Durham Jones &
Pinegar, 111 East Broadway, Suite 900, Salt Lake City, Utah 84111,
telecopier: (801) 415-3500;
(b) if to Donlar, at Donlar Corporation, 6502 South Archer Avenue,
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Bedford Park, Illinois 60501, telecopier: (708) 563-9212, Attention:
Lawrence Koskan, with a copy to Eric Fogel, Esquire, Duane, Morris &
Heckscher LLP, 227 West Monroe Street, Suite 3400, Chicago, IL 60606,
telecopier: (312) 499-6701;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
All notices, consents or other communications required or permitted to be given
under this Agreement shall be deemed to have been duly given and received (i)
when delivered personally, (ii) three business days after being mailed by first
class mail, postage prepaid, or (iii) one business day after being sent by a
reputable overnight delivery service, postage or delivery charges prepaid, to
the parties at their respective addresses stated on the signature page of this
Agreement. Notices may also be given by telecopier and shall be effective on the
date transmitted if confirmed within 24 hours thereafter by a signed original
sent in the manner provided in the preceding sentence.
8.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada notwithstanding any
conflicts-of-law doctrines of such state or any other jurisdiction to the
contrary. EACH OF THE PARTIES HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT.
8.8 Entire Agreement. This Agreement, including the Schedules hereto,
together with the other writings referred to herein or delivered pursuant hereto
which form a part hereof, constitutes the sole and entire agreement of the
parties with respect to the subject matter hereof. All Schedules hereto are
hereby incorporated herein by reference.
8.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 Amendments. This Agreement may not be amended or modified, and no
provisions hereof may be waived, without the written consent of Biomune and
Donlar.
8.11 Severability. The invalidity or unenforceability of any term, phrase,
clause, paragraph, restriction, covenant, agreement or other provision hereof
shall in no way affect the validity or enforceability of any other provision, or
any part thereof, but this Agreement shall be construed as if such invalid or
unenforceable term, phrase, clause, paragraph, restriction, covenant, agreement
or other provision had never been contained herein unless the deletion of such
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term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision would result in such a material change as to cause the covenants and
agreements contained herein to be unreasonable or would materially and adversely
frustrate the objectives of the parties as expressed in this Agreement.
8.12 Titles and Subtitles. The titles and subtitles used in this Agreement
are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
8.13 Public Announcements. Biomune and Donlar shall consult with each other
before issuing any press release or otherwise making any public statement
relating to the subject matter of this Agreement and shall not issue any such
press release or make any such public statement prior to such consultation and
without the consent of the other party which shall not be unreasonably withheld,
except as may be required by federal securities laws.
8.14 Bulk Transfer Laws. Biomune acknowledges that Donlar will not comply
with the provisions of any bulk transfer laws of any jurisdiction in connection
with the transactions contemplated by this Agreement.
ARTICLE IX
DEFINITIONS
9.1 "Affiliated Companies" means a Party and its Subsidiaries,
collectively.
9.2 "Applicable Contract" means any Contract (a) under which any Party or
any of its Subsidiaries has or may acquire any rights, (b) under which any Party
or any of its Subsidiaries has or may become subject to any obligation or
Liability, or (c) by which any Party or any of its Subsidiaries or any of the
assets owned or used by it is or may become bound.
9.3 "Common Stock" means Biomune's Common Stock, $.0001 par value.
9.4 "Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
9.5 "Environmental Laws" means any and all Laws, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions relating
to pollution and the protection of the environment or the release of any
materials into the environment, including but not limited to those relating to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
9.6 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
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particular section of the Exchange Act shall include reference to the comparable
section, if any, of any successor federal statute.
9.7 "GAAP" means United States generally accepted accounting principles as
in effect from time to time.
9.8 "Government Entity" means any supranational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
9.9 "Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances, including but not limited to biomedical waste,
that might pose a hazard to health or safety, the removal of which may be
required or the generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use, disposal, release,
discharge, spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable Law (including, without limitation,
asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).
9.10 "Knowledge" or "to Know" means actual knowledge after reasonable
investigation.
9.11 "Laws" includes any foreign, federal, state, or local law, statute,
rule, regulation, Order or other restriction of any court or other Government
Entity.
9.12 "Liability" means any debt, liability or obligation, whether known or
unknown, asserted or unasserted, accrued, absolute, contingent or otherwise,
whether due or to become due.
9.13 "Major Supplier" means a supplier of $50,000 or more in materials
and/or services to a Party or any of its Subsidiaries during the last twelve
months.
9.14 "Material Adverse Effect" or "Materially Adversely Affect" means any
event or change which has a material adverse effect on (a) the properties,
business, prospects, operations, earnings, assets, liabilities or the condition
(financial or otherwise) of a party taken as a whole, whether or not in the
ordinary course of business, (b) the ability of a party to perform its
obligations under this Agreement or (c) the validity or enforceability of this
Agreement.
9.15 "Ordinary Course of Business" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if: (a) such
action is consistent with the past practice of such Person (including with
respect to quality and frequency) and is taken in the ordinary course of the
normal day-to-day operations of such Person; and (b) such action is not required
to be authorized by the board of directors of such Person (or by any Person or
group of Persons exercising similar authority).
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9.16 "Organizational Documents" means the articles or certificate of
incorporation and the bylaws of a corporation; the partnership agreement and any
statement of partnership of a general partnership; the limited partnership
agreement and the certificate of the limited partnership of a limited
partnership; any charter or similar document adopted or filed in connection with
the creation, formation, or organization of a Person; and any amendment to any
of the foregoing.
9.17 "Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Government Entity.
9.18 "Promissory Note" means that certain note (or notes) delivered by
Donlar in payment for the Common Stock issued under that certain Stock Purchase
Agreement between Donlar and Biomune dated August 7, 2000.
9.19 "SEC" means the United States Securities and Exchange Commission.
9.20 "Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of any successor federal statute.
9.21 "Series H Preferred Stock" means the Series H Preferred Stock of
Biomune, as created by the Series H Preferred Stock.
9.22 "Stock Incentive Plans" means Biomune's 1992 Stock Incentive Plan,
1993 Stock Incentive Plan, 1995 Stock Incentive Plan, 1996 Stock Incentive Plan
and 1999 Stock Incentive Plan, and any other stock incentive plans adopted by
Biomune.
9.23 "Subsidiary" with respect to any Person (the "Owner") means any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries.
(Signature page to follow.)
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IN WITNESS WHEREOF, Biomune and Donlar have executed this Agreement as
of the day and year first above written.
BIOMUNE SYSTEMS, INC.
By:
Title:
DONLAR CORPORATION
By:
Title:
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EXHIBIT A
Terms of Series H Preferred Stock
Each share of Series H Preferred Stock shall have a $10.00 liquidation
preference.
The Series H Preferred Stock will be convertible by the Company into Common
Stock at any time after the first anniversary of Closing at a ratio of one share
of Common Stock for every share of Series H Preferred Stock.
The Series H Preferred Stock will be convertible by the holders prior to the
first anniversary of the Closing upon a "Sale of the Company."
The Series H Preferred Stock will not have voting rights.
47
